Target Energy Undertakes Entitlement Issue

WEST PERTH, AUSTRALIA--(Marketwired - April 27, 2015) - US-focused oil and gas producer Target Energy Limited ("Target") (OTCQX: TEXQY) (ASX: TEX) announces that it is undertaking a renounceable pro-rata entitlement issue to raise up to approximately A$5m.

• Renounceable pro-rata entitlement issue to raise up to approximately $5.0m, with approximately $2.9m of underwriting secured
• Directors to sub-underwrite approximately $1.3 million of the entitlement issue and further $1.4 million of commitments have been received from shareholders
• Target's major shareholder, Wyllie Group Limited, has committed to participate for its full entitlement $0.45m
• Rights issue priced at a 68% discount to 30-day volume weighted average price(1) with one free listed option for every two shares issued to encourage shareholder participation
• Divestment of the West Texas Fairway Project is still planned, however Target will seek to sell into a stronger market
• Fairway oil and gas production remains operating cash flow positive at current oil prices(2)
• Target continues to hold a large working interest in 4,483 acres in the most coveted and prolific hydrocarbon basin in the United States with multiple, thick, oil bearing horizons

(1) Shares in Target Energy Limited have not traded since 31 March 2015 due to a trading halt and voluntary suspension. The volume weighted average price is calculated on the 30 trading days to 31 March 2015. The last traded price on the 31 March was $0.013.
(2) Operating cash flows defined as net revenues (after royalties) less field operating costs. Does not include general and administration costs. Current WTI benchmark oil prices are US$56/bbl.

US-focused oil and gas producer, Target Energy Limited (Target), advises that it is undertaking a renounceable pro-rata entitlement issue (Entitlement Issue) to raise up to approximately A$5m. 

Eligible shareholders will be able to subscribe for 5 new fully paid ordinary shares in Target (Shares) for every 3 existing Shares they hold at the Record Date (as set out in the timetable below) at an issue price of A$0.006 per share, together with one free attaching option to acquire a Share for every two Shares issued (New Option). The New Options will have an exercise price of $0.012 and an expiry date of 28 February 2017.

Patersons Securities Limited (Patersons) has agreed to underwrite the first $2.9m raised under the Entitlement Issue. Directors have agreed to convert their existing loans into Shares and New Options as part of the Entitlement Issue, thereby retiring over $640,000 in company debt.

Funds raised from the Entitlement Issue will be used to address payables, provide working capital and to potentially allow the Company to undertake an asset optimisation program.

For more details on the Entitlement Issue please refer to the table of key dates to follow and the Entitlement Issue prospectus which will be despatched to eligible shareholders in accordance with the proposed timetable.

Target's Managing Director, Laurence Roe, commented, "We originally invested in the Fairway asset because of the excellent geology and access to infrastructure in the Permian Basin. We committed a significant amount of the Company's resources in the development of Fairway to grow production, cash flows and reserves but also to position the Fairway asset for a divestment.

"Earlier this year Target and its partners made the decision to defer the divestment until oil prices recover or until such time as we receive a suitable offer. It is our belief that commodity prices are beginning to recover and if that recovery continues, we should have a better market in which to sell the Fairway asset.

"In the meantime, we are pleased to have secured a solid underwriting from which to launch this Entitlement Issue and I wish to thank our underwriter, a number of our Top 20 shareholders and my fellow directors and staff for their strong support."

Laurence Roe
Managing Director

NOTE: In accordance with ASX Listing Rules, any hydrocarbon reserves and/or drilling update information in this report has been reviewed and signed off by Mr. Laurence Roe, B Sc, Managing Director of Target Energy, who is a member of the Society of Exploration Geophysicists and has over 30 years' experience in the sector. He consents to that information in the form and context in which it appears. Note also that Target reports a thermal equivalent when combining gas and oil production, where 1 BOE = 6mcf.

Key Dates for Entitlement Issue                       
                                                                            
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                            Event                                  Date     
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Lodgement of Prospectus with the ASIC                         24 April 2015 
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Lodgement of Prospectus & Appendix 3B with ASX                24 April 2015 
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Notice sent to Shareholders                                   28 April 2015 
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Ex date                                                       29 April 2015 
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Rights start trading                                          29 April 2015 
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Record Date for determining Entitlements                        1 May 2015  
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Prospectus sent out to Shareholders & Company announces this    6 May 2015  
 has been completed                                                         
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Rights stop trading                                             8 May 2015  
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Shares and New Options quoted on a deferred settlement basis   11 May 2015  
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Last day to extend the Offer*                                  12 May 2015  
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Closing Date                                                   15 May 2015  
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ASX notified of under subscriptions                            19 May 2015  
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Issue date/Shares and New Options entered into Shareholders'   21 May 2015  
 security holdings                                                          
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Quotation of Shares and New Options issued under the Offer*    22 May 2015  
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* This timetable is indicative only and may be subject to change. The Directors can extend the Closing Date by giving at least 3 Business Days notice to ASX prior to the Closing Date.

CONTACT INFORMATION:

USA
Laurence Roe
Managing Director (Houston)
Target Energy
[phone] direct

Australia
Ross Dinsdale
Business Development Manager (Perth)
[phone] cell
[phone] direct