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The final paragraph under the Funding sub-headline for this announcement, as released at 3.00 pm today was incorrect (RNS no 0354S) and has been corrected.

The incorrect paragraph read: 

Signature of the SPA and BPA will now enable publication of the 2008 Annual Accounts and the 2008 Interim Report for the six months and thereby the restoration of the Company's Ordinary Shares to trading on AIM on Friday 15 May 2009.

The corrected announcement now reads: 

Signature of the SPA and BPA will now enable publication of the 2008 Annual Accounts and the 2008 Interim Report on Friday 15 May 2009 and thereby, following this, the restoration of the Company's Ordinary Shares to trading on AIM.

FOR IMMEDIATE RELEASE

11 May 2009

SOVEREIGN OILFIELD GROUP Plc

('Sovereign' or 'the Company' or 'the Group')

Proposed disposal of Vertec Engineering Limited and the Cabin Rental Fleet of Labtech Services Limited ('the Disposals')

Your Board announces today that the Company has entered into, subject inter alia to Shareholder approval, a Share Purchase Agreement ('SPA') to dispose of the entire issued share capital of Vertec Engineering Limited ('Vertec') and a Business Purchase Agreement ('BPA') to dispose of the rental cabin assets of Labtech Services Limited ('the Labtech Assets') for a total consideration £5.45 million to be paid in cash.

Vertec and Labtech specialise in the design, engineering and manufacture of onshore and offshore engineering cabins, containers, baskets, air conditioning and refrigeration units. In addition they both run repair, and refurbishment operations as well as a cabin rental service.

The gross assets of Labtech and Vertec were £1.2 million and £2.0 million as at 31 March 2008 and the operating profit is approximately £0.8 million and £0.1 million respectively. The figures above are extracted from management accounts for the year to 31 March 2008.

Cooltime Engineering Services Limited, a wholly owned subsidiary of Vertec, does not form part of these Disposals.

All of the sale proceeds will be used to pay down existing debt facilities with the Existing Lending Consortium. 

The proposed disposals are deemed to be a 'disposal resulting in a fundamental change of the business' for the purpose of AIM Rule 15 as the disposal proceeds are in excess of the market capitalisation of the Company at close of business on 25 September 2008, being the day prior to the Ordinary Shares being suspended from trading on AIM. By virtue of being deemed to be a fundamental change of business, the disposal of Vertec and the Labtech Assets is conditional on approval of the Shareholders.

Remaining businesses of the Company

Subject to shareholder approval, the Drilling Division and remaining Fabrication Division businesses will be the remaining trading businesses of the Group. As such Directors do not consider that the Company will be classed as an investing company under Rule 15 of the AIM Rules. 

For the year to 31 March 2008 the unaudited turnover attributable to the Drilling Division and remaining Fabrication Division businesses of the Group was £87.0 million with a gross profit of £21.3 million before the allocation of administration costs. The figures above are extracted from management accounts for the year to 31 March 2008.

Funding

These Disposals became a condition of continued banking support from our lender group HBOS, Merrill Lynch, Cyrus Partners and Polygon Investment Partners (the 'Existing Lending Consortium') and consequently the Board has concluded that the Group should dispose of Vertec and the Labtech Assets. 

Sovereign currently has debt facilities of £32.8 million comprising £16.4 million senior debt and £16.4 million of mezzanine debt from its Existing Lending Consortium. They have confirmed continued support of the Group's existing banking facilities, subject to certain conditions subsequent, which will be met on completion of this transaction.

Signature of the SPA and BPA will now enable publication of the 2008 Annual Accounts and the 2008 Interim Report on Friday 15 May 2009 and thereby, following this, the restoration of the Company's Ordinary Shares to trading on AIM.

GENERAL MEETING

A circular will be sent to shareholders shortly giving notice of a General Meeting at which Shareholders will be asked to consider, and if thought fit, to approve the Resolutions in order to implement the proposed sale by the Company of Vertec and the Labtech Assets.

Further information:

Sovereign Oilfield Group Plc                                        Tel: 01224 261900

Graham Burgess, Chief Executive Officer

Julie Cowie, Finance Director

Buchanan Communications                                         Tel: 0207 466 5000

Tim Thompson/Catherine Breen

Charles Stanley Securities - Nominated Advisor            Tel: 0207 149 6000

Mark Taylor/Freddy Crossley

NOTE

Sovereign's shares were suspended from trading on AIM on 26 September 2008 pending publication of the Company's annual report and accounts for the year ended 31 March 2008 ('the 2008 Annual Accounts'). The Company also announced on 26 September 2008 that it was in negotiations with a number of lenders, including its existing lenders, regarding a restructuring of the Group's debt facilities.  

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