Hague and London Oil Regulatory News (HNL)

WESSEX EXPLORATION PLC

(AIM: WSX)

Heads of Agreement

Planned corporate acquisition, including Philippines asset and new board members

Further to its announcements of 17 April and 8 May 2014, Wessex Exploration PLC ("Wessex" or "the Company"), the hydrocarbon exploration company, is pleased to announce that it has exchanged Heads of Agreement relating to its proposed acquisition of Hague and London Oil BV ("HALO"), which is significant and potentially transformational for Wessex.

Highlights of the proposed transaction

· Company with highly prospective asset in the Philippines to be acquired

· Andrew Cochran and Bill Phelps (ex-Coastal Energy) to join the Board

· Proposed new Directors have a proven track record in international oil and gas exploration companies

· Near-term potential production asset in a well-known region with further exploration upside

· Consideration to be paid in shares, HALO to bring US$1 million in cash

· Demonstrates ongoing implementation of the strategy defined by the Directors

Growth Strategy and Proposed Transaction

Following the conclusion of the 2013 drilling campaign in Guyane, the Board announced that it was pursuing an active strategy to identify opportunities to acquire attractive assets or undertake a corporate transaction with the potential to add significant value to the Company.

As announced on 17 April and 8 May 2014, Wessex has been engaged in discussions aimed at securing the future of the Company through an acquisition which would create value by the addition of an experienced management team and assets with near-term production potential.

As a result of these discussions, the Company is pleased to announce that it has exchanged Heads of Agreement for the proposed acquisition of HALO, led by an established management team which will bring a highly prospective asset in the Philippines.

The consideration for the acquisition will be satisfied by the issue to the vendors of 241,000,000 ordinary shares in the Company, approximately 25% of the enlarged capital. On completion, the Heads of Agreement calls for HALO to hold US$1 million in cash.

HALO

The principals of HALO are Andrew Cochran and Bill Phelps, formerly executive directors of Coastal Energy Company ("Coastal"), who were instrumental in the sale of Coastal to Compañia Española de Petroleos, S.A.U. ("CEPSA") for approximately C$2.3 billion in November 2013. Both Andrew and Bill have an in-depth knowledge of the region, not least because Coastal's main assets were operated 100% large blocks in the Gulf of Thailand as well as varying interests onshore Thailand. They have substantial experience in bringing assets to production and, on acquisition by CEPSA, Coastal's daily production was around 22,000 bopd from three offshore fields.

On completion, HALO will hold a 15% interest in offshore Service Contract SC54A in the Philippines, which contains a number of existing oil discoveries in moderate water depths, as well as further exploration potential. In the opinion of the Directors, it would be possible to bring one or more of these discoveries into production in the near-term. Partners in SC54A are NIDO Petroleum (Operator, 42.4%), Yilgam Petroleum Philippines Pty Ltd (30.1%) and TG World (BV) Corp. (12.5%). The Heads of Agreement calls for HALO to also hold US$1 million of cash, sufficient to fund its current contractual drilling obligation on SC54A. The Directors believe there may be potential to increase HALO's interest in SC54A.

Proposed Board Changes

Following completion of the acquisition of HALO it is envisaged that Mr. Cochran, who previously served as the CEO of Dominion Petroleum Limited and held founding and executive positions with Salamander Energy plc and Endeavour International Corporation, will join the board of Wessex as Chairman and interim CEO. Mr. Phelps who was the Chief Financial Officer ("CFO") of Coastal and before that CFO of NuCoastal Corporation and NuCoastal Thailand, will join the Wessex board as a non-executive director.

Following completion of the acquisition of HALO, Malcolm Butler has agreed that he will step back from his role as Chairman and interim Technical Director to become a non-executive director and will not seek re-election as a Director at the next Annual General Meeting. It is anticipated that the new board will utilise its expertise and contacts to undertake further transactions to help build more value for shareholders.

Conditionality

Following the exchange of Heads of Agreement, the Company intends to progress to final agreement as soon as possible. However, shareholders should be aware that the proposed transaction is conditional, inter alia, on the completion of due diligence and on shareholders voting against all seven resolutions to be proposed at the forthcoming Requisitioned General Meeting on 15 May 2014.

Benefits of the Acquisition

The acquisition, if completed, brings a number of benefits to Wessex:

· a highly prospective offshore exploration block in the Philippines, which contains a number of existing oil discoveries, as well as further exploration potential;

· in the opinion of the Directors, the possibility of bringing one or more of these discoveries into production in the near-term, thereby generating cash flow;

· terms call for additional cash resources of US$1 million to be provided;

· two new directors, Andrew Cochran and Bill Phelps, with substantial experience in the international oil and gas exploration business and support from new shareholders;

· a new chairman in Mr. Cochran, who would also be interim CEO;

· board ownership of at least 15% of the enlarged share capital of Wessex;

· additional large shareholders who are committed to helping drive the Company forward.

Forthcoming General Meeting

The Company has noted the Milroy Capital Press Release of 23 April 2014 and comments as follows:

The emotive language used by Milroy Capital ("Milroy") in its Press Release of 23 April 2014, combined with a lack of clear and concrete strategy is in stark contrast with the focused activity being undertaken by the Board of Wessex to restore the value of the Company, the first step of which has been announced today.

In particular, the Board would make the following comments:

· Milroy Capital is proposing to use opaque and complex financial instruments to fund the Company, which the Board considers to be a risky strategy, inappropriate for a small Exploration and Production company and not likely to be in the interests of shareholders.

· Milroy Capital makes a great play of "skin in the game". It should be noted that the present Directors have invested over £207,000 into Wessex shares, a figure which is comparable to the value of Milroy Capital's shareholding in the Company (as of 7 May 2014), much of which was acquired recently. If the HALO deal is completed, the expanded board would own over 15% of the enlarged share capital of the Company. This is more than three times greater than that of Milroy Capital.

Milroy Capital is attempting to gain control of the company and its available cash resources without making a general offer for the company.

THE BOARD URGES SHAREHOLDERS TO REJECT ALL SEVEN RESOLUTIONS TO ENABLE THE COMPANY TO PROCEED WITH THE INTENDED ACQUISITION AND CONTINUE TO IMPLEMENT THE GROWTH STRATEGY IT HAS COMMENCED

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