Exxon Mobil to Acquire Celtic Exploration

Exxon Mobil to Acquire Celtic Exploration 
Companies agree to $3.1 Billion Acquisition plus Spinout of Assets 
CALGARY, ALBERTA -- (Marketwire) -- 10/17/12 -- Exxon Mobil
Corporation ("ExxonMobil") (NYSE:XOM) and Celtic Exploration Ltd.
("Celtic") (TSX:CLT) today announced that Canadian affiliates of
ExxonMobil, including Exxon Mobil Canada Ltd. ("ExxonMobil Canada"),
and Celtic have entered into an agreement for the purchase by a
subsidiary of ExxonMobil Canada of all of Celtic's outstanding common
shares at a cash price of C$24.50 per share. Additionally, Celtic
shareholders will receive 0.5 of a share of a new company, 1705972
Alberta Ltd. ("Spinco"), for each Celtic common share. 
Including the amount to be paid for Celtic's outstanding convertible
debentures and including Celtic's bank debt and working capital
obligations, the transaction is valued at approximately C$3.1 billion
(excluding the estimated value of Spinco shares). The transaction is
to be completed by way of an arrangement under the Business
Corporations Act (Alberta).  
Highlights 


 
--  Cash price is C$24.50 per Celtic share 
--  Celtic shareholders also receive 0.5 of a share of a new company to be
    led by Celtic's current management team 
--  Transaction has received the unanimous approval of Celtic's Board of
    Directors 

