(TSX-V | OYL)

TORONTO , May 28, 2012 /CNW/ - CGX Energy Inc. (TSX-V - OYL) ("CGX" or the "Company") announced on May 7, 2012 cost increases on its Eagle-1 well and the need to raise approximately $20 million in the near term. The initial cost estimate for the Eagle-1 well was $55 million increasing to $71 million on May 7 . But now as final costs accumulate, the ultimate cost is estimated to be approximately 10% higher than estimated on May 7 . To meet its near term funding requirements, the Company is pleased to announce that it has entered into a definitive subscription agreement (the "Subscription Agreement") with Pacific Rubiales Energy Corp. ("Pacific Rubiales") dated May 27, 2012 pursuant to which Pacific Rubiales has subscribed for 85,714,285 units of CGX (the "Units") by way of private placement at a price per Unit of
.35 for an aggregate purchase price of $30 million . Each Unit will consist of one common share and one-half of one common share purchase warrant of the Company (each whole warrant, a "Warrant"). Each Warrant will be exercisable for one CGX common share at an exercise price of
.60 per common share for a period of 18 months following the date of issuance of the Units. All common shares that comprise the Units and any common shares issued on exercise of the Warrants will be subject to a four month hold period from the date of issuance of the Units. The proceeds from the private placement will be used to fund expenditures related to the Company's oil and gas exploration activities in the Guyana-Suriname Basin and for general corporate purposes. The private placement is subject to approval of the Company's shareholders (as described below) and acceptance by the TSX Venture Exchange (the "Exchange"). The Units are expected to be issued within a week following the required Exchange and shareholder approval.

Pacific Rubiales currently owns approximately 18% of the Company's issued and outstanding common shares and is an insider of the Company. As a result, the private placement is considered a Related Party Transaction (as that term is defined in the policies of the Exchange and applicable securities laws). The private placement will result in Pacific Rubiales becoming a new Control Person (as that term is defined in the policies of the Exchange) holding approximately 35% of the Company's issued and outstanding common shares on closing of the private placement (approximately 41% if all of the Warrants are exercised). Accordingly, the private placement is subject to approval by the Company's shareholders as well as acceptance by the Exchange. Shareholder approval will be sought at the Annual and Special Meeting of Shareholders of the Company to be held on June 28, 2012 (or at any adjournment or postponement thereof) (the "Meeting") by ordinary resolution of shareholders, provided that the votes attached to the Company's common shares held by Pacific Rubiales and its associates and affiliates will be excluded from the calculation of such approval. Certain of the directors of the Company have entered into voting agreements with Pacific Rubiales pursuant to which they will vote their CGX shares in favour of the private placement at the Meeting. The closing of the private placement is expected to occur five business days following the date that the Company obtains all necessary shareholder and Exchange approvals.

In connection with the entering into of the Subscription Agreement and in order to meet the Company's immediate financing needs, Pacific Rubiales has agreed to advance to the Company $30 million on May 29, 2012 (the "Loan"). The Loan will be evidenced by a promissory note and secured as described below. If the required Exchange and shareholder approvals for the private placement are obtained, on closing of the private placement, the promissory note will be cancelled by Pacific Rubiales in full satisfaction of the aggregate purchase price of the Units. If the approvals have not been obtained on or before July 31, 2012 , the promissory note will become payable upon 30 business days notice by Pacific Rubiales to the Company. Prior to July 31, 2012 , no interest is payable on the promissory note. However, if the Units are not issued by July 31, 2012 , interest will become payable on the principal amount of the promissory note at a rate of 13.5%, compounded quarterly, until the promissory note is repaid in full. In such a scenario, the Company expects to repay the amounts owing under the promissory note through the issuance of additional equity or the sale of a farm-in interest in one or more of its petroleum agreements.

As security for the obligations of the Company under the promissory note, the Company has agreed to enter into a pledge agreement with Pacific Rubiales pursuant to which it will pledge 49% of the common shares of CGX Resources Inc. ("CGX Resources"), a wholly-owned subsidiary of the Company, to Pacific Rubiales. If shareholder approval for the private placement is not obtained at the Meeting, the Company will pledge the remaining 51% of the common shares of CGX Resources to Pacific Rubiales to secure its obligations under the Loan. The security interest(s) will terminate on the first to occur of the closing of the private placement and the date that the promissory note has been repaid.

If the Company's shareholders do not approve the private placement at the Meeting, the Company has also agreed that all standstill provisions currently restricting Pacific Rubiales will be deemed to be automatically terminated.

