25th Oct 2007 15:45
Leni Gas & Oil PLC25 October 2007 For Immediate Release 25 October 2007 Leni Gas & Oil Plc ("Leni Gas" or the "Company") Proposed acquisition of Compagnine Petrolifera De Sedano ("CpS") Application for Admission of the Enlarged Share Capital to trading on AIM Introduction The Board is pleased to announce that it has today entered into a conditionalagreement to purchase the entire issued share capital of CpS from Ascent for:(i) EUR 2,250,000 (two million two hundred and fifty thousand Euros) and; (ii)eight million Ordinary Shares hereinafter defined as the Consideration Shares(which at the closing mid-share price of 7.375 pence per share as at the closeof business on 24 October 2007 represents a value of £590,000). Therefore thetotal consideration for the Acquisition will be approximately £2,075,000. The business of CpS will, subject to Completion, consist of the exploration forand production of oil and gas in Spain, principally the operation of 11production wells in the Ayoluengo Field, the only onshore oil field in Spain.Under the terms of the Acquisition Agreement, Ascent has agreed to procure thatthe legal ownership of the La Lora License and the Exploration Licence (to theextent not already vested in CpS) are transferred to the Company and allroyalties, net proceeds and returns derived from the La Lora License and theExploration Licence accrue to the Company with effect from 1 August 2007. The LaLora Licence is subject to an external 11.25 per cent. beneficial interest asreferred to below. Ascent has further granted the Company an option to acquire a40 per cent participating interest in the interest that Ascent holds in relationto Seeland-Frienisberg Permit in Switzerland. Following Completion, the Company will enter into arrangements with Gold Oil PLCto document the continued existence of Gold Oil Plc's beneficial interest of11.25 per cent in the La Lora Licence resulting in the Company retaining an88.75 per cent. interest through its ownership of CpS. The Directors believe that the Proposals represent an opportunity to createvalue for Shareholders and consequently the marginal dilution of the existingOrdinary Shares together with the utilisation of approximately 27 per cent ofthe Company's cash resources are justified. The Acquisition constitutes a Reverse Takeover under the AIM Rules due to thesize of the transaction in relation to the size of the Company and is thereforeconditional (inter alia) upon the approval of Shareholders. This will result inthe change in status of the Company from an investing company to an operatingcompany with a material trading activity. A Reverse Takeover also involves thecancellation of the Company's shares from trading on AIM and application hasbeen made for the Enlarged Share Capital amounting to 393,400,427 OrdinaryShares of 0.05p each to be admitted to trading on AIM and it is expected thatdealings will commence following the reverse on 13 November 2007. Background to and Reasons for the Acquisition Since IPO Admission the Directors have been reviewing various opportunities inline with the Company's investment and acquisition strategy. The Company'sinvestment strategy is to review project opportunities at all stages from earlyexploration to later production. The Ayoluengo Field has been in production since 1964, and is in the finalstages of primary production. Reserves are reported in the Competent Person'sReport on the basis that operations continue as at present, with no newinvestment in the field. The Directors believe that the opportunity existsthrough investment in secondary recovery methods to increase the currentreserves base. The Ayoluengo Field lies within the La Lora Licence, which isbeneficially owned by Ascent (88.75 per cent. interest) and Gold Oil Plc(11.25per cent.). Ascent acquired its interests over the period 2005-2006. TheLa Lora Licence was granted in 1967, and expires on 30th January 2017. The CPS Exploration Licences are subject to a 50 per cent. interest held byTethys Oil Spain AB. Given that the La Lora Licence was held by separate entities in a complexstructure, the Company has agreed pursuant to the Acquisition Agreement toacquire CpS (which has a limited trading history) from Ascent which in turn hasagreed to transfer the legal title of La Lora Licence to CpS. The Directors believe that, taking into account the value of the Considerationand the potential performance and expansion opportunities for the EnlargedGroup, the Acquisition which is in line with the