Jersey Oil&gas Regulatory News (JOG)

Trap Oil Group Plc

("Trapoil" or the "Company")

Operational Update

Trapoil (AIM: TRAP), the independent oil and gas exploration, appraisal and production company focused on the UK Continental Shelf ("UKCS") region of the North Sea, is pleased to provide a corporate and operational update.

Trapoil's management is in the process of determining how best to create value from the group's existing cash reserves and assets while minimising risk for shareholders. Following extensive discussions both with existing and potential new partners, the Company announces certain initiatives which it believes will significantly strengthen Trapoil's position in the North Sea.

New Business Initiatives

Within its existing geographical focus of the North Sea, Trapoil has agreed revised terms with Suncor Energy UK Limited ("Suncor") in respect of, inter alia, the Romeo discovery (Licence P.1666, Block 30/11c), whereby the Company will assume a majority equity position in this potentially high value asset. These new arrangements, further details of which are set out below, are subject to the approval of both partners and the Department of Energy and Climate Change ("DECC").

In addition, Trapoil has entered into an agreement with Prostar Capital Limited ("Prostar"), a global private equity firm, which will enable Trapoil to potentially participate in the consolidation of assets within the North Sea. Prostar's management believes that there is considerable value in the North Sea, and has established a substantial fund targeted at acquiring undervalued assets and companies in the region. Prostar will utilise Trapoil's management and technical expertise to identify and evaluate potential companies and orphaned asset investment opportunities on behalf of its fund. Trapoil has the option to acquire up to a 5 per cent. interest in any acquisition target and, in addition, will receive both a 2.5 per cent. carried interest on closing in respect of acquisitions made by Prostar and a conditional 2.5 per cent. cash payment on future disposal. The agreement has an initial duration of six months with the option to extend subject to mutual consent.

Revised Equity Positions

Trapoil, via its wholly owned subsidiary Trap Oil Limited, currently holds a 22.5 per cent. equity interest (13.124 per cent. paying and 9.375 per cent. carried interest) in the Romeo discovery (Licence P.1666, Block 30/11c) ("Romeo") and a 28 per cent. equity interest (20 per cent. paying and 8 per cent. carried interest) in the Niobe prospect (Licence P.1889, Blocks 12/26b & 27) ("Niobe"). Trapoil has negotiated new arrangements with Suncor, the operator of these two assets, whereby Suncor's 5.5 per cent. share of Trapoil's existing carried interest in Niobe will be extinguished in return for Suncor assigning to Trapoil its entire 50.625 per cent. equity interest in the Romeo licence. Following completion of this agreement, the partners in Romeo will be First Oil & Gas Limited ("First Oil") with a 15 per cent. equity interest, Total E&P UK Limited ("Total") with a 11.875 per cent. equity interest and Trap Oil Limited with a 73.125 per cent. equity interest. The revised partner positions in Niobe will be Suncor with a 49.5 per cent. equity interest, Norwegian Energy Company UK Limited ("Noreco") with a 22.5 per cent. equity interest and Trap OiI Limited with a 28 per cent. equity interest, of which 2.5 per cent. will continue to be carried by Noreco and the balance will be a paying interest.

Romeo discovery

The Romeo discovery (drilled in 2012) in which we now hold a controlling position, has significant potential in the event a further planned high impact well is drilled. Total controls, with 100% equity, the adjacent block to the west that contains approximately 20 per cent. of Romeo and has a lookalike structure named Alfa (or Scarinish). In Q4 2013, Trapoil farmed out its Valleys asset, located near the Forties field, to Total and in return negotiated, inter alia, an option to acquire up to a 35 per cent. equity interest in Alfa. This option has now been extended through to late July 2014. The Company believes this option to be important as drilling information from the Alfa prospect will be key to unlocking the potential in the Romeo discovery. Alfa is expected to be drilled in 2015 and is a commitment to DECC.

Mark Groves Gidney, Chief Executive Officer of Trapoil, commented:

"The agreements entered into with Suncor and Prostar have the potential to generate significant value for Trapoil over the coming years. The Prostar agreement in particular could deliver significant growth in our offshore portfolio. With other projects and potential new business streams currently at an advanced stage of negotiation, we look forward to an exciting next phase in the group's development."

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Notes to editors:

· The Trapoil Group was created in 2008 by a team of experienced industry executives with a broad range of oil and gas technical, operational and financial expertise and professional skills.

· Since its IPO an AIM in 2011, Trapoil's strategy has been to combine organic development of its existing portfolio with the acquisition of additional assets to create a full cycle exploration and production company focused on the UKCS. This strategy has been executed in an increasingly difficult environment. As indicated in the group's final results in April 2014, there are early signs of recovery in the North Sea region, but activity remains low. Larger companies and financial institutions continue to rationalise their investment in the area which has had a negative impact, particularly on junior oil and gas companies.

· Trapoil has developed long term relationships with key oil industry partners and major suppliers and consultants including CGG Services (UK) Limited ("CGG") and Applied Drilling Technology International.

· The Trapoil Group utilises a research-led, knowledge-based approach to identify and deliver promising exploration and appraisal opportunities, and to this end has secured extensive long-term access to CGG's state of the art 3D seismic database over the majority of the Central North Sea area on negotiated terms. CGG is a leading pure-play geophysical services and equipment provider. Access to such 3D seismic data serves to strengthen the group's ability to create opportunities on both open and held acreage in the UKCS.