Issue of Convertible Loan Notes

For Immediate Release 23 May 2014

Kea Petroleum plc

("Kea" or the "Company")

Issue of Convertible Loan Notes

Kea Petroleum plc (AIM: KEA), the oil and gas company focused on New Zealand, is pleased to announce that it has entered into an agreement with Darwin Strategic Limited ("Darwin") to issue up to £2.0 million of Convertible Loan Notes ("CLNs"). This new agreement replaces the convertible note facility agreement with Darwin announced on 10 January 2014, under which Darwin had agreed conditionally to subscribe for £1.2 million of CLNs, of which £800,000 have been issued to date. The obligation to issue the remaining £400,000 of CLNs under the original facility therefore falls away; in addition the Company has mutually agreed with Darwin to the early expiration, effective immediately, of the £5 million Equity Finance Facility announced on 10 January 2014.

The proceeds of the issue of the CLNs under the new agreement will be used to fund Kea's commitment of NZ$1.0 million under Phase 1 of the farm-out agreement with MEO Australia Limited, and to meet its ongoing working capital requirements.

Announcing the new agreement with Darwin, Ian Gowrie-Smith, Chairman of Kea, said "Following the successful negotiations of the farm-in agreement with MEO Australia Limited, announced in April 2014, regarding the Puka prospect, it was important that we moved quickly to secure the finance required to enable us to meet our initial funding obligations. We are pleased that Darwin, with whom we have developed a successful relationship in recent months, have agreed to continue their support of the Company by increasing their commitment to the Company by a further £1.44 million, to £2.52 million".

Convertible Loan Notes

A first tranche of £1.0 million of CLNs has today been issued, in integral units of £50,000 at a price of £45,000 per unit to raise a cash amount of £900,000 before expenses. Darwin has conditionally agreed to subscribe for up to an additional £1.0 million loan notes of principal value for a further consideration of £900,000. The remaining CLNs will be issued in two equal tranches of £500,000 in integral units of £50,000 at a price of £45,000 per unit, the first on 11 July 2014 and the second on 22 August 2014, subject to the condition referred to below.

The CLNs are convertible, subject to the condition referred to below, into Ordinary Shares of the Company ("Shares") at Darwin's option at the lesser of 3 pence per Share, or 90% of the volume-weighted average prices of the Shares on the 15 consecutive trading days ending on the last trading day before the date of conversion. The investment in each subsequent tranche is conditional, inter-alia, on the share price of the Company being no less than 80% of the price at the close of the trading day prior to the initial £1 million loan notes being issued (that is, no less than 1.56p) on all but two trading days following the date of the preceding issuance, unless both the Company and Darwin otherwise consent.

The CLNs are repayable on 23 May 2015, or earlier on the occurrence of certain events, and may be redeemed by the Company for cash at any time during their term subject to a small redemption premium. They are interest free and unsecured, ranking at least pari passu with all Kea's other indebtedness other than certain existing debt.

Conditionality

The conversion right attaching to the CLNs is conditional upon the directors holding the required authorities in that regard under the Companies Acts. The directors' authority is currently limited to 59,824,524 shares. The Directors have undertaken to Darwin to convene a general meeting of the Company to seek further authorities, to be held before 23 June 2014. If the relevant resolutions are not duly passed by that date, Darwin is entitled to cancel the conversion rights and call for the initial loan notes with a face value of £1,000,000 to be repaid by the Company on three months' notice.

Issue of Shares

The Company has paid Darwin a fee which Darwin has immediately re-invested by way of subscription to 3,589,743 Shares in the Company. Application will be made for these Shares to be admitted to trading on AIM and trading is expected to commence on 2 June 2014. Following this issue of shares the Company's issued share capital consists of 765,106,364 Shares.

Warrants

In connection with issue of the CLNs, the Company has issued to Darwin warrants to subscribe for 8,205,128 Shares priced at 2.4375p per Share being a 25% premium to the closing share price on 22 May 2014 (the "Warrants"). The granting of the Warrants is conditional on the further authorities referred to above, following which they are exercisable until 30 May 2019.

Management change confirmation

The Company confirms that as previously advised, Richard Parkes has now ceased to be a director.

For further information please contact:

Kea Petroleum plc Tel: +44 (0)20 7340 9970

David Lees, Executive Director

WH Ireland Limited (NOMAD) Tel: +44 (0)20 7220 1666

James Joyce

Nick Field

Darwin Strategic Ltd. Tel +44 (0) 20 7491 6512

Anand Sambasivan www.darwin-strategic.com

Jamie Vickers

Buchanan Tel: +44 (0)20 7466 5000

Mark Court

Sophie Cowles

Notes to Editors 

Kea Petroleum is an AIM listed oil and gas exploration company with interests in three petroleum exploration permits in the Taranaki Basin of New Zealand. Kea listed on the London AIM market in February 2010.