NLG.L Regulatory News (NLG)

28 Oct 2005 06:59

28 October 2005 NELSON RESOURCES LIMITED ANNOUNCES CNPC INTENTION TO ASSERT PRE-EMPTION RIGHTS AT NORTH BUZACHI Nelson Resources Limited ("Nelson" or the "Company") of Bermuda (TSX/AIM: NLG), a leading oil exploration and production company operating in Kazakhstan, announces that it has been informed by China National Petroleum Corporation ("CNPC"), the Company's joint venture partner on the North Buzachi oil field, that CNPC intends to take the necessary measures to exercise its pre-emptive right under the North Buzachi Joint Operating Agreement to acquire the Company's 50% interest in the North Buzachi field, following the purchase by Lukoil Overseas Holding Ltd. ("Lukoil") of a 65% controlling interest in the Company.Nelson takes the position that no such pre-emptive right exists in the currentcircumstances.CNPC argues that the purchase by Lukoil of the 65% controlling interest in theCompany constitutes a transfer of the Company's participating interest underthe North Buzachi Joint Operating Agreement, dated December 16, 2003, betweenCNPC and the Company's subsidiary Nelson Petroleum Buzachi BV. As a result,CNPC asserts that the Corporation did not comply with the provisions of theJoint Operating Agreement in connection with Lukoil's purchases. In thatregard, CNPC is asserting that they have certain pre-emptive rights to acquirethe Corporation's participating interest under the Joint Operating Agreement,and that any transfer of the Corporation's participating interest to a thirdparty must be undertaken in accordance with the procedures under the JointOperating Agreement.While CNPC has advised the Company that it will take the necessary measures toexercise its pre-emptive right in accordance with the Joint OperatingAgreement, to the knowledge of the Company, no formal legal proceedings haveyet been commenced.The Company takes the position that Lukoil's purchase of the 65% controllinginterest in the Company on October 14, 2005, does not breach the subjectprovisions of the Joint Operating Agreement and no pre-emptive right arises inthe current circumstances. The Company therefore intends to oppose any measurestaken by CNPC to prove and exercise this right.For further information, please contact:----------------------------------------Nick Greene, Chief Financial Officer Tel: 020 7495 8908Nelson Resources Limited ngreene@nelsonresources.co.ukFred Hodder Tel: 020 7495 8908Nelson Resources Limited fhodder@nelsonresources.co.ukInvestor Relations:Ann-marie Wilkinson / Nick Lambert Tel: 020 7861 3232Bell Pottinger Corporate & Financial (London)ENDNELSON RESOURCES LIMITED