Sintana Energy Inc. Completes ColCan Business Combination And $11 Million Bought Financing Deal

TORONTO, May 18, 2012 /CNW/ - Toronto Sintana Energy Inc. (TSX-V: SNN) ("Sintana" or the "Company") announces that it has completed its previously announced business combination (the "Business Combination") with ColCan Energy Corp. ("ColCan"), including receipt of $11 Million in additional financing.

The principal purpose of the Business Combination is to combine interests in oil and natural gas blocks held by Sintana with those held or in the process of being acquired by ColCan in Colombia.

ColCan contributed its interest in VMM 37 by virtue of its ownership of Patriot Energy Sucursal Colombia, the owner on record with the ANH, and its private participation investments in three other blocks in Colombia's Middle Magdalena basin, the VMM-4, VMM-15 and VMM-37 and one located in the Llanos basin, the LLA-18.

Prior to the closing of the transaction, Sintana had made private participation investments in three blocks in Colombia's Upper Magdalena basin, the Talora, COR-11 and COR-39 and one in Peru's Sechura basin, the Bayovar XXVII.

Sintana's Colombia Growth Strategy

Making additional investments in Colombia is consistent with Sintana's growth strategy which is focused on acquiring interests in blocks that: (1) are located in proven oil-prone basins; (2) have multi-zone prospects that have previously been overlooked or undervalued for specific technical reasons; (3) are in close proximity to infrastructure or a local market; and (4) where possible, have both conventional and unconventional liquid hydrocarbon potential.

The three additional VMM blocks provide Sintana with a significant strategic position in the Middle Magdalena play and expose the Company to both conventional and unconventional resource potential. Sintana's investment in LLA-18 marks the Company's entry into the Llanos, Colombia's most prolific oil and gas producing basin.

As a result of the Business Combination, the total gross acreage in Colombia that Sintana has invested in has more than doubled, with gross acreage holdings increasing from 331,000 acres to nearly 700,000 acres. Total gross acreage controlled by Sintana, including in the Bayovar Block in Peru, is now approximately 875,000 acres. Participation interests for the eight blocks owned by the Company range from 25% to 100%.

In addition to Sintana's Upper Magdalena basin exploration strategy, the business combination will further advance Sintana's strategic goal of exposure in the Middle Magdalena, the oldest producing basin in Colombia, dating back to the 1918 discovery of the giant La Cira-Infantas field complex (900 million barrels). Historically, only the Tertiary section (conventional reservoirs) has been systematically explored. Approximately two billion barrels of oil have been produced in the basin over the last century. Sintana sees substantial remaining conventional resource potential in the Tertiary plays in its VMM blocks.

Unconventional Resources

Two of the ColCan blocks, VMM-37 (100%) and VMM-4 (25%), are located in the fairway of the most important industry development in Colombia with a growing recognition of what appears to be significant hydrocarbon potential in the unconventional resource play in this area of the Magdalena basin.

The La Luna formation, which is a primary target in the Middle Magdalena is considered one of the most productive source rocks in the world. It is also the primary source rock in Venezuela's Maracaibo basin, which is estimated to contain over 250 billion barrels of recoverable oil.

In the last year, the Middle Magdalena unconventional play type has received considerable attention from world-class, international resource play operators. In early April, Canacol Energy Ltd. and ExxonMobil Exploration Colombia Limited announced a farmout deal on VMM-2 which is adjacent to Sintana's VMM-4 block.

ExxonMobil will carry the cost of drilling and testing of up to three wells with conventional and unconventional targets in the La Luna and Rosablanca formations, both proven oil source rocks in the area. The reported potential investment by ExxonMobil on the block is approximately US$ 50 million.

Shell is currently preparing to initiate an exploration program on VMM-3 which is adjacent to the VMM-2 and VMM-4. Additionally, Ecopetrol is targeting significant production levels from the Middle Magdalena unconventional shale fairway by 2015.

VMM-4 (25% carried interest) and VMM-37 (100% interest) expose Sintana to a potentially large, unconventional shale oil fairway in the thick Cretaceous La Luna and Rosablanca formations which are analogous to the Eagle Ford formation found in Texas. Resource estimates for the Eagle Ford by World Oil Online in June 2011 placed the total gas in place around 84 Tcf, and estimates of recoverable oil ranging from 3 billion bbl to 4.8 billion bbl.

Preliminary regional resource estimates for the VMM basin are considerable, ranging from several billion to almost 40 billion barrels of recoverable oil (source: Colombian Agencia Nacional de Hidrocarburos & Universidad Nacional de Colombia, February, 2012). There are other zones within the unconventional section of the basin that, with additional exploration, could lead to significant increases to this resource estimate.

Capital Obligations

The operator of VMM-37 is Patriot Energy Sucursal Colombia, a registered Colombian branch wholly owned indirectly by ColCan. Capital obligations with respect to VMM-37 include two wells and 150 kilometres of 3-D seismic over the next two years. ColCan owns 25% participation interests in each of its other three blocks; Phase I capital requirements in respect of these blocks are to be carried by the operator.

Sintana's Chief Executive Officer, Doug Manner, commented: "The investment in the four Colombia blocks by Sintana represent significant growth opportunity, enhance our prospect inventory and add tremendous conventional and unconventional reserve potential to Sintana's asset base in the Middle Magdalena Basin. The 25% carried interests in three of the blocks as well as the 100% interest in VMM-37, which can be farmed out, will reduce portfolio risk and capital requirements while allowing Sintana to significantly increase its drilling inventory. The Company would like to thank Andy DeFrancesco, CEO & Chairman and Ron MacMicken, President and COO of ColCan for their commitment and dedication in working with Sintana to complete this transaction."

