TIDMPPC
RNS Number : 0488M
President Petroleum Company PLC
12 September 2012
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.
This announcement does not constitute a prospectus or offering
memorandum or an offer in respect of any securities and is not
intended to provide the basis for any decision in respect of
President Petroleum Company PLC or other evaluation of any
securities of President Petroleum Company PLC or any other entity
and should not be considered as a recommendation that any investor
should subscribe for or purchase any such securities.
12 September 2012
PRESIDENT PETROLEUM COMPANY PLC
(Incorporated in England and Wales with registered no.
5104249)
("President" or the "Company")
Farm-in Agreement in 2 contiguous blocks of 16,000 km2 in
Paraguay
Firm Placing and Conditional Placing of 115,850,000 New Ordinary
Shares at 20 pence per share
Proposed Open Offer of up to 19,998,541 New Ordinary Shares at
20 pence per share
Proposed Subscription of 18,750,000 New Ordinary Shares at 20
pence per share
President announces it has signed a Farm-In Agreement for two
contiguous blocks in Paraguay and a proposed fundraising comprising
a firm placing of 28,962,500 New Ordinary Shares, a conditional
placing of 86,887,500 New Ordinary Shares, an open offer of up to
19,998,541 New Ordinary Shares and a subscription of 18,750,000 New
Ordinary Shares, in each case at 20 pence per share to raise
GBP30.92 million (approximately US$49.47 million) assuming a full
take-up under the Open Offer.
The Farm-In Agreement provides for President to earn up to a 59
per cent. interest in the Pirity Block from Pirity Hidrocarburos (a
subsidiary of PetroVictory); and up to a 60 per cent. interest in
the Demattei Block from Crescent Global Oil Paraguay S.A. (a
subsidiary of Crescent Oil LLC) in the Chaco region of Paraguay.
The combined blocks have a gross risked recoverable resource
potential of greater than 150 million barrels, with a net success
case NPV10 estimated at over US$25 per barrel (President
estimates).
This is a significant transaction for the Company in a
relatively untapped region of the world, which is open for
business. The transaction is a strategic fit for President, as the
petroleum system is well known to the Company through its
operations across the border in Argentina. The transaction builds
critical mass in the region while providing entry into a new
country, and utilises President's expanding technical and
operational team.
Farm In Highlights:
-- Initial payment to the vendors, certain aspects of the work
programme in relation to the Pirity and Demattei Blocks and other
opportunities across the Group to be funded through a placing of
approximately US$37.07 million, a US$6.00 million subscription, a
US$15 million loan facility, and an open offer of up to
approximately US$6.40 million
-- Pirity Sub Basin is an extension of a proven petroleum system
in the Olmedo Sub Basin on the Argentine side of the border, which
has produced in excess of 150 million barrels of oil equivalent to
date
-- Farm in provides sole operatorship and control over an almost
entire Cretaceous rift basin of 16,000 km(2), with a proven
petroleum system, which has been inaccessible for 25 years
-- The Pirity Sub Basin has proven source rock, multiple
structures, with on trend production (the Palmar Largo field in
Argentina 20 km to the west has produced 44 million barrels to
date, and Gran Tierra have recently discovered an extension to the
field, with the well Proa X2 initially flowing over 6,000 bopd)
Rationale
-- A strategic fit in a frontier oil and gas region where
President can make excellent use of its technical capabilities and
knowledge of the region.
-- Paraguay is a constitutional republic, is open for business,
and has an attractive hydrocarbon law, with a sliding scale royalty
of a maximum of 14 per cent. and a 10 per cent. corporate tax rate.
Paraguay is enjoying strong economic growth and inward investment
such as a Rio Tinto aluminium smelter
-- President's US partners in the blocks have been active in
Paraguay for 7 years, and enjoy strong support in Paraguay and the
USA
Equity Fundraising Highlights
-- 115,850,000 New Ordinary Shares have been placed with
investors at a price of 20 pence per share, to raise gross proceeds
of GBP23.17 million (approximately US$37.07 million)) split
between
o 84,425,000 New Ordinary Shares placed with Institutional
Investors (raising approximately GBP16.89 million)
o 31,250,000 New Ordinary Shares placed with Levine Capital
Management (raising approximately GBP6.25 million)
o 175,000 New Ordinary Shares placed with Directors (raising
approximately GBP35,000)
-- The Issue Price represents a discount of 20 per cent. to the
closing middle market price of 25 pence per Ordinary Share on 11
September 2012, being the last trading day before this
announcement
-- 28,962,500 New Ordinary Shares expected to be admitted
pursuant to the Placing to trading on AIM at 8.00 a.m. on 17
September 2012, with the remainder subject to, amongst other
things, shareholder approval
-- Peter Levine, through Levine Capital Management to subscribe
for 31,250,000 New Ordinary Shares (raising approximately US$10.00
million) in Placing, all such New Ordinary Shares to be issued by
Second Admission although payment for 15,625,000 of those New
Ordinary Shares will be deferred until 31 December 2012. Peter
Levine will additionally provide a US$15.00 million revolving loan
facility available to President for a further 24 months.
-- Certain Shareholders (including Levine Capital Management and
the Directors) have irrevocably undertaken to vote or procure to
the voting in favour of the Resolutions 1 and 2 relating to the
Placing, Subscription and Open Offer in respect of 48,982,533
Existing Ordinary Shares, in aggregate, representing approximately
38.1 per cent. of the existing issued ordinary share capital of the
Company
-- 7 for 45 Open Offer to raise up to GBP4.00 million to allow
all of the Company's existing Shareholders the opportunity to
participate in the fundraising
-- 18,750,000 New Ordinary Shares to be subscribed for by Pirity
Hidrocarburos (raising approximately GBP3.75 million) on completion
of the Acquisition. The subscription by Pirity Hidrocarburos is
conditional on, amongst other things, shareholder approval and
completion of the Acquisition taking place.
-- RBC Capital Markets and Jefferies are acting as Joint Bookrunners
Peter Levine, Chairman of President, commented:
"This transaction is a transformational step for President which
will allow it to achieve substantial growth and reflects our
determination to transform President into a mid-cap company. The
high impact exploration potential in these large blocks in Paraguay
is a company making opportunity, with identified prospects having
gross risked recoverable resource potential of greater than 150
million barrels, with a net success case NPV10 estimated at over
US$25 per barrel (President estimates). We are pursuing an on-trend
play across the Argentine border into Paraguay where we have
secured control over the Paraguayan side of the basin.
The ability to solely operate and control almost an entire
under-drilled Cretaceous rift basin is a unique opportunity for
President to leverage our extensive knowledge of the play systems
from our nearby Argentine operations. Combining President's
expertise, with the knowledge of our experienced partners' who
enjoy significant support in Paraguay, will allow us to play a
major role at this exciting time for the oil industry in Paraguay.
I am also delighted by the support shown to us by our existing and
new investors in supporting this important growth step for
President, as it builds critical mass in the region."
An investor presentation regarding the Acquisition and Placing
will be available on President's website: www.presidentpc.com.
This summary should be read in conjunction with, and is subject
to, the full text of this announcement. The Schedule to this
announcement (which form part of this announcement) include the
terms and conditions of the Placing.
For further information contact:
President Petroleum Company
John Hamilton, Director +44 (0) 207 811 0140
Ben Wilkinson, Finance Director +44 (0) 207 811 0140
RBC Capital Markets (Nomad, Joint Broker)
Matthew Coakes, Jeremy Low, Stephen Foss +44 (0) 207 653 4000
Jefferies (Joint Broker)
Simon Hardy, Lee Morton, Max Jones +44 (0) 207 029 8316
Pelham Bell Pottinger +44 (0) 207 861 3232
James Henderson, Mark Antelme
IMPORTANT NOTICES
This announcement contains (or may contain) certain
forward-looking statements with respect to certain of the Company'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 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's
control. As a result, President's actual future results may differ
materially from the plans, goals, and expectations set forth in
President's forward-looking statements. Any forward-looking
statements made in this announcement by or on behalf of President
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 or regulation, President
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'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 and the
information contained herein has not been verified by RBC Capital
Markets or Jefferies.
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 RBC Capital Markets or Jefferies, or by
any of their respective affiliates, directors, officers, employees,
professional advisers 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.
RBC Capital Markets, which is authorised and regulated in the
United Kingdom by the FSA, is acting for President and for no-one
else in connection with the Capital Raising, and will not be
responsible to anyone other than President for providing the
protections afforded to clients of RBC Capital Markets nor for
providing advice to any other person in relation to the Capital
Raising, Acquisition or any other matter referred to herein.
Jefferies, which is authorised and regulated in the United
Kingdom by the FSA, is acting for President and for no-one else in
connection with the Capital Raising, and will not be responsible to
anyone other than President for providing the protections afforded
to clients of Jefferies nor for providing advice to any other
person in relation to the Capital Raising, Acquisition or any other
matter referred to herein.
The distribution of this announcement and the offering of the
New Ordinary Shares in certain jurisdictions may be restricted by
law or regulation. No action has been taken by President, RBC
Capital Markets or Jefferies 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, RBC Capital Markets and Jefferies 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")), (II) PERSONS IN THE UNITED KINGDOM WHO ARE QUALIFIED
INVESTORS AND/OR (III) PERSONS IN THE UNITED STATES WHO ARE
QUALIFIED INSTITUTIONAL BUYERS (WITHIN THE MEANING OF RULE 144A
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") (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 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 THE COMPANY.
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 New Ordinary Shares that are
allocated to it for the purposes of its business; and (ii) (a)
outside the United States and is subscribing for the New Ordinary
Shares in an "offshore transaction" (within the meaning of
Regulation S under the Securities Act or (b) is subscribing for the
New Ordinary Shares pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of 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 in a Restricted
Jurisdiction. In particular, the New Ordinary 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 New Ordinary 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 will
be made in connection with the Capital Raising 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
New Ordinary 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
New Ordinary 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 New Ordinary 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 New Ordinary Shares to which this announcement relates may
be illiquid and/or subject to restrictions on their resale.
Prospective subscribers for the New Ordinary Shares offered should
conduct their own due diligence on the New Ordinary Shares. If you
do not understand the contents of this announcement you should
consult an authorised financial adviser.
The New Ordinary 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's website nor any website
accessible by hyperlinks on President's website is incorporated in,
or forms part of, this announcement.
PART A
Letter from the Chairman
Farm in Agreement in 2 contiguous blocks in Paraguay
Proposed Placing of 115,850,000 New Ordinary Shares at 20 pence
per share
Proposed Open Offer of up to 19,998,541 New Ordinary Shares at
20 pence per share
Proposed Subscription of 18,750,000 New Ordinary Shares at 20
pence per share
1. Introduction
President has announced today that it has entered into
conditional Farm-In Agreements to acquire certain Paraguayan
Concession Interests comprising:
(a) a farm-in to earn up to a 59 per cent. working interest in
the Pirity Concession from Pirity Hidrocarburos (a subsidiary of
PetroVictory); and
(b) a farm-in to earn up to a 60 per cent. working interest in
the Demattei Concession from Crescent Global Oil Paraguay (a
subsidiary of Crescent Oil).
Under the terms of the Farm-In Agreements, President will
acquire an immediate 11.8 per cent. working interest in the Pirity
Concession for an initial consideration of US$10.00 million in cash
and a 3 per cent. working interest in the Demattei Concession for
an initial consideration of US$2.00 million in cash. The total
up-front payment in cash of US$12.00 million will be used to repay
back costs to the Vendors in respect of each Paraguayan Concession.
It is intended that further interests in each Paraguayan Concession
will be acquired incrementally by the Company should it elect to
fund the agreed work programmes. A summary of the consideration
amounts and working interests of the farm-ins are set out in the
table below:
Pirity Concession Demattei Concession
----------------------------------------- ----------------------------------- --------------------------
Incremental
Work Incremental Interest Approximate Interest Approximate
Programme Earned (%) Cost (US$)(1) Earned (%) Cost (US$)(1)
----------------------------------------- -------------------- ------------- ----------- -------------
Initial payment (Back costs) 11.8% US$10m 3% US$2m
----------------------------------------- -------------------- ------------- ----------- -------------
Seismic programme 5.9% US$10m 7.125% US$10m
----------------------------------------- -------------------- ------------- ----------- -------------
Commencement of the operation
at 5.9% 7.125%
Well 1 US$10m US$10m
Well 1 11.8% 14.25%
----------------------------------------- -------------------- ------------- ----------- -------------
Well 2 11.8% US$10m 14.25% US$10m
----------------------------------------- -------------------- ------------- ----------- -------------
Well 3 11.8% US$10m 14.25% US$10m
----------------------------------------- -------------------- ------------- ----------- -------------
Total (including initial consideration) 59% US$50m 60% US$42m
----------------------------------------- -------------------- ------------- ----------- -------------
Note (1): The approximate costs set out in the table are as
agreed under the Pirity Farm-In Agreement and the Demattei Farm-In
Agreement between the parties thereto, and are stated on the
assumption that there are no cost overruns in relation to each
staged work programme. However, the Company is only obliged to pay
up to US$50.00 million in respect of the agreed work programme to
earn its full 59 per cent. interest in the Pirity Concession and up
to US$42.00 million in respect of the agreed work programme to earn
its full 60 per cent. interest in the Demattei Concession.
The Board has also announced that the Company proposes a
fundraising comprising a firm placing of 28,962,500 New Ordinary
Shares, a conditional placing of 86,887,500 New Ordinary Shares, an
open offer of up to 19,998,541 New Ordinary Shares and a
subscription of 18,750,000 New Ordinary Shares, in each case at 20
pence per share to raise up to GBP30.92 million (approximately
US$49.47 million). The Issue Price of 20 pence per New Ordinary
Share represents a 20 per cent. discount to the closing middle
market price of 25 pence per Existing Ordinary Share on 11
September 2012, being the last Business Day before the announcement
of the Capital Raising.
The Capital Raising is being made by way of the Placing to
institutional and other investors, the Subscription and an Open
Offer, thus allowing the Company's existing Shareholders the
opportunity to participate in the fundraising through the Open
Offer. The Placing is being undertaken in two stages:
(a) 28,962,500 New Ordinary Shares have already been placed with
institutions and other investors pursuant to the Firm Placing and
are being issued pursuant to the Directors' existing authorities to
allot shares for cash on a non pre-emptive basis, thereby raising
gross proceeds of GBP5.79 million (US$9.27 million) for the
Company. The Firm Placing Shares are to be admitted to trading on
AIM at the time of First Admission, which is expected to take place
on 17 September 2012.
