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Oil Quest Resources (OILQ)

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Tuesday 07 February, 2006

Oil Quest Resources

Acquisition and Placing

Oil Quest Resources PLC
07 February 2006

  For publication in the United Kingdom only. Not for release, publication or
  distribution in or into any other jurisdiction including the United States,
       Canada, Australia, South Africa, the Republic of Ireland or Japan.



                            Oil Quest Resources plc


  Proposals relating to the acquisition of the EnCore Companies, a placing to
            raise £17.5 million and change of name to EnCore Oil plc


Oil Quest, the UK onshore and offshore exploration company, today announces that
it has agreed the terms of recommended offers to be made for the whole of the
issued share capital of EnCore Exploration and EnCore Petroleum and signed a
conditional agreement to acquire the entire issued share capital of EnCore
Natural Resources and EnCore Oil and Gas.


The Offer Document, which contains separate offers for EnCore Exploration and
EnCore Petroleum, is being posted to EnCore Shareholders today. The Admission
Document, which contains notice of an extraordinary general meeting to be held
on 2 March 2006, is also being posted to Oil Quest Shareholders today.


The consideration for the Acquisitions is to be satisfied by the issue of up to
48,450,000 Consideration Shares to the EnCore Shareholders which, at the
mid-market price of the existing ordinary shares of 15.625p on 17 November 2005,
the date of the suspension of Oil Quest's ordinary shares from trading on AIM,
values the EnCore Companies at £7.57 million.


In conjunction with the Acquisitions, the Company has raised £17.5 million
(before expenses) through a conditional institutional placing of 112,000,000
Placing Shares at a price of 15.625p per share, of which 108,340,000 Placing
Shares are being placed by Westhouse on behalf of the Company and 3,660,000
Placing Shares are being subscribed by certain US persons directly with the
Company.


On Admission (assuming full acceptance of the Offers), the Company will have a
market capitalisation at the Placing Price of approximately £32.0 million.


It is proposed that, subject to the Offers becoming or being declared
unconditional in all respects, the name of the Company will be changed to EnCore
Oil plc.


Due to the size of the Acquisitions in relation to Oil Quest and the fact that,
subject to completion of the Proposals, all of the current Oil Quest Directors
will step down from the Board and the EnCore Directors will be appointed to the
Board, the Acquisitions are classified as a reverse takeover of the Company
under the AIM Rules. Accordingly, the Acquisitions are subject, inter alia, to
the consent of Oil Quest's shareholders at the EGM.


As a result of the publication of the Admission Document, it is expected that
the suspension of the Ordinary Shares from trading on AIM will be lifted with
effect from 8.00 a.m. today.


Michael Thomsen, Non-Executive Chairman of Oil Quest said: 'We consider the
acquisition of the EnCore Companies to be an excellent opportunity to advance
the development of the Company. The strength of the proposition has been
confirmed by the substantial interest from institutional investors in the
Placing.'


Alan Booth, proposed Chief Executive said: 'We are delighted to have agreed
terms with Oil Quest. Oil Quest principally has interests onshore UK which
complement our own interests and together we believe that they offer exciting
growth potential. We intend to build on the progress made by the Oil Quest
Directors and seek opportunities to enhance the portfolio further through
licence acquisitions and joint ventures.'


This summary should be read in conjunction with the information which follows.


Enquiries:

Oil Quest Resources plc                                       0117 957 3666
David Bramhill, Managing Director

EnCore                                                        020 7224 4546
Alan Booth, Chief Executive Officer
Eugene Whyms, Chief Financial Officer

Westhouse Securities LLP                                      020 7601 6100
Tim Feather

Aquila Financial Limited                        [email protected]
Peter Reilly                                                  020 7202 2601
Yvonne Fraser                                                 020 7202 2609



Reasons for the Acquisitions


Oil Quest currently has interests in 12 UK onshore hydrocarbon licences situated
within the Wessex, Weald and Cleveland Basins. In addition, the Company has been
offered, following an application in the 23rd Licensing Round, by the DTI, a 30
per cent. interest in Block 43/6 in the Southern Gas Basin of the North Sea.


