Parkmead Regulatory News (PMG)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

28 May 2012

RECOMMENDED OFFER

for

DEO Petroleum plc ("DEO")

by

The Parkmead Group plc ("Parkmead")

(to be implemented by way of a Scheme of Arrangement

under Part 26 of the Companies Act)

Summary

·; The boards of Parkmead and DEO are pleased to announce that they have reached agreement on the terms of a recommended offer under which Parkmead will acquire the entire issued and to be issued ordinary share capital of DEO (the "Acquisition"). It is intended that the Acquisition be implemented by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act.

·; Under the terms of the Acquisition, Scheme Shareholders will be entitled to receive 2 Parkmead Consideration Shares for each DEO Share held at the Scheme Record Time.

·; Based on the price of a Parkmead Share of 14.75 pence, being the Closing Price of a Parkmead Share on 25 May 2012, the Acquisition values the entire issued and to be issued share capital of DEO at approximately £12.7 million, and each DEO Share at 29.5 pence. This is based on 43,109,931 DEO Shares in issue as at the date of this announcement.

·; The consideration of 29.50 pence for each DEO Share represents a premium of approximately:

- 40.5 per cent. over the Closing Price of 21.00 pence per DEO Share on 25 May 2012, being the last practicable date prior to this announcement; and

- 30.5 per cent. to the average Closing Price of 22.61 pence per DEO Share for the one month period up to and including 25 May 2012, being the last practicable date prior to the date of this announcement.

·; Parkmead is an AIM listed emerging independent oil and gas company with a stated strategy of utilising the significant technical and commercial expertise that exists within its experienced team, led by its Executive Chairman Tom Cross, to fully exploit the exploration and production opportunities that exist in the Parkmead team's known and preferred areas of expertise within Europe and Africa.

·; DEO is an AIM listed independent oil and gas appraisal and development company focused on the UK Continental Shelf region of the North Sea with a stated intention of acquiring and building a portfolio of profitable assets with near term exploration potential. DEO's principal asset is its interest in the Perth field in the UKCS. Led by its Chief Executive, David Marshall, DEO's management team is one of the more experienced development groups currently operating in the North Sea, having had exposure to over 20 developments. DEO owns 52 per cent. and is operator of the Perth field and, having submitted a Field Development Plan to DECC, is targeting recovery of 21.5mmbbls (net to DEO) of resources in the first phase of a planned FPSO development. The DEO Directors' latest estimate of 21.5mmbbls recoverable is an upgrade to a previous estimate of 14.1mmbbls, as stated in December 2011. DECC consent is anticipated by DEO in due course.

·; The DEO Directors, who have been so advised by FirstEnergy Capital LLP, consider the terms of the Acquisition to be fair, reasonable and in the best interests of DEO and DEO Shareholders as a whole. In providing its advice, FirstEnergy Capital LLP has taken into account the commercial assessments of the DEO Directors.

·; Accordingly, the DEO Directors unanimously recommend DEO Shareholders to vote in favour of the Scheme and the resolutions at the Court Meeting and the General Meeting (or in the event that the Acquisition is implemented by means of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), as the DEO Directors have irrevocably undertaken to do in respect of their entire beneficial holdings in DEO, amounting to, in aggregate, 3,387,342 DEO Shares, representing approximately 7.9 per cent. of the issued ordinary share capital of DEO.

·; Parkmead has also received irrevocable undertakings to vote in favour of the Scheme and the resolutions at the Court Meeting and the General Meeting from certain non-director employees of DEO and from institutional shareholders in respect of 17,367,902 DEO Shares, representing 40.3 per cent. of the issued ordinary share capital of DEO.

·; In addition, one of the institutional shareholders who has provided an irrevocable undertaking has also provided to Parkmead a non-binding letter of intent that they intend to close a contract for difference in respect of an additional 3,502,700 DEO Shares (representing 8.1 per cent. of the issued ordinary share capital of DEO) and to procure the transfer of the beneficial interest in such shares to it at which point it intends to provide a further irrevocable undertaking on the same terms as the existing irrevocable undertaking it has already given.

·; Parkmead has therefore received total irrevocable undertakings and a letter of intent in respect of 24,257,944 DEO Shares representing, in aggregate, 56.3 per cent. of the existing issued ordinary share capital of DEO. All of the irrevocable undertakings remain binding in all circumstances, including in the event of a higher offer, unless the Scheme lapses or is withdrawn.

·; The Acquisition is conditional on, inter alia, certain approvals by DEO Shareholders and the sanction of the Scheme by the Court. In order to become effective, the Scheme must be approved by a majority in number of the Scheme Shareholders voting at the Court Meeting representing not less than 75 per cent. in value of the Scheme Shares held by the Scheme Shareholders present and voting in person or by proxy. It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and General Meeting together with the Forms of Proxy, will be posted by 25 June 2012 and that the Acquisition and the resolutions required to implement the Scheme will be put to DEO Shareholders at the Court Meeting and the General Meeting. Subject to the satisfaction or, where relevant, waiver of all relevant Conditions, the Scheme is expected to become effective by 8 August 2012.

Commenting on the Acquisition, David Marshall, CEO of DEO, said:

"The DEO management team has delivered its key objective to take its principal asset, Perth, to FDP submission and has also increased its recoverable resource estimate from 8.6mmbbls at the time of DEO's admission to trading on AIM in November 2010 to 21.5mmbbls. I believe that the combination with Parkmead will improve the deliverability of the Perth project and allow both management teams to use their complementary skills to address new and exciting project opportunities. I believe that DEO shareholders can look forward to value growth from the creation of one of the most experienced and innovative companies operating in the natural resources sector."

Commenting on the Acquisition, Tom Cross, Executive Chairman of Parkmead, said:

"This deal will add significant value for both Parkmead and DEO shareholders. The enlarged group will be stronger and better positioned, with a wider base of oil and gas assets in the UK and Netherlands, spanning the whole upstream opportunity-cycle from exploration, through appraisal, development and production."

The Acquisition will be made on the terms and subject to the conditions and further terms set out herein and in Appendix I to this announcement and the further terms and conditions to be set out in the Scheme Document and Forms of Proxy when issued. The bases and sources of certain financial information contained in this announcement are set out in Appendix II to this announcement. A summary of the irrevocable undertakings given by the DEO Directors and the irrevocable undertakings and letter of intent given by certain other DEO Shareholders is contained in Appendix III to this announcement. Certain terms used in this announcement are defined in Appendix IV to this announcement.

Charles Stanley Securities, which is authorised and regulated in the UK by the Financial Services Authority, is acting exclusively for Parkmead and no one else in connection with the Acquisition and this announcement and will not be responsible to anyone other than Parkmead for providing the protections afforded to clients of Charles Stanley Securities nor for providing advice in connection with the Acquisition or any matter referred to herein.

