PA Resources announces a fully underwritten rights issue of SEK 891 million and bond refinancing undertakings in excess of SEK 500 million

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1 NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, SINGAPORE, SWITZERLAND, SOUTH AFRICA, JAPAN, HONG KONG OR NEW ZEALAND OR IN ANY JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE OF THIS PRESS RELEASE WOULD BE UNLAWFUL. PA Resources announces a fully underwritten rights issue of SEK 891 million and bond refinancing undertakings in excess of SEK 500 million Based on a continued weak development of Azurite and the fact that the company has not yet regained sufficient confidence among investors to refinance itself in the debt markets on acceptable terms, the board of PA Resources has identified the need to further strengthen the company s balance sheet. Hence the board proposes a new issue of shares with preferential rights for the company s shareholders, and has secured undertakings towards a refinancing of the SEK bond loan maturing in October Rights issue of SEK 891 million fully committed and underwritten by Gunvor Group, Lorito Holdings (an investment company wholly owned by a Lundin family trust) and a guarantee consortium put together by Carnegie Investment Bank The board of PA Resources has identified a total funding need including loan maturities, interest payments and committed capital expenditures of at least SEK 1.6 billion until 31 December 2014 In the rights issue, each existing share will give the right to subscribe for three new shares at a subscription price of SEK per new share An EGM on 5 July 2013 is to resolve on the rights issue Larger shareholders with an aggregate holding of approximately 7 percent of the shares and votes in the company, excluding shares and votes represented by Gunvor Group, have undertaken to vote in favour of the rights issue at the EGM The company has received subscription commitments from Gunvor Group and other larger shareholders corresponding to 17 percent of the total rights issue In addition, the company has received underwriting commitments from Gunvor Group (53 percent) and Lorito Holdings (13 percent). The remaining part of the rights issue is underwritten by a guarantee consortium put together by Carnegie Investment Bank Possible new bond issue of up to SEK 1,000 million of which more than 50 percent is underwritten Two larger institutional investors have undertaken to subscribe and pay for more than 50 percent of a bond issue in an amount of up to SEK 1,000 million, subject to terms and conditions being similar to the terms and conditions of the SEK bond loan with maturity in October 2013 PA Resources largest shareholder Gunvor Group has stated their intention to support PA Resources financially as well as with their oil industry expertise. For further information see separate press release dated 5 June 2013 on Webcast conference call today, 5 June 2013, at a.m. CET, see page 6 Background and reasons New major shareholder following the recapitalization in February 2013 In December 2012, PA Resources AB (publ) ( PA Resources or the Company ) made an offer to the holders of the convertible bonds in the Company to set off their claims pursuant to the convertible bonds against newly issued shares, after which the Company carried out a fully underwritten rights issue of SEK 1 (7)

2 705 million. The two transactions (the Recapitalization ) decreased the Company s net debt with SEK 1,421 million and increased the Company s equity with SEK 1,572 million. Through the Recapitalization, Gunvor Group Ltd. ( Gunvor Group ), with extensive experience from the international oil industry, became the largest shareholder and today holds just under 10 percent of the shares and votes in the Company. Gunvor Group is also a lender to the Company through a reserve based credit facility with the Aseng field as collateral. New board of directors and management team A new board of directors in PA Resources was elected by the annual general meeting held on 14 May 2013 (the Board ). The Board includes members with extensive experience of the international oil industry as well as the international financial markets. The Board resolved to appoint the Board member Philippe R Probst as CEO effective as of 15 May A process to recruit a CEO on a permanent basis is currently ongoing. Tomas Hedström joined the Company as CFO on 2 May As previously announced, the Board and management are in the process of reviewing the Company s strategy, assets and long-term financing. Proposed strengthening of the balance sheet and continued development of prioritized assets The business plan presented in connection with the Recapitalization assumed, inter alia, considerable farm-outs of assets and that the Company would be in a position to refinance planned amortizations, including the SEK bond loan maturing in October 2013, in the debt markets on acceptable terms. Following the Recapitalization, the production at the Murphy Oil-operated Azurite field in the Republic of Congo has been significantly below the business plan that was presented in December 2012, which is a result of a failed side-track production well. This has up to date had a limited negative effect on cash flow. However, the negative effect in the coming months is expected to be substantial. During the first quarter of 2013, PA Resources amortized loans in an amount of SEK 245 million. In addition, the Company estimates amortizations to amount to approximately SEK 1.1 billion during the period 1 April December As a result of the above, the total funding need of the Company until 31 December 2014 amounts to at least SEK 1.6 billion. The cash projection should be seen as a minimum funding requirement based on a best estimate of production profiles, the current oil price and current capital expenditure plans. In addition, there are other planned but not yet committed capital expenditure projects that are not included in the estimate below. Minimum funding requirements up to 31 December 2014 Estimated amounts (SEK billion) Cash opening balance as of 31 March Cash flow from operations 0.1 Tunisian farm-out 0.2 Committed capital expenditure -0.7 Amortizations (SEK-bond, NOK-bond, convertible -1.2 bond) Interest payments -0.3 Minimum funding requirement up to December 2014 As described in a press release on 29 May 2013, the Company has entered into an agreement with EnQuest Plc. regarding a farm-out of the operatorship and 70 percent of interest in its Tunisian offshore assets. The transaction is considered by the Board as an important step in creating value by developing prioritized assets into production. However, in a short-term perspective, the effects on the Company s financing needs are limited to reducing levels of capex commitments. 2 (7)