The Oil Quest Directors believe that the optimum way to increase shareholder
value in the oil and gas E&P sector is to build a balanced portfolio of
interests in licences with the potential for providing major capital growth. It
further believes that diversification of risk is important to ensure that the
future value of the Group does not depend to any significant extent on the
results of any particular project.


The Oil Quest Directors recognise, however, that scale is important and that
highly successful E&P companies have had significant exposure to large projects.
As a result, the Oil Quest Board has reviewed a number of potential acquisitions
which would enable Oil Quest to gain more critical mass with the intention of
developing into a significant E&P company. The Oil Quest Board considers the
acquisition of the EnCore Companies to be an excellent opportunity to advance
the development of the Group in this way.


Background to the EnCore Companies


The EnCore group, founded in April 2005 and headquartered in London, is an E&P
group of companies focused on the UKCS and selected international areas.
EnCore's strategy is to add value through successful exploration and, where
appropriate, appraisal and development of assets, along with licence
acquisitions and joint ventures.


During 2005, fundraisings were undertaken by both EnCore Exploration and EnCore
Petroleum, raising, in aggregate, approximately US$6.3 million.


In November 2005, EnCore Petroleum entered into an agreement with Petro-Canada
under which EPL will acquire (subject to regulatory approval) six highly
prospective UK offshore blocks and part blocks containing six undeveloped
discoveries. Subject to successful further evaluation and appraisal, the
interests have the potential to enhance the value of the Group substantially in
the near to medium term.


EnCore Exploration has a 25 per cent. interest in two blocks awarded in the 23rd
Licensing Round with co-venturers, Apache and Samson. The co-venturers will fund
the cost of drilling the 18/5-G Prospect in the second half of 2006.


EnCore Natural Resources has been offered a licence offshore Western Sahara,
subject to finalising the terms of a production sharing agreement.


Management


On Admission, the Oil Quest Directors will step down from the Board and the
Proposed Directors will be appointed. The Proposed Directors are:


Michael T Lynch, Proposed Chairman, was Managing Director and Chief Executive of
Santa Fe Exploration (UK) Limited ('SFX') from 1988. Under his leadership until
his departure in 1995, SFX grew into a company producing approximately 70,000
equivalent barrels of oil per day, a tenfold increase over the preceding five
years and with a tripling of oil and gas reserves, to be ranked in the top 25 UK
production companies with proved reserves in excess of 200 mmboe. It was
subsequently sold to Saga for US$1.23 billion. In October 1996, Mike Lynch
founded Intrepid Energy, which was subsequently sold for over US$1 billion.
Intrepid was an independent UK oil and gas E&P company with its primary focus
being in the UK sector of the North Sea.


Alan Booth, Proposed Chief Executive Officer, was Chairman and Managing Director
of EnCana (U.K.) Limited (now Nexen Petroleum U.K. Limited), and a member of
EnCana Corporation's executive management team. He was instrumental in building
EnCana UK from a new UK entrant in late 1996, with a $55 million exploration
funding obligation into a significant UK production operator and the discoverer
and development operator for the Buzzard field. In late 2004, he led the team
which sold EnCana (U.K.) Limited to Nexen Corporation for $2.1 billion. Prior to
EnCana, he worked in a number of positions of increasing seniority for Amerada
Hess and Oryx Energy both in the UK and overseas. He has particular experience
in the acquisition of new ventures and exploration in the UK, Scandinavia,
Australasia, as well as the Middle East and Africa.


From December 2003 until March 2005, he was President of the United Kingdom
Offshore Operators Association (UKOOA), the representative body for all UKCS
offshore operators. In addition, he was a member of PILOT, the main forum for
Government-Industry liaison, chaired by the Energy Minister, as well as being a
member of the Industry Leadership Team (ILT). In 2003, he was elected President
of the Petroleum Exploration Society of Great Britain. In April 2004, he was
awarded the Petroleum Group Silver Medal by the Geological Society in
recognition of his contribution to the industry.


