Longreach & APIC Combination Agreement

JERSEY, CHANNEL ISLANDS--(Marketwire - Oct 2, 2012) -

2 October 2012 Not for distribution to United States wire services or dissemination in the United States. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. JOINT PRESS RELEASE LONGREACH OIL AND GAS AND APIC PETROLEUM ENTER INTO BUSINESS COMBINATION AGREEMENT FOR IMMEDIATE RELEASE Longreach Oil and Gas Limited (LOI.V) ("Longreach") and APIC Petroleum Corporation (API.V) ("APIC") announced today that they have entered into a binding agreement (the "Agreement") effective September 30, 2012, pursuant to which Longreach has agreed to acquire all of the issued and outstanding shares of APIC by way of a share exchange, merger, amalgamation, arrangement, share purchase or other similar form of transaction (the "Proposed Transaction"). In addition, APIC has received expressions of interest totalling $30,000,000 in connection with its private placement (the "APIC Private Placement") of subscription receipts. The completion of the APIC Private Placement is a key condition to the Proposed Transaction. The final structure and required steps to be taken to complete the Proposed Transaction will be determined mutually by Longreach and APIC based on tax, securities and corporate laws and other considerations including the results of due diligence enquiries. Upon completion of the Proposed Transaction, Longreach will continue to operate under the name "Longreach Oil and Gas Limited" (the "Resulting Issuer") and APIC Shares are expected to be delisted from the TSX Venture Exchange (the"Exchange"). Transaction Highlights * Longreach and APIC will combine businesses with Longreach continuing to operate under the name "Longreach Oil and Gas Limited" * APIC intends to complete a subscription rights offering to raise gross proceeds of a minimum of $30 million * Longreach will have a solid balance sheet to unlock the value in its asset portfolio and pursue its growth strategy which includes a multi well drill programme during 2013 in Morocco * Shareholders of APIC will receive one common share of Longreach for 5.3846 common shares of APIC * Dennis A. Sharp, currently Chairman and CEO of APIC, will be named Executive Chairman of the Board of Directors and Andrew Benitz, currently Chief Operating Officer of Longreach, will be named Chief Executive Officer of Longreach (the Board of Directors will consist of eight Directors in total, six chosen from Longreach's existing board and two to be nominated by APIC) * The Proposed Transaction has been unanimously approved by the Boards of Directors of both companies * APIC's Board of Directors intends to unanimously recommend to shareholders of APIC to vote in favour of the Proposed Transaction * The Proposed Transaction is subject to customary conditions and is expected to close on or about November 30, 2012 Commenting, Bryan Benitz, Chairman and CEO of Longreach, said:"The business combination of Longreach and APIC brings two highly capable and compatible management teams together with the necessary funds to execute a very exciting near term drill programme on Longreach's onshore licences in Morocco, with particular focus on our operated Sidi Moktar acreage. Since inception, Longreach has developed a diversified portfolio of licences in Morocco, carefully selected with first mover advantages. On each of our onshore licences we have executed detailed geophysical work programmes and applied state of the art reprocessing and interpretation techniques to further enhance our technical understanding and develop the licences towards the drill phase. We have successfully de-risked the financial commitments on our offshore licences through two farm out deals announced in August. Our plan from the start has been to work towards addressing Morocco's energy needs and this announcement takes us a step closer to achieving that goal. We remain committed to our country focus, which we believe to be in the best interests of our shareholders." Dennis A. Sharp, Chairman and CEO of APIC, commented:"This is an exciting time for the shareholders of both APIC and Longreach as we take a very important step towards building a technically innovative and well capitalized oil and gas exploration company. The successful completion of this merger will position the combined company to advance its Moroccan properties and deliver both near and long-term value to its shareholders". Summary of the Proposed Transaction The Proposed Transaction is an arm's length transaction and is currently intended to be effected by way of a three-cornered amalgamation whereby APIC will amalgamate with a wholly-owned subsidiary of Longreach and holders of common shares of APIC ("APIC Shares") will be entitled to receive one (1) common share of Longreach ("Longreach Shares") for 5.3846 APIC Shares (the "Exchange Ratio"). In connection with the Proposed Transaction, APIC intends to use its best efforts to conduct a non-brokered private placement (the "APIC Private Placement") of subscription receipts (the "Subscription Receipts"), pursuant to which APIC intends to issue a minimum of 230,769,230 Subscription Receipts at a price of $0.13 per Subscription Receipt, to raise gross proceeds of a minimum of $30,000,000, subject to increase based on market demand. The proceeds from the APIC Private Placement will be held in escrow by Computershare Trust Company of Canada ("Computershare") pursuant to a subscription receipts