AOGL.L Regulatory News (AOGL)

The following amendment has been made to the 'Placing, Investment in Heavy Oil Project in Utah and Issue of Equity' announcement released on 16 November 2017 at 7.00am under RNS No 6474W.

In the section headed 'Deloro acquiring 49% interest in Asphalt Ridge' the last sentence of the last bullet point should have read 'Following Mayan's investment it is expected to have approximately US$2.9million in cash and Mayan shares and no material liabilities'. In the original announcement it read 'approximately US$2.9million in cash' which should have been 'approximately US$2.9million in cash and Mayan shares'

In addition, in the section headed 'The Deloro, Petroteq Memorandum of Understanding', the last sentence should have read 'Following Mayan's investment it is expected to have approximately US$2.9million in cash and Mayan shares and no material liabilities'. In the original announcement it read 'approximately US$5.3million in cash' which should have been 'approximately US$2.9million in cash and Mayan shares'.

All other details remain unchanged.

The full amended text is shown below.

Mayan Energy Ltd / Index: AIM / Epic: MYN/ ISIN: VGG6622A1057 / Sector: Oil and Gas

16 November 2017

Mayan Energy Ltd ("Mayan" or "the Company")

Placing, Investment in Heavy Oil Project in Utah and Issue of Equity

Mayan (AIM: MYN), the AIM listed oil and gas company, is pleased to announce that it has raised £ 2,000,000 (before expenses) via an oversubscribed Placing with institutional and private investors (the "Placing") of 333,333,333 new ordinary shares of no par value each (the "Placing Shares") at a price of 0.6p per share (the "Placing Price"). The Placing was arranged by Mayan and Novum Securities Limited and the Placing Price represents a premium of 60.5% to the Company's 30 day VWAP. At the same time Mayan has also agreed to issue 30,192,305 Ordinary Shares at the Placing Price in settlement of adviser fees and outstanding creditors ('Adviser and Settlement Shares'). 

In addition, Mayan has agreed to invest US$1,505,000 (the "Investment") into Deloro Energy LLC ("Deloro"). The investment is to be effected by way of US$ 1,005,000 paid from the proceeds of the Placing, and US$500,000 settled by way of 64,102,564 Ordinary Shares at the Placing Price (the "Deloro Investment Shares"). Deloro, is a newly formed private company which has been established to acquire a 49% interest in the Asphalt Ridge heavy oil project in Utah, USA ('Asphalt Ridge') which is being 'spun out' of TSX listed Petroteq Energy Inc ("Petroteq"). 

In total 432,692,304 Ordinary shares will be issued at the Placing Price, and it is expected that Admission will become effective and dealings in the Placing, Deloro Investment Shares, Adviser and Settlement Shares will commence on or around 22 November 2017. 

Other than the investment in Deloro, the proceeds of the Placing will provide working capital for the Company's US operations where an ongoing development programme is successfully underway, targeting an initial near term 300-500 bopd (net to Mayan) across its existing onshore assets.

Investment Highlights

Asphalt Ridge: a 2,230 acre heavy oil project with significant resources and near-term development potential

· 87 Million Stock Tank Barrels ("STB") contingent resource in place

· Highly attractive economics/Net present Values- ("NPV") both at discount rates of 5% (NPV5) and 10% (NPV10), as determined by Chapman Petroleum Engineering in their Nov 2017 Contingent Resource report:

o $107m pre-tax NPV5 (post tax NPV5: US$73m) low estimate (1,000bopd)

o $269m pre-tax NPV5 (post tax NPV5: US$187m) best estimate (2,500bopd)

o $557m pre-tax NPV5 (post tax NPV5: US$399m) high estimate (5,000bopd)

o $55m pre-tax NPV10 (post tax NPV10: US$35m) low estimate (1,000bopd)

o $135m pre-tax NPV10 (post tax NPV10: US$90m) best estimate (2,500bopd)

o $280m pre-tax NPV10 (post tax NPV10: US$196m) high estimate (5,000bopd)

· Defined development programme to rapidly increase production utilising the existing Asphalt Ridge plant, Petroteq's patented processes (49% of which is being acquired by Deloro) and Deloro's proprietary technology:

o 1,000 barrels oil per day ("bopd") targeted by February 2018;

o 5,000+ bopd targeted for 2019 -expansion to 2,500bopd and 5,000 bopd expected to be largely debt funded;

o 6 months continuous production at 1,000 bopd triggers upgrade of a materially significant portion of the existing 87 MMSTB Contingent resources to P1/P2 reserves.

· Low cost/high margins: anticipated all in costs of US$18-25 per barrel ("Bbl") expected to generate netback margins of US$15-20 per Bbl (at US$45 Bbl oil);

Deloro acquiring 49% interest in Asphalt Ridge

· Deloro has entered into an MOU with Petroteq to acquire a 49% interest in the Asphalt Ridge project for a total consideration of US$10million, in the form of convertible loan notes, payable as follows:

o Tranche 1: US$2.5million due immediately to fund completion of plant upgrades and start-up of initial production;

o Tranche 2: US$3.5million due once plant is operating at greater than 1,000 bopd for more than 30 days and

o Tranche 3: US$3.95million due on or before by 1 June 2018.

