CALGARY , Sept. 25, 2014 /CNW/ - Exall Energy Corporation ("Exall" or the "Company") (TSX:EE and TSX:EE.DB) is pleased to announce that it has signed a Debenture Purchase Commitment Letter (the "Commitment Letter") with a private Canadian lender ("Lender") pursuant to which the Lender will lend $35 million to the Corporation.  The Agreement contemplates the closing and the issue of the underlying debenture for principal amount of $35 million (the "Debenture"), the proceeds of which will be used to pay out in full all amounts outstanding under the current credit facilities with Exall's current senior Canadian lender.  The Debenture will be secured by all of the assets of the Corporation.  Exall's public filings can all be found at www.exall.com or www.sedar.com.

Highlights:

• Exall enters into an agreement to issue $35,000,000 worth of senior secured debentures, fully secured by Exall's oil and gas assets, maturing 5 years from the issue date, and bearing interest at 8% per annum,
• Previously announced sale of 18% of the Exall working interest, to a private corporation ("Private Co.") in the Mitsue oil and gas properties for $14,000,000 , as most recently announced on August 13, 2014 , also scheduled to close concurrently with the issue of the Debenture,
• Related parties to the Lender have also agreed to purchase 15 million common shares of Exall, at 20 cents per share, for total gross proceeds to Exall of $3,000,000 under a private placement scheduled to close concurrently with the issue of the Debenture,
• Exall has received written demand from its current senior Canadian lender for repayment of all outstanding amounts on or before September 30 , 2014.  The proceeds from the Debenture once closed will be used to pay out the current senior Canadian lender in full.

Debenture

Exall has entered into the Commitment Letter pursuant to which it is obligated to issue the $35,000,000 Debenture to the Lender.  The Debenture will be fully secured by all of Exall's oil and gas assets and will mature 5 years from the date of issue, and bear interest at 8% per annum.  At Exall's option, the interest may be paid on an annual basis or accrued and paid at maturity in 5 years.  The Debenture is subject to certain other standard covenants.

Exall will utilize the proceeds from the Debenture towards paying out in full the current secured facilities with Exall's current senior Canadian lender (the "Facilities").  Exall's current senior Canadian lender has sent a demand notice requiring full payment of the Facilities on or before September 30, 2014 .

Sale of 18% Working Interest

Pursuant to an amended and restated purchase and sale agreement between Exall and Private Co. July 29, 2014 (the "Purchase Agreement"), the Private Co. is acquiring approximately eighteen percent (18%) of Exall's interest in its oil and gas assets (being approximately a thirteen percent (13%) working interest in and to the Marten Mountain discovery in the Mitsue area, north-central Alberta ). Exall will retain an average working interest in Mitsue, Alberta of 67.72%, with a range of 54.12% to 100%, as well as retaining its role as operator of the Mitsue area play.  Proceeds from this transaction will be utilized by Exall for continued development of the Marten Mountain, Alberta Gilwood Waterflood Asset.

Private Placement

Exall has also entered into subscription agreements to issue 15 million common shares on a private placement basis, at 20 cents per share, for gross proceeds of $3,000,000 .  The subscriptions are scheduled to close concurrently with the Debenture closing.  A portion of the proceeds from the private placement will be will be utilized by Exall towards paying out in full the current secured facilities, with the balance being put towards the continued development of the Marten Mountain, Alberta Gilwood Waterflood Asset.

The closing of the private placement is subject to the approval of the Toronto Stock Exchange, and the common shares to be issued will be subject to a standard four month and one day resale restriction.

Senior Canadian Credit Facility

Exall has received a written demand notice from the current senior Canadian lender, for repayment of all amounts outstanding under the senior Canadian lender credit facilities by September 30 , 2014.  The aggregate amount of approximately $35,337,000 currently outstanding under the senior Canadian lender credit facilities will be paid from the closing of the Debenture and the Private Placement and concurrently therewith the senior Canadian lender will release its security over Exall's oil and gas assets.

About Exall

Exall is a junior oil and gas company active in its business of oil and gas exploration, development and production from its properties in Alberta.  Exall is currently developing the new Mitsue area "Marten Mountain" discovery in north-central Alberta .

Exall currently has 66,634,854 common shares outstanding. The Company's common shares are listed on the Toronto Stock Exchange under the trading symbol EE. The Company's convertible debentures are listed on the Toronto Stock Exchange under the trading symbol EE.DB

Reader Advisory

This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including those relating to results of operations and financial condition, capital spending, financing sources, commodity prices and costs of production. By their nature, forward-looking statements are subject to numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, actual results may differ materially from those predicted. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such factors include fluctuating commodity prices, capital spending and costs of production, and other factors described in the Company's most recent Annual Information Form under the heading "Risk Factors" which has been filed electronically by means of the System for Electronic Document Analysis and Retrieval ("SEDAR") located at www.sedar.com. Such forward-looking statements are made as at the date of this news release, and the Company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.

For the purposes of calculating unit costs, natural gas has been converted to a barrel of oil equivalent (boe) using 6,000 cubic feet equal to one barrel (6:1), unless otherwise stated. The boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method and does not represent a value equivalency; therefore boe may be misleading if used in isolation. This conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities.

Please visit Exall Energy's website at: www.exall.com

SOURCE EXALL ENERGY CORPORATION