Senmar Capital Corp.
TSX VENTURE : SMR.P

April 25, 2012 14:56 ET

Senmar Capital Corp. Enters into an Amalgamation Agreement with Toscana Resource Corporation and Announces a Sponsorship and Technical Update to its Proposed Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - April 25, 2012) -

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Senmar Capital Corp. (TSX VENTURE:SMR.P) is pleased to announce, further to its news release dated March 27, 2012, that it has entered into an Amalgamation Agreement (the "Proposed Transaction") with Toscana Resource Corporation ("Toscana"). Senmar Capital Corp. ("Senmar") is also pleased to provide an update with respect to the sponsorship requirement and a technical update in connection with the Proposed Transaction.

Amalgamation Agreement

Toscana is a private company incorporated under the laws of Alberta and is engaged in the acquisition of long life oil and gas assets in Western Canada including royalties, non operating working interests and unitized production for yield and capital appreciation. Senmar is a "capital pool company" and intends for the Proposed Transaction to constitute its Qualifying Transaction as set forth in Policy 2.4 of the TSX Venture Exchange ("Exchange") Corporate Finance Manual (the "Manual"). The Proposed Transaction is not a Non-Arm's Length Qualifying Transaction as defined in the policies of the Exchange and it remains subject to the approval of the Exchange.

The Proposed Transaction is structured by way of a three corner amalgamation, in which Senmar will amalgamate with a wholly-owned subsidiary of Toscana (the "Subsidiary") pursuant to which the shareholders of Senmar will receive common shares in the capital of Toscana (the "Toscana Shares") in exchange for the common shares in the capital of Senmar ("Senmar Shares"), based on an exchange ratio of 0.01011879 of a Toscana Share for each Senmar Share (the "Exchange Ratio"). Following the amalgamation, the resulting issuer will be Toscana and the amalgamated entity will be a wholly-owned subsidiary of Toscana. Toscana will seek a listing for the Toscana Shares on the Exchange. The Proposed Transaction will require shareholder approval of both Senmar and the Subsidiary prior to the amalgamation being effected.

Senmar currently has 4,500,000 common shares issued and outstanding; 450,000 stock options exercisable at $0.20 per common share; and 250,000 agent's options exercisable at $0.20 per common share. As part of the Proposed Transaction, all of the foregoing unexercised Senmar stock options and agent's options shall be replaced with options in the capital stock of Toscana in accordance with the Exchange Ratio. Upon closing of the Proposed Transaction, the amalgamated Subsidiary will carry on the business of Toscana as currently constituted.

Sponsorship

Further to Senmar's news release dated March 27, 2012 wherein Senmar announced its intention to obtain a sponsor, Senmar has decided to make application to the Exchange that the Qualifying Transaction should be exempt from the sponsorship requirements in accordance with Policy 2.2 of the Manual. However, there can be no certainty that such an application for exemption from the sponsorship requirements will be granted by the Exchange and if not granted, GMP Securities LP has agreed to act as a sponsor in connection with this transaction.

Trading Halt

Trading in the shares of Senmar has been halted and will remain halted until such time as Senmar obtains the exemption in connection with the sponsorship requirements or is advised by the Exchange that such application will not be granted and Senmar engages a sponsor. There can be no assurance that trading in the shares of Senmar will resume prior to the completion of the Proposed Transaction.

Summary of Operational Information Relating to Toscana

Toscana was incorporated under the Business Corporations Act (Alberta) on March 2, 2010 by Toscana Merchant Group, an association of oil and gas specialists, with the mandate to acquire long life oil and gas assets including royalties, non operated working interests and unitized production for yield and capital appreciation. Toscana has grown since inception through the successful completion of a number of acquisitions and is currently producing an aggregate of approximately 1,425 Boe/d comprised of 40% oil and natural gas liquids and 60% natural gas. Toscana owns its oil and gas assets through its wholly-owned subsidiary Firenze Energy Ltd. ("Firenze").

Summary of Reserves Information Relating to Toscana

Sproule Associates Ltd. ("Sproule"), an independent reserves evaluator, prepared an evaluation of the proved and probable crude oil, natural gas liquids and natural gas reserves and the net present value of those reserves for the petroleum and natural gas interests of Firenze (other than Firenze's Carmangay property), a wholly-owned subsidiary of Toscana, effective as of December 31, 2011. In addition, McDaniel & Associates Consultants Ltd. ("McDaniel's"), an independent reserves evaluator, prepared an evaluation of the proved and probable crude oil, natural gas liquids and natural gas reserves and the net present value of those reserves for the petroleum and natural gas interests of Firenze's Carmangay property effective as of December 31, 2011. The reserve estimates and future net revenue forecasts were prepared by Sproule and McDaniel's respectively, in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

The future net revenues and net present values presented below were calculated using forecast prices and costs based on the crude oil, natural gas and natural gas liquids prices as published in Sproule's December 31, 2011 price deck and as published in McDaniel's January 1, 2012 price deck respectively.

