AAK Arawak

    RNS Number : 0979K
  Arawak Energy Limited
  15 December 2008
   

    


    Arawak ENERGY LIMITEd
    Whiteley Chambers, Don Street, St. Helier, Jersey JE4 9WG

    LSE & TSX TRADING SYMBOL: AAK

    15 DECEMBER 2008

    FOR IMMEDIATE RELEASE

    ARAWAK updates shareholders on rosco offer process

    Arawak Energy Limited ("Arawak" or the "Company") today provides shareholders with an update on the status of the pre-conditional cash
offer (the "Offer") made by Rosco S.A. ("Rosco") for the entire issued share capital of Arawak.

    Rosco, a subsidiary of Vitol Holding B.V., announced on 28 October 2008 that, subject to a pre-condition, it intended to make an offer
for the entire issued and to be issued share capital of Arawak at a price of CAD $0.90 per share payable in cash. Vitol Holding B.V. and its
subsidiaries currently own an aggregate of 75,668,399 shares representing 41.43% of the issued common shares in Arawak. These shares are
held through Rosco, which holds 67,315,812 common shares, and Vitol B.V., which holds 8,352,587 common shares. 

    Subsequent to Rosco's announcement, Arawak has announced the creation of a special committee (the "Special Committee") of the Board of
Directors (the "Board") to consider the Offer. The Special Committee has appointed RBC Capital Markets ("RBC") as financial adviser and has
also engaged Macquarie Capital Markets Canada Ltd ("Macquarie") to conduct an independent valuation of the Company's shares as required by
applicable provincial securities laws in Canada.

    A number of Arawak shareholders have contacted the Company with questions related to the Offer. In order to ensure that all shareholders
have access to the same information, we would like to provide the answers to the most commonly asked questions: 
 
1.   What is the current status of Rosco*s offer? Why have shareholders not yet received mailings or a circular?
 
    Arawak is a company with a dual listing on the Toronto Stock Exchange ("TSX") and the London Stock Exchange ("LSE"). The Offer is
governed by the takeover provisions of both Canadian securities law and the UK Code on Takeovers and Mergers (the "UK Code"). 

    On 28 October 2008, Rosco announced its intention to make an offer, subject to a pre-condition, for the entire issued and to be issued
share capital of Arawak. The pre-condition was the approval, in terms reasonably satisfactory to Rosco, of the Offer by the Federal
Anti-Monopoly Service ("FAS") of the Russian Federation. Rosco's announcement stated that the making of the Offer would take place following
the satisfaction, or waiver by Rosco, of the pre-condition.

    In addition, the Offer will be deemed an insider bid under applicable Canadian securities legislation as a result of Rosco being a
significant shareholder of Arawak. Accordingly, a formal valuation (the "Independent Valuation") of the securities that are the subject of
the Offer must be prepared by an independent valuator at Rosco's expense and be published in Rosco's bid circular (the "Offer Document") in
conjunction with the Offer, unless such requirement is waived by the applicable Canadian securities regulators. 

    Under the UK Code, an offer document will normally be required to be published within 28 days of an announcement of a firm intention to
make an offer (or where such announcement is subject to a pre-condition, within 28 days of the satisfaction or waiver of the pre-condition).
However, allowing for the Offer being subject to the pre-condition and the Canadian requirement for the Independent Valuation, the UK Panel
on Takeovers and Mergers (the "UK Panel") agreed to vary the normal period for posting of the Offer Document under the UK Code.

    If publication of the Independent Valuation is unduly delayed Rosco may, with the agreement of the UK Panel and the Ontario Securities
Commission ("OSC"), be permitted to publish the Offer Document before publication of the Independent Valuation. 

    As a result, it is expected that Rosco will publish its Offer Document and forms of acceptance within seven days following the later of
(i) satisfaction or waiver of the pre-condition and (ii) receipt by Rosco of the Independent Valuation required pursuant to Canadian
securities laws (or a waiver of such requirement from applicable Canadian regulators).

2.   Why is Arawak commissioning an independent valuation report and what is the process for that? 

    Since Vitol owns 41.43% of Arawak, it is deemed an insider and, therefore, under Canadian securities laws an Independent Valuation needs
to be produced. This would normally be expected to be appended to the Offer Document when it is published. Arawak has appointed Macquarie to
produce the Independent Valuation.

    The process for producing the Independent Valuation can take some time and should be based on up-to-date information including in the
view of the Special Committee updated reserve reports since the Company's last reserve reports were dated 31 December 2007 and there has
been significant operational activity since that date. Certain precedent independent valuations for similarly situated oil and gas companies
have typically taken 60-90 days to produce.
 
3.   Do you need to update the reserves reports that are dated 31 December 2007 in order for the Independent Valuation to be prepared? How
long is that going to take? Who is going to prepare those reports?

    The last independent reserve reports on the Company's oil and gas assets are now more than eleven months old. In order for Macquarie to
complete the Independent Valuation and for the Special Committee and RBC to assess the Offer, an up-to-date assessment of the Company's oil
and gas assets  is desirable. The most current and independent assessment of these assets would be updated,  independently produced reserve
reports reflecting significant work programmes undertaken throughout 2008. 

