Proposed Placing

RNS Number : 5662T

President Petroleum Company PLC

30 September 2010

 

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION.

 

 

30 September 2010

PRESIDENT PETROLEUM COMPANY PLC

 

Proposed Placing of 63,291,140 new Ordinary Shares at 50 pence per share

 

President Petroleum (AIM: PPC), the oil and gas exploration and production company with onshore producing and exploration assets in Louisiana, USA and onshore exploration licences in South Australia, announces that it has conditionally placed 63,291,140 new Ordinary Shares with institutional investors at a price of 50 pence per share to raise gross proceeds of £31.6 million (approximately US$50.0 million and £30.2 million net of expenses). The Placing Price represents a discount of 17.7 per cent. to the closing middle market price of 60.75 pence per Ordinary Share on 29 September 2010, being the last trading day before this Announcement. 

 

Highlights

 

·; Net proceeds of the Placing will substantially be used to fully fund:

o two high impact exploration wells scheduled for drilling in the next six months; and ,

o contingent on success further exploration and appraisal drilling and development on the Kafoury acreage in Louisiana and on PEL 82 in South Australia.

·; US$29.8 million allocated for the Kafoury 3 well, completion costs and a programme of four further wells in Louisiana, targeting total un-risked net reserves of 10.8 mmboe which have been independently valued at US$265 million on a NPV10 basis.

·; US$15.5 million allocated for the Northumberland 2 well on PEL 82 in South Australia, targeting an immediate prospect of 40 mmbbls oil, or 54 bcf gas, a second exploration well and additional seismic, with overall licence prospects of 430 mmbbls of prospective resources.

·; A successful programme in Louisiana is projected to increase net production by the end of 2011 to approximately 3,000 boe/d compared with current net production of 200 boe/d.

·; Levine Capital Management Limited and Related Parties have subscribed for approximately 29.9 per cent. of the Placing Shares.

·; Growth through acquisitions of both a "bolt-on" and transformational nature remains a key element of the Board's strategy.

 

Stephen Gutteridge, Chairman of President Petroleum, said:

 

"In November 2009 President Petroleum underwent a fundamental repositioning, with Levine Capital Management becoming a major shareholder and a strengthening of the Board and management team. In the first six months of 2010, with the support of Levine Capital Management, we have added low-cost reserves and production and have brought two high impact wells to drill ready status. The Company aims to move quickly to capitalise on success at either or both of these wells with further drilling and rapid completion and monetisation of reserves. This Placing enables us to sustain a rapid pace of development in both Louisiana and South Australia and maintains our financial flexibility, particularly as we continue to seek to add further value through acquisitions of both a bolt-on and transformational nature.

 

"Our objective remains to build a mid-cap independent E&P company with critical mass and a strategic presence in its key areas of interest, and today's announcement is a further step towards that goal."

 

A Circular containing notice of a General Meeting of the Company, convened for 11.00 a.m. on 18 October 2010, will today be sent to Shareholders of the Company outlining the terms of the Placing and seeking Shareholder approval to, inter alia, enable the Directors to allot the Placing Shares in connection with the Placing.

 

An investor presentation regarding the Placing, together with the Circular, will be available on President Petroleum's website: www.presidentpc.com. The independent competent person's report by D-O-R Engineering, Inc., dated 27 June 2010, the prospectivity summary report on PEL 82, with the extracts from the results of the 3D seismic survey and operational updates, can also be found on the Company's website.

 

This summary should be read in conjunction with, and is subject to, the full text of this Announcement. The Appendices to this Announcement (which forms part of this Announcement) includes the terms and conditions of the Placing.

 

Ed Childers, the Company's Chief Operating Officer, and Dr Michael Cochran, the Company's Exploration Director, who meet the criteria of qualified persons under the AIM guidance note for mining and oil and gas companies, have reviewed and approved the technical information contained in this Announcement.

 

For further information contact:

 

President Petroleum Company
Stephen Gutteridge, Chairman	+44 (0) 207 811 0140
John Hamilton, Non-executive Director	+44 (0) 207 036 9369
Evolution Securities	+44 (0) 207 071 4300
Robert Collins, Tim Redfern, Neil Elliot, Adam James
RBS Hoare Govett	+44 (0) 207 678 8000
Stephen Bowler, John MacGowan, Lee Morton
Financial Dynamics	+44 (0) 207 831 3113
Ben Brewerton, Ed Westropp

 

 

IMPORTANT NOTICES

 

This Announcement contains (or may contain) certain forward-looking statements with respect to certain of President Petroleum's plans and its current goals and expectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. President Petroleum cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", or other words of similar meaning. Examples of forward-looking statements include, amongst others, statements regarding or which make assumptions in respect of the future performance of the Company's principal subsidiary undertakings, the on-going exploration and appraisal of the Group's portfolio of assets, the timing of the commencement of any development of and future production (if any) from those assets and the sustainability of that production, the ability of the Group to discover new reserves, the prices achievable by the Group in respect of any future production, the costs of exploration, development or production, future foreign exchange rates, interest rates and currency controls, the future political and fiscal regimes in the overseas markets in which the Group operates, the Group's future financial position, plans and objectives for future operations and any other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, economic and business conditions, the effects of continued volatility in credit markets, market-related risks such as changes in the price of oil or changes in interest rates and foreign exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards ("IFRS") applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of pending and future litigation or regulatory investigations, the success of future explorations, acquisitions and other strategic transactions and the impact of competition. A number of these factors are beyond President Petroleum's control. As a result, President Petroleum's actual future results may differ materially from the plans, goals, and expectations set forth in President Petroleum's forward-looking statements. Any forward-looking statements made in this Announcement by or on behalf of President Petroleum speak only as of the date they are made. Except as required by the Financial Services Authority (the "FSA"), the London Stock Exchange, the AIM Rules or applicable law, President Petroleum expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this Announcement to reflect any changes in President Petroleum's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

 

This Announcement is for information purposes only and shall not constitute an offer to buy, sell, issue, or subscribe for, or the solicitation of an offer to buy, sell, issue, or subscribe for any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This Announcement has been issued by and is the sole responsibility of President Petroleum.

 

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Evolution Securities, RBS Hoare Govett, or by any of their respective affiliates or agents as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

 

Evolution Securities, which is authorised and regulated in the United Kingdom by the FSA, is acting for President Petroleum and for no-one else in connection with the Placing, and will not be responsible to anyone other than President Petroleum for providing the protections afforded to clients of Evolution Securities nor for providing advice to any other person in relation to the Placing or any other matter referred to herein.