Company's strategy, providesthe opportunity to generate significant value for Shareholders. Information on Ayoluengo Field in the La Lora Licence, Spain The Ayoluengo Field, discovered in 1964 by Chevron, is the only onshore oilfield in Spain, located in the Burgos sub-basin in the Cantabrian mountains ofnorthern Spain. Production started in 1964, ramping up to a peak production of5098 b/d in July 1969. The field is now very mature and heavily in decline.Cumulative production at 1st August 2007 was 17.002 mmbo. 52 production wellshave been drilled, of which 41 are now shut in, leaving 11 still producing.Field production in July 2007 was 116 b/d, with an average production of 9.7 b/dper well. The primary development of the field included 32 wells in the 1960'sfollowed by 19 wells between 1976 and 1985. The last well was drilled in 1991. Some water injection has been carried out on the field in up to 5 wells,although there is limited information on injection performance. The AyoluengoField is currently operated by Ayoluengo Operating Company (Ayoopco) which isone of the Vendors, which sells the produced oil in an unrefined state to alocal glass factory, but the Directors believe subject to the Proposals beingsuccessfully implemented, the opportunity exists for the Company to increase thecurrent reserves base through investment in secondary recovery methods. CpS willbecome the operator on Completion. TRACS have reported in their CPR that no information was provided toindependently calculate STOIIP. Chevron estimated 107.8 mmbo in 1983, a figurewhich has been quoted in published literature. An examination of presentationmaterial, maps and limited well logs suggest that this estimate is of thecorrect order of magnitude, but TRACS have no means of verifying it. There areno reliable estimates of GIIP. Information on the Seeland-Frienisberg Permit, Switzerland The Seeland-Frienisberg Permit in the Alpine Tertiary foreland (Molasse) basinof northwest Switzerland has one well drilled on it in 1982 by Elf, which flowed a smallamount of gas from Triassic dolomitic limestones. Although a number of gas seepsand discoveries have been found in the area, no commercial production has yetbeen made. Should the Proposals be successfully implemented, the opportunityexists to explore a number of leads currently identified on the block, and toappraise the Hermrigen-1 discovery to attempt to achieve commercial productionrates. The 363.5km(2) Seeland-Frienisberg surface prospecting permit was awarded inJuly 2005, and Phase 1 of that permit expires on 31st December 2007. Ascent isthe operator with a 90% interest and is solely responsible for the renewal orotherwise of the licence. If the Proposals are successfully implemented theCompany will have the option to farm in to up to 40 per cent of Ascent'sinterest. The Swiss company SEAG holds the remaining 10%. SEAG's costs arecarried until production. Phase 1 work commitments including a spectral acousticseismic trial, geochemical field studies, and integration of all data has beencompleted. For any subsequent periods, commitments will be proposed by theoperator and agreed with mining authorities a month before renewal date. A drilling permit is currently being requested, with the intention of drillingone appraisal well on the Seeland-Frienisberg structure. To convert the licenceto an exploration permit, a well commitment will be required. The Seeland-Frienisberg Permit is still at an early phase of exploration, and noplans for development are yet in place, or indeed possible with the currentinformation available. Given that Switzerland, and surrounding countries havewell developed gas markets, all of which are dependent on imports, there is inprinciple every reason to expect any significant gas discoveries to bedeveloped.So far, Hermrigen-1 is the only gas discovery, but the small provenvolume, and the very low production rates achieved are considered by TRAC's tobe sub-commercial. Given the size of the geological structure , it may yet bepossible, through appraisal drilling to demonstrate that commercial volumesexist, and that they can be achieved at commercial rates. At the present timehowever, this is not evident. Accordingly, the Hermrigen-1 discovery can beclassified as Contingent Resources. Development of the Hermrigen-1 discovery is contingent upon demonstration ofcommercial production rates and reserves volumes. From the limited dataavailable at the present time, TRACS considers this to be unlikely, given theapparently