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Mesa Energy And Armada Oil Execute Definitive Agreement For Business Combination

Stocks in this article: AOIL MSEH

Armada Oil, Inc. (OTCBB: AOIL) (“ Armada Oil”) and Mesa Energy Holdings, Inc. (OTCBB: MSEH) (“ Mesa Energy”) today announced that they have entered into a definitive asset purchase agreement and plan of reorganization pursuant to which Armada Oil will acquire substantially all of the assets of Mesa Energy and in return assume the liabilities of Mesa Energy specified in the purchase agreement and issue and distribute, in connection with Mesa Energy’s contemplated plan of dissolution and liquidation, 0.40 shares of its common stock to the stockholders of Mesa Energy for each Mesa Energy common share owned by such stockholder as of the closing of the transaction (collectively, the “Proposed Transaction”). The Proposed Transaction is intended to qualify as a “reorganization” within the meaning of Section 368(a)(1)(C) of the Code and to constitute a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3.

On October 3 rd, 2012, Armada Oil and Mesa Energy announced their execution of a non-binding letter of intent to pursue a possible business combination, with a share distribution ratio of 0.325 shares of Armada Oil common stock for each Mesa Energy common share. The distribution ratio increased from 0.325 to 0.40 shares of Armada Oil common stock for every share of Mesa Energy due to further due diligence by and negotiations between the companies.

The modified distribution ratio of 0.40 represents an approximately 135% premium to Mesa Energy’s closing price of $0.14 on November 14 th, 2012 (and based on the closing of price of Armada Oil’s common stock on that date) and a 188% premium to Mesa’s Energy’s closing price of $0.168 on October 3 rd, 2012 (and based on the closing of price of Armada Oil’s common stock on that date).

Upon completion of the Proposed Transaction, the stockholders of Mesa Energy will own approximately 62.4% and stockholders of Armada Oil will own approximately 37.6% of the combined company common stock (each on an actual basis, without giving effect to exercise or vesting of any options, warrants or employee restricted stock awards). Armada Oil will assume all outstanding Mesa Energy options, warrants and employee restricted stock awards adjusted by the same distribution ratio. Following the closing of the Proposed Transaction, Mesa Energy will be dissolved and Armada Oil will relocate its headquarters to Dallas, Texas.

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