Eugene Whyms FCCA, Proposed Chief Financial Officer, was co-founder of the
EnCore Companies and was previously the Finance Director of EnCana (U.K.)
Limited (now Nexen Petroleum U.K. Limited). He joined EnCana in 2002 and was
responsible for finance and IT as well as for acquisitions and disposals, in
which role he was part of the team that sold EnCana (U.K.) Limited to Nexen
Corporation. He has over 20 years' experience in the oil industry and held a
variety of posts at Enterprise Oil plc including Head of Group Finance, Group
Audit Manager and Manager, Financial Accounting. He has extensive experience of
finance, tax, treasury, and joint ventures in UK, Ireland, Norway, Italy, USA,
Brazil, Indonesia and Australia, together with extensive mergers & acquisitions
experience, both on corporate and asset deals.


Graham Dore, Proposed Exploration Director, was a senior geologist with Nexen
Petroleum U.K. Limited. He has over 18 years' experience in the oil industry,
initially as a geologist with Amerada Hess in the UKCS and Norway. After joining
EnCana (U.K.) Limited in 1997, he was responsible for developing and acquiring a
wide-ranging exploration portfolio. He generated and developed the Buzzard
prospect leading to the discovery of the Buzzard field in 2001.


Christine Wheeler OBE, Proposed Non-Executive Director, commenced her career
advising the upstream sector of the oil industry when she joined Arthur Young,
Chartered Accountants in 1973. She has advised on UK taxation issues since that
time including lobbying for fiscal changes. More recently, her advisory role has
focused on structuring and commercial transactions from small farm-ins to
acquisitions and disposals, the largest of which was US$2 billion. She was the
head of the natural resources division of Ernst & Young and subsequently, for
ten years, was the chairman of an independent consultancy. She now has an active
consultancy which remains focused on E&P activities in the UK and overseas. In
1994, she was awarded the OBE for services to the oil industry.


Each of the executive Proposed Directors has entered into a service agreement
with Oil Quest which is conditional upon Admission, under which Alan Booth and
Eugene Whyms will be paid an annual salary of £125,000 and Graham Dore an annual
salary of £100,000. Each such agreement is terminable on 12 months' written
notice by either party. Oil Quest is obliged to make contributions equivalent to
15 per cent. of each Proposed Director's annual basic salary into personal
pension plans of the Proposed Director's choice.


Details of the Acquisitions


The Offer Document, which contains the recommended offers being made by
Westhouse, on behalf of Oil Quest (and in the United States by Oil Quest), to
acquire the entire issued share capital of each of EEL and EPL through the issue
of a maximum of 46,200,000 Consideration Shares, is being sent to EnCore
Shareholders today. Oil Quest has also conditionally agreed, pursuant to the
Transaction Agreement, to acquire the entire issued share capital of ENRL and
EOGL in consideration of the issue of an aggregate of 2,250,000 Consideration
Shares.


Upon completion of the Acquisitions and assuming full acceptance of the Offers,
Oil Quest will issue the 48,450,000 Consideration Shares in the following
proportions to the EnCore Shareholders:

EnCore Exploration                      26,000,000 Consideration Shares
EnCore Petroleum Ordinary Shares         1,189,353 Consideration Shares
EnCore Petroleum Preference Shares      19,010,647 Consideration Shares
EnCore Oil and Gas                       1,600,000 Consideration Shares
EnCore Natural Resources                   650,000 Consideration Shares


The Acquisitions are conditional, inter alia, on:


    • valid acceptances of the Offers in respect of not less
      than 90 per cent. (or such lesser percentage as Oil Quest, the EnCore
      Directors and Westhouse may decide) of the issued shares of each class in
      the capital of EPL and EEL;
    • the approval of Oil Quest shareholders at the EGM; and
    • Admission.


The Offers will lapse if all of the conditions to which the Offers are subject
have not been satisfied or waived in accordance with their terms by 31 March
2006 or such later date as may be provided under such terms.


