Rain Resources Inc.

September 06, 2011 09:10 ET

Letter of Intent to Combine Rain Resources Inc., Octant Energy Ltd. and Propel Energy Corp.

BURNABY, BRITISH COLUMBIA--(Marketwire - Sept. 6, 2011) -

Rain Resources Inc. (the "Corporation" or "Rain") (TSX VENTURE:RAN.H), Octant Energy Ltd. ("Octant"), and Propel Energy Corp. ("Propel") are pleased to announce that they have entered into an non-arm's length letter of intent (the "LOI") dated September 2, 2011, where the parties have agreed to negotiate a definitive agreement relating to a proposed business combination (the "Transaction"). Pursuant to the Transaction it is intended that Octant and Propel (collectively the "Target Companies") will become wholly-owned subsidiaries of Rain and certain management of the Target Companies will become the management of the Resulting Issuer. The combined assets of the Target Companies will provide a mix of cash and petroleum to the Resulting Issuer. Pursuant to the LOI, the parties have agreed to the essential terms of the Transaction which will be disclosed in a subsequent press release once the TSX Venture Exchange (the "Exchange") has received and reviewed certain information in accordance with their Policies. The Proposed Transaction is a non- arm's length transaction as Murray Atkins a director of Rain has ownership or other interest in Propel.

Upon completion of the Transaction, all of the existing directors and officers of Rain will resign and the directors and officers of the Resulting Issuer are anticipated to include the persons identified below:

J. Christopher McLean - Chairman

Mr. McLean is the founder and President of Stonechair Capital Company, a private venture capital firm (since April 2009). Prior to starting Stonechair Capital, he was the Head of Capital Markets and Investment Banking at Wolverton Securities Ltd. (from 2007 to 2009). Mr. McLean currently sits as a director and the chairman of the audit committee of Canadian Overseas Petroleum Ltd (TSX:XOP).

Rick Schmitt – President and Director

Mr. Schmitt has been the President of Propel since June 2011. Previously, he was President & Chief Executive Officer of Black Marlin Energy Holdings Limited and its predecessor company until October 2010. From 2006 to 2009, Mr. Schmitt was the President and Chief Executive Officer of Africa Oil Corp. Mr. Schmitt is currently a board member of a few TSX listed companies.

Bill Evaroa – Chief Financial Officer

Mr. Evaroa is a chartered accountant who brings to the company 25 years of oil and gas industry experience, gained while working in 12 international locations. His experience includes setting up operations, systems implementation, policies and procedures and reporting as well as working in a head office environment. It includes 7 years with Nexen beginning with in country Finance Manager for Vietnam, then transferring to Indonesia before being posted to the Calgary head office where he managed the reporting of Nexen's international division, its annual budget and implementation of Sarbanes Oxley. More recently Mr. Evaroa was a key member of Tanganyika Oil's Syria based operation at times heading up Finance, HR, IT and Admin., before the company was acquired by Sinopec. Mr. Evaroa's last position was as VP Finance and CFO with Black Marlin Energy Ltd.

Murray Atkins - Director

Mr. Atkins has been the President of Blur Investments Ltd., a privately held investment company, since 1998. He is also the President and CEO of Restoration Properties, which is involved in real estate development and the management of several revenue-producing properties. Mr. Atkins is currently a board member of a few TSX listed companies.

Scott E. Fleurie - Director

Mr. Fleurie is a Director of Investment Banking for Fraser Mackenzie Limited (since October 2010). He was previously Vice-President & Partner, Energy Banking at Genuity Capital Markets (from 2006 to 2008) and previous to that was Vice-President at MGI Securities Investment Banking (from 2004 to 2006).

Cautionary Statements

The Proposed Transaction is a non- arm's length transaction as Murray Atkins a director of Rain has ownership or other interest in Propel. As part of the regulatory approval process, Rain anticipates submitting for review to the Exchange an information circular. The common shares of Rain will remain halted until such time as permission to resume trading has been obtained from the Exchange and submission of required documentation to the Exchange. Prior to the commencement of trading an additional press release will be issued providing detailed information relating to the consideration for the Transaction, the NI 51-101 report on the oil and gas assets of the Target Companies, financial information of the Target Companies and the management of the Resulting Issuer.

Completion of the Transaction is subject to a number of conditions including, but not limited to, the parties entering into a definitive agreement, Exchange acceptance and, if applicable pursuant to Exchange Requirements, Rain shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. For this purpose, acceptances of the offer by shareholders of the Target Companies must be at least at a level to enable compulsory acquisition of any non-accepting minority. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon.

All information contained in this news release with respect to Rain and the Target Companies was supplied by Rain and the Target Companies, respectively, for inclusion herein, and with respect to such information, Rain and its board of directors and officers have relied on the Target Companies with respect to information concerning the Target Companies.

Trading in the securities should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

This news release may contain forward-looking statements based on assumptions and judgments of management of the Corporation and the Target Companies regarding future events or results. Such statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements. The Corporation disclaims any intention or obligation to revise or update such statements except as may be required by law.

This new release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

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