poor reservoir quality, with low porosity and probably lowconnectivity, and poor production test rates TRACS's estimate is thatHermrigen-1 has an approximately 20 per cent. chance of being developed. Principal Terms of the Acquisition Pursuant to the Acquisition Agreement, the Company will purchase the entireissued share capital of CpS. The consideration for the Acquisition will be theissue to Ascent by the Company of the Consideration Shares and the payment toAscent by the Company of EUR 2,250,000 (two million two hundred and fiftythousand Euros) which will be financed out of the Company's existing cashresources. Under the Acquisition Agreement, the Company will neither assume theburden of any liabilities nor receive the benefit of any revenues, in each casearising in respect of CpS or the Licences prior to 1 August 2007. In determiningthe consideration to be paid by the Company pursuant to the Acquisition, theDirectors have attributed the majority of the consideration to the La LoraLicence. The terms of the Acquisition also includes an option to acquire a 40 per centparticipating interest in the interest held by Ascent in the Seeland-FrienisbergPermit in consideration of the Company agreeing to fund 100 per cent of theaggregate costs of the drilling and initial testing of the first appraisal ofthe Seeland-Frienisberg Permit. The current estimate of the aggregate costs isEUR 6,000,000. Any excess above these costs are to be borne by the parties inproportion to their interests. If the Company elects not to perform itsobligations to fund the drilling and initial testing of the first appraisal thena cancellation fee of EUR 2,000,000 is payable to Ascent and the Company'sinterest will become 10 per cent. The Acquisition is conditional, inter alia, upon approval of the Resolution bythe Shareholders and transfer of the legal ownership of the Licences into CpS. Pursuant to the Acquisition Agreement the La Lora Licence will be transferred toCpS. This may not be finalised before the Acquisition is completed, as thetransfer requires the approval of the Ministry of Industry in Spain. The Companyhas been advised that there should not be any prima facie impediment to thisapproval and the Directors are not aware of any reason why this transfer shouldnot be completed. No assurance can be given at this stage that the transfer willbe successfully completed. However, the Acquisition Agreement containsprovisions to enable the Company to enjoy the benefits of ownership of thislicence pending such transfer. Competent Person's Report A Competent Person's Report has been prepared by TRACS on the Ayoluengo Field,Spain and the Seeland-Frienisberg Permit, Switzerland. The Competent Person reports that the Ayoluengo Field has Gross Proven +Probable Reserves (best estimate) of 0.48 MMbbls based on continuation ofproduction using current operational practices. The estimated ranges of Reservesare summarised in the table below. +-----------------+--------------------------+----------------------------+--------+|Classification | Gross Reserves | Net Attributable to Leni |Operator|| +--------+--------+--------+----------+--------+--------+--------+|Reserves on | Proved |Proved +|Proved +| Proved |Proved +|Proved +| ||Production | |Probable|Probable| |Probable|Probable| || | | | + | | | + | || | | |Possible| | |Possible| |+-----------------+--------+--------+--------+----------+--------+--------+--------+| | MMbbls | MMbbls | MMbbls | MMbbls | MMbbls | MMbbls | |+-----------------+--------+--------+--------+----------+--------+--------+--------+|Ayoluengo Field | 0.40 | 0.48 | 0.57 | 0 | 0 | 0 |Ayoopco |+-----------------+--------+--------+--------+----------+--------+--------+--------+ (Source: CPR) Table 1 - TRACS Estimates of Gross and Net attributable Reserves This estimate does not include any volumes which could potentially be developedwith additional investment. There are currently no disclosed plans for furtherinvestment by the current owners. The Ayoluengo data comprised field productiondata to July 2007, some old maps (from Chevron 1969-70) and some presentationmaterial from Northern Petroleum Exploration Ltd showing some recent 3D seismicdata. TRACS have not independently checked title interests with Government orlicence authorities. The Competent Person also reports contingent resources for the Hermrigen-1 wellin Switzerland: +----------------+--------------------------+----------------------------+-----------+|Classification |Gross Contingent Resources| Net