FirstEnergy Capital LLP, which is authorised and regulated in the UK by the Financial Services Authority, is acting exclusively for DEO and no one else in connection with the Acquisition and this announcement and will not be responsible to anyone other than DEO for providing the protections afforded to clients of FirstEnergy Capital LLP nor for providing advice in connection with the Acquisition or any matter referred to herein.

Canaccord Genuity, which is authorised and regulated in the UK by the Financial Services Authority, is acting exclusively for DEO and no one else in connection with the Acquisition and this announcement and will not be responsible to anyone other than DEO for providing the protections afforded to clients of Canaccord Genuity nor for providing advice in connection with the Acquisition or any matter referred to herein.

Parkmead reserves the right to elect, with the consent of the Panel (where necessary), to implement the Acquisition by way of a Takeover Offer. In such event, the Takeover Offer will be implemented on substantially the same terms, subject to appropriate amendments, as those which would apply to the Acquisition.

This announcement is for information purposes only and does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to buy securities, pursuant to the Acquisition or otherwise. The Acquisition will be made solely by means of the Scheme Document, which will contain the full terms and conditions of the Acquisition, including details of how to vote in favour of the Scheme. DEO and Parkmead urge DEO Shareholders to read the Scheme Document which will be distributed to Scheme Shareholders in due course (with the exception of certain Scheme Shareholders in Restricted Jurisdictions), as it will contain important information relating to the Acquisition.

This announcement does not constitute a prospectus or prospectus equivalent document.

This announcement has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

Overseas shareholders

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements.

Unless otherwise determined by Parkmead or required by the City Code and permitted by applicable law and regulation, the Acquisition will not be made, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and the Acquisition will not be capable of acceptance from or within a Restricted Jurisdiction. Accordingly, copies of this announcement and all documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions as doing so may invalidate any purported acceptance of the Acquisition.

The availability of the Acquisition to DEO Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

Further details in relation to overseas DEO Shareholders will be contained in the Scheme Document.

Forward looking statements

This announcement, any oral statements made by Parkmead or DEO in relation to the Acquisition, and other information published by Parkmead or DEO may contain statements about Parkmead and DEO that are or may be forward looking statements. All statements other than statements of historical facts included in this announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Parkmead's or DEO's operations and potential synergies resulting from the Acquisition; and (iii) the effects of government regulation on Parkmead's or DEO's business.

Such forward looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements. Parkmead and DEO disclaim any obligation to update any forward looking or other statements contained herein, except as required by applicable law.

Not a profit forecast

No statement in this announcement is intended as a profit forecast or profit estimate and no statement in this announcement should be interpreted to mean that the future earnings per share of the Parkmead Group as enlarged by the Acquisition, Parkmead and/or DEO for current or future financial years will necessarily match or exceed the historical or published earnings per share of Parkmead or DEO.

Disclosure requirements of the Takeover Code (the "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 paper 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 paper 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 paper 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 paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper 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 paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper 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 paper offeror, 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 paper 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.

This summary should be read in conjunction with the full text of this announcement. Appendix I to this announcement contains the conditions to, and certain further terms of, the Acquisition. Appendix II to this announcement contains further details of the sources of information and bases of calculations set out in this announcement. Appendix III contains a summary of the irrevocable undertakings and letter of intent given by the DEO Directors, certain non Director employees of DEO and by certain institutional shareholders. Appendix IV contains definitions of certain expressions used in this summary and in this announcement.

Information relating to DEO Shareholders

Please be aware that addresses, electronic addresses and certain information provided by DEO Shareholders, persons with information rights and other relevant persons for the receipt of communications from DEO may be provided to Parkmead during the Offer Period where requested under Section 4 of Appendix 4 of the Code.

Publication on website

A copy of this announcement will be made available, free of charge subject to certain restrictions relating to persons resident in Restricted Jurisdictions, at www.deo-petroleum.com by no later than 12 noon (London time) on the Business Day following the date of this annoucement.

Neither the content of the website referred to in this announcement nor the content of any website accessible from hyperlinks on DEO's website (or any other website) is incorporated into, or forms part of, this announcement.

You may request a hard copy of this announcement, free of charge, by contacting Heather Ruth on 01224 548777.Unless so requested, a hard copy of this announcement will not be sent to you. DEO Shareholders may also request that all future documents, announcements and information to be sent to them in relation to the Acquisition should be in hard copy form.

Rule 2.10 Disclosure

In accordance with Rule 2.10 of the Code, DEO confirms that it has 43,109,931 DEO Shares in issue and admitted to listing on the AIM Market of the London Stock Exchange under ISIN reference GB00B3PZFR25.

In accordance with Rule 2.10 of the Code, Parkmead confirms that it has 675,419,147 Parkmead Shares in issue and admitted to listing on the AIM Market of the London Stock Exchange under ISIN reference GB0002532801.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

28 May 2012

RECOMMENDED OFFER

for

DEO Petroleum plc ("DEO")

by

The Parkmead Group plc ("Parkmead")

(to be implemented by way of a Scheme of Arrangement

Under Part 26 of the Companies Act)

1 Introduction

The boards of Parkmead and DEO are pleased to announce that they have reached agreement on the terms of a recommended offer under which Parkmead will acquire the entire issued and to be issued ordinary share capital of DEO (the "Acquisition").

2 The Acquisition

It is intended that the Acquisition be implemented by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act.

Pursuant to the Acquisition, which will be subject to the conditions and further terms set out below and in Appendix I and to the full terms and conditions which will be set out in the Scheme Document, Scheme Shareholders will receive:

for each DEO Share 2 Parkmead Consideration Shares

Based on the price of a Parkmead Share of 14.75 pence, being the Closing Price of a Parkmead Share on 25 May 2012 (the last practicable date prior to this announcement), the Acquisition values the entire issued and to be issued share capital of DEO at approximately £12.7 million and each DEO Share at 29.50 pence. This is based on 43,109,931 DEO Shares in issue as at the date of this announcement.

The consideration of 29.50 pence for each DEO Share represents a premium of approximately:

- 40.5 per cent. over the Closing Price of 21.00 pence per DEO Share on 25 May 2012, being the last practicable date prior to this announcement; and

- 30.5 per cent. to the average Closing Price of 22.61 pence per DEO Share for the one month period up to and including 25 May 2012 (being the last practicable date prior to the date of this announcement).

The Acquisition is conditional on, inter alia, certain approvals by DEO Shareholders and the sanction of the Scheme by the Court. In order to become effective, the Scheme must be approved by a majority in number of the Scheme Shareholders voting at the Court Meeting representing not less than 75 per cent. in value of the Scheme Shares held by the Scheme Shareholders present and voting in person or by proxy.

