News Column

Exall Energy Corporation Announces: New Banking Arangements and 18% Working Interest Disposition

May 15, 2014

CALGARY, May 15, 2014 /CNW Telbec/ - Exall Energy Corporation ("Exall" or the "Company") (TSX:EE and TSX:EE.DB) is pleased to announce its new banking arrangements subject to the completion of a disposition of 18% of Exall's working interest in the Marten Mountain, Alberta area.  Exall's filings can all be found at www.exall.com or www.sedar.com.

Highlights include:

• A stepped down Revolving Production Loan Facility of $21.0 million, as of May 30, 2014, with a Canadian financial institution at the financial institution's prime lending rate plus 220 basis points. • A $1.0 million dollar Term Loan Facility as of May 30, 2014 with a Canadian financial institution at the financial institution's prime lending rate plus 300 basis points, with payments of $83,333.33 monthly commencing June 30, 2014. • The disposition of 18% of Exall's working interest in certain lands for $14.0 million, to fund the reductions to the Revolving Production Loan Facility to be completed on May 30, 2014: • Representing an approximate cost of $73,684.21 per flowing barrel of oil equivalence ("boe"). • Representing an approximate cost of $36.25 per December 31, 2014 Total Proven boe. • Representing an approximate cost of $21.77 per December 31, 2014 Total Proven + Probable boe.

Debt Facility

Effective May 14, 2014 Exall signed an extension of its current $36.0 million loan facility to May 30, 2014 and an Indicative Term Sheet with its current Canadian debt facility provider ("Lender") for facilities through to April 30, 2015. Under the terms of Indicative Term Sheet Exall, as of May 30, 2014, will have its current Revolving Production Loan Facility reduced from $36.0 million to a Production Loan Facility of $21.0 million and a Term Loan Facility of $1.0 million.

The Revolving Production Loan Facility will be subject to an interest rate of the then Lender's Prime Rate plus 220 basis points. The Term Loan Facility will be subject to an interest rate of the then Lender's Prime Rate plus 300 basis points, and will be subject to principle payments of $83,333.33 per month commencing June 30, 2014.

The Indicative Term Sheet is subject to the confirmation of the closing on May 30, 2014 of the Purchase and Sale Agreement ("PSA") Exall entered into with a private company ("Purchaser") for proceeds of $14.0 million. The closing net proceeds are to be applied to the Lender's debt, thus reducing the credit facilities held to a Production Loan Facility of $21.0 million and a Term Loan Facility of $1.0 million on May 30, 2014.

Exall's current debt as at March 31, 2014 was approximately $59.0 million which included a conforming $26.0 million Revolving Production Loan Facility and a non-conforming $10.0 million Revolving Production Loan Facility held with the Company's Lender that bore interest at the Lender's base prime rate plus 3.00 percent. The balance of the debt is a $23.0 million Convertible Debenture with a maturity date of March 31, 2017 that pays an annual interest rate of 7.75%.

Marten Mountain "Gilwood" Asset Disposition

Effective May 9, 2014 Exall signed the Purchase and Sale Agreement ("PSA") with the Purchaser for the disposition of 18% of Exall's working interest in and to the Petroleum and Natural Gas Rights, Tangibles and Miscellaneous Interests in certain lands held by Exall in the Marten Mountain area of Alberta. Completion of the transaction under the PSA is a condition of the new banking arrangements.

The gross Purchase Price for 18% of Exall's working interest is $14.0 million and will be paid at closing occurring on May 30, 2014. The total Purchase Price of $14.0 million translates to an approximate cost of $73,684.21 per flowing boe, $36.25 per total proved boe reserve and $21.77 per total proved plus probable boe reserve based on the Exall December 31, 2013 third party engineering report.

The PSA contains a provision for an Adjustment to the Purchase Price should Exall not meet certain annual production targets. Each of Fiscal 2014, 2015 and 2016 will see a reduction of $10,000 per flowing boe below the target rates (190 boe/d, 225 boe/d and 250 boe/d respectively) to a maximum Purchase Price adjustment of $1.0 million.

About Exall

Exall is a junior oil and gas company active in its business of oil and gas exploration, development and production from its properties in Alberta. Exall Energy is currently developing the new Mitsue area "Marten Mountain" discovery in north-central Alberta.

Exall Energy currently has 66,634,854 common shares outstanding. The Company's common shares are listed on the Toronto Stock Exchange under the trading symbol EE. The Company's convertible debentures are listed on the Toronto Stock Exchange under the trading symbol EE.DB.

Reader Advisory

This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including those relating to results of operations and financial condition, capital spending, financing sources, commodity prices and costs of production. By their nature, forward-looking statements are subject to numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, actual results may differ materially from those predicted. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such factors include fluctuating commodity prices, capital spending and costs of production, and other factors described in the Company's most recent Annual Information Form under the heading "Risk Factors" which has been filed electronically by means of the System for Electronic Document Analysis and Retrieval ("SEDAR") located at www.sedar.com. Such forward-looking statements are made as at the date of this news release, and the Company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.

For the purposes of calculating unit costs, natural gas has been converted to a barrel of oil equivalent (boe) using 6,000 cubic feet equal to one barrel (6:1), unless otherwise stated. The boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method and does not represent a value equivalency; therefore boe may be misleading if used in isolation. This conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.

SOURCE EXALL ENERGY CORPORATION


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