Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information for the purposes of Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication of this announcement, this information is now considered to be in the public domain.

10 October 2023

San Leon Energy plc

("San Leon" or the "Company")

Investment of up to US$187 million from a strategic investor

and

further investments into ELI

San Leon, the independent oil and gas production, development and exploration company focused on Nigeria, is pleased to announce the following significant developments:

1. an investment of up to US$187 million by Tri Ri Asset Management Corp. ("TRAM") into San Leon; and

2. further investments by San Leon in Energy Link Infrastructure (Malta) Limited ("ELI") using the proceeds of the TRAM investment, making San Leon the largest and majority shareholder in ELI with approximately 55 per cent. of the company.

Oisin Fanning, Chief Executive Officer of San Leon, commented:

"It is no secret that the past few months have been difficult for San Leon, as they have been for many businesses, but it is testament to the determination and commitment of our team that we have secured one of the largest fundraisings by an AIM oil & gas company in recent years. In addition, and in line with our announcements over the past year, we have aligned San Leon with a strategic funding partner who has been able to commit a greater level of support than our previous proposed lender, through an innovative investment arrangement which includes them becoming a major shareholder of our Company.

"Importantly our partnership with TRAM enables us to fulfil our long-held strategy of becoming the majority shareholder in ELI. It is no understatement to say that the commissioning of the FSO Akaso Terminalis a game changer, not only for OML 18 but for the entire industry in that region. We are confident that the FSO and the ACOES pipeline will be a significantly profitable and cash-generative project from which San Leon expects substantial upside."

Overview and summary of the investment in San Leon by TRAM

The Company has entered into documentation with TRAM in relation to an investment of up to US$187 million by TRAM into San Leon (the "Investment"). The Investment comprises of:

1. a US$125 million convertible secured loan from TRAM to San Leon (the "Loan"). The Loan will be fully drawn down by the Company immediately;

2. a US$16 million subscription by TRAM for 44,991,302 new ordinary shares of ?0.005 each in the Company (the "Ordinary Shares") at 30 pence per new Ordinary Share, which is proposed to take place before the end of October 2023 (the "Subscription"); and

3. a potential US$46 million further investment by TRAM from the grant of 62,500,000 warrants by San Leon, exercisable at 60 pence per new Ordinary Share, to TRAM (the "Warrants").

A. Details of the Loan

The Loan has a term of three years and the Company will pay a 7.5 per cent. fixed rate of interest per annum. The aggregate interest to be charged on the Loan over the three-year term (being US$28.125 million) has been deducted from the principal drawn down by the Company and the Company is also paying a one-off arrangement fee of US$7.5 million (being 6.0 per cent of the gross value of the Loan) to certain advisers who arranged the Investment. The Company will therefore receive net proceeds from the Loan of US$89.375 million. There are no commissions payable on either the Subscription or the issue/exercise of the Warrants.

TRAM has the right to convert the Loan at any time prior to the end of the three-year term as follows:

1. US$70 million of the principal value of the Loan into a one-third shareholding in San Leon ELI Limited ("SLE ELI"), the Company's wholly owned subsidiary which owns San Leon's shareholding in ELI; and

2. the remaining proportion of the principal value of the Loan, being US$55 million, into 90 million new Ordinary Shares at an effective conversion price of 50 pence per new Ordinary Share.

In addition to the fixed interest described above, TRAM will be entitled to a preferential economic return (the "PER"), equal to 50% of any dividends directly or indirectly received by San Leon from ELI, for a period of 15 years (provided always that SLE ELI shall not be obliged to pay any PER to TRAM from ELI dividends received in respect of any investment that it may have in ELI at any time that represents more than 50% of ELI). The PER will be payable to TRAM whether the Loan is repaid in full or if TRAM exercises its conversion rights as described above. Under the terms of the Loan, TRAM is also entitled to co-invest with San Leon on any future investments that the Company may make in ELI (excluding the New ELI Investments described below).

San Leon has granted a fixed and floating charge over the Company and its subsidiaries, including the Company's direct and indirect investments in the OML 18 oil and gas block in Nigeria ("OML 18") and ELI and any receivables due to the Company. San Leon has also provided a negative pledge to TRAM in relation to any further security over the Group's assets and certain of San Leon's subsidiaries have provided a corporate guarantee to TRAM.