Attributable to Leni | || | | | ||Contingent +--------+--------+--------+----------+--------+--------+-----------+|Resources | Low | Best | High | Low | Best | High |Development|| |Estimate|Estimate|Estimate| Estimate |Estimate|Estimate|Risk Factor||Development | | | | | | | ||Unclarified | 1C |2C | 3C | 1C |2C | 3C | || | | | | | | | |+----------------+--------+--------+--------+----------+--------+--------+-----------+| | Bcf | Bcf | Bcf | Bcf | Bcf | Bcf | |+----------------+--------+--------+--------+----------+--------+--------+-----------+|Hermrigen-1 |4.5 |10.7 |21.2 | 0 | 0 | 0 | 20% |+----------------+--------+--------+--------+----------+--------+--------+-----------+ (Source: CPR) TRACS also reports prospective resources for the prospects/leads identified onthe Seeland-Frienisberg Permit: +----------------+--------------------------+---------------------------+-----------+|Classification |Gross Contingent Resources| Net Attributable to Leni | || | | | ||Prospective +--------+--------+--------+---------+--------+--------+-----------+|Resources | Low | Best | High | Low | Best | High |Exploration|| |Estimate|Estimate|Estimate|Estimate |Estimate|Estimate|Risk Factor|| | | | | | | | |+----------------+--------+--------+--------+---------+--------+--------+-----------+| | Bcf | Bcf | Bcf | Bcf | Bcf | Bcf | |+----------------+--------+--------+--------+---------+--------+--------+-----------+| Hermrigen East | 46.5 | 105.1 | 228.1 | 0 | 0 | 0 | 0.140 || Bajocian | | | | | | | |+----------------+--------+--------+--------+---------+--------+--------+-----------+| Hermrigen East | 28.2 | 69.8 | 162.2 | 0 | 0 | 0 | 0.202 || Keuper | | | | | | | |+----------------+--------+--------+--------+---------+--------+--------+-----------+| Ruppolsreid | 35.9 | 66.9 | 113.1 | 0 | 0 | 0 | 0.112 || Bajocian | | | | | | | |+----------------+--------+--------+--------+---------+--------+--------+-----------+| Ruppolsreid | 5.6 | 13.5 | 29.0 | 0 | 0 | 0 | 0.206 || Keuper | | | | | | | |+----------------+--------+--------+--------+---------+--------+--------+-----------+|Tschugg Bajocian| 56.8 | 90.6 | 140.1 | 0 | 0 | 0 | 0.080 |+----------------+--------+--------+--------+---------+--------+--------+-----------+| Tschugg Keuper | 0.7 | 1.8 | 4.0 | 0 | 0 | 0 | 0.168 |+----------------+--------+--------+--------+---------+--------+--------+-----------+ (Source: CPR_ Spanish legal opinion on CpS and the Licences A Spanish legal opinion letter has been received from Gimenez Alvira y CebrianAbogados relating to the constitution of CpS and the status of the Licence. CpS has been duly established and registered as a legal entity in the form ofLimited Liability Company (Sociedad de Responsabilidad Limitada) in accordancewith the laws of Spain. CpS is subject to suit and being sued in its own name,and CpS has the requisite corporate capacity and corporate authority to carryout the business of the exploration for oil and gas, to own its property andassets, including the Licences, and to incur indebtedness. CpS has all necessary corporate power and authority to undertake, observe andperform its obligations under the Licences that are required to be observed andperformed by it, and CpS has taken all necessary corporate action to approve andauthorise the same. CpS has purchased the 100% of interest in La Lora Licence, subject to theapproval of the Ministry of Industry. The Licences confer upon CpS the exclusiveand uninterrupted right to explore for and produce oil and gas in and for theareas defined by such Licence. Apart from CpS, no person, individual or entity, has any proprietary or otherinterest in the area covered by the Licences, nor is any such other person,individual, entity entitled to carry on exploration, development, mining orextraction activities related to hydrocarbons on the area covered by theLicences. Apart from the Licences, no other consents, Licence, approvals, authorisationsor declarations of any governmental authority in Spain are required to conductthe oil and gas exploration and production activities proposed to be conductedby CpS on the areas covered by the Licences. Each of the Licences is in good standing, and there is no default of any naturecurrently existing which would result in the suspension or termination of anyLicence. In the event of a further discovery of oil reservoirs, CpS has the right toapply for an exploitation and production licence for the licence areas. CPS Exploration Licences The transfer of the titles to the CpS