Caracal Energy and TransGlobe Energy Announce Proposed Business Combination to Create One of the Largest Independent Africa

Caracal Energy and TransGlobe Energy Announce Proposed Business Combination to 
Create One of the Largest Independent Africa Focused Oil Producers 
NEWS RELEASE TRANSMITTED BY Marketwired 
FOR: TransGlobe Energy Corporation 
TSX SYMBOL:  TGL
NASDAQ SYMBOL:  TGA 
MARCH 15, 2014 
Caracal Energy and TransGlobe Energy Announce Proposed Business Combination to
Create One of the Largest Independent Africa Focused Oil Producers 
Caracal and TransGlobe joint investor conference call at 7:00 a.m. Calgary
Time, March 17, 2014 
CALGARY, ALBERTA--(Marketwired - March 15, 2014) -  
NOT FOR DISSEMINATION OUTSIDE OF CANADA AND THE UNITED STATES 
Caracal Energy Inc. (LSE:CRCL) ("Caracal") and TransGlobe Energy
Corporation (TSX:TGL)(NASDAQ:TGA) ("TransGlobe") announced today that
they have entered into an agreement (the "Arrangement Agreement") to
merge the two companies by way of an exchange of shares pursuant to a plan of
arrangement under the Business Corporations Act (Alberta) (the
"Arrangement"). 
Rationale for the Proposed Business Combination 
The Arrangement would create one of the largest independent Africa focused oil
producers, poised for strong growth in oil production and reserves from
development and high impact exploration in Chad and Egypt. Based on March 14,
2014 closing prices, the merged company would have a combined market
capitalization of approximately US$1.8 billion(1) and:  
/T/ 
--  Material Onshore Oil Production - Pro forma current oil production of 
25,100 bbl/d (company working interest) and 2P reserve base of 135 MMbbl 
(company working interest) from majority operated assets in Chad and 
Egypt and additional non-operated interests in Yemen 
--  Near Term Production Growth - Average 2014E production target of 31,000-    34,000 bbl/d (company working interest); ongoing appraisal and 
development program 
--  Catalyst Rich Exploration Program - Campaign of 30-42 high impact 
exploration wells in Chad by 2016, targeting 70+ per cent of a total 833 
MMbbl of gross risked mean prospective resources and low risk step out 
exploration in the Egyptian Eastern Desert 
--  Strong Regional Position - Enhanced scale provides a platform for future 
organic and acquisition growth in Africa, building on core operated 
positions in Chad and Egypt, with ready access to key infrastructure and 
export markets 
--  Improved Financial Position - Combined business plan remains fully 
funded, with a pro forma cash position of US$302 million and no net debt 
as at December 31, 2013, and a growing cash flow profile  
(1) Calculated on basic shares outstanding as of March 14, 2014 including    
shares assuming full conversion of Caracal outstanding convertible       
debentures into 28.6mm shares. Exchange rates based on posted Bank of    
England Daily Spot Exchange Rates against GBP as at March 13, 2014.      
/T/ 
"This transaction will clearly benefit both companies and their
shareholders, as the enhanced scale will expedite production growth and
increase cash flow," said Gary Guidry, Caracal's President &
Chief Executive Officer. "At its core, this transaction is about greater
value creation for all shareholders of the merged company. Through the
combination of complementary asset bases, we will create a solid regional
platform for compounding reserves and production growth."  
Added Ross Clarkson, TransGlobe's President & Chief Executive Officer,
"Consistent with our onshore, operated, oil strategy, the combination will
provide shareholders with significant organic production and reserves growth,
while providing increased country diversification. Specifically, we're
pursuing additional upside of over four billion barrels of gross mean unrisked
prospective resource, aggressively targeted with a fully funded drilling
program. And as one of the largest independent oil producers in Africa, we will
be well positioned for future value-enhancing growth." 
The merged company will benefit from an experienced Board of Directors, with
Robert Hodgins as independent non-executive Chairman. Other independent board
members include Carol Bell, John Bentley, Peter Dey, Ronald Royal, and Brooke
Wade. It is proposed that two directors from TransGlobe, Ross Clarkson and
Lloyd Herrick, will join the Caracal Board.  