B. Equity components of the Investment

TRAM intends to subscribe for 44,991,302 new Ordinary Shares in San Leon (equivalent to 10 per cent. of the Company's existing issued share capital) (the "Subscription Shares") on or before 31 October 2023 at a price of 30 pence per Subscription Share, which would raise gross proceeds of approximately £13.5 million (or US$16.4 million at an exchange rate of £1:US$1.215) for the Company. The Company intends to seek admission of the Subscription Shares to trading on AIM ("Admission"). A further announcement will be made in relation to the Subscription Shares in due course.

San Leon has also issued warrants to TRAM to subscribe for 62,500,000 new Ordinary Shares at 60 pence per new Ordinary Share for a period of five years from 6 October 2023. If exercised in full, the Warrants could generate a further £37.5 million of equity capital (US$45.6 million) for the Company. The Company will apply for any new Ordinary Shares issued pursuant to the exercise of the Warrants to be admitted to trading on AIM.

Exercise of the Warrants and conversion of the Loan into Ordinary Shares will be subject to approval of shareholders and San Leon expects to publish a circular convening an extraordinary general meeting ("EGM") in due course. Toscafund Asset Management LLP ("Toscafund"), the Company's largest shareholder and holding 75.00 per cent. of the Ordinary Shares, has provided the Company and TRAM with a letter of intent to vote in favour of all necessary resolutions at the EGM.

C. Use of proceeds

The Company intends to use the net proceeds from the Investment to, inter alia:

a) loan a further US$37 million into ELI, which owns a new pipeline and a floating storage and offloading vessel, together with the right to subscribe for 35 per cent. of ELI. The Board continues to believe that it is important for San Leon to assist ELI with the funding requirements for achieving its key project milestones;

b) acquire a further 13.5 per cent. of ELI's existing shares from Ocean Pearl Maritime SA ("Ocean Pearl") for US$12 million (which has been successfully negotiated down from the indicative price of US$15 million as set out in the Company's admission document last year); and

c) repay the US$5 million loan from funds managed by Toscafund, which was announced on 8 August 2023, along with its associated coupon at a rate of 10 per cent. per annum. As announced on 9 October 2023 Toscafund has provided the Company with a redemption and release letter which sets out, inter alia, the arrangements for the release of their security, comprising both a debenture issued by the Company as well as assignments and pledges over all of its group companies' loan and equity interests in ELI. The redemption and release letter includes a standstill provision by which Toscafund has agreed not to make any demand for repayment of its loan or enforce its security before 13 October 2023. Following the full repayment of the loan from funds managed by Toscafund and the release of their security the Company will grant similar security in favour of TRAM; and

d) settle the Company's creditors, satisfy its working capital needs and pursue its strategy. As previously announced, the Company has numerous outstanding creditors (totaling around US$15 million) and these creditors have been exerting increasing pressure on the Company (including sending letters before action). The Board believes that without the receipt of the proceeds of the Investment, the Company's financial position would have become increasingly precarious and that it would need to take steps to protect the interests of the Company's creditors.

It is a condition of the Investment that San Leon advances the further US$37 million to ELI and acquires Ocean Pearl's shareholding in ELI without delay. ELI is heavily indebted and requires an immediate injection of capital in order to meet certain court sanctioned obligations to its main contractor for the pipeline construction (which have not been complied with by ELI). Without the further US$37 million loan from San Leon, the Board believes that ELI would be unable to pursue its strategy and, in particular, would have failed to secure customers for its pipeline. This would inevitably have been highly detrimental to the value of San Leon's investment in ELI. In addition, the Board believes that, due to ELI's severe financial difficulties, without the US$37 million loan from San Leon, ELI may be required to take steps to protect the interests of its creditors. The Board anticipates that part of the US$37 million loan will be applied by San Leon settling ELI's creditors directly.

The purchase of Ocean Pearl's shareholding is likewise significant as it takes San Leon's shareholding in ELI to approximately 55 per cent. in aggregate. As the majority shareholder, San Leon is now able to exert control over ELI's strategy and management and this is an important factor in TRAM's decision to make the Investment. Of most importance is the conclusion of the pipeline construction by ELI which San Leon will now be directly overseeing.

D. Further information on TRAM

TRAM is a concentrated, research-intensive, fundamental value investor in the public markets based in New York. Since 2019, TRAM has built a portfolio of public market and real estate investment. As of March 2023, TRAM's portfolio is composed of US$850 million in assets under management along with US$1.2 billion in co-investments.

