Sea Dragon Energy Inc. provides additional information in connection with its strategic business combination, including a Filing Statement for review by shareholders

LONDON, Sept, 22, 2015 /CNW/ - Sea Dragon Energy Inc. ("Sea Dragon" or the "Company") (TSX VENTURE: SDX) is pleased to provide this update regarding its proposed strategic business combination with Madison PetroGas Ltd. ("Madison"), a private, arm's length, Canadian company incorporated under the Business Corporations Act (Alberta) ("ABCA") (Sea Dragon and Madison, together the "Parties").

As previously announced in a press release dated August 19, 2015, the Parties entered into an arrangement agreement dated August 18, 2015 (the "Arrangement Agreement") pursuant to which Sea Dragon will, subject to certain conditions, acquire all of the issued and outstanding shares of Madison ("Madison Shares") by way of a statutory plan of arrangement under the ABCA (the "Transaction").

Expected Benefits of the Transaction

The Arrangement is expected to enhance Sea Dragon's immediate liquidity, near term cost of capital and future access to capital in order to fund its current field development and exploration commitments, and provide a better platform for its future acquisition opportunities.

Sea Dragon expects that the combined company, after completion of the Arrangement, will have the following pro forma characteristics and will offer the following benefits for shareholders of both Madison and Sea Dragon:

• Complementary portfolios with a continued focus on Egyptian development projects;
• Increased scale that is expected to improve liquidity in the capital markets;
• Increased production and operational cash flow;
• Reduced general and administrative expenses per barrel of production;
• Working capital of approximately $19.1 million including $13.0 million of cash (before transaction costs);
• Funded and transformational optionality in the event of exploration drilling success in Egypt and Cameroon; and
• The ability to leverage technical, commercial and operational skills from both Madison and Sea Dragon, achieving cost savings and operating efficiencies.

Terms of the Proposed Transaction

Under the terms of the Arrangement Agreement, Sea Dragon will acquire all of the issued and outstanding Madison Shares on the basis of an exchange ratio of 16.7 Sea Dragon common shares ("Sea Dragon Shares") for each Madison Share (on a pre-Sea Dragon Consolidation (as defined below) basis). Prior to the closing of the Transaction, Sea Dragon will affect a share consolidation (the "Sea Dragon Consolidation") on the basis of one (1) post-consolidation Sea Dragon Share for thirty-five (35) pre-consolidation Sea Dragon Shares. Upon closing the Transaction, it is anticipated that the existing holders of Madison Shares (the "Madison Shareholders") will hold approximately 71% of the combined entity, to be renamed "SDX Energy Inc.", with the holders of Sea Dragon Shares (the "Sea Dragon Shareholders") holding approximately 29% of the combined entity.

Sea Dragon and Madison agreed that the exchange ratio reflect their respective contribution to net asset value, determined based on the independently certified 2P reserves and current working capital balances of both parties. This is a transparent and attractive option to both shareholder groups.  On that basis, Sea Dragon was valued at approximately US$28 million (or C$0.094 per Sea Dragon Share) and Madison at approximately US$70 million (or C$1.60 per Madison Share).

The consideration paid pursuant to the Transaction reflects the value of 26.9 million shares to be issued post consolidation at  a deemed price of C$0.70 per share, for aggregate deemed consideration of approximately US$15 million (C$19 million).

The Transaction is subject to a number of conditions including, among other things:

• approval of the Transaction from at least two-thirds of the votes cast by the Madison Shareholders at the special meeting of shareholders scheduled to be held on September 28, 2015 (the "Madison Meeting");
• approval of the Sea Dragon Consolidation from at least two-thirds of the votes cast by the Sea Dragon Shareholders at the annual and special meeting of shareholders scheduled to be held on September 28, 2015 (the "Sea Dragon Meeting");
• approval from the TSXV of the Transaction and the Sea Dragon Consolidation; and
• other customary closing conditions, including approval from the Court of Queen's Bench of Alberta.

The complete details of the Transaction are set out in the Arrangement Agreement, which has been filed by Sea Dragon on SEDAR and is available for viewing under its profile at www.sedar.com.

The closing of the Transaction is expected to occur in early October.

Sea Dragon Meeting

At the Sea Dragon Meeting on September 28, 2015, in addition to annual matters to be voted upon, the Sea Dragon Shareholders will be asked to consider the following special business items relating to the Transaction:

• an amendment to the articles of the Company to effect the Sea Dragon Consolidation; and
• an amendment to the articles of the Company to effect a name change of the combined entity to "SDX Energy Inc.".

