Lfeaccetfusd Regulatory News (FEP)

10 May 2011

FORUM ENERGY PLC

("Forum Energy" or the "Company")

Settlement with Basic Energy Corporation

Forum Energy, the UK incorporated oil and gas exploration and production company with a focus on the Philippines, today announces that it has negotiated and agreed a settlement with Basic Energy Corporation ("BEC") in relation to certain of its service contracts in the NW Palawan area, offshore Philippines.

In the course of an arbitration process, on 10 May 2011, BEC and Forum Energy signed a settlement agreement (the "Agreement") in relation to disputes relating to BEC's share in the historical cost recoveries arising from Service Contract 14 A and B (Nido-Matinloc Blocks), Service Contract 14-C (Galoc Block), and other blocks of Service Contract 14 and Service Contract 6, pursuant to the Sale and Purchase Agreement executed by BEC and Forum on 3 April 2006 (the "SPA").

If the terms and conditions of the Agreement are met, Forum Energy will make a cash payment to BEC of US$650,000, and cause the conveyance of (i) 50% of Forum Energy Philippines Corporation's (a wholly owned subsidiary of FEP) ("FEPC") participating interests in the foregoing service contracts, and (ii) 50% of the related recoverable costs, subject to the approval of the Department of Energy.

Upon fulfillment of certain pre-conditions, the parties will submit the Agreement to an arbitration tribunal for the rendition of a final consent award and accordingly FEPC's minority participating interests in its producing fields will be reduced, and consequently Forum Energy's group revenues and its gross profits will be reduced accordingly, as follows:

·; Galoc (SC14C-1): participating interest will fall by 50% to 1.137875%. Galoc produced 2.69 million barrels in 2010 (gross) with an estimated 1.76 million barrels expected to be produced in 2011 (gross).

·; Nido (SC14A): participating interest will fall by 50% to 4.234%. Nido produced 86,626 barrels in 2010 (gross) with an estimated 65,000 barrels expected to be produced in 2011 (gross).

·; Matinloc (SC14B) and North Matinloc (SC14B-1): participating interests will fall by 50% to 6.203% and 9.7315%, respectively. Matinloc and North Matinloc had a combined production of 88,237 barrels in 2010 (gross) with an estimated 91,680 barrels expected to be produced in 2011 (gross).

For the avoidance of doubt, the Agreement does not relate to:

·; SC40 (Cebu), in which Forum Energy has a 66.7% interest which includes the Libertad gas field.

·; SC72 (Reed Bank), in which Forum Energy has a 70% interest, and which includes the Sampaguita Gas Discovery with mean GIP of 3.4TCF and a number of additional leads. As announced on 15 March 2011, Forum Energy completed its seismic acquisition over SC72 and is currently processing the data with the aim of further evaluating the commercial potential of the block, and to help identify the best location for possible appraisal wells to be drilled in the next sub-phase of the SC72 licence.

If the terms and conditions of the Agreement are met:

·; Forum Energy will no longer be liable to pay potential additional consideration of up to US$ 9.03 million on the acquisition of FEPC (formerly Basic Petroleum & Minerals Inc), as was disclosed in the audited results for the year ended 31 December 2010, as announced on 8 March 2011; and

·; the Directors believe that no further liabilities in respect of BEC's arbitration claims and other issues arising from the SPA will exist in relation to the service contracts included in the Agreement.

For further information please contact:

Forum Energy Plc

Andrew Mullins, Executive Director Tel: +44 (0) 1932 445 344

 Execution Noble & Company Limited

Harry Stockdale / John Llewellyn-Lloyd Tel: +44 (0) 20 7456 9191

 Or visit the Company's website:

www.forumenergyplc.com <http://www.forumenergyplc.com>