Panoro Energy ASA

M&A Activity • Feb 9, 2021

Panoro Energy Announces Transformational Acquisition of Producing Assets in West Africa and Contemplated Equity Private Placement of US$ 70 million

Panoro Energy Announces Transformational Acquisition of Producing Assets in West Africa and Contemplated Equity Private Placement of US$ 70 million

Oslo, 9 February 2021 - Panoro Energy ASA (the "Company" or "Panoro") is pleased

to announce that it has entered into agreements with Tullow Oil plc and its

subsidiaries ("Tullow") to acquire high-quality oil producing assets offshore

Equatorial Guinea and Gabon for an initial aggregate cash consideration of up to

US$ 140 million and aggregate contingent consideration of up to US$ 40 million,

based on an effective date of 1 July 2020 (collectively the "Acquisitions").

Highlights

· Acquisitions of 14.25% working interest ("WI") in Block G, offshore

Equatorial Guinea, and an additional 10% WI in Dussafu Marin Permit, offshore

Gabon, each from subsidiaries of Tullow Oil plc for initial combined cash

consideration of up to US$ 140 million

· Transformative and highly accretive transactions firmly establishing Panoro

as a leading Africa focussed independent listed E&P

· Purchased at US$ 5.6 per 2P barrel (based on initial consideration) and US$

2.6 per 2P+2C barrel

· Company size increased 3-4x, with the Acquisitions adding 6,900 bopd net WI

production (estimated 2021) and 25 MMbbl net WI 2P reserves[1]

· Reserve life of acquired assets ~13 years, with a payback before capex of

less than 2.5 years based on forward curve[2]

· To be financed through a combination of a contemplated US$ 70 million equity

private placement (the "Private Placement") and an up to US$ 90 million

underwritten debt facility by a company within the Trafigura group of companies

("Trafigura")

· Post the Acquisitions and the related equity and debt financing, Panoro is

expected to be fully financed for all foreseeable capex and production ramp-up

to ~12,000 bopd[2] net

· Strong free cash flow, positioning the Company for dividend payments from

2023[2]

"These truly transformational Acquisitions will establish Panoro as one of the

world's leading independent E&P companies focussed on Africa. We are purchasing

high-quality, low operating cost assets, substantial production and material

reserves in West Africa. These are highly accretive assets that deliver a major

change in our operational and financial profile, and position the Company well

to generate sustainable long-term value for our shareholders." commented John

Hamilton, CEO Panoro Energy ASA.

"We welcome the opportunity to increase our exposure in Dussafu, offshore Gabon,

where Panoro has been an integral part of its success since 2007. In Equatorial

Guinea we are new entrants and look forward to excellent cooperation and working

with the field partners and the Ministry of Mines and Hydrocarbons to grow

further in the country. We look forward to realising the significant upside

potential that we see in these assets through an active and fully funded work

programme.", added John Hamilton.

The Acquisitions

Panoro will acquire i) a 14.25% WI in Block G, offshore Equatorial Guinea (the

"EG Acquisition") and ii) a 10% additional WI in Dussafu Marin Permit

("Dussafu") offshore Gabon (the "Dussafu Acquisition") (collectively, the

"Assets"). Completion of the EG Acquisition and the Dussafu Acquisition,

respectively, are not inter-dependent.

The Assets comprise seven high quality, non-operated oil production fields

within Panoro's core area with combined additional net production of 6,900 bopd

(estimated 2021) and net 2P reserves of 25 MMbbl[1]. The Assets have excellent

operators, low operating costs and significant upside potential with 2C

resources of 29 MMbbl and material exploration potential. Through the

Acquisitions, the Company will increase its net interest in its core asset

Dussafu from 7.5% to 17.5% and achieves significant diversification through the

entry into Block G, offshore Equatorial Guinea, which comprises six producing

offshore fields through the Ceiba and Okume Complex assets. The EG Acquisition

represents a new country entry for Panoro. Following the Acquisitions, Panoro

will hold assets in Gabon, Equatorial Guinea, Tunisia, Nigeria (prior to

completion of the sale of its interests in Aje to PetroNor) and South Africa[3]

and will increase its 2021e production and 2P reserves by 4x and 3x

respectively. Through the Acquisitions, Panoro will be firmly established as one

of the leading independent E&P companies focussed on Africa.

