£3.25million Fundraising, Loan Restructuring & TVR

Source: www.gulfoilandgas.com 5/5/2016, Location: South America

LGO has raised £3.25 million, before expenses, by way of a Company arranged placing of 1,625,000,000 new ordinary shares of 0.05p each ("the Placing Shares") at a placing price of 0.2p per share ("Placing Price") through a wholly institutional fund raise.

In a separate positive development, LGO has agreed with BNP Paribas ("BNPP"), the Company's bankers, a new indicative repayment schedule for the outstanding loan due to BNPP, reducing the outstanding loan liability to US$4.87 million by offsetting the funds previously frozen by BNPP as security. The liability will now be met over the remaining life of the loan until September 2017 at an average rate of US$286,000 per month, approximately 50% of the previous rate of repayment. Payment of the May 2016 instalment is being made against the new agreed schedule.

The net funds raised by way of the Placing Shares will be used as working capital by the Company. As a result of these funds being raised, agreement has now been reached with all material trade creditors outstanding from the 2015 drilling campaign in the Goudron Field in Trinidad ("Goudron"). Further announcements on these arrangements will be made in due course. This allows the Company to refocus its efforts on increasing oil production from Goudron.

Whilst the BPPP loan remains at call, LGO continue to explore ways to further restructure the liability such that the current default on covenants can be fully remedied. The Company now intends to embark on discussions it is hoped will lead to earlier repayment of the balance of the loan with BNPP. As a result of the progress being made the Company wishes to confirm that the non-binding term sheet for a US$20 million convertible loan as announced on 24 February 2016 is no longer being pursued.

Neil Ritson, LGO's Chief Executive, commented:

"The Board are pleased to have secured institutional backing to address the remaining trade creditors from the 2015 drilling campaign at Goudron. Well recompletion work is now underway to raise production and is showing encouraging results. The Company's primary focus is on clearing all creditors and to increase production, and then to proceed to the drilling of the previously announced Goudron Sandstone well program as soon as practical."

Application is being made for the admission of the 1,625,000,000 Placing Shares to trading on AIM and it is expected that this will occur on or around 11 May 2016. These shares will rank pari passu in all respects with the Company's existing issued ordinary shares.

Subsequent to the issuance of these Placing Shares, the Company will have 5,699,053,046 ordinary shares in issue, with voting rights.


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