Placing to raise up to £5 million

Kea Petroleum plc

("Kea" or the "Group")

Placing to raise up to £5 million

Kea Petroleum plc (AIM: KEA), the oil and gas company focused on New Zealand, is pleased to announce a placing of up to 35,700,000 Units at 14p per unit, to raise up to £5,000,000. Each unit consists of two ordinary shares of 1p each, fully paid, and one warrant, entitling the holder to subscribe in cash for a further ordinary share at 10p prior to 31 May 2015. The notional price of 7p per share represents a premium of 9.8% to yesterday's closing price.

Kea has received unconditional commitments to subscribe for 21,428,571 Units, representing a committed investment of £3,000,000.

The placing remains open until 12 noon (BST) on 10 May 2013. Application will be made for the ordinary shares comprised within the Units to be admitted to AIM and dealings are expected to commence on 16 May 2013.

Use of Proceeds

The recent successful flow testing of Puka 2 and the imminent restart of Puka 1 has required the construction of new production facilities and the funding will be applied partly towards their completion. The Company also has a requirement to drill a further well in PEP 51155 prior to the end of September 2013 as part of the committed exploration work program for the permit. Following interpretation of existing 3D data recently made available to Kea, another Mt Messenger prospect similar to Puka has been identified on PEP 51155. The funds being raised now will assist in financing the drilling of this prospect, known as Angus, prior to the required date.

The Company also intends to drill up to three further Puka wells from the existing surface location during the balance of 2013 depending on revenues from oil production and if need be on the level of funds raised now or in the future.

Company Update

Mercury Prospect

The Company is delighted to advise the completion of the 100 km2 Mercury 3D seismic survey in the offshore portion of PEP 52333. The acquisition was completed on time and virtually without incident in the ecologically sensitive area. The cost of this survey was US$3.0 Million. Whilst conducting this survey at this time was financially uncomfortable, completing the analysis of this 3D seismic will be critical in encouraging farm in partners for drilling in 2014/15. The 3D seismic was part of the committed work program for the permit and the Company took the opportunity to do it ahead of winter sea conditions and the limited availability of a seismic vessel.

Puka 

The intersection of a separate oil pool in basal Mt Messenger sands in Puka 2, which was deviated some 600 metres North of Puka 1, announced on 8 April 2013, confirms the Company's contention that the Puka field is stratigraphically confined. This model has now been further confirmed by initial interpretation of the 50km2 Puka 3D seismic data acquired late last year. Detailed interpretation of the 3D seismic data is continuing and a further announcement will be made in due course.

Hickman Prospect

Following the extension of PEP 51155 in February this year, the Company has commenced the acquisition of 58 kilometres of 2D seismic over the Hickman prospect on PEP 51155. This survey forms part of the committed work program for the permit with the cost of this seismic being shared with Methanex under the Alliance Agreement. Hickman is a deep gas/ condensate prospect. The well is not part of the current permit exploration work program and there are no plans to drill Hickman in the immediate future.

Ian Gowrie-Smith, Chairman of Kea Petroleum, commented:

"We are pleased that investors continue to support the Company in maintaining its momentum to exploit the Puka discovery, as well as enabling the Company to carry out it Permit obligations. The majority of the commitment costs are fortunately now behind us. Whilst it was disappointing that the Mauku well failed to have hydrocarbons, shareholders should not lose sight of our transitioning to being an oil producer from being a pure explorer."

This release has been approved by non-executive director Peter Mikkelsen FGS, AAPG, who has consented to the inclusion of the technical information in this release in the form and context in which it appears.

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Notes to Editors:

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