It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and General Meeting together with the Forms of Proxy, will be posted by 25 June 2012 and that the Acquisition and the resolutions required to implement the Scheme will be put to DEO Shareholders at the Court Meeting and the General Meeting which are expected to be held by 20 July 2012. Subject to the satisfaction or, where relevant, waiver of all relevant Conditions, the Scheme is expected to become effective by 8 August 2012.

3 Background to and reasons for the Acquisition

Both Parkmead and DEO are relatively new independent E&P companies listed on the AIM Market of the London Stock Exchange, however, both companies have very experienced management teams which complement each other well.

Parkmead and DEO signed a collaboration agreement in May 2011 to become joint venture partners across certain areas in the UK Central North Sea. This agreement was put in place as both companies recognised that the teams within Parkmead and DEO have complementary skills which when combined could manage an asset through its entire lifecycle thus adding significant value. The Directors of Parkmead believe that the Acquisition therefore provides both DEO and Parkmead shareholders with the opportunity to benefit from the combined strengths of the Parkmead and DEO management teams working closely together going forward.

The combination of the two businesses will bring DEO's experienced development team alongside Parkmead's exploration, operations and commercial teams, allowing the enlarged group to operate a broader and more substantial range of oil and gas assets. The Directors of Parkmead believe that not only will the combined group therefore have the skill sets to discover, develop and operate a portfolio of assets, but DEO and Parkmead combined will also have a greater financial base from which to pursue further opportunities to build on the existing portfolio of assets. Most importantly, the Directors of Parkmead believe that this combination will enable the enlarged group to retain a greater share of the assets currently within the two companies, therefore securing the maximum value for shareholders.

The board of Parkmead also believes that the combination of the two businesses will facilitate the provision of finance to fully exploit the potential of the existing assets within the combined group as well as further opportunities. One of the issues affecting junior oil companies in recent years has been that bank and other finance providers have been noticeably more cautious about lending to them. The enlarged group will allow shareholders to benefit from Parkmead's earlier production and cash flow, thereby making finance more readily available to the enlarged group, and at a lower cost of capital. In addition, the acquisition will create a broader portfolio of assets for financial institutions to lend against therefore lowering financial risk.

Finally the board of Parkmead believes that the enlarged group will be much more likely to be successful in completing further acquisitions as it seeks to become a key consolidation vehicle for further value-adding assets and interests in the North Sea and beyond.

4 Recommendation

The DEO Directors, who have been so advised by FirstEnergy Capital LLP, consider the terms of the Acquisition to be fair, reasonable and in the best interests of DEO and DEO Shareholders as a whole. In providing its advice, FirstEnergy Capital LLP has taken into account the commercial assessments of the DEO Directors.

Accordingly, the DEO Directors unanimously recommend DEO Shareholders to vote in favour of the Scheme and the resolutions to be proposed at the Court Meeting and the General Meeting (or in the event that the Acquisition is implemented by means of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) as the DEO Directors have, in respect of their entire beneficial holdings in DEO, irrevocably undertaken to do. Such shares represent, in aggregate, 3,387,342 DEO Shares, representing approximately 7.9 per cent. of the entire issued ordinary share capital of DEO.

5 Background to and reasons for the DEO Directors recommending the Acquisition

DEO's main objectives when it was admitted to trading on AIM in November 2010 was to submit a Field Development Plan ("FDP") to the Department of Energy and Climate Change ("DECC") for the Perth field, based on Contingent Resources of 8.6mmbbls. DEO submitted a FDP on 30th September 2011 and is now targeting 21.5mmbbls (net) from its 52 per cent. share of Phase one of the development. In addition, DEO has a carried interest of 12.62 per cent. in a Gamma/Spaniards appraisal well, and will make no cash contribution to the dry-hole cost of the first well, expected to be drilled in the second half of 2012. New seismic activity has also been undertaken which will seek to identify further prospects in the Perth area.

Whilst the DEO Directors recognise that considerable progress has been made during the last 18 months, given some of the difficulties faced by small E&P companies in attracting capital, to be part of a larger group with a wide portfolio of producing, development and exploration assets would assist in the development of DEO's assets.

The DEO Directors believe that the combination with Parkmead is an exciting opportunity for DEO Shareholders and employees, to continue the good progress made with its Perth field and other assets but also to gain exposure to the Parkmead portfolio and a significant number of new opportunities. The DEO Directors believe that the combination of the two teams creates a full cycle E&P company, fully experienced and capable of creating one of the largest new independent companies in the natural resources sector.

6 Irrevocable undertakings and letter of intent

Parkmead has received irrevocable undertakings to vote in favour of the Scheme and the resolutions at the Court Meeting and the General Meeting, (or in the event that the Acquisition is implemented by means of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) from DEO Directors in respect of 3,387,342 DEO Shares, representing approximately 7.9 per cent. of the issued ordinary share capital of DEO and from certain non-Director employees of DEO in respect of 1,154,000 DEO Shares, representing 2.7 per cent. of the issued ordinary share capital of DEO.

Parkmead has also received irrevocable undertakings to vote in favour of the Scheme and the resolutions at the Court Meeting and the General Meeting from certain institutional shareholders in respect of 16,213,902 DEO Shares, representing approximately 37.6 per cent. of the issued ordinary share capital of DEO.

In addition, one of the institutional shareholders who has provided an irrevocable undertaking has also provided to Parkmead a non-binding letter of intent that they intend to close a contract for difference in respect of an additional 3,502,700 DEO Shares (representing 8.1 per cent. of the issued ordinary share capital of DEO) and to procure the transfer of the beneficial interest in such shares to it at which point it intends to provide a further irrevocable undertaking on the same terms as the existing irrevocable undertaking it has already given.

Parkmead has therefore received total irrevocable undertakings and a letter of intent in respect of 24,257,944 DEO Shares representing, in aggregate, approximately 56.3 per cent. of the issued ordinary share capital of DEO. All of the irrevocable undertakings remain binding in all circumstances unless the Scheme lapses or is withdrawn.

Further details of these irrevocable undertakings (including the circumstances in which they will fall away) and letter of intent are set out in Appendix III to this announcement.

7 Information on Parkmead

Parkmead's stated strategy is to build a significant new independent oil and gas company, with a focus on Parkmead's known and preferred areas of expertise within Europe and Africa.

Parkmead has put in place a very experienced oil and gas team, a significant number of whom, led by the Executive Chairman Tom Cross, built and developed Dana Petroleum plc to create one of the largest British independent operators active on the UK Continental Shelf, with E&P interests across nine countries at the time of its sale. The Parkmead team has a strong technical and commercial background and is using its expertise and technical knowledge of certain proven and frontier areas to try and exploit the exploration and production opportunities it believes exist in these areas.

