Canadian Energy Exploration Inc.
TSX VENTURE : XPL

Canadian Energy Exploration Inc.
Standard Exploration Ltd
TSX VENTURE : SDE

Standard Exploration Ltd

August 20, 2012 09:00 ET

Standard Exploration Ltd. and Canadian Energy Exploration Inc. Announce Plan of Arrangement

CALGARY, ALBERTA--(Marketwire - Aug. 20, 2012) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS.

Standard Exploration Ltd. ("Standard") (TSX VENTURE:SDE) and Canadian Energy Exploration Inc. ("Canadian Energy") (TSX VENTURE:XPL) are pleased to announce they have entered into an arrangement agreement (the "Arrangement Agreement") with respect to a combination of both companies (the "Transaction"). Under the terms of the Arrangement Agreement, Canadian Energy shareholders will receive one common share in the capital of Standard (each, a "Standard Share") for every 7.15 common shares of Canadian Energy ("Canadian Energy Shares") held. The Transaction will be undertaken by means of a plan of arrangement (the "Arrangement") under the Business Corporations Act (Alberta). Standard will issue approximately 18.9 million Standard Shares to Canadian Energy shareholders. The Arrangement Agreement contemplates that Canadian Energy will hold a meeting of its shareholders on or prior to October 19, 2012 (the "Canadian Energy Meeting") to permit shareholders to vote on the Arrangement.

The board of directors of Canadian Energy unanimously supports the Transaction, has determined that the Transaction is in the best interest of Canadian Energy and recommends that the shareholders of Canadian Energy vote in favour of the Transaction. All of the senior officers and directors of Canadian Energy, who collectively hold approximately 1.1% of the issued and outstanding common shares of Canadian Energy, have agreed to vote their shares in favour of the Transaction at the Canadian Energy Meeting.

After completion of the Transaction, Standard expects to have a total of approximately 82.3 million shares outstanding.

Upon successful completion of the Transaction, Standard will be well positioned to continue their focus on mergers/acquisitions and continue to develop drilling opportunities. Standard will have:

  • $6.5 million in cash
  • $6.2 million proved plus probable reserves, discounted at 10%, effective March 31, 2012
  • 75 bbl/d of oil
  • Net operating income of $750,000/annum
  • 20,000 net acres of undeveloped land

In the near term (to the end of 2012), Standard plans to spend $1.4 million on drilling and seismic activities.

The Arrangement Agreement includes non-solicitation covenants (subject to the fiduciary obligations of the board of directors of Canadian Energy and the right of Standard to match any Superior Proposal, as defined in the Arrangement Agreement). The Arrangement Agreement, among other things, provides for non-completion fees of up to $150,000 payable by Standard and Canadian Energy in the event the Transaction is not completed or is terminated by either party in certain circumstances. The Arrangement Agreement provides that completion of the Transaction is subject to certain conditions, including the receipt of all required regulatory approvals (including the approval of the TSX Venture Exchange), the approval of the shareholders of Canadian Energy and the approval of the Court of Queen's Bench of Alberta. The Transaction is anticipated to close in October 2012.

Sayers Energy Advisors is acting as exclusive financial advisor to Canadian Energy with respect to the Transaction and has provided the board of directors of Canadian Energy with a verbal opinion that, subject to its review of the final form of documents effecting the Transaction, the consideration to be received by Canadian Energy shareholders is fair, from a financial point of view, to the Canadian Energy Shareholders.

The executive management group of Standard, led by Mr. Ronald Wiebe as President and Chief Executive Officer, will manage the combined enterprise. The board of directors of Standard will be unchanged after completion of the Transaction, with the exception of the addition of John McGilvary who is currently on Canadian Energy's board of directors. For a complete list of management and directors please view our corporate presentation on our website at www.standardexploration.com.

Complete details of the terms of the Transaction are set out in the Arrangement Agreement, which will be filed by each of Standard and Canadian Energy on SEDAR and will be available for review under each of Standard and Canadian Energy's profiles at www.sedar.com.

READER ADVISORIES

Forward-Looking Information - This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward looking statements and information concerning the combined company's exploration and development activities, working capital, production, reserves, cash flow, undeveloped land holdings and anticipated benefits from the Transaction. The forward-looking statements and information are based on certain key expectations and assumptions made by Standard and Canadian Energy, including expectations and assumptions concerning prevailing commodity prices and exchange rates, applicable royalty rates and tax laws; future well production rates and reserve volumes; the timing of receipt of regulatory and shareholder approvals, the performance of existing wells; the success obtained in drilling new wells; and the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services. Although Standard and Canadian Energy believe that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Standard and Canadian Energy can give no assurance that they will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to reserves, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory and other approvals; and changes in legislation, including but not limited to tax laws, royalties and environmental regulations.

There are risks also inherent in the nature of the proposed Transaction, including failure to realize anticipated synergies or cost savings; risks regarding the integration of the two entities; incorrect assessments of the values of the other entity; and failure to obtain the required shareholder, court, regulatory and other third party approvals. This press release also contains forward-looking statements and information concerning the anticipated completion of the proposed Transaction and the anticipated timing for completion of the Transaction. Standard and Canadian Energy have provided these anticipated times in reliance on certain assumptions that they believe are reasonable at this time, including assumptions as to the timing of receipt of the necessary regulatory and court approvals and the time necessary to satisfy the conditions to the closing of the Transaction. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary regulatory or court approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the Transaction. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release concerning these times. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Standard's or the combined company's operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this press release are made as of the date hereof and Standard and Canadian Energy undertake no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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 RELEASE.

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