Sirius Pet Regulatory News (SRSP)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

All defined terms in this announcement shall have the same meaning as set out in the Admission document published today and available from the Company's website www.siriuspetroleum.com

Sirius Petroleum plc

(the "Company" or "Sirius ")

Entry into the Ororo Joint Operating Agreement

Proposed Equity Placing raising approximately US$9.5m

Application for Readmission to Trading on AIM

Posting of Admission Document and Notice of General Meeting

Sirius Petroleum (AIM: SRSP), the investing company focused on oil and gas exploration and development opportunities in Nigeria, is pleased to announce the following:

Highlights

· Proposed placing of 723,700,000 new Ordinary Shares to raise gross proceeds of approximately US$9.5 million at a price of 1 pence per share as follows:

o Unconditional Placing of 394,000,000 new Unconditional Placing Shares, and

o Conditional Placing of 329,700,000 new Conditional Placing Shares

· Convertible Loan Facility of US$12 million with London Oil & Gas Limited ("LOG") ("the LOG Convertible") carrying a coupon of LIBOR plus 6.5 per cent. and partially convertible at a 50 per cent premium to the Issue Price of the Placing. LOG is wholly owned by London Power Corporation plc and is an established institutional investor in the international oil and gas sector www.lpcplc

· The combined proceeds of the proposed Placing and the LOG Convertible ("the Fundraising") and the commitments of the Company's commercial partners under previously announced Commercial Agreements will allow the Company to drill the Ororo-2 well and bring it into production in accordance with the Ororo Joint Operating Agreement ("JOA").

· The Company expects to commence an initial programme to drill the Ororo-2 well in Q1 2018 and access the contingent oil and gas resources in the Ororo field with an early production scheme through an extended well test generating an initial estimated rate of approximately 2,700 bopd;

· The Company is in discussions with REYL & Co (UK) LLP, part of the Swiss banking group REYL et Cie, which has CHF 13bn AUM, to structure a contingent liquidity facility of up to US$100 million which would be backed by the securitisation of receipts under the BP Prepayment and Offtake Agreement. 

· On confirmation that the Ororo-2 well production rates of the hydrocarbon reservoirs are in line with those estimated in the CPR, and conditional on the Company securing further financing, by way of the non-dilutive REYL facility, the Company will undertake a multi well campaign to fully develop the Ororo Field, involving the drilling of up to four further wells and the installation of permanent production, processing and pipeline facilities at the Field.

The entry into the JOA enables the Company to transition from an investing company into an operating company and as such Sirius is required under the AIM Rules for Companies to seek Shareholder approval and re admission of its Enlarged Share Capital to trading on AIM pursuant to AIM Rule 14 and, accordingly, the Company requires the approval by its Shareholders of the Proposals, such approval to be sought at the General Meeting, expected to be held at: at the offices of Fladgate LLP, 16 Great Queen Street, London WC2B 5DG and a notice of which will be contained in the Admission Document. If the Resolutions are duly passed at the General Meeting, the Company's existing trading facility on AIM will be cancelled and the Company will apply for the Enlarged Share Capital to be admitted to trading on AIM.

The Company has today published the Admission Document and Notice of General Meeting to shareholders which will also be made available on the Company's website at www.siriuspetroleum.com.

Bobo Kuti, Chief Executive, commented:

"We would like to thank all of our stakeholders for their support and we are now in a strong position as we seek shareholder approval to embark on the first operational stage of the Company's asset - the Ororo Field. This will be a transformational period for Sirius as we implement our strategy to develop proven oil and gas assets in Nigeria working alongside our World class partners.

"The proposed contingent liquidity facility, which is being structured by REYL, is intended as an innovative and competitive method of providing certainty of funding for the full development of the Ororo field. Alongside the BP offtake agreement, this will provide us with a continuity of funding for the full field, multi well drilling and production programme without suffering excessive dilution for equity shareholders, subject to us delivering the necessary production volumes.

"Our success in securing the vendor finance consortium, comprising world-class service partners, and the pre-pay facility and offtake agreement with BP underlines the confidence all stakeholders have in achieving the successful development of the Ororo asset. We are very excited by this development and anticipate replicating this structure as we seek to build a substantial portfolio of producing and near-production assets in Nigeria."

Enquiries:

Sirius Petroleum +44 20 3740 7640

Bobo Kuti / Jack Pryde

Cantor Fitzgerald Europe +44 20 7894 7000

Sarah Wharry

Gable Communications +44 20 7193 7463

John Bick

srsp@gablecommunications.com

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Publication of Admission document 30 November 2017

CREST accounts to be credited with Unconditional Placing Shares (as applicable) 5 December 2017

Definitive share certificates for the Unconditional Placing Shares expected

to be despatched (as applicable) 14 December 2017

Latest time and date for receipt of forms of proxy 10 a.m. on 14 December 2017

General meeting 10 a.m. on 18 December 2017

Admission effective and dealings expected to commence

in the Enlarged Share Capital on AIM 19 December 2017

CREST accounts to be credited with Conditional Placing Shares (as applicable) 19 December 2017

