LETTER OF OFFER · 2018-10-10 · LETTER OF OFFER This Document is important and requires your...

LETTER OF OFFERThis Document is important and requires your immediate attention

This Letter of Offer is sent to you as an Equity Shareholder (s) of Hindustan Oil Exploration Company Ltd. If you require any clarificationsabout the action to be taken, you may consult your Stock Broker or investment consultant or Managers to the Offer / Registrars to the Offer.In case you have recently sold your Equity Shares in the Company, please hand over this Letter of Offer and the accompanying Form ofAcceptance cum Acknowledgement [which includes Form of Withdrawal] and Transfer Deed to the Purchaser of shares or Member of theStock Exchange through whom the said sale was effected.

Cash Offerby

Burren Energy India Ltd, London [Acquirer Company]Corporate Office: 2nd Floor, Kierran Cross, 11 Strand, London WC2N 5HR

Tel No: 00 44 20 7484 1900; Fax No: 00 44 20 7484 1910; Email ID: [email protected]

Unocal Bharat Limited [Person Acting in Concert / (PAC)]2nd Floor, Kierran Cross, 11 Strand, London WC2N 5HR

Tel No: 00 44 20 7484 1900; Fax No: 00 44 20 7484 1910to acquire 1,17,48,990 fully paid up Equity Shares of the Face Value of Rs. 10/- each representing 20.00% of the voting paid up equity

share capital as at the expiration of 15 days after the closure of the public offer at a price of Rs. 92.41 per fully paid up equity share[payable in cash] of

HINDUSTAN OIL EXPLORATION COMPANY LIMITED [HOEC]Regd Office: ‘HOEC House’, Tandalja Road, Vadodara 390020 India

Tel No: 91 0265 2330766; Fax No: 91 0265 2333567; Email ID: [email protected]

1. This Offer is being made pursuant to Regulation 10 and 12 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)Regulations, 1997 and subsequent amendments thereto [SEBI Takeover Regulations].

2. Application will be filed by the Acquirer Company, Burren Energy India Ltd, London with Foreign Investment Promotion Board [FIPB] / Secretariat of IndustrialAssistance [SIA] of Government of India [GOI] for their requisite approval for transfer of equity shares to be tendered in the open offer by the existing equityshareholders in their favor. Necessary application will be filed with the Reserve Bank of India [RBI] for their permission to open and fund cash escrow accountin India by way of transfer of funds from the offshore escrow account. Acquirers will approach RBI for their permission to open a special account in India for thepurpose of releasing purchase consideration to eligible shareholders after the closure of the Open Offer. Further, Acquirers will make an application to RBI / anyother authority for their approval (if required) for transfer of equity shares from the existing equity shareholders in their favor upon closure of open offer oncethe basis of acceptance is determined.

3. Shareholders who have accepted the offer by tendering the requisite documents in terms of the Public Announcement / Letter of Offer can withdraw the sameupto three working days prior to the date of the closure of the offer i.e. upto Wednesday - August 31, 2005.

4. The Acquirers are permitted to revise the offer price and number of shares to be acquired upward any time up to seven working days prior to the date of closureof the offer i.e. upto Thursday - August 25,2005. If there is an upward revision of the Offer Price in terms of Regulation 26, the same would be informed by wayof a Public Announcement in the same newspapers where the original Public Announcement has appeared as mentioned in Para No. 2.2.4 of the Letter ofOffer. Such revised price would be payable by the Acquirers for all the shares tendered at anytime during the Offer.

5. There was no competitive bid.

6. As the Offer price cannot be revised during 7 working days prior to the closing date of the Offer, it would therefore, be in the interest of theshareholders to wait till the commencement of that period to know the final offer price and tender their acceptance accordingly.

7. A copy of the Public Announcement and Letter of Offer (including Form of Acceptance-cum- Acknowledgement) are also available on SEBI’s website atwww.sebi.gov.in

Managers to the Offer Registrars to the OfferInd Global Corporate Finance Pvt Limited Intime Spectrum Registry Ltd[A Member of Ernst & Young Pvt Ltd] C-13, Pannalal Silk Mills Compound19th Floor, Express Towers, Nariman Point LBS Marg, Bhandup WestMumbai 400 021 Mumbai 400078Tel No: 91 22 22825000 Fax No: 91 22 22826000 Tel No: 91 22 5555 5391-94 Fax No: 91 22 5555 5499Email: [email protected] Email: [email protected] Reg No: MB / INM 0000 10700 SEBI Reg No: INR 00000 3761Contact: Mr. Gigy Mathew Contact: Mr. Vishwas Attavar

Offer Opens : Tuesday - August 16, 2005 Offer Closes : Monday - September 05, 2005

Schedule of the Activities [Revised]

Activities Days & DatesOriginal Public Announcement date Tuesday - February 15, 2005Specified Date * Wednesday - February 16, 2005Last date for Competitive Bid Tuesday - March 08, 2005Date by which letter of offer posted to shareholders Tuesday - August 09, 2005Date of Opening of the Offer Tuesday - August 16, 2005Last date for revising the Offer Price/ number of equity shares Thursday - August 25,2005Last date up to which shareholders may withdraw Wednesday - August 31, 2005Date of Closure of the Offer Monday - September 05, 2005Date for communicating acceptance/rejection under the Offer and payment of Tuesday - September 20, 2005consideration for applications accepted.

* Specified Date is only for the purpose of determining the names of shareholders as on such date to whom the letter of offer would be sent.

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INDEX

Sl No. Particulars Page No.

1 Disclaimer Clause .......................................................................................................................... 5

2 Details of the Offer ......................................................................................................................... 5

3 Background of the Acquirer Company and Person Acting in Concert .......................................... 8

4 Disclosure in terms of Regulation 21(3) ........................................................................................ 14

5 Background of the Target Company .............................................................................................. 14

6 Offer Price and Financial Arrangements ....................................................................................... 22

7 Terms and Conditions of the Offer ................................................................................................ 27

8 Procedure for Acceptance and Settlement of the Offer ................................................................ 28

9 Documents for Inspection .............................................................................................................. 31

10 Declaration by the Acquirer Company and Person Acting in Concert .......................................... 32

Form of Acceptance cum Acknowledgement is enclosed

Risk Factors (a) relating to Transaction, (b) relating to Offer and (c) involved in associating with the Acquirer Companyand PAC:

1. UBL, Infrastructure Leasing and Financial Services Ltd [IL&FS] and Housing Development Finance Corporation [HDFC]are, inter alia, parties to a Shareholders Agreement [SHA] entered into on October 14, 1998, which, inter alia, regulatestheir inter-se relationship and provides for pre-emption rights and other similar rights therein for their collaboration.

2. As per conditional Share Purchase Agreement 2 [Conditional SPA 2] dated February 14, 2005 entered into between UBLand IL&FS, UBL has the right to acquire 25,23,587 equity shares of Rs. 10/- each representing 4.30% in HOEC, subjectto the terms of the SHA. Similarly, IL&FS has the right to sell 25,23,587 equity shares of Rs. 10/- each representing 4.30%in the paid up equity share capital of HOEC held by IL&FS, subject to the terms of the SHA and the Civil Suit. This rightto acquire/ sell shares is conditional upon (a) receipt of requisite regulatory approvals for the acquisition of HOEC sharesheld by IL&FS and (b) completion of the Open Offer by BEIL following the acquisition of UBL shares by BEIL from UnocalInternational Corporation.

3. As per conditional Share Purchase Agreement 3 [Conditional SPA 3] dated February 14, 2005 entered into between UBLand HDFC, pursuant to the satisfaction of (a) receipt of requisite regulatory approvals for the acquisition of HOEC sharesheld by HDFC and (b) completion of the Open Offer by BEIL following the acquisition of UBL shares by BEIL, and subjectto terms of the SHA, UBL shall have the option to acquire such number of shares, inclusive and upto 10.70% in the paidup equity share capital of HOEC that will enable BEIL and UBL collectively to hold 51% of the total issued and paid upcapital of HOEC. If as a result of the Open Offer and the IL&FS divestment pursuant to Conditional SPA 2, UBL and BEILcollectively hold 51% of the paid up equity share capital of HOEC, UBL may not acquire any shares of HDFC held inHOEC.

4. Hardy Oil and Gas (UK) Limited [Hardy UK] had filed a Civil Suit being Special Civil Suit No. 18 of 2005 against HOEC,Infrastructure Leasing & Financial Services Ltd. [IL&FS], Housing Development Finance Corporation Ltd. [HDFC] andUBL before the Court of Civil Judge (S.D.) Vadodara, Gujarat [First Civil Suit] for Specific Performance of Hardy UK’salleged right to nominate a Director on the Board of HOEC under the shareholders agreement dated October 14, 1998[SHA] and the purported deed of adherence dated August 30, 2001. The Civil Judge (S.D.) passed an ex-parte ad-interimorder on January, 11, 2005 restraining the Defendants from taking and/or implementing any steps that may dilute /jeopardize or otherwise affect Hardy UK’s status as 8.5% shareholder in HOEC.

HOEC filed an application under Section 45 of the Arbitration and Conciliation Act, 1996 [Section 45 Application] prayingfor dismissal of the First Suit and referring the Parties to Arbitration. The Section 45 Application was allowed vide orderdated May 6, 2005 and the Parties to the First Suit were directed to approach before the Arbitral Tribunal to resolve theirdisputes and the ex-parte ad-interim injunction granted on January 11, 2005 was vacated effective from May 13, 2005.The First Civil Suit has also been dismissed by the Civil Judge (S.D.), Vadodara on June 28, 2005.

Subsequent to the Original Public Announcement, Hardy UK has filed another Civil Suit being Special Civil Suit No. 118of 2005 on March 11, 2005 against Unocal International Corporation [UIC], BEIL, UBL, HDFC, IL&FS and HOEC beforethe Court of Civil Judge (S.D.), Vadodara, Gujarat [Second Civil Suit] again for Declaration, Injunction and for SpecificPerformance of Hardy UK’s alleged right of pre-emption under the SHA read with the purported deed of adherence datedAugust 30, 2001. On April 5, 2005, BEIL filed an Application for Rejection of Plaint under Order 7 Rule 11 of the Code ofCivil Procedure, 1908 on the ground that the Jurisdiction of Civil Court has been specifically barred as per Section 20A ofthe SEBI Act. The said Application was disallowed vide order dated May 27, 2005. HOEC has preferred an Application

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under Section 45 of the Arbitration and Conciliation Act, 1996 praying for dismissal of the Second Suit and referring theParties to the Arbitration. The Application is pending hearing. No interim relief has been granted by the Civil Judge (S.D.),Vadodara in the Second Suit.

HOEC, UBL and HDFC have already initiated arbitration proceedings before the London Court of International Arbitration(“LCIA”) on April 29, 2005 for declaration that Hardy UK has not acquired the shares in HOEC in accordance with theprovisions of the Shareholders’ Agreement and, therefore, Hardy UK is not entitled to claim any rights and/or any benefitsunder the Shareholders Agreement or to in any manner enforce the Shareholders’ Agreement [Arbitration proceedings].

Hardy UK has nominated its Arbitrator before LCIA and is participating in the Arbitration Proceedings. Pending the Arbitration,Hardy UK preferred a Petition before the District Judge, Vadodara under Section 9 of the Arbitration and Conciliation Act,1996 for interim relief in similar terms of the ex-parte ad-interim injunction vacated by the Civil Judge (S.D.). The JointDistrict, Judge, Vadodara vide order dated May 16, 2005 dismissed the Petition of Hardy, UK with costs. Being aggrievedby the said order, Hardy, UK filed an Appeal before the Gujarat High Court. The Appeal filed by Hardy was also dismissedby the Gujarat High Court vide order dated July 20, 2005.

This Open offer is subject to the adverse (if any) final outcome of aforesaid pending proceedings.

5. Necessary application will be filed with RBI for their requisite permission to (a) open and fund cash escrow account inIndia by way of transfer of funds from the offshore escrow account and (b) open a special account in India for the purposeof releasing purchase consideration to eligible shareholders after the closure of the Open Offer.

6. Application will be filed by the Acquirers with FIPB / SIA of GOI for their requisite approval for transfer of equity shares tobe tendered in the open offer by resident Shareholders, i.e., individuals and institutions, private corporate bodies, foreigncompanies, NRIs / OCBs, FIIs, etc in their favor.

7. Acquirers will make an application to RBI / any other relevant authority for their approval (if required) for transfer of equityshares from above categories of eligible shareholders upon closure of open offer once the basis of acceptance is determined.

Likely adverse effect of above risk factors on the shareholders:

Shareholders who offer their shares in the open offer can get adversely affected with respect to (a) acceptance of tenderedshares by the Acquirers and (b) release of purchase consideration by the Acquirers to eligible shareholders, by each of theabove mentioned risk factors in the event of non receipt / delay in receipt of aforesaid FIPB / SIA / GOI / RBI and any otherapprovals (if required) and other issues covered in the agreements.

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DEFINITIONS

Acquirer Company/ BEIL Burren Energy India Ltd

Person Acting in Concert/ Unocal Bharat LtdPAC/ UBL

Acquirers Acquirer Company and PAC

Target Company/ Hindustan Oil Exploration Company LtdThe Company/ HOEC

Managers to the Offer/ IGCF Ind Global Corporate Finance Pvt Ltd

Registrars to the Offer Intime Spectrum Registry Limited

Offer Offer to acquire 1,17,48,990 fully paid up Equity Shares of the Face Value of Rs. 10/-each representing 20.00% of the voting paid up equity share capital as at theexpiration of 15 days after the closure of the public offer

Offer Price Rs. 92.41 per fully paid up Equity Share

Indirect Seller Unocal International Corporation, USA

Seller 2 Infrastructure Leasing & Financial Services Ltd / IL&FS

Seller 3 Housing Development Finance Corporation / HDFC

Sellers Indirect Seller, Seller 2 and Seller 3 collectively

Shareholders Agreement/ SHA Agreement entered into, inter alia, between HOEC, UBL, IL&FS and HDFC onOctober 14, 1998

Offshore Share Purchase Agreement entered into between BEIL and Unocal International Corporation, USA toAgreement/ Offshore SPA 1 acquire the entire equity share capital of UBL on February 14, 2005, constituting indirect

acquisition within the meaning of acquisition as defined in Regulation 11 of the TakeoverRegulations.

Conditional SPA 2 Agreement entered into between UBL and IL&FS on February 14, 2005 for conditionalsale of shares.

Conditional SPA 3 Agreement entered into between UBL and HDFC on February 14, 2005 for conditionalsale of shares.