(b) The second stage of the Placing will comprise a Proposed
Placing of 86,887,500 further New Ordinary Shares. As the allotment
and issue of the Firm Placing Shares will have exhausted the
Directors' existing authorities to allot shares for cash on a non
pre-emptive basis, the General Meeting is being called to seek
Shareholders' approval to grant new authorities to enable the
Directors, inter alia, to complete the Conditional Placing, thereby
raising further gross proceeds of GBP17.38 million (US$27.80
million) for the Company. The Conditional Placing Shares are
expected to be admitted to trading on AIM at the time of Second
Admission, which is scheduled for 1 October 2012.
Pursuant to the Subscription, Pirity Hidrocarburos (a subsidiary
of PetroVictory) has agreed to subscribe for 18,750,000 New
Ordinary Shares at the Issue Price. Completion of the Subscription
will take place at the time of completion of the Farm-In Agreements
and is conditional on, amongst other things, completion of the
Farm-In agreements and shareholder approval.
In addition to the Placing and the Subscription, President has
launched an Open Offer to issue up to 19,998,541 New Ordinary
Shares to Qualifying Shareholders. Qualifying Shareholders may
subscribe for Open Offer Shares on the basis of 7 Open Offer Shares
for every 45 Existing Ordinary Shares held on the Record Date.
Shareholders subscribing for their full entitlement under the Open
Offer may also request additional New Ordinary Shares through the
Excess Application Facility.
Assuming full take-up under the Open Offer, the issue of the
Open Offer Shares will raise further gross proceeds of up to
GBP4.00 million (up to US$6.40 million) for the Company. The New
Ordinary Shares to be issued pursuant to the Open Offer are to be
admitted to trading on AIM at the time of Second Admission, which
is expected to take place on 1 October 2012.
The gross proceeds of the Placing (comprising of the Firm
Placing and the Proposed Placing) and the Subscription of GBP26.92
million (US$43.07 million) and the Open Offer of up to GBP4.00
million (US$6.40 million) will be used principally to fund the
obligations of the Company to acquire its initial interests in the
Paraguayan Concessions and to fund the initial parts of the work
programmes as set out in the provisions of the Farm-In Agreements.
The remaining proceeds will be used for incremental exploration and
development work on President's Argentinian assets, including the
new concessions that were recently awarded at Matorras and Ocultar,
new wells in Louisiana, pursuing further business development
opportunities and to cover the expenses associated with the
Placing, Subscription and Open Offer.
The Proposed Placing, Subscription and Open Offer are each
conditional upon, inter alia, Shareholder approval which will be
sought at the General Meeting to be held at 11.00 a.m. on 28
September 2012. Should Shareholder approval not be obtained at the
General Meeting, the Proposed Placing, Subscription and Open Offer
will not proceed. In addition, the Subscription is conditional on
the completion of the Farm-In Agreements. Should the Farm-In
Agreements not close, the Subscription will not proceed.
Under the terms of the Farm-In Agreements, the Company has
agreed to pay US$3.00 million of the up-front payment to acquire
its initial interests in the Paraguayan Concessions, at the time of
First Admission and with the balance due on completion.
Accordingly, the Company will use part of the funds raised from the
Firm Placing to pay the US$3.00 million deposit under the Farm-In
Agreements and this amount will not be returned in the event that
the deposit is not refunded to the Company. Should any of the
conditions to the Farm-In Agreements not be satisfied or waived by
the Company then completion of the Acquisition will not take place
and, in such eventuality, the Company will seek to return funds
invested in the Company pursuant to the Placing and/or Open
Offer.
The Board also proposes to change the name of the Company from
President Petroleum Company PLC to President Energy PLC, pursuant
to a Resolution being proposed at the General Meeting.
2. Information on President Petroleum Company PLC
President Petroleum Company PLC is a UK AIM listed oil and gas
company, with producing licences in Argentina and Louisiana, USA,
and with other exploration licences in South Australia.
President's stated aim is to achieve growth through a twin track
strategy of the 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.
In July 2011 President acquired a 50 per cent. working interest
in the Puesto Guardian Concession in the Salta Province of
Argentina. This entry into Argentina was seen as the first stage in
developing a South American business and President is seeking to
build upon its regional presence. On 20 August 2012, the Company
announced that the Government of Salta Province, Argentina, had
awarded to President two new exploration licences called Matorras
and Occultar, that are adjacent to the Puesto Guardian Concession
and which cover a combined area of 2,203 km(2) . President also
announced that it had separately entered into an agreement with its
partner in Puesto Guardian to acquire for nominal value the entire
interest in Matorras and Ocultar, with any such transfer, however,
being subject to prior consent and approval of the regulatory
authorities in the Province of Salta.
President is further expanding its regional presence by entering
into neighbouring Paraguay, by farming into two existing oil and
gas concessions, the Pirity Concession and the Demattei Concession.
The entry will be funded using the proceeds of the Capital
Raising.
Further information on President Petroleum Company PLC's
existing strategy, current assets, reserves and resources and
financial reports, inter alia, can be found on the Company's
website, www.presidentpc.com.
3. Background to and reasons for the Capital Raising and the Acquisition
President has secured farm-in agreements as operator of the
Pirity and Demattei Concessions which combine to cover almost all
of the prospective Pirity Basin (16,000 km(2) ) in the Chaco region
of Paraguay, which is virtually undrilled and a direct extension of
the proven Olmedo basin on the Argentine side of the country
border. President has developed the opportunity as a direct
consequence of the regional knowledge and experience gained in the
adjacent and contiguous Olmedo basin of Argentina. President has a
deep understanding of the geology of the basin and believes these
licences to be highly prospective. Whereas the Argentine Olmedo
sector has been continuously explored and has produced oil and gas
over the past 30 years (over 150 mmboe of cumulative production to
date), the attraction of Paraguay is that the Pirity Basin (which
contains large undrilled structures) has remained fallow just a few
kilometres to the east for political reasons.
The Pirity Basin acreage (comprising the Pirity and Demattei
blocks) is currently owned by two US private companies, Pirity
Hidrocarburos (a subsidiary of PetroVictory) and Crescent Global
Oil Paraguay (a subsidiary of Crescent Oil). PetroVictory and
Crescent Oil are both substantially under the control of the same
US citizens. Both of the Paraguayan Concessions have been the
subject of litigation over recent years, although this litigation
has now been settled in full. Following disputes which arose
between the Vendors of the Paraguayan Concession Interests and the
Paraguayan Ministry of Public Communications and Works, the
Government of Paraguay issued Decrees in 2009 and 2010 declaring
that the Pirity Concession and Demattei Concession had expired.
Accordingly, the Vendors of the Paraguayan Concession Interests
initiated legal proceedings to revoke the Decrees and re-instate
the Paraguayan Concessions and thereby bring them back into full
force and effect. Earlier this year, settlement agreements were
entered into in relation to both of the Paraguayan Concessions,
pursuant to which the parties agreed to settle all outstanding
claims and thereby settle the litigation proceedings between them.
In August 2012, Court Orders were issued by the Supreme Court of
Paraguay, pursuant to which the settlement agreements became final
and binding and all outstanding litigation was settled in full and
is no longer subject to any right of appeal by the parties.
Over the past seven years, Crescent Oil has commissioned several
extensive geological studies which evaluate the hydrocarbon
potential of the Pirity Basin. President estimates that the 16
identified prospects have a gross risked recoverable resource
potential greater than 150 mmb. A 3D seismic programme is planned
to further de-risk the prospect inventory and a competent person's
report is expected to be commissioned following the planned seismic
programme.
Following a competitive process, with a number of parties
expressing an interest in acquiring the Paraguayan Concessions,
President has successfully agreed to farm into the two blocks
covering the entire Paraguayan Pirity Basin. The Acquisition of the
Paraguayan Concession Interests will comprise:
(c) a farm-in to earn up to a 59 per cent. working interest in
the Pirity Concession (Law 3479/08) from Pirity Hidrocarburos (a
subsidiary of PetroVictory); and
(d) a farm-in to earn up to a 60 per cent. working interest in
the Demattei Concession (Law 3549/08) from Crescent Global Oil
Paraguay (a subsidiary of Crescent Oil).
Each block is approximately 8,000 km(2) in size. In the Pirity
Block adjacent to the Argentine border,
President will earn its full 59 per cent. working interest in
return for funding a seismic programme and a staged three well
drilling programme for a capped investment of US$50.00 million,
including back costs incurred by the Vendor of US$10.00 million in
the manner outlined above. In the adjacent Demattei Block,
President will earn its full 60 per cent. working interest in
return for funding a seismic programme and a staged three well
drilling programme for a capped investment of US$42.00 million,
including back costs incurred by the Vendor of US$2.00 million,
again in the manner outlined in the above table. President has
negotiated certain provisions to limit risk exposure and the
ability to retain or assign any of its interests in the event that
it elects not to complete in full the respective drilling campaign
on the Pirity Concession and the Demattei Concession,
respectively.
In addition to the Placing and Open Offer, Pirity Hidrocarburos
has irrevocably agreed to subscribe for 18,750,000 New Ordinary
Shares at the Issue Price for GBP3.75 million.
Under the terms of the Farm-In Agreements, President will
acquire an immediate 11.8 per cent. working interest in the Pirity
Concession for an initial consideration of US$10.00 million in cash
and a 3 per cent. working interest in the Demattei Concession for
an initial consideration of US$2.00 million in cash. The total
up-front payment in cash of US$12.00 million will be used to repay
back costs to the Vendors in respect of each Paraguayan Concession.
Further interests in each Paraguayan Concession may then be
acquired incrementally by the Company should it elect to fund the
agreed work programmes.
US$3.00 million of the US$12.00 million up-front payment is due
to be paid under the terms of the Farm-In Agreements shortly after
First Admission, by way of a deposit to secure the farm-ins. This
deposit will be retained by the Vendors in the event that the
Company fails to pay the US$9.00 million balance of the up-front
payment at the time of completion. The Farm-In Agreements are
subject to various conditions including, inter alia Paraguayan
Government approvals of the assignment to President of the
participating interests and confirmation of the terms of the
Paraguayan Concessions, in the case of Demattei Concession only the
renewal/restatement of the environmental licences being given by
the Paraguayan Environmental Agency which are required for the
commencement of works on the Paraguayan Concessions and
confirmation that all court decisions, documents, notices and other
filings have been completed in respect of the litigation
proceedings affecting each Paraguayan Concession.
Should any of the conditions to the Farm-In Agreements not be
satisfied or waived by the Company then completion of the
Acquisition will not take place. In such eventuality, the Company
will seek to return to Shareholders those funds invested in the
Company pursuant to the Placing and/or Open Offer in as tax
efficient a manner as possible. Should the Company be unable to pay
the US$9.00 million balance of the up-front payment due on
completion then the US$3.00 million deposit will not be refunded to
the Company and therefore will not be returned to placees who have
invested as part of the Firm Placing.
4. About Paraguay
Paraguay moved to a democratic political system in 1992
following 35 years of dictatorship under General Stroessner. The
right-wing Colorado party held power for the succeeding years until
the 2008 election of Fernando Lugo, the first time power had passed
peacefully to an opposing party. In June 2012, Fernando Lugo was
impeached under the Paraguayan constitution, leading to the
incumbent Vice-President Federico Franco becoming President.
Elections are scheduled for April 2013 andPresident Franco has
begun his presidency by demonstrating his support for foreign
investment by, inter alia, approving the construction of Rio
Tinto's proposed US$3.5 billion aluminium plant and expressing
support for the oil and gas industry. Regional oil and gas
companies such as YPF and UK listed Amerisur Resources PLC already
operate in Paraguay, and a number of other companies have expressed
interest in entering into the country. The UK Government has also
recently announced the re-opening of the British Embassy in
Asunción, which is expected to accelerate the unlocking of
commercial opportunities for British companies in Paraguay.
Paraguay is a fast-growing economy, experiencing average GDP
growth of 9.4 per cent. in 2010-2011. Paraguay is governed by
particularly favourable hydrocarbon laws. A Tax and Royalty system
provides an initial four year exploration period (which can be
extended by drilling one well per year) and a twenty year
exploitation period which may be extended by ten years. Tax is
levied at a flat 10 per cent. rate on business profits whilst
royalties are levied on production on a sliding scale from 10 per
cent. for production of less than 5,000 bopd to 14 per cent. for
production over 50,000 bopd. Paraguay does not currently have any
hydrocarbon production and the country imports approximately 27,000
bopd. Management believes that the Paraguayan Government is eager
to establish domestic production, as demonstrated by Petropar
expressing a written interest to offtake up to 27,000 bopd at
international prices from any future production at the farm-in
blocks.
5. Current Trading and Prospects
On 11 May 2012, the Company announced its results for the year
ended 31 December 2011. Subsequently, the Company has provided
corporate and operational updates, including the Trading and
Operational Update dated 3 August 2012. Group production for the 6
months to 30 June 2012 averaged 315 boepd, evenly split between the
Group's Argentine and Louisiana operations. Average realised prices
per barrel during the period were US$72 in Argentina and US$109 in
Louisiana. Due to drilling activity during the period, group
production for the month of June 2012 was 430 boepd, principally
comprising oil production in Argentina of 235 bopd and in Louisiana
of 195 boepd. Net debt position at 30 June 2012 was approximately
US$3.5 million comprising cash (US$1.1 million) and debt (US$4.6
million). The Company and other members of the Group's outstanding
indebtedness as at 11 September 2012 under the Existing LCM Loan
Facility was US$9 million.
