Tomco Energy Regulatory News (TOM)

16 September 2020

TOMCO ENERGY PLC

("TomCo" or the "Company")

Greenfield Pre-FEED Report

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 the receipt of the Pre-FEED (Front-End Engineering and Design) Report (the "Report") for the proposed Greenfield Energy LLC ("Greenfield") operated oil sands plant. Greenfield is the Company's recently formed 50/50 joint venture with Valkor LLC ("Valkor").

The purpose of the Report, compiled by Crosstrails Engineering LLC ("Crosstrails"), a subsidiary of Valkor, was to confirm the technical feasibility of a 10,000 barrel of oil per day ("bopd") oil sands plant in Eastern Utah (the "Plant") and to make a first estimation of capital and operating costs.

Highlights

· The Report provides analysis of the Plant operations and indicates favourable economics

· It is estimated that the total incremental cost of production, including mining, fuel, electricity, personnel and all expenses to take oil bearing ore from the earth to a commercial petroleum product is likely to fall below US$30 per barrel of oil ("bbl"), targeting less than US$25/bbl in the next round of design through heat recovery and various process optimisations

· Confirmation that the Plant could feasibly be constructed using conventional mining and oil processing equipment

· Report concludes that the Plant could be constructed in a relatively short time frame - estimated to be just over a year from the commencement of construction to the start of production

· Estimated capital cost for a 10,000 bopd Plant of US$185 million

· The completed Pre-FEED Report provides a high level of confidence in the project and will be used in the next project step, Front-End Engineering and Design ("FEED"), as the project progresses

Summary of the Report

The purpose of the Report was to confirm the technical feasibility of an, in aggregate, 10,000 bopd oil sands plant in Eastern Utah and to make a first estimation of the capital and operating costs for the Plant, based on previous work undertaken by Crosstrails in the preparation of a feasibility report for a 2,500 bopd unit and which has then been scaled up for this Report. The Report confirms that, on the basis the Plant is able to be constructed using conventional mining and oil processing equipment, it should be feasible to construct a Plant capable of producing, in aggregate, 10,000 bopd.

The Report is based on the Plant processing bitumen ore mined in the Asphalt Ridge area near Vernal Utah, having an approximate saturation of 7% by weight. It should be noted that a suitable location for Greenfield's Plant has not yet been identified and whilst Greenfield is seeking to identify a suitable site within the Uinta Basin area, there can be no guarantee that it will be able to do so and accordingly, the economics of Greenfield's Plant may be materially different to those set out in the Report.

The Report assumes that the Plant will produce sales products comprising a synthetic heavy fuel oil ("HFO") derived from Quadrise Fuels International plc's ("Quadrise") MSAR® technology, subject to Greenfield entering into a licence with Quadrise for the use of the MSAR® technology at the Plant, as well as raw bitumen and a small diesel fraction extracted from the lighter ends of the bitumen extracted from the sands, along with the heavier ends of the solvent utilised in that extraction.

The Report estimates that the capital cost of the 10,000 bopd Plant will be approximately US$185 million, or US$18,500 per nameplate bopd. The capital cost is inclusive of all project management and engineering, all equipment and systems, site construction, start-up, and commissioning sufficient to have a fully operational oil sands plant capable of processing oil sands ore into high grade bitumen product. The Report assumes that for this design, contract mining will be used to provide ore to the Plant and the capital costs do not include the cost of land, leases and/or mining equipment.

As part of the Report, Crosstrails also undertook a basic economic analysis of the Plant's operations, which indicates favourable economics. The Report sets out that the total incremental cost of production, including mining, fuel, electricity, personnel and all expenses to take oil bearing rock from the earth to a commercial petroleum product is estimated to be below US$30/bbl, with the ultimate target of being less than US$25/bbl in the next round of design through heat recovery and various process optimisations. The Report does not take into account any licence or royalty fees that will potentially be due and the operating costs, including the mining costs, could vary significantly from the costs assumed in the Report based on the final site identified by Greenfield for the Plant and therefore, the cost of production may be materially different.

The Report also details that the Plant could be constructed within a relatively short time frame, as there is no equipment required having a lead time longer than a year. As a result, the Report estimates that from the commencement of construction to the start of production would likely be just over a year, although this will be confirmed as a part of the FEED.

The Board of TomCo believes that the Report provides a high level of confidence that Petroteq Energy Inc's Oil Sands Plant ("POSP") can be scaled up to enable production of 10,000 bopd, subject, inter alia, to the successful completion of the proposed upgrade works to the POSP that are currently underway and the associated trials to demonstrate the POSP's commerciality, the identification and securing of a suitable site for the Plant and a licence being agreed with Quadrise for the use of the MSAR® technology at the Plant.

The Report will be used as the basis for the FEED for the Plant, with the Pre-FEED having defined, specified, and estimated all major equipment needed for the Plant. In the FEED Study, actual quotes will be received for all major equipment, with the balance of equipment being estimated, to determine the capital expenditure requirements for the Plant to within plus/minus 15%. It is currently estimated that the FEED Study will take approximately four months to complete from its commissioning and will further detail and optimise operating costs in order to derive a refined estimated total cost per produced barrel of oil.

Commenting, John Potter, CEO of TomCo, said: "We are delighted with the conclusions of the pre-FEED study, which indicates that the proposed commercial scale oil sands plant has favourable economics, both in terms of plant construction costs and cost per barrel of oil produced. This coupled with the potentially modest time frame to construct a plant capable of producing ready for sale products means that we are very excited for the future of Greenfield. We look forward to progressing matters with our partners and announcing further updates in due course."

Enquiries:

TomCo Energy plc

Stephen West (Chairman) / John Potter (CEO) +44 (0)20 3823 3635

Strand Hanson Limited (Nominated Adviser)

James Harris / Richard Tulloch / Jack Botros +44 (0)20 7409 3494

Turner Pope Investments (TPI) Limited (Joint Broker)

Andy Thacker / Zoe Alexander +44 (0)20 3657 0050

Novum Securities Limited (Joint Broker)

Charlie Brook-Partridge +44 (0)20 7399 9402

IFC Advisory Limited (Financial PR)

Tim Metcalfe / Graham Herring +44 (0)20 3934 6630

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