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Farm-out Agreement, Off Shore Malta

Offshore Malta, Mediterranean Oil & Gas, Area 4, Blocks 4, 5, 6 & 7

London - August 2012

Stellar Energy Advisors is is pleased to announce that a conditional agreement between Mediterranean Oil and Gas plc's ("MOG") wholly owned subsidiary, Phoenicia Energy Company Limited ("PECL") and Genel Energy plc ("Genel") with respect to PECL's 100% interest in the Area 4 exploration licences offshore Malta.

Highlights of the Malta Transaction:

Genel is to acquire 75% of PECL's interest in its Area 4 (Blocks 4, 5, 6 and 7) Offshore Malta Production Sharing Contract ("PSC") for the following consideration:

  • US$10 million cash payment on completion of the Malta Transaction;
  • 100% carry on the first exploration well, which is planned to be drilled to a minimum depth of 2,500 metres;
  • 100% carry on the second exploration well up to a maximum of US$30 million gross expenditure;
  • At PECL's option, should the costs of the second well exceed US$30 million, Genel to provide a financing arrangement to fund PECL's 25% share of any additional expenditure, at an interest rate equivalent to 3 Month Libor plus 400 bps.

PECL is to remain as operator until completion of the first exploration well, at which time Genel can elect to become the operator, or at such later date as the parties may agree.

Area of Mutual Interest Agreement:

In addition to the Malta Transaction, MOG has signed an Area of Mutual Interest agreement ("AMI") with Genel to cooperate in acquiring exploration and production assets in the offshore basins of Libya, Tunisia and Malta for a minimum term of three years. The equity in any asset acquired within the AMI will be shared on the basis of 20% to MOG and 80% to Genel.

The proposed Malta Transaction, targeted by the parties to be completed by the end of October 2012, is conditional upon receipt of approval by the Maltese Minister for Resources and Rural Affairs, together with the grant of a minimum one year extension of the first phase exploration period of the Malta Area 4 licence.

We anticipate further announcements shortly at the completion of other successful transactions where Stellar has acted as the sole advisor.

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Stellar was the sole advisor to Mediterranean Oil & Gas plc.