Petra Petroleum Inc.
TSX VENTURE : PTL

Petra Petroleum Inc.

September 04, 2014 09:00 ET

Petra Petroleum Inc. Announces Letter of Intent with Mitra Energy Limited

CALGARY, ALBERTA--(Marketwired - Sept. 4, 2014) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS.

Petra Petroleum Inc. (the "Corporation" or "Petra") (TSX VENTURE:PTL) is pleased to announce that it has entered into a letter of intent (the "Letter of Intent") agreed to on August 28, 2014 with Mitra Energy Limited (www.mitraenergylimited.com) ("Mitra"), an arm's length private company incorporated pursuant to the laws of Bermuda, in respect of a proposed business combination of the two companies. The proposed business combination is expected to be completed by way of a statutory plan of arrangement or other suitable structure, whereby either Petra will acquire Mitra in a transaction that would constitute a Reverse Takeover of Petra pursuant to the TSX Venture Exchange (the "Exchange") Policy 5.2 - Changes of Business and Reverse Takeovers or a merger or an acquisition of Petra by Mitra (the "Proposed Transaction"). The formal structure of the Proposed Transaction is subject to confirmation as the parties consider applicable corporate, tax and securities law considerations.

Highlights of the Proposed Transaction

Pursuant to the terms of the Letter of Intent, and subject to any regulatory, shareholder or such other approvals that may be required, the completion of satisfactory due diligence by each of the Corporation and Mitra and other conditions contained in the Letter of Intent, the parties intend to negotiate and enter into a definitive agreement (the "Definitive Agreement") on or before October 15, 2014, which, once executed, will supersede the Letter of Intent. The Definitive Agreement will incorporate the principal terms of the Proposed Transaction as described in this press release, and in addition, such other terms and provisions of a more detailed structure and nature as the parties may agree upon after receiving further tax, legal and financial advice from their respective advisers. However, there is no assurance that the Definitive Agreement will be successfully negotiated or entered into.

Mitra is a privately owned, independent oil and gas company focused on southeast Asia, with a portfolio of exploration assets and discoveries within approximately 13.9 million acres of awarded acreage across the Philippines, Vietnam, Indonesia and Thailand. The Corporation and Mitra intend to complete a business combination and the resulting entity is hereinafter referred to as "Topco". Upon completion of the Proposed Transaction, Topco will be engaged in the business of exploration and development of Topco's combined assets. In addition, Topco may explore and develop such other assets and interests as may be subsequently acquired by Topco.

Bridge Financing

Prior to the completion of the Proposed Transaction and subject to obtaining requisite Exchange approval, it is intended that Petra will loan approximately US$5,000,000 to Mitra by way of an investment in an issue of bonds, to explore and develop Mitra's assets. These bonds will be issued pursuant to Mitra's existing convertible bond instrument and will rank pari passu with the existing unsecured convertible bonds issued thereunder, maturing on May 8th, 2015, or earlier if so agreed by Petra and Mitra.

Private Placement Financing

The Proposed Transaction is subject to Petra arranging an equity financing of Topco on a best efforts basis for gross proceeds of US$50,000,000 (the "Financing"). It is anticipated that, in connection with the Proposed Transaction, the net proceeds from the Financing will be used for: (a) exploring and developing Topco's assets and other oil and gas opportunities; and (b) general working capital purposes.

Conditions of the Proposed Transaction

The Proposed Transaction is subject to a number of conditions precedent. Unless all of such conditions are satisfied or waived by the party for whose benefit such conditions exist, to the extent they may be capable of waiver, the Proposed Transaction will not proceed. There is no assurance that the conditions will be satisfied or waived on a timely basis, or at all. Such conditions include the Petra shareholders and Mitra shareholders approving the Proposed Transaction and its structure, the closing of the Financing, satisfactory completion of due diligence by each of the parties prior to execution of the Definitive Agreement, and that all other consents and approvals (including regulatory approvals) are obtained.

Furthermore, the Letter of Intent may be terminated by written consent of Petra and Mitra, and the Letter of Intent will terminate automatically if: (a) either party has not confirmed to the other party in writing that it is satisfied with the results of its due diligence investigation by October 15, 2014, or (b) the Definitive Agreement is not executed on or before October 15, 2014, or such later date as Petra and Mitra may agree to in writing.

Additional Information

In accordance with Exchange policy, the Corporation's shares are currently halted from trading and will remain so until such time as the Exchange determines which, depending on the policies of the Exchange, may not occur until the completion of the Acquisition.

If and when a Definitive Agreement between the Corporation and Mitra is executed, the Corporation will issue a subsequent press release in accordance with the policies of the Exchange containing the details of the Definitive Agreement and additional terms of the Proposed Transaction, including information relating to sponsorship, summary financial information in respect of the Corporation and Mitra, and to the extent not contained in this press release, additional information with respect to assets, Financing, and insiders of Topco upon completion of the Proposed Transaction.

Completion of the Proposed Transaction is subject to a number of conditions including but not limited to, Exchange acceptance and if required by Exchange policies, majority of the minority shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Petra should be considered highly speculative.

A further press release will be prepared and disseminated regarding the Proposed Transaction and related transactions, in due course, in compliance with the policies of the Exchange as information becomes available.

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.

Cautionary statements

This press release contains forward-looking information and statements ("forward-looking information") within the meaning of applicable securities laws relating to the proposal to complete the Proposed Transaction and associated transactions, including statements regarding the terms and conditions of the Proposed Transaction, the bridge financing, the Financing, and the use of proceeds of the bridge financing and the Financing. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Proposed Transaction, the bridge financing, the Financing and associated transactions, that the ultimate terms of the Proposed Transaction, the bridge financing the Financing and associated transactions will differ from those that currently are contemplated, and that the Proposed Transaction, the bridge financing the Financing and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this press release are made as of the date of this release. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Corporation or Mitra, their securities, or their respective financial or operating results or (as applicable). Although Petra believes that the expectations reflected in our forward-looking information is reasonable, our forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Corporation's control, including without limitation: volatility in the market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital acquisitions; geological, technical, drilling and processing problems; fluctuations in foreign exchange or interest rates; health safety and environmental risks; stock market volatility; global economic events or conditions; and other factors, many of which are beyond the control of the Corporation. We caution that the forgoing list of risks and uncertainties is not exhaustive.

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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