Greenfields Petroleum

Greenfields Annouces Funding of Default of Baghlan Energy Limited


HOUSTON, TEXAS--(Marketwired - July 23, 2014) -


Greenfields Petroleum Corporation ("Greenfields" or the "Company") (TSX VENTURE:GNF) (TSX VENTURE:GNF.DB), an independent exploration and production company with assets in Azerbaijan, announces that pursuant to the terms of the investment and shareholders agreement (the "Shareholders Agreement") with respect to Bahar Energy Limited ("BEL"), Greenfields Petroleum International Company Ltd. ("GPIC"), a wholly-owned subsidiary of the Company, has funded, by way of a loan to BEL, approximately US$16.5 million of defaulted obligations (the "Default Amount") of the other shareholder of BEL, Baghlan Energy Limited ("Baghlan"). BEL is the parent of Bahar Energy Operating Company Limited, being the operating company with respect to the Gum Deniz Oil Field and Bahar Gas Field.

Baghlan has failed to fund its share of the costs of BEL in accordance with the Shareholders Agreement and its funding loan obligation to BEL since January 1, 2014. The Shareholders Agreement provides that in the event of a default by a shareholder in a funding obligation, the other shareholder is required, by additional loan, to provide such funds to BEL. To the extent that Baghlan defaults on its future funding obligations, Greenfields anticipates that it may also fund such amounts by further loans to BEL.

As a result of the loan by GPIC of the Default Amount to BEL, pursuant to the Shareholders Agreement:

  1. all of Baghlan's loans to BEL have become "last in" loans and will not be repaid by BEL until all amounts outstanding under all of GPIC's loans to BEL, including the payment of the Default Amount, have been paid by BEL to GPIC in full, regardless of when such loans were made my Baghlan;

  2. Baghlan is deemed to have assigned to GPIC a share of its dividends equal to the sum of: (i) the Default Amount; (ii) Greenfields' Cost of Funding (as defined in the Shareholders Agreement) of such Default Amount; and (iii) a default rate of 4% on such Default Amount computed from and including the date on which the Default Amount has been funded by GPIC to, but excluding, the date Baghlan remedies the default (the "Default Interest"); and

  3. the right of any directors appointed by Baghlan to BEL to vote at a meeting of the board of directors of BEL is suspended until the Default Amount has been paid in full, together with the Default Interest.

Greenfields drew approximately US$16.5 million of the US$21 million available under the loan facility described in the July 2, 2014 press release of the Corporation to enable GPIC to fund the Default Amount.

Mr. Harkins, President and CEO of Greenfields stated that "Greenfields is disappointed that Baghlan has been unable to fund its share of the Bahar project and has defaulted on its obligations to BEL. Nevertheless, this default has permitted BEL to reorganize operations under BEOC and we expect to restore gross production by year end of this year through a series of oil and gas well workovers and recompletions to levels of 9000+ BOEPD that were reached in March 2014. We are working closely with SOCAR to revise our 2014 and 2015 Budgets to re-establish drilling operations in the oil field in 2015. Despite the underfunding of our partner in 2014, we have maintained the 3D seismic acquisition in the Gum Deniz oil field, which we feel will be key to identifying additional development drilling opportunities for the future."

About Greenfields Petroleum Corporation

Greenfields is a junior oil and natural gas corporation focused on the development and production of proven oil and gas reserves principally in the Republic of Azerbaijan. The Company plans to expand its oil and gas assets through further farm-ins and acquisitions of Production Sharing Agreements from foreign governments containing previously discovered but under-developed international oil and gas fields, also known as "greenfields". More information about the Company may be obtained on the Greenfields website at

Forward-Looking Statements

This press release contains forward-looking statements. More particularly, this press release may include, but is not limited to, statements concerning the Company's plans with respect to funding future defaults, operations and production targets. In addition, the use of any of the words "initial, "scheduled", "can", "will", "prior to", "estimate", "anticipate", "believe", "should", "forecast", "future", "continue", "may", "expect", and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained herein are based on certain key expectations and assumptions made by the Company, including, but not limited to, expectations and assumptions concerning the success of optimization and efficiency improvement projects, the availability of capital, current legislation, receipt of required regulatory approval, the success of future drilling and development activities, the performance of existing wells, the performance of new wells, general economic conditions, availability of required equipment and services, weather conditions and prevailing commodity prices. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity price and exchange rate fluctuations, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional information on these and other factors that could affect the Company's operations and financial results are included under the headings "Risk Factors" in Greenfield's Annual Information Form, its Management Information Circular and similar headings in the Company's Management's Discussion & Analysis which may be viewed on

The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

Greenfields Petroleum Corporation

John W. Harkins
Chief Executive Officer
(832) 234-0836

A. Wayne Curzadd
Chief Financial Officer
(832) 234-0835

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