PGR.L Regulatory News (PGR)

6 March 2019

Phoenix Global Resources plc

("Phoenix" or the "company")

Q4 2018 Operational Update

Phoenix Global Resources plc (AIM: PGR; BCBA: PGR), the upstream oil and gas company offering its investors direct exposure to Argentina's Vaca Muerta shale formation and other unconventional resources, is pleased to announce its operational update for the fourth quarter of 2018, together with an update on planned drilling and other operational activity for the next six months.

Operational highlights

· Eight unconventional vertical wells were successfully completed at Puesto Rojas in H2 2018 with all the wells currently on test and producing

· The encouraging results from the Puesto Rojas area well tests, together with well results from previous campaigns, have been used to help define the 2019 development plan for the area

· The Company's first horizontal well located at Mata Mora completed drilling in early January 2019. Drilling started on a second horizontal well on the block at the end of January 2019. When drilling of the second well is finished, both Mata Mora wells will be completed and put on test

· In February 2019, the company concluded discussions to obtain the Corralera Noroeste licence. The company now holds all the licences comprising the Corralera block at a 90% working interest level and is operator on each of the licences. Securing Corralera Noroeste adds 26,000 additional acres of Vaca Muerta and other unconventional exposure

· The sale of certain Colombian licences was completed in November 2018, further focusing the group's activities on Argentina

· Average working interest daily production of 9,985 boe in Q4 2018 (Q3 2018: 9,946 boe*)

*adjusted for volumes under-reported by Chañares Herrados operator in Q3 2018

Financial performance (unaudited)

· Convertible RCF increased by US$25.0 million in December 2018 and by a further US$50.0 million in February 2019. Additional funds to be used for 2019 appraisal and development plan

· FY 2018 Revenue of US$177.0 million

· Average realised prices for 2018 before hedge of US$50.24/ boe (oil US$59.26/ bbl; gas US$4.10/ mmcf)

· Brent swap contract expired 14 December 2018. The company no longer holds any hedging instruments

· FY 2018 Capital expenditure of US$130.2 million

Outlook

· Completion of the initial horizontal wells at Mata Mora planned for H1 2019, up to four additional horizontal wells planned for 2H 2019 contingent on the results of flowback testing of the first two horizontal Mata Mora wells

· Up to eight additional unconventional vertical wells planned in 2019 as part of the initial development of the Puesto Rojas folded Agrio formation

Anuj Sharma, CEO, said:

"Q4 2018 was a period of strong operational progress for Phoenix Global Resources. Through two highly positive unconventional appraisal projects, we have been able to further our understanding of our unconventional asset base and define our forward work programme.

Specifically, after the successful initial results from our completions campaign at Puesto Rojas, the company now plans to move towards the development of the folded Agrio formation using unconventional vertical wells. At Mata Mora, evaluation of the Vaca Muerta formation continues with further horizontal wells planned for H2 2019 pending the outcome of the initial two wells and based on the success that other operators have experienced on neighbouring blocks.

The results underscore the potential of the unconventional asset base that we have assembled in both Neuquén and Mendoza provinces and the potential value generated by selectively adding key acreage to our portfolio.

As we now move to appraisal and development plans in multiple unconventional targets, including the Vaca Muerta and Agrio formations, we look forward to updating shareholders on results of the horizontal wells at Mata Mora when the completions phase has concluded, and the production potential of the wells has been determined."

For further information, please contact:

Qualified Person Review

In accordance with AIM guidance for mining, oil and gas companies, Mr. Javier Vallesi and Mr. Greg

Easley have reviewed the information contained in this announcement. Mr. Vallesi, Chief Operating

Officer for the group, is a petroleum engineer with over 22 years of experience in the oil and gas industry and is a member of the Argentinian Institute of Oil and Gas. Mr. Easley, Senior Manager -Reservoir and Engineering, is a petroleum engineer with over 10 years of experience in the oil and gas industry, is a licenced Professional Engineer in the State of Texas and is a member of the Society of Petroleum Engineers.

About Phoenix

Phoenix Global Resources is an independent oil and gas exploration and production company focused on Argentina and listed on the London Stock Exchange (AIM: PGR) and Buenos Aires Stock Exchange (BCBA: PGR). The Company has over 6.3 million licensed working interest acres in Argentina (of which over 5 million are operated), 57.2 million boe of working interest 2P reserves and average working interest production of approximately 9,885 boepd in Q4 2018. Phoenix has significant exposure to the unconventional opportunity in Argentina through its 560,000 working interest acres with Vaca Muerta potential.

The Company's website is www.phoenixglobalresources.com

Q4 2018 production

Average total daily production volumes in Q4 2018 compared to full year 2017 and Q3 2018 were as follows:

*adjusted for volumes under-reported by Chañares Herrados operator in Q3 2018

Total average daily production in Q4 2018 was 9,885 boepd. Production in most basins remained stable with the exception of the mature Cuyana basin that continues to experience natural decline in production volumes.

