Pipestone Oil Corp. (‘Pipestone') entered into an agreement to acquire Blackbird Energy Inc. (TSXV:BBI) (‘Blackbird') from GMT Capital Corp. and other shareholders in a reverse merger transaction on October 26, 2018. The transaction will be completed by way of an amalgamation of Blackbird and Pipestone to create Pipestone Energy Corp. pursuant to a plan of arrangement. The transaction is structured as the acquisition of Pipestone by Blackbird in stock merger wherein Pipestone shareholders will receive 103.75 million new shares (equivalent to 1.0375 billion pre-consolidation shares) of Blackbird. Pursuant to share conversion terms under the arrangement, Blackbird common shares of will be consolidated on a 10:1 basis. Upon completion of the arrangement and financings, Blackbird shareholders would own approximately 45% stake in the combined entity. As part of share reorganization under the arrangement, Blackbird's minority interest in the stage completions group of companies will be transferred to a holding company whose shares will be distributed to Blackbird's shareholders. In a related transaction, Blackbird and Pipestone have entered into agreements with certain of their existing shareholders who have committed to common equity financings totaling CAD 111 million and Pipestone has arranged CAD 198.5 million of debt financing. The agreement also provides for mutual non-completion fees in the amount of CAD 12 million in the event that the arrangement is not completed or the arrangement agreement is terminated by either party in certain circumstances.

Pipestone Energy will be led by Paul Wanklyn (as President and Chief Executive Officer) and Bob Rosine (as Chief Operating Officer). Certain employees of both companies will have roles in Pipestone Energy. The Board of Pipestone Energy will comprise two Blackbird nominees, Garth Braun (Chairman, Chief Executive Officer and President of Blackbird) and Bill Lancaster (President of GMT Exploration Company LLC); three Pipestone Oil nominees, Geeta Sankappanavar (Co-Founder & President of Grafton Asset Management), Robert Tichio (Partner at Riverstone Holdings LLC), and Paul Wanklyn (President and Chief Executive Officer of Pipestone Energy); and two additional independent nominees (one of whom will serve as the Chairperson of the Pipestone Energy Board). Richard Grafton will serve as a strategic advisor to the Board of Directors.

The transaction is subject to approval from holders of Blackbird shares with at least 66-2/3% of votes cast in favor of the transaction. In addition to shareholder approval, the agreement is also subject to the receipt of certain regulatory, court and TSX-V approvals, completion of private placement transaction, execution of escrow agreement, execution of registration rights agreement and certain other closing conditions customary in transactions of this nature, including under the Competition Act (Canada) and if applicable, disinterested shareholder approval. The Blackbird Board unanimously approved the transaction and has recommended that the holders of Blackbird Shares vote in favor of the transaction. All of the Directors and officers of Blackbird, and Blackbird's principal shareholder GMT (together representing approximately 16.9% of the issued and outstanding Blackbird shares), have entered into agreements with Pipestone pursuant to which they have agreed to vote their Blackbird shares in favor of the transaction. On December 19, 2018, Blackbird shareholders approved the transaction at a special meeting by a majority of over 99% of votes cast. On December 20, 2018, the Alberta Court of Queen's Bench granted a final order approving the arrangement. The transaction has also been conditionally accepted by the TSX Venture Exchange, subject to the filing of customary documentation. The transaction is expected to close on or about January 4, 2019. The transaction is expected to be accretive to the combined company.

Cormark Securities Inc. and BMO Capital Markets are acting as financial advisors and Colin Perry of Bennett Jones LLP acted as the legal advisor to Blackbird. Cormark Securities Inc. and BMO Capital Markets have provided an opinion to the Blackbird Board that the consideration is fair from a financial point of view to the holders of Blackbird shares. Peters & Co. Limited is acting as the exclusive financial advisor to Pipestone. National Bank Financial is acting as financial advisor to Pipestone and the lead arranger and sole bookrunner with respect to the credit facility. CIBC World Markets acted as a financial advisor to the Board of Canadian Non-Operated Resources LP, the parent company of Pipestone. Neal Ross of Osler, Hoskin & Harcourt LLP acted as the legal advisor to Pipestone. Kevin Crews, Benjamin Adelson, Alex Poor and Lane Morgan of Kirkland & Ellis LLP acted as legal advisors to Canadian Non-Operated Resources. Laurel Hill Advisory Group acted as the information agent to Blackbird.Dan Komarek, David Cohen, Xiaotang Wang, Brenda Lenahan, David Choi, David Peck, Allyson Seger and Mark Phillips of Vinson & Elkins acted as legal advisor to Canadian Non-Operated Resources L.P., parent of Blackbird Energy Inc.

Pipestone Oil Corp. completed the acquisition of Blackbird Energy Inc. (TSXV:BBI) (‘Blackbird') from GMT Capital Corp. and other shareholders in a reverse merger transaction on January 4, 2019. Concurrent with the transaction, Blackbird and Pipestone Oil closed equity financings totaling CAD 111 million with certain existing shareholders and Pipestone Oil arranged CAD 198.5 million of debt financing. It is expected that the common shares of Pipestone Energy Corp. (the combined company) will commence trading on the TSX Venture Exchange under the trading symbol "PIPE" within two to three business days after closing and the issuance of a bulletin by the TSX-V regarding completion of the arrangement. Blackbird's existing common share purchase warrants will continue as obligations of Pipestone Energy and will retain the trading symbol “BBI.WT”.