Hardy Oil and Gas plc has entered into a conditional share purchase agreement for the disposal of its wholly owned Nigerian business. The disposal is being undertaken by way of the sale of Hardy's entire investment in Hardy Oil (Africa) Limited for cash consideration of US$4,550,001 ("Disposal") to Inergia Petroleum Limited ("IPL"), a newly incorporated upstream energy company focused on Nigeria.

HOA's wholly owned subsidiary, Hardy Oil Nigeria Limited ("HON"), has a 20 per cent interest in each of the Oza and Atala marginal fields in Nigeria. The Oza Field is located on-land in the north western part of OML 11, near Port Harcourt, with three suspended wells in the field and a concession area of 20 km2. The Atala Field is located within OML 46, which is situated within a mangrove swamp on the Dodo River, a coastal area of Bayelsa State with a concession area of 34 km2. HON has a project office located in Lagos Nigeria with 11 employees most of whom are anticipated to remain with the Nigerian operations. During 2009, HOA incurred a loss of US$0.74 million (2008: US$0.50 million) principally resulting from ongoing general and administrative and financing charges. As at 31 December 2009, HOA's gross assets were approximately US$4.4 million (2008: US$4.2 million).

Under the Agreement, Hardy and IPL will enter into a deed of assignment of the shareholder loan at completion. The total cash consideration for the Disposal is US$4,550,001 comprising US$4,550,000 payable in respect of the assignment of an intercompany loan and US$1.00 for the entire issued share capital of HOA, subject to adjustment at completion. The adjustment to consideration will be to reflect any further sums advanced by the Company to HOA for operational expenses from 1 October 2010 until completion, which is capped at US$100,000. A deposit of US$200,000 has been received by Hardy from IPL which will be applied towards the total consideration for the Disposal. Completion is conditional on the approval of Hardy shareholders and is anticipated to occur immediately following shareholder approval at an extraordinary general meeting of shareholders ("EGM"). Following completion, HON will be permitted to continue to operate under its current registered name for a period of up to two years from the date of the Agreement.

Mr Sastry Karra ("the Related Party Director") is a non-executive director of Hardy and holds approximately 10 per cent of the issued share capital of Hardy. Mr Karra also holds a significant equity position in IPL. As a result, the Disposal is a related party transaction within the meaning of the Listing Rules. The Agreement and completion of the Disposal is therefore conditional on the approval by Hardy shareholders. The EGM is to be convened at which an ordinary resolution will be proposed to approve the Disposal. Hardy anticipates distributing a circular to shareholders containing a notice convening the EGM in early October 2010.

The sale of HOA is in line with the Company's stated strategy of focusing time and resources on developing its business in India, where it has a high impact exploration portfolio, valuable experience and strong relationships. The Board initiated the sale process in July 2010 and provided an independent and experienced consultant with a formal mandate to manage the sale process. A sales memorandum was circulated to a number of potential purchasers and as of 20 September 2010, the Company had received IPL's offer and has executed the Agreement with IPL. Completion of the Disposal is anticipated before the end of October 2010.

Mr Karra has not participated in the Board's consideration of the Disposal and will not vote at the EGM.

The Directors (other than the Related Party Director) consider that the principal benefits of the Disposal will be as follows: • The Disposal will eliminate ongoing operating losses and associated cash outflows which would arise if the Nigeria business was to remain within the Group; • The Disposal will eliminate the need to fund any future expenditure on Oza, following the initial development to first oil, as well as the Atala re-entry programme; • Net proceeds from the Disposal will be retained to provide additional working capital for Hardy and will be added to its cash resources for continued investment in Hardy's assets in India; • An immediate exit from Nigeria will free up valuable management time and corporate resources that can solely be devoted to Hardy's India focused strategy; and • The Directors (other than the Related Party Director) expect that the Disposal will not have any material impact on the Company's consolidated income or loss for the year ended 31 December 2010.

Commenting on the Disposal, Paul Mortimer, non-executive Chairman of Hardy said: "Hardy's original entry into Nigeria was driven by its strategy to increase production in the near term since most of the exploration efforts on blocks in India have long lead times to production. As a result of significant delays in executing the work programmes in Nigeria, the Board believes it is appropriate for Hardy to exit Nigeria and focus its efforts exclusively on its exploration and development programmes in India."

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