Crimson Exploration Inc. (CXPO)

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Crimson Exploration Announces Completion of Private Placement of Common Stock and Related Option

Press Release Source: Crimson Exploration Inc. On Wednesday October 27, 2010, 11:03 am

HOUSTON--(BUSINESS WIRE)-- Crimson Exploration Inc. (NasdaqGM:CXPO - News) announced today that it has entered into a private placement with American Energy Capital Corporation (“ACEC”), a private investor, whereby ACEC can purchase up to $30,000,000 of newly issued Crimson common stock at a purchase price of $5.00 per share in a two step transaction. Yesterday, Crimson completed the first step of the transaction and issued 4,250,000 shares of common stock, or 9.9% of the post-transaction outstanding shares, to ACEC for a total cash consideration of $21,250,000. Crimson also issued a 60-day option to ACEC. Under the option agreement, ACEC may acquire an additional 1,750,000 shares of a newly created series of preferred stock at $5.00 per share, for additional consideration of $8,750,000. The preferred stock will automatically convert into an equal number of Crimson common shares on or before December 31, 2010. Under the terms of the preferred stock, ACEC would have the right to appoint a director to the Crimson board of directors prior to conversion. If the option is exercised and the preferred shares are converted, ACEC would own approximately 13.4% of the outstanding shares of common stock of the Company. The Company intends to use the net proceeds from the private placement for general corporate purposes, including the continued development of its significant inventory of drilling prospects.



ACEC is the U.S. private equity investment subsidiary of Shanghai Zhong Rong Property Group, Ltd., a private multi-faceted Shanghai-based company with operations in real estate, energy, mining, commercial property management, and financial investments. Upon funding the first part of this investment, the Chairman and CEO of the Zhong Rong Group, Mr. Ni Zhaoxing, expressed his confidence that this additional capital will enable Crimson to more fully exploit its attractive asset mix of conventional properties and highly prospective resource plays.



Mr. Allan D. Keel, President and CEO of Crimson, commented, “Over the last several months we have gotten to know the members of the ACEC and Zhong Rong teams and believe that we share the same vision and excitement for the continued growth of Crimson; therefore, we are very pleased to welcome them as new investors in Crimson Exploration.”



The common stock being sold by the Company in this transaction will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. Crimson expects to file a Current Report on Form 8-K describing this private placement in more detail, including as exhibits, copies of the related subscription agreement, option agreement, registration rights agreement and certificate of designations for the preferred stock.



Crimson Exploration is a Houston, TX-based independent energy company engaged in the acquisition, development, exploitation and production of crude oil and natural gas, primarily in the onshore Gulf Coast regions of the United States. The Company owns and operates conventional properties in Texas, Louisiana, Colorado and Mississippi, approximately 12,000 net acres in the highly prospective Haynesville Shale, Mid-Bossier, and James Lime plays in San Augustine and Sabine counties in East Texas, approximately 9,300 net acres in the prospective Eagle Ford play in South Texas and approximately 11,000 net acres in the Denver Julesburg Basin of Colorado.



Additional information on Crimson Exploration Inc. is available on the Company's website at http://crimsonexploration.com.





Contact:
Crimson Exploration Inc., HoustonE. Joseph Grady, 713-236-7400