Digital Look

Virgin Credit Card:

Apply for the 16 months 0% card from Virgin (Typical APR 16.6%)

Oil & Gas Producers (0530)

Change Today

-72.01 ()

Value

6,066.73

Business Update

RNS Number : 8658C

Equator Exploration Limited

05 September 2008

FOR IMMEDIATE RELEASE - 5 September 2008

FOR: EQUATOR EXPLORATION LIMITED

("Equator"or the "Company")

SUBJECT: Settlement with BW Offshore and update on suspension of share trading

London, 5 September 2008 – Equator hereby makes the following announcement to provide details of a settlement of one of the Company’s outstanding contingent liabilities and an update on the current suspension of share trading.

Contingent Liabilities

Equator and a number of its wholly-owned subsidiaries have entered into an agreement (the “Settlement Agreement”) with BW Peace Limited, a subsidiary of BW Offshore AS (“BW”), to settle all outstanding amounts resulting from the termination of a contract for the provision of an FPSO for the Bilabri oil development in OML122, offshore Nigeria. This Settlement Agreement has now become unconditional and as a result, the contingent liability of US$52million for early termination noted in our most recent financial reports is reduced by US$10million. In addition, if payment is made before 31 December 2008, there will be a further reduction of US$12million, resulting in a net settlement of US$30million plus interest instead of the original potential of US$52 million.

The Company has already paid US$20million, as guarantor under the FPSO Contract. Therefore if payment is made prior to 31 December 2008, a termination payment of US$10.6 million plus interest will satisfy in full all claims from BW. The Company has arranged for the settlement amount to be assigned from the cash proceeds receivable under the farm-out agreement on OPL323 with BG Exploration and Production Nigeria Limited announced on 17 August 2007.

In addition, the Settlement Agreement requires that the Company pays for variation orders under the FPSO Contract. The amount due for one variation order is still under negotiation with a third party but the total is expected to be no more than US$8.2 million, excluding any interest which may be due. Provision has been made under the Settlement Agreement for the variation orders to be funded from the cash proceeds of any farm-out of the Company’s interest in OPL321. However, provision has also been made within the Bilabri Settlement Agreement, dated 13 September 2007 (“BSA”), for amounts due under the FPSO Contract to be paid from the proceeds of the financing of the Bilabri oil development being arranged by Peak Petroleum Industries Nigeria Limited. The status of this financing will be addressed in a separate news release.

2007 Annual Report and Accounts

The Company’s shares were suspended from trading at the end of June because the 2007 financials had not been published within the required period of 6 months from the end of 2007. This was due to complications resulting from the implementation of International Financial Reporting Standards and their effect on the accounting treatment of the loans and warrants issued by the Company and of their subsequent re-pricings and repayment deferrals. The treatment has now been agreed with our auditors, PricewaterhouseCoopers, and the financial statements have been submitted to them for their final review. The Board of Directors will publish the 2007 Annual Report and Accounts as soon as it has approved the financial statements. Once published, the Company’s share suspension is expected to be lifted and share trading should therefore re-commence.

An update covering other current issues will be distributed in due course.

Enquiries:

Equator	+44 (0)207 235 2555
Philip Rand
Chief Executive Officer

Beaumont Cornish Limited (Nominated Adviser to Equator)	+44 (0)207 628 3396
Roland Cornish

Fox-Davies Capital Limited (Nominated Broker to Equator)	+44 (0)207 936 5234
Richard Hail

Buchanan Communications	+44 (0)207 466 5000
Bobby Morse/Ben Willey

Information on Equator

Equator Exploration Limited engages in the exploration and development of oil and gas projects in highly prospective West Africa. Equator's objective is to build a diversified portfolio of exploration, appraisal and production assets in the region. The Company has exploration interests in the territorial waters of Nigeria and of São Tomé e Príncipe as well as in the Joint Development Zone between the two countries.

Additional information regarding the Company can be obtained from the Company's website at www.equatorexploration.com.

This information is provided by RNS

The company news service from the London Stock Exchange

END

MSCILFLVAEIEIIT

News Channel

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.