Hong Kong Exchange and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

PetroAsian Energy Holdings Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 850) MEMORANDUM OF UNDERSTANDING IN RESPECT OF A POSSIBLE ACQUISITION OF EQUITY INTEREST IN A CRUDE OIL EXPLORATION AND PRODUCTION COMPANY IN KAZAKHSTAN

This announcement is made by PetroAsian Energy Holdings Limited (the "Company" which together with its subsidiaries, the "Group") pursuant to Rule 13.09(2)(a) of the Rules (the "Listing Rules") Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange").
The board of directors of the Company (the "Board") wishes to inform the shareholders of the Company that on 30 January 2013 (after trading hours), the Company entered into a non-legally binding memorandum of understanding ("MOU") with a target company (the "Target Company") and its existing owners (the "Vendors") which are independent of and not connected with the Company and its connected persons (within the meaning of the Listing Rules) regarding a possible acquisition (the "Possible Acquisition") of 100% interest in the Target Company from the Vendors, which if materializes, may constitute a notifiable transaction on the part of the Company under the Listing Rules.

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The term of the MOU shall be for a period commencing from the date of the MOU and ending on 1 July 2013 (both days inclusive) (or such other period as may be agreed by the parties to the MOU) (the "Term") unless it is terminated earlier in accordance with the MOU. The entering into of the formal agreement (the "Formal Agreement") for the Possible Acquisition shall be subjected to, including but not limited to, (i) the satisfactory results of the technical, legal and financial due diligence reviews to be conducted by the Group and (ii) the unanimous agreement of the terms of the Formal Agreement. Each of the parties to the MOU will proceed to the negotiation for a legally-binding Formal Agreement within the Term.
The Target Company is an oil and natural gas exploration and production company currently operating a producing oilfield in the Republic of Kazakhstan. The purpose of the MOU is to establish a collaborative working relationship and timeline between the Group and the Target Company for the purpose of agreeing to the final terms of the Possible Acquisition. Following the execution of the MOU, the Group will perform its necessary due diligence to further explore the Possible Acquisition.

The Board wishes to emphasize that no binding agreement in relation to the Possible Acquisition has been entered into as at the date of this announcement. Accordingly, the Possible Acquisition may or may not proceed. In the event that the Possible Acquisition materializes, the Company will make further announcement in compliance with the Listing Rules as and when appropriate. Shareholders of the Company and other investors are urged to exercise caution when dealing in the securities of the Company.

By order of the Board

PetroAsian Energy Holdings Limited Poon Sum

Honorary Chairman

Hong Kong, 30 January 2013

As at the date of this announcement, the Board comprises (i) four executive directors, namely Mr. Poon Sum, Mr. Wang Bo, Mr. Wong Kwok Leung and Mr. Poon Wai Kong; (ii) one non-executive director, namely Mr. Zaid Latif; and (iii) three independent non-executive directors, namely Mr. Chan Kam Ching, Paul, Mr. Chan Shu Kin and Mr. Cheung Kwan Hung.

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