The EnCore Directors and one other EnCore Shareholder have irrevocably
undertaken to accept the Offers in respect of their own holdings of shares in
EEL and EPL. The total number of EEL shares subject to irrevocable undertakings
is 1,050,563 shares (representing 85.2 per cent. of the EEL shares in issue),
the total number of EPL ordinary shares subject to irrevocable undertakings is
135,028 ordinary shares (representing 38.4 per cent. of the EPL ordinary shares
in issue) and the total number of EPL preference shares subject to irrevocable
undertakings is 1,292,619 preference shares (representing 23.0 per cent. of the
EPL preference shares in issue).


The Placing


The Company is proposing to raise approximately £16.0 million (net of expenses)
through a conditional placing by Westhouse of 108,340,000 Placing Shares
pursuant to the Placing Agreement and a subscription of 3,660,000 Placing Shares
pursuant to the US Subscription Agreements at 15.625 pence per share. The
Placing is not being underwritten.


The Placing Shares will represent approximately 54.7 per cent. of the Enlarged
Share Capital (assuming full acceptance of the Offers). The Placing is
conditional upon, inter alia, the completion of the Acquisitions and Admission.
The Placing Shares will not be available to the public.


The Placing Shares, which will be issued on Admission, rank pari passu in all
respects with the Existing Ordinary Shares, including the right to receive all
dividends and other distributions declared, made or paid after the date of this
announcement in respect of the ordinary share capital of the Company.


The net funds raised will be used to participate in exploration wells (both
offshore and onshore), to acquire seismic data, to enable the Enlarged Group to
pursue further opportunities and for working capital. The Group is currently
considering its options for farming-out a number of wells, including on a
multi-licence portfolio basis. If successful, this would not only reduce risk,
but also provide additional financial flexibility to finance further exploration
wells beyond the current portfolio.


Michael Thomsen, David Bramhill, Joseph O'Farrell, David Racher and Dr. Richard
Stabbins, who are the Oil Quest Directors, are subscribing for 32,000, 96,000,
400,000, 320,000 and 300,000 new Ordinary Shares respectively in the Placing.


Michael Lynch, Alan Booth, Eugene Whyms, Graham Dore and Christine Wheeler, who
are the Proposed Directors, are subscribing for 1,084,800, 1,000,000, 1,000,000,
480,000 and 320,000 new Ordinary Shares respectively in the Placing.


Following the Placing and the Acquisitions, assuming full acceptance of the
Offers, the Oil Quest Directors will be interested in an aggregate of 3,041,840
Ordinary Shares, and the Proposed Directors in an aggregate of 32,892,400
Ordinary Shares, together representing 17.5 per cent. of the Enlarged Share
Capital on Admission.


Each of the Oil Quest Directors and the Proposed Directors has agreed that he or
she will not dispose of any interest in the Company's share capital held by him
or her at Admission for a period of 12 months following Admission, save for
230,140 Ordinary Shares to be acquired by Dr. Richard Stabbins as a result of
the Offers, except in strictly limited circumstances. For a further period of 12
months thereafter, each Proposed Director has undertaken (for as long as he or
she remains a Director and Westhouse remains broker to the Company and subject
to certain exceptions) not to dispose of any of his or her shares without
Westhouse's consent (such consent not to be unreasonably withheld or delayed),
unless in the reasonable opinion of Westhouse such disposal might materially
jeopardise the orderly market in the Ordinary Shares.


New Share Option Plan


The Proposed Directors believe that it is important that directors and employees
are appropriately motivated and rewarded and, accordingly, the Company intends
to adopt the New Share Option Plan.


It is intended that the Company will grant options over a total of 6,980,000
Ordinary Shares to the Proposed Directors and certain employees on Admission.


Strategy


The Proposed Directors will implement a strategy designed to create shareholder
value through the successful exploration and appraisal of prospects and
discoveries and the development of those assets through to commercial sanction.