The following table summarizes Firenze's oil and gas reserves and the undiscounted value and the present value, discounted at 0%, 5%, 10%, 12% and 15% of Firenze's estimated future net revenue based on forecast price and cost assumptions as of December 31, 2011 pursuant to the Sproule report:

Table S-1A

Firenze Energy Ltd. Consolidation

Summary of the Evaluation of the P&NG Reserves

(As of Date: 2011-12-31)

Remaining Reserves Net Present Value Before Income Taxes
Company
Gross WI RI 0% 5% 10% 15% 20%
100% Gross Gross M$ M$ M$ M$ M$
Oil (MBBL)
Proved Developed Producing 5494.8 2002.9 1789.0 104071 59275 41188 36818 31879
Probable Developed Producing 569.6 167.6 156.6 20069 7063 3555 2886 2216
Probable Developed Non-Producing 11.8 5.9 5.6 281 222 179 165 147
Total Probable 581.3 173.4 162.2 20350 7284 3734 3051 2363
Total Proved + Probable 6076.1 2176.3 1951.2 124421 66559 44922 39869 34242
Solution Gas (MMCF)
Proved Developed Producing 2329 947 834 0 0 0 0 0
Probable Developed Producing 116 48 42 0 0 0 0 0
Total Proved + Probable 2445 995 876 0 0 0 0 0
Non-Assoc, Assoc Gas (MMCF)
Proved Developed Producing 23790 8736 8157 20468 16077 13138 12227 11067
Proved Developed Non-Producing 382 77 73 211 174 146 137 125
Proved Undeveloped 623 311 293 111 48 -4 -23 -48
Total Proved 24795 9124 8523 20790 16300 13280 12341 11143
Probable Developed Producing 8295 3209 2951 10142 6030 4021 3499 2894
Probable Developed Non-Producing 4954 1281 1105 3720 2469 1705 1485 1217
Probable Undeveloped 125 62 59 235 186 150 138 122
Total Probable 13373 4552 4115 14097 8685 5876 5121 4233
Total Proved + Probable 38168 13677 12638 34887 24984 19156 17463 15376
NGLs (MBBL)
Proved Developed Producing 238.1 94.9 72.9 0 0 0 0 0
Proved Developed Non-Producing 18.4 1.2 0.9 0 0 0 0 0
Total Proved 256.5 96.1 73.8 0 0 0 0 0
Probable Developed Producing 23.7 9.8 7.2 0 0 0 0 0
Probable Developed Non-Producing 3.7 0.2 0.2 0 0 0 0 0
Total Probable 27.4 10.0 7.3 0 0 0 0 0
Total Proved + Probable 283.8 106.1 81.1 0 0 0 0 0
Grand Total (Mboe)
Proved Developed Producing 10085.9 3711.6 3360.4 124539 75352 54326 49045 42945
Proved Developed Non-Producing 82.1 14.0 13.1 211 174 146 137 125
Proved Undeveloped 103.8 51.9 48.9 111 48 -4 -23 -48
Total Proved 10271.8 3777.5 3422.4 124861 75574 54468 49159 43022
Probable Developed Producing 1995.2 720.2 662.7 30211 13092 7576 6385 5110
Probable Developed Non-Producing 841.1 219.7 189.9 4001 2690 1884 1650 1364
Probable Undeveloped 20.8 10.4 9.8 235 186 150 138 122
Total Probable 2857.0 950.2 862.4 34447 15969 9610 8172 6596
Total Proved + Probable 13128.8 4727.7 4284.8 159308 91543 64078 57331 49618

Solution gas revenue included in oil. NGL revenue included with oil and gas.