Definitive share certificates for the Conditional Placing Shares expected

to be despatched (as applicable) 2 January 2018

KEY STATISTICS

Number of Existing Ordinary Shares in issue 2,542,029,522

Number of Conversion Shares (including Fee Shares) 290,236,279

Number of Unconditional Placing Shares 394,000,000

Number of Conditional Placing Shares 329,700,000

Enlarged Share Capital on Admission 3,555,965,801

Placing Price 1p

Market capitalisation at Admission at the Placing Price £35,559,658

Number of warrants and options outstanding on Admission 796,500,000

Number of LOG Conversion Shares 92,307,692

Notes:

The following exchange rates have been used throughout this document where appropriate: £1.00 = US$1.3

The number of the LOG Conversion Shares is an estimate based on the exchange rate set out above. The actual number of Ordinary Shares to be issued on the conversion of the Convertible Loan Facility may vary due to future fluctuations in the exchange rate.

1. Introduction

On 16 August 2017, the Company announced that it had entered into a joint operating agreement in respect of the Ororo Field, offshore Nigeria, and that it had applied for a voluntary suspension from trading of its shares pending the publication of this document.

The Company announced today that it has agreed an Unconditional Placing of 394,000,000 new

Unconditional Placing Shares at the Placing Price to raise gross proceeds of approximately £3,940,000 and a Conditional Placing of 329,700,000 new Conditional Placing Shares at the Placing Price to raise gross proceeds of approximately £3,297,000 million.

Additionally, the Company also announced that it has entered into an agreement with London Oil and Gas for the provision of the $12 million Convertible Loan Facility.

The net proceeds of the Placing, the Convertible Loan Facility and the commitments of the Company's partners under the Commercial Agreements will allow the Company to drill the Ororo-2 well in accordance with the Ororo JOA. If the Ororo-2 well confirms that the production rates of the

hydrocarbon reservoirs are in line with those estimated in the CPR, it is the intention of the Board to raise further funds by way of a non-dilutive REYL facility to enable the Company to drill a multi well campaign on the Field, currently projected to involve the drilling and completion of a further four wells and the installation of permanent production, processing and pipeline facilities at the Field. The Company is in discussions with REYL regarding putting the proposed Liquid Facility in place to provide this further funding.

The entry into the JOA marks the transformation of the Company from an investing company into an operating company, which is deemed to constitute a reverse takeover of the Company under the AIM Rules and, accordingly, the Company requires the approval by its Shareholders of the Proposals, such approval to be sought at the General Meeting, notice of which is set out at the end of this document. If the Resolutions are duly passed at the General Meeting, the Company's existing trading facility on AIM will be cancelled and the Company will apply for the Enlarged Share Capital to be admitted to trading on AIM.

2. Background to and reasons for the Proposals

Since April 2007, the Company has had no substantive trading business following the decision to cease the business of developing and using aggregation software in the gaming industry. Since that date, the Company has been classified as an investing company under the AIM Rules. The investing policy has been to identify oil and gas opportunities, particularly interests in marginal fields in Nigeria. Since July 2008, the Company has entered into various agreements with third parties to seek out opportunities in the Nigerian oil and gas sector.

In October 2011, the Company announced that it had entered into the Ororo FTSA with Owena and Guarantee in relation to a proposed investment in the Ororo Field located in OML 95 in Nigeria. Pursuant to the Ororo FTSA, as reaffirmed, amended and restated by the FTSA Affirmation Agreement and FARA, Sirius Ororo holds an economic, rather than legal, interest in the Ororo Field. In order to convert its economic interest in the Ororo Field into a legal Participating Interest, Sirius Ororo will be required to enter into a formal deed of assignment with Owena and Guarantee and to obtain requisite consents from the MPR Minister, NNPC and Chevron to such assignment. Since its entry into the Ororo FTSA, the Company has endeavoured to raise the finance necessary to develop the Ororo Field and to progress the preliminary work programme under the Ororo FTSA.

Between June 2015 and August 2017, the Company announced that it had entered into a number of conditional Commercial Agreements in respect of financing the development of the Ororo Field.

These included:

• the Drilling Agreement;

• the Well Management Agreement;

• the Technical Services Agreement;

• the BP Prepayment and Offtake Agreement;

• the ISM Agreement; and

• the Offshore Service Vessels Agreements.

The effect of the Commercial Agreements is to provide technical services to the Group to assist with the drilling of the Ororo 2 well.

3. Company Strategy

The Company's strategy is to target proven opportunities and maximize hydrocarbon production and recovery through the acquisition of discovered assets in Nigeria, with a particular focus on shallow water offshore areas and realise upside potential through appraisal activities.

The Board will seek to farm into or acquire high quality assets located in major producing complexes of Chevron, Shell, Total, Mobil, ENI and other majors.

The Company is in active discussions to farm into a number of near term production opportunities,

leveraging on the commercial arrangements with its partners.

President Buhari's administration initiated many structural reforms within the NNPC and the MPR to provide clarity, transparency, and accountability within the Nigerian oil and gas Industry. These reforms continue to support indigenous projects. The Company hopes that its existing relationship with Owena, the energy arm of the Ondo State Government, will enhance its access to proven oil discoveries located within Ondo State.