Persons eligible to participate All owners (registered and unregistered) of shares of HOEC except parties to the 3in the Offer Agreements i.e. (a) Acquirer Company, (b) PAC and (c) Sellers

Public Announcement/ PA Public Announcement for the Open Offer released on behalf of the Acquirer Companyand PAC on February 15, 2005

Regulations/ Takeover Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)Regulations/ SEBI Takeover Regulations, 1997 and subsequent amendments theretoRegulations

SEBI Securities and Exchange Board of India

FIPB/ SIA/ GOI Foreign Investment Promotion Board/ Secretariat of Industrial Assistance/ any otherappropriate authority of the Government of India

RBI Reserve Bank of India

Shares Fully Paid-up Equity Shares of Rs.10/- each of HOEC

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1 DISCLAIMER CLAUSE

“It is to be distinctly understood that the filing of the draft Letter of Offer with SEBI should not in any way be deemedor construed that the same has been cleared, vetted or approved by SEBI. The Draft Letter of Offer has been submittedto SEBI for a limited purpose of overseeing whether the disclosures contained therein are generally adequate and arein conformity with the regulations. This requirement is to facilitate the shareholders of Hindustan Oil ExplorationCompany Ltd to take an informed decision with regard to the Offer. SEBI does not take any responsibility either forfinancial soundness of the Acquirers, or the Company whose shares are proposed to be acquired or for the correctnessof the statements made or opinions expressed in the Letter of Offer. It should also be clearly understood that whilethe Acquirers are primarily responsible for the correctness, adequacy and disclosure of all relevant information inthis Letter of Offer, the Managers to the Offer is expected to exercise due diligence to ensure that the Acquirers dulydischarge their responsibility adequately. In this behalf and towards this purpose, the Managers to the Offer, IndGlobal Corporate Finance Private Limited, Mumbai has submitted a due diligence certificate dated March 1, 2005 toSEBI in accordance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 and subsequentamendments thereof. The filing of the Letter of Offer does not however absolve the Acquirers from the requirement ofobtaining such statutory clearances as may be required for the purpose of the offer.”

The Acquirers and Managers to the Offer accept no responsibility for statements made otherwise than in the Letter of Offer orin the advertisement or any material issued by or at the instance of the Acquirers and the Managers to the Offer and anyoneplacing reliance on any other source of information would be doing so at his/her/their own risk.

2 DETAILS OF THE OFFER

2.1 Background of the Offer

2.1.1. BEIL has entered into a Share Purchase Agreement [Offshore SPA 1] on February 14, 2005 with Unocal InternationalCorporation, 2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245, USA [hereinafter referred to as the“Indirect Seller”], a 100% subsidiary of Union Oil Company of California, to acquire the entire equity share capital ofUBL, which owns and holds 1,52,81,633 equity shares of Rs. 10/- each representing 26.01% in the paid up equityshare capital of HOEC for cash at a negotiated acquisition price of US$ 26,010,000 [Rs. 113,71,57,200] [ExchangeRate: 1 US$ = Rs. 43.72 on February 14, 2005. Source: rbi.org.in]. The acquisition is an unconditional and absolutetransfer of shares by a foreign shareholder to a foreign shareholder outside India at the holding company level andthese shares are already registered in the name of BEIL in the records of UBL.

2.1.2 UBL, IL&FS and HDFC are, inter alia, parties to a Shareholders Agreement entered into on October 14, 1998 [hereinafterreferred to as the “SHA”], which, inter alia, regulates their inter-se relationship and provides for pre-emption rights andother similar rights therein for their collaboration.

2.1.3 UBL and IL&FS have entered into a conditional Share Purchase Agreement on February 14, 2005 [hereinafter referredto as “Conditional SPA 2”], wherein it has been provided that UBL has the right to acquire 25,23,587 equity shares of Rs.10/- each representing 4.30% in the paid up equity share capital of HOEC held by IL&FS, subject to the terms of the SHA.Similarly, IL&FS has the right to sell 25,23,587 equity shares of Rs. 10/- each representing 4.30% in the paid up equityshare capital of HOEC held by IL&FS, subject to the terms of the SHA and the Civil Suit. This right to acquire/ sell sharesis conditional upon (a) receipt of requisite regulatory approvals for the acquisition of HOEC shares held by IL&FS and (b)completion of the Open Offer by BEIL following the acquisition of UBL shares by BEIL from Unocal International Corporation.

2.1.4 Hardy Oil and Gas (UK) Limited [Hardy UK] had filed a Civil Suit being Special Civil Suit No. 18 of 2005 against HOEC,Infrastructure Leasing & Financial Services Ltd. [IL&FS], Housing Development Finance Corporation Ltd. [HDFC] andUBL before the Court of Civil Judge (S.D.) Vadodara, Gujarat [First Civil Suit] for Specific Performance of Hardy UK’salleged right to nominate a Director on the Board of HOEC under the shareholders agreement dated October 14, 1998[SHA] and the purported deed of adherence dated August 30, 2001. The Civil Judge (S.D.) passed an ex-parte ad-interim order on January, 11, 2005 restraining the Defendants from taking and/or implementing any steps that may dilute/ jeopardize or otherwise affect Hardy UK’s status as 8.5% shareholder in HOEC.


Subsequent to the Original Public Announcement, Hardy UK has filed another Civil Suit being Special Civil Suit No. 118of 2005 on March 11, 2005 against Unocal International Corporation [UIC], BEIL, UBL, HDFC, IL&FS and HOEC beforethe Court of Civil Judge (S.D.), Vadodara, Gujarat [Second Civil Suit] again for Declaration, Injunction and for SpecificPerformance of Hardy UK’s alleged right of pre-emption under the SHA read with the purported deed of adherence datedAugust 30, 2001. On April 5, 2005, BEIL filed an Application for Rejection of Plaint under Order 7 Rule 11 of the Code of

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Civil Procedure, 1908 on the ground that the Jurisdiction of Civil Court has been specifically barred as per Section 20Aof the SEBI Act. The said Application was disallowed vide order dated May 27, 2005. HOEC has preferred an Applicationunder Section 45 of the Arbitration and Conciliation Act, 1996 praying for dismissal of the Second Suit and referring theParties to the Arbitration. The Application is pending hearing. No interim relief has been granted by the Civil Judge (S.D.),Vadodara in the Second Suit.


Hardy UK has nominated its Arbitrator before LCIA and is participating in the Arbitration Proceedings. Pending theArbitration, Hardy UK preferred a Petition before the District Judge, Vadodara under Section 9 of the Arbitration andConciliation Act, 1996 for interim relief in similar terms of the ex-parte ad-interim injunction vacated by the Civil Judge(S.D.). The Joint District, Judge, Vadodara vide order dated May 16, 2005 dismissed the Petition of Hardy, UK with costs.Being aggrieved by the said order, Hardy, UK filed an Appeal before the Gujarat High Court. The Appeal filed by Hardywas also dismissed by the Gujarat High Court vide order dated July 20, 2005.


2.1.5 The provisions of the Conditional SPA 2 above are without prejudice to IL&FS’s and/ or UBL’s stand in the First Civil Suit(which has subsequently been dismissed) and nothing in the Conditional SPA 2 can be or should be interpreted in anyway to be contrary to IL&FS’s and/ or UBL’s stand in the First Civil Suit (which has subsequently been dismissed)..

2.1.6 The other salient features of Conditional SPA 2 are (a) upon satisfaction of the conditions stated in Conditional SPA 2,UBL shall have the right to buy IL&FS shares subject to the SHA and the contentions in the First Civil Suit (which hassubsequently been dismissed) at Rs. 78.30 per share on spot delivery basis, free and clear of all liens, options, equities,claims, or other third party rights including rights of pre-emption of any nature whatsoever, together with all rights attachingto them. The Conditional SPA 2 also enables IL&FS to sell these shares to UBL subject to the SHA and the First Civil Suit(which has subsequently been dismissed). This IL&FS disinvestment, upon satisfaction of the aforesaid conditions, is tobe completed within a period of six (6) months from February 14, 2005 or such other date as IL&FS and UBL maymutually agree. As IL&FS has agreed to sell its shares under Conditional SPA 2, it may not be able to participate in theopen offer process without being in breach of Conditional SPA 2. However, IL&FS has vide letter dated August 04, 2005questioned the validity of Conditional SPA 2, and UBL is presently examining the legal validity of the said contention.

2.1.7 UBL and HDFC have entered into a Share Purchase Agreement on February 14, 2005 [Conditional SPA 3]. As per theConditional SPA 3, pursuant to the satisfaction of two conditions being (a) receipt of requisite regulatory approvals for theacquisition of HOEC shares held by HDFC and (b) completion of the Open Offer by BEIL following the acquisition of UBLshares by BEIL, and subject to terms of the SHA, UBL shall have the option to acquire such number of shares, inclusiveof and upto 62,87,222 equity shares of Rs. 10/- in total representing 10.70% in the paid up equity share capital of HOECto enable BEIL and UBL collectively to hold 51% of the total issued and paid up capital of HOEC. If as a result of the OpenOffer and the IL&FS divestment pursuant to Conditional SPA 2, UBL and BEIL collectively hold 51% of the paid up equityshare capital of HOEC, UBL may not acquire any shares of HDFC held in HOEC. This HDFC disinvestment, uponsatisfaction of the aforesaid conditions, is to be completed within a period of six (6) months from February 14, 2005 orsuch other date as HDFC and UBL may mutually agree. Furthermore, as per Conditional SPA 3, HDFC cannot tender itsshares for sale in the open offer process without the prior permission of UBL. Presently, HDFC has not made anyrequest to UBL seeking its permission.

2.1.8 With respect to the First Civil Suit (which has subsequently been dismissed), HDFC and UBL have amongst others, interalia, contended that Hardy UK is not a party to the SHA and therefore is not entitled to any rights or benefits thereunder,including the right to nominate a director to the board of directors of HOEC. The provisions of the Conditional SPA 3 arewithout prejudice to HDFC’s and / or UBL’s stand in the First Civil Suit (which has subsequently been dismissed) andnothing in the Conditional SPA 3 can be or should be interpreted in any way to be contrary to HDFC’s and / or UBL’sstand in the First Civil Suit (which has subsequently been dismissed).

2.1.9 The other salient feature of the Conditional SPA 3 is that upon satisfaction of conditions stated in Conditional SPA 3, UBLshall have the right to buy HDFC shares subject to the SHA and the contentions in the Civil Suit [as defined earlier] at Rs.85.04 per share on spot delivery basis, free and clear of all liens, options, equities, claims, or other third party rightsincluding rights of pre-emption of any nature whatsoever, together with all rights attaching to them.

2.1.10 The Acquirer Company, Person Acting in Concert, Sellers and the Target Company have not been prohibited by SEBIfrom dealing in securities in terms of direction issued u/s 11B of SEBI Act, 1992 or under any other regulations madeunder the SEBI Act.

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2.1.11 UBL substituted its then present directors on the Board of HOEC with Mr. Atul Gupta and Mr. Finian O’ Sullivan onFebruary 14, 2005, i.e., prior to the date of PA. Acquirers shall be entitled to reconstitute the Board of Directors of HOECsubsequent to the completion of the open offer and name persons for appointment to the Board of directors of HOEC atthe general meeting of the shareholders.

2.1.12 Conditional SPA 2 and Conditional SPA 3 contain certain conditions precedent that the requirements of the TakeoverRegulations shall be fully complied with prior to implementation of the said agreements.

Details of Indirect Seller

2.1.13 Unocal International Corporation is a 100% subsidiary of Union Oil Company of Corporation and it is situated at 2141Rosecrans Avenue, Suite 4000, El Segundo, California 90245, USA

Details of Seller 2

2.1.14 Infrastructure Leasing and Financial Services LtdTel No: 91 22 2653 3333; Fax No: 91 22 2653 3069

Details of Seller 3

2.1.15 Housing Development Finance Corporation

Tel No: 91 22 2282 0282; Fax No: 91 22 2285 2731

2.2 Details of the proposed Offer

2.2.1 Pursuant to the provisions of Regulation 10 and 12, BEIL is making the open offer to all the remaining equity shareholdersof HOEC to acquire 1,17,48,990 fully paid up Equity Shares of the Face Value of Rs. 10/- each representing 20.00% ofthe voting paid up equity share capital as at the expiration of 15 days after the closure of the public offer at a price of Rs.92.41 per fully paid up equity share payable in cash. BEIL acquired the shareholding of Unocal International Corporationin UBL in an offshore transaction concerning foreign securities involving two non-resident companies as buyer andseller, which does not affect the register of members of HOEC. UBL was a shareholder holding 26.01% shares of HOECand it continues to hold the same percentage at the time of the offer but the acquisition, as defined in Regulation 11,exceeds the stipulated minimum trigger limit of 15%. UBL as part to the Conditional SPA 2 and Conditional SPA 3 wouldfacilitate the acquirer to acquire control of HOEC pursuant to the agreements with IL&FS and HDFC. BEIL is making theopen offer to all the remaining shareholders of HOEC. UBL is a PAC with BEIL but it is not acquiring any shares inrelation to the open offer. All shares to be acquired pursuant to the open offer shall be acquired by BEIL. BEIL proposesto acquire 1,17,48,990 Equity Shares representing 20.00% of the paid up equity share capital of HOEC at a price of Rs.92.41 per fully paid up equity share (“Offer Price”) payable in cash (“Offer”) subject to the terms and conditions mentionedin the PA and this Letter of Offer.

2.2.2 The Offer is not subject to any minimum level of acceptance and the Acquirer Company will be obliged to acquire theequity shares of HOEC that are tendered in the valid form in terms of this offer up to a maximum of 1,17,48,990 EquityShares. No other entity / person, other than UBL is acting / deemed to be acting in concert with the Acquirer Company forthe purpose of this offer. Equity Shares of HOEC that would be tendered in the valid form in terms of this open offer willbe transferred in favor of BEIL.

2.2.3 As on the date of PA, the subscribed, called up and paid up Equity Share Capital of HOEC is Rs. 58,74,49,350/- comprisingof 5,87,44,935 Equity Shares of Rs. 10/- each and while determining 20.00% of the paid up equity share capital for thepurpose of minimum public offer as above, aforesaid paid up equity share capital is considered in terms of Regulation21(5) of SEBI Takeover Regulations which provides that for this purpose, voting rights as at the expiration of 15 daysafter the closure of the proposed public offer shall be reckoned. No fresh equity share capital is going to be issued byHOEC within 15 days after the closure of the proposed public offer.

2.2.4 The Public Announcement of the Offer [PA] was published in the newspapers in terms of Regulation 15(1) of SEBITakeover Regulations on Tuesday – February 15, 2005 and the details of the same are as follows:

Language Name of the Newspapers Editions

English Financial Express All i.e. Ahmedabad, Bangalore, Chandigarh, Chennai,Hyderabad, Kochi, Kolkata, Mumbai and New Delhi

Hindi Janasatta All i.e. Kolkata and Delhi

Marathi Lokmat Mumbai

Gujarati Financial Express [Gujarati] Ahmedabad

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2.2.5 In case of any upward revision in the Offer price by the Acquirers at any time upto 7 working days prior to the date ofclosure of the Offer i.e. Thursday - August 25,2005 the same would be announced in the above mentioned newspapersand the same price would be payable by the Acquirers for all the equity shares tendered at anytime during the offer andaccepted under the Offer.

2.2.6 There are no partly paid up equity shares as on the date of PA.

2.2.7 Acquirers have not acquired any equity shares of HOEC during the 12 months period prior to the date of the PA.

2.2.8 Acquirers have not acquired any equity shares in the paid up equity share capital of the target company during the 26weeks period prior to the date of the PA by way of (a) allotment in public issue or (b) allotment in rights issue or(c) preferential allotment of the Target Company.

2.2.9 Other than above i.e., 1,52,81,633 equity shares of Rs. 10/- each representing 26.01% in the paid up equity share capitalof HOEC held by PAC, the Acquirers do not hold any Equity Shares in the paid up equity share capital of HOEC as onthe date of the PA and further the Acquirers have not acquired any equity shares of HOEC from the date of PA till the dateof this Letter of Offer.

2.2.10 PA and Letter of Offer are available on SEBI’s website i.e. www.sebi.gov.in

2.2.11 The equity shares will be acquired by the Acquirer company free from all liens, charges and encumbrances and togetherwith all rights attached thereto, including the right to all dividends, bonus and rights offer declared hereafter.

