Desire Petroleum PLC Recommended combination with Desire Petroleum plc (6250P)

TIDMDES

RNS Number : 6250P

Desire Petroleum PLC

03 October 2013

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

3 OCTOBER 2013

RECOMMENDED COMBINATION

Falkland Oil & Gas Limited ("FOGL")

with

Desire Petroleum plc ("Desire")

(to be implemented by way of a Scheme of Arrangement

under Part 26 of the Companies Act)

and

FARM-OUT HEADS OF AGREEMENT AGREED

with

Premier Oil Exploration and Production Limited ("Premier") and Rockhopper Exploration (Oil) Limited ("Rockhopper")

in respect of

certain North Falkland Basin licences

Summary

-- The boards of FOGL and Desire are pleased to announce that they have reached agreement on the terms of a recommended combination of FOGL with Desire (the "Combination"), pursuant to which FOGL will acquire the entire issued and to be issued share capital of Desire in exchange for FOGL Consideration Shares. The Combination is to be effected by way of a Scheme of Arrangement of Desire under Part 26 of the Companies Act.

-- The boards of FOGL and Desire believe that the Combination will diversify the activities of the two companies, resulting in a balanced portfolio with enhanced long-term prospects, a strong balance sheet and improved financing options.

-- FOGL has also signed heads of agreement ("Heads of Agreement") with Premier and Rockhopper with respect to a farm-out of licences PL004a and PL004c (the "Licences") (the "Farm-Out"). Premier and Rockhopper will farm-in to the Licences and, in exchange, will fund the Combined Group's share of the cost of two exploration wells, one on each of the Licences. Completion of the Farm-Out is subject to, inter alia, the Scheme becoming effective, any required approvals from the Falkland Islands Government and completion of definitive documents in respect of the Farm-Out.

-- The Combination and the Farm-Out together will enable the execution of an enhanced drilling programme of five wells in the next drilling campaign, including:

o two wells in the South Falkland Basin, partnered with Noble Energy and Edison International; and

o three wells in the North Falkland Basin, one of which will target the Zebedee prospect.

-- The next drilling campaign is expected to be fully funded from existing cash, the Farm-Out and other previously completed farm-out agreements.

Overview of the Combination

-- Under the terms of the Combination, Scheme Shareholders will be entitled to receive 0.6233 FOGL Consideration Shares for each Desire Share.

-- Following the Combination becoming effective, FOGL Shareholders will own 60 per cent. of the Combined Group's issued share capital, with Desire Shareholders owning the remaining 40 per cent.

-- The Combined Group will be a balanced, focussed E&P company with exposure to all known major hydrocarbon plays in the Falklands.

-- As at 30 June 2013, the aggregate cash balances of FOGL and Desire were approximately US$170 million.

-- Based on the price of a FOGL Share of 28.50 pence, being the Closing Price of a FOGL Share on 2 October 2013, the Combination values the entire issued share capital of Desire at approximately GBP61 million, and each Desire Share at 17.76 pence.

-- Thisrepresents a premium of approximately 45 per cent. over the Closing Price of 12.25 pence per Desire Share on 2 October 2013, being the last practicable date prior to this announcement.

-- Following implementation of the Combination, the management team of the Combined Group will comprise Tim Bushell as Chief Executive Officer and Colin More as Exploration Director. Richard Liddell, Non-Executive Chairman of FOGL, will continue as Non-Executive Chairman of the Combined Group. In addition to Mr. Liddell, the Board of the Combined Group will comprise Timothy Jones (Non-Executive Director of FOGL), David Hudd (Non-Executive Director of FOGL), Tim Bushell and Colin More, as well as Stephen Phipps (Desire's current Chairman), Ian Duncan (Desire's current Chief Executive Officer) and Robert Lyons (a current Non-Executive Director of Desire) who will all join the Board of the Combined Group as Non-Executive Directors.

-- Stephen Phipps, who controls 10.7 per cent. of the issued share capital of Desire, has entered into a conditional lock-in agreement with FOGL for a period of six months following completion of the Combination in respect of the FOGL Consideration Shares issued to him (and those persons associated with him) on completion of the Combination.

-- The Desire Directors, who have been so advised by Peel Hunt LLP, consider the terms of the Combination to be fair and reasonable. In providing its advice, Peel Hunt LLP has taken into account the commercial assessments of the Desire Directors.

-- Accordingly, the Desire Directors unanimously recommend Desire Shareholders vote in favour of the Scheme and the resolutions at the Court Meeting and the Desire General Meeting (or in the event that the Combination is implemented by means of a Takeover Offer, to accept or procure acceptance of the Takeover Offer), as the Desire Directors have irrevocably undertaken to do (or procure that those persons connected with them so do) in respect of their entire beneficial holdings in Desire, amounting to, in aggregate, 37,405,557 Desire Shares, representing approximately 10.9 per cent. of the issued ordinary share capital of Desire. These undertakings include an undertaking from the Chairman of Desire, Stephen Phipps, who controls 10.7 per cent. of the issued ordinary share capital of Desire. The irrevocable undertakings remain binding in all circumstances, including in the event of a higher offer, unless the Scheme lapses or is withdrawn and/or the Panel does not require FOGL to proceed with the Scheme.

-- The Combination is conditional on, inter alia, certain approvals by Desire 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. In addition, special resolutions approving the Scheme and the related Capital Reduction must be passed by Desire Shareholders representing at least 75 per cent. of the votes cast at the Desire General Meeting.

-- The Combination is also conditional on the FOGL Shareholders approving, by way of ordinary resolution, the issue of the FOGL Consideration Shares at the FOGL General Meeting.

-- The FOGL Directors believe that the Combination is in the best interests of FOGL and FOGL Shareholders as a whole and accordingly intend to unanimously recommend that FOGL Shareholders approve the resolutions to be proposed at the FOGL General Meeting as they have irrevocably undertaken to do in respect of their own beneficial holdings totalling 720,185 FOGL Shares, representing approximately 0.23 per cent. of the FOGL Shares.

-- FOGL has received irrevocable undertakings to vote in favour of the resolutions to be proposed at the FOGL General Meeting from the FOGL Directors in respect of their entire beneficial holdings in FOGL, amounting to, in aggregate, 720,185 FOGL Shares, representing approximately 0.23 per cent. of the issued ordinary share capital of FOGL. FOGL has also received an irrevocable undertaking to vote in favour of the resolutions to be proposed at the FOGL General Meeting from Erebus Limited (a subsidiary of Falkland Islands Holdings plc of which David Hudd, one of the FOGL Directors, is also a director), in respect of its holding of 12,825,000 FOGL Shares, representing approximately 4.01 per cent. of the issued ordinary share capital of FOGL. Accordingly, FOGL has received irrevocable undertakings to vote in favour of the resolutions to be proposed at the FOGL General Meeting in respect of a total of 13,545,185 FOGL Shares, representing approximately 4.23 per cent. of the issued ordinary share capital of FOGL.

-- The Scheme is also subject to the Conditions set out in Appendix I to this announcement, including any required approvals from the Falkland Islands Government.

   --        The Combination is not conditional upon completion of the Farm-Out.

-- It is expected that the Scheme Document, containing further information about the Combination and notices of the Court Meeting and Desire General Meeting together with the Forms of Proxy, will be posted as soon as reasonably practicable and that the Combination and the resolutions required to implement the Scheme will be put to Desire Shareholders at the Court Meeting and the Desire General Meeting in November 2013, with the FOGL General Meeting being held around the same time. Subject to the satisfaction or, where relevant, waiver of all relevant Conditions (as set out in Appendix I), the Scheme is expected to become effective by 31 December 2013.

Overview of the Farm-Out

-- FOGL has signed Heads of Agreement with Premier and Rockhopper with respect to the Farm-Out of the Licences in which Desire currently holds working interests of 92.5 per cent. and 75 per cent. respectively. Completion of the Farm-Out is conditional on,inter alia, the Scheme becoming effective, receipt of any approvals required from the Falkland Islands Government and entry into and completion of definitive documentation in respect of the Farm-Out.

