Africa Oil Corp

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Lion Energy to acquire Southern Star, Gold Star


2009-11-06 08:13 ET - News Release

Also News Release (C-GXX) Gold Star Resources Corp


Mr. Brian Thurston of Lion Energy reports

LION ENERGY CORP. (TSX-V: LEO), SOUTHERN STAR ENERGY INC. (OTC BB:SSEY) AND GOLD STAR RESOURCES CORP. (TSX-V: GXX) ANNOUNCE PROPOSED BUSINESS COMBINATION

Lion Energy Corp., Southern Star Energy Inc., a U.S.-based oil and gas exploration company with lease acreage properties in Louisiana, and Gold Star Resources Corp. have signed a non-binding letter of intent to complete a proposed business combination. Upon completion of the transaction, the combined entity will be a mid-sized, well-capitalized company with domestic and international exploration operations, a seasoned management team, and a strong board of directors.

"The collaboration of Lion, Southern and Gold Star combines an excellent portfolio of diverse African exploratory opportunities and a solid platform for growth in North America. This acquisition also brings significant talent to continue adding opportunity and value for our shareholders," said David Gibbs, president and chief executive officer of Southern. "The combined company will be focused on the acquisition of additional strategic assets in North America so we can build a strong foundation of cash flow and stable growth opportunities. This will provide solid returns and fund and expand the combined company's high potential exploration programs in Africa."

It is anticipated that Lion will issue approximately 40 million of its common shares, with approximately 26 million being issued to the shareholders of Southern and approximately 14 million being issued to the shareholders of Gold Star in exchange for all of the outstanding shares of Southern and Gold Star.

The transaction is subject to the completion of confirmatory financial and legal due diligence, definitive documentation, regulatory approvals, court approval, and approval of the shareholders of each of Lion, Gold Star and Southern.

About Southern Star Energy Inc.

Southern, based in Houston, Tex., owns and operates a 40-per-cent interest in approximately 5,000 acres in the Haynesville shale play in northwest Louisiana. Southern's acreage contains excellent Haynesville shale potential, as well as a successful Cotton Valley sandstone development project. The Bossier shale is also indicated productive on this acreage. To date, Southern has drilled seven successful wells into the Cotton Valley. Three exploratory wells have also been drilled and successfully encountered substantial gas-bearing sections in the Haynesville and Bossier shales. For further information, please visit the company's website.

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