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Sea Dragon Formalizes NPC Acquisition Agreement

Source: www.gulfoilandgas.com 3/20/2012, Location: Egypt

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Sea Dragon Energy Inc. (“Sea Dragon”) announces that further to its press release of March 8, 2012, on March 19, 2012, it entered into an Amended and Restated Share Purchase Agreement (the “Amended Agreement”) with Golden Crescent Investments Ltd. (“Golden Crescent”) whereby Sea Dragon will acquire, directly or indirectly, all of the issued and outstanding shares of National Petroleum Company Egypt Limited (“NPC Egypt”) (the “Acquisition”).

Revised Terms of Acquisition
Under the terms of the Amended Agreement, Sea Dragon will acquire, directly or indirectly, all of the issued and outstanding shares of NPC Egypt in consideration of the issuance of 437.5 million common shares of Sea Dragon at a deemed price of US$0.20 per share (the “Common Share Consideration”) and US$60 million of redeemable, convertible, non-voting preferred shares (the “Preferred Shares”) to be issued, directly or indirectly, to Golden Crescent at the closing of the Acquisition (the “Preferred Share Consideration”), subject to certain working capital adjustments made in accordance with the terms of the Amended Agreement.

The Preferred Shares will bear a preferred cumulative dividend of seven (7%) percent per annum for the first twelve months after issuance, ten (10%) percent per annum for the next nine months and twelve (12%) percent per annum thereafter until converted or redeemed. In certain circumstances, dividends may be capitalized and added to the redemption value of the Preferred Shares. The Preferred Shares may be redeemed by Sea Dragon at any time after issuance in increments of not less than US$20 million upon 45 days’ written notice. Golden Crescent has the right to convert the Preferred Shares, in whole or in part, into common shares of the Corporation at a conversion price of Cdn$0.15 per common share at any time after the first anniversary of the date of issuance. Golden Crescent shall not be entitled to transfer the Preferred Shares until after the first anniversary of the issuance date.

Sea Dragon has until May 8, 2012 to complete the Acquisition (subject to a 10 day extension). Following execution of the Amended Agreement, Golden Crescent will be entitled until May 1, 2012, to solicit and entertain alternative proposals. In the event that Golden Crescent receives a proposal it wishes to accept, it may terminate the Amended Agreement without any: (a) penalty or payment in favour of Sea Dragon of the previously contemplated termination fee; or (b) right of Sea Dragon to match any alternative proposal.

The revised terms of the Acquisition are subject to certain conditions precedent including Sea Dragon shareholder approval; receipt of all necessary consents and approvals from Sea Dragon’s existing senior secured lenders; completion of certain amendments to Sea Dragon’s senior secured reserve-based credit facility agreement and related agreements with BNP Paribas and HSBC; regulatory and stock exchange approvals; and completion, in accordance with the terms set out in the Amended Agreement of the proposed International Finance Corporation financing announced by the Corporation on January 31, 2012 (the “IFC Financing”).

Other than as set forth above, the terms of the Acquisition, terms of the pre-closing reorganization, the net profits interest and the termination fee payable by Sea Dragon (with the inclusion of the above IFC and lenders conditions and confirmation by Sea Dragon of its ability to close the Acquisition as additional termination fee events) remain substantially unchanged from the terms announced in the Corporation’s January 8, 2012, January 9, 2012 and March 8, 2012 press releases.

Commenting on the proposed revised terms of the Acquisition, Said Arrata, CEO and Chairman of Sea Dragon said: “This is an important and significant step towards the closing of the Acquisition, which will now be submitted to our shareholders for their approval. We are already working hard on preparing for the Muzhil Project implementation so that we can get started immediately upon closing.”

Rescheduling of Sea Dragon Shareholders Meeting
Sea Dragon announces that the special meeting of the holders of the common shares of Sea Dragon is anticipated to be rescheduled to be held on April 30th, 2012 to approve, among other things, the Acquisition.

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