The following table summarizes Firenze's oil and gas reserves and the undiscounted value and the present value, discounted at 0%, 5%, 10%, 12% and 15% of Firenze's estimated future net revenue based on forecast price and cost assumptions as of December 31, 2011 pursuant to the McDaniel report:

Firenze Energy Ltd. - Carmangay Property
Total Company Reserves and Net Present Value
Forecast Prices and Costs as of December 31, 2011
Total Reserves


Company Share of Remaining
Reserves
(Mbbl, MMcf, Mlt)


Company Share of Net Present Value
Before Income Tax (M$) (5)


Gross (1)
RI (2) Net (3)
@ 0.0%

@ 5.0%

@ 10.0%

@ 12.0%

@ 15.0%
Proved Producing Reserves
Light/Medium Oil 372.0 - 322.0 20,814.90 17,410.10 14,967.30 14,178.90 13,150.10
Natural Gas 99.3 - 92.7 345.0 276.5 229.9 215.4 196.7
Natural Gas Liquids 2.0 - 1.2 107.9 90.1 77.7 73.7 68.5
Total 21,267.80 17,776.70 15,274.90 14,468.0 13,415.30
Proved Non-Producing Reserves
Light/Medium Oil - - - -179.3 -118.5 -80.1 -68.9 -55.3
Total -179.3 -118.5 -80.1 -68.9 -55.3
Proved Undeveloped Reserves
Light/Medium Oil 312.6 - 272.4 13,957.10 10,844.60 8,560.60 7,818.80 6,851.0
Natural Gas 81.2 - 77.2 328.8 261.8 213.5 198.0 177.8
Natural Gas Liquids 1.6 - 1.1 96.7 79.6 67.0 62.8 57.3
Total 14,382.60 11,186.0 8,841.10 8,079.60 7,086.10
Total Proved Reserves
Light/Medium Oil 684.6 - 594.4 34,592.60 28,136.30 23,447.80 21,928.80 19,945.80
Natural Gas 180.5 - 169.9 673.8 538.3 443.5 413.4 374.5
Natural Gas Liquids 3.6 - 2.4 204.6 169.7 144.6 136.5 125.9
Total 35,471.0 28,844.30 24,035.90 22,478.70 20,446.20
Probable Producing Reserves
Light/Medium Oil 106.4 - 91.3 6,047.10 4,080.30 2,912.10 2,580.20 2,180.60
Natural Gas 29.1 - 27.2 132.4 87.5 61.8 54.6 46.0
Natural Gas Liquids 0.6 - 0.4 33.5 22.9 16.8 15.0 12.9
Total 6,213.0 4,190.70 2,990.70 2,649.80 2,239.50
Probable Undeveloped Reserves
Light/Medium Oil 77.3 - 65.9 4,665.0 2,950.10 1,928.60 1,641.30 1,300.0
Natural Gas 20.8 - 19.7 110.0 67.7 43.5 36.8 28.9
Natural Gas Liquids 0.4 - 0.2 24.1 14.9 9.6 8.1 6.4
Total 4,799.10 3,032.70 1,981.70 1,686.20 1,335.30
Total Probable Reserves
Light/Medium Oil 183.8 - 157.1 10,712.10 7,030.40 4,840.70 4,221.50 3,480.50
Natural Gas 49.9 - 46.9 242.3 155.2 105.2 91.4 74.9
Natural Gas Liquids 1.0 - 0.6 57.6 37.8 26.3 23.1 19.3
Total 11,012.0 7,223.40 4,972.20 4,336.0 3,574.70
Proved & Probable Producing Reserves
Light/Medium Oil 478.5 - 413.3 26,862.0 21,490.40 17,879.40 16,759.10 15,330.60
Natural Gas 128.5 - 119.9 477.3 364.0 291.7 269.9 242.7
Natural Gas Liquids 2.6 - 1.6 141.4 113.1 94.4 88.7 81.4
Total 27,480.70 21,967.50 18,265.50 17,117.70 15,654.70
Proved & Probable Non-Producing Reserves
Light/Medium Oil - - - -179.3 -118.5 -80.1 -68.9 -55.3
Total -179.3 -118.5 -80.1 -68.9 -55.3
Proved & Probable Undeveloped Reserves
Light/Medium Oil 389.9 - 338.2 18,622.10 13,794.70 10,489.20 9,460.10 8,151.0
Natural Gas 102.0 - 96.9 438.8 329.6 257.0 234.8 206.7
Natural Gas Liquids 2.0 - 1.4 120.8 94.5 76.6 70.9 63.8
Total 19,181.70 14,218.80 10,822.80 9,765.80 8,421.50
Total Proved & Probable
Reserves
Light/Medium Oil 868.4 - 751.5 45,304.70 35,166.70 28,288.50 26,150.30 23,426.30
Natural Gas 230.4 - 216.8 916.1 693.5 548.7 504.7 449.4
Natural Gas Liquids 4.6 - 3.0 262.2 207.6 171.0 159.6 145.2
Total 46,483.0 36,067.80 29,008.20 26,814.60 24,020.90