In Argentina, a workover and frac programme has commenced, with
the first frac timed for the fourth quarter of 2012. Significant
effort is being made in seismic reprocessing and reservoir studies
which will provide the foundation for the continued development of
drilling activity in 2013. In Louisiana, a new well is planned at
East White Lake for next month, and smaller recompletions and
workovers are anticipated. On 20 August 2012, President announced
that the Government of Salta, Argentina had awarded the Company in
Puesto Guardian two new exploration concession areas surrounding
Puesto Guardian, namely Matorras and Ocultar. President will be the
operator of the two concessions and has the right to acquire all of
its partner's interest in the concessions for nominal value
(subject to the prior consent and approval of the regulatory
authorities in the Province of Salta). These areas cover a combined
area of 2,203 km(2) partly surrounding the 633 km(2) Puesto
Guardian Concession. Matorras (1,469 km(2) ) is on the same
structural trend as the palaeozoic prospect under Martinez del
Tineo that was the subject of the GCA audited resource report
announced by the Company on 23 January 2012. In the palaeozoic
prospect under Martinez del Tineo, GCA assessed gross unrisked mid
case prospective gas and condensate resource of 570 bcf and 14.5
million barrels of condensate.
6. Use of Proceeds
The net proceeds of the Placing, Subscription and Open Offer
will be used principally to fund the Company's obligations to
acquire its initial interests in the Paraguayan Concessions and the
initial work programmes for the Pirity Concession and Demattei
Concession. In addition, the remaining funds will be used for
incremental exploration and development work on President's
Argentinian assets (including the recently awarded new licences),
building the regional delivery team, pursuing regional business
development opportunities, incremental new drilling activity in
Louisiana and to cover the expenses associated with the Placing,
Subscription and Open Offer, broken down as follows:
Use of Funds US$ million
------------------------------------------------- -----------
Paraguay(1) 37
Back costs (earn 11.8 per cent. working interest
in the 12
Pirity Block and 3 per cent. working interest
in the
Demattei Block)
Seismic on the Pirity Block ($10 million) and
the Demattei 12
Block ($2 million)
Corporate set-up and business development 3
Well 1 on the Pirity Block 10
Argentina 2
Exploration work programme - new acreage 2
USA (Louisiana) 1
New wells 1
Corporate 2
Deal Expenses(2) 2
Sub-Total 42
-----------
Loan repayment(3) 9
TOTAL 51
================================================= ===========
Note (1): The further work programme in Paraguay is to be funded
from cash flow, farm-outs or later corporate activity;
note (2): These are estimated costs only; and note (3): The loan
repayment relates to the LCM Loan Facility as detailed below.
7. Levine Capital Management Limited
LCM is an entity beneficially owned by Peter Levine, the
Company's Executive Chairman, and is the Company's largest
shareholder. LCM and the Related Parties, who are deemed by the UK
Panel on Takeovers and Mergers to be acting in concert with LCM for
the purpose of the City Code on Takeovers and Mergers, currently
hold 37,714,525 Existing Ordinary Shares in aggregate, representing
approximately 29.3 per cent. of the Company's Existing Ordinary
Shares.
LCM (through its subsidiary, IYA Global Limited) has made
available to President the Existing LCM Loan Facility until 25
October 2013, under which US$9.00 million is currently outstanding.
The provision of the Existing LCM Loan Facility has enabled
President to continue investing in business development and the
ongoing operational programme at Puesto Guardian.
LCM and the Related Parties (as well as the remaining Directors)
have irrevocably undertaken to vote or procure to vote in favour of
the Resolutions 1 and 2 relating to the Placing, Subscription and
Open Offer in respect of 37,714,525 Existing Ordinary Shares, in
aggregate, representing approximately 29.3 per cent. of the
existing issued ordinary share capital of the Company.
As part of the Placing, LCM has irrevocably agreed to subscribe
for 31,250,000 Placing Shares at the Issue Price for GBP6.25
million. This will comprise the subscription by LCM of 7,812,500
Firm Placing Shares which will be settled as to GBP1.56 million at
the time of First Admission, and of 23,437,500 Conditional Placing
Shares which will be settled as to GBP1.56 million at the time of
Second Admission and as to GBP3.13 million on 31 December 2012.
As part of the Proposals, the Company will also repay the
US$9.00 million outstanding under the Existing LCM Loan Facility,
in accordance with its terms. LCM has also agreed to provide the
New LCM Loan Facility, under which, a US$15.00 million committed
line of credit is available to the Company for a period of two
years. Loan monies may be drawn down and repaid under the New LCM
Loan Facility at the Company's election and provides additional
operational flexibility going forwards. Interest accrues on the
loan at 10 per cent. per annum on amounts drawn under the New LCM
Loan Facility and 5 per cent. per annum on the undrawn balance of
the facility. Following LCM's participation in the Placing, LCM
will have invested over US$30.00 million in President.
8. The Subscription
Pirity Hidrocarburos has conditionally agreed to subscribe for
the Subscription Shares at the Issue Price, raising a further
GBP3.75 million for the Company.
The Subscription Shares subscribed for by Pirity Hidrocarburos
will represent 6.6 per cent. of the Enlarged Share Capital
immediately following Third Admission, assuming a full take up
under the Open Offer. The settlement of the Subscription will take
place on the completion of the Acquisition. Pirity Hidrocarburos
has entered into a lock-up agreement with the Company pursuant to
which it has agreed not to offer, dispose of, directly or
indirectly, any of the Subscription Shares held by it for a period
of 6 months from date of Third Admission. Should the completion of
the Acquisition not occur, Pirity Hidrocarburos will not subscribe
for the Subscription Shares and the Company will not receive the
subscription proceeds from Pirity Hidrocarburos.
9. Directors' shareholdings
Immediately following Third Admission, it is expected that the
Directors will have the following beneficial shareholdings:
Total no. of Ordinary
Shares Percentage of the Enlarged
held following Share Capital immediately
Third Admission following Third Admission*
-------------------------------- --------------------- --------------------------
Peter Levine 68,523,525 24.2
-------------------------------- --------------------- --------------------------
John Andrew Hamilton 300,000 0.11
-------------------------------- --------------------- --------------------------
Benjamin David Wilkinson 40,000 0.01
-------------------------------- --------------------- --------------------------
David Anthony Lawson Jenkins 75,000 0.03
-------------------------------- --------------------- --------------------------
Michael David Cochran 100,000 0.04
-------------------------------- --------------------- --------------------------
David Christopher Wake-Walker 253,804 0.09
-------------------------------- --------------------- --------------------------
*Assuming full take of entitlements under the Open Offer
In addition to the shares subscribed for by LCM in the Placing
referred to above, David Wake-Walker has agreed to subscribe for
125,000 Placing Shares and David Jenkins has agreed to subscribe
for 50,000 Placing Shares.
10. Related Party Transactions
The subscription by LCM in the Placing at the Issue Price and
the provision of the New LCM Loan Facility are each classified as a
related party transaction under the AIM Rules. Accordingly, the
Directors, excluding Peter Levine, John Hamilton, Benjamin
Wilkinson and Michael Cochran (who are not considered independent
by virtue of their respective relationships with LCM), consider,
having consulted with RBC, the Company's nominated adviser, that
the terms of LCM's participation in the Placing and the New LCM
Loan Facility are each fair and reasonable insofar as independent
Shareholders are concerned.
11. Directors' recommendation
The Directors consider the Proposals to be in the best interests
of the Company and its Shareholders as a whole.
Accordingly the Directors unanimously recommend that
Shareholders vote in favour of the Resolutions to be proposed at
the General Meeting. Certain Shareholders (including Levine Capital
Management and the Directors) have irrevocably undertaken to vote
or procure to the voting in favour of the Resolutions 1 and 2
relating to the Placing, subscription and Open Offer in respect of
48,982,533 Existing Ordinary Shares, in aggregate, representing
approximately 38.1 per cent. of the existing issued ordinary share
capital of the Company.
PART B
Expected Timetable of Principal Events
2012
Record Date for entitlement under the Open Offer close of business
on
7 September
Announcement of the Proposals 12 September
Posting of the Circular, Forms of Proxy and, to 12 September
Qualifying non-CREST
Shareholders only, the Application Forms
Open Offer Entitlements and Excess CREST Open 8.00 a.m. on 13
Offer Entitlements credited to stock accounts September
in CREST of Qualifying CREST Shareholders
First Admission effective and dealings in the 8.00 a.m. on 17
Firm Placing Shares expected to commence on AIM September
Expected date for crediting of Firm Placing Shares 8.00 a.m. on 17
in uncertificated form to CREST stock accounts September
Expected date of despatch of share certificates 24 September 2012
in respect of Firm Placing Shares in certificated
form
Latest recommended time and date for requesting 4.30 p.m. on 24
withdrawal of Open Offer Entitlements and Excess September
CREST Open Offer Entitlements from CREST
Latest time for depositing Open Offer Entitlements 3.00 p.m. 25 September
and Excess CREST Open Offer Entitlements into
CREST
Latest time and date for receipt of Forms of Proxy 11 a.m. on 26 September
Latest time and date for splitting Application 3.00 p.m. 26 September
Forms (to satisfy bona fide market claims)
Latest time and date for receipt of completed 11.00 a.m. on 28
Application Forms and payment in full under the September
Open Offer or settlement of relevant CREST instruction
(as appropriate)
General Meeting 11.00 a.m. on 28
September
Expected time of announcement of results of the by 4.30 p.m. on
General Meeting 28 September
Expected time and date of announcement of results 7.00 a.m. on 1 October
of the Placing and Open Offer
Second Admission effective and dealings in the 8.00 a.m. on 1 October
Conditional Placing Shares and Open Offer Shares
expected to commence on AIM
Expected date for crediting of Conditional Placing 8.00 a.m. on 1 October
Shares and Open Offer Shares in uncertificated
form to CREST stock accounts
Expected date of despatch of share certificates 8 October
in respect of Conditional Placing Shares and Open
Offer Shares in certificated form
Third Admission Following completion
of the Farm-In Agreements
Notes:
(1) If you have any questions on the procedure for acceptance
and payment, you should contact Equiniti Limited, Aspect House,
Spencer Road, Lancing, West Sussex BN99 6DA, telephone: 0871 384
2050 from the UK or +44 121 415 0259 from overseas. Calls to the
0871 384 2050 number cost 8 pence per minute (excluding value added
tax) plus your service provider's network extras. Calls to the +44
121 415 0259 number will be charged at applicable international
rates. Different charges may apply to calls from mobile telephones.
Please note that Equiniti cannot provide financial advice on the
merits of the Capital Raising or as to whether or not you should
take up your entitlement.
(2) The dates set out in the Expected Timetable of Principal
Events above and mentioned throughout this document may be adjusted
by President in which event details of the new dates will be
notified to AIM and, where appropriate, to Shareholders.
(3) All references to time in this document are to time in London.
PART C
Risk Factors
An investment in the New Ordinary Shares is highly speculative
and involves a high degree of risk due to the nature of oil and gas
exploration. Before making any investment decision, prospective
investors should carefully consider all the information contained
in this document including, in particular, the risk factors
described below. In addition to the usual risks associated with an
investment in an oil and gas exploration business, the Directors
believe that, in particular and in no order of priority, the
following risk factors should be considered. Other factors relate
principally to an investment in the New Ordinary Shares. It should
be noted that this list is not exhaustive and that other risk
factors may apply. Additional risks and uncertainties not currently
known to the Directors, or that the Directors currently deem
immaterial, may also have an adverse effect on the Group's
business, financial condition and results of operations.
An investment in the Company may not be suitable for all
recipients of this announcement. Investors are advised to consult
an independent financial adviser authorised under the FSMA who
specialises in advising on the acquisition of shares and other
securities before making a decision to invest.
Risks related to the oil and gas industry
Oil and gas pricing and demand
The price of and demand for oil and gas is highly dependent on a
number of factors, including worldwide supply and demand levels,
energy policies, weather, competitiveness of alternative energy
sources, global economic and political developments and the
volatile trading patterns of the commodity futures markets. Natural
gas prices also continue to be highly volatile. Changes in oil and
gas prices can impact on the Company's valuation of reserves.
International oil and gas prices have fluctuated widely in recent
years and may continue to do so in the future. Lower oil and gas
prices will adversely affect the Company's revenues, business or
financial condition and the valuation of its reserves. In periods
of sharply lower commodity prices, the Company may curtail
production and capital spending projects and may defer or delay
drilling wells because of lower cash flows. In addition, the demand
for and supply of oil and gas worldwide may affect the Company's
level of production.
Exploration, production and general operational risks
The exploration for and production of oil and other natural
resources is speculative and involves a high degree of risk. In
particular, the operations of the Company may be disrupted by a
variety of risks and hazards which are beyond the control of the
Company, including environmental hazards, industrial accidents,
occupational and health hazards, technical failures, labour
disputes, earthquakes, unusual or unexpected geological formations,
flooding, earthquake and extended interruptions due to inclement or
hazardous weather conditions, explosions and other accidents. These
risks and hazards could also result in damage to, or destruction of
wells or production facilities, personal injury, environmental
damage, business interruption, monetary losses and possible legal
liability.
Delays in the construction and commissioning of projects or
other technical difficulties may result in the Company's current or
future projected target dates for production being delayed or
further capital expenditure being required. If the Company fails to
meet its work and/or expenditure obligations, the rights granted
therein will be forfeited and the Company may be liable to pay
large sums, which could jeopardise its ability to continue
operations.
Increase in drilling costs and the availability of drilling
equipment
The oil and gas industry historically has experienced periods of
rapid cost increases. Increases in the cost of exploration and
development would affect the Company's ability to invest in
prospects and to purchase or hire equipment, supplies and services.
In addition, the availability of drilling rigs and other equipment
and services is affected by the level and location of drilling
activity around the world. An increase in drilling operations may
reduce the availability of equipment and services to the Company.
The reduced availability of equipment and services may delay its
ability to exploit reserves and adversely affect the Company's
operations and profitability.
Risks related to the Group
Estimation of reserves, resources and production profiles
The estimation of oil and gas reserves and their anticipated
production profiles involves subjective judgements and
determinations based on available geological, technical,
contractual and economic information. They are not exact
determinations. In addition, these judgments may change based on
new information from production or drilling activities or changes
in economic factors, as well as from developments such as
acquisitions and dispositions, new discoveries and extensions of
existing fields and the application of improved recovery
techniques. Published reserve estimates are also subject to
correction for errors in the application of published rules and
guidance.
