Pharos Energy : Proposed Placing, Subscription and Retail Offer of Ordinary Shares

Proposed Placing, Subscription and Retail Offer of Ordinary Shares

Pharos Energy plc (LSE: PHAR.L), the Asia-MENA focussed independent oil and gas exploration and production company, today announces its intention to raise up to approximately US$13.0 million (£9.6 million) by way of a Placing, Subscription and Retail Offer (in each case as defined below, and together the 'Fundraise') of new ordinary shares of £0.05 each in the capital of the Company ('Ordinary Shares') at a price of 19.25 pence per Ordinary Share (the 'Placing Price').

The Fundraise is being conducted on a non-pre-emptive basis. The Placing will comprise the issue of such number of new Ordinary Shares (the 'Placing Shares') as, together with the Subscription Shares, represents 10 per cent. of the Company's existing issued share capital (the 'Placing').

The Company intends to enter into subscription agreements with certain of its directors and existing shareholders who have indicated that they intend to subscribe for an aggregate amount of new Ordinary Shares (the 'Subscription Shares') equivalent to up to US$2.47 million (£1.81 million) at the Placing Price. The Subscription Shares represent up to approximately 2.4 per cent. of the Company's existing issued share capital (the 'Subscription').

In addition to the Placing and Subscription, an offer will be made by the Company on the PrimaryBid platform of up to 9,937,892 new Ordinary Shares (the 'Retail Shares'), representing up to 2.5 per cent. of the Company's existing issued share capital, at the Placing Price (the 'Retail Offer'), to provide retail investors with an opportunity to participate in the equity fundraise. A separate announcement will be made shortly regarding the Retail Offer and its terms.

Together, the total number of Placing Shares, Subscription Shares and Retail Offer Shares will not exceed 49,689,460, representing approximately 12.5 per cent of the current issued share capital of the Company.

Peel Hunt LLP ('Peel Hunt') and Auctus Advisors LLP ('Auctus') (Peel Hunt, together with Auctus, being the 'Joint Bookrunners') are acting as joint bookrunners in relation to the Placing.

The Placing, which is being conducted by way of an accelerated bookbuild (the 'Bookbuild') and is available to qualifying new and existing investors, will be launched immediately following the release of this announcement. The timing of the closing of the Bookbuild and the allocations are at the absolute discretion of the Joint Bookrunners and the Company. The results of the Placing will be announced as soon as practicable after the close of the Bookbuild.

The Placing is subject to the terms and conditions set out in the Appendix to this announcement (which forms part of this announcement, such announcement and the Appendix together being this 'Announcement').

Highlights of the Fundraise

The Company is seeking to raise gross proceeds of up to approximately US$13.0 million (£9.6 million) through the issue of the Placing Shares, the Subscription Shares and the Retail Shares (together the 'New Ordinary Shares')

• The net proceeds of the Fundraise will be deployed to support the Company's investment programme in Egypt in order to provide reservoir pressure support and stimulate production.
• This will include completion of two water injector wells that have already been drilled, well intervention of two wells and recompletions of 6 wells to add waterflooded zones to production.
• Investment of the net proceeds of the Placing and the Subscription will be made in advance of the conclusion of the farm out in Egypt (as announced on 13 January 2021), which is intended to close during H2 2021.
• The Placing is conditional, inter alia, upon the Subscription, but is not conditional upon the Retail Offer.

The Placing Price of 19.25 pence represents a discount of approximately 9.8 per cent. to the closing price on 21 January 2021, the last practicable day prior to the announcement of the Fundraise.

Expected timetable and principal events

Announcement of the Fundraise	21 January 2021
Announcement of the results of the Placing and the Retail Offer	22 January 2021
Admission and commencement in dealings in the New Ordinary Shares expected to commence	27 January 2021
CREST stock accounts expected to be credited for New Ordinary Shares	27 January 2021

The above times and/or dates may be subject to change and, in the event of such change, the revised times and/or dates will be notified to Shareholders by an announcement through a Regulatory Information Service. All references to times in this document are to London times.

Details of the Placing

Peel Hunt and Auctus are acting as joint bookrunners in relation to the Placing. The Company, Peel Hunt and Auctus have entered into a placing agreement dated 21 January 2021 in connection with the Placing (the 'Placing Agreement').

The Placing will be conducted through the Bookbuild which will be launched immediately following the release of this Announcement, in accordance with the terms and conditions of the Placing set out in the Appendix to this Announcement.