 

RBS Hoare Govett, which is authorised and regulated in the United Kingdom by the FSA, is acting for President Petroleum and for no-one else in connection with the Placing, and will not be responsible to anyone other than President Petroleum for providing the protections afforded to clients of RBS Hoare Govett nor for providing advice to any other person in relation to the Placing or any other matter referred to herein.

 

The distribution of this Announcement and the offering of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by President Petroleum, Evolution Securities or RBS Hoare Govett that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by President Petroleum and the Joint Bookrunners to inform themselves about, and to observe such restrictions.

 

The price of shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the shares.

 

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE TERMS AND CONDITIONS SET OUT IN THIS ANNOUNCEMENT ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT PERSONS WHO ARE: (A) (I) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"), OR (II) PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER, OR (III) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED; AND (B) (I) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS (AS DEFINED IN ARTICLE 2(1)(E) OF EU DIRECTIVE 2003/71/EC (THE "PROSPECTUS DIRECTIVE")), AND/OR (II) PERSONS IN THE UNITED KINGDOM WHO ARE QUALIFIED INVESTORS (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE TERMS AND CONDITIONS SET OUT IN THIS ANNOUNCEMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE TERMS AND CONDITIONS SET OUT IN THIS ANNOUNCEMENT RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN PRESIDENT PETROLEUM COMPANY PLC.

 

Persons (including individuals, funds or otherwise) by whom or on whose behalf a commitment to acquire Placing Shares has been given ("Placees") will be deemed to have read and understood this Announcement, including the Appendices, in its entirety and to be making such offer on the terms and conditions, and to be providing the representations, warranties, acknowledgements, and undertakings contained in the Appendices. In particular, each such Placee represents, warrants and acknowledges that it is: (i) a Relevant Person (as defined above) and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business; and (ii) outside the United States and is subscribing for the Placing Shares in an "offshore transaction" (within the meaning of Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act")).

 

This Announcement, including the Appendices, is not for distribution, directly or indirectly, in or into or from the United States (including its territories and possessions, any state of the United States and the District of Columbia), Canada, Australia, the Republic of South Africa, the Republic of Ireland or Japan or any jurisdiction into which the same would be unlawful (each a "Restricted Jurisdiction"). This Announcement does not constitute or form part of an offer or solicitation to purchase or subscribe for shares in the capital of President Petroleum in a Restricted Jurisdiction. In particular, the Placing Shares referred to in this Announcement have not been, and will not be, registered under the Securities Act or under the securities legislation of any state of the United States, and may not be offered or sold in the United States absent registration or pursuant to an exemption from, or in a transaction not subject to, the registration requirements under the Securities Act. Subject to exceptions, the Placing Shares referred to in this Announcement are being offered and sold only outside the United States in accordance with Regulation S under the Securities Act. No public offering of securities of President Petroleum will be made in connection with the Placing in the United Kingdom, the United States or elsewhere.

 

The relevant clearances have not been, and nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus or admission document has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; and the Placing Shares have not been, and nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Canada, Australia, the Republic of South Africa, the Republic of Ireland or Japan. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into or from a Restricted Jurisdiction.

 

The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any State securities commission or any other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is unlawful. 

 

Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of the Appendices or this Announcement should seek appropriate advice before taking any action.

 

The Placing Shares to which this Announcement relates may be illiquid and/or subject to restrictions on their resale. Prospective subscribers for the Placing Shares offered should conduct their own due diligence on the Placing Shares. If you do not understand the contents of this Announcement you should consult an authorised financial adviser.

 

The Placing Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than AIM. Neither the content of President Petroleum's website nor any website accessible by hyperlinks on President Petroleum's website is incorporated in, or forms part of, this Announcement. 

 

 

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION.

 

Proposed Placing of 63,291,140 new Ordinary Shares at 50 pence per share

 

1. Introduction

 

The Board announces that it proposes to raise £31.6 million (approximately US$50.0 million and £30.2 million net of expenses) by way of a conditional placing of 63,291,140 new Ordinary Shares at a price of 50 pence per share. The Placing is conditional, inter alia, upon the Company obtaining approval from its Shareholders pursuant to the Resolution to grant the Board authority to allot the Placing Shares and to disapply statutory pre-emption rights which would otherwise apply to the allotment of the Placing Shares. The Placing, which has been underwritten by Evolution Securities and RBS Hoare Govett (save for the LCM Placing Shares), is conditional upon Admission.

 

Shareholders (which include the Directors and LCM) have irrevocably undertaken to vote or procure to vote in favour of the Resolution to be proposed at the General Meeting in respect of 14,367,393 Existing Ordinary Shares, in aggregate, representing approximately 31.61 per cent. of the existing issued ordinary share capital of the Company.

 

2. Background to and reasons for the Placing

 

In November 2009, President Petroleum was restructured in conjunction with a placing and open offer in which LCM became a strategic investor, holding 29.99 per cent. of the Existing Ordinary Shares in conjunction with the Related Parties. LCM is the private investment fund of Peter Levine, founder and former Chairman of Imperial Energy Corporation PLC, the Russia-focused oil exploration and production company, which was acquired by the Indian state-owned energy firm, Oil and Natural Gas Corporation Limited, for approximately US$2 billion in January 2009.

 

Alongside LCM, other major UK institutions invested in the Company in November 2009 and the Board and the Group's management were strengthened. The Board established a target of achieving mid-cap status through a twin track strategy of growth through the organic development of the Group's existing assets together with acquisitions of oil and gas assets. Growth through acquisitions of both a "bolt-on" and transformational nature remains a key aspect of the Board's strategy. In recent months, the most significant progress has been in developing a new major exploration prospect in Louisiana and advancing drilling plans in South Australia.

 

Louisiana

The Group has been an operator and producer in Louisiana since the acquisition of interests in the East Lake Verret ("ELV") field in 2008. Louisiana is the Company's current cash generator, with further low-cost production and reserves added in the first half of 2010. Louisiana is a mature oil and gas producing area, with easy access to infrastructure, skills and suppliers and where new discoveries are able to be monetised quickly. Over the past year, President Petroleum has been working with local geoscientists who have access to 3D seismic data to identify substantial additional exploration opportunities in the deeper Planulina and Cristellaria R sands, which are within the broad area of the Company's existing operations at ELV. The Board believes this work programme has de-risked the drilling of these deeper sands. A leasing programme has been completed, adding 400 acres of rights to these deeper prospects, together with an option to acquire a further 498 acres for minimal cost. An Independent Competent Person's Report by D-O-R has confirmed the possible net reserves covered by the leases as 61 bcf of natural gas and 660 mbbls of oil, equivalent to 10.8 mmboe, which is 10 times the Company's current proved reserves. D-O-R valued these reserves at US$265 million on a NPV10 basis.

