Mr. Massimo Geremia reports

MANITOK ENERGY INC. ANNOUNCES A SIGNIFICANT ASSET ACQUISITION AND A $20.0 MILLION OFFERING OF UNITS CONSISTING OF COLLATERALIZED EXCHANGE LISTED NOTES(TM) AND WARRANTS

Manitok Energy Inc. has entered into an asset purchase agreement with an Alberta-based private oil and gas company to acquire certain assets that averaged 1,934 barrels of oil equivalent per day (32 per cent light oil and natural gas liquids) of production in the second quarter of 2016, and that are anticipated to average approximately 1,750 boe per day (34 per cent light oil and NGLs) in November, 2016, upon the closing of the acquisition. A majority of the assets being acquired pursuant to the acquisition are composed of mature Cardium light oil and natural gas assets in the Willisden Green area of west-central Alberta, and the balance of the assets is found in the Wildcat Hills and Enchant areas of Alberta. The acquisition is complementary to Manitok's existing asset base and technical expertise, providing the corporation with an accretive increase in reserves and production relative to its outstanding common shares.

The total consideration for the acquisition is $13.5-million before closing adjustments, payable in a combination of cash and units (as defined herein). The units will have a deemed value of $100 per each unit issued. The total unit consideration to be issued to the vendor by Manitok shall be determined by Manitok in its sole discretion, up to a maximum of $4.5-million of units. The cash consideration shall be an amount equal to the total consideration of $13.5-million less the unit consideration. It is anticipated that the acquisition will close on or before Nov. 30, 2016.

The acquisition is expected to provide Manitok with a 37-per-cent increase to its anticipated corporate production for November, 2016, and additional growth potential in areas where it has significant expertise. The acquisition includes approximately 90,000 acres (55,800 net) of undeveloped land and facilities in Willisden Green, which include an emulsion-handling facility with capacity of approximately 2,500 barrels per day and a natural gas compressor station with a capacity of 11 million cubic feet per day. The oil facility is pipeline connected to a terminal owned and operated by Pembina Pipeline Corp. and is only 70 kilometres east of Manitok's Stolberg assets. The corporation anticipates potential transportation cost savings and oil-blending synergies between the Stolberg and Willisden Green assets.

The acquisition has the following approximate metrics:

• Initial production anticipated at closing of 1,750 barrels of oil equivalent per day (34 per cent light crude oil and natural gas liquids) with an anticipated production decline of 20 per cent annually;
• An estimated $4.5-million operating netback for the 12 months ended June 30, 2016, attributable to the assets (the amount of which is based on management's belief after such financial and operational due diligence in connection with the acquisition as was deemed reasonable by management, and which has not been audited or subject to a review by any external auditor);
• Proven developed producing (PDP) reserves of 4,091,000 boe, a 68-per-cent increase to Manitok's PDP reserves at Dec. 31, 2015 (1);
• Total proven (TP) reserves of 7,747,000 boe, a 78-per-cent increase to Manitok's TP reserves at Dec. 31, 2015 (1);
• Total proven plus probable (TPP) reserves of 10,783,000 boe, a 61-per-cent increase to Manitok's TPP reserves at Dec. 31, 2015 (1);
• The reserves and valuation multiples indicated in the attached table.

                  RESERVES SUMMARY (1)

                              Volume             NPV10
Dec. 31, 2015                  (Mboe)             ($MM)

Proven developed producing       4.1             $33.4
Total proven                     7.7             $47.4
Total proven plus probable      10.8             $77.9

Valuation multiples
Transaction value/ 
production                  ($/boe/d)           $6,515
Transaction value/ 
operating netback                                 3.0x
Transaction value/ 
PDP reserves                  ($/boe)            $3.30
Transaction value/ 
1P reserves                   ($/boe)            $1.74
Transaction value/ 
2P reserves                   ($/boe)            $1.25
Transaction value/ 
PDP NPV10                                         0.4x
Transaction value/1P NPV10                        0.3x
Transaction value/2P NPV10                        0.2x

Purchase price of 3.0 times the estimated operating 
netback for the 12 months ended June 30, 2016, 
attributable to the assets.
(1) Based upon combined independent engineering 
evaluations prepared by McDaniel & Associates 
Consultants Ltd. and Sproule Associates Ltd., 
effective Dec. 31, 2015, using its respective Dec.
31, 2015, price forecasts. The acquisition reserves 
report evaluated the oil, NGL and natural gas 
reserves attributable to the assets and has been 
prepared in accordance with Canadian oil and gas 
evaluation handbook and National Instrument 51-101
(standards of disclosure for oil and gas 
activities).

Manitok's management has identified additional benefits of the acquisition including:

• Approximately 53 gross development drilling locations, with about 25 in the Willisden Green area and 16 in the Wildcat Hills area, with the potential to increase this inventory in the future with further technical work;
• Over 10 exploration drilling locations have also been identified on the acquisition lands;
• Opportunities for well recompletions and optimization of existing producing and suspended wells; Manitok anticipates an initial two- to four-well recompletion program in Wildcat Hills before year-end 2016;
• Recently negotiated natural-gas-processing and transportation costs totalling about 75 cents per thousand cubic feet at Wildcat Hills with a senior producer in the area with excess capacity in its gas plant; the revised costs provide an opportunity for future economic natural gas development at current gas price levels;
• The acquisition is anticipated to lower Manitok's corporate royalty rate from approximately 32 per cent to 25 per cent and to lower general and administrative expenses to below $2.60 per boe.

Offering

In conjunction with the acquisition, Manitok is pleased to announce it has filed a preliminary prospectus supplement dated Sept. 29, 2016, in connection with a marketed underwritten offering, of 200,000 units of Manitok, for total aggregate proceeds of $20.0-million. Raymond James Ltd. and Integral Wealth Securities Ltd. are acting as joint lead bookrunners for the offering.

Details of the offering

Each unit will consist of a $100 principal amount senior secured note due 2021 with an interest rate of 10.5 per cent per annum (collateralized exchange-listed notes) and common share purchase warrants in an amount to be determined upon the completion of marketing of the deal. The units will immediately separate into CEL notes and warrants upon issuance. The CEL notes will mature at 5 p.m. (Calgary time) on Nov. 15, 2021. Interest on the CEL notes will be payable quarterly in arrears. Each warrant will entitle the holder thereof to purchase one common share of Manitok upon payment of the exercise price therefor. The warrants will be exercisable at any time until 5 p.m. (Calgary time) on Nov. 15, 2021.

The CEL notes and the warrants will be governed by a note indenture and a warrant indenture, respectively, each of which will be entered into on the closing date of the offering by the corporation and Computershare Trust Company of Canada. Closing of the offering is scheduled to occur on or about Oct. 20, 2016, or such later date as may be agreed to between Manitok and the underwriters but no later than the date that is 42 days after the filing of Manitok's final prospectus supplement in connection with the offering.

The corporation will use the net proceeds of the offering for the acquisition, and the remaining net proceeds will be used to temporarily reduce borrowings under Manitok's senior secured credit facility.

Completion of the offering is subject to necessary regulatory approvals, including the approval of the TSX Venture Exchange. The corporation has applied to list the CEL notes, the warrants and the common shares issuable on the exercise of the warrants on the TSX Venture Exchange. Listing will be subject to the corporation fulfilling all of the applicable listing requirements of the TSX Venture Exchange.

We seek Safe Harbor.