Using its strong industry and government relations, Parkmead has made three acquisitions within the last six months, as well as putting in place both new institutional equity, through a placing which raised £8.5 million, and a flexible debt facility of a further £8.0 million. Parkmead's current assets are in both the UK and Netherlands, including its first producing interests.

In November 2011, Parkmead completed the acquisition of three stakes of 15 per cent. interest each in Blocks 48/1a, 47/5b and 48/1c in the UK Southern North Sea containing the Platypus gas field and the Possum gas prospect. The following month saw Parkmead announce that it had signed an agreement to acquire four stakes of 20 per cent. interest each in Blocks 47/4d, 47/5d, 47/10c and 48/6c. These four blocks, which lie adjacent to the Parkmead Group's existing acreage, contain the 47/10-8 gas discovery as well as the large Pharos gas prospect. Finally, in March 2012, Parkmead announced that it had signed an agreement to acquire a portfolio of Netherlands onshore assets from Dyas B.V.. As at 1 January 2012, the assets acquired from Dyas B.V. were producing at a rate of approximately 2,000 boepd, being 300 boepd net to Parkmead.

Parkmead's technical and commercial teams have a detailed working knowledge of these assets and surrounding areas, and therefore these acquisitions were an ideal fit for the Parkmead Group's growth strategy. Parkmead announced in April 2012 that drilling commenced on the first major development well on the Platypus field in the UK Southern North Sea. The well will include a circa 3,000 feet horizontal section right through the heart of the reservoir and will be retained for future use as a producer.

Through its wholly owned subsidiary, Aupec, Parkmead provides petroleum economics, benchmarking and valuation expertise to a wide range of government bodies and international oil and gas companies. Aupec has to date worked with over 100 governments, national oil companies, majors and independents, across the world, as well as a number of multi-national agencies such as the European Commission and the World Bank. Aupec is currently undertaking an important benchmarking project for a group of the world's largest super-major oil companies. Going forward, Parkmead intends to utilise the relationships and analytical rigour within Aupec to actively pursue investment and advisory opportunities throughout the North Sea, and internationally, using the combined capabilities of the enlarged group.

For the year ended 30 June 2011, Parkmead generated revenues of £3.75 million and a loss before taxation of £3.5 million. On 30 March 2012, Parkmead announced its interim results for the six months to 31 December 2011. As at 31 December 2011, Parkmead had net assets of £6.3m. Subsequent to 31 December 2011, Parkmead raised £8.5 million by way of a successful equity placing.

Parkmead holds a 2.1 per cent. stake in Faroe Petroleum plc. As at 25 May 2012 (being the last practicable date prior to this announcement) the value of this investment was £6.8 million.

8 Information on DEO

DEO is an Aberdeen based company whose strategy is to invest in North Sea oil development and production projects with the potential to generate high value returns for shareholders. DEO has a reputation for technical and commercial innovation and dynamic project delivery. The company has built a balanced portfolio of licence interests focused on the Perth field area.

DEO's management team is one of the more experienced development groups currently operating in the North Sea, having had exposure to over 20 developments in the North Sea. DEO management's operational experience emanated from working for Hess, BP, Marathon, Lasmo, EnQuest, Eni, Kerr-McGee, Shell, Oilexco, Lundin, Amoco, Monument, Kufpec, Petro Canada (Suncor), Centrica, Gulf, Oryx and others.

DEO History

- Acquired 52 per cent. and operatorship of the Perth oilfield, Dolphin, & Sigma oil discoveries;

- £17 million raised from management and institutions in 2010 to fund the acquisition of the Perth licence interests and submit FDP. As at 27th May 2012, DEO had a cash balance of £1.02m;

- Submitted Perth Field Development Plan in September 2011 and Environmental Statement. Consent anticipated in due course;

- DEO management estimate Phase 1 Resources targeted of 21.5mmbbls (net). First oil expected to be two years from project sanction;

- Negotiated 12.6 per cent. carried interest in the 2012 Gamma Spaniards appraisal well which is expected to be drilled by Premier Oil (Operator) in H2 2012.

Perth Licence Interests

The Perth Field is located in licences P218 (Block 15/21a) and P588 (Block 15/21c), in the Outer Moray Firth area of the Central North Sea. The field is located about 6 km southwest of Tartan and 10 km northwest of Scott.

Perth is a combined structural/stratigraphic trap comprising Upper Jurassic Claymore sandstones onlapping the Tartan Ridge to the north. The discovery wells 15/21a-7 and 15/21b-47 were followed by the 15/21b-47Z, 47Y, 15/21b-49 and 15/21b-56 appraisal wells.

DEO is the licence operator with 52.03 per cent. equity. The FDP for development of the Core Perth (Phase 1) development has been submitted and project sanction is expected later in 2012 subject to commercial arrangements being in place and FDP consent by DECC. First oil would be approximately two years from project sanction, from a four producer and two water injector FPSO development scheme. Development of the Perth Terraces is planned as a second phase project.

The development potential of the larger Perth Field as well as the unlocking of other development potential in the area due to the spare FPSO capacity and ability to handle sour hydrocarbons would have a positive effect on the Phase 1 development.

DEO has licenced the recently completed 3D seismic survey over the company's entire acreage portfolio. Processed data is expected to be available in 3Q 2012, in time to aid Phase 1 well placement and Phase 2 development planning.

Gamma/Spaniards

DEO has a carried interest of 12.62 per cent. and will make no cash contribution to the dry-hole cost of the first well. The well is anticipated to be drilled by Premier Oil (Operator) in H22012.

9 Management, employees and locations

Parkmead believes that the combination of the businesses of Parkmead and DEO and the strategy for the enlarged group should offer enhanced opportunities for the existing management team and the employees of DEO. This is because the enlarged group will have a broader portfolio of oil and gas assets which span the full upstream life-cycle from exploration through appraisal, development and production.

Parkmead and DEO are currently located within one mile of each other in Aberdeen. It is the intention of Parkmead to eventually consolidate the operations of the enlarged group in Parkmead's existing offices, which has all the necessary capacity to house the enlarged group.

Parkmead has given assurances to the DEO Directors that the existing employment rights, including pension rights, of all DEO employees will be fully safeguarded upon completion of the Acquisition. The existing service agreements of certain DEO employees contain change of control clauses which will result in the termination of these existing service agreements upon the Scheme becoming effective, with payments in lieu of their 12 month notice periods due to such employees. Parkmead intends to enter into discussions with all DEO employees regarding their desire to play a role in the enlarged group. The DEO Non-Executive Directors intend to resign from the board of DEO upon the Scheme becoming effective.

