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 
/NOT FOR DISSEMINATION OUTSIDE OF CANADA AND THE UNITED STATES/ 
-Caracal and TransGlobe joint investor conference call at 7:00 a.m. Calgary 
Time, March 17, 2014-
CALGARY, March 15, 2014 /CNW/ - 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: 


        --  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 businessplan 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

"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)

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(2/3 )per 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):

£1.00 = CAD $1.8445
£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 km(2) 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:
        --  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.

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.

_______________________
(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.
(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.



SOURCE  Caracal Energy Inc. 
For further information about Caracal: 
Caracal Energy Inc. Gary Guidry, President and Chief Executive Officer Trevor 
Peters, Chief Financial Officer +1 403-724-7200  For North American Media 
Inquiries Longview Communications Alan Bayless Joel Shaffer +1 604-694-6035 +1 
416-649-8006 
For further information about TransGlobe: 
Steve Langmaid Investor Relations (403) 444-4787 
investor.relations@trans-globe.com www.trans-globe.com 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/March2014/15/c5384.html 
CO: Caracal Energy Inc.
ST: Alberta
NI: OIL MNA CONF  
-0- Mar/16/2014 00:03 GMT
 
 
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