PA Resources carries out a fully underwritten rights issue of approximately SEK 705 million

PA Resources carries out a fully underwritten rights issue of approximately SEK
705 million, partly directed to owners of the company’s A-shares and partly to
owners of the company’s B-shares, which were issued following the completion of
the offer to the company’s convertible bondholders.
Summary

  · The Board of Directors in PA Resources AB (publ) (”PA Resources” or the
”Company”) has today, with support from the authorization from the extraordinary
general meeting held on 7 December 2012, resolved to carry out a fully
underwritten rights issue of approximately SEK 705 million (the “Rights Issue”)

  · The rights issue is fully underwritten by a underwriting consortium put
together by Carnegie Investment Bank AB (”Carnegie”) consisting of 40 Swedish
and international investors

  · The total Rights Issue proceeds amounts to approximately SEK
705[1] (http://#_ftn1) million and the subscription price is set at SEK 0.10 per
share

  · The shareholders of the Company will have preferential rights to subscribe
for the new shares

–      Two (2) A-shares (i.e. the shares that today are listed on NASDAQ OMX
Stockholm) entitle to subscription for twelve (12) new A-shares

–      Two (2) B-shares (i.e. the shares that have been issued in the set-off
issue directed to the Company’s convertible bondholders) entitle to subscription
for one (1) new B-share

–      Following the completion of the Rights Issue, the B-shares will
automatically be converted into A-shares

  · The record date in order to receive subscription rights is 7 January 2013

  · The subscription period runs from and including 9 January 2013 until and
including 23 January 2013

  · The period for trading in subscription rights for both A- and B-shares runs
from and including 9 January 2013 until and including 18 January 2013

  · The terms and conditions will be described in detail in the prospectus that
is expected to be made public on or around 28 December 2012. The prospectus will
be available on PA Resources’, Carnegie’s and the Swedish Financial Supervisory
Authority’s (Sw. Finansinspektionen) respective websites

Background and motives

Substantial asset portfolio and positive cash flow from producing fields

PA Resources has a substantial asset portfolio of producing fields, fields under
development, and assets which the Company has not yet begun developing. In
addition, the Company has a number of assets with, in the view of the Company,
great exploration potential. The current production is generating a positive
operating cash flow, and during November 2012, an average of 7,200 barrels of
oil was produced per day. During the period January–November 2012 an average of
8,000 barrels of oil were produced per day.

The production rates and the operating cash flow have improved substantially
since the Aseng field was brought into production in late 2011. The field has
produced above plan and the development investments were recovered already by
midyear 2012.

Weakened financial position as a result of lower than expected production from
the Azurite field

As previously presented, the Company’s financial position and flexibility have
been significantly weakened as a result of the unfavorable development in the
Azurite field in the Republic of Congo (Brazzaville). During the past two years
it has become evident that the significant investment that was made by PA
Resources in the field has generated a considerably lower return than
anticipated – the actual production from Azurite during 2012 turned out to be
almost 10,000 barrels per day lower than the plan presented in 2010 and the
total cash flow since 2010 has been more than SEK 2.9 billion below the plan.
The total investments in the field will most likely not be recovered and the
Company has since 2010 written down the book value of the field at two occasions
by SEK 1,436 million and SEK 1,321 million respectively.

As a consequence of the low production rates and write-downs of the fields’ book
value, the Company has received less favorable credit terms and higher costs,
and the Company has also breached covenants in the bond loan agreements.
Furthermore, the Company has been forced to accelerate the amortization of the
credit facilities linked to the Azurite field, which has significantly weakened
the Company’s financial position and flexibility.

Outcome of the offer to holders of the Company’s convertible bond 2008/2014

In order to find a solution to the Company’s distressed financial position, the
Board of Directors in PA Resources presented, on 7 November 2012, an offer to
the holders of the Company’s convertible bond 2008/2014 to set-off their claims
according to the convertible bonds against newly issued shares in the Company,
as well as a subsequent fully underwritten Rights Issue of new shares.

