Independent oil and gas production & development company, EnQuest PLC has entered into an Arrangement Agreement to acquire the entire issued share capital of Stratic Energy Corporation.

Highlights • EnQuest set to acquire Stratic, in a transaction recommended by Stratic's Board • the acquisition increases EnQuest's North Sea 2P reserves by 7.27MMboe • the purchase price equates, adjusted for tax, to paying US$11.2 per barrel of 2P reserves • the acquisition consolidates EnQuest's 27.7% position in West Don with an additional 17.25% working interest, • estimated to increase EnQuest's production by approximately a net 900 bopd • it provides EnQuest with a substantial 19% interest in the Crawford field development

Stratic shareholders shall be entitled to receive 0.089626 EnQuest shares per Stratic share. Based on EnQuest's average closing price on the London Stock Exchange between 28 July to 2 August 2010, this equates to an offer of 17.00 Canadian cents (the "Offer Price") for each existing Stratic share, valuing the issued and to be issued share capital of Stratic at approximately US$45.7 million (the "Offer Value"). The Offer Price represents a 70% premium to Stratic's closing price on Friday 30 July (the Toronto Stock Exchange was closed on Monday 2 August) and a 9% premium to Stratic's three month volume weighted average price of 15.56 Canadian cents. This purchase price is the equivalent, adjusted for tax, to paying approximately US$11.2 per barrel for 2P reserves. All amounts are in US dollars, unless otherwise stated.

As part of the transaction EnQuest will refinance Stratic's US$74.7 million net debt (as at 30 June), consisting of bank debt of US$18.9 million, convertible bonds of US$66.7 million and cash of US$10.9 million. EnQuest has agreed with the providers of its existing $280 million committed banking facility to increase the facility size by $70 million.

EnQuest Chief Executive Amjad Bseisu said, "I am delighted to announce EnQuest's first acquisition since our listing in April. The acquisition of Stratic is in line with our strategy to deliver sustainable growth in shareholder value through the exploitation of existing reserves and pursuit of selective acquisitions. The acquisition of Stratic provides a meaningful 7.27MMboe increase in our 2P reserves in the North Sea. It immediately enhances our production profile, it consolidates EnQuest's working interest in West Don and it adds a working interest in the Crawford development to our asset base."

The Acquisition has been unanimously recommended by the Stratic Board of directors and shall be effected by means of a Plan of Arrangement (the "Plan of Arrangement"). A Plan of Arrangement is a Canadian court process used for the acquisition of a company and an Arrangement Agreement is a binding contract entered into by both parties following mutual due diligence. Completion of the Acquisition is subject to court and Stratic shareholder approval and other customary closing conditions being satisfied. The proposed transaction will require Stratic to publish an information circular and to hold a special meeting for its shareholders to consider and vote on the Plan of Arrangement - the resolution requires a majority of not less than two thirds of the votes cast. It is anticipated that this process should take 8 to 10 weeks. An application for the listing of additional EnQuest shares will occur following completion of the Plan of Arrangement.

Tags: EnQuest PLC, Stratic Energy Corporation