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ENEGI OIL PLC

Trading symbols:

London Stock Exchange: ENEG

19 May 2011

Enegi Oil Plc

('Enegi' or 'the Company')

Corporate Update

Enegi is pleased to announce that it has secured an exclusive, four month option, at nominal cost to acquire the entire share capital of Advanced Buoy Technology (ABTechnology) Ltd ("ABT"). The option can be extended at any time during the term by a further four months for a fee of £250,000.

ABT is a private limited company, with an irrevocable option to acquire the exclusive global rights to a range of buoy technologies developed by Ocean Energy and Resource Ltd. These technologies provide ABT with the ability to offer an innovative approach to developing proven oil and gas assets where the current estimates of recoverable reserves and extraction costs would cause the assets to be classified as marginal or sub-economic. The premise behind this innovative approach is to utilise an unmanned buoy, which sits just below the surface, housing production and processing equipment. This contrasts with more traditional solutions where a fixed or floating production platform might be utilised. The resultant effect of this is to significantly lower capital and operational costs for these developments allowing previously marginal fields to be economic.

ABT has the capability to provide such solutions as a result of its strategic partnership with Wood Group, the international energy services company. In addition, ABT has an option to acquire a buoy for £750,000 for which the structural fabrication is at an advanced stage. It is anticipated that this buoy will be used on the first project.

The rationale for this potential acquisition is that it will provide Enegi with a platform to allow it to execute its previously announced strategy of reducing risk concentration by providing the Company with a solution that can be leveraged with partners or on a standalone basis to extract value from assets previously considered to have limited value. ABT is wholly owned by Alan Minty, the Chairman and CEO of Enegi, and has been managed as his duties to Enegi allow by Barath Rajgopaul an executive director of the Company.

ABT has been developed independently of Enegi because Enegi has been unable to commit to the required investment. To date Enegi has not expended any funds on the proposed acquisition hence, the Company intends to undertake technical, commercial, legal and financial due diligence over a period of four months before, if appropriate, presenting a circular and recommendation to shareholders at a General Meeting of the Company where shareholders' approval to exercise this option will be sought.

In order to undertake this due diligence and to meet its working capital requirements Enegi is pleased to announce that it has secured a three year Equity Line Facility of up to £7.5 million (the "ELF") with Dutchess Opportunity Cayman Fund ("Dutchess"). The ELF has been arranged by First Columbus LLP, Dutchess's joint venture partner in the UK.

The remainder of this announcement will describe ABT, the opportunities that its potential acquisition could create and the ELF.

Highlights:

·; Enegi has obtained, at nominal cost, an exclusive four month option to acquire ABT. The option can be extended for a further four months by a payment of £250,000 ("ABT Option");

·; ABT is an Aberdeen based business, established to develop solutions using buoy technology that enables cost-effective exploitation of offshore oil fields that are currently considered marginal or sub-economic, in the North Sea and beyond;

·; ABT has a strategic partnership with Wood Group, the international energy services company, to ensure the delivery of unmanned buoy technology;

·; Unmanned buoy technology has the potential to significantly reduce the capital and operational expenses associated with the development of offshore hydrocarbon fields;

·; ABT has an irrevocable option to acquire the world-wide, exclusive rights via a 5-year licence agreement for the intellectual property of Ocean Energy and Resource Limited ("ORL") as it relates to buoy technology;

·; ABT has an option to purchase an unmanned buoy for £750,000 which is currently located at the Port of Dundee ("Dundee Buoy"), whose structural fabrication is at an advanced stage of completion;

·; Acquiring ABT would give Enegi a strategic advantage as it continues to focus on identifying and acquiring further hydrocarbon assets;

·; Enegi has secured a £7.5 million Equity Line Facility (ELF) from Dutchess.

Acquisition of ABT

Marginal Fields Opportunity

Enegi is pleased to announce that it has been granted an exclusive option to acquire ABT, which can be exercised at any time during its term at the Board's discretion.

The UK Continental Shelf alone has approximately 70 possible new field development opportunities estimated to contain 3.3 billion barrels of oil equivalent ("boe") of potentially recoverable reserves, with half the fields considered to be 20 million barrels or less in size. In addition, over 160 projects are planned for the potential recovery of 2.6 billion boe by incremental development in and around existing fields. The majority of these projects are small in size, with three quarters of the developments being between 1 and 10 million barrels.

ABT is wholly owned by Alan Minty, the Chairman and CEO of Enegi. ABT is a private, limited company that was established to provide, through buoy technology, an alternative to conventional technology when developing oil and gas fields. The types of fields that the technology appears most suited to are those that are considered to be marginal or sub-economic. Generally, when operating, buoys are usually unmanned and can potentially generate significant capital and operational savings. The Directors consider that the technology is particularly suitable for smaller offshore developments, where smaller field size economics restrict the number of feasible development options.

ABT has been financed privately by Alan Minty since July 2010. After considerable investment it has now been developed to a stage where it could be acquired and used by Enegi.