agreement to be entered into between APIC and Computershare. Release of the proceeds from the APIC Private Placement will be subject to a number of conditions, including, but not limited to, the receipt of all necessary regulatory, stock exchange and shareholder approvals for the Proposed Transaction. Each Subscription Receipt will be automatically exercisable for no additional consideration, and without any further action by the holder thereof, into one APIC Share, immediately prior to the completion of the Proposed Transaction, and all such APIC Shares will be acquired by Longreach pursuant to the Proposed Transaction on the basis of the Exchange Ratio. Any finder associated with the Offering will be entitled to receive a finder's fee equal to 5% of the gross proceeds received from subscribers introduced to the Offering by the finder. Prior to giving effect to the APIC Private Placement, to the knowledge of management of APIC based on public disclosure, the following persons are currently shareholders of APIC holding 10% or more of the APIC Shares: (a) Dundee Corporation (12.8%); and (b) Sheldon Inwentash (15.3%), who may subscribe for subscription receipts pursuant to the APIC Private Placement. On completion of the Proposed Transaction and assuming receipt of the minimum proceeds pursuant to the APIC Private Placement, it is anticipated that current Longreach shareholders will hold approximately 23,465,398 Longreach Shares, current APIC shareholders will hold approximately 14,503,196 Longreach Shares, and subscribers of the APIC Subscription Receipts will hold approximately 42,857,265 Longreach Shares, representing approximately 29.03%, 17.94% and 53.02% respectively of the outstanding Longreach Shares on a non-diluted basis. Management of Longreach intends to spend the net proceeds available upon completion of the Proposed Transaction on a near term drill programme on Longreach's onshore licences in Morocco, with particular focus on its operated Sidi Moktar acreage, and on general corporate purposes. D. Campbell Deacon is a non-executive director of APIC and Longreach. Mr. Deacon declared his interest in respect of the Proposed Transaction and abstained from voting in respect thereof. Other than Mr. Deacon, no Non-Arm's Length Party (as that term is defined under TSX Venture Exchange Policies) of APIC has any direct or indirect beneficial interest in Longreach or is an insider of Longreach, and there is no relationship between any Non-Arm's Length Party of APIC and any Non-Arm's Length Party of Longreach. D. Campbell Deacon currently owns: * 5.8% of the outstanding options of Longreach (100,000 options); * 4% of the common shares of APIC (3,125,000 common shares); * 6.5% of the outstanding options of APIC (500,000 options); and * 50% of the outstanding warrants of APIC (1,562,500 warrants). On completion of the Proposed Transaction, all convertible securities of APIC will also be acquired by Longreach and exchanged into convertible securities of Longreach with the same terms, except that the exercise/conversion price and the number of underlying securities will be adjusted on the basis of the Exchange Ratio. Longreach will issue: (i) 580,358 warrants of Longreach in exchange for 3,125,000 warrants of APIC; and (ii) 1,433,718 share options of Longreach in exchange for 7,720,000 options of APIC. The Exchange Ratio was negotiated at arm's length between the parties and it was based on the prevailing market prices of each of Longreach's and APIC's share prices over a significant period of time. The fair market value of the parties' share prices was determined to be $0.70 for Longreach and $0.13 for APIC. These prices were then used to calculate the Exchange Ratio of 5.3846. Multilateral Instrument 61-101 - Protection of Minority Shareholders in Special Transactions ("MI 61-101") will apply to APIC in connection with both the Proposed Transaction and the APIC Private Placement. As such, APIC will be required to obtain minority shareholder approval in respect of both those transactions (however, APIC will be exempted from the valuation requirement imposed by MI 61-101). MI 61-101 will not apply to Longreach in respect of the Proposed Transaction as Longreach is not a "related party" of APIC. The directors and officers of APIC, together with certain shareholders of APIC, will enter into support agreements in respect of the Proposed Transaction, pursuant to which, among other things, such directors, officers and shareholders will agree to vote their shares in favour of any resolutions as may be required to approve or implement the Proposed Transaction. Conditions Precedent to Completing the Proposed Transaction The parties' obligations to complete the Proposed Transaction are subject to the satisfaction of a number of conditions, including but not limited to, (i)Exchange approval; (ii) approval of shareholders of APIC and Longreach, if required, and (iii) completion of the APIC Private Placement. Completion of the Proposed Transaction is subject to a number of conditions including but not limited to, Exchange acceptance and if required, disinterested shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the management information circular of APIC 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 APIC and Longreach should be considered highly speculative. The Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release. About Longreach Longreach is an independent oil and gas