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Cairn Energy farm-in to Foum Draa

JERSEY, CHANNEL ISLANDS--(Marketwire -08/28/12)-

  28 August 2012 LONGREACH OIL AND GAS LIMITED Cairn Energy PLC to farm-in to Longreach's Foum Draa Permits, offshore Morocco LONGREACH OIL AND GAS LIMITED (LOI.V) ("Longreach" or "the Company"), an independent oil and gas company holding exploration and near term development licences in Morocco, is pleased to announce that, subject to the consent of the Ministry of Energy and the Ministry of Finance in Morocco, Cairn Energy plc ("Cairn"), through its subsidiary Capricorn Exploration and Development Company Limited ("Capricorn"), will join Longreach and its joint venture partners, San Leon Offshore Morocco B.V. and Serica Foum Draa B.V. (respectively "San Leon" and"Serica"), in the exploration of the set of permits which comprise the Foum Draa Offshore area ("Foum Draa") in Morocco. Under the transaction, Cairn will acquire a 50% operated equity interest in Foum Draa, pro rata from each of Longreach, San Leon and Serica according to their respective equity interests. In return, Cairn will pay its equity interest share of past costs, being US$1.5 million (US$150,000 net to Longreach) and will pay the first US$60 million towards drilling of the commitment well required under the terms of the First Extension Period of the Foum Draa permits (including in relation to ONHYM's 25% carried interest). As a result of the farm-out, Longreach will hold an ongoing interest of 2.5% in the Foum Draa permits with San Leon and Serica holding 14.17% and 8.33% respectively. The joint venture partners have already informed the Moroccan authorities of their intention to proceed with the First Extension Period, which entails the drilling of a commitment well targeted for 2013. Over the past 21/2 years, Longreach and its joint venture partners have carried out extensive geological and geophysical analyses of the sub surface in Foum Draa. Having identified several prospective exploration targets, a farm-out process was initiated to attract a partner with the requisite financial and technical capability to drill in the relatively deep waters of Foum Draa. The transaction with Cairn is the successful result of that process. Commenting, Bryan Benitz, Chairman and CEO of Longreach, said:"Longreach and its joint venture partners are delighted to welcome Cairn into the Foum Draa permits, offshore Morocco. The work undertaken on the permits has shown considerable opportunities and bringing in a new partner such as Cairn will enable the partners to conduct near term exploration drilling on this licence. Following closely on from last week's announcement of Genel Energy farming into our Sidi Moussa offshore acreage, this deal with Cairn further demonstrates industry appeal for Morocco. With a carried interest in two offshore wells and near term drilling opportunities for our onshore Sidi Moktar licence, our regionally focused business plan is progressing well." -ENDS- For Further Information: Longreach Bryan Benitz Chairman & CEO +44 20 3137 7756 Pelham Bell Pottinger Mark Antelme / Philip Dennis / Rollo Crichton-Stuart +44 207 861 3232 Additional information on Longreach Oil and Gas Limited can be found at www.longreachoilandgas.com Additional information on Longreach Oil and Gas Limited can also be found at www.sedar.com Special Note Regarding Forwarding Looking Statements: This press release contains forward-looking statements. These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "may", "will","should", "expect", "plan", "anticipate", "believe", "estimate","predict", "project", "potential", "targeting", "intend", "could","might", "continue" or the negative of these terms or other similar terms. Forward-looking statements in this press release include, but are not limited to the completion of evaluations and processing and interpretation of data, the performance characteristics of the Company's oil and gas properties, capital expenditure programs, drilling plans, and realization of the anticipated benefits of acquisitions. Forward-looking statements are only predictions. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this press release include, but are not limited to: general economic conditions in Canada, the Kingdom of Morocco and globally; industry conditions, including fluctuations in the price of oil and gas, governmental regulation of the oil and gas industry, including environmental regulation; fluctuation in foreign exchange or interest rates; risks inherent in oil and gas operations; political risk; geological, technical, drilling and processing problems; unanticipated operating events which could cause commencement of drilling and production to be delayed; the need to obtain consents and approvals from industry partners, regulatory authorities and other third-parties; stock market volatility and market valuations; competition for, among other things, capital, acquisitions of reserves, undeveloped land and skilled personnel; incorrect assessments of the value of acquisitions or resource estimates; any future inability to obtain additional funding, when required, on acceptable terms or at all; credit risk; changes in legislation; any unanticipated disputes or deficiencies related to title matters; dependence on management and key personnel; and risks associated with operating in and being part of a joint venture. Although the forward-looking statements contained in this press release are based upon assumptions which management of the Company believes to be reasonable, the Company cannot assure that actual results will be consistent with its expectations and assumptions. Undue reliance should not be placed on the forward-looking statements contained in this news release as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. These statements speak only as of the date of this press release, and the Company does not undertake any obligation to publicly update or revise any forward-looking statements except as expressly required by applicable securities laws. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This information is provided by RNS The company news service from the London Stock Exchange END