Exploration Licences to CpS has beenapproved by the Junta de Castilla y Leon on 11 July 2007 and awaits publicationin the official bulletins. The Exploration Licences are subject to a jointoperating arrangement with Tethys Oil Spain AB which will continue to have a 50per cent interest in the CpS Exploration Licences following the Acquisition. Astwo of the CpS Exploration Licences are due to expire at the end of January2008, the Company does not intend to formalise any joint operating arrangementuntil after the Acquisition and pending review as to whether there is any meritin seeking the renewal of the relevant Exploration Licences. Malta In accordance with its strategy, the Company announced, on 18 April 2007, thatit had acquired from Malta Oil Pty Limited ("MOL", a subsidiary of MOG) aninitial 20% interest in four oil and gas exploration blocks known as Area 4,located in Maltese waters between Libya and Malta, covering an area in excess of5,000 km(2). As previously announced by the Company, the seismic surveying MVGeomariner of Seabird Exploration, has been commissioned to undertake 1,000 linekilometre of 2D seismic in Area 4 off-shore Malta. Once results from the seismic work are received by the Company, it will be in abetter position to determine drillable prospects and it will report toShareholders the implications of any further expenditure on Area 4. The Company has an obligation to fund US$1,500,000 of the exploration studycosts and thereafter subject to shareholder approval (if required) andcompliance with the requirements of the AIM Rules (as required) to fund afurther US$3,500,000. If the Company does not advance more than the initialUS$1,500,000 then it is obliged to return a pro rata portion of theparticipating interest it received on signing. Furthermore, in the event that a Production Sharing Contract is granted pursuantto provisions of the Exploration Study Agreement entered into on 24 March 2005between (1) MOL and (2) the Government (as extended by a letter from theGovernment dated 07 March 2007), the Company will have the right to furthersolely fund, 80% of the first exploration well cost to increase itsparticipating interest in Area 4 to 50% and MOL will maintain a participatinginterest of 50% by funding 20% of the exploration well costs. The timing (but not the amount) of the Company's obligation to contribute fundsto the exploration costs is limited in the following manner: (i) US$1,500,000within the first 12 month period following the Consent Date; (ii) US$1,000,000in the second 12 month period following the Consent Date; and (iii) theCompany's obligation to contribute sole funding after the initial 24 monthperiod following the Consent Date in aggregate amount shall not exceedUS$5,000,000. Strategy The Company remains focused on its strategy of building a diversified portfolioof oil and gas exploration and production assets by exploring and developing thepotential of the Company's existing projects and continuing to identify projectsand businesses, which in the opinion of the Directors, may contain a developmentpremium that the Directors hope to unlock through the provision of a combinationof financial, commercial and technical support. On 18 April 2007, the Company acquired an initial 20 per cent interest in fouroil and gas exploration blocks offshore Malta known as Area 4, details of whichare set out in paragraph 9 above. The Company proposes to await the results ofthe seismic studies currently being undertaken. It is expected that the resultswill be available prior to the end of 2007. The Company has no immediateobligation to expend further funds on this project and intends to assess thisproject at the appropriate time. Subject to the Proposals being implemented, the Company will acquire CpS whichwill own the Licences (88.75 per cent. of the La Lora Licence and 50 per cent.of the CpS Exploration Licences). In respect of the La Lora Licence, the opportunity exists for the Company toincrease the current reserves base through investment in secondary recoverymethods. The Company's plan is to undertake the following: •Initially continue with the existing production programme and operations; •Engage oil industry specialists to conduct a strategic review of the Ayoluengo Field to establish ways to enhance current production and increase recoverable reserves via technical evaluation. As two of the CPS Exploration Licences are due to expire at the end of January2008, the Company do not have any immediate plans to exploit them and it