Pennpetro Energy Regulatory News (PPP)

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Pennpetro Energy PLC

("Pennpetro", the "Company" or the "Group")

Operational Update

Proposed US Gulf Coast Joint Ventures, Tunisian Update and New Appointment

London, 6 October 2022 - Pennpetro Energy PLC ("Pennpetro"), an independent oil and gas company focusing on production in the Gonzales Oil Field in Texas, USA, today announces that, through its wholly owned subsidiary Nobel Petroleum USA Inc. ("Nobel"), it has signed a heads of terms ("HoT") agreement with ESG Energy, Inc. ("ESGY") for a proposed petroleum joint venture covering multiple counties in East Texas. 

Nobel has also agreed terms for a joint venture focused on the Austin Chalk covering 250,000 acres in Gonzales County, Texas. The Gonzales joint venture ("Gonzales JV") with an experienced and successful private, independent oil and gas company, does not impact Nobel's City of Gonzales ("COG") development, which will continue to be owned 100% and operated by Nobel.

Drilling for both joint ventures is expected to start in January 2023. Nobel will be the designated operator in East Texas. It will also remain operator in COG and will be non-operating partner in the Gonzales JV.

East Texas Joint Venture

Nobel will enter into a Joint Venture and Standard-Form Joint Operating Agreement with ESGY pursuant to which Nobel will be responsible for up to 75% of the cost to drill and complete two exploration wells ("Commitment Wells") to a depth sufficient to test certain shallow gas seismic prospects for early production. Nobel will be appointed as the Operator and will carry ESGY for 12.5% working interest of the cost to drill and complete each well to the tanks and ESGY will have the right to back-in for a further 12.5% working interest after Nobel fully recovers its expenditures.

Nobel will select the Commitment Wells from ESGY's inventory of more than 300 shallow gas prospects, further defined as those seismic anomalies identified from a major Exxon 2-D seismic dataset in the north Houston salt dome and adjoining counties of Texas, as well as Rapides Parish and adjoining parishes of Louisiana. Nobel will further select an additional twenty-eight shallow gas prospects ("Highgraded Prospects") in which Nobel will be granted a Right of First Refusal ("ROFR") by ESGY.

Upon fulfilling its obligations by the drilling of the Commitment Wells, Nobel will have earned the ROFR with respect to the Highgraded Prospects and an additional right to participate in other like prospects, under the same participation terms as the Commitment Wells, within the East Texas Shallow Gas Play Area on the same terms and conditions as agreed between the parties relative to the first thirty prospects. Nobel will be responsible for its prorated share of any supplemental leasing costs associated with each selected prospect.

Gonzales County Joint Venture

Nobel has agreed terms relative to an Area of Mutual Interest ("AMI") covering 250,000 acres in Gonzales County, Texas. Nobel will pay 33.33% of the cost to drill and complete up to ten development wells to the tanks for a net 25% working interest in each well.

Nobel will enter into a Farm-In Agreement with the existing operator to participate in up to ten development wells ("Initial Wells") to a depth sufficient to test the target Austin Chalk interval. Nobel will be granted a ROFR to participate on the same terms and conditions for any subsequent exploration and development wells within the AMI once the Initial Wells have been drilled.

The existing operator, who has successfully drilled and completed five Austin Chalk development wells within the AMI to date, with excellent oil production from their current wells, will retain operatorship and a formal Farm-In Agreement and Standard-Form Joint Operating Agreement will be executed between the parties.

Tunisia Update

A recent scouting trip to Tunisia reaffirmed the Company's interest in establishing a foothold in Tunisia for future growth. The country offers a large portfolio of attractive opportunities, ranging from potential acquisitions of existing producing assets, joint venture participation on development opportunities to low-risk exploration ventures, including the previously reported Upland Resources' Saouaf Permit, where we have negotiated a Farm-In Agreement, subject to Tunisian government approvals and the award of an extension of time to enable the necessary work obligation to be undertaken.

New Appointment

Pennpetro is pleased to announce the appointment of Andy Clifford as Chief Operating Officer of Pennpetro as well as his existing role of President of Nobel Petroleum USA Inc., which will continue in effect. Furthermore, Andy's appointment to Pennpetro's Board of Directors as an Executive Director, effective immediately, was unanimously approved by shareholders at the Company's Annual General Meeting held on 30 September 2022.

Tom Evans, CEO of Pennpetro Energy plc, commented:

"These proposed joint ventures with these two, exciting Gulf Coast opportunities complements our existing Gonzales oil development while increasing our exposure to technological innovation relative to the Austin Chalk play as well as to natural gas. Furthermore, this larger footprint gives us a clear path to production, allowing us to accelerate our production profile in the nearer term on a portfolio basis, meaning we can focus our efforts to suit any commodity price environment going forward.

There are over 300 exciting shallow gas prospects defined by high quality 2-D seismic data located in eastern Texas and western Louisiana. While we plan to initially focus on two of the most attractive to drill first, we will have a right to participate on the remaining inventory.

We have agreed terms to participate with another operator in the Austin Chalk play in Gonzales County, which will not interfere or overlap with our own development plans in COG. We remain fully committed to continuing our Gonzales development programme where we hope to resume drilling in early 2023.

We had a very good trip to Tunisia in the past few weeks and have been presented with a large number of exciting projects.

As per the Upland Resources announcement from 15 September 2022, we await the result of Upland's engagement post their receipt of a final notification to them from the Ministry of Industry Mines and Energy of Tunisia. We continue to endeavour to complete the Farm-In Agreement, subject to the licence held by Upland Resources being extended. We bear no financial obligation, current or future, if the Farm-In cannot be completed on acceptable terms.

Finally, we are excited to have Andy Clifford join Pennpetro's Board and help us build the Company into an internationally-recognised operator and developer of high-quality assets utilising state-of-the-art technology. In addition to his own extensive experience including exploration and development drilling success domestically and internationally, Andy has assembled a cadre of experienced operational and engineering talent to oversee all drilling and development activities. We welcome him to the Board and look forward to working together."

Andy Clifford, Nobel's President, added:

"With our own Texas COG development an ongoing interest, these JVs represent an excellent opportunity to further our involvement with a highly experienced operator in the Austin Chalk. Nobel will likely participate on their seventh development well and on the subsequent ten wells in a huge AMI.

We are eager to start drilling the East Texas play to take advantage of the high natural gas prices which make this opportunity particularly attractive.

I am excited to join Pennpetro's Board and I would like to thank our existing shareholders for their continued support."

-ENDS-

This announcement contains inside information within the meaning of Article 7(1) of (i) Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014, as amended (the "EU Market Abuse Regulation") and (ii) the EU Market Abuse Regulation as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018.

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NOTES TO EDITORS

Pennpetro Energy is an independent oil and gas company focusing on production in the Gonzales Oil Field in Texas, USA. Shares in the company were admitted to the Official List of the London Stock Exchange by way of a Standard Listing on 21 December 2017.

Further information on the Company can be found at www.pennpetroenergy.co.uk