2.2.12 There was no competitive bid.

2.3 Reasons for the acquisition, rationale for the offer and future plans

2.3.1 In view of the requirements of the SEBI Takeover Regulations and Regulation 10 and 12 thereof, pursuant to the acquisitionof Unocal International Corporation’s shares in UBL by BEIL, and Conditional SPA 2 and Conditional SPA 3, this mandatoryopen offer is being made.

2.3.2 BEIL believes that there exists significant opportunity in India for the exploration and production of oil and gas to satisfythe country’s growing energy demands and has for some time been studying potential investment opportunities. Acquisitionof HOEC would be strategically advantageous to BEIL in achieving its objective.

2.3.3 BEIL believes that HOEC has attractive prospects in the medium term in light of its planned developments in the offshoreCauvery basin and elsewhere in India. It has therefore entered into SPAs described in Para No. 2.1 and will be seekingto contribute to the future development of the Target Company through board representation, secondment of personneland certain technical consultancy arrangements and intends to work closely with the Target Company’s management infurtherance of its strategic objectives.

2.3.4 The Acquirer Company and PAC do not have any plans to dispose of or otherwise encumber any significant assets ofHOEC in the next two years except in the ordinary course of business of HOEC including raising finance to further thebusiness of HOEC.

Acquirer Company and PAC undertake that they shall not sell or dispose of or otherwise encumber any substantialassets of HOEC in the next two years except with the prior approval of the shareholders of the Target Company. BEIL/UBL are prepared to subscribe for additional equity share capital in HOEC to enable it to fund its development needs.

2.3.5 UBL substituted its then present directors on the Board of HOEC with Mr. Atul Gupta and Mr. Finian O’ Sullivan onFebruary 14, 2005 i.e. prior to the date of PA. The issue as to whether the appointment of directors on February 14, 2005is in violation of SEBI Takeover Regulations is under examination of SEBI. Acquirers shall be entitled to reconstitute theBoard of Directors of HOEC subsequent to the completion of the open offer and name persons for appointment to theBoard of directors of HOEC at the general meeting of the shareholders.

In this regard the Acquirer Company and PAC hereby undertakes that any person representing the Acquirer Companyand PAC or having any interest in the Acquirer Company and PAC, including any persons representing the AcquirerCompany or PAC as a director on the Board of HOEC appointed thereto prior to the date of the Public Announcement,shall refrain from participating in any matters of HOEC concerning or relating to this Open Offer.

3. BACKGROUND OF THE ACQUIRERS

Burren Energy India Limited [BEIL], the Acquirer Company, is a wholly owned [100%] subsidiary of Burren Energy plc [BE]andit therefore belongs to the BE group. BEIL is a new company formed for the purpose of this transaction and for holding anysubsequent Burren investments in India. Being a newly incorporated company, BEIL has not produced financial accounts todate and therefore complete background of BE is given below. BE is not acting in concert with BEIL for this transaction andtherefore BE is neither Acquirer nor a PAC.

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3.1 Burren Energy plc [“BE”]

3.1.1 BE was incorporated on January 14, 1998 as a limited company under the Companies Act, 1985 of England and Walesand its corporate office is situated at Kierran Cross, 11 Strand, London WC2N 5HR. The Company was started byMr. Finian O’ Sullivan, the current CEO whose concept was to create a western managed oil transportation and marketingbusiness in the Caspian region with a view to using the business as a platform to acquire upstream assets.

3.1.2 BE commenced its activities, transporting crude oil purchased from local producers in Turkmenistan to markets in Iran,Azerbaijan, Turkey and Black Sea region. Today BE is an independent oil and gas exploration and production group withactivities in three principal regions viz the Caspian Region of the Former Soviet Union, West Africa and North Africa.Principal E&P assets of BE are located in two geographical areas viz Turkmenistan and The Republic of Congo.

3.1.3 Burren operates a fleet of 8 oil tankers and 3 tug-barge trains in the Caspian and Russian river system. The shippingbusiness is not considered core to Burren and the Company is working towards its disposal.

3.1.4 BE’s last declared total proven and probable oil reserves as at April 2004 were 133 million barrels. Group oil productionis approximately 20,000 bopd net. BE has producing oilfields in Turkmenistan, where the group operates a 1000 sq. km.onshore concession, and in Republic of Congo (Brazzaville).

3.1.5 BE shares are listed on the Official List of the UK Listing Authority and have been traded on the London Stock Exchangesince December 2003 and on February 11, 2005, its market capitalization was Pounds 660 million. At close of businesson February 11, 2005 the share price was 480p.

3.1.6 Details of major shareholders of BE are as follows:

Registered shareholders Shareholding Represented onNo. % Board by

Funds managed by BaringVostok Capital Partners

First NIS Regional Fund, SICAV 12,088,085 8.76%

Cavendish Nominees Limited 5,222,794 3.79%

NIS Restructuring Facility 961,890 0.70%

18,272,769 13.25% Michael Calvey

Tacoma E&P Limited 15,595,000 11.31% Pierre Lasry

Sunfloat Shipping Limited 10,737,179 7.78% Andrei Pannikov

Balor Holdings Limited 6,043,892 4.38% Finian O’ Sullivan

3.1.7 Details of the companies promoted by BE / group companies of BE are as follows:

Name Place of incorporation Shareholding Principal business

Burren Energy Services Limited United Kingdom 100% Service company

Burren Energy (Bermuda) Limited Bermuda 100% Holding Company

Burren Energy Congo Limited British Virgin Islands 100% Oil exploration and production

Burren Resources Petroleum Limited Bermuda 100% Oil exploration and production

Burren Energy (Egypt) Limited United Kingdom 100% Oil exploration and production

Burren Energy India Limited United Kingdom 100% Holding Company

Unocal Bharat (Burren Shakti) Limited Bermuda 100% Holding Company

Burren (Cyprus) Holdings Limited Cyprus 100% Holding Company

Burren Energy Ship Management Limited Cyprus 100% Ship management

Burren Energy Shipping and Transportation Limited Cyprus 100% Shipping

Burren Energy Shipping and Transportation Russia 100% Shipping(Samara) Limited

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3.1.8 Board of Directors of BE and their respective dates of appointment on the Board are as follows:

Names of Directors Dates of appointmentBrian Lavers [Chairman] January 27, 1999Mike Calvey September 28, 1998Andrew Rose May 24, 2000Pierre Lasry February 17, 2004Andrei Pannikov March 27, 1998Atul Gupta January 27, 1999Alan Cole October 2, 2003Finian O’ Sullivan March 10, 1998

3.1.9 Brief audited financials of BE are as follows:

Profit & Loss Statement [Rs. in lakhs]

For the year ended December 31 2001 2002 2003 9 monthsperiod ended

Sept. 04Income from operations 37,132./56 28,851.48 38,193.73 50,394.31

Total expenditure (32,831.06) (17,587.51) (15,733.18) (22,836.79)

Earnings from Operations 4,301.50 11,263.97 22,460.55 27,557.52

Depreciation and Amortization (3,452.45) (4,209.41) (6,125.90) –

Interest (net) 42.81 (1,360.52) (1,370.15) (272.48)

Extraordinary Income 800.64 0.00 0.00 0.00

Profit before Tax 1,692.50 5,694.04 14,964.50 27,285.04

Provision for Tax (net) (101.75) 0.00 (1,802.79) (6,840.93)

Profit after Tax 1,590.75 5,694.04 13,161.71 20,444.11

Balance Sheet Statement [Rs. in lakhs]


Sept. 04

Liabilities and Shareholders’ Equity

Paid up share capital 11,327.54 12,071.40 20,315..23 23,224.38

Reserve and Surplus (excluding revaluation) 6,859.82 13,872.59 54,604.68 77,073.12

Networth 18,187.36 25,943.99 74,919.91 100,297.50

Revaluation reserve 0.00 0.00 13,092.72 12,313.68

Current Liabilities 6,214.96 14,692.30 11,999.36 19,571.19

Non current Liabilities 2,029.32 6,506.03 2,564.16 1,793.88

Deferred tax 0.00 0.00 1,608.79 8,477.46

Total 26,431.64 47,142.32 104,184.94 142,453.71Assets

Current assets 3,210.28 7,902.76 23,276.31 32,277.44

Non current assets 23,221.36 39,239.55 80,908.63 110,176.27

Total 26,431.64 47,142.31 104,184.94 142,453.71

Other Financial Data [Rs. in lakhs]


Sept. 04

Dividend Payout Ratio 0.00 0.00 0.00 0.00

Earning per share (Rs./share) 2.59 6.90 13.67 14.98

Return on Net Worth (%) 8.75 21.95 17.57 20.38

Book value per share (Rs./share) 25.96 35.89 55.45 73.16

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3.1.10 Significant accounting policies followed by BE are as follows:

The accounting policies of BE, which have been applied consistently in respect of the aforesaid years, are set out below:

Basis of preparation: Other than in relation to the acquisition of Tacoma Resources Limited, the financial statementshave been prepared under the historical cost convention in accordance with applicable United Kingdom accountingstandards.

Oil and gas industry accounting standards: In addition, the accounting for oil and gas exploration and production activitiesis guided by the Statement of Recommended Practice (“SORP”) “Accounting for Oil and Gas Exploration, DevelopmentProduction and Decommissioning Activities”, issued by the UK Oil Industry Accounting Committee. The financial statementshave been prepared in accordance with the provisions of the SORP, with the exception that the accounting policyadopted for oil and gas under lift is not in compliance with the SORP.

Reporting currency: The financial statements are presented in pounds sterling, although the Company and the majorityof its subsidiaries have a US Dollar functional currency.

Basis of consolidation: The financial statements consolidate the results of the Company and all its subsidiary undertakings.The results of subsidiaries acquired or sold are consolidated for the periods from or to the date at which control is passed.Acquisitions are accounted for under the acquisition method, under which purchase consideration is allocated to theassets and liabilities on the basis of fair value at the date of acquisition.

Oil and gas properties: The Group follows the full cost method of accounting for oil and gas properties under whichexpenditure on pre-license, license acquisition, exploration, appraisal and development activities is capitalized. Allcapitalized exploration and development expenditure is recorded within an appropriate cost pool within tangible fixedassets, except that certain exploration and appraisal costs may be held outside a cost pool pending determination ofcommercial reserves, within intangible fixed assets. The Group has three cost pools: the Caspian Region, West Africaand North Africa.

Pre-license acquisition, exploration and appraisal costs of individual license interests held outside a cost pool remainundepreciated pending determination but subject to there being no evidence of impairment. When a decision to developan oil and gas property has been taken, or if there is evidence of impairment in value, the costs are transferred to theappropriate cost pool within tangible fixed assets.

Costs carried within each pool are depreciated on a unit of production basis using the ratio of oil and gas production in theperiod to the estimated quantity of commercial reserves at the end of the period plus production in the period. Costs inthe unit of production calculation include the net book value of capitalized costs plus estimated future development costs.Changes in estimates of commercial reserves or future development costs are dealt with prospectively.

When events or changes in circumstances indicate that the carrying amount of expenditure within a cost pool may not berecoverable from future net revenues from oil and gas reserves attributable to that pool, a comparison between the netbook value of the cost pool and the discounted future cash flows from that cost pool is undertaken. To the extent that thecarrying amount exceeds the recoverable amount, the pool is written down to its recoverable amount and charged asadditional depreciation.

Decommissioning: Where a material liability for the removal of production facilities and site restoration at the end of theproductive life of a field exists, a provision for decommissioning is recognized. The amount recognized is the presentvalue of estimated future expenditure determined in accordance with local conditions and requirements. A tangible fixedasset of an amount equivalent to the provision is also created and depreciated on a unit of production basis. Changes inestimates are recognized prospectively, with corresponding adjustments to the provision and the associated fixed asset.There were no material decommissioning liabilities at September 30, 2004 and at 31st December 2003, 2002 and 2001.

Other tangible fixed assets: Other tangible fixed assets are stated at cost less depreciation and any provision for impairment.Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of assets on a straight-linebasis over their useful lives

Oil and gas overlift and underlift: Underlifts of entitlement to crude oil production are recorded at the lower of productioncost and market value, whereas overlifts are recorded at market value. This is not in accordance with the SORP whichrecommends the use of market value for measuring overlift and underlift. The Group has adopted this policy becausemanagement believes that it more fairly reflects the Group’s results.

Stocks: Stocks are stated at the lower of cost and net realizable value. Net realizable value is based on estimated sellingprice, less further costs expected to be incurred to completion and disposal. Provision is made for obsolete, slow-movingor defective items where appropriate.

Debt: Debt is initially stated at the amount of the net proceeds after deduction of issue costs. The carrying amount isincreased by the finance cost in respect of the period and reduced by payments made in the period. Convertible debt isreported as a liability unless conversion actually occurs. No gain or loss is recognized on conversion. Finance costs ofdebt are recognized in the profit and loss account over the term of the debt instrument at a constant rate on the carryingamount.

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Revenue recognition: Oil sales revenue represents amounts invoiced (exclusive of sales related taxes) for the Group’sshare of oil sales in the year.

Shipping repairs and renewals: Ships are dry-docked periodically and the costs are expensed as incurred. Othermaintenance costs are carried out and expensed as incurred.

Foreign currencies: Company - Transactions in currencies other than US dollars are recorded in US dollars at the rate ofexchange ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-translated at the rate of exchange prevailing at the balance sheet date. Gains and losses on foreign currency translationare included in the profit and loss account. Group - The financial statements of subsidiary undertakings that do not useUS dollars as a functional currency are translated into US dollars at the rates of exchange ruling at the balance sheetdate. The exchange difference arising on the retranslation of opening net assets is taken directly to reserves. All otherexchange differences are taken to the profit and loss account for the year.

Operating leases: Rentals payable under operating leases are charged in the profit and loss account on a straight linebasis over the lease term.

Taxation: Current tax, including UK corporation tax and overseas tax, is provided at amounts expected to be paid (orrecovered) using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date.Deferred tax is recognized in respect of all timing differences that have originated but not reversed at the balance sheetdate where transactions or events have occurred at that date that will result in an obligation to pay more or a right to payless tax, with the exceptions viz (a) no provision is made for deferred tax that would arise on remittance of the retainedearnings of overseas subsidiaries; and (b) deferred tax assets are recognized only to the extent that it is considered morelikely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differencescan be deducted. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in theperiods in which timing differences reverse, based on tax rates and laws enacted or substantially enacted at the balancesheet date.

Derivative financial instruments: The Group uses forward crude oil sales contracts, swaps and options to reduce exposureto fluctuations in the price of crude oil. Contracts are only entered into to hedge physical positions related to the Group’scrude oil production and are, accordingly, accounted for as hedge transactions. The gain or loss arising on theseinstruments is deferred and recognized only when the hedged transaction occurs. The Group does not hold or issuederivative financial instruments for speculative purposes.

Investments: Fixed asset investments are shown at cost less provision for impairment

3.1.11 Corporate Governance: The Directors of BE are committed to maintaining high standards of corporate governance anda disclosure was made in the Annual Report for the year ended December 31, 2003 that the Principles of Good Governanceas set out in Section 1 of the Combined Code issued in 1998, i.e., The Hampel Code are applied.

3.2 Burren Energy India Ltd [“BEIL”]

3.2.1 Burren Energy India Limited [BEIL] was incorporated on December 22, 2004 as a private limited company under theCompanies Act, 1985 of England and Wales and it is situated at Kierran Cross, 11 Strand, London WC2N 5HR. It is awholly owned [100%] subsidiary of BE and it therefore belongs to the BE group.