The final outcome of the offer to the convertible bondholders shows that a total
of approximately SEK 968,365,541 in outstanding nominal amount including accrued
interest as per 6 November 2012, corresponding to approximately 90.5 percent of
the total claim according to the convertible bonds has been set-off against
newly issued B-shares. This means that the Company’s net interest-bearing
indebtedness has decreased by SEK 890 million while the equity has increased by
SEK 968 million. The new issue has increased the total number of shares in the
Company from 637,477,652 to 7,093,247,924, of which 6,455,770,272 are B-shares,
corresponding to a dilution of approximately 91 percent of the capital and
approximately 84 percent of the votes in the Company.

The Board of Directors has resolved to carry out a fully underwritten Rights
Issue of approximately SEK 705 million

All conditions for completion in the offer to the Company’s convertible
bondholders are fulfilled and the Board of Directors has therefore, with support
from the authorization from the extraordinary general meeting on 7 December
2012, resolved to carry out a fully underwritten Rights Issue of approximately
SEK 705 million.

Following the completion of Rights Issue, the Company’s net indebtedness will
decrease by approximately SEK 705 million while the equity will increase by
approximately SEK 705 million. Assuming full subscription in the Rights Issue
from holders of both A- and B-shares, holders of A-shares (i.e. the former
shareholders) will control 32 percent of the shares in the Company and holders
of B-shares (i.e. the former convertible bondholders) will control the remaining
68 percent of the shares in the Company.

The Company’s net indebtedness as per 30 September 2012 amounted to SEK 3,410
million and the Company’s equity amounted to SEK 956 million. Given the
assumptions that the offer to the convertible bondholders as well as the
upcoming Rights Issue had been completed as per 30 September 2012, the Company’s
net indebtedness would in that case have amounted to SEK 1,814 million, while
the equity would have amounted to SEK 2,629 million.

Financial position enabling the business plan

The completed set-off of approximately 90.5 percent of the Company’s convertible
bond 2008/2014 against new shares in combination with the upcoming Rights Issue
strengthens the Company’s financial position substantially.

In order to adjust the size of the future investments to the Company’s financial
position following the Rights Issue, as well as to reduce the Company’s exposure
to single projects, the Company intends to continue the work to reduce its
ownership interest in certain of the prioritized assets through so called farm
-outs. The Company is currently involved in several discussions regarding such
transactions and the Company is of the opinion that the opportunities to
finalize these discussions will improve through its strengthened financial
position.

Furthermore, the Company is of the opinion that it, through a continued use of
alternative forms of financing and a net indebtedness in line with the level
following the Rights Issue, will be able to use the cash flow from the producing
fields to continue the development of the prioritized assets. The prioritized
assets currently include the Danish discoveries Broder Tuck and Lille John in
the 12/06 license, the Elyssa and Zarat fields in the Zarat license in Tunisia
and Block I including the Aseng field in Equatorial Guinea. In addition, limited
and selective exploration activities will be carried out.

The Company’s cash flow in combination with the proceeds from the Rights Issue
will also enable continued maintenance investments in producing fields in the
following years. At the same time the Company is of the opinion that its balance
sheet following the Rights Issue will be sufficiently strong to, combined with
new external debt financing, complete the planned amortizations on outstanding
bond loans of a total of approximately SEK 950 million and the planned
amortizations on the reserve based credit facility of approximately USD 64
million during 2013.

Given the Company’s assumptions regarding future farm-outs, the investments to
develop prioritized assets of approximately 30 million barrels of oil to
producing reserves and to continue selective exploration activities are
estimated to approximately SEK 1.8 billion during the period 2013–2018, which
results in a development cost of approximately USD 9 per barrel. Given the
Company’s business plan for the period 2013–2018, the Company is estimated to
hold a net cash position by the end of 2018 of approximately SEK 600 million.

Altogether the management and Board of Directors are of the opinion that the
Company has an attractive underlying asset base that is currently burdened by an
excessive indebtedness. The Company’s financial position following the Rights
Issue will create a strong basis for long-term production growth and value
creation.

The Rights Issue

On 21 December 2012, the Board of Directors in PA Resources resolved, with
support from the authorization from the extraordinary general meeting on 7
December 2012, to carry out a new issue of A- and B-shares of a total of
approximately SEK 705 million with preferential rights for the Company’s
existing shareholders. The Company’s shareholders will have preferential right
to subscribe for new shares in relation to the number of shares held on the
record date.

