Octant Energy Corp. Announces Acquisition Update, Debenture Financing, Board Changes and Voluntary Delisting from the TSX Venture Exchange

Octant Energy Corp. is pleased to provide the following updates.

In October 2015, the Corporation announced that it entered into three agreements with subsidiaries of Afren plc to acquire assets in the Republic of Kenya and the United Republic of Tanzania (the "Proposed Transactions"). The assets include Block L17/L18 and Block 1 in Kenya and Tanga Block in Tanzania. The Proposed Transactions are subject customary approvals from the respective governments of Kenya and Tanzania.

The Corporation is pleased to report that progress is being made in connection with the satisfaction of the conditions for completion of the Proposed Transactions. The agreements to consummate the Proposed Transactions have a long stop date of April 30, 2017.

Block L17/L18 area is located in the Lamu coastal basin, in southern on and offshore Kenya. The individual blocks L17 and L18 cover an area of approximately 1,275 km 2 and 3,630 km 2 , respectively, and are situated both onshore and in water depths varying from a few meters along the shoreline up to approximately 500 m. Afren has a 100% interest in Block L17/18.

Block 1 is located on the western margin of the Mandera-Lugh basin and is comprised of an area of 22,250 km 2 . Afren's working interest is 80% in Block 1.

The Tanga Block is located offshore Tanzania and comprises an area of 1,935 km 2 . Afren has a 74% interest in the Tanga Block.

The Corporation has entered into a term sheet with Rosseau Asset Management ("RAM" or "Rosseau") to proceed with a financing (the "Financing") of up to USD$10,000,000 through the issuance of secured convertible debentures.

The indebtedness under the Financing will bear interest at a rate of 8% per annum, payable annually in arrears on the anniversary date of the initial close through the issuance of Common Shares and will have a maturity date of four (4) years after the closing of the first tranche.

The Financing is anticipated to be comprised of three tranches. The first tranche will be for USD$1,000,000 and will be advanced upon certain conditions being satisfied in connection with the establishment of security for the Financing (including subsidiary guarantees and general security agreements) and board changes (as further discussed below). The proceeds from the first tranche of the Financing will be used by Octant to complete the acquisition of the Tanga Block.

The remaining two tranches are each in the amount of USD$4,500,000 and will be advanced to Octant to complete the acquisition of Kenya Block L17/L18 and Kenya Block 1. There is no assurance that the remaining two tranches of the Financing or that the Proposed Transactions will be completed.

Mr. Rick Schmitt, CEO & President of the Corporation, commented, "The position taken by Rosseau to support the efforts of Octant in its acquisitions speaks volumes about the quality of these assets. I look forward to moving these assets forward expeditiously in a meaningful way and positively enhancing the value for all interested parties including the people of Tanzania and Kenya."

Concurrently with the closing of the first tranche, the Corporation has executed an Investor Rights Agreement with RAM.

Pursuant to the Investor Rights Agreement, the Corporation will include two nominees appointed by RAM, at the discretion of RAM (the "RAM Nominees"), on management's proposed slate of directors at each meeting of shareholders of the Corporation at which directors are to be elected. Furthermore, at any time at which the board of directors of the Corporation does not include the RAM Nominees, the Corporation shall cause the RAM Nominees (or any replacement thereof, at the sole discretion of RAM) to be appointed to the board of directors of the Corporation for a term expiring following the close of the next general meeting of shareholders of the Corporation.

The Investor Rights Agreement also provides that, for as long as RAM or its affiliates continue to hold more than 10% of the issued and outstanding Common Shares, RAM has the right to request that the Corporation diligently pursue a listing of the Common Shares on a stock exchange in a jurisdiction that RAM considers acceptable.

In addition, the Investor Rights Agreement grants market standard registration rights to RAM so long as RAM holds more than 20% of the Common Shares.

In connection with the Financing and the closing of the first tranche of the Financing, two new nominees of RAM will join the board of directors of the Corporation as independent members. Mr. Murray Atkins and Mr. Scott Fleurie have tendered their resignation from the Board to be effective concurrently with the closing of the first tranche of the Financing.

The Board of Directors would like to thank both of the departing directors for their contributions to the Corporation over the past years.

The new Board members are Mr. Trevor Peters of Calgary, Alberta and Mr. Wishart Robson of Nanoose Bay, British Columbia.

Mr. Peters is President and CEO of Torenco Energy Inc., a company focused on business development in upstream oil and gas. Prior thereto, Mr. Peters was Chief Financial Officer of Caracal Energy Inc., a LSE listed company with operations in southern Chad. Prior to Caracal, Mr. Peters was a co-founder and Vice President of Business Development at Orion Oil & Gas Corporation, a TSX listed company with operations in Alberta, Canada. Previously, Mr. Peters was a co-founder and Vice President of Business Development at Waseca Energy Inc., a private heavy oil company based in Lloydminster, Alberta, Canada. Mr. Peters has a Bachelor of Mathematics (Honours) from the University of Waterloo.

Mr. Robson retired from Nexen in 2014. His working career spanned 45 years the last 17 years supporting Nexen's international operations and special assignments from the Executive offices. Prior to that, Mr. Wishart Robson spent two years with Halliburton in Nigeria, 15 years with Petro-Canada in the Frontier and International division.

Mr. Robson has worked in more than 60 countries on six continents, primarily on upstream exploration and development projects where he focused on business development, government relations, regulatory approvals and operational support.

Mr. Robson completed the Institute of Corporate Directors course at the University of Calgary and has been a frequent presenter and commentator on subjects at the intersection of environment, energy and the economy.

In order to complete the Proposed Transactions and the Financing in a timely manner, the Corporation has applied for voluntary delisting of the Common Shares from the TSX Venture Exchange ("TSX-V").

The Board of Directors of Octant made the decision to voluntarily delist from the TSX-V based on the expected review period by the TSX-V for the Proposed Transactions and the Financing and the anticipated timing for the required completion of the Proposed Transactions and Financing. The Corporation received written consent from holders of 53% of the Common Shares in support of the delisting.

In connection with the delisting, the TSX-V has issued a bulletin for the voluntary delisting effective at the close of business Wednesday, March 8, 2017.

The Corporation will continue to be a reporting issuer under Canadian securities laws and thus remain subject to Canadian continuous disclosure obligations.

Upon completion of the first tranche of the Financing, RAM and its affiliates will have acquired securities convertible into 13,333,333 Common Shares, resulting in RAM and its affiliates' percentage shareholdings of Octant being approximately 16.8% on an as-converted basis (based on Octant's 65,577,481 Common Shares currently outstanding). RAM's participation in the first tranche of the Financing was completed for investment purposes, and RAM has advised that it holds a long-term view of the investment of RAM and its affiliates in Octant and may acquire additional securities either on the open market or through the Financing or private acquisitions and that it may sell the securities they hold either on the open market or through private dispositions in the future depending on market conditions, reformulation of plans and/or other relevant factors, in each case in accordance with applicable securities laws.

A copy of the early warning report relating to RAM's participation in the first tranche of the Financing will be available under Octant's profile on SEDAR.


Source: Octant Energy Corp.
Date: Mar 9, 2017