The Business Combination was conditioned on a private placement being successfully completed prior to closing. Sintana and ColCan announced on April 25, 2012 that they had closed an $11 million bought-deal private-placement financing of subscription receipts into ColCan co-led by Canaccord Genuity Corp. and Cormark Securities Inc. and with a syndicate which included Casimir Capital Ltd., Clarus Securities Inc. and GMP Securities LP (the "Financing").

The four additional blocks added to Sintana's Colombia portfolio as a result of the ColCan Business Combination is another major milestone in achieving several of the Company's strategic goals.

Further Details of the Business Combination

The Business Combination was structured in the form of a three-cornered amalgamation, pursuant to which a wholly-owned subsidiary of Sintana amalgamated with ColCan, and all of the issued and outstanding common shares of ColCan (the "ColCan Shares") were acquired by Sintana from the existing holders thereof in consideration of the issuance of 1.5 common shares of Sintana (each, a "Sintana Share") for each ColCan Share issued and outstanding immediately prior to the closing of the Business Combination (including all Colcan Shares issued in connection with the Financing).

Prior to the completion of the Business Combination, existing ColCan debentures in the aggregate principal amount of $3 million were redeemed and the proceeds were reinvested by their holders in ColCan Shares. Also in connection with the Business Combination, all of the existing stock options and the stock option plan of ColCan have been cancelled, and Sintana has issued an aggregate of 6,945,000 stock options to certain directors, officers and consultants, each exercisable to acquire one Sintana Share at an exercise price of $0.27. Immediately following the closing of the Business Combination, an aggregate of 310,632,503 Sintana Shares are issued and outstanding, of which 196,968,134 Sintana Shares are held by former ColCan shareholders and 113,664,369 Sintana Shares are held by Sintana shareholders existing immediately prior to closing. Furthermore, an additional 24,374,997 Sintana Shares are reserved for issuance upon the closing of the Business Combination pursuant to pre-existing share purchase warrants of ColCan. To the knowledge of ColCan and Sintana, following the closing of the Business Combination, no person or company beneficially owns, directly or indirectly, or controls or directs more than 10% of the issued and outstanding Sintana Shares on a non-diluted basis, other than Front Street Canadian Energy Fund and Front Street Opportunities Fund which together hold approximately 10.39% of all issued and outstanding Sintana Shares.

This transaction remains subject to receipt of all applicable regulatory and governmental approvals in Colombia, including those of Colombia's National Hydrocarbon Agency (ANH). Cormark Securities Inc. acted as financial advisor to ColCan in connection with the Business Combination, and Canaccord Genuity Corp. acted as financial advisor to Sintana. Delavaco Securities Inc. acted as strategic advisor to ColCan and Sintana with respect to the Financing.

ABOUT SINTANA ENERGY

The Company is primarily engaged in petroleum and natural gas exploration and development activities in Colombia and Peru. The Company's exploration strategy is to acquire, explore, develop and produce superior quality assets with significant reserve potential. The Company currently holds a 25% interest in 175,000 acres in the Bayovar Block XXVII in the Sechura Basin, Peru. The Company's private participation investments in Colombia include a 30% interest in 108,336 acres in the Talora Block and a 30% interest in 272,021 acres in the COR-39 & COR-11 Blocks in the Upper Magdalena Basin. In the Middle Magdalena Basin private participation investments are 100% interest in the 59,522 acre VMM-37 Block and 25% carried interests in the 154,909 acre VMM-4 and 59,522 acre VMM-15 Blocks. In the Llanos Basin the company has made a private participation investment in a 25% carried interest in the 11,624 acre LLA 18 Block. The Company continues to evaluate a portfolio of other exploration opportunities in South America.

On behalf of Sintana Energy

"Doug Manner"
Chief Executive Officer

For additional information or to receive timely updates about Sintana's South America projects and recent corporate activities please visit the Company's website at www.sintanaenergy.com or email [email protected]

Corporate Contact:	Corporate Contact:
Douglas Manner	Sean Austin
Chief Executive Officer	Vice President
Tel: [phone]	Tel: [phone]

Forward-Looking Statement

This news release includes forward-looking statements related to the expected occurrences in relation to the properties identified. A multitude of factors can cause actual events to differ significantly from any anticipated development and although the Company believes that the expectations represented by such forward-looking statements are reasonable; there can be no assurance that such expectations will be realized. These forward looking statements are based on assumptions that the Company has made concerning the oil and gas industry in South America, that all applicable regulatory approvals will be obtained, the reliability of available data regarding the properties and increasing demand for oil and gas. Risk factors which may cause actual results to differ from those anticipated in such forward looking statements include but are limited to, the uncertainty of conducting operations under a foreign regime, the uncertainty of obtaining all applicable regulatory approvals, the availability of labour and equipment, the fluctuating prices of oil and natural gas, the availability of financing and the Company's dependence on Sintana's management personnel and other participants in the property areas. Neither the Company nor any of its subsidiaries nor any of its officers or employees guarantee that the assumptions underlying such forward-looking statements are free from errors, nor do any of the foregoing accept any responsibility for the future accuracy of any of the opinions expressed in this document or the actual occurrence of forecasted developments.

Although the Company believes that the expectations represented by the forward-looking statements contained herein are reasonable, undue reliance should not be placed on the forward-looking statements as there can be no assurance that such expectations will be realized. The forward-looking statements contained in this document are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. This press release does not constitute an offer to sell or a solicitation to buy any of the securities of Sintana Energy Inc. in the United States.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Sintana Energy Inc.

http://www.sintanaenergy.com