Acquisition & Placing

Regal Petroleum PLC
26 September 2003


For Immediate Release                                  Friday, 26 September 2003



                                 REGAL PETROLEUM PLC



  Proposed acquisition of up to 89.92 per cent. of the issued share capital of

                      Eurotech Services S.A. ('Eurotech')



     Placing of 35,086,667 new Ordinary Shares at a price of 75p per share



Regal Petroleum plc ('Regal' or 'the Company'), the London based independent oil
and gas exploration and production company, is pleased to announce the following
(which should be read in conjunction with the circular to Shareholders to be
posted later today):



Agreed terms on the acquisition of 89.92% of Eurotech



Following the announcement on 27 June 2003 that Regal had signed heads of
agreement to acquire 90 per cent. of the entire issued share capital of
Eurotech, Regal today announces that, following the completion of satisfactory
due diligence, it has agreed terms to acquire up to 89.92 per cent. of the
issued share capital of Eurotech for a consideration to be satisfied by the
issue of up to 5,000,000 new Ordinary Shares. It is expected that the
Acquisition Agreement will be entered into, and the Acquisition will be
completed, shortly after the EGM.



Eurotech is a private company incorporated in Greece, which owns, inter alia, 67
per cent. of the entire issued share capital of Kavala.  Kavala, which is also a
private company incorporated in Greece, has, pursuant to a State Agreement,
exclusive rights to develop, exploit and operate oil fields in the North Aegean
Sea.  Following completion of the Acquisition, Regal will indirectly own 60.2
per cent. of the entire issued share capital of Kavala.



Proposed Fund raising of £24.15 million (net of expenses)



Regal also announces today that it proposes to raise approximately £24.15
million (net of expenses) by way of a placing of 35,086,667 new Ordinary Shares
at a price of 75p per share. The Placing is conditional, inter alia, upon the
Company obtaining approval from its Shareholders to increase its authorised
share capital, to disapply statutory pre-emption rights and to grant the Board
authority to allot the New Ordinary Shares.  The Placing, which has been
arranged by Evolution Beeson Gregory Limited ('EVBG') pursuant to the terms of
the Placing Agreement, is also conditional upon Admission and has been fully
underwritten by EVBG.  The Placing proceeds will be used to fund the working
capital requirements of the Enlarged Group.



Extraordinary General Meeting ('EGM')



An EGM will be held on 20 October 2003 at the offices of EVBG, 100 Wood Street,
London EC2V 7AN, at 10.00 a.m., at which the Resolutions will be proposed for
the purposes of implementing the Placing and the Acquisition.



Commenting on the Acquisition and Placing, Frank Timis, Executive Chairman,
said:



'The acquisition of a producing oil and gas asset in Greece with potential for
considerably higher levels of production together with the raising of funds for
the further development of our existing oil and gas assets, will assist Regal in
becoming a significant exploration and production oil and gas company.'





For further information please contact:


Regal                                                       Tel: [phone]

Frank Timis, Executive Chairman
Glenn Featherby, Finance Director

Buchanan Communications                                     Tel: [phone]
Bobby Morse / Catherine Miles






All defined terms contained within this announcement have the same meaning as
set out in the circular to Shareholders to be posted later today.



Attached:         Background to and reasons for the Acquisition

                        Proposed terms of the Acquisition

                        Issue of Ordinary Shares to Guenter Nolte

                        Proposed Director

                        Current trading and prospects

                        The Placing

                        Use of Proceeds

Recommendation



Background to and reasons for the Acquisition



General

Regal's strategy is to become an owner and operator of international oil and gas
assets and the acquisition of Kavala represents the next stage in this strategy.



To date, all development expenditure in Kavala has been funded internally and no
additional development financing has been available under its current ownership
structure. The Directors believe that the proceeds of the Placing, through the
Facility Agreement, will allow for the further development of Kavala's oil
fields and result in increased production levels. The Placing will also provide
funds for the exploration programme in the Kallirachi prospect. Further details
of the Company's production and exploration plans for Kavala are set out below.



Information on Eurotech

Eurotech, a private company incorporated in Greece, is a provider of engineering
services, equipment and personnel. Eurotech has approximately 29 employees of
which 12 are currently supplying consultancy services to Kavala. The annual
turnover for Eurotech for 2002 was €643,000 (2001: €1,004,000). Eurotech's
assets also include a 67 per cent. interest in the entire issued share capital
of Kavala.



