Scimitar Hydrocarbons Corporation And Rally Energy Corp. Finalize Pre-Acquisition Agreement

Business Wire, May 8, 2002

Business Editors

CALGARY, Alberta--(BUSINESS WIRE)--May 8, 2002

Scimitar Hydrocarbons Corporation ("Scimitar") (CDNX: SIY) announces that it has signed a pre-acquisition agreement with Rally Energy Corp. ("Rally") in respect of a proposed business combination of Rally and Scimitar whereby Rally will acquire from or exchange with all of the holders of common shares of Scimitar ("Scimitar Shares") all Scimitar Shares on the basis of one common share of Rally for each 2.2 Scimitar Shares.

Since the October 2001 Commerciality Declaration of the Issaran Project, Scimitar now has the opportunity to significantly expand its Egyptian investment and increase oil production from its currently estimated level of 700 bopd. Additionally, Scimitar was awarded an Exploration Licence and Concession Agreement for gas/condensate properties in Pakistan and has commenced the two year evaluation period. In order to access the management expertise and additional capital required to enhance shareholder value, Scimitar has explored a number of options, including debt financing, joint ventures and various strategic alliances. As a result of this review, the Board of Directors of Scimitar has unanimously approved the proposed transaction with Rally. The Board of Directors of Rally has also approved the proposed transaction.

The proposed transaction is subject to a number of terms and conditions including:

(i) the execution of a definitive acquisition agreement;

(ii) if the proposed transaction is structured as a plan of

arrangement, the approval by holders of Scimitar Shares of a

special resolution approving the proposed transaction;

(iii)if required under applicable law, the approval of the

proposed transaction by shareholders of Rally;

(iv) the completion of due diligence to the satisfaction of both

parties;

(v) receipt by each of Rally and Scimitar of an opinion from its

respective financial advisor that the proposed transaction

is fair, from a financial point of view, to its

shareholders;

(vi) the repayment by Scimitar of the outstanding $900,000 loan

which was provided by an arm's length third party in

February 2002; and

(vii)Rally shall have completed or obtained irrevocable

subscriptions for an equity financing for minimum gross

proceeds of $4 million.

The management of Rally will assume management of Scimitar's international projects, effective immediately. Angus A. Mackenzie and James S. Palmer will be appointed to the Board of Directors of the combined entity.

Rally and Scimitar have each agreed that it will not solicit any offer or expression of interest to acquire any material portion of its assets outside of the ordinary course of business or securities, subject to the fiduciary obligations of the Boards of Directors to their respective shareholders. In addition, each of Rally and Scimitar has agreed to pay a non-completion fee of $250,000 in certain circumstances.

Jennings Capital Inc. has been retained as financial advisor to the Board of Directors of Scimitar to provide a written opinion with respect to the fairness of the financial terms of the proposed transaction.

Certain shareholders of Scimitar who hold approximately 25% of the current outstanding Scimitar Shares (and 31% of the outstanding Scimitar Shares calculated on a fully diluted basis), including all officers and directors of Scimitar, have agreed to tender their shares to or vote their shares in favour of the proposed transaction.

The TSX Venture Exchange has neither approved nor disapproved the information contained herein.