Rationale for entering into the Option

Since 2009 the Board has been undertaking a strategic review believing that the biggest threat to the Company was risk concentration where a single, negative outcome could have a significant impact on shareholder value. Therefore, after concluding its arrangements with creditors the Board sought to implement a diversified strategy, the first stage of this being the construction of a regional development play for the assets in Western Newfoundland.

The Board has continued to review ways in which to structure the group and believes the option to acquire ABT further enables the Company to expand its portfolio with assets where the technology can be used to enter the development and production phases of the asset life-cycle.

ABT is also attractive in that the technology offers the potential strategic advantage of expanding the Company's portfolio with assets that have a reduced subsurface risk.

During the option period, prior to any decision by Enegi to exercise, ABT will continue to seek opportunities and projects that will demonstrate the returns and the value that can be created using the technology and concept.

Option to acquire ABT

Enegi has entered into an option agreement with the shareholder of ABT. Under the option agreement, Enegi will have a four month option to acquire all of the issued share capital of ABT from Alan Minty which it may exercise subject to certain conditions being satisfied. The cost of the option is nominal. At any time during the term of this option Enegi can pay a fee of £250,000 to extend the option for a further four months which will be deducted from the final amount payable via the first project (see below). The conditions include completion of due diligence on ABT, ABT having entered into a binding contract with a third party for development of a project, completion of the valuation of Net Present Value ("NPV") of this first project and approval by shareholders of Enegi exercising the option.

The consideration payable for the exercise of the option is as follows:

·; 50% of the NPV of the first project entered into by the Company, which will be payable by way of shares and fees. 35% will be payable in shares issued upon a contractual commitment by a client for the development of a project and 65% in fees as revenues accrue to Enegi;

·;

·; 20% of the NPV of the next 3 projects, which will be payable by way of shares and fees. 35% will be payable in shares upon a contractual commitment by a client for development of a project and 65% in fees as revenues accrue to Enegi; and

·; 10% of the NPV of the next 7 projects, which will be payable by way of shares and fees. 35% will be payable in shares upon a contractual commitment by a client for development of a project and 65% in fees as revenues accrue to Enegi.

The NPV for each project will be verified by a firm of independent accountants to be agreed between Enegi and ABT.

The Directors believe that the acquisition of ABT could facilitate the expansion of the Company's existing asset portfolio and provide an alternative revenue source independent of the Company's existing assets. Over a period expected not to exceed four months, Enegi will undertake a legal, financial, technical and commercial due diligence exercise on ABT. It is expected the cost associated with the due diligence exercise will be approximately £325,000.

ABT is wholly owned by Alan Minty, the Company's Chairman and Chief Executive Officer and Barath Rajgopaul, Executive Director of the Company is Managing Director of ABT and, therefore, should the option be exercised, the proposed acquisition of ABT will be considered a related party transaction pursuant to the AIM Rules for Companies. Following the exercise of the ABT Option, both Mr Minty and Mr Rajgopaul will no longer be independent for the purposes of Enegi's ongoing activity and interests in these arrangements and, in particular, the scope and results of the due diligence process or any decision to move forward with the ABT option. This process will be conducted by Tej Minhas, the Company Secretary and will be overseen by Alex Lamb, the Company's non-executive director, who will also decide whether or not the proposed acquisition of ABT is ultimately proposed to shareholders.

Shareholders should also be aware that the Company is currently seeking to appoint up to two new independent, non-executive directors to help provide a stronger balance across the Board. In addition, it is intended that the two roles of CEO and Chairman will be separated prior to the next AGM.

In order for the proposed acquisition of ABT to proceed, the Company will be required to publish a detailed circular which will be sent to shareholders, containing the background to and merits of proceeding with the transaction, a full summary of the findings of the due diligence exercise, together with a recommendation from the independent directors inviting shareholders to approve the transaction at a General Meeting of the Company. The circular will also contain a statement that with the exception of Alan Minty and Barath Rajgopaul who are involved in the transaction as related parties, the directors consider, having consulted with its Nominated Advisor, Cenkos Securities, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.

ABT Strategic Partnership with Wood Group

ABT has entered into a strategic partnership with Wood Group, the international energy services company, to commercialise and ensure the delivery of unmanned buoy technology. Wood Group has been involved in feasibility assessments with ABT for oil production buoys and will be the exclusive provider of project management, engineering, operational and maintenance services to ABT, including dutyholding where appropriate.

The strategic partnership is crucial in ensuring that any projects incorporating buoy technology can be delivered by an organisation with the appropriate expertise and a proven track record.

Wood Group is an international energy services company with $5.5bn sales, employing more than 34,000 people worldwide and operating in 50 countries. The Group has three businesses - Engineering, Wood Group PSN and Gas Turbine Services - providing a range of engineering, production support, maintenance management and industrial gas turbine overhaul and repair services to the oil & gas and power generation industries worldwide.

License Agreement with Ocean Energy and Resource Limited

ABT has an irrevocable option to enter into a 5-year licence agreement under which it will obtain the world-wide exclusive rights to intellectual property of ORL relating to buoy technology. The intellectual property contains patents, registered designs and know-how that relate to the implementation of buoy technology. ORL have a strong track record in the field of buoy design and engineering and have designed and developed a number of buoys with a variety of functions including the Dundee Buoy.

