Desmarais Provides Update on Creditor Settlement and Entering into of a Consulting Arrangement

TSX Venture Exchange Symbol: DES

CALGARY, Jan. 11, 2012 /CNW/ - Desmarais Energy Corporation (TSXV: DES) (the "Corporation" or "Desmarais") announces that the dispute period applicable to Desmarais' creditor proposal under the Bankruptcy and Insolvency Act (Canada) (the "Proposal") has now expired and that no notices of dispute were received by Desmarais.  Accordingly, the Corporation has now applied to the TSX Venture Exchange (the "TSXV") for approval for the issuance of 25,910,426 (the "Payment Shares") common shares of the Corporation ("Common Shares") at a deemed price of $0.08 per share, which Payment Shares are to be issued under the Proposal in satisfaction of approximately $2,072,830 of unsecured debt (the "Settled Debt") of Desmarais. The payment of all consideration to creditors under the Proposal is subject to the withholding by Desmarais of a levy, payable to the Office of the Superintendent of Bankruptcy (the "Superintendent"), equal to 5% of the consideration paid.  Accordingly, 5% of the Payment Shares, being approximately 1,295,520 Common Shares, are required to be issued by Desmarais to the Superintendent in payment of such levy, with the balance, an aggregate of approximately 24,614,900 Common Shares, being issued to creditors under the Proposal.  A copy of the Proposal has been filed on Desmarais' SEDAR profile and is available for viewing at www.sedar.com.

The Corporation also announces that it has retained Mr. James Long (the "Consultant"), the former President and CEO, and currently a director, of Desmarais, on a consulting basis to assist the Corporation with its day to day operations, going forward. Subject to the receipt of all applicable regulatory approvals, including the approval of the TSXV, Desmarais has agreed to issue to the Consultant, as a one-time, incentive consulting payment, an aggregate of 4,452,082 Common Shares at a deemed price of $0.08 per Common Share. The agreement between the Consultant and Desmarais further provides for a fixed term, expiring on June 30, 2012 (subject to extension), the payment of a cash amount to the Consultant for each day that services are provided and other customary terms and conditions.

Upon the issuance of the Payment Shares in satisfaction of the Settled Debt and issuance of Common Shares to the Consultant, Desmarais will have approximately $2,000,000 of secured debt and approximately 57,444,340 Common Shares outstanding.

Pursuant to the Proposal and the above described consulting arrangement, Desmarais expects to issue the following number of Common Shares to persons who are currently directors of the Corporation (or to companies controlled or directed by such persons): 8,765,475 Common Shares to Doug Robinson, Desmarais' interim President and Chief Executive Officer and a director; 5,668,243 Common Shares to James Long, a director of the Corporation; and 100,781 Common Shares to Sue Anne Davis, a director of the Corporation.

Reader Advisory:  The press release may contain certain forward looking statements which may include plans, expectations, forecasts, projections, guidance or other statements that are not statements of fact, including without limiting the generality of the foregoing, the number of Common Shares issuable pursuant to the Proposal and the consulting arrangement, the status and amount of both secured and unsecured debt, the effect of the Proposal under the Bankruptcy and Insolvency Act (Canada) on the Corporation and the Corporation's expectations regarding the same. Although Desmarais believes that the expectations reflected in such forward looking statements are reasonable, it cannot give any assurance that such expectations will prove to be correct. The effect of the Proposal and related matters are subject to a number of conditions which Desmarais cannot give any assurance that such conditions will be met on a timely basis, or if at all, as certain of the conditions are in the control of other parties. As such, the future plans and objectives of Desmarais are forward looking statements that involve risks and uncertainties that may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in such statements. The foregoing list of risk factors is not exhaustive. Additional information on risk factors is included in other public documents available under Desmarais' profile on SEDAR. Although Desmarais has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in the forward looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. In making its forward looking statements, Desmarais used, among others, the following material factors or assumptions to develop forward looking information enumerated above: the protections under the BIA are available to Desmarais and Desmarais proper identification and classification of its debts. Desmarais' forward looking statements are expressly qualified in their entirety by this cautionary statement. Unless otherwise required by applicable securities laws, Desmarais does not intend, nor does it undertake any obligation, to update or review any forward looking statements to reflect subsequent information, events, results or circumstances or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Desmarais Energy Corporation

For further information:

Doug Robinson, Interim President and Chief Executive Officer
Desmarais Energy Corporation
Tel: (403) 265-8007 / Fax: (403) 264-7076
E-mail:  info@desmaraisenergy.com
Website: www.desmaraisenergy.com

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Desmarais Energy Corporation

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