Salvatore Fuda - Chairman - Echo Energy Canada Inc. - Shareholder Oppression Claim



    (TSX Venture - EEI.V)

    TORONTO, Dec. 11 /CNW/ - Challenge Gas Holding AB ("Challenge"),
Exclusive Asset Management Inc. ("Exclusive") and Salvatore Fuda
(collectively, the "Plaintiffs") have brought a claim (the "Oppression Claim")
on November 26, 2007, in the Ontario Superior Court of Justice against Echo
Energy Canada Inc. ("Echo Energy"), Gary Conn, Michael Hunter, Robert Moore,
David Johnstone and Sal Pacifico (collectively, the "Defendants") claiming
among other things:

    
    (a)    a declaration from the Court that the Defendants have engaged in
           conduct that is oppressive, unfairly prejudicial to, and unfairly
           disregards the interests of the Plaintiffs contrary to the
           Business Corporations Act (Ontario);

    (b)    an order requiring the Defendants to engage an independent third
           party expert to assess Echo Energy's gas reserves; and

    (c)    an interim and permanent injunction preventing the Defendants from
           taking any further steps to pursue a private placement of Echo
           Energy shares purportedly approved by the Defendants Gary Conn,
           Michael Hunter, Robert Moore, David Johnstone and Sal Pacifico on
           November 20, 2007.
    

    The Plaintiffs Challenge and Exclusive together own 31.1% of the shares
of Echo Energy. The Plaintiff Salvatore Fuda is the Chairman and a director of
Echo Energy. The Defendant Gary Conn is the President and a director of Echo
Energy. Each of the Defendants Michael Hunter, Robert Moore, David Johnstone
and Sal Pacifico is a director of Echo Energy.
    The Defendants have issued a notice of intent to defend the Oppression
Claim.
    In the Oppression Claim, the Plaintiffs among other things note:

    
    (a)    the substantial drop in Echo Energy's share price from the $2.39
           price (and an overall market capitalization of approximately
           $100,000,000) set out in a fairness opinion delivered by Dundee
           Securities Corporation in 2004, which fairness opinion was based
           largely upon a gas reserves estimate prepared by Jim McIntosh
           Petroleum Engineering Ltd. (the "McIntosh Quantification"), to a
           current share price of approximately $0.20 to $0.25 (and an
           overall market capitalization of approximately $10,000,000) today;

    (b)    the inexplicably low gas production volumes realized by Echo
           Energy since 2004; and

    (a)    the obvious market scepticism in the gas reserves estimates
           contained in the McIntosh Quantification.
    

    The Plaintiff Salvatore Fuda has on a number of occasions suggested to
the Board of Echo Energy, and in particular the Defendants Gary Conn, Michael
Hunter, Robert Moore, David Johnstone and Sal Pacifico, that, in the face of
the precipitous drop in Echo Energy's share price since 2004 (which price was
in 2004 based largely upon the McIntosh Quantification), and Echo Energy's
inexplicably low gas production volumes since 2004, Echo Energy should engage
an independent third party expert to assess Echo Energy's gas reserves. The
Plaintiff Salvatore Fuda has even offered to personally pay for this
independent assessment. To date, the Defendants Gary Conn, Michael Hunter,
Robert Moore, David Johnstone and Sal Pacifico have refused to permit any
independent review of Echo Energy's gas reserves.
    The Plaintiff Salvatore Fuda notes that:

    
    (a)    Echo Energy's management has as recently as November 14, 2007, in
           a publicly released management discussion and analysis of Echo
           Energy's financial statements for the period ending September, 30,
           2007, stated that Echo Energy "reasonably expects" to fund 2007
           working capital requirements from current operations assuming that
           its gas production volumes and the market price for gas remain at
           current levels; and

    (b)    Echo Energy reported net assets (assets less liabilities) of
           $31.7 million as at September 30, 2007.
    

    The Plaintiff Salvatore Fuda notes that the Defendants Gary Conn, Michael
Hunter, Robert Moore, David Johnstone and Sal Pacifico purported to approve a
private placement of shares of Echo Energy (the "Purported Private Placement")
on November 20, 2007, to raise a maximum $2 million at a share price which
suggests a current total market value for Echo Energy's shares of
approximately $10 million to $13 million.
    The Defendant Gary Conn maintains that the proceeds of the Purported
Private Placement are required to fund the further drilling of wells by Echo
Energy. The Plaintiff Salvatore Fuda notes that the vast majority of Echo
Energy's wells have since 2004 produced gas at less than, and in most cases
substantially less than (if at all), an economically viable rate. These wells
were acquired and drilled by Echo Energy largely in reliance upon the McIntosh
Quantification.
    The Plaintiff Salvatore Fuda maintains that the purported approval by the
Defendants Gary Conn, Michael Hunter, Robert Moore, David Johnstone and Sal
Pacifico of the Purported Private Placement was improper and of no effect. The
Plaintiff Salvatore Fuda further maintains that the Purported Private
Placement is ill advised at this time:

    
    (a)    given Echo Energy's inexplicably poor gas production volumes in
           the last 3 years from its 76 wells;

    (b)    given the significant uncertainty as to the exact nature and
           extent of Echo Energy's gas reserves;

    (c)    as it suggests a total value for Echo Energy's shares which is
           approximately one-third of the recently reported value of Echo
           Energy's net assets;

    (d)    in light of management's statement less than one week before that
           Echo Energy anticipated that its near term working capital
           requirements could be financed solely from operations;

    (e)    as the maximum amount which could be raised from the Purported
           Private Placement, $2 million, is not nearly sufficient to fund
           any reasonable future drilling program by Echo Energy, and will
           likely result in an unnecessary further waste of Echo Energy's
           assets; and

    (f)    is otherwise not supported by any proper business case.
    

    On November 21, 2007, the Plaintiffs Challenge and Exclusive delivered to
Echo Energy a requisition for a special meeting of Echo Energy's shareholders
to consider the removal of Robert Moore and Salvatore Pacifico as directors of
Echo Energy, and to elect Thomas M. Sheppard and Brian Monrad as directors of
Echo Energy to fill the vacancies created by their removal. This requisition
is supported by shareholders of Echo Energy whose shareholdings, when combined
with those of Challenge and Exclusive, represent approximately 51.9% of the
shares of Echo Energy. To date, Echo Energy has not called the requisitioned
shareholders' meeting.

    No securities commission or regulatory authority has approved or
    disapproved the contents of this news release. The TSX Venture Exchange
    does not accept responsibility for the adequacy or accuracy of this news
    release.





For further information:

For further information: Further information can be obtained from
Salvatore Fuda in Toronto by calling (416) 360-4032 or by e-mail at
sfuda@micromeminc.com

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