CERP.L Regulatory News (CERP)

For Immediate Release 7 December 2015

 LGO ENERGY PLC("LGO" or the "Company")

 Strategic review and commencement of an Offer Period 

The Board of LGO today announces that it has initiated a formal strategic review of the Company's business and assets with a view to considering all options to maximise shareholder value.  

LGO is an onshore oil production and development company with ongoing production operations and significant oil reserves under licence in both Trinidad and Spain. The Company owns and operates, through a wholly owned subsidiary, Goudron E&P Limited, the Incremental Production Service Contract for the Goudron oil field in south eastern Trinidad where the Company has recently drilled 15 new development wells and has reactivated over 60 legacy wells drilled prior to 1986. The Company also owns and operates the Ayoluengo oil field onshore in northern Spain where continued production is achieved from 12 legacy wells that have been recompleted and maintained by the Company's Spanish subsidiary Compañia Petrolifera de Sedano since 2007. The Goudron field oil production is by primary flow and pumping and is considered suitable for an enhanced oil recovery project, planned to commence in 2016 subject to permitting and financing. The Company plans to start the redevelopment of the Ayoluengo field by means of new side-track wells in 2017 subject to a licence renewal and financing. The Company also holds an extensive tract of low risk onshore exploration acreage in south western Trinidad where considerable number of undrilled oil and gas prospects adjacent to, and at deeper levels from, existing small scale oil production.

Against the backdrop of a sustained period of low commodity prices and the Company's specific situation announced 3 November 2015 which was brought about by the loss of well GY-678 in Trinidad and the resulting financial and business impacts, the Company mandated advisors, Wellford Capital Markets, LLC and Height Securities, LLC, in the USA to assist in strategic funding arrangements.

Having agreed with BNP Paribas on 26 November 2015 to crystallise the liability under its pre-paid swap, the Board now feels that a widening of the strategic options being considered is both timely and appropriate and that all options available to the Company should now be considered, including strategic partnerships, strategic investments, asset sales, mergers and potential offers for the Company.

The Board believe that LGO possesses high quality assets and an experienced and successful management team, and that all options available to the Company should now be considered.

Takeover Code

Any discussions in relation to a merger with a third party or a sale of the Company will take place within the context of The City Code on Takeovers and Mergers (the "Code") in order to enable conversations with parties interested in making such a proposal to take place on a confidential basis.

The Takeover Panel has granted a dispensation from the requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Code such that any interested party participating in the formal sale process will not be required to be publicly identified as a result of this announcement (subject to Note 3 on Rule 2.2 of the Code) and will not be subject to the 28 day deadline referred to in Rule 2.6(a), for so long as it is participating in the formal sale process. Interested parties should note Rule 21.2 of the Code, which will prohibit any form of inducement fee or other offer-related arrangement, and that the Company, although it may do so in the future, has not at this stage requested any dispensation from this prohibition under Note 2 of Rule 21.2.

This announcement is not an announcement of a firm intention to make an offer under Rule 2.7 of the Code and there can be no certainty that an offer will be made, nor as to the terms on which any offer will be made.

Following this announcement, the Company is now in an "offer period" as defined in the Code, and the dealing disclosure requirements listed below will apply.

Beaumont Cornish Limited ("Beaumont Cornish"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for LGO and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than LGO for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

Relevant Securities in Issue 

The Company confirms that it has 3,179,843,712 Ordinary Shares of 0.05 pence each in issue at the close of business on 4 December 2015 and the Ordinary Shares in the Company are admitted to trading on AIM under the UK ISIN code GB00B1TWX932.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

In accordance with Rule 26.1 of the Code, a copy of this announcement will be published, subject to certain restrictions relating to persons in any restricted jurisdiction, at www.lgo-energy.com.

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