Oil & Gas Acquisition

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

 9^th October 2020

                                               MetalNRG plc

                                               (The "Company" or "MetalNRG")

                                                    OIL & GAS ACQUISITION

MetalNRG plc (LON:MNRG) the natural resource investing and exploration company is pleased to inform the market that, having completed due diligence, its subsidiary joint venture undertaking, BritNRG Limited ("BritNRG"), has signed a Sale and Purchase Agreement with Mr Rupert Lycett Green to acquire the entire issued share capital of Sunswept Enterprises Limited ("Sunswept") and its subsidiaries. Completion will occur in the following weeks, subject to certain conditions including confirmation of no objection to the change of control of Sunswept from the UK Oil and Gas Authority.  

BritNRG will become MetalNRG's special purpose vehicle focused on energy opportunities and eventually it will be owned 50% by MetalNRG and 50% by international private investors, who will form part of BritNRG's board of four directors and an experienced management team. MetalNRG will have a casting vote at Board level in case of tied voting.

Following completion of the acquisition and at current modest production, Sunswept is expected to be net cashflow positive at circa $43 bbls/day which represents the current market level.

The initial investment made by MetalNRG in BritNRG will be via a convertible loan note which will convert into BritNRG shares once all regulatory approvals have been obtained. 

The convertible loan note entered into by MetalNRG and BritNRG is for a total amount of £475,000 payable in 3 tranches. The first tranche of £25,000 was paid upon signing of the heads of terms, as announced to the market previously, the second tranche of £275,000 is payable within the next few weeks and a final tranche is due to be paid in December 2020. 

The total working capital investment in BritNRG via MetalNRG's convertible loan note and the private investor group will be £750,000, which will enable BritNRG to meet purchase commitments and all its financial requirements to maintain the current operations and priority interventions on a stable footing for the next 18 months.

The gross transaction cost for Sunswept's issued share capital is £1,900,000; however, the net purchase price is expected to be circa £150,000 after settlement of a director loan and associated corporation tax consolidation. This represents a very low entry to an onshore oil and gas producing asset, fully in line with the MetalNRG strategy.

Under the view of current revenues and reserves/production forecasts, the fair business value post-completion is expected to be significantly higher than the net purchase price also in consideration of the new working capital investment of £750,000, which taken all together represent a compelling growth opportunity for MetalNRG shareholders.

Importantly, the funding for the convertible loan note by MetalNRG will not require it to issue new or additional shares; the funding is being met by existing cash resources and is therefore non-dilutive for existing shareholders.

The Sunswept Acquisition

Sunswept's subsidiaries have interests in the following UK onshore licences: PL199 (95%, Operator); PL215 (50%); EXL141 (100%, Operator); EXL294 (100%, Operator); PEDL090 (50%, Operator); and PEDL209 (28%). The producing licences were first commissioned and operated by BP in the mid-1980s. The UK Midlands basin activity goes back to the pre-war era.

The Sunswept portfolio includes three producing licences and three exploration permits in Lincolnshire. The producing assets are: The Whisby Field, currently producing from: Whisby #4 well at c. 55bbls/day, Whisby #6 well at c.40bbls/day, temporarily shut in (awaiting wax removal workover), The Reepham Field, with one well, currently shut-in and the Newton on Trent Field, with one well, currently shut-in.

Oil has been produced from the thin basal Westphalian sands, overlying oil-bearing but unproductive Dinantian Carbonate in Whisby and Reepham, with production in Newton from Carboniferous Crawshaw and Longshaw sands.  

The produced fluids are separated and treated at a central Whisby processing plant. Stabilised oil is transported by tanker for sale at the Immingham dock and thereafter to the Chevron's Humber Refinery.

The acquisition of Sunswept and its licence portfolio gives BritNRG the opportunity to apply modern seismic surveys, geophysical analysis as well as advanced reservoir study methods not applied by the current operator, which may lead to further development and appraisal opportunities.

Rolf Gerritsen, MetalNRG's CEO, commented "I am pleased to be able to report our progress on our first energy transaction and look forward to updating the market on the operational progress that BritNRG will make over the coming months. This is a first step for us in the energy sector and we look forward to developing BritNRG together with the private investors."

The person who arranged for the release of this information is Rolf Gerritsen, chief executive

officer of the Company.

For further information, please contact: