Scheme of arrangement

Xtract Energy plc
12 February 2007

                               XTRACT ENERGY PLC
                                   ('Xtract')

                             CAMBRIAN OIL & GAS PLC
                                    ('COIL')

                             Scheme of Arrangement

12 February 2007

The boards of Xtract and COIL are pleased to announce that they have reached
agreement on the terms of a recommended proposal for COIL shareholders (other
than Xtract) to acquire shares in Xtract for shares in COIL by way of scheme of
arrangement under section 425 of the Companies Act 1985 (the 'Scheme'). The
Scheme requires approval by COlL shareholders (other than Xtract) and the
sanction of the Court. Xtract currently holds approximately 64% of the current
issued share capital of COIL.

Highlights

   • Under the proposed terms of the Scheme, COIL shareholders will receive 9
     new Xtract shares for every 10 COIL shares. The closing mid market prices
     per share of Xtract and COIL on 9 February 2007 were 5.25 pence and 3.625
     pence respectively.

   • Based on these closing mid prices, the Scheme:

   • Values each COIL share at 4.725 pence; and

   • Values COIL at approximately £14.85 million (on an undiluted basis); and

   • Represents a premium to COIL shareholders of approximately 30.3%.

   • The directors of COIL unanimously recommend COIL shareholders to vote in
     favour of the Scheme.

The COIL board believes that COIL shareholders will benefit from:

   • Exposure to a more diversified asset portfolio;

   • Additional management expertise;

   • Removal of the multiple holding company discount on COIL's associated
     investments, especially its major investment in MEO Australia Limited (MEO);

   • A broader institutional shareholders base;

   • Improved access to funding, particularly in regard to COIL participating
     in any future major funding for MEO's planned drilling program, which starts
     later this year; and

   • Potential for increased liquidity through the exchange of their COIL
     shares for Xtract shares.

The Xtract board believes Xtract shareholders will benefit from:

   • Entry into the Australian Oil and Gas industry through COIL's holding in
     MEO;

   • COIL becoming a wholly-owned subsidiary which will allow it to
     consolidate 100% of the future cash flows from the operations of COIL;

   • The potential unlocking of value through the removal of the double
     holding company discount on COIL's associated investments; and

   • Overhead and management synergies.

Commenting on the Scheme Neale Taylor, Chief Executive Officer of COIL, said:

'The Scheme presents shareholders with the opportunity to receive an immediate
30% premium to the current share price and to hold stock in a larger company
with a broad asset base and diversified portfolio of assets while still
participating in the existing COIL story.'

Also commenting on the proposed acquisition, John Newton, Chief Executive
Officer of Xtract, said:

'This is a significant step for Xtract to build a direct stake in the Australian
Oil & Gas industry and participate in the MEO gas to liquids project, the Tassie
Shoal Methanol Project and the Timor Sea LNG project.

The Scheme has the support of the COIL board who have recommended that COIL
shareholders vote in favour of it. We believe that both Xtract and COIL
shareholders will benefit from the consolidation which should create a stronger
combined company'.

The Scheme

The Scheme extends to:

1. all the existing issued ordinary shares of 1p each in the capital of COIL;

2. any further COIL shares which are issued after the date of the Scheme
document to be posted to COIL Shareholders and before 6.00pm on the date of the
meeting of the COIL shareholders convened by order of the Court pursuant to
section 425 of the Companies Act 1985 and the Extraordinary General Meeting of
COIL convened to approve and implement the Scheme (the 'Voting Record Time')
including shares issued arising from the exercise of options and warrants; and

3. any further COIL shares issued at or after the Voting Record Time and before
the making of the relevant Court order either on the terms that the original or
any subsequent holder thereof shall be bound by the Scheme or in respect of
which the holder shall have agreed in writing to be bound by the Scheme.

Based on the closing mid price of a COIL share of 3.625 pence on 9 February
2007, the Scheme values COIL (on an undiluted basis) at approximately £14.85
million and each COIL share at approximately 4.725 pence. This represents a
premium for COIL shareholders of approximately 30.3% based on the closing mid
price of 5.25 pence per Xtract share on 9 February 2007, being the last business
day immediately preceding this announcement. Implementation of the Scheme would
involve the issue by Xtract of up to approximately 100.17 million new Xtract
shares for the existing issued COIL shares (representing approximately 15.2% of
Xtract's issued share capital as enlarged by this issue).'