The reserves, resources and production profile data contained in
this document are estimates only and should not be construed as
representing exact quantities. They are based on production data,
prices, costs, ownership, geophysical, geological and engineering
data and other historical and current information assembled by the
Company and third parties. The estimates may prove to be incorrect
and potential investors should not place undue reliance on the
forward-looking statements contained in this document concerning
the Group's reserves and resources or production levels.
If the assumptions upon which the estimates of the Group's
hydrocarbon reserves, resources or production profiles have been
based prove to be incorrect the Group may be unable to recover and
produce the estimated levels or quality of hydrocarbons set out in
this document and the Group's business, prospects, financial
condition or results of operations could be materially adversely
affected.
Delays in production, marketing and transportation
Various production, marketing and transportation conditions may
cause delays in oil production and adversely affect the Company's
business. Drilling wells in areas remote from distribution and
production facilities may delay production from those wells until
sufficient reserves are established to justify construction of the
necessary transportation and production facilities. The Company's
inability to complete wells in a timely manner would result in
production delays.
In addition, marketing demands, which tend to be seasonal, may
reduce or delay production from wells. The marketability and price
of oil and natural gas that may be acquired or discovered by the
Company will be affected by numerous factors beyond the control of
the Company. The ability of the Company to market its natural gas
may depend upon its ability to acquire space on pipelines that
deliver natural gas to commercial markets. The Company is also
subject to market fluctuations in the prices of oil and natural
gas, deliverability uncertainties related to the proximity of its
reserves to adequate pipeline and processing facilities and
extensive government regulation relating to price, taxes,
royalties, licences, land tenure, allowable production, the export
of oil and natural gas and many other aspects of the oil and
natural gas business. Moreover, weather conditions may impede the
transportation and delivery of oil by sea.
Decommissioning costs
The Company may become responsible for costs associated with
abandoning and reclaiming wells, facilities and pipelines which it
may use for production of oil and gas. Abandonment and reclamation
of facilities and the costs associated therewith is often referred
to as "decommissioning". There are no immediate plans to establish
a reserve account for these potential costs. Rather, the costs of
decommissioning are expected to be paid from the proceeds of
production in accordance with the practice generally employed in
onshore and offshore oilfield operations. Should decommissioning be
required, the costs of decommissioning may exceed the value of
reserves remaining at any particular time to cover such
decommissioning costs. The Company may have to draw on funds from
other sources to satisfy such costs. The use of other funds to
satisfy such decommissioning costs could have a materially adverse
effect on the Company's financial position and future results of
operations.
Third party contractors and providers of capital equipment can
be scarce
The Group contracts or leases services and capital equipment
from third party providers. Such equipment and services can be
scarce and may not be readily available at times and places
required. In addition, costs of third party services and equipment
have increased significantly over recent years and may continue to
rise. Scarcity of equipment and services and increased prices may
in particular result from any significant increase in exploration
and development activities on a region by region basis which might
be driven by high demand for oil and gas. In the regions in which
the Group operates there is significant demand for capital
equipment and services. The unavailability and high costs of such
services and equipment could result in a delay or restriction in
the Group's projects and adversely affect the feasibility and
profitability of such projects and therefore have an adverse effect
on the Group's business, financial condition, results of operations
and prospects.
Significant competition
The Company's competitors include major and independent oil and
gas companies. The oil and gas business is highly competitive in
the search for and acquisition of reserves and in the gathering and
marketing of oil and gas production and in the recruitment and
employment of qualified personnel. In addition, the Company will
compete with oil and gas companies in the bidding for exploration
and production licences. Some of the Company's competitors have
significantly greater financial, technical and other resources than
it and are able to devote greater resources to the development of
their businesses. If the Company is unable successfully to compete,
its business will suffer.
Limited diversification
Generally, risk is reduced through diversification.
Diversification is maximised by drilling a large number of wells
over a large and geographically diverse areas of prospects having
different geological characteristics. The drilling and development
programme, therefore, will have only a limited amount of
diversification with a correspondingly higher degree of financial
risk for investors.
Requirements for permits and licences
The operations of the Company require licences, permits and in
some cases assignments or renewals of existing licences and permits
from various governmental authorities. Governmental approvals,
licences and permits are subject to the discretion of the
applicable governments or governmental offices, and are outside the
control of the Company. The Company's ability to obtain, sustain,
renew or assign such licences and permits on acceptable terms is
therefore subject to the discretion of the applicable governments
as well as changes in regulations and policies. A failure to
obtain, sustain, renew or assign these where needed could result in
the dilution or forfeiture of interests held by the Company which
could have a material adverse effect on the Group's business,
financial condition, results of operations and prospects.
Health, Safety, Environment and Security ("HSES")
The range of the Group's operated and joint venture production
operations globally means that the Group's HSES risks cover a wide
spectrum. These risks include major process safety incidents;
failure to comply with approved policies; effects of natural
disasters and pandemics; social unrest; civil war and terrorism;
exposure to general operational hazards; personal health and
safety; and crime. The consequences of such risks materialising can
be injuries, loss of life, environmental harm and disruption to
business activities. Depending on cause and severity, the
materialisation of such risks may affect the Group's reputation,
operational performance and financial position.
In addition, failure by the Group to comply with applicable
legal requirements or recognised international standards may give
rise to significant liabilities. HSES laws and regulations may over
time become more complex and stringent or the subject of
increasingly strict interpretation or enforcement. The terms of
licences may include more stringent HSES requirements. The
obtaining of exploration, development or production licences and
permits may become more difficult or be the subject of delay by
reason of governmental, regional or local environmental
consultation, approvals or other considerations or requirements.
These factors may lead to delayed or reduced exploration,
development or production activity as well as to increased
costs.
Environmental risk and insurance coverage
There are significant exploration and operating risks associated
with drilling oil and gas wells, including blowouts, cratering,
sour gas releases, uncontrollable flows of oil, natural gas or well
fluids, adverse weather conditions, and fire, all of which can
result in accidental spills, leakages or discharges of harmful
liquids and toxic gases. The occurrence of any of these incidents
can result in substantial losses to the Group due to injury or loss
of life, damage to or destruction of the Company's oil and gas
wells, pollution or other environmental damage. Damages occurring
as a result of such risks can give rise to claims against the
Company or a member of its Group, and can result in the Company's
targets for drilling or production being delayed or halted.
Although the Company will exercise due care in the conduct of
its business and will maintain what it believes to be customary
insurance coverage for companies engaged in similar operations, the
Company is not fully insured against all risk in its business. The
occurrence of a significant event against which the Company is not
fully insured could have a material adverse effect on its
operations and financial performance. In addition, in the future
some or all of the Company's insurance coverage may become
unavailable or prohibitively expensive.
Working Capital
The Company may need to raise additional funds in the future in
order to develop further exploration and development programmes
including funding the work programme for the Pirity Block and the
Demattei Block. Additional equity financing may be dilutive to
Shareholders and could contain rights and preferences superior to
those of the New Ordinary Shares. Debt financing may involve
restrictions on the
Company's financing and operating activities. In either case,
additional financing may not be available to the Company on
acceptable terms. If the Company is unable to raise additional
funds as needed, the scope of its operations may be reduced and or
its interest in concessions diluted or expired and, as a result,
the Company may be unable to fulfil its long-term expansion
programme.
Foreign currency exchange rates
As an international operator, the Company's business
transactions may not be denominated in the same currencies. To the
extent that the Company's business transactions are not denominated
in the same currency, the Company is exposed to foreign currency
exchange rate risk. In addition, holders of the Company's shares
are subject to foreign currency exchange rate risk to the extent
that its business transactions are denominated in currencies other
than the US dollar. Fluctuations in foreign currency exchange rates
may adversely affect the Company's profitability. At this time, the
Company does not plan actively to hedge its foreign currency
exchange rate risk.
Risks related to the Acquisition
Conditionality of the Farm-In Agreements
The Company has entered into the Farm-In Agreements, pursuant to
which it (or another member of its Group) will acquire the
Paraguayan Concession Interests. US$3 million of the US$12 million
up-front payment is due to be paid under the terms of the Farm-In
Agreements shortly after First Admission, by way of a deposit to
secure the farm-ins. This deposit will be retained by the Vendors
in the event that the Company fails to pay the US$9 million balance
of the up-front payment at the time of completion. The Farm-In
Agreements are subject to various conditions including, inter alia,
Paraguayan Government approvals of the assignment to the Company of
the participating interests and confirmation of the terms of the
Paraguayan Concessions, the renewal/restatement of the
environmental licences being given by the Paraguayan Environmental
Agency which are required for the commencement of works on the
Paraguayan Concessions, certificates of good standing being issued
by the Paraguayan Ministry of Public Works and Communications in
respect of each Paraguayan Concession and confirmation that all
court decisions, documents, notices and other filings have been
completed in respect of the litigation proceedings affecting each
Paraguayan Concession. The Paraguayan Government approvals,
renewals/ restatements and confirmations may take a longer than
expected period of time to obtain which could delay completion of
the Acquisition and/or may have occurred by the time of the
completion of the
Proposed Placing, Subscription and Open Offer. In addition,
there can be no assurance that the conditions to the Farm-In
Agreements will be satisfied or waived or that the Acquisition will
be completed, the occurrence of which could have a material adverse
effect on the share price of the Company.
Counterparty risk to the Farm-In Agreements
The Farm-In Agreements contain, inter alia, certain warranties
and indemnities and ongoing obligations of the Vendors of the
interests which they hold in the Paraguayan Concessions. In
addition, the Joint Operating Agreements also contain certain
ongoing obligations. Pirity Hidrocarburos and Crescent Global Oil
Paraguay are private companies registered in Paraguay and the only
assets they hold are believed to comprise of the interests they
hold in the Paraguayan Concessions. Whilst the parent companies of
Pirity Hidrocarburos and Crescent Global Oil Paraguay (being Petro
Victory and Crescent Oil, respectively) have agreed to guarantee
the obligations of the Vendors under the Farm-In Agreements, the
parent companies are also private companies which may also have
limited assets. Accordingly, there can be no guarantee that the
Group will be able to recover all or any of the losses it may incur
as a result of any breach of those warranties, indemnities or other
ongoing obligations. If this occurred then the Group's business,
financial condition, results of operations and prospects may be
adversely affected as a result.
Joint Venture partners
Pirity Hidrocarburos (in respect to the Pirity Concession) and
Crescent Global Oil Paraguay (in respect to the Demattei
Concession) will hold majority working interests in each respective
Paraguayan Concession until the Company has earned up to its full
working interests. While the Company is the operator of each
Paraguayan Concession and maintains good working relationships with
each respective partner, certain decisions, approvals and other
actions require the vote of both the Company and the respective
partner. Any non-compliance by or disagreement with the partners
may lead to delays in the pace of the work programmes that may be
detrimental to the project or may otherwise have adverse
consequences for the Company.
In accordance with the terms of the Farm-In Agreements, the
Company is obliged to pay up to US$50 million in respect of the
agreed work programme to earn its full 59 per cent. interest in the
Pirity Concession and up to US$42 million in respect of the agreed
work programme to earn its full 60 per cent. interest in the
Demattei Concession. The Company's financial obligations under
each Farm-In Agreement are based on cost approximations which have
been agreed by the parties thereto, and are stated on the
assumption that there are no cost overruns in relation to each
staged work programme. A cost overrun in relation to either
Paraguayan Concession will be split equally and will be payable by
the parties to the Farm-In Agreements respectively. The occurrence
of cost overruns could however mean that the Company and its
respective partners may need to obtain further financing to meet
their financial obligations under the staged work programmes. In
contrast to President, both Pirity Hidrocarburos and Crescent
Global Oil Paraguay are private companies and are unable to access
the public markets for capital. Liquidity and cash flow problems
encountered by the Company's farm-in partners and/or any
non-compliance by the Company's partners may lead to a delay in the
agreed work programmes which could have a material adverse effect
on the Group's business, financial condition, results of operations
and prospects.
Title, rights and interests
The operations of the Company require the title to, and rights
and interests in, its licences and permits to be in good standing
in order to carry on its intended exploration and exploitation
activities. Both of the Paraguayan Concessions have been the
subject of litigation over recent years, although this litigation
has now been settled in full. Following disputes which arose
between the Vendors of the Paraguayan Concession Interests and the
Paraguayan Ministry of Public Communications and Works, the
Government of Paraguay issued Decrees in 2009 and 2010 declaring
that the Pirity Concession and Demattei Concession had expired.
Accordingly, the Vendors of the Paraguayan Concession Interests
initiated legal proceedings to revoke the Decrees and re-instate
the Paraguayan Concessions and thereby bring them back into full
force and effect. Earlier this year, settlement agreements were
entered into in relation to both of the Paraguayan Concessions,
pursuant to which the parties agreed to settle all outstanding
claims and thereby settle the litigation proceedings between them.
In August 2012, Court Orders were issued by the Supreme Court of
Paraguay, pursuant to which the settlement agreements became final
and binding and all outstanding litigation was settled in full and
is no longer subject to any right of appeal by the parties.
Whilst the Company has investigated and obtained a legal opinion
on the title to, and rights and interests in, its licences and
permits with respect to the Paraguayan Concessions, and is
satisfied that the settlement agreements are final and binding,
such licences and permits may be subject to undetected defects and
future unforeseen events including action by third parties, changes
in Paraguayan laws and regulations or a further change in the
Paraguayan Government following the appointment of a new Paraguayan
President after the next presidential elections scheduled for April
2013. If a defect or unforeseen event should occur, it is possible
that President may lose all or part of its interest in the licence
or permit to which the defect relates and its exploration and
exploitation programmes and prospects may accordingly be adversely
affected.
Native rights of landowners
The Paraguayan Concession Interests are in relation to the
Pirity Block and the Demattei Block which are located in Paraguay's
occidental region which is made up of large privately held ranches.
The operation of the agreed work programmes for each Paraguayan
Concession Interest requires the approval and cooperation of each
landowner where the blocks are located. Each of the Company's
partners have maintained working relationships and dialogue with
each landowner and the outcome of early discussions regarding the
seismic and drilling programmes have been positive. It is normal
practice to not have formal written agreements in place with
landowners at the current stage of the work programmes, and
obtaining approval is considered a straightforward process. There
can be no guarantee, however, that the approval and co-operation of
each landowner will be forthcoming, if required. Should this occur,
the Paraguayan government can be requested by the concession holder
of the relevant Paraguayan Concession to expropriate private
properties where the prospection, exploration and exploitation of
the land is declared of benefit to the public. In the unlikely
outcome that the Company is unable to obtain the approval and
co-operation of each landowner and there is an unsuccessful outcome
from an application to expropriate the land, there could be a
disruption, curtailment and/or delay in the operations and planned
drilling activities of the Company, which could have a material
adverse effect on its business, financial condition, results of
operations and prospects.
