Shenul Capital Inc.

April 25, 2011 11:20 ET

Shenul Capital Inc. and Underground Energy, Inc. Announce Syndicate for Previously Announced US$50 Million Brokered Financing

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 25, 2011) -


Further to Shenul Capital Inc.'s ("Shenul") (TSX VENTURE:SHE) April 14, 2011 press release, where Shenul announced the execution of a letter of intent with Underground Energy, Inc. ("Underground") with respect to a proposed business combination transaction ("Business Combination"), Shenul is pleased to announce the composition of the syndicate of agents for Underground's previously announced brokered private placement of subscription receipts ("Subscription Receipts") for gross proceeds of up to US$50,000,000 at a price of US$1.35 per Subscription Receipt (the "BrokeredFinancing"). The Brokered Financing will be led by Raymond James Ltd. ("RaymondJames") and will include Haywood Securities Inc. and Stifel Nicolaus Canada Inc. (collectively, the "Agents") and is expected to close on or around June 2, 2011, or such other date as mutually agreed to between Underground and Raymond James.

Upon completion of the Business Combination, the net proceeds from the Brokered Financing are intended to be used by Underground to delineate and drill its Asphaltea Monterey prospect in California and to delineate and drill one well in 2012 on its Nevada prospective oil and gas shale leases. Each Subscription Receipt will be deemed to be exercised for one (1) common share of Underground in accordance with, and subject to the terms and conditions of, a subscription receipt agreement to be entered into among Underground, the Agents and a subscription receipt trustee.

Underground is also pleased to announce the appointment of Douglas C. Urch, to the board of directors of Underground. Mr. Urch has over 30 years of oil and gas industry experience, is a Certified Management Accountant (CMA) and a Commerce graduate from the University of Calgary. Mr. Urch is currently Executive Vice President, Finance and Chief Financial Officer of Bankers Petroleum Ltd. ("Bankers") (TSX:BNK), which operates heavy oil fields in Albania. From September 2000 until January 2008, Mr. Urch was Vice President, Finance and Chief Financial Officer of Rally Energy Corp., which had heavy oil operations in Egypt. Mr. Urch is currently a Director and Audit Committee Chairman of Petrodorado Energy Ltd. (TSX:PDQ) and a Director of privately-held P1 Energy Corp. Previously, Mr. Urch has provided financial management services for a variety of public and private companies including Mohave Exploration, Sunshine Oilsands, Barrington Petroleum, TriGas Exploration and Ryerson Oil and Gas.

About Underground

Underground's primary business is to identify, acquire rights to, explore for, develop, and produce oil and gas reserves from shale formations in North America. Its initial focus is on proving up large, high-impact opportunities identified in the Monterey Shale formation of Central California's Santa Maria Basin and in emerging shale opportunities in the shales of Nevada's Great Basin. Underground has assembled a quality management team with extensive experience in exploring and developing the Monterey Shale and Nevada opportunities. It has aggregated over 37,000 net acres in these two plays and is actively pursuing additional prospective acreage. Please refer to Shenul's April 14, 2011 press release for additional information.

Cautionary Statements

Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, information with respect to: operational decisions and the timing thereof, and timing for completion of the Brokered Financing and the use of proceeds thereof, the Business Combination and drilling and exploration plans on the properties of Underground. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Shenul believes that the expectations reflected in such forward-looking information is reasonable, undue reliance should not be placed on forward-looking information because Shenul can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things: the ability of Underground to complete the Brokered Financing and Business Combination and the other transactions described in this press release and the timely receipt of any required regulatory and shareholder approvals. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. Shenul undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, unless required by law.

The reader is cautioned not to place undue reliance on this forward-looking information.

The securities of Shenul have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Neither the 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 press release.

Contact Information

  • Shenul Capital Inc.
    Steve Vanry

    Underground Energy, Inc.
    Peter Ballachey
    Chief Financial Officer
    805-845-4700 x17