Red Rock Energy Inc.
TSX VENTURE : RRK.H
NEX BOARD : RRK.H

Red Rock Energy Inc.

January 25, 2017 15:06 ET

Red Rock Announces Reorganization Plan

CALGARY, ALBERTA--(Marketwired - Jan. 25, 2017) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES

Red Rock Energy Inc. (NEX:RRK.H) ("Red Rock" or the "Company") is pleased to announce a reorganization plan (the "Reorganization") comprised of a number of steps including the issuance of shares for debt, two non-brokered private placements to raise gross proceeds of up to $2.5 million, reactivation of the Company onto the TSX Venture Exchange (the "TSXV") and related matters.

In general terms, the Reorganization contemplates the following steps:

1. Shares for Debt Transaction

The Company proposes to issue up to 18,000,000 common shares ("Pre-Consolidation Common Shares") at $0.05 per Pre-Consolidation Common Share to satisfy up to $900,000 of existing indebtedness, including indebtedness to related parties (the "Shares for Debt Transaction").

2. The Consolidation

It is currently proposed that the Company will consolidate its issued and outstanding Pre-Consolidation Common Shares on the basis of 15 Common Shares for 1 post consolidation share (a "Post Consolidation Share") such that, post-consolidation and inclusive of the shares issued under the Shares for Debt Transaction, there will be 4,500,000 Post Consolidation Shares issued and outstanding (the "Consolidation"). Shareholders of the Company will be asked to approve a resolution approving the Consolidation at a special meeting of shareholders, to be held on February 14, 2017 (the "Meeting").

3. First Tranche Private Placement

The Company will issue, via non-brokered private placement, up to 10,000,000 units ("Units") at $0.05 per Unit for gross proceeds of $500,000 to a new investor group. Each Unit shall be comprised of one Post Consolidation Common Share and one warrant (a "Warrant"), with each Warrant entitling the holder thereof to purchase one additional Post Consolidation Common Share at a price of $0.10 for a period of 12 months from date of issuance of the Warrants. It is anticipated that a new investor group, including Jose Francisco Arata, Marino Ostos, William Mauco and Krishna Vathyam, will each subscribe for 2,500,000 Units, thereby becoming new Control Persons (as defined in TSXV Policy 4.1) in respect of Red Rock. The new investor group will bring a broad range of experience and expertise in assisting the Company with its Reactivation efforts.

Shareholders of the Company will be asked to approve a resolution authorizing the creation of such new Control Persons at the Meeting. Additional details regarding these individuals and the share issuance will be disclosed in the management information circular prepared in connection with the Meeting.

4. Reactivation

The Company also intends to explore various strategic options to seek re-listing of the Company on the TSXV (the "Reactivation"), which options may include the commissioning of a new work program on one of the Company's existing properties, or other opportunities that may present itself to the Company.

5. Second Tranche Private Placement

Concurrent with the closing of the Reactivation and the re-listing of the Company on the TSXV, the Company intends to complete, by way of non-brokered private placement, of an additional 20,000,000 Post Consolidation Shares at $0.10 per share for gross proceeds to Red Rock of $2,000,000. Proceeds of the financings will be used as required for the Reactivation, to continue the Company's projects and for general working capital.

It is also anticipated that the Company will pay a finder's fee of up to $50,000 via the issuance of up to 500,000 Post Consolidation Shares to arm's-length finders in connection with the financings.

Completion of the Reorganization is conditional upon satisfaction of a number of conditions precedent, including completion of the financings, execution of formal documentation and the receipt of all necessary corporate, shareholder and regulatory approvals, including approval of the TSXV.

For further information, visit www.redrockenergy.ca or www.sedar.com.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

This release may contain forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans," "anticipates," "believes," "intends," "estimates," "projects," "potential," and similar expressions, or that events or conditions "will," "would," "may," "could," or "should" occur.

Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward-looking statements. Forward- looking statements are based on the beliefs, estimates, and opinions of the Company's management on the date such statements were made. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

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