willre-assess its position at a later stage. As regards the Seeland-Frienisberg Permit in Switzerland, the Directors willreview opportunities if and when the permit is renewed by Ascent, as describedabove. Current trading and prospects Since IPO Admission, the Company has sought an appropriate acquisition orinvestment target in line with its investment and acquisition strategy. TheCompany is now pleased to be in a position to make a proposed investment in theAyoluengo Field subject to Shareholder approval. In the Directors' opinion, theAcquisition will create a source of income and cashflow for the Company. The Company's strategy is to continue to make investments and/or acquisitions inthe oil and gas sector. The Directors believe that in light of the Acquisition and the strategy set outabove, the prospects for the Enlarged Group are good. CpS for the period of 7 months to 31 July 2007 reported an audited loss beforeand after taxation of £1,193,199 on nil turnover. This principally relates tohistoric drilling costs. The La Lora Licence which is to be transferred into CpS under the terms of theAcquisition Agreement achieved for the year ended 31 August 2007 production andsales of 40,105 and 39,785 barrels respectively and reported an unaudited grossprofit of Euro 350,805 on turnover of Euro 1,408,455. These are the figuresattributable to the 100 per cent. interest in the licence whereas the Company isproposing (as set out above) to purchase an 88.75 per cent. interest. On completion, the Vendors have agreed to exclude from the transaction CpS's networking capital liability and write-off agreed proportions of the intercompanybalances as at 31 July 2007, eliminating net liabilities of £1,176,000 as at 31July 2007. Net assets in respect of the La Lora Licence amount to £321,000.Accordingly, the unaudited pro forma net assets of the Enlarged Group based uponthe audited balance sheet of Leni Gas & Oil as 31 August 2007 are £6,956,000. Working Capital In the opinion of the Directors having made due and careful enquiry, the Companywill have sufficient resources for its present requirements, that is for atleast twelve months from the date of Admission. Directors David Anthony Lenigas, Chairman, age 46 David holds a Bachelor of Applied Science Degree in Mining Engineering and hasover 25 years of experience in the mineral resources industry covering oil andgas, gold, diamonds, coal and base metals industries. He has extensiveexperience operating in the AIM environment and was formerly the Chairman and isnow a non executive director of Mediterranean Oil & Gas PLC which is producinggas and condensate in Italy and holds extensive oil and gas resources in Italy,Malta, Tunisia and France. It is currently the fourth largest gas producer inItaly. David is also Executive Chairman and Chief Executive of Lonrho Plc, andis non-executive director of Global Coal Management Plc, River Diamonds Plc andTemplar Minerals Limited. Jeremy Samuel Edelman, Executive Director, age 39 Jeremy holds Bachelor degrees in Commerce and Law together with a Masters degreein Applied Finance. He was admitted as a solicitor to the Supreme Courts ofWestern Australia and New South Wales. Previously Jeremy worked for some for theworld's leading investment banks in debt and acquisition finance. Jeremy hasheld various positions in stock exchange listed companies in the UK andAustralia with a focus on resource exploration and development includinginvestment companies established with the specific objective of investing in oiland gas projects. Jeremy has worked in various regions of the world includingthe Republic of Kazakhstan, Russia, South Africa and Australia. The Company is actively seeking the appointment of an independent non-executivedirector. Donald Ian George Layman Strang, Finance Director, age 39 Donald is a qualified chartered accountant with over 15 years experience in thefinancial and resources sectors. He has experience operating in the AIMenvironment. He is currently Finance Director of Brinkley Mining Plc and waspreviously the Chief Financial Officer and Company Secretary for Global CoalManagement Plc (formerly Asia Energy Plc) and BDI Mining Corp. He has previouslyheld senior financial positions with Ernst & Young and several publicly listedAustralian mining companies (Macraes Mining Company Limited and Perilya MiningLimited) and has also worked with Deutsche Bank and Credit Suisse Group in theinvestment banking sector. The Company is actively seeking the appointment of an