Drilling and completions campaign

Appraisal activity in the period has been focused on the continuation of work at Puesto Rojas and the commencement of horizontal drilling at Mata Mora. Most of the drilling and completions activity in 2018 has been at Puesto Rojas where the company has multiple unconventional opportunities. The appraisal work at Puesto Rojas has yielded encouraging results and has provided a significant amount of data to gain a better understanding of each of the potential target formations. This has enabled the company to better delineate prospects and prioritise investment.

The Agrio opportunity at Puesto Rojas is now defined in three elements, being the folded, tight and organic Agrio. The folded Agrio, together with the Vaca Muerta formation at Mata Mora represent the company's primary near term unconventional development prospects. The folded Agrio has been de-risked for development through the wells previously drilled at Puesto Rojas and the results of the eight completions performed in H2 2018. The Vaca Muerta formation at Mata Mora is considered to be sufficiently de-risked based on the results from other operators on neighbouring offset blocks together with the information acquired by the company during the drilling of the initial horizontal well at Mata Mora.

Puesto Rojas Area

During Q4 2018, the company drilled the CDM-3004 well, which will be completed unconventionally in the folded Agrio pending the necessary provincial permits. In addition to the planned completion in the folded Agrio, this well has also been designed to collect additional data in the Vaca Muerta formation in preparation for horizontal drilling operations at Puesto Rojas planned for H2 2019. The planned horizontal well, our first at Puesto Rojas, is designed to further appraise the development opportunity for Vaca Muerta in the area.

The well CDM-3012 (previously CDM-3003) was completed in the Vaca Muerta formation during Q4 2018. The well also contains behind pipe potential in the Agrio stages. Unlike previous wells at Cerro del Medio, the CDM 3012 well has not yet been completed in the Agrio formation and is only completed in the Vaca Muerta formation at this time. This slight modification to the completion process will allow the company to assess the sensitivity of Vaca Muerta performance to the shut-in period that would otherwise be needed to allow other horizons to be completed. The shallower Agrio stages are planned to be developed at a later date.

The ongoing flowback operations and results are discussed below in the Neuquina basin activity summary. Based on the encouraging results of the program the company expects to move to development drilling of the folded Agrio using vertical wells in 2019. This formation is considered as the initial lower risk and potentially high return development prospect at Puesto Rojas. We also plan to drill the initial horizontal evaluation well in the Vaca Muerta at Puesto Rojas during 2019.

Mata Mora

The Mata Mora.x-1001 well successfully reached its total depth of 5,259 metres on 2 January 2019 and was subsequently cased and cemented. The well was drilled to a total lateral length of 1,969 metres, with 99.3% of the lateral section successfully drilled within a seven-metre window in the Vaca Muerta and a significant portion of the lateral remaining within a narrower three-metre window.

The second horizontal well at Mata Mora, the MM.x-1002 well, was spud in late January 2019 and has completed drilling the vertical section at a depth of approximately 2,400 metres in late February. Drilling has now commenced on the lateral portion of the well.

When drilling is complete at MM.x-1002, the well will be completed in a simultaneous hydraulic fracturing operation together with Mata Mora.x-1001, that is planned for Q2 2019. The performance of these wells will then be evaluated ahead of drilling further wells in the block that are currently planned for later this year.

Business development activity

On 18 January 2019, Phoenix was awarded the Corralera Noroeste block in Neuquén province by GyP, the province owned oil and gas company. The approval of the final decree from the provincial Governor related to the formal grant of the licence was received in late February 2019. The company now holds a 90% working interest and operates all three of the licences comprising the Corralera block. This adds approximately 26,000 acres of Vaca Muerta and Tight Agrio potential to the company's existing licences.

Neuquina basin

Puesto Rojas Area

Operator: PGR

The production increase at Puesto Rojas was due to wells that were completed in the third quarter, coming on flowback during Q4 2018. This production increase from new wells was offset by minor downtime events, including at the CP-1010 Vaca Muerta well that was taken offline due to a pump failure on 22 October 2018. The well was returned to production at a rate of 150 bopd on 29 October 2018.

Multiple unconventional horizons at Puesto Rojas were tested through unconventional completions in the period. Four new wells were completed together with four older wells with the objective of identifying which horizons have potential for horizontal unconventional completion and which are better suited to vertical unconventional completion.

All eight wells completed at Puesto Rojas during 2018 are currently on flowback with the drilling and stimulation work designed to maximise data recovery from this important stacked play. The flowback operations provide valuable data to the company about well performance and the production potential of each well.

The first stage of flowback recovers the pumped water that was used for hydraulic fracture from the formation and is performed by grouping together frac stages that are subject to similar pressure regimes. For example, the Agrio and Chachao formations are flowed back separately to the higher pressure Vaca Muerta formation. When enough frac load water has been removed from the well, oil should begin flowing. A series of production logging tools are then run to determine the most productive intervals, the potential of which will be verified by individually swab-testing each zone such that a flow rate can be established as well as an approximate oil cut. If appropriate, an extended pump test can also be performed on each zone to attempt to determine its full production potential.

