GOIL Granby Oil

    12 March 2007

Granby Oil and Gas plc

("Granby" or "the Company" or "the Group")

Galoc Development - Project Financing Completed

Highlights

    �       Successfully closed the project financing for its share of the US$100 million Galoc oil
            field development offshore NW Palawan in the Republic of the Philippines
    �       Development of the Galoc oil field is now fully approved by co-venturers and the relevant
            authorities
    �       The drill rig is now expected to arrive in the field in September 2007
    �       First  oil  production  from the field expected in Q1 2008  at  an  initial  rate  of
            approximately 15,000 bopd
    �       The development is expected to recover up to 16mmbbls


Granby, the oil and gas exploration and production company with interests in the UK North Sea  and
the  Philippines, is pleased to announce that Galoc Production Company W.L.L ("GPC"), operator  of
the  Galoc  oil field, has successfully closed the project financing for its share of  the  US$100
million  Galoc  Oil  Field  development offshore NW Palawan in the Republic  of  the  Philippines.
Granby has a 9.14% indirect interest in the Galoc field through its 15.69% shareholding in GPC.

Development  of  the  Galoc  oil  field is now fully approved by  co-venturers  and  the  relevant
authorities.  The drill rig is now expected to arrive in the field in September 2007,  with  first
oil production from the field expected in Q1 2008 at an initial rate of approximately 15,000 bopd,
with the development expected to recover up to 16mmbbls.

The  financing has been fully underwritten by sole lead arranger Intesa Sanpaolo S.p.A. Hong  Kong
Branch  ("Intesa  Sanpaolo")  (Rated  AA-/Aaa3).  Intesa  Sanpaolo  was  originally  appointed  as
Financial  Advisor  to  GPC  to  structure  the  financing  arrangements.   Intesa  Sanpaolo   has
subsequently underwritten 100% of the required debt tranches for GPC, and is expected to syndicate
the  transaction to 3 other relationship banks of the GPC partners.  Full details of the financing
are contained in the notes to editors below.

The  field  is  located in 290m of water approximately 50 km North West of  the  northern  tip  of
Palawan  Island. The development being undertaken involves 2 subsea wells with extended  reservoir
contacts, connected to the Floating Production Storage and Offloading unit ("FPSO") via  a  seabed
pipeline and mid-water riser system.

  It  is  anticipated  that  additional wells and facility capacity will  be  installed  once  the
performance  of  the  reservoir  is confirmed. GPC has obtained the  final  Department  of  Energy
approvals  along  with  the  environmental compliance certificate  issued  by  the  Department  of
Environment  and  Natural  Resources  through  the Environmental  Management  Bureau.   All  major
contracts for drilling, sub-sea installation and equipment and the FPSO have been signed  and  the
cost of development is now locked in under firm contract orders.

Further  information  on  GPC,  the Galoc Field and the financing structure  and  role  of  Intesa
Sanpaolo can be obtained from GPC's web site www.galoc.com

Bob Moore, Commercial Director of Granby Oil and Gas, said:

"Granby  has  been  instrumental in the development of the Galoc  Field  which  was  previously  a
moribund discovery and now has first oil scheduled for Q1 2008. Using our integrated technical and
commercial  approach Granby was closely involved in the Field Development Plan and  process  which
has now resulted in a fully financed project through GPC.

We  are also very pleased with the excellent work done by the GPC project management team based in
Singapore which is operator of the development."

Enquiries:
 Granby Oil and Gas                                    020 7653 3660
    David Grassick, Managing Director                  07785 921080
                                                       
    Nigel Burton, Finance Director                     077 8523 4447
                                                       
                                                       
 College Hill                                          020 7457 2020
    Nick Elwes / Paddy Blewer                                       
                                                       

Notes to Editors

Background
Overview of Galoc
The  Galoc Field lies in the NW Palawan basin offshore Philippines in a water depth of 320m.   The
field was discovered in 1981 and produced 385,000 barrels on long term test in 1988.  Team Oil  (a
wholly  owned  subsidiary of Granby) and its co-venturer Cape Energy demonstrated  the  commercial
potential  of  the field and farmed into Block C of Service Contract Area 14 (SC14)  in  September
2004. Team Oil subsequently arranged the initial financing plan for the project then exchanged its
interest for a shareholding in GPC.