Commenting on Parkmead's statement regarding management, employees and locations above, David Marshall, CEO of DEO said:

"The Directors of DEO believe the combined team, which has complementary oil and gas skill sets, will create a better organisation and that the combined organisation will be able to access and execute superior business opportunities. The strategy of the enlarged group will enhance the opportunity for the respective management teams to combine and deliver greater growth and value enhancement.

We are very happy that Parkmead has recognised the rights of our employees and their existing service agreements. Given the close proximity of the two companies, combining the teams into Parkmead's existing office space will be easy and Parkmead's office is an excellent physical platform for our combined teams. The Directors of DEO believe that Parkmead will provide a good work environment for those employees who choose to join the combined entity and maintains them in Aberdeen's vibrant oil and gas sector."

10 DEO Share Schemes

Participants in the DEO Share Schemes will be contacted separately regarding the effect of the Acquisition on their rights under the DEO Share Schemes and appropriate proposals will be made to such persons in due course. The proposals will extend to any DEO Shares which are unconditionally allotted or issued before the Scheme Record Time as a result of the exercise of existing options under the DEO Share Schemes.

11 Parkmead Consideration Shares

The Parkmead Consideration Shares will be ordinary shares in the capital of Parkmead. The Parkmead Consideration Shares will rank pari passu in all respects with the existing Parkmead Shares and will be entitled to all dividends and/or other distributions declared or paid by Parkmead by reference to a record date on or after the Effective Date.

The Parkmead Shares trade on the AIM Market of the London Stock Exchange and an application will be made for the Parkmead Consideration Shares to be admitted to trading on AIM. Parkmead Consideration Shares will settle through CREST or Parkmead share certificates will be posted to certificated holders of DEO Shares.

12 Opening Position Disclosures and interests

Parkmead confirms that it is making an Opening Position Disclosure today, setting out the details required to be disclosed by it under Rule 8.1(a) of the Code.

13 Structure of the Acquisition

It is intended that the Acquisition will be effected by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act. The Scheme is an arrangement between DEO and the Scheme Shareholders and is subject to the approval of the Court.

The purpose of the Scheme is to provide for Parkmead to become the holder of the entire issued and to be issued ordinary share capital of DEO. This is to be achieved by the cancellation of the Scheme Shares held by Scheme Shareholders and the application of the reserve arising from such cancellation in paying up in full such number of new ordinary shares of 1 pence each in DEO which is equal to the number of Scheme Shares cancelled and issuing such new ordinary shares to Parkmead. Parkmead will subsequently issue the Parkmead Consideration Shares to which DEO Shareholders on the register of members at the Scheme Record Time are entitled pursuant to the terms of the Acquisition.

To become effective, the Scheme will require, amongst other things, the approval by a majority in number of Scheme Shareholders representing at least 75 per cent. in value of the Scheme Shares held by such Scheme Shareholders voting, either in person or by proxy, at the Court Meeting (or any adjournment thereof), and the passing by the DEO Shareholders of a special resolution necessary to implement the Scheme (including approving appropriate amendments to the articles of association of DEO) at the General Meeting (or any adjournment thereof). In addition, the Scheme must be sanctioned, and the Capital Reduction must be confirmed, by the Court.

The Scheme will also be subject to certain conditions and certain further terms referred to in Appendix I of this announcement and to be set out in the Scheme Document.

Once the necessary approvals from DEO Shareholders have been obtained and the other Conditions have been satisfied or (where applicable) waived, the Scheme will become effective upon the delivery of the Reduction Court Order to the Registrar of Companies. The Scheme is expected to become effective by 8 August 2012. If the Scheme does not become effective on or before 1 October 2012, it will lapse and the Acquisition will not proceed (unless the parties agree otherwise with the consent of the Panel).

Upon the Scheme becoming effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting.

The Parkmead Consideration Shares in DEO to be issued to DEO Shareholders pursuant to the Scheme will be issued fully paid and free from all liens, charges, equities, encumbrances, rights of pre-emption and any other interests of any nature whatsoever and together with all rights attaching thereto, including voting rights and the rights to receive and retain in full all dividends and other distributions declared, made or paid on or after the date of their issue.

Parkmead reserves the right, with the consent of the Panel (where necessary), to elect to implement the Acquisition by way of a Takeover Offer as an alternative to the Scheme. Any such Takeover Offer will be subject to an acceptance condition of Parkmead having acquired (whether pursuant to the Acquisitionor otherwise) such percentage (being more than 50 per cent.) of the DEO Shares, as Parkmead may decide, having consulted with the Panel, and will otherwise be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which would apply to the Scheme, and in compliance with applicable laws and regulations.

Further details of the Scheme, including how Scheme Shareholders may participate in the Court Meeting and General Meeting, will be contained in the Scheme Document.

14 Expected Timetable

DEO currently anticipates that:

(a) it will despatch the Scheme Document, together with the Forms of Proxy, to DEO Shareholders and, for information only, to the holder of options granted under the DEO Share Schemes within the next 28 days (or such later date as may be agreed with the Panel);

(b) the Court Meeting and General Meeting will take place on or around 20 July 2012;

(c) subject to the Scheme becoming unconditional and Effective in accordance with its terms, the Acquisition is expected to become effective on or around 8 August 2012, with the consideration being issued to DEO Shareholders no later than 14 days after the Effective Date.

The timing of events which relate to the implementation of the Acquisition is, however, subject to the approval of the Court and is therefore subject to change. A full anticipated timetable will be set out in the Scheme Document.

If the Acquistion does not become effective by the Long Stop Date, the Acquisition will lapse except where the approval of DEO Shareholders at the Court Meeting and General Meeting is obtained before this date, in which case the Long Stop Date for the Acquisition may be extended to such later date as Parkmead and DEO may agree and, if appropriate, the Court may approve.

15 Regulatory issues

The Acquisition will be subject to the conditions and further terms set out below and in Appendix I and the full terms and conditions which will be set out in the Scheme Document.

16 Disclosure of interests in DEO Shares

Neither Parkmead, nor any of the Parkmead Directors nor, so far as the Parkmead Directors are aware, any other person acting in concert with Parkmead for the purposes of the Acquisition, owns, controls, holds, or has borrowed or lent any DEO Shares or any securities convertible or exchangeable into DEO Shares or rights to subscribe for or purchase or options (including traded options) in respect of, or derivatives referenced to, any such DEO Shares.

17 Overseas Shareholders

The availability of the Acquisition or distribution of this announcement to persons not resident in the United Kingdom may be prohibited or affected by the laws of the relevant jurisdictions. Such persons should inform themselves about, and observe, any applicable requirements. Further details in relation to overseas DEO Shareholders will be contained in the Scheme Document.