The Acquisitions are conditional on Panoro shareholders approving a contemplated

US$ 70 million equity Private Placement and will also be financed through an up

to US$ 90 million debt facility underwritten by Trafigura (jointly the

"Financing"). Following the Acquisitions and the Financing, Panoro is expected

to be fully funded through all foreseeable capex and expects to be in a position

to pay dividends after first oil from the Hibiscus/Ruche development in Gabon in

2023[2]. In addition to the US$ 90 million debt facility, Trafigura are also

providing a US$ 20 million working capital facility and a US$ 50 million

accordion option.

The Acquisitions are projected to:

· Achieve pay back before capex in less than 2.5 years

· Position Panoro to generate 2021 operating cash flow after tax of

approximately US$ 80 million (based on US$ 55 per barrel, prior to capex, base

case lifting date assumptions)

· Finance all foreseeable capex and debt repayments, allowing dividend

capacity from 2023

· Increase the Company's net WI 2P reserves, 2C resources and 2021e production

by approximately 3x, 8x and 4x respectively

· Be purchased at US$ 5.6 per 2P barrel (based on initial consideration) and

US$ 2.6 per 2P+2C barrel

· Be materially accretive on all standard valuation metrics used in the

industry

· Not result in any material increase to Panoro's corporate cost base, despite

transformational nature of Acquisitions

Block G, Equatorial Guinea (EG Acquisition)

Panoro and its fully owned subsidiary Panoro Energy Holding B.V. have entered

into an agreement with Tullow and Tullow Overseas Holdings B.V. to acquire 100%

of the shares of Tullow Equatorial Guinea Limited ("TEGL") for an initial cash

consideration of US$ 89 million based on a locked box mechanism as at 1 July

2020 and subject to a customary locked box indemnity for a period of 6 months

after completion. TEGL holds a 14.25% non-operated WI in Block G that contains

the Ceiba and Okume Complex assets, offshore Equatorial Guinea (the "EG

Assets"). The EG Assets comprise six producing oil fields in water depths of 50

-850 metres, approximately 35 kilometres from shore. Based on a competent

person's report prepared by TRACS International Limited, the EG Assets hold net

WI 2P reserves of 14.2 MMbbl and net WI 2C resources of 25.6 MMbbl as of 30 June

2020. Current net production is approximately 4,500 bopd, with a potential to

grow - close to 8,000 bopd net in 2023-25 driven by facility upgrades, well

workovers, perforation of behind pipe zones and infill drilling.

Block G is operated by Trident Energy ("Trident") with a 40.375% WI and other

non-operated joint venture partners include Kosmos Energy ("Kosmos") with a

40.375% WI and GEPetrol, the Equatorial Guinea national oil company, with a 5%

revenue interest. Trident and Kosmos acquired their interest from Hess in 2017

and have created a first-class operating partnership, with Trident being

responsible for production operations and optimization, and Kosmos for

exploration and subsurface evaluation. Backed by Warburg Pincus, Trident is a

highly proactive operator specializing in mid-life assets with a strong focus on

achieving growth from untapped potential and efficiencies. Trident is mostly led

by former Perenco executives, a global leading operator of mid-life E&P assets.

The Kosmos team, which originally discovered and managed the Ceiba and Okume

fields, has a strong track record as proven oil finders and brings a deep, long

term understanding of the subsurface performance and nearby exploration

potential at the EG Assets.