There is no guarantee that the Company will be able to carry out its intended strategy, that any

discussions with third parties will result in the Group entering into definitive agreements relating to

subject matter of those discussions or that the Group will pursue any new business opportunities.

4. Key strengths

Subject to the approval of the Resolutions, the Directors and Proposed Directors believe that the Group's key strengths include:

• an initial programme to drill the Ororo-2 well and access the contingent oil and gas resources in the Ororo field with an early production scheme through an extended well test generating an initial estimated rate of 2,700 boepd;

• following successful completion of the Ororo 2 well, access to short term cash flows from the sale of oil and gas;

• world class partners in Schlumberger, COSL (a subsidiary of the stateowned China National Oil Corporation), Add Energy and BP, who have indicated their support for the technical merits of the Ororo Field through the terms of the Commercial Agreements; and

• a committed Board and management team with significant corporate and operational experience and a depth of contacts and relationships in Nigeria.

5. The Ororo Field

5.1 Overview

The Ororo Field is located within OML 95 in the Niger Delta, offshore Nigeria, in the western part of the prolific Niger Delta petroleum system. It lies in shallow waters offshore Ondo State in water depths ranging between 23ft and 27ft. The field is adjacent to the Mina, West Isan, Ewan, Eko and Parabe fields, all of which are operated by Chevron.

The Ororo Field was discovered in OML 95 by Gulf Oil Company of Nigeria (Chevron) and NNPC in 1986 with the drilling of Ororo1. Hydrocarbons were discovered in seven sandstone reservoirs (D1 to D5, F and G) in Ororo1. Four of the reservoirs were tested, two produced oil (D3 and G) and two produced gas condensate (D4 and D5).

The Ororo Field was not developed by Chevron and was designated a marginal field by the DPR on 27 August 2001. Under the 2003 Marginal Fields Allocation Round, the Ororo Field was awarded to Guarantee (55 per cent. interest) and Owena (45 per cent. interest). Under the marginal field terms, the marginal field remains part of OML 95, but is contractually ringfenced under the Farmout Agreement to Guarantee and Owena, who are then entitled to perform petroleum operations as the farmee. NNPC and Chevron as holders of the licence to OML 95 entered into the Farmout Agreement with Guarantee and Owena in March 2004, which transferred production rights to Guarantee and Owena, as the farmee, in consideration of the grant of an overriding royalty from production from the Ororo Field. The royalty payable by the farmee under the Farmout Agreement is calculated on a progressive basis as follows:

On production of oil _

• up to 2,000 bpd - 2.5 per cent. of production value;

• 2,001 to 5,000 bpd - 3 per cent. of production value;

• 5,001 to 10,000 bpd - 5.5 per cent. of production value;

• 10,001 to 15,000 bpd - 7.5 per cent. of production value; and

• in excess of 15,000 bpd - an additional rate agreed between the parties to the Farmout Agreement.

On production of natural gas

• 0 to 20 MMscfd - nil;

• 20 to 50 MMscfd - 2.5 per cent. of production value;

• 50 to 100 MMscfd - 3.5 per cent. of production value; and

• in excess of 100 MMscfd - 5 per cent. of production value.

The Farmout Agreement was initially entered into for a term of 60 months. The DPR, however, has

extended the Ororo Field licence beyond its original term, and the licence is now due to expire on 1 May 2019 if the field has not been developed by that date. The term of the Farmout Agreement was, accordingly, also extended.

5.2 The Ororo FTSA and Ororo JOA

In October 2011, Sirius Ororo entered into the Ororo FTSA with Guarantee and Owena which provided for the transfer to Sirius Ororo of a 40 per cent. participating interest in the Ororo Field. In exchange for this interest, the Ororo FTSA provides for the appointment of Sirius Ororo as the sole service provider assisting the operator, the provision by Sirius Ororo of certain technical, financial and operational support to Owena and Guarantee on an exclusive basis, and following the decision to proceed with field development, the requirement to fund the development of the Ororo Field on a 100 per cent. basis. Upon completion of reentry and flow testing, which result in production, the Ororo FTSA also requires that Sirius Ororo pay the amount of US$500,000 in aggregate to Guarantee and Owena. At such time, Sirius Ororo will be entitled to a preferential cash flow from the production of crude oil to recover its investment in funding the field to production of first oil, receiving 88 per cent. of net cash flows from the Ororo Field, until full cost recovery is achieved. Following this, the Ororo FTSA envisages that Sirius Ororo's cash flow entitlement will revert to 40 per cent. in accordance with its equity interest. As at the date of this document, the 40 per cent. participating interest in the Ororo Field is held by Guarantee and Owena on trust for Sirius Ororo, a structure adopted by some of the other London quoted companies developing Nigerian oil and gas assets. The transfer of such participating interest to Sirius Ororo is intended to be perfected at a later stage, which will be subject to the MPR Minister's consent, as well as consents from both NNPC and Chevron.

