RNS - 06/02/13

[usher03]

U.S OIL And GAS Plc
Operations Update & Award of Share Options

6 February 2013

U.S. Oil & Gas Plc.

("U.S. Oil" or the "Company")

Operations Update &

Award of Share Options

Operations Update

U.S. Oil & Gas Plc (GXG: USOP), the oil and gas exploration company with exploration assets in Nevada, is
pleased to announce that it has completed preparations for testing its Eblana #1 well. Flow specialists are
onsite and the planned testing programme has begun. The Company will make a further announcement once testing
is complete.

Award of Options

At the Company's Annual General Meeting (AGM) on 31 August 2012, the Directors were granted the authority to
issue and allot up to 2,500,941 Ordinary Shares representing 6% of the Company's Issued Ordinary Share Capital
subject to the approval by the Remuneration Committee of the terms and conditions of the Share Option Scheme.

The Remuneration Committee has approved the terms and conditions of the Scheme and awarded options. Under the
Scheme, shares cannot be traded for at least six months after date of exercise of the options. The exercise of
options will be announced to the market.

The Company reports the award of 2.455 million share options at 65 and 68 pence per share representing 5.88 %
of the Company's issued share capital. The options were awarded to service providers, consultants and
Directors. Details of the options awarded to Directors are as follows:

Name Option Exercise Last Exercise Date Number of Options Awarded
price

Brian McDonnell STG .65p 22 November 2017 895,000

Peter Whelan STG .65p 22 November 2017 565,000

Karim Akrawi STG .65p 22 November 2017 535,000

Paul O'Callaghan STG .68p 22 November 2017 100,000

THE DIRECTORS OF THE COMPANY ACCEPT RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT

For further information contact:

Brian McDonnell, Chief Executive Officer +353 (0) 87 238 3419

Alexander David Securities Ltd - Corporate Finance Adviser
Fiona Kinghorn/David Scott +44 (0) 20 7448 9800

Lionsgate Communications
Jonathan Charles +44 (0)779 189 2509
jcha...@lionsgatecomms.com

GXG Markets
Simon Kiero-Watson +44 (0) 20 7653 1935
s...@gxgmarkets.co.uk

Alex Benger +44 (0) 20 7653 1935
a...@gxgmarkets.co.uk

Notes to Editors

U.S. Oil & Gas plc is a GXG quoted (Ticker: USOP) oil and gas exploration company with a strategy to identify
and acquire oil and gas assets in the early phase of the upstream life-cycle and mature them. The Company's
main asset is in Nye County, Nevada where it holds the entire share capital of US-based company Major Oil
International LLC ("Major Oil"). Major Oil has acquired rights to exploration and development acreage in Hot
Creek Valley, Nye County, adjacent to the oil and gas rich Railroad Valley area of Nevada, both of which are
part of the Sevier Thrust of central Nevada and western Utah, USA.

For further information please refer to our website at: www.usoil.us

U.S. OIL AND GAS PLC

[usher03]

RNS: "Flow specialists are

onsite and the planned testing programme has begun."

Could that be Schlumberger?...I wonder?

;-)

[Debug]

<RANT>

            OK, My honest view is that its taking the piss at 65p when Brian caused that. No one is likely to want to say it though, but there you go its borderline outrageous.

</RANT>

Now the Good bits. 2,095,000 shares went to the current Directors, with "service providers"  and "consultants" getting 360,000, with a 6 month lock in after exercising..  

Any way you look at that its good news, Contractors and consultants don't take payment in shares when there is apparently this much risk; when there is zero support in the market to sell any quantity; when they are locked in for at least 6 months.  If they think there is a probability to shift that many shares for any value in 6 months then what does that say to you?  Is this going to fail? Not a chance imho.

I think we may just have been mugged a bit and I am not pleased about that, but this is a big signal to the market that those with all the information including those who are not obliged to take shares are very confident.

[Mosa]

Debug, if you wont say it, I will.  That is your pump at the AGM folks, we voted the 6% remember that.  People need to wake up to Brian, he is not all clean cut.  Sorry but that is a fucking P&D right there.  Yes this might well come good, but Brian is also amassing a very large pot to get votes should he wish to take complete control.

Where did he get £600k from to buy these, Mr only takes £60k a year and works for peanuts, my arse.  This boy is playing the game and we have been sucked in.

How many others behind the scenes benefited as well, the off GXG shite etc etc.  What a royal fucking stitch up.  

Debug, I do not read anywhere that the consultants etc were payed using these.  I assume they get payed and these are an option to buy in same as the directors.

[rbale1977]

hi debug

my sentiments exactly (in BOTH respects). Very well put.

cheers
DickyB

[fightfear]

In Brian McLandau we trust!

[Mosa]

paid, not payed

[bigfatpies]

Mosa..

think you're a little off target personally.