With first oil in 2000 (Ceiba) and 2006-11 (the Okume Complex), and combined

production to date of almost 450 MMbbl gross, the EG Assets are well-established

assets with a long production history and track record. With an estimated break

-even of limited capex requirements, the EG Assets are well positioned to weather any

potential prolonged period of low and volatile oil prices.

With its substantial remaining reserves and contingent resources, the EG Assets

have a potential to produce well beyond the current license expiry (2029 for

Ceiba and 2034 for the Okume Complex) and Panoro sees the technical potential to

continue production from the EG Assets until 2050 and beyond.

Through this transformational acquisition, Panoro adds high quality, low cost

and well managed oil producing assets with substantial upside potential. In

addition, it establishes Equatorial Guinea as a new core geographical area for

Panoro.

Ceiba and Okume Complex field details

The Ceiba field was discovered in 1999 and is located in 600-800 metres of water

depth on the slope of the southern Rio Muni Basin approximately 35 kilometres

offshore. Oil production commenced in November 2000, with the field being

developed in phases with production wells tied back to the Ceiba FPSO through a

system of six subsea manifolds and flowlines. The produced liquids are processed

on the Ceiba FPSO for export. The field has 16 active production wells and 10

water injectors. Up to the end of June 2020, the field had produced a total of

204 MMbbl.

The Okume Complex consists of five separate oil fields, Okume, Ebano, Oveng,

Akom North and Elon, that were discovered in 2001-2. All fields are tied back to

a central processing facility (CPF) located at one of the Elon platforms. The

processed oil from the CPF is transported via a 25 kilometres pipeline to the

Ceiba FPSO for export. The Okume Complex fields have 32 active production wells

and 12 water injectors. Up to the end of June 2020, the Okume Complex fields

have produced a total of 237 MMbbl.

Consideration

The consideration for the EG Acquisition consists of an initial cash

consideration of US$ 89 million based on a locked box mechanism as at 1 July

2020 and subject to a customary locked box indemnity for a period of 6 months

after completion, as well as a contingent consideration of up to US$ 16 million

(the "EG Contingent Consideration"). In addition, Tullow will also be entitled

to a US$ 5 million deferred consideration, payable on the later of (a)

completion of the EG Acquisition, or (b) within 2 business days of completion of

the Dussafu Acquisition (as described below).

The EG Contingent Consideration is up to US$ 16 million in aggregate payable

only in years where the average annual net production of the acquired interests

is in excess of 5,500 bopd. Once this initial net production threshold has been

reached, in that year, and for the four consecutive subsequent annual periods,

annual contingent consideration of US$ 5.5 million will be payable to Tullow

provided that the production threshold is met in such annual period and the

average daily Dated Brent oil prices in respect of the annual period is in

excess of US$ 60/bbl, subject to the aforementioned cap of US$ 16 million.

The completion of the EG acquisition is expected during H1 2021.

Dussafu Acquisition

Panoro and its fully owned subsidiary Pan Petroleum Gabon BV, have entered into

an agreement with Tullow and Tullow Oil Gabon SA to acquire a 10% WI in the

Dussafu Marin Permit, offshore Gabon for an initial cash consideration of US$ 46

million based on an effective date of 1 July 2020 which is subject to customary

working capital and other customary adjustments to be made at completion. Panoro

currently holds 7.5% WI in Dussafu and upon completion of the Dussafu

Acquisition, the Company will increase its WI to 17.5%. The Dussafu Acquisition

will significantly increase Panoro's exposure to the near-term production and

considerable upside potential from this high-quality asset. Following completion

of the Dussafu Acquisition, Panoro's net WI 2P reserves at Dussafu will be

approximately 19 MMbbl, and net WI production from the field is expected to

increase from 1,200 bopd to approximately 2,800 bopd (2021 operator estimate).

