Woodrose Corporation Announces Acquisition of Viking Energy (SC-6 Cadlao) Limited

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec. 11, 2013) - Woodrose Corporation (TSX VENTURE:WRS.H) ("Woodrose" or the "Company") is pleased to announce that it has entered into a binding letter agreement with Viking Energy Cadlao Holding (VECH) Limited ("VECH") and Viking Energy (SC-6 Cadlao) Limited ("VEP") dated effective December 9, 2013 (the "Letter Agreement") to acquire 100% of the outstanding shares of VEP (the "Transaction"). VEP owns a 50% shareholding in Cadlao Development Company Limited ("CADCO") that holds an 80% operated participating interest in the Service Contract 6 (Cadlao) offshore Republic of the Philippines (the "Service Contract"). The Service Contract governs an offshore petroleum exploitation area that contains the Cadlao oilfield, an anticlinal structure which was discovered (off of vintage 2D seismic) by Amoco in 1977 and produced c.11 million barrels of very light crude oil (47° API, 0.520% of sulphur) from 1981 until 1991 before being suspended. CADCO plans to redevelop the Cadlao oilfield based off of a new 3D seismic interpretation.

The Transaction will constitute a "reverse-takeover" of Woodrose in accordance with the policies of the TSX Venture Exchange (the "TSXV") and the reactivation of Woodrose, which is currently an NEX-listed issuer.

Overview

The Transaction is the first step in Woodrose's new strategy to become a leading independent oil producer focused on the development and the exploitation of highly cash generative proven shallow waters offshore oilfields in South-East Asia using cost-effective development concepts and offshore production and storage facilities. Woodrose will also seek to establish itself as a preferred partner for national oil companies and local operators to un-lock and monetize undeveloped offshore oilfields throughout South-East Asia.

Woodrose seeks to accumulate a portfolio of operated interests in offshore oilfields with the objective to reach a net oil production of 20,000 barrels per day and proven and probable ("2P") reserves of 50 million barrels in the next 3 to 5 years. As a result of the Transaction, Woodrose intends to become the largest oil producer in the Philippines once production from the Cadlao oilfield is resumed.

Woodrose will work closely with the Thome Group of Companies (www.thome.com.sg) and its affiliated company Offshore Production Solutions to secure cost-effective offshore production and storage solutions (facilities together with operations and maintenance services) for the exploitation of the Service Contract and other future projects.

Summary of Transaction

Under the terms of the Letter Agreement, Woodrose has agreed to acquire all of the issued and outstanding shares of VEP (the "VEP Shares") in exchange for Woodrose common shares ("Woodrose Shares"). Upon completion of the VEP Financing and the Consolidation (as defined below), it is anticipated that Woodrose will issue, on the closing of the Transaction (the "Closing"), 73,500,000 Woodrose Shares at a price of CDN$0.50 per Woodrose Share to shareholders of VEP immediately prior to Closing.

Woodrose has agreed that, prior to Closing, it will consolidate all of the issued and outstanding 8,196,374 Woodrose Shares into 3,800,000 Woodrose Shares (the "Consolidation"). Also, as referred to above, prior to Closing, VEP will complete an equity financing for a minimum of US$20,000,000 (the "VEP Financing"). VEP may, at its option, increase the financing by up to CDN$12,000,000. In the event the VEP Financing is so increased, the number of Woodrose Shares to be issued to the VEP shareholders will increase to up to 97,500,000. In addition, prior to completion of the Transaction, the Company has agreed to complete a private placement financing (the "Woodrose Financing") prior to Closing to raise a minimum of CDN$5,800,000 and a maximum of CDN$12,000,000 through the issuance of subscription receipts ("Subscription Receipts") at a price of CDN$0.50 per Subscription Receipt. Each Subscription Receipt will be automatically convertible into one post-Consolidation Woodrose Share upon Closing. The proceeds of the Woodrose Financing will be used for working capital and payment of costs and expenses relating to the Transaction. All securities issued pursuant to the Woodrose Financing will be subject to a statutory four-month hold period from their date of issuance.

