Canoel Provides Update on Acquisition of Gas Producing Licenses and Exploration Acreage in Italy

CALGARY, ALBERTA--(Marketwired - April 3, 2013) -

THIS PRESS RELEASE IS NOT TO BE DISTRIBUTED TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Canoel International Energy Ltd. ("Canoel" or the "Company") (TSX VENTURE:CIL) considers it is appropriate to communicate with the market after seven months from the first announcements informing that its important acquisition in Italy is well progressing.

In September 6^th 2012, Canoel announced that it has entered into a purchase and sale agreement with Medoilgas Italia SpA and Medoilgas Civita Limited, each a subsidiary of Mediterranean Oil and Gas Plc (collectively, "MOG") (AIM: MOG) to acquire MOG's entire working interest in 13 onshore exploration and production assets (the "Proposed Transaction").

The parties are waiting approval of the Italian Ministero Sviluppo Economico before closing the Proposed Transaction. Canoel expects such approval to be obtained, tough the exact timing is unclear.

The production assets (the "Assets") are comprised of (i) 6 operated onshore gas production concessions: Masseria Grottavecchia (20% working interest), San Teodoro (100% working interest), Torrente Cigno (45% working interest), Misano Adriatico (100% working interest), Sant'Andrea (40% working interest) and Masseria Petrilli (50% working interest); (ii) 3 non-operated onshore gas production concessions: Masseria Acquasalsa (8.8% working interest), Lucera (13.6% working interest) and San Mauro (18% working interest) (collectively, the "Gas Licences"); (iii) an operated exploration permit: Montalbano (57.15% working interest) (the "Exploration Permit"); and (iv) and 3 exploration permit applications: Serra dei Gatti (100% working interest), Villa Carbone (50% working interest) and Colle dei Nidi (25% working interest) (the "Exploration Applications").

Upon completion of the Proposed Transaction the Company will (i) assume the liability for all future plug, abandonment and site remediation costs associated with the Assets; (ii) receive EUR1,250,000 (approximately CAD $1,650,000) as a partial contribution towards the future plug, abandonment and site remediation costs for the Assets; and (iii) furthermore receive the revenues MOG received from the Assets during the period between the effective date of the Proposed Transaction (August 24, 2012) and the date the Proposed Transaction is closed, net of allowable operating costs and agreed capital expenditure associated with the Assets and incurred by MOG from the effective date until closing. This second amount is estimated approximately to be be CAD 500,000 if the transaction would close in the month of April 2013.

Hence the total amount that Canoel will receive amounts to CAD 2,150,000 (CDN $ Two million one hundred fifty thousands)
The gas production to be acquired currently accounts for 13,800 m3/day (equal to 487 MCF per day).

Most of the Gas Licenses are located in the Southern part of Continental Italy in the Regions of Puglia, Basilicata, Molise, Abruzzo and Marche.

The Exploration Permit and Exploration Applications are in respect of properties located in the South of Italy and have a total acreage dimension of 1.285,41 square kilometres.

In addition, last year Canoel was awarded 2 gas producing concessions in this same geographical area by the Italian "Ministero dello Sviluppo Economico", These concessions, Torrente Vulgano and Canaldente, are respectively located in the Regions of Puglia and Basilicata.

Canoel has engaged an engineering company to prepare a 51-101 report on the properties subject to the Gas Licences and the Exploration Permits as well as the Torrente Vulgano and Canaldente concessions previously acquired.

While the major contribution to Canoel's business remains its profitable oil production in Argentina (see Press release disseminated on the 2^nd of April 2013), with this acquisition Canoel will develop its second operations center already based in Italy.

Italy ranks as the 4^th largest producer of oil & gas in Europe with 8,330 billion m3 (294,500 bcf) of annual natural gas production. Current European pricing metrics offer a premium to North American commodity prices, with current cost per MMBtu ranging in the equivalent of approximately CAD $12.70 compared to North American pricing approximately around CAD $2.35. ( Source NEB)

Indeed in the Italian markets the current prices at which the natural gas is sold vary between Euro 0.34 and Euro 0.38 per m3 of gas.

Andrea Cattaneo, the company's CEO, states " We are satisfied to see the transaction developing steadily. These new concessions complements Canoel's current operational structure, i.e. its Italian subsidiary, Canoel Italia S.r.l. which operates two existing licences already in Canoel hands, Torrente Vulgano and Canaldente; so maximizing Canoel Italia's resources in the region and the existing structures of the group in Italy.

We work toward combining these revenues with the already existing revenues in Argentina to form a stronger group based on the cash flows from Argentina and Italy and with the upside represented by the negotiations for new producing properties in Libya and in Nigeria."

Forward-Looking Information

Certain information in this press release is forward-looking within the meaning of Canadian securities laws as it relates to anticipated events and strategies. When used in this context, words such as will, anticipate, believe, plan, mandated, intend, target, and expect or similar words suggest future outcomes.

Forward-looking information in this press release includes, among other things, information relating to: (i) the closing of the Proposed Transaction; (ii) the ability of the Company to operate the operated Gas Licences; (iii) the Company preparing its engineering report in accordance with National Instrument 51-101; and (iv) the sales prices expected to be received for gas produced from the properties subject to the exploration licences.

These statements are based on certain assumptions and analyses made by the Company in light of its experience, current conditions and expected future developments and other factors it believes are appropriate. The material factors and assumptions used to develop these forward-looking statements include, but are not limited to: (i) the ability of the Company to close the Proposed Transaction as contemplated; (ii) the ability of the Company to raise the needed capital to operate the operated Gas Licences; (iii) the ability of the Company to complete its engineering report of the Assets in accordance with National Instrument 51-101; and (iv) that the Company will be able to sell the gas produced from the Assets, if any, at current market prices.

Whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from the Company's expectations. Such risks and uncertainties include, but are not limited to, risks relating to: (i) whether the Proposed Transaction will be completed or close as expected; (ii) whether the Company is able to maintain tenure to Gas Licences and the Exploration Permit; (iii) whether the Exploration Applications will be successful; (iv) the ability of the Company to effectively operate the operated Gas Licences; and (iv) obtaining new financing, as required, to operate and maintain the properties. If any such risks actually occur, they could materially adversely affect the Company's business, financial condition or results of operations. In that case the trading price of the Company's common shares could decline, perhaps materially .

Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Forward-looking statements are provided for the purpose of providing information about management's current expectations, and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. Canoel does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in Canoel's expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

Glossary

Bcf Billion cubic feet

MMBtu Million British Thermal Unit