Equator Exploration Limited

Transcription

1 NEWS RELEASE FOR IMMEDIATE RELEASE 11 JUNE 2007 FOR: EQUATOR EXPLORATION LIMITED SUBJECT: MERGER OF CAMAC ENERGY HOLDINGS LIMITED AND EQUATOR EXPLORATION LIMITED. FINANCING UPDATE Equator Exploration Limited Not for release, distribution or publication in or into Australia, Canada, Japan or the United States or any other jurisdiction where it is unlawful to do so. The securities to be issued in connection with the merger referred to herein have not been, and are not intended to be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold, directly or indirectly, into the United States except pursuant to an applicable exemption. The Equator Common Shares are intended to be made available within the United States in connection with the merger pursuant to an exemption from the registration requirements of the Securities Act. For immediate release Highlights EQUATOR EXPLORATION LIMITED MERGER OF CAMAC ENERGY HOLDINGS LIMITED AND EQUATOR EXPLORATION LIMITED FINANCING UPDATE The board of Equator Exploration Limited (the Company or Equator ) is pleased to announce that Equator has entered into a conditional Merger Agreement relating to a proposed merger of Equator and CAMAC Energy Holdings Limited ( CEHL or Target ), a wholly owned subsidiary of CAMAC International Limited ( CAMAC International or Parent ). Through the merger with CEHL, Equator will acquire CAMAC International s exploration and production interests in the territorial waters of Nigeria which include participating interests in OML 108, OML 120, OML 121, OPL 278 and OPL 282.

2 2 The Merger will be structured by way of a reverse takeover of Equator. Equator will acquire the entire issued share capital of CEHL in consideration for the issue of the Consideration Shares to CAMAC International s wholly owned subsidiary, CAMAC Energy EP Limited ( CAMAC or Seller ). Based on Equator s existing issued share capital, the terms of the Merger will result in the Enlarged Group being 70% owned by CAMAC EP and 30% owned by Equator Shareholders, on an undiluted basis. The Enlarged Group will be led by a board selected from existing directors and senior managers of CAMAC International and Equator and will be complemented by additional independent non-executive directors. The Merger is conditional upon, amongst other things, the posting of the AIM Admission document to Equator Shareholders and Equator Shareholders subsequently passing a resolution approving the Merger at an Extraordinary General Meeting to be convened in due course. The AIM Admission Document will only be posted once the current Equator directors and the proposed directors of the Enlarged Group are each satisfied that the Enlarged Group will have sufficient working capital to meet its requirements and are satisfied that due diligence relating to the re-admission of the Company has been completed. The AIM Admission Document will be posted to existing Equator Shareholders in due course and in any event no later than 31 August. It will include the notice of the Extraordinary General Meeting. Equator has also entered into a working capital facility agreement with South African Oil Company ( SAOC ), a wholly owned subsidiary of CAMAC International, and a working capital facility agreement with a shareholder lender. Under these agreements, SAOC and the shareholder lender have each agreed to provide to the Company a $5 million facility. These facilities each have a maturity date of 15 February 2009 and will be utilised by Equator for near-term working capital requirements. In addition to the $10 million drawn down from the two working capital facilities, Equator and CAMAC EP have identified potential sources of additional financing that will be required to fund the future working capital requirements of Equator and the Enlarged Group. As the proposed Merger is a reverse takeover for the purposes of AIM Rules, Equator securities will remain suspended by the London Stock Exchange pending the publication of an AIM Admission Document for the Enlarged Group. Commenting on today s announcement, Samuel Jonah, KBE, OSG, Executive Chairman of Equator Exploration Limited said: Having carried out an in-depth review of Equator s strategic, operational and financial position, I am delighted that we can today present to Equator shareholders this proposed merger with CAMAC Energy Holdings Limited. This strategic transaction will offer shareholders a larger and more balanced portfolio of assets in the highly