independent non-executivedirector. Incentive scheme The principal incentive scheme of the Company is a discretionary bonus scheme bywhich bonuses are paid to staff and used by the recipients to subscribe forOrdinary Shares at market value. A total of up to 5 per cent of the issued sharecapital of the Company is made available for this purpose per annum. Share option scheme Pursuant to share option agreements made between the Company and each of theDirectors ("the Share Option Agreements") as set out in the IPO Document, theDirectors of the Company have been granted options to subscribe for OrdinaryShares in the Company ("the Options"). The Options are exercisable at 3 penceper Ordinary Share pursuant to and on the terms of the Share Option Agreements.The Company has reserved a total of 10 per cent. of the Ordinary Shares in issuefrom time to time for the purposes of options to be issued to directors,officers, employees and consultants at the discretion of the remunerationcommittee as new appointments are made. Such options shall be granted on thesame terms and conditions as the Options as described in the Share OptionAgreements. Lock-ins At Admission, the Directors and persons connected with them will own 182,000,000Ordinary Shares representing 46.26 per cent of the Enlarged Share Capital andoptions to acquire a further 16,000,000 Ordinary Shares under the Share OptionAgreement. Accordingly, the Directors have undertaken to the Company and toBeaumont Cornish Limited that they will not sell or dispose of, any of theirrespective interests in Ordinary Shares at any time before the first anniversaryof IPO Admission except in the following circumstances: (i) in the event ofdeath; (ii) pursuant to acceptance of a takeover offer for the Company which isopen for acceptance to all its shareholder; and (iii) an intervening courtorder. Dividend Policy The nature of the Company's business means that it is unlikely that theDirectors will recommend a dividend in the early years following Admission. TheDirectors believe the Company should seek to generate capital growth for itsShareholders but may recommend distributions at some future date, depending uponthe generation of sustainable profits, when it becomes commercially prudent todo so. Corporate Governance The Directors acknowledge the importance of the Combined Code and intend,following Admission, to continue to apply its principles so far as ispracticable taking into account the Company's size and stage of development. The Directors will continue to abide by Rule 21 of the AIM Rules for directors'dealings as applicable to AIM companies and will also take all reasonable stepsto ensure compliance by the Company's applicable employees (if any). CREST The Company's Articles of Association contain certain provisions concerning thetransfer of shares which are consistent with the transfer of shares inuncertificated form in CREST in accordance with the CREST Regulations. CREST isa computerised paperless share transfer and settlement system, which allowsshares and other securities to be held in electronic rather than paper form. TheExisting Ordinary Shares are currently enabled for settlement through CREST andthe Directors have applied to Euroclear UK & Ireland Limited to issue theConsideration Shares in uncertificated form. CREST is a voluntary system and holders of Ordinary Shares who wish to receiveand retain certificates will be able to do so. Any shareholders wishing to holdtheir stock through CREST can dematerialize from a certificated holding to aCREST holding by lodging their share certificate and a CREST transfer form withtheir stockbroker or other CREST member. Recommendation The Directors, having been advised by Beaumont Cornish Limited, believe that theProposals are in the best interests of Shareholders and therefore recommendShareholders to vote in favour of the Resolution, as we intend to do in respectof our shareholdings, amounting in aggregate to 182,000,000 Ordinary Shares,representing 47.22 per cent. of the Existing Ordinary Shares. In giving itsadvice to the Board, Beaumont Cornish has taken into account the Directors'commercial assessments. A Circular comprising an Admission Document under the AIM Rules has beenpublished and is being sent to shareholders today. Copies of this Admission Document is available from the Company's websitewww.lenigasandoil.com and from the offices of Beaumont Cornish Limited, 5thFloor, 10-12 Copthall Avenue, London, EC2R 7DE. For further information, please contact:Leni