-- Following implementation of the Combination, any required approvals being received from the Falkland Islands Government and the completion of definitive documentation in respect of the Farm-Out, Premier and Rockhopper will farm in to the Licences and as a result of this, the Combined Group's working interests in PL004a and PL004c will both be reduced to 40 per cent.

-- In exchange for aggregate working interests of 52.5 per cent. in PL004a and 35 per cent. in PL004c, Premier and Rockhopper will fund the Combined Group's share of the cost of two exploration wells, one on each of the Licences. It is anticipated that these two wells will be included in the next drilling campaign. The Heads of Agreement provide that the Combined Group will retain operatorship of the Licences until the second carried exploration well is plugged and abandoned.

Commenting on the Combination, Tim Bushell, Chief Executive of FOGL, said:

"This combination is a compelling opportunity to consolidate the portfolios of FOGL and Desire, diversifying the risk profile for both companies' shareholders and enabling the combined group to move forward with an active, long-term programme for growth in the Falkland Islands. Specifically, this transaction provides FOGL with access to Desire's interests in the North Falkland Basin (including the Sea Lion area) which we believe are highly complementary to our existing exploration portfolio in the South.

The farm-out to Premier and Rockhopper, which will reduce the combined group's working interests in PL004a and PL004c to 40 per cent., is a prudent piece of portfolio management and allows us to participate in a more extensive exploration programme due to the drilling carry we have agreed, while retaining control through operatorship until both wells have been drilled.

FOGL is in a strong financial position and these transactions will enhance the company's opportunity set and offer new and exciting potential opportunities to deploy capital and create value for both companies' shareholders."

Commenting on the Combination, Stephen Phipps, Chairman of Desire, said:

"We have for a number of months been seeking additional investment into our North Falkland Basin licences and are pleased that this process has concluded with the combination with FOGL. Not only do Desire shareholders retain material interests in Desire's highly prospective exploration acreage, but we also benefit from the farm-out with Premier and Rockhopper, exposure to FOGL's upcoming programme in the South Falkland Basin, a strong balance sheet and expert partners. We are entering an extremely exciting period in the Falklands with shareholders in the combined group now having fully funded, material exposure to five wells across three basins, testing three different play types."

 
 
   Enquiries: 
 FOGL 
 Tim Bushell, Chief Executive Officer           +44 (0)20 7563 1260 
 RBC Europe Limited (Financial Adviser, 
  Joint Broker and NOMAD to FOGL) 
 Jeremy Low / Matthew Coakes                    +44 (0)20 7653 4000 
 Jefferies International Limited (Financial 
  Adviser and Joint Broker to FOGL) 
 Richard Kent / Chris Zeal / Graham Hertrich    +44 (0)20 7029 8000 
 Desire 
 Stephen Phipps, Chairman 
  Ian Duncan, Chief Executive Officer           +44 (0)20 7436 0423 
 Peel Hunt LLP (Financial Adviser, Broker 
  and NOMAD to Desire) 
 Richard Crichton / Charlie Batten              +44 (0)20 7418 8900 
 Media Enquiries: 
 FTI Consulting (PR Adviser to FOGL) 
 Ed Westropp / Natalia Erikssen                 +44 (0)207 831 3113 
 Buchanan (PR Adviser to Desire) 
 Tim Thompson / Tom Hufton                      +44 (0)20 7466 5000

This summary should be read in conjunction with, and is subject to, the full text of this announcement (including the Appendices).

The Combination 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 Desire Directors is contained in Appendix III to this announcement. Certain terms used in this announcement are defined in Appendix IV to this announcement.

RBC Europe Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is acting as financial adviser to FOGL and no one else in connection with the contents of this announcement and will not be responsible to anyone other than FOGL for providing the protections afforded to clients, or for providing advice in relation to any matters referred to herein.

Jefferies International Limited, which is authorised and regulated in the UK by the Financial Conduct Authority, is acting exclusively for FOGL and no one else in connection with the Combination and this announcement and will not be responsible to anyone other than FOGL for providing the protections afforded to clients of Jefferies nor for providing advice in connection with the Combination or any matter referred to herein.

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

Falkland Oil & Gas Limited reserves the right to elect, with the consent of the Panel (where necessary), to implement the Combination 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 Combination.

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 Combination or otherwise. The Combination will be made solely by means of the Scheme Document, which will contain the full terms and conditions of the Combination, including details of how to vote in favour of the Scheme. Desire and FOGL urge Desire 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 Combination.

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 FOGL or required by the City Code and permitted by applicable law and regulation, the Combination 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 Combination will not be capable of acceptance from or within a Restricted Jurisdiction. Accordingly, copies of this announcement and all documentation relating to the Combination 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 Combination (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 Combination.

The availability of the Combination to Desire 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 Desire Shareholders will be contained in the Scheme Document.

Forward looking statements

This announcement, any oral statements made by FOGL or Desire in relation to the Combination, and other information published by FOGL or Desire may contain statements about FOGL and Desire 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 FOGL's or Desire's operations and potential synergies resulting from the Combination; and (iii) the effects of government regulation on FOGL's or Desire'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. FOGL and Desire 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 FOGL Group as enlarged by the Combination, FOGL and/or Desire for current or future financial years will necessarily match or exceed the historical or published earnings per share of FOGL or Desire.

Disclosure requirements of the Takeover Code (the "Code")

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. 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 per cent. 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, 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.

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 Combination. 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 given by the Desire Directors. Appendix IV contains definitions of certain expressions used in this summary and in this announcement.

Information relating to Desire Shareholders

Please be aware that addresses, electronic addresses and certain information provided by Desire Shareholders, persons with information rights and other relevant persons for the receipt of communications from Desire may be provided to FOGL 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.fogl.com and www.desireplc.co.uk by no later than 12 noon (London time) on the business day following the date of this annoucement.

You may request a hard copy of this announcement, free of charge, by contacting Capita Registrars on+44 (0) 871 664 0300.

Desire Shareholders may also request that all future documents, announcements and information to be sent to them in relation to the Combination should be in hard copy form.

Rule 2.10 Disclosure

In accordance with Rule 2.10 of the Code, Desire confirms that it has342,282,198 Desire Shares in issue and admitted to listing on the AIM Market of the London Stock Exchange under ISIN reference GB0002689494.

In accordance with Rule 2.10 of the Code, FOGL confirms that it has 320,000,000 FOGL Shares in issue and admitted to listing on the AIM Market of the London Stock Exchange under ISIN reference FK00B030JM18.

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

3 October 2013

RECOMMENDED COMBINATION

Falkland Oil & Gas Limited ("FOGL")

with

Desire Petroleum plc ("Desire")

(to be implemented by way of a Scheme of Arrangement

under Part 26 of the Companies Act)

and

FARM-OUT HEADS OF AGREEMENT AGREED

with

Premier Oil Exploration and Production Limited ("Premier") and Rockhopper Exploration (Oil) Limited ("Rockhopper")

in respect of

certain North Falkland Basin licences

   1        Introduction

The boards of FOGL and Desire are pleased to announce that they have reached agreement on the terms of a recommended combination of FOGL with Desire (the "Combination"), pursuant to which FOGL will acquire the entire issued and to be issued share capital of Desire in exchange for FOGL Consideration Shares.

It is intended that the Combination be implemented by way of a Court sanctioned Scheme of Arrangement under Part 26 of the Companies Act.

FOGL has also signed heads of agreement (the "Heads of Agreement") with Premier and Rockhopper with respect to a farm-out of licences PL004a and PL004c (the "Licences") (the "Farm-Out"). In exchange, Premier and Rockhopper will farm-in to the Licences and will fund the Combined Group's share of the cost of two exploration wells, one on each of the Licences. Completion of the Farm-Out is conditional on, inter alia, the Scheme becoming effective, receipt of any approvals required from the Falkland Islands Government and entry into and completion of definitive documentation in respect of the Farm-Out.

The Combination and the Farm-Out together will enable the execution of an enhanced drilling programme of five wells in the next campaign, including:

o two wells in the South Falkland Basin, partnered with Noble Energy and Edison International; and

o three wells in the North Falkland Basin, one of which will target the Zebedee prospect.

