Regal Energy and G2 Resources announce proposed business combination


    Trading Symbol - TSXV - "GRT"
    Trading Symbol - TSXV - "REG"

    CALGARY, March 12 /CNW/ - Regal Energy Ltd. ("Regal") and G2 Resources
Inc. ("G2") are pleased to announce that they have entered into a letter of
intent to effect a business combination by way of plan of arrangement (the
"Proposed Transaction"). The Proposed Transaction, which is subject to due
diligence reviews, the approval of regulatory authorities and the approval of
shareholders, combines Regal and G2 with a privately held oil and gas company
("PrivateCo"), and will result in the shareholders of G2 and PrivateCo holding
common shares of Regal (the "Regal Shares").

    Terms of the Proposed Transaction

    Under the terms of the Proposed Transaction, it is expected that all of
the outstanding shares of G2 shall be exchanged for common shares of Regal on
the basis of two Regal Shares for each three G2 Shares. All of the outstanding
shares of PrivateCo will be acquired for total consideration of $13.3 million
consisting of $8.86 million in cash and approximately 17.7 million Regal
Shares. Upon conclusion of the Proposed Transaction and assuming completion of
the proposed concurrent equity financing, it is anticipated that Regal
shareholders will hold approximately 46 percent of the issued stock of the
resulting company, G2 shareholders will hold approximately 44 percent, and
shareholders of PrivateCo will hold approximately 10 percent.

    Concurrent Financing

    Concurrent with the Proposed Transaction, Regal intends to conduct equity
financings for gross proceeds of approximately $7 million, at prices per Regal
Share to be determined in the context of the market and to be raised with the
assistance of Acumen Capital Finance Partners Limited, Nova Bancorp Securities
Ltd. and others.

    Benefits of the Proposed Transaction

    Management of all three companies believe the Proposed Transaction will
be highly beneficial to their shareholders. The Proposed Transaction provides
the shareholders of each company the opportunity to participate in the future
growth of a larger company with a broader range of prospects and a more
diversified asset base. The combined entity is expected to have initial
combined oil and gas production of approximately 1,000 boe/d, funds flow of
approximately $5 million, a strong drilling prospect inventory within existing
lands, significant tax pools and a low cost overhead structure with the
elimination of redundant general and administrative costs. In addition the new
entity will have a larger market capitalization which may lead to improved
liquidity of investment for shareholders and an enhanced ability to raise
capital. With increased funds flow, larger capital programs will be possible,
thereby enhancing the resulting company's competitive position in the capital
intensive oil and gas industry.
    Following the Proposed Transaction, the existing management team of G2,
led by Curtis Hartzler as President and Chief Executive Officer and including
Derek Batorowski as Chief Financial Officer, Manfred Rockel as Vice President,
Engineering and Jake Pronk as Managing Director/Exploration, will assume the
management of Regal. It is intended that the Board will be reconstituted to
have three members from both Regal and G2.
    Mr. Hartzler said, "From the perspective of G2 shareholders, we believe
that this is a very synergistic combination of the individual strengths of all
three companies. The Proposed Transaction results in a solid foundation from
which to substantially grow the asset base."
    Following the Proposed Transaction, the resulting company will have, on a
combined basis, the following:

    -   daily average production of approximately 1,000 boe/d, weighted 70%
        to natural gas and 30% to oil and natural gas liquids

    -   annualized pro forma funds flow of approximately $5 million

    -   94,688 net acres of undeveloped land

    -   approximately 167 million basic shares issued (assuming completion of
        an equity financing for gross proceeds of $7 million)

    -   tax pools of approximately $70 million

    -   net debt of approximately $6.5 million

    The Proposed Transaction has the unanimous support of the boards of
directors of Regal, G2 and PrivateCo. The Proposed Transaction remains subject
to the completion of due diligence and confirmation of the share exchange
ratios discussed above, completion of a formal arrangement agreement by
April 9, 2008, receipt by each of Regal and G2 of a fairness opinion, approval
by regulatory authorities and approval by shareholders. The proposed plan of
arrangement will also require the approval of 66-2/3% of the votes of the G2
shareholders cast at a meeting held to consider the arrangement, as well as
approval of the Court of Queen's Bench of Alberta and other regulatory
agencies. The information circular that will detail the Proposed Transaction
is anticipated to be mailed to shareholders of G2 and Regal in early May 2008,
with the meetings of shareholders to be held approximately one month following
the mailing.

    G2, Regal and PrivateCo are Calgary, Alberta, Canada based oil and
natural gas exploration, development and production companies. The shares of
G2 and Regal are traded on the TSX Venture Exchange.


    Natural gas has been converted to a barrel of oil equivalent (Boe) using
6,000 cubic feet (6 Mcf) of natural gas equal to one barrel of oil (6:1),
unless otherwise stated. The Boe conversion ratio of 6 Mcf to 1 Bbl is based
on an energy equivalency conversion method and does not represent a value
equivalency; therefore Boe's may be misleading if used in isolation. (This
conversion conforms to NI 51-101). References to natural gas liquids ("NGLs")
in this news release include condensate, propane, butane and ethane and one
barrel of NGLs is considered to be equivalent to one barrel of crude oil
equivalent (Boe).


    Funds flow is not a recognized measure under Canadian generally accepted
accounting principles (GAAP). However, management believes that funds flow
from operations is a useful measure of financial performance. For the purposes
of funds flow calculations, funds flow is defined as the cash flow from
operations before changes in non-cash working capital. The funds flow cited in
this press release may not be comparable to that reported by other companies.


    Certain information regarding Regal and G2 set forth in this news
release, including management's assessment of future plans, operations and
operational results may constitute forward-looking statements under applicable
securities law and necessarily involve risks associated with oil and gas
exploration, production, marketing and transportation such as loss of market,
volatility of prices, currency fluctuations, imprecision of reserves
estimates, environmental risks, competition from other producers and ability
to access sufficient capital from internal and external sources. As a
consequence, actual results may differ materially from those anticipated in
the forward-looking statements.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.

For further information:

For further information: G2 RESOURCES INC., Curtis A. Hartzler,
President, Telephone: (403) 263-4310, Fax: (403) 263-4368; REGAL ENERGY LTD.,
Douglas O. McNichol, President, Telephone: (403) 509-2581, Fax: (403)

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