KEA.L Regulatory News (KEA)

Kea Petroleum plc

("Kea" or "the Company")

Strategic Update

Kea Petroleum plc (AIM: KEA), the oil and gas company focused on New Zealand, announces that it is launching a review of the strategic options open to the Company with the intention of considering all opportunities for maximising value for shareholders. Accordingly, the Company is undertaking a careful evaluation of its business plan, operational assets, development strategy, market valuation of assets and capital structure.

Background

On 14 January the Company announced that, as a result of the current oil price and a mechanical problem, it had shut in production at its Puka site. It also announced that it continues in discussions with potential farm-in partners for its Mercury, Mauku and Shannon prospects.

At the time of the publication of the Company's final results the Directors stated the Company was in discussions to secure additional funding to cover an expected funding shortfall in 2015. To date the Company has not entered into any funding agreements but discussions continue.

As a consequence of a combination of these factors the Board has decided to commence a strategic review. In the meantime the Company has taken a number of cost cutting measures to preserve its working capital which remains tight.

Strategic review

The review of strategic options may include a corporate transaction such as a merger with, acquisition of or subscription for the Company's securities by a third party, a sale of the business or a farm down or disposal of assets. Discussions in relation to a merger with a third party or a sale of the Company will take place within the context of a "formal sale process" in accordance with Note 2 on Rule 2.6 of the City Code on Takeovers and Mergers (the "Code"), such that the Board of Kea is able to have discussions with third parties interested in such a transaction on a confidential basis to the extent permitted by the Code.

Any interested party will be required to enter into a non-disclosure agreement with the Company on reasonable terms satisfactory to the Board and on the same terms, in all material respects, as the other interested parties before being permitted to participate in the process. Following execution of an agreed non-disclosure agreement, the Company intends to provide interested parties with equality of information on the Company. Following receipt of the materials, interested parties shall be invited to submit proposals to the Company.

The Board reserves the right to alter any aspect of the process as outlined above or to terminate it at any time and will make further announcements as appropriate. The Board reserves the right to reject any approach or terminate discussions with any interested party or participant at any time.

The Panel on Takeovers and Mergers (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 to Rule 2.2 of the Code) and will not be subject to the 28 day deadline referred to in Rule 2.6(a) of the Code, for so long as it is participating in the formal sale process.

Interested parties should note Rule 21.2 of the Code, which prohibits any form of inducement fee or any other offer-related arrangement, and that the Company has not at this stage requested any dispensation from this prohibition under Note 2 of Rule 21.2 of the Code.

There can be no certainty that any offers will be made as a result of the formal sale process, that any sale or transaction will be concluded, nor as to the terms on which any offer might be made.

As a consequence of this announcement, the Company is now considered to be in an "Offer Period" as defined in the Takeover Code. The dealing disclosure requirements and other provisions of the Code that now apply are listed below.

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available on the Company's website at http://www.keapetroleum.com/ as soon as possible and in any event no later than 12:00 noon (London time) on 17 February 2015 (being the business day following the date of this announcement). The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Rule 2.10 Disclosure

In accordance with Rule 2.10 of the Code, Kea confirms that it currently has in issue 93,986,957 ordinary shares of 1.0 pence each. The International Securities Identification Number for the ordinary shares is GB00BRTL3035.

A further announcement will be made as appropriate.

Disclosure requirements of the Takeover 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.

For further information please contact:

Notes to Editors:

Kea Petroleum is an AIM listed oil and gas exploration company with interests in three petroleum exploration permits in the Taranaki Basin of New Zealand. Kea listed on the London AIM market in February 2010.