EEL Equator Exp.

    RNS Number : 8658C
  Equator Exploration Limited
  05 September 2008
   


    FOR IMMEDIATE RELEASE - 5 September 2008
    FOR: EQUATOR EXPLORATION LIMITED 
    ("Equator"or  the "Company")
    SUBJECT: Settlement with BW Offshore and update on suspension of share trading 

    
London, 5 September 2008 * Equator hereby makes the following announcement to provide details of a settlement of one of the Company*s
outstanding contingent liabilities and an update on the current suspension of share trading.
 
Contingent Liabilities
 
Equator and a number of its wholly-owned subsidiaries have entered into an agreement (the *Settlement Agreement*) with BW Peace Limited, a
subsidiary of BW Offshore AS (*BW*), to settle all outstanding amounts resulting from the termination of a contract for the provision of an
FPSO for the Bilabri oil development in OML122, offshore Nigeria. This Settlement Agreement has now become unconditional and as a result,
the contingent liability of US$52million for early termination noted in our most recent financial reports is reduced by US$10million.  In
addition, if payment is made before 31 December 2008, there will be a further reduction of US$12million, resulting in a net settlement of
US$30million plus interest instead of the original potential of US$52 million.
 
The Company has already paid US$20million, as guarantor under the FPSO Contract. Therefore if payment is made prior to 31 December 2008, a
termination payment of US$10.6 million plus interest will satisfy in full all claims from BW. The Company has arranged for the settlement
amount to be assigned from the cash proceeds receivable under the farm-out agreement on OPL323 with BG Exploration and Production Nigeria
Limited announced on 17 August 2007.
 
In addition, the Settlement Agreement requires that the Company pays for variation orders under the FPSO Contract. The amount due for one
variation order is still under negotiation with a third party but the total is expected to be no more than US$8.2 million, excluding any
interest which may be due. Provision has been made under the Settlement Agreement for the variation orders to be funded from the cash
proceeds of any farm-out of the Company*s interest in OPL321.  However, provision has also been made within the Bilabri Settlement
Agreement, dated 13 September 2007 (*BSA*), for amounts due under the FPSO Contract to be paid from the proceeds of the financing of the
Bilabri oil development being arranged by Peak Petroleum Industries Nigeria Limited. The status of this financing will be addressed in a
separate news release.
 
 
 
2007 Annual Report and Accounts
 
The Company*s shares were suspended from trading at the end of June because the 2007 financials had not been published within the required
period of 6 months from the end of 2007. This was due to complications resulting from the implementation of International Financial
Reporting Standards and their effect on the accounting treatment of the loans and warrants issued by the Company and of their subsequent
re-pricings and repayment deferrals. The treatment has now been agreed with our auditors, PricewaterhouseCoopers, and the financial
statements have been submitted to them for their final review. The Board of Directors will publish the 2007 Annual Report and Accounts as
soon as it has approved the financial statements. Once published, the Company*s share suspension is expected to be lifted and share trading
should therefore re-commence.
 
An update covering other current issues will be distributed in due course.


    Enquiries:

 Equator                                                   +44 (0)207 235 2555
 Philip Rand
 Chief Executive Officer

 Beaumont Cornish Limited (Nominated Adviser to Equator)   +44 (0)207 628 3396
 Roland Cornish

 Fox-Davies Capital Limited (Nominated Broker to Equator)  +44 (0)207 936 5234
 Richard Hail

 Buchanan Communications                                   +44 (0)207 466 5000
 Bobby Morse/Ben Willey


    Information on Equator

    Equator Exploration Limited engages in the exploration and development of oil and gas projects in highly prospective West Africa.
Equator's objective is to build a diversified portfolio of exploration, appraisal and production assets in the region. The Company has
exploration interests in the territorial waters of Nigeria and of S Tome Prcipe as well as in the Joint Development Zone between the two
countries.


    Additional information regarding the Company can be obtained from the Company's website at www.equatorexploration.com.

This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
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