SignalEnergy Inc.

January 18, 2007 23:59 ET

SignalEnergy Inc. Announces 2007 Budget, $30 Million Distribution, Name Change and Plan of Arrangement

CALGARY--(CCNMatthews - Jan. 18) -


SignalEnergy Inc. (TSX:SGI) ("Signal" or the "Corporation") announces its first quarter capital budget, a management appointment, and, as part of a Plan of Arrangement, a $30 million distribution to shareholders, a change of name to Fortress Energy Inc. and changes to the Board of Directors.

$15 million First Quarter 2007 Capital Budget

SignalEnergy announces a $15 million capital budget which is expected to be incurred by the end of the first quarter. The capital expenditure program in the first quarter will focus on expenditures in the Ladyfern area with drilling of 13 (gross) infill development wells and three exploration wells, as well as 16 (gross) re-completions and tie-ins of existing well bores. The Corporation has an interest in approximately 87,000 gross acres of land in the Ladyfern area of which 62,000 gross acres are owned and 25,000 gross acres are under option. The Corporation's average working interest in the area is approximately 55%. The $15 million capital program will be funded from cash flow and $11.5 million of positive working capital following the distribution of $30 million of cash to shareholders pursuant to the previously announced Plan of Arrangement ("the Arrangement").

Production in December 2006 averaged 780 boe/d and approximately 200 boe/d remains shut-in awaiting a regulatory decision from the British Columbia Utility Commission regarding a common carrier dispute. A decision regarding the dispute is expected by the end of January, 2007. In addition approximately 70 boe/d was shut-in due to facility constraints in the Ladyfern area.

$30 Million Cash Distribution

A Special General Meeting of Shareholders is scheduled to be held on February 15, 2007 to consider the Arrangement and the reorganization of the Corporation. An Information Circular for the Arrangement is expected to be mailed to shareholders on or about January 19, 2007. The Information Circular is available on SEDAR at If Shareholders approve the Arrangement and reorganization, shareholders can elect to receive either:

1. $1.30 cash per share up to an aggregate maximum of $30 million;


2. One share of Fortress Energy Inc. for each five shares currently held.

In the event shareholders in aggregate elect to receive greater than $30 million, shareholders will receive a pro rata distribution of cash with the balance being satisfied by the issuance of common shares of Fortress Energy Inc.

New Name - Fortress Energy Inc

As part of the Arrangement and reorganization of the Corporation, the business and operations of the Corporation will be carried on under the name Fortress Energy Inc. It is expected that the Arrangement will be completed on February 20, 2007 and trading will begin under the name Fortress Energy Inc. thereafter. The new trading symbol will be "FEI".

New People

The Corporation is pleased to announce the appointment of Mr. Robert D'Adamo as the Vice President of Land. Mr. D'Adamo has 19 years of experience in the oil and gas industry and was most recently Senior Land Negotiator for EnCana Corporation. Prior thereto he was Vice President, Business Development, Land and Marketing at NAV Energy Trust. From 1997 to 2003 Mr. D'Adamo was Manager, Land Negotiations at Petro-Canada Oil and Gas.

Upon the completion of the Plan of Arrangement Mr. Will Franklin and Mr. John Clarkson will be joining the Board of Directors. Mr. Franklin is a Director of Lime Rock Partners a firm specializing in providing growth capital for the energy sector. Mr. Franklin currently serves on the Board of Directors of Slate River Resources. He previously served on the Board of Directors of Hercules Offshore and IDM Equipment. He has over 12 years experience in corporate finance, private equity, and energy and is a graduate of the University of Texas at Austin (B.A., B.B.A.) and the Harvard Business School (M.B.A).

Mr. Clarkson is a Senior Adviser to Lime Rock Partners. Prior thereto he was Manager of Oil Development at Renaissance Energy Ltd. He also serves on the Board of Directors of Slate River Resources and on the investment committee of Lime Rock Resources. He previously served on the Board of Directors of NQL EnergyServices, Deer Creek Energy, IPEC, SmartSynch, Patriot Drilling, and U.S. Exploration Holdings. Mr. Clarkson has 23 years of experience in oil and gas operations and energy finance and is a graduate with a B.Sc. in Geological Engineering from the University of Manitoba. He is registered as a professional engineer in the Province of Alberta.

The Corporation has accepted the resignation of Mr. Randy Harrison who has been on the Board for Directors of Signal since the acquisition of Predator Exploration Ltd. in January 2005. We would like to thank Mr. Harrison for his valuable contribution.

BOE Presentation

Natural gas reserves and volumes recorded in thousand cubic feet are converted to barrels of oil equivalent ("boe") on the basis of six thousand cubic feet ("mcf") of gas to one barrel ("bbl") of oil. The term "barrels of oil equivalent" may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf to 1 bbl is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalent at the wellhead.

Caution to Reader

This news release contains forward-looking statements and the reader is cautioned not to place undue reliance on these statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. This specifically includes estimated volumes and timing of future production, business plans for exploration, development and drilling, anticipated budget costs for items including drilling, plant and equipment and whether the Arrangement and reorganization of the Corporation will be approved or implemented. By their nature, 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.

The common shares of Signal have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S. person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

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