Petrocapita Proceeding With $20 Million Preferred Unit Offering

CALGARY, ALBERTA--(Marketwired - Feb. 8, 2017) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES

Petrocapita Income Trust (CSE:PCE.UN)(CSE:PCE.UN.CN) (the "Trust") announces that it is proceeding with its offering of up to $20,000,000 of series 1 preferred trust units of the Trust ("Preferred Units") by way of an exempt market offering (the "Offering"). The Offering consists of a tied offering of Preferred Units of the Trust and Class A shares ("Shares") of Petrocapita Energy Corp., a subsidiary of the Trust (the Trust and its subsidiaries, collectively "Petrocapita"). The Trust has entered into arrangements with registered dealers to effect sales of the securities on a best efforts basis.

Each Preferred Unit is priced at $1.00 and each Share is priced at $0.001. Each Preferred Unit is entitled to an annual distribution of $0.09 payable quarterly in arrears, is redeemable by the holder without reduction or penalty for $1.00 plus accrued distributions from and after the 4th year anniversary of issuance, and is retractable by the Trust. Each Share is exchangeable for 32 of the publically traded common units of the Trust (CSE:PCE.UN)(CSE:PCE.UN.CN) at any time after 18 months from the date of issuance of the Shares or on the occurrence of certain events, subject to certain restrictions, conditions and adjustments in certain circumstances.

The Offering is being made by way of private placement only to eligible investors in Canada and closings will occur from time to time at the discretion of the Trust.

Petrocapita intends to use the net proceeds from the Offering principally to acquire and develop oil and gas properties and related infrastructure assets, or interests therein, in the Lloydminster and surrounding area of Alberta and Saskatchewan. It is anticipated that a majority of the assets to be acquired will be in respect of heavy oil properties and related or ancillary infrastructure assets, which are expected to include produced water disposal facilities, produced water flow-lines, fuel gas flow-lines, fluid transportation equipment and facilities, drilling and well servicing equipment, and centralized oil processing facilities.

Petrocapita is actively pursuing such asset acquisitions and has currently identified a number of potential transactions which are now under evaluation and negotiation. The nature of the assets subject to these transactions include:

• producing as well as shut-in heavy oil wells - current aggregate production of approximately 200 bbls/d with up to an approximate 370 bbls/d shut-in;
• interest in a water disposal facility and ancillary infrastructure;
• fluid transportation equipment with third party contracts increasing capacity approximately 300%;
• well servicing rigs and equipment with third party contracts increasing capacity approximately 250%.

None of these transactions have yet reached the stage of entering binding definitive transaction agreements and so there is no certainty as to the completion of any of these transactions. However, it is anticipated that:

1. if all transactions for the acquisition of heavy oil wells, both producing and shut-in, and the disposal facilities were to complete, the capital outlay would be approximately $6.85 million (inclusive of an estimated $0.6 million in capital expenditures to bring on shut-in production). In addition there would be future abandonment and reclamation obligations associated with these assets of approximately $3.5 million.
2. if all transactions for the acquisition of the above assets, other than the heavy oil wells and the disposal facilities, were to complete, the aggregate acquisition cost would be approximately $3.5 million.

In respect to funding the acquisition of these assets, Petrocapita intends to pursue funding up to as much as $5.55 million through vendor take back financing in the form of long-term debentures issued to the vendors. If any binding acquisition agreements are entered, Petrocapita would intend to pursue completion of closing in the first half of 2017.

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

About Petrocapita

Petrocapita Income Trust is a Specified Investment Flow Through trust developing and acquiring heavy oil production and infrastructure assets in the Lloydminster area of east central Alberta and west central Saskatchewan through its wholly owned subsidiaries, Petrocapita Oil and Gas LP and Petrocapita Processing LP. Petrocapita owns, operates and has interests in oil wells, gas wells, produced water disposal facilities, produced water disposal/injection wells, custom oil processing facilities, natural gas compressor stations, oilwell service rigs, fluid haul tractors and trailers, motor graders, oil field service trucks and wellsite processing and ancillary equipment. It is seeking accretive opportunities to acquire both oil production and complimentary midstream assets during a cyclical low in the oil and gas markets.

Forward-Looking Information and Statements

This news release contains certain forward-looking information as defined under applicable securities legislation. All statements, other than statements of historical facts, with respect to activities, circumstances, events, outcomes and other matters that Petrocapita forecasts, plans, projects, estimates, expects, believes, assumes or anticipates (and other similar expressions) will, should or may occur in the future, are considered forward-looking information. In particular, forward-looking information contained in this news release includes, but is not limited to, information and statements concerning the Offering; the securities to be issued pursuant to the Offering and the timing of such issuance; the use of proceeds from the Offering; the completion of potential acquisitions, including the cost and timing of completion of same; the magnitude of obligations and liabilities assumed in connection with acquisitions; the degree to which potential acquisitions may be debt funded; and the estimate of follow-on capital expenditure requirements in respect to potential acquisitions of oil and gas properties.

The forward-looking information provided in this news release is based on management's current beliefs, expectations and assumptions, based on currently available information as to future events (including the outcome and timing thereof). Petrocapita cautions that assumptions have been made regarding, the use of proceeds, liquidity, plans for future operations, the ability of Petrocapita to complete acquisitions, the magnitude of obligations and liabilities assumed in connection with acquisitions, timing and amount of future capital expenditures, and Petrocapita's investment objectives and strategies, all of which are subject to all of the risks and uncertainties normally incident to the acquisition, development, production and sale of oil and gas. These risks include, but are not limited to: the inability to raise capital on the terms of the Offering in a timely manner or at all; the inability to source and complete acquisitions; unanticipated operational and development issues which escalate capital expenditure requirements; volatility in market prices and demand for crude oil; general economic, market and business conditions; the loss of key personnel; the failure to realize the benefits of acquisitions made; the inability to generate sufficient cash flow from operations to meet current and future obligations; unforeseen liabilities and obligations; the inability to obtain required debt and/or equity capital on acceptable terms or at all; adverse regulatory, royalty or tax changes; diversion of management to manage unforeseen business or operating issues; risks related to the acquisition, exploration, development and production of oil and natural gas reserves; and other risks as described in documents and reports that Petrocapita files with the securities commissions or similar authorities in applicable Canadian jurisdictions on the System for Electronic Document Analysis and Retrieval (SEDAR). Any of these factors could cause Petrocapita's actual results and plans to differ materially from those contained in the forward-looking information.

Forward-looking information is subject to a number of risks and uncertainties, including those mentioned above, that could cause actual results to differ materially from the expectations set forth in the forward-looking information. Forward-looking information is not a guarantee of future performance or an assurance that our current estimates, assumptions and projections are valid. All forward-looking information speaks only as of the date of this news release, and Petrocapita assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking information, except as required by law. You should not place undue reliance on forward-looking information. You are encouraged to closely consider the additional disclosures and risk factors contained in Petrocapita's periodic filings on SEDAR (www.sedar.com) that discuss in further detail the factors that could cause future results to be different than contemplated in this news release.