Key elements to this strategy are:


   • the Group plans only to operate licences where it is
     necessary in order to develop sufficient momentum to enable the full
     evaluation of the blocks to take place;
   • the focus will be principally on UKCS Central North Sea
     and UK onshore;
   • value adding opportunities outside these areas, where the
     team can apply its expertise and experience, will be considered;
   • the risk profile of the projects will be balanced, ranging
     from high impact offshore exploration drilling to onshore appraisal 
     drilling or the acquisition of commercially proved reserves;
   • the percentage holdings in several of the EnCore Licences
     are substantial. The Group may seek to farm-out a proportion of these and
     future licences to other companies, for example by taking advantage of the
     interest in UK projects being shown by larger independent E&P companies,
     particularly those from North America;
   • the Proposed Directors will adopt an opportunistic
     approach to consolidation within the sector; and
   • the Proposed Directors may seek to divest or swap part or
     all of the Group's interest in a successful project at the point of
     commercial sanction.


Current Trading and Prospects


The principal activities of both Oil Quest and the EnCore Companies are the
exploration for and exploitation of hydrocarbons in the UK.


Oil Quest has a portfolio of interests in 13 UK hydrocarbon licences, one of
which is pending award by the DTI. The criteria, in most cases, applied by the
Directors in building the portfolio have been that the proposed drilling of
either appraisal or exploration wells on each licence is at a planning stage to
reduce the lead time in the development of the Group's projects.


Oil Quest has a 20 per cent. interest in PEDL 068 on which both the Kirkleatham
and Westerdale Prospects are located.


On 10 January 2006, Oil Quest announced that gas shows had been encountered
during the drilling of the Kirkleatham-4 well. Logging operations confirmed the
presence of a gas column of approximately 19m within the Cadeby Formation.
Evaluation of wireline log data indicated high gas saturations and good porosity
development within the gas bearing interval. The well is being completed and
testing operations will be undertaken using a work-over rig. Further activity at
Kirkleatham will be assessed once test results have been evaluated.


The BDF drilling rig has been mobilised to the Westerdale-1 well site where
drilling commenced on 20 January 2006. The well is being directionally drilled
to a total depth of approximately 1,250m.


The Directors anticipate that further wells will be drilled on the areas covered
by the Oil Quest Licences during the course of 2006, but there are no firm
commitments at this stage.


EnCore's main activities to date have been the acquisition of licences for the
purpose of exploration for petroleum in the central North Sea. To date, EPL and
EEL have also raised approximately US$6.3 million collectively through the
private placement of shares.


EPL has agreed to acquire (subject to regulatory approval) six licences through
a sale and purchase agreement with Petro-Canada. These licences contain six
undeveloped discoveries. EEL successfully participated in the 23rd Licensing
Round when it was awarded equity in Blocks 18/5 and 19/1 (part), on which EnCore
will participate in one exploration well and, subject to its results, one
contingent well in 2006. These wells will be operated by Apache and EnCore's
costs of the exploration well will be carried by Apache and Samson.


EnCore Natural Resources has been offered a licence in the Western Sahara
subject to finalisation of a production sharing agreement.


On Admission, the Proposed Directors anticipate that the Enlarged Group will
have cash resources (including the net proceeds of the Placing) of approximately
£20.5 million.



Admission to AIM


The Admission Document is being published and sent to Oil Quest Shareholders
today. Copies of the Admission Document will be available from the offices of
Westhouse Securities LLP, Clements House, 14-18 Gresham Street, London EC2V 7NN
from today until the date one month from Admission.


Application will be made to the London Stock Exchange for all of the Existing
Ordinary Shares, the Consideration Shares and the Placing Shares to be admitted
to trading on AIM. Admission is expected to become effective and trading in the
Ordinary Shares to commence on 3 March 2006.



Additional Information


The Admission Document also contains the Interim Results for the six months
ended 31 December 2005, an unaudited pro forma statement of net assets of the
Enlarged Group and a Competent Person's Report on each of the Oil Quest Licences
and the EnCore Licences.


