Oil & Gas Transaction Completion

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

 15^th January 2021

MetalNRG plc

(The "Company" or "MetalNRG")

OIL & GAS TRANSACTION COMPLETION

MetalNRG plc (LON:MNRG), the natural resource investing and exploration company, announces that it has received confirmation from the Oil & Gas Authority ("OGA") that it does not oppose the change of control of Sunswept Enterprise Limited and associated subsidiaries to BritNRG Limited ("BritNRG"), the special purpose vehicle created for the acquisition.

As a result, BritNRG has now completed the transaction as announced on 9^th October 2020 and has acquired 100% of Sunswept Enterprises Limited and related assets.

Following completion of the acquisition and at current modest production levels, Sunswept is expected to be net cashflow positive at Brent prices sub $40/bbl, which is significantly below the current Brent price. A reduction of the breakeven oil price reference is expected as production levels are restored by bringing the Whisby #6 Well back on stream (by a wax removal workover) possibly within Q1/2021. Further reductions and additional cash generation is expected with the near-term development in both the Whisby and Newton on Trent assets. The relevant appraisals are nearing finalisation and BritNRG intends to present detailed plans to the OGA in the shortest possible timeframes.

The initial investment made by MetalNRG in BritNRG will be via a convertible loan note for a total amount of £450,000, payable in 3 tranches and which upon redemption will convert into 50% of the total BritNRG equity.  

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: i) purchase commitments, ii) all financial commitments as required to maintain the current operations on a stable footing for at least the next 18 months and iii) priority accretive interventions.

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

With current revenues and reserves/production forecasts, the fair business value post-completion is expected to be significantly higher than the net purchase price in consideration of the new working capital investment of £750,000, but most importantly in consideration of the substantial accretive and the de-risking activity carried out as part of an extensive due diligence, which included resource reappraisal and realignment of critical commercial relationships and which will allow BritNRG to operate in a considerably improved position in relation to the previous operator.

Further details will be provided in the coming months, including an independent evaluation of the business.

 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 and 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 and which we are in process to appraise in view to near-term development.

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, CEO of MetalNRG, commented:

 "I am extremely pleased with the outcome and would like to thank Pierpaolo Rocco for his hard work in leading the transaction to a successful conclusion and I welcome the opportunity to work with the private investors who are our partners in this venture. Now that we have operational control of the assets the real work can commence and both Pierpaolo and I look forward to updating the market on BritNRG's progress over the next few months as we develop the potential upside of the assets."

The person who arranged for the release of this information is Rolf Gerritsen, the Company's Chief Executive Officer.

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