Corcel Plc: Oil Acquisition in Angola

Oil Acquisition in Angola

Corcel PLC

("Corcel" or the "Company")

Oil Acquisition in Angola - Vendor Equity Subscription - TVR

24 May 2023

Corcel Plc (London AIM: CRCL), the extractive industries exploration and development company, with interests across battery metals and oil and gas, announces that it has signed its first oil and gas acquisition with the purchase of a 90% interest in Atlas Petroleum Exploration Worldwide Limited ("APEX"), that has working interests in several historically producing oil assets in the Kwanza Basin, onshore Angola.

Highlights

o Entry into onshore Angola through the acquisition of a 90% interest in APEX - owner of working interests of between 20% and 35% in 3 onshore blocks containing two historically producing oilfields for re-development and one exploration licence

o Initiates the Company's pan-Angola/Brazil strategy capitalising on both the resource opportunities as well as the historic ties and shared geology and language between the two countries

o Brownfield re-development potential on 2 existing fields (Tobias and Galinda) of 85 MMbls P50 gross unrisked remaining contingent oil resources (APEX estimates), 15.98 MMbls net to Corcel

o Additional exploration potential of 1,460 MMbls gross unrisked P50 prospective oil resources post-salt/pre-salt (APEX estimates), 297.1 MMbls net to Corcel

o Consideration for the acquisition is 800,000 satisfied through the issuance of 200,000,000 new ordinary shares at a price of 0.004, locked up for 18 months

o Simultaneous investment in Corcel of 282,741 by APEX shareholders and investors from the oil & gas sector in Brazil and Angola, resulting in the issuance of 70,685,250 new ordinary shares at a price of 0.004

o Combination of the recent Mt. Weld partial sale proceeds and the vendor placing ensures project is fully funded for the licence acquisition phase

o Mr Scott Gilbert, a vendor, joining the Board as a Non-Executive subject to regulatory checks - Mr Gilbert brings a long track record as an executive and investor in the oil and gas sector internationally, including Angola and Brazil

Corcel Executive Chairman, James Parsons, commented:

"I am delighted to announce this first acquisition in our oil and gas strategy, providing a strong initial platform on which to progress our pan-Angola/Brazil growth strategy. The metrics on this acquisition are compelling for Corcel shareholders and the window is now open for rapid further consolidation onshore Angola alongside new asset acquisitions in Brazil. I look forward to being in Angola later this week with our partners for the licence signature and award ceremonies.

The Kwanza basin has been producing for 35 years, is a well understood petroleum system and has both significant scale and upside. Corcel sees significant opportunities to increase the legacy operator estimated resources given the structural configuration of the basin and recent new structural mapping. We also see large stratigraphic and structural pre salt structures on blocks, analogous to the offshore Cameia discovery. Our initial focus will however be on quickly securing first oil and revenues through our redevelopment opportunities."

Transaction Summary:

Corcel has acquired a 90% interest in APEX, a privately owned company domiciled in the BVI, for 800,000 settled via the issuance of 200,000,000 new ordinary shares, priced at 0.004 per share (the "Consideration Shares"). The Consideration Shares are locked up for 18 months post issuance. Existing APEX shareholders will retain a 10% interest in the company and will be carried by Corcel through first oil on the KON-11, KON-12 and KON-16 blocks.

Completion of the transaction is contingent upon the formal execution of three Risk Service Contracts ("RSCs") covering the KON 11/12/16 blocks, with the Angolan government, expected later this week. The terms of the RSCs include an initial exploration phase of 5 years, with a subsequent exploration phase of 2 years and a base production period of 20 years. The minimum spend on the blocks are US$6m on KON-11 and KON-12 and US$3m on KON-16, with commitments to drill one well on all three blocks. As part of the transaction, the vendors have agreed to provide any guarantees should they be required by government. Further announcements on completion will be made as appropriate.

