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CORPORATE NEWS RELEASE : FEC Resources Inc - Date: 19 05 2015

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FEC REPORTS ON FEP DELISTING

FEC RESOURCES INC. (OTCBB: FECOF) ("FEC") wishes to advise shareholders that it has noted the following announcement made by Forum Energy PLC. ("FEP").

"Forum Energy plc

Cancellation of admission to trading of Ordinary Shares on AIM

Offer by Philex Petroleum Corporation to acquire the minority interests in the Company not held by the Philex Concert Parties

Re-registration of the Company as a private company and amendments to the Company’s articles of association     

The Board of Forum Energy plc (“Forum” or the “Company”) today announces:

  • the proposed cancellation to trading of the admission of its ordinary shares of 10 pence each (the “Ordinary Shares”) on AIM (“Cancellation”);
  • the proposed re-registration of the Company as a private limited company (the “Re-registration”); and
  • the proposed replacement of the Company’s existing articles of association (together with the Re-registration and the Cancellation, the “Proposals”).
In connection with the Cancellation, the Boards of Forum and Philex Petroleum Corporation (“Philex”) announce an offer by Philex to acquire the minority interests in the Company’s Ordinary Shares not held by the Philex Concert Parties or Shareholders in Restricted Jurisdictions for a cash consideration of 20 pence per Ordinary Share (the “Offer”).

The Company is today posting a circular to its Shareholders (the “Circular”) which incorporates notice of an annual general meeting to be held on 17 June 2015 at which special resolutions to approve the Proposals (the “Resolutions”) are to be considered and also includes the Offer and the terms thereof.

Defined terms used but not defined in this announcement have the meanings set out in the Circular.

Cancellation   
On 2 March 2015, the Company announced that its principal asset, a 70 per cent interest in SC72, an oil and gas contract to develop a gas discovery, was put into force majeure by the Philippine Department of Energy because the relevant contract area falls within the territorial disputed area of the West Philippine Sea which is the subject of an United Nations arbitration process between the Republic of Philippines and the People’s Republic of China.   

In 2006, results from a 3D seismic survey over this contract area had indicated a mean volume of 3.4 trillion cubic feet of gas-in-place with significant upside potential. In 2011, the Company acquired 2,202 line-kilometres of 2D seismic data and 565 square kilometres of 3D seismic data over SC72, which the Company’s independent petroleum consultants interpreted and which indicated 1.8 trillion cubic feet of Contingent Resources and 6.2 trillion cubic feet of Prospective Resources, as announced by the Company on 24 April 2012. This satisfied the obligations under the first sub-phase of the contract. However, since then the Company has not been able to complete its second sub-phase work obligations as it has been unable to secure the necessary approvals from the DOE, which instead granted extensions to the Company’s obligations under SC72 in both 2013 and 2014. As a result of the force majeure, all exploration work at SC72 has been suspended and the second sub-phase of SC72 has been put on hold until further notice.  

There can be no guarantee as to if and when the force majeure on SC72 will be lifted. If it is lifted, there can be no guarantee that the DOE will grant the necessary approvals to proceed with the work required to satisfy the Company’s obligations under the second sub-phase of SC72.   

There are significant costs associated with maintaining a quotation on AIM which the Company has paid for just under ten years whilst waiting to be able to develop SC72. These costs (estimated at more than £300,000 per annum) include fees payable to the London Stock Exchange, nominated adviser fees, shareholder communication time and costs, as well as other professional fees. The Cancellation would reduce these recurring administrative costs.   

In view of the ongoing uncertainty as to if and when the force majeure on SC72 will be lifted, the Board has concluded that the costs of maintaining the admission of the Ordinary Shares to trading on AIM are likely to outweigh the potential benefits.  Accordingly, the Board has concluded that it is therefore no longer in the Company’s or Shareholders’ best interests for the Ordinary Shares to remain publicly traded.   

The Company has notified the London Stock Exchange of the proposed Cancellation. Subject to the passing of the Resolutions at the Annual General Meeting, it is intended that the Cancellation will occur no earlier than five clear Business Days after the Annual General Meeting and it is expected that trading in the Ordinary Shares on AIM will cease at the close of business on 24 June 2015, with Cancellation taking effect at 7:00 a.m. on 25 June 2015.  

The Philex Concert Parties and Tidemark, holding in aggregate an interest in 90.96 per cent of the Company’s existing issued share capital, have entered into irrevocable undertakings to vote in favour of the Resolutions. Further details in respect of the irrevocable undertakings are set out below.