After completion of the transaction the combined assets and employees will
operate under the Caracal name and will be led by Caracal's CEO Gary
Guidry and a combination of Caracal's and TransGlobe's current
executive teams.  
In connection with the Arrangement, Caracal is required to seek a listing for
the merged company on the Toronto Stock Exchange ("TSX").  
Terms of the proposed transaction 
Exchange Ratio  
Pursuant to the Arrangement, each TransGlobe shareholder will receive 1.23 new
common shares of Caracal ("New Caracal Shares") in exchange for each
TransGlobe common share ("TransGlobe Share") held. After completion
of the Arrangement the merged company will have approximately 238,503,645
shares issued and outstanding prior to adjusting for conversion of
Caracal's outstanding convertible debentures. After taking into
consideration the conversion of the convertible debentures it is expected that
current Caracal shareholders would hold approximately 65.6 per cent and former
TransGlobe shareholders would hold approximately 34.4 per cent of the issued
shares of the merged company. (2) 
/T/ 
( 2)Calculated on basic shares outstanding as of March 14, 2014 including    
shares assuming full conversion of Caracal outstanding convertible       
debentures into 28.6 million shares. Exchange rates based on posted Bank 
of England Daily Spot Exchange Rates against GBP as at March 13, 2014.   
/T/ 
Treatment of TransGlobe Debentures 
Upon completion of the transaction, TransGlobe's 6.0% convertible
unsecured subordinated debentures with an aggregate principal amount of
CAD$97,750,000 (the "TransGlobe Debentures") will continue to be
obligations of TransGlobe, as a wholly-owned subsidiary of Caracal. The
conversion price of the TransGlobe Debentures will be adjusted pursuant to the
terms of the trust indenture governing the TransGlobe Debentures based on the
exchange ratio under the Arrangement. After completion of the Arrangement,
conversion rights will be into Caracal shares.  
Following closing of the transaction, in accordance with its terms, Caracal
intends to make an offer for the TransGlobe Debentures at Par plus accrued and
unpaid interest (the amount of interest will depend on the time of any
repurchase). The repurchase offer will be made within 30 days of closing of the
proposed transaction. Should a holder of the TransGlobe Debentures elect not to
accept the repurchase offer, the debentures will mature as originally set out
in their respective indentures. Holders who convert their TransGlobe Debentures
following completion of the Arrangement will receive common shares of Caracal.  
Dividends 
In light of the significant capital programs for development and exploration
for the combined company, neither Caracal nor TransGlobe will pay dividends in
the interim period prior to closing. However, the Board of the combined company
will consider dividends in the future as a part of normal course business. 
Further details of the transaction 
Caracal's CEO Mr. Guidry has recused himself from the process of
considering the Arrangement because he served as a director of TransGlobe from
October 2009 until March 11, 2014, when he resigned. Mr. Guidry owns the
following TransGlobe securities: 40,000 TransGlobe shares, CAD$100,000 in
TransGlobe convertible debentures and options to acquire 160,500 TransGlobe
shares. Mr. Guidry's TransGlobe share ownership amounts to approximately
0.05 per cent of the 74.7 million TransGlobe shares outstanding. Mr.
Guidry's ownership of Caracal shares, including beneficial ownership,
amounts to 1,674,173 shares or approximately 1.14 per cent of the 146.7 million
current basic Caracal shares outstanding. 
The Boards of Directors of Caracal (other than Mr. Guidry, who has recused
himself for the reason mentioned above) and TransGlobe have each unanimously
approved the Arrangement Agreement and have concluded that the Arrangement is
in the best interests of Caracal and TransGlobe, respectively. The Board of
Directors of Caracal has received fairness opinions from RBC Capital Markets
and Canaccord Genuity Corp. with respect to the Arrangement. The Board of
Directors of TransGlobe has received a fairness opinion from Scotiabank with
respect to the Arrangement.  
The Boards of Directors of each of Caracal (other than Mr. Guidry, who has
recused himself for the reason mentioned above) and TransGlobe intend to
unanimously recommend to their respective shareholders that they vote their
shares in favor of the Arrangement in the information circulars to be prepared
and mailed by Caracal and TransGlobe in connection with the Arrangement.  
