AMYT.L Regulatory News (AMYT)

18 July 2012

Fastnet Oil & Gas plc

Acquisition of Pathfinder Hydrocarbon Ventures Ltd, including a material position in potentially high impact, Kosmos-operated exploration acreage, offshore Morocco

Fastnet Oil and Gas plc ("Fastnet" or the "Company") (AIM: FAST, ESM: FOI) the newly listed E&P company focussed on near term exploration acreage in the Celtic Sea and Africa, is pleased to announce that it has acquired the entire issued share capital of Pathfinder Hydrocarbon Ventures Ltd ("Pathfinder") from its parent company, Pathfinder Energy Maghreb plc ("PEMP") for an initial consideration of US$8.0 million to be satisfied by the payment of US$1.0 million in cash and by the issue of 40,688,212 new ordinary shares in the capital of the Company ("Ordinary Shares") at a price of 11 pence per Ordinary Share. Additional contingent consideration of US$1.0 million is payable on the condition that Pathfinder receives payment from Kosmos Energy Deepwater Morocco ("KEDM"), a wholly owned subsidiary of Kosmos Energy Ltd. ("Kosmos"), of US$1.0 million due under the farmout agreement between the parties (described below).

Prior to the acquisition, Pathfinder and PEMP entered into a royalty agreement ("Royalty Agreement") in relation to the Foum Assaka licence area ("Licence Area"). The Royalty Agreement provides that, in certain circumstances, Pathfinder will pay PEMP a 1 per cent. royalty of the gross amount recovered by it from sales of oil and gas from the Licence Area, which rises to 3 per cent. after the recovery of certain costs.

Key highlights

á Potentially transformational deal, executed within 6 weeks of IPO, in line with stated strategy on Admission

á Acquisition of an 18.75% stake (paying interest of 25% through exploration to carry) in the highly prospective Foum Assaka Offshore Petroleum Agreement and Exploration Permits within the Agadir Basin (the "Licence"), including an area of approximately 6,500 km2 in the sought after exploration frontier region along the prolific West African producing trend

á Prospective Foum Assaka Offshore gross STOIIP resources contained in over 23 existing prospects are consistent in scale with producing West African fields - interpretation of the new 3D seismic acquired earlier in 2012 is anticipated to add significant additional resources as it has been targeted at the potential Cretaceous fans, which is Kosmos' core geological theme in West Africa, in an under-explored Petroleum System

á Licence Area provides the opportunity for near-term high impact drilling and the interest currently being shown by the industry in offshore Morocco provides Fastnet with a prudent option to farm out any drilling activity at its sole discretion, whilst still retaining a high impact material position in an exciting and developing new potential petroleum province

á Licence commitments during current phase of the Licence (which runs until 31 December 2013) are largely completed

á Licence benefits from approximately 4,800 km2 of 3D seismic which is being processed in H2 2012

á Fastnet will benefit from a carry that includes the 3D seismic acquisition costs

á Kosmos has indicated publicly that the first "fast-tracked" high impact exploration drilling is currently anticipated to take place in 2013, although a one well commitment in the next phase of the Licence is not required until it commences on 1 January 2014

á KEDM as operator, brings a wealth of knowledge and experience of these potential Cretaceous fan plays following its success in Ghana with the Jubilee Field

á The transaction provides Fastnet with access to an additional technical management team and preserves the ongoing relationship with Office National des Hydrcarbures et des Mines ("ONHYM") and authorities in Morocco

á Fastnet also has a 12 month option to take a 50% participating interest in the Merada (Onshore) Petroleum Agreement ("Merada Licence"). The Merada Licence area contains an exciting under-explored biogenic gas play, successfully tested by Repsol and Circle Oil in Morocco and which is the focus of activity in the Eastern Mediterranean following several large biogenic gas discoveries

á PEMP will own Ordinary Shares representing 19.80% of the Company's share capital and has agreed not to dispose of any Ordinary Shares for 12 months from the date of the transaction and also for a further 12 months, subject to the consent of Fastnet

