Framework Agreement

Cardinal Resources plc
30 October 2007


    CARDINAL RESOURCES PLC SIGNS FRAMEWORK AGREEMENT FOR SALE OF UKRAINIAN
    ASSETS

    LONDON - Tuesday, 30 October 2007                                       

    Cardinal Resources plc (AIM:CDL) ('Cardinal' or 'the Company'), the
    independent oil and gas exploration and production company operating in
    Ukraine, has entered into a framework agreement ('the Agreement') for
    the potential sale of its Ukrainian assets, subject to contract, to
    Kuwait Energy Company K.S.C.C. ('Acquirer') for total consideration of
    US$71 million (the 'Transaction').

    As contemplated the Transaction will consist of a sale of 100% of the
    share capital of Carpatsky Petroleum Inc., Raget Commercial Ltd and
    Mitre Resources Limited each owned 100% by Cardinal Resources Finance,
    Ltd. ('Finance'), a 100% owned subsidiary of Cardinal.

    Cardinal's shares were suspended from trading on AIM on 1 October 2007
    pending conclusion of refinancing discussions. As reported on 18
    September 2007 and again on 16 October 2007, Cardinal has been in
    ongoing discussions with one or more potential funding providers to
    obtain a viable financial solution. The Directors of Cardinal have
    reviewed all the options available to obtain the most value for
    shareholders of the Company and have now agreed the principal terms and
    conditions on which Cardinal would enter into a binding sale and
    purchase agreement ('SPA'), subject to shareholders approval and other
    conditions, to sell its Ukrainian assets.

    The parties to the Agreement have agreed to use reasonable endeavours
    to enter into the SPA no later than 9 November 2007, with closing of
    the Transaction currently expected to occur by 10 December 2007.

    Transaction highlights:
    -----------------------

    • Cardinal to sell, subject to shareholder approval, 100% of its
    Ukrainian assets for a total consideration of US$ 71 million;

    • US$ 52 million to be applied in full discharge of all indebtedness owed
    by Cardinal to an affiliate of Silver Point Capital LLP, the current
    holder of the PIK Notes issued by Cardinal (Silver Point Capital LLP
    and their respective affiliates together, 'SPC');

    • All warrants held by SPC in Cardinal and Finance and the special share
    held by SPC in Finance to be cancelled at closing;

    • The balance of US$19 million to be available at closing of the
    Transaction to Cardinal for satisfaction of other creditors, including
    transaction expenses and expenses incurred by SPC and its affiliates.
    The strategy for the Company going forward will be outlined in a
    forthcoming circular;

    • A Cardinal subsidiary entering into forward sale contracts and agency
    agreements with an affiliate of the Acquirer for the sale of gas and
    gas condensate to fund Cardinal's short term working capital needs
    through to closing of the Transaction, with the amounts payable by the
    Acquirer under such contracts being deducted from the balance of the
    US$19 million portion of the total consideration allocated to Cardinal
    (to the extent gas is not delivered prior to closing).

    Key terms of the Transaction:
    -----------------------------

    US$52 million of the consideration, on closing of the Transaction, will
    be paid to SPC in discharging irrevocably all the indebtedness owed by
    Cardinal and its subsidiaries and affiliates to SPC with respect to the
    notes issued by Cardinal under the terms of an instrument dated 23
    December 2006 (as amended on 28 February 2006 and as amended and
    restated on 22 December 2006) (the 'PIK Notes') and with respect to any
    other creditor arrangements between Cardinal and SPC (subject to
    Cardinal settling the out of pocket expenses of SPC including, without
    limitation, all legal, financial and other advisory costs and expenses
    of SPC). SPC will also transfer to Cardinal for no or nominal
    consideration, and Cardinal will cancel, all warrants held by SPC in
    Cardinal and Finance, and the special share in Finance.

    The balance of US$19 million of the consideration (less amounts
    received from forward gas sales to the Acquirer to the extent not
    settled prior to closing) will be available at closing of the
    Transaction to Cardinal for satisfaction of its other creditors,
    including transaction expenses and expenses incurred by SPC in
    connection with Cardinal's default condition. The strategy for the
    Company going forward will be outlined in a forthcoming circular. In
    addition to its portion of the Transaction consideration, post-closing,
    Cardinal's only material assets will be its 6.75% shareholding in
    Condor Exploration, Inc. ('Condor') and its administrative and
    technical services agreement with Condor pursuant to which it is
    entitled to a minimum of US$1 million per year in revenue as announced
    on 9 August 2007.

    It is contemplated that the definitive SPA will be entered into by the
    parties no later than 9 November 2007. Cardinal would provide customary
    warranties to the Acquirer in the SPA, subject to Cardinal's liability
    thereunder being limited to a six month period post-closing and a
    financial cap of US$10 million. SPC has agreed, subject to certain
    termination events, not to enforce its rights under the Notes in
    respect only of existing defaults until the SPA has been signed andit
    is contemplated that a similar agreement will be entered into for the
    period between signing and closing of the SPA, for the period up to
    closing of the Transaction.

    The consent of shareholders of Cardinal to the proposed transaction is
    required pursuant to AIM Rule 15 and will be sought at an Extraordinary
    General Meeting ('EGM') held in accordance with the AIM Rules. A
    circular convening the EGM, and which will set out Cardinal's investing
    strategy going forward, will be posted to shareholders shortly after
    signing of the SPA.