General


The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law and therefore persons in such
jurisdictions into which this announcement is released, published or distributed
should inform themselves about and observe such restrictions.


The Offers in the United States are being made solely by the Company and neither
Westhouse nor any of its affiliates or related entities is making the Offers in
the United States.


No offer, invitation or inducement to acquire shares or other securities in the
Company or any other company is being made by this announcement. This
announcement is not an offer of securities for sale in the United States.  Oil
Quest does not intend to register any part of the offering in the United States,
and securities may not be offered or sold in the United States absent
registration or an exemption from registration.  In addition, Oil Quest does not
intend to make a public offering of securities in the United States, and any
such public offering would be made by means of a prospectus obtained from Oil
Quest containing detailed information about it, its management, and its
financial statements.


Certain statements contained in this announcement may constitute forward-looking
statements. Any such forward-looking statements involve risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Group, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements speak only as of
the date of this announcement and there can be no assurance that the results and
events contemplated by such forward-looking statements will, in fact, occur. The
Company and the Directors expressly disclaim any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statement
contained herein, save as required to comply with any legal or regulatory
obligations (including the AIM Rules), to reflect any change in the Company's
expectations with regard thereto or any change in events, conditions, or
circumstances on which any such statement is based.


This announcement has been approved by Westhouse for the purposes of section 21
of the Financial Services and Markets Act 2000 ('FSMA').


This announcement is not an invitation nor is it intended to be an inducement to
engage in investment activity for the purposes of section 21 of FSMA.


The Placing Shares have not been, and will not be, registered under the United
States Securities Act of 1933 as amended (the 'Securities Act') or qualified for
sale under the laws of any state of the United States or under the applicable
laws of any of Canada, Australia, South Africa, the Republic of Ireland or Japan
and, subject to certain exceptions, may not be offered or sold in the United
States or to, or for the account or benefit of, US persons (as such term is
defined in Regulation S under the US Securities Act 1933 (as amended)) or to any
national or resident of Canada, Australia, South Africa, the Republic of Ireland
or Japan.


Westhouse Securities LLP, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting as nominated adviser and
broker to the Company in connection with the Proposals. Its responsibilities as
the Company's nominated adviser under the AIM rules are owed solely to the
London Stock Exchange and are not owed to the Company or to any Director or
Proposed Director or to any other person in respect of his decision to acquire
shares in the Company in reliance on any part of this document (without limiting
the statutory rights of any person to whom this document is issued). Westhouse
Securities LLP will not be offering advice and will not otherwise be responsible
to anyone other than the Company for providing the protections afforded to
customers of Westhouse Securities LLP or for providing advice in relation to the
contents of this document or any other matter.



Appendix


Definitions


The following definitions apply throughout this announcement, unless the context
requires otherwise:

'23rd Licensing Round'    the 23rd Seaward Licensing Round, as administered
                          by the DTI, awards for which were announced in
                          September 2005

'Acquisitions'            the proposed acquisitions by the Company, in the
                          case of EPL and EEL, pursuant to the Offers and,
                          in the case of ENRL and EOGL, pursuant to the
                          Transaction Agreement

'Admission'               admission of the Enlarged Share Capital to
                          trading on AIM becoming effective in accordance
                          with the AIM Rules (and for such purposes the
                          Enlarged Share Capital only includes such number
                          of Consideration Shares as have been allotted on
                          or before the date on which the Offers are
                          declared unconditional in all respects)

'Admission Document'      the AIM admission document of the Company dated 7
                          February 2006

'AIM'                     the market of that name, owned and operated by
                          the London Stock Exchange

'AIM Rules'               the rules published by the London Stock Exchange
                          from time to time governing admission to, and the
                          operation of, AIM

'Apache'                  Apache North Sea Limited

'Company' or 'Oil Quest'  Oil Quest Resources plc

'Consideration Shares'    up to an aggregate of 48,450,000 new Ordinary
                          Shares to be issued to EnCore Shareholders in
                          relation to the Acquisitions (assuming full
                          acceptance of the Offers)