Risks relating to the Placing, Subscription and Open Offer and
the New Ordinary Shares
There may be volatility in the price of the New Ordinary
Shares
The Issue Price may not be indicative of the market price for
the New Ordinary Shares following Admission. The market price of
the New Ordinary Shares could be volatile and subject to
significant fluctuations due to a variety of factors, including
changes in sentiment in the market regarding the Company, the
sector or equities generally, any regulatory changes affecting the
Group's operations, variations in the Group's operating results
and/or business developments of the Group and/ or its competitors,
the operating and share price performance of other companies in the
industries and markets in which the Group operates, news reports
relating to trends in the Group's markets or the wider economy and
the publication of research analysts' reports regarding the Company
or the sector generally.
The proportionate ownership and voting interest in the Company
of Shareholders (who are not Placees) will be reduced pursuant to
the Placing, Subscription and Open Offer. In addition, to the
extent that Shareholders do not take up the Open Offer Shares under
the Open Offer, their proportionate ownership and voting interest
in the Company will be further reduced and the percentage that
their Existing Ordinary Shares represents of the Enlarged Share
Capital will be reduced accordingly. Subject to certain exceptions,
Shareholders in the United States and other Excluded Territories
will not be able to participate in the Open Offer.
Pre-emptive rights may not be available for US and other non-UK
holders of ordinary shares
In the case of an increase in the share capital of the Company
for cash, the Shareholders are generally entitled to pre-emption
rights pursuant to the Act unless such rights are waived by a
special resolution of the Shareholders at a general meeting (as
proposed in respect of the Capital Raising), or in certain
circumstances stated in the Articles, and such an issue could
dilute the interests of the Shareholders. To the extent that
pre-emptive rights are applicable, US and certain other non-UK
holders of Ordinary Shares may not be able to exercise pre-emptive
rights for their shares unless the Company decides to comply with
applicable local laws and regulations and, in the case of US
holders, unless a registration statement under the US Securities
Act is effective with respect to those rights or an exemption from
the registration requirements thereunder is available. The New
Ordinary Shares to be issued will not be registered under the US
Securities Act. Qualifying Shareholders who have a registered
address, or who are resident in, or who are citizens of, countries
other than the United Kingdom should consult their professional
advisers about whether they require any governmental or other
consents or need to observe any other formalities to enable them to
take up their Open Offer Entitlements or acquire Open Offer
Shares.
Risks relating to Paraguay
Corporate Governance in Paraguay
The proposed acquisition of the Paraguayan Concession Interests
will signify the Group's entry into a new country, Paraguay. The
country has a low score in the Transparency International 2011
"Corruption Perceptions Index" which ranks countries and
territories according to their perceived levels of public sector
corruption. Paraguay ranks 154th in the world, thus highlighting
there is a risk that corruption permeates government institutions
and corrupts the execution of their functions.
The Group values its reputation for ethical behaviour and for
financial probity and reliability and has adopted an anti-bribery
policy statement and other safeguards designed to prevent the
occurrence of fraud, bribery and corruption. It may not be
possible, however, for the Company to detect or prevent every
instance of fraud, bribery or corruption that may occur with
respect to the proposed Paraguayan Concession Interests. Should
this occur, the Company may be subject to civil and criminal
penalties and to reputational damage. Instances of fraud, bribery
and corruption, and violations of laws and regulations in Paraguay
and the other jurisdictions in which the Company operates could
have a material adverse effect on its results of operations and
financial condition.
Political risks in Paraguay
Paraguay moved to a democratic political system in 1992
following 35 years of dictatorship under General Stroessner. The
right-wing Colorado party held power for the succeeding years until
the 2008 election of Fernando Lugo, the first time power had passed
peacefully to an opposing party. In June 2012, Fernando Lugo was
impeached under the Paraguayan constitution, leading to the
incumbent Vice-President Federico Franco becoming President.
Democratic elections are scheduled for 23 April 2013 with Franco
stepping down from office on 15 August 2013. The heightened
political instability and unrest could have a material adverse
effect on the Company's ability to operate the Paraguayan
Concessions.
The recent political instability and impeachment of President
Lugo has caused international denunciation of the Paraguayan
government, for denying its President due process and the right to
a defence against his removal. In particular, these events have
resulted in the suspension of Paraguay from the Union of South
American Nations ("Unasur"), the intergovernmental union
integrating two existing customs unions: Mercosur and the Andean
Community of Nations. The suspension, which is expected to remain
in place until the April 2013 elections, prevents Paraguay from
participating in meetings but does not impose economic sanctions.
This could result in the country's political isolation and have a
significant effect on economic trade for the country, particularly
if the suspension remains in place beyond April 2013. In
particular, the suspension could result in sanctions being imposed
on the country and also affect the funding it receives from Unasur.
As a result, the Group's operations in Paraguay may be adversely
affected.
In addition, future operations of President may be affected in
varying degrees by government regulations with respect to, but not
limited to, restrictions on production, price controls, export
controls, currency remittance, income taxes, foreign investment,
maintenance of claims, environmental legislation, land use, land
claims of local people, water use and oil and natural gas safety
matters. As with any country, the possibility that future
governments may adopt substantially different policies, which may
extend to the expropriation of assets cannot be ruled out. However,
there is no precedence for this.
Failure to comply strictly with applicable laws, regulations and
local practices relating to property applications and tenure, could
result in loss, reduction or expropriation of entitlements. The
occurrence of these various factors and uncertainties cannot be
accurately predicted and could have an adverse effect on the
Company's business, results of operations and financial
condition.
Economic risks in Paraguay
Paraguay's economy is small and remains heavily dependent on its
traditional agricultural exports of soyabeans (Paraguay is the
world's 4th largest exporter), cotton and meat. Approximately 20
per cent. of the country's GDP is derived from agriculture and
agricultural activities employ approximately one-quarter of the
country's workforce. While economic growth has been substantial in
recent years with GDP growth of 9.4 per cent. between 2010-2011,
Paraguay depends on imports of manufactured goods, as well as
capital goods that are necessary to supply the industrial and
investment requirements of the economy. Due to this over-dependence
on agriculture and its reliance on imported goods, Paraguay is
vulnerable to economic downturns and there can be no guarantee that
Paraguay's economy would be able to withstand or rebound from a new
or a continued global economic downturn. The occurrence of these
various factors and uncertainties cannot be accurately predicted
and could have an adverse effect on the Company's business, results
of operations and financial condition.
Lack of oil and gas production in Paraguay
The Group's Paraguayan Concession Interests will be at the
exploration stage only. Paraguay's oil and gas industry is
dependent on imported fuel and is at the nascent stage with known
hydrocarbon deposits but no proven reserves or domestic oil
production.
There is no assurance that commercial quantities of crude oil
and/or gas will be discovered at any of Paraguayan Property
Concessions or any future properties, nor is there any assurance
that the exploration or development programs of the Group thereon
will yield any positive results. Even if commercial quantities of
crude oil and/or natural gas are discovered, there can be no
assurance that any property of the Group in Paraguay will ever be
brought to a stage where oil and/or natural gas can profitably be
produced thereon. Factors which may limit the ability of the Group
to produce oil and/or natural gas from its properties include, but
are not limited to, commodity prices, availability of additional
capital and financing and the nature of any crude oil and/or
natural gas deposits.
Legal system and regulatory landscape in Paraguay
Paraguay may have less developed legal systems than more
established economies, which may result in risks such as: (i)
potential difficulties in obtaining effective legal redress in its
courts, whether in respect of a breach of law or regulation, or in
an ownership dispute; (ii) a higher degree of discretion on the
part of governmental authorities; (iii) the lack of judicial or
administrative guidance on interpreting applicable rules and
regulations; (iv) inconsistencies or conflicts between and within
various laws, regulations, decrees, orders and resolutions; or (v)
relative inexperience of the judiciary and courts in such
matters.
Historically, the Paraguayan Government has sought to restrict
foreign investment in the country. However, over recent years,
attempts have been made to attract and secure foreign investment
through privatisation. In June 2006, for example, the governments
of Bolivia and Paraguay approved a plan to construct a pipeline
from southern Bolivia to Paraguay, which led to an increase in
interest from international oil and gas companies. To attract
further foreign investment, Paraguay enacted favourable hydrocarbon
and tax laws which offer benefits conducive to the high risk nature
of oil and natural gas exploration and development. While these
measures have sought to attract the level of foreign investment
required to explore and develop hydrocarbons in Paraguay, progress
has been slow.
No assurance can be given that new laws, rules or tariffs will
not be enacted or that existing laws, rules and tariffs will not be
applied in a manner which could limit or curtail exploration,
development or production by foreign companies. Any amendment to
the current Paraguayan laws, rules and tariffs which govern the
operations and activities of oil and gas operations such as the
intended work programmes at the Paraguayan Concession Interests
could have a substantial adverse impact on the Company's results of
operations and financial condition.
Availability of infrastructure in Paraguay
Crude oil and natural gas exploration, development and
production activities depend, to one degree or another, on third
parties providing access to the necessary infrastructure. Reliable
roads, bridges, power sources, water supply and disposal facilities
are important determinants, which affect capital and operating
costs. The Company intends to transport hydrocarbons produced from
the Pirity Block and the
Demattei Block to local and/or Argentine refineries via a road
network which provides a border crossing between Argentina and
Paraguay approximately 200 kilometres west of Filadelfia and a
further road network which provides a transport link to the
proposed refinery near Tartagal. Unusual or infrequent weather
phenomena, sabotage, government or other interference in the
maintenance or provision of such infrastructure could adversely
affect the operations, financial condition and results of
operations of the Group. While in recent years, the level of
investment by foreign companies has increased, Paraguay has limited
infrastructure with respect to the commercialisation of
hydrocarbons.
Other risk factors
The Existing Ordinary Shares are traded on AIM rather than the
main market of the London Stock Exchange. An investment in shares
traded on AIM may carry a higher risk than an investment in shares
listed on the Official List of the UK Listing Authority and traded
on the main market of the London Stock Exchange.
Investors should be aware that the value of the New Ordinary
Shares may be volatile and may go down as well as up and investors
may therefore not recover their original investment, especially as
the market in the New Ordinary Shares on AIM may have limited
liquidity.
The market price of the New Ordinary Shares may not reflect the
underlying value of the Company's net assets. The price at which
investors may dispose of their shares in the Company may be
influenced by a number of factors, some of which may pertain to the
Company, and others of which are extraneous. Investors may realise
less than the original amount invested.
The risks above do not necessarily comprise all those faced by
the Company and are not intended to be presented in any assumed
order of priority.
The investment offered in this document may not be suitable for
all of its recipients. Investors are accordingly advised to consult
an investment adviser, who is authorised under the FSMA and who or
which specialises in investments of this kind before making a
decision to invest.
PART D
Definitions
The following definitions apply throughout this announcement
(save for the Schedule to this announcement which contains
definitions which apply throughout that Schedule only) unless the
context otherwise requires:
"Act" the Companies Act 2006 (as amended)
"Acquisition" the acquisition by the Group of the Paraguayan
Concession Interests pursuant to the Farm-In
Agreements
"Admission" the admission to trading on AIM of the New
Ordinary Shares to be issued pursuant to the
Capital Raising taking place in accordance
with the AIM Rules for Companies, which shall
take place in three stages at the time of
First Admission, Second Admission and Third
Admission
"AIM" the market of that name operated by the London
Stock Exchange
"AIM Rules for Companies" the AIM Rules for Companies, as published
and amended from time to time by the London
Stock Exchange
"AIM Rules for Nominated the rules for nominated advisers to AIM companies,
Advisers" as published and amended from time to time
by the London Stock Exchange
"Applicant" a Qualifying Shareholder or a person entitled
by virtue of a bona fide market claim who
lodges an Application Form under the Open
Offer
"Application Form" the application form which accompanies this
document for Qualifying non-CREST Shareholders
for use in connection with the Open Offer
"Articles" the existing articles of association of the
Company as at the date of this announcement
"boepd" barrels of oil equivalent per day
"bopd" barrels of oil per day
"Board" the board of directors of the Company from
time to time
"Business Day" any day (excluding Saturdays and Sundays)
on which banks are open in London for normal
banking business and the London Stock Exchange
is open for trading
"Capital Raising" together, the Placing, Subscription and the
Open Offer, details of which are set out in
this document
"CCSS" the CREST courier and sorting service, established
by Euroclear UK & Ireland to facilitate, inter
alia, the deposit and withdrawal of certified
securities "certificated" or "certificated
form" not in uncertificated form
"Change of Name" the proposed change of the Company's name
to President Energy PLC, such change to be
approved pursuant to a Resolution to be proposed
at the General Meeting
"Circular" the circular to be sent to shareholders containing
details of the proposals and notice of the
General Meeting
"Company" or "President" President Petroleum Company PLC
"Conditional Placing the 86,887,500 New Ordinary Shares which have
Shares" been placed conditionally with investors by
RBC and Jefferies pursuant to the Proposed
Placing
"Crescent Oil" Crescent Global Oil, LLC
"Crescent Global Oil Crescent Global Oil Paraguay S.A.