18 Delisting and re-registration

Upon or shortly after the Effective Date, it is intended that Parkmead will procure that DEO makes applications to cancel the listing of DEO Shares on AIM.

On the Effective Date, DEO will become a wholly-owned subsidiary of Parkmead and share certificates in respect of the DEO Shares will cease to be valid and should be destroyed. Entitlements to DEO Shares held within the CREST system will be cancelled on the Effective Date.

It is also proposed that on or following the Effective Date DEO will be re-registered as a private limited company.

19 DEO financing arrangements

A loan agreement has today been entered into between Parkmead and DEO pursuant to which Parkmead shall provide DEO with a loan facility for DEO's general corporate purposes, including working capital. The loan agreement is up to a maximum amount of £2,000,000 at an interest rate of 2.5 per cent. per annum over LIBOR. The repayment date is 6 months from completion of the loan agreement, with an extension of 6 months available by mutual agreement. Repayment of the loan is to be guaranteed by DEO Petroleum U.K. Limited. Voluntary pre-payments are permitted and DEO is to pay an arrangement fee of 1.5 per cent. and a commitment fee of 50 per cent. of the applicable margin payable on the available amount of the facility. Parkmead will receive a first ranking security over the assets of DEO and the guarantor and DEO will give usual and customary positive and negative covenants to the Company. The loan agreement is not conditional on, or related to, the Acquisition.

20 General

The Acquisition will be made on the terms and subject to the conditions and further terms set out herein and in Appendix I to this announcement. The bases and sources of certain financial information contained in this announcement are set out in Appendix II to this announcement. A summary of the irrevocable undertakings and letter of intent is contained in Appendix III to this announcement. Certain terms used in this announcement are defined in Appendix IV to this announcement.

21 Documents on display

Copies of the following documents will be made available, subject to certain restrictions relating to persons resident in any Restricted Jurisdiction, on Parkmead's website (www.parkmeadgroup.com) by no later than 12 noon (London time) on 29 May 2012 until the end of the Offer:

·; the irrevocable undertakings and letter of intent referred to in paragraph 6above and summarised in Appendix III to this announcement;

·; directors' responsibility statements; and

·; this announcement.

The Acquisition will be made on the terms and subject to the conditions and further terms set out herein and in Appendix I to this announcement and the further terms and conditions to be set out in the Scheme Document and Forms of Proxy when issued. The bases and sources of certain financial information contained in this announcement are set out in Appendix II to this announcement. A summary of the irrevocable undertakings and letter of intent given by the DEO Directors and the irrevocable undertakings given by certain other DEO Shareholders is contained in Appendix III to this announcement. Certain terms used in this announcement are defined in Appendix IV to this announcement.

Charles Stanley Securities, which is authorised and regulated in the UK by the Financial Services Authority, is acting for Parkmead and no one else in connection with the Acquisition and this announcement and will not be responsible to anyone other than Parkmead for providing the protections afforded to clients of Charles Stanley Securities nor for providing advice in connection with the Acquisition or any matter referred to herein.

FirstEnergy Capital, which is authorised and regulated in the UK by the Financial Services Authority, is acting exclusively for DEO and no one else in connection with the Acquisition and this announcement and will not be responsible to anyone other than DEO for providing the protections afforded to clients of FirstEnergy Capital LLP nor for providing advice in connection with the Acquisition or any matter referred to herein.

Canaccord Genuity, which is authorised and regulated in the UK by the Financial Services Authority, is acting exclusively for DEO and no one else in connection with the Acquisition and this announcement and will not be responsible to anyone other than DEO for providing the protections afforded to clients of Canaccord Genuity nor for providing advice in connection with the Acquisition or any matter referred to herein.

Parkmead reserves the right to elect, with the consent of the Panel (where necessary), to implement the Acquisition by way of a Takeover Offer. In such event, the offer will be implemented on substantially the same terms, subject to appropriate amendments, as those which would apply to the Acquisition.

This announcement is for information purposes only and does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to buy securities, pursuant to the Acquisition or otherwise. The Acquisition will be made solely by means of the Scheme Document, which will contain the full terms and conditions of the Acquisition, including details of how to vote in favour of the Scheme. DEO and Parkmead urge DEO Shareholders to read the Scheme Document which will be distributed to Scheme Shareholders in due course (with the exception of certain Scheme Shareholders in Restricted Jurisdictions), as it will contain important information relating to the Acquisition.

This announcement does not constitute a prospectus or prospectus equivalent document.

This announcement has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

Mike Cooper B.Sc. (Hons.) in Geological Sciences and M.Sc. in Petroleum Geochemistry and DEO's VP Exploration & Subsurface, who has over 30 years' experience in the oil exploration and production industry, has reviewed and approved the technical information contained in this announcement in so far as it relates to DEO. DEO's evaluation of the recoverable hydrocarbons was prepared in accordance with the 2007 Petroleum Resources Management System prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers and reviewed and jointly sponsored by the World Petroleum Council, the American Association of Petroleum Geologists and the Society of Petroleum Evaluation Engineers.

Overseas shareholders

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements.

Unless otherwise determined by Parkmead or required by the City Code and permitted by applicable law and regulation, the Acquisition will not be made, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and the Acquisition will not be capable of acceptance from or within a Restricted Jurisdiction. Accordingly, copies of this announcement and all documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions as doing so may invalidate any purported acceptance of the Acquisition.

The availability of the Acquisition to DEO Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

Further details in relation to overseas shareholders will be contained in the Scheme Document.

Forward looking statements

This announcement, any oral statements made by Parkmead or DEO in relation to the Acquisition, and other information published by Parkmead or DEO may contain statements about Parkmead and DEO that are or may be forward looking statements. All statements other than statements of historical facts included in this announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Parkmead's or DEO's operations and potential synergies resulting from the Acquisition; and (iii) the effects of government regulation on Parkmead's or DEO's business.

Such forward looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. Parkmead and DEO disclaim any obligation to update any forward looking or other statements contained herein, except as required by applicable law.

Not a profit forecast

No statement in this announcement is intended as a profit forecast or profit estimate and no statement in this announcement should be interpreted to mean that the future earnings per share of the Parkmead Group as enlarged by the Acquisition, Parkmead and/or DEO for current or future financial years will necessarily match or exceed the historical or published earnings per share of Parkmead or DEO.

Disclosure requirements of the Takeover Code (the "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 paper 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 paper 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 paper 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 paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper 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 paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper 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 paper offeror, 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 paper 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.