3 The Board is of the opinion that PA Resources, despite the strengthened financial position following the Recapitalization, has not yet regained sufficient confidence among investors to be able to refinance itself in the debt markets on acceptable terms, without a prior strengthening of its balance sheet. This is illustrated by the current pricing of the Company s bonds. With this in mind, the Board is of the opinion that the most favourable course of action for the Company and its shareholders is to raise additional equity through a new issue of shares with preferential rights for the Company s shareholders (the rights issue ), potentially combined with an issue of a new bond ( the bond issue ). Gross proceeds to the Company from the rights issue will amount to approximately SEK 891 million. In addition, the Company may issue new bonds in an amount of up to SEK 1 billion, of which more than 50 percent has been underwritten, subject, inter alia, to the terms of such bond being similar to the terms of the SEK bond loan with maturity in October The Board is of the view that it will be possible to fund residual financing requirements, if any, up until 31 December 2014 through debt financing on acceptable terms. Apart from the operational setbacks on the Azurite field, which has been communicated during the last months, the Company is performing in line with the business plan presented in December The Board is, as announced, presently reviewing the assets and the strategy of the Company. A potential consequence of such a review could involve both further divestments and additional acquisitions, which may result in further funding requirements. Further information on the rights issue The Board decided on 5 June 2013 to summon an EGM to be held on 5 July 2013 (see separate press release for the notice summoning the EGM), and to propose the EGM to resolve on the rights issue. Pursuant to the Board s proposal, shareholders who are registered in the share register of PA Resources on the record date 15 August 2013 will receive one (1) subscription right for each share held. One (1) subscription right will entitle the holder to subscribe for three (3) new shares at a subscription price of SEK per new share. The subscription price corresponds to a discount of approximately 19 percent of the theoretical ex-rights price based on the closing price for the PA Resources share on the last trading day prior to the announcement date. The rights issue will raise approximately SEK 891 million before transaction related costs. The rights issue will increase the Company s share capital with a maximum of SEK 891,197,937 and the number of shares with a maximum of 84,875,994, corresponding to approximately 75 percent of the shares and votes in the Company following the rights issue. Rights issue subscription undertakings and underwriting commitments Shareholders in PA Resources, including Gunvor Group, with an aggregate ownership of 17 percent of the shares and votes, have committed to subscribe for their respective pro rata shares in the rights issue. In addition to the above subscription undertakings, PA Resources has received underwriting commitments from Gunvor Group in an amount corresponding to approximately 53 percent of the total rights issue and from Lorito Holdings (Guernsey) Ltd. ( Lorito Holdings ) in an amount corresponding to approximately 13 percent of the total rights issue. The remaining part of the rights issue has been underwritten by a guarantee consortium consisting of current shareholders and other investors put together by Carnegie Investment Bank. Consequently, the rights issue is fully committed and underwritten. All underwriters will receive underwriting fees corresponding to 4 percent of their respective amount underwritten (in excess of their respective pro rata share). Each underwriter has the right to terminate their underwriting commitment as per above, inter alia, in case the Company has not, prior to the end of the 3 (7)