In order to extend the underlying Ororo Field licence in 2016 with a view to jointly developing the

Ororo Field, in September 2015, Sirius Ororo, Guarantee and Owena reaffirmed the Ororo FTSA by entering into the FTSA Affirmation Agreement. The parties committed to performing a work

programme intended to progress the development of the Ororo Field. Under the FTSA Affirmation

Agreement, a preliminary work programme to be funded by Sirius Ororo, comprising:

• community relations programme;

• environmental impact assessment (completed and approved by the FME);

• geotechnical and seabed bathymetry survey;

• provision of a work programme/field development plan;

• securing a permit to drill a new well (Ororo-2);

• rig slot confirmation and other long lead items;

• rig mobilisation to Ororo Field for Ororo-2 well; and

• drilling of Ororo-2 well or reentry of Ororo1 well.

In November 2016, Sirius Ororo, Guarantee and Owena entered into the FARA to amend the terms of the Ororo FTSA and the FTSA Affirmation Agreement. The amendments included a reduction of the agreed preliminary work programme, to include only the provision of a work programme/field development plan, securing a permit to drill a new well (Ororo-2) and drilling of Ororo-2 well or re-entry of Ororo1 well. The parties agreed to extend the deadlines for receipt of requisite government approvals, as well as the renewal of the Ororo Field Licence to the end of February 2017. In particular, no deadline applies to obtaining the consent of the MPR Minister to the acquisition by Sirius Ororo of its 40 per cent. participating interest in the Ororo Field. Sirius Ororo agreed to provide Owena and Guarantee with a cash backed guarantee in the amount of US$5 million by the end of March 2017, to commence the amended preliminary work programme at the same time and to pay to Guarantee and Owena an administrative fee (previously called OPEX under the Ororo FTSA). Whilst, as at the date of this document, such deadlines have not fully been met, the parties to the FARA continue their cooperation under the FARA. As part of such cooperation, the Group engaged Polaris Consulting Company to complete the geotechnical and seabed bathymetry surveys. Following the analysis of the seabed bathymetry survey, the Company announced on the 24th May 2017 that it had confirmed the "COSL Power" as the jackup rig to be utilised for the Ororo field campaign. In relation to the cash backed guarantee, both Owena and Guarantee have confirmed in writing that provision of a guarantee, valid for 28 days, fully satisfies the requirement. It should be noted that the issue of such a guarantee will be subject to the normal credit approval process, including approval by the credit committee of the Company's bank and possible requirements to provide additional security, as well as to payment of arrangement and other fees.

In October 2015, approval was granted by the MPR to drill the Ororo-2 well in a location close to the Ororo-1 well. In April 2016, Sirius Ororo submitted an environmental impact assessment which was approved by the FME in July 2016. The drilling permit and DPR's approval of the environmental impact assessment have expired and Sirius Ororo is taking steps to renew them. Sirius Ororo is taking steps to secure other operating permits, which are customary for an oil and gas company.

Sirius Ororo has entered into the Ororo JOA with Guarantee and Owena. The Ororo JOA sets out the key commercial terms on which the parties will conduct the joint operation of the Ororo Field under the Ororo FTSA. In particular, the Ororo JOA provides that within 60 business days of the date of the Ororo JOA, Sirius Ororo will, with the reasonable support of the other parties, deliver to the operating committee established under the Ororo JOA a proposed work programme and budget detailing the joint operation of the Ororo Field, which will include the following:

• obtaining a suitable drilling rig in a timely manner;

• obtaining appropriate access to drilling sites in the Ororo Field;

• obtaining necessary approvals and authorisations from the government of Nigeria, NNPC and Chevron as may be required for the contemplated work; and

• the parties' acceptance of all conditions and/or revisions proposed by the government of Nigeria and/or NNPC and Chevron, as the original farmor of the Ororo Field, with respect to the work programme.

Pursuant to the Ororo JOA, the agreed initial work programme comprises the following:

• pipeline route and other activities required for the rig move to site;

• rig mobilization to site;

• the drilling of a new well, flow testing and completion of the Ororo-2 well;

• evaluation of the data obtained from well test(s); and

• development of a Field Development Plan.

If a discovery is made, Sirus Ororo will be required to submit to the operating committee, established under the JOA, a report relating to such discovery, together with Sirius Ororo's recommendations. If the operating committee determines that the discovery merits appraisal, Sirius Ororo will be required to deliver a work programme and budget for the appraisal of such discovery, to include:

• commissioning and execution of the front end engineering and design study;

• preparation of and submission of a field development plan to the DPR;

• extension of the cost recovery point;

• implementation of the approved and agreed field development plan;

• execution of production operations in the Ororo Field until the end of its economic life, which may include work over or drilling of infill production wells; and

• abandonment of the Ororo Field.

5.3 Reserves and resources

Rockflow completed the CPR which evaluated the contingent oil, condensate and gas resources at the Ororo Field and is dated 2 June 2017. A summary of the contingent resources at the Ororo Field as evaluated in the CPR is set out in the table below.

 (1) 1 barrel of oil equivalent = 5,800 cubic feet of natural gas.

(2) The CoD (Chance of Development) indicates the probability that the full field development will be undertaken.

6. The planned work programme

The Group has engaged with leading oil field services companies in order to develop the Ororo Field, which will initially comprise the drilling of the Ororo-2 well and following its successful completion, and subject to the Company securing further funding, will then comprise up to a further four wells. The development programme has been formulated on the basis of reduced upfront costs and favourable payment terms from these service providers, combined with the technical merits of the staged drilling programme. A summary of the field development programme is set out in paragraphs 6.1 to 6.3 below, with further detailed analysis in the CPR, which is included in Part IV of the Admission Document.