    The Company has advised the OSC that it would be more appropriate to base the Independent Valuation on such updated, independent
engineering reports, prepared by qualified reserves evaluators, as the 2007 reserves are now stale and the information contained in such
reports will be inherently more reliable than reserve estimates based on Macquarie's due diligence investigations and management estimates.
Arawak relies upon its independent reserve auditors to make these assessments as required under the Canadian securities law instrument,
National Instrument 51-101 ("NI 51-101"). 

    Although it is difficult to give precise timing for the production of updated independent reserve reports, the Company does not believe
that the Independent Valuation will be materially delayed by virtue of relying on these reports. Ordinarily, the NI 51-101 reserve reports
for the period ending 31 December 2008 would be available in time for the publication of the Company's 2008 financial results, which are due
to be published in March 2009. Under the circumstances, Arawak has directed its independent reserve auditors to accelerate the production of
updated reserves reports to help facilitate consideration of Rosco's offer.

    Arawak's independent reserve auditors are Ryder Scott Company L.P. and McDaniel & Associates Consultants Limited.

    4.     When will Arawak*s Board make a formal recommendation to shareholders? What is the preliminary view? 

    The Board of Arawak will provide its formal recommendation and supporting comments in a circular to shareholders to be published not
later than 14 days after Rosco has published its Offer Document.

    The view of the Board is that the unsolicited Offer from Rosco is opportunistic and does not reflect the underlying value of Arawak's
shares.

5.      What are the strategic alternatives mentioned in Arawak*s press release dated 5 December 2008?

    The Board has a fiduciary duty to maximise value for its shareholders. To ensure this duty is met, the Board has established the Special
Committee of non-executive directors, which has appointed RBC as its financial adviser and has tasked RBC with exploring the full range of
strategic alternatives available to the Company. These strategic alternatives will include determining whether there is other third party
interest in the Company and its assets. 

6.     Can Rosco change its announced intention by not making an offer or reducing the original price of C$0.90 per share?

    The circumstances under which Rosco may not proceed with its Offer as announced on 28 October 2008 are limited. If the approval of the
FAS is not forthcoming and the pre-condition is not waived by Rosco, Rosco will not need to make a formal Offer.  
      
    Rosco's announcement of a firm intention to make an Offer included the Offer price. Under the UK Code, Rosco is not now permitted to
make an Offer at a lower price except with the consent of the UK Panel.  

    7.   What should I be doing about my Arawak shares right now?

    The Board recommends that Arawak shareholders take no action at this time. Shareholders are advised to wait for Rosco's Offer Document
and for the Company's subsequent response.
      Enquiries: 

 Arawak Energy Limited          Tel: +44 20 7973 4285
 Alastair McBain
 Charles Carter

 RBC Capital Markets            Tel: +44 20 7653 4804
 Andrew Smith
 Sarah Wharry

 Lute & Company                 Tel: +1 416 929 5883 (Ext 222)
 John Lute


    Notes to editors

    Arawak is engaged in the exploration, development and production of oil and natural gas in Kazakhstan, Russia and  Azerbaijan. In
Kazakhstan, the Company holds five producing fields and two exploration blocks. The Company has a 40% participating interest in the Saigak
producing block acquired in June 2008. The remaining assets are held through its 100% wholly-owned subsidiary Altius Energy Corporation
("Altius"). Altius' main producing field is Akzhar with smaller fields at Besbolek, Karataikyz and Alimbai. The two exploration blocks East
Zharkamys III and Tamdykol are also situated in western Kazakhstan. Arawak's producing assets in Russia are held through ZAO PechoraNefteGas
("PNG") and LLC NK Recher-Komi ("Recher-Komi") in which Arawak has a 50% interest with the remaining interest being held by Lundin Petroleum
AB. Also in Russia, Arawak holds a 100% interest in the Kymbozhyuskaya exploration block and in the South Sotchemyu appraisal block. In
Azerbaijan, the Company's asset is its interest in the Exploration Development and Production Sharing Agreement ("EDPSA") for the South West Gobustan oil and gas fields. CGL, a company registered
in Anguilla, British West Indies, in which the Company has a 37.17% interest, holds an 80% interest in the EDPSA with the remaining 20% held
by an affiliate of SOCAR. The remaining 62.83% share in CGL is held by two affiliates of the project operator, CNPC.

    This announcement includes "forward-looking statements", including statements with respect to Arawak's anticipated exploration and
development activities which are based on the opinions and estimates of management at the date the statements are made, and are subject to a
variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in
the forward-looking statements. These risks and uncertainties include, but are not limited to, risks associated with the oil and gas
industry (including operational risks in development, exploration and production; delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections in relation
to production, costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate
fluctuations, the uncertainty associated with commercial negotiations and negotiating with foreign governments and risks associated with international activity. Although Arawak believes that its
expectations represented by these forward-looking statements are reasonable, there can be no assurance that such expectations will prove to
be correct. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in the Company's
securities should not place undue reliance on these forward-looking statements. For a detailed description of the risks and uncertainties
facing Arawak, readers should refer to Arawak's Annual Information Form for the year ended 31 December 2007 and dated 31 March 2008 as filed
at www.sedar.com.


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