Panoro Energy ASA

M&A Activity • Oct 21, 2019

Panoro Energy Announces Agreement for the Sale of all its Interest in OML 113, Offshore Nigeria

Panoro Energy Announces Agreement for the Sale of all its Interest in OML 113, Offshore Nigeria

Oslo, 21 October 2019 - Panoro Energy ASA (the "Company" or "Panoro" with OSE

Ticker: "PEN") is pleased to announce that it has entered into a sale and

purchase agreement with PetroNor E&P Limited ("PetroNor"), an exploration &

production oil and gas company listed on the Oslo Axess, to divest all

outstanding shares in its fully owned subsidiaries Pan-Petroleum Services

Holding BV and Pan-Petroleum Nigeria Holding BV (together referred to as

"Divested Subsidiaries") for an upfront consideration consisting of the

allotment and issue of new PetroNor shares with a fixed value of US$ 10 million

(the "Share Consideration") plus a contingent consideration of up to US$ 25

million based on future gas production volumes (the "Transaction").

The Divested Subsidiaries hold 100% of the shares in Pan-Petroleum Aje Limited

("Pan Aje"), which participates in the exploration for and production of

hydrocarbons in Nigeria and holds a 6.502% participating interest, with 16.255%

cost bearing interest, representing an economic interest of 12.1913% in Offshore

Mining Lease no. 113 ("OML 113"). Following completion of the Transaction,

Panoro will have no presence in Nigeria.

John Hamilton, Chief Executive Officer of Panoro said: "We are extremely pleased

to have reached this win-win agreement with PetroNor that perfectly suits both

parties' ambitions. Aje was a non-core asset for Panoro and allows us to further

focus on expanding our organic operations in Tunisia and Gabon while retaining

exposure to the considerable upside at OML 113 through the deferred

consideration. We are very confident that PetroNor has the technical and

financial capabilities along with the depth of expertise and vision to advance

further the next ambitious development phases of Aje in a smooth and efficient

aligned partnership with the operator, YFP."

Further Information

Under the terms of the Transaction, PetroNor has an option to pay a portion of

the Share Consideration in cash, in an event PetroNor's share price reduces to

less than US$ 0.13 per share (based on the current number of shares in issue),

at the time of completion of the Transaction.

By its indirect acquisition of Pan Aje, PetroNor will with effect as of 30 June

2019, assume all the benefits and obligations in relation to Panoro's interest

in the OML 113 operations.

Concurrently, PetroNor is in the process of finalising separate agreements with

the OML 113 operator Yinka Folawiyo Petroleum ("YFP") to create a new holding

company. PetroNor will assume a lead technical and management role in order to

progress the next phases of the project. Together these agreements provide the

framework and pathway towards sanction of the next phases of the Aje project in

order to exploit the substantial gas and liquids reserves and unlock its

significant value.

Completion of the Transaction is conditional upon the execution and completion

of the agreements between PetroNor and YFP, the authorisation of the Nigerian

Department of Petroleum Resources and the consent of the Nigerian Minister of

Petroleum Resources. Securing the authorisation and consent is expected to take

several months with a long stop date agreed by the parties of 31 December 2020,

following which either party is entitled to terminate the Transaction.

Following completion of the Transaction, subject to the terms agreed with

PetroNor on a best efforts basis, Panoro's intention is to declare a special

dividend and distribute the Share Consideration, to the extent received in

shares, to its shareholders. Further information about such a possible dividend,

including the applicable record date, will be given in connection with

completion of the Transaction.

Once Pan Aje has recovered all costs related to the accumulated investments

incurred after the date of completion, PetroNor must pay to Panoro additional

consideration of US$ 0.15 per 1,000 cubic feet of the Aje Natural Gas Sales

Volume, such additional consideration being capped at US$ 25 million (the

"Contingent Consideration").

The Transaction is expected to generate a net gain for Panoro which will be

accounted for in the Financial Statements of Panoro upon closing of the

Transaction. The final amount will depend on the Contingent Consideration.

Following completion, Panoro's production and reserve numbers will be adjusted

to reflect the sale.

Julien Balkany, Chairman of Panoro, commented: "Panoro has been reviewing

options in relation to its Nigerian assets with the objective of potentially

unlocking value of OML 113 for its shareholders. This divestment is consistent

with Panoro's strategy to optimize its E&P portfolio. In addition, through the

contemplated distribution of PetroNor shares to Panoro shareholders, this

transaction provides Panoro's shareholders with the opportunity to directly

retain exposure to OML 113. Panoro remains fully committed to its growth

strategy in Africa for the benefit of its shareholders".

No agreements have been entered or are expected to be entered into, with

shareholders in Panoro or PetroNor, Boards of Directors or senior management in

connection with the Transaction.

Since Panoro's interest in OML 113 is non-operated, the Transaction is not

expected to have any impact of changes to the number of employees, key

management personnel and the Board of Directors within the Company or its

remaining subsidiaries. Details of the key financial information is included in

an Appendix to this announcement. Furthermore, there are no material undisclosed

assets or commitments in addition to those disclosed in the Appendix.

This information is pursuant to the requirements of Oslo Stock Exchange

Continuing Obligations Chapter 3.4.

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 E&P company based in London and listed on

the Oslo Stock Exchange with ticker PEN. The Company holds high quality

production, exploration and development assets in Africa, namely the Dussafu

License offshore southern Gabon, OML 113 offshore western Nigeria, and the TPS

operated assets, Sfax Offshore Exploration Permit and Ras El Besh Concession,

offshore Tunisia. For more information, please visit the Company's website

at www.panoroenergy.com.

Appendix

The below tables show key unaudited production, sales and financial information

including those from the balance sheet and profit and loss account for Pan Aje

on a consolidated basis with the Divested Subsidiaries for the financial years

ended 31 December 2016, 2017 and 2018 and half year ended 30 June 2019:

HY ended  YE 31  YE 31  YE 31 December 2016

30 June December December

2019  2018  2017

Net average daily 373 358 307 515

production (Bopd)

Oil sales (bbls) - 92,842 142,761 113,367 110,539

Net to Panoro

Balance sheet highlights as at:

Amounts in US$ 30 31 December 2018 31 December 2017 31 December 2016

000           June

2019

Assets

Licence and 7,204 7,204 11,768 10,933

exploration

assets

Production 5,529 6,415 3,532 25,143

assets and

equipment

Other current 455 1,113 3,275 1,004

assets

Total assets 13,188 14,732 18,575 37,081

Liabilities

Decommissioning 3,189 2,159 2,039 1,925

liability

Other non 6,847 6,847 6,847              -

-current

liabilities

Other current 3,583 5,940 6,475 1,248

liabilities

Total 13,618 14,947 15,361 3,173

liabilities

Profit and loss highlights for the periods ended:

Amounts in US$ HY 30  YE 31   YE 31  YE 31 December 2016

000 June December December

2019  2018  2017

Oil revenue 6,301 9,474 6,021 5,461

Operating costs (4,188) (7,577) (6,858) (4,558)

EBITDA 2,113 1,897 (837) 903

Impairment and (1,862) (3,282) (34,656) (40,945)

depreciation

General and (57) (130) (190) (132)

administration

costs

Net (82) (1,941) (36,081) (40,443)

income/(loss)

The foregoing information in this Appendix has been extracted from Panoro

group's accounting records after taking into account intercompany group

elimination adjustments that had been included for group consolidation purposes

in the periods presented.