Company Share of Remaining Reserves (MBOE)
Company Share of Net Present Value Before Income Tax ($/BOE)
Gross (1) RI (2) Net
(3)
@ 0.0% @ 5.0% @ 10.0% @ 12.0% @ 15.0%
BOE Reserves and NPV/BOE (4)
Proved Producing 390.6 - 338.7 54.45 45.51 39.11 37.04 34.35
Proved Non-Producing - - - - - - - -
Proved Undeveloped 327.7 - 286.3 43.89 34.13 26.98 24.66 21.62

Firenze Energy Ltd. - Carmangay Property
Total Company Reserves and Net Present Value
Forecast Prices and Costs as of December 31, 2011
Total Reserves
Company Share of Remaining Reserves (Mbbl, MMcf, Mlt)

Company Share of Net Present Value Before Income Tax (M$) (5)

Gross (1)
RI
(2)
Net
(3)

@ 0.0%

@ 5.0%

@ 10.0%

@ 12.0%

@ 15.0%
Total Proved 718.3 - 625.1 49.38 40.16 33.46 31.29 28.46
Probable Producing 111.9 - 96.2 55.52 37.45 26.73 23.68 20.01
Probable Undeveloped 81.2 - 69.4 59.10 37.35 24.41 20.77 16.44
Total Probable 193.1 - 165.6 57.03 37.41 25.75 22.45 18.51
Proved & Probable Producing 502.4 - 434.9 54.70 43.73 36.36 34.07 31.16
Proved & Probable Non-Producing - - - - - - - -
Proved & Probable Undeveloped 409.0 - 355.7 46.90 34.76 26.46 23.88 20.59
Total Proved & Probable 911.4 - 790.7 51.00 39.57 31.83 29.42 26.36

(1) Gross reserves are working interest reserves before royalty deductions.

(2) Royalty interest reserves.

(3) Net reserves include working interest after royalty deductions plus royalty interest reserves.

(4) Barrels of Oil Equivalent based on 6.0:1 for Natural Gas, 1.0:1 for Condensate and C5+, 1.0:1 for Ethane,1.0:1 for Propane, 1.0:1 for Butanes, 1.0:1 for NGL Mix. NPV/BOE based on Co. Share BOE reserves. BOE's may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

(5) Costs associated with extraction of natural gas products have in most cases been deducted from the natural gas revenues.

The following table sets out the forecast price assumptions used by Sproule as of December 31, 2011:

To view the table please visit the following link:

http://media3.marketwire.com/docs/425smrtables-2.jpg

The following tables set out the forecast price assumptions and the forecast natural gas price assumptions respectively, used by McDaniel as of January 1, 2012:

To view the table please visit the following links:

http://media3.marketwire.com/docs/425smrmcdanieltable.jpg

http://media3.marketwire.com/docs/425smrtable2.jpg

Significant Conditions to Completion of the Proposed Transaction

Completion of the Proposed Transaction is subject to: various closing conditions which are usual and appropriate for an amalgamation; Exchange acceptance; and if applicable pursuant to Exchange requirements, 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 a capital pool company should be considered highly speculative.

The Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this news release.

Cautionary Note Regarding Forward-Looking Statements

This news release contains forward-looking statements relating to the Proposed Transaction, including statements regarding the exchange ratio for the Proposed Transaction, the sponsorship, the receipt of all necessary regulatory and shareholder approvals and satisfaction of all other closing conditions in connection with the Proposed Transaction and other statements that are not historical facts. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward looking statements will not occur, which may cause actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward looking statements. These assumptions, risks and uncertainties include, among other things: that the necessary approvals and/or exemptions are not obtained or some other condition to the closing of the Proposed Transaction is not satisfied; the risk that closing of the Proposed Transaction could be delayed if Senmar and Toscana are not able to obtain the necessary approvals on the timelines planned; and the assumptions relating to the timing of obtaining required approvals and satisfying closing conditions for the Proposed Transaction, state of the economy in general and capital markets in particular, investor interest in the business and future prospects of Senmar and Toscana.

The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by law, Senmar and Toscana disclaim any intention and assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law. Additionally, Senmar and Toscana undertake no obligation to comment on the expectations of, or statements made, by third parties in respect of the matters discussed above.

Additional Advisories

Boes are presented on the basis of one Boe for six Mcf of natural gas. Disclosure provided herein in respect of Boes may be misleading, particularly if used in isolation. A Boe conversion ratio of 6 Mcf:1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Net present values do not necessarily represent the fair market value of the estimated reserves.

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

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