In addition, each of the Directors and Executive Officers of Caracal and
TransGlobe have agreed to vote their shares in favor of the Arrangement. In
aggregate this represents 3,338,903 Caracal shares, or approximately 2.28 per
cent of the 146.7 million current basic Caracal shares outstanding, and
3,092,054 TransGlobe shares or approximately 4.14 per cent of the 74.7 million
current basic TransGlobe shares outstanding.  
The proposed transaction will be implemented by way of a court-approved plan of
arrangement and will require the approval of at least 66 2/3per cent of holders
of TransGlobe shares represented in person or by proxy at a special meeting of
TransGlobe shareholders (the "TransGlobe Meeting") to be called to
consider the Arrangement. If required, the approval will consist of a
"majority of the minority" of the holders of TransGlobe shares, being
a majority of the votes cast by shareholders excluding shareholders whose votes
may not be included pursuant to Canadian Multilateral Instrument 61- 101
Protection of Minority Securityholders in Special Transactions. The exclusion,
if required, would apply only to Mr. Guidry, by virtue of his role as a
director of TransGlobe from October 2009 until March 11, 2014. 
It is expected that the Arrangement will be exempt from the registration
requirements of the U.S. Securities Act of 1933, as amended, pursuant to the
court approval exemption afforded by section 3(a)(10) under that Act. The
proposed transaction is also subject to obtaining the approval of a majority of
the votes cast by the holders of Caracal shares at a special meeting of Caracal
shareholders (the "Caracal Meeting") to be called to consider the
Arrangement and the issuance of New Caracal Shares in connection with the
proposed transaction. 
The Arrangement Agreement provides that each party is subject to
non-solicitation provisions and provides that the board of directors of each
party may, under certain circumstances, terminate the agreement in favour of an
unsolicited superior proposal, subject to payment of a termination fee of
US$9.25 million to the other party and subject to a right in favour of Caracal
to match the superior proposal. In addition, each party has agreed to pay a
termination fee of US$9.25 million to the other party in certain circumstances. 
Trading, Listings And Regulatory Approvals 
Subsequent to the completion of the Arrangement, the TransGlobe shares will
cease trading and be delisted from the TSX and the NASDAQ. Under the
Arrangement, Caracal is required to apply to the TSX to list Caracal shares,
including the New Caracal Shares, on the TSX. It is a condition to the
completion of the Arrangement that such a listing shall have been approved,
subject only to routine filings. 
The Arrangement is classified as a reverse takeover for Caracal under the
Listing Rules of the United Kingdom Listing Authority ("UKLA").
Consequently, Caracal will be required to re-apply for and, on completion of
the Arrangement, satisfy the relevant requirements for listing on the premium
segment of the Official List of the UKLA.  
Advisors 
For Caracal, RBC Capital Markets is acting as financial advisor. Each of RBC
Capital Markets and Canaccord Genuity Corp. provided a fairness opinion to
Caracal's Board. FirstEnergy Capital Corp. is acting as a strategic
advisor. Stikeman Elliott LLP is the legal advisor. 
For TransGlobe, Scotiabank is acting as financial advisor and has provided a
fairness opinion to TransGlobe's Board. Blake Cassels & Graydon LLP is
the legal advisor. 
Information Circulars 
Further information regarding the proposed transaction will be contained in
information circulars that Caracal and TransGlobe will prepare, file and mail
in due course to their respective shareholders in connection with the Caracal
Meeting and TransGlobe Meeting. Prior to the closing of the transaction,
Caracal will also publish a prospectus in connection with the issue of the New
Caracal Shares and the required re-application for listing of such shares on
the Official List and to trading on the London Stock Exchange's
("LSE") main market for premium listed securities
("Prospectus").  
It is expected that the TransGlobe Meeting and the Caracal Meeting will take
place in June 2014, with closing expected to occur as soon as possible
thereafter subject to regulatory approval. All Caracal and TransGlobe
shareholders are urged to read the relevant information circular once it
becomes available, as it will contain additional important information
concerning the proposed transaction and the Arrangement. 
A copy of the Arrangement Agreement will be filed on Caracal's and
TransGlobe's SEDAR profiles and will be available for viewing at
www.sedar.com.  