The next drilling campaign will be fully funded from existing cash, the Farm-Out and other previously completed farm-out agreements.

Pursuant to the Combination, 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 Desire Share                        0.6233 FOGL Consideration Shares

Based on the price of a FOGL Share of 28.50 pence, being the Closing Price of a FOGL Share on 2 October 2013 (the last practicable date prior to this announcement), the Combination values the entire issued share capital of Desire at approximately GBP61 million and each Desire Share at 17.76 pence.

This represents a premium of approximately 45 per cent. over the Closing Price of 12.25 pence per Desire Share on 2 October 2013, being the last practicable date prior to this announcement.

Following the Combination becoming effective, FOGL Shareholders will hold 60 per cent. of the Combined Group's issued share capital, with Desire Shareholders holding the remaining 40 per cent.

The Combination is conditional on, inter alia, certain approvals by Desire 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.

The Combination is not conditional upon completion of the Farm-Out.

It is expected that the Scheme Document, containing further information about the Combination and notices of the Court Meeting and Desire General Meeting together with the Forms of Proxy, will be posted as soon as reasonably practicable and that the Combination and the resolutions required to implement the Scheme will be put to Desire Shareholders at the Court Meeting and the Desire General Meeting which are expected to be held in November 2013. Subject to the satisfaction or, where relevant, waiver of all relevant Conditions, the Scheme is expected to become effective by 31 December 2013.

Furthermore, the Combination is also conditional on the FOGL Shareholders approving the issue of the FOGL Consideration Shares at the FOGL General Meeting. It is anticipated such meeting will take place around the same time as the Court Meeting and the Desire General Meeting.

   2        Background to and reasons for the Combination and the Farm-Out

The Combined Group retains FOGL and Desire's focus on highly prospective acreage positions in the Falkland Islands, while successfully diversifying the activities of the two companies. The Farm-Out would reduce the Combined Group's working interest in PL004a and PL004c to an appropriate level, while enabling the Combined Group to participate in an expanded drilling programme through the agreed drilling carry. The boards of FOGL and Desire believe the Combination and the Farm-Out will create a balanced portfolio with enhanced long-term prospects, a strong balance sheet and improved financing options.

Geographic focus

The Combination consolidates FOGL and Desire's mutual focus on the Falkland Islands, a proven but underexplored hydrocarbon province. The Combination creates the only Falkland Islands focussed exploration, appraisal and development company operating across the North, East and South Falkland Basins. By combining FOGL and Desire's knowledge and expertise of exploring and operating in the Falkland Islands, the boards of both companies believe that the opportunities for creating value for both sets of shareholders are significantly improved.

Balanced, diversified portfolio

The Combination creates a balanced, diversified portfolio including: Sea Lion, an oil development project; material, highly prospective acreage in the South Falklands Basin; and appraisal and exploration opportunities in the North Falklands Basin.

Based on initial 3D seismic interpretation, multiple large prospects have been mapped on FOGL's South and East Falkland Basin acreage which offer a series of high-impact drilling opportunities. The size and prospective nature of this acreage enabled FOGL to successfully conclude farm-out transactions with both Noble Energy and Edison International in 2012.

Desire's portfolio is focussed on the North Falkland Basin. Desire has an interest in the Sea Lion development project, the quantum of which has yet to be determined and from which first oil is currently forecast to be produced in 2018. Desire's portfolio also offers multiple drilling locations, including step out exploration and appraisal opportunities in the Sea Lion area. The Farm-Out confirms Premier and Rockhopper's shared belief in the prospectivity of these opportunities.

Active drilling programme

The Combined Group will be well funded (as at 30 June 2013, the aggregate cash balances of FOGL and Desire were approximately US$170 million). Together with the Farm-Out and FOGL's existing farm-out agreements with Noble Energy and Edison International, the Combined Group will have sufficient resources to drill five wells in the next drilling campaign, which is expected to commence in late 2014. It is currently anticipated that two wells will be drilled in the South Falkland Basin, the first of which will target the Diomedia Fan complex. A further three wells are expected to be drilled in the North Falkland Basin, including the Zebedee exploration well which will aim to prove the extension of the southern portion of the Sea Lion field and also new reservoir targets within PL004b. The two other wells in the North Falkland Basin are expected to be drilled on PL004a and PL004c, pursuant to the Farm-Out, targeting the Isobel and Jayne prospect stacks.

   3        Desire Recommendation and irrevocable undertakings

The Desire Directors, who have been so advised by Peel Hunt LLP, consider the terms of the Combination to be fair and reasonable. In providing its advice, Peel Hunt LLP has taken into account the commercial assessments of the Desire Directors.

Accordingly, the Desire Directors unanimously recommend Desire Shareholders vote in favour of the Scheme and the resolutions to be proposed at the Court Meeting and the Desire General Meeting (or in the event that the Combination is implemented by means of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) as the Desire Directors have, in respect of their entire beneficial holdings in Desire, irrevocably undertaken to do (or procure that their relevant connected persons so do). Such shares represent, in aggregate, 37,405,557 Desire Shares, representing approximately 10.9 per cent. of the issued ordinary share capital of Desire. These undertakings include an undertaking from the Chairman of Desire, Stephen Phipps, who controls 10.7 per cent. of the issued ordinary share capital of Desire. The irrevocable undertakings remain binding in all circumstances, including in the event of a higher offer, unless the Scheme lapses or is withdrawn and/or the Panel does not require FOGL to proceed with the Scheme.

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

   4        FOGL Recommendation and irrevocable undertakings

The FOGL Directors believe that the Combination is in the best interests of FOGL and FOGL Shareholders as a whole and accordingly intend to unanimously recommend that FOGL Shareholders approve the resolutions to be proposed at the FOGL General Meeting as they have irrevocably undertaken to do in respect of their own beneficial holdings totalling 720,185 FOGL Shares, representing approximately 0.23 per cent. of the FOGL Shares.

FOGL has received irrevocable undertakings to vote in favour of the resolutions to be proposed at the FOGL General Meeting from the FOGL Directors in respect of their entire beneficial holdings in FOGL, amounting to, in aggregate, 720,185 FOGL Shares, representing approximately 0.23 per cent. of the issued ordinary share capital of FOGL. FOGL has also received an irrevocable undertaking to vote in favour of the resolutions to be proposed at the FOGL General Meeting from Erebus Limited (a subsidiary of Falkland Islands Holdings plc of which David Hudd, one of the FOGL Directors, is also a director), in respect of its holding of 12,825,000 FOGL Shares, representing approximately 4.01 per cent. of the issued ordinary share capital of FOGL. Accordingly, FOGL has received irrevocable undertakings to vote in favour of the resolutions to be proposed at the FOGL General Meeting in respect of a total of 13,545,185 FOGL Shares, representing approximately 4.23 per cent. of the issued ordinary share capital of FOGL.

   5        Information on the Farm-Out

FOGL has signed Heads of Agreement with Premier and Rockhopper with respect to a farm-out of the Licences, in which Desire currently holds working interests of 92.5 per cent. and 75 per cent. respectively.

Following implementation of the Combination and subject to any required approvals from the Falkland Islands Government and the completion of definitive documents in respect of the Farm-Out, Premier and Rockhopper will farm in to the Licenses, pursuant to which the Combined Group's working interests in PL004a and PL004c will both be reduced to 40 per cent. In exchange for working interests of 52.5 per cent. in PL004a and 35 per cent. in PL004c, Premier and Rockhopper will fund the Combined Group's share of the cost of two exploration wells, one on each of the Licences.

It is anticipated that these two wells will be included in the next drilling campaign, which is expected to commence in late 2014, and will be targeting the Isobel and Jayne prospect stacks. Desire is the current operator of the Licences, and the Combined Group will transfer operatorship of the Licences to Premier only once the second exploration well has been plugged and abandoned.

Completion of the Farm-Out is conditional on, inter alia, the Scheme becoming effective, receipt of any approvals required from the Falkland Islands Government and the entry into and completion of definitive documents in respect of the Farm-Out.

