Divestment of Permian Basin Assets

For immediate release 23 December 2010

Divestment of Permian Basin Assets

Melrose Resources plc (LSE: MRS) ("Melrose" or "the Company"), the oil and gas exploration, development and production company, today announces that it has completed the sale of the Company's assets in the Permian Basin in the USA to Quantum Resources Management, LLC ("Quantum").

Permian Basin Divestment

The divested assets are interests in mature oil field leases located in the Permian Basin in West Texas and East New Mexico. The interests cover three main field areas, namely Artesia, Jalmat Cone and Turner Gregory, together with a number of smaller units. The fields are characterized by having long producing lives with relatively material reserves but with low production levels. The current combined field production rate is approximately 830 bpd of oil and 0.5 MMcfpd of gas and the remaining proved plus probable reserves at year end 2009 were 20.3 MMbbl of oil and 16.1 Bcf of gas on a working interest basis.

In order to fully optimise the field developments and access the reserves, a significant amount of additional investment will be required in the assets over forthcoming years. The Company has determined that a preferable alternative to this investment programme is to dedicate its capital resources to strategic, higher growth opportunities in areas where it has, or can create, a competitive advantage. 

Given the above, the Company commissioned Scotia Waterous to manage a formal sales process for the assets and this has now been successfully concluded with Quantum selected as the preferred bidder. 

Quantum has acquired the assets for a cash consideration of $80 million, subject to normal working capital and transaction adjustments and individual lease pre-emption provisions. For the avoidance of doubt, the transaction excludes the Melrose leases in East Texas and the Fort Worth Basin.

The sale proceeds will primarily be used to pay down debt with the balance to fund the capital work programme, consistent with the Company's plan to reduce financial gearing towards 100 percent by the end of 2011.

Other Operational Matters

In the Rhone Maritime concession, offshore Southern France, a seismic vessel is currently on location and has to date completed 1,365 kilometres of the planned 7,500 kilometre 2D seismic acquisition programme. The survey is expected to complete in March 2011.

In Egypt, the South East Dikirnis-1 exploration well has been drilled by the EDC-9 rig to test a Qawasim prospect in the Mansoura concession. No hydrocarbon indications were found and the well has been plugged and abandoned. The drill rig has since relocated to West Dikirnis where it will drill the fifth horizontal production well in the main field area. In the South East Mansoura concession, the seismic data acquisition programme has been successfully completed with the acquisition of 140 kilometres of 2D and 365 square kilometres of 3D data which will primarily be used to evaluate the undrilled Cretaceous oil play on the block. The preliminary data interpretation is expected to be completed by early April 2011.

Commenting on the above, David Thomas, Chief Executive, said:

"The completion of the Permian Basin assets divestment is an important step for the Company and we are pleased that the sale process has yielded a satisfactory result. We are now focusing our resources on other initiatives which present more material growth opportunities and are better aligned with our core strategy. The cash generated from the sale will further strengthen the Company's financial outlook."

For further information please contact:

or visit www.melroseresources.com

Notes to Editors:

Melrose Resources plc is an oil and gas exploration and production company with interests in Egypt, Bulgaria, Romania, the USA, Turkey and France. The Group has a diverse portfolio of production, development, appraisal and exploration assets offering a range of investment opportunities. Melrose is headquartered in Edinburgh and is listed on the Main Market of the London Stock Exchange. For the year ended 31 December 2009, the oil and gas assets the subject of the sale generated revenue of $13.7 million, reported a loss after tax of $4.2 million, and had a gross asset value of $114.9 million. 

Glossary:

bpd -- barrels per day

Bcf - billion cubic feet 

MMbbl - million barrels

MMcfpd-- million cubic feet of gas per day

Disclaimer

This announcement contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business. While Melrose believes the expectations reflected herein to be reasonable, the actual outcome may be materially different owing to factors either within or beyond Melrose's control, and accordingly no reliance may be placed on the figures contained in such forward looking statements.