Great Plains Announces Combination with RedStar Oil & Gas Inc.



    CALGARY, March 7 /CNW/ - Great Plains Exploration Inc. ("Great Plains")
(TSX - GPX) and RedStar Oil & Gas Inc. ("RedStar") (TSX - RED) are pleased to
announce that they have entered into a Pre-Acquisition Agreement, pursuant to
which Great Plains will make an offer, subject to certain conditions, to
acquire all of the issued and outstanding common shares of RedStar by way of a
take-over bid (the "Offer"). Pursuant to the contemplated Offer, Great Plains
will acquire all of the RedStar shares in consideration for the issuance of
0.9 Great Plains shares for each RedStar share held. Total consideration
offered by Great Plains is expected to be 32.2 million Great Plains shares,
effectively representing $0.83 per RedStar share based on a 5-day weighted
average price per share of $0.92 for Great Plains, being a 21% premium on the
5-day weighted average price of RedStar on the TSX.

    Proposed Acquisition Overview

    The combination of Great Plains and RedStar will provide both groups of
shareholders with ownership in a large, financially stronger entity, with
increased liquidity, the opportunity to participate in price appreciation and
the ability to take advantage of additional acquisition potential. The
exchange ratio was based on the relative Net Asset Values of each company
supported by relative cash flow contributions so as to provide all
shareholders with representative ownership in Great Plains. RedStar's assets
will balance Great Plains' high impact oil-weighted exploration in West
Central Alberta, by bringing a new gas-weighted focus area in north-east B.C.
which provides production, development potential and a hedge against the
proposed Alberta New Royalty Framework.
    Great Plains will acquire approximately 1,000 BOE/d (100% gas),
approximately 2.6 MMBOE of proven plus probable reserves (based on RedStar's
draft year end engineering report), a proprietary 3D seismic database with a
market value of approximately $18 million and 153,000 net acres of undeveloped
land, valued at approximately $5 million.

    
    Highlights of the combined company:

    -   Over 2,200 BOE/d of current production (approximately 30% light oil,
        70% gas)
    -   Proven plus probable reserve base of 6.6 MMBOE valued at
        $111.3 million (PV10)
    -   Undeveloped land base of approximately 300,000 net acres
    -   Strong proforma balance sheet, with a debt to annualized current cash
        flow ratio of 0.7x
    -   Tax pools of approximately $85 million
    -   Large drilling inventory of over 70 low risk and higher impact
        exploration locations, in focus areas of Pembina/Crossfire (AB),
        Randell (AB) and north-east BC
    -   The combined company will have approximately 82.7 million common
        shares outstanding
    

    Stephen Gibson, President and CEO of Great Plains stated, "The proposed
combination of these two companies will create a growth-oriented vehicle with
a strong balance sheet, managed by a team and board of seasoned professionals,
with a focused program and a larger production base thereby able to attract
greater interest from the capital markets."
    Chester Krala, President and CEO of RedStar stated, "The combined
entity's larger production and cash flow base will allow shareholders to
benefit in the accelerated capture of both companies' future potential".
    Upon completion of the transaction, Mr. William Gallacher and Mr. Gary
Dundas, current directors of RedStar, will join the Great Plains Board of
Directors. Both Mr. Gallacher and Mr. Dundas have over 25 years of experience
in the oil and gas and merchant banking industries in Canada and serve on the
boards of several public Canadian companies. In conjunction with this
transaction, Mr. Garth MacRae will retire from the Great Plains Board of
Directors.
    The offer has the unanimous support of the Board of Directors of both
Great Plains and RedStar. The directors and officers of RedStar will enter
into lock-up agreements with Great Plains whereby they will agree to tender
their RedStar Shares to the offer.
    Each of Great Plains and RedStar have agreed to pay a non-completion fee
in the amount of $1,500,000 to the other in certain circumstances if the Offer
is not completed. Each of Great Plains and RedStar have agreed to terminate
any discussions with other parties and agreed not to solicit or initiate
discussion or negotiation with any third party with respect to alternate
transactions.
    Great Plains expects to mail a takeover bid circular to RedStar
shareholders by the end of March 2008. Great Plains has appointed Jennings
Capital Inc. as advisors on this transaction, and RedStar has appointed GMP
Securities LP. The proposed transaction is subject to the approval of the TSX
and the RedStar shareholders.

    Investors should note that boes may be misleading, particularly if used
in isolation. A boe conversion rate of 6 Mcf: 1bbl is based on an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead.

    Reader Advisory

    This news release contains forward-looking statements which include, but
are not limited to: operations plans and outlook, expectations, the effect of
the transaction, timing of matters relating to the approval and implementation
of the transaction, opinions, forecasts, projections, guidance or other
statements that are not statements of fact. Although the Companies believe
that the expectations reflected in such forward-looking statements are
reasonable, they cannot give any assurance that such expectations will prove
to be correct or that the proposed transaction will be completed or required
shareholder and regulatory approvals will be received. Results of the
Companies may be affected by a variety of variables and risks associated with
oil and gas exploration, production and transportation, such as loss of
market, volatility of oil and gas prices, currency fluctuations, imprecision
of reserve estimates, environmental risks, competition from other producers,
ability to access sufficient debt and equity capital from internal and
external sources, ability to replace and expand oil and gas reserves, ability
to generate sufficient cash flow from operations to meet its current and
future obligations, and risks associated with existing and potential future
lawsuits and regulatory actions made against the Companies; as a consequence,
actual results could differ materially from those anticipated or implied in
the forward-looking statements.
    The Companies' forward-looking statements are expressly qualified in
their entirety by this cautionary statement and are made as of the date of
this news release. Unless otherwise required by applicable securities laws,
the Companies do not intend nor do they undertake any obligation to update or
review any forward-looking statements to reflect subsequent information,
event, results or circumstances or otherwise, except as may be required by
applicable securities laws.
    The term "cash flow" is not a recognized measure under Canadian generally
accepted accounting principles ("GAAP"). Management of Great Plains and
RedStar believes that in addition to net earnings, cash flow is a useful
measure as it provides an indication of the results generated by their
principal business activities. However, the Companies' method of calculating
cash flow may differ from other companies and may not be comparable to
measures used by other companies. Great Plains and RedStar calculate cash flow
as cash from operating activities before the change in non-cash working
capital related to operating activities.

    The TSX has neither approved nor disapproved of the contents of this
    press release.

    %SEDAR: 00020740E




For further information:

For further information: Great Plains Exploration Inc., Stephen P.
Gibson, President & CEO, Sean Bovingdon, VP Finance & CFO, Tel: (403)
262-9620, Fax: (403) 262-9622, www.greatplainsexp.com,
info@greatplainsexp.com; RedStar Oil & Gas Inc., Chester Krala, President &
CFO, Lawrence Walter, VP Finance & CFO, Tel: (403) 262-3130, Fax: (403)
239-0621, www.rstar.ca

Organization Profile

GREAT PLAINS EXPLORATION INC.

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RedStar Oil & Gas Inc.

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