San Leon Regulatory News (SLE)

27 March 2014

San Leon Energy Plc

("San Leon" or the "Company")

TransAtlantic signs a Term Sheet Agreement to Farm-in to Permian/SW Carboniferous Basin of Poland - Focused on Commercial Production

San Leon has signed a Term Sheet Agreement ("Agreement") with North American independent TransAtlantic Petroleum Limited ("TransAtlantic") to farm-in to the Company's extensive acreage position in the Permian/SW Carboniferous Basin of Poland. Under the terms of the Agreement, TransAtlantic would fund 100% of a six well work program focused on achieving commercial production in the Permian Main Dolomite and Rotliegendes formations while further proving the huge upside potential of the Carboniferous tight gas play.

Based on San Leon's historical costs, the estimated value of the work program is USD 60-70 million, however it is expected that the cost of the program should decrease with the recent increase in service providers in Poland. TransAtlantic would earn an undivided 50% working interest in the Nowa Sol, Wschowa, Gora, Rawicz, Prisice, Kotlarka, Olesnica, Praska and Wielun Concessions totalling more than 1.9 million gross acres. The carried work program is expected to be completed by December 2015. Hutton Energy plc is also participating in the joint venture through its interests in the Olesnica and Wielun Concessions. The final interests in the Concessions would comprise 50% TransAtlantic, who would also become the operator, 37.5% San Leon, and 12.5% Hutton Energy.

Under the terms of the Agreement, TransAtlantic would:

· Pay USD 5.0 million to San Leon as a contribution to back costs, which TransAtlantic would recover from revenue generated from production;

· Pay a further USD 5.0 million to San Leon upon reaching a net accumulated sales volume of 150,000 barrels of oil equivalent;

· Fund 100% of the cost to drill and complete one well to test the Rawicz field, scheduled to spud by June 2014. The Rawicz field is estimated to contain mean case recoverable reserves of 57 billion cubic feet of high quality methane gas in the Permian Rotliegendes sandstones;

· Fund 100% of the cost to re-enter, complete and stimulate three wells in the Permian Main Dolomite. This may include the drilling of several horizontal sections;

· Fund 100% of the cost to re-enter and stimulate the Siciny-2 well in the Carboniferous tight gas play;

· Fund 100% of the cost to drill and complete one well on a location and target to be agreed between the parties to the Agreement;

· Fund 50% of all concession and usufruct fees, bank guarantees, and other financial commitments required to maintain the Concessions in good standing; and

· Become the operator of the Concessions and fund its 50% share of all general and administrative costs going forward.

The final agreement is subject to the approval of regulatory authorities and the execution of definitive agreements.

TransAtlantic is successfully applying North American technologies and practices to under-developed reserves in Turkey and Bulgaria. TransAtlantic's technical team is experienced in horizontal drilling and hydraulic fracturing. TransAtlantic's use of modern 3D seismic data has resulted in a deeper understanding of the basins where TransAtlantic operates and has led to successful commercial production with significant upside development opportunities.

TransAtlantic has drilled 31 horizontal and deviated wells in Turkey and undertaken 158 hydraulic fractures. Their experience in both drilling and seismic acquisition brings a successful operator to San Leon's position in Poland.

Oisin Fanning, Chairman of San Leon, commented:

"This is a great step forward in quickly bringing our Permian/SW Carboniferous Basin plays to commercial production. TransAtlantic brings the experience of a proven North American operator with a track record of successfully proving and producing unconventional oil and plays in Turkey and Bulgaria. The joint venture with TransAtlantic and Hutton will accelerate our activities in Poland while reducing our risk exposure going forward. This transaction further proves San Leon's long term commitment to Poland and is further validation of our technical and financial commitment to unlocking the significant reserves that exist across our extensive acreage position."

For further information contact:

Qualified person

Joel Price, who has reviewed this update, has 20 years' experience in the oil & gas industry and is a member of the Society of Petroleum Engineers. He holds a BA in Natural Sciences from Cambridge University, an MEng from Heriot-Watt University, and an MBA from Durham University. Joel is Chief Operating Officer for San Leon Energy and is based in San Leon's London office.