The Scheme, which will be subject to the conditions and further terms set out
below and to be set out in Scheme Documentation to be despatched to COIL
shareholders in due course (as required by the Companies Act), will be effected
on the following basis:

1. COIL shareholders will receive 9 Xtract Ordinary Shares for every 10 COIL
Shares they hold. This represents an approximate premium of 30.3% based on
prevailing market prices.

2. Any 3p COIL warrants which are not exercised prior to the Voting Record Time
shall cease and determine in accordance with their terms.

3. For those COIL options and 3p warrants which are not exercised prior to the
Voting Record Time and which under their terms do not cease and determine if
they are not so exercised, following the completion of the Scheme, Xtract will
procure an amendment to COIL's Articles of Association which will entitle such
COIL option and warrant holders to receive Xtract shares upon exercise of such
options and warrants at the same ratio as in paragraph 1 above.

Conditions of the Scheme

Xtract and COIL agree that the sanction of the Court in respect of the Scheme
will only be sought if:

1. No Material Adverse Change

since 30 June 2006, save as otherwise disclosed, no event, change or condition
has occurred or become known to Xtract where that would have or could be
reasonably expected to have a material adverse effect on the business, assets,
liabilities, trading or financial position, profitability or prospects of COIL
('Material Adverse Change').

2. No Material Acquisitions, Disposals or New Commitments

since 30 June 2006 (other than in relation to the purchases of interests in Elko
Energy Inc and MEO):

   • COIL has not disposed of or acquired any assets or businesses, or
     offered or agreed to announce any acquisitions or disposals, for an amount
     in aggregate of £0.5 million (or in the case of disposals, where the book
     value was in aggregate greater than £0.5 million);
   • COIL has not entered into or offered or agreed to enter into, or
     announced any arrangement which required expenditure, or the foregoing of
     revenue, by COIL of an amount in aggregate of £0.5 million;
   • the business of COIL has otherwise carried on in the usual and ordinary
     course.

3. Consequences of the Scheme

save as otherwise disclosed, no provision of any agreement to which COIL is a
party or by which COIL or any part of its assets may be bound would, as a
consequence of the Scheme, result in a Material Adverse Change.

4. Issue of Equity

from the date of this announcement there is no further issue of equity by COIL
save for the issue as a result of the exercise of existing warrants or options.

5. Xtract Consents

any consents required by Xtract under any existing contractual arrangements or
otherwise are granted.

The above represents the principal conditions but is not intended to be
exhaustive. Detailed documentation will need to be drafted by way of a scheme of
arrangement to be approved by the COIL board and its advisors prior to
submission to the Court and posting to COIL Shareholders.

The City Code on Takeovers and Mergers ('the Takeover Code')

As has been previously announced on 17 August 2006, although COIL is
incorporated in England, the place of central management of COIL is currently
located outside the UK, the Channel Islands or the Isle of Man since the main
place of business of COIL is in Australia. The majority of Board meetings are
held outside the UK, the Channel Islands and the Isle of Man and the majority of
the Board are resident outside the UK, the Channel Islands and the Isle of Man.
Accordingly, as COIL is a company to which paragraph 3 (a) (ii) of the
Introduction to the Takeover Code does not apply, the Panel on Takeovers and
Mergers has confirmed that COIL is not subject to the Takeover Code and
Shareholders will not be afforded any protections under the Takeover Code.

Recommendation

The directors of COIL have reached agreement with Xtract on the terms of the
Scheme. The directors of COIL unanimously recommend that COIL shareholders vote
in favour of the Scheme.

General Procedure of the Scheme of Arrangement

The basic steps required to implement a scheme of arrangement are as follows:

1. COIL shall apply to Court for an order that a meeting of COIL shareholders
excluding Xtract be called.

2. if the Court agrees, it will order that the appropriate COIL
shareholder meeting is held. If a majority in number and 75% in value of the
COIL shareholders (other than Xtract) present and voting at the meeting agree to
the arrangement and it is also approved by the Court, then it is binding on all
the COIL shareholders whether or not they voted in favour or voted at all and on
COIL.

3. for the Scheme to have effect, a copy of the Court order shall
be delivered to Companies House.