Effect of Cancellation and Change of Board

The principal effect of the proposed Cancellation is that there would no longer be a formal market mechanism enabling Shareholders to trade their Ordinary Shares on AIM or any other recognised market or trading exchange.

In connection with the Cancellation, it is intended that the composition of the Board be altered such that only Eric Recto, Robert Nicholson and Paul Wallace will remain on the Board. As a result, following the Cancellation, and with the Company’s central management and control being outside the UK, Channel Islands and the Isle of Man, the Company will no longer be bound by or subject to the Takeover Code.

Shareholders should also be aware that the Company will no longer be bound by the AIM Rules. As a consequence, certain previously prescribed corporate governance procedures may not be adhered to in the future and the Company will no longer be required to announce material events or transactions. However, Shareholders’ attention is drawn to the fact that the Company is a subsidiary of Philex which is itself listed on the Philippine Stock Exchange and has its own disclosure and governance requirements.

The Company will continue to be bound by the Companies Act 2006 (which requires shareholder approval for certain matters) following the Cancellation.

Other Proposals

In order to introduce a corporate framework more suitable for an unlisted company, the Directors are also proposing that, on the Cancellation becoming effective, the Company will re-register as a private limited company. To do so, it will be required to adopt articles of association appropriate for a private limited company.

The Resolutions to be proposed at the Annual General Meeting include the adoption of the New Articles with effect from completion of the Re-registration.

The Offer

Under the Offer, Philex is offering to acquire the Ordinary Shares not held by the Philex Concert Parties or Shareholders in Restricted Jurisdictions on the following terms:

20 pence in cash for each Ordinary Share.

The Offer is open to Qualifying Shareholders, being all Shareholders from time to time save for Shareholders located in a Restricted Jurisdiction and the Philex Concert Parties. The Philex Concert Parties have an interest in 63.82 per cent of the Company’s existing issued share capital, and Philex is offering to acquire 36.17 per cent of the Company’s Ordinary Shares from Qualifying Shareholders.

However, Tidemark Holdings Limited (“Tidemark”) has irrevocably undertaken to Philex not to accept the Offer in respect of its interest in 9,646,757 Ordinary Shares, representing approximately 27.14 per cent of the total issued share capital of the Company.

Qualifying Shareholders may accept the Offer in respect of some, all or none of their holdings of Ordinary Shares.

Unless extended by means of an announcement through a Regulatory Information Service, the Offer will close at 1 p.m. on 22 June 2015.

Qualifying Shareholders who do not accept the Offer will, on completion of the Cancellation, hold Ordinary Shares in a private limited company, and there will be no market facility for dealing in the Ordinary Shares, no price will be publicly quoted for the Ordinary Shares and the Company’s CREST facility will be terminated with Ordinary Shares no longer being transferable through CREST.

The terms of the Offer are set out in further detail in Appendix 1 to this announcement and, in respect of the Ordinary Shares held in certificated form, in the Forms of Acceptance.

The Offer is being financed from Philex’s own cash resources.

Execution Noble has sought and obtained confirmations in relation to Philex’s funding arrangements, and is satisfied that sufficient resources are available to Philex to enable it to satisfy the consideration payable as a result of full acceptance of the Offer by those Shareholders who have not given a binding irrevocable undertaking not to accept the Offer.

As a result of the Company’s principal asset, SC72, being placed into force majeure, the Independent Directors, who have been so advised by Execution Noble (which has taken into account the commercial assessments of the Independent Directors), are unable to conclude whether or not the terms of the Offer are fair and reasonable.

The Independent Directors believe that the following points should be taken into account by Shareholders when considering whether to retain their Ordinary Shares or accept the Offer:

Reasons for retaining the Ordinary Shares

The Company holds a 70 per cent interest in SC72, an offshore oil and gas service contract containing the Sampaguita Gas Field and which, in the Independent Directors’ view, is the Company’s principal asset.  In 2011, the Company acquired 2,202 line-kilometres of 2D seismic data and 565 square kilometres of 3D seismic data over SC72, which the Company’s independent petroleum consultants interpreted and which indicated 1.8 trillion cubic feet of Contingent Resources and 6.2 trillion cubic feet of Prospective Resources, as announced by the Company on 24 April 2012.

If the force majeure in respect of SC72 were to be lifted, the underlying value of the Company’s interest in SC72 could be worth significantly more per Ordinary Share than the Offer Price.  In this regard, the Independent Directors note that in the five Business Days following the Company’s announcement of 24 April 2012, the Company’s share price reached an average of 182 pence per Ordinary Share.