You talk of a P&D.. but there is no way this was pumped for those in the know to dump... cos all the board still hold shares, and now award themselves a fat bonus... so it tells me everything about what is down that hole. The main requirement of a p&d is that there is no substance to the rise... and clearly they wouldnt award this option if there was nowt there...

I am a little peeved however, and agree that Brian has let us down.... especially when he told me personally that the option scheme was a reward system for the directors/managers/contractors... but NOT himself... that he had "enough" shares... ..hmm... seems the little green eyed monster came out in the end... greed...

However, all that aside I do now firmly believe we can move onwards, and that any talk of the price being manipulated to accomodate a low strike price is done and dusted.. it may well have occurred, but if so, its done.. now the market is there in its pure form ... The outcome is that we have a very invested board, a crucial component for investing... without a strong board, it would be easy for them to keep dipping the market  for cash,  but now, any dilution will hurt them badly, so is less likely imho.

All good I reckon, and hopefully just a matter of weeks before the real news that could change our lives... 

good luck all

[bigfatpies]

Mosa, forgot to say...

Nobody has had to come up with any cash yet have they? they will pay the tax on the purchase of shares when they elect to execute the option... at least thats what I thought... 

I wouldnt be surprised to see them executed fairly soon though... If I understand it right, the tax payment will be calculated on the "in the money" element of the option at execution... so at say 65p, with a share price of £1 they would have tax to pay on 35p?? so clearly the higher the price, the more tax... I know they would also pay tax when they eventually sell the stock, but thats a different calculation..

anyway, hopefully DickyB is around and can put the matter straight..

Cheers all

[Debug]

Mosa, I assume they got paid cash too, but a share option is another  form of payment that would seem to part of the package.

I don't hold that this was a 100% P&D as I think Brian and Karim truly believe what we have, however the wo1 really did not go as well as hoped for possibly good or bad reasons and then the combination of constant attacks and fear caused the crash, triggered by Brian's own rubbish RNS and the inflated expectations he helped instil.  I might have let him off the hook, had he then put out subsequent correcting RNS, but he let it drift down with no real attempt to sort it out.  There is obviously a lot at stake here and it looks like games have been played because the opportunity arose.  

I feel bad for all those who had to sell or sold on worry, I was lucky enough to be able to hold, but it did stress me out watching things unfold.  All I can say is they have had their pay day now so I expect things to change.

As for a controlling share,  I think he needs to go some significant way yet, but it is something worth watching. 

[bigfatpies]

Usher,

I wondered about this part of the RNS..

Why they didnt confirm that BES has commenced was a little odd to me..

I wonder if the got BES in to start the W/O, and s seperate specialist to do the flow testing... and WHY mention FLOW specialists ??

BES can do reservoir flow management etc etc... so why hilight that particular part of a very expansive program..

is this Brian trying to give us a hint?

is this Brian taking the piss?

is this Brian just being a total moron and not putting the right thing in the RNS?

is this Brian being deliberately misleading?

[bigfatpies]

correction:

why didint they "just" confirm that BES....

[Debug]

Pies, I forgot about the tax implications that does have a big impact for them so they will want to exercise sooner rather than later.

Like we have all said, its not the greatest thing they could have done, but it is done now and this for me is a sign that things should start to change. 

[Mosa]

Pies (N Debug)

From the stand point of a P&D has no rainbow at the end I agree with you.  If it was a total scam there would be cement down the hole and people would still be meeting in pubs talking about what happened.

Look at the chart tho and it's pretty telling.  Who is to say Brian does not have an account help by a friend or a family or etc etc.

There were plenty of people in the background who will have benefitted from the rise to £6 - plenty and those same sellers REALLY benefited at 35p as well.

I agree on the semantics could be argued back and forth as there is not a true description that can be overlaid on what happened.

But I'm sorry, if anyone can defend the pre AGM RNS's and what happened afterwards and especially that in November I'll happily listen.  It will all be forgotten of course if it comes good but it should not be.  Good, honest people were duped at the AGM and bought.  I survived but it sticks in my throat looking at that rediculous RNS in November, don't treat PI's as complete idiots.

Yes the cash component can come from the offset of sold shares etc etc

[fightfear]

Maybe BM is planning to sell some of his shares to get the money for the options?

BM diluted his holding by about 6% but increased it (with options) by 23% at the same time so overall he has a bigger stake in the co. (10.76% up from 9.25%) so if he sells the difference (which is about 666,486 shares) he would be back to his 9.25% AND have the money for options even if he sold at £1. He would of course have to announce the sale which probably wouldn't be received very well. If this is not the case than it's pretty obvious where the money comes from.

[redallover]

Although not happy with the strike price I cannot see any logic in taking the options now when they all have another four and a half years before maturing.

