New ordinary share placing

RNS Number:4968L
Baltic Oil Terminals Plc
03 November 2006


3 November 2006

    Baltic Oil Terminals PLC ("Baltic", the "Company" or, together with its
                           subsidiaries, the "Group")


   NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES,
       CANADA, JAPAN, AUSTRALIA, THE REPUBLIC OF IRELAND OR SOUTH AFRICA.


              Placing of new ordinary shares to raise #8.4 million

Introduction

Further to the announcement on 20 October 2006 of the results of the high
definition 2D seismic and gas seismotomography for the Privolny licence block,
Baltic announces that it has entered into a placing agreement (the "Placing
Agreement") with Arden Partners plc ("Arden Partners"), under which Arden
Partners has placed 4.2 million new ordinary shares of 1 pence each ("Placing
Shares") for 200 pence per share.


The Directors of Baltic intend to use the net proceeds of the Placing
principally to finance an exploratory drilling programme by Zauralneftegaz
Limited ("Zauralneftegaz").


A letter from the Chairman of Baltic, together with a notice convening an
Extraordinary General Meeting of the Company (the "EGM") to approve, inter alia,
the issue of the Placing Shares in connection with the Placing, will, be posted
to shareholders today (the "Circular").


Background


The Group was founded in December 2004 to invest in oil related infrastructure
projects and upstream activities in Russia and other countries in the FSU to
generate a diversified and recurring revenue stream with reduced exposure to
fluctuations in oil and gas prices. The Group's principal activities are
focussed around its transhipment activities in Kaliningrad and its exploration
activities in Kurgan.


The Group's transhipment activities in Kaliningrad comprise:


   *a 58.35 per cent equity interest in Tetoil Limited, which is constructing
    a oil export transhipment terminal in Kaliningrad, a sovereign Russian
    territory located on the Baltic Sea between Poland and Lithuania;


   *a 100 per cent equity interest in OOO Baltic Top, the owner and operator
    of a refined products terminal business which stores gasoline and diesel 
    for delivery to customers in the Kaliningrad region;


   *a 51 per cent equity interest in Torgovy Dom Kaliningradneft, which
    tranships, for export, oil and refined products using the Russian Naval
    Authorities' facilities at Baltysk, which is located approximately 38
    kilometres to the west of Kaliningrad; and


   *a 50 per cent equity interest in OOO Polex Service, which owns and
    operates a vessel cleansing business, based in Kaliningrad, under an
    agreement with Rosmorport, the Russian Port Authority.


Its exploration activities in Kurgan are conducted through a 50 per cent equity
interest in Zauralneftegaz, which is licensed to explore for hydrocarbons over
more than one million acres in the Kurgan region of Western Siberia.
Zauralneftegaz is under the board and operational control of the Group through a
joint operating agreement with Siberian Energy Group Inc., the Group's fellow
shareholder in Zauralneftegaz.


The Board of Directors of Baltic (the "Board") believes that the infrastructure
in the Kurgan area, in general, and the Zauralneftegaz licence blocks, in
particular, is well developed for any future production which might result from
the exploration programme. A metalled road is located within half a kilometre
from the proposed first drilling exploration site, referred to below, and the
land between the road and the site is flat and firm. In addition, the main
Trans-Siberian railway line runs through the Zauralneftegaz licence blocks.


Zauralneftegaz exploration programme


On 9 August 2006, Baltic announced that an extensive surface geochemical survey,
a gas seismotomography(R) programme, carried out by Exotrad Incorporated. BVI
("Exotrad"), on the Privolny and Mokrousovsky blocks of Zauralneftegaz's
exploration acreage in Kurgan, Western Siberia, had identified a number of well
defined geochemical leads. Exotrad is involved in cost-effective passive and
active seismic and soil and gas surveying for hydrocarbon reservoir detection
and monitoring. It has undertaken over 260 projects since the late 1980s in
Central and Eastern Asia, Eastern Europe and North and South America.