á Post transaction, Fastnet will have approximately £8.9 million in cash (including funds to be repaid from the Foum Assaka guarantee) and, excluding the potential exercise of a 12 month option in Merada, is fully funded beyond December 2013 with the minimum work programme on the License, all commitments pursuant to the Company's existing Celtic Sea interests and general working capital requirements

Dr.Steve Staley, CEO of Fastnet commented:

 "We are very pleased to have completed this transaction which is in-line with our stated strategy so soon after IPO. Through this acquisition, we are exposing our shareholders to near term drilling activities offshore West Africa in a very exciting frontier basin. We are pleased that we will be working with Kosmos and will benefit from the tremendous experience they have gained through discovering and quickly bringing into production the Jubilee Field offshore Ghana - a field which shares similar geology to the acreage in the offshore block we are acquiring today. I look forward to updating shareholders as to progress."

John Craven, a shareholder, commented:

"As a shareholder, I am supportive of Pathfinder's Moroccan West African fan play and confident that Fastnet can forge a strong relationship with Kosmos, a company that has enjoyed a huge amount of success offshore Ghana"

There will be a conference call held by management at 08.30 this morning to discuss the transaction. The dial in details are: 00 44 1452 542 303.

Further details on the principal terms of the acquisition, the Licence Area and related matters are set out below.

Details of the acquisition

Pathfinder

Pathfinder is a Jersey registered company and, subject to the completion of a transfer between it and KEDM of rights to part of the Foum Assaka licence area, it will have an 18.75 per cent. working interest (25 per cent. paying interest) in the Foum Assaka Offshore Petroleum Agreement and Exploration Permits, offshore Morocco, which is its sole asset. Pathfinder generated no profits in the financial year to 31 December 2011.

Principal terms of the acquisition

In consideration for the acquisition of all of the issued shares of Pathfinder, Fastnet has agreed to pay to PEMP:

á A cash sum of US$1.0 million

á An additional contingent cash consideration of US$1.0 million ("Contingent Consideration"). The Contingent Consideration shall be payable only if and to the extent that the Pathfinder receives payment from KEDM of US$1.0 million due under the Farmout Agreement (as defined below)

á US$7.0 million, to be satisfied by the issue of 40,688,212 Ordinary Shares at a notional price of 11 pence per share.

In addition, Fastnet has agreed:

á to discharge certain transaction costs and outstanding professional fees incurred by Pathfinder totalling an aggregate amount of approximately £340,000; and

á to procure that the amount of US$1,040,000 due to Mr. Paul Griffiths under a loan agreement dated 17 May 2011 (as amended) in relation to the Foum Assaka guarantee ("Guarantee") shall be discharged by Pathfinder upon completion of the transaction ("Completion").

It is expected that the Guarantee will be repaid in full to Pathfinder in the coming months, with the first US$500,000 being discharged shortly upon confirmation that all 3D seismic tapes have been delivered to ONHYM. A further announcement will be made in due course.

Fastnet also has the right, for a period of six months from Completion, at its option, arrange to place up to 20,344,106 Ordinary Shares issued to PEMP as part of the consideration with a third party or parties nominated by Fastnet or its brokers at the price of the greater of 11 pence per share and the volume weighted average closing mid-price per share for the ten business days prior to the date on which any Ordinary Shares are to be sold. Fastnet expects to only exercise its rights in relation to these Ordinary Shares to satisfy market demand for the shares.

Royalty Deed

Prior to the acquisition, PEMP entered into a royalty deed with its subsidiary, Pathfinder, pursuant to which, in consideration of PEMP undertaking to discharge amounts due to directors and contractors of Pathfinder and certain third party liabilities, Pathfinder granted a royalty interest to PEMP in relation to sales of oil and gas from the Foum Assaka licence area. Subject to the completion of a transfer between it and KEDM of rights to part of the Foum Assaka licence area, Pathfinder will have an 18.75% percentage interest in the Foum Assaka licence area. The Royalty Deed provides that, until Pathfinder has recovered all its costs relating to the licence area, Pathfinder shall pay a 1 per cent. royalty of the gross amount recovered by it from sales of oil and gas from the licence area less 1 per cent. of the annual royalty payable to the government of Morocco from sales of oil and gas and 1 per cent. of the amount payable in respect of gas processing and transportation of oil and gas between the concession and point of sale to a purchaser of oil and gas. After the recovery of costs, the royalty increases to 3 per cent. in both instances. A single payment of US$5,000,000 by way of bonus will be paid after receipt of funds from the first commercial sale from the licence area. This payment will act as a credit against costs not yet recovered.

Lock-in

Pursuant to the terms of the share purchase agreement, PEMP has undertaken that it will not (and will procure, insofar as it is able, that any affiliated companies will not) dispose of any interest in any ordinary shares in the capital of the Company held by it or its affiliates for a period of one year from admission of the Ordinary Shares to trading on AIM, save in limited circumstances. It has also undertaken that it will for a further twelve months, notify Fastnet and a broker nominated by Fastnet of any intention to deal or otherwise dispose of any Fastnet shares and deal or otherwise dispose of the relevant shares through the broker nominated by Fastnet on a best price and execution basis.

The Merada Option

As part of the terms of the acquisition, PEMP has granted Fastnet an option, subject to obtaining any regulatory clearances, to acquire a 50% interest (or such lower percentage interest as may be specified by Fastnet) in the any hydrocarbon exploration or exploitation rights granted in the Merada area of interest. Fastnet shall be entitled to acquire such interest by:

(i) paying 50 per cent. (or such other percentage as aforesaid) of all costs incurred for the purpose of acquiring the Merada Licence/under the Merada Association Contract/Petroleum Agreement and

(ii) undertaking to pay 50 per cent. of all future development and exploration costs (or such other percentage as aforesaid) of the cost of procuring any bank guarantee required to be put in place in connection with the Merada exploration or exploitation rights.

The option must be exercised by notice in writing within 12 months.

Paul Griffiths

As part of the acquisition, Paul Griffiths, the largest shareholder and CEO of PEMP, will join Fastnet in the role of Executive Vice President of Exploration. Mr Griffiths was previously already on the Advisory Board of Fastnet alongside John Craven. He was the founder and CEO of AIM quoted Island Oil & Gas which was acquired by San Leon Energy in 2010.

Foum Assaka

The Foum Assaka Offshore Petroleum Agreement includes four Exploration Permits (Foum Assaka I, II, III and IV) that cover an area of 6,473 km2 in the offshore Agadir Basin in water depths ranging from 300 metres to 2,100 metres. To date 18 wells have been drilled in the basin, of which a very high proportion, 16, have had hydrocarbon shows. The vast majority of the wells have been located in shallow water on the Jurassic carbonate platform. Two wells have been drilled in the outboard basin area, critically there has been no valid test of the Kosmos Cretaceous fan play in an optimum geological location. Barrus Petroleum, which has an interest in the undeveloped Cap Juby oil field (reservoir in Upper Jurassic carbonates) was recently sold to Genel Energy plc, led by Tony Hayward, representing the first significant M&A transaction in the Agadir Basin and reflecting the rising tide of industry interest in Moroccan Atlantic Margin. The current Foum Assaka Petroleum Agreement was applied for by Pathfinder and subsequently awarded to Pathfinder and KEDM, following an invitation from Pathfinder to Kosmos to join the Licence Application, on 4th May 2011, with the Moroccan state oil company, ONHYM, as the third member of the contractor group. The Petroleum Agreement is held under the terms of the Moroccan Hydrocarbon Code.

Initial exploration

The initial exploration period under the Foum Assaka Licence is two and a half years, effective from 1 July 2011 (the "Initial Exploration Period"). During the Initial Exploration Period, KEDM and Pathfinder have agreed to acquire, process and interpret 2,500 km2 of 3D seismic data, the minimum exploration work programme agreed with ONHYM was for 500 km2 of 3D seismic data ("Minimum Exploration Work Programme").

Farmout Agreement

Pathfinder currently has a 37.5 per cent. economic interest in the Foum Assaka Licence. In November 2011, Pathfinder entered into a farmout agreement with KEDM (the "Farmout Agreement") under which:

á Pathfinder will receive a payment of US$1.0 million; and

á KEDM will carry Pathfinder, capped at US$16.2 million, for the Minimum Exploration Work Programme agreed with ONHYM for the Initial Exploration Period

á Pathfinder sold an 18.75 per cent. interest to KEDM.