Consistent with APEX's obligation with the Angolan government to develop the capabilities of and strengthen local exploration and production companies, the Company has also signed an agreement with a local exploration and production company to buy this entity out of an internal consortium agreement with APEX, whereby they would otherwise have had entitlement to 25% of the APEX position in these three licenses, and would also have entitlement to certain cash payments. This buy-out agreement involves Corcel issuing 28,240,839 new ordinary shares (the "Buy-Out Shares") and paying US$225,000 cash expected to be utilized towards the local exploration and production company's operations. The shares will be locked in for 18 months.

APEX Portfolio Overview:

The APEX portfolio is located onshore Angola, and consists of interests in three licences:

o KON - 11 Non-Operated - 12 historical wells (20% working interest - 18% net to CRCL)

o KON - 12 Non-Operated - 8 historical wells (25% working interest - 22.5% net to CRCL)

o KON - 16 Operated - 1 historical well (35% working interest - 31.5% net to CRCL)

KON-11 and KON-12 are considered brownfield development opportunities and include the historically producing Tobias and Galinda fields, both drilled and developed in the 1960s and 1970s by Petrofina, with combined historic production over 30 MMbbls. Both licences are operated by Sonangol (the Angolan national oil company).

APEX's total reported unproduced contingent oil resources are estimated at:

o KON-11 - 65 MMbbls, 11.7 MMbls net to CRCL

o KON-12 - 19 MMbbls, 4.28 MMbls net to CRCL

All three blocks have significant post and pre-salt prospective resources, both stratigraphic and structural with APEX estimating Prospective Resources of:

o Post-salt 456 MMbbls - unrisked P50 (138 MMbo risked), 81.1 MMbls net to CRCL

o Pre-salt 1,029 MMbbls - unrisked P50 (223 MMbo risked), 215.9 MMbls net to CRCL

Both the Tobias (KON-11) and Galinda (KON-12) fields were discovered and originally developed in the 1960s. Both reservoirs are in the Binga limestone with 4-14% porosity and located at 700m and 1,900m respectively. Peak production at Tobias was approximately 17,500 bbls/d and at Galinda was approximately 2,700 bbls/d. Historic total production, which started in 1960 and ceased in the early '80s, was 29MMbbls and 2.8MMbbls respectively. APEX and Corcel believe that significant recoverable volumes of oil remain in place at both locations and initial plans may include additional seismic work to firm up drill locations, as well as a combination of vertical and horizontal wells. The development plan envisioned for KON-11/12/16 qualify for marginal field fiscal terms, as outlined by the Angolan government, resulting in advantageous royalty, tax and depreciation regimes.

The Company estimates an initial funding requirement below US$1M to secure the three RSCs which includes US$800k of pre-negotiated signature bonuses. The Company is fully funded, post the recent partial sale of Mt Weld and the vendor placing, for this requirement.

APEX has net assets of approximately $15,000 and did not trade in the year ended 30 September 2022.

The Company also notes recent announcements by TotalEnergies to develop the offshore component of the Kwanza basin.

The Company plans to re-launch its investor presentation shortly and hold an investor event to more fully explain to shareholders the forward work programme.

Vendor Subscription:

The Company further announces the completion of a fundraising of 282,741 ("the Placing") through the issuance of 70,685,250 new ordinary shares of a nominal value of 0.0001 priced at 0.004 per share ("Placing Shares") subscribed for by the vendors of APEX and several Brazilian and Angolan oil and gas investors.

The Company has agreed on the following staged settlement timeline with the investors.

o 201,958 representing 50,489,500 shares to be settled on 31 May 2023 ("Tranche 1")

o 25,000 representing 6,250,000 shares to be settled on 30 June 2023 ("Tranche 2")

o 25,000 representing 6,250,000 shares to be settled on 31 July 2023 ("Tranche 3")

o 30,783 representing 7,695,750 shares to be settled on 31 August 2023 ("Tranche 4")

New Director Appointment and Executive Appointment:

Mr Scott Gilbert, one of the vendors, will join the Board as Non-Executive, subject to regulatory checks. Mr Gilbert brings a long track record in oil and gas sector with significant experience in Angola and Brazil. In addition, a Luanda based ex-Chevron oil and gas professional, and one of the vendors, will also join the Company as Chief Commercial Officer and MD Angola.