The issued share capital of Eurotech is held by Nikolaos Loutsigkas (60.0 per
cent.), Theodoros Sidiropoulos (26.1 per cent.) and on behalf of the
beneficiaries of a deceased estate (13.9 per cent.).



Following completion of the Acquisition, Eurotech will transfer all of its
assets (apart from its Kavala shareholding), liabilities and business to a newly
established company incorporated by the Managers in accordance with the terms of
the Restructuring Plan. The Managers have agreed to indemnify the Company
against any claims, liabilities or losses it may suffer in connection with this
restructuring of Eurotech.



Information on Kavala

General

Kavala exclusively operates oil, gas and sulphur production facilities
(including an onshore processing plant) in the North Aegean Sea pursuant to the
State Agreement.



The issued share capital of Kavala is held by Eurotech (67 per cent.) and on
behalf of an association of Kavala's employees (33 per cent.).



State Agreement

Kavala has entered into a concession agreement with the Greek State and Kavala's
shareholders pursuant to which Kavala has been granted an exclusive right to
undertake petroleum exploration, exploitation and production operations in the
area of the Thracian Sea. Under the terms of the State Agreement, Kavala has the
right to exploit two existing drilling operations in the Prinos and South Kavala
fields until November 2009 and may also be granted further rights to explore and
exploit new deposits for periods of up to 10 years from the relevant date of
grant. Under the terms of the State Agreement, the Greek State currently
receives a fee equivalent to 5 per cent. of the annual gross income of Kavala.
The State Agreement may be terminated by the Greek State in the event that,
inter alia, Kavala is in material breach of its obligations under the State
Agreement.



Production

Kavala currently produces approximately 4,000 barrels of stabilised crude oil
each day from two sour crude oil reservoirs, Prinos and Prinos North. The
Directors believe that following work-over and infill drilling programmes,
production will increase. The oil extracted from Kavala's fields, 'sour crude'
oil, has a high concentration of Hydrogen Sulphide ('H2S') in the associated
gas. The onshore processing plant removes the H2S to ensure that the final
product conforms to international standards. The oil is sold to Hellenic
Petroleum S.A. in accordance with the State Agreement and the sulphur by-product
is sold locally. The Prinos and Prinos North fields together have approximately
11 million barrels of proven and probable reserves which, at current levels of
production, equates to approximately 6 years of production remaining.



In addition, the smaller South Kavala gas field, produces sweet gas, a gas which
does not contain H2S, and which is used for generating power for certain parts
of the Kavala oil fields. Current production is approximately 60,000m3/day.



Development

Under the State Agreement, Kavala also has the exclusive right to exploit and
develop the Epsilon field which lies to the west of the Prinos field. The
Epsilon field has approximately 12 million barrels of proven and probable
reserves. Kavala intends to drill production wells and build associated
production infrastructure during 2004.



Exploration

Pursuant to the State Agreement, Kavala has an exclusive right to explore the
Kallirachi prospect which is located north of the South Kavala field. Based on
seismic data, this prospect is expected to contain between 96 and 227 million
barrels of recoverable oil. In the first instance, the Company plans to commence
the drilling of an exploration well in Kallirachi in 2003 to convert the
resource to a proven and probable reserve.



Trading Record

A summary of Kavala's trading record over the three years ended 31 December 2002
is set out below:


                                                                             2002               2001               2000

Oil Production volumes (bbls)                                           1,392,327          1,410,965          2,034,047

Sales                                                                 €33,795,000        €32,938,000        €54,648,000
Profit/(loss) after extraordinary items before tax                   (€8,486,000)            €42,000        €25,602,000
Adjusted Profit*                                                       €7,995,000         €8,359,000        €21,292,000

*Adjusted to align with the Company's accounting policies



Further Information

Vasile Frank Timis has a 30 per cent. interest in European Hydrocarbons Limited
('EHL'), a privately owned company. EHL has signed heads of agreement with
Denison Energy Inc. ('Denison') which is listed on the Toronto Stock Exchange,
giving EHL an option to acquire Denison's 75 per cent. interest in an
exploration area near Kavala, west of the Island of Thassos.