· Petroteq and Deloro will enter into a Joint Operating Agreement in due course and Petroteq will retain operatorship of the Asphalt Ridge project;

· The disposal by Petroteq of its 49% interest in Asphalt Ridge is conditional on approval by its Shareholders at a General Meeting which is expected to be convened following completion of Tranche 3 of the funding as detailed above; Mayan will update investors once this has been completed.

· As a newly formed "specific purpose investment vehicle", Deloro has no historic turnover or losses. Following Mayan's investment it is expected to have approximately US$2.9million in cash and Mayan shares and no material liabilities. 

Mayan acquiring an effective 8.3% interest in Asphalt Ridge via investment in Deloro

· Mayan has agreed to acquire an interest of 17.6% in Deloro for US$1.5005million, payable as follows:

o Acquisition of US$1,005,000 worth of 350 new Deloro units being issued at US$4,300 per Deloro unit; and

o Acquisition of new Deloro units being issued at US$4,300 per Deloro unit, in exchange for the issue of US$500,000 of Mayan shares issued to Deloro at the Placing price (the "Deloro Investment Shares ") and subject to a three month lock in period, expiring 31 January 2018.

· Deloro will use the US$1.5005m invested by Mayan along with money raised from other third parties to fund the Tranche 1 and part of the Tranche 2 payments in respect of Deloro's acquisition of a 49% interest in and plant expansion of Asphalt Ridge

· Intention to rollout both locally and globally Petroteq's patented process technology, which is proven to unlock heavy oil without generating greenhouse gases or waste

o A number of suitable deposits already identified

Issue of Equity to Creditors, Advisors and Directors

· Issue of 30,192,305 Ordinary shares to creditors to settle amounts owed and certain advisors at the Placing Price (the "Settlement Shares")

· In addition, it is proposed to issue 5,064,102 new Ordinary Shares to two Directors at the Placing price (the "Deferred Settlement Shares"); such shares to be issued in settlement of accrued salary owed. A further announcement will be made once this has been completed.

Eddie Gonzalez, Managing Director, said: "With a programme at Asphalt Ridge to commence production of 1,000 bopd gross by February 2018, the Asphalt Ridge investment is in line with our new strategy of acquiring interests where production can be significantly enhanced by applying the advanced techniques, technologies and experience that are now available to us. Thanks to a US$269m pre-tax NPV5 best estimate, Mayan's 8.3% interest in the Asphalt Ridge project will provide significant asset backing to Mayan from the outset and we believe this will increase going forward as Asphalt Ridge production milestones are met. Together with activities across our existing asset base in Texas and Oklahoma -where we are targeting an initial increase in production of 300-500bopd (net to Mayan)- the next few months will not be short of high impact value trigger events, and I look forward to providing further updates on our progress."

Related Party Transaction

Eddie Gonzalez and Charlie Wood, respectively Chief Executive Officer and Chairman of Mayan, each presently have an interest of 17.1% in Deloro while David Kahn, an 11.36% shareholder in Mayan, also is a 17.1% shareholder in Deloro. As such Mayan's investment in Deloro constitutes a related party transaction in accordance with AIM Rule 13. Accordingly, JD McGraw, a Non-Executive Director at Mayan, who is independent of the Deloro investment, having consulted with the Company's Nominated Adviser, considers the terms of the investment to be fair and reasonable insofar as Mayan's shareholders are concerned. In forming this opinion, JD McGraw has taken into account the conclusions of an independent valuation report prepared by Chapman Petroleum Engineers on Deloro, and in particular the NPV10 of the Asphalt Ridge Project and the synergies with Mayan's existing business this investment is expected to exploit. Further reassurance also comes from an independent valuation report which values Mayan's stake in Deloro in a range of US$ 3.4 - 4.2 million. 

Placing Details, Issues of equity and Total Voting Rights ("TVR")

The Placing

Mayan has raised gross proceeds of £2,000,000 through the placing of 333,333,333 Ordinary Shares at the Placing Price. The Placing is conditional on Admission and application will be made for the Placing Shares, which will rank pari passu with the existing Ordinary Shares, to be admitted to trading on AIM (the "Admission"). 

Issue of Shares to Creditor and Advisors

Mayan has also agreed to issue 30,192,305 Ordinary Shares at the Placing Price in settlement of £ 181,154 in adviser fees and outstanding creditors (the 'Settlement Shares').

Issue of Shares to Deloro (the "Deloro Investment Shares")

Mayan has also agreed to issue 64,102,564 Ordinary Shares at the Placing Price in settlement of the remaining investment of US$ 500,000 (£ 384,615) in Deloro.

It is expected that Admission will become effective and dealings in the Placing Shares, Consideration Shares, Deloro Investment Shares and Settlement and Adviser Shares will commence on or around 22 November 2017. The Deloro Investment Shares are subject of a three month lock in period, expiring 31 January 2018.