The first phase of the field development plan, which was approved by the Philippines Department of
Energy in March this year, consists of two horizontal subsea wells which will be connected  via  a
flowline and riser system to a floating production, storage and offloading vessel.

Granby also recently announced the award of the project's first two major contracts for a drilling
rig  and subsea trees.  The Energy Searcher, a drill ship managed by Jet Drilling, is expected  to
begin  drilling  the two wells in September 2007.  The FPSO is contracted and fabrication  of  the
process plant is underway, second-hand trees have been purchased and are being refurbished.  First
oil  production  from the field is expected in Q1 2008 at an initial rate of approximately  15,000
bopd. Further contracts are expected to be awarded shortly.

Financing
The  US$77.5 million in debt facilities consist of three tranches; two non-recourse debt  tranches
totalling  over two thirds of the debt and one contingent recourse debt tranche for the remainder.
This structure is in addition to the equity provided by the Sponsors and has been supplemented  by
a  fixed amount of completion support by the Sponsors and operating cash shortfall support with  a
release  mechanism linked to oil field production performance. The borrowers are GPC for  the  oil
block development and Vitol Marine Asia, an intermediate entity for the purposes of the term lease
arrangement  for  the FPSO facility on behalf of GPC.  The creative debt structure  has  minimised
sponsor  completion support and allowed for the conversion of the recourse debt  tranche  to  non-
recourse  based  on  the  attainment of certain production and coverage  ratios.  Intesa  Sanpaolo
structured  the deal based on the Perth based technical and reservoir consultant RISC's assessment
of the proven and probable reserve base.  A larger non-recourse element of the loan was structured
on  the  proven (P90) reserve levels, whereas the recourse level provides the sponsors  an  upside
wherein  the  full amount of the loan could be converted to non-recourse as and  when  the  equity
forecast production levels are attained.  GPC will also benefit from a crude oil hedging mechanism
put  in  place prior to financial close that will greatly limit the oil price volatility risk  and
underpin the future revenue stream.


Overview of Granby
Granby  Oil and Gas plc (ticker symbol GOIL) is an oil and gas business focused on exploration  in
carefully  selected  areas  in  the North Sea and elsewhere, and also  on  securing  oil  and  gas
production  and developments. The Group's strategy is to build a significant portfolio  of  assets
through both discovery and exploitation of oil and gas reserves.

Granby raised �11.5m in 2005, of which �10m was from a placing and Admission to AIM in June  2005,
and an additional �9m in a placing in August 2006.

Granby's portfolio and plans

Granby's current acreage comprises interests in a portfolio of offshore licences in the North Sea,
containing  multiple prospects generated by the Company. Granby also has an interest in  a  single
onshore licence in Yorkshire.

Granby's next exploration well is expected to be drilled onshore in Yorkshire later in the year.

Granby  has a 42% participating interest in the Tristan North West gas development in block 49/29b
in  the  UK  Southern  North  Sea  and  has executed a loan  facility  agreement  with  Mitsubishi
Corporation  for  the  development. A rig has been contracted and  a  tree,  controls  &  flowline
purchased. First gas is expected at the end of 2007.

Granby also has a 9.0% interest in the Monkwell gas field, which consists of two separate dry  gas
accumulations located in UKCS Licence P.001, Block 42/29a.  The field was discovered  in  1989  by
well 42/29-6, which produced gas at a rate of 26.8mmcfd from the Lower Leman Sandstone.  The field
was  appraised  by two further wells which also tested gas.  The operator is actively  progressing
engineering studies on the Monkwell gas field, targeting near-term gas production as a subsea tie-
back to nearby infrastructure.




                                                                
Granby Oil & Gas plc



                                                                

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