MENA Hydrocarbons Inc.

MENA Hydrocarbons Inc.

June 15, 2012 17:31 ET

MENA Hydrocarbons Announces Initiation of Strategic Review Process and Share Consolidation

CALGARY, ALBERTA--(Marketwire - June 15, 2012) - MENA Hydrocarbons Inc. ("MENA" or the "Company") (TSX VENTURE:MNH) announced a corporate update further to its news release of May 30, 2012.


As at the date of this news release, the Company had a working capital deficiency of approximately $7.2 million. As disclosed on May 30, 2012, the Company's limited cash resources and liquidity creates a material uncertainty about the Company's ability to operate as a going concern in the near term.

For the last several months, the Company has attempted to raise the necessary funds to meet its near term operating and capital obligations without success. Since soon after inception, the Company has attempted to manage operations and raise capital in the face of the Arab Spring in the Middle East causing us to suspend our exploration program in Syria, after incurring Syrian expenditures of approximately $13 million, and proceed with a minimum work development program for the Lagia oil field based on available funding in order to meet our near term commitments to the governmental authorities. The prevailing capital market conditions and near closure of the global equity and debt markets make the raising of new capital extremely challenging, particularly for companies with limited market liquidity and relatively high working capital deficiencies.

Drilling operations on the Lagia oil field development have been suspended, as planned, and the Shams 1 rig has been temporarily farmed out to allow evaluation of data gathered in the 3 well drilling campaign. The Lagia 9 well has now been fracked and the two previously existing Lagia 6 and 7 wells, which were drilled in 2000, have been worked over and re-perforated. About 1,000 bbls oil have been produced to date from these three wells and is being stored in heated tanks at the field. Pump remediation work is being done on Lagia 9 which may enhance its cold flow rates and the newly drilled wells Lagia 8 and 10 are awaiting pumps to be installed, at which time they are expected to be placed on production also. The new wells drilled confirmed the presence of heavy oil in a low permeability reservoir which are expected to be best flowed under the steam injection scenario. On June 12th, the first road tanker loaded with 265 bbl of crude oil from the Lagia field was sent to the General Petroleum Company's (GPC) facilities in Ras Gharib for processing and sale to the Egyptian Petroleum Company (EGPC).

Strategic review process

In light of the working capital deficiency, the Board of Directors has initiated a process to identify, examine and consider strategic alternatives with the view to enhancing shareholder value. Strategic alternatives may include, but are not limited to, sale of the corporation, merger or other business combination, recapitalization, sale of all or a portion of the Company's assets, or any combination thereof, continued execution as its business plan, among all other alternatives. At this time, the Board of Directors has decided not to establish a special committee or retain a financial advisor to assist the Board of Directors with this process but may revisit making such appointments in the future depending on the circumstances at the time.

It is the Company's current intention not to disclose developments with respect to the strategic review process until the Board of Directors has approved a specific transaction or otherwise determines that disclosure is necessary or appropriate. The Company cautions that there are no assurances or guarantees that the process will result in a transaction or, if a transaction is undertaken, the terms or timing of such a transaction. The Company has not yet set a definite schedule to complete its evaluation or process.

Share consolidation

The Company also announced that the Board of Directors proposes to consolidate the issued and outstanding common shares of the Company, with the final consolidation ratio to be determined at a later date and prior to sending the Company's notice of meeting and information circular for the shareholder meeting to consider and approve the consolidation.

The Board of Directors believes that the consolidation, if implemented, will reduce its outstanding share amount to a level that will allow the Company to move forward with other initiatives and enhance the marketability of the Company's common shares as an investment.

Shareholder meeting

The Board of Directors has called a shareholder meeting for July 25, 2012 to approve, among things, the election of directors, appointment of auditors, share consolidation, and change of name of the Company.

About MENA Hydrocarbons

MENA Hydrocarbons is an international oil and gas company focused on growing an asset base of production, development and high impact exploration in the Middle East and North Africa region. In Egypt, MENA owns and operates the development lease for the Lagia oil field, a 32 square kilometre onshore block located on the Sinai Peninsula, directly adjacent to the Gulf of Suez. In Syria, MENA owns a 30% participating interest in Block 9 in Syria, a 10,032 square kilometre onshore block prospective for crude oil, natural gas and condensate. In the United States, MENA owns 6,242 gross acres (with an 81.2% average working interest) in Northwestern Montana with light/medium oil reserves. MENA's shares currently trade on the TSX Venture Exchange under the symbol "MNH".

Forward looking information

This news release contains forward-looking information relating to the development and appraisal of the Lagia oil field development, including production therefrom, the appointment of a special committee and retaining a financial advisor to assist the Board of Directors with its strategic review process, share consolidation, holding of the shareholder meeting and other statements that are not historical facts. Such forward-looking information is subject to important risks, uncertainties and assumptions. The results or events predicated in this forward-looking information may differ materially from actual results or events. As a result, you are cautioned not to place undue reliance on these forward-looking information.

Forward-looking information is based on certain factors and assumptions regarding, among other things, the Company maintaining its stock exchange listing; the availability of capital on acceptable terms or at all and the timing such capital is needed; the impact of increasing competition; the general stability of the economic and political environments in which the Company operates or owns interests; the timely receipt of any required regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; 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; the ability of the Company to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development of exploration; 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, taxes and environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its oil and natural gas products, and other similar matters. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Forward looking-information is subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what is currently expected. These factors include risks associated with the Company's ability to successfully maintain its stock exchange listing, the availability of capital on acceptable terms or at all and the timing such capital is needed, instability of the economic and political environments in which the Company operates or owns interests, oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, the inability to settle the definitive terms of the farmout arrangements, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, reliance on key personnel, regulatory risks and delays, including risks relating to the acquisition of necessary licenses and permits, environmental risks and insurance risks.

You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, the Company is under no obligation and does not undertake to update this information at any particular time, except as required by law.


The Company cautions readers that the production results to date are not necessarily indicative of long-term performance or of ultimate recovery.

Neither the 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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