LASMO: Chairman's Speech to Shareholders at Annual General Meeting.

Business Editors

LONDON--(BUSINESS WIRE)--May 5, 2000

LASMO plc (NYSE:LSO), the international oil and gas exploration and production company, announced that, today, at LASMO's Annual General Meeting, Chairman Rudolph Agnew made the following comments.

"Before moving on to the formal business of the meeting I would like to make a few brief remarks concerning both the current business environment and LASMO's performance. I will then hand over to our Chief Executive, Joe Darby, to describe the Company's achievements over the past year and prospects for growth in more detail.

In summary, 1999 was a year of contrasting fortunes. From an operational and financial viewpoint the Company performed extremely well, delivering record cash flow and profits and ending the year with a very sound balance sheet. In contrast however, despite this strong performance and despite the rise in oil price from the lows of 1998, our share price has continued to drift down to a level which does not reflect the true value of the business. This is of major concern to the Board.

The last 12 months has seen the Company:

-- make good progress in our exploration and development

programs;

-- implement operational efficiencies in our producing assets;

-- drive down our breakeven price to around $12.75 from $15 per

barrel a year ago;

-- implement a major organizational change program delivering

important overheard savings; and last, but by no means least

-- acquire and integrate Monument Oil & Gas which has provided

further quality assets and contributed significantly to our

balance sheet strength.

During 1999, with the average price of Brent oil at $17.86 per barrel, LASMO generated (pounds)113 million of profit after tax, and an additional (pounds)41 million of exceptional profit relating to asset disposals. Total net cash inflow amounted to over half a billion pounds. This was outstanding performance and to reflect your Board's confidence in the strength of the underlying business, we propose increasing the ordinary dividend from 2.3p to 2.5p.

In addition, as portfolio management will continue to feature as a key element of our business, we have outlined a distribution policy which seeks to ensure shareholders benefit from this activity. As we create value through the asset market and realize significant exceptional profits, we will consider returning some of that value to shareholders through the most tax-efficient mechanism available, subject of course to the business environment and our investment requirements. To that end, we are seeking powers at this meeting to repurchase up to 10% of the Company's outstanding equity.

We have emerged from 1999 a much stronger Company that is well financed, profitable and has excellent growth prospects. However, the severe under-valuation represented by the current share price remains your Board's principal concern. The market continues to be absorbed by "new" versus "old" economy issues at a time when the fundamentals of our business have never been stronger. We have not seen oil prices sustained at these levels since the 1980's, and achievements in prudent capital management and cost reduction, as well as our position for top line growth have yet to be recognized in the value of our stock.

As a result of the Monument acquisition, we welcomed two new non-executive directors to the Board, Tim Eggar and Thierry de Rudder. Tim has now taken a full time role with ABN Amro, and has resigned from the Board. Resolution 3 seeking his reappointment will not be put to the meeting.

Needless to say, the year presented significant challenges to the staff and management alike, and I am pleased to say they have risen to the occasion magnificently. The talented management team under Joe Darby, many of whom are here today, have demonstrated the qualities necessary to deliver performance under tough conditions.

Year 2000 is set to be another record year for financial performance as oil prices have averaged almost $27 per barrel over the first quarter, and over the next 18 months the forward curve is still holding up above $20 per barrel despite the recent OPEC decision to increase production. Our strategy is sound, focusing on increasing shareholder return through further improvement in business efficiency, cost reduction and a disciplined approach to capital management to achieve future growth while maintaining a strong balance sheet.

With the Company in such good financial shape and delivering sound operational performance, I am announcing today that I am stepping down as Chairman and handing over to Antony Hichens. I have been Chairman of LASMO for 6 years, a most interesting period in the Company's development which I have enjoyed immensely. The timing of this hand-over will allow Antony a full three-year term as Chairman. Antony's strengths are well known to both myself and the rest of the Board. I have worked with Antony for many years and he has supported me as Deputy Chairman for the last five years. I wish him every success in his new role."

LASMO's shares trade on the London and New York Stock Exchanges. Shares are quoted on the SEAQ System, and prices may be accessed on the Reuter Equities 2000 Service under the symbol LSMR.L and on Quotron under the symbol LSMRU.EU. For further information, visit LASMO's web page at http:\\www.lasmo.com.