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Target Energy Limited Announces 10% Sale of Fairway Project for A$6.5m

WEST PERTH, AUSTRALIA -- (Marketwired) -- 05/12/14 -- US-focused oil and gas producer Target Energy Limited ("Target") (OTCQX: TEXQY) (ASX: TEX) is pleased to announce that it has agreed to sell a 10% Working Interest in its Fairway Project in West Texas for a total cash consideration of approximately A$6.5m.

  • Target has signed a Letter of Intent with Texas-based Victory Energy Corporation ("Victory") (OTCQX: VYEY) in which Target agrees to sell a 10% Working Interest in the Fairway Project for US$6m (A$6.5m) in cash.
  • Target will realise a premium of approx. 72% on the sale of the interest, relative to the current implied market valuation(1).
  • Target will remain as the largest interest-holder in the project, retaining a 50% Working Interest in all leases other than Wagga Wagga (35% WI).
  • The sale is subject to the prior approval of the holders of Target's 2014 Convertible Notes and to the completion of due diligence and of a Sale & Purchase Agreement to the satisfaction of both parties.
  • The sale will be to Aurora Energy Partners, a related party to Victory and for which Victory is the managing member.
  • The deal is expected to close on or about 5 June 2014, with an effective date of 1 May 2014.

Managing Director Laurence Roe commented on the transaction: "This is another successful outcome for Target -- not only does it strengthen our financial position but also clearly indicates that the value of Fairway materially exceeds the Company's present market capitalisation.

"The majority of the funds will be used in the ongoing drilling program at Fairway and to pursue new opportunities.

"Target's growth outlook is excellent and this sale helps to ensure our future is well funded.

"We will be promptly seeking approval from the holders of our 2014 Convertible Notes for whom the Notes are secured by the Fairway asset. As the sale would effectively reduce the security by one-sixth, Target will offer to redeem pro-rata up to one-sixth of the Notes.

"I believe Target shareholders will welcome a transaction that adds cash to the Company's coffers while simultaneously adding value to the Company."

(1) Enterprise value of Target is calculated at May 7, 2014 using a 4.3c share price, A$6m of outstanding convertible notes and adjusted cash of A$3.2m.

Laurence Roe
Managing Directo
r.

NOTE: In accordance with ASX Listing Rules, any hydrocarbon reserves and/or drilling update information in this report has been reviewed and signed off by Mr. Laurence Roe, B.Sc, Managing Director of Target Energy, who is a member of the Society of Exploration Geophysicists and has over 30 years' experience in the sector. He consents to that information in the form and context in which it appears. Note also that Target reports a thermal equivalent when combining gas and oil production, where 1BOE = 6 mcf.

About Victory Energy Corporation (OTCQX: VYEY)

Victory Energy (OTCQX) is a growth-oriented exploration and production company head-quartered in Austin, Texas. The company is focused on rapidly growing unconventional oil, liquids-rich natural gas reserves and cash flow via continued low risk vertical well development. The focus on returns is achieved by targeting the predictable resource plays, favourable operating environment, consistent reservoir quality across multiple target horizons, long lived reserve characteristics and high drilling success rates of the Permian Basin.

Media Inquiries:
USA
Bradley Holmes
Target Investor Relations (Houston)
+1 713 304 6962 cell
+1 713 654 4009 direct

Laurence Roe
Target Energy
+1 713 275 9800 direct

Australia
Ross Dinsdale
Business Development Manager (Perth)
+61 429 702 970 cell
+61 8 9476 9000 direct

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