Investor conference call and presentation details  
TransGlobe and Caracal will host a joint conference call and webcast to discuss
the Arrangement on March 17, 2014: 
Time: 7:00 a.m. Calgary Time (Mountain Time) (9:00 a.m. Eastern Time)  
Dial-in: 416-340-8530 or toll free at 1- 800-766-6630  
http://www.gowebcasting.com/5234 
Shortly after the conclusion of the call, a replay will be available by dialing
(905) 694-9451 or toll-free at 1-800-408-3053. The pass code is 5119337#. The
replay will expire at 23:59 p.m. (Eastern Time) on March 23, 2014. Thereafter,
a copy of the call can be accessed through a link on TransGlobe's Web site
at www.trans-globe.com and at Caracal's website at www.caracalenergy.com. 
A joint presentation has been prepared to accompany the conference call. The
presentation is also available for review on the Caracal and TransGlobe
websites.  
Exchange Rates 
For reference purposes only, the following exchange rates were prevailing on
March 13, 2014 as per the Bank of England Daily Spot Exchange Rates against GBP
(being the latest practicable date prior to publication of this announcement):  
GBP 1.00 = CAD $1.8445  
GBP 1.00 = US$1.6677  
US$1.00 = CAD$1.1060  
All amounts in this announcement expressed in the above currencies have, unless
otherwise stated, been calculated using the above exchange rates. 
About Caracal 
Caracal Energy Inc. is an international exploration and development company
focused on oil and gas exploration, development and production activities in
the Republic of Chad, Africa. In 2011, Caracal entered into three production
sharing contracts ("PSCs") with the government of the Republic of
Chad. These PSCs provide exclusive rights to explore and develop reserves and
resources over a combined area of 26,103 km2 in southern Chad. The PSCs cover
two world-class oil basins with oil discoveries, and numerous exploration
prospects. The Caracal common shares trade on the LSE under the symbol CRCL.  
About TransGlobe  
TransGlobe is a Calgary-based, growth-oriented oil and gas exploration and
development company focused on the Middle East and North Africa region with
production operations in the Arab Republic of Egypt and the Republic of Yemen.
TransGlobe's common shares trade on the TSX under the symbol TGL and on
the NASDAQ Exchange under the symbol TGA. TransGlobe's Convertible
Debentures trade on the TSX under the symbol TGL.DB. In TransGlobe's
audited financial statements for the financial year ended December 31, 2013,
TransGlobe reported gross assets of US$675.8 million and profits before tax of
US$143.9 million. 
Cautionary Statements  
This announcement contains forward-looking statements and forward-looking
information within the meaning of applicable securities laws and are based on
the expectations, estimates and projections of management of the parties as of
the date of this news release unless otherwise stated. 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 statements or information.
More particularly and without limitation, this announcement contains
forward-looking statements and information concerning: the anticipated benefits
of the Arrangement to TransGlobe and its securityholders and to Caracal and its
securityholders, including anticipated synergies; the timing and anticipated
receipt of required regulatory, court and securityholder approvals for the
transaction; the ability of TransGlobe and Caracal to satisfy the other
conditions to, and to complete, the Arrangement; the anticipated timing of the
mailing of the information circulars regarding the Arrangement, the holding of
the TransGlobe Meeting and the Caracal Meeting and the closing of the
Arrangement and the listing of Caracal's shares on the TSX or the Official
List.  
In respect of the forward-looking statements and information concerning the
anticipated benefits and completion of the proposed Arrangement, the
anticipated timing for completion of the Arrangement and the listing of
Caracal's shares on the TSX or the Official List, Caracal and TransGlobe
have provided such in reliance on certain assumptions that they believe are
reasonable at this time, including assumptions as to the time required to
prepare and mail securityholder meeting materials, including the required
information circulars and Prospectus; the ability of the parties to receive, in
a timely manner, the necessary regulatory, court, securityholder, stock
exchange and other third party approvals, including but not limited to the
receipt of applicable regulatory approvals; the ability of the parties to
satisfy, in a timely manner, the other conditions to the closing of the
Arrangement; and expectations and assumptions concerning, among other things:
customer demand for the merged company's services; commodity prices and
interest and foreign exchange rates; planned synergies, capital efficiencies
and cost-savings; applicable tax laws; future production rates; the sufficiency
of budgeted capital expenditures in carrying out planned activities; and the
availability and cost of labour and services. The anticipated dates provided
may change for a number of reasons, including unforeseen delays in preparing
meeting materials, inability to secure necessary securityholder, regulatory,
court or other third party approvals in the time assumed or the need for
additional time to satisfy the other conditions to the completion of the
Arrangement. Information relating to reserves and resources is deemed to be
forward-looking information, as it involves the implied assessment, based on
certain estimates and assumptions, that the reserves and resources described
exist in the quantities predicted or estimated, and can be profitably produced
in the future. 