Proposed terms of the Acquisition



The Acquisition

The Company has agreed terms with the Vendors to acquire up to 89.92 per cent.
of the entire issued share capital of Eurotech in consideration for the issue of
the Consideration Shares in accordance with the terms of the Acquisition
Agreement. The balance of the issued share capital of Eurotech will be held by
Nikolaos Loutsigkas, the president and managing director of Kavala. Based on the
closing middle market price of 84p of an Existing Share on 25 September 2003
(being the latest practicable date prior to the publication of this
announcement), the aggregate value of the Consideration Shares is £4,200,000.



The Company and the Vendors have agreed the terms of the Acquisition and the
Board expects that the Acquisition Agreement will be entered into and the
Acquisition completed shortly after the EGM. The Company has, however, entered
into a further agreement with the Vendors in respect of the Acquisition pursuant
to which the Vendors are liable to pay the Company the sum of €1 million if the
Vendors fail to enter into the Acquisition Agreement upon the satisfaction of
certain conditions.



Upon completion of the Acquisition Nikolaos Loutsigkas has agreed to join the
Board of the Company and Glenn Featherby and Guenter Nolte will join the board
of Kavala. Nikolaos Loutsigkas and Theodoros Sidiropoulos, a Vendor and a
director of Kavala, will enter into new service agreements with Kavala. The
Company has also agreed to pay the Managers a royalty fee equal to 3 per cent.
of any dividend payable by Kavala to Eurotech on an annual basis.



As part of the terms of the Acquisition, the Company will also provide Kavala
with a US$30,000,000 revolving credit facility to fund its operations on the
terms of the Facility Agreement which will be entered into on completion of the
Acquisition.



Hellenic Competition Commission Approval

The Company has been advised that the Acquisition requires the prior approval of
the Hellenic Competition Commission ('HCC'). Accordingly, the Company intends to
notify the HCC of the Acquisition as soon as practicable and to use all
reasonable endeavours to obtain the HCC approval prior to the EGM. The Directors
believe that this approval is likely to be given as Regal currently has no
interests in the Greek petroleum markets and there is therefore no concentration
of interests as a result of the Acquisition.



The Directors consider that because the likelihood of not getting approval is
very low, it is in the best interests of Regal and its Shareholders to proceed
with the Acquisition on the intended date of completion, even if this approval
has not been received by that date. The Directors have been advised that such a
course of action may result in the HCC imposing a fine on the Company.  They
have been further advised that, based on previous HCC practice, the level of the
fine is not likely to be material, probably not more than 1 per cent. of the
aggregate turnover of Eurotech and Kavala, which based on the latest published
accounts, would result in a fine of up to €344,380. However, under Greek
competition law the HCC has the right to impose a fine of up to 15 per cent. of
the combined turnover (€5,165,700).



Issue of Ordinary Shares to Guenter Nolte  ('GN Shares')



At the time of Guenter Nolte's appointment as Chief Executive Officer of the
Company, on 1 March 2003, the Company agreed to pay Mr Nolte an introduction fee
of £750,000, in consideration for his introduction of the Acquisition to the
Company. In addition, the Company shall pay any tax the Company is required to
pay in connection with this fee, which the Directors estimate to be
approximately £100,000. This payment is conditional upon the completion of the
Acquisition and the Resolutions being passed at the EGM. Mr Nolte has agreed to
apply this fee to subscribe for 1 million new Ordinary Shares at the Placing
Price. As at the date of this announcement Mr Nolte is interested in 34,800
Existing Shares representing 0.06 per cent. of the Company's existing issued
Ordinary Share capital.



Proposed Director



Following completion of the Acquisition, Nikolaos Loutsigkas will join the Board
with primary responsibility for Kavala and the Company's interests in Greece.
Nikolaos Loutsigkas is currently a 60.0 per cent. shareholder in Eurotech and
therefore, under the terms of the Acquisition Agreement he will be allotted
2,775,812 Consideration Shares representing 2.82 per cent. of the Company's
enlarged issued ordinary share capital following the issue of New Ordinary
Shares. In the event that the Company exercises its option, Nikolaos Loutsigkas
will be allotted an aggregate of 3,336,283 Consideration Shares representing
3.39 per cent. of the Company's enlarged issued ordinary share capital following
the issue of the New Ordinary Shares (assuming the allotment of all the
Consideration Shares).



