Tapoil Acquires Highly Attractive Thailand Gulf Assets

Tap Oil Limited  announced the acquisition of 75% of the issued capital of Northern Gulf Petroleum Pte Ltd (“Northern Gulf”) and a capital raising of up to approximately A$82 million.

The proceeds of the raising are to facilitate the acquisition and exploration, appraisal and pre-FID engineering costs leading to an FID decision in early 2012. Northern Gulf holds a 40% interest in three petroleum concessions in the Gulf of Thailand.

• Northern Gulf holds a 40% interest in the undeveloped Manora Oil Field – estimated at  24 million barrels (mmbbl) of oil for 100%1
• Northern Gulf also holds a 40% interest in the Rossukon oil discovery and over 200 mmbbls of cumulative unrisked exploration potential
• Immediate exploration and appraisal program with up to 8 wells in the next 15 months
• Potential to triple Tap Oil’s reserves within 12 months
• A$13m institutional placement and A$69m accelerated non-renounceable 1 for 2 entitlement offer

Acquisition

The petroleum concessions include the Manora oil field (estimated at 24 mmbbls1) which was discovered in late 2009 and is actively being appraised. It is expected to reach a development decision in early 2012.

Experienced international operator and operator of the nearby Jasmine field, Pearl Energy, is operator of all of the acquired licences and holds the remaining 60% interest in the petroleum licences.

1 Best estimate for 100%, as independently reviewed and accepted as reasonable by RISC

Consideration for the acquisition includes:

 an upfront cash payment of US$25.0m (A$25.4m2); and

 US$12.5m (A$12.7m2) in Tap ordinary shares issued by way of placement to the owner of Northern Gulf priced at A$0.95 which is the 10 day volume weighted average price (VWAP) prior to 13 October 2010. These shares are subject to an escrow period of 2 years. Subsequent payments from Tap to Northern Gulf are contingent on achieving milestones at the Manora project.

Peter Stickland, Tap’s Managing Director and CEO said that the acquisition of two oil discoveries and a large exploration acreage position is an excellent fit with Tap’s existing portfolio and strategy.

“The Manora oil field is an exciting recent discovery that will be further appraised in 2011 with a final investment decision anticipated in early 2012,” Mr Stickland said.

“The concessions acquired also include the single well Rossukon oil discovery that, alongside the Manora discovery in late 2009, highlights the significant exploration upside in this 31,000km2 exploration area,” he said.

Tap currently sees over 200 mmbbls of cumulative unrisked follow up potential.

Placement and Entitlement Offer

Tap intends to undertake an equity raising of up to approximately A$82 million via an institutional placement and an accelerated non-renounceable entitlement offer. The equity raising will be used to provide funding for the acquisition and subsequent exploration, appraisal and pre-development studies in the acquired assets. Any additional funds will be used for general working capital purposes and to support Tap’s existing exploration program. The raising comprises a A$13 million institutional placement (“Placement”) and a A$69 million 1 for 2 non-renounceable pro-rata entitlement offer (“Entitlement Offer”) to all eligible shareholders.

The Placement and the institutional component of the Entitlement Offer (“Institutional Entitlement Offer”) totalling A$50 million are fully underwritten. Under the Entitlement Offer, eligible shareholders are invited to participate on a pro-rata basis to their existing holdings by subscribing for 1 new Tap share (“New Share”) for every 2 Tap shares owned, at a price of A$0.81 per share (“Entitlement”). An offer document setting out the terms of the Entitlement Offer has been lodged with the ASX today. Eligible shareholders will be sent a copy of the offer document and application form on 21 October 2010.

The offer price of A$0.81 represents a discount of 13.8% to Tap’s closing price on 13 October 2010 and a discount of 9.7% to the theoretical ex-rights price. All New Shares will rank equally with existing shares from allotment. The Entitlements are non-renounceable and will not be tradeable on ASX or otherwise transferable. Shareholders who do not take up their Entitlements in full will not receive any value in respect of those Entitlements that they do not take up. Shareholders who are not eligible to 2 AUDUSD at 0.984.  receive Entitlements will not receive any value in respect of Entitlements they would have  received had they been eligible.

Tap’s largest institutional shareholder M&G Investment Management has committed to take up its entitlement in full.

UBS AG, Australia Branch (UBS) is the Sole Lead Manager, Sole Underwriter and Sole Bookrunner to the Placement and Institutional Entitlement Offer and has entered into an underwriting agreement with Tap in relation to approximately A$50 million of shares.

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Source:Tapoil , October 14, 2010;