Enquiries in relation to Xtract please contact:

Xtract Energy plc                                 [phone]
John Newton, CEO   

Smith & Williamson Corporation Finance Ltd        [phone]
David Jones                                   
Azhic Basirov

Enquiries in relation to COIL please contact:

Cambrian Oil and Gas plc
Neale Taylor, CEO                                 [phone]
Paul McGroary, Director                           [phone]

W.H Ireland Limited
Paul Dudley                                       [phone]

About Xtract Energy Plc

Xtract's prime assets are its interest in shale oil deposits at Julia Creek in
Queensland, Australia and a joint venture with the Australian research group,
CSIRO, to develop a process for extracting oil from shale deposits.  The initial
validation tests, comprising small scale batch extractions of oil from the shale,
have demonstrated that recovery from Xtract's Julia Creek shales in Queensland,
Australia, would be in the order of 150 litres of light crude oil per tonne of
shale.  Earlier conventional retorting experiments indicated that the conversion
of kerogen to oil yielded about 74 litres of oil per ton of shale.

Applying this rate of yield increase to the yields of 50 - 65 litres per tonne
used in Xtract's AIM admission document in relation to certain of Xtract's
Julia Creek leases results in estimated in-situ shale oil resources of over 1.6 
billion barrels of oil.


Other energy assets held by Xtract are:

   • Approximately 64% of Cambrian Oil and Gas Plc ('COIL') which is
     developing oil and gas assets in the Kyrgyz Republic. COIL also owns
     approximately 22% of the issued share capital of ASX listed MEO. MEO is
     focused on developing a gas-to-liquids project in the Timor Sea,
     approximately 275 km northwest of Darwin, Australia, in an area known as
     Tassie Shoal. It has secured Australian Commonwealth Government
     environmental approvals for two large scale (1.8 mtpa) methanol plants (50%
     interest) and a 3 mtpa LNG plant (100%), which is the only new Australia
     LNG project to receive its Commonwealth Government environmental approvals.

   • Approximately 15% of Wasabi Energy Limited which has rights to the
     Kallina power technology, uranium exploration interests in the Northern
     Territory, Australia, interests in the newly-formed Evolution Energy joint
     venture to produce bio-diesel fuel in Australia and in a coal deposit in
     Canada.

   • Approximately 18.6% of Aviva Corporation Limited with promising thermal
     coal deposits in the mid-west of Western Australia.

About Cambrian Oil & Gas Plc

COIL has a portfolio of interests in Central Asia, China, the North Sea and
Australia.

The Kyrgyz interests held through the Company's wholly owned subsidiary Zhibek
Resources Plc include a production sharing agreement with Kyrgyzneftegaz to
instigate a water injection project on the Beshkent-Togap oil field, a 72%
interest in JSC KNG Hyrdocarbons, which holds several exploration licences in
the Tash Kumyr area and 100% interest in the Toktogul exploration licence.

COIL also holds approximately 22% of MEO. MEO has successfully completed the
acquisition of new 2D and 3D seismic data over Epenarra, located in MEO's 100%
owned Exploration Permit NT/P68 in the Timor Sea. The Epenarra structure is a
broad, low relief anticline with mapped closure of approximately 1,200 square
kilometres, located entirely within Australian waters. The data has been
acquired to confirm optimal well locations for the Heron-2 appraisal well and
production test on the Epenarra structure and the Blackwood-1 exploration well.

MEO intends drilling up to three wells (Heron-2, Blackwood-1 and potentially
Heron-3) in the Permit area and has secured a new jack-up rig to undertake the
drilling. The rig is expected to arrive on location in August 2007.

COIL also holds approximately 33.5% of the issued capital of Elko.

Elko, an oil and gas exploration company, has been awarded a 5,400 square
kilometre exploration and production licence in the Danish North Sea Sector,
which it holds with an 80% interest.  The remaining 20% is held by the Danish
State, which has a direct and full working interest. Phase I of the technical
studies has been completed. Following further ongoing technical work it is
planned to farm down Elko's interest during 2007 in exchange for future seismic
and drilling obligations being paid for by a new partner.

Elko also owns approximately 40% of Dragon Energy Inc., a private Canadian
company with a significant development project in Gansu Province, China
('Dragon').  Dragon has signed a Joint Venture Agreement with a provincial
subsidiary of CNPC of China, the 10th largest oil company worldwide, providing
for the re-development of the Maling Oilfield in Gansu Province, China.

In the year ended 30 June 2006 COIL made a loss of £0.4 million and net assets
at that date were £3.6 million.




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