Having been a partner in Dussafu since 2007, Panoro has a deep knowledge of the

block and its potential. Located in a prolific fairway offshore Gabon, Dussafu

has an outstanding track record with 15 consecutive successful well penetrations

and an increase in resource base from 7 MMbbl in 2010 to +150 MMbbl in 2019,

excluding the +100 MMbbl additional resource potential identified on the

Hibiscus field during 2020.

Dussafu is currently producing approximately 15,000 bopd gross from four wells

at the Tortue field, which is expected to increase to ~20,000 bopd during 2021

with the addition of two additional Tortue wells. Through the Hibiscus/Ruche

development, consisting of the Hibiscus and Ruche fields, production is expected

to grow to ~40,000 bopd in 2023 with further growth potential from

Hibiscus/Ruche phase 2.

A minimum of one exploration well is planned to be drilled in Q2 2021 into the

greater Hibiscus structure, with another optional well being considered for Q3.

As with the EG Assets, Dussafu benefits from a break-even oil price of 25/bbl with a substantial production growth ahead.

Consideration

The consideration for the Dussafu Acquisition consists of an initial cash

consideration of US$ 46 million (to be adjusted at completion for working

capital and other customary adjustments) and a contingent consideration of up to

US$ 24 million (the "Dussafu Contingent Consideration").

The effective date of the Dussafu Acquisition is 1 July 2020 and completion is

expected during H1 2021.

The Dussafu Contingent Consideration of up to US$ 24 million may be payable once

commercial production commences on Hibiscus and Ruche and achieves daily

production equal to or greater than 33,000 bopd gross over any 60-day continuous

period. Once this milestone has been met, annual contingent consideration will

apply to that year and to each of the subsequent four years where the average

daily Dated Brent oil price is in excess of US$ 55 per barrel, subject to the

US$ 24 million cap. Where the oil price threshold has been met, the Dussafu

Contingent Consideration payable for that year will be based on 15% of net free

cashflow after all taxes, operating and capital costs from the acquired 10% WI.

The contingent payment will be capped for any year at US$ 5 million.

Julien Balkany, Chairman of Panoro added: "These two very attractive and highly

value accretive acquisitions perfectly complement our existing upstream E&P

portfolio in West Africa and represent a major step in the execution of Panoro's

ambitious growth strategy to continue building a balanced full-cycle E&P company

focused on Africa. We are proud and excited to strengthen our position in Gabon

and to enter Equatorial Guinea and intend to deliver strong returns for all the

stakeholders involved."

Funding of the Acquisitions

Trafigura, one of the world's leading independent commodity trading and

logistics houses is providing a fully underwritten acquisition finance loan

facility of up to US$ 90 million to Panoro to partially finance the

Acquisitions. The loan will be made available in two tranches, Tranche A of up

to US$ 55 million in respect of the EG Acquisition and Tranche B of up to US$ 27

million in respect of the Dussafu Acquisition; provided that Tranche B shall

automatically increase to up to US$ 35 million upon the completion of the EG

Transaction. Tranche A and Tranche B can be drawn separately and are not

conditional on each other. Each loan will amortise over a period of 5 years, and

carries an annual interest rate of 3M LIBOR plus 7.5%. Amongst other fees under

the terms agreed, the loan facility is being made available against the issuance

of US$ 562,500 worth of Panoro shares issued in conjunction with, and in

addition to the shares issued in, the Private Placement. As part of this

transaction, Trafigura will also provide (i) in addition to the acquisition

financing facilities, a working capital facility of up to US$ 20 million to

address the irregular nature of crude liftings; and (ii) crude oil marketing.

Panoro and Trafigura have signed a binding commitment letter for this debt

financing subject to long form financing documentation and certain customary

conditions precedent being fulfilled. An accordion option for an additional US$

50 million is included alongside (and in addition to) the acquisition finance

facilities. There is no long-term oil price hedging obligation, although Panoro

will seek to hedge a portion of near term production to manage price risk for

its lifting schedule.