Publication on website

A copy of this announcement will be made available, free of charge subject to certain restrictions relating to persons resident in Restricted Jurisdictions, at www.deo-petroleum.com by no later than 12 noon (London time) on the Business Day following the date of this announcement.

Neither the content of the website referred to in this announcement nor the content of any website accessible from hyperlinks on DEO's website (or any other website) is incorporated into, or forms part of, this announcement.

You may request a hard copy of this announcement, free of charge, by contacting Heather Ruth on 01224 548777. DEO Shareholders may also request that all future documents, announcements and information to be sent to them in relation to the Acquisition should be in hard copy form.

Rule 2.10 Disclosure

In accordance with Rule 2.10 of the Code, DEO confirms that it has 43,109,931 DEO Shares in issue and admitted to listing on the AIM Market of the London Stock Exchange under ISIN reference GB00B3PZFR25

In accordance with Rule 2.10 of the Code, Parkmead confirms that it has 675,419,147 Parkmead Shares in issue and admitted to listing on the AIM Market of the London Stock Exchange under ISIN reference GB0002532801.

APPENDIX I

CONDITIONS AND CERTAIN FURTHER TERMS OF THE ACQUISITION

Part A: Conditions of the Acquisition

The Acquisition will be conditional upon the Scheme becoming unconditional and becoming effective by no later than the Long Stop Date, or such later date (if any) as Parkmeadand DEO may agree and the Court may allow.

(a) The Scheme will be conditional upon:

(1) its approval by a majority in number representing not less than three-fourths in value of the Scheme Shareholders (or the relevant class or classes thereof, if applicable) present and voting, either in person or by proxy, at the Court Meeting and at any separate class meeting which may be required by the Court or at any adjournment of any such meeting;

(2) all resolutions necessary to approve and implement the Scheme being duly passed by the requisite majority or majorities at the General Meeting of DEO or at any adjournment of that meeting; and

(3) the sanction of the Scheme with or without modification (but subject to any such modification being acceptable to Parkmead and DEO) and the confirmation of the Capital Reduction by the Court and:

(i) the delivery of a copy of the necessary Court Order(s) and of the requisite statement of capital to the Registrar of Companies; and

(ii) if the Court so orders for it to become effective, the registration of the Court Order(s) and the statement of capital by the Registrar of Companies.

In addition, Parkmead and DEO have agreed that the Acquisition will be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme effective will not be taken unless the following Conditions (as amended if appropriate) have been satisfied or, where relevant, waived:

(b) no indication having been made by the Office of Fair Trading in the United Kingdom that the Acquisition or any matter arising there from or related thereto will be referred to the Competition Commission;

(c) without prejudice to paragraphs (e) or (f) below, the Secretary of State for Energy and Climate Change not having indicated an intention to (i) revoke or recommend the revocation of any exploration or production licence held by any member of the DEO Group or (ii) to require a further change of control of any such member as a result of the implementation of the Acquisition;

(d) the London Stock Exchange agreeing to admit the Parkmead Consideration Shares to trading on AIM subject to the allotment of such Parkmead Consideration Shares and/or the Scheme becoming or being declared unconditional in all respects;

(e) except as Disclosed, there being no provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider DEO Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, which in consequence of the Acquisition or the proposed acquisition of any shares or other securities in DEO or because of a change in the control or management of DEO or otherwise, could or might reasonably be expected to result (in each case to the extent to which it is material in the context of the Wider DEO Group or Wider Parkmead Group as a whole) in:

and no event having occurred which, under any provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider DEO Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, could result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (viii) of this Condition (in each case to the extent which it is material in the context of the Wider DEO Group as a whole);

(f) no government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body, court, trade agency, association, institution or any other body or person whatsoever in any jurisdiction (each a "Third Party") having decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or enacted, made or proposed any statute, regulation, decision or order, or having taken any other steps which would or might be expected to in each case to an extent which is material in the context of the Wider DEO Group as a whole or, as the case may be, Wider Parkmead Group as a whole:

and all applicable waiting and other time periods during which any such Third Party could institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or any other step under the laws of any jurisdiction in respect of the Acquisition or the acquisition or proposed acquisition of any DEO Shares having expired, lapsed or been terminated;

(g) all necessary filings or applications having been made in connection with the Acquisition and all statutory or regulatory obligations in any jurisdiction having been complied with in connection with the Acquisition or the acquisition by any member of the Wider Parkmead Group of any shares or other securities in, or control of, DEO and all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals (collectively "Consents") reasonably deemed necessary or appropriate by Parkmead or any member of the Wider DEO Group for or in respect of the Acquisition or the proposed acquisition of any shares or other securities in, or control of, DEO by any member of the Wider Parkmead Group having been obtained in terms and in a form satisfactory to Parkmead from any appropriate Third Parties or persons with whom any member of the Wider DEO Group has entered into contractual arrangements in each case where the absence of such Consent would have a material adverse effect on the Wider Parkmead Group taken as a whole and all Consents reasonably necessary or appropriate to carry on the business of any member of the Wider DEO Group which is material in the context of the Parkmead Group or the DEO Group as a whole remaining in full force and effect and all filings necessary for such purpose have been made and there being no notice or intimation of any intention to revoke or not to renew any of the same at the time at which the Acquisition becomes otherwise unconditional and all necessary statutory or regulatory obligations in any jurisdiction having been complied with in all material respects;

(h) except as Disclosed, no member of the Wider DEO Group having, since 31 December 2010:

and, for the purposes of paragraphs (iii), (iv), (v) and (vi) of this Condition, the term "DEO Group" shall mean DEO and its wholly-owned subsidiaries;

(i) except as Disclosed, since 31 December 2010: 

(j) except as Disclosed, Parkmead not having discovered:

(k) Parkmead not having discovered that:

For the purposes of these Conditions the "Wider DEO Group" means DEO and its subsidiary undertakings, associated undertakings and any other undertaking in which DEO and/or such undertakings (aggregating their interests) have a significant interest and the "Wider Parkmead Group" means Parkmead and its subsidiary undertakings, associated undertakings and any other undertaking in which Parkmead and/or such undertakings (aggregating their interests) have a significant interest and for these purposes "subsidiary undertaking" and "undertaking" have the meanings given by the Companies Act, "associated undertaking" has the meaning given by paragraph 19 of Schedule 6 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 other than paragraph 19(1)(b) of Schedule 6 to those Regulations which shall be excluded for this purpose, and "significant interest" means a direct or indirect interest in ten per cent. or more of the equity share capital (as defined in the Companies Act).

To the extent permitted by law and subject to the requirements of the Panel, Parkmead reserves the right to waive, in whole or in part, all or any of Conditions (a) to (k) above, except for Condition (a), which cannot be waived.

