ZOL.L Regulatory News (ZOL)

23 May 2007 12:28

Crosby Capital Partners Inc23 May 2007 ORCHARD PROPERTY EXCHANGE AGREEMENT WITH LIVINGSTONE PETROLEUM Crosby Capital partners Inc. (Crosby) is pleased to report that OrchardPetroleum Ltd ("Orchard") has entered into a Property Exchange Agreement withLivingstone Petroleum Ltd ("Livingstone") (ASX: LPL AU) in respect of certaininterests in oil and gas leases in the Sacramento and San Joaquin basin,California. The agreement consolidates Orchard's interests on projects withestablished production and relatively low risk development prospects, andprovides Orchard with critical mass within its operations in the SacramentoBasin, increasing operating efficiencies within this project. Under the Property Exchange Agreement: •Save for certain areas referred to below, Livingstone will transfer its 50% interest in the Forbes Project areas to Orchard, including its interests in the producing Larner 1-12 well, Larner 2-12 well and the Edge 1-10 discovery well which is awaiting hook up before coming onto production; •Orchard will transfer its 50% interest in the Buckeye and the Arbuckle prospect areas of the Forbes Project to Livingstone. No wells have as yet been drilled in these area and non were planned to be drilled in this acreage by Orchard in the foreseeable future; •Livingstone will pay Orchard US$163,500 for pre-paid lease rentals on the Buckeye project and US$100,000 for Livingstone's 50% share of the South Buckeye well completion costs; •Orchard will release Livingstone from approximately US$600,000 in respect of past drilling expenses; •The recent South Buckeye discovery well will continue to be held 50/50 between Orchard and Livingstone and Orchard will continue as operator of this well. Flow testing and completion of this well is expected to commence in late June / early July as soon as a service rig can be secured; •Orchard will transfer to Livingstone its 50% interest in the Block B lease at Southeast Lost Hills (San Joaquin basin), including its interest in the non-producing Jack Hamar 1-13, 2-13, 3-13 and 1-12 wells and the uncompleted pipeline relating thereto. Ian Gibbs, Director of Orchard Petroleum, commented: "This Agreement immediatelyincreases Orchard's production, operational cashflows and reserves base. Goingforward it also enables Orchard to fully dictate the development plan for thespecific prospects within the Forbes Project area that Orchard believes shouldbe drilled and to maximise its participation in those prospects. It isconsistent with Orchard's strategy of rationalising its partnershiprelationships to ensure that Orchard is able to develop its project portfolio ina manner most likely to maximise value to Orchard shareholders." About Orchard Petroleum •Orchard is an upstream oil and gas company exclusively focused on California. •Orchard has a portfolio of 10 high quality projects, the majority of which are operated by Orchard. Five of the projects are in partnership with Aera (Shell - Exxon Mobil JV and California's largest producer) and another on acreage leased from Occidental Petroleum. •All of the projects are onshore California in the prolific San Joaquin and Sacramento petroleum basins. Eleven of the top 100 US oil fields are in the San Joaquin basin, including 4 of the top 10. •Orchard's project leases are all adjacent to and extensions of existing giant mature producing oil and gas fields (such as the Belridge field), with an abundance of infrastructure to supply the vast US market. Crosby owns a 23.75% stake in the profits of Eskdale Petroleum Pty Ltd the bidvehicle that was established to takeover Orchard Petroleum. The takeover wascompleted in April 2007. About Crosby Capital Partners Crosby Capital Partners Inc. is a leading independent deal-focused Asia-orientedmerchant banking and asset management group. Crosby is quoted on the AIM marketof the London Stock Exchange. Further details can be found on the Company'swebsite For further information on Crosby please contact: Steve Fletcher, Chief Operating Officer on +44 20 7590 2800 This information is provided by RNS The company news service from the London Stock Exchange