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Armada's Rockies Drilling Program Hit by Drop in Oil Prices

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Armada Oil, Inc. has provided an update on its activities.

Armada has spent the last three months working diligently on a producing property acquisition and an associated comprehensive financing facility that would have provided capital not only for the acquisition but also for refinancing and an extensive drilling program in its Kansas property as well as the completion of the Bear Creek # 1 well in the Company’s Wyoming project area. Unfortunately, the recent precipitous drop in oil prices combined with the high operating cost nature of the proposed acquisition took away the viability of the transaction. Accordingly, the Company has terminated the purchase agreement related to the acquisition.

The Company is working with its current lender to secure an extension of the terms of its existing credit facility and expects a resolution of that effort before the end of 2014. Although the Company has received an offer to purchase all or part of its Kansas property from an outside party at a price that is equal to or greater than the payoff, the Kansas property provides a solid foundation to the Company’s activities and we are hopeful that a reasonable arrangement can be made with the lender.

The Bear Creek # 1 remains uncompleted at this time. The loss of the financing facility was a setback in that regard and the Company’s efforts have shifted toward a sale of a working interest or a joint venture arrangement of some nature that will allow us to proceed with what is, based on all the data we have obtained to date, not only an outstanding well but also a tremendous Niobrara development project.

Randy M. Griffin, CEO of Armada Oil, Inc., commented: "Although the drop in oil prices resulted in the loss of an outstanding financing opportunity, there is a silver lining. We believe that producing property acquisition opportunities will surface in the 1^st quarter of 2015 at pricing that has not been seen in a number of years and that the relationship we now have with the investment fund we were working with on the finance facility will be invaluable when those opportunities present themselves. Armada is a viable public vehicle with the experience and expertise to locate, evaluate, acquire and operate any size or type of oil and gas property. Our intention now is to reduce expenses as best we can and to stay the course. The opportunities will come, and we fully expect to be in a position to take advantage of them when they do."