Norse, Pan-Petroleum Form New S. Atlantic Independent

New Brazil Holding ASA and Pan-Petroleum (Holding) Cyprus have entered into a business combination agreement. The business combination will create a strong South Atlantic oil & gas independent with a reserve and resource base in excess of 200 MMBOE, and establishes a solid foundation for further growth through additional M&A activities.

The combination of assets is based on a 50/50 equity valuation of Norse Energy do Brasil and Pan-Petroleum. The companies have secured funding for the new company through equity capital commitments of USD 65 million based on a pre-money equity valuation of USD 288 million. The transactions are contingent, inter alia, upon approval from an Extraordinary General Meeting in NEC to be held in April, 2010.

Pan-Petroleum is owned 94.5 percent by funds managed by Sector Omega ASA with the balance owned by Pan–Petroleum management. Sector is owner of a 30% minority interest in Norse Energy do Brasil, which will also be included in the transaction. Sector will control approximately 66 percent of the shares in the combined company, but understands the need for share liquidity and believes its shareholding is likely to be diluted as the combined company pursues its growth strategy.

Lars Tell, the CEO of Sector Asset Management, commented, "Sector has a long track record in building companies in the oil and gas arena, including E&P companies, and believes materiality is critical in this industry. We are keen to remain a significant and strategic long-term shareholder of the combined company and are committed to participate in creating value for all shareholders."

NEC has evaluated several strategic alternatives for its Brazilian division for the past two years. The previously announced demerger will facilitate independent growth. Company size is critical for attracting capital and human resources and to be a strong player when seeking additional assets. The merger with Pan Petroleum will thus establish a strong platform for further growth.

Kjetil Solbrække, CEO of Norse Energy do Brasil commented, "The creation of a stronger, focused, independent South Atlantic oil & gas company is an exciting milestone for us. The experienced management and organization have the capability to both manage the current portfolio and take advantage of new business opportunities in the South Atlantic. We are all very confident about the region and look forward to getting started."

Norse Energy do Brasil currently has one field in production–the Manati gas field in the Camamu Almada basin–as well as three fields planned for development and attractive exploration assets in the Santos Basin in Southern Brazil.

Pan-Petroleum's West-African asset base offers near-term production from a discovery offshore Nigeria (the Ajapa field), access to a huge onshore resource base in Congo (the MKB license), an interest in a substantial gas, condensate and oil development offshore Nigeria (the Aje Field), as well as considerable exploration potential in the Dussafu license offshore Gabon. The company is registered in Cyprus and has most of its staff based in London.

Dr. Phil Vingoe, the CEO of Pan-Petroleum commented, "We look upon this merger with great enthusiasm. Over the past two years Pan-Petroleum has built a world class team and compiled an exciting portfolio of assets in West Africa. Access to both the additional skills in Norse plus new sources of capital will accelerate the delivery of value to all shareholders, partners and host governments."

The combined company will have a strong management team with complementary organizations. The CEO of the new company will be Kjetil Solbrække, and Dr. Phil Vingoe will be proposed as Chairman of the Board in the combined company. Current CFO in Norse Energy ASA, Anders Kapstad, will become CFO in the new company and Nishant Dighe, the COO in Pan-Petroleum, will assume the position of COO. Thor A. Tangen will assume the role of EVP, Field Development and Alistair Stobie that of EVP, New Ventures.

Financing of the combined company has been secured through equity capital commitments of USD 15 million from leading international and Norwegian investors, in addition to commitments of USD 20 million from Norse Energy Corp. ASA and USD 30 million from Sector. The raising of new capital for the combined company was based on a pre-money valuation of USD 288 million. Pan-Petroleum has no debt and the post-money enterprise value of the combined company will be approximately USD 418 million.

Application for a separate listing of New Brazil Holding ASA has been submitted with the Oslo Stock Exchange. A supplemental prospectus will be made to account for the business combination with Pan-Petroleum. A new name for the combined company will be communicated in due course.

Norse Energy and Pan-Petroleum have engaged Pareto Securities AS and Arctic Securities ASA, as financial advisors in connection with the merger. Pareto and Arctic have also acted as joint lead managers for the new equity issue in the combined company.


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