3 3 prospective West African offshore basin. In addition, the financing facilities and our collaborative efforts with CAMAC EP to secure additional financing can give Equator shareholders more confidence in the Company s financial position and the sustainability of its operations. Dr. Kase L. Lawal, the Chairman and Chief Executive Officer of CAMAC International Corporation, said: "We are excited about our shared intention to merge CAMAC Energy Holdings Limited and Equator. We believe that the combination of these two entities and their portfolios of assets will create for shareholders a more diversified and better capitalised business focused on the West African offshore sector. We believe that both asset portfolios offer significant upside potential, which can best be pursued through the combination of our managerial and capital resources as well as our respective regional knowledge and relationships." This summary should be read in conjunction with the full terms of the following announcement. Appendix 2 contains definitions of certain terms used in this summary and the following announcement. Enquiries: CAMAC International: Kimberly Nichols Manager, Corporate Affairs kimberlynichols@camac.com Jean-Michel Malek Senior Vice President & General Counsel jmm@camac.com Equator Exploration: Philip Rand Chief Financial Officer +44 (0) KBC Peel Hunt Ltd (Nominated Adviser to Equator) +44(0) Jonathan Marren Richard Kauffer Buchanan Communications +44 (0) Bobby Morse/Ben Willey

4 4 MERGER OF CEHL AND EQUATOR EXPLORATION LIMITED 1. Introduction The board of Equator today announces a merger of Equator and CEHL, a wholly owned subsidiary of CAMAC International. The Merger will be structured by way of a reverse takeover of Equator. Equator will acquire the entire issued share capital of CEHL from CAMAC International s wholly owned subsidiary, CAMAC EP, in consideration for the issue of the 408,719,710 Equator Common Shares to CAMAC EP. Based on Equator s closing price on 4 May 2007 of 42.25p, this represents an aggregate value for the acquisition of CEHL of approximately million. Based on Equator s existing issued share capital, CAMAC EP will own 70% and Equator Shareholders will own the remaining 30% of the Enlarged Group, on an undiluted basis, following completion of the Merger. Equator also announces today that it has entered into agreements with each of SAOC and a shareholder lender under which SAOC and the shareholder lender each will make available a working capital facility of $5 million. 2. Information about Equator Equator engages in the exploration and development of oil and gas projects in the highly prospective waters of 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 Sa o Tome & Pri ncipe as well as in the Joint Development Zone between the two countries. 3. Information about CAMAC CAMAC International and its affiliated companies are oil and energy services corporations operating in West Africa, South Africa, and South America with more than 1,000 employees worldwide. The interests of those companies currently include the Nigerian exploration interests listed below, which will be contributed to the Enlarged Group when Equator acquires CEHL on completion of the Merger. CAMAC International will carry out a corporate reorganisation before completion of the Merger. Following that reorganisation, CEHL will own the entire issued share capital of CAMAC International Nigeria Limited and Allied Energy Nigeria Resources Limited. Allied Energy Nigeria Resources Limited will own the entire issued share capital of ARC Oil & Gas Nigeria Limited which itself will own 60 per cent of Alliance Oil Producing Company Nigeria Limited.

5 5 Through these entities, CEHL will hold the following interests in the Gulf Of Guinea: Block Location Acreage Interest Operator OML 120 OML 121 OPL 278 OPL 282 OML 108 Nigeria deepwater Nigeria deepwater Nigeria coastal Nigeria coastal Nigeria offshore km2 60% ENI/Agip km2 60% ENI/Agip 91.9 km2 30% Oando plc km2 6% ENI/Agip km2 2.5% Express Petroleum & Gas A competent person s report is currently being prepared by Netherland, Sewell & Associates, Inc. on the above assets and the existing assets of Equator for inclusion within the AIM Admission Document. None of the above assets is currently producing revenue other than OML 108, which currently is producing revenue and does not have any exploration prospects. CAMAC International has a strong strategic relationship with ENI S.p.A ( ENI ) through various agreements between companies in their respective groups. ENI is one of the world's leading integrated energy companies, operating in the oil and gas, power generation, oilfield services and engineering industries and has been present in Nigeria since The cooperation between CAMAC International and ENI includes production sharing agreements on three properties: OML 120, OML 121 and OPL 282, which are being contributed to the Enlarged Group. CAMAC International hopes to continue to build on its strategic relationships with ENI to further develop the asset portfolio of the Enlarged Group. Following the Merger, CAMAC International and its affiliated companies will continue to hold significant interests and carry on significant activities separate from the Enlarged Group. CAMAC International's affiliated companies which will not form part of the Merger or the Enlarged Group include: CAMAC International Corporation, Allied Energy Colombia Corporation of Colombia, South America; SAOC Oil Corporation; and SAOC UK Ltd. Their principal activities include the exploration and production of crude oil and natural gas, plus the physical trading of crude oil and refined products for markets throughout the world. CAMAC International and its affiliates have offices in Houston, Texas; Bogotá, Colombia; Lagos, Nigeria; London, England and Johannesburg, South Africa. CAMAC International and CAMAC International Corporation were founded by Dr Kase L. Lawal, who is currently the Chairman and Chief Executive of CAMAC International Corporation. Dr Lawal is also Vice Chairman of Unity National Bank, a commissioner of the Port of Houston Authority, Vice Chairman of the Houston Airport Development