 
                  Current Working     Post Farm-Out 
                     Interests       Working Interest 
 PL004a 
 FOGL / Desire         92.5%              40.0% 
 Premier               4.5%               36.0% 
 Rockhopper            3.0%               24.0% 
 
 PL004c 
 FOGL / Desire         75.0%              40.0% 
 Premier               15.0%              36.0% 
 Rockhopper            10.0%              24.0% 
---------------  ----------------  ------------------ 
 
   6        Information on FOGL

Falkland Oil & Gas Limited is an oil & gas exploration company incorporated in the Falkland Islands and whose shares are admitted to trading on AIM. All of its upstream assets are located in the South and East Falkland Basins, offshore Falkland Islands.

In 2012, FOGL and its joint venture partners (Noble Energy and Edison International) drilled two exploration wells. The Loligo well demonstrated a working hydrocarbon system in the northern part of the East Falkland Basin and that Loligo is a viable stratigraphic trap. The main hydrocarbon phase encountered within all the reservoir objectives was gas. The Scotia well also established working hydrocarbon systems in the mid Cretaceous Fan play and demonstrated that Scotia is a viable stratigraphic trap.

In 2013, more than 7,000 km(2) of 3D seismic has been acquired over the Cretaceous Diomedia fan complex and Fault Block area. Initial fast track data is currently being interpreted and will be used to commence prospect mapping and the selection of well locations. Preliminary work on the 3D data has already identified a number of large prospects within the Diomedia fan complex. A further 3D survey in the Northern Licence Area is planned for Q4 2013.

   7        Information on Desire

Desire (named after HMS Desire which discovered the Falkland Islands in 1592) was incorporated in 1996 specifically to participate in the first round of licences granted by the Falkland Islands Government to explore for hydrocarbons. The Company is admitted to trading on AIM and is primarily focussed on exploring for oil & gas in the North Falkland Basin.

Desire's current licence holdings comprise licences PL003 (Tranche C), PL004 (Tranche D) and PL005 (Tranche F). The assets include undeveloped discoveries and 45 undrilled prospects. PL004b contains an extension to the Sea Lion field main reservoir as well as the Beverley, Casper and Casper South discoveries.

During February 2010 Desire commenced the Ocean Guardian drilling campaign with six wells drilled on Desire's acreage. On 12 October 2011, Desire announced an agreement with Rockhopper to farm-in to the northern part of the PL004 licence. The final 14/15-4a well proved the extension of the Sea Lion discovery into this licence. The results from this well were analysed by Senergy with a CPR update released on 20 April 2012 which estimated mean contingent oil resources net to Desire of 85 million barrels within PL004b.

These results were combined with the final interpretation of the 2012 merged 3D seismic survey and an assessment of the 14/19-1 Liz gas condensate discovery to compile a complete assessment of Desire's assets (the "CPR Update"), which was announced on 23 November 2012. The CPR Update showed 45 prospects in various play types, of which 12 prospects have gross resource potential exceeding 100 million barrels of oil equivalent, and 10 prospects had a geological chance of success of 30 per cent. or more.

On 31 October 2012, Desire announced approval from the Falkland Islands Government to group PL003, PL004 and PL005 together and confirmed that the existing phase 2 work commitment across these licences had been completed, with the licence period having been extended to 1 May 2016, with a commitment to drill one exploration well during this period. As part of this approval, Desire relinquished PL006, PL007 and PL034, in the southern part of the basin.

   8        Management and employees

FOGL sees the retention of the expertise and knowledge vested in the current Desire Board and management as an important key to unlocking the exploration potential of Desire's North Falkland Basin licences and will work closely with Desire's management to develop a plan that effectively integrates the complementary strengths of the two companies.

Following implementation of the Combination, the management team of the Combined Group will comprise Tim Bushell as Chief Executive Officer and Colin More as Exploration Director. Richard Liddell, Non-Executive Chairman of FOGL, will continue as Non-Executive Chairman of the Combined Group. In addition to Mr. Liddell, the Board of the Combined Group will comprise Timothy Jones (Non-Executive Director of FOGL), David Hudd (Non-Executive Director of FOGL), Tim Bushell and Colin More, as well as Stephen Phipps (Desire's current Chairman), Ian Duncan (Desire's current Chief Executive Officer) and Robert Lyons (a current Non-Executive Director of Desire) who will all join the Board of the Combined Group as Non-Executive Directors.

The proposed board of the Combined Group is shown below:

 
 Name              Position in Combined Group                 Currently 
----------------  -----------------------------------------  ---------- 
 Richard Liddell   Non-Executive Chairman                     FOGL 
----------------  -----------------------------------------  ---------- 
 Tim Bushell       Executive Director, Chief Executive        FOGL 
                    Officer 
----------------  -----------------------------------------  ---------- 
 Colin More        Executive Director, Exploration Director   FOGL 
----------------  -----------------------------------------  ---------- 
 Timothy Jones     Non-Executive Director                     FOGL 
----------------  -----------------------------------------  ---------- 
 David Hudd        Non-Executive Director                     FOGL 
----------------  -----------------------------------------  ---------- 
 Stephen Phipps    Non-Executive Director                     Desire 
----------------  -----------------------------------------  ---------- 
 Robert Lyons      Non-Executive Director                     Desire 
----------------  -----------------------------------------  ---------- 
 Ian Duncan        Non-Executive Director                     Desire 
----------------  -----------------------------------------  ----------

FOGL expects that the other non-executive members of the Desire Board will cease to have any involvement with the Combined Group from the Effective Date and that they and the two executive members of the Desire Board will resign as directors of Desire at such time.

FOGL has given assurances to the Desire Directors that the existing employment rights of all Desire employees will be fully safeguarded following implementation of the Combination.

   9        Desire Share Schemes

Participants in the Desire Share Schemes will be contacted separately regarding the effect of the Combination on their rights under the Desire Share Schemes.

Options granted under the Desire Unapproved Executive Share Option Scheme (the "Option Scheme") shall, to the extent not already exercisable, be exercisable pursuant to Rule 7.3 of the Option Scheme upon sanction by the Court of the Scheme. Options will lapse six months following Court sanction to the extent not exercised.

Share appreciation rights granted under the Desire Incentive Plan 2006 (the "SARS Scheme") shall, to the extent not already exercisable, be exercisable pursuant to Rule 6.2 (b) of the SARS Scheme upon sanction by the Court of the Scheme within six months following Court sanction and no discretion will be exercised by the remuneration committee of Desire to extend such 6 month period under the terms of the rules of the SARS Scheme. To the extent not exercised, awards under the SARS Scheme will lapse.

   10      FOGL Consideration Shares

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

Shares of non-UK companies (such as FOGL) cannot be held and transferred directly into the CREST system. Holders of Scheme Shares who hold Desire Shares in uncertificated form (that is, in CREST) will be entitled to FOGL Depositary Interests, representing the FOGL Consideration Shares to which the relevant Desire Shareholder is entitled under the terms of the Scheme. The FOGL Depository Interests can be held and transferred through the CREST system. It is expected that the FOGL Depository Interests will trade on the AIM Market of the London Stock Exchange under ISIN FK00B030JM18 in the same way as existing FOGL Shares.

Fractions of FOGL Consideration Shares will not be allotted or issued pursuant to the Scheme directly to Scheme Shareholders, but entitlements of Scheme Shareholders will instead be rounded down to the nearest whole number of FOGL Consideration Shares and all fractional entitlements will be aggregated and allotted and issued to the person appointed by FOGL as nominee for such Scheme Shareholders and sold in the market as soon as practicable after the Effective Date. The net proceeds of sale shall be paid to such Scheme Shareholders in due course. However, individual entitlements to amounts of less than GBP2 will not be paid to Scheme Shareholders but will instead be retained for the benefit of FOGL.

   11      Opening Position Disclosures and interests

FOGL 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.

   12      Structure of the Combination

It is intended that the Combination 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 Desire and the Scheme Shareholders and is subject to the approval of the Court.