Conditions (b) to (k) (inclusive) must be fulfilled or waived by no later than 11.59pm on the date immediately preceding the date of the Court hearing to sanction the Scheme, failing which the Scheme will lapse. Parkmead shall be under no obligation to waive or treat as satisfied any of Conditions (b) to (k) (inclusive) by a date earlier than the latest date specified above for the fulfilment or waiver thereof, notwithstanding that the other Conditions of the offer may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

If Parkmead is required by the Panel to make an offer for DEO Shares under the provisions of Rule 9 of the Code, Parkmead may make such alterations to any of the above Conditions as are necessary to comply with the provisions of that Rule.

Parkmead reserves the right to elect (with the consent of the Panel) to implement the Acquisition by way of a takeover offer (as defined in Part 28 of the Companies Act). In such event, such Offer will be implemented on the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect the change in method of effecting the Acquisition, including (without limitation and subject to the consent of the Panel) an acceptance condition that is set at 90 per cent. (or such lesser percentage, as Parkmead may decide) (i) in nominal value of the shares to which such Offer relates; and (ii) of the voting rights attached to those shares, and that is subject to the Parkmead and/or (with the consent of the Panel) any members of the Parkmead Group having acquired or agreed to acquire, whether pursuant to the Offer or otherwise, shares carrying more than 50 per cent. of the voting rights normally exercisable at a general meeting of DEO, including, for this purpose, any such voting rights attaching to DEO Shares that are unconditionally allotted or issued before the takeover offer becomes or is declared unconditional as to acceptances, whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise.

The availability of the Acquisition to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

The Acquisition will be governed by English law and will be subject to the jurisdiction of the English courts and to the Conditions set out in this announcement and in the formal Scheme Document (or Offer Document and related Form of Acceptance, as the case may be). The Acquisition will comply with the applicable rules and regulations of the Financial Services Authority and the London Stock Exchange and the Code.

Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

Part B: Certain further terms of the Acquisition

The Acquisition will not be made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone, internet or e-mail) of interstate or foreign commerce of, or of any facility of a national securities exchange of, the United States, Canada, Japan or Australia and the Acquisition will not be capable of acceptance by any such use, means, instrumentality or facility or from within the United States, Canada, Japan or Australia.

DEO Shares which will be acquired under the Acquisition will be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now or hereafter attaching or accruing to them, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this announcement.

APPENDIX IISOURCES OF INFORMATION AND BASES OF CALCULATION

In this announcement:

(i) As at the close of business on 25 May 2012, being the last business day prior to the date of this announcement, Parkmead had in issue 675,419,147 Parkmead Shares and DEO had in issue 43,109,931 DEO Shares. The ISIN for Parkmead Shares is GB0002532801 and for the DEO Shares is GB00B3PZFR25.

(ii) The value placed on the issued share capital of DEO (approximately £12.7 million) is based on 43,109,931 DEO Shares in issue on 25 May 2012, being the last dealing day prior to the date of this announcement.

(iii) The closing mid-market share prices of Parkmead Shares on 25 May 2012, referred to in this announcement are derived from the London Stock Exchange Daily Official List.

(iv) The closing mid-market share prices of DEO Shares on 25 May 2012, referred to in this announcement are derived from the London Stock Exchange Daily Official List.

(v) Unless otherwise stated, the financial information relating to DEO is extracted or derived from the Annual Report and the Interim Report (without any adjustment).

(vi) Unless otherwise stated, the financial information relating to Parkmead is extracted or derived from the Annual Report and Accounts of Parkmead for the financial year to 30 June 2011 and the interim results for the six months to 31 December 2011 (without any adjustments).

APPENDIX IIIIRREVOCABLE UNDERTAKINGS AND LETTER OF INTENT

Directors and other employees

Parkmead has received irrevocable undertakings from the DEO Directors and other employees to vote in favour of the Scheme and the resolutions to be proposed at the Court Meeting and the General Meeting (and if the Acquisition is subsequently structured as a Takeover Offer, to accept any such offer made by Parkmead) in respect of their entire holdings in DEO Shares, representing approximately 10.5 per cent. of the existing issued ordinary share capital of DEO. Details of these undertakings are set out below.

Other DEO Shareholders

Parkmead has received irrevocable undertakings from YF Finance Ltd, Rab Octane (Master) Fund Limited and Marlborough Fund Managers to vote in favour of the Scheme and the resolutions to be proposed at the Court Meeting and the General Meeting (and if Parkmead exercises its rights to structure the Acquisition as a Takeover Offer, to accept or procure the acceptance of such Takeover Offer) in respect of DEO Shares representing approximately 37.6 per cent. of the existing issued ordinary share capital of DEO. Details of these undertakings are set out below.

Accordingly, the number of DEO Shares in respect of which irrevocable undertakings have been received is, in aggregate, 20,755,244, representing approximately 48.1 per cent. of the issued share capital of DEO.

All the irrevocable undertakings remain binding in the event of a higher competing offer for DEO however they will cease to be binding if:

(i) the Scheme Document is not posted within 28 days from the date of this Announcement;

(ii) the Scheme does not become effective (or, in the event that Parkmead elects to implement the Acquisition by way of a takeover offer (within the meaning of section 974 of the Companies Act) does not become wholly unconditional) on or before the date being six months following the date of the Announcement (or 1 October 2012 in respect of the irrevocable undertaking from RAB Octane (Master Fund) Limited); or

(iii) the Scheme is withdrawn or otherwise lapses.

Details of irrevocable undertakings

The following DEO Directors, employees and other shareholders have given irrevocable undertakings on the terms summarised above:

Letter of Intent

In addition, RAB Energy Fund Limited has also provided a non-binding letter of intent to Parkmead that they intend to close a contract for difference in respect of an additional 3,502,700 DEO Shares (representing 8.1 per cent. of the issued ordinary share capital of DEO) and to procure the transfer of the beneficial interest in such shares to it at which point it intends to provide a further irrevocable undertaking on the same terms as the existing irrevocable undertaking already given by RAB Octane (Master Fund) Limited.

Parkmead has therefore received total irrevocable undertakings and a letter of intent in respect of 24,257,944 DEO Shares representing, in aggregate, approximately 56.3 per cent. of the existing issued ordinary share capital of DEO.

APPENDIX IVDEFINITIONS

The following definitions apply throughout this announcement unless the context requires otherwise.

For the purposes of this announcement, "subsidiary", "subsidiary undertaking", "undertaking" and "associated undertaking" have the respective meanings given thereto by the Companies Act.

All references to "pounds", "pounds Sterling", "Sterling", "£", "pence", "penny" and "p" are to the lawful currency of the United Kingdom.

All the times referred to in this announcement are London times unless otherwise stated.

References to the singular include the plural and vice versa.