Transaction to diversify PetroNor’s portfolio with production and significant
upside potential 

Oslo, 21 October 2019: PetroNor E&P Limited (the "Company" or “PetroNor” with
OSE ticker: “PNOR”), the independent oil and gas exploration and production
company with a focus on production, development and exploration assets across
sub-Saharan Africa, is pleased to announce that it has entered into a sale and
purchase agreement (“SPA”) with Panoro Energy ASA (“Panoro”), for its interest
in Offshore Mining Lease no. 113 (“OML 113”) Offshore Nigeria, containing the
Aje oil and gas field.

The proposed transaction will see PetroNor acquire 100% of the shares of
Panoro’s fully owned subsidiaries Pan-Petroleum Services Holding BV (“PPSH”) and
Pan-Petroleum Nigeria Holding (“PPNH”) (“Transaction”), which currently hold
100% of the shares in Pan-Petroleum Aje Limited (“Pan Aje”), which participates
in the exploration for and production of hydrocarbons in Nigeria and holds a
6.502% participating interest, with 16.255% cost bearing interest, representing
an economic interest of 12.1913% in OML 113.

The upfront consideration for the Transaction is US$ 10 million to be paid in
PetroNor shares, with an option to pay partly in cash should the share price of
PetroNor fall below USD 0.13 per share. The transaction also includes a
contingent consideration structured as a royalty payment on future gas sales
associated with the further development in OML 113.

Concurrently, PetroNor is in parallel concluding a separate agreement with the
OML 113 operator Yinka Folawiyo Petroleum (“YFP”) to create a new holding
company (“SPV”) that will see PetroNor assume the lead technical and management
role to develop the next phases of the project. Together these agreements
provide the framework and pathway towards sanction of the next phases of the Aje
project in order to exploit the substantial gas and liquids reserves and unlock
its significant value. PetroNor and YFP will hold respectively 45% and 55% of
the SPV. The SPV, which will include the current license ownerships of YFP (the
Operator), YPF-DW and Panoro, will hold an approximate 75.5 % participating
interest, approximately 29% economic interest for the initial period and
approximately 38.7% economical interest for the main part of the project going
forward. The closing of the two transactions are interlinked and each is
contingent on the closing of the other.

Jens Pace, Chief Executive Officer of PetroNor said: “This acquisition is wholly
in line with our stated growth strategy in terms of acquiring assets that add
production and material reserves and resources to the Company. The upside
potential attached to this project is significant and we are confident that the
restructuring of the Aje partners, through the partnership with YFP, will result
in a dynamic and effective operating JV capable of realising the full value of
the field, both in terms of near-term oil production growth and more importantly
with regards to the development of the substantial gas resources associated with
the field. 

The Transaction ensures alignment between PetroNor, Panoro and YFP meaning all
parties benefit in the success case. We continue to assess a pipeline of
opportunities that will enable us to achieve our ambitious growth target of
30,000 boepd within three years through organic and acquisitive means, as we
seek to establish ourselves as a premier, full-cycle, pan-African operator”.

The Transaction is conditional on execution and conclusion of the agreement with
YFP, expected to conclude in the coming weeks, and upon the authorisation of the
Nigerian Department of Petroleum Resources and the consent of the Nigerian
Minister of Petroleum Resources. Securing the authorisation and consent is
expected to take several months with a long stop date agreed by the parties of
31 December 2020, following which either party is entitled to terminate the
agreement.

Transaction highlights: 
•	The transaction diversifies PetroNor’s portfolio through the addition of: 
o	An initial net production rate of 350 - 400 boepd
o	An added 2C reserves base of 20 million barrels of oil equivalents (boe) that
are expected to be converted to 2P reserves upon approval of the development
plan
o	A successful development of the gas associated with the Aje field could result
in net daily production of approximately 2,500-3,000 boepd to PetroNor

•	The principal strategic rationale for the acquisition:
o	Become technical operator of a de-risked development project with significant
upside potential 
o	Alignment of the license partners to support a fully financed project
re-development
o	Opportunity to leverage PetroNor’s technical experience to progress Aje
project and deliver near-term increased commercial recovery of hydrocarbons 
o	Diversification of portfolio in line with stated strategy
o	Entry into Nigeria providing a foothold to explore further opportunities in
country 
o	Funding mechanism that ensures alignment of all parties, diversifies
PetroNor’s shareholder register with approximately 3,000 shareholders from
Panoro and enhances free-float
o	Positive environmental impact as PetroNor intends to eliminate the current gas
flaring within 18 months
o	The gas development project will provide a cleaner source of energy for the
city of Lagos replacing diesel fired power generators

•	PetroNor to acquire 100% of the shares of Panoro’s fully owned subsidiaries
Pan-Petroleum Services Holding BV (“PPSH”) and Pan-Petroleum Nigeria Holding
(“PPNH”)

•	PPSH and PPNH are holding companies with local Directors Vistra (Amsterdam)
BV, representing the sole shareholder, Panoro. Since Pan Aje has a non-operating
participation on OML 113, the company does not have local employees and are
represented by Panoro employees as the Board of Directors. The three companies
are managed by Panoro personnel.  

•	The acquired companies hold 100% of the shares in Pan Aje, which participates
in the exploration for and production of hydrocarbons in Nigeria and holds a
6.502% participating interest, with 16.255% cost bearing interest, representing
an economic interest of 12.1913% in Offshore Mining Lease no. 113 (OML 113)

•	Separate Agreement with YFP, the Operator of OML 113, will result in the
creation of a special purpose vehicle (“SPV”) to restructure the OML 113 licence
partnership and fund the further development of the Aje field
o	The SPV will combine the YFP, YFP-DW and Panoro ownership of OML 113
o	The SPV will hold 75% participating interest in the license and an effective
38.755% economical interest for the main production period 
o	The SPV will be the operator and PetroNor will be the lead technical partner
through a joint team

•	Upfront consideration: allotment and issue of shares in PetroNor with a value
of US$ 10 million. In the event the share price is less than USD 0.13, PetroNor
has the right to pay partly in cash.

•	Contingent consideration: once Pan Aje has recovered all costs related to the
accumulated investments incurred after the date of completion, PetroNor shall
pay to Panoro additional consideration of US$ 0.15 per 1,000 cubic feet of the
Aje Natural Gas Sales Volume 

The Asset
The Aje field came on production in May 2016 and has produced a cumulative of
3.6 million barrels of oil and condensate as at 1st August 2019. The current
production rate is in the order of 3,000 bopd of oil (including some
condensate). PetroNor has been working with the indigenous company, YFP, to
prepare a re-vitalisation plan for the field. The development program is phased
to minimize exposure and secure a solid rate of return on the investment. The
field is expected to reach a gross production of 20,000 boepd of which
5,000-7,000 bopd consist of oil and condensate.

Conference call
The management of PetroNor will host a conference call at 09:30 Oslo time on
Tuesday 22 October. Interested parties can access the call on the following dial
in details:
•	Norway: 800 62 196 
•	United Kingdom: 0800 358 9473 
•	International: +47 23500243
•	PIN: 23956996#

An audio playback of the call will be made available upon request.

For further information, please contact:
Jens Pace, Chief Executive Officer
Stephen West, Chief Financial Officer
Tel: +44 20 3655 7810

Buchanan – Investor Relations
Ben Romney
Tel: +44 207 466 5000
 
Appendix

The Appendix in the attached document show key unaudited production, sales and
financial information including those from the balance sheet and profit and loss
account for Pan Aje on a consolidated basis with the Divested Subsidiaries for
the financial years ended 31 December 2016, 2017 and 2018 and half year ended 30
June 2019.