3.2.2 At the date of the Public Announcement, BEIL had no activities other than by reason of its interest in UBL.

3.2.3 The details the Board of Directors of BEIL are:

Name Qualification Residential Address Experience

Mr. Atul Gupta Degrees in Chemical 43 Loveday Road, 17 years worked with international oilEngineering from London W13 9JT, and gas productions with CharterhouseCambridge Univ. and United Kingdom Petroleum, Petrofina and Monument.Petroleum Engineering, A director in various companies,Heriot-Watt Univ. including BE.

Mr. Andrew Degree in Engineering, Itchel House, Itchel Lane, Several years of experience inBenedict Rose Cambridge University. Crondalll, Farnham, investment banking, working in

Surrey GU10 5PT, advisory, capital markets and structuredUnited Kingdom finance roles.

Mr. Finian Rory Degree in Geology and Tangley House, 17 years with Chevron, GeophysicalO’Sullivan Geophysics, Southdown Road, Systems and Olympic Oil and Gas.A

Univ. college Galway Shawford, Hampshire director in various companies, includingSO21 2BY, United Kingdom BE.

3.2.4 Mr. Gupta and Mr. O’Sullivan were appointed to the Board of HOEC on 14 February 2005.

3.2.5 BEIL undertakes that the directors representing the acquirer as a director on the Board of HOEC appointed prior to thedate of the Public Announcement, shall refrain from participating in any matters of HOEC concerning or relating to thisOpen Offer.

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3.2.6 BEIL, a private company limited by shares, is a new company formed for the purpose of this transaction and for holdingany subsequent Burren investments in India.

3.2.7 Share capital of the company is 1000 Pounds [Rs. 84,370] divided into 1000 shares of £ 1 each. [Exchange Rate:1Pound = Rs. 84.37 as on December 22, 2004]. Issued Share Capital of the company is 2 shares of £ 1 each (both heldby Burren Energy plc) and unissued share capital is 998 shares of £ 1 each. Being a newly incorporated company, BEILhas not produced financial accounts to date. Its shares are not listed on any Stock Exchange.

3.3 Person Acting in Concert i.e. Unocal Bharat limited

3.3.1 UBL was incorporated in Mauritius in July 1996. The entire issued share capital of UBL was acquired by Unocal InternationalCorporation in September 1996. In January 2004, the country of incorporation of UBL was transferred from Mauritius toBermuda. At the date of the Public Announcement, UBL had no activities other than by reason of its interest in 26.01%of the issued share capital of HOEC. Unocal International Corporation was the owner of 100% of the issued share capitalof UBL prior to 14 February 20005, at which time its entire shareholding in UBL was acquired by BEIL.

3.3.2 Details the Board of Directors of UBL are given below:

Name Qualification Residential Address Experience

Mr. Atul Gupta Degrees in Chemical 43 Loveday Road, 17 years worked withEngineering from London W13 9JT, international oil and gasCambridge Univ. and United Kingdom productions with CharterhousePetroleum Engineering, Petroleum, Petrofina andHeriot-Watt Univ. Monument. A director in various

companies, including BE.

Mr. Andrew Degree in Engineering, Itchel House, Itchel Lane, Several years of experience inBenedict Rose Cambridge University. Crondalll, Farnham, investment banking, working in

Surrey GU10 5PT, advisory, capital markets andUnited Kingdom structured finance roles.

Mr. Finian Rory Degree in Geology and Tangley House, 17 years with Chevron, GeophysicalO’Sullivan Geophysics, Southdown Road, Shawford, Systems and Olympic Oil and

Univ. college Galway Hampshire SO21 2BY, Gas. A director in various companies,United Kingdom including BE.

3.3.3 Mr. Gupta and Mr. O’Sullivan were appointed to the Board of HOEC on 14 February 2005.

3.3.4 UBL undertakes that the directors representing the PAC as a director on the Board of HOEC appointed prior to the dateof the Public Announcement, shall refrain from participating in any matters of HOEC concerning or relating to this OpenOffer.

3.3.5 UBL acquired its 26.01% interest in HOEC in October 1998. It has not subsequently entered into in any transaction forthe purchase or sale of shares in HOEC.

3.3.6 UBL, situated at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.is an existing shareholder of HOEC andholds 1,52,81,633 equity shares of Rs. 10/- each representing 26.01% of the total issued and paid up share capital ofHOEC. It is, inter alia, a party to the SHA. Pursuant to the purchase by BEIL of foreign securities, i.e., shares owned byUnocal International Corporation in UBL, UBL has become a wholly owned subsidiary of BEIL. UBL is therefore now partof the BE Group. Authorized Share Capital of UBL is US$ 70,000,000 [Rs. 29743.00 lakhs] divided into 700,000 sharesof US$ 100 each. Minimum share capital of the Company is US$ 12,000 [Rs. 5.10 lakhs] [Exchange Rate: 1 US$ = Rs.42.49 as on December 31, 2004. Source: www.rbi.org.in]. Its shares are not listed on any Stock Exchange.

3.3.7 UBL was incorporated as a private company limited by shares under Section 19 of the Companies Act, 2001 on July 19,1996 by Registrar of Companies, Mauritius. The documents relating to the transfer of incorporation of UBL were filed atthe office of Companies Division, Port Louis on January 07, 2004 and the Registrar of Companies, Port Louis, vide itsletter dated January 09, 2004 confirmed that (a) “a Notice under Section 306 of the Companies Act, 2001 shall bepublished in the Government Gezette to the effect that the Company has been removed subject to certificate of incorporationunder the law in force in Bermuda be submitted to this office” and (b) “ the Notice of Dissolution of the Company shall beeffective as from the date of incorporation of the Company in Bermuda”. The Registrar of Companies, Bermuda onJanuary 16, 2004, issued, in accordance with Section 132C(4)(d) of the Bermudan Companies Act, 1981, a Certificate ofContinuance to UBL whereby UBL was registered by the Registrar of Companies, Bermuda in the Register maintainedby him under the provisions of said Section. Consequently, UBL (w.e.f January 16, 2004) is a company incorporated inBermuda.

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3.3.8 Brief audited financials of UBL for last 3 years are as follows:


For the year ended December 31 2002 2003 2004

Income from operations (533.31) 254.43 944.98

Total expenditure (2,122.98) (603.16) (83.32)

Earnings from Operations (2,656.29) (348.73) 861.66

Other Income 0.00 0.01 3.08

Profit before Tax (2,656.29) (348.72) 864.74

Provision for Tax (net) 0.00 0.00 0.00

Profit after Tax (2,656.29) (348.72) 864.74



Liabilities and Shareholders’ Equity

Paid up share capital 31,363.59 29,783.33 29,114.75

Reserve and Surplus (excluding revaluation) (23,906.84) (23,051.00) (20,609.43)

Networth 7,456.75 6,732.33 8,505.32

Revaluation reserve 0.00 0.00 0.00

Liabilities 661.37 1,444.67 (95.05)

Total 8,118.12 8,177.00 8,410.27

Assets

Current assets 234.67 109.83 72.08

Non current assets 7,870.61 8,012.27 8,338.18

Deferred tax 12.84 54.90 0.00

Total 8,118.12 8,177.00 8,410.26



Dividend Payout Ratio 0.00 0.00 0.00

Earning per share (Rs./share) (406.78) (53.40) 132.43

Return on Net worth (%) (35.62) (5.18) 10.17

Book value per share (Rs. / share) 1,141.92 1,030.98 1,302.50

3.3.9 BEIL is a wholly owned subsidiary of BE. UBL is a wholly owned subsidiary of BEIL. Neither BEIL nor BE hold any sharesin the paid up equity share capital of HOEC as on date of Public Announcement.

3.3.10 Any subsequent acquisition of shares by the Acquirers other than during the offer period would be governed by SEBITakeover Regulations prevalent at that point of time and the same shall be subject to the outcome of disputes pending atvarious fora.

4. DISCLOSURE IN TERMS OF REGULATION 21(3)

Not applicable.

5. BACKGROUND OF THE TARGET COMPANY - HINDUSTAN OIL EXPLORATION COMPANY LIMITED[HOEC]

5.1 Hindustan Oil Exploration Company Limited is a public limited company incorporated on September 22, 1983 under theCompanies Act, 1956. The Company transferred its registered office from Maharashtra to Gujarat pursuant to certificateof registration dated June 11, 1996 issued by the Registrar of Companies, Gujarat and the Registered Office of theCompany is presently situated at “HOEC House”, Tandalja Road, Vadodara, 390020 and the Corporate Office issituated at Lakshmi Chambers, 192, St.Mary’s Road, R.A. Puram, Chennai-600 028.

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5.2 HOEC was established by Late Shri H. T. Parekh. HOEC has been the first private sector Exploration and Productioncompany set up to explore, develop and produce Hydrocarbon resources within and outside India by integrating andoptimizing the collective output of people and technology with respect to available resources.

5.3 The Company currently has interests in 8 E&P projects covering Cambay Basin, Cauvery Basin and Assam ArrakanBasin.

5.4 Cambay Business Unit consists of (a) Asjol Oil Field which is a “producing asset” where HOEC as Operator has 50%participating interest, (b) North Balol Gas Field where HOEC as Operator has 25% participating interest and is expectedto commence commercial production shortly, (c) Block CB – ON – 7 where HOEC as Operator has 50% explorationinterest (with ONGC having back-in rights for upto 30% interest) and is expected to commence commercial productionfrom Pramoda Discovery and (d) Block CB – OS – 1 where HOEC has 57.11% participating interest and currently ONGCas an Operator is appraising the discoveries in the Block.

5.5 Cauvery Business Unit consists of (a) PY-1 Gas Field which is under development where HOEC has 100% participatinginterest, (b) PY-3 Oil Field which is a “producing asset” where HOEC has 21% non-operating participating interest and (c)Block CY-OSN-97/1 where HOEC as an Operator has 80% participating interest, is under exploration.

5.6 Assam Business Unit consists of Block AAP-ON-94/1 where HOEC has 25% non-operating participating interest and theBlock is under exploration phase.

5.7 As on the date of Public Announcement and Letter of Offer, the Capital Structure of the Company was as under:

Paid-up Equity Shares No of Shares / voting rights % of Shares / voting rights

Fully Paid-up Equity Shares 5,87,44,935 100.00

Partly Paid-up Equity Shares Nil NA

Total Paid-up Equity Shares 5,87,44,935 100.00

Total voting rights 5,87,44,935 100.00

Note: The Company has no partly paid-up Equity Shares and no calls in arrears.

5.8 Current capital structure of the Company has been built up since inception as per the details given below:

Date of Issue/ Shares Cumulative Mode of Allotees identity Status ofAllotment/ Allotment complianceForfeiture/Cancellation

Number % Share Capital

20/09/83 190 0 *190 19,000 Pvt Placement Subscribers to MA 1983

1983 49,810 0.85 *50,000 50,00,000 Pvt Placement Participating business parties 1983

1985 73,020 1.24 *1,23,020 1,23,02,000 Rights 1985

1986 26,980 0.46 *1,50,000 1,50,00,000 Pvt Placement Rights 1986

1986-87 1,00,000 1.7 *2,50,000 2,50,00,000 Pvt Placement Public 1986-87

02/02/1988 2,50,075 4.26 *5,00,075 5,00,07,500 Pvt Placement Public 1988

Shares subdivided to Rs. 10 from Rs. 100 50,00,750 5,00,07,500 Shares subdivided to Rs. 10 from Rs. 100

28/03/1990 1,00,00,000 17.02 1,50,00,750 15,00,07,500 IPO Public 19/04/1990

21/12/1992 1,57,50,850 26.81 3,07,51,600 30,75,16,000 Rights Public 05/01/1993

23/06/1995 -2,400 0 3,07,49,200 30,74,92,000 Foreiture Public 23/06/1995

02/07/1997 67,50,000 11.49 3,74,99,200 37,49,92,000 Preferential Hardy Oil & Gas 07/07/1997

02/07/1997 47,50,000 8.09 4,22,49,200 42,24,92,000 Preferential HDFC Ltd. 07/07/1997

02/07/1997 20,00,000 3.4 4,42,49,200 44,24,92,000 Preferential IL & FS Ltd 07/07/1997

17/10/1998 1,52,81,633 26.01 5,95,30,833 59,53,08,330 Preferential Unocal Bharat Ltd 10/11/1998

04/02/1999 -30,575 -0.05 5,95,00,258 59,50,02,580 Forfeiture Public 04/02/1999

08/09/1999 -7,55,323 -1.28 5,87,44,935 58,74,49,350 Un-subscribed shares cancelled

Total shares 5,87,44,935 100

*Shares of Rs. 100/- each

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5.9 Equity Shares of HOEC are presently listed and traded on (i) The Stock Exchange, Mumbai (“BSE”) and (ii) The NationalStock Exchange of India Ltd (“NSE”). Equity Shares of HOEC are also listed on the Stock Exchanges at Delhi (“DSE”)and Calcutta (“CSE”). However, the Company has filed applications with DSE and CSE for delisting vide letters datedFebruary 01, 2005 and January 31, 2005 respectively and the Company is in the process of complying with voluntarydelisting formalities to get its shares delisted from DSE and CSE in compliance with the provisions of SEBI [Delisting ofSecurities] Guidelines 2003 (delisted post Public Announcement). Equity Shares of the Company were also listed on theStock Exchanges at Ahmedabad (“ASE”), Bangalore (“BgSE”) and Chennai (“MSE”). However, the Company had filedapplications seeking delisting and the equity shares were accordingly delisted from ASE, BgSE and MSE with effect fromJanuary 23, 2005, January 10, 2005 and February 16, 2005 respectively as per letters dated January 24, 2005, January10, 2005 and February 16, 2005 issued by ASE, BgSE and MSE respectively.

5.10 The Company entered the capital market with a Public Issue of 1,00,00,000 Equity Shares of Rs.10/- each for cash at paraggregating to Rs. 10,00,00,000 in terms of Prospectus dated December 29, 1989.

5.11 HOEC vide its letter dated February 18, 2005 has certified that (a) to the best of their knowledge and as per informationavailable with them, they have complied with the requirements of the listing agreement and (b) there has been no penalactions taken by / warnings issued by the Stock Exchanges with respect to any non compliance of the requirements oflisting agreement.

5.12 There are no outstanding warrants in the books of the Company.

5.13 As on the date of PA, issued share capital of HOEC is Rs. 58,77,79,100/- comprising of 5,87,77,910 Equity Shares of Rs.10/- each whereas subscribed and paid up Equity Share Capital of HOEC is Rs. 58,76,09,465/- comprising of 5,87,44,935Equity Shares of Rs. 10/- each. While determining 20.00% of the paid up equity share capital for the purpose of minimumpublic offer, aforesaid paid up equity share capital has been considered in terms of Regulation 21(5) of SEBI TakeoverRegulations which provides that for this purpose, voting rights as at the expiration of 15 days after the closure of theproposed public offer shall be reckoned. There are no partly paid up equity shares and no calls in arrears.

