LNG Energy Ltd.

LNG Energy Ltd.

August 29, 2011 15:00 ET

LNG Energy Announces Farm in Agreement With TransAtlantic Petroleum and Equity Financing

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 29, 2011) -


LNG Energy Ltd. ("LNG") (TSX VENTURE:LNG) is pleased to announce that it has entered into an exclusive term sheet with TransAtlantic Worldwide Ltd., a wholly owned subsidiary of TransAtlantic Petroleum Ltd. (TSX:TNP)(NYSE Amex:TAT) ("TransAtlantic") to earn a 50% interest in a future gas shale formation production concession in northwest Bulgaria (the "Transaction").

LNG intends to finance the Transaction as well as its existing work program through an equity financing and has filed a preliminary short form prospectus in connection with an overnight marketed public offering of the common shares of LNG ("Common Shares") (the "Offering"). The Offering will be conducted through a syndicate of underwriters led by Paradigm Capital Inc. and including Canaccord Genuity Corp., Fraser Mackenzie Ltd. and GMP Securities L.P. (the "Underwriters").

Summary of the Transaction

The term sheet contemplates that LNG will initially fund up to US$7.5 million to immediately drill, core and test a 3,200 meter (approximately 10,500 foot) exploration well on the A-Lovech exploration license in Bulgaria targeting the Middle Jurassic Etropole shale formation. As required in Bulgaria, on a successful result from this well, TransAtlantic's subsidiary, Direct Petroleum Bulgaria EOOD ("Direct Bulgaria"), will apply to the government of Bulgaria for a production concession (the "Etropole Concession"). The Etropole Concession is expected to cover an area up to 1,640 square kilometers (405,080 acres) for a term of up to 35 years.

Subject to certain conditions, including the issuance of the Etropole Concession, LNG is expected to form a subsidiary in Bulgaria ("LNG Bulgaria") which will fund up to an additional US$12.5 million, of which US$7.5 million is expected to be used to drill a second well or for other exploration activities on the Etropole Concession. In return, and subject to Bulgarian government approval, LNG Bulgaria will acquire a 50% undivided interest in the Etropole Concession. LNG is currently negotiating definitive agreements with TransAtlantic in respect of the Transaction.

In connection with the term sheet, LNG has paid a non-refundable deposit of US$1.5 million and has been granted the exclusive right to negotiate and finalize the definitive documentation in respect of the proposed Transaction until September 23, 2011. The non-refundable deposit will be applied against the initial US$7.5 million which is payable by LNG to fund the costs of the exploration well on the A-Lovech exploration license.

The Etropole Formation, especially its organic-rich lower part (Stefanetz Member), is the targeted interval for a gas resource. This formation is the proven source rock for major oil and gas fields in northwestern Bulgaria. The Etropole formation is a thick, black organic rich source rock lying at depths ranging from less than 2500 meters to greater than 5000 meters; it shows appropriate maturity for gas generation and is also over-pressured throughout much of the region. The Etropole shale is calcareous in nature similar in characteristics to the Upper Jurassic Haynesville shale in the US.

The proximity to an established gas market, an existing gas pipeline infrastructure and gas prices of over $10/mcfg make the Etropole play an economically attractive target. Significant gas shows were detected while drilling the Etropole formation in the most recently drilled well by Direct Bulgaria (Deventci R-1). Many older wells have also encountered shows while drilling in the play area. Given the rock properties of the Etropole, it is believed that it will respond favorably to modern completion and stimulation techniques and may yield significant economic gas resources.

Summary of the Equity Financing

The Offering will be priced in the context of the market with final terms of the Offering to be determined at the time of pricing. The Offering is scheduled to close on or about September 14, 2011 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the TSX Venture Exchange and the securities regulatory authorities.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state of the United States in which such offer, solicitation or sale would be unlawful. The securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any applicable securities laws of any state of the United States and may not be offered or sold in the United States absent such registration or an applicable exemption from such registration requirements.

LNG is a Canadian exploration and development company focused on developing oil and gas reserves in Papua New Guinea, Poland and the US. LNG holds a 100% interest in approximately 5.5 million acres of prospective oil and gas properties in Papua New Guinea. LNG has a 50% net interest in approximately 360,000 gross acres of prospective shales in Poland together with Realm Energy (BVI). LNG also has a 20% net interest in approximately 734,000 gross acres of prospective shales in Poland together with BNK Petroleum Inc., Sorgenia E&P S.p.A., and Rohol-Aufsuchungs Aktiengesellschaft. LNG shares trade on the TSX Venture Exchange under the symbol "LNG".


Dave Afseth, President & CEO

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this news release constitute "forward-looking information" as such term is used in applicable Canadian securities laws, including with respect to the closing of the Offering, the closing of the proposed transaction with TransAtlantic Worldwide Ltd. and, if completed, the granting of the Etropole Concession by the Bulgarian government and the proposed well program in respect of the Etropole Concession. Forward-looking information is based on plans and estimates of management at the date the information is provided and certain factors and assumptions of management. Forward looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information. Factors that could cause the forward-looking information in this news release to change or to be inaccurate include, but are not limited to, the risks related to unsatisfactory results of due diligence, international operations and doing business in foreign jurisdictions, risks associated with the oil and gas industry and exploratory and development activities generally (e.g., operational risks in development, exploration and production, delays or changes in plans with respect to exploration or development projects or capital expenditures, risks associated with equipment procurement and equipment failure), the risk of commodity price and foreign exchange rate fluctuations, risks related to future royalty rate changes, and risks and uncertainties associated with securing and maintaining necessary regulatory approvals, and counterparty risk related to the stability and viability of LNG's joint venture participants.

Shares Outstanding: 258,059,365

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 release.

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