The status of the flowback operations is summarised below:

The four new wells completed in the period are all located at Cerro del Medio.

CDM-3001 flowed back the tight Agrio, organic Agrio, and organic Chachao sections comingled at a rate of 92 bopd and as of 2 January 2019 was flowing back Vaca Muerta stages in the well.

CDM-3007 flowed back the tight Agrio, organic Agrio, and organic Chachao sections comingled at a peak rate of 84 bopd. As of 8 December 2018, the well was flowing back Vaca Muerta stages at a peak rate of 96 bopd. This well also has behind pipe potential in the folded Agrio section, which will be completed later.

CDM-3023 flowed back the folded Agrio and tight Agrio sections together with a peak rate of 351 bopd. Based on this rate, and prior well results, the company plans to move ahead with vertical development of the folded Agrio play. The well has been flowing back Vaca Muerta stages since 8 November 2018 with a peak rate of 153 bopd. During the Vaca Muerta flowback, the Agrio stages were allowed to continue producing up the annulus and have continued to flow naturally at over 350 bopd.

CDM-3012 is currently testing the Vaca Muerta formation and achieved a peak rate to date during pumping operations of 88 bopd. It is likely that rate will continue to increase as pump rate is increased and water cut decreases.

Based on the highly encouraging results of the wells on Cerro del Medio, the folded Agrio has been identified as a target development with vertical unconventional wells. The remaining wells show promise for horizontal development of the formations under test.

A number of older wells were also completed in the current campaign.

CP-1013 and CP-1017 were limited tests of tight Agrio stages and flowed back at a peak rate of 25 bopd and 20 bopd respectively.

PR-53, an older Chachao well, was completed in the Vaca Muerta section. The well is now currently on test in the Agrio stages, with results pending.

ClCh.x-2001 was a more selective test of tight Agrio and Vaca Muerta stages, limiting each to selective set in each zone. The Vaca Muerta stages produced at a peak rate of 30 bopd. On 16 September 2018 the Agrio stages were put online and reached a peak rate of 37 bopd.

Each of these wells provides valuable information related to the formations being tested that will be used to determine the most appropriate drilling and completion methodologies .

Chachahuen Sur

Operator YPF

Production at Chachahuen Sur was largely flat in Q4 2018, driven by a decrease in drilling activity as the field is increasingly drilled-out. The operational focus at Chachahuen Sur is moving towards water flood to stabilise production and arrest decline. The current focus of the operator, YPF, is on improvements in water flood conformance as it seeks to better understand how effective the injection of water is in pushing oil to production wells. In addition to drilling water injection wells, several production wells have also been converted to injectors. The expectation of the water flood operations is that production should be held largely stable over the next several months.

During the quarter YPF drilled eight (Q3 2018: 11) new wells and performed 11 workovers (Q3 2018: 12), most of which were undertaken to improve water flood results.

In December 2018, the province of Mendoza granted the Cerro Morado Este part of the original Chachahuen Sur concession as a separate exploitation concession. YPF is operator of the concession (PGR: 20%) and is currently drawing up plans to develop the concession over the next several years. Any development decision will require PGR's approval and the company is in discussion with YPF through a regular programme of operating committee meetings to understand the plans, economics of the play and the associated capital requirements in advance of any capital investment sanction.

Austral basin

Production remained largely flat in the Austral basin with production increases realised from the Tierra del Fuego assets offset in part by minor production declines in the Santa Cruz Sur assets.

Santa Cruz Sur

Operator: ROCH S.A.

Production decreases at Santa Cruz Sur were driven largely by natural decline. In Q4 2018, nine minor pulling jobs for well repairs were performed with no other significant activity undertaken.

Tierra del Fuego

Operator: ROCH S.A.

Production increases in Tierra del Fuego were largely driven by completion of the LFE-1004 well in the Tobifera formation during October 2018. The well tested at initial rates of 5.2 MMscfpd and 11 bopd. In addition, hydraulic fractures were performed on the SM-1003 and LR.x-1001 in December, which are currently still under evaluation.

The continued development plans for both Santa Cruz Sur and Tierra del Fuego remain under discussion between Phoenix and the asset operator, ROCH S.A.

Cuyana basin

* re-presented, refer footnote below field-by-field production table

Operator: PGR

The company continues to experience natural production decline in the relatively mature Cuyana basin assets.

No major activity took place in the Cuyana basin. Eight maintenance pulling jobs were performed in the period.

Additional information

Production summary

* The previous operational update under-reported Q3 volumes at the Chañares Herrados concession as at the time only production data through August had been made available and verified. This report presents updated Q3 volumes.

All production figures in the tables and the text of this announcement are Net figures for the company's interest in the various licences. Totals may not add due to rounding.

- ENDS -