Signing of Heads of Agreement for ICENERGY

16 October 2026

Pennpetro Energy plc

("Pennpetro" or the "Company")

Signing of Heads of Agreement for the Proposed Acquisition of ICENERGY

Pennpetro Energy plc (LSE: PPP) announces that it has entered into Heads of Agreement with Indigenous Canadian Energy Holdings Inc. (“ICENERGY”) in relation to the proposed acquisition by Pennpetro of the entire issued share capital of ICENERGY (the “Proposed Transaction”). The Heads of Agreement are non-binding, save for certain provisions described below.

The Proposed Transaction follows the Company’s previous announcement on 15 September 2026 confirming ICENERGY as its reverse takeover target and that the Heads of Agreement would be finalised after the Company’s annual general meeting on 30 September 2026.

ICENERGY is a Canadian transition energy business focused on the steam-enhanced treatment of lignocellulosic fibre. As previously announced, its business includes the proposed conversion of low-quality waste wood fibre into high-value pelletised biofuel for use as a replacement for coal in residential and industrial heat and power generation markets, initially in the European Union, starting with Poland, where first deliveries are scheduled for December 2026.

Proposed Transaction

Under the Heads of Agreement, Pennpetro would acquire the entire issued share capital of ICENERGY from its shareholders. The consideration would be satisfied wholly through the allotment and issue of new ordinary shares in Pennpetro to ICENERGY’s shareholders. No cash consideration would be payable.

ICENERGY’s shareholders would own not less than 90 per cent. of Pennpetro’s issued share capital immediately following completion, before the proposed placing described below and on the basis that Pennpetro has no material assets or liabilities at completion. The percentage remains subject to the agreed treatment of Pennpetro’s existing obligations and outstanding options, warrants, convertible securities and other equity interests, and to the definitive transaction documentation.

As previously announced, the Proposed Transaction is expected to constitute a reverse takeover for the purposes of the UK Listing Rules. On completion, the Company’s existing listing in the Equity Shares (Transition) Category would be cancelled and a fresh application made for the enlarged group’s ordinary shares to be admitted to the Equity Shares (Commercial Companies) Category of the Official List and to trading on the Main Market of the London Stock Exchange.

The proposed Acquisition will be subject to the provisions of the Takeover Code, including, where applicable, obtaining a waiver from the Panel on Takeovers and Mergers of any obligation to make a mandatory offer under Rule 9 of the Takeover Code, together with any necessary approval of independent shareholders.

Proposed Placing

In connection with the Proposed Transaction, Pennpetro, with the cooperation of ICENERGY, has agreed to use reasonable endeavours to raise £20 million before expenses through a placing of new ordinary shares, conditional upon re-admission. No placing commitments have yet been obtained.

Under the Heads of Agreement, the placing shares would represent a maximum of 20 per cent. of the enlarged issued share capital immediately following completion of the Proposed Transaction and the placing, based on a pre-money valuation of the enlarged group of at least £80 million.

The net proceeds are expected to be applied towards ICENERGY’s retail business, including the construction of a wholly owned retail production plant (current supply comes from a contracted third-party facility), retail sales and marketing in Europe, working capital and the costs associated with the Proposed Transaction and placing.

Completion of the Proposed Transaction will be conditional upon the placing raising not less than £20 million before expenses. ICENERGY will also have the right to terminate the Heads of Agreement if firm written indications of interest for at least £15 million have not been obtained by 31 January 2027.

Board of the Enlarged Group

The board of the enlarged group would be constituted so as to comply with the UK Corporate Governance Code 2024 to the extent applicable, including through the appointment of independent non-executive directors.

Related-party considerations

Directors Richard Spinks and Grand Chief Ronald Derrickson are both directors and shareholders in ICENERGY.

Accordingly, the Proposed Transaction will be a related party transaction for the purposes of the Disclosure Guidance and Transparency Rules.

The Proposed Transaction will also require the approval of Pennpetro’s shareholders under section 190 of the Companies Act 2006.

In order to support the independent directors assessment of the Proposed Transaction, the Heads of Agreement provide for an independent valuation of ICENERGY to be obtained from an appropriately qualified independent valuer.

Conditions and next steps

Completion of the Proposed Transaction remains subject to a number of conditions, including:

• completion of legal, financial and technical due diligence by each party to its reasonable satisfaction;
• negotiation and execution of definitive transaction documentation;
• approval by the board and shareholders of ICENERGY;
• approval by the Pennpetro directors who are not interested in the Proposed Transaction;
• approvals from Pennpetro shareholders in relation to acquisition and the issue of consideration and placing shares;
• subject to the consent of the Panel on Takeovers and Mergers, approval by Pennpetro’s independent shareholders of a waiver of the obligation to make a general offer that would otherwise arise under Rule 9 of the City Code on Takeovers and Mergers in connection with the issue of the consideration shares to ICENERGY’s shareholders;
• approval by the Financial Conduct Authority of a prospectus for the enlarged group;
• completion of the proposed placing; and
• admission of the enlarged group’s shares to the Equity Shares (Commercial Companies) Category of the Official List and to trading on the Main Market of the London Stock Exchange.

The Board expects to propose, in connection with re-admission, a change of the Company’s name and ticker.

The Heads of Agreement provide for a long-stop date of 31 March 2027, which may be extended by written agreement between the parties, including where adverse market conditions affect the timing or availability of the proposed placing. The Board intends to complete the Proposed Transaction as quickly as possible; the long-stop date allows for matters outside the Board’s control, including regulatory approvals.

With the exception of certain provisions, including those relating to exclusivity, confidentiality, capacity, costs, liability and governing law, the Heads of Agreement are not legally binding and do not oblige either party to proceed with the Proposed Transaction.

There can be no certainty that the Proposed Transaction or the proposed placing will complete. Further announcements will be made as appropriate.

This announcement contains inside information for the purposes of the UK Market Abuse Regulations. The person responsible for arranging the release of this announcement on behalf of the Company is Richard Spinks, Executive Co-Chairman.

Richard Spinks, Executive Co-Chairman of Pennpetro Energy Plc, said:

“Signing these Heads of Agreement marks an important step towards the proposed acquisition of ICENERGY and the transformation of Pennpetro into an international transition energy business with operations across Canada, the United States and Europe.

“Since confirming ICENERGY as our reverse takeover target, the parties and their advisers have worked constructively to establish a clear framework for the Proposed Transaction. We will now focus on completing due diligence, agreeing the definitive documentation, progressing the proposed placing and preparing the prospectus and shareholder documentation required for re-admission.”

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