Mr. Glenn McNamara reports

PETROMANAS ANNOUNCES SALE OF ALBANIAN ASSETS TO SHELL, PROPOSED SPECIAL DISTRIBUTION AND PROVIDES UPDATE ON ASSETS IN FRANCE AND AUSTRALIA

Petromanas Energy Inc. has entered into a sale and purchase agreement with Shell Upstream Albania BV, a wholly owned subsidiary of Royal Dutch Shell PLC, pursuant to which Shell has agreed to acquire all of Petromanas's Albanian assets for aggregate gross proceeds of $45-million (U.S.) (subject to closing adjustments). The proposed transaction is expected to close on or about March 15, 2016, and is subject to customary closing conditions including applicable regulatory approvals, as well as Petromanas shareholder approval.

The proposed transaction

Petromanas Albania GmbH, a wholly owned subsidiary of the company, and Shell are parties to a production sharing contract in onshore Albania and are parties to a joint operating agreement for the Block 2-3 PSC dated Feb. 9, 2012. On Aug. 5, 2015, PAG and Shell were awarded the right to negotiate a production sharing contract for Block 4 onshore in Albania. The company and Shell currently hold, respectively, a 25-per-cent and 75-per-cent participating interest in the Block 2-3 PSC, the JOA and the Block 4 right. Under the terms of the agreement, the company will dispose of its 25-per-cent participating interest in the Block 2-3 PSC (including operatorship), the JOA and the Block 4 right to Shell. A total of $5-million (U.S.) of the gross proceeds from the proposed transaction will be held in escrow and not released to Petromanas until the expiration of the indemnity period under the agreement, being six months following the closing date of the proposed transaction.

The company believes that the proposed transaction will provide significant benefits as it is intended to allow the company to return capital to shareholders, wind down the company's Albanian operations in an orderly manner and provide sufficient capital for the company to reorganize itself, including making strategic decisions on its assets in France. The board of directors and management of the company believe that the proposed transaction is in the best interests of the company.

Return of capital

Following closing of the proposed transaction, determination of postclosing adjustments and subject to shareholder and regulatory approval, Petromanas intends to make a special distribution to shareholders. The distribution is intended to be a return of capital and will be financed primarily from the net proceeds of the proposed transaction but will also include approximately $3-million (U.S.) of working capital. Petromanas anticipates that an aggregate of approximately $43-million (U.S.) will be available for distribution to shareholders following closing of the proposed transaction, which, subject to currency exchange fluctuations, would result in a distribution to Petromanas shareholders of approximately eight cents to nine cents per share. The company anticipates fixing a record date in respect of the distribution once final closing adjustments have been determined.

Shareholder meeting

A special meeting of the shareholders of common shares of the company is expected to be held in Calgary on or about March 14, 2016. The proposed transaction and the distribution will require the approval of the shareholders of Petromanas by way of special resolution of two-thirds of the shareholders present in person or represented by proxy at the meeting.

The board has carefully reviewed and considered the terms and conditions of the agreement and, after consultation with its financial and legal advisers, has unanimously determined that the proposed transaction and the distribution are in the best interests of the company. Accordingly, the board unanimously recommends that shareholders vote in favour of the resolutions to approve the proposed transaction and the distribution.

Strategic process

The proposed transaction is expected to conclude the company's previously announced strategic process. In October, 2014, and based on the costs associated with drilling the Shpirag-2 and Molisht-1 wells, management entered into a strategic process to identify and review all options to support the financial requirements of a longer-term appraisal and development of blocks 2-3. The company retained Peters & Co. Ltd. to act as its financial adviser in connection with such review process. The board has received an opinion from Peters & Co. that the consideration to be received by the company under the agreement is fair from a financial perspective to Petromanas. Norton Rose Fulbright Canada LLP and Fasken Martineau DuMoulin LLP acted as legal counsel to Petromanas.

Update on assets in France and Australia

Petromanas has also previously announced marketing initiatives to identify opportunities to further develop its assets in both France and Australia. The company believes in the value of its French assets and intends to continue supporting the marketing initiative going forward. The company intends to allocate sufficient capital from the net proceeds of the proposed transaction, including retention of the escrow funds, to support its activities in France and for general corporate purposes. Based on current market conditions, reduced interest from potential partners, and the higher risk profile of its Australian assets, Petromanas has elected to terminate the process for its Australian assets and has submitted a letter to the Western Australian Department of Mines and Petroleum to relinquish its exploration licences (EP 464 and EP 486) in the Canning basin.

We seek Safe Harbor.