Together with Wood Group, ORL will provide the expertise to ensure that the technology can be delivered.

ABT option to purchase the Dundee Buoy

In addition, ABT has an option to acquire the Dundee Buoy for £750,000. The option currently expires on 22nd September 2011. Structural fabrication of the Dundee Buoy is at an advanced stage of completion. It is anticipated that the Dundee Buoy will be used as part of the implementation of the first project that will demonstrate the returns that can be generated and the value of using buoy technology.

Equity Line Facility of £7.5 million secured from Dutchess Opportunity Cayman Fund

Enegi is pleased to announce that it has secured the ELF with Dutchess. The ELF has been arranged by First Columbus LLP ("First Columbus"), Dutchess's joint venture partner in the UK.

Use of Proceeds

The funds available to draw down under the ELF will be used to continue the development of the Company's asset base, to fund the due diligence exercise on ABT and to manage the Company's working capital needs.

Terms of the ELF

The ELF agreement, which is dated 19th May 2011, provides Enegi with a facility which (subject to certain limited restrictions) can be drawndown at any time over the next three years. The timing and amount of any drawdown is at the discretion of Enegi.

Enegi is under no obligation to make a drawdown and may make as many drawdowns as it wishes, up to the total value of the ELF, by way of issuing drawdown notices to Dutchess. Following delivery of a drawdown notice, Dutchess will, subject to certain conditions, subscribe and Enegi will allot to Dutchess new ordinary shares in Enegi ("Ordinary Shares").

The subscription price for any Ordinary Shares to be subscribed by Dutchess under a drawdown notice will be at a 5% discount to an agreed reference price determined during 10 trading days following delivery of a drawdown notice (the "Pricing Period"). Enegi is also obliged to specify in each drawdown notice a minimum price below which Ordinary Shares will not be issued. The Company will have the right (with the agreement of Dutchess) to modify that minimum price at any time during the relevant Pricing Period.

The number of Ordinary Shares which may be issued under any individual drawdown notice shall be such monetary amount as would be equal to six hundred per cent (600%) of the average daily trading volume of Ordinary Shares in issue in the three consecutive trading days immediately preceding the drawdown notice date, multiplied by the average of the bid price on the three consecutive trading days immediately preceding the drawdown notice date by reference to trading on AIM and Plus. This may be reduced in certain circumstances, including where the minimum price is not maintained.

Any drawdown notice which Enegi may issue will only be valid to the extent that it has the requisite shareholder authority to issue the maximum number of Ordinary Shares that Dutchess may be required to subscribe under the relevant drawdown notice.

Dutchess or the Company may terminate the ELF in specified circumstances. The issue of drawdown notices is subject to specified pre-conditions. The Company has provided warranties and indemnities to Dutchess and affiliated persons.

In consideration for arranging the ELF, Enegi has agreed to pay First Columbus a Commitment Fee of £75,000 in Ordinary Shares.

Enegi has entered into a warrant agreement dated 19th May 2011 for the grant to First Columbus and Dutchess of warrants to subscribe for up to 526,315 Ordinary Shares, such warrants to be exercisable at a price of 21.375 pence per share, being a 50 per cent premium to the Company's market closing price on 18th May 2011 and to be exercisable at any time prior to the expiry of 36 months following the date of the warrant agreement.

Alex Lamb, non-executive director of Enegi Oil commented:

"The potential of the unmanned buoy technology is significant and could transform how smaller offshore hydrocarbon fields are managed and developed. Having the ABT Option at nominal cost means that Enegi has exclusive access to the opportunities presented by this technology whilst not having to commit anything now. At this stage it appears that the proposed acquisition of ABT represents a great opportunity for Enegi. Over the coming months we will be performing the required due diligence on ABT prior to making a decision as to whether the technology is appropriate for Enegi's future.

In addition we welcome the facility provided by Dutchess, which complements our existing sources of finance. The facility by Duchess gives the Company flexibility as to the amount and timing of each draw down, thereby preventing unnecessary dilution to shareholders."

Enegi Oil Tel: + 44 161 817 7460

Alan Minty, CEO

Cenkos Securities Tel: + 44 207 397 8900

Jon Fitzpatrick

Beth McKiernan

College Hill Tel: + 44 207 457 2020

Nick Elwes

www.enegioil.com

The Company

Enegi Oil Plc is an independent oil and gas company. Current operations are focused on opportunities around the Port au Port Peninsula in Newfoundland, Canada and the Clare Basin in County Clare, Ireland. The Port au Port Peninsula is located in western Newfoundland, which, although lightly explored, is in an active petroleum system with light oil having been encountered on a number of occasions. The Clare Basin is located in western Ireland and initial technical studies show that it has the potential to contain shale gas.

About ABT

ABTechnology is an Aberdeen based business, established to develop solutions using buoy technology that enables cost-effective exploitation of offshore oil fields that are currently considered marginal or sub-economic, in the North Sea and beyond.