Cancen Closes First Tranche of Its Private Placement and Enters Into A Term Sheet for Mezzanine Financing

EDMONTON, ALBERTA – August 3, 2012 – Cancen Oil Canada Inc. ("Cancen" or the "Corporation" – TSX Venture: COI) is pleased to announce that it has closed the first tranche of its previously announced private placement financing (the "Private Placement") consisting of 12% secured subordinated convertible debentures (the "Secured Subordinated Debentures").

Pursuant to the first closing of the Private Placement, the Corporation issued 2,960 Secured Subordinated Debentures representing an aggregate principal amount of $2,960,000 through a syndicate of agents led by Stonecap Securities Inc. and including Wolverton Securities Ltd. (the "Agents") together with Macquarie Private Wealth Inc. as a special selling group member. The Agents were paid a cash commission and advisory fees of $235,550 and were granted 197,333 compensation warrants (the "Compensation Warrants"), with each Compensation Warrant entitling the holder to acquire one common share of the Corporation at a price of $0.60 per Share until August 2, 2014.

The net proceeds from the Private Placement will be used to fund the Corporation's 2012 capital expenditure program and for general working capital purposes.

The Corporation and the Agents anticipate a second closing of the Private Placement will take place on or about August 23, 2012.

In addition to the closing of the first tranche of the Private Placement, the Corporation also announces it has entered into a term sheet with Tallinn Capital Corp. ("Tallinn"), pursuant to which Tallinn has offered to loan up to $10,200,000 to the Corporation (the "Mezzanine Financing"). The Mezzanine Financing will bear interest at a rate of 12.75% and will have a term of two years. Completion of the Mezzanine Financing is subject to several conditions precedent, including completion of due diligence by Tallinn, Cancen board of directors approval, regulatory approval, completion of formal security documentation, Cancen completing an additional closing of the Private Placement, as well as the usual other conditions for financings of this nature.

The Secured Subordinated Debentures have a face value of $1,000 per Secured Subordinated Debenture, a maturity date of July 31, 2016, and be convertible into common shares of the Corporation at the option of the holder at a conversion price, subject to certain adjustments, of $1.00 per common share (the "Conversion Price") being a conversion rate of 1,000 Cancen common shares for each $1,000 principal amount of Secured Subordinated Debentures. The Secured Subordinated Debentures accrue interest at a rate of 12.0% per annum payable semi-annually in arrears on January 31 and July 31 in each year commencing January 31, 2013. The January 31, 2013 interest payment will represent accrued interest for the period from the closing date. After July 31, 2015 and prior to the maturity date, the Corporation may, at its option, subject to providing not more than 60 and not less than 30 days prior notice, redeem the Secured Subordinated Debentures, in whole or in part, at par plus accrued and unpaid interest provided that the volume weighted average trading price of the common shares of the Corporation on the TSX Venture Exchange ("TSX Venture") during the 20 consecutive trading days ending five trading days preceding the date on which the notice of redemption is given is not less than 125% of the Conversion Price.

Subject to specified conditions, the holders of the Secured Subordinated Debentures may elect, subject to regulatory approval, to have the Corporation repay the outstanding principal amount of the Secured Subordinated Debentures, on maturity or redemption, through the issuance of common shares of the Corporation. The Secured Subordinated Debentures are subject to a four month hold period expiring on December 3, 2012.