 

The first well to assess these reserves, the Kafoury 3 well, is expected to spud in November 2010 with results expected before the end of the year. If successful, production is anticipated to commence in the first quarter of 2011 with a further four wells anticipated to be drilled in 2011 and a further two wells initially planned for 2012. At least one of these wells will target the shallower D sands, which are already substantial producers in the ELV field. The deeper Planulina and Cristellaria R sands are also substantial producers in neighbouring fields and, based on actual well data from these fields, production rates of three to six mmcfd per well net to President Petroleum are possible. Based on the flow rates of these neighbouring wells and in the event of a successful drilling campaign, total net production of over 18 mmcfd (approximately 3,000 boe/d) could be achieved by the end of 2011. This compares with the Company's current net production of 200 boe/d.

 

As announced today, Axxis Drilling has been contracted to drill the Kafoury 3 exploration well at ELV. The well is planned to test the extension of the known shallow field pays of the Siphonina Davisi and Margulina D-1 sands and to penetrate the deeper Planulina and Cristellaria R sands, which are also substantial producers in neighbouring fields. The possible gross reserves attributable to the prospect are 110 bcf of gas and 1.2 mmbbls of oil, of which around 85 per cent. is located in the deeper sands. The Company expects to have a net revenue interest of approximately 55 per cent. in these deeper sands whilst the interests in the shallower sands have not yet been finalised. The Kafoury 3 well is estimated to cost US$5.5 million to drill, with completion costs, including a new pipeline, of a further US$3.3 million. 2011 capital expenditure for the additional four wells is estimated at US$21 million. Production costs are very low in Louisiana at around US$0.5 per mcf. With approximately 75 per cent. of drilling costs potentially allowable against federal tax, the Directors expect strong cash generation from this drilling programme with a payback of the development costs of each successful well within approximately 12 months.

 

In addition to the plans for the Kafoury 3 well and its subsequent development, the Company will continue to invest in the low cost, low risk drilling and development of proven undeveloped ("PUD") and behind pipe reserves at its existing fields. Expenditure on these over the next 18 months is expected to be US$1.6 million, with two wells already scheduled for the fourth quarter of 2010.

 

South Australia

The PEL 82 exploration licence ("PEL 82") (wholly owned by President Petroleum) is an onshore coastal licence in the Otway Basin in South Australia. The Otway Basin has generated significant offshore production in the neighbouring state of Victoria, where the primary producing sands are the Flaxman and Waarre sands. Over the past few years, detailed studies by President Petroleum's consulting geoscientists have built up a persuasive case that there are good prospects for significant offshore-style hydrocarbon discoveries in these sands onshore within PEL 82.

 

In early 2009, President Petroleum recorded and processed 88 km2 of 3D seismic data to define drill targets, a significant investment for the Company. Interpretation of the 3D data confirmed the substantial prospective resources in the Flaxman and Waarre sands and identified ten target traps. Total prospective resources in these traps were assessed as 133 mmbbls of oil or 186 bcf of gas. Access to the main interstate gas pipeline system is possible via Mount Gambier just 25 km away whilst oil could be exported from the deepwater port at Portland, 100 km away.

 

Two additional large structural closures have been identified in the northern part of the licence outside the area covered by the 3D seismic survey. Total prospective resources in these structural closures are assessed as 300 mmbbls. An additional seismic survey will be required to locate drilling targets on these structures.

 

Three well locations have been identified where both the Flaxman and the underlying Waarre sands can be tested from a single well. The first exploration well, Northumberland 2, is targeted at the largest prospect of 40 mmbbls oil or 54 bcf gas and is expected to spud in the first quarter of 2011. The Company's drilling contract provides President Petroleum with an option to drill two further wells in addition to Northumberland 2.

 

The PEL 82 exploration licence expires in four years and the Company plans a comprehensive exploration programme over that period. The initial well will be comparatively expensive at US$7.5 million, as a result of higher mobilisation and demobilisation costs to relocate the drilling rig to PEL 82 from the Cooper Basin. Additional wells are estimated to cost US$5.0 million per well and a further seismic survey will cost up to US$3.0 million. The main risk on the Northumberland 2 well is inadequate sealing although any indication of hydrocarbons will be very encouraging and provide a solid case for drilling a second exploration well in mid-2011. The northern closures are structurally similar and, depending on the results of the additional seismic survey, further drilling in 2012 is possible.

 

Outlook

Success in any of the drilling and development plans for Louisiana or South Australia would be transformational for President Petroleum. As a combined programme running in parallel, they provide a balanced opportunity with the substantially derisked and quickly monetised 10.8 mmbbl target in Louisiana potentially elevating the Company to sizeable production levels and the much larger prospects in South Australia potentially delivering a material reserve and resource base.

 

The Board, fully supported by its largest shareholder, LCM, believes that by completing the Placing, the Company will be able to sustain a rapid pace of development, maintain flexibility and maximise the potential of its assets. The Board also wishes to maintain its position of being able to acquire further oil and gas assets if attractive opportunities become available.

 

3. Use of proceeds

 

The net proceeds of the Placing, together with existing cash, will be used to fund two high impact wells planned in the next six months, in addition to the contingent follow-up and development drilling of the Company's existing assets in Louisiana and South Australia during the fourth quarter of 2010 and throughout 2011. US$31.4 million shall be allocated for Louisiana, of which US$10.4 million is committed, and US$15.5 million shall be allocated for South Australia, of which US$7.5 million is committed.

 

Source of funds1,2		US$ million
Cash (as at 30 June 2010)		4.0
Net proceeds from the Placing		47.7
Total		51.7
Use of funds:	Timing
Committed
Louisiana Kafoury 3 well	Q4 2010	5.5
Completion of Kafoury 3 well – deep zones	Q1 2011	3.3
Drilling PUDs onshore Louisiana	Q4 2010	1.6
Australia Northumberland 2 well	Q1 2011	7.5
Committed subtotal		17.9
Contingent3
Louisiana Kafoury 4 shallow well / completion	H1 2011	3.0
Additional Kafoury deep wells / completions	2011	18.0
Australia second PEL 82 well	Q2 2011	5.0
Australia additional 3D seismic survey	Q4 2011	3.0
Contingent subtotal		29.0
Headroom		4.8
Total		51.7

 

Notes:

1. The Company has a bank loan of US$3.0 million outstanding with Macquarie Bank Limited, expiring June 2011.

2. Cash flows resulting from any successful wells drilled by the Company are not included in the source of funds.

3. Implementation of the contingent work plan is subject to the outcome of the Kafoury 3 and Northumberland 2 high impact wells.