5.14 BEIL entered into Offshore SPA 1 with Indirect Seller to acquire the entire equity share capital of UBL, which owns andholds 26.01% in the paid up equity share capital of HOEC and the acquisition is absolute transfer of shares by a foreignshareholder to a foreign shareholder outside India at the holding company level. Other than Equity Shares covered inOffshore SPA 1, BEIL does not hold any Equity Shares in the paid up equity share capital of HOEC as on the date of thePA and further BEIL has not acquired any equity shares of HOEC from the date of PA till the date of this Letter of Offerand hence confirmation with regard to compliance of of SEBI Takeover Regulations is not applicable. UBL has confirmedthat they have complied with requirement of Chapter II of SEBI Takeover Regulations.

Since Indirect Seller has not sold any shares of HOEC, confirmation with regard to compliance of Chapter II of SEBITakeover Regulations is not found to be relevant.

IL&FS did not hold 5% in the paid up equity share capital of HOEC at any point of time in the past till date and henceconfirmation with regard to compliance of Chapter II of SEBI Takeover Regulations is not applicable. IL&FS has issueda confirmation to this effect vide their letter dated February 28, 2005.

HDFC, vide their letter dated February 28, 2005, have confirmed that they have complied with the provisions of ChapterII of SEBI Takeover Regulations over a period of time except for some delay in reporting. SEBI may initiate suitableaction against HDFC for the delay in compliance.

HOEC, vide their letter dated February 23, 2005, have confirmed that they have complied with the provisions of ChapterII of SEBI Takeover Regulations over a period of time except for some delay on account of lack of understanding ofapplicability of the regulations. SEBI may initiate suitable action against HOEC for the delay in compliance.

5.15 The Company’s management is vested with the Board of Directors. The composition of the Board of Directors as on thedate of PA i.e. February 15, 2005 was as follows:

Names Designation Date of Qualification Residential Experience ParticularsAppointment Addresses

Mr. R. Chairman June 11, 1997. M.A.(Econ) E-262, Held various highVasudevan Univ. of Delhi Greater Kailash-I, level positions in government

New Delhi –110 048 of India, including Secretary,M.P.A. Ministry of Power. Providing(Dev.Econ.) consultancy in infrastructure,Harvard Univ. industry and finance.USA On the Board of Directors

of various companies.

17

Names Designation Date of Qualification Residential Experience ParticularsAppointment Addresses

Mr. Rakesh Jain Managing Director w.e.f. BE (MechEngg.) Abbotsbury, Flat 7 C, 15 years with Tata groupDirector July 29, 2003. IIT, Delhi Block 2, Alwarpet in upstream oil and gas.

Managing M.B.A. Chennai -600018 Since August 2003 to dateDirector w.e.f. IIMCalcutta with HOEC as ManagingAugust 1, 2003. Director.

Mr. Deepak Director October 6, Chartered 9, Darbhanga Mansion, Began his career withParekh 1994 Accountant, 12, Carmichael Road, Ernst & Ernst

ICA England Mumbai – 26 Management Consultancy,& Wales New York. Then worked

with Grindlays Bank (ANZ)Mumbai; ChaseManhattan Bank.

On the Board of Directorsof various companies.

With HDFC since 1978and its Chairman since1993.

He has been a member ofvarious governmentcommittees especially inthe field of Finance andCapital Market.

Mr. Vimal Director June 14, 1996. B.Com., 2-A, Shrikunj Apartments, Several years at StandardBhandari Chartered 3, Altamount Road, Chartered Bank and ICICI.

Accountant Mumbai – 26ICAI, Functional Head of IL&FSNew Delhi for many years.

Country Manager forAEGON India BusinessServices since August2004.

On the Board of Directorsof various companies.

Wide experience indeveloping new financialproducts for corporatesector. Worked onpossible scheme forprivatization ofgovernment owned PSUs.Wide knowledge andexperience in the field offinance and accounts.

Mr. Finian Director February 14, Degree in Tangley House 17 years with Chevron,O’Sullivan 2005. Geology and Southdown Road, Geophysical Systems and

Geophysics, Stanford, Olympic Oil and Gas.AUniv. college Havits 50212BY director in variousGalway companies, including BE.

Mr. Atul Gupta Director February 14, Degrees in 43, Love day Road 17 years worked with2005. Chemical London @W13 9JT international oil and gas

Engineering from U.K. productions withCambridge Univ. Charterhouse Petroleum,and Petroleum Petrofina and Monument.Engineering, A director in variousHeriot-Watt companies, including BE.Univ.

18

Note: On 14th February, 2005 HOEC’s Board appointed Mr. Atul Gupta and Mr. Finian O’Sullivan to the Board of Directorspursuant to UBL’s notice of substitution of directors. These appointments were made prior to the PA. The issue as towhether the appointment of directors on February 14, 2005 is in violation of SEBI Takeover Regulations is under examinationof SEBI. These directors are representing PAC and their details are provided in the above table. In this regard the PAChereby undertakes that these directors have refrained and shall continue to refrain from participating in any matters ofHOEC concerning or relating to this Open Offer.

5.16 There has been no merger/ demerger/ spin off of HOEC in the last three years.

5.17 Brief audited financial details of HOEC for last 3 years and certified financial results for the 9 month period endedDecember 31, 2004 are as under:


For the year ended March 31 2002 2003 2004 9 monthsperiod ended

Dec. 04

Income from operations 4,268.29 4,832.68 4,186.58 6,569.46

Other Income 1,250.19 950.33 778.11 526.07

Total Income 5,518.48 5,783.01 4,964.69 7,095.53

Total expenditure (3,299.61) (5,218.59) (2,303.42) (1,654.06)

Profit before Depreciation, Interest and Tax 2,218.87 564.41 2,661.27 5,441.47

Depreciation (46.49) (49.60) (456.18) (569.17)

Interest (9.73) 0.00 0.00 (107.56)

Profit before Tax 2,162.64 514.81 2,205.09 4,764.74

Extraordinary item 0.00 0.00 (52.49) –

Provision for Tax (net) (615.24) 645.97 59.55 (1,689.27)

Profit after Tax 1,547.41 1,160.79 2,212.15 3,075.47


For the year ended March 31 2002 2003 2004

Sources of Funds

Paid up share capital 5,876.09 5,876.09 5,876.09

Reserve and Surplus (excluding revaluation) 11,802.76 12,433.37 13,983.00

Networth 17,678.85 18,309.46 19,859.09

Loans 0.00 0.00 0.00

Total 17,678.85 18,309.46 19,859.09

Uses of Funds

Net fixed assets (including CWIP) 6,532.56 5,419.05 8,042.00

Investments 2,669.67 358.13 1,902.00

Deferred tax 158.09 994.76 1,215.00

Net current assets 8,304.15 11,521.86 8,689.00

Miscellaneous expenditure 14.38 15.67 11.00

Total 17,678.85 18,309.46 19,859.00


For the year ended March 31 2002 2003 2004

Dividend (%) 12.00 8.00 10.00

Earning per share (Rs./share) 2.63 1.98 3.77

Return on Net Worth (%) 8.75 6.34 11.14

Book value per share (Rs./Share) 30.09 31.17 33.81

19

Formulae / Ratio details:

Earning per share = Profit After Tax / Number of SharesReturn On Net Worth = Profit After Tax / Networth * 100Book Value = Networth / Number of shares

5.18 Pre and Post Offer Shareholding Pattern:

Shareholders Shares/voting Shares which Shares to be acquired Shareholding after Openrights prior to SPAs triggered SEBI in Open Offer Offer $

and Open Offer Takeover

No. % No. % No. % No. %

1. Promoters’ Group

(a) Parties to SPAs 0 0.00 0 0.00 0 0.00 0 0.00

(b) Othr than above 0 0.00 0 0.00 0 0.00 0 0.00

Total 0 0.00 0 0.00 0 0.00 0 0.00

2. Acquirers

(a) Acquirer Company i.e. BEIL 0 0.00 0 0.00 11748990 20.00 11748990 20.00

(b) PAC i.e. Unocal Bharat Ltd. 15281633 26.01 152816331 26.011 0 0.00 15281633 +x2 26.01+x%2

Sub-total 15281633 26.01 152816331 26.011 11748990 20.00 27030623+x2 46.01+x%2

3. Parties to SPAs other than above

a. IL & FS 2523587 4.30 25235873 4.303 0 0.00 0 0.00

b. HDFC 6287222 10.70 62872224 10.704 0 0.00 6287222-y6 10.70-y%6

Sub-total 8810809 15.00 88108096 15.005 0 0.00 6287222-y6 10.70-y%6

37091720

4. Public (Other than 1.2 & 3 above)

a. FIs/MFs/FIIs/Banks/SFCs 3773875 6.42 0 0.00 0 0.00 3773875 6.42

b. Others (Nos. 47023) 30878618 52.56 0 0.00 -11748990 -20.00 191296287 32.56

Sub-total 34652493 58.99 0 0.00 -11748990 -20.00 229035037 38.99

Grand Total 58744935 100.00 240924421 41.011 1174990 20.00 58744935 100.00

1 As stated in clause 2.1.1, BEIL entered into Offshore SPA1 with Unocal International Corporation, USA to acquire the entire equity sharecapital of Unocal Bharat Ltd. [UBL]. UBL held 15281633 equity shares in HOEC prior to Public Announcement and continue to hold theseshares. However, this Offshore SPA1 triggered SEBI Takeover Regulations.

2 In addition to its existing shareholding of 15281633 shares in HOEC (being 26.01%), UBL shall acquire additional shares of HOEC fromIL & FS and HDFC pursuant to Conditional SPA2 and Conditional SPA3 respectively. The number of shares to be acquired by UBL fromIL & FS and HDFC is subject to the circumstances/conditions set forth in foot notes 3 and 4 herein below.

3 UBL entered into Conditional SPA2 with IL & FS as indicated in clause 2.1.3. This would result in IL & FS selling 25,23,587 equity sharesamounting to 4.30% subject to the Civil Suit. UBL would acquire the same either in entirely or pro-rated if other shareholders, being partlyto the SHA, exercise their right of pre-emption.

4 UBL entered into Conditional SPA3 with HDFC as indicated in clause 2.1.7. If, pursuant to (i) Offshore SPA1; (ii) open offer, and (iii)Conditional SPA2, the Acquirers (in combination) hold 51% of the total issued and paid capital of HOEC then no shares shall be sold byHDFC. However, if the aforesaid 51% shareholding is not achieved, HDFC shall sell such number of shares to UBL, as would enable theAcquirers to hold (in combination) upto 51% of the equity capital of HOEC.

5 Please refer to foot notes 3 and 4 above.6 As stated in foot note 4 above, if HDFC sells its shares to UBL (and to other shareholders pursuant to pre-emption under SHA), then ‘y’

would be such number of shares as sold by HDFC.7 As stated in foot notes 3 and 4 above, sale of shares by IL & FS and HDFC is subject to right of pre-emption of shareholders under the

SHA. If any shareholders to the SHA (other than UBL) exercise its pre-emption right and purchase shares then this number would increaseby such number of shares.

It is assumed that BEIL will acquire 20% in Open Offer i.e. 11748990 shares, provided public response to Open Offer will be 100%.

$ Shareholding pattern of HOEC after acquisition of shares by BEIL and UBL pursuant to Offshore SPA1, Open Offer, Conditional SPA2 andConditional SPA3.

20

Notes:

1. Acquirer Company and PAC have not purchased any shares in HOEC after the date of Public Announcement till thedate of this letter of offer.

2. There are 47,023 shareholders in public category and all owners (registered or unregistered) of shares of HOEC[except parties to Conditional SPA 2 and Conditional SPA 3 i.e. Acquirer Company, PAC and Sellers 2 and 3]anytime before closure of the Offer are eligible to participate in the Offer.

3. Acquisition of shares under SPA2 and SPA3 are subject to the outcome of the pending litigations.

4. Financial Institutions, Banks, Mutual Funds etc are eligible to participate in the offer along with remaining public.

5.19 HOEC is a professionally managed Company and there is no promoter group in the company. The Company, vide itsletter dated February 05, 2004 addressed to BSE clarified that Late Shri H T Parekh founded the Company and sinceincorporation, the Company has been under the professional management of the Board consisting of industrialists,professionals and technocrats. The Company further confirmed vide above letter that no single director/ group has anycontrol over the Company. Therefore, details of (a) change in shareholding of the promoters over a period of time and (b)the status of compliance of applicable provisions are not applicable.

5.20 Corporate Governance: The Company has complied with the requirements of Clause 49 on Corporate Governance in theListing Agreement. A statement on Corporate Governance and Certificate of Compliance by Statutory Auditors areavailable in the Annual Report for the year ended March 31, 2004. Mr. Nalin M Shah, Partner, S B Billimoria & Co,Chartered Accountants, the Statutory Auditors of the Company, vide their Certificate / Report on Corporate Governancedated July 26, 2004 which formed part of the Annual Report for the year ended March 31, 2004 confirmed that (a) theyhave examined the compliance of conditions of corporate governance by the Company for the year ended March 31,2004 as stipulated in Clause 49 of the Listing Agreement (b) The Company has complied with the conditions of corporategovernance as stipulated in the Listing Agreement (c) no investor grievance is pending for a period exceeding one monthagainst the Company as at March 31, 2004 and (d) Such compliance is neither an assurance as to future viability of theCompany nor the efficiency or effectiveness with which management has conducted the affairs of the Company.

5.21 The Company has appointed Mr. Mahesh Bhatt, Senior Associate- Company Secretariate as the Compliance Officer andhis address is Hindustan Oil Exploration Company Ltd, Lakshmi Chambers, 192, St. Mary’s Road, R.A. Puram, Chennai– 600 028 (Tamilnadu)Tel No: 044-5522 9000 Fax No: 044-5522 9011/9012.

5.22 Reasons for rise/ fall in total income/ PAT:

Revenue from operations has been lower in 2003-04 on account of curtailment in production from PY-3 field. This wasprimarily due to conversion of one producer well into a water injector. However during the year 2004-05, the PY-3Consortium completed another producer well and the current production is around 6500 bopd.

Volume of crude oil sold decreased by 24% from 4,09,677 barrels to 3,09,819 barrels attributable to lower production asmentioned above coupled with increase in the closing stock. In terms of value, sales decreased by 22.3% marginally offsetting volume reduction on account of around 3% higher average crude oil price realization per barrel in the previousyear. Further reduction in total income occurred on account of lower other income mainly comprising of interest anddividend earned on surplus funds reduced by 18% on account of lower investible funds as well as lower interest rateaffecting annual yield by nearly 1.25% due to softening of interest rates in the market.

Effective April 1, 2003 the Company has changed its accounting policy related to valuation of stock of crude oil from “costof production or market price whichever is lower” to “net realizable value” basis. Had the Company not changed theaccounting policy, valuation of stock of crude oil and corresponding profit for the year would have been lower by Rs.338.00 lakhs.

5.23 Pending Litigation matters / Disputed Liability:

Hardy Oil and Gas (UK) Limited [Hardy UK] had filed a Civil Suit being Special Civil Suit No. 18 of 2005 against HOEC,Infrastructure Leasing & Financial Services Ltd. [IL&FS], Housing Development Finance Corporation Ltd. [HDFC] andUBL before the Court of Civil Judge (S.D.) Vadodara, Gujarat [First Civil Suit] for Specific Performance of Hardy UK’salleged right to nominate a Director on the Board of HOEC under the shareholders agreement dated October 14, 1998[SHA] and the purported deed of adherence dated August 30, 2001. The Civil Judge (S.D.) passed an ex-partead-interim order on January, 11, 2005 restraining the Defendants from taking and/or implementing any steps that maydilute / jeopardize or otherwise affect Hardy UK’s status as 8.5% shareholder in HOEC.