6 6 Corporation and served on the President of the United States Business Advisory Council. CAMAC International Corporation was named in the 2006 Forbes Magazine list of the 400 largest privately-owned companies and as the 2006 Company of the Year by Black Enterprise Magazine. 4. The Merger The Merger is to be effected pursuant to a Merger Agreement between Equator, CAMAC EP and CAMAC International (as CAMAC EP s Guarantor). The completion of the Merger is conditional upon, amongst other things: the posting of the AIM Admission Document to Equator Shareholders. The AIM Admission Document will only be posted once the current Equator directors and the proposed directors of the Enlarged Group are each satisfied that the Enlarged Group will have sufficient working capital to meet its requirements and are satisfied that due diligence relating to the readmission of the Company has been completed. Additional finance will be required to be raised in order to fund the Enlarged Group s future working capital requirements; Equator Shareholders passing a resolution approving the Merger at the Extraordinary General Meeting; and the receipt of the necessary consents and approvals to the Merger, including, from the Governments of Nigeria and Sa o Tome & Pri ncipe. Equator has received irrevocable undertakings from the Shareholder Lenders that they will vote in favour of the Merger at the Extraordinary General Meeting. Under the Merger Agreement the Company will pay CAMAC EP a Break Fee if: the AIM Admission Document is posted to Equator Shareholders and the directors of the Company fail to recommend unanimously that Equator Shareholders approve the Merger, or if the directors of the Company adversely modify such recommendation and in each case Equator Shareholders subsequently do not approve the Merger at the Extraordinary General Meeting; or a Third Party Announcement is made and the Third Party Transaction referred to in such announcement is subsequently completed. Further details about the Merger Agreement are set out in Appendix Board of Directors and Management The Enlarged Group will be led by a board selected from existing directors and senior managers of CAMAC International and Equator, and will be complemented by additional independent non-executive directors. Precise details of the board are currently being determined and further information will be provided at the time of the publication of the AIM Admission Document.

7 7 6. Intentions and Strategy The Enlarged Group will benefit from a larger and more diversified portfolio of assets, focused on the highly prospective Gulf Of Guinea. It is the current intention of Equator and CAMAC International to continue the exploration and development of these assets, for both oil and gas, of both companies. Both Equator and CAMAC International have significant experience in and a deep understanding of the West African exploration sector and therefore this region is expected to continue to be the focus for the Enlarged Group in the foreseeable future. The Enlarged Group also intends to pursue new licences, farm-in opportunities and acquisitions to continue to enhance the balance, growth, potential value and risk profile in the portfolio. In addition, the Enlarged Group may evaluate farm-out proposals and other opportunities to share the risks in the portfolio and secure financing for ongoing operations and development, as well as for future potential expansions of the portfolio. 7. Extraordinary General Meeting Subject to the relevant conditions, the AIM Admission Document, which will include a notice convening an Extraordinary General Meeting of the Company, will be posted to Equator s Shareholders in due course and in any event no later than 31 August. At the Extraordinary General Meeting, resolutions will be proposed to approve the Merger for the purposes of Rule 14 of the AIM Rules and to amend the existing articles of association of the Company. Further information regarding these resolutions and the Extraordinary General Meeting will be set out in the AIM Admission Document. 8. Recommendation The directors of Equator intend unanimously to recommend that Equator Shareholders vote in favour of the resolution approving the Merger which is to be proposed at the Extraordinary General Meeting. 9. Re-admission to listing Application will be made by the Company for the Enlarged Share Capital to be admitted to AIM to be effective upon completion of the Merger. It is expected that Admission will take place and trading in such shares will commence on the first dealing day following that on which the Merger Agreement becomes unconditional in all respects (save as to Admission). The Consideration Shares will not be available to the public in conjunction with the application and will only be issued to CAMAC EP under the terms of the Merger Agreement. 10. Two $5 Million Working Capital Facilities Equator has entered into a working capital facility agreement with SAOC, a wholly owned subsidiary of CAMAC International, and a working capital facility agreement with a shareholder lender. Under these agreements, SAOC and the shareholder lender have each agreed to provide to the Company a $5 million facility. These facilities each have a maturity date of 15 February 2009 but are repayable earlier if either the board of Equator becomes satisfied that the Company has sufficient funds to repay the loan or if