As a result of the work by Exotrad, which has been accredited in an independent
report dated 19 September 2006 by two doctors of geology at Tyumen State Oil and
Gas Institute, the Board commissioned Bashneftegeofizika of Ufa, Bashirs, a
member of the Bashneft group of companies, to shoot high definition 2D seismic
along the geochemical survey lines of the Privolny and Mokrousovsky licence
blocks. A total of 150 kilometres of new 2D seismic was shot on the Privolny
block. This data was subsequently processed and interpreted in the UK by RPS
Energy, the results of which were announced by the Company on 20 October 2006.
Shooting, processing and interpretation of 320 kilometres of new 2D seismic data
on the Mokrousovsky block is continuing and is expected to be completed later
this year.


The Exotrad geochemical survey has continued since the announcement on 9 August
this year. The field work has now been concluded and interpretation has been
completed in respect of a further three blocks. In an interim report issued on
19 October 2006, Exotrad reported that it had identified a strong surface
geochemical anomaly in the Orlovo-Pashkovsky licence block; in addition, two
further strong geochemical anomalies, which are still being interpreted, have
been mapped in the Petukhovsky and Lebyazhevsky blocks.


In its report on the Privolny seismic data, RPS Energy reported that two robust
prospects had been identified in the north of the Privolny licence area, beneath
the surface geochemical anomaly which had been previously identified in the
Exotrad geochemical survey. The Directors believe that the exploration risk on
these prospects has been substantially reduced through Exotrad's surface
geochemical work and would be further reduced following the first exploration
well at the Privolny block. RPS Energy also reported that the two prospects,
which it considers to be drillable, have a combined area of closure of
approximately 28 square kilometres. The Directors therefore believe that these
prospects could be significant.


As the results of the Privolny 2D seismic confirm the encouraging findings of
the gas seismotomography(R) programme, the Board has determined to drill up to
four exploration test wells in Zauralneftegaz's Kurgan licence blocks. At least
two of these wells are proposed to be drilled in northern locations in the
Privolny block and potentially two are proposed to be drilled on the
Mokrousovsky block. Zauralneftegaz has contracted a highly experienced Russian
contractor to drill the wells, using an Uralmash 3000 rig. The first well will
be drilled on the Privolny block to a maximum depth of 2000 metres, with logging
and coring undertaken in accordance with a programme designed by RPS Energy and
the Tyumen State Oil and Gas Institute, which will be used as the basis for the
drilling licence application.


In the event that the wells prove successful in establishing the presence of
hydrocarbons, the Board intends that production testing will be supervised by a
leading firm of reservoir evaluation consultants. The Board will then determine
the most appropriate means of commercialising the licence blocks.


The total budget for the exploration programme and further seismic, which the
Board proposes to shoot on Zauralneftegaz's Lebyazhevsky block, amounts to
approximately #8 million.


Baltic has agreed with Siberian Energy Group Inc., its fellow shareholder in
Zauralneftegaz, to finance this expenditure through a loan from Caspian Finance
Limited, a wholly owned member of the Group, at interest rates of between 12 per
cent and 14 per cent per annum. As part of these arrangements, Siberian Energy
Group Inc. has agreed that the Baltic Group will also receive a gross override
royalty of 3 per cent of any gross revenues from oil production by
Zauralneftegaz, up to the maximum amount of the loan. It is a term of the
relevant loan agreement that all loans from Caspian Finance Limited, and accrued
interest relating thereto, will be repaid prior to any distribution of dividends
by Zauralneftegaz to Baltic and Siberian Energy Group.


The Board expects to announce the results of the first Privolny well by Spring
2007.


The Board continues to assess how best, whether by demerger, farm-in, outright
sale or otherwise, to maximise shareholder value from the Group's investment in
Zauralneftegaz, and the appropriate time for implementing such action.



Reasons for the Placing and use of proceeds


The reason for the Placing and the principal use of the net proceeds is to
finance a loan to Zauralneftegaz to enable it, under Baltic's control, to
finance its exploration programme, including, in particular, the drilling of up
to four exploration wells and seismic analysis of the Lebyazhevsky licence
block.


Current trading and prospects


On 9 August 2006, in its interim statement in respect of the period ended 30
June 2006, the Board announced that good progress was being made by both Tetoil
Limited and Zauralneftegaz Limited. This continues to be the case and both
projects remain within budget. In addition, OOO Baltic Top and OOO Polex Service
are trading satisfactorily, and Torgovy Dom Kaliningradneft ("TDKN") is expected
shortly to enter into its first contract to ship gasoline, which is therefore
expected to commence in November 2006. The Directors now anticipate that TDKN
will reach output of 200,000 tons per month by August 2007.