exploration company focused on exploration and development within Morocco. Longreach holds directly an operating interest in one onshore exploration licence in Central Morocco, and through its wholly-owned subsidiary Longreach Oil and Gas Ventures Limited ("Ventures"), Longreach holds non-operating interests in four oil and gas exploration licences in southern onshore and offshore Morocco. In aggregate, Longreach's direct and indirect interests in such exploration licences cover approximately 52,706 km2 (gross interest) / 11,238 km2 (net interest) or approximately 13.0 million acres (gross interest) / 2.7 million acres (net interest). Longreach's operating interest comprises a 50% interest in the onshore Sidi Moktar exploration licences referred to as Sidi Moktar West, Sidi Moktar South and Sidi Moktar North located in the Essaouira Basin in Central Morocco. Maghreb Petroleum Exploration S.A. ("MPE") and the ONHYM each hold 25% non-operating interests in the Sidi Moktar exploration licences. The ONHYM is an independent financially autonomous public institution representing the interests of the Kingdom of Morocco in the field of exploration and production of hydrocarbons and mining resources. Longreach's four non-operating licences and its interest in each include: (i) the Zag exploration licence (22.5% interest), (ii) the Tarfaya exploration licence (22.5% interest), (iii) the Sidi Moussa exploration licence (7.5% interest) and (iv) the Foum Draa exploration licence (7.5% interest). Longreach believes that the Sidi Moktar exploration licences, together with these four non-operating exploration licences, represent approximately 11% of Morocco's total licence area. Additional information on Longreach Oil and Gas Limited can be found at www.longreachoilandgas.com and at www.sedar.com . About APIC APIC Petroleum Corporation, a company incorporated under the laws of Canada, is an oil and gas exploration and development company seeking to acquire oil and gas properties in Europe and elsewhere. Additional information on APIC Petroleum Corporation can be found at www.apiccorp.com , and at www.sedar.com . CAUTIONARY STATEMENTS RE FORWARD LOOKING INFORMATION Statements in this press release contain forward-looking information within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as"contemplates", "intends", "plan", "expect", "project", "believe","anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking information in this press release includes, without limitation, statements with respect to: completion of the Proposed Transaction; completion of the APIC Private Placement; receipt of all necessary shareholder, regulatory and third party approvals, if applicable; and the composition of the board of directors and management of the Resulting Issuer. Readers are cautioned that assumptions used in the preparation of forward-looking information may prove to be incorrect. Although Longreach and APIC each believes that the expectations reflected in the forward-looking information is reasonable, there can be no assurance that such expectations will prove to be correct. Neither Longreach nor APIC can guarantee future results, level of activity, or performance of achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information. Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors (many of which are beyond the control of Longreach and APIC) that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors could cause results to differ materially from those expressed in the forward-looking information include, but are not limited to, the risks that the parties will not proceed with the Proposed Transaction and associated transactions, that the ultimate terms of the Proposed Transaction and associated transactions will differ from those that currently are contemplated, and that the Proposed Transaction and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). Industry related risks could include, but are not limited to: operations with foreign entities; delays or changes in plans; competition for, among other things, capital, acquisitions, skilled personnel and supplies; governmental regulation of the oil and gas industry; technical problems; the uncertainty of estimates and projections of costs and expenses; unanticipated operating events or performance which can reduce productivity; the need to obtain required approvals from regulatory authorities; stock market volatility; liabilities inherent in oil and gas operations; access to capital; and other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive. The statements in this news release are made as of the date of this release. Neither Longreach nor APIC undertakes any obligation to comment on analyses, expectations or statements made by third parties in respect of either of them, or their respective financial or operating results or (as applicable), their securities. For additional information, please contact: For Longreach Oil and Gas Limited For APIC Petroleum Corporation Bryan Benitz, Chairman & Chief Dennis A. Sharp, Chairman and Chief Executive Officer Executive Officer +44 20 3137 7756 (416) 367-0150 (416) 367-0165 (FAX) Pelham Bell Pottinger or Mark Antelme / Philip Dennis / Rollo Crichton-Stuart John Clark, Chief Financial Officer +44 207 861 3232 (416) 367-0150 (416) 367-0165 (FAX) 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. This information is provided by RNS The company news service from the London Stock Exchange END