Cap Energy Ltd
LSE : CAPP

December 30, 2008 10:32 ET

Acquisition of Interests in Stacks Dome Oilfield

                                                                                                      
                                                                                                

                                                                                 ISIN : GB00B0MH9D42

                                          CAP ENERGY LIMITED                        30 December 2008


                                                   
                           ACQUISITION OF INTERESTS IN STACKS DOME OILFIELD
                                                   
   CAP Energy  Ltd ("CAP") wishes to announce that its wholly-owned US subsidiary, CAP Energy USA,
   Inc. ("CAPUSA") has exchanged contracts on the acquisition of interests in the Starks Dome
   oilfield in southern Louisiana from CSV Holdings, Inc. ("CSV"). Total consideration due is
   US$350,000 cash and US$650,000 in shares (at 10p), loan notes or cash, giving CSV a maximum  29.9%
   shareholding in CAP. As part of the agreement, CSV has the right to nominate a further  director
   for both CAP and CSPUSA at such time as it wishes.
   
   The assets acquired comprise working interests in seven producing oil wells and three new wells
   shortly to be completed for production, plus the right to participate at base cost in any new
   wells to be drilled on CSV's lease.
   
   Included in the acquisition is the right to participate in the recompletion of up to forty
   existing wells in the Starks Dome Field which are not included in the original agreement but
   which contain unproduced oil reserves in the upper zones of the wells. These wells are
   particularly important in that recompletion operations are much cheaper than the drilling of new
   wells, and can be quite profitable even at the current low prices.
   
   Included  also in the acquisition is the right to participate in the recompletion of a productive
   well drilled on the Iberia Dome structure in southern Louisiana. CAPUSA would earn a 10% share
   of CSV's interest, with much of the cost success-based. While this project has a higher risk
   profile than the Starks Dome project, there is a real possibility of achieving rates of
   production many times higher, of both oil and gas. The Iberia Dome Field has already produced
   large quantities of oil and gas, so pipeline facilities are already in place.
   
   This acquisition represents a major step change for CAP. Apart from the fact that the producing
   interests are a scale larger than its existing assets, there is potential for many years'
   drilling and recompletion activity at Starks Dome at base costs, with progressively deeper and
   more prolific production potential as oil prices and economics allow. The Iberia Dome project
   has the potential to make a substantial further increase in CAP's asset value, combined with  a
   relatively low cost/low risk first phase. With a major portion of its consideration being in
   CAP's shares, CSV has every incentive to help the company grow successfully.
   
   Initially CAP had planned a share placing to finance the final stage of the acquisition and the
   short term field development costs. As a result of the recent events on world money and oil
   markets, it is now planned to offer two alternatives, for completion in January, 2009:
   
   1.  Loan stock carrying a competitive coupon, convertible at a price reflecting the long term
       average for CAP stock.
       
   2.  Conventional Placing at a heavily discounted share price to the above.
   
   The Directors of the Issuer accept responsibility for this announcement.


For further information:


Contact:
Cap Energy Limited
John Killer
Tel: 07979 903673

St Helen's Capital Plc
Duncan Vasey
Tel: 020 7628 5582





   
   

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