Crown Point Energy Inc.
TSX VENTURE : CWV

Crown Point Energy Inc.

December 22, 2014 09:00 ET

Crown Point Agrees to Revised Terms for US$15 Million Equity Financing, Closes First Tranche and Appoints Two New Board Members

CALGARY, ALBERTA--(Marketwired - Dec. 22, 2014) - Crown Point Energy Inc. (TSX VENTURE:CWV) ("Crown Point" or the "Company") today announced that due to current market conditions it has amended the terms of its previously announced US$15 million private placement of common shares to two new strategic investors, Liminar Energia S.A. and GORC S.A. (the "Investors"). Crown Point also announced that it has closed the first tranche of the financing and has appointed two nominees of the Investors to its Board of Directors.

"This is a transformative development for Crown Point," said Murray McCartney, CEO of Crown Point. "This financing will help us to realize the full potential of our exploration and development efforts in Argentina. It will provide the necessary capital to expand on the success of our current drilling program, allowing us access to new development, production and reserve opportunities."

"Because of the recent sharp decline in global oil prices and other related factors we have decreased the issue price and increased the number of shares as compared with our original financing terms announced more than a month ago," continued Mr. McCartney. "Even so, Crown Point's ability to secure such a significant investment in these difficult market conditions speaks to the quality of our assets and validates our strategy. Our two new directors will further strengthen the Board with their expertise across the Argentinian energy and banking sectors and we believe they will help us grow Crown Point into a significant player in the Argentine oil and gas sector."

The New Board Members

The two new directors, both from Argentina, are Pablo Bernardo Peralta, President of Liminar Energia S.A., and Gabriel Dario Obrador, President of GORC S.A.

Said Mr. Peralta: "Argentina as a nation has a priority of reducing its reliance on imports of energy by encouraging growth in domestic oil and gas production. Crown Point already is well positioned to contribute to such growth through the drill bit, by developing its high quality concessions in Argentina. We can further accelerate Crown Point's growth by leveraging our financial capabilities and our local business networks to assist the management team to access new opportunities through acquisitions and farm-ins on strategic assets."

Said Mr. Obrador: "We invested in Crown Point because we like the management team and the assets. Our goal is to make Crown Point a high growth and profitable oil and gas company that will seize opportunities currently existing in the market and ones that will arise in the near future. During the many months that we have been negotiating with Crown Point, we have discussed different growth strategies and we are confident that Crown Point is capable of achieving our common goals of growth and profitability."

Details of the Financing

The amended agreement with the Investors still provides for the US$15 million investment to be completed in two tranches. Under the amended terms of the agreement, the aggregate number of common shares to be issued increases to 60,000,000 from 51,724,138 and the price is reduced to US$0.25 per share (approximately C$0.29 per share) from US$0.29 per share.

At the closing of the first tranche of the financing completed on Friday, December 19, 2014, the Investors purchased 25,965,704 common shares for gross proceeds of US$6,491,426. With the closing of the first tranche, the Investors own approximately 19.9% of Crown Point's outstanding common shares. The purchase price was paid as follows: (i) US$2,000,000 in US dollars ("USD"); and (ii) US$4,491,426 through the payment of $38,446,607 Argentine pesos ("ARS") (based on the USD - ARS exchange rate of Banco de la Nación Argentina at the close of business on December 18, 2014, being US$1 = ARS$8.56).

The USD - ARS exchange rate used for the financing is the exchange rate that the Company must use to purchase Argentine pesos when it transfers money into its Argentine subsidiaries to fund its operations. No other exchange rate is available to the Company under Argentine law. Although many of the contracts to which Crown Point's Argentine subsidiaries are a party are denominated in USD, under Argentine law those contracts must be settled in Argentine pesos at the official exchange rate. As a result, the Argentine peso is the currency in which the Company receives its oil and gas revenues and that it uses to make capital expenditures and pay for its general and administrative expenses in Argentina.

The second tranche of the financing calls for the Investors to purchase 34,034,296 common shares for gross proceeds of US$8,508,574. Following the second tranche closing, the Investors will own approximately 36.5% of Crown Point's outstanding common shares. The purchase price for the second tranche of common shares will be paid in ARS based on the USD - ARS exchange rate of Banco de la Nación Argentina at the close of business on the business day prior to the second closing date.