The purpose of the Scheme is to provide for FOGL to become the holder of the entire issued and to be issued ordinary share capital of Desire. 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 Desire which is equal to the number of Scheme Shares cancelled and issuing such new ordinary shares to FOGL. FOGL will subsequently issue the FOGL Consideration Shares to which Desire Shareholders on the register of members at the Scheme Record Time are entitled pursuant to the terms of the Combination.

To become effective, the Scheme will require, inter alia, 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 Desire Shareholders of a special resolution necessary to implement the Scheme (including approving appropriate amendments to the articles of association of Desire) at the Desire 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 including any approvals required from the Falkland Islands Government.

Once the necessary approvals from Desire 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 31 December 2013. If the Scheme does not become effective on or before 31 May 2014, it will lapse and the Combination 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 Desire General Meeting.

The FOGL Consideration Shares to be issued to Desire 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.

FOGL reserves the right, with the consent of the Panel (where necessary), to elect to implement the Combination by way of a Takeover Offer as an alternative to the Scheme. Any such Takeover Offer will be subject to an acceptance condition of FOGL having acquired (whether pursuant to the Combinationor otherwise) such percentage (being more than 50 per cent.) of the Desire Shares, as FOGL 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 an indicative timetable for its implementation together with notices of the Court Meeting and Desire General Meeting, will be contained in the Scheme Document which will be published as soon as reasonably practicable after the date of this announcement.

   13      Offer related arrangements

Confidentiality Agreement

FOGL and Desire entered into a confidentiality agreement in a customary form in relation to the Combination, pursuant to which they each undertook, subject to certain exceptions, to keep information relating to FOGL and Desire confidential and not to disclose it to third parties. Unless terminated earlier, the confidentiality obligations will remain in force for two years from the date of the agreement.

Co-operation Agreement

FOGL and Desire have entered into a co-operation agreement pursuant to which FOGLand Desire have agreed to use their reasonable endeavours to provide each other with information or assistance for the purposes of obtaining any official authorisation or regulatory clearance required in connection with the implementation of the Acquisition, including in respect of any letter of comfortletter or consent that may be required from the Falkland Islands Government regarding change of control of the licences held by Desire.

The parties have also agreed to provide for an exchange of information in respect of the Scheme Document and the FOGL Circular.

In addition, with regard to the Desire Shares Schemes, FOGL and Desire have agreed as set out in paragraph 9 above.

   14      Stephen Phipps Lock-In

In consideration for the shares he controls in Desire, Stephen Phipps and those persons connected with him will receive 22,876,751 FOGL Consideration Shares. Stephen Phipps has entered into a conditional agreement pursuant to which he will agree not to, and will procure that none of his associates shall, dispose of, or agree to dispose of, any FOGL Consideration Shares at any time until the 6 month anniversary of the admission of his FOGL Consideration Shares to trading other than in certain agreed circumstances.

   15      Expected timetable

Desire currently anticipates that:

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

   (b)        the Court Meeting and Desire General Meeting will take place in November 2013; and

(c) subject to the Scheme becoming unconditional and Effective in accordance with its terms, the Combination is expected to become effective no later than 31 December 2013, with the consideration being issued to Desire Shareholders no later than 14 days after the Effective Date.

In addition, FOGL currently anticipates that:

(a) it will despatch the FOGL Circular to FOGL Shareholders as soon as reasonably practicable; and

(b) the FOGL General Meeting will take place in November 2013, around the same time as the Court Meeting and the Desire General Meeting.

The timing of events which relate to the implementation of the Combination 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 Combination does not become effective by the Long Stop Date, the Combination will lapse except where the approval of Desire Shareholders at the Court Meeting and Desire General Meeting is obtained before this date, in which case the Long Stop Date for the Combination may be extended to such later date as FOGL and Desire may agree and, if appropriate, the Court may approve.

   16      Regulatory issues

The Combination will be subject to the conditions and further terms set out below and in Appendix I, including the receipt of any required approvals from the Falkland Islands Government and the full terms and conditions which will be set out in the Scheme Document.

   17      Disclosure of interests in Desire Shares

Save as disclosed below, neither FOGL, nor any of the FOGL Directors nor, so far as the FOGL Directors are aware, any other person acting in concert with FOGL for the purposes of the Combination, owns, controls, holds, or has borrowed or lent any Desire Shares or any securities convertible or exchangeable into Desire Shares or rights to subscribe for or purchase or options (including traded options) in respect of, or derivatives referenced to, any such Desire Shares:

 
 Name             Number of Desire Shares 
 Timothy Jones                     16,638 
 David Hudd                         1,000 
 
   18      Overseas Shareholders

The availability of the Combination 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 Desire Shareholders will be contained in the Scheme Document.

   19      Delisting and re-registration

Upon or shortly after the Effective Date, it is intended that FOGL will procure that Desire applies to cancel the listing of Desire Shares on AIM.

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

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

   20      General

The Combination 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 Desire irrevocable undertakings 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 FOGL's website (www. fogl.com) and Desire's website (www.desireplc.co.uk) by no later than 12 noon (London time) on 4 October 2013) (being the Business Day following the date of this announcement):

-- the irrevocable undertakings referred to in paragraph 3 above and summarised in Appendix III to this announcement;

   --     the confidentiality agreement referred to at paragraph 13 above; 
   --     the co-operation agreement referred to at paragraph 13 above; and 
   --     this announcement. 
 
 Enquiries: 
 FOGL 
 Tim Bushell, Chief Executive Officer           +44 (0)20 7563 1260 
 RBC Europe Limited (Financial Adviser, 
  Joint Broker and NOMAD to FOGL) 
 Jeremy Low / Matthew Coakes                    +44 (0)20 7653 4000 
 Jefferies International Limited (Financial 
  Adviser and Joint Broker to FOGL) 
 Richard Kent / Chris Zeal / Graham Hertrich    +44 (0)20 7029 8000 
 Desire 
 Stephen Phipps, Chairman 
  Ian Duncan, Chief Executive Officer           +44 (0)20 7436 0423 
 Peel Hunt LLP (Financial Adviser, Broker 
  and NOMAD to Desire) 
 Richard Crichton / Charlie Batten              +44 (0)20 7418 8900 
 Media Enquiries: 
 FTI Consulting (PR Adviser to FOGL) 
 Ed Westropp / Natalia Erikssen                 +44 (0)207 831 3113 
 Buchanan (PR Adviser to Desire) 
 Tim Thompson / Tom Hufton                      +44 (0)20 7466 5000

FOGL reserves the right to elect, with the consent of the Panel (where necessary), to implement the Combination 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 Combination.

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

The technical information included in this announcement in respect of FOGL has been reviewed, verified and compiled by FOGL's geological staff, including a qualified person, Colin More BSc., MSc. (Exploration Director), who has over 26 years of experience in petroleum exploration, for the purpose of the Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in respect of AIM companies, which outline standards of disclosure for mineral projects. Mr. More is a member of the Geological Society of London, the American Association of Petroleum Geologists and the Society of Exploration Geophysicists.

The technical information included in this announcement in respect of Desire has been reviewed, verified and compiled byhas been approved by Mr Ken Black, Exploration Director of Desire Petroleum plc, who is a member of the Petroleum Exploration Society of Great Britain, with over 30 years experience in petroleum exploration and management and who is a Qualified Person in accordance with the guidance note for Mining, Oil & Gas Companies issued by the London Stock Exchange in respect of AIM Companies.

Overseas shareholders

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

Forward looking statements

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. FOGL and Desire disclaim any obligation to update any forward looking or other statements contained herein, except as required by applicable law.

Not a profit forecast

Disclosure requirements of the Takeover Code (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.fogl.com and www.desireplc.co.uk by no later than 12 noon (London time) on the Business Day following the date of this announcement.

You may request a hard copy of this announcement, free of charge, by contacting Capita Registrars on +44 (0) 871 664 0300. Desire Shareholders may also request that all future documents, announcements and information to be sent to them in relation to the Combination should be in hard copy form.

Rule 2.10 Disclosure

APPENDIX I

CONDITIONS AND CERTAIN FURTHER TERMS OF THE COMBINATION

   Part A:                 Conditions of the Combination

The Combination 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 FOGLand Desire 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 Desire General Meeting 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 FOGL and Desire) 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.