4 subscription period for the rights issue (i) reached an agreement to amend the terms and conditions of the NOK bond loan in relation to a reduction of the minimum equity covenant from SEK 2,000 million to SEK 1,000 million, and (ii) obtained, with respect to the terms and conditions of the Company s SEK bond loan, such waivers as may be required to ensure compliance with the terms of the SEK bond loan with respect to equity covenants. Assuming utilisation in full of the underwriting commitments, Gunvor Group would become owner of approximately 49.9 percent of the shares and votes in the Company and Lorito Holdings would become owner of approximately 9.9 percent of the shares and votes in the Company. Gunvor Group has been granted exemption from the mandatory bid rules by the Swedish Securities Council (Swe. Aktiemarknadsnämnden) should its ownership exceed 30 percent following a fulfilment of its underwriting commitment in the rights issue. The exemption from the mandatory bid rules is subject to the EGM s resolution on the rights issue being supported by shareholders representing at least two thirds of both the shares represented and the votes cast at the EGM, excluding shares held and represented at the EGM by Gunvor Group. As part of the proposed transactions the Company has agreed with Gunvor Group that the outstanding reserve based credit facility provided by Gunvor Group amounting to USD 84 million will not be amortized before it has been replaced with new external debt financing on acceptable terms. Bond maturity and additional debt financing Following the completion of the rights issue the Board will evaluate the possibility to replace the SEK bond loan maturing in October 2013 with new external debt financing, including for example reserve based lending facilities and/or new bond loans. Provided a successful completion of the rights issue and a issue of a new bond loan of up to SEK 1,000 million, the Company has secured commitments from two larger institutional investors to subscribe and pay for more than 50 percent of such new bond, on terms and conditions based on the terms and conditions of the SEK bond loan maturing in October 2013, with certain amendments e.g. lower maintenance covenants in relation to minimum equity of SEK 1,000 million and a maintained capital employed to book equity ratio of minimum 40 percent. The bond investors will, subject to certain conditions, receive an underwriting fee corresponding to 4 percent of the amount underwritten. The completion of the rights issue together with the bond refinancing undertakings will enable the Company to repay the SEK 850 million bond loan with maturity in October The Company s financial risk exposure will, as a consequence, be significantly reduced and it is the Board s opinion that the Company, following the rights issue, will be well positioned for future refinancing as well as for further divestments and acquisitions. Impairments, accounting effects and bond covenants The farm-out agreement relating to Didon and Zarat, announced on 29 May 2013, resulted in a capital loss of SEK 110 million, accounted for directly. In addition, following a preliminary review of the book values of other assets of the Company, an impairment of values relating to license 2008/17 (Block 8) in Greenland and the Gita license in Denmark will be made in an amount of approximately SEK 180 million. In total, the Company s equity will be negatively affected with approximately SEK 290 million in the second quarter of As a result of these measures the Company might breach certain financial covenants assumed under the terms and conditions for its SEK and NOK bond loans. The Company has launched discussions with the respective agents for the SEK and NOK bondholders with a view to obtaining, in respect of the SEK bond loan, a waiver of the relevant covenants and, in respect of the NOK bond loan, an amendment of the terms of the bond loan so as to ensure compliance with the relevant covenant going forward. As noted above, the underwriting commitments in relation to the rights issue and the new bond, respectively, are conditional upon receipt of such waivers and amendments. 4 (7)

5 In addition to the write-down expected in the second quarter 2013, it should be noted that PA Resources is further targeting a farm-out on the Exploration Area of Mer Profonde Sud in the Republic of Congo, which is dependent on a successful conclusion of negotiations prior to a decision to enter an optional phase for a one-well commitment by November 2013, if the license is not extended. Mer Profonde Sud had a book value of approximately SEK 800 million as of 31 March, Un-audited financial effects of the rights issue and expected write-downs The rights issue will affect the Company s equity and net indebtedness. Expected write-downs in the second quarter of 2013 will negatively affect equity and assets with approximately SEK 290 million. The balance sheet and key ratios set out below represent summarized financial information derived from PA Resources interim report for the period 1 January 31 March 2013 where the rights issue and expected write-downs are reflected as if they had occurred on 31 March Unaudited key financial items and key ratios SEK million Actual before rights issue and write-downs March 31, 2013 Rights issue 1 Write-downs Pro forma after rights issue 1 and write-downs March 31, 2013 Equity 2, ,802 Net interest bearing debt 2, ,220 Equity/capital employed 48% % Debt/equity 96% % 1) Excluding transaction related costs. Indicative timetable 5 July 2013 Extraordinary General Meeting 14 August 2013 Interim report January June 2013 published 15 August 2013 Record date to participate in the rights issue 15 August 2013 The prospectus regarding the rights issue is made public 19 August 2 September 2013 Subscription period in the rights issue Around 4 September 2013 Announcement of outcome in rights issue PA Resources reserves the right to extend the subscription period for the rights issue as well as to postpone the settlement date. Financial and legal advisors Carnegie Investment Bank AB is acting as book runner and financial advisor to PA Resources. Advokatfirman Vinge KB is acting as legal advisor to PA Resources. Gernandt & Danielsson Advokatbyrå KB is acting as legal advisor to Carnegie Investment Bank AB. 5 (7)