Accordingly, readers should not place undue reliance on forward-looking
information which by its nature is based on current expectations regarding
future events that involve a number of assumptions, inherent risks and
uncertainties, which could cause actual results to differ materially from those
anticipated. Forward-looking information is not based on historical facts but
rather on current expectations and assumptions regarding, among other things,
the timing and scope of certain of Caracal and TransGlobe's operations and
the timing and level of production from their properties, plans for and results
of drilling activity and testing programmes, future capital and other
expenditures (including the amount, nature and sources of funding thereof),
continued political stability, and timely receipt of any necessary government
or regulatory approvals. Although the expectations and assumptions reflected in
such forward-looking information are believed to be reasonable, they may prove
to be incorrect. Forward-looking information involves significant known and
unknown risks and uncertainties. A number of factors could cause actual results
to differ materially from those anticipated by Caracal or TransGlobe including,
but not limited to, the merged company's ability to integrate efficiently
new businesses following the successful completion of the transaction; the
merged company's ability to achieve the anticipated financial and other
benefits resulting from the successful completion of the transaction, risks
associated with the oil and gas industry (e.g. operational risks in exploration
and production; inherent uncertainties in interpreting geological data; changes
in plans with respect to exploration or capital expenditures; interruptions in
operations together with any associated insurance proceedings; reductions in
production capacity, the uncertainty of estimates and projections in relation
to costs and expenses and health, safety and environmental risks), the risk of
commodity price and foreign exchange rate fluctuations, the uncertainty
associated with negotiating with foreign governments, risk associated with
international activity, including the risk of political instability, the risk
of adverse economic market conditions, the actual results of marketing
activities and the risk of regulatory changes. Forward-looking information
cannot be relied upon as a guide to future performance. Well-test results are
not necessarily indicative of long-term performance or ultimate recovery. 
Risks and uncertainties inherent in the nature of the Arrangement include the
failure of TransGlobe or Caracal to obtain necessary security holder,
regulatory, court and other third party approvals, or to otherwise satisfy the
conditions to the Arrangement, in a timely manner, or at all. Failure to so
obtain such approvals, or the failure of TransGlobe or Caracal to otherwise
satisfy the conditions to the Arrangement, may result in the Arrangement not
being completed on the proposed terms, or at all. In addition, the failure of
one party to comply with the terms of the Arrangement Agreement may result in
that party being required to pay a non-completion or other fee to the other
party, the result of which could have a material adverse effect on the paying
party's financial position and results of operations and its ability to
fund growth prospects and current operations.  
Readers are cautioned that the foregoing list of factors is not exhaustive.
Additional information on other factors that could affect the operations or
financial results of the parties, and the combined company, are included in
reports on file with applicable securities regulatory authorities, including
but not limited to; TransGlobe's Annual Information Form for the year
ended December 31, 2013 which may be accessed on TransGlobe's SEDAR
profile, and Caracal's Final Short Form Prospectus dated October 24, 2013
on Caracal's SEDAR profile at www.sedar.com.  
The forward-looking statements and information contained in this announcement
are made as of the date hereof and the parties undertake no obligation to
update, review or revise such forward-looking information contained in this
announcement to reflect any change in its expectations or any change in events,
conditions or circumstances on which such information is based unless required
to do so by applicable law.  
Reserves Disclosure 
Terms related to reserves and resources classifications referred to in this
announcement are based on definitions and guidelines in the Canadian Oil and
Gas Evaluation Handbook ("COGE") which are as follows.  
