SignalEnergy Inc.

May 16, 2005 23:59 ET

SignalEnergy and Goose River announce arrangement agreement signed

CALGARY--(CCNMatthews - May 16) - SignalEnergy Inc. ("SignalEnergy") and Goose River Resources Ltd. ("Goose River") announce that they have entered into a formal agreement to effect the business combination announced May 6, 2005. The proposed transaction is to be completed by way of plan of arrangement and remains subject to the approval of regulatory authorities and Goose River's shareholders.

The Arrangement is expected to result in:

- the assets of SignalEnergy and Goose River (other than specified exploration assets from each company) being combined, to be managed by SignalEnergy's management

- the creation of a new exploration company ("Exploreco"), to be managed by Goose River's management

- the shareholders of Goose River exchanging each share of Goose River for (at their election): (1) 0.83 SignalEnergy shares, (2) $1.00 in cash, or (3) 0.60 SignalEnergy shares and $0.28 in cash, provided that the maximum aggregate amount of cash available shall be limited to $10.0 million and the maximum aggregate SignalEnergy shares issued shall be limited to 21.25 million shares

- the shareholders of Goose River receiving 1/20 of an Exploreco share for each share of Goose River (approximately 1.78 million Exploreco shares in aggregate)

- the shareholders of SignalEnergy receiving their pro rata share of approximately 1.78 million Exploreco shares

The directors of each of SignalEnergy and Goose River have unanimously approved the transaction. Goose River's board of directors has received the opinion of Acumen Capital Finance Partners Limited that the consideration offered pursuant to the arrangement is fair, from a financial point of view, to the Goose River shareholders and has resolved to recommend that shareholders vote in favour of the transaction. Goose River management and directors, representing approximately 13% of the outstanding Goose River shares, have indicated that they intend to vote in favour of the transaction.

The plan of arrangement will require the approval of 66-2/3% of the votes of the Goose River shareholders cast at a meeting held to consider the arrangement, as well as approval of the Court of Queen's Bench of Alberta and other regulatory agencies. The information circular that will detail the plan of arrangement is anticipated to be mailed to shareholders of Goose River before June 15, 2005, with the meeting of Goose River's shareholders to be held approximately one month following the mailing.

Goose River and SignalEnergy have agreed that if the plan of arrangement is not completed due to circumstances within the control of one of the parties, such party will pay the other party a non-completion fee of $600,000.

First Associates Investments Inc. and Canaccord Capital Corporation have acted as financial advisors to SignalEnergy. Acumen Capital Finance Partners Limited has acted as financial advisor to Goose River.

SignalEnergy and Goose River are Calgary, Alberta, Canada based crude oil and natural gas exploration, development and production companies.

Certain information set forth in this news release, including management's assessment of SignalEnergy's and Goose River's future plans and operations, contains forward looking statements. By their nature, forward looking statements are subject to numerous risks and uncertainties, some of which are beyond the parties' control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward looking statements. Actual results, performance or achievement could differ materially from those expressed in, or implied by the forward looking statements in this news release, and accordingly, no assurance can be given that any of the events anticipated by the forward looking statements will transpire or occur, or if any of them do so, what benefits the parties will derive therefrom. SignalEnergy and Goose River each disclaim any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

Contact Information

    J. Cameron Bailey
    President and Chief Executive Officer
    (403) 398-3345
    (403) 398-3366(FAX)


    Curtis A. Hartzler
    (403) 263-4310
    (403) 263-4368(FAX)