Longreach & APIC Combination Agreement

Date : 10/02/2012 @ 2:00AM
Source : Marketwired

Longreach & APIC Combination Agreement

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

                       COMBINATION AGREEMENT

                       FOR IMMEDIATE RELEASE

Longreach Oil and Gas Limited (TSXV: LOI) ("Longreach") and APIC
Petroleum Corporation (TSXV: API) ("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

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

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

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 i

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

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.


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

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)


                    This information is provided by RNS
          The company news service from the London Stock Exchange


Contacts: RNS Customer Services 0044-207797-4400 Email Contact http://www.rns.com

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