Reasons for accepting the Offer

The Company has received irrevocable undertakings to vote in favour of the Cancellation from Shareholders in respect of 90.96 per cent of the total issued share capital of the Company. Accordingly, subject to receiving confirmation from the London Stock Exchange of the Cancellation shortly after the AGM, the Independent Directors expect that the cancellation of admission to trading of the Ordinary Shares on AIM will take place at 7:00 a.m. on 25 June 2015.

Upon Cancellation, there would no longer be a formal market mechanism enabling Shareholders to trade their Ordinary Shares.

Upon Cancellation, the Company would no longer be subject to, and its Shareholders would consequently lose the protections afforded by, certain corporate governance regulations which apply to the Company currently.  In particular, the Company would no longer be subject to the AIM Rules or the Takeover Code.

There can be no assurances that the pre-drill assumptions or estimates provided by the Company’s independent petroleum consultants in 2011 in respect of SC72, as set out in the Company’s financial statements, will prove to be accurate, as future technical evaluations and results, including drilling results, could lead to variations or differ materially from those included in the report, nor can there be any guarantee that hydrocarbons will be capable of being extracted commercially.

There can be no guarantee as to if and when the DOE will grant the necessary approvals (including lifting the force majeure) to allow the Company to proceed with the work required on the Company’s principal asset, SC72.

There can be no guarantee as to whether the Company will be able to raise significant funds that may be required to carry out the Company’s obligations on the remaining sub-phases of SC72, if the necessary approvals are granted by the DOE.

There can be no guarantee that, after the Offer closes at 1:00 p.m. on 22 June 2015 (or at such later time as specified in an announcement of any extension to the Offer period through a Regulatory Information Service), Philex or any other purchaser would be prepared to make a subsequent offer to acquire any Ordinary Shares in which it does not already have an interest. Nor can there be any guarantee as to the price of any such offer.

Accordingly, any Shareholder who does not accept the Offer may find it difficult to sell its Ordinary Shares after the Offer closes, may not receive regular information from the Company, would not benefit from regulatory compliance with governance procedures (other than under the Companies Act 2006 or as may be prescribed through the Philippine Stock Exchange for so long as the Company remains a subsidiary of a Philippine listed company), nor would they enjoy the protections afforded by the AIM Rules and the Takeover Code. Furthermore there is no guarantee that Philex or any other purchaser would be willing to buy Ordinary Shares after the Offer has closed and, if they were, any price offered might not reflect the underlying value of the Company’s assets.

Shareholders should note that the Directors understand that Tidemark has entered into an irrevocable undertaking not to accept the Offer in the hope of an eventual lifting of the force majeure in relation to SC72 and the prospect of realising greater shareholder value at some later date.

The Directors recommend that all Shareholders consult their duly authorised independent advisers before they make a decision as to whether or not to accept the Offer in respect of some, all or none of their Ordinary Shares, in order to obtain advice relevant to their particular circumstances.   

For further information please contact:

Forum Energy Plc
Paul Wallace                        Tel: +44 (0) 208 616 7297
Robin Nicholson

Execution Noble & Company
(financial adviser, nominated adviser and corporate broker to Forum Energy plc) Harry Stockdale                 Tel: +44 (0) 207 456 9191
John Riddell
Francisco Bastos   

Philex Petroleum Corporation
Mark Raymond Rilles        Tel: +632 631 1381
Finance Controller

A copy of this announcement will be available on the Company's website at www.forumenergyplc.com.

For Irrevocable Undertakings, Information and Appendix please click here

On behalf of the Board of,

FEC Resources, Inc.

Carlo Pablo

Carlo Pablo

Chairman

This press release contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of applicable Canadian and US securities legislation. All statements, other than statements of historical fact, included herein are forward-looking statements. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking statements as a result of various factors, including, but not limited to, variations in the nature, quality and quantity of any natural resources that may be located, variations in the market price of any natural resource products the Company may produce or plan to produce, the Company's inability to obtain any necessary permits, consents or authorizations required for its activities, the Company's inability to produce natural resources from its properties successfully or profitably, to continue its projected growth, to raise the necessary capital or to be fully able to implement its business strategies, and other risks and uncertainties disclosed in the Company’s Annual Report on Form 20-F for the year ended December 31, 2009 and its most recent quarterly reports filed with the United States Securities Exchange Commission (the "SEC"), and other information released by the Company and filed with the appropriate regulatory agencies. All of the Company's Canadian public disclosure filings may be accessed via www.sedar.com and its United States public disclosure filings may be accessed via www.sec.gov, and readers are urged to review these materials.

For more information please contact (403) 290-1676 e-mail info@FECResources.com or visit the FEC Resources website at www.FECResources.com

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