Subject to the Shareholders' approval of the Resolutions at the General Meeting, the Company's level of funding will enable it to drill and complete the Ororo-2 well only. The Company intends to complete the Ororo-2 well in the G sands and test the D sands. In order to complete the full field development programme as envisioned in the CPR, the Company will require further funds and is in discussions with various finance providers regarding this. It is the Director's intention to utilise the proposed Facility, when entered into and which will be conditional, among other things, on certain production rates being achieved based on the CPR estimates. There is no guarantee that the Facility will be entered into or that its final terms or that the conditions for it being drawn will be fulfilled.

If no further funding is secured, production at Ororo-2 may need to be suspended after an initial period of 9 months as the operating costs designed to accommodate 10,000 bopd production will be in excess of the likely revenues derived from the sale of the produced oil.

6.1 Ororo-2 well and Extended Well Test (EWT)

The drilling rig is proposed to be mobilised to the Ororo Field in order to begin drilling the Ororo-2 well in March 2018, which will be drilled in a location close to Ororo1. The Ororo-2 well is planned to penetrate all of the D sands with the top three sands (D1, D2 and D3) being sampled and pressure tested. The objectives of the tests are to determine GOCs, the pressure regimes, fluid compositions, and insitu gasoil ratios to gain confidence for the full field development.

Rockflow has estimated that the Ororo-2 well will target a total Stocktank Oil Initially in Place (STOIIP) of 2.98 mmbbls in the G sands within the Ororo Field (at a midcase scenario). Drilling of the Ororo-2 well is expected to take approximately 45 days from mobilisation of the drilling rig to site. During the EWT phase, the Ororo-2 well is expected to initially produce into a temporary well test production facility mounted on a barge. Both the production facility and the barge are intended to be leased from their respective suppliers. Oil is expected to be treated (degassing and dehydration) to standard specifications for shuttle tanker transportation. Separate oil storage capacity is expected to be provided on the barge to store up to 10 days' production (approximately 50,000 bbls).

The EWT flow rate is anticipated to be a maximum of 10,000 bopd oil and up to 15 MMscfd of

associated gas. The separators and the heater are expected to be sized to handle 15,000 bopd of gross liquids and 25 MMscfd gas. Gas from the Ororo-2 well fluids is expected to be separated and treated in a purpose built gas processing train to meet export specifications. It is proposed to install the oil and gas processing as well as oil storage facilities on a host facility installed on a barge. Oil is then expected to be transferred to a shuttle tanker for onward transport and offloading at the Chevron operated Escravos Terminal as per the BP Prepayment and Offtake Agreement. It is planned to install an 8 inch diameter x 5 km pipeline for export of 6.0 MMscfd gas to the Parabe field, with flaring as a fall back option.

6.2 Ororo-3 well and EWT

Following completion of the Ororo-2 well and conditional on further funding being obtained, the drilling rig is intended to proceed to drill the Ororo3 well, which is proposed to target the D sand reservoir sequence. The D sands were flow tested by Chevron in the 1986 Ororo1 well and the results of Ororo-1 DST (Drill Stem Test) program recovered 36° API oil at a rate of 624 bopd from the D3 sands. The CPR estimates that the highest oil production rates could be achieved from the D1 sands which could deliver an initial combined rate from a two bore multilateral well of 4,781 bopd. Therefore, the D1 may be considered as a target for Ororo3 if oil is recovered from this reservoir in Ororo-2. Currently, however, the Ororo-3 well is planned to target the D3 sands which holds a P50 STOIIP of 10.18 mmbbls as it was proven to flow oil on test.

Drilling of the Ororo-3 well is expected to take approximately 30-45 days following completion of the Ororo-2 well, the well is proposed to be put on early production via an EWT along with hydrocarbons produced from the Ororo-2 well.

If the fluid results in the above wells for the D1 and D2 sands are positive, two further wells, Ororo-4 and Ororo-5, targeting these sands may be drilled as the second phase of the EWT. If such further wells are drilled, their planning and design will require geophysical and geological analysis of new data gathered from the Ororo-2 and Ororo-3 wells.

6.3 Associated infrastructure

The Group plans to produce the wells through an unmanned Conductor Supported Platform. The wells are expected to be tied back to the well testing facilities installed on a barge, to be moored nearby, via a high pressure flexible flow line. Depending on the success of the first two wells, a second well head platform would be installed for the 4th EWT well and any further development.

Gross fluids and oil handling capacity of production facilities leased for the purpose of EWT will be

adequate in capacity to handle FFD production rates. As such, no new or additional equipment is

expected to be required for the oil processing train. It is proposed to purchase the gross fluids and oil processing train at the conclusion of the EWT prior to launching the FFD phase of the project.

7. Commercial agreements

In order to implement the field development programme, the Group has entered into several Commercial Agreements with leading oil field service providers and offtakers. These agreements cover the provision of certain services, and also contain provisions which allow the Company to finance the development programme from a mix of oil prepayment, equity capital and cash flows from the early production of oil.