21


Subsequent to the Original Public Announcement, Hardy UK has filed another Civil Suit being Special Civil Suit No. 118of 2005 on March 11, 2005 against Unocal International Corporation [UIC], BEIL, UBL, HDFC, IL&FS and HOEC beforethe Court of Civil Judge (S.D.), Vadodara, Gujarat [Second Civil Suit] again for Declaration, Injunction and for SpecificPerformance of Hardy UK’s alleged right of pre-emption under the SHA read with the purported deed of adherence datedAugust 30, 2001. On April 5, 2005, BEIL filed an Application for Rejection of Plaint under Order 7 Rule 11 of the Code ofCivil Procedure, 1908 on the ground that the Jurisdiction of Civil Court has been specifically barred as per Section 20Aof the SEBI Act. The said Application was disallowed vide order dated May 27, 2005. HOEC has preferred an Applicationunder Section 45 of the Arbitration and Conciliation Act, 1996 praying for dismissal of the Second Suit and referring theParties to the Arbitration. The Application is pending hearing. No interim relief has been granted by the Civil Judge (S.D.),Vadodara in the Second Suit.


Hardy UK has nominated its Arbitrator before LCIA and is participating in the Arbitration Proceedings. Pending theArbitration, Hardy UK preferred a Petition before the District Judge, Vadodara under Section 9 of the Arbitration andConciliation Act, 1996 for interim relief in similar terms of the ex-parte ad-interim injunction vacated by the Civil Judge(S.D.). The Joint District, Judge, Vadodara vide order dated May 16, 2005 dismissed the Petition of Hardy, UK with costs.Being aggrieved by the said order, Hardy, UK filed an Appeal before the Gujarat High Court. The Appeal filed by Hardywas also dismissed by the Gujarat High Court vide order dated July 20, 2005.


The provisions of the Conditional SPA 2 and Conditional SPA 3 are without prejudice to IL&FS’s, HDFC’s and/or UBL’sstand in the First Civil Suit (which has subsequently been dismissed) and nothing in the Conditional SPA 2 and ConditionalSPA 3 can be or should be interpreted in any way to be contrary to IL&FS’s, HDFC’s and/or UBL’s stand in the First CivilSuit (which has subsequently been dismissed).

Government of India had encashed the Performance Guarantee of Rs. 101.49 lakhs for PG Block abandoned by theConsortium under the force majeure clause of the Production Sharing Contract. The Govt has also raised an additionaldemand of Rs.2154.93 lakhs (including interest) [as at March 31, 2004: Rs. 1931.84 lakhs]. The Company has beenlegally advised that the said actions of the Government are not justified. The Company has initiated legal proceedings asper the provisions of the Production Sharing Contract in the matter. Pending the outcome of this, provision has beenmade in the Accounts in this regard to the extent of Rs. 101.49 lakhs [as at March 31, 2005].

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6. OFFER PRICE AND FINANCIAL ARRANGEMENTS

6.1 Justification of Offer Price

6.1.1 Equity Shares of HOEC are presently listed and traded on BSE and NSE. Equity Shares of HOEC were also listed onDSE, CSE and MSE as on the date of the Public Announcement. However, the Company is in the process of complyingwith the voluntary delisting formalities to get its shares delisted from DSE and CSE in compliance with the provisions ofSEBI [Delisting of Securities] Guidelines 2003. Equity Shares of the Company were also listed on ASE, BgSE and MSE.However, the Company filed applications seeking delisting and the equity shares were accordingly delisted from ASE,BgSE and MSE with effect from January 23, 2005, January 10, 2005 and February 16, 2005 respectively. All the EquityShares of the Company are listed and based on the information available, the Equity Shares of HOEC are frequentlytraded on NSE and BSE.

6.1.2 The details of the trading volumes on NSE, BSE, DSE, CSE and MSE during the 6 months calendar months prior to themonth in which the Public Announcement was made are as follows:

Stock Exchanges Total shares traded Total No. of listed Annualized tradingshares prior to PA turnover as a % of total

number of listed sharesNSE 13,90,41,329 5,87,44,935 473.37BSE 6,96,03,548 5,87,44,935 236.97DSE 0 5,87,44,935 0CSE 51,500 5,87,44,935 0.18MSE 0 5,87,44,935 0

Equity Shares of HOEC are deemed to be frequently traded on NSE and BSE as the annualized trading turnover constitutesmore than 5% of the total number of listed shares in terms of Explanation (i) to Regulation 20(5) of SEBI TakeoverRegulations.

Equity Shares of HOEC are not traded on DSE, and MSE and the trading on CSE is very insignificant, therefore EquityShares are deemed to be infrequently traded on DSE, MSE and CSE as the annualized trading turnover constitutes lessthan 5% of the total number of listed shares in terms of Explanation (i) to Regulation 20(5) of SEBI Takeover Regulations.

National Stock Exchange - NSE

6.1.3 Following are the average of the weekly high and low of the closing prices and volume data for the 26 week period endedon February 14, 2005:

Wk No Week Ending Weekly High Weekly low Weekly Average Volume Traded

26 14-Feb-05 102.10 87.25 94.68 11632048

25 7-Feb-05 90.05 85.75 87.90 2504975

24 31-Jan-05 84.55 83.70 84.13 769998

23 24-Jan-05 90.00 81.85 85.93 2529271

22 17-Jan-2005 88.15 84.90 86.53 4963012

21 10-Jan-2005 87.80 81.30 84.55 1756590

20 3-Jan-2005 88.55 81.60 85.08 2236673

19 27-Dec-2004 88.10 83.70 85.90 1013379

18 20-Dec-2004 91.55 87.90 89.73 2144247

17 13-Dec-2004 88.80 87.75 88.28 1219801

16 6-Dec-2004 92.75 88.90 90.83 2417409

15 29-Nov-2004 93.45 87.65 90.55 1824283

14 22-Nov-2004 91.50 86.90 89.20 1764988

13 12-Nov-2004 93.15 87.85 90.50 3120600

12 8-Nov-2004 94.85 93.45 94.15 3183032

11 1-Nov-2004 96.10 90.40 93.25 7950200

10 25-Oct-2004 92.25 85.15 88.70 7528276

9 18-Oct-2004 84.80 83.45 84.13 3190814

8 11-Oct-2004 89.10 82.70 85.90 9808733

7 4-Oct-2004 86.00 80.10 83.05 11317034

6 27-Sep-2004 79.90 77.55 78.73 7813778

5 20-Sep-2004 81.35 69.40 75.38 15255867

23

Wk No Week Ending Weekly High Weekly low Weekly Average Volume Traded

4 13-Sep-2004 72.35 69.05 70.70 5628800

3 6-Sep-2004 73.70 66.95 70.33 17341840

2 30-Aug-2004 62.40 52.70 57.55 10485247

1 23-Aug-2004 50.15 48.90 49.53 1742767

Average 85.90 80.65 83.27

6.1.4 Following are the price and volume data for the 2 week period ended on February 14, 2005 i.e. the date preceding thedate of PA:

Relevant Dates Daily High Daily Low Daily Average14-Feb-05 104.70 95.75 100.2311-Feb-05 99.40 94.80 97.1010-Feb-05 110.00 96.15 103.089-Feb-05 102.35 87.10 94.738-Feb-05 88.45 85.75 87.107-Feb-05 88.95 85.50 87.234-Feb-05 90.90 87.25 89.083-Feb-05 92.05 88.85 90.452-Feb-05 91.35 87.00 89.181-Feb-05 88.50 83.45 85.982 weeks Average 92.41

(Sources for determination of trading frequency and pricing: NSE web site)

6.1.5 The Offer Price of Rs. 92.41 per Equity Share of Face Value Rs. 10/- each of HOEC is as per the parameters as set outin Regulation 20(4) of SEBI Takeover Regulations and the same is justified as per Regulation 20(11) as follows:

Parameters as per Regulation 20(4) Price per Equity Shareof Rs. 10/- each of HOEC

The negotiated price paid by the acquirer to Unocal International Corporation Rs. 74.41*for the indirect acquisition of shares held by UBL in HOEC as per OffshoreSPA 1 dated February 14, 2005.

The price paid by the Acquirer Company and PAC for acquisitions, if any, Not Applicableincluding by way of allotment in a public or rights or preferential issue,during the 26 week period prior to the date of Public Announcement

Average of the weekly high and low of the closing prices of HOEC during the Rs. 83.2726 weeks preceding the date of PA

Average of the daily high and low prices of HOEC during the 2 weeks Rs. 92.41preceding the date of PA

* US $ 1.70 per share of HOEC (Exchange Rate: 1 US $ = Rs.43.72 on February 14, 2005)

Bombay Stock Exchange - BSE



The negotiated price paid by the acquirer to Unocal International Corporation Rs. 74.41*for the indirect acquisition of shares held by UBL in HOEC as per OffshoreSPA 1 dated February 14, 2005.

The price paid by the Acquirer Company and PAC for acquisitions, if any, Not Applicableincluding by way of allotment in a public or rights or preferential issue,during the 26 week period prior to the date of Public Announcement

Average of the weekly high and low of the closing prices of HOEC during Rs. 83.21the 26 weeks preceding the date of PA

Average of the daily high and low prices of HOEC during the 2 weeks Rs. 92.05preceding the date of PA


24

Stock Exchanges at Delhi, Calcutta and Chennai

6.1.9 Equity Shares of HOEC are deemed to be infrequently traded on DSE, CSE and MSE as there has been no trading onDSE and MSE and very insignificant trading on CSE.



The negotiated price paid by the acquirer to Unocal Rs. 74.41*International Corporation for the indirect acquisition ofshares held by UBL in HOEC as per OffshoreSPA 1 dated February 14, 2005.

The price paid by the Acquirer Company and PAC Not Applicablefor acquisitions, if any, including by way of allotment in apublic or rights or preferential issue, during the 26 weekperiod prior to the date of Public Announcement

Other parameters based on the audited financial 1. Book Value per share Rs. 29.94results for the year ended on March 31, 2004 2. Return on Networth 12.58%

3. Earning Per Share Rs. 3.774. Offer P/E [Price Earning Ratio] Rs. 24.515. P/E multiple for the Industry category,

i.e., “Oil Drilling / Allied Services” is 11.8[Source: “Capital Market” dated January31, 2005 to February 13, 2005]

6. Fair Value of the share keeping in viewSupreme Court decision in HLL case Rs. 54.06

Other parameters based on the unaudited financial 1. Book Value per share Rs. 36.92results for the 9 months period ended on December 2. Return on Networth 18.91%31, 2004 3. Earning Per Share Rs. 6.98

4. Offer P/E [Price Earning Ratio] 13.245. P/E multiple for the Industry category,

i.e., “Oil Drilling / Allied Services” is 11.8[Source: “Capital Market” dated January 31,2005 to February 13, 2005]6. Fair Value ofthe share keeping in view Supreme Courtdecision in HLL case Rs. 54.06


6.1.11 Share price arrived at as per Regulation No. 20(5) of SEBI (Substantial Acquisition of Shares and Takeovers)Regulations in light of Supreme Court Judgment on Hindustan Lever case keeping in view the guidelines oferstwhile Controller of Capital Issues.

A. Net Asset Value [NAV]

Latest audited Balance Sheet available as on the valuation date is for the 12 months period ended on March31, 2004 and forms the basis for estimating the NAV of the Company.

NAV of the Company per share is Rs. 29.94 as on March 31, 2004 and Rs. 36.92 as on December 31, 2004[Annualized based on unaudited published financial results for the 9 months period ended on December 31, 2004.]

B. Market Based Value

The average of daily high and low prices of the shares of HOEC on National Stock Exchange [NSE] for the2 weeks period ended on February 14, 2005 is Rs. 92.41

The average of daily high and low prices of the shares of HOEC on Bombay Stock Exchange [BSE] for the2 weeks period ended on February 14, 2005 is Rs. 92.05

The average of weekly high and low of the closing prices of the shares of HOEC on NSE for the 26 weeksperiod ended on February 14, 2005 is Rs. 83.27

The average of weekly high and low of the closing prices of the shares of HOEC on BSE for the 26 weeksperiod ended on February 14, 2005 is Rs. 83.21

Source for share price and volume data: NSE web site and BSE web site.

Note: Based on the information available, Equity Shares of HOEC are deemed to be frequently traded onBSE and NSE whereas Equity Shares are deemed to be infrequently traded on the Stock Exchanges atDelhi, Calcutta and Madras.

25

C. Profit Earning Capacity Value [PECV]

We have considered the last 3 years’ audited financial results for the period [12 months period ended onMarch 31, 2002, March 31, 2003 and March 31, 2004] for assessing the profits.

It is noticed that average of NAV and PECV is less than 2 weeks average market price on NSE by morethan 20% and hence PECV has been re worked at 11.5% capitalization rate with regard to 3 years’ averagenet profit after tax as stipulated in CCI Guidelines under the head “Fair Value”.

Value of the Equity Share of HOEC based on profit earning capacity would be Rs. 24.28

D. Share Valuation on applying the Principles laid down by Supreme Court in the Judgment onHindustan Lever Case.

Considering Supreme Court decision in HLL Employees Union vs. Hindustan Lever Ltd (1995), 83 Comcase 30, wherein the Hon’ble Court opined that Fair Value for a listed company could be assessed basedon the following weightages:

Net Asset Value 1

Market Based Value 2

Earning Based Value 2

Considering above:

Estimated Fair Value of Equity Share of HOEC is Rs. 50.40 as on March 31, 2004 and Rs. 51.79 as onDecember 31, 2004 [Annualized] whereas Estimated Fair Value of Equity Share of HOEC based on reworked PECV is Rs. 52.66 as on March 31, 2004 and Rs. 54.06 as on December 31, 2004 [Annualized].

Accordingly, Fair Value of Equity Share of HOEC as per Regulation No. 20(5) of SEBI Takeover Regulationsis Rs. 54.06 being the highest of above.

Fair value of the shares of HOEC for the purpose of open offer as per Regulation No. 20(5) of SEBI[Substantial Acquisition of Shares and Takeovers] Regulations, 1997 and subsequent amendments theretois Rs. 54.06 per share.

Justification for offer price

6.1.12 Annualized trading turnover on NSE and BSE are 473.37% and 236.97% which are more than 5% of the totalnumber of listed shares and therefore the shares of HOEC are deemed to be “frequently traded” on NSE and BSEin terms of Explanation (i) to Regulation 20(5) of SEBI Takeover Regulations. As per the parameters set out inRegulation 20(4) of SEBI Takeover Regulations, applicable for companies whose shares are frequently traded, theminimum offer price works out to Rs. 92.41 as illustrated above and the open offer price of Rs. 92.41 is the highestof the parameters as specified in Regulation 20(4) of SEBI Takeover Regulations.

6.1.13 Equity Shares of HOEC are not traded frequently on DSE and MSE and the trading on CSE is very insignificant,therefore the shares of HOEC are deemed to be “infrequently traded” on DSE,MSE and CSE in terms of Explanation(i) to Regulation 20(5) of SEBI Takeover Regulations. As per the parameters set out in Regulation 20(5) of SEBITakeover Regulations, applicable for companies whose shares are infrequently traded, the minimum offer priceworks out to Rs. 54.06 as illustrated above and the open offer price of Rs. 92.41 is the highest of the parametersas specified in Regulation 20(5) of SEBI Takeover Regulations.

6.1.14 None of the parties to Offshore SPA1, Conditional SPA 2 and Conditional SPA 3 has entered into any non competeagreements amongst or between themselves.