Warrants

In connection with the Placing, Mayan has issued 23,333,333 warrants to subscribe for new shares in Mayan to two direct placees and the Brokers, and these are exercisable at the Placing Price within two years from admission of the Placing Shares.

Share Capital and Total Voting Rights ("TVR")

Following the issue of the 432,692,304 Placing, Settlement and Adviser and Deloro Investment Shares Mayan's issued share capital will consist of 1,166,335,931 Ordinary Shares of no par value with voting rights. No Ordinary Shares are held in treasury at the date of this announcement and therefore following the Admission, the total number of Ordinary Shares in Mayan with voting right will be 1,166,335,931.

The above total voting rights figure may be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in the Company.

The Deloro, Petroteq Memorandum of Understanding

· Deloro is a newly formed private company which has entered into an MOU with Petroteq Deloro has entered into a joint venture arrangement with Petroteq under which Deloro will invest in a project that:

o holds the right to explore, mine, extract, product and sell or dispose of oil sands, bitumen, asphalt and other hydrocarbon substances and minerals in and within certain lands and properties situated in Uintah County, State of Utah, in the United States ("the Asphalt Ridge project") that comprises: 250 bopd plant & equipment; 87 MMSTB's of contingent reserves; and intellectual property relating to the processing and extraction technology and land title; and

o owns an oil sands processing facility, having a processing capacity of 250 bopd;

· and subject to the investment of an aggregate amount in stages of US$10m by Deloro, it will earn up to a 49% interest in the Asphalt Ridge project in the form of convertible loan notes, payable as follows:

o Tranche 1 of US$2.5million due immediately to fund completion of plant upgrades and start-up of initial production;

o Tranche 2 of US$3.5million due once plant for more than 30 days is operating at greater than 1,000 bopd, and

o Tranche 3 of US$3.95million due on or before by 1 June 2018.

· Petroteq and Deloro will enter into a Joint Operating Agreement in due course and Petroteq will retain operatorship of the Asphalt Ridge project;

The disposal by Petroteq of its 49% interest in Asphalt Ridge is conditional on approval by its Shareholders at a General Meeting which is expected to be convened following completion of Tranche 3 of the funding as detailed above. 

As a newly formed "specific purpose investment vehicle", Deloro has no historic turnover or losses. Following Mayan's investment it is expected to have approximately US$2.9million in cash and Mayan shares and no material liabilities. 

The Mayan Deloro Investment Agreement

· Mayan has agreed to acquire an interest of 17.6% in Deloro for US$1.5million, payable as follows:

o Acquisition of US$1,005,000 worth of 350 new Deloro units being issued at US$4,300 per Deloro unit; and

o Acquisition of Deloro units of new Deloro units being issued at US$4,300 per Deloro unit, in exchange for the issue of US$500,000 of Mayan shares issued to Deloro at the Placing price (the "Consideration Shares") and subject to a three month lock in period, expiring 31 January 2018.

· Deloro and Mayan have provided certain representations and warranties relating to the Investment.

Special note concerning the Market Abuse Regulation:

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 ("MAR"). Market soundings, as defined in MAR, were taken in respect of the Placing, with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to Mayan and its securities. 

**ENDS**

For further information visit www.mayanenergy.com or contact the following:

Notes:

Mayan Energy Limited is an AIM listed (London Stock Exchange) oil and gas energy Company focussed on the redevelopment and enhancement of its upstream oil and gas interests in Oklahoma and Texas.

Technical sign off

All of the technical information, including information in relation to reserves and resources that is contained in this announcement has been reviewed by, Mr Stephen Brock. Mr Brock is a petroleum engineer who is a suitably qualified person with over 30 years' experience in assessing hydrocarbon reserves and has reviewed the release and consents to the inclusion of the technical information.

The Technical information prepared by Chapman Petroleum Engineering as referred to in this announcement has been prepared in accordance with the standards set out in the Canadian Oil and Gas Evaluation Handbook ("COGEH") and the report has been prepared and/ or supervised by a "Qualified Reserves Evaluator" under NI 51-101.

Technical Glossary

Bopd: means barrels of oil per day. There are 42 gallons (approximately 159 litres) in one barrel of oil, which will contain approximately 5.8 million British Thermal Units.

EUR: Estimated ultimate recovery is an approximation of the quantity of oil or gas that is potentially recoverable or has already been recovered from a reserve or well.

MMSTB: Millions of Stock Tank Barrels of oil- oil volume at 60 Fahrenheit and 14.65 pound per square inch absolute ("psia").

NPV5 and NPV10: Net present value is the present value of an investment's expected cash inflows minus the outflows as discounted at a specific discount rate or cost of capital. NPV5 is an NPV estimate determined using a 5% cost of capital. NPV10 is an NPV estimate determined using a 10% cost of capital. 

Workover: The process of performing major maintenance or remedial treatments on an oil or gas well. In many cases, workover implies the removal and replacement of the production tubing string after the well has been killed and a workover rig has been placed on location. This operation saves considerable time and expense. 

WTI: West Texas Intermediate is the common reference price for comparisons of crude oil prices.