Nikolaos Loutsigkas, aged 55, is a qualified energy engineer and a qualified
electrical and economic engineer. He is a founder of Eurotech where he has been
Managing Director since 1992. Prior to 1992 Mr Loutsigkas worked for 14 years
with North Aegean Petroleum Corporation as an electrical and instrumentation
engineer. Mr Loutsigkas is the President and Managing Director of Kavala.  The
directorships and partnerships held by Nikolaos Loutsigkas in the last 5 years
are set out below:


Current directorships and partnerships          Previous directorships and partnerships


Eurotech Services SA                            -
Kavala Oil SA                                   -
Enertek SA                                      -



There are no other disclosures to be made in respect of the appointment of Mr
Loutsigkas under paragraph 15 of the AIM rules.



Current trading and prospects



Regal

On 3 September 2003, the Company announced a trading update and its unaudited
interim results for the six months ended 30 June 2003. In Ukraine, the Company
is currently producing approximately 200,000 cubic metres of gas per day from
two wells. The Directors expect that two work-over wells and the two new
development wells will be completed by the end of 2003 and accordingly there
will be six wells in production producing 800,000 cubic metres of gas per day by
the end of 2003. In Romania, the Company has identified two large structures
from existing seismic data and additional seismic investigations will be
undertaken to further delineate these structures. Since 3 September 2003 there
has been no material change to the Company's trading.



Kavala

Kavala is currently producing approximately 4,000 barrels of crude oil per day.
Further details regarding Kavala's current production and historic trading
record is set out above.



The Placing



The Company proposes to raise approximately £24.15 million (net of expenses)
through the issue of the Placing Shares at the Placing Price, which represents a
discount of 10.71 per cent. to the closing middle market price of 84p per
Existing Share on 25 September 2003, being the last practicable date prior to
the publication of this announcement. The Placing Shares will represent 35.60
per cent. of the Company's issued share capital immediately following Admission
assuming the allotment of all of the Consideration Shares.



The Placing Agreement

Pursuant to the terms of the Placing Agreement, EVBG has conditionally agreed to
use its reasonable endeavours to place the Placing Shares with certain
institutional and other investors. The Placing has been fully underwritten by
EVBG. The Placing Agreement is conditional upon, inter alia, the Resolutions
being duly passed at the EGM, the Acquisition Agreement being entered into and
completed and Admission becoming effective on or before 8.00 a.m. on 27 October
2003 (or such later date as the Company and EVBG may agree, but in any event by
no later than 30 November 2003).



The Placing Agreement contains warranties by the Company in favour of EVBG in
relation to, inter alia, the accuracy of the information in this announcement
and other matters relating to the Enlarged Group and its business. In addition,
the Company has agreed to indemnify EVBG in respect of certain liabilities it
may incur in respect of the Placing. EVBG has the right to terminate the Placing
Agreement in certain circumstances prior to Admission, in particular, in the
event of a material breach of the warranties.



Under the Placing Agreement and subject to it becoming unconditional in all
respects and not being terminated in accordance with its terms, the Company has
agreed to pay EVBG a commission of 5.0 per cent. on the value at the Placing
Price of the Placing Shares, together with any applicable value added tax.



Settlement and dealings

Application will be made to the London Stock Exchange for the Placing Shares,
the Consideration Shares and the GN Shares to be admitted to trading on AIM. It
is expected that such Admission will occur on 27 October 2003.



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



Use of Proceeds



The net proceeds of the Placing of £24.15 million will be used to develop
Regal's existing assets and the newly acquired assets. The Directors estimate
these costs will be apportioned as follows:



(i)                  £2.4 million to build a new manifold/pipeline in 2003 and
second gas processing plant in Ukraine in 2004;



(ii)                £0.9 million to build a high capacity pipeline connecting
the existing infrastructure to the Ukraine distribution network, to be completed
by the end of 2003;



(iii)               £2.4 million to develop the Romanian gas field;



(iv)              £13.15 million to drill and develop new and existing wells in
the Kavala oil fields;

             and



 (v)       £5.3 million to drill an exploration well in the Kallirachi oil
prospect.



Work carried out in Kavala will be funded in accordance with the Facility
Agreement.









Recommendation



The Directors consider the Placing and the Acquisition to be in the best
interests of the Company and its Shareholders as a whole and accordingly
unanimously recommend Shareholders to vote in favour of the Resolutions to be
proposed at the EGM as they have irrevocably undertaken to do so in respect of
their beneficial holdings amounting, in aggregate, to 10,889,687 Existing
Shares, representing approximately 18.95 per cent. of the existing issued share
capital of the Company.



                                    - Ends -




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