Concurrent with the Transaction, it is also proposed that the Company will continue from Alberta (Canada) into the British Virgin Islands (the "Continuation"). Shareholders of the Company will vote on the Continuation and the Transaction at a special shareholders meeting anticipated to be held in March 2014.

Upon completion of the Transaction, it is anticipated that the Company will be classified as a Tier 2 Oil and Gas Issuer on the TSXV.

Proposed Management Team

As part of the Transaction, a new board of directors gathering experienced oil and gas executives and entrepreneurs will be appointed. Upon closing of the Transaction, the following directors and senior officers are anticipated to be appointed in replacement of Woodrose's current board and management:

Roderick Fraser (Chairman of the Board)

Mr Fraser is a production engineer with over 30 years of experience in the oil and gas sector initially through industry roles with Amoco (production engineer), Esso (field superintendent) and Fuel Resources (VP Operations and Board member). Mr Fraser moved to oil and gas investment banking in 1992. Mr Fraser held various senior positions with JP Morgan Chase (Managing Director, Head of Oil & Gas Latin America), WestLB (Managing Director, Head of Oil & Gas Americas) and Standard Bank (Managing Director, Global Head of Oil & Gas). Mr Fraser is currently an independent consultant acting as strategic advisor for large financial institutions (investment banks and private equity / hedge funds). Mr Fraser also serves as non-executive director of Fortaleza Energy Inc.

Conrad Clauson (President and Chief Executive Officer)

Mr Clauson is an entrepreneur with 20 years of experience in investment banking, shipping and oil & gas in Asia. Mr Clauson held senior positions with Merrill Lynch (Head of Norway) and Donaldson, Lufkin & Jenrette (Head of Scandinavia). Mr Clauson has extensive experience in business development and deal structuring together with long-standing relationships with national oil companies, private local operators and local authorities in South-East Asia.

Ali Al-Qabandi (Non-Executive Director)

Mr Al-Qabandi is a Chartered Public Accountant with 35 years of experience in the oil and gas industry. Mr Al-Qabandi held numerous senior positions with Kuwait Oil Company ("KOC") including Executive Assistant Managing Director of Planning and Finance, Director of Kuwait National Petroleum Company and Kuwait Gulf Oil. Mr Al-Qabandi is a co-founder of Gulf Keystone Petroleum Ltd (listed on AIM with a market capitalisation of US$2.5 billion) and served as Chief Financial Officer (2001-2007) and Business Development Director (2007-2013).

Gabriel Simonian (Non-Executive Director)

Mr Simonian is a geologist (PhD) with over 35 years of experience in the oil and gas business worldwide. Mr Simonian was previously a Director of the geophysical consulting company Scott Pickford undertaking asset evaluations for oil and gas companies. Mr Simonian is co-founder of Simco Petroleum, a geo-technical advisory boutique advising oil and gas companies in asset acquisitions / divesture transactions and providing business development and licence management services. Mr Simonian also established a number of private and listed oil and gas companies including Scotsddale Petroleum (sold to PA Resources AB) and Crown Energy AB.

Alexander Trotter (Non-Executive Director)

Mr Trotter has over 20 years of experience in asset / fund management. Mr Trotter was initially trained as a lawyer and practiced with multinational law firm Linklaters LLP. Mr Trotter held various portfolio management positions with GAM and UBS. Mr Trotter is currently portfolio manager of Fulcrum Asset Management's Africa Funds including upstream oil and gas allocations. Mr Trotter also serves as non-executive director of several private companies and trustee of philanthropic foundations including the Tony Elumelu Foundation.

Neil Herbert (Non-Executive Director)

Mr Herbert is a Chartered Public Accountant with over 15 years of experience in the natural resources exploration and exploitation sector. From 2005 until 2007, Mr Herbert served as Finance Director of UraMin Inc., a uranium mining company listed on AIM and TSX which was acquired by Areva in 2007 for US$2.5 billion. Mr Herbert was previously Executive Chairman of Polo Resources Limited, a natural resources investment company with holdings in mining and oil & gas companies / projects worldwide. Mr Herbert is currently the Executive Chairman of UrAmerica, uranium exploration and exploitation company focusing on mining projects in Latin America.

