Octant Energy Corp. Announces Up to $65,000,000 Subscription Receipt Financing and Results of Indepent Resource Evaluation

Octant Energy Corp. Announces Up to $65,000,000 Subscription Receipt Financing and Results of Indepent Resource Evaluation

CALGARY -Octant Energy Corp. is pleased to announce that it has engaged a syndicate of agents, co-lead by RBC Capital Markets and Canaccord Genuity Corp. and including FirstEnergy Capital Corp. (the "Agents") to raise, on a reasonable commercial efforts basis, up to $65,000,000 (the "Offering") through the issuance of subscription receipts of the Corporation (each a "Subscription Receipt").

The proceeds of the Offering will be used to fund a capital program focused on exploration and development in Madagascar, Uganda, the Democratic Republic of Congo ("DRC") and Somaliland as well as for general corporate purposes. The Corporation has entered into: (i) an option agreement ("Madagascar Option") to farm into the Block 2102 production sharing contract (the "Madagascar PSC") in Madagascar; and (ii) a letter of intent ("LOI") to farm into Uganda Block EA4B, DRC Block V and Somaliland Berbera Block (Block 35), with Ophir Energy Plc ("Ophir") (LSE:OPHR).

The Corporation is also pleased to report the results of independent evaluations of oil resources prepared by DeGolyer and MacNaughton Canada Limited ("DeGolyer") on the blocks contemplated in the Madagascar Option and the LOI (the "DeGolyer Reports"). The DeGolyer Reports have an effective date of December 31, 2011, and were prepared in accordance with NI 51-101 (as defined below). According to the DeGolyer Reports, the best estimate gross prospective resources associated with the Madagascar Option and LOI blocks is 796 million bbl1.

Madagascar Option and LOI

Pursuant to the exercise of the Madagascar Option, the Corporation will receive a 50% operating interest in Block 2102, a 12,290 km2 onshore block in Madagascar. The Corporation thereby agrees to fund 100% of the drilling costs for the first two exploration wells drilled on Block 2102. The first exploration well is anticipated to commence drilling in July 2012 and each well is expected to cost approximately $20 million. Accordingly, $40 million of the net proceeds of the Offering will be allocated to exercising the Madagascar Option and funding Octant's commitments in Block 2102.

In addition, the LOI provides that the Corporation pay: (i) 46.75% of certain geological exploration costs for a 26.75%, non-operated, interest in Block V, a 7,447 km2 onshore block in the DRC; (ii) 100% of the certain geological exploration and drilling costs for an 80%, operated interest in Block 4B, a 486 km2 block in Uganda; and (iii) 75% of certain geological exploration costs for a 55%, operated interest in Block 35, a 16,270 km2 onshore exploration block in Somaliland (Block 35).

The Offering

Each Subscription Receipt will entitle the holder to receive, without the payment of any additional consideration or further action on the part of the holder thereof, one common share ("Common Share") in the capital of the Corporation upon the Escrow Release Conditions being satisfied prior to the Qualification Deadline (each as defined below).

If the Escrow Release Conditions are not satisfied on or before 5:00 p.m. on May 4, 2012, or the Madagascar Option between the Corporation and Ophir to enter into a farm-in agreement (the "Madagascar Farm-in Agreement") on Marovoay Block 2102, Majunga Basin, Madagascar (the "Madagascar Farm-in") is terminated at any earlier time or if the Corporation has advised the Agents or announced to the public that it does not intend to proceed with the Madagascar Farm-in (in any case, the "Termination Time"), holders of Subscription Receipts will receive the full purchase price of the Subscription Receipt, together with their pro rata portion of interest earned thereon between the Closing Date (as defined below) and the Termination Time.

The Corporation will use its reasonable commercial efforts to file a final long form prospectus qualifying the Common Shares issuable upon exercise of the Subscription Receipts (the "Prospectus") in each of the Canadian jurisdictions in which the Subscription Receipts are sold and obtain a receipt therefor on or before the day that is 45 days after the Closing Date (the "Qualification Deadline" and the day upon which such receipt is issued is the "Qualification Date"). If a receipt for the Prospectus is not obtained on or before the Qualification Deadline, the Subscription Receipts shall thereafter be exercisable, for no additional consideration or further action on the part of the holder thereof, into 1.1 Common Shares on the earlier of: (i) four months plus a day after the closing date of the Offering scheduled for April 5, 2012 (the "Closing Date"); and (ii) the Qualification Date. Notwithstanding the foregoing, the Corporation will continue to use its reasonable commercial efforts to obtain a receipt for the Prospectus after the Qualification Deadline. In any case, the Subscription Receipts shall be deemed to be exercised and exchanged for Common Shares on the date that is four months and one day following the Closing Date (subject to satisfaction of the Escrow Release Conditions).

The gross proceeds from the sale of the Subscription Receipts (the "Escrowed Proceeds") will be delivered to and held by a licensed Canadian trust company or other escrow agent (the "Escrow Agent") mutually acceptable to the Corporation and the Co-Lead Agents in an interest bearing account. The remainder of the fee payable to the Agents not payable on the Closing Date, plus accrued interest thereon, shall be released to the Agents out of the Escrowed Proceeds and the balance of the Escrowed Proceeds, plus accrued interest thereon, shall be released to the Corporation upon satisfaction of certain conditions, including: (i) the exercise of the Madagascar Option by Octant in accordance with its terms; and (ii) transfer of a 50% participating interest to Octant in the Madagascar PSC and the related joint operating agreement in accordance with their respective terms (collectively, the "Escrow Release Conditions").


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