 

4. Current trading and prospects

 

The Company's interim results for the six month period ended 30 June 2010 were also announced earlier today. In those results, the Chairman made the following statement:

 

"The first half of 2010 has been a very active period for President Petroleum with over US$5 million invested in acquisition and development activity. This commitment has continued into the second half of the year with further acreage acquisitions in Louisiana, and the confirmation of at least two significant wells to be spudded within the next few months.

 

This increased activity has created significant prospects for the Group and is a direct result of the restructuring of the Group in November 2009, and the substantial financial and resource support provided by the Group's largest shareholder, Levine Capital Management."

 

Please see the separate interim results announcement for further details which is available on President Petroleum's website: www.presidentpc.com.

 

5. Levine Capital Management Limited

 

LCM and the Related Parties, who the UK Panel on Takeovers and Mergers has deemed to be acting in concert with LCM for the purpose of the City Code on Takeovers and Mergers, currently hold 13,633,947 Existing Ordinary Shares in aggregate, representing approximately 29.9 per cent. of the Company's Existing Ordinary Shares. LCM has irrevocably agreed to subscribe for 18,896,342 Placing Shares pursuant to the Placing which, together with the Placing Shares subscribed for by John Hamilton and the Options anticipated to be granted to Michael Cochran, will result in LCM and the Related Parties maintaining their 29.9 per cent. holding in the capital of the Company.

 

The subscription by LCM in the Placing is classified as a related party transaction under the AIM Rules. Accordingly, the Directors, excluding John Hamilton and Michael Cochran, consider, having consulted with Evolution Securities, the Company's nominated adviser, that the terms of the participation are fair and reasonable insofar as independent Shareholders are concerned.

 

6. Irrevocable undertakings

 

Shareholders (which include the Directors and LCM) have irrevocably undertaken to vote or procure to vote in favour of the Resolution to be proposed at the General Meeting in respect of 14,367,393 Existing Ordinary Shares, in aggregate, representing approximately 31.61 per cent. of the existing issued ordinary share capital of the Company.

 

7. Information on President Petroleum

 

President Petroleum is an oil and gas exploration and production company with onshore producing assets and exploration licences in Louisiana, USA, and onshore exploration licences in South Australia. The Company is committed to substantial growth through a twin track strategy of acquisition of new oil and gas assets and the organic development of the Group's existing assets, with a view to creating a mid-cap exploration and production company with critical mass and a strategic presence in its key areas of interest.

 

Further information on, inter alia, President Petroleum's existing strategy, current assets, financial reports and reserves and resources can be found on the Company's website: www.presidentpc.com.

 

8. The Placing

 

The Company proposes to raise gross proceeds of £31.6 million, (approximately US$50.0 million and £30.2 million net of expenses) through the issue of the Placing Shares at the Placing Price. The Placing Price represents a discount of 17.7 per cent. to the closing middle market price of 60.75 pence per Ordinary Share on 29 September 2010, being the last practicable date prior to this Announcement. The Placing Shares will represent approximately 58.2 per cent. of the Company's issued ordinary share capital immediately following Admission.

 

Pursuant to the terms of the Placing Agreement, Evolution Securities and RBS Hoare Govett have conditionally agreed to use their reasonable endeavours, as agents for the Company, to place the Placing Shares at the Placing Price with certain institutional and other investors or, failing which, subscribe for such shares (excluding the LCM Placing Shares) themselves on an equal basis. The Placing Agreement is conditional upon, inter alia, the Resolution being duly passed at the General Meeting and Admission becoming effective on or before 8.00 a.m. on 19 October 2010 (or such later time and/or date as the Company and the Joint Bookrunners may agree, but in any event by no later than 8.00 a.m. on 31 October 2010).

 

The Placing Agreement contains warranties from the Company in favour of the Joint Bookrunners in relation to, inter alia, the accuracy of the information contained in the Circular and certain other matters relating to the Group and its business. In addition, the Company has agreed to indemnify the Joint Bookrunners in relation to certain liabilities they may incur in respect of the Placing. The Joint Bookrunners each independently have the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, for force majeure or in the event of a material breach of the warranties set out in the Placing Agreement.

 

Expenses

Under the Placing Agreement and subject to it becoming unconditional in all respects and not being terminated in accordance with its terms, the Company has agreed to pay the Joint Bookrunners an aggregate commission of 4.0 per cent. on the gross proceeds of the Placing, other than in relation to the LCM Placing Shares, together with all reasonable expenses and any applicable value added tax.

 

Total expenses payable to the Joint Bookrunners, LCM and other advisers are expected to total £1.4 million.

 

Settlement and dealings

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that such Admission will become effective and that dealings will commence at 8.00 a.m. on 19 October 2010.

 

The Placing Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive dividends and other distributions declared following Admission. It is expected that CREST accounts will be credited on the day of Admission and that share certificates (where applicable) will be dispatched by first class post, at the risk of Shareholders, by 2 November 2010.

 

Directors' shareholdings

John Hamilton has agreed to subscribe for 100,000 Placing Shares at the Placing Price, such shares to be subscribed for in the name of LCM.

 

Immediately after Admission, it is expected that the Directors will have the following beneficial shareholdings:

 

Director	Total no. of Ordinary Shares held following Admission	Percentage of the Enlarged Share Capital immediately following Admission
Stephen Gutteridge	498,392	0.46%
Angelo Baskaran	106,250	0.10%
Michael Cochran	100,000	0.09%
John Hamilton	300,000	0.28%
David Wake-Walker	128,804	0.12%

 

9. Global Incentive Plan

 

The Directors believe that the success of the Company will depend to a significant degree on the future performance of the management team and that the Company will be better able to recruit, retain and motivate its executive Directors and senior management through the grant of awards pursuant to the Global Incentive Plan, which was adopted by the Board on 28 June 2010.