6.1.15 Therefore the Offer Price of Rs. 92.41 per Equity Share of Face Value Rs. 10/- each of HOEC is as per theparameters as set out in Regulation 20(4) and 20(5) of SEBI Takeover Regulations and the Offer price is justifiedas per Regulation 20(11) of SEBI Takeover Regulations.

6.1.16 Based on the above, (a) the Managers to the Offer and (b) the Acquirer Company and PAC are of the opinion thatthe Offer Price of Rs. 92.41 per equity share is justified.

6.1.17 The Offer Price is higher than the highest price paid by the Acquirer Company and PAC for any acquisition of EquityShares of HOEC from the date of Public announcement i.e. February 15, 2005 upto 7 working days prior to theclosure of the Offer i.e. August 25, 2005.

Conditional Share Purchase Agreements:

6.1.18 UBL and IL&FS have entered into “Conditional SPA 2” on February 14, 2005, wherein it has been provided that UBLhas the right to acquire 25,23,587 equity shares of Rs. 10/- each representing 4.30% in the paid up equity sharecapital of HOEC held by IL&FS, subject to the terms of the SHA at a negotiated price of Rs.78.30 as per the details

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given in Clause No.2.1.3. UBL and HDFC have entered into Conditional SPA 3 on February 14, 2005 and as perthe Conditional SPA 3, pursuant to the satisfaction of two conditions being (a) receipt of requisite regulatoryapprovals for the acquisition of HOEC shares held by HDFC and (b) completion of the Open Offer by BEIL followingthe acquisition of UBL shares by BEIL, and subject to terms of the SHA, UBL shall have the option to acquire suchnumber of shares, inclusive of and upto 62,87,222 equity shares of Rs. 10/- in total representing 10.70% in the paidup equity share capital of HOEC at a negotiated price of Rs.85.04 as per the details given in Clause No.2.1.7. BeingConditional SPAs, the negotiated prices of the same have not been considered for the purpose of justification ofoffer price above.

6.2 Financial Arrangements

6.2.1 The total funds required for the acquisition of 1,17,48,990 Equity Shares of HOEC in the Open Offer assuming fullacceptance at Rs. 92.41 per Equity share amount to Rs. 1,08,57,24,165/-. Acquirer Company and PAC haveadequate resources to meet the financial requirements of the Offer and sources of funds shall be existing cashresources of BEIL/ UBL.

6.2.2 Acquirer Company has opened an offshore cash escrow account with Natexis Banques Populaires, a Companyincorporated under French law, having its Head Office at 45, rue Saint Dominique, 75007 Paris, France (hereinafterreferred to as “Natexis”) under the name and style of “Burren Energy India – Hindustan Oil Exploration CompanyLtd - Open Offer Escrow Account (BEIL - HOEC -Open Offer Escrow Account)” bearing No. 3K249538000.

6.2.3 Acquirer Company had earlier proposed to fund the above mentioned off shore cash escrow account by way ofdeposits of US$ 19,000,000 equivalent to Rs. 83,06,80,000/- at an exchange rate of Rs. 43.72 per US$ [ExchangeRate as on February 14, 2005] and 3,500,000 Pounds equivalent to Rs. 28,70,70,000/- at an exchange rate ofRs. 82.02 per Pound [Exchange Rate as on February 14, 2005] aggregating to a Rupee equivalent ofRs. 1,11,77,50,000/- which is more than 100% of the total purchase consideration payable under the Offer assumingfull acceptance of the Offer at the aforesaid Offer price.

6.2.4 However, due to the remittance happening around the close of business hours on February 14, 2005 in France,there was limited time available for them on February 14, 2005 to affect the remittance to Natexis BanquesPopulaires, Paris, France. Given the urgency to release the artwork layout to the advertising agency in Mumbai, itwas then decided to fund the escrow account fully with US$ and accordingly at the close of business hours onFebruary 14, 2005 of Natexis Banques Populaires, the above mentioned offshore cash escrow account was fundedfully by way of US$ 25,130,000 equivalent to Rs. 1,09,86,74,856/- which is more than 100% of the total purchaseconsideration payable under the Offer assuming full acceptance at the aforesaid Offer price.

6.2.5 Acquirer Company has confirmed that the funds lying in the above mentioned offshore cash escrow account willbe utilized exclusively for the purpose of the Open Offer. Further, Acquirer Company has obtained a lien markedon the funds lying in the aforesaid cash escrow account by Natexis Banques Populaires in favor of the Managersto the Offer as per the rules prevailing in France.

6.2.6 Application will be filed by the Acquirer Company, Burren Energy India Ltd, London with Foreign InvestmentPromotion Board [FIPB] / Secretariat of Industrial Assistance [SIA] of Government of India [GOI] for their requisiteapproval for transfer of equity shares to be tendered in the open offer by the existing equity shareholders in theirfavor. As soon as requisite approval is obtained from RBI for opening and operating an escrow account in India,Acquirer Company will open a cash escrow account with a scheduled commercial bank in India as per theprovisions of SEBI Takeover Regulations and upon the instructions of the Managers to the Offer, transfer the fundslying in the above mentioned offshore cash escrow account to the said domestic cash escrow account to the extentof 25% of the total purchase consideration payable under the Offer assuming full acceptance at the aforesaid Offerprice in accordance with the Regulations and the balance 75% will remain in off shore cash escrow account withlien marked on the said funds in favor of the Managers to the Offer. Managers to the Offer will be duly authorizedto operate the domestic cash escrow account in compliance with Regulation 28 of SEBI Takeover Regulations.Acquirer Company has undertaken to mark a lien thereon in favor of the Managers to the Offer.

6.2.7 In view of the aforesaid offshore cash escrow deposit which constitutes 100% of the total purchase considerationpayable under the Offer, the Managers to the Offer are satisfied that firm arrangements for financial resourcesrequired to implement the offer i.e. funds and money for payment through verifiable means are in place to fulfill theOffer obligations and are satisfied that Acquirer Company and PAC have the ability to implement the Offer inaccordance with the Regulations.

6.2.8 In the event of any short fall in the cash escrow amount arising on account of exchange rate fluctuations, theAcquirer Company has undertaken to provide additional funds to ensure that the escrow accounts, both off shoreand domestic, collectively, have adequate funds to the extent of 100% of the total purchase consideration payableunder the Offer at all times, to discharge its / their offer obligations irrespective of fluctuations in the exchange rate.

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7. TERMS AND CONDITIONS OF THE OFFER

7.1 The Offer is being made by the Acquirers to (a) all the remaining Equity Shareholders of HOEC whose namesappeared in the Register of Members on Wednesday - February 16, 2005 i.e. Specified Date [except parties toConditional SPA 2 and Conditional SPA 3 i.e. Acquirer Company, PAC and Sellers 2 and 3] and (b) beneficial ownersof the equity shares of HOEC whose names appeared as beneficiaries on the records of the respectiveDepositories, at the close of business hours on Wednesday - February 16, 2005 i.e. Specified Date and (c) to thosepersons who own the Equity Shares of HOEC any time prior to the date of the closure of the Offer i.e. Monday -September 05, 2005 but who are not the registered Shareholders of HOEC, pursuant to SEBI Takeover Regulations.

7.2 The Offer is not subject to any minimum level of acceptance and the Acquirer Company will be obliged to acquirethe equity shares of HOEC that are tendered in the valid form in terms of this offer up to a maximum of 1,17,48,990Equity Shares.

7.3 The Offer will open on Tuesday - August 16, 2005 and close on Monday - September 05, 2005.

7.4 Shareholders who have accepted the offer by tendering the requisite documents in terms of the PublicAnnouncement / Letter of Offer can withdraw the same upto three working days prior to the date of the closure ofthe offer i.e. on or upto Wednesday - August 31, 2005.

7.5 The instructions, authorizations and provisions contained in the Acceptance Form constitute an integral part of theterms of this Offer.

7.6 Each Shareholder of HOEC to whom this Offer is being made is free to offer his shareholding in HOEC in wholeor in part while accepting the Offer. However, parties to Conditional SPA 2 and Conditional SPA 3 i.e. AcquirerCompany and Sellers 2 and 3 are not eligible to tender their shares under the Offer.

7.7 The shares will be acquired by the Acquirer Company free from all liens, charges and encumbrances and togetherwith all rights attached thereto, including the right to all dividends, bonus and rights offer declared thereafter.

7.8 The Offer is subject to receipt of the following statutory and regulatory approvals, and clearances:

(a) Application will be (prior to the date of opening of the offer) filed by the Acquirer with FIPB / SIA of GOI fortheir requisite approval for transfer of equity shares to be tendered in the open offer by resident Shareholdersi.e. individuals and institutions, NRIs/OCBs, Private Corporate Bodies, FIIs, etc in their favor.

(b) Necessary application will be filed with RBI for their requisite permission to (a) open and fund cash escrowaccount in India by way of transfer of funds from the offshore escrow account and (b) open a special accountin India for the purpose of releasing purchase consideration to eligible shareholders after the closure of theOpen Offer.

(c) Acquirers will make an application to RBI/any other authority for their approval (if required) for transfer ofequity shares from above categories of eligible shareholders upon closure of open offer once the basis ofacceptance is determined.

Acquirers do not require any approvals from banks/ financial institutions for the offer.

Besides above, transfer of shares covered in the Conditional SPA 2 and Conditional SPA 3 and theacceptance of shares to be tendered in the open offer are subject to any other non-Indian regulatory approvalsthat may be required and that may become applicable.

As on date no other statutory / other approvals other than those indicated above are required for the Offer.If any other statutory approvals become applicable, the offer would be subject to such approvals. Acquirerswill have a right, in terms of Regulation No. 27 (1)(b) of SEBI Takeover Regulations, not to proceed with theoffer in the event that statutory approvals indicated above are not obtained / refused.

7.9 Now the Open Offer is happening as per the revised activity schedule. SEBI has power to grant extension of timeto Acquirers for payment of consideration to eligible shareholders / beneficial owners, subject to Acquirers agreeingto pay interest for the delayed period as directed by SEBI in terms of Regulation No. 22(12) of the Regulations.If the delay occurs due to willful default of the Acquirers in obtaining requisite approvals, Regulation 22(13) of theRegulations will become applicable.

7.10 Where the Acquirers fail to obtain the requisite approvals in time on account of willful default or neglect or inactionor non-action on its part, the amount lying in the escrow account shall be liable to be forfeited and dealt with inthe manner provided in Regulation 28 of SEBI Takeover Regulations, apart from the Acquirers being liable forpenalty as provided in the Regulations.

7.11 There was no competitive bid.

7.12 As the Offer price cannot be revised during 7 working days prior to the closing date of the Offer, it wouldtherefore, be in the interest of the shareholders to wait till the commencement of that period to know thefinal offer price and tender their acceptance accordingly.

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7.13 The Acquirers / Managers to the Offer will within a period of 45 days of the closure of the Offer inform the StockExchanges and SEBI as to level of acceptance received thereof.

7.14 The acceptance of the Offer of the Acquirers is entirely at the discretion of the Equity Shareholders of HOEC. TheAcquirers will not be responsible for any loss of Equity Share certificate(s) and Offer acceptance documents duringtransit and the Equity Shareholders of HOEC are advised to adequately safeguard their interests in this regard.

7.15 The Acquirers will proceed with the Offer even if they are unable to obtain acceptance to the extent of 1,17,48,990fully Paid-up Equity Shares of face value of Rs. 10/- each of HOEC.

7.16 In the case of shares acquired from non resident shareholders, the Acquirers will not be responsible for any fallin the value of the Rupee due to any fluctuation in the foreign exchange market on account of delay in the approval.

7.17 Accidental omission to dispatch this Letter of Offer to any person to whom this Offer has been made to or non-receipt of this Offer by any such person shall not invalidate the Offer in any way.

7.18 The acceptance must be unconditional and should be sent with the attached form duly filled in, signed by theapplicant Shareholder(s) which should be received by the Registrars to the Offer at the address mentioned in ParaNo. 8.13 on or before Monday - September 05, 2005. If any change or modification is made, the acceptance is liableto be rejected.

7.19 Expenses relating to the Offer will be borne by the Acquirers.

7.20 The Acquirers reserve the right of upward revision of (a) price and (b) number of Shares to be acquired at any timeup to 7 working days prior to the closure of the Offer as per Regulation 26 of SEBI Takeover Regulations. The sameprice would be paid by the Acquirers for all the Shares tendered any time during the Offer and accepted under theOffer. The information about such revision(s), if any, would appear in the same newspapers in which PublicAnnouncement has appeared.

7.21 There are no locked-in shares in the books of HOEC as of date.

8. PROCEDURE FOR ACCEPTANCE AND SETTLEMENT OF THE OFFER

8.1 Shareholders of HOEC who wish to avail this Offer should forward the under mentioned documents by hand deliveryor by registered post or by courier to Intime Spectrum Registry Limited, Registrars to the Offer [details of collectioncenters are given in Para No. 8.13] so as to reach the Registrars on or before Monday - September 05, 2005 ontheir working days during business hours indicated in Para No. 8.13. In the case of dematerialized shares, theRegistrar is not bound to accept those offers which have not yet been credited to the Escrow Depository Participant(DP) account as on the date of Closure of the Offer, i.e. Monday - September 05, 2005. No documents for tenderingthe shares should be sent either to the Acquirers or Managers to the Offer or HOEC.

8.2 Registered Shareholders of HOEC holding physical shares should submit:

The enclosed Acceptance Form duly completed and signed in accordance with the instructions containedtherein by the Equity Shareholders of HOEC in the same order in which they hold Shares in HOEC. The ordercannot be changed or altered nor can any new name be added for the purpose of accepting the Offer.

Original Equity Share Certificate(s).

Valid Share Transfer Deed(s) duly signed as transferors by all shareholders (in case of joint holdings) in thesame order and as per specimen signatures lodged with HOEC. In case the present signature of theshareholder(s) differ from the specimen signatures lodged with HOEC, transfer deeds should be dulywitnessed at the appropriate place by a notary or bank manager or member of stock exchange under theirseal of office and membership number. In each case, the name and address of the attesting authority, attestingauthority’s seal and registration number (if the authority is a notary public/member of stock exchange) or thename and address of the bank (if the authority is a Bank manager) should appear. Further, all attestationsshould be unconditional, i.e. the authority attesting should not deny the responsibility of identifying the personand the signature by qualifying the attestation. If the said guidelines are not followed, Acquirers reserve theright to reject the transfer deed alongwith the application.

8.3 Not withstanding that the signature(s) of the transferor(s) has/ have been attested as aforesaid, if the signature(s)of the transferor(s) differ(s) from the specimen signature(s) recorded with HOEC or are not in the same order, suchequity shares are liable to be rejected under this Offer even if the Offer has been accepted by a bonafide ownerof such equity shares.

8.4 Unregistered Owners of equity shares / Registered shareholders who have not received the Letter of Offer and areholding physical shares should enclose the Acceptance Form which is available on SEBI web site (www.sebi.gov.in),duly completed and signed in accordance with the instructions contained therein or an application in writing on aplain paper with Original Equity share certificates, original broker contract note, valid share transfer deed(s) asreceived from the market stating the name, address, number of shares held, number of shares offered, distinctivenumbers and folio number. All other requirements for valid transfer (including matching of signatures) will beprecondition for acceptance. No indemnity is required from the unregistered owners.