Further information on ELI

The Investment enables the Company to conclude its further US$42 million investment in ELI, as originally announced on 8 August 2023, as well as complete the acquisition from Ocean Pearl of its entire holding in ELI (together the "New ELI Investments"). The New ELI Investments, together with the Company's existing investments in ELI, will make San Leon the largest and majority shareholder in ELI with approximately 55 per cent. of the company. The Company has entered into an agreement with Ocean Pearl for the acquisition of Ocean Pearl's 54,600 shares in ELI (representing 13.5 of ELI's existing issued shares) for a consideration of US$12 million. Although San Leon needs to advance the payment to Ocean Pearl shortly, settlement of the share transfer is subject to the consent of ELI's lender, Guaranty Trust Bank Limited, which holds a pledge over all shares issued by ELI.

ELI owns the alternative crude oil evacuation system, comprising a new undersea pipeline and the FSO ELI Akaso Terminal (the "ACOES"). The mooring of the FSO ELI Akaso has now been completed and has been classed by Bureau Veritas for oil storage services and will now start processing hydrocarbons through its facilities. As previously announced, the ACOES will provide a dedicated oil export route from the OML 18 oil and gas block and is a new 47-kilometre secure undersea pipeline from OML 18 to the FSO ELI Akaso terminal. The ACOES pipeline component is expected to have a throughput capability of 100,000 barrels per day (b/d) of oil, while the FSO ELI Akaso has a storage capacity of 2 million barrels of oil. Once commissioned, the ACOES is expected to reduce the downtime and allocated pipeline losses currently associated with the Nembe Creek Trunk Line ("NCTL"), to below 10 per cent. The ACOES is expected to be completed in the second half of 2023.

ELI's accounts for the year ended 31 December 2021 state that the company made a loss before tax of approximately US$10.5 million and reported total assets of approximately US$226.9 million. One of San Leon's directors is currently appointed to ELI's board. Due to its difficult financial condition (indicated above) ELI has not yet prepared its accounts for the year ended 31 December 2022.

The Board believes that the ACOES pipeline will have a significant effect on the operation of OML 18, primarily through the reduction of downtime and losses associated with the existing export route. ELI, through its Nigerian subsidiary, will also earn fees for transporting and storing crude oil from OML 18 and potential third parties.

The New ELI Investments constitute a reverse takeover under the AIM Rules for Companies and full details will be included in a separate admission document which will be published by the Company. The Company's shareholders will be asked formally to approve the New ELI Investments at a general meeting to be convened and the Company will seek irrevocable undertakings from its three largest shareholders to vote in favour of ratifying the New ELI Investments prior to the readmission to trading on AIM of the Company, as enlarged by the New ELI Investments.

The Board notes that Company has previously sought and obtained shareholder approval (at an extraordinary general meeting held on 5 August 2022) for the Company to increase its shareholding in ELI above 50%. Notwithstanding the Company having received approval at the extraordinary general meeting for further investment into ELI and the Board being comfortable proceeding with the New ELI Investments on this basis, the Company will seek ratification from shareholders that they support the method of financing the New ELI Investments.

The admission document in relation to the New ELI Investments will be in addition to, and separate from, any admission document that may be published in connection with the potential transaction the Company is discussing with Midwestern Oil & Gas Company Limited ("Midwestern") following the Company's decision to terminate the proposed transactions with Midwestern, details of which were announced on 9 October 2023.

In light of the discussions with the Company's three principal shareholders (set out below) the Board considers that it is appropriate for the Company to enter into the New ELI Investments.

The Ordinary Shares will remain suspended until the Company has published an admission document in relation to the New ELI Investments and the Company's shareholders have ratified the actions taken by the Board.

Discussions with the Company's major shareholders

As announced on 9 October 2023 over the last couple of months, while enaging with TRAM on the Investment, the Board has reappraised the strategic opportunities for the Company. The Board believe that the Company's existing investment in ELI has potential to generate significant value for shareholders, but it will only do so once ELI is refinanced. This will be achieved by the New ELI Investments.

As announced 9 October 2023 the Board has engaged with the Company's three largest shareholders, being: i) funds managed by Toscafund (75.00 per cent. shareholding in the Company); ii) Midwestern (13.18 per cent. shareholding); and iii) Oisin Fanning, the Company's Chief Executive Officer (2.11 per cent. shareholding) on revising the Company's strategy. All three shareholders (who together own 90.29 per cent. of the Company's issued shares) have confirmed in writing that they are supportive of the Company's revised strategy, the financing of the Company by way of the Investment and the Company making the New ELI Investments.

Appointment of joint broker

San Leon is also pleased to announce the appointment of Fortified Securities as joint broker to the Company with immediate effect. Fortified Securities introduced TRAM and assisted in the investment negotiations .

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