SHPNF Shoal Point Energy Ltd (PK)

Shoal
Point Energy Ltd. (“Shoal Point” “SPE” or the “Company”) (SHPNF on OTCQX) (SHP
on CNSX) has concluded a Farmout Agreement (“Agreement”)
with Black Spruce Exploration Corp. (“BSE”), a subsidiary of Foothills Capital
Corp. This Agreement follows a Letter of Intent between the two parties as
announced on December 17, 2012. The Agreement contemplates the continued
exploration and development of SPE’s approximately 720,000 gross acres of Green
Point “oil-in-shale” rights in offshore west Newfoundland.

 

The terms of the Agreement allow for two phases of earning
during 2013-2015 which give BSE the right to earn up to 60% of SPE’s working
interests in its three Exploration Licenses (EL’s).  Details of this earning program are presented below:

 

Phase I Earning Program (2013-2014):

 

BSE will drill one well on each of EL’s 1070, 1120, and 1097R.

 

• 
  
•        on EL 1070, the Shoal Point 3K39 well will by June 15, 2013
  be re-entered and sidetracked from surface casing to drill, stimulate, complete
  and evaluate prospective oil-bearing zones within the Green Point shale
  formation. Earning depth of the well will be 1800 metres below sea level;
• 
  
•        on EL 1120, a well will be drilled, stimulated, and
  completed to evaluate prospective oil-bearing zones within the Green Point
  shale formation. Earning depth of the well will be 3000 metres below sea level;
• 
  
•        on EL 1097R, a well will be drilled, stimulated, and
  completed to evaluate prospective oil-bearing zones within the Green Point
  shale formation. Earning depth of the well will be 3000 metres below sea level;
• 
  

 

Having met the conditions of the above program, BSE will
earn a 40% interest in SPE’s working interest rights, that is, 40% of “shallow
rights” in EL 1070, where SPE currently holds a 100% working interest,  40% of all rights in EL 1097R, where
SPE currently holds a 100% working interest, and 32% of “shallow rights” in EL
1120, where SPE currently holds the right to earn an 80% working interest from
Ptarmigan Energy Inc. by drilling a well to test the Green Point shale. (n.b. The definition of “shallow rights”
includes all Green Point rights on these properties).

 

Optional Phase 1 Earning Well: Upon rig release at the third
earning well above, BSE will have the right to elect, within a period of 60
days, to drill, stimulate, complete and evaluate a fourth well at a location of
its choice, on either of the three EL’s noted above, to earn an additional 10%
of SPE’s working interest in all three properties. Having so elected, BSE will be
required to spud this well by April 30, 2014.

 

If all the conditions of Phase 1 Earning are met, then BSE
will hold a 50% working interest in SPE’s rights in west Newfoundland (50%
of  “shallow rights” in EL 1070;
50% of all rights in EL 1097R, and 40% of 
“shallow rights” in EL 1120) at the conclusion of Phase 1 Earning.

 

Application for Significant Discovery
Licenses: During Phase 1 earning, upon the
successful testing and recovery of petroleum in an exploration well on a
particular license, BSE and SPE (the “Parties”) will cooperate to apply to the
Canada-Newfoundland Offshore Petroleum Board for a Significant Discovery License
(“SDL”) for that property, which when awarded will allow the parties to hold,
develop and produce from the lands.

 

 

Phase II Earning Program (2014-2015):

 

Upon meeting all of the conditions of the above Phase I
Earning Program, BSE will have the right to elect by July 31, 2014 to proceed
to the Phase 2 Earning Program, whereby it can earn up to an additional 10%
working interest in SPE’s interests, as defined at the close of Phase 1 above,
by drilling up to eight (8) wells at locations of BSE’s choice across the three
properties. The number and location of Phase 2 earning wells must be specified
upon election. Having so elected, BSE will have to spud the first Phase 2
earning well by September 15, 2014.

 

Each Phase 2 earning well will consist of drilling,
stimulation, completion and evaluation of the Green Point “oil-in-shale”
formation, or equivalent units, to an earning depth of 3000 metres below sea
level.

 

Upon conclusion of each Phase 2 Earning Well, BSE will earn
an incremental 1.25% interest in all SPE’s working interest rights in western
Newfoundland, up to a maximum of 10%. For example, if BSE concludes four of the
eight earning wells, it will have earned an additional 5% of SPE’s interests,
and so on.

 

If the maximium earning conditions of the Phase 1 Earning
Program and Phase 2 Earning Program are met, BSE will have earned 60% of SPE’s
interests in west Newfoundland, as described above.

 

All wells in Phases 1 and 2 are contemplated as sited at onshore
locations and deviated to the offshore rights.

 

 

Operatorship

 

BSE will become the Licensed Operator of the wells once the
appropriate regulatory approvals have been obtained and prior to the spudding
of Phase 1 wells.

 

Seismic Program

The Parties will, on a best efforts basis and subject to the availability
of a seismic vessel in western Newfoundland, jointly plan and shoot a 2D
seismic program over EL 1097R and EL 1120 in 2013 or 2014. The
program will consist of approximately 130 line kilometres of data, at an
estimated cost of $1 million. BSE will be responsible for the first $1 million
in associated expenditures, after which the Parties will share any additional
expenditures according to their final working interests in the Farmout Lands
once all earning operations are completed.    

