San Leon Regulatory News (SLE)

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information for the purposes of Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication of this announcement, this information is now considered to be in the public domain.

7 July 2021

San Leon Energy plc

("San Leon" or the "Company")

Conditional Payment Waiver in relation to MLPL Loan Notes

San Leon, the independent oil and gas production, development and exploration company focused on Nigeria, provides the following update regarding its loan notes from Midwestern Leon Petroleum Limited ("MLPL") (the "Loan Notes").

As previously announced by San Leon, during the course of this year, San Leon was due to receive, under the Loan Note instrument which governs the loan it made at the time of its investment in OML 18, its final payments of over US$98 million in three equal instalments, commencing in July 2021 and completing by December 2021.

MLPL is part of the structure through which San Leon holds its current 10.58% indirect economic interest in OML 18. San Leon currently has a 40% equity interest in MLPL with the remaining interest in MLPL being owned by Midwestern Oil and Gas Company Limited ("Midwestern"). Midwestern is also the guarantor of the Loan Notes. MLPL has a 100% equity investment in Martwestern Energy Limited ("Martwestern"), which in turn has a 98% economic interest in Eroton Exploration and Production Company Limited ("Eroton"), which holds a 27% working interest in OML 18 and is its operator.

On 24 June 2021, San Leon announced that, inter alia, the Company was in preliminary discussions with Midwestern in relation to a transaction that would effect a reorganization to consolidate Midwestern's holdings in the Company and MLPL into a single holding in the Company, with the Company holding the remaining 60% equity interest in MLPL it does not currently own (the "Potential Transaction"). It is expected that, inter alia, as part of the Potential Transaction, the amounts owed to San Leon by MLPL pursuant to the Loan Notes will be taken into account in the overall structure and eliminated from the resulting structure.

As indicated in the Company's announcement of 24 June 2021, San Leon's discussions and considerations regarding the Potential Transaction described above (and in the Company's announcement of 24 June 2021) are at an early stage and will therefore be subject to a number of factors. As such, there is no certainty that such transactions will proceed nor any certainty regarding the terms on which they would proceed.

However, in light of the discussions with Midwestern regarding the Potential Transaction, San Leon has agreed with MLPL, Midwestern and Martwestern to a conditional payment waiver in respect of the repayment of approximately US$32 million of MLPL's Loan Notes and interest that fell due on 5 July (the "Conditional Payment Waiver"). The Conditional Payment Waiver expires at the end of August 2021 or, if sooner, the termination of discussions or the signing of an agreement to effect the Potential Transaction, and interest will accrue on this installment of the Loan Notes over this period. The sums to which the Conditional Payment Waiver relates (and those falling due within 30 days after the expiry of the Conditional Payment Waiver) will be payable 90 days after such expiry, save for, inter alia, if there is an event of default.

Midwestern and MLPL are related parties of the Company for the purposes of the AIM Rules by virtue of Midwestern holding more than 10% of the existing Ordinary Shares in the Company and the level of Midwestern's current interest in MLPL. The Conditional Payment Waiver is therefore a related party transaction under the AIM Rules. The Directors of San Leon (excluding Adekolapo Ademola who is not considered to be independent as he is a representative of Midwestern on the Company's board) consider, having consulted with the Company's nominated adviser, Allenby Capital Limited, that the terms of the Conditional Waiver are fair and reasonable insofar as the Company's shareholders are concerned.

Enquiries: