West Isle Energy Inc.

April 12, 2011 10:36 ET

West Isle Energy Inc. Announces Agreement and Financing Re: Colombia

CALGARY, ALBERTA--(Marketwire - April 12, 2011) -


West Isle Energy Inc. ("West Isle") (CNSX:WEI) announces that it has entered into an arm's-length agreement (the "Reto Transaction") for the purchase of all the shares of a private corporation called Reto Petroleum Limited Colombian Branch ("Reto"). Reto has entered into a farm out agreement ("Amerisur/Reto Agreement") on the Fenix Block in Colombia with Amerisur Resources PCL ("Amerisur"), a London based oil & gas exploration company that is listed on AIM board of the London Stock Exchange.

The Fenix Block consists of 24,117 hectares in the Middle Magdalena Basin of central Colombia leased to Amerisur by the Agencia Nacional de Hidrocarburos ("ANH") under an exploration and production contract ("Lease Contract"). Some 2D and 3D seismic is available over the block and a discovery well has been drilled by Amerisur and is on production. The Amerisur/Reto Agreement is designed to delineate and expand upon this discovery, and also to satisfy certain earning obligations under the Lease Contract.

West Isle will issue 12,500,000 common shares ("Common Shares") at a deemed value of $0.20 each, representing the agreed value of Reto's interest in the Amerisur/Reto Agreement, to acquire all of the shares of Reto. The issuance of these Common Shares to acquire Reto will constitute a reverse take-over of West Isle. The reverse take-over transaction is conditional on the completion of a concurrent financing in the amount of $7 million to fund the work program under the Amerisur/Reto Agreement to earn interests in the Lease Contract.

The Amerisur/Reto Agreement has two earning phases. Under Phase 1 Reto can earn a 20% working interest in the Lease Contract by drilling 5 stratigraphic wells and 5 appraisal/developments wells in the area of Amerisur's discovery well. The first appraisal/development well must be completed within 12 months, and all of these wells must be completed within 18 months. Reto estimates that its cost of this work program will be USD$3.5MM. Under Phase 2 Reto can earn an additional 10% working interest in the Lease Contract by the acquisition and processing of 75kms of 2D seismic on the eastern side of the Fenix Block prior to June 21, 2012, in accordance with the terms of an earning obligation under the Lease Contract.

To implement the Phase 1 work program Reto intends to purchase and operate a drilling rig suitable to the requirements of the work program. The cost to purchase and to outfit the drilling rig to conduct operations on the Fenix Block will be approximately USD$1.5MM. By owning a drilling rig Reto can significantly reduce the cost of the Phase 1 work program, it can improve the economics of further exploration and appraisal activities on the Fenix Block and it may create opportunities for Reto to participate in further exploration activities in Colombia.

To finance the cost of the Amerisur/Reto Agreement, and to provide necessary working capital, West Isle has entered into a best efforts Engagement Agreement with D & D Securities Inc. ("Agent") of Toronto to raise $7 million under a private placement by the issuance of units ("Units") of West Isle at $0.20 per Unit where each Unit is comprised of one Common Share and one half of a warrant ("Warrant") and a full Warrant entitles the holder to purchase one additional Common Share at the price of $0.30 each. The exercise period for the Warrants shall be 24 months from date of issuance, subject to a shortened expiry period in the event the Common Shares of West Isle trade at or above $0.40 each for more than 20 consecutive days. The Agent will be paid a commission of 8% cash and the Agent will receive broker's warrants ("Broker's Warrants") to purchase that number of West Isle Common Shares equal to 8% of the number of Units sold under the offering, at a purchase price of $0.30 per Common Share, and the exercise period for the Broker's Warrants shall be 24 months from the date of issuance, subject to a shortened expiry period in the event the Common Shares of West Isle trade at or above $0.40 each for more than 20 consecutive days. The closing of the financing is conditional on a formal Agency Agreement with standard market-out clause and appropriate regulatory approvals.

For more information about West Isle visit the website www.westisleenergy.com, the Listings Disclosure Hall at www.cnsx.ca or on SEDAR at www.sedar.com.

This release includes certain statements that may be deemed "forward looking statements". All statements in this release, other than statements of historical facts, which address future activities including the closing of the financing, exploration drilling and activity, and events or developments that the Corporation intends, plans, anticipates, believes, estimates or expects are forward looking statements. Actual results may differ materially. Although the Corporation believes such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward looking statements. Factors that could cause results to differ materially from those in the forward looking statements include, but are not limited to: inability to close the Reto Transaction or the Financing or closing with material amendments, market conditions and difficulties of raising funds in the economic environment, availability and costing of exploration contractors; exploration success; continued availability of capital government regulations, laws and charges; environmental developments; exploitation economics; and generally the economic, market, financial and business conditions in the present volatile and uncertain economic period. Investors are cautioned that any statements are not guarantees of future performance and actual results or developments may differ materially from those stated in the forward looking statements. The Corporation does not intend, and does not assume any obligation, to update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by West isle. This news release shall not constitute an offer to sell or the solicitation of any offer to buy securities in any jurisdiction.

The CNSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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