In addition, as separately announced today, Panoro is launching the Private

Placement where the net proceeds will be used to partially finance the

Acquisitions, and related fees and expenses as well as for general corporate

purposes. The Company's two largest shareholders, Sundt AS and Kistefos AS, have

committed to subscribe,  and will be allocated offer shares, for an amount of

NOK 100 million and NOK 85 million (USD 10 million) respectively, which

corresponds to more than their pro-rata share of the Private Placement. In the

event that one or both Acquisitions do not close, the net proceeds will (in

whole or in part) be used for general corporate purposes.

The Private Placement will trigger a requirement to publish a prospectus, which

will include pro forma financial information with respect to the Acquisitions.

As Panoro is also proposing to include a subsequent offering, the prospectus

will be a joint listing and offering prospectus expected to be published shortly

after the extraordinary general meeting of Panoro, scheduled to be held on or

around 3 March 2021.

Conditions precedent to the Acquisitions

The Dussafu Acquisition is subject to customary governmental notifications and

non-objection to the transaction, and joint venture consents. Each Acquisition

is subject to Panoro's shareholders approving the Private Placement and

completing the Trafigura acquisition finance loan facility. In addition, the EG

Acquisition is subject to Tullow's general meeting of shareholders approving the

disposal of their EG subsidiary. There are no pre-emptive rights for the

Acquisitions.

Under each Acquisition agreement, Panoro or the relevant Tullow seller, are

required to pay to the other a break fee of US$ 2 million if it fails to carry

out its obligations with respect to the satisfaction of the conditions precedent

or fails to undertake its completion obligations.

Expected timetable of key events

EVENT EXPECTED TIMING

Commencement and close of Book Commencement of book-building: 9

-build period Private February 2021Expected close: 10 February

Placement 2021

Panoro EGM On or around 3 March 2021

Publication of prospectus Expected shortly after the date of the

EGM

Execution of Financing Expected on or about the date of the EGM

Date of Tullow general meeting Fifteen clear days after issuance of

of shareholders Tullow's Class 1 circular and meeting

notice

Completion under the Expected during H1 2021

Acquisition Agreements

No agreements for the benefit of members of the board or management of Panoro

have been or will be entered into in connection with the Acquisitions.

Mildwaters Consulting LLP and Advokatfirmaet Schjødt have acted as legal counsel

to Panoro in connection with the Acquisitions.

A corporate presentation will be available shortly on Panoro's website

www.panoroenergy.com and the Company will hold a webinar presentation for

Investors at 8.30am CET on 10 February 2021.

The webinar presentation can be accessed through registering at the link below

and the online event will be equipped with features to ask live questions.

Joining instructions for participating online or through using local dial-in

numbers will be available upon completion of registration.

Date and 10 February 2021, 08:30 .a.m. CET

Time:

Registration: https://register.gotowebinar.com/register/5255107441268667664

After registering, participants will receive a confirmation

email containing information about joining the webinar.

Participants can use their telephone or computer microphone and

speakers (VoIP).

Notes

Estimates per the Competent Person's Reports (CPR) from TRACS International

Limited (TRACS) and Netherland, Sewell & Associates Inc (NSAI).

2. Management estimates based on prevailing oil prices.

3. The Aje asset in Nigeria is in the process of being divested to PetroNor

E&P South Africa is subject to completion of transaction.

Enquiries:

John Hamilton, Chief Executive Officer

Qazi Qadeer, Chief Financial Officer

Tel:     +44 203 405 1060

Email: investors@panoroenergy.com

About Panoro Energy

Panoro Energy ASA is an independent exploration and production company based in

London and listed on the main board of the Oslo Stock Exchange with the ticker

PEN. Panoro holds production, exploration and development assets in Africa,

namely the Dussafu License offshore southern Gabon, OML 113 offshore western

Nigeria (held-for-sale, subject to completion), and the TPS operated assets,

Sfax Offshore Exploration Permit and Ras El Besh Concession, offshore Tunisia.