8 8 SAOC or the shareholder lender elect to apply any amount outstanding under the facilities to exercise their right to subscribe for shares pursuant to the warrants (details of which are set out below). Equator has drawn down $5 million under each facility and these funds will bear interest at an annual rate of 8% and will be utilised by Equator for near-term working capital requirements. In consideration for each facility, the Company has agreed to issue to each of SAOC and the shareholder lender 7,326,000 warrants to subscribe for Common Shares at an exercise price of 35p each. The facilities are secured by way of a pledge of Equator s interests in Equator Exploration JDZ Limited and Aqua Exploration Limited. In addition to the $10 million drawn down from the two working capital facilities, Equator and CAMAC EP have identified potential sources of additional financing that will be required to fund the future working capital requirements of Equator and the Enlarged Group. Enquiries: CAMAC International: Kimberly Nichols Manager, Corporate Affairs kimberlynichols@camac.com Jean-Michel Malek Senior Vice President & General Counsel jmm@camac.com Equator Exploration: Philip Rand Chief Financial Officer +44 (0) KBC Peel Hunt Ltd (Nominated Adviser to Equator) +44(0) Jonathan Marren Richard Kauffer Buchanan Communications +44 (0) Bobby Morse/Ben Willey Overseas Jurisdictions

9 9 The distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction. This announcement has been prepared for the purposes of complying with English Law and the AIM Rules 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 and regulations of any jurisdiction outside the United Kingdom. This announcement does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Merger or otherwise, nor shall there be any purchase, sale or exchange of securities or such solicitation in any jurisdiction in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. This announcement does not constitute a prospectus or prospectus equivalent document. Equator Shareholders are advised to read carefully the formal documentation in relation to the Merger once it has been despatched. This announcement does not constitute an offer of securities for sale in the United States or an offer to acquire securities in the United States. The Consideration Shares have not been, and will not be, registered under the Securities Act or under the securities law of any state, district or other jurisdiction of the United States, Australia, Canada or Japan and no regulatory clearance in respect of the Consideration Shares has been, or will be, applied for in any jurisdiction other than the UK. The Consideration Shares may not be offered or sold in the United States absent registration under the Securities Act or an exemption from registration. Forward Looking Statements This announcement contains statements about Equator, CAMAC International Corporation, CAMAC International, CAMAC EP, CEHL and the Enlarged Group 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', 'should', 'may', 'anticipates', 'estimates', 'synergies', ' cost savings', 'projects', 'strategy' 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) the expected timetable for completing this transaction, future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects of Equator, CAMAC International Corporation, CAMAC International, CAMAC EP, CEHL or the Enlarged Group; and (ii) business and management strategies and the expansion and growth of Equator, CAMAC International Corporation, CAMAC International, CAMAC EP, CEHL or the Enlarged Group s operations and potential synergies resulting from the Merger.

10 10 These forward looking statements are not guarantees of future performance. They have not been reviewed by the auditors of Equator, CAMAC International Corporation, CAMAC International, CAMAC EP or CEHL. These forward looking statements involve known and unknown risks, uncertainties and other factors which may cause them to differ from the actual results, performance or achievements expressed or implied by such forward looking statements. These forward looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. Investors are cautioned not to place undue reliance on the forward looking statements, which speak only as of the date they were made. All subsequent oral or written forward looking statements attributable to Equator, CAMAC International Corporation, CAMAC International, CAMAC EP or CEHL or any of their respective members, directors, officers or employees or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. All forward looking statements included in this announcement are based on information available to Equator, CAMAC International Corporation, CAMAC International, CAMAC EP or CEHL on the date hereof. Investors should not place undue reliance on such forward looking statements and Equator undertakes no obligation (except as required by the AIM Rules) to revise or update any forward looking statement contained in this announcement, regardless of whether that statement is affected as a result of new information, future events or otherwise.