(b) The Combination will also be conditional upon the FOGL Shareholders approving the issue and allotment of the FOGL Consideration Shares in the FOGL General Meeting.

In addition, FOGL and Desire have agreed that the Combination 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:

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

(d) without prejudice to paragraphs (f) or (g) below, the Falkland Islands Government not having indicated an intention to (i) revoke or recommend the revocation of any exploration or production licence held by Desire or (ii) to require a further change of control of Desire as a result of the implementation of the Combination;

(e) the London Stock Exchange agreeing to admit the FOGL Consideration Shares to trading on AIM subject only to the allotment of such FOGL Consideration Shares and/or the Scheme becoming effective;

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

(i) any moneys borrowed by or any other indebtedness (actual or contingent) of, or grant available to Desire, being or becoming repayable or capable of being declared repayable immediately or earlier than their or its stated maturity date or repayment date or the ability of Desire to borrow moneys or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(ii) any such agreement, arrangement, licence, permit or instrument or the rights, liabilities, obligations or interests of Desire thereunder being terminated or modified or affected or any onerous obligation or liability arising or any action being taken or arising thereunder;

(iii) any assets or interests of Desire being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged;

(iv) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of Desire;

(v) the rights, liabilities, obligations or interests of Desire in, or the business of Desire with, any person, firm or body (or any arrangement or arrangements relating to any such interest or business) being terminated, adversely modified or affected;

(vi) the value of Desire or its financial or trading position or prospects being prejudiced or adversely affected;

(vii) Desire ceasing to be able to carry on business under any name under which it presently does so; or

(viii) the creation of any liability, actual or contingent, by Desire otherwise than in the ordinary course of business,

and no event having occurred which, under any provision of any agreement, arrangement, licence, permit or other instrument to which Desire is a party or by or to which Desire or any of its assets may be bound, entitled or subject, would 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 to Desire);

(g) 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 reasonably be expected, in each case, to be material to Desire or, as the case may be, the Wider FOGL Group as a whole or in the context of the Combination:

(i) require, prevent or delay the divestiture, or materially alter the terms envisaged for any proposed divestiture by any member of the Wider FOGL Group or by Desire of all or any portion of their respective businesses, assets or property or impose any material limitation on the ability of any of them to conduct their respective businesses (or any of them) or to own any of their respective assets or properties or any material part thereof;

(ii) require, prevent or delay the divestiture by any member of the Wider FOGL Group of any shares or other securities inDesire;

(iii) impose any limitation on, or result in a delay in, the ability of any member of the Wider FOGL Group directly or indirectly to acquire or to hold or to exercise effectively any rights of ownership in respect of shares or loans or securities convertible into shares or any other securities (or the equivalent) in Desire or the Wider FOGL Group or to exercise management control over any such member;

(iv) otherwise materially adversely affect the business, assets, profits or prospects of any member of the Wider FOGL Group or of Desire;

(v) make the Combination or its implementation or the acquisition or proposed acquisition by FOGL or any member of the Wider FOGL Group of any shares or other securities in, or control of Desire void, illegal, and/or unenforceable under the laws of any jurisdiction, or otherwise, directly or indirectly, restrain, restrict, prohibit, delay or otherwise materially challenge or interfere with the same, or impose material additional conditions or obligations with respect thereto;

(vi) if FOGL elects to implement the Combination by way of an Offer, save as pursuant to the 'squeeze-out' procedure in accordance with the provisions of Part 28 of the Companies Act 2006, require any member of the Wider FOGL Group or Desire to offer to acquire any shares or other securities (or the equivalent) or interest in Desire or the Wider FOGL Group owned by any third party; or

(vii) result in Desire ceasing to be able to carry on business under any name under which it presently does so,

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 Combination or the acquisition or proposed acquisition of any Desire Shares having expired, lapsed or been terminated;

(h) all necessary filings or applications having been made in connection with the Combination and all statutory or regulatory obligations in any jurisdiction having been complied with in connection with the Combination or the acquisition by any member of the Wider FOGL Group of any shares or other securities in, or control of, Desire and all regulatory authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals (collectively "Consents") deemed necessary or appropriate by FOGL, acting reasonably, or Desire for or in respect of the Combination or the proposed acquisition of any shares or other securities in, or control of, Desire by any member of the Wider FOGL Group having been obtained in terms and in a form reasonably satisfactory to FOGL from any appropriate Third Parties in each case where the absence of such Consent would have a material adverse effect on the Wider FOGL Group taken as a whole and all Consents reasonably necessary or appropriate to carry on the business of Desire which is material in the context of the FOGL Group as a whole or to Desire 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 Combination becomes otherwise unconditional and all necessary statutory or regulatory obligations in any jurisdiction having been complied with in all material respects;

   (i)            except as Disclosed, Desire not having, since 31 December 2012:

(i) save for Desire Shares issued pursuant to the exercise of options granted under the Desire Share Scheme, issued, authorised or proposed the issue of additional shares of any class;

(ii) save for the grant of options under the Desire Share Scheme, issued or agreed to issue, authorised or proposed the issue of securities convertible into shares of any class or rights, warrants or options to subscribe for, or acquire, any such shares or convertible securities;

(iii) recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution whether payable in cash or otherwise;

(iv) merged or demerged with any body corporate or acquired or disposed of or transferred, mortgaged or charged or created any security interest over any assets or any right, title or interest in any asset (including shares and trade investments) or authorised or proposed or announced any intention to propose any merger, demerger, acquisition or disposal, transfer, mortgage, charge or security interest, in each case, other than in the ordinary course of business and to an extent which is material to Desire;

(v) made or authorised or proposed or announced an intention to propose any change in its loan capital;

(vi) issued, authorised or proposed the issue of any debentures or, save in the ordinary course of business, incurred or increased any indebtedness or become subject to any contingent liability to an extent which is material to Desire;

(vii) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect to the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

(viii) implemented, or authorised, proposed or announced its intention to implement, any reconstruction, amalgamation, scheme, commitment or other transaction or arrangement otherwise than in the ordinary course of business in any case which is material to Desire or entered into or changed the terms of any contract with any director or senior executive of Desire, in any case to an extent which is material to Desire;

(ix) entered into or varied or authorised, proposed or announced its intention to enter into or vary any material contract, transaction or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or which is or would be reasonably likely to be materially restrictive on the businesses of Desire or the Wider FOGL Group or which involves or is reasonably likely to involve an obligation of such a nature or magnitude or which is outside the ordinary course of business and in each such case is or would reasonably likely to be material to Desire;

(x) taken any corporate action or had any legal proceedings started or threatened against it for its winding-up, dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or had any such person appointed;

(xi) entered into any contract, transaction or arrangement which would be restrictive on the business of Desire or the Wider FOGL Group other than to a nature and extent which is normal in the context of the business concerned;

(xii) waived or compromised any claim otherwise than in the ordinary course of business which is material to Desire;

(xiii) entered into any contract, commitment, arrangement or agreement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced any intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition;

(xiv) proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme, pension scheme obligationsor other benefit relating to the employment or termination of employment of any person employed by Desire.

   (j)            except as Disclosed since 31 December 2012:

(i) no material adverse change or deterioration having occurred in the business, assets, financial or trading position or profits or prospects of the Desire;

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings to which Desire is or may become a party (whether as a plaintiff, defendant or otherwise) and no investigation by any Third Party against or in respect of Desire having been instituted announced or threatened by or against or remaining outstanding in respect of Desire which in any such case might be reasonably expected to have a material adverse affect on Desire;

(iii) no contingent or other liability having arisen or become apparent to FOGL which would be likely to have a material effect on Desire; and

(iv) no steps having been taken which are reasonably likely to result in the withdrawal, cancellation, termination or modification of any licence held by Desire which is necessary for the proper carrying on of its business and the absence of which in any case would have or would reasonably be expected to have a material adverse effect on Desire;

   (k)           except as Disclosed, FOGL not having discovered:

(i) that any financial, business or other information concerning Desire as contained in the information publicly disclosed at any time by or on behalf of Desire is materially misleading, contains a misrepresentation of fact or omits to state a fact necessary to make that information not materially misleading and which was not subsequently corrected before 2 October 2013 by public disclosure, in any case which is material to Desire; and

(ii) that Desireis subject to any liability (contingent or otherwise) which is material to Desire;

   (l)            FOGL not having discovered that:

(i) Desire has failed to comply with any and/or all applicable legislation or regulation, of any jurisdiction with regard to the disposal, spillage, release, discharge, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or harm human health or animal health or otherwise relating to environmental matters, or that there has otherwise been any such disposal, spillage, release, discharge, leak or emission (whether or not the same constituted a non-compliance by any person with any such legislation or regulations, and wherever the same may have taken place) any of which disposal, spillage, release, discharge, leak or emission would be likely to give rise to any liability (actual or contingent) on the part of Desire and which is material to Desire; or

(ii) there is, or is likely to be, for that or any other reason whatsoever, any material liability (actual or contingent) of Desire to make good, repair, reinstate or clean up any property or any controlled waters now or previously owned, occupied, operated or made use of or controlled by Desire, under any environmental legislation, regulation, notice, circular or order of any government, governmental, quasi-governmental, state or local government, supranational, statutory or other regulatory body, agency, court, association or any other person or body in any jurisdiction and which is material to Desire.

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

Conditions (c) to (l) (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. FOGL shall be under no obligation to waive or treat as satisfied any of Conditions (c) to (l) (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 FOGL is required by the Panel to make an offer for Desire Shares under the provisions of Rule 9 of the Code, FOGL may make such alterations to any of the above Conditions as are necessary to comply with the provisions of that Rule.

FOGL reserves the right to elect (with the consent of the Panel) to implement the Combination 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 Combination, 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, being more than 50 per cent., as FOGL may, subject to the Code and with the consent of the Panel, decide) (i) in nominal value of the shares to which such Offer relates; and (ii) of the voting rights attached to those shares; and (iii) of the voting rights normally exercisable at a general meeting of Desire, including, for this purpose, any such voting rights attaching to Desire 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 Combination 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 Combination 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 Combination will comply with the applicable rules and regulations of the Financial Conduct 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 Combination

The Combination 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 Combination will not be capable of acceptance by any such use, means, instrumentality or facility or from within the United States, Canada, Japan or Australia.

Desire Shares which will be acquired under the Combination 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 II

SOURCES OF INFORMATION AND BASES OF CALCULATION

In this announcement:

(i) As at the close of business on 2 October 2013, being the last business day prior to the date of this announcement, FOGL had in issue 320,000,000 FOGL Shares and Desire had in issue 342,282,198Desire Shares. The ISIN for FOGL Shares is FK00B030JM18 and for the Desire Shares is GB0002689494.

(ii) The values placed on the issued share capital of Desire (approximately GBP61 million) is based on 342,282,198 Desire Shares in issue on 2 October 2013, being the last dealing day prior to the date of this announcement.

(iii) The closing mid-market share prices of FOGL Shares on 2 October 2013, referred to in this announcement are derived from the London Stock Exchange Daily Official List.

(iv) The closing mid-market share prices of Desire Shares on 2 October 2013, referred to in this announcement are derived from the London Stock Exchange Daily Official List.

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

(vi) Unless otherwise stated, the financial information relating to FOGL is extracted or derived from the Annual Report and Accounts of FOGL for the financial year to 31 December 2012 and the interim results for the six months to 30 June 2013 (without any adjustments).

APPENDIX III

DESIRE IRREVOCABLE UNDERTAKINGS

Directors and other employees

FOGL has received irrevocable undertakings from the Desire Directors to vote in favour of the Scheme and the resolutions to be proposed at the Court Meeting and the Desire General Meeting (and if the Combination is subsequently structured as a Takeover Offer, to accept any such offer made by FOGL) in respect of their entire holdings in Desire Shares, representing approximately 10.9 per cent. of the existing issued ordinary share capital of Desire. Details of these undertakings are set out below.

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

(i) FOGL announces, with the consent of the Panel, that it does not intend to make or proceed with the Combination; or

(ii) the Scheme or Offer (as applicable) lapses, closes or is withdrawn (as applicable) and/or the Panel confirms that FOGL is no longer required to proceed with the Scheme.

Details of irrevocable undertakings

The following Desire Directors have given irrevocable undertakings on the terms summarised above:

 
                     Desire Shares subject to irrevocable undertakings 
 Name                Number of Desire Shares   % of Desire issued share capital 
 Directors: 
 Stephen Phipps                   36,702,633                             10.72% 
 Ian Duncan                          485,369                              0.14% 
 Eddie Wisniewski                     30,000                             0.009% 
 Ken Black                            75,000                             0.022% 
 Andrew Windham                       37,555                             0.011% 
 Robert Lyons                         75,000                             0.022% 
 Graeme Thomson                            0                                 0%

APPENDIX IV

DEFINITIONS

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

 
 "AIM"                            the AIM market of the London Stock 
                                   Exchange 
 "AIM Rules"                      the AIM Rules for Companies 
 "Annual Report" and "Accounts"   the annual report and accounts of 
                                   Desire or FOGL for the year ended 
                                   31 December 2012 
 "Business Day"                   any day which is not a Saturday, Sunday 
                                   or a bank or public holiday in England 
 "Capital Reduction"              the proposed reduction of the ordinary 
                                   share capital of Desire provided by 
                                   the Scheme under section 641 of the 
                                   Companies Act 
 "Capital Reduction Hearing"      the hearing by the Court to confirm 
                                   the Capital Reduction at which the 
                                   Reduction Court Order is expected 
                                   to be granted 
 "City Code" or "Code"            The City Code on Takeovers and Mergers, 
                                   as amended from time to time 
 "Closing Price"                  the closing middle market quotation 
                                   of a Desire or a FOGL Share as derived 
                                   from the Daily Official List 
 "Combination"                    the proposed acquisition of the entire 
                                   issued and to be issued share capital 
                                   of Desire by FOGL to be implemented 
                                   by means of the Scheme (or, if FOGL 
                                   so elects, a Takeover Offer) on the 
                                   terms and subject to the Conditions 
                                   set out in this announcement and to 
                                   be set out in the Scheme Document 
                                   (or the Offer Document (as the case 
                                   may be)) and, where the context admits, 
                                   any subsequent revision, variation, 
                                   extension or renewal thereof 
 "Combined Group"                 the FOGL Group (including Desire) 
                                   following the Effective Date 
 "Companies Act"                  the Companies Act 2006 (as amended, 
                                   modified, consolidated, re-enacted 
                                   or replaced from time to time) 
 "Conditions"                     the conditions of the Combination 
                                   set out in Appendix I to this announcement 
                                   and to be set out in the Scheme Document 
                                   and a "Condition" shall mean any one 
                                   of them 
 "Court"                          the High Court of Justice in England 
                                   and Wales 
 "Court Meeting"                  the meeting (or any adjournment thereof) 
                                   of the Scheme Shareholders to be convened 
                                   by order of the Court pursuant to 
                                   Part 26 of the Companies Act to consider 
                                   and, if thought fit, approve the Scheme 
                                   (with or without modification) 
 "Court Orders"                   the Scheme Court Order and the Reduction 
                                   Court Order 
 "CREST"                          the relevant system (as defined in 
                                   the CREST Regulations) in respect 
                                   of which Euroclear UK & Ireland Limited 
                                   is the operator (as defined in the 
                                   CREST Regulations) 
 "CREST Regulations"              the Uncertificated Securities Regulations 
                                   2001 (SI 2001 No. 3755), as amended 
                                   from time to time 
 "Daily Official List"            the Daily Official List published 
                                   by the London Stock Exchange 
 "Dealing Disclosure"             has the same meaning as in Rule 8 
                                   of the Code 
 "Desire"                         Desire Petroleum plc 
 "Desire Directors"               the directors of Desire as at the 
                                   date of this announcement 
 "Desire General Meeting"         the general meeting (or any adjournment 
                                   thereof) of the Desire Shareholders 
                                   to be convened in connection with 
                                   the Scheme, expected to be held as 
                                   soon as the preceding Court Meeting 
                                   shall have been concluded or adjourned 
 "Desire Share Schemes"           the Desire Petroleum plc Unapproved 
                                   Executive Share Option Scheme adopted 
                                   on 7 April 1998 and the Desire Incentive 
                                   Plan 2006 
 "Desire Shareholders"            the holders of Desire Shares from 
  or "Shareholders"                time to time 
 "Desire Shares"                  the existing unconditionally allotted 
                                   or issued and fully paid ordinary 
                                   shares of 1 pence each in the capital 
                                   of Desire and any further such ordinary 
                                   shares which are unconditionally allotted 
                                   before the Scheme becomes effective 
 "Disclosed"                      (i) publicly announced via a Regulatory 
                                   Information Service by or on behalf 
                                   of Desire prior to 3 October 2013, 
                                   (ii) disclosed in the Annual Report 
                                   and Accounts of Desire for the financial 
                                   year ended 31 December 2012, (iii) 
                                   disclosed in the Interim Report of 
                                   Desire for the six months ended 30 
                                   June 2013 or (iv) as fairly disclosed 
                                   in writing by or on behalf of Desire 
                                   to FOGL or its advisers in connection 
                                   with the Combination prior to 3 October 
                                   2013 
 "Edison International"           Edison International S.p.A. 
 "Effective Date"                 the date on which the Scheme becomes 
                                   effective 
 "Excluded Shares"                any Desire Shares of which any member 
                                   of the FOGL Group is the holder or 
                                   in which any member of the FOGL Group 
                                   is beneficially interested 
 "Financial Conduct Authority"    the United Kingdom Financial Services 
                                   Authority and any successor or replacement 
                                   regulatory body or bodies 
 "FOGL"                           Falkland Oil & Gas Limited 
 "FOGL Circular"                  the document to be sent to FOGL Shareholders 
                                   which will, among other things, contain 
                                   the notice convening the FOGL General 
                                   Meeting 
 "FOGL Consideration Shares"      new FOGL Shares to be allotted and 
                                   issued to Desire Shareholders pursuant 
                                   to the terms and conditions of the 
                                   Scheme should the Scheme become effective, 
                                   to be constituted by the FOGL Depository 
                                   Interests 
 "FOGL Depository Interests"      the depository interests in respect 
                                   of the FOGL Shares 
 "FOGL Directors"                 the directors of FOGL as at the date 
                                   of this announcement 
 "FOGL General Meeting"           the extraordinary general meeting 
                                   (or any adjournment thereof) of the 
                                   FOGL Shareholders to be convened in 
                                   connection with the FOGL Resolution, 
                                   notice of which will be set out in 
                                   the FOGL Circular 
 "FOGL Group"                     means FOGL, its subsidiaries and subsidiary 
                                   undertakings 
 "FOGL Resolution"                the ordinary resolution to be proposed 
                                   at the FOGL General Meeting for the 
                                   purpose of authorising the FOGL Directors 
                                   to issue and allot the FOGL Consideration 
                                   Shares 
 "FOGL Shares"                    Ordinary shares in the capital of 
                                   FOGL, with a nominal value of 0.002 
                                   pence each 
 "Forms of Proxy"                 the forms of proxy to be enclosed 
                                   with the Scheme Document for use at 
                                   the Court Meeting and Desire General 
                                   Meeting 
 "FSA"                            the Financial Services Authority 
 "FSMA"                           the Financial Services and Markets 
                                   Act 2000 and any subordinate legislation 
                                   made under it, or any applicable successor 
                                   or replacement regulatory regime in 
                                   the UK 
 "GIP"                            gas in place 
 "Heads of Agreement"             the heads of agreement among FOGL, 
                                   Premier and Rockhopper 
 "Interim Report"                 the interim report and accounts of 
                                   Desire for the six months ended 30 
                                   June 2013 
 "Jefferies"                      Jefferies International Limited 
 "London Stock Exchange"          London Stock Exchange plc 
 "Long Stop Date"                 means 31 May 2014 
 "Offer Document"                 in the event FOGL elects to implement 
                                   the Combination by means of a Takeover 
                                   Offer, the document containing the 
                                   Takeover Offer to be sent to Desire 
                                   Shareholders 
 "Noble Energy"                   Noble Energy Falklands Limited 
 "Offer Period"                   the offer period (as defined in the 
                                   City Code) relating to Desire which 
                                   commenced on 3 October 2013 
 "Opening Position Disclosure"    has the same meaning as in Rule 8 
                                   of the Code 
 "Panel"                          the Panel on Takeovers and Mergers 
 "Premier"                        Premier Oil Exploration and Production 
                                   Limited 
 "RBC"                            RBC Europe Limited 
 "Reduction Court Order"          the order of the Court confirming 
                                   the Capital Reduction under section 
                                   641 of the Companies Act 
 "Registrar of Companies"         the Registrar of Companies in England 
                                   and Wales 
 "Restricted Jurisdiction"        any such jurisdiction where local 
                                   laws or regulations may result in 
                                   significant risk of civil, regulatory 
                                   or criminal exposure if information 
                                   concerning the Combination is sent 
                                   or made available to Desire Shareholders 
                                   in that jurisdiction (in accordance 
                                   with Rule 23.2 of the City Code) 
 "Rockhopper"                     Rockhopper Exploration (Oil) Limited 
 "Scheme Court Order"             the order of the Court sanctioning 
                                   the Scheme under Part 26 of the Companies 
                                   Act 
 "Scheme Document"                the document to be sent to Desire 
                                   Shareholders which will, among other 
                                   things, contain the terms and conditions 
                                   of the Scheme and notices convening 
                                   the Court Meeting and the Desire General 
                                   Meeting 
 "Scheme Record Time"             anticipated to be 6.00pm on the Business 
                                   Day before the Capital Reduction Hearing 
 "Scheme Shareholders"            the holders of Scheme Shares 
 "Scheme Shares"                   the Desire Shares: 
                                    (a) in issue at the date of the Scheme 
                                    Document; 
                                    (b) (if any) issued after the date 
                                    of the Scheme Document and prior to 
                                    the Voting Record Time; or 
                                    (c) (if any) issued at or after the 
                                    Voting Record Time and at or prior 
                                    to the Scheme Record Time either on 
                                    terms that the original or any subsequent 
                                    holders thereof shall be bound by 
                                    the Scheme and/or in respect of which 
                                    the original or any subsequent holders 
                                    thereof are, or shall have agreed 
                                    in writing to be, bound by the Scheme, 
                                    in each case, excluding any Excluded 
                                    Shares 
 "Scheme" or "Scheme of           the proposed scheme of arrangement 
  Arrangement"                     made under Part 26 of the Companies 
                                   Act between Desire and the Scheme 
                                   Shareholders (with or subject to any 
                                   modification, addition or condition 
                                   approved or imposed by the Court and 
                                   agreed to by FOGL and Desire) particulars 
                                   of which will be set out in the Scheme 
                                   Document 
 "Takeover Offer"                 the implementation of the Combination 
                                   by means of a takeover offer under 
                                   the City Code 
 "United Kingdom" or "UK"         the United Kingdom of Great Britain 
                                   and Northern Ireland 
 "United States"                  the United States of America, its 
                                   territories and possessions, any State 
                                   of the United States of America and 
                                   the District of Columbia 
 "US$"                            means United States Dollars 
 "Voting Record Time"             the time and date specified in the 
                                   Scheme Document by reference to which 
                                   entitlement to vote on the Scheme 
                                   will be determined 
 "Wider FOGL Group"               FOGL, its subsidiaries, subsidiary 
                                   undertakings and associated undertakings 
                                   and any other body corporate, partnership, 
                                   joint venture or person in which FOGL 
                                   and such undertakings (aggregating 
                                   their interests) have a direct or 
                                   indirect interest of 20 per cent. 
                                   or more of the voting or equity capital 
                                   or the equivalent

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", "GBP", "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.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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