Japan Drilling Co., Ltd. Acquires 16,522,500 Common Shares of CGX Energy Inc.

TORONTO, ONTARIO--(Marketwired - Jan. 21, 2016) - Japan Drilling Co., Ltd. ("JDC") announces that on January 11, 2016, pursuant to a settlement agreement dated November 30, 2015 between JDC, CGX Energy Inc. ("CGX") and CGX's wholly owned subsidiary CGX Resources Inc. (the "Settlement Agreement"), JDC has closed the acquisition of, and now owns and controls, 16,522,500 common shares ("Settlement Shares") of CGX representing, on a non-diluted basis, approximately 15% of the issued and outstanding common shares of CGX ("CGX Shares") after giving effect to the issuance of the Settlement Shares. JDC did not own or control any CGX Shares prior to the issuance of the Settlement Shares.

CGX issued the Settlement Shares from treasury at a deemed price of C$0.44 per Settlement Share as consideration for the settlement of C$7,269,900 in outstanding debt owing to JDC.

Pursuant to the Settlement Agreement, the parties agreed to settle approximately US$20.35 million of outstanding debt owed by CGX Resources Inc. to JDC (the "JDC Debt"). The Settlement Agreement provides for a parent guarantee from CGX to JDC in respect of the JDC Debt. Pursuant to the Settlement Agreement, the parties agreed to settle the JDC Debt as follows: (i) US$5.5 million in exchange for the issuance of the Settlement Shares; (ii) US$500,000 paid on or before December 1, 2015 (the "First Payment"); (iii) approximately US$7.18 million paid on or before March 25, 2016; and (iv) approximately US$7.18 million paid on or before June 15, 2016. On January 11, 2016, CGX paid US$100,898.63, representing US$100,000 plus the accrued and unpaid interest thereon, from and including December 1, 2015, in respect of the partial settlement of the First Payment and JDC has agreed to CGX's deferred payment of the remaining balance of the First Payment (plus the accrued and unpaid interest thereon, from and including December 1, 2015) which shall be made immediately upon funds becoming available to CGX to satisfy such amount, however, by not later than March 25, 2016. The Settlement Agreement contains representations, warranties and covenants of the respective parties and conditions to closing that are standard and customary in agreements of this nature.

JDC acquired the Settlement Shares pursuant to the Settlement Agreement for investment purposes. JDC intends to assess its percentage holdings in CGX from time to time and, insofar as it deems it appropriate and it is permissible in law, will consider increasing or decreasing its holdings in CGX based on market conditions and other circumstances.

The Settlement Shares are being issued pursuant to the prospectus exemption contained in section 2.14 of National Instrument 45-106 - Prospectus Exemptions which provides that the prospectus requirement does not apply to a distribution by a reporting issuer of a security of its own issue to a creditor to settle a bona fide debt of that reporting issuer.

For further information and to obtain a copy of the early warning report which will be filed under applicable Canadian securities laws, please see CGX's profile on the SEDAR website at www.sedar.com.