 
Based on the cash consideration (not including the value of Spinco
shares), the transaction price represents a premium of 35% over
Celtic's closing share price on the Toronto Stock Exchange of C$18.12
on October 16, 2012, and 34% over Celtic's 30-trading day volume
weighted average trading price of C$18.28 per share ending on October
16, 2012. 
Information regarding the Transaction 
Following an extensive review and analysis of the proposed
transaction and consideration of other available alternatives, the
Board of Directors of Celtic has unanimously determined that the
arrangement is in the best interests of Celtic and is fair to
Celtic's securityholders. The Board of Directors of Celtic has
unanimously approved the transaction and determined to recommend that
Celtic's shareholders and debentureholders vote in favour of the
arrangement. Each of the officers and directors of Celtic,
representing in aggregate approximately 17.5% of the outstanding
common shares (on a 
fully diluted basis), have entered into lock-up
agreements with ExxonMobil Canada supporting the transaction,
pursuant to which they have agreed to vote their common shares and
convertible debentures held in favour of the approval of the
arrangement. 
The Board of Directors of Celtic has received from each of
FirstEnergy Capital Corp. and RBC Capital Markets, opinions that, as
of the date of the arrangement agreement, the consideration to be
paid to Celtic's shareholders and debentureholders is fair from a
financial point of view to Celtic's securityholders. 
The agreement between ExxonMobil Canada and Celtic provides for,
among other things, a non-solicitation covenant on the part of
Celtic, subject to "fiduciary out" provisions that entitle Celtic to
consider and accept a superior proposal and a right in favour of
ExxonMobil Canada to match any superior proposal. The arrangement
agreement provides for a C$90.0 million termination fee payable by
Celtic in certain circumstances if the transaction is not completed. 
Completion of the transaction is subject to customary closing
conditions, including receipt of court, shareholder and regulatory
approvals, including under the Investment Canada Act and Competition
Act. Celtic's securityholders will be asked to vote on the
transaction at a special securityholders meeting and the completion
of the transaction will require the approval of two-thirds of the
votes cast by shareholders in person or by proxy at the meeting.  
Under the proposed transaction, the holders of the Celtic convertible
unsecured subordinated debentures outstanding will receive Celtic
common shares, including shares pursuant to the make whole payments
provided under the terms of the debentures in total equal to the
amount they would otherwise receive, following the completion of the
arrangement if they were not acquired under the arrangement, plus
accrued interest to the closing date, plus additional interest for 32
days. The Celtic common shares received by debentureholders under the
arrangement will be exchanged, as part of the arrangement, for the
same $24.50 in cash and 0.5 of a Spinco share to be received by other
holders of Celtic common shares. 
Celtic's debentureholders will be asked to vote on the arrangement;
however, completion of the arrangement is not conditional on their
approval. If debentureholder approval is not obtained, the debentures
will be excluded from the arrangement and will remain outstanding
following completion of the arrangement and continue to be governed
by the terms of their indenture. 
An information circular regarding the arrangement is expected to be
mailed to securityholders in late November for a special meeting of
the holders of common shares and debentures to take place in late
December, with closing expected to occur as soon as reasonably
practicable following the securityholder vote and regulatory
approval.  
A copy of the arrangement agreement and the information circular and
related documents will be filed with Canadian securities regulators
and will be available at www.sedar.com.  
FirstEnergy Capital Corp. and RBC Capital Markets have each provided
the Board of Directors of Celtic with a fairness opinion regarding
the proposed transaction for the shareholders and debentureholders. A
copy of each opinion will be included in the information circular to
be sent to Celtic securityholders for the special meeting to be
called to consider the arrangement. Borden Ladner Gervais LLP is
acting as legal counsel to Celtic. 
About Celtic Exploration 
Celtic is a Calgary, Alberta, Canada-based oil and gas company
focused on exploration, development and production of crude oil and
natural gas resources primarily in west central Alberta. Celtic holds
large acreage positions in the Montney and Duvernay resource gas
plays. Throughout its history, Celtic has a proven track record of
growing reserves, production and the underlying value of the company
for its shareholders. Common shares of Celtic are listed on the
Toronto Stock Exchange under the symbol CLT.  
About Spinco 
Spinco will be a new publicly listed junior oil and gas exploration
and production company led by Celtic's current management team,
including David J. Wilson and Sadiq H. Lalan
i. Spinco will be a
growth oriented company with approximately 3,300 BOE per day of
production, weighted 90% to gas and 10% to oil, with an initial land
position consisting of approximately 49,000 net undeveloped acres.
Spinco's assets will be made up of three core areas: a gas property
at Grand Cache, Alberta; a liquids-rich natural gas property at Inga,
BC; and an oil prospect at Karr, Alberta. Spinco expects to complete
a non-brokered private placement equity financing concurrently with
the closing of the acquisition of Celtic by issuing up to 6.0 million
common shares of Spinco at a price equal to the net asset value per
Spinco share, primarily to officers, directors and employees of
Spinco. The net asset value per Spinco share is estimated to be $2.32
based on an independent engineering evaluation whereby the net
present value of proved plus probable reserves are discounted at 10%
before tax.  
Cautionary Statement on Forward-Looking Information 
This press release contains forward-looking statements and
forward-looking information within the meaning of applicable
securities laws. The use of any of the words "expect", "anticipate",
"continue", "estimate", "objective", "ongoing", "may", "will",
"project", "should", "believe", "plans", "intends" and similar
expressions are intended to identify forward-looking information or
statements. In particular, forward looking statements in this press
release include, but are not limited to the anticipated timing of the
meeting of securityholders and of closing of the transaction; plans
for Spinco and the estimated consideration payable to holders of the
debentures.  
The forward-looking statements and information are based on certain
key expectations and assumptions made by Celtic, including, but not
limited to, expectations and assumptions concerning the ability to
obtain all required regulatory approvals for the transaction,
including, but not limited to, shareholder, Court and regulatory
approvals. Although Celtic believes that the expectations and
assumptions on which such forward-looking statements and information
are based are reasonable, undue reliance should not be placed on the
forward looking statements and information because there can be no
assurance that they will prove to be correct. 
Since forward-looking statements and information address future
events and conditions, by their very nature they involve inherent
risks and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks.
These include, but are not limited to, the risk that the transaction
may not close when planned or at all or on the terms and conditions
set forth in the arrangement agreement; the failure to obtain the
necessary shareholder, Court, regulatory and other third party
approvals required in order to proceed with the transaction;
operational risks in development, exploration and production for oil
and gas; delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of
reserve and resource estimates; health, safety and environmental
risks; commodity price and exchange rate fluctuations; marketing and
transportation; loss of markets; environmental risks; competition;
incorrect assessment of the value of acquisitions; ability to access
sufficient capital from internal and external sources; and changes in
legislation, including but not limited to tax laws, royalties and
environmental regulations. Readers are cautioned that the foregoing
list of factors is not exhaustive.  
Management has included the above summary of assumptions and risks
related to forward-looking information provided in this press release
in order to provide securityholders with a more complete perspective
on the proposed transaction and such information may not be
appropriate for other purposes. Actual results, performance or
achievement could differ materially from those expressed in, or
implied by, these forward-looking statements and, accordingly, no
assurance can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of them
do so, what benefits may be derived there from.  
The forward-looking statements and information contained in this
press release are made as of the date hereof and Celtic undertakes no
obligation to update publicly or revise any forward-looking
statements or information, whether as a result of new information,
future events, or results or otherwise, other than as required by
applicable securities laws. 
Measurements and Abbreviations 
All dollar amounts are referenced in Canadian dollars, except when
noted otherwise. Where amounts are expressed on a barrel of oil
equivalent ("BOE") basis, natural gas volumes have been converted to
oil equivalence at six thousand cubic feet per barrel and sulphur
volumes have been converted to oil equivalence at 0.6 long tons per
barrel. The term BOE may be misleading, particularly if used in
isolation. A BOE conversion ratio of six thousand cubic feet per
barrel is based on an energy equivalency conversion method primarily
applicable at the b
urner tip and does not represent a value
equivalency at the wellhead. References to "oil" in this discussion
include crude oil and natural gas liquids ("NGLs"). NGLs include
condensate, pentane, propane, butane and ethane. References to "gas"
in this discussion include natural gas and sulphur. 
This release does not constitute an offer to purchase or a
solicitation of an offer to sell any security, or a solicitation of
votes with respect to any security. Celtic securityholders are urged
to read the information circular carefully before making any decision
with respect to the arrangement.
Contacts:
Celtic Exploration Ltd.
David J. Wilson
President and Chief Executive Officer
403-201-5340 
Celtic Exploration Ltd.
Sadiq H. Lalani
Vice President, Finance and Chief Financial Officer
403-215-5310 
Celtic Exploration Ltd.
Suite 600, 321 - 6th Avenue SW
Calgary, Alberta, Canada
T2P 3H3