Edouard Etienvre (Director and Chief Financial Officer)

Mr Etienvre was previously oil and gas equity research associate with Société Générale and reserve-based lending banker with Bank of Scotland plc. Mr Etienvre has extensive corporate finance, business development, commercial and deal execution experience in the oil and gas / offshore sector.

Ian Ripley (Chief Operating Officer)

Mr Ripley is a chemical and structural engineer with over 30 years of experience in managing offshore oil and gas field developments / redevelopments worldwide with Woodside Petroleum (North Rankin and Goodwyn projects in Australia), Occidental Petroleum, Apache Energy (Stag and Devil Creek projects in Australia), Hyundai Heavy Industries (West Seno project in Indonesia), Daewoo Oil Company (Shwe project in Myanmar) and Talisman (Thang Long project in Vietnam). Mr Ripley has a successful track-record in delivering offshore oil and gas field developments / redevelopments on schedule and within budget using cost-effective development concepts and proven technologies. Mr Ripley also has long-standing relationships with operators, contractors and authorities throughout Asia.

In addition, upon closing of the Transaction, Woodrose will be entitled to appoint two additional non-executive directors of the Company.

Roderick Fraser, the proposed Chairman of the Board, commented: "I am very pleased to join the board of directors of Woodrose Corporation upon closing of the acquisition of Viking Energy (SC-6 Cadlao) Limited. The redevelopment of the Cadlao oilfield is a low risk / high reward project that will be a stepping stone for Woodrose Corporation to implement its new strategy and establish itself as a leading low-cost offshore oil producer in South-East Asia."

Description of VEP and Service Contract

Each of VEP, VECH and CADCO are companies existing pursuant to the laws of the British Virgin Islands. VECH is currently the sole shareholder of VEP which, in turn, holds a 50% shareholding in CADCO. VEP's 50% shareholding of CADCO is subject to the terms and conditions of a shareholders' agreement.

CADCO holds an 80% participating interest in the offshore petroleum exploitation area located off the west coast of the Republic of the Philippines and governed by the terms of the Service Contract (the "Service Contract Area"). CADCO is the operator of the Service Contract Area and the remaining 20% participating interest is held by VenturOil Philippines, Inc. a private Philippines oil and gas company. The Service Contract Area contains the Cadlao oilfield which was discovered by the Cadlao-1 well drilled in 1977 by Amoco Philippines Petroleum Company ("Amoco").

The Cadlao oilfield is an anticline structure (reservoir depth 1,950 meters) located in shallow waters (18-90 meters) with oil-in-place volumes estimated at 40 million barrels. It was initially developed by Amoco in 1981 based on 2D seismic data with two subsea wells located in a water depth of 90 meters and tied to a floating production storage off-loading vessel ("FPSO"). The Cadlao oilfield produced c.11 million barrels of very light crude oil (47° API, 0.520% of sulphur) from 1981 until 1991 when production was suspended at 900 barrels per day.

The redevelopment of the Cadlao oilfield is anticipated to consist of drilling four new deviated wells in two phases whereby two new wells will be drilled and completed prior to first oil ("Phase 1") and if necessary to extract recoverable oil, two additional new wells are planned to be drilled 3-9 months after first oil ("Phase 2") (the expenditures related to these wells are anticipated to be self-funded out of cash flow from Phase 1).

The Phase 1 and Phase 2 wells will be drilled from the seamount located within the Service Contract Area using an independent leg jack-up rig (water depth of 18 meters). The new wells will have dry-tree completions and will be tied to a jack-up production platform hosting a suitable processing unit and connected to a CALM buoy moored storage tanker using a subsea pipeline. The offshore production and storage facilities (jack-up production platform, storage tanker and CALM buoy) will be chartered from Offshore Production Solutions (Cadlao) Limited on a time charter basis under a charter agreement with a firm period of 3 years. First oil from the Cadlao oilfield is currently anticipated in Q4 2014 at 12,500 barrels per day.

The Company will engage Gaffney, Cline and Associates to issue a technical report on the Service Contract Area reflecting the progress made by CADCO on the Cadlao oilfield redevelopment over the last 15 months and compliant with NI 51-101 standards and which will be filed under the Company's profile at www.sedar.com.