Paraguay"
"CREST" the relevant system for the paperless settlement
of trades and the holding of uncertificated
securities operated by Euroclear UK & Ireland
in accordance with the CREST Regulations
"CREST member" a person who has been admitted by Euroclear
UK & Ireland as a system-member (as defined
in the CREST Regulations)
"CREST participant" a person who is, in relation to CREST, a system
participant (as defined in the CREST Regulations)
"CREST payment" shall have the meaning given in the CREST
Manual issued by Euroclear UK & Ireland
"CREST Regulations" the Uncertified Securities Regulations 2001,
as amended
"CREST sponsor" a CREST participant admitted to CREST as a
CREST sponsor
"CREST sponsored member" a CREST member admitted to CREST as a sponsored
member (which includes all CREST Personal
Members)
"Deferred Shares" the existing deferred shares of 29 pence each
of the Company
"Demattei Block" the oil and gas exploration and exploitation
area designated as "Demattei Block" which
is located in Paraguay's occidental region
"Demattei Concession" the concession contract enacted into Paraguayan
Law No. 3549 of 16 July 2008 in respect of
the Demattei Block
"Demattei Farm-In the conditional agreement dated 11 September
Agreement" 2012 between Crescent Global Oil Paraguay,
Crescent Oil and the Company, pursuant to
which terms the Company would acquire certain
of its interest in the Demattei Concession
on an incremental basis
"Demattei Joint Venture the agreement to be entered into between the
Agreement" Company and Crescent Global Oil Paraguay S.A.
governing future operations on the Demattei
Concession and pursuant to which terms the
Company would act as operator of the Demattei
Concession
"Directors" the directors of the Company at the date of
this announcement
"Enlarged Share Capital" the issued ordinary share capital of the Company
immediately following Third Admission
"enabled for settlement" in relation to Open Offer Entitlements or
Excess Open Offer Entitlements, enabled for
the limited purpose of settlement of claim
transactions and unmatched stock event transactions
(each as described in the CREST Manual issued
by Euroclear UK & Ireland)
"Euroclear UK & Ireland" Euroclear UK & Ireland Limited, the operator
or "Euroclear" of CREST
"Excess Application the arrangement pursuant to which Qualifying
Facility" Shareholders may apply for Open Offer Shares
in excess of their Open Offer Entitlements
"Excess CREST Open in respect of each Qualifying CREST Shareholder,
Offer the entitlement
"Entitlement" to apply for Open Offer Shares in addition
to his Open Offer Entitlement credited to
his stock account in CREST, pursuant to the
Excess Application Facility, which is conditional
on him taking up his Open Offer Entitlement
in full and which may be subject to scaling
back in accordance with the provisions of
the Open Offer
"Excess Open Offer an entitlement for each Qualifying Shareholder
Entitlement" to apply to subscribe for Open Offer Shares
in addition to his Open Offer Entitlement
pursuant to the Excess Application Facility
which is conditional on him taking up his
Open Offer Entitlement in full and which may
be subject to scaling back in accordance with
the provisions of the Open Offer
"Excess Shares" New Ordinary Shares in addition to the Open
Offer Entitlement for which Qualifying Shareholders
may apply under the Excess Application Facility
"Excluded Territories" the United States, Australia, Canada, Japan,
the Republic of South Africa, the Republic
of Ireland and any other jurisdiction where
the extension or availability of the Open
Offer would breach any applicable law or regulations
"Existing LCM Loan the existing loan facilities of US$9 million
Facility" made available to the Company and other members
of the Group by IYA Global Limited, a subsidiary
of LCM
"Existing Ordinary the existing issued ordinary shares of 1 penny
Shares" each in the capital of the Company as at the
date of this announcement
"Farm-In Agreements" the Demattei Farm-In Agreement and the Pirity
Farm-In Agreement
"Firm Placing" the placing of the Firm Placing Shares at
the Issue Price by RBC and Jefferies pursuant
to the Placing and Open Offer Agreement
"Firm Placing Shares" the 28,962,500 New Ordinary Shares which have
been placed firm by RBC and Jefferies and
are to be issued by the Company to investors
pursuant to the Firm Placing
"First Admission" the admission to trading on AIM of the Firm
Placing Shares, which is expected to take
place on 17 September 2012
"Form of Proxy" the form of proxy relating to the General
Meeting being sent to Shareholders
"FSA" the Financial Services Authority of the United
Kingdom
"FSMA" the Financial Services and Markets Act 2000
(as amended)
"GCA" Gaffney, Cline & Associates, Inc. of Suite
1000, 1300 Post Oak Blvd., Houston, Texas
77056, USA
"General Meeting" the general meeting of the Company convened
for 11.00 a.m. on 28 September 2012 (or any
adjournment of it), notice of which is set
out in the Circular
"Group" the Company and its subsidiary undertakings
"ISIN" International Securities Identification Number
"Issue Price" 20 pence per New Ordinary Share
"Jefferies" Jefferies Hoare Govett, a division of Jefferies
International Limited, the Company's Joint
Broker
"Joint Operating Agreements" the Pirity Joint Operating Agreement and the
Demattei Joint Operating Agreement
"London Stock Exchange" London Stock Exchange plc
"LCM" Levine Capital Management Limited, a company
registered in the British Virgin Islands under
number 1533154 with registered office at OMC
Chambers, Wickhams Cay 1, Road Town, Tortola,
British Virgin Islands.
"Member Account ID" the identification code or number attached
to any member account in CREST
"mmb" million barrels
"mmboe" million barrels of oil equivalent
"Money Laundering the Money Laundering Regulations 2007 (as
Regulations" amended)
"New LCM Loan Facility" the US$15 million revolving loan term facility
to be provided by LCM (or an associated party
of LCM and/or Peter Levine) to President
"New Ordinary Shares" up to 154,598,541 ordinary shares of 1 penny
each in the capital of the Company to be issued
pursuant to the Capital Raising
"Official List" the Official List of the UK Listing Authority
"Open Offer" the invitation to Qualifying Shareholders
to subscribe for Open Offer Shares at the
Issue Price on the terms of and subject to
the conditions set out or referred to in the
Circular and, where relevant, in the Application
Form
"Open Offer Entitlement" the pro rata basic entitlement for Qualifying
Shareholders to apply to subscribe for 7 Open
Offer Shares for every 45 Existing Ordinary
Shares held by them on the Record Date pursuant
to the Open Offer
"Open Offer Shares" the 19,998,541 New Ordinary Shares for which
Qualifying Shareholders are being invited
to apply under the terms of the Open Offer
"Overseas Shareholders" Shareholders who are resident in, or who are
citizens of, or who have registered addresses
in, territories other than the United Kingdom
"Paraguay" the Republic of Paraguay
"Paraguayan Concession" the Pirity Concession and the Demattei Concession
"Paraguayan Concession certain interests in the Pirity Concession
Interests" and the Demattei Concession to be acquired
by the Group pursuant to the Acquisition
"Participant ID" the identification code or membership number
used in CREST to identify a particular CREST
member or other CREST participant
"PetroVictory" PetroVictory LLC
"Pirity Block" the oil and gas prospecting, exploration and
exploitation area designated as "Pirity Block"
which is located in Paraguay's occidental
region
"Pirity Concession" the concession contract enacted into Paraguayan
Law No. 3479 of 13 May 2008 in respect of
the Pirity Block
"Pirity Farm-In Agreement" the conditional agreement dated 11 September
2012 between Pirity Hidrocarburos, PetroVictory
and the Company, pursuant to which terms the
Company would acquire certain of its interest
in the Pirity Concession on an incremental
basis
"Pirity Hidrocarburos" Pirity Hidrocarburos S.R.L.
"Pirity Joint Operating the agreement to be entered into between the
Agreement" Company and Pirity Hidrocarburos governing
future operations on the Pirity Concession
and pursuant to which terms the Company would
act as operator of the Pirity Concession
"Placees" the persons who conditionally agree to subscribe
for the Placing Shares
"Placing" the Firm Placing and the Proposed Placing
"Placing and Open the agreement dated 11 September 2012 between
Offer Agreement" the Company, RBC and Jefferies relating to
the Placing and Open Offer
"Placing Shares" the Firm Placing Shares and Conditional Placing
Shares
"Proposed Placing" the conditional placing by RBC and Jefferies
of the Conditional Placing Shares at the Issue
Price pursuant to the Placing and Open Offer
Agreement
"Proposals" together, the Capital Raising, the Acquisition
and the Change of Name
"Prospectus Rules" the rules made by the FSA under Part VI of
FSMA in relation to offers of transferable
securities to the public and admission of
transferable securities to trading on a regulated
market
"Puesto Guardian Concession" the exploitation concession over the CNO-8
"Puesto Guardian Area" located in the Province
of Salta, Argentina granted by means of a
Presidential Decree 1596/1991 dated 15 August
1991 of the National Executive Branch (as
subsequently amended)
"Qualifying CREST Qualifying Shareholders whose Existing Ordinary
Shareholders" Shares on the register of members of the Company
at the close of business on the Record Date
are held in uncertificated form
"Qualifying non-CREST Qualifying Shareholders whose Existing Ordinary
Shareholders" Shares on the register of members of the Company
at the close of business on the Record Date
are held in certificated form
"Qualifying Shareholders" holders of Existing Ordinary Shares on the
Company's register of members at the Record
Date (other than certain Overseas Shareholders)
"RBC" or "RBC Capital RBC Europe Limited (trading as RBC Capital
Markets" Markets), the Company's Nominated Adviser
and Joint Broker
"Record Date" close of business on 7 September 2012
"Registrar", "Receiving Equiniti Limited, Aspect House, Spencer Road,
Agent" or "Equiniti" Lancing, West Sussex, BN99 6DA
"Related Parties" the related parties of LCM being John Hamilton,
Benjamin Wilkinson, Michael Cochran and Richard
Hubbard
"Resolutions" the resolutions set out in the notice of the
General Meeting
"Second Admission" the admission to trading on AIM of the Conditional
Placing Shares and Open Offer Shares, which
is expected to take place on 1 October 2012
"Shareholders" holders of Existing Ordinary Shares
"stock account" an account within a member account in CREST
to which a holding of a particular share or
other security in CREST is credited
"subsidiary" a "subsidiary undertaking" as that term is
defined in the Act
"Subscription" the conditional subscription of 18,750,000
Subscription Shares at the Issue Price by
Pirity Hidrocarburos
"Subscription Shares" the 18,750,000 New Ordinary Shares which are
to be issued by the Company to Pirity Hidrocarburos
pursuant to the Subscription
"Third Admission" the admission to trading on AIM of the Subscription
Shares expected to take place following completion
of the Farm-In Agreements
"uncertificated" or recorded on the relevant register or other
"uncertificated form" record of the share or other security concerned
as being held in uncertificated form in CREST,
and title to which, by virtue of the CREST
Regulations, may be transferred by means of
CREST
"UK Listing Authority" the FSA acting in its capacity as the competent
authority for the purposes of Part VI of FSMA
"United Kingdom" or the United Kingdom of Great Britain and Northern
"UK" Ireland
"GBP" or "Pounds" UK pounds sterling, being the lawful currency
of the United Kingdom
"United States", "USA" the United States of America, its territories
or "US" and possessions and any state of the United
States of America and the District of Columbia
"US$" or "US Dollars" US dollars, being the lawful currency of the
United States
"US Securities Act" the United States Securities Act of 1933,
(as amended)"
THE TERMS AND CONDITIONS CONTAINED IN THIS SCHEDULE HAVE BEEN
EXTRACTED FROM THE SCHEDULE TO THE PLACING LETTERS WHICH HAVE BEEN
SENT TO PLACEES IN RELATION TO THE PLACING
SCHEDULE
"PLACING TERMS AND CONDITIONS
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL,
TAX, BUSINESS AND RELATED ASPECTS OF A SUBSCRIPTION FOR THE NEW
ORDINARY SHARES.
This schedule does not constitute a prospectus or offering
memorandum or an offer in respect of any securities and is not
intended to provide the basis for any decision in respect of the
Company or other evaluation of any securities of the Company or any
other entity and should not be considered as a recommendation that
any investor should subscribe for or purchase any such
securities.
Details of the Cash Placing and the Conditional Placing
RBC Capital Markets (a trading name of RBC Europe Limited; "RBC
Capital Markets") and Jefferies Hoare Govett (a division of
Jefferies International Limited; "Jefferies") are proposing to
enter into an agreement with the Company (the "Placing Agreement")
under which terms, subject to the conditions set out in that
agreement, the Banks will agree to use their respective reasonable
endeavours to procure subscribers for the Placing Shares at the
Placing Price with certain institutional and other investors or, in
the event of any default by any subscriber in respect of the
Placing Shares (other than LCM or any Placee subscribing for
Company Settled Shares), subscribe for such shares themselves , as
further described in the Placing Letter (including this schedule)
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.
Open Offer
The Company is also separately making the Open Offer to raise a
maximum of GBP4.000 millionfrom existing Shareholders.
Applications for admission to trading
Applications 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, certain conditions in the
Placing Agreement being satisfied and the Placing Agreement not
having been terminated in accordance with its terms.
It is expected that Admission of the Cash Placing Shares will
become effective at 8.00 a.m. on 17 September 2012 and that
dealings in the Cash Placing Shares will commence at that time.
It is expected that Admission of the Conditional Placing Shares
will become effective at 8.00 a.m. on 1 October 2012 and that
dealings in the Conditional Placing Shares will commence at that
time.
Participation in, and principal terms of, the Cash Placing and
the Conditional Placing
The Banks are arranging the Cash Placing and the Conditional
Placing as agents for and on behalf of the Company. The Banks will
determine in their absolute discretion the extent of each Placee's
participation in the Cash Placing and the Conditional 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.
Each Placee will be required to pay to the Banks, on the
Company's behalf, the Placing Price for each Placing Share agreed
to be acquired by it under the Cash Placing and the Conditional
Placing in accordance with the terms set out in the Placing Letter
(including this schedule). Each Placee's obligation to acquire and
pay for Placing Shares under the Cash Placing and the Conditional
Placing will be owed to the Banks and the Company. Each Placee has
an immediate, separate, irrevocable and binding obligation, owed to
the Banks, 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 terms and
conditions set out in the Placing Letter (including this schedule)
in their entirety, to be participating in the Cash Placing and the
Conditional Placing upon the terms and conditions contained in the
Placing Letter (including this schedule), and to be providing the
representations, warranties, agreements, acknowledgements and
undertakings, in each case as contained in the Placing Letter
(including this schedule). To the fullest extent permitted by law
and applicable Financial Services Authority ("FSA") rules (the "FSA
Rules"), none of (i) RBC Capital Markets or Jefferies, (ii) any of
their respective directors, officers, employees or consultants, nor
(iii) to the extent not contained within (i) or (ii), any person
connected with RBC Capital Markets or Jefferies 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 Cash
Placing or the Conditional Placing.
The Cash Placing Shares will be allotted to Placees pursuant to
share authorities approved by Shareholders at the Company's recent
annual general meeting held on 13 June 2012.
