Tomco Energy Regulatory News (TOM)

26 August 2021

TOMCO ENERGY PLC

("TomCo" or the "Company")

Acquisition of Valkor's 50% interest in Greenfield

TomCo Energy plc (AIM: TOM), the US operating oil development group focused on using innovative technology to unlock unconventional hydrocarbon resources, is pleased to announce that it has acquired from Valkor LLC ("Valkor") its 50% interest in Greenfield Energy LLC ("Greenfield"), the 50/50 joint venture company established by TomCo and Valkor in mid 2020, for wholly deferred equity consideration (the "Acquisition").

Details of the Acquisition

Pursuant, inter alia, to the terms of a membership interest purchase agreement ("MIPA"), entered into between the Company, Valkor and Greenfield on 25 August 2021 (the "Effective Date") to implement the Acquisition, Valkor has assigned its 50% membership interest in Greenfield to the Company such that TomCo now owns 100% of Greenfield and the existing joint venture ("JV") agreement between TomCo and Valkor with respect to Greenfield has been terminated.

The deferred consideration for the Acquisition comprises the issue to Valkor of 592,830,258 new ordinary shares of no par value in TomCo ("Ordinary Shares") (the "Acquisition Shares") which currently equates, in aggregate, to 29% of the Company's issued share capital as enlarged by the Acquisition Shares, subject to adjustment to ensure that Valkor and any person acting in concert with it shall not exceed a 29% ownership interest in the Company at the time such shares are issued. Valkor currently has no pre-existing interest in TomCo's issued share capital.

Issue of the Acquisition Shares is subject to Greenfield receiving funds from, or drawing upon, a loan or credit facility in connection with the construction of an oil sands processing facility as specified in the FEED Study dated 21 July 2021 (as amended or superseded) ("Financial Close"). In the event that Financial Close is not achieved within 3 years of the Effective Date no consideration is payable by the Company to Valkor and the obligation to issue the Acquisition Shares will lapse. The value of the maximum Acquisition Shares, based on the mid-market price of an Ordinary Share at the close of business on 25 August 2021 (being the latest practicable date prior to the date of this announcement) is, in aggregate, approximately £3.1 million. The MIPA contains, inter alia, certain customary representations and warranties from Valkor in relation to the sale of its interest in Greenfield for a transaction of this nature.

In connection with the Acquisition and shortly prior to receiving the Acquisition Shares, Valkor has agreed to enter into a lock-in and orderly market agreement with the Company. During the period of 18 months from execution of this agreement, Valkor will, subject to limited exceptions, not dispose or agree to dispose of any Acquisition Shares or any other Ordinary Shares or interest in Ordinary Shares from time to time acquired by or issued to it. Thereafter, for so long as Valkor holds 10% or more of the Company's issued ordinary share capital, Valkor has agreed not to dispose or agree to dispose of any interest in Ordinary Shares except with the prior written consent of the Company, with any agreed disposal being subject to orderly market principles. The limited exceptions include the acceptance of a recommended takeover offer for the Company, the execution of an irrevocable commitment to accept such an offer and a disposal pursuant to a court order.

In addition, shortly prior to receiving the Acquisition Shares, Valkor has also agreed to enter into a relationship and standstill agreement with the Company and the Company's Nominated Adviser, to, inter alia, regulate the ongoing relationship between itself and the Company on arm's length terms and a normal commercial basis and, save with the Nominated Adviser's prior written consent, prohibit any acquisition of any interest in Ordinary Shares, other than the Acquisition Shares, or making of any offer for all or any of the Ordinary Shares, either by Valkor itself or by any person with whom it may be acting in concert from time to time. Following its execution, such agreement shall terminate and cease to apply upon Valkor ceasing to hold 10% or more of the Company's issued ordinary share capital.

Background to the Acquisition

The Acquisition follows the successful completion of all of the planned trial work utilising Petroteq Energy Inc.'s existing oil sands plant at Asphalt Ridge, Utah (the "POSP"), as announced by the Company on 2 July 2021, the commencement of requisite due diligence on Tar Sands Holdings II LLC ("TSHII") and its site as announced on 9 June 2021 and, most recently, the receipt of the finalised FEED (Front-End Engineering and Design) study for production facilities, together with the associated third-party technical verification report on the proposed process, as announced on 27 July 2021.

TSHII owns approximately 760 acres of land and certain non-producing assets (the "Site") in Uintah County, Utah, USA. Subject to securing the requisite funding and satisfactory due diligence, Greenfield plans to use the Site, if ultimately acquired via TSHII, for the future mining of oil sands and construction of a commercial scale processing plant utilising the findings of the FEED study, and other knowledge and experience gained from Greenfield's operation of the POSP. The Site has existing infrastructure, plant and equipment, together with an existing Large Mine Permit No. M0470032, that could facilitate any future development by Greenfield.

The FEED study covers the production facilities for a 5,000 barrels of oil per day ("bopd") oil sands project (the "Greenfield Plant"). The Greenfield Plant is currently intended to be located at the Site. The proposed plant is planned to consist of an initial 5,000 bopd train but configured for possible expansion to 10,000 bopd via a second future train.

The FEED study will be utilised as the basis for the EPC phase of the project and TomCo's directors continue to believe that the completed FEED study, together with the supporting third-party technical verification report and recently completed testing operations at the POSP, serve to provide a high level of confidence in both the potential economics and the technical feasibility of Greenfield's plans. The Acquisition enables TomCo to assume full control of Greenfield and, the TomCo directors believe, should facilitate discussions with potential debt and equity funders with respect to the potential acquisition of TSHII and future plant construction and achieve greater alignment with Valkor.

As at 31 March 2021, Greenfield had unaudited total assets of approximately US$4.67 million and incurred an unaudited loss before tax for the period from incorporation to 31 March 2021 of approximately US$0.11 million.

Related Party Transaction

As a JV partner, Valkor is considered to be a related party of the Company (as defined in the AIM Rules for Companies) and, accordingly, the Acquisition constitutes a related party transaction pursuant to AIM Rule 13. The TomCo directors, having consulted with Strand Hanson Limited, the Company's Nominated Adviser, consider that the terms of the Acquisition are fair and reasonable insofar as the Company's shareholders are concerned.

Commenting, John Potter, CEO of TomCo, said: "We are delighted to have reached agreement with Valkor to acquire their 50% interest in Greenfield and look forward to welcoming Valkor as a substantial shareholder in TomCo as and when Financial Close for construction of the proposed Greenfield Plant is achieved within the next three years.

"We are very excited by the future potential of Greenfield. The due diligence undertaken so far on the Site has been positive such that it appears ideally suited for the construction, subject to funding, of Greenfield's first commercial scale plant, with significant resources for potential exploitation. Additionally, the recent results of the FEED study were most encouraging.

"Greenfield's focus remains on completing the requisite due diligence on TSHII and the Site and progressing the necessary funding package in order to, inter alia, pursue construction of an initial 5,000 bopd facility at the earliest opportunity. We now have full control of Greenfield which affords TomCo's shareholders the opportunity to fully benefit from Greenfield's significant potential."

Enquiries:

TomCo Energy plc

Malcolm Groat (Chairman) / John Potter (CEO) +44 (0)20 3823 3635

Strand Hanson Limited (Nominated Adviser)

James Harris / Matthew Chandler +44 (0)20 7409 3494

Novum Securities Limited (Broker)

Jon Belliss / Colin Rowbury +44 (0)20 7399 9402

IFC Advisory Limited (Financial PR)

Tim Metcalfe / Florence Chandler +44 (0)20 3934 6630

For further information, please visit www.tomcoenergy.com.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018.