    In the event that Cardinal does not obtain shareholder approval to the
    Transaction, it will be required to pay to the Acquirer an amount equal
    to its out of pocket expenses incurred in connection with the
    Transaction not exceeding US$1.25 million (plus VAT). In the event that
    shareholder approval is not obtained and the Transaction does not
    complete, it is also highly probable that Cardinal would need to
    implement an insolvency procedure which would be highly unlikely to
    provide any return to Cardinal's shareholders.

    The Transaction is currently expected to close on 10 December 2007,
    subject (amongst other things) to:

    • Successful completion by the Acquirer of confirmatory legal, financial
    and technical due diligence;

    • Successful negotiation and execution of an SPA by 9 November 2007;
    
    • Shareholders approval being obtained at the EGM in accordance with AIM
    rules; and,

    • The approval of the Transaction by the Ukrainian anti-monopoly
    authorities.

    If closing of the Transaction has not occurred by 10 December 2007, the
    amount of consideration to be allocated for the repayment of
    indebtedness to SPC shall be increased to reflect a portion of the
    interest that continues to accrue on the amounts owed to SPC from 1
    December 2007, at a rate of 10% per annum, if closing occurs by 20
    December, or at a rate of 21% per annum if closing occurs after 20
    December 2007.

    In any such case a corresponding reduction shall be made to the US$19
    million portion of the consideration amount to be otherwise allocated
    for the use of Cardinal.

    Under the Agreement Cardinal undertakes and agrees that it shall not
    directly or indirectly solicit or invite enquiries, proposals or offers
    relating to a relevant Transaction from any third party.

    Short-term financing:
    ---------------------

    The Acquirer agreed to fund the short term working capital commitments
    of Cardinal by entering into a forward sale contract ('The First Gas
    Sales Contract') and an agency agreement for the sale of gas and gas
    condensate and shall pay to a subsidiary of Cardinal the sum of
    US$600,000 in accordance with the terms of such contracts ('The Second
    Gas Sales Contract' and 'The Third Gas Sales Contract'). Thereafter, it
    is expected to enter into two further forward sale contracts to the
    value of US$600,000 and US$1,450,000 respectively with delivery and
    agency sale to be effected as soon as Cardinal shall be in possession
    of available volumes of gas/condensate to satisfy such contracts in
    priority to any other third party but no earlier than February 2008.
    Cardinal undertakes to deliver gas/condensate at the following fixed
    prices under the First Gas Sale Contract:

    • Natural gas at US$140.20 per 1,000 cubic meters (exclusive of VAT)
    • Gas condensate at US$455.00 per metric tonne (exclusive of VAT)

    The entering into of the Second Gas Sales Contract and the paying of
    the cash consideration due under it shall be subject to the execution
    of the SPA. The entering into, by the Acquirer of the Third Gas Sales
    Contract and the paying of the cash consideration due under it shall be
    subject to execution of the SPA and Cardinal having obtained
    shareholders approval for the Transaction.

    Should Cardinal fail to deliver the agreed volume of natural gas/
    condensate with a value corresponding to the advance payments under The
    First Gas Sales Contract or/when entered into The Second Gas Sales
    Contract or The Third Gas Sales Contract, it shall reimburse such
    portion of the relevant advanced payment no later than by 45 days after
    the agreed delivery date together with a penalty in the amount of
    interest accruing at the rate of 15 percent per annum.

    The amounts paid by the Acquirer under the forward sale contracts (to
    the extent they remain outstanding or unfulfilled) will be deducted
    from the portion of the total consideration payable to Cardinal at
    closing of the Transaction.

    Directors' Fairness Opinion on SPC Settlement:
    ----------------------------------------------

    SPC may be considered to be a related party under the AIM Rules by
    virtue of the special share it holds in Finance. Taking into account
    the fact that SPC would on closing of the Transaction agree to a full
    discharge of all indebtedness owing to them, the cancellation of the
    warrants in Cardinal and Finance and the Finance special share, in
    consideration for an amount which is less than the full amount of
    principal and interest which will be owed to SPC at closing, and that
    entering into the Transaction is the only reasonable strategy currently
    available to Cardinal other than an insolvency procedure, a majority of
    the Directors of Cardinal consider that the terms of the Transaction
    are fair and reasonable insofar as shareholders are concerned. Due to
    the fact that Cardinal is currently without a nominated adviser
    following the resignation of Nabarro Wells & Co. Limited as its
    nominated adviser on 23 October 2007, the Directors are not able to
    consult their nominated adviser in reaching this opinion, as
    contemplated by the AIM Rules. However, shareholders will be able to
    make their own decision on whether or not to approve the Transaction at
    the EGM in due course.

    For further information please contact:

    Cardinal Resources                         Conduit PR Ltd
    Charles Green / Natalia Egorova            Jonathan Charles
    [phone]                       [phone]
    [e-mail]         [e-mail]

    Notes to Editor

    Cardinal Resources plc is an independent oil and gas company engaged in
    the acquisition, development, production and exploration of oil and
    natural gas properties in Ukraine. Cardinal is an experienced operator
    in the country focused on expanding its existing operations through the
    farm-in or acquisition of additional upstream oil and gas assets that
    can be further developed through the application of modern technology
    and expertise.





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