Transco Resources Corp.
TSX VENTURE : TRN

CEP International Petroleum Ltd.

November 01, 2005 18:03 ET

Transco Corporate Update

CALGARY, ALBERTA--(CCNMatthews - Nov. 1, 2005) - Transco Resources Corp. (TSX VENTURE:TRN) ("Transco") previously announced on October 11, 2005, that they had entered into a binding agreement dated September 30, 2005 ("Agreement") to combine the businesses of Transco and CEP International Petroleum Ltd. ("CEP") by means of an amalgamation (the "Proposed Transaction") to form a new company to be known as CEP International Petroleum Ltd. ("Amalco") (the proposed combination of Transco and CEP is referred to as the "Proposed Combination"). Transco would like to announce amendments to the agreement.

CEP's principal assets are located in the Eastern Russia on the Kamchatka peninsula. The Kamchatka peninsula sits between the Sea of Okhotsk and the Bering Sea in the North Pacific Ocean. It is located approximately 1000 miles North of Japan.

Upon completion of the Proposed Combination, Amalco will continue as an oil and gas exploration and development company, with focus in Eastern Russia on the Kamchatka peninsula.

ECL Canada has completed an extensive geological report on the license areas held by CEP, the report describes in detail the petroleum geology of West Kamchatka projects. The ECL report provides in summary, that the CEP licenses contain a working petroleum system together with number of prospects which are already partially defined by the available data.

The stratigraphy of western Kamchatka is similar to that of Sakhalin Island. According to data published by Russian government agencies, in the Sakhalin area a total of 63 onshore and 11 offshore fields have demonstrated proven reserves of more than 6 billion barrels of recoverable oil, establishing Sakhalin Island as an important oil producing region in Eastern Russia.

Amended Terms of Proposed Combination

The Agreement dated September 30, 2005, will be amended to include increases in the number of shares that will be issued pursuant to the Agreement, holders of common shares of CEP ("CEP Shares") will now receive shares of Amalco ("Amalco Shares") such that all of the securities of CEP will be acquired for up to a maximum of 20,444,958 Amalco Shares or 1.00 Amalco Share for each CEP Share. Securities convertible into CEP Shares will be exchanged for Amalco securities of a similar character based on the CEP exchange ratio of 1 to 1. The increase in the number of shares is due CEP closing a private placement of 3,269,000 common shares at an effective price of $1.00 per share.

Pursuant to the Agreement, holders of common shares of Transco ("Transco Shares") will receive Amalco Shares such that all of the securities of Transco will be acquired for up to a maximum of 23,056,682 Amalco Shares or 1.00 Amalco Share each Transco Share. Securities convertible into Transco Shares will be exchanged for Amalco securities of a similar character based on the Transco exchange ratio of 1 to 1. The increase in the number of shares is due to Transco closing the brokered private placement discussed below.

Certain of the Amalco Shares issued pursuant to the Proposed Combination in exchange for CEP Shares may be required to be deposited into escrow and released on terms to be determined in accordance with the requirements of the TSX Venture Exchange Inc. (the "Exchange").

Private Placement

Transco is pleased to report that the brokered private placement through Research Capital Corporation, previously announced on September 20, 2005 has closed in escrow, subject to TSX Venture Exchange Inc. final approval, for total gross proceeds of $8,000,000. Transco issued 8,000,000 shares at a price of $1.00 per share. As part of the placement the agent received warrants entitling them to purchase 480,000 common shares at a price of $1.00 per share anytime in the next twelve months. All of the securities issued in connection with this private placement are subject to a four-month hold.

Approvals and Conditions

The Proposed Combination is subject to both shareholder approval and regulatory acceptance under the policies of the Exchange.

Research Capital Corporation, subject to satisfactory due diligence, will act as a sponsor to Transco in connection with the transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

Cautionary Statements

Completion of the Proposed Combination is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance. The Proposed Combination cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Combination will be completed as proposed, or at all.

Investors are cautioned that, except as disclosed in the Joint Management Information Circular of Transco and CEP to be prepared in connection with the Proposed Combination, any information released or received with respect to the Proposed Combination may not be accurate or complete and should not be relied upon. Trading in the securities of Transco should be considered highly speculative.

Trading Status

It is expected that the shares of Transco will be reinstated for trading at the opening of business on Wednesday November 3, 2005.

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

The Exchange has not reviewed and does not accept responsibility for the adequacy and accuracy of this information.

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