Atlantic Petroleum P/F - Company Announcement

Atlantic Petroleum Acquires UK Development Assets

Tórshavn, Faroe Islands, 2012-12-13 15:48 CET (GLOBE NEWSWIRE) -- P/F Atlantic
Petroleum (OMX: FO-ATLA) (“Atlantic”) is pleased to announce that it, through
its fully owned subsidiary Volantis Exploration Limited, has entered into a
definitive agreement to acquire a 25% non-operated working interest from Iona
Energy Company (UK) Limited (“Iona”) in the Orlando and Kells fields. Atlantic
Petroleum has agreed to pay Iona a USD$3.4 million deposit immediately and a
base payment of USD$30.6 million upon closing. Consequent to completion of the
transaction, Atlantic has informed Iona that Atlantic will commit to pro-rata
funding of the Orlando and Kells developments commensurate with its 25% working
interest and will provide the necessary financial assurances to the U.K.'s
Department of Energy and Climate Change (“DECC”) enabling the Joint Venture
partners to obtain final Field Development Plan (“FDP”) approvals. 

In addition to the payments outlined above, pursuant to the agreement, Atlantic
has committed to pay: 

  1. USD$1.25 million upon Kells FDP approval; 
  2. Staged payments commencing six months after first production from Orlando
     of USD$1.8 million, USD$1.8 million, USD$1.8 million, USD$0.925million, and
     USD$0.925 million made every six months thereafter respectively; and
  3. a proportionate share of  royalties payable to the previous owner of the
     Kells field, Fairfield Energy.

Completion of this transaction is subject to DECC approval, expected before the
end of January, 2013. 

Atlantic Petroleum will fund the acquisition and capital expenditure required
to bring first production from Orlando from cash reserves and its existing
production base. The acquisition has no impact on the published guidance
numbers for 2012. 

Iona commissioned Gaffney Cline and Associates Ltd. (“GCA”) to undertake
independent reserve estimates of Orlando and Kells. Effective as of September
30, 2012 GCA  reported Orlando's 100% gross proved reserves (“1P”) of 7.83
million barrels of oil (“MMbbls”), gross proved plus probable (“2P”) reserves
of 15.37 MMbbls, and gross proved plus probable plus possible ("3P") reserves
of 21.56 MMbbls. Effective as of March 31, 2012, GCA reported Kells 100% gross
1P reserves of 3.4 million barrels of oil equivalent ("MMboe"), 2P reserves of
8.9 MMboe, and 3P reserves of 10.7 MMboe. 

Orlando and Kells will be developed as subsea tie backs to the Ninian Central
platform. Orlando first oil is expected in the second half of 2014, and after
Kells is sanctioned in 2013 first oil is expected in late 2015. 

Commenting on the acquisition Ben Arabo, CEO of Atlantic Petroleum, said:

“This is a major step for Atlantic Petroleum to increase the Company's short to
mid- term oil production. We look forward to working with Iona to complete the
transaction and secure the approval of the Field development plans in 2013. 
The acquisition significantly increases Atlantic Petroleum's reserves and the
company's oil production when the fields come on-stream. 



Further Details:

Further details can be obtained from Ben Arabo, CEO, tel +298 350100
(ben.arabo@petroleum.fo). This announcement will be available, together with
other information about Atlantic Petroleum, on the Company's website:
www.petroleum.fo. 

On the website, it is also possible to sign up for the Company's e-mail
newsletter. 



Announcement no. 41/2012

Issued 13-12-2012


         P/F Atlantic Petroleum
         Yviri við Strond 4
         P.O. Box 1228
         FO-110 Tórshavn
         Faroe Islands
         Telephone +298 350 100
         Fax +298 350 101
         Website: www.petroleum.fo
         E-mail: petroleum@petroleum.fo

Attachments:

41-2012 Orlando Kells Development Schematic.pdf