Tern Regulatory News (TERN)

15 March 2012

Silvermere Energy plc

("Silvermere" or the "Company")

Warrant Variation and Business Development Update

Silvermere, the independent oil and gas company focusing principally on appraisal and production opportunities in the US, is pleased to confirm additional funding arrangements that will help the Company to accelerate its business development pipeline once gas and condensate production start at its Mustang Island 818-L asset. Installation and tie-in operations remain on schedule to recommence in April 2012.

Variation of May 2011 Warrant Instrument

Pursuant to a pre-IPO funding round completed on 26 May 2011 the Company issued 2,857,143 warrants to be exercised at a price of 45p per share at any time up to 26 May 2012 ("May 2011 Warrants").

In accordance with the intentions expressed in the Company's admission document dated 31 August 2011 issued in connection with its re-admission to trading on AIM ("Admission"), and following consent given by the required quorum of warrant-holders, the warrant instrument has been varied by extending the validity period of the warrants until 26 May 2013 and reducing the exercise price to 30p per share.

Warrant-Holders Incentive Plan

As part of the amendment of the instrument, an incentive plan has been adopted (the "Incentive Plan") under the terms of which the holders of May 2011 Warrants can opt for early exercise of such warrants on advantageous terms. Holders of May 2011 Warrants exercising them on or before 15 April 2012 may do so at an exercise price of 20p per share and will in addition receive a further warrant with an exercise price of 30p per share valid until 31 August 2013. Additional warrants issued under the Incentive Plan will be equivalent in terms to the May 2011Warrants.

An undertaking to participate in the Incentive Plan has been received from T1ps Investment Management Limited ("t1ps") under the terms of which it will exercise sufficient May 2011 Warrants by 15 April 2012 to raise a minimum of £100,000 of additional funds for the Company. T1ps is the discretionary fund manager of SF t1ps Smaller Companies Growth Fund ("SF") and Elite t1ps Income & Growth Fund which own 11.9 per cent and 7.23 per cent, respectively, of the issued share capital of Silvermere.

Variation of terms of Warrant Undertaking

Further to the announcement made on 23 December 2011, the Company has agreed a second variation of the terms of the warrant undertaking entered into with the Company at the time of Admission by t1ps (the "Warrant Undertaking").

As a result of the further support offered by t1ps through its Incentive Plan undertaking above, the Company does not require funds due to it under the terms of the Warrant Undertaking immediately. T1ps has therefore requested and the Company has agreed that the latest date on which t1ps can be required to exercise warrants under the Warrant Undertaking will be further extended from 22 March 2012 until 15 July 2012.

Due to the size of SF's shareholding, its undertaking to participate in the Incentive Plan and the variation of the terms of the warrant undertaking constitute related party transactions as defined by the AIM Rules. The directors of the Company, having consulted with Merchant Securities Limited, the Company's nominated adviser, consider that SF's undertaking to participate in the Incentive Plan and the variation of the terms of the warrant undertaking are fair and reasonable insofar as Shareholders are concerned.

Summary and Comments

The effect of the above arrangements is to provide additional working capital of at least £100,000 to the Company which will enable the Board to commit to certain preparatory business development actions before the start of production.

The total amount raised under the Warrant-Holders Incentive Plan will be announced after 15 April 2012.

Commenting on the arrangements, Andy Morrison, Chief Executive of Silvermere said, "We are pleased with the support shown by existing investors which provides a win/win outcome that strengthens the Company's balance sheet while enabling those who invested at higher prices in the past to engage in the future growth plans of the Company. The additional working capital will enable us to advance our business development pipeline and we look forward to reporting on further progress in coming months."

--ENDS--

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About Silvermere Energy PLC

The Company acquired its interest in the Mustang Asset on 30 August 2011. This comprises a 33.33 per cent. working interest and 20.83 per cent. net entitlement interest in the Mustang Licence Area, an area within the southern half of the north west quarter and northern half of the south west quarter of the Block 818-L field as defined in State of Texas Oil and Gas Lease numbers 108873 and 108874. The Mustang Island 818-L field, located in Kleberg County waters of the Gulf of Mexico, is a field re-habilitation project targeting bypassed or only partially produced gas-condensate.

Early in 2011 the Hercules Offshore 205 jack-up rig was contracted to re-enter the I-1 Well on the Mustang Licence Area which was considered to be the most likely of the historic well sites to provide 14 optimum re-entry conditions. The I-1Well re-entry and side-tracking operation was completed in March 2011 leaving it ready to complete in sand horizons I-1 to I-6. Production and flow testing was carried out during June 2011. The well re-entry programme was led by Dominion as the operator. Gas and oil produced from the I-1Well is proposed to be connected to pipeline infrastructure and tied in via a subsea assembly, constructed for the purpose and then transported to the Six Pigs gas facility.

Silvermere's strategy is to acquire a portfolio of US oil and gas licence interests onshore and in shallow offshore waters, characterised by relatively low risk and low cost with the potential for near term production.

Silvermere is quoted on the AIM Market of the London Stock Exchange plc (AIM: SLME) with its offices in London.