The Farmout Agreement is subject to the issue of the Joint Ministerial Order, following approval from the Moroccan Minister of Energy.

Working Capital

The funding requirement for Fastnet to June 2013 arising in respect of the acquisition of Pathfinder and the associated work programme under the Foum Assaka Offshore Petroleum Agreement licence is expected to be approximately £1.5 million.

Information on Kosmos

Kosmos is an international oil and gas explorer and producer of hydrocarbons focused on frontier and emerging areas in West Africa and South America. It is listed on the New York Stock Exchange under the ticker symbol "KOS" and has a current market capitalisation of approximately US$4 billion. As well as its Moroccan position, Kosmos' asset portfolio includes existing production, major discoveries and exploration prospects offshore Ghana (including Jubilee Field), as well as exploration licenses with significant hydrocarbon potential offshore Suriname and onshore Cameroon.

Information on the Foum Assaka Block

Previously the northern half of the Foum Assaka Petroleum Agreement Area was held by Shell which relinquished the area in 2006, one year before discovery of the Jubilee Field offshore Ghana. The reservoir fairways in the Licence Area are prospective for Cretaceous fan prospects that are expected to be identified following the interpretation of the new 3D seismic acquired earlier this year. The shelf slope Cretaceous fan play has not been tested in the Agadir Basin and represents a major opportunity for increasing the potential STOIIP resources already identified in the Agadir Basin by SLR's independent Competent Person's Report.

Foum Assaka work programme

The work programme agreed between Kosmos and Pathfinder under the terms of Pathfinder's sale of equity in Foum Assaka to Kosmos included the acquisition and processing of 2,500km2 of 3D seismic. The 3D acquisition was completed on 1 April 2012. A further 2,200km2 of existing 3D is also being reprocessed, providing a large volume of data to interpret during the second half of 2012.

Merada Licence

The proposed Merada Petroleum Agreement, if awarded to PEMP, will contain four Exploration Permits (Merada I, II, III and IV) in the Guercif Basin in northeast Morocco and will cover an area of 7,269 km2. Fastnet has a 12 month option to participate in any future Merada Petroleum Agreement for a 50 per cent. participating interest by paying its pro-rata share of all costs.

The prospective targets in the Merada Licence area are a Miocene biogenic gas play, successfully tested in Morocco by Repsol and Circle Oil, and a Triassic thermogenic gas play, which is the producing horizon in Morocco's Meskala gas field.

The Miocene Biogenic Gas Play is well developed in the Rharb Basin in Northeast Morocco, west of the proposed Merada Petroleum Agreement Area, where Circle Oil has had highly successful drilling programmes in the Sebou and Oulad N'zala blocks in 2008/9 and 2010/11, during which 10 gas discoveries were made from only 11 wells.

Merada Licence work programme

The Petroleum Agreement, if executed, would require that a minimum work programme be undertaken in the first, three year-long Initial Exploration Period, to include reprocessing and interpretation of 1,000 km2 of existing 2D seismic data plus a number of desk studies. Dependent on the outcome of this work, Pathfinder must also either acquire, process and interpret a minimum of 250 km2 of new 2D seismic data or drill one well to a minimum depth of 2,000 metres or to the top of the Middle Jurassic, whichever is shallower.

Morocco

The Kingdom of Morocco is a constitutional monarchy governed by a bicameral elected parliament consisting of the Assembly of Representatives of Morocco and the Assembly of Councillors. The King, currently Mohammed VI, retains executive power as the secular political leader presiding over the Council of Ministers.

Morocco produces approximately 3,938 bbl oil per day and 60 million mT gas per day. It consumes 209,000 bbl oil per day and 560 million mT gas per day, making it a net importer of both (97 per cent. energy in 2008 was imported (Source: ONHYM)).

Admission

Application has been made to the London Stock Exchange for the Ordinary Shares to be admitted to trading on AIM and to the Irish Stock Exchange for the Ordinary Shares to be admitted to trading on the ESM; admission is expected to take place on 24 July 2012. Following admission, the enlarged issued share capital of the Company will constitute 205,496,069 Ordinary Shares.

For further information, please contact: