TXO TXO

TIDMTXO

RNS Number : 4852J

TXO PLC

30 June 2011

FOR IMMEDIATE RELEASE 30 June 2011

TXO PLC

("TXO" or the "Company")

INVESTMENT AND OPTION GRANTED

TXO RECEIVES REPAYMENT OF LOAN TO MORGAN OIL USA LLC LOAN, ACQUIRES 10% SHAREHOLDING OF THE GRAND BAHAMA GROUP LIMITED, AND GRANTS SHORT TERM LOAN TO GRAND BAHAMA GROUP LIMITED

The board of TXO Plc ("TXO") announces that today, it has received full repayment of the unsecured GBP300,000 loan made to Morgan Oil USA LLC ("Morgan Oil").

The Company also announces that today, it has completed the purchase of an investment holding in the Grand Bahama Group Limited ("the Group").

The Company has purchased 100 Ordinary Shares in the share capital of the Group for an investment of GBP500,000 representing a 10% shareholding. The existing shareholders of the Group have also granted a further six month option, exercisable, at the Company's call, in two parts, for TXO to acquire a further 521 Ordinary Shares for GBP3.45 million. TXO will then hold 621 Shares, representing a 42.2% shareholding in the Group.

TXO has also granted a short term unsecured loan of GBP112,500 to the Group.

This investment is in line with the Company's investing policy as approved by Shareholders on 18 May 2011. Following commercial due diligence on the Group, the Board recognises the potential opportunity that Morgan Oil Marine has to leverage off the potential growth of the Freeport, Grand Bahamas. The expectation is that the revenues from Morgan Oil will part fund the growth of Morgan Oil Marine.

The Group has two separate wholly owned subsidiaries:

The first is Morgan Oil USA LLC ("Morgan Oil"), an existing oil production company that currently has interests varying between 82% and 87.5% on eight leases, where there are currently 16 wells, in the Henderson and Webster counties of Western Kentucky USA. There was an independent evaluation of the remaining oil reserves within the Morgan Oil leases conducted in January 2010, showing an estimated 400,000 barrels of recoverable reserves remaining, with a valuation of $22.75million at the January 2010 oil price of $65 per barrel. The valuer, who has reviewed and approved disclosure of this information, has recently confirmed his opinion that the value of the remaining recoverable reserves would be correspondingly higher at today's oil price. It should be noted however that these valuations were conducted using the "Volumetric Method" which although widely used, is not in compliance with AIM standard and should accordingly be treated with appropriate caution. The Company has recently received an offer from an unconnected third party exploration company to undertake and fund, the first of a number of proposed horizontal drills on the Morgan Oil estate, replacing four traditional wells with one horizontal well. Horizontal well drilling has become one of the most valuable technologies introduced to the oil business and is an enhanced oil recovery method which has been shown to both increase production and increase recoverable reserves. The offer includes a substantial upfront payment of $700,000 to Morgan Oil, an initial 7% interest in oil production, rising to 25% interest when the third party has recovered the cost of drilling. In the period from 1 January 2011 to 11 June 2011, a period during which Morgan Oil has completed significant refurbishment to its sites, Morgan Oil had income of $86,500 against expenses of $181,000 and as at 11 June 2011 Net Liabilities of $853,000. It should be noted that the Net Liabilities include the value of the reserves at cost to Morgan Oil less accumulated depreciation and does not represent the independent valuation of the remaining reserves.

The second is Morgan Oil Marine (Bahamas) Limited ("Morgan Oil Marine"), that has recently been appointed the exclusive BP Marine Limited distributor of lubricants for the whole of the Bahamas. Under this distributor agreement Morgan Oil Marine has recently submitted its first major tender and has commenced marketing with identified potential customers in order to fully utilise and develop the exclusive contract for the Bahamas region. Morgan Oil Marine has recently received the conditional approval, subject to Morgan Oil Marine being able to show it has funding available to it of approximately GBP1.2m, of the Grand Bahama Port Authority to base its operations in Freeport, Grand Bahamas. This is a significant opportunity to supply the large volume of ships that visit the highly strategic Freeport, being one of the fastest expanding deep water ports in the region, including those on the eastern seaboard of the USA. Subject to further funding, Morgan Oil Marine will offer collection facilities for ships slops, tank washings and other waste oils. The company then intends to build facilities for the reprocessing of such waste into heavy fuel and base oils, for pre-identified local and international markets. Morgan Oil Marine has, from incorporation to today spent approximately $204,000 on developing the business, has earned nil revenues and has negligible net assets.

The newly incorporated Grand Bahama Group has acquired Morgan Oil Marine and Morgan Oil specifically in anticipation of this transaction. As such there are no separately available figures for the Group.

Following completion of the investment TXO will have net cash of approximately GBP100,000.

The information contained in the 7(th) paragraph (and marked in bold italics) of this announcement has been reviewed by Howard A. Nevins, President, Trey Exploration Inc, who is a Registered Professional Geologist in the Commonwealth of Kentucky and has sufficient experience relevant to the type of oil and gas resource and region in which they are found, to qualify as a Qualified Person for the purposes of this announcement.

For further information, please contact:

TXO PLC

Tim Baldwin, Chairman +44 (0) 771 287 2820

Iain May, Director +44 (0) 7887 865444

Beaumont Cornish Limited

Roland Cornish +44 (0) 20 7628 3396

This information is provided by RNS

The company news service from the London Stock Exchange

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