The allotment of the Conditional Placing Shares will require the
passing of the Resolutions at the General Meeting. If passed, the
Resolutions will grant authorities to Directors to allot further
shares for cash on a non pre-emptive basis. Allotment of the
Conditional Placing Shares will take place as soon as practicable
following the General Meeting, conditional on Second Admission.
Conditions of the Conditional Placing
The obligations of the Banks in respect of the Conditional
Placing under the Placing Agreement are conditional on, amongst
other things:
(a) the Company having complied with all of its obligations
under the Placing Agreement (to the extent such obligations fall to
be performed prior to Second Admission);
(b) the warranties contained in the Placing Agreement being
true, accurate and not misleading in any respect as at the date of
the Placing Agreement and at all times up to and including Second
Admission (in each case in the opinion of either of the Banks,
acting in good faith) by reference to the facts and circumstances
existing from time to time;
(c) in the opinion of either of the Banks, acting in good faith,
there having been no material adverse change, whether or not
foreseeable at the date of the Placing Agreement, in, or any
development involving a prospective material adverse change in or
affecting, the condition (financial operational, legal or
otherwise) or the assets, earnings, management, business affairs,
business prospects or financial prospects of the Company or of the
Group (taken as a whole), whether or not arising in the ordinary
course of business;
(d) the posting by no later than 12 September 2012 (by first
class pre-paid mail) of the Circular to Shareholders and such other
persons (if any) entitled to receive notice of the General Meeting
in accordance with the Company's Articles of Association together
(where applicable) with a Form of Proxy and, to Qualifying
Shareholders (other than certain overseas Qualifying Shareholders),
the Application Form;
(e) the Open Offer Entitlements being admitted as a
participating security (as defined in the CREST Regulations) to
CREST; Open Offer Entitlements being credited to the CREST stock
accounts of Qualifying CREST Shareholders in the proportions set
out in the Circular; and the Open Offer Entitlements becoming
enabled for settlement within CREST, in each case by not later than
the Business Day following the date of posting of the Circular;
(f) the passing of the Resolutions by the requisite majority
without material amendment at the General Meeting (or at any
adjournment thereof);
(g) First Admission having occurred;
(h) the Farm-in Agreements remaining in full force and effect; and
(i) Second Admission taking place by not later than 8.00 a.m. on
1 October 2012 (or such other later date as may be agreed between
the parties).
Conditions of the Cash Placing
The obligations of RBC Capital Markets and Jefferies in respect
of the Cash Placing under the Placing Agreement are conditional on,
amongst other things:
(a) the conditions set out in paragraphs (a) to (i) above, except that:
(i) the conditions set out at paragraphs (d), (e), (f), (g) and
(i) shall not be applicable; and
(ii) the references to Admission of the Conditional Placing
Shares or Second Admission in paragraphs (a) and (b) shall be
deemed to be references to Admission of the Cash Placing Shares or
First Admission; and
(b) First Admission taking place by not later than 8.00 a.m. on
17 September 2012 (or such other later date as may be agreed
between the parties).
If any of the respective conditions contained in the Placing
Agreement in relation to the Cash Placing and the Conditional
Placing are not fulfilled or waived by the Banks, by the respective
time or date where specified, the Cash Placing and/or the
Conditional Placing will not proceed and the Placees' 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 Banks and the Company may agree in writing to extend the
time and/or date by which any of the conditions contained in the
Placing Agreement are required to be fulfilled to no later than
3.00 p.m. on the Long Stop Date.
The Banks may, in their absolute discretion and on such terms as
they think appropriate, waive fulfilment by the Company of the
whole or any part of any or all of the Company's obligations in
relation to the conditions in the Placing Agreement (to the extent
permitted by applicable law or regulation). Any such extension or
waiver will not affect Placees' commitments as set out in the
Placing Letter.
None of the Banks, the Company 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 Cash Placing
or the Conditional Placing nor for any decision they may make as to
the satisfaction of any condition or in respect of the Cash Placing
or the Conditional Placing generally, and by participating in the
Cash Placing and the Conditional Placing, each Placee agrees that
any such decision is within the absolute discretion of the
Banks.
Termination of the Placing Agreement
The Banks are entitled, at any time before Second Admission, to
terminate the Placing Agreement in relation to their obligations in
respect of the New Ordinary Shares by giving notice to the Company
if, amongst other things, any of the following events have
occurred:
(a) any of the warranties under the Placing Agreement being
untrue, inaccurate or misleading in any respect when made or
becoming untrue, inaccurate or misleading in any respect (in each
case in the opinion of either of the Banks, acting in good faith)
by reference to the facts and circumstances existing from time to
time or any matter arising which might reasonably be expected to
give an entitlement on the part of the Banks to make a claim under
the indemnities set out in the Placing Agreement; or
(b) any statement made in any of the Marketing Documents being
untrue, inaccurate or misleading in any respect when made or
becoming untrue, inaccurate or misleading in any respect (in each
case in the opinion of the Banks, acting in good faith) by
reference to the facts and circumstances existing from time to
time, or any matter arising which might, if the Marketing Documents
were issued at that time, constitute a material omission from them
or a misleading inaccuracy in any announcements released by the
Company through a Regulatory Information Service or other document
issued to shareholders of the Company or otherwise to the public by
any member of the Group, in each case since the Accounts Date;
or
(c) any of the following has occurred:
(i) the suspension of trading in securities generally on the
London Stock Exchange or the New York Stock Exchange or trading is
limited or minimum prices established on any such exchange; or
(ii) the declaration of a banking moratorium in London or by the
US federal or New York State authorities or any material disruption
to commercial banking or securities settlement or clearance
services in the US or the UK; or
(iii) any adverse change, whether or not foreseeable at the date
of the Placing Agreement, or development involving a prospective
adverse change, in the financial markets in the United States, the
United Kingdom, Argentina or Paraguay or any member of the European
Union, or in international financial, economic, political,
industrial or market conditions or currency exchange rates or any
incident of terrorism or outbreak or escalation of hostilities or
any declaration by the UK or the US of a national emergency or war
or any other calamity or crisis; or
(iv) an adverse change, whether or not foreseeable at the date
of this Agreement, or a prospective adverse change occurring since
the date of this Agreement in (A) US or UK, Argentina or Paraguay
taxation affecting the Group or the Ordinary Shares or the transfer
of the Ordinary Shares; (B) the hydrocarbon industry (including,
without limitation, governmental regulation or policy regarding
hydrocarbon concessions or licences, or rights thereto) in
Argentina or Paraguay; or (C) the imposition of exchange controls
by the United States or the United Kingdom or Argentina or
Paraguay,
which events described in (i), (ii), (iii) or (iv) above either
of the Banks considers in its opinion (acting in good faith) may
have an adverse effect on the financial or trading position or the
business or prospects of the Group which is material in the context
of Group as a whole or which renders it impracticable or
inadvisable to market the New Ordinary Shares or to enforce the
contracts for the sale of the New Ordinary Shares; or
(d) in the opinion of either of the Banks (acting in good
faith), any material adverse change, whether or not foreseeable at
the date of the Placing Agreement, in, or any development involving
a prospective material adverse change in or affecting, the
condition (financial operational, legal or otherwise) or the
assets, earnings, management, business affairs, business prospects
or financial prospects of the Company or of the Group (taken as a
whole), whether or not arising in the ordinary course of
business.
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 Banks of any right of termination or other discretion under
the Placing Agreement shall be within the absolute discretion of
the Banks and that the Banks need not make any reference to Placees
and that the Banks 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 Cash Placing or the
Conditional Placing and Placees' commitments will be made solely on
the basis of the information contained in the Placing Letter
(including this schedule and the draft Press Announcement attached
at Appendix 1 to the Placing Letter).
Each Placee, by accepting a participation in the Cash Placing
and the Conditional Placing agrees that the content of the Placing
Letter (including this schedule) is exclusively the responsibility
of the Company and confirms that it has neither received nor relied
on any other information, representation, warranty, or statement
made by or on behalf of the Company or the Banks or any other
person and none of the Banks, the Company nor any other person will
be liable for any Placee's decision to participate in the Cash
Placing and the Conditional 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 the Company in accepting a participation in the
Cash Placing and the Conditional Placing. Nothing in this paragraph
shall exclude the liability of any person for fraudulent
misrepresentation.
Registration and settlement
Settlement of transactions in the New Ordinary Shares following
Admission will take place within the system administered by
Euroclear UK & Ireland Limited ("CREST"), subject to certain
exceptions. The Company reserves the right to require settlement
for and delivery of the Placing Shares (or a portion thereof) to
Placees in certificated form if, in either Bank's 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 Cash Placing or the Conditional Placing is
only available to persons who are invited to participate in it by
the Banks.
Each Placee's commitment to acquire a fixed number of Placing
Shares under the Cash Placing or the Conditional Placing will be
agreed orally or in writing or via email with either of the Banks
or via the Bloomberg messaging system, and such agreement will
constitute a legally binding commitment on such Placee's part to
acquire such number of Placing Shares at the Placing Price, subject
to the terms and conditions set out in the Placing Letter
(including this schedule), and the Company's Articles of
Association.
Each Placee allocated Placing Shares in the Cash Placing and the
Conditional Placing will be sent a contract note (if affirmation is
not sent electronically) 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 Banks. Settlement should be through RBC
Capital Markets against CREST ID: 388, account designation: RBC, or
through Jefferies against CREST ID: 393, as the case may be. For
the avoidance of doubt, allocations in respect of the Cash Placing
will be booked with a trade date of 12 September 2012 and
settlement date of First Admission and allocations in respect of
the Conditional Placing will be booked with a trade date of 12
September 2012 and settlement date of Second Admission.
The Company will deliver the Placing Shares to the CREST
accounts operated by the Banks as agents for the Company and the
Banks will enter their 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 in respect of the Cash Placing
Shares will take place on the date of First Admission and
settlement in respect of the Conditional Placing Shares will take
place on the date of Second Admission, each 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 Banks.
Each Placee is deemed to agree that, if it does not comply with
these obligations, the Company may sell any or all of the Placing
Shares allocated to that Placee on such Placee's behalf and retain
from the proceeds, for the Company'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 Cash Placing or the
Conditional Placing.
