Conditional Financing

RNS Number:3580O
Black Rock Oil & Gas PLC
20 February 2008




For immediate release                                    20 February 2008


                            Black Rock Oil & Gas PLC
                        ("Black Rock" or the "Company")
                   Conditional financing of Colombian assets


The Board of Black Rock Oil (stock code: BLR), the AIM-traded oil and gas
exploration and production company, is pleased to announce that the Company has
conditionally agreed the terms of new funding to develop further the Company's
interests in Colombia (the "Financing"). Pursuant to the Financing, Prospero
Hydrocarbons Inc ("Prospero"), a private Canadian based oil exploration and
development company, has agreed to invest US$1,439,015 for an equity interest of
up to 49 per cent. in the Company's interests in and the Alhucema E&P Contract
in the Middle Magdalena Valley of Colombia. In addition, the Company and
Prospero have signed binding heads of terms under which Prospero has agreed to
invest up to US$4,000,000 in relation to the Las Quinchas Association Contract.


The Board is excited about the prospects for the Alhucema E&P Contract and the
Las Quinchas Association Contract (the "Colombian Interests") and has explored
the options for securing the funding required for its continued participation,
including a further equity issue by the Company, a farm-in or strategic
investment. The Directors believe that the proposed investment by Prospero is in
the best interests of the Company and should enable the Company to develop its
Colombian Interests over the course of the next year. In addition, the Directors
believe that the Company will benefit from Prospero management's extensive South
American heavy oil experience.


Closing of the Financing is expected to occur on or before 4 March 2008 and w
hile there can be no certainty at this stage, the Board believes that there is a
reasonable likelihood that the Financing will be concluded in the timeframe
envisaged. A further announcement will be made in due course.


Transaction Summary

Alhucema E&P Contract

The Company has entered into a loan, subscription and purchase agreement in
respect of the Alhucema E&P Contract with Prospero (the "Alhucema Agreement").
On closing of the Alhucema Agreement ("Closing"), Black Rock will assign its
interest in the Alhucema E&P Contract to a wholly-owned Barbados-based
subsidiary, Alhucema Resource Corp. ("Alhucema Resource"). Prospero has provided
an initial bridge loan of US$1,439,015 (the "Alhucema Bridge Note"), pending
Closing, which Black Rock will use to pay its proportion of the current drilling
costs, including the first Alhucema well, Arrinconada-1, owed to its partner in
Colombia, Kappa Resources Colombia Limited ("Kappa"). The Alhucema Bridge Note
carries an initial interest coupon of LIBOR plus 2%.


Black Rock and Prospero have also entered into a conditional share purchase
agreement (the "Alhucema Bridge Subscription") pursuant to which Prospero is
entitled to subscribe £734,030 for new ordinary shares of 1p each in the capital
of the Company ("Ordinary Shares"). The subscription price is equal to the
average closing mid-market price of an Ordinary Share for the five business days
prior to subscription. Prospero's interest in Black Rock shall not, pursuant to
any subscription under the Alhucema Bridge Subscription, exceed in aggregate
29.9 per cent. of the issued share capital of the Company from time to time.


On Closing and in consideration for the cancellation of the Alhucema Bridge Note
and the Alhucema Bridge Subscription, Prospero will receive a 49 per cent.
interest in Alhucema Resource. Closing is expected to occur on or before 4 March
2008 and is conditional, inter alia, on completion of the assignment of Black
Rock's interest in the Alhucema E&P Contract to Alhucema Resource.


In the event that Closing does not occur on or before 4 March 2008 then Prospero
may subscribe pursuant to the Alhucema Bridge Subscription for a period of 12
months and the Alhucema Bridge Note will become repayable on demand. In the
event that Prospero seeks repayment of the Alhucema Bridge Note then Black Rock
can call for the Alhucema Bridge Subscription to be exercised.


Black Rock has provided a number of representations and warranties pursuant to
the Alhucema Agreement and a guarantee to Prospero, capped at a maximum of
US$1,439,015.


Black Rock and Prospero have also entered into an investors' agreement in
respect of the Alhucema Resource (the "Alhucema Investors Agreement"). Pursuant
to the Alhucema Investors Agreement, each of Black Rock and Prospero can appoint
one director to the Board of Alhucema Resource. The Alhucema Investors Agreement
contains certain drag and tag rights, and grants Black Rock and Prospero a right
of first refusal over each other's shareholding in Alhucema Resource in the
event that any party which owns more than 50 per cent. of Alhucema Resource
subsequently seeks to sell, transfer, assign or otherwise dispose of its
shareholding in Alhucema Resource.


In addition, Prospero will, subject to the AIM Rules, be entitled to nominate a
director to the Board of Black Rock.