6 Webcast telephone conference today, 5 June 2013, at a.m. CET A webcast telephone conference will be held today at a.m. CET where the President and CEO Philippe R Probst and CFO Tomas Hedström will present the background to and facts about the proposed refinancing. The presentation will be webcasted live on and an on-demand version will be available after the presentation. Shortcut to the webcast: For participation by telephone, please call: SE: UK: Stockholm, 5 June 2013 PA Resources AB (publ) For queries, please contact: Philippe R Probst, CEO Tomas Hedström, CFO PA Resources AB (publ) is an international oil and gas group which conducts exploration, development and production of oil and gas assets. The Group operates in Tunisia, Republic of Congo (Brazzaville), Equatorial Guinea, United Kingdom, Denmark, Greenland, the Netherlands and Germany. PA Resources has oil production in West and North Africa. The parent company is located in Stockholm, Sweden. In 2012, PA Resources reported sales of SEK 2.2 billion. The share is listed on NASDAQ OMX in Stockholm, Sweden. For further information please visit The above information has been made public in accordance with the Securities Market Act and/or the Financial Instruments Trading Act. The information was published at a.m. CET on 5 June Important notice The information in this press release is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, New Zeeland, Hong Kong, Japan, Canada, Singapore, Switzerland or South Africa. The distribution of this press release in certain other jurisdictions may be restricted. The information in this press release shall not constitute an offer to sell or the solicitation of an offer to purchase any securities in PA Resources in any jurisdiction. This press release does not constitute, or form part of, an offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein may not be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S. Securities Act of 1933, as amended. PA Resources does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being distributed or sent and may not be distributed or sent to the United States, Australia, New Zeeland, Hong Kong, Japan, Canada, Singapore, Switzerland or South Africa. This document has not been approved by any regulatory authority. This document is a press release and not a prospectus and investors should not subscribe for, or purchase any securities referred to in this 6 (7)

7 document, except on the basis of information that will be provided in the prospectus to be published by PA Resources on its web site in due course. European Economic Area PA Resources has not resolved to offer to the public shares or rights in any Member State of the European Economic Area other than Sweden and any other jurisdiction into which the offering of shares or rights may be passported. Within such Member States of the European Economic Area other than Sweden (and any other jurisdiction into which the offering of shares or rights may be passported) and which has implemented the Prospectus Directive (each, a Relevant Member State ), no action has been undertaken as of this date to make an offer to the public of shares or rights requiring a publication of a prospectus in any Relevant Member State. As a result hereof, the shares or rights may only be offered in Relevant Member States: (a) to a qualified investor (as defined in the Prospectus Directive or under applicable law); or (b) in any other respect that does not require that PA Resources publishes a prospectus in accordance with Article 3(2) of the Prospectus Directive. For the purposes hereof, the expression an offer to the public of shares or rights in any Relevant Member State means the communication, in any form, of sufficient information on the terms of the offer and the shares or rights to be offered so as to enable an investor to decide to purchase any securities, as the same may be varied in a Relevant Member State due to the implementation of the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC including any relevant implementing measure in each Relevant Member State. Carnegie Investment Bank is acting for PA Resources and no one else in connection with the rights issue and will not be responsible to anyone other than PA Resources for providing the protections afforded to its clients or for providing advice in relation to the rights issue and/or any other matter referred to in this announcement. Carnegie Investment Bank accepts no responsibility whatsoever and makes no representation or warranty, express or implied, for the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by Carnegie Investment Bank, or on its behalf, in connection with PA Resources and the new shares, the rights issue, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Carnegie Investment Bank accordingly disclaims to the fullest extent permitted by law all responsibility and liability whether relating to damages, contract or otherwise which it might otherwise have in respect of this announcement or any such statement. Forward-looking statements This press release contains forward-looking statements that reflect management s current views with respect to future events and potential financial performance. Although PA Resources believes that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results can differ materially from those set out in the forward-looking statements as a result of various factors. You are advised to read this announcement, and the prospectus and the information incorporated by reference therein once available, in their entirety for a further discussion of the factors that could affect the PA Resources future performance and the industries in which PA Resources operates. In light of these risks, uncertainties and assumptions, it is possible that the events described in the forward-looking statements in this announcement may not occur. 7 (7)