Subject to completion of certain conditions, Panoro has also farmed-into an

exploration Block 2B, offshore South Africa.

For more information visit the Company's website at www.panoroenergy.com.

IMPORTANT NOTICE

This announcement is not and does not form a part of any offer to sell, or a

solicitation of an offer to purchase, any securities of Panoro Energy ASA. The

distribution of this announcement and other information may be restricted by law

in certain jurisdictions. Copies of this announcement are not being made and may

not be distributed or sent into any jurisdiction in which such distribution

would be unlawful  or would  require registration  or other  measures. Persons

into whose possession this announcement or such other information should come

are required to inform themselves about and to observe any such restrictions.

The securities referred to in this announcement have not been and will not be

registered under the U.S.  Securities Act of 1933, as amended (the "Securities

Act"), and accordingly may not be offered or sold in the United States absent

registration or an applicable exemption from the registration requirements of

the Securities Act and in accordance with applicable U.S. state securities laws.

The Company does not intend to register any part of the offering or their

securities in the United States or to conduct a public offering of securities in

the United States. Any sale in the United States of the securities mentioned in

this announcement will be made solely to "qualified institutional buyers" as

defined in Rule 144A under the Securities Act.

In any EEA Member State, this communication is only addressed to and is only

directed  at qualified investors in that Member State within the meaning of the

Prospectus Regulation, i.e., only to investors who can receive the offer without

an approved prospectus in such  EEA Member State. The expression "Prospectus

Regulation" means Regulation 2017/1129 as amended together with any applicable

implementing measures in any Member State.

This communication is only being distributed to and is only directed at persons

in  the United   Kingdom that are (i) investment professionals falling within

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Promotion) Order 2005, as amended (the "Order") or (ii) high net worth entities,

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Matters discussed in this announcement may constitute forward-looking

statements. Forward-looking statements are statements that are not historical

facts and may be identified by words such as "believe", "expect", "anticipate",

"strategy", "intends", "estimate", "will", "may", "continue", "should" and

similar expressions. The forward-looking statements in this release are based

upon various assumptions, many of which are based, in turn, upon further

assumptions. Although the Company believes that these assumptions were

reasonable when made, these assumptions are inherently subject to significant

known and unknown risks, uncertainties, contingencies and other important

factors which are difficult or impossible to predict and are beyond its control.

Actual events may differ significantly from any anticipated development due to a

number of factors, including without limitation, changes in investment levels

and need for the Company's services, changes in the general economic, political

and market conditions in the markets in which the Company operate, the Company's

ability to attract, retain and motivate qualified  personnel, changes in the

Company's ability to engage in commercially acceptable acquisitions and

strategic investments, and  changes  in  laws and regulation and the potential

impact of legal proceedings and actions. Such risks, uncertainties,

contingencies and other important factors could cause actual events to differ

materially from the expectations expressed or implied in this release by such

forward-looking statements. The Company does not provide any guarantees that the

assumptions underlying the forward-looking statements in this announcement are

free from errors nor does it accept any responsibility for the future accuracy

of the opinions expressed in this announcement or any obligation to update or

revise the statements in this announcement to reflect subsequent events. You

should not place undue reliance on the forward-looking statements in this

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The information, opinions and forward-looking statements contained in this

announcement speak only as at its date, and are subject to change without

notice. The Company does not undertake any obligation to review, update,

confirm, or to release publicly any revisions to any forward-looking statements

to reflect events that occur or circumstances that arise in relation to the

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Neither the Company nor any of their respective affiliates makes any

representation as to the accuracy or completeness of this announcement and none

of them accepts any responsibility for the contents of this announcement or any

matters referred to herein.

This announcement is for information purposes only and is not to be relied upon

in substitution for the exercise of independent judgment. It is not intended as

investment advice and under no circumstances is it to be used or considered as

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-12 the Norwegian Securities Trading Act.