Representations and warranties
By participating in the Cash Placing and the Conditional
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 the Placing Letter (including this schedule) 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 Cash Placing or the Conditional Placing and represents and
warrants that it has not received a prospectus, admission document
or other offering document in connection with the Cash Placing, the
Conditional Placing or the New Ordinary Shares;
3 acknowledges that the ordinary shares in the capital of the
Company are admitted to trading on AIM, and the Company 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 the Company's business and the
Company'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 the Banks or the Company 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 New Ordinary Shares or the Company or any other
person other than the Placing Letter (including this schedule); nor
has it requested any of the Banks, the Company, 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 New Ordinary Shares is not, and at the time the New
Ordinary Shares are acquired will not be located in or residents of
a Restricted Jurisdiction, and (ii) the New Ordinary 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 New Ordinary Shares have not been and
will not be registered under the Securities Act and further
acknowledges that the New Ordinary Shares are being offered and
sold only (i) outside the United States pursuant to Regulation S
under the Securities Act in an "offshore transaction" (as such term
is defined in Regulation S under the Securities Act) or (ii) in the
United States only to limited number of QIBs, pursuant to an
exemption from registration under the Securities Act in a
transaction not involving any public offering;
7 represents and warrants that it is (and any such account for
which it is acting is) either (i) a QIB that has executed and
returned to the Banks or their affiliates a US Investor Letter; or
(ii) outside the United States and is acquiring the New Ordinary
Shares in an "offshore transaction", as defined in and in
accordance with, Regulation S under the Securities Act;
8 acknowledges that the New Ordinary Shares have not been and
will not be qualified for distribution by a prospectus under
applicable Canadian securities laws, and may only be offered and
sold pursuant to an exemption from the prospectus requirements of
those laws. Accordingly, the New Ordinary Shares may only be
offered and sold to purchasers in Canada who are "accredited
investors" within the meaning of Canadian securities laws and
otherwise in compliance with all applicable Canadian securities
laws;
9 acknowledges that the content of the Placing Letter (including
this schedule) is exclusively the responsibility of the Company and
that neither of the Banks nor any person acting on their behalf has
or shall have any liability for any information, representation or
statement contained in the Placing Letter (including this schedule)
or any information previously published by or on behalf of the
Company and will not be liable for any Placee's decision to
participate in the Cash Placing or the Conditional Placing based on
any information, representation or statement contained in the
Placing Letter (including this schedule) 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 New Ordinary Shares is
contained in the Placing Letter (including this schedule and the
draft Press Announcement attached to the Placing Letter at Appendix
1), and any information previously published by the Company by
notification to a Regulatory Information Service, such information
being all that it deems necessary to make an investment decision in
respect of the New Ordinary Shares and that it has neither received
nor relied on any other information given or representations,
warranties or statements made by any of the Banks or the Company
and none of the Banks or the Company will be liable for any
Placee's decision to accept an invitation to participate in the
Cash Placing or the Conditional 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 the
Company in deciding to participate in the Cash Placing or the
Conditional Placing;
10 acknowledges that neither of the Banks nor any person acting
on behalf of the Banks nor any of their affiliates has or shall
have any liability for any publicly available or filed information,
or any representation relating to the Company, provided that
nothing in this paragraph excludes the liability of any person for
fraudulent misrepresentation made by that person;
11 represents and warrants that neither it, nor the person
specified by it for registration as a holder of New Ordinary Shares
is, or is acting as nominee or agent for, and that the New Ordinary
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);
12 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;
13 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 New Ordinary Shares subscribed for
by it in the Cash Placing and Conditional 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 Banks has been
given to the proposed offer or resale;
14 represents and warrants that it has not offered or sold and,
prior to the expiry of a period of six months from Second
Admission, will not offer or sell any New Ordinary 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");
15 represents and warrants that it has not offered or sold and
will not offer or sell any New Ordinary Shares to persons in the
European Economic Area prior to Second 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);
16 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
New Ordinary Shares in circumstances in which section 21(1) of FSMA
does not require approval of the communication by an authorised
person;
17 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 New Ordinary Shares in, from or
otherwise involving, the United Kingdom;
18 (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 the Placing Letter (including this
schedule) may otherwise be lawfully communicated; and (b)
acknowledges that any offer of New Ordinary 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;
19 represents and warrants that it is entitled to subscribe for
New Ordinary Shares under the laws of all relevant jurisdictions
which apply to it, and that its subscription of the New Ordinary
Shares will be in compliance with applicable laws and regulations
in the jurisdiction of its residence, the residence of the Company,
or otherwise;
20 undertakes that it (and any person acting on its behalf) will
make payment for the New Ordinary Shares allocated to it in
accordance with the Placing Letter (including this schedule) on the
due time and date set out herein, failing which the relevant New
Ordinary Shares may be placed with other subscribers or sold as the
Banks may in their discretion determine and without liability to
such Placee;
21 acknowledges that neither of the Banks, nor any of their
respective affiliates, nor any person acting on behalf of the
Banks, is making any recommendations to it, advising it regarding
the suitability of any transactions it may enter into in connection
with the Cash Placing and/or the Conditional Placing and that
participation in the Cash Placing and the Conditional Placing is on
the basis that it is not and will not be a client of either of the
Banks for the purposes of the Cash Placing and/or the Conditional
Placing and that the Banks have no duties or responsibilities to it
for providing the protections afforded to its clients or for
providing advice in relation to the Cash Placing or the Conditional
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;
22 undertakes that the person whom it specifies for registration
as holder of the New Ordinary Shares will be (i) itself or (ii) its
nominee, as the case may be. Neither the Banks nor the Company 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 indemnify the Company and the Banks in respect of the same on
the basis that the New Ordinary Shares will be allotted to the
CREST stock account of RBC Capital Markets or Jefferies as the case
may be who will hold them as nominee on behalf of such Placee until
settlement in accordance with its standing settlement
instructions;
23 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 New Ordinary Shares (together
with any interest chargeable thereon) may be taken by the Company
or the Banks 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;
24 acknowledges that RBC Capital Markets and Jefferies 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 the Banks
to produce the Press 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 therein;
25 agrees to indemnify and hold the Company, the Banks 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 Placing Letter (including this schedule) and
further agrees that the provisions of the Placing Letter (including
this schedule) shall survive after completion of the Cash Placing
and the Conditional Placing;
26 represents and warrants that it will acquire any New Ordinary
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;
27 acknowledges that its commitment to subscribe for New
Ordinary 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 Cash Placing and/or the
Conditional Placing and that Placees will have no right to be
consulted or require that their consent be obtained with respect to
the Company's conduct of the Cash Placing and/or the Conditional
Placing. The foregoing representations, warranties and
confirmations are given for the benefit of the Company as well as
each of the Banks. 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 the Company for the New Ordinary
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 New Ordinary Shares
is, or is acting as nominee or agent for, and that the New Ordinary
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 New Ordinary 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 the Company nor the Banks
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 Banks accordingly;
28 understands that no action has been or will be taken by any
of the Company, the Banks or any person acting on behalf of the
Company or the Banks that would, or is intended to, permit a public
offer of the New Ordinary Shares in any country or jurisdiction
where any such action for that purpose is required;
29 in making any decision to subscribe for the New Ordinary
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 New Ordinary
Shares. It further confirms that it is experienced in investing in
securities of this nature in this sector, is familiar with the
market in which the Company operates 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 Cash Placing
and/or the Conditional 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 and conditions set out
in the Placing Letter (including this schedule), including the
merits and risks involved;
30 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 New
Ordinary Shares; and (d) made its investment decision based upon
its own judgement, due diligence and analysis and not upon any view
expressed or information provided by or on behalf of the Banks or
any of their respective Affiliates;
31 understands and agrees that it may not rely on any
investigation that the Banks or any person acting on their behalf
may or may not have conducted with respect to the Company, its
Group, or the Cash Placing and/or the Conditional Placing and the
Banks have not made any representation to it, express or implied,
with respect to the merits of the Cash Placing and/or the
Conditional Placing, the subscription for the New Ordinary 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 New Ordinary Shares. It acknowledges and agrees that no
information has been prepared by the Banks or the Company for the
purposes of the Cash Placing and/or the Conditional Placing;
32 acknowledges and agrees that all representations, warranties,
acknowledgements, undertakings and agreements which have been made
in the Placing Letter (including this schedule) shall survive the
transaction and the delivery of the New Ordinary Shares; and
33 accordingly it acknowledges and agrees that it will not hold
the Banks 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
neither the Banks nor any person acting on behalf of either of the
Banks, 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.
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 New Ordinary Shares or the agreement by them to
subscribe for any New Ordinary Shares.
Each Placee and any person acting on behalf of each Placee
acknowledges and agrees that either of the Banks and any of their
respective affiliates may, in their absolute discretion, agree to
become a Placee in respect of some or all of the New Ordinary
Shares.
When a Placee or person acting on behalf of the Placee is
dealing with either RBC Capital Markets or Jefferies, any money
held in an account with RBC Capital Markets or Jefferies 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 the relevant Bank's money in accordance with the
client money rules and will be used by such Bank in the course of
its own business; and the Placee will rank only as a general
creditor of such Bank.
All times and dates in the Placing Letter (including this
schedule) may be subject to amendment. The Banks 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 Schedule to this
announcement only and unless the context otherwise requires:
"Accounts Date" 31 December 2011
"Admission" the First Admission and/or the Second
Admission, as the context requires
"Affiliates" any person that directly, or indirectly
through one or more intermediaries,
controls or is controlled by, or is
under common control with, the person
specified
"AIM" the market of that name operated by
the London Stock Exchange
"Application Form" the application form in the agreed
form for use by Qualifying Shareholders
in connection with the Open Offer
"Associate" in relation to a person, each of its
affiliates, controlling entities, subsidiaries,
branches and associates (as defined
by applicable laws and regulations)
"Banks" RBC Capital Markets and Jefferies,
or either one of these as the context
requires
"Business Day" a day not being a Saturday or a Sunday
on which banks are open for business
in the City of London
"Cash Placing" the placing of the Cash Placing Shares,
based on the Company's existing share
allotment authority, on the terms of
the Issue Documents
"Cash Placing Shares" the 28,962,500 new Ordinary Shares
to be placed with Placees pursuant
to the Cash Placing
"Circular" the circular to be issued by the Company
to Shareholders including, inter alia,
details of the Cash Placing and the
Conditional Placing and details and
terms of the Open Offer, and attaching
the Form of Proxy and, to Qualifying
Shareholders (other than certain overseas
Qualifying Shareholders), the Application
Form
"Company" or "the Company" President Petroleum Company PLC
or "President"
"Company Settled Shares" the New Ordinary Shares to be subscribed
by certain Placees pursuant to the
Cash Placing and the Conditional Placing
who will make payment in respect of
such New Ordinary Shares directly to
the Company
"Concessions" means the Pirity Concession and the
Demattei Concession
"Conditional Placing" the placing of the Conditional Placing
Shares, subject to the passing of the
Resolutions, on the terms of the Issue
Documents
"Conditional Placing Shares" the 86,887,500 new Ordinary Shares
to be placed with Placees pursuant
to the Conditional Placing
"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
"Pirity Placing Shares" the 18,750,000 new Ordinary Shares
to be subscribed by Pirity Hidrocarburos
S.R.L. pursuant to the terms of the
Pirity Placing Letter
"Pirity Placing Letter" the placing letter and attached form
of acceptance or confirmation sent
by the Company to Pirity Hidrocarburos
S.R.L. setting out the terms and conditions
of their subscription for 18,750,000
New Ordinary Shares for a subscription
amount of US$6 million
"Demattei Concession" the lands in the Republic of Paraguay
designated as "Block Demattei" under
"Concession Contract" enacted into
Paraguayan law No. 3549 on 16 July
2008
"Demattei Farm-in Agreement" the agreement dated the same date as
this Agreement entered into by Crescent
Global Oil Paraguay S.A.; Crescent
Global Oil, LLC and the Company pursuant
to which the Company can earn up to
a 60 per cent interest in the Demattei
Concession
"Directors" or "Board" the directors of the Company, or any
duly authorised committee thereof
"Excess Application Facility" the arrangement pursuant to which Qualifying
Shareholders may apply for Open Offer
Shares in excess of their Open Offer
Entitlements
"Excess Open Offer Entitlement" an entitlement for each Qualifying
Shareholder to apply to subscribe for
Open Offer shares in addition to his
Open Offer Entitlement pursuant to
the Excess Application Facility
"Existing Ordinary Shares" the 128,562,055 Ordinary Shares in
issue at the date of this Placing Letter
"Farm-in" the farm-in by the Company in respect
of the Pirity Concession and the Demattei
Concession pursuant to the Farm-in
Agreements
"Farm-in Agreements" the Pirity Farm-in Agreement and the
Demattei Farm-in Agreement
"First Admission" admission of the Cash Placing Shares
to trading on AIM becoming effective
(pursuant to Rule 6 of the AIM Companies
Rules)
"Form of Proxy" the form of proxy in relation to the
General Meeting, to be sent to each
of the Shareholders together with 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 meeting of the Company, at which
the Resolution will be proposed, to
be held at 11.00 a.m. on 28 September
2012, notice of which is contained
in the Circular
"GMT" Greenwich Mean Time
"Group" the Company, its subsidiaries and its
subsidiary undertakings
"Issue Documents" the Press Announcement, the Circular,
the Application Form and the Placing
Letters
"Issue Price" 20 pence per New Ordinary Share, being
the same as the Placing Price
"Jefferies" Jefferies Hoare Govett (a division
of Jefferies International Limited),
the Company's joint bookrunner, together
with RBC Capital Markets
"London Stock Exchange" London Stock Exchange plc
"LCM" or "Levine Capital Levine Capital Management Limited,
Management" a company registered in the British
Virgin Islands
"LCM Placing Shares" the 31,250,000 New Ordinary Shares
to be subscribed by LCM or any other
entity controlled by Peter Levine pursuant
to the Cash Placing and the Conditional
Placing
"Long Stop Date" 15 October 2012
"Management Presentation" the slides and text used in the Company's
presentation to potential Placees
"Marketing Documents" the Press Announcement, the Management
Presentation and the Circular
"New Ordinary Shares" the 135,848,541 Ordinary Shares to
be issued by the Company pursuant to
the Cash Placing, the Conditional Placing
and the Open Offer
"Open Offer" the open offer to Qualifying Shareholders
(on the terms set out in the Issue
Documents) of up to 19,998,542 New
Ordinary Shares at the Issue Price
"Open Offer Entitlement" an entitlement to apply to subscribe
for one New Ordinary Share, allocated
to Qualifying Shareholders pursuant
to the Open Offer
"Ordinary Shares" ordinary shares of 1 pence each in
the capital of the Company
"Pirity Concession" lands in the Republic of Paraguay designated
as "Block Pirity" under "Concession
Contract" enacted into Paraguayan law
No. 3479 on 13 May 2008
"Pirity Farm-in Agreement" means the agreement dated the same
date as this Agreement entered into
by Pirity Hidrocarburos S.R.L, Petro
Victory LLC, and the Company pursuant
to which the Company can earn up to
a 59 per cent interest in the Pirity
Concession
"Placee" means those persons (including individuals,
funds or otherwise) who will agree
to subscribe for Placing Shares pursuant
to the Cash Placing and/or the Conditional
Placing on the terms and conditions
contained in the Placing Letter
"Placing" the Cash Placing and/or the Conditional
Placing as the context may require
"Placing Agreement" the agreement to be entered into between
(i) the Company (ii) RBC Capital Markets
and (iii) Jefferies relating to the
Cash Placing, Conditional Placing and
Open Offer, further details of which
are set out in the Placing Letter
"Placing Letter" the placing letter relating to the
Placing sent by the Banks to each of
the Placees, (excluding LCM and the
placees in respect of Company Settled
Shares) together with the schedules
and appendices thereto
"Placing Price" 20 pence per Placing Share
"Press Announcement" the press announcement and the appendices
thereto in the agreed form giving details
of the Farm-in Agreements, the Cash
Placing, the Conditional Placing and
the Open Offer to be released on the
same date as the signing of the Placing
Agreement
"Placing Shares" 115,850,000 New Ordinary Shares, being
the Cash Placing Shares and the Conditional
Placing, including the LCM Placing
Shares and the Company Settled Shares,
and "Placing Share" means any one of
them but excluding the Pirity Placing
Shares
"QIB" qualified institutional buyers within
the meaning of Rule 144A under the
Securities Act
"Qualifying Shareholders" holders of Ordinary Shares on the register
of members of the Company as at close
of business on the record date set
out in the Circular who are eligible
to be offered New Ordinary Shares under
the Open Offer in accordance with the
terms and conditions of the Issue Documents;
and Qualifying CREST Shareholders means
Qualifying Shareholders whose Ordinary
Shares are in uncertificated form
"RBC Capital Markets" RBC Europe Limited (trading as RBC
Capital Markets), the Company's nominated
adviser and joint bookrunner, together
with Jefferies
"Regulation S" Regulation S under the Securities Act
"Regulatory Information a regulatory information service that
Service" is approved by the London Stock Exchange
for the release of AIM announcements
and is on the list of regulatory information
services maintained by the London Stock
Exchange
"Resolutions" the resolutions of the Company authorising
the Directors to allot the New Ordinary
Shares and disapplying Shareholders'
pre-emption rights but excluding the
resolution to change the name of the
Company, as set out in the Circular
"Restricted Jurisdiction" Australia, the Republic of South Africa,
the Republic of Ireland or Japan or
any other jurisdiction in which it
would be unlawful to distribute the
Placing Letter or subscribe for New
Ordinary Shares
"Second Admission" admission of the Conditional Placing
Shares to trading on AIM becoming effective
(pursuant to Rule 6 of the AIM Companies
Rules)
"Securities Act" the US Securities Act of 1933, as amended
"Shareholders" holders of Ordinary Shares from time
to time
UK" or "United Kingdom" the United Kingdom of Great Britain
and Northern Ireland
"United States" or "US" 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
"US Investor Letter" the investor representation letter
and attached confirmation sent by the
Banks to relevant Placees setting out
the terms and conditions of the Placing,
in the agreed form
This information is provided by RNS
The company news service from the London Stock Exchange
END
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