7.1 Drilling Agreement

In November 2016, the Company entered into the Drilling Agreement with COSL for the provision of a high specification jackup rig that will be utilised by the Company to drill offshore wells on the Ororo Field and on other mutually agreed areas (if applicable) as part of its shallow offshore development strategy in Nigeria. COSL will extend delayed invoice and payment terms to Sirius which will have the effect, dependent on successful drilling, of deferring a significant portion of the cost of the rig until after the Company commences the production of hydrocarbons, but is otherwise on normal industry terms. COSL is to carry out the work on a daywork basis with the agreement setting out the daily rates and payments due to COSL. Upon execution of the agreement, the Company paid COSL a non-refundable deposit of US$500,000. A further fee of US$3 million is payable to COSL for the mobilisation of the drilling unit no less than 60 days prior to the date the drilling unit departs for the Ororo Field. The operating cost rate of the drilling unit is US$90,000 per day and is payable from the moment the drilling unit is positioned on the Company's first drilling location into a drilling position. Additional profit and bonus payments may apply upon completion of the first well in the campaign, at the rates of US$27,000 and US$5,350 (respectively) per day.

COSL is the international division of COSL China, one of the leading global oilfield service companies. COSL is a majority owned subsidiary of the Chinese stateowned China National Offshore Oil Corporation. COSL is a global provider of drilling equipment and services to the upstream oil and gas industry, providing drilling rigs, seismic vessels and services, well service and marine and transport vessels.

7.2 ISM Agreement

The Company has entered into an integrated services management contract with Schlumberger. The contract is for a multiwell campaign and Schlumberger will provide Sirius with a comprehensive package of managed and integrated products and services including directional drilling services, logging, completion and production fluids, cementing and pumping services, well intervention and stimulation products and services, well testing services, wellsite communications and data and software solutions.

The price of the works will be set out in relevant work orders, absent which Schlumberger's standard price list will apply. During the base of design phase, Schlumberger will charge US$75,000 plus expenses per month for assignment of a project manager to the Company.

Schlumberger will issue an estimated invoice for 85 per cent. of its charges for the works for the first well 90 days prior to mobilisation. The Company is to make payment 30 days prior to mobilisation. Following this, Schlumberger will invoice the Company on a monthly basis with the Company being required to pay all invoices within a period of thirty days plus a further 30 days grace period from receipt. The remaining 15 per cent. of the service charges, together with a bonus equal to 25 per cent. of the total service charges for the relevant well, will be payable if a well reaches production capability. Where a well reaches production capability at a later stage, interest may apply at a rate of 5 per cent. per annum, calculated on the total service charge for that well.

Schlumberger is the world's leading provider of technology for reservoir characterization, drilling, production, and processing to the oil and gas industry. Working in more than 85 countries and employing approximately 100,000 people, Schlumberger supplies the industry's most comprehensive range of products and services, from exploration through production and integrated poretopipeline solutions for hydrocarbon recovery that optimize reservoir performance.

7.3 BP Prepayment and Offtake Agreement

On 14 July 2017, Sirius entered into the Prepayment and Offtake Agreement with BP. Under the terms of the agreement, BP will provide a prepayment facility for a fixed volume of Escravos Blend crude deliveries by prepaying an amount of up to US$10 million per cargo to Sirius. The availability of the prepayment facility is conditional upon, among other things, the Ororo Field achieving certain daily production levels.

Whilst the Company intends to drill the Ororo-2 well into the G sands and to test the D sands, there is a high probability that production from the Ororo-2 well alone will be insufficient to allow the BP prepayment facility to be drawn.

If the facility is drawn, the prepay volume will be delivered to BP following 30 days written notice from BP to Sirius, and is required to be delivered in full by no later than 120 days following the disbursement of the initial advance amount to Sirius. An interest rate of one month US Dollar Libor plus nine per cent. per annum will apply to the outstanding balance of the facility from the date of the initial advance.

The price paid by BP for the oil is determined by reference to averages of the Platts quotations for the applicable pricing period (as nominated by BP) plus the NNPC monthly published differential, less a freight adjustment in case of smaller cargoes.

7.4 Technical Services Agreement

The Company has entered into a technical services agreement with Havoc. Under the terms of the

agreement, Havoc will be technical adviser to Sirius and will provide a technical and commercial assessment of the oil and gas assets in which Sirius is interested in acquiring or farming into, including all geological and geophysical services required. Two representatives of Havoc will sit on the Company's technical advisory committee.

7.5 Well Management Agreement

The Company has entered into a well management agreement with Add Energy. Under the agreement, Add Energy has agreed to provide well management services to Sirius and, as part of the agreement, will extend delayed invoice and payment terms to Sirius in line with the Company's other project partners. The Company is to make a lump sum payment of approximately US$2.3 million, of which approximately US$269,000 has been paid, and the balance is expected to be paid on Admission. For the execution phase of the project, invoices will be issued at the end of the month with payment terms of 14 days. An amount equal to 30 per cent. of each invoice will be deducted and deferred for three months following commencement of production from the first well in the programme. A bonus, at a rate of 5 per cent., will be charged on each such deferred amount.