 

The Remuneration Committee of the Board has been delegated responsibility for determining the nature of granting individual awards under the Global Incentive Plan. The following Options have today been granted, conditional upon Admission, to the Directors and senior management set out below:

 

Employee	Number of Options to be granted under the GIP
Stephen Gutteridge	425,000
Michael Cochran	130,000
Angelo Baskaran	180,000
Senior management	440,000
Total	1,175,000

 

Subject to satisfaction of any performance conditions, the Options will be exercisable at the Placing Price at any time commencing on the third anniversary of the date of grant and expiring on the day before the tenth anniversary of the date of grant.

 

Other than the Options referred to in this paragraph, there are no other outstanding options over the Company's Ordinary Shares.

 

10. Working capital

 

In the opinion of the Directors and taking into account the net proceeds of the Placing, the working capital available to the Group will be sufficient for the Group's present requirements, that is for at least 12 months following Admission.

 

11. General Meeting

 

A notice convening the General Meeting to be held on 18 October 2010 at the offices of Grant Thornton UK LLP, 30 Finsbury Square, London EC2A 1AG, at 11.00 a.m. is set out in the Circular, at which the Resolution will be proposed for the purposes of implementing the Placing.

 

 

 

APPENDICES

 

 

PLACING STATISTICS

 

Placing Price	50p
Number of Existing Ordinary Shares	45,446,492
Number of Placing Shares	63,291,140
Estimated net proceeds of the Placing	£30.2 million
Number of Ordinary Shares in issue following Admission	108,737,632
Number of Placing Shares as a percentage of the Enlarged Share Capital	58.2 per cent.

 

 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 

Latest time and date for receipt of Forms of Proxy	11.00 a.m. on 16 October 2010
General Meeting	11.00 a.m. on 18 October 2010
Admission and dealings in the Placing Shares expected to commence on AIM	8.00 a.m. on 19 October 2010
Expected date for CREST stock accounts to be credited for Placing Shares in uncertificated form	19 October 2010
Expected date for posting of share certificates for Placing Shares in certificated form	by 2 November 2010

 

(1) The dates set out in the Expected Timetable of Principal Events above and mentioned throughout this Announcement may be adjusted by President Petroleum in which event details of the new dates will be notified via a Regulatory Information Service.

 

(2) All references to time in this Announcement are to London time.

 

 

EXCHANGE RATES

 

In this Announcement, references to "pounds sterling", "£", "pence" and "p" are to the lawful currency of the United Kingdom and references to "US dollars", "$" and "cents" are to the lawful currency of United States of America. Unless otherwise stated, the basis of translation of pounds sterling into US dollars for the purposes of inclusion in this Announcement is US$1.58/£1.00.

 

 

TERMS AND CONDITIONS

 

IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING.

 

THIS ANNOUNCEMENT, INCLUDING THE APPENDICES AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, the Republic of South Africa, the Republic of Ireland JAPAN OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

 

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF A SUBSCRIPTION FOR THE PLACING SHARES.

 

Details of the Placing

 

Evolution Securities and RBS Hoare Govett have today entered into an agreement with President Petroleum (the "Placing Agreement") under which, subject to the conditions set out in that agreement, Evolution Securities and RBS Hoare Govett have agreed to use their respective reasonable endeavours to procure subscribers for Placing Shares at the Placing Price with certain institutional and other investors or, failing which, subscribe for such shares themselves (other than the LCM Placing Shares) on an equal basis, as further described in this Announcement and as set out in the Placing Agreement.

 

The Placing Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive dividends and other distributions declared or made following Admission.

 

Application for admission to trading 

 

Application will be made to the London Stock Exchange for admission of the Placing Shares to trading on AIM. Admission is conditional upon, amongst other things, the passing of the Resolution by the Shareholders at the General Meeting to be held at 11.00 a.m. on 18 October 2010. It is expected that Admission will become effective at 8.00 a.m. on 19 October 2010 and that dealings in the Placing Shares will commence at that time.

 

Participation in, and principal terms of, the Placing

 

The Joint Bookrunners are arranging the Placing as agents for and on behalf of the Company. Each of Evolution Securities and RBS Hoare Govett will determine in their absolute discretion the extent of each Placee's participation in the Placing, which will not necessarily be the same for each Placee. No commissions will be paid to or by Placees in respect of their agreement to acquire any Placing Shares other than in respect of LCM.

 

Each Placee will be required to pay to the Joint Bookrunners, on the Company's behalf, the Placing Price for each Placing Share agreed to be acquired by it under the Placing in accordance with the terms set out in the Appendices. Each Placee's obligation to acquire and pay for Placing Shares under the Placing will be owed to each of the Joint Bookrunners and the Company. Each Placee has an immediate, separate, irrevocable and binding obligation, owed to the Joint Bookrunners, to pay to them (or as they may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to subscribe for. Each Placee will be deemed to have read and understood the Appendices in their entirety, to be participating in the Placing upon the terms and conditions contained in the Appendices, and to be providing the representations, warranties, agreements, acknowledgements and undertakings, in each case as contained in the Appendices. To the fullest extent permitted by law and applicable Financial Services Authority ("FSA") rules (the "FSA Rules"), neither (i) Evolution Securities nor RBS Hoare Govett, (ii) any of their respective directors, officers, employees or consultants, or (iii) to the extent not contained with (i) or (ii), any person connected with the Joint Bookrunners as defined in the FSA Rules ((i), (ii) and (iii) being together "affiliates" and individually an "affiliate"), shall have any liability to Placees or to any person other than the Company in respect of the Placing.

 

Conditions of the Placing

 

The obligations of the Joint Bookrunners under the Placing Agreement are conditional on, amongst other things:

 

(a) the representations and warranties contained in the Placing Agreement being true, accurate and not misleading on the date of the Placing Agreement and at all times up to and including Admission; 

 

(b) President Petroleum's compliance with all of the agreements and undertakings and satisfaction and performance of all of its conditions and obligations under the Placing Agreement in so far as they are required to be performed prior to Admission;

 

(c) in the opinion of the Joint Bookrunners, there having been no material adverse change in, or any development reasonably likely to involve a material adverse change in the condition (financial, operational, legal or otherwise), or in the earnings, business affairs, management or business or financial prospects of President Petroleum and its subsidiaries taken as a whole, whether or not arising in the ordinary course of business since the date of the Placing Agreement;

 

(d) the passing of the Resolution, without amendment, at the General Meeting of the Company to be convened (save with consent of the Joint Bookrunners) not later than 8.00 a.m. on 31 October 2010; and

 

(e) Admission taking place by 8.00 a.m. on 19 October 2010 (or such later date as the Joint Bookrunners may otherwise determine being no later than 8.00 a.m. on 31 October 2010).