Las Quinchas Association Contract ("Las Quinchas")

The Company has also entered into binding heads of terms with Prospero in
respect of the Las Quinchas Association Contract (the "Las Quinchas Agreement").
On closing of the Las Quinchas Agreement, Black Rock will assign its interest in
the Las Quinchas Association Contract to a wholly-owned Barbados-based
subsidiary, Las Quinchas Resource Corp. ("Las Quinchas Resource") and Prospero
will invest up to US$4,000,000 in tranches of US$250,000 for an equity interest
of up to 49 per cent. of Las Quinchas Resource. The proceeds of this
subscription will be used to fund the continued development of Las Quinchas,
including Acacia Este. The Las Quinchas Agreement is expected to be on
substantially similar terms as the Alhucema Agreement and a further announcement
will be made in due course.


The Company's Colombian Interests

In respect of Las Quinchas, Black Rock has completed all its obligations under
the farm-in contract signed in April 2005 with Kappa, the field operator, in
which Black Rock agreed to fund certain exploration drilling activities in order
to earn a right to obtain, subject to Ecopetrol's (the National Oil Company of
Colombia) approval, a 50 per cent. interest in the block. Consequently, Kappa is
in the process of applying for the formal assignment to Black Rock of 50 per
cent. of its interest in Las Quinchas. This assignment is subject to the
approval of both Ecopetrol and the ANH, the Colombian government agency
responsible for overseeing Colombia's oil and gas exploration and production
sector.


Within Las Quinchas, there has been a significant discovery on the Acacia Este
exploration well. The Acacia Este 1 well was drilled to a total depth of 3,970
feet in August last year and fair to good oil shows were encountered whilst
drilling the target Lower Mugrosa Formation. Subsequently the well was tested
and production reached a maximum rate of 101 barrels per day ("BOPD") of
16degrees API oil with only 5 per cent. bottom sediment and water at standard
conditions. A subsequent work-over of the well was then undertaken to
re-complete the well with a gravel pack within the liner over the upper zone
that had previously been tested. Initial flow rates of an extended production
test following the work-over peaked at 98 BOPD at 2 strokes per minute, with
very little water. The well was subsequently shut-in.


In December 2007 the second appraisal well, Acacia Este 2, was spudded 500
metres north of Acacia Este 1 by Kappa. Acacia Este 2 was drilled to a total
depth of 3752 feet and oil shows were encountered over more than one hundred
feet whilst drilling the target Tertiary-aged Lower Mugrosa Formation. The well
reached basement at 3720 feet. As previously announced, preliminary
interpretation of the logs run at total depth indicated the potential for oil in
a number of zones although there were differences in the nature and thickness of
the reservoir sands in Acacia Este 2 compared to Acacia Este 1 that made
correlation between the wells more complex without further seismic data. These
differences are not unusual with reservoir sand deposits formed in a fluvial
environment and the significance of the differences between the well log
responses will be assessed in the light of the test results. A further update
announcement is expected to be made shortly by the Company.


Las Quinchas also includes the Arce Field project which has been disappointing
to date. 50% of the remaining acreage in Las Quinchas is due for relinquishment
in July 2008.


The first well under the 164,750 acre Alhucema E&P Contract ("Alhucema") is to
be drilled shortly, subject to receipt of suitable permitting and land access
approvals. The first well, Arrinconada-1, is targeting a heavy oil prospect in
the Tertiary Mugrosa Formation. Drilling of this well fully completes the
Company's obligations in year 2 of Alhucema following the acquisition of 50kms
of 2D seismic in late 2006 that represented the Company's obligations for year
1. Black Rock's formal assignment of a 50% interest in the Alhucema contract
from Kappa is subject to the approval of the ANH.


Following closing of the Financing, Black Rock will retain a 51 per cent.
shareholding in each of Las Quinchas Resource and Alhucema Resource and will
continue to consolidate its Colombian Interests in its consolidated accounts. As
at 30 June 2007, Black Rock's Colombian Interests had a net book value of
£2,990,150 and made a loss before taxation of £327,200.


Dr John Cubitt, Managing Director of Black Rock Oil & Gas plc, commented:


"We are delighted to have agreed this deal with Prospero. Not only does it
provide sufficient funds to enable us to meet our anticipated 2008 funding
obligations, but it also brings in a partner with significant heavy oil
experience. I believe this deal will allow us to make real progress with our
Colombian assets."


Qualified Person


Dr John Cubitt (a Director of the Company) has been involved in the oil and gas
production industry for more than 26 years. Dr John Cubitt is a registered
Chartered Geologist (CGeol) and has a BSc and PhD in geology. He has compiled,
read and approved the technical disclosure as it relates to Black Rock in this
regulatory announcement.





For further information, please contact:

Black Rock Oil & Gas plc                                01189 001350 
Dr John Cubitt, Managing Director                       www.blackrockoil.com

Beaumont Cornish                                        0207 628 3396
Michael Cornish 

Hanson Westhouse Limited                                0207 601 6100
Tim Feather

Aquila Financial Limited                                0207 202 2601
Peter Reilly     



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