Add Energy is an international consultancy provider for the energy industry, with a focus on drilling and well operations, asset and operations management, and risk and safety management. Add Energy works with major international oil & gas companies, including BP, Shell, Woodside and Statoil and has provided well management solutions in Africa, Europe and Australasia.

7.6 Offshore Service Vessels Agreement

The Company has entered into charter party agreements with Tidewater for the hire of two offshore vessels for the term of drilling of one well, with an option to extend the agreements for three additional well drilling terms. The Company will be charged for the provision of the vessels at a daily rate of US$11,000 per vessel, of which 70 per cent. will be payable monthly in arrears, and the remaining 30 per cent., together with a 5 per cent. deferral bonus, will be payable within 60 days of identification of hydrocarbons. The daily rates are exclusive of fuel, lubricants, water, garbage skip, VAT and other expenses, taxes, levies, custom charges, dues and duties.

Pursuant to Addendum 1 to the charter party agreements, the Company is to notify Tidewater of a

delivery window set for the first calendar quarter of 2018, 60 days in advance. An advance payment of US$990,000 per vessel, will be payable by the Company to Tidewater within 30 days of such notice.

8. Current trading and prospects for the Group

Assuming that the Proposals are approved at the General Meeting and completion of the Placing is by no later than mid December 2017, the Directors expect to immediately instruct the commencement of technical services for the Ororo-2 well drilling programme, with rig mobilisation expected approximately within one month from Admission and the start of the drilling of the well expected within approximately two months from Admission. Assuming that the results of the drilling programme are as expected, then the Directors anticipate production commencing in March 2018, with cash flows from production anticipated to be realised by the Company shortly thereafter.

As at 29 November 2017, being the last practicable date prior to the publication of this document, the Company had unaudited cash and cash equivalents of £0.1 million, and total debt by way of convertible loans outstanding of £0.55 million.

9. Details of the Placing, the Convertible Loan Facility, and use of proceeds

9.1 Key terms of the Placing

The Placing is being made by the Company through Novum, DS&C, Patronus Partners and the Company's own contacts. The Placing comprises the Unconditional Placing and the Conditional Placing.

Pursuant to the Unconditional Placing, the Company has raised £3.9 million (approximately US$5.1 million) (before expenses) through the Unconditional Placing of the Unconditional Placing

Shares with investors at the Placing Price.

Pursuant to the Conditional Placing, the Company has conditionally raised £3.3 million (approximately US$4.3 million) (before expenses) though the Conditional Placing of the Conditional Placing Shares with investors at the Placing Price conditional, inter alia, upon the Resolutions being approved by Shareholders at the General Meeting and on Admission.

The net proceeds of the Placing are estimated at £7.2 million. The net proceeds will be used to finance upfront capital costs associated with the field development programme at the Ororo Field, the costs of Admission and for general working capital purposes.

The Placing Shares will, upon issue, rank pari passu with the Existing Ordinary Shares. The Conditional Placing is conditional upon, inter alia, Shareholders passing the Resolutions at the General Meeting and Admission becoming effective by not later than 8.00 a.m. on 19 December 2017.

Christopher Neal, a non-executive Director of the Company, has subscribed for 3,000,000 Conditional Placing Shares pursuant to the Conditional Placing at the Placing Price. Following Admission, Mr Neal will be beneficially interested in 24,486,536 Ordinary Shares.

9.2 London Oil and Gas Convertible Loan Facility

The Company has entered into the LOG Facility Agreement, pursuant to which LOG agreed to make available to the Company a US$12,000,000 convertible loan facility, in one or more drawdowns during the period of 17 months starting 10 November 2017. The Convertible Loan Facility bears interest at LIBOR plus 6.5 per cent. It is repayable in full on 22 July 2019. If the Company receives any payment under the BP Offtake and Prepayment Agreement on or after 1 March 2019, it will apply 65 per cent. of the amounts received to repay on the last day of each three months' interest period the outstanding balance of the loan drawn (principal and all accrued and unpaid interest and fees outstanding at that time).

LOG may at any time before the facility is repaid in full (principal and interest), elect to convert up to 15 per cent. of the committed principal amount of the facility into Ordinary Shares at the conversion price of 1.5p.

The Company entered into a collateral letter agreement with LOG, pursuant to which within 5 business days of delivering a drawdown notice under the LOG Facility Agreement, the Company will deliver to LOG such collateral, including the Company's future oil revenue receipts from the Ororo Field or other assets, as will be acceptable to LOG, and will grant security in favour of LOG over such collateral.

9.3 Use of proceeds

The purpose of the Placing and the Convertible Loan Facility, is to fund the development of Ororo-2 and to bring the well into production. Further funding will be required to maintain production at the Ororo-2 well beyond an initial 9 month period and to fund the costs of the further field development programme at the Ororo Field.