 

If any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by the Joint Bookrunners, by the respective time or date where specified, the Placing will not proceed and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.

 

The Joint Bookrunners may, at their discretion and upon such terms as they think fit, waive compliance by President Petroleum with the whole or any part of any of President Petroleum's obligations in relation to the conditions in the Placing Agreement. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.

 

None of the Joint Bookrunners, President Petroleum or any other person shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or the date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Joint Bookrunners. 

 

Termination of the Placing Agreement

 

The Joint Bookrunners are entitled, at any time before Admission, to terminate the Placing Agreement in relation to their obligations in respect of the Placing Shares by giving notice to President Petroleum if, amongst other things:

 

(a) there has, in the opinion of either of the Joint Bookrunners, been a breach of any of the warranties or representations or any of the obligations of the Company under the Placing Agreement or there are any facts or circumstances existing giving an entitlement on the part of either of the Joint Bookrunners to make a claim under the indemnities set out in the Placing Agreement; or

 

(b) it shall come to the notice of the Joint Bookrunners that any statement contained in this Announcement, or any other document or announcement issued or published by or on behalf of President Petroleum in connection with the Placing (together the "Placing Documents"), is or has become untrue, incorrect or misleading in any material respect, or any matter has arisen, which would, if the Placing were made at that time, constitute a material omission from the Placing Documents, or any of them; or

 

(c) there has occurred (i) any material adverse change in the financial markets in the United States, the United Kingdom, member states of the European Union or in the international financial markets, (ii) any outbreak or escalation of hostilities, act of terrorism or other calamity or crisis or (iii) any change or development involving a prospective change in national or international political, financial or economic conditions, or currency exchange rates, in each case the effect of which is such as to make it, in the judgment of the Joint Bookrunners (acting in good faith), impracticable or inadvisable to market the Placing Shares or to enforce contracts for the sale of the Placing Shares; or

 

(d) admission of the Placing Shares to AIM has been withdrawn, or trading in any shares of the Company on AIM has been suspended or limited by the London Stock Exchange, or if trading generally on the London Stock Exchange has been suspended or limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by the London Stock Exchange, the New York Stock Exchange or any other major financial market or by such system or by order of the regulatory authorities of the United Kingdom, the United States, or any other governmental or self-regulatory authority, or a material disruption has occurred in commercial banking or shares settlement or clearance services in the United Kingdom, the United States or in Europe; or

 

(e) a banking moratorium has been declared by the authorities of any of the United Kingdom, the United States, the State of New York or any other member state of the European Economic Area.

 

Upon such termination, the parties to the Placing Agreement shall be released and discharged (except for any liability arising before or in relation to such termination) from their respective obligations under or pursuant to the Placing Agreement subject to certain exceptions.

 

By participating in the Placing, Placees agree that the exercise by the Joint Bookrunners of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Joint Bookrunners and that they need not make any reference to Placees and that they shall have no liability to Placees whatsoever in connection with any such exercise or failure so to exercise.

 

No prospectus

 

No offering document, prospectus or admission document has been or will be submitted to be approved by the FSA or submitted to the London Stock Exchange in relation to the Placing and Placees' commitments will be made solely on the basis of the information contained in this Announcement (including the Appendices) released by President Petroleum today, and subject to the further terms set forth in the contract note to be provided to individual prospective Placees.

 

Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement (including the Appendices) is exclusively the responsibility of President Petroleum and confirms that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of President Petroleum or the Joint Bookrunners or any other person and none of Evolution Securities, RBS Hoare Govett or President Petroleum nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of President Petroleum in accepting a participation in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

 

Registration and settlement

 

Settlement of transactions in the Placing Shares following Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"), subject to certain exceptions. President Petroleum reserves the right to require settlement for and delivery of the Placing Shares (or a portion thereof) to Placees in certificated form if, in the Joint Bookrunners' opinion, delivery or settlement is not possible or practicable within the CREST system or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

 

Participation in the Placing is only available to persons who are invited to participate in it by the Joint Bookrunners.

 

A Placee's commitment to acquire a fixed number of Placing Shares under the Placing will be agreed orally with the Joint Bookrunners. Such agreement will constitute a legally binding commitment on such Placee's part to acquire that number of Placing Shares at the Placing Price on the terms and conditions set out or referred to in the Appendices and subject to the Company's Memorandum and Articles of Association.

 

After such agreement is entered into, each Placee allocated Placing Shares in the Placing will be sent a contract note stating the number of Placing Shares allocated to it at the Placing Price and settlement instructions.

 

Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions that it has in place with the Joint Bookrunners. Settlement should be through Evolution Securities against CREST ID: 50X23, account designation: PLACING or through RBS Hoare Govett against CREST ID: 521, account designation: AGENT. For the avoidance of doubt, Placing allocations will be booked with a trade date of 30 September 2010 and settlement date of 19 October 2010, the date of Admission.

 

President Petroleum will deliver the Placing Shares to the CREST accounts operated by Evolution securities and RBS Hoare Govett as agents for President Petroleum and Evolution Securities and RBS Hoare Govett will each enter its delivery (DEL) instruction into the CREST system. The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.

 

It is expected that settlement will take place on 19 October 2010, being the business day following the General Meeting, on a delivery versus payment basis. 

 

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by the Joint Bookrunners.

 

Each Placee is deemed to agree that, if it does not comply with these obligations, President Petroleum may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for President Petroleum's account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.

 

If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.

 

Representations and warranties

 

By participating in the Placing each Placee (and any person acting on such Placee's behalf) acknowledges, undertakes, represents, warrants and agrees (as the case may be) the following. It:

 

1. has read this Announcement, including the Appendices, in its entirety;

 

2. acknowledges and agrees that no offering document, prospectus or admission document has been or will be prepared in connection with the Placing and represents and warrants that it has not received a prospectus, admission document or other offering document in connection with the Placing or the Placing Shares;

 

3. acknowledges that the ordinary shares in the capital of President Petroleum are admitted to trading on AIM, and President Petroleum is therefore required to publish certain business and financial information in accordance with the rules and practices of AIM (collectively, the "Exchange Information"), which includes a description of the nature of President Petroleum's business and President Petroleum's most recent balance sheet and profit and loss account and that it is able to obtain or access such Exchange Information without undue difficulty and is able to obtain access to such information or comparable information concerning any other publicly traded company without undue difficulty;

 

