Sale of 25% of Kraken to EnQuest PLC

Nautical Petroleum plc

("Nautical" or the "Company")

Sale of 25% of Kraken to EnQuest PLC for carry of up to $240 million

Nautical Petroleum plc (LSE:NPE) is pleased to announce that it has agreed with EnQuest PLC (EnQuest) to divest a 25% interest in United Kingdom Petroleum Production Licence P1077, North Sea Blocks 9/2b & 9/2c, which contain the Kraken discovery.

In consideration for the transaction Nautical will receive a carry on its future expenditure on the Kraken field of up to $240 million, consisting of a $150 million firm carry and a contingent carry of up to $90 million. The value of the contingent carry will be calculated by reference to a determination of the gross 2P reserves in Blocks 9/2b & 9/2c by a competent person, as follows:

The reserve determination will take place during the development drilling phase. The current estimate of 2C Resources for the Kraken field is 160mmbo, which is supported by an Independent Resource Opinion provided by Gaffney Cline & Associates on 15 July 2011, prior to the successful 9/02b-5z well test.

Whilst not part of this agreement with EnQuest, Nautical remains entitled to receive from Canamens North Sea Energy Limited an additional $5 million bonus upon Field Development Plan approval and payments totalling £7 million ($10 million) relating to sole risk activity on the 9/02b-4 and 4z wells.

Subject to the approval of the joint venture partners and the Department of Energy and Climate Change (DECC), EnQuest will become the operator of Blocks 9/2b & 9/2c.

In addition to the disposal of a 25% interest in Kraken, Nautical will also divest to EnQuest interests in exploration blocks in the Greater Kraken area as follows:

The transfers of interest are subject to approval by joint venture partners and DECC. Following completion, Nautical's holding will be as follows:

The transaction also provides EnQuest with the option to earn a 45% farm-in interest in Nautical's wholly owned Block 9/1a, which contains the Ketos discovery, in return for paying up to 90% of the gross cost of drilling up to two wells to the appraise the discovery. EnQuest's liability to carry Nautical's costs for the first well is capped at 45% of $15 million gross well cost. For the second well, which is contingent on the success of the first well, the carry is capped at 45% of $20 million gross well cost.

Steve Jenkins, Nautical Chief Executive Officer, commented:

"I am delighted to welcome EnQuest, as partners, strengthening the joint venture both technically and financially. This transaction provides Nautical with a carry of up to $240 million on our remaining 25% interest in Kraken, significantly mitigating our funding requirements for the development of the field. The Nautical team has made excellent progress towards the development of the Kraken accumulation. We are currently carrying out concept selection (pre-FEED) studies and are in discussions with contractors to provide a leased FPSO. We now look forward with confidence as we move toward Field Development Plan approval in Q4, 2012 and first oil in 2015."

For further information please contact:

This announcement has been approved for issue by Steve Jenkins, Chief Executive Officer of Nautical Petroleum plc. Mr. Jenkins, who is a "qualified person" for the purposes of AIM's Note for Mining and Oil & gas Companies (June 2009), is a qualified Geologist with more than 28 years' experience, having a BSC Hons from Queens University (Belfast) and MSC in Petroleum Geology from Imperial College (London) and is a Fellow of the Geological Society.