The completion of the second closing may result in the Investors becoming a "control person" of the Company under the rules of the TSX Venture Exchange ("TSXV"). As a result, the second closing is conditional on, among other things, the Company obtaining disinterested shareholder approval of the second tranche in accordance with the rules of the TSXV.

Subject to certain exceptions, the Company has agreed to work exclusively with the Investors to complete the financing and to not pursue other sources of equity financing. Provided the second closing occurs, the Investors have also agreed not to sell or otherwise transfer any common shares owned by them for a period of two years following closing, which the Company believes demonstrates their long-term commitment to Crown Point. Under applicable securities laws and TSXV rules, the common shares issued at the first closing are subject to a four month hold period expiring on April 20, 2015.

Use of proceeds

The net proceeds from the investment will be used to fund the Company's exploration and development program in Argentina and for general corporate purposes. A portion of the net proceeds, together with funds flow from operations and working capital, will be used to complete the Company's ongoing 14-well development drilling, recompletion and exploration program in Argentina.

About Crown Point

Crown Point Energy Inc. is an international oil and gas exploration and development company headquartered in Calgary, Canada, incorporated in Alberta, Canada, trading on the TSX Venture Exchange and operating in South America. Crown Point's exploration and development activities are focused in the Austral and Neuquén basins in Argentina. Crown Point has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a basis for future growth.

Advisory

Forward looking information: Certain information set forth in this document, including: the statement that the financing will help Crown Point to realize the full potential of its exploration and development efforts in Argentina and will provide the necessary capital to expand on the success of its current drilling program, allowing it to access to new development, production and reserve opportunities; statements from the newly appointed directors of Crown point with respect to their expectations and plans for Crown Point, including their assessment of Argentina's priority of reducing its reliance on imports of energy by encouraging growth in domestic oil and gas production and the effects this may have on Crown Point, that they may further accelerate Crown Point's growth by leveraging their financial capabilities and local business networks to assist the management team to access new opportunities through acquisitions and farm-ins on strategic assets and their goal is to make Crown Point a high growth and profitable oil and gas company that will seize opportunities currently existing in the market and ones that will arise in the near future; matters with respect to describing the Second Closing, including the dollar amounts and currencies of payment; the statement that the Board intends to call and hold a special meeting of the Company's shareholders to consider the Second Closing in due course that an information circular describing the Second Closing and the Investors will be prepared and mailed to the Company's shareholders for this purpose; the intended use of proceeds of the Investment; and the statement that the Investors have agreed not to sell or otherwise transfer any shares owned by them for a period of two years following closing (subject to certain conditions) are considered forward-looking information, and necessarily involve risks and uncertainties, certain of which are beyond our control.
Such risks include but are not limited to: failure of Crown Point (and the investors) to realize the anticipated benefits of the Investment, as described herein; failure to complete the Second Closing; regulatory risks including TSXV approval for the Second Closing and the related matters; failure to secure the requisite shareholder approval for the Second Closing; failure to complete the Second Closing on the timelines the Company as planned; the risk that a meeting to approve the Second Closing (including the mailing of the related information circular) will be delayed or frustrated; and the risk that the use of proceeds from the Investment, as described herein, may change. Actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that we will derive therefrom. With respect to forward-looking information contained herein, Crown Point has made assumptions regarding, among other things: the receipt of all regulatory (including TSXV) and shareholder approvals; that the Company will be able to realize certain benefits from the Investment and related matters; that the Company will be able to hold a shareholder meeting to approve the Second Closing in due course; that the Investment will be completed in accordance with the terms set forth in the Agreement; the use of proceeds from the Investment will remain the same; the impact of increasing competition; the general stability of the economic and political environment in which the Company operates; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the costs of obtaining equipment and personnel to complete the Company's capital expenditure program; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration activities; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, commodity price controls, import/export matters, taxes and environmental matters in Argentina; and the ability of the Company to successfully market its oil and natural gas products.
Additional information on these and other factors that could affect us are included in reports on file with Canadian securities regulatory authorities, including under the heading "Risk Factors" in our annual information form, and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward-looking statements contained in this document are made as of the date of this document, and we do not undertake any obligation to update publicly or to revise any of the forward looking statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

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