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August 17, 2012 - CALGARY, ALBERTA - Pennine Petroleum Corporation (PNN on TSX.V) (the "Company") is pleased to provide an update on the proposed transaction with NPT Oil Corporation ("NPT") previously announced in the Company's December 22, 2011 and February 13, 2012 news releases (the "Proposed Transaction"). The Proposed Transaction approval process is ongoing as preliminary documentation has been filed with the TSX Venture Exchange (the "Exchange") and is presently being reviewed. In addition, the Company and NPT have renegotiated certain terms of the Proposed Transaction. As a result, the Company is pleased to provide the following updated summary of the Proposed Transaction.
The Proposed Transaction
To carry out the Proposed Transaction, the Company signed a Purchase and Sale Agreement with NPT dated February 7, 2012, as amended (the "Agreement"). Under the terms of the Agreement, Pennine will acquire all geological, geophysical and engineering data, and, indirectly through the acquisition of NPT's wholly owned subsidiaries, Atlantic Petroleum Ltd. and Bahamas Exploration Limited, license applications for the licensing of certain petroleum and natural gas rights with respect to the Blake Plateau (the "Blake Plateau Property") in the northern territorial waters of the Commonwealth of the Bahamas (the "Licenses"). As consideration for such assets, Pennine will issue a total of 40,000,000 Units ("Unit(s)"), each Unit comprising a common share of Pennine (a "Common Share") at a deemed price of Cdn$0.05 per share and a Common Share purchase warrant with an exercise price of Cdn $0.10 per warrant, exercisable within a 2 year period from closing of the Proposed Transaction. It is a condition of the Agreement that 32,000,000 of the 40,000,000 Units issued to NPT at closing of the Proposed Transaction be concurrently paid to the shareholders of NPT by way of a dividend.
As additional consideration, the Agreement provides that in the event any of the Licenses are granted (of which there is no assurance), Pennine will issue additional Common Shares for each acre of License granted (the "Additional Common Shares"). The number of Additional Common Shares which could be issued in the event any Licenses are granted was initially ten per acre of License granted, up to a maximum of 61,010,360 Additional Common Shares. However, this was subsequently renegotiated and increased to forty Additional Common Shares per acre of License granted, up to a maximum of 244,405,440. If Issued, the Additional Common Shares will be issued at the then "discounted market price", as such term is defined in Exchange Policy 1.1.
In connection with the Proposed Transaction, it is also proposed that 1359410 Alberta Inc. ("135") be granted an aggregate of 1,000,000 Pennine Shares issued at a deemed price of $0.05 per share and a cash payment of $10,000 as a finder's fee. 135 also provides investor relations services to the Company pursuant to a consulting agreement.
The Concurrent Financing
An additional condition of the Proposed Transaction is that the Company complete a brokered private placement of units for minimum gross proceeds of $1,500,000 (the "Private Placement"). The Company and NPT have entered an engagement letter with Macquarie Private Wealth Inc. (the "Agent") whereby the Agent has agreed, subject to, among other things, completion of satisfactory due diligence to act as agent for the Private Placement on a commercially reasonable efforts agency basis to raise minimum gross proceeds of CAD$1,500,000 and maximum gross proceeds of CAD $2,000,000. The Private Placement will be comprised of an offering of units of the Company (the "Offered Units") at a price of $0.05 per Offered Unit. Each Offered Unit will be comprised of one Common Share and one Common Share purchase warrant ("Warrant"), with each Warrant entitling the holder to purchase one additional Common Share at CAD $0.10 for a 2 year period from closing of the Private Placement.
The Agent will receive a cash commission equal to 8% of the gross proceeds raised by the Agent or its sub-agents, and agents options entitling the Agent and its designated sub-agents, if any, to purchase that number of Common Shares equal to 8% of the number of Offered Units sold under the Private Placement exercisable at a price of $0.05 per Common Share for a period of 24 months from the closing of the Private Placement.
The closing of the Private Placement is conditional upon, among other things, completion of satisfactory due diligence by the Agent, completion of the Proposed Transaction, the final acceptance of the Private Placement and Proposed Transaction by the Exchange and each of NPT and the Company entering into a formal agency agreement with the Agent.
All securities issued pursuant to the Private Placement will be subject to a four month hold period from the date of issuance.
The net proceeds of the Private Placement will primarily be used to fund the costs associated with the proposed work program respecting the Blake Plateau Property, certain activities and related costs of which are subject to the granting of the Licenses. In addition, net proceeds will be used to fund the costs of completing the Proposed Transaction, and for general working capital purposes.
Status of Proposed Transaction
As the Proposed Transaction is a Reverse Takeover in accordance with Policy 5.2 of the Exchange, it is subject to Exchange approval. This requires, among other things, that the Company obtain shareholder consent, and that it prepare and file on SEDAR a filing statement disclosing detailed information on the Proposed Transaction. The Company continues to work with the Exchange in obtaining its conditional approval.
Management of the Company and NPT continue to commit to finalizing the Proposed Transaction as soon as reasonably possible.
Conditions to Completion of the Proposed Transaction
Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance, shareholder consent, completion of the minimum Private Placement, and various customary closing conditions appropriate for transactions similar in nature and size to the Proposed Transaction. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.
In accordance with Exchange policies, the Common Shares are currently halted from trading, and it is expected that they will remain halted until completion of the Proposed Transaction. Provided the Proposed Transaction is completed, the Company will be listed as a Tier 2 Oil and Gas Issuer on the Exchange and is expected to resume trading under the symbol "PNN".
Cautionary Notes
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.
This news release contains forward-looking statements relating to the Proposed Transaction and the Private Placement, including statements regarding the Proposed Transaction, closing of the Proposed Transaction and the Private Placement, the receipt of all necessary regulatory and shareholder approvals and satisfaction of all other closing conditions in connection with the Proposed Transaction and the Private Placement and other statements that are not historical facts. Certain statements contained in this news release constitute forward looking statements. The use of any words such as "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements.
Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Readers are cautioned not to place undue reliance on these statements as the Company's actual results, performance, or achievements may differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements if known or unknown risks, uncertainties or other factors affect the Company's business, the Proposed Transaction or the Private Placement, or if the Company's estimates or assumptions prove inaccurate. Therefore, the Company cannot provide any assurance that forward-looking statements will materialize. The Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or any other reason except as required by applicable securities laws.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state in the United States in which such offer, solicitation or sale would be unlawful. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
About Pennine Petroleum Corporation
Pennine Petroleum Corporation is an emerging oil and gas exploration and development company currently active in Alberta and Saskatchewan.
For further information, contact:
Pennine Petroleum Corporation
N. Desmond Smith
T: 403 277-4421
F: 403 277-4439
E: des.smith@penninecorp.com
Boardmarker Group
Dean Stuart
T: 403 517 2270
E: dean@boardmarker.net
Neither 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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