Details of the Sea Dragon Meeting are outlined in the Sea Dragon Management Information Circular dated August 24, 2015, which has been delivered to the Sea Dragon Shareholders and is also available for viewing under the Company's profile on SEDAR (www.sedar.com).

Filing Statement

A filing statement (the "Filing Statement") dated September 22, 2015 regarding the Transaction, including detailed information about Madison and the issuer resulting from the combination of the Parties, has been filed and is available for viewing under the Company's profile on SEDAR (www.sedar.com). Sea Dragon encourages all Sea Dragon Shareholders to review the Filing Statement prior to voting at the Sea Dragon Meeting on the special business relating to the Transaction.

About Sea Dragon

Sea Dragon is an international exploration and development oil company, headquartered in London, England, UK, with a focus on North Africa and the Middle East. Activities are currently concentrated in Egypt, with interest in three concessions: NW Gemsa, a producing asset in the Eastern desert; South Ramadan, a development asset in the Gulf of Suez; and South Disouq, an exploration asset in the Nile Delta.

Advisory

Forward-Looking Statements

Certain statements contained in this press release constitute "forward-looking statements" as such term is used in applicable Canadian securities laws. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact should be viewed as forward-looking statements. In particular, statements concerning the Parties, the details of the Transaction, the Sea Dragon Meeting and the Madison Meeting, and items to be considered thereat should be viewed as forward-looking statements.

The forward-looking statements contained in this document are based on certain assumptions and although management considers these assumptions to be reasonable based on information currently available to them, undue reliance should not be placed on the forward-looking statements because Sea Dragon can give no assurances that they may prove to be correct. This includes, but is not limited to, assumptions related to the Sea Dragon Meeting and the Madison Meeting, the ability of either Party to receive, in a timely manner, the necessary regulatory, court, securityholder, stock exchange and other third party approvals, the ability of the Parties to satisfy, in a timely manner, the other conditions to the closing of the Transaction and expectations and assumptions concerning, among other things: 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 inability to secure necessary securityholder, regulatory, court, stock exchange 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 Transaction.

By their very nature, forward-looking statements are subject to certain risks and uncertainties (both general and specific) that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. Such risks and other factors include, but are not limited to the timing of the Transaction,  requisite approvals of Sea Dragon Shareholders, Madison Shareholders and the TSXV, political, social and other risks inherent in daily operations for each of the Parties, risks associated with the industries in which the Parties operate in general, such as: operational risks; delays or changes in plans with respect to growth projects or capital expenditures; costs and expenses; health, safety and environmental risks; commodity price, interest rate and exchange rate fluctuations; environmental risks; competition; failure to realize the anticipated benefits of the Transaction and to successfully integrate the Parties; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws and environmental regulations. There is a risk that either of the Parties fail to satisfy the conditions to the Transaction which may result in the Transaction not being completed on the proposed terms, or at all. Readers are cautioned that the foregoing list of risk factors is not exhaustive and are advised to reference Sea Dragon's Annual Information Form for the year ended December 31, 2014 for a description of additional risks and uncertainties associated with Sea Dragon's business, including its exploration activities, which can be found on Sea Dragon's SEDAR profile at www.sedar.com.

The forward-looking statements contained in this press release are made as of the date hereof and the Parties do not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

THIS PRESS RELEASE SHOULD NOT BE CONSIDERED A COMPREHENSIVE SUMMARY OF THE TRANSACTION. COMPLETION OF THE TRANSACTION IS SUBJECT TO A NUMBER OF CONDITIONS INCLUDING, BUT NOT LIMITED TO, SHAREHOLDER AND TSXV APPROVAL. THERE CAN BE NO ASSURANCE THAT THE TRANSACTION WILL BE COMPLETED AS PROPOSED OR AT ALL.

INVESTORS ARE CAUTIONED THAT, EXCEPT AS DISCLOSED IN THE MANAGEMENT INFORMATION CIRCULAR AND FILING STATEMENT FILED BY SEA DRAGON, ANY INFORMATION RELEASED OR RECEIVED WITH RESPECT TO THE TRANSACTION MAY NOT BE ACCURATE OR COMPLETE AND SHOULD NOT BE RELIED UPON.

NEITHER THE TSXV NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSXV) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE RELEASE.

SOURCE Sea Dragon Energy Inc.

Sea Dragon Energy Inc. Paul Welch, President and Chief Executive Officer, Tel: [phone]; Olivier Serra, Chief Financial Officer, Tel: [phone]