American Natural Energy Corporation Announces Letter of Intent

TULSA, Okla., Aug. 3 /PRNewswire-FirstCall/ -- American Natural Energy Corporation ("ANEC") (TSX Venture: ANR.U) announced that it has signed a non-binding Letter of Intent ("LOI") with a group of institutional investors to provide financing to be used for the drilling and completion of ANEC's proved undeveloped reserves.

The financing, in the total amount of US$5 million including an Original Issued Discount ("OID") of US$1 million, can be drawn in 2 tranches of US$2 million each evidenced by separate secured convertible notes ("Notes"). The second tranche is available upon meeting several administrative and operational conditions within six months of the original funding, including the success of our initial drilling activities using the initial tranche and our common stock trading on an acceptable trading market.  The Notes are non-interest bearing and convertible into ANEC common shares at US$0.10 per share.  Warrants, exercisable into common shares, will also be issued with the funding of each tranche in the amount of 19 million and 12 million, respectively and exercisable at US$0.15 and US$0.25, respectively.  All warrants are exercisable for a term of 36 months from date of issue. The OID portion of the financing ("OID Note") will be issued in proportion to the funding of each tranche of Notes. Each OID Note will be non-interest bearing, non-convertible and amortizable commencing 22 months after closing of the respective tranche of Notes. Each OID Note will have an amortization period of 15 months until repaid. The OID Notes are un-secured and 1 million restricted bonus shares will be issued with each OID Note.  The full conversion of the notes and exercise of the warrants will result in the issuance of an additional approximately 73.0 million shares of our common stock.  All share amounts and exercise and conversion prices are subject to anti-dilution adjustment including adjustment for our intended 1 for 10 reverse stock split.

Completion of the funding under the LOI is subject to completion of definitive documentation.  

ANEC is a Tulsa, Oklahoma based independent exploration and production company with operations in St. Charles Parish, Louisiana.  For further information please contact Michael Paulk, CEO at 918-481-1440 or Steven P. Ensz, CFO at 281-367-5588.

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.

This Press Release may contain statements which constitute forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995, including statements regarding the plans, intentions, beliefs and current expectations of ANEC, its directors, or its officers with respect to the future business, well drilling and operating activities and performance of ANEC.  Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The actual results and outcome of events may differ materially from those in the forward-looking statements as a result of various factors.  The levels of and fluctuations in the prices for natural gas and oil and the demand for those commodities, the outcome of ANEC's development and exploration activities, including the success of its current and proposed well drilling activities and the availability of capital to pursue those activities could affect ANEC and its future prospects. Important additional factors that could cause such differences are described in ANEC's periodic reports and other filings made with the Securities and Exchange Commission and may be viewed at the Commission's Website at http://www.sec.gov.

SOURCE American Natural Energy Corporation