Area of Mutual Interest and Exclusion
Area

 

The Agreement establishes an Area of Mutual Interest (AMI)
which encompasses the existing Farmout Lands described above as well as an Area
of Exclusion pertaining to other lands prospective for Green Point shale in
western Newfoundland. The AMI provides a means for the Partners to cooperate
fully in future exploration and development outside the Farmout Lands.

 

All drilling, testing, completion, and
seismic programs contemplated herein will be subject to approvals of the
Canada-Newfoundland and Labrador Offshore Petroleum Board and the Newfoundland
and Labrador Department of Natural Resources.

 

Private Placement Financing

 

According to the terms of the Letter of Intent announced on
December 18, 2012, an affiliated company of BSE has committed to subscribe for
$2,100,000 of a private placement being completed by SPE. The SPE private
placement for a total of $5,000,000 (this may be increased by up to 50%) is
comprised of units at $0.06 per unit. The hard dollar units include a full
warrant exercisable at $0.15 for eighteen months, while the flow-through units
include a half-warrant exercisable at $0.15 for eighteen months.

 

To date, SPE has closed a total of 57,822,495 units for
gross proceeds of $3,469,350. This financing includes $750,000 invested by an
affiliate of BSE. The balance of this financing including the further
contribution by the affiliate of BSE of $1,350,000 is scheduled to close on or
before January 31, 2013.

 

About Black
Spruce Exploration Corp.

Black Spruce
Exploration Corp., (“BSE”), with offices in Calgary, Alberta and Richmond Hill,
Ontario, is an exploration and production company with property rights,
licenses and interests in the province of Newfoundland. A wholly-owned
subsidiary of Foothills Capital Corp. (www.foothillscapcorp.com), Black Spruce Exploration has
signed, as of January 11, 2013, a farmin agreement with Shoal Point Energy Ltd.

As operator,
Black Spruce Exploration has the mandate to determine the best methodology for
the extraction of hydrocarbons from an extensive oil-in-shale play on the west
coast of Newfoundland, ranging 180 kilometres from Port au Port Bay northward
to just past the Parsons Pond area. To achieve this objective, Black Spruce
Exploration, under the direction of its board of directors, and in conjunction
with Shoal Point Energy, will determine the best strategy for this shale-oil
development. It will also employ the investment capital it receives from
Foothills Capital Corp. and its shareholders to execute its strategic plan.

Black Spruce
Exploration Equipment is making arrangements with its affiliated companies to
bring a drilling rig, drill pipe, casing pipe, tubing pipe, heavy picker truck,
hauling trucks and a skidding unit, machine lathes and other field support
equipment from various affiliates of Foothills Capital Corp. in order to ensure
that Black Spruce Exploration has the necessary equipment to safely and
effectively properly drill and develop hydrocarbon energy reserves on the
west coast of Newfoundland.

The board of
directors of Black Spruce Exploration Corp. has over 100
years combined experience directly or indirectly in the energy sector, engaging in transactions that have ranged from $1 million
to over $1 billion in value. Board members have worked for or with junior
companies or large international players such as Conwest Exploration Inc.,
Alberta Natural Gas, Bayridge Resources Limited, HESS Corporation, Burlington
Resources, Gulf Oil, EnCana, Exxon, Helmrich & Payne, Nabors Drilling,
CNRL, UPRI, British Petroleum America, Shell, Southwest Energy, Chesapeake
Energy, Talisman and Statoil. Full details of the officers and directors of BSE
will be provided on the BSE website at www.blspexp.com  which is expected to be fully updated by
January 21, 2013.

Foothills Capital, under TRP Holdings, Corp., presently operates in the
Bakken shale-oil formation through its subsidiary entity Bakken ND Pipe &
Supply, LLC, which is located in Ross, North Dakota. The officers and directors
have worked in other oil and gas shale formation plays throughout the United
States, as well as in conventional oil and gas fields in the United States and
Canada.

About Shoal Point Energy Ltd.

Shoal Point Energy
Ltd is a Canadian-listed public company (SHP:CNSX) with a large working
interest position in a regionally-extensive “tight” oil play within the
Cambro-Ordovician Green Point Formation (“Shale”) of western Newfoundland. The
Green Point is an approximate stratigraphic equivalent, within the northernmost
Appalachians, of the well-known Utica Formation currently under development in
the United States. The company’s technical database, in addition to third-party
analysis, indicates that the Green Point contains a very large resource in the
oil window, and the Company has dedicated itself, in cooperation with its
partners, to bringing this resource to production over the next several years.

 

SPE’s current holdings in western Newfoundland consist of:
(1) a 100% working interest in the Green Point shale rights (“shallow rights”)
in EL 1070, comprising approximately 150,000 acres of prospective shale area,
(2) a right to earn an 80% working interest in the “shallow rights” within a
nearshore portion of EL 1120, held by Ptarmigan Energy Inc., comprising
approximately 67,000 acres, and (3) a 100% working interest in all rights in EL
1097R, comprising approximately 500,000 acres, for a total exposure of
approximately 720,000 gross acres to the Green Point “Shale” play.

 

Shoal
Point currently has 330,531,959 common shares issued and outstanding.

 

Visit our
website at www.shoalpointenergy.com   

 

For further
information, please contact:

 

David Black
-                       
  416-637-2181 ext 308

Hayley Clift
- 416-637-2181 ext 306

 

Except for historical information contained herein, this news release
contains forward-looking statements that involve risks and uncertainties.
Actual results may differ materially from those currently anticipated due to a
number of factors and risks. The forward looking statements contained in this
press release are made as of the date hereof and Shoal Point Energy Ltd.
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.