Surely this has been done now to take advantage of the low sp (which is of Brians making) in order to then sell their ordinary shares after a major hike in the sp due to a strike and convert to the options thus maintaining the large percentage holding and making a fat profit.

If BM has to pay 600k to convert he would only have to sell 60k shares at £10 to gain another 835k shares for nothing (less tax) - or is that too simplistic?

I dont know about tax liabilities etc just thoughts off the top of my head

[Mosa]

FF, when did Brian dilute his share holding? do we know what price he did that at?

[fightfear]

I meant the options dilute everyone's holding by about 6% (including Brians) but because some of them will go to him it "undilutes" it (is that a word?) by more than 6% (about 23% so overall he gained about 1.5% which he could despose of to pay for options and tax). Not the greatest explanation in the world I know

Sorry if it wasn't clear - I'm at work and juggling 10 different things whilst trying to read BB's and write.

[tetchy]

Not sure about the Irish tax implications for the BOD regarding options? Obviously Brian has got his pad in Monaco lined up. 

Getting to the point, if directors have to pay tax on the difference of say 65p offer to say 100p at point of take up, this creates a few problems one imagines. They can't sell for 6 months and even their existing holding is embargoed at this point in time as they conduct tests. So where would they get the money to take the options? Someone may be able to clear this up.

So. the AGM saw some pretty confident rhetoric and talk of going into production. Next thing the sp is probably a bit higher than Brian had thought possible. The RNS may have been designed to dampen things down, but hey, the sp collapses! Not necessarily all according to a master plan would be my suggestion. Foul deeds, but not so different to the kind of things that others get up to, just that they didn't see the ramifications. 

Not condoning anything, as folks have suffered. However, at this point, we might just have had a clue to as to where they are on site. Could there be modest oil flows already on site that have forced this next move? Not ramping but just considering this as a scenario. Looks promising to me, in spite of the 'difficult; road to this point.

[usher03]

I have a conspiracy theory going on in my mind at present over the last few months and it's slowly coming to pass with every RNS. The final piece to the jigsaw needed is a good commercial flow rate RNS and then it will be solved.

I partly agree with Mosa in relation to my own conspiracy theory regarding the option price and the Nov 15th RNS, but Mosa needs to realise what many people have said for many many years now...

"THE OIL BUSINESS IS A DIRTY GAME!"

How many of us were reading that Nov 15th RNS and thinking what the hell??!!!!...and absolutely going mad over the wording and the order of information etc which caused BM to have to do two sets of Q&A's the very next day?!

That Nov 15th RNS appears to have been worded poorly thus resulting in a massive drop, therefore enabling a low option price which doesn't look bad compared to how it would have looked at £6 a share.

BUT...the important factor to bear in mind is that although this experience last year was terrible for all of us, it has great ramifications for us in that once we get an RNS in the coming weeks of a good commercial flow rate and the share price flies upwards then we'll all be merry.

The way I see it is that although these shady thins occur amongst MOST companies out there across all business sectors, at the end of the day which one of us would have been able to research 18 different data sets of Nevada geology, create a company to then be able to apply to drill in Nevada when many Big companies have already failed to find oil, and then have the funds to drill and then HIT oil which is very difficult to do???...and then by God's grace we get good flow rates in the coming weeks it will be the icing to a cake that none of us could have ever baked! lol

Mosa, just keep the faith until flow rates, if flow rates are non-commercial then we're all toast, but I honestly feel we're going to be very happy over the coming months ahead.

[MJS28]

As posted on the Forum - 

 With only a paultry 6% of the of the Company's share capital to allocate via the scheme, surely shareholders would want the option strike price to be as low as possible in order to make the performance incentives to the BoD as great as possible? Are the BoDs gonna work harder to get the SP to, say, a tenner if the added incentive to themselves for achieving this is £2m or if it's £20m? Think about it, us shareholders want that carrot to be as big as possible to the BoD. Remember, it's still only 6% of the share capital, not 60%. Are we gonna begrudge the BoD an extra £20m if they can get the SP to a tenner & beyond? I don't think so.
It's about giving them as much incentive as possible to perform, within the 6% remit that we agreed to last August. Just my opinion 

[hkseal8]

Hi guys, just be re- admitted to the site after an email account was hacked.

Happen to think Mosa's comments are not far off. If they had set the options at say £1.50 this would have encouraged PIs to buy more at present, whereas I think at this price many will hold off. I will be interested to see when they do exercise them.

In a brighter note, we are moving in the right direction with EB1.

[Jazzy]

The next few week's will be a catalyst for this share, lets hope the 150 NPZ & or upper levels being tested gives good flows & EB2 can commence.

Its a waiting game gor sure.

[Debug]

The remainder of the 380ft gross zone might throw up additional NPZ, that would be very nice.

Also it's not clear if we have the luxury of time and money to make the other more tricky zones flow, if this is the case I would be much happier if they move straight to testing the shallow light oil zones.