'Directors'               the directors of the Company from time to time

'DTI'                     the Department of Trade and Industry of the UK
                          Government

'E&P'                     abbreviation for exploration and production

'EnCore Companies'        EEL, ENRL, EOGL and EPL

'EnCore Directors' or     the directors of the EnCore Companies who are
'Proposed Directors'      also the Proposed Directors

'EnCore Exploration' or   EnCore Exploration Limited
'EEL'

'EnCore Licences'         the UK exploration and production licences in
                          which EEL and EPL have interests

'EnCore Natural           EnCore Natural Resources Limited
Resources' or 'ENRL'

'EnCore Oil and Gas' or   EnCore Oil and Gas Limited
'EOGL'

'EnCore Petroleum' or     EnCore Petroleum Limited
'EPL'

'EnCore Shareholder(s)'   holder(s) of shares in any of the EnCore
                          Companies

'Enlarged Share Capital'  the issued ordinary share capital of the Company
                          at Admission as enlarged by the Proposals
                          comprising the Existing Ordinary Shares, the
                          Consideration Shares and the Placing Shares
                          (assuming full acceptance of the Offers)

'Existing Ordinary        the Ordinary Shares in issue at the date of this
Shares'                   document

'Extraordinary General    the extraordinary general meeting of the Company
Meeting' or 'EGM'         convened for 10.00 a.m. on 2 March 2006 (or any
                          adjournment thereof) to be held at the offices of
                          Osborne Clarke, One London Wall, London EC2Y 5EB

'Group'                   the Company and its subsidiaries from time to
                          time

'London Stock Exchange'   London Stock Exchange plc

'Offers'                  the recommended offers being made by Westhouse on
                          behalf of Oil Quest for the entire issued share
                          capital of each of EEL and EPL (and in the US by
                          Oil Quest)

'Offer Document'          the document dated 7 February 2006 containing the
                          Offers

'Oil Quest Board' or 'Oil the directors of the Company
Quest Directors'

'Oil Quest Licences'      the UK exploration and production licences in
                          which Oil Quest has an interest

'Oil Quest Shareholder(s) holder(s) of Ordinary Shares
'

'Ordinary Shares'         ordinary shares of 5 pence each in the Company

'Petro-Canada'            Petro-Canada UK Limited

'Placing'                 the conditional placing by Westhouse of
                          108,340,000 Placing Shares, pursuant to the
                          Placing Agreement and the subscription of
                          3,660,000 new Ordinary Shares pursuant to the
                          U.S. Subscription

'Placing Agreement'       the conditional agreement dated 7 February 2006,
                          between the Company, the Oil Quest Directors, the
                          Proposed Directors and Westhouse relating to the
                          Placing and Admission, further details of which
                          are set out in the Admission Document

'Placing Price'           15.625 pence per Placing Share

'Placing Shares'          the 112,000,000 new Ordinary Shares to be issued
                          pursuant to the Placing of which 108,340,000 are
                          to be placed by Westhouse and 3,660,000 are to be
                          subscribed for pursuant to the US Subscription

'Proposals'               the proposals described in this announcement and
                          the Admission Document

'Samson'                  Samson North Sea Limited

'Subscription Agreements' the agreements dated 7 February 2006, between the
                          Company and certain US persons

'Transaction Agreement'   the conditional agreement dated 7 February 2006
                          entered into between Oil Quest and the Proposed
                          Directors relating to the acquisition by the
                          Company of ENRL and EOGL

'UK'                      the United Kingdom of Great Britain and Northern
                          Ireland

'UKCS'                    United Kingdom Continental Shelf

'US$'                     United States dollars

'US Subscription'         the conditional subscription by certain US
                          persons for an aggregate of 3,660,000 new
                          Ordinary Shares

'Westhouse'               Westhouse Securities LLP, the nominated adviser
                          and broker to the Company






                      This information is provided by RNS
            The company news service from the London Stock Exchange                                     

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