Under the terms of the Subscription Agreement, Dr. Marino Ostos Rosales will be appointed to the board of directors of the Company. In addition, the Company has agreed to include Dr. Ostos and Mr. José Francisco Arata on management's slate of nominees for director included in the management information circular to be prepared in connection with the Meeting and to appoint a third individual nominated by Pacific Rubiales and eligible under the Business Corporations Act(Ontario) to serve on the Company's board of directors on or prior to December 31 , 2012. Dr. Ostos is Senior Vice President, New Areas for Pacific Rubiales. He has over 30 years of experience in E&P operations and management and was one of the founders of Pacific Stratus Ventures, later known as Pacific Stratus Energy where he served as President and Chief Operating Officer. Dr. Ostos holds a Masters and Ph.D. in Geological Sciences from Rice University, Houston , Texas as well as a Bachelor in Geosciences and a Geological Engineering Degree.

Subject to obtaining any required approvals of the Exchange, the Company has agreed to pay an advisory fee of 4% of the gross proceeds of the private placement to GMP Securities L.P.

In connection with the private placement and the Loan, the Company has granted Pacific Rubiales the right until the earlier to occur of: (a) the date on which Pacific Rubiales owns less than 15% of the outstanding common shares of the Company, and (b) the date that is two years following the closing date of the private placement, to participate in certain subsequent offerings or private placements by the Company in order for Pacific Rubiales to maintain the lesser of: (i) its percentage ownership interest in the common shares of the Company held immediately prior to such offering or placement, and (ii) 35.06% of the issued and outstanding common shares of the Company.

The Company and Pacific Rubiales have also entered into an earn-in and technical cooperation agreement dated May 27, 2012 pursuant to which, among other things: (i) Pacific Rubiales will provide technical assistance to the Company in respect of its operations, and (ii) Pacific Rubiales will have the right to participate in the Company's next commitment well on each of the Corentyne Petroleum Prospecting License ("PPL") and the Annex PPL by funding 50% of all costs related to such commitment wells (and in the case of the Annex PPL, by also funding 50% of the seismic program) in exchange for a 33% interest in the applicable petroleum license.

Suresh Narine, Chairman, commented, "We are very pleased with the support we have received from Pacific Rubiales, a major shareholder of CGX, and we are looking forward to working with Dr. Ostos and Mr. Arata , both highly experienced E&P professionals. This investment underscores Pacific Rubiales' confidence in the Company's offshore acreage and the exploration program being undertaken by CGX."

Pacific Rubiales, is a Canadian-based company and producer of natural gas and heavy crude oil, owns 100 percent of Meta Petroleum Corp., a Colombian oil operator which operates the Rubiales and Piriri oil fields in the Llanos Basin in association with Ecopetrol, S.A., the Colombian national oil company. Pacific Rubiales is focused on identifying opportunities primarily within the eastern Llanos Basin of Colombia as well as in other areas in Colombia and northern Peru . Pacific Rubiales has working interests in 45 blocks in Colombia , Peru and Guatemala . Pacific Rubiales' common shares trade on the Toronto Stock Exchange and La Bolsa de Valores de Colombia under the ticker symbols PRE and PREC, respectively. Additional information on Pacific Rubiales may also be examined and/or obtained through the internet by accessing the website of Pacific Rubiales atwww.pacificrubiales.com.

CGX Energy is a Canadian-based oil and gas exploration company focused on the exploration of oil in the Guyana-Suriname Basin, an area ranked second in the world for oil and gas prospectivity by the United States Geological Service. CGX is managed by a team of experienced oil and gas and finance professionals from Guyana , Canada , the United States and the United Kingdom .

The Units when issued will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements.

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.

Forward-Looking Statements:

This press release contains forward-looking statements. More particularly, this press release contains statements that include, but are not limited to, the timing of the advance and related security, the closing of the private placement, the anticipated use of proceeds and the receipt of the required shareholder and stock exchange approvals. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "would", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur.

The forward-looking statements are based on certain key expectations and assumptions made by CGX. Although CGX believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because CGX can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. In addition to other risks that may affect the forward-looking statements in this press release and those set out in CGX's management discussion and analysis of the financial condition and results of operations for the year ended December 31, 2011 , the closing of the private placement could be delayed if CGX is not able to obtain the necessary shareholder and stock exchange approvals on the timelines it has planned and the private placement will not be completed at all if these approvals are not obtained or some other condition to the closing is not satisfied. Accordingly, there is a risk that the private placement will not be completed within the anticipated time or at all. The intended use of the net proceeds of the private placement by CGX may change if the board of directors of CGX determines that it would be in the best interests of CGX to deploy the proceeds for some other purpose.

The forward-looking statements contained in this press release are made as of the date hereof and CGX undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.