Accordingly the Board expects trading for the year ending 31 December 2006 to be
satisfactory and continues to believe that the Group's prospects are excellent.


Details of the Placing


The Placing Shares have been placed by Arden Partners in accordance with the
Placing Agreement with both new and existing eligible institutional investors.
The Placing has been conducted in accordance with the Placing Agreement, which
is conditional, inter alia, upon:


   *the passing of the appropriate resolution ("Resolution") relating to the
    Placing Shares to be proposed at the EGM; and


   *admission of the Placing Shares to trading on AIM ("Admission") becoming
    effective by no later than 8.00 am on 28 November 2006 or such later time as
    the Company and Arden Partners agree, being in any event not later than 31
    December 2006.


The Placing Agreement may be terminated by Arden Partners in certain
circumstances up until the time of Admission, including for a material breach of
the Company's obligations under the Placing Agreement or for a material breach
of a warranty contained in the Placing Agreement or in the event of force
majeure or a material adverse change in the financial condition of the Company.


Application will be made to London Stock Exchange PLC for the Placing Shares to
be admitted to trading on AIM. Subject to the passing of the Resolution:


   *the Placing Shares will be issued credited as fully paid and will rank
    pari passu in all respects with the existing ordinary shares of the Company,
    including the right to receive all dividends and distributions, declared,
    made or paid after the date of this Announcement; and


   *it is expected that Admission will become effective and dealings in the
    Placing Shares will commence on 28 November 2006.


Commenting on today's announcement, Simon Escott, Chief Executive of Baltic,
stated:


"Following encouraging 2D seismic data, which matched our geochemical results
and showed two robust drilling prospects in our Privolny licence block, we are
pleased to now have the capability to move forward with our drilling programme,
with the spud date for the first well in December this year.


"We have de-risked and added value to our acreage for shareholders, and with the
imminent drilling, we look forward to the results of the first well in Spring
2007.


"Meanwhile, our three terminal operations in Kaliningrad are either already in
operation, due to commence operations in November or on schedule and budget to
commence by the end of January 2007."


Enquiries


Baltic Oil Terminals PLC
Simon Escott                       020 7667 6371
Robert Wilde                       01908 547 920


Arden Partners plc                 020 7398 1638
Chris Fielding
Tom Fyson

Financial Dynamics                 020 7831 3113
Billy Clegg
Ed Westropp

NOTES TO EDITORS

General

This Announcement is not an offer to sell or issue or the solicitation of an
offer to buy or subscribe for Placing Shares in any jurisdiction in which such
offer or solicitation is unlawful and, in particular, is not for publication or
distribution into the United States, Canada, Japan, Australia, South Africa or
the Republic of Ireland or in any other jurisdiction where such publication or
distribution is unlawful unless permitted pursuant to an exemption under the
relevant local law. The Placing Shares have not been, nor will be, registered in
the United States under the United States Securities Act of 1933, as amended
(the "Securities Act"), or under the securities laws of any state or other
jurisdiction of the United States or the laws of Canada, Australia, Japan, the
Republic of Ireland or South Africa. Accordingly, subject to certain exceptions,
they may not be offered, or sold, directly or indirectly, within the United
States, Canada, Australia, Japan, the Republic of Ireland or South Africa or to,
or for the account or benefit of, any person in, or any national, citizen or
resident of, the United States, Canada, Australia, Japan, the Republic of
Ireland or South Africa. The distribution of this Announcement outside the
United Kingdom may be restricted by law and therefore persons outside the United
Kingdom into whose possession this Announcement comes, should inform themselves
about and observe any restrictions as to the Placing, the Placing Shares or the
distribution of this Announcement.

Arden Partners, which is regulated and authorised by the Financial Services
Authority, is acting exclusively for Baltic in connection with the Placing and
no one else and will not be responsible to anyone other than the Company for
providing the protections afforded to clients of Arden Partners nor for
providing advice in relation to the Placing or any transaction or arrangement
referred to herein.




                      This information is provided by RNS
            The company news service from the London Stock Exchange

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