11 11 Appendix 1 Key Terms and Conditions of the Merger Agreement CAMAC EP has agreed to sell the entire issued share capital of CEHL to the Company in consideration for the issue of the Consideration Shares to CAMAC EP. (A) The Merger is conditional upon: (i) (ii) (iii) (iv) (v) (vi) the receipt by Equator and CAMAC EP of any necessary consents, approvals or agreement to the Merger by regulatory or governmental authorities in the Federal Republic of Nigeria and the Republic of Sa o Tome & Pri ncipe; the receipt of any necessary consent, approval or agreement to the transactions contemplated by the Merger Agreement from the counterparties to CAMAC EP and Equator s respective petroleum exploration and/or production licences and related documentation and such counterparties waiving or not exercising any pre-emptive right, option, right to acquire or termination rights they may have over such petroleum exploration and/or production licences; the posting of the AIM Admission Document to Equator Shareholders, no later than 31 August; Equator Shareholders passing a resolution approving the Merger at the Extraordinary General Meeting; the admission of the Consideration Shares to trading on AIM and the re-admission of Equator s Existing Shares to trading on AIM following the suspension of trading; and the completion of the reorganisation of certain companies and assets within CAMAC International s group. (B) Under the Merger Agreement the Company will pay CAMAC EP a Break Fee if: (i) (ii) the AIM Admission Document is posted to Equator Shareholders and the directors of the Company fail to recommend unanimously that the Equator Shareholders approve the Merger, or if the directors of the Company adversely modify such recommendation and in each case the Equator Shareholders subsequently do not approve the Merger at the Extraordinary General Meeting; or a Third Party Announcement is made and the Third Party Transaction referred to in such announcement is subsequently completed. (C) Both CAMAC EP and Equator are subject to customary conduct of business restrictions in relation to the period between signing and Completion.

12 12 (D) Under the Merger Agreement the Company has received the benefit of certain warranties given by CAMAC EP and in turn, the Company has agreed to give a limited number of warranties to CAMAC EP. These warranties are subject to customary limitations. In particular, no claims for less than $30,000 may be made in respect of the warranties given by either party and in respect of all claims over and above $30,000, no claims may be made unless the value of all such claims exceeds $3,000,000. Each party s liability under the warranties is capped at an amount equal to: (i) (ii) In the case of CAMAC EP, 70% of the Company s market capitalisation from time to time; and In the case of Equator, 30% of the Company s market capitalisation from time to time. CAMAC EP and Equator may elect to settle the amount of any liability incurred by either of them in respect of a claim or claims under the warranties by: (i) (ii) in the case of CAMAC EP, surrendering or transferring a certain number of Common Shares (to the extent permitted by law, regulation, this Agreement and the AIM Rules) to Equator or otherwise as Equator may direct; or in the case of Equator, by issuing a certain number Common Shares to CAMAC EP; (E) (F) The Merger Agreement includes a limited tax indemnity from CAMAC EP to Equator in respect of certain pre-completion tax liabilities; The Merger Agreement automatically terminates if: (i) (ii) the AIM Admission Document has not been posted to Equator Shareholders by 31 August 2007 (or such other date as Equator and CAMAC EP may agree); or any of the other conditions to the Merger Agreement are not fulfilled by 30 September 2007 (or such other date as Equator and CAMAC EP may agree). (G) Either party may terminate the Merger Agreement if at any time prior to Completion, a material breach of warranty occurs such that a party would have a claim or claims exceeding $10,000,000; (H) The Merger Agreement also establishes certain principles governing CAMAC EP s interests in the Company, including the following: (i) CAMAC EP has agreed to a lock-in under which it will not be permitted to dispose of its Common Shares for a period of 12 months following completion of the Merger except in the limited circumstances listed in Rule 7 of the AIM Rules;

13 13 (ii) (iii) (iv) (v) (vi) For 12 months after the lock-in period, CAMAC EP will generally only dispose of its Equator shares through Equator s nominated broker; CAMAC EP shall procure that, other than in respect of certain identified services, each member of the Enlarged Group will be able to carry on its business independently of the CAMAC Retained Group; Until CAMAC EP and various associated persons hold less than 50% of the Common Shares, CAMAC EP shall ensure that there shall be a minimum of two independent directors on the Board of Equator at all times; In the first 12 months following completion of the Merger, CAMAC EP will not acquire additional Common Shares such that its shareholding would exceed 75% (excluding any Common Shares arising on the exercise of the CAMAC Warrants) or 83% (including any such shares); and Until CAMAC EP and various associated persons hold less than 35% of the Common Shares, they will not exercise their voting rights so as to approve a de-listing of the Company or its voluntary winding up unless the relevant resolution has the support of a majority of independent shareholders. (I) CAMAC EP s obligations under the Merger Agreement are guaranteed by CAMAC International.