Gas & Oil PLCJeremy Edelman, Director Tel +44 (0) 20 7016 5100 Beaumont Cornish LimitedRoland Cornish Tel +44 (0) 20 7628 3396 Pelham PRCharles VivianEvgeniy Chuikov Tel + 44 (0)20 7743 667 Tel +44 (0)20 3008 5506 DEFINITIONS The following definitions shall apply throughout this announcement unlessotherwise stated or the context otherwise requires: "Acquisition Agreement" the agreement dated 25 October 2007 between the Company, Ascent, Ayoopco Limited and Teredo Oils Limited relating to the Acquisition "Acquisition" the proposed acquisition of CpS by the Company pursuant to the Acquisition Agreement "Act" the Companies Act 1985 (as amended) and the Companies Act 2006 (as such provision are in force from time to time) "Admission" admission of the Enlarged Share Capital of the Company to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules "AIM Rules" the rules of AIM as issued by the London Stock Exchange "AIM" a market operated and regulated by the London Stock Exchange "Ascent" Ascent Resources Plc "Ayoluengo Field" The only onshore oil field in Spain, located in the Burgos sub-basin in the Cantabrian mountains of northern Spain. "Beaumont Cornish" Beaumont Cornish Limited, authorised and regulated by the Financial Services Authority "CpS" Compania Petrolifera de Sedano, S.L. or Compagnine Petrolifera de Sedano, a limited liability company incorporated and registered under the laws of Spain. "CPS Exploration Licences" certain exploration licences within the Junta de Castilla y Leon in the Province of Burgos in Spain corresponding to the permits "Huermeces, Valderredible and Basconcillos. "Combined Code" the Combined Code on Corporate Governance and the Code of Best Practice included with the listing rules of the FSA "Company" or "Leni Gas & Leni Gas & Oil PlcOil " "Completion" completion of the Acquisition in accordance with the Acquisition Agreement "Consideration Shares" a total of 8 million Ordinary Shares to be issued to Ascent on Completion "CREST" the relevant electronic settlement system (as defined in the CREST Regulations) in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in the CREST Regulations) "CREST Regulations" The Uncertificated Securities Regulations 2001 (SI 2001 No. 2001/3755) as amended "Directors" or "Board" the directors of the Company at the date of the Document whose names are set out in this announcement Document" the admission document "Enlarged Group" the Company, its subsidiaries and, following completion of the Acquisition, CpS "Enlarged Share Capital" the Existing Ordinary Shares and the Consideration Shares "EU" European Union "Euros/EUR" the basic monetary units of currency in the EU "Existing Ordinary Shares" the 385,400,027 Ordinary Shares of 0.05p each in issue immediately prior to Admission "Extraordinary General the extraordinary general meeting of theMeeting" or "EGM" Company convened for 12 noon on 12 November 2007 (or any adjournment thereof), notice of which is set out at the end of this document "Form of Proxy" the form of proxy enclosed with the document for use in connection with the EGM "FSA" The Financial Services Authority "IPO Admission" The admission of Ordinary Shares to trading on AIM on 16 March 2007 "La Lora Licence" The La Lora concession described in the competent person's report in Part 7 of the document."Licences" the La Lora Licence and the Exploration Licences "London Stock Exchange" London Stock Exchange plc "MOG" Mediterranean Oil & Gas Plc "Official List" the official list of the UK Listing Authority "Ordinary Shares" ordinary shares of 0.05p each in the share capital of the Company "Proposals" together, the Acquisition, the issue of the Consideration Shares and the Admission "Resolution" the Resolution to be proposed at the EGM as detailed in the notice set out at the end of the Document "Seeland-Frienisberg The 363.5km(2) Seeland-Frienisberg surfacePermit" prospecting permit awarded in July 2005. "Shareholders" those persons (natural and/or legal) who are registered holders of Existing Ordinary Shares "TRACS" Tracs International Consultancy Limited "UK" the United Kingdom of Great Britain and Northern Ireland "UK Listing Authority" or The FSA acting in its capacity as the"UKLA" competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000 "US" The United States of America "US$" the basic monetary units of currency in the US "Vendors" Ayoopco Limited and Teredo Oils Limited, being subsidiaries of Ascent This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CERP.L