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Maxim Resources lands UAE acreage with Quest equity deal

23rd March 2015

Maxim Resources has entered into a non-binding Heads of Agreement (HOA) dated effective March 20, 2015 with Dubai-based Quest Investments LLC (QI) and its wholly owned subsidiary Quest Oil & Gas Ventures Inc.

Maxim Resources has entered into a non-binding Heads of Agreement (HOA) dated effective March 20, 2015 with Dubai-based Quest Investments LLC (QI) and its wholly owned subsidiary Quest Oil & Gas Ventures Inc.
Pursuant to the terms of the HOA, Maxim will acquire 50 per cent of the issued and outstanding shares of Quest, which will in turn provide Maxim with an indirect 25 per cent equity ownership interest in Canemir

Upon completion of the transactions contemplated in the HOA, Quest will become a significant shareholder of the Maxim, and Maxim will acquire up to a 25 per cent indirect equity ownership interest in an oil and gas exploration and production concession covering an onshore area of 747 square kilometres within the Emirate of Umm Al-Quwain, in the United Arab Emirates.

"This transaction represents a unique strategic and commercial opportunity for Maxim to accelerate its growth and deliver shareholder value by partnering with leading investment group in the United Arab Emirates," said Andrew Male, CEO of Maxim.

The Concession Rights are held pursuant to a Petroleum Concession Agreement, (PCA) in the Emirate of Umm Al-Quwain in the UAE held by UAQ Petroleum Limited, a Hong Kong domiciled company.

UAQ PL is a subsidiary of Canemir Petroleum (UAQ) Corp., domiciled in the British Virgin Islands. Canemir is owned 50 per cent by Quest and 50 per cent by Arawak Euroasia FZE (Arawak), which is part of the Vitol Group.

Pursuant to the terms of the HOA, Maxim will acquire 50 per cent of the issued and outstanding shares of Quest, which will in turn provide Maxim with an indirect 25 per cent equity ownership interest in Canemir.

Pursuant to the HOA and subject to the negotiation and execution of definitive agreements, Maxim can acquire up to a 50 per cent interest in Quest through a staged transaction, involving the exchange of common shares in the capital of Maxim and cash consideration for shares in Quest.

Closing of the final stage of the transaction is scheduled to occur on or around June 12, 2015, or such other date as mutually agreed to by the parties.

Upon completion of the transactions contemplated in the HOA, Quest may own more than 20 per cent of the issued and outstanding Maxim Shares and may therefore be a "control person" of Maxim as defined in the policies of the TSX Venture Exchange.

The HOA and transactions contemplated therein remain subject to standard closing conditions for a transaction of this nature, including being conditional upon the completion by Maxim of satisfactory due diligence on or before April 6, 2015, and the successful negotiation of definitive agreements.

Pursuant to the HOA, upon signing of definitive agreements, Ian Baron, a director of UAQ PL and stakeholder in Quest, will be appointed to the board of directors of Maxim.

All of the transactions contemplated in the HOA (including the creation of Quest as a "control person" of Maxim) remain subject to the receipt of all required regulatory approvals, including the approval of the TSXV, and the approval of the shareholders of Maxim.

Moreover, it positions Maxim well for future growth by strategically aligning itself with an established MENA-based oil and gas exploration group.

Baron has almost 40 years' experience in the upstream oil and gas business, most of it living and working in the Middle East region. His expertise covers exploration, field development and infrastructure projects. In 2002 he established ESG Dubai, a firm providing project management and advisory services to the energy industry. He has been a non-executive director of several private and public energy companies. He was CEO of Cadogan Petroleum plc and before this was CEO of Dragon Oil plc.

He spent a large part of his career with Conoco Inc. where he reached the position of V.P. of Conoco Middle East based in Dubai, UAE. Baron graduated in Geology from the University of Manchester in England in 1977 and is a member of the UK Institute of Directors, the Association of International Petroleum Negotiators and the American Association of Petroleum Geologists.

Quest and QI are privately held companies whose founder, chairman and controlling interest holder is Mahmood Al Ansari, a U.A.E. national. Through the contemplated transaction QI will become a substantial shareholder of Maxim and in turn QI will agree to appropriate trading restrictions as stipulated by the TSX Venture Exchange and the AIM in the U.K.

Maxim along with its London, U.K. advisors S.P. Angel, who are the company's broker and nomad for its intended AIM Listing in London, will work together to complete an equity capital raising that will be concurrent with Maxim's listing on AIM.

The concession acreage comprises the majority of the land area of the Emirate of Umm Al Quwain in the United Arab Emirates; approximately 747 square kilometres. The concession is well located in a prospective area for oil and gas, and is on trend with significant producing fields in the adjacent Emirates and in the neighbouring Sultanate of Oman.

The main hydrocarbon play is the Lower Cretaceous Thamama Group carbonates which are productive throughout the region.

The Thamama Group is the main reservoir in the Saaja field, located in the Emirate of Sharjah within seven kilometres of Umm al Quwain's southern boundary. The Sajaa Field, operated by BP, has previously reported in place volumes of 7.5 Tcf (trillion cubic feet) gas and 450 MMbbl (million barrels) condensate.

Further to the South in the Margham Field in the Emirate of Dubai where reserves have been reported of 1 Tcf and 100 MMbbl of condensate, the Thamama Group is again the reservoir and is on the same structural trend. Additionally, there are fields to the north of Umm al Quwain, notably the Bukha and West Bukha in the Sultanate of Oman originally discovered by Elf Petroleum.

The concession is also prospective for hydrocarbons at shallower levels with potential in the Lower Tertiary similar to the Hamidyah Field 10 km's west in the neighbouring Emirate of Ajman with estimates of recoverable reserves in the order of 20MMbbl condensate.

The Mecom‐Pure UAQ‐1 well drilled on the Concession in 1967 also encountered oil and gas shows at several levels in the Tertiary. The Late Cretaceous Simsima Limestone is known to be present nearby and is a potential reservoir that is productive in the Shah Field in Abu Dhabi.

Eight wells have been drilled in the concession since exploration began in the 1960's however none have been drilled since 1986. Only two wells are reported to have penetrated the top of the primary reservoir target, the Thamama Group and post drilling seismic interpretation indicates that both of these appear to have been drilled outside structural closures. Post drilling interpretation also indicates that none of the wells were drilled on valid closures at the shallower Tertiary or Late Cretaceous levels. Nevertheless several wells had gas shows, including Al Ali - 2, Thunayah - 1 and Al Rusaifah - 1, while the Mecom‐Pure UAQ‐1 well is reported to have encountered oil and gas shows at multiple levels from 7575'-7725'MD in the Tertiary.

The concession remains under-explored and will benefit from modern seismic acquisition and interpretation technology over the fold and thrust belt complex that covers much of its territory.

A Technical Report on the concession, was prepared by Senergy (GB) Ltd. of the United Kingdom in accordance with National Instrument 51-101, in January 2013.

The company's Phase 1 work program, has been completed comprising re-processing and re-interpretation of the most recent existing 2D and 250 square kilometres of existing 3D seismic data, followed by the acquisition of 200 square kilometres of new 3D seismic acquisition. Based on the results of this program the company anticipates being able to identify a primary prospect for the drilling of an exploration well as its second phase work programme.

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