PATH.L Regulatory News (PATH)

7 February 2018

Path Investments plc

("Path" or the "Company")

Update re Proposed Farm-in Agreement

Path Investments plc (TIDM: PATH), is pleased to provide the following update in relation to the Company's conditional acquisition of a 50% participating interest in an onshore producing conventional gas field, the Alfeld-Elze II Licence and Gas Field in Germany, located some 22 km south of Hannover (the "Proposed Transaction").

As previously announced, the Company intends to undertake a fund raising and to seek admission of the Company's ordinary shares to trading on the AIM Market of the London Stock Exchange plc ("AIM") during Q1 2018 in conjunction with the completion of the Proposed Transaction.

The Alfeld-Elze II Licence and Gas Field (the "Field")

The licence on which the Field is situated is a production licence covering 64.6km2 (the "Licence") and was previously split in two, with the two separate prior licences historically owned and operated by Mobil and Preussag. The single combined Licence was issued to 5P Energy GmbH ("5P Energy"), the current 100 per cent. owner and operator of the Licence, in 2012 and expires on 14 March 2041.

The Field is a conventional Rotliegend sandstone gas reservoir, with 2D seismic coverage, existing production, well control and good access to infrastructure. The wells are relatively shallow, with a total depth of circa 1,500 metres, with a range of gross reservoir penetration intervals from approximately 90 to 260 metres. Typical for Germany, the gas produced from the Field is high in nitrogen content at 31 per cent and is mixed and blended at a local station before it enters into the Nowega low caloric gas regional pipeline at Grossgiesen.

The Field previously produced approximately 66Bcf of gas from nine wells between 1972 and 1995, when the field was abandoned following water breakthrough. Four of these wells each produced more than 10Bcf of gas.

The Field was brought back into production in 2015 by 5P Energy through the workover and re-entry of an existing well ("Z2") and the installation of processing facilities at the well site. Since 2015, this vertical well (now renamed H-WD Z2) has produced in excess of 2.6Bcf at a choked rate of c 3.0 MMscf/d.

5P Energy identified another existing well workover candidate ("Z4") and the drilling operations for the re-opening of this well (now renamed A-EZ Z4 (2)), which is located less than 1 km away from H-WD Z2, are complete and, subject to testing, demobilisation, final approvals and commissioning of the second well, production is anticipated to start around mid-2018.

Preliminary results of the CPR

The Company is now pleased to announce receipt of the preliminary results of a Competent Person's Report in relation to the Alfeld-Elze II Licence and Gas Field (the "CPR") which has been prepared by Rockflow Resources Limited with an effective date of 31 October 2017.

The following tables sets out the total reserves, which are attributable to the Phase 1 development of the Alfeld-Elze II Licence and Gas Field consisting of two wells, the H-WD Z2 well (which has been in production since January 2015) and the A-EZ Z4 (2) well ("Phase 1"), and the contingent resources of the Alfeld-Elze II Licence and Gas Field, which are the volumes estimated to be economically recoverable from a further incremental three horizontal well programme currently under consideration ("Phase 2").

Reserves

Contingent Resources

(1) Gross Field gas reserves are the volumes that are estimated to be economically recoverable from the Field Phase 1 from the effective date of 31 October 2017.

(2) Assuming an effective date for the Path farm-in of 1 January 2018, at which point, subject to completion of the Proposed Transaction, Path will become entitled to a 50% participating interest in the reserves and/or contingent resources estimated by Rockflow to be in place as at 1 January 2018.

(3) Gross Field gas contingent resources are the volumes that are estimated to be economically recoverable from the Field Phase 2 incremental horizonal well programme, if carried out.

(4) CoD is the estimated "Chance of Development", that the volumes will be commercially extracted.

Field Development Plan

Converting the MMm3 above to Bcf, the CPR has ascribed a 2P Reserve of 20Bcf for the Phase 1 vertical wells H-WD Z2 and A-EZ Z4 (2). The Phase 2 programme, which may require the drilling of up to three horizontal wells, has an ascribed 2C Contingent Resource of 64Bcf.

In terms of field economics, the gross capex required to complete the Investment Phase (2018-2021) is estimated to be up to €25 million. Once complete, the likely increased gas production will move the project into its long term stable Cashflow Phase (2022-2035).

Principal terms of the Farm-in Agreement

As initially announced on 15 December 2017, Path is intending to acquire a 50% participating interest in the Field and enter into a Joint Operating Agreement with 5P Energy. The consideration payments are as follows:

Phase 1

€5 million, payable in cash, on completion of the Proposed Transaction ("Completion") as partial reimbursement of the H-WD Z2 costs;

On A-EZ Z4 (2) achieving commercial production, a cash payment of €2 million as partial reimbursement of the Z4 costs accrued prior to 1 January 2018;

Phase 2

€10 million towards 100% of the costs of the drilling, logging, testing and completion of one or more horizontal wells and if agreed the acquisition of 3D seismic over the Field; and

Future Performance Payments

Additional future cash payments could amount to €7.25 million, if certain discrete revenue (€100 million gross; a €3 million payment) and gas production milestones (10Bcf and 40Bcf; €2.25 million and €2 million payments respectively) are successfully met within the first five years of operations following Completion.

Timetable update

The parties intend to proceed as quickly as possible with the Proposed Transaction. However, there can be no certainty that the Proposed Transaction will be successfully completed. Nonetheless, in order to complete the equity fund raising and seek admission of the Ordinary Shares to trading on the AIM Market of the London Stock Exchange ("AIM") in an orderly manner the Company has requested that the cancellation of the listing of the Ordinary Shares on the Official List be postponed until 8.00 a.m. on 9 March 2018. Accordingly, it is expected that the last day of dealings in the Ordinary Shares (which remain suspended) on the Main Market will be Thursday 8 March 2018.

Further announcements will be made, as appropriate, in due course.

This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

For further information please contact:

The volumetric estimates are made in accordance with SPE standards.

Reserves are those quantities of hydrocarbons anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Resources are all quantities of petroleum (recoverable and unrecoverable) naturally occurring on or within the Earth's crust, discovered and undiscovered, plus those quantities already produced. Reserves and contingent resources are specific types of resources. Contingent resources are those quantities of petroleum estimated, as at a given date, to be potentially recoverable from known accumulations but where the applicable project(s) are not yet considered mature enough for commercial development due to one or more contingencies.

MMm3 means million cubic metres of natural gas; Bcf means Billion standard cubic feet of natural gas