In case all new shares are not subscribed for by the exercise of subscription
rights, shareholders and other external investors will have the right to
subscribe for new shares without subscription rights. Allotment will be carried
out in accordance with the principles in the Board of Directors’ resolution.

Shareholders who, on the record date on 7 January 2013, hold shares in the
Company will be allotted subscription rights. Holders of A-shares will receive
twelve (12) subscription rights for new A-shares (“A-subscription rights”) for
each one (1) A-share they hold on 7 January 2013. Holders of B-shares will
receive one (1) subscription right for new B-shares (“B-subscription rights”)
for each one (1) B-share they hold on 7 January 2013. Two (2) subscription
rights entitle to subscription for one (1) new share of each series of shares
respectively at a subscription price of SEK 0.10 per new share, i.e. two (2) A
-subscription rights will entitle to subscription for one (1) A-share and two
(2) B-subscription rights entitle to subscription for one (1) B-share. The
proceeds from the Rights Issue are expected at approximately SEK 705 million
before transaction related costs. The Rights Issue will increase the Company’s
share capital with a maximum of SEK 705,275,104.80 and the number of shares with
a maximum of 7,052,751,048, whereof a maximum of 3,824,865,912 A-shares and a
maximum of 3,227,885,136 B-shares.

Following the completion of the Rights Issue the B-shares will automatically be
converted into A-shares. The subscription period will run from 9 January 2013 to
23 January 2013. The Board of Directors reserves the right to extend the
subscription period. Trading in subscription rights (both A- and B-subscription
rights) will take place on NASDAQ OMX Stockholm from 9 January 2013 until 18
January 2013. Subscription rights that have not been exercised on 23 January
2013 at the latest or sold on 18 January 2013 at the latest will become void and
lose all value.

The terms and conditions for the Rights Issue will be described in detail in the
prospectus that is expected to be made public on or around 28 December 2012. The
prospectus will be available on PA Resources’, Carnegie’s and the Swedish
Financial Supervisory Authority’s (Sw. Finansinspektionen) websites.

Underwriting commitments

An underwriting consortium put together by Carnegie has agreed to underwrite,
subject to certain conditions, in aggregate an amount corresponding to the total
proceeds from the Rights Issue. The underwriting consortium consists of 40
Swedish and international investors, of which several have previously invested
in securities issued by the Company. The largest guarantors are Gunvor Group
Ltd. (with an amount of SEK 200 million), Sparinvest SiCAV (with an amount of
SEK 60 million) and Traction Konsult Aktiebolag (with an amount of SEK 35
million). Bo Askvik, the Company’s CEO, Hans Kristian Rød, the chairman of the
Board of Directors and Per Jacobsson, director of the Boards of Directors have,
personally or through companies, underwritten an amount of SEK 1 million each.
The other 34 guarantors have underwritten between SEK 0.5-30 million each.

The remainder of the Rights Issue is underwritten by Carnegie, provided that
certain conditions are fulfilled.

Preliminary timetable in the Rights Issue

2 January 2012                     Last day for trading in the Company’s share
with right to receive subscription rights

28 December 2012             Estimated day for publication of the prospectus

7 January 2013                     Record date to participate in the Rights
Issue, i.e. the shareholders as of this date that are registered in the share
ledger of PA Resources will receive subscription rights for participation in the
Rights Issue

9–18 January 2013             Trading in subscription rights

9–23 January 2013             Subscription period

25 January 2013 Announcement of preliminary outcome

Financial and legal advisors

Carnegie is acting as book runner and financial advisor to PA Resources.
Advokatfirma DLA Nordic KB and Advokatfirman Vinge KB are acting as legal
advisors to PA Resources. Gernandt & Danielsson Advokatbyrå KB is acting as
legal advisor to Carnegie.

Stockholm, 21 December 2012
PA Resources AB (publ)
In case of questions, please contact:
PA Resources: + 46 8 545 211 50

PA Resources AB (publ) is an international oil and gas group which conducts
exploration, development and production of oil and gas assets. The Group
operates in Tunisia, Republic of Congo (Brazzaville), Equatorial Guinea, United
Kingdom, Denmark, Greenland, the Netherlands and Germany. PA Resources has oil
production in West and North Africa. The parent company is located in Stockholm,
Sweden. In 2011, PA Resources reported sales of SEK 2,154 million. The share is
listed on NASDAQ OMX Stockholm, Sweden (segment Mid cap). For further
information please visit www.paresources.se.