"Proved reserves" are those reserves that can be estimated with a
high degree of certainty to be recoverable. It is likely that the actual
remaining quantities recovered will exceed the estimated proved reserves.  
"Probable reserves" are those additional reserves that are less
certain to be recovered than proved reserves. It is equally likely that the
actual remaining quantities recovered will be greater or less than the sum of
the estimated proved plus probable reserves.  
The qualitative certainty levels referred to in the definitions above are
applicable to individual reserves entities (which refers to the lowest level at
which reserves calculations are performed) and to reported reserves (which
refers to the highest-level sum of individual entity estimates for which
reserves estimates are presented). Reported reserves should target the
following levels of certainty under a specific set of economic conditions:  
/T/ 
--  at least a 90 percent probability that the quantities actually recovered 
will equal or exceed the estimated proved reserves. This category of 
reserves can also be denoted as 1P;  
--  at least a 50 percent probability that the quantities actually recovered 
will equal or exceed the sum of the estimated proved plus probable 
reserves. This category of reserves can also be denoted as 2P; and  
--  at least a 10 percent probability that the quantities actually recovered 
will equal or exceed the sum of the estimated proved plus probable plus 
possible reserves. This category of reserves can also be denoted as 3P.  
/T/ 
Additional clarification of certainty levels associated with reserves estimates
and the effect of aggregation is provided in the COGE Handbook. The estimates
of reserves and future net revenue for individual properties may not reflect
the same confidence level as estimates of reserves and future net revenue for
all properties, due to the effects of aggregation.  
"Prospective resources" are those quantities of petroleum estimated,
as of a given date, to be potentially recoverable from undiscovered
accumulations by application of future development projects. Prospective
resources have both an associated chance of discovery (geological chance of
success) and a chance of development (economic, regulatory, market, facility,
corporate commitment or political risks). The chance of commerciality is the
product of these two risk components. The prospective resource estimates
referred to herein have not been risked for either the chance of discovery or
the chance of development.  
There is no certainty that any portion of the prospective resources will be
discovered. If a discovery is made, there is no certainty that it will be
developed or, if it is developed, there is no certainty as to the timing of
such development or that it will be commercially viable to produce any portion
of the prospective resources.  
Figures related to Caracal's reserves and resources are derived from a
report prepared by McDaniel & Associates Consultants Ltd.
("McDaniel"), an independent qualified reserves evaluator, evaluating
the prospective resources of Caracal effective as of June 30, 2013 (the
"McDaniel Resource Report") and a report prepared by McDaniel
evaluating the reserves of Caracal effective as of December 31, 2013 (the
"McDaniel Reserve Report"). A description of the uncertainties and
significant positive and negative factors associated with the estimates of
resources in respect of the June 30, 2013 McDaniel Report is contained in
Caracal's July 25, 2013 material change report. Copies of these documents
are available on the internet under Caracal's profile at www.sedar.com.  
Figures related to TransGlobe's reserves and resources are derived from a
report prepared by DeGolyer & MacNaughton Canada Limited
("DeGolyer"), an independent qualified reserves evaluator, evaluating
the prospective reserves and resources of TransGlobe effective as of December
31, 2013 (the "DeGolyer Report") with a report date of January 15,
2014. A description of the uncertainties and significant positive and negative
factors associated with the estimates of resources in respect of the DeGolyer
Report is contained in TransGlobe's Annual Information Form dated March
13, 2014 for the year ended December 31, 2013. Copies of these documents are
available on the internet under TransGlobe's profile at www.sedar.com. 
-30-
FOR FURTHER INFORMATION PLEASE CONTACT: 
Caracal Energy Inc.
Gary Guidry, President and Chief Executive Officer
Trevor Peters, Chief Financial Officer
+1 403-724-7200
or
For North American Media Inquiries
Longview Communications
Alan Bayless
+1 604-694-6035
or
Longview Communications
Joel Shaffer
+1 416-649-8006
or
TransGlobe
Steve Langmaid
Investor Relations
(403) 444-4787
investor.relations@trans-globe.com 
INDUSTRY:  Energy and Utilities - Oil and Gas  
SUBJECT:  PRT 
-0-
-0- Mar/16/2014 00:40 GMT
 
 
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