OILEXCO INCORPORATED
TSX : OIL
LSE : OIL

OILEXCO INCORPORATED

December 19, 2008 18:33 ET

Oilexco Provides Update to December 17 Financing Announcement

CALGARY, ALBERTA--(Marketwire - Dec. 19, 2008) - Oilexco Incorporated ("Oilexco" or "the Company")(TSX:OIL)(LSE:OIL) announced that it has received regulatory approval for the equity success fee component of its $47.5 million bridge financing announced on December 17, 2008.

As part of the bridge financing, Oilexco and its wholly-owned subsidiary Oilexco North Sea Limited ("ONSL") agreed to pay the members of its banking syndicate (collectively, the "Banks") an equity success fee effectively upon the occurrence of any of the following events: (i) an acquisition of more than 50% of the voting securities of Oilexco (ii) a sale of all or substantially all of the Company's assets or (iii) the payment of any dividend or distribution or return of capital in connection with a sale of all or substantially all of Oilexco's or ONSL's assets. In each case the specified events require a successful conclusion of the sale or recapitalization of the Company such that the Banks can participate in such a transaction pari passu with all common shareholders of Oilexco. The equity success fee was announced as being payable in the form of common shares of Oilexco provided that certain legal and regulatory considerations could be satisfied; otherwise it will be paid in cash.

Oilexco has now received conditional listing approval from the Toronto Stock Exchange ("TSX") for the common shares that may be issued pursuant to the equity success fee. It is anticipated that an Exchange Rights Agreement to evidence the equity success fee will be entered into early next week between ONSL, Oilexco and The Royal Bank of Scotland plc, on behalf of the Banks. The maximum number of common shares that may be issued to the Banks is equal to 24.9% of Oilexco's total issued and outstanding common shares from time to time (presently equal to 55,734,374 common shares).

Under TSX rules, the issue of the common shares pursuant to the equity success fee would normally require shareholder approval. Instead, Oilexco will rely on a TSX exemption from the shareholder approval requirement, available due to the Company's serious financial difficulty. The transaction is designed to improve Oilexco's financial situation and is considered by Oilexco's board of directors to be reasonable for the Company in the circumstances. As a result of Oilexco's reliance on the exemption, the TSX will review the Company with respect to meeting the TSX's continued listing requirements.

About the Company

Oilexco is an oil and gas exploration and production company active in the United Kingdom. Oilexco's producing properties, exploration and development activities are located in the UK Central North Sea, specifically in the Outer Moray Firth and Central Graben areas. Oilexco operates in the United Kingdom through its wholly owned subsidiary, Oilexco North Sea Limited, a company registered under the laws of England and Wales. Oilexco shares are listed for trading on the London Stock Exchange (LSE) and the Toronto Stock Exchange (TSX) under the symbol "OIL".

Forward Looking Statements

This disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties, certain of which are beyond Oilexco's control, including: the impact of general economic conditions in the areas in which Oilexco operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with oil and gas operations, therefore Oilexco's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amounts of proceeds, which Oilexco will derive therefrom. All statements included in this press release that address activities, events or developments that Oilexco expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include future production rates, completion and production timetables and costs to complete wells, and production facilities. These statements are based on assumptions made by Oilexco based on its experience perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.

Contact Information

  • Oilexco Incorporated
    Arthur S. Millholland
    President
    (403) 262-5441
    or
    Oilexco Incorporated
    Brian L. Ward
    Chief Financial Officer
    (403) 262-5441
    or
    Oilexco Incorporated
    Rob Elgie
    Manager Investor Relations
    (403) 262-5441
    or
    Pelham PR
    James Henderson
    Managing Director
    44 (20) 7743 6673
    or
    Pelham PR
    Alisdair Haythornthwaite
    Director
    44 (20) 7743 6676