The above information has been made public in accordance with the Securities
Market Act and/or the Financial Instruments Trading Act. The information was
published at 5.30 PM CET on 21 December 2012.

IMPORTANT NOTICE

The information in this press release is not for release, publication or
distribution, directly or indirectly, in or into the United States, Australia,
Denmark, Hong Kong, Canada, Japan, Switzerland, Singapore, South Africa or New
Zeeland. The distribution of this press release in certain other jurisdictions
may be restricted. The information in this press release shall not constitute an
offer to sell or the solicitation of an offer to purchase any securities in PA
Resources in any jurisdiction. This press release does not constitute, or form
part of, an offer or solicitation to purchase or subscribe for securities in the
United States. The securities referred to herein may not be offered or sold in
the United States absent registration or an exemption from registration as
provided in the U.S. Securities Act of 1933, as amended (“the Securities Act”).
PA Resources does not intend to register any portion of the offering of the
securities in the United States or to conduct a public offering of the
securities in the United States. Copies of this announcement are not being
distributed or sent and may not be distributed or sent to the United States,
Australia, Denmark, Hong Kong, Canada, Japan, Switzerland, Singapore, South
Africa or New Zeeland.

This document has not been approved by any regulatory authority. This document
is a press release and not a prospectus and investors should not subscribe for,
or purchase any securities referred to in this document, except on the basis of
information that will be provided in the prospectus to be published by PA
Resources and on its website in due course.

EUROPEAN ECONOMIC AREA

PA Resources has not resolved to offer to the public securities in any Member
State of the European Economic Area other than Sweden and any other jurisdiction
into which the offering of securities may be passported. Within such Member
States of the European Economic Area other than Sweden (and any other
jurisdiction into which the offering of securities may be passported) and which
has implemented the Prospectus Directive (each, a “Relevant Member State”), no
action has been undertaken as of this date to make an offer to the public of
securities requiring a publication of a prospectus in any Relevant Member State.
As a result hereof, the securities may only be offered in a Relevant Member
State: (a) to a qualified investor (as defined in the Prospectus Directive or
under applicable law); or (b) in any other circumstances, not requiring PA
Resources to publish a prospectus as provided under Article 3(2) of the
Prospectus Directive.

For the purposes hereof, the expression an “offer to the public of securities ”
in any Relevant Member State means the communication, in any form, of sufficient
information on the terms of the offer and the securities to be offered so as to
enable an investor to decide to purchase any securities, as the same may be
varied in a Relevant Member State due to the implementation of the Prospectus
Directive in that Member State and the expression “Prospectus Directive” means
Directive 2003/71/EC including any relevant implementing measure in each
Relevant Member State.

Carnegie is acting for PA Resources and no one else in connection with the
Rights Issue and will not be responsible to anyone other than PA Resources for
providing the protections afforded to its clients or for providing advice in
relation to the Rights Issue or any other matter referred to in this
announcement.

Carnegie accepts no responsibility whatsoever and makes no representation or
warranty, express or implied, for the contents of this announcement, including
its accuracy, completeness or verification or for any other statement made or
purported to be made by Carnegie, or on its behalf, in connection with PA
Resources and the securities or the Rights Issue, and nothing in this
announcement is, or shall be relied upon as, a promise or representation in this
respect, whether as to the past or future. Carnegie accordingly disclaims to the
fullest extent permitted by law all responsibility and liability whether
relating to damages, contract or otherwise which it might otherwise have in
respect of this announcement or any such statement.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that reflect management’s
current views with respect to future events and potential financial performance.
Although PA Resources believes that the expectations reflected in such
statements are reasonable, no assurance can be given that such expectations will
prove to have been correct. Accordingly, results can differ materially from
those set out in the forward-looking statements as a result of various factors.
You are advised to read this announcement, and the prospectus and the
information incorporated by reference therein, in their entirety for a further
discussion of the factors that could affect the PA Resources’ future performance
and the industries in which the Company operates. In light of these risks,
uncertainties and assumptions, it is possible that the events described in the
forward-looking statements in this announcement may not occur.

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[1] (http://#_ftnref1) Before deduction of transaction related costs of
approximately SEK 100 million