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8.5 In the case of shareholders who have sent their physical share certificates for transfer to HOEC can enclose theacknowledgement if any, received from HOEC. Shareholders who are attaching the acknowledgement arerequested to direct HOEC in writing to retain the share certificates for onward submission to the Registrars to theOffer.

8.6 If required such shareholders, may download the Acceptance Form from the SEBI’s site (www.sebi.gov.in) or mayrequest for the Acceptance Form from the Registrars to the Offer.

PLEASE DO NOT FILL IN ANY OTHER DETAILS IN THE TRANSFER DEED EXCEPT NAME, SIGNATURE ANDWITNESS.

8.7 Procedure for Equity shares held in Dematerialized form - Registered Beneficiary Owners:

Beneficiary owners (holders of shares in Dematerialized Form) who wish to tender their shares will be required tosend their Form of Acceptance cum Acknowledgement along with a photocopy of the delivery instructions in “Off-market” mode or counterfoil of the delivery instruction in “Off-market” mode, duly acknowledged by the DepositoryParticipant (DP) in favor of the escrow demat / depository account.

8.8 Unregistered Beneficiary Owners/ Registered Demat Shareholders who have not received Letter of Offer:

These shareholders can apply on a plain piece of paper giving details like the Name, address, Number of sharesheld, No of shares offered, Depository Details i.e. DP name, DP ID and Client ID along with a photocopy of thedelivery instructions in “Off-market” mode or counterfoil of the delivery instruction in “Off-market” mode, dulyacknowledged by the Depository Participant (DP) in favor of the escrow demat / depository account. Alternatively,they may download the Acceptance Form from the SEBI’s site (www.sebi.gov.in) or may request for the AcceptanceForm from the Registrars to the Offer. All other requirements for valid transfer (including matching of signatures) willbe precondition for acceptance.

8.9 Intime Spectrum Registry Limited, Registrars to the Offer have opened a special depository account under the nameand style of “Intime - BEIL HOEC Escrow Demat A/c” with Infrastructure Leasing & Financial Services Ltd [IL&FS],IL&FS House, Plot No. 14, Raheja Vihar, Chandivali, Andheri East, Mumbai 400072 who is acting as DepositoryParticipant and registered with CDSL. DP ID is 14800 and Client ID is 1601480000035671. ISIN Number is INE345A01011.

8.10 Shareholders having their depository account with a Depository Participant who is registered with NSDL have touse inter-depository delivery instruction slip for the purpose of crediting their shares in favor of the escrow demat/ depository account with CDSL.

8.11 For each delivery instruction, the beneficial owner should submit a separate Acceptance Form.

8.12 The Equity Shareholders should also provide all relevant documents, which are necessary to ensure transferabilityof the Shares in respect of which the acceptance is being sent. Such documents may include (but are not limitedto):

Duly attested death certificate and succession certificate / No Objection Certificates / letters from legal heirs(in the case of single Shareholder) where the original Shareholder has expired.

Duly attested Power of Attorney, if any person other than the Shareholder has signed the Form of Acceptancecum acknowledgement or transfer deed(s).

In case of companies, the necessary corporate authorizations (including Board and General MeetingResolutions) and specimen signatures of authorized signatories.

Any other relevant documents, as deemed necessary.

8.13 The equity shareholders of HOEC who wish to avail of the Offer can deliver all the relevant documents referred toabove to the Registrars to the Offer at the addresses given below (on all days except holidays and Sundays) inaccordance with the instructions specified in the Letter of Offer. Collection centre mentioned below would remainopen from Monday to Friday between 10.00 am and 1.00 pm & 2.00 pm and 4.00 pm and on Saturdays between10.00 am and 1.00 pm.

Address of the Collection Contact Mode of Phone/Centers Person delivery Fax / Email

Intime Spectrum Registry Limited Mr. Vishwas A Hand Delivery / Tel No: 022-55555391-94(Unit : Hindustan Oil Exploration Regd Post / Fax No: 022-55555499Company Limited - HOEC) Speed Post / [email protected], Pannalal Silk Mill Compound CourierL B S Marg, Bhandup - WestMumbai - 400 078

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Address of the Collection Contact Mode of Phone/Centers Person delivery Fax / Email

Intime Spectrum Registry Limited, Mr. Vivek Limaye Hand Delivery Tel No: 022-22694127203, Davar House, [email protected] to Central Camera,D N Road, Fort Mumbai - 400 001

Intime Spectrum Registry Limited, Mr. Sunil S Joshi Hand Delivery Tel No: 0265 2332474 /201 Sidcup Tower, Near Marble Arch, 2312489Race Course Circle, Fax No: 0265 2332474Vadodara - 390 007 Email ID:

[email protected]

Intime Spectrum Registry Ltd., Mr. Sanjiv Kapoor Hand Delivery Tel No: 91 11 51410592 /3 /43rd Floor, A-31, Fax No: 91 11 51410591Naraina Industrial Area, Emil ID:Phase I, New Delhi -110 028 [email protected]

Intime Spectrum Registry Limited, Mr. S.P. Guha Hand Delivery Tel No: 033-22890539/4059C, Chowringhee Road, Fax No: 033-22890539/403rd Floor, Kolkata-700020 (Telefax)

Email ID:[email protected]

8.14 The documents sent by Registered Post/ Speed Post/ Courier or through other means will be at the applicant’s ownrisk and cost.

8.15 All owners (registered or unregistered) of shares of HOEC [except parties to Conditional SPA 2 and ConditionalSPA 3 i.e. Acquirer Company and Sellers 2 and 3], anytime before closure of the Offer are eligible to participatein the Offer.

8.16 Present offer is being made by Acquirers to acquire 1,17,48,990 Equity Shares representing 20.00% of the paid upequity share capital of HOEC following the completion of Offshore SPA 1 and pursuant to Conditional SPA 2 andConditional SPA 3 dated February 14, 2005. In the event that the shares tendered in the Offer by the shareholdersof HOEC are more than the shares to be acquired under the Offer, the acquisition of shares from each shareholderwill be as per the provisions of Regulation 21(6) of the Regulations on a proportionate basis in consultation withthe Managers to the Offer, irrespective of whether the shares are held in physical or dematerialized form.

The shares of HOEC are traded in compulsorily dematerialized mode and the minimum marketable lot is one share.

8.17 Equity shares, if any, that are the subject matter of litigation wherein the shareholder(s) is/ are/ may be precludedfrom transferring the shares during the pendency of the said litigation are liable to be rejected in case directions/orders from competent authority regarding these shares are not received together with the shares tendered underthe Offer. The Letter of offer in such cases, would be forwarded to the concerned competent authority for furtheraction at their end. In case the shares of HOEC are in the name of tainted persons or the transfer of shares werekept in abeyance due to the inclusion of the tainted persons as declared by the Special Custodian under the SpecialAct, offers will not be accepted until the shares are cleared by the Special Court appointed for this purpose.

8.18 Shareholders who have sent their shares for dematerialization need to ensure that the process of getting sharesdematerialized is completed well in time so that the credit in the Escrow demat / depository account should bereceived on or before the date of closure of the Offer, else the application would be rejected.

8.19 The Registrars to the Offer will hold in trust the share certificates, shares lying in credit of the escrow demat/depository account, Form of Acceptance cum Acknowledgement, if any and the transfer form(s) on behalf of theshareholders of HOEC who have accepted the Offer, till the cheques/ demand drafts for the consideration and/ orthe unaccepted shares / share certificates are returned/ dispatched.

8.20 In the case of dematerialized shares, the equity shares would reside in the Escrow Demat/ Depository Account asmentioned above. The Registrars to the Offer will debit the Escrow Demat/ Depository account to the extent ofpayment of consideration made by the Acquirers and give instructions for the credit to the beneficiary account ofthe Acquirers. The Equity shares held in dematerialized form to the extent not accepted as a result of non-payment/part payment of consideration by the Acquirers will be released to the Beneficial Owner’s depository account withthe respective beneficial owner’s depository participant as per details furnished by the Beneficial owner in theAcceptance Form, at the sole risk of the beneficial owner.

8.21 In accordance with Regulation 22(5A) of the Regulations, shareholders who have tendered the requisite documentsin terms of the PA and Letter of Offer shall have the option to withdraw acceptances tendered upto three workingdays prior to the offer closing date. The withdrawal option can be exercised by submitting the documents as perthe instructions given below so as to reach the Registrars to the Offer at the collection centers mentioned aboveas per the mode of delivery indicated therein on or before Wednesday-August 31, 2005.

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8.22 The withdrawal option can be exercised by submitting the form of withdrawal which will be sent to shareholdersalong with the Letter of Offer and the copy of the acknowledgement received from the Registrars to the offer whiletendering the acceptances together with (a) In respect of physical shares – name, address, distinctive numbers,folio number, and number of shares tendered and (b) In respect of dematerialized shares – name, address, numberof shares tendered, DP Name, DP ID, beneficiary account number and photocopy of the delivery instruction in offmarket mode duly acknowledged by DP. In case of non-receipt of form of withdrawal, the above application can bemade on a plain paper.

8.23 The consideration for the equity shares accepted by the Acquirers will be paid by crossed account payee cheques/demand drafts. Such considerations in excess of Rs.1,500/- or unaccepted Share certificates, transfer forms andother documents, if any, will be returned by Registered Post/ Speed post at the shareholders/ unregistered owners’sole risk to the sole / first shareholder. Consideration upto Rs.1,500/- will be dispatched Under Certificate of Posting.It is mandatory that shareholders provide bank account details in the Acceptance Form so that the same can beincorporated in the cheque/ demand draft.

8.24 While tendering shares under the open offer, non resident shareholders (NRI/OCB/FII etc) will be required to submitthe previous RBI/ GOI approvals, if any, which they would have obtained for acquiring the shares of HOEC and NoObjection Certificate/ Tax Clearance Certificate from the Income Tax Authorities under the Income Tax Act, 1961indicating the rate at which the tax is required to be deducted by the Acquirers before remitting the consideration.In case previous approvals as explained above are not submitted, Acquirers reserve the right to reject the sharestendered in the open offer. In case the aforesaid No Objection Certificate/ Tax Clearance Certificate is not submitted,Acquirers will deduct the tax at the current prevailing rates as applicable on the offer price and interest thereon ifapplicable.

8.25 In the case of resident shareholders, the Acquirers will deduct the tax on the interest component exceedingRs.5,000/- at the current prevailing rates as applicable, if applicable. If the resident shareholder requires that no taxis to be deducted or tax is to be deducted at a lower rate than the prescribed rate, he will be required to submitNo Objection Certificate from the Income Tax authorities or a self declaration in Form 15H as may be applicableindicating the rate at which tax is to be deducted by the Acquirers. Shareholders eligible to receive interestcomponent exceeding Rs. 5,000/- would be required to give their PAN for Income Tax purposes. Clauses relatingto payment of interest will become applicable only in the event of Acquirers becoming liable to pay interest for delayin release of purchase consideration.

8.26 Eligible shareholders/ beneficial owners are entitled to receive interest at the rate of 10% pa for the delay in paymentof purchase consideration beyond Wednesday - May 11, 2005, the date by which acceptance/ rejection would havebeen intimated and the corresponding payment for the acquired shares and/ or the share certificates/ shares forthe rejected shares would have been dispatched / returned, as per the schedule in terms of Public Announcementmade on Tuesday, February 15, 2005.

9. DOCUMENTS FOR INSPECTION

Copies/ certified copies of the following documents will be available for inspection at the office of Ind GlobalCorporate Finance Pvt Limited, 19th Floor, Express Towers, Nariman Point, Mumbai 400021 during normal businesshours on any working day i.e. Monday to Friday between 10:00 am and 3:00 pm during the Offer period i.e. fromTuesday - August 16, 2005 to Monday - September 05, 2005.

1. Certificate of Incorporation of BEIL

2. Certificate of Incorporation of UBL

3. Certificate of incorporation of change of name of BEIL

4. Certificate of transfer of incorporation of UBL from Mauritius to Bermuda

5. Memorandum of Association of BEIL

6. Articles of Association of BEIL

7. Audited Annual Report of BE for the year ended December 31, 2003 and Part III, page 44-91 (“FinancialInformation on Burren”) of the Listing Particulars document issued by BE in 2003 in accordance with theFinancial Services and Markets Act, 2000 of England.

8. Financial Statements of UBL for the years ended December 31, 2004, 2003 and 2002

9. Audited financial results of BE for the 9 month period ended September 30, 2004, denominated in £ sterlingand prepared in accordance with UK Generally Accepted Accounting Principles. These financial results havebeen reviewed by the statutory auditors of BE in accordance with the guidance contained in United KingdomAuditing Practices Board Bulletin 1999/4 ‘Review of Interim Financial Information’. This review is substantiallyless in scope than an audit performed in accordance with United Kingdom auditing standards and thereforeprovides a lower level of assurance than an audit. Accordingly, the statutory auditors of BE do not expressan audit opinion on these financial results.

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10. Unaudited financial results of HOEC for the 9 month period ended December 31, 2004 certified by theStatutory Auditors

11. Letter from Natexis Banques Populaires, France confirming (a) deposit in off shore escrow cash account and(b) lien in favor of Managers to the Offer

12. Confirmation from BEIL that off shore escrow funds will be exclusively utilized for the open offer

13. Confirmation from UBL that off shore escrow funds will be exclusively utilized for the open offer

14. Newspaper Clipping of the Public Announcement published on February 15, 2005

15. Board Resolutions passed by BEIL for the acquisition and open offer

16. Board Resolutions passed by UBL for the acquisition and open offer

17. Letter dated July 25, 2005 received from SEBI in terms of the provisions of Regulation 18(2)

18. Offshore SPA 1 entered into between BEIL and Unocal International Corporation to acquire UBL

19. Conditional SPA 2 entered into between UBL and IL&FS

20. Conditional SPA 3 entered into between UBL and HDFC

21. Escrow Depository agreement entered into with Depository Participant

22. Letters from DSE, CSE and MSE certifying price and volume data

23. Applications filed with DSE, CSE and MSE for voluntary delisting and the Delisting confirmation letters.

24. Delisting confirmation letters issued by ASE and BgSE

25. HOEC Share Valuation Report issued by Dinesh Bangar & Co, Chartered Accountants, in terms of Regulation20(5) of SEBI Takeover Regulations

10. DECLARATION BY THE ACQUIRERS

10.1 A copy of the draft Letter of Offer was delivered to (a) the Board of Directors of HOEC and (b) NSE, BSE, DSEand CSE for information and perusal on March 01, 2005.

10.2 (a) Acquirer Company, i.e., BEIL and (b) Directors of the BEIL and (c) Person Acting in Concert [PAC], i.e., UBLand (d) Directors of UBL accept full responsibility for the information contained in this Letter of Offer and also forthe obligations of Acquirer Company and PAC as laid down in Regulation 22(6) of SEBI Takeover Regulations.

10.3 (a) Acquirer Company, i.e., BEIL and (b) Directors of the BEIL and (c) Person Acting in Concert [PAC], i.e., UBLand (d) Directors of UBL are severally and jointly responsible for ensuring compliance with SEBI TakeoverRegulations.

10.4 The Managers to the Offer have ensured that Mr. Andrew Rose, Director, BEIL is duly and legally authorized to signthe Letter of Offer.

For and on behalf ofBurren Energy India Ltd [Acquirer Company] and Unocal Bharat Ltd [PAC]

Sd/-

Andrew RoseAuthorized Signatory

Place : London

Date : August 05, 2005

Encl: 1. Form of Acceptance cum Acknowledgement

2. Transfer Deed (as applicable)

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