4. acknowledges that none of Evolution Securities, RBS Hoare Govett or President Petroleum or any of their respective affiliates or any person acting on behalf of any of them has provided, and will not provide, it with any material regarding the Placing Shares or President Petroleum or any other person other than this Announcement; nor has it requested any of Evolution Securities, RBS Hoare Govett, President Petroleum, any of their respective affiliates or any person acting on behalf of any of them to provide it with any such information;

 

5. acknowledges that (i) it and, if different, the beneficial owner of the Placing Shares is not, and at the time the Placing Shares are acquired will not be located in or residents of a Restricted Jurisdiction, and (ii) the Placing Shares have not been and will not be registered under the securities legislation of the United States, Australia, Canada, the Republic of South Africa, the Republic of Ireland or Japan and, subject to certain exceptions, may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, in or into those jurisdictions;

 

6. acknowledges that the content of this Announcement is exclusively the responsibility of President Petroleum and that none of Evolution Securities, RBS Hoare Govett or any person acting on their behalf has or shall have any liability for any information, representation or statement contained in this Announcement or any information previously published by or on behalf of President Petroleum and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to subscribe for the Placing Shares is contained in this Announcement and any information previously published by President Petroleum by notification to a Regulatory Information Service, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by any of the Joint Bookrunners or President Petroleum and none of Evolution Securities, RBS Hoare Govett or President Petroleum will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of President Petroleum in deciding to participate in the Placing;

 

7. acknowledges that neither of the Joint Bookrunners nor any person acting on behalf of them nor any of their affiliates has or shall have any liability for any publicly available or filed information, or any representation relating to President Petroleum, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;

 

8. represents and warrants that neither it, nor the person specified by it for registration as a holder of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services);

 

9. represents and warrants that it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2007 (the "Regulations") and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;

 

10. if a financial intermediary, as that term is used in Article 3(2) of EU Directive 2003/71/EC (the "Prospectus Directive") (including any relevant implementing measure in any member state), represents and warrants that the Placing Shares subscribed for by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the European Economic Area which has implemented the Prospectus Directive other than to qualified investors, or in circumstances in which the prior consent of the Joint Bookrunners has been given to the proposed offer or resale;

 

11. represents and warrants that it has not offered or sold and, prior to the expiry of a period of six months from Admission, will not offer or sell any Placing Shares to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the Financial Services and Markets Act 2000 ("FSMA");

 

12. represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (Directive 2003/71/EC) (including any relevant implementing measure in any member state);

 

13. represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person;

 

14. represents and warrants that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom; 

 

15. (a) represents and warrants that it is a person falling within Article 19(5) and/or Article 49(2)(a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or is a person to whom this Announcement may otherwise be lawfully communicated; and (b) acknowledges that any offer of Placing Shares may only be directed at persons to the extent in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive and represents and agrees that it is such a qualified investor;

 

16. represents and warrants that it is entitled to subscribe for Placing Shares under the laws of all relevant jurisdictions which apply to it, and that its subscription of the Placing Shares will be in compliance with applicable laws and regulations in the jurisdiction of its residence, the residence of the Company, or otherwise;

 

17. undertakes that it (and any person acting on its behalf) will make payment for the Placing Shares allocated to it in accordance with this Announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as the Joint Bookrunners may in their discretion determine and without liability to such Placee;

 

18. acknowledges that neither of the Joint Bookrunners, nor any of their respective affiliates, nor any person acting on behalf of either of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of Evolution Securities or RBS Hoare Govett for the purposes of the Placing and that the Joint Bookrunners have no duties or responsibilities to it for providing the protections afforded to their clients or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

 

19. undertakes that the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. Neither of the Joint Bookrunners nor President Petroleum will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing and it agrees to indemnify President Petroleum and the Joint Bookrunners in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock accounts of Evolution Securities and RBS Hoare Govett who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;

 

20. acknowledges that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions and any non-contractual obligations arising out of or in connection with such agreements shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by President Petroleum, Evolution Securities or RBS Hoare Govett in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange; 

 

21. acknowledges that Evolution Securities and RBS Hoare Govett and their respective affiliates will rely upon the truth and accuracy of the representations, warranties and acknowledgements set forth herein and which are irrevocable and it irrevocably authorises Evolution Securities and RBS Hoare Govett to produce this Announcement, pursuant to, in connection with, or as may be required by any applicable law or regulation, administrative or legal proceeding or official inquiry with respect to the matters set forth herein;

 

22. agrees to indemnify and hold President Petroleum, the Joint Bookrunners and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in the Appendices and further agrees that the provisions of the Appendices shall survive after completion of the Placing;

 

23. represents and warrants that it will acquire any Placing Shares subscribed for by it for its account or for one or more accounts as to each of which it exercises sole investment discretion and it has full power to make the acknowledgements, representations and agreements herein on behalf of each such account;

 

24. acknowledges that its commitment to subscribe for Placing Shares on the terms set out herein and in the relevant contract note will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to President Petroleum's conduct of the Placing. The foregoing representations, warranties and confirmations are given for the benefit of President Petroleum as well as the Joint Bookrunners. The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to the subscription by it and/or such person direct from President Petroleum for the Placing Shares in question. Such agreement assumes, and is based on a warranty from each Placee, that neither it, nor the person specified by it for registration as holder, of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services). If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable. In that event the Placee agrees that it shall be responsible for such stamp duty or stamp duty reserve tax, and neither President Petroleum nor the Joint Bookrunners shall be responsible for such stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify the Joint Bookrunners accordingly;

 

25. understands that no action has been or will be taken by any of the Company, the Joint Bookrunners or any person acting on behalf of President Petroleum or the Joint Bookrunners that would, or is intended to, permit a public offer of the Placing Shares in any country or jurisdiction where any such action for that purpose is required;

 

26. in making any decision to subscribe for the Placing Shares, confirms that it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for the Placing Shares. It further confirms that it is experienced in investing in securities of this nature in this sector and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain a complete loss in connection with the Placing. It further confirms that it relied on its own examination and due diligence of the Company and its associates taken as a whole, and the terms of the Placing, including the merits and risks involved;

 

27. represents and warrants that it has (a) made its own assessment and satisfied itself concerning legal, regulatory, tax, business and financial considerations in connection herewith to the extent it deems necessary; (b) had access to review publicly available information concerning the Group that it considers necessary or appropriate and sufficient in making an investment decision; (c) reviewed such information as it believes is necessary or appropriate in connection with its subscription of the Placing Shares; and (d) made its investment decision based upon its own judgment, due diligence and analysis and not upon any view expressed or information provided by or on behalf of Evolution Securities and RBS Hoare Govett; 