As previously announced on 20 February 2023 the Company is also in the process of reviewing its executive staffing model and Board to reflect the recent strategic broadening to oil and gas and will make further announcements in this regard in due course.

Total Voting Rights:

Application has now been made for the Consideration Shares, the Buy-Out Shares and Tranche 1 of the Placing Shares, resulting in 278,730,339 new ordinary shares to be admitted to trading on AIM and it is expected that their admission to AIM will take place on or around 02 June 2023 ("Admission").

Following Admission, the Company's total issued share capital will consist of 1,220,091,631 Ordinary Shares, with one voting right per share. The Company does not hold any shares in treasury. Therefore, the total number of Ordinary Shares and voting rights in the Company will be 1,220,091,631 from Admission. This figure may be used by shareholders in the Company from admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company pursuant to the FCA's Disclosure Guidance and Transparency Rules.

Further updates will be provided on Total Voting Rights on completion of Tranches 2, 3 and 4 of the Placing.

Qualified Persons Statement:

Leonardo Salvadori, a Geologist with over 35 years of relevant experience in the oil industry and member of the Society of Petroleum Engineers. has reviewed this announcement for the purposes of the current Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in June 2009.

For further information, please contact:

Scott Kaintz Corcel Plc CEO

020 7747 9960

James Joyce / James Bavister /Andrew de Andrade WH Ireland Ltd NOMAD & Broker

0207 220 1666

Patrick d'Ancona Vigo Communications IR

0207 3900 230

Estimates of contingent resources presented in this RNS have been prepared in accordance with the Petroleum Resources Management System (PRMS) issued in June 2018 by the Society of Petroleum Engineers, the World Petroleum Council, the American Association of Petroleum Geologists, the Society of Petroleum Evaluation Engineers, the Society of Exploration Geophysicists (SEG), the Society of Petrophysicists and Well Log Analysts (SPWLA) and the European Association of Geoscientists & Engineers (EAGE).

Estimates of contingent resources should be regarded only as estimates that may change as future production history and additional information become available. Not only are such reserves and contingent resources estimates based on that information, which is currently available, but such estimates are also subject to the uncertainties inherent in the application of judgmental factors in interpreting such information.

Glossary:

P50: With respect to resources categorization, the most realistic assessment of recoverable quantities if only a single result were reported. If probabilistic methods are used, there should be at least a 50% probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

Prospective resources: Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.

Recoverable resources: Those quantities of hydrocarbons that are estimated to be producible by the project from either discovered or undiscovered accumulations.

Risk: The probability of loss or failure. Risk is not synonymous with uncertainty. Risk is generally associated with the negative outcome, the term "chance" is preferred for general usage to describe the probability of a discrete event occurring.

Risked / Unrisked: Those quantities of hydrocarbons on which the Risk of failure has been applied (Risked) or not applied (Unrisked)

Pre-salt: Stratigraphic sequence underlaying the "Massive Salt" formation of Aptian age, where the deeper hydrocarbon prospective resources are present

Post-salt: Stratigraphic sequence overlaying the "Massive Salt" formation of Aptian age, where the shallower hydrocarbon prospective and contingent resources are present

Structural trap: Type of geological trap that forms as a result of changes in the structure of the subsurface, due to tectonic, diapiric, gravitational and compactional processes.

Stratigraphic trap: Type of geological trap where the geometry allowing the accumulation of hydrocarbons is of sedimentary origin and has not undergone any post-depositional deformation.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 which is part of UK law by virtue of the European Union (withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

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