Significant Conditions to Completion

Closing of the Transaction ("Closing") is subject to conditions precedent, which include but are not limited to the following:

• Completion of formal due diligence by Woodrose on the business, the assets and the financial condition of VEP
• Execution of the definitive agreement between the Company, VECH, VEP and VEP's shareholders
• Completion of a technical report on the Cadlao oilfield prepared in compliance with NI 51-101
• Delivery of audited financial statements of VEP and completion of pro-forma financial statements for Woodrose
• Sufficient funding in place on Closing to fund VEP's obligations towards the anticipated Phase 1 work program
• No material adverse change having occurred in the business, the assets or liabilities of VEP and Woodrose
• Completion of the minimum VEP Financing
• Completion of the minimum Woodrose Financing
• Approval of the Transaction and the Continuation by the Woodrose shareholders
• Receipt of all necessary regulatory approvals including from TSXV

The Transaction and the Continuation is recommended by the board of directors of Woodrose. To date, shareholders of Woodrose holding approximately 67% of the Woodrose Shares have entered into agreements wherein they have agreed to vote in favour of the Transaction and the Continuation.

Escrow Requirements

The new Woodrose Shares to be issued by the Company to shareholders of VEP who will be "Principals" (as defined in the policies of the TSXV) will be subject to certain escrow conditions as prescribed by the TSXV. In addition, the Company, VECH and VEP will procure that the following parties enter into voluntary escrow agreements:

• Woodrose's largest shareholders as of the date of the Letter Agreement; and
• The shareholders of VECH as of the date of the Letter Agreement;

These voluntary escrow arrangements will have an 18-month release schedule with 10% of the shares in Woodrose held by these parties to be released on Closing, 15% being released 6 months after Closing; 15% being released 12 months following Closing; and all the remaining shares placed in escrow to be released 18 months after Closing. All securities issued pursuant to the Transaction may be subject to additional resale restrictions required by the TSX-V.

Summary of the Work Program

The gross costs associated with the proposed Phase 1 of the Cadlao oilfield have been budgeted at US$62.5 million. CADCO's net share of the costs associated with Phase 1 of the Cadlao oilfield redevelopment (80% of the gross amount) will be funded entirely by loans from VEP which will be financed by a combination of equity injection from the Company and debt finance.

The gross costs associated with the proposed Phase 2 of the Cadlao oilfield have been budgeted at US$40.0 million. It is anticipated that 100% of CADCO's net share of the costs associated with Phase 2 of the Cadlao oilfield redevelopment (80% of the gross amount) will be funded out of cash flows from Phase 1.

Sponsorship

Wolverton Securities Ltd. ("Wolverton") has agreed, subject to completion of a satisfactory due diligence review, to act as the sponsor of the Company with respect to the Transaction. Wolverton will be engaged by Company on arm's length terms.

Wolverton will receive a sponsorship fee and reimbursement of expenses. An agreement to sponsor should not be construed as any assurance with respect to the merits of the Transaction or the likelihood of completion.

ON BEHALF OF WOODROSE CORPORATION

Darren Devine

President, CEO and Director

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.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, majority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Transaction, any information with respect to the Transaction may not be accurate or complete and should not be relied on. Trading in securities of the Company should be considered highly speculative.

Cautionary Note Regarding Forward-Looking Statements

Information set forth in this news release may involve forward-looking statements under applicable securities laws. Forward-looking statements are statements that relate to future, not past, events. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as "anticipate", "believe", "plan", "estimate", "expect", and "intend", statements that an action or event "may", "might", "could", "should", or "will" be taken or occur, or other similar expressions. All statements, other than statements of historical fact, included herein including, without limitation; statements about the terms and completion of the Transaction are forward-looking statements. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: failure to satisfy all conditions precedent to the Transaction, including shareholder approval, approval of the TSX Venture Exchange and completion of the necessary financings, continuation and the additional risks identified the management discussion and analysis section of Woodrose Corporation's interim and most recent annual financial statement or other reports and filings with the TSX Venture Exchange and applicable Canadian securities regulators. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the respective companies undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable securities laws. Investors are cautioned against attributing undue certainty to forward-looking statements.