 

28. understands and agrees that it may not rely on any investigation that Evolution Securities and RBS Hoare Govett or any person acting on their behalf may or may not have conducted with respect to the Company, its group, or the Placing and Evolution Securities and RBS Hoare Govett have not made any representation to it, express or implied, with respect to the merits of the Placing, the subscription for the Placing Shares, or as to the condition, financial or otherwise, of the Company, its Group, or as to any other matter relating thereto, and nothing herein shall be construed as a recommendation to it to subscribe for the Placing Shares. It acknowledges and agrees that no information has been prepared by Evolution Securities, RBS Hoare Govett or the Company for the purposes of this Placing; and

 

29. accordingly it acknowledges and agrees that it will not hold Evolution Securities, RBS Hoare Govett or any of their respective affiliates or any person acting on their behalf responsible or liable for any misstatements in or omission from any publicly available information relating to the Group or information made available (whether in written or oral form) in presentations or as part of roadshow discussions with investors relating to the Group (the "Information") and that none of Evolution Securities, RBS Hoare Govett or any person acting on behalf of Evolution Securities or RBS Hoare Govett, makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of such Information or accepts any responsibility for any of such Information.

 

By participating in the Placing, each Placee (and any person acting on Placee's behalf) subscribing for Placing Shares acknowledges that: (i) the Placing Shares are being offered and sold only pursuant to Regulation S under the Securities Act in a transaction not involving a public offering of securities in the United States and the Placing Shares have not been and will not be registered under the Securities Act; and (ii) the offer and sale of the Placing Shares to it has been made outside of the United States in an "offshore transaction" (as such term is defined in Regulation S under the Securities Act) and it is outside of the United States during any offer or sale of Placing Shares to it.

 

In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the United Kingdom by them or any other person on the subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares.

 

Each Placee and any person acting on behalf of each Placee acknowledges and agrees that Evolution Securities, RBS Hoare Govett or any of their affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.

 

When a Placee or person acting on behalf of the Placee is dealing with Evolution Securities or RBS Hoare Govett, any money held in an account with any of Evolution Securities or RBS Hoare Govett on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FSA made under FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from Evolution Securities' or RBS Hoare Govett's money in accordance with the client money rules and will be used by Evolution Securities and RBS Hoare Govett in the course of their own business; and the Placee will rank only as a general creditor of Evolution Securities or RBS Hoare Govett (as applicable). 

 

All times and dates in this Announcement may be subject to amendment. The Joint Bookrunners shall notify the Placees and any person acting on behalf of the Placees of any changes.

 

Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.

 

 

 

DEFINITIONS

 

The following definitions apply throughout this Announcement unless the context otherwise requires:

 

"Act"	the Companies Act 2006 (as amended)
"Admission"	admission of the Placing Shares to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules
"AIM"	the market of that name operated by the London Stock Exchange
"AIM Rules"	the AIM Rules for Companies as published by the London Stock Exchange from time to time
"Announcement"	means this announcement (including the appendices to this announcement)
"bcf"	billion cubic feet of gas
"boe/d"	barrels of oil equivalent per day
"Circular"	the circular to Shareholders dated 30 September 2010 containing details of the Placing and the Notice of General Meeting
"Company" or "President Petroleum"	President Petroleum Company PLC
"CREST"	the relevant system (as defined in the Uncertificated Securities Regulations 2001) for the paperless settlement of trades and the holding of uncertificated securities operated by Euroclear UK & Ireland Limited
"Directors" or "Board"	the directors of the Company, or any duly authorised committee thereof
"D-O-R"	D-O-R Engineering, Inc.
"Enlarged Share Capital"	the issued ordinary share capital of the Company immediately following Admission
"Evolution Securities"	Evolution Securities Limited, the Company's nominated adviser and Joint Bookrunner
"Existing Ordinary Shares"	the 45,446,492 Ordinary Shares in issue at the date of this Announcement
"Form of Proxy"	the form of proxy for use in connection with the General Meeting which accompanies the Circular
"FSA"	the Financial Services Authority in its capacity as the competent authority for the purposes of Part VI of FSMA
"FSMA"	the Financial Services and Markets Act of 2000 (as amended).
"General Meeting"	the general meeting of the Company to be held on 18 October 2010, notice of which is set out at the end of the Circular
"Global Incentive Plan" or "GIP"	the President Petroleum Global Incentive Plan adopted by the Board on 28 June 2010
"Group"	the Company, its subsidiaries and its subsidiary undertakings
"Joint Bookrunners"	together, Evolution Securities and RBS Hoare Govett
"km"	kilometres
"km2"	square kilometres
"London Stock Exchange"	London Stock Exchange plc
"LCM" or "Levine Capital Management"	Levine Capital Management Limited, a company registered in the British Virgin Islands
"LCM Placing Shares"	the Placing Shares conditionally subscribed for by LCM
"mbbls"	thousand barrels
"mcf"	thousand cubic feet of gas
"mmbbls"	million barrels
"mmboe"	million barrels of oil equivalent
"mmcfd"	million cubic feet of gas per day
"Notice of General Meeting"	the notice convening the General Meeting which is set out at the end of the Circular
"NPV10"	net present value at a discount rate of 10 per cent.
"Options"	options to acquire Ordinary Shares pursuant to the Global Incentive Plan
"Ordinary Shares"	ordinary shares of 1 pence each in the capital of the Company
"Placing"	the conditional placing of the Placing Shares at the Placing Price by the Joint Bookrunners as agents for and on behalf of the Company pursuant to the terms of the Placing Agreement
"Placing Agreement"	the agreement dated 30 September 2010 between (i) the Company; (ii) Evolution Securities; and (iii) RBS Hoare Govett relating to the Placing, further details of which are set out in this Announcement
"Placing Price"	50 pence per Placing Share
"Placing Shares"	the 63,291,140 new Ordinary Shares of 1 pence each to be issued in connection with the Placing
"RBS Hoare Govett"	RBS Hoare Govett Limited, the Company's Joint Bookrunner
"Related Parties"	John Hamilton and Michael Cochran (both Directors) and Christopher Hopkinson (a former director of the Company)
"Resolution"	the resolution set out in the Notice of General Meeting
"Shareholders"	holders of Ordinary Shares
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland
"United States" or "USA"	United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all other areas subject to its jurisdiction

 

 

 

This information is provided by RNS

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