The Placing is intended to raise gross proceeds of £7.2 million before costs and net proceeds of

£6.4 million. The Convertible Loan Facility will provide the Company with a further $12 million of

funding to support the capital expenditure and working capital requirements of the Company. A

summary of the use of proceeds of the Placing is shown in the table below:

£'000(2)

Sources of funds

Existing cash as at 29 November 2017(1) 93

Gross proceeds from the Unconditional Placing 3,940

Gross proceeds from the Conditional Placing 3,297

Convertible Loan Facility 9,231

Total sources of funds 16,561

Uses of funds

Costs of the Placing and Admission 759

Deposit payable under the Drilling Agreement 2,308

Other capital costs 9,752

Working capital to first oil 1,406

Total use of proceeds 14,225

(1) Being the latest practicable date prior to publishing this document.

(2) Based on a GBP:USD exchange rate of 1.3.

9.4 Other information relating to the Placing

The Unconditional Placing is unconditional, and settlement of the Unconditional Placing Shares shall be three Business Days after the date of publication of this document.

The Conditional Placing is conditional, inter alia, upon:

a) the passing of the Resolutions;

b) the Introduction and Placing Agreement becoming unconditional in all respects (other than

Admission) and not having been terminated in accordance with its terms; and

c) Admission of the Enlarged Share Capital becoming effective by not later than 19 December

2017 (or such later time and/or date as Cantor Fitzgerald and Novum may agree, not being later

than 2 January 2018).

Accordingly, if any of such conditions are not satisfied, or, if applicable, waived, the Conditional Placing will not proceed.

The Placing will result in the issue of in total 723,700,000 new Placing Shares (representing, in

aggregate, approximately 20 per cent. of the Enlarged Share Capital). The Placing Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares and therefore rank equally for all dividends or other distributions declared, made or paid after the date of issue of the Placing Shares. No temporary documents of title will be issued.

Application has been made to the London Stock Exchange for the Unconditional Placing Shares and the Enlarged Share Capital to be admitted to trading on AIM.

It is expected that Admission of the Unconditional Placing Shares will become effective and that dealings in the Unconditional Placing Shares will commence on 5 December 2017. Definitive share certificates in respect of the Unconditional Placing Shares will be dispatched on or before 14 December 2017.

It is expected that Admission of the Enlarged Share Capital will become effective and that dealings in the Enlarged Share Capital will commence on 19 December 2017. Definitive share certificates in respect of the Conditional Placing Shares and the Conversion Shares will be dispatched on or before 2 January 2018.

10. Future Funding Discussions Ongoing

The Company has agreed in principle the commercial terms of the Facility, proposed to be structured by REYL and intended to fund the full field development of the Ororo field, involving a multiwell drilling programme and installation of permanent production, processing and pipeline facilities on the field.

The Facility, if entered into, is intended to be backed by the securitisation of receipts under the BP

Prepayment and Offtake Agreement, which will require BP's consent. The Company intends to establish a special purpose vehicle for the purposes of such securitisation.

The Facility is expected to contain certain conditions to drawdown, including the Ororo Field delivering production volumes equivalent to at least 80% of the estimated daily production volumes attributed to the Ororo Field in the CPR.

The structure of the Facility has been agreed in principle between REYL and the Company and the

definitive facility and securitisation documents are being negotiated. The availability of the Facility and its terms are subject to the parties entering into the definitive facility documents. There is no certainty that the Facility will be entered into or drawn down.

11. General meeting

A notice is set out at the end of the Admission document convening a general meeting of the Company to be held at the offices of Fladgate LLP, 16 Great Queen Street, London WC2B 5DG on 18 December 2017 at 10.00 a.m. at which the Resolutions will be proposed to:

1. Approve the Proposals: Shareholders' approval of the Proposals, being ratification of the entry

of the Company into the Ororo JOA and approval of the Conditional Placing, which is conditional

on these approvals, is required under the AIM Rules because collectively they are deemed a

reverse takeover and a transition of the Company from an investing company into an operating

company;

2. Authorise the directors to allot equity securities: Shareholders' approval is required in order

to allot the Conditional Placing Shares to allow the Company to receive the net proceeds of the

Conditional Placing and to authorise the directors to allot the Conversion Shares, the LOG

Conversion Shares and certain Warrants;

3. Disapply pre-emption rights: Shareholders' approval is required to disapply pre-emption

rights in respect of the Conditional Placing Shares to allow the Company to receive the net

proceeds of the Conditional Placing and to authorise the directors to allot the Conversion Shares,

the LOG Conversion Shares and certain Warrants;

4. Appoint Mark Henderson, Toby Hayward and Simon Hawkins as directors of the Company; and

5. Approve the change in the Articles: Shareholders' approval is required in order to change the

Articles to increase the limit on the aggregate fees of the Directors that may from time to time

be determined by the Board from £100,000 (one hundred thousand pounds) per annum to

£350,000 per annum. Additional sums may from time to time be determined by the company

by ordinary resolution. In the case of an executive Director, such fees will be payable to him in addition to his remuneration as an executive Director.

Each of the above resolutions is interconditional on the other.

Under the AIM Rules, if Shareholders approve the Resolutions at the General Meeting, the Company's existing trading facility on AIM will be cancelled and the Company will be admitted to AIM as a new applicant on the first business day after the General Meeting. If Shareholder approval is not given, the Company will not have the funding necessary to fulfil the Commercial Agreements, the Conditional Placing will not complete and the trading in the Company's Shares on AIM will remain suspended.