Placing and Open Offer

Kern River PLC
18 October 2000


                                Kern River plc


  Placing and Open Offer of 11,500,000 new Ordinary Shares at 25p per share



*    Placing to raise £2.7m net of expenses to repay indebtedness, finance new
development programme at Starks Field and for working capital



*    Open Offer to qualifying shareholders of 1 new share for each existing
share at 25p



*    Stuart Bickerstaff has agreed to become non executive chairman from
completion of the Placing



Commenting, Neville A Brown, non-executive chairman, said:



'We consider that current oil price levels present a sound background against
which to implement a progressive development programme at the Starks Field'



Commenting, Stuart Bickerstaff, said:

'I look forward to joining the board and seeking opportunities to build Kern
River through the acquisition of additional businesses and assets, including
where appropriate, other energy related businesses and other opportunities
which present the potential for substantial growth of shareholder value.'

For further information please contact:

Neville A Brown
Non-executive chairman, Kern River plc
(via Marshall Securities Limited)                     020 7490 3788


Rob Luetchford/John Webb
Marshall Securities Limited                           020 7490 3788

                                Kern River plc



  Placing and Open Offer of 11,500,000 new Ordinary Shares at 25p per share


The Company is pleased to announce a placing of 11,500,000 new Ordinary Shares
at 25p per share to raise approximately £2.7 million, net of expenses. The
Placing is subject to the right of Shareholders, other than certain overseas
shareholders, to apply for the New Ordinary Shares to which they are entitled
pursuant to the Open Offer. The Placing and Open Offer is being organised to
enable the Company to repay its borrowings and to finance a development
programme at the Starks Field in order to increase production substantially.

The Company also announces today that Stuart Bickerstaff has agreed to join
the board on completion of the Placing and Open Offer.

A prospectus describing the Placing and Open Offer is being sent to
Shareholders.

Proposed development of the Starks Field

Against the background of more favourable oil prices, Kern River intends to
commence a three year development programme at the Starks Field, Louisiana,
which is expected to increase gross production from the current level of
approximately 185 barrels of oil per day ('bopd') to a peak of approximately
575 bopd. The programme is expected to require approximately £1 million of
capital expenditure.

Use of net proceeds of the Placing and Open Offer

The proceeds of the Placing and Open Offer, which are estimated to amount to
approximately £2.7 million after expenses, will be used to repay the Group's
indebtedness to Ultrasis plc and its subsidiaries ('Ultrasis Group') and to
finance the proposed development programme at the Starks Field, with the
balance being available for working capital.

As at 30 September 2000 the Group owed Ultrasis Group the equivalent of £2.2
million comprising a loan secured on the Starks Field equivalent to £1.7
million and working capital loans made since February 1999 of £0.5 million,
inclusive of accrued interest. Ultrasis, a major shareholder in the Company,
and its subsidiaries have agreed to accept  £1.5 million and a deferred
production note of US$1 million in full settlement of all amounts due to them.

Board changes

The Board is pleased to announce that Stuart Bickerstaff has agreed to join
the board as non-executive chairman on completion of the Placing and Open
Offer. Stuart is a non-executive director of Ultrasis plc. He was founder and
managing director of Lamar UK Limited, a company involved in the supply of
materials to the printed circuit board industry, from 1984 to 1997 when the
company was sold.



Neville A Brown will continue as a non-executive director and as chairman of
the remuneration committee.



Current trading and prospects



Gross production at the Starks Field averaged 185 bopd during the first half
of September 2000. The board considers that the current oil price levels
present a sound background against which to implement the progressive
development programme at the Starks Field. The Company's Nukern Field in
California continues to produce at a low level necessary to maintain the
property.



A consulting petroleum engineer's report set out in the prospectus to be sent
to Shareholders states that, at 1 September 2000, the proven reserves of the
Group were as follows:


               Net oil reserves        NPV of future cash flows at 10% discount
Nukern Field      4,267,187 bbl                                     $47,636,728
Starks Field      1,081,963 bbl                                     $11,878,301

Total             5,349,150 bbl                                     $59,515,029



Future Growth Strategy



The board intends to seek opportunities to build the Group through the
acquisition of additional businesses and assets. In addition to considering
the acquisition of producing oil fields located in the United States where
these can be secured on attractive terms, the board also intends to consider
other energy related businesses and other business opportunities which present
the potential for substantial growth of shareholder value.



Details of the Placing and Open Offer



Marshall Securities Limited ('Marshall'), as agent for the Company, has
conditionally placed 11,500,000 Ordinary Shares at 25p per share subject to
the right of shareholders other than certain overseas shareholders to apply
for the New Ordinary Shares pursuant to the Open Offer.



Qualifying Shareholders are being invited to apply under the Open Offer for
New Ordinary Shares at 25p per share (payable in full on application and free
of all expenses) on the basis of one New Ordinary Share for each existing
Ordinary Share held at the close of business on 10 October 2000. Qualifying
Shareholders may apply for any number of New Ordinary Shares up to their
maximum entitlement as set out in their Application Form. The Application Form
is personal to the Shareholder named therein and cannot be traded, split,
assigned or transferred except to satisfy bona fide market claims.



Under the Placing Marshall has placed firm 8,910,000 New Ordinary Shares
representing the entitlements of Ultrasis plc and certain US shareholders who
have irrevocably undertaken not to apply for the New Ordinary Shares to which
they would be entitled. Colin Weaver and Neville A Brown, directors of the
Company, intend to take up their full entitlements under the Open Offer
amounting to 40,000 New Ordinary Shares in aggregate. Mr Brown and Mr Weaver
have also agreed to acquire up to 15,604 New Ordinary Shares each in the
Placing and Stuart Bickerstaff has agreed to acquire up to 936,228 New
Ordinary Shares in the Placing.



It is expected that dealings in the New Ordinary Shares on AIM will commence
on 15 November 2000. The Placing and Open Offer are conditional, inter alia,
on admission of the New Ordinary Shares to trading on AIM on such date (or by
such later date, being not later than 30 November 2000 as the Company and
Marshall may agree).



The New Ordinary Shares will, when issued and fully paid, rank pari passu with
the Existing Ordinary Shares and will rank for all dividends or other
distributions declared, made or paid after the date of issue of the New
Ordinary Shares.



Reduction of share premium account



The Company had a deficit on profit and loss account amounting to £241,809 as
at 31 March 2000. The Company has a balance on share premium account of £
381,325. Accordingly, the board proposes to reduce the amount standing to the
credit of the share premium account by £241,809, thereby creating a reserve in
the balance sheet against which the deficit on profit and loss account can be
reduced or eliminated. The reduction of the share premium account requires the
approval of shareholders and the confirmation of the Court.



Extraordinary General Meeting



An Extraordinary General Meeting of the Company is being convened for 14
November 2000 at which special resolutions will be proposed to increase the
authorised share capital of the Company and give the Directors authorities
necessary to implement the Placing and Open Offer, to disapply pre-emption
rights in accordance with normal practice and to approve the reduction of the
share premium account.



Expected timetable


Record date                                                     10 October 2000
Latest time and date for splitting                 3.00 pm      6 November 2000

(to satisfy bona fide market claims only)
Latest time and date for acceptance and           3.00 pm.      8 November 2000

payment in full
Extraordinary General Meeting                    11.00 am.     14 November 2000
Dealings in new Ordinary Shares                                15 November 2000
commence on AIM




Further details of the Placing and Open Offer, including the procedures for
application and payment will be set out in a letter from Marshall contained in
a prospectus which is being sent to Shareholders today and in the Application
Form which will accompany the prospectus.