14 14 Appendix 2 Definitions Admission "AIM" AIM Admission Document" "AIM Rules" Australia Break Fee Business Day CAMAC EP CAMAC International CAMAC Retained Group CAMAC Warrants Canada CEHL Circular means the admission of the Enlarged Share Capital to trading on AIM; means a market operated by London Stock Exchange plc; means the document to be produced pursuant to Rule 14 of the AIM Rules which, inter alia, gives details of the Enlarged Group and comprises the Circular; means the rules of AIM published by the London Stock Exchange plc; means the Commonwealth of Australia, its territories and possessions; means 740,074 (inclusive of Value Added Tax, if applicable) being an amount equal to one per cent. of the market capitalisation of Equator determined by reference to the latest middle market price of the Common Shares on the Business Day immediately preceding the date of the Merger Agreement; means any day (other than a Saturday or a Sunday or a public holiday) on which banks in London are generally open for the transaction of normal banking business (other than solely for the purposes of trading and settlement in euro); means CAMAC Energy EP Limited; means CAMAC International Limited; means CAMAC EP, its subsidiaries and subsidiary undertakings, any holding company of CAMAC EP and all other subsidiaries or subsidiary undertakings of any such holding company(s) from time to time, but excluding, from Completion, CEHL and its subsidiaries and subsidiary undertakings; means the 7,326,000 warrants at an exercise price of 35p each issued by the Company to SAOC in consideration for the $5 million working capital facility made available by SAOC; means Canada, its provinces and territories and all areas subject to its jurisdiction or any political subdivision thereof; means CAMAC Energy Holdings Limited; means the circular to be issued to Equator Shareholders giving details of the Merger and the subsequent readmission of the

15 15 Common Shares and admission of the Consideration Shares to trading on AIM and containing notice of the Extraordinary General Meeting; "Common Shares" Completion "Consideration Shares" "Enlarged Group" Enlarged Share Capital Equator Shareholders Existing Shares Extraordinary General Meeting holding company Japan Merger Merger Agreement OML OPL Resolutions means the common shares of no par value in the capital of the Company; means completion of the Merger under the Merger Agreement; means the 408,719,710 Common Shares to be issued by Equator in consideration for the sale by CAMAC EP to Equator of the entire issued share capital of CEHL; means, from Completion, the group of companies comprising Equator and CEHL and their respective subsidiaries and subsidiary undertakings; means the issued share capital of the Company immediately following the Merger; means the holders of Common Shares from time to time; means the existing Common Shares in issue at the date of this announcement; means the extraordinary general meeting of Equator to be convened in connection with the Merger in which the consent of the Equator Shareholders to the Merger will be sought pursuant to Rule 14 of the AIM Rules; has the meaning given to it by the Companies Act 1985 (as amended); means Japan, its cities, prefectures, territories and possessions; means the proposed merger of CEHL and Equator as described in this announcement; means the merger agreement between Equator, CAMAC International as guarantor and CAMAC EP as Seller pursuant to which the Merger is to be implemented; means oil mining lease; means oil prospecting licence; means the resolutions set out in the notice of the Extraordinary General Meeting;

16 16 SAOC Shareholder Lenders Shareholder Loan Agreement subsidiary and subsidiary undertaking Third Party Announcement means South African Oil Company; means the lenders under the Shareholder Loan Agreement; means the agreement dated 3 August 2006 between, inter alia, the Company and certain lenders under which those lenders have made available a $65 million secured bridge facility to the Company; have the meanings given to them by the Companies Act 1985 (as amended); means an announcement in which a third party, which is not acting in concert with any member of the CAMAC Retained Group, either: (i) (ii) (iii) announces an intention to make an offer in respect of the entire issued share capital of the Company; or announces an intention to conduct a transaction which would constitute a reverse takeover of the Company under the AIM Rules; or publicly makes known its intention to conduct a transaction that would result in that third party (and any person or persons acting in concert with that third party) acquiring fifty per cent. or more of the Common Shares then in issue; Third Party Transaction means the offer or transaction referred to in a Third Party Announcement. Unless otherwise stated, all times referred to in this announcement are references to London time.