The final number of Placing Shares will be determined at the close of the Bookbuild, and the result will be announced as soon as practicable thereafter. The timing for the close of the Bookbuild, the allocation of the Placing Shares shall be determined together by, and at the absolute discretion of, the Joint Bookrunners and the Company. The Placing is not underwritten.

The Placing Shares, when issued, will be fully paid and will rank pari passu in all respects with each other and with the Subscription Shares, the Retail Shares and the existing Ordinary Shares, including, without limitation, the right to receive all dividends and other distributions declared, made or paid after the date of issue.

The Retail Shares will be subscribed for on the basis set out in a separate announcement regarding the Retail Offer to be released by the Company shortly, rather than pursuant to the terms and conditions of the Placing contained in the Appendix to this Announcement. The Subscription Shares will be subscribed for on the basis agreed pursuant to subscription agreements between the Company and the relevant subscribers, rather than pursuant to the terms and conditions of the Placing contained in the Appendix to this Announcement. The Retail Shares and the Subscription Shares will be subscribed for at the same price as the Placing Price.

Applications will be made (i) to the Financial Conduct Authority (the 'FCA') for admission of the Placing Shares and the Subscription Shares to the premium listing segment of the Official List; and (ii) to London Stock Exchange plc for admission of the Placing Shares to trading on its main market for listed securities (together, 'Admission'). Application will also be made for the Retail Shares to be so admitted.

It is expected that such admissions will become effective at or around 8.00 a.m. on 27 January 2021 and that dealings in the Placing Shares, Subscription Shares and Retail Shares will commence at that time. The Placing is conditional upon, amongst other things, the Subscription and Admission becoming effective and the Subscriptions. The Placing is not conditional upon the Retail Offer. The Placing is also conditional upon the Placing Agreement not being terminated in accordance with its terms. The Appendix to this Announcement sets out further information relating to the Bookbuild and the terms and conditions of the Placing.

Egypt Update

On 13 January 2021 the Company announced that a farm-out process of its assets in Egypt had commenced. Significant interest from credible counterparties has been received to date and the Company expects bids will be received in early February. The Company expects definitive agreements will be signed during H1 2021, with completion expected in H2 2021.

The conclusion of the farm-out is expected to provide an opportunity to fast track material production growth by doubling Egypt production to over approximately 12,000 bopd within 24 months, through the implementation of a defined investment programme of 57 identified well targets (the 'Investment Case').

The Investment Case targets recovery of 45 mmbbl, with a further 48 mmbbl potential beyond the Investment Case as contingent resources. Through the investment programme, the Company expects breakeven operating costs to improve from current life of field breakeven of US$38-42/bbl to 100% and a Capital Productivity Index of roughly 5.

The Company has today uploaded a revised corporate presentation to its website.

For further information, please contact:

Pharos Energy plc: Ed Story, President & Chief Executive Officer Jann Brown, Managing Director & Chief Financial Officer Mike Watts, Managing Director	[phone]
Peel Hunt (Joint Bookrunner and Joint Corporate Broker):	[phone]
Richard Crichton / Alexander Allen Jock Maxwell Macdonald / Sohail Akbar
Auctus Advisors (Joint Bookrunner):	[phone]
Jonathan Wright / Rupert Holdsworth Hunt / Harry Baker
Camarco (PR):	[phone]
Billy Clegg / Owen Roberts / Monique Perks

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in the 'Important Notices' section of this Announcement.

IMPORTANT NOTICES

THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) AND THE TERMS AND CONDITIONS SET OUT HEREIN (TOGETHER, THIS 'ANNOUNCEMENT') IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR FORM ANY PART OF AN OFFER TO SELL OR ISSUE, OR A SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY SECURITIES IN THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA (COLLECTIVELY, THE 'UNITED STATES')), AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NO PUBLIC OFFERING OF THE PLACING SHARES IS BEING MADE IN ANY SUCH JURISDICTION. ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF SUCH JURISDICTIONS.

This Announcement is not for public release, publication or distribution, in whole or in part, directly or indirectly, in or into the United States, Australia, Canada, the Republic of South Africa, Japan or any other jurisdiction in which such release, publication or distribution would be unlawful.

The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the 'Securities Act'), and may not be offered or sold in the United States, except pursuant to an applicable exemption from the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. No public offering of the Placing Shares is being made in the United States.

No action has been taken by the Company, Peel Hunt or Auctus or any of their respective affiliates, or any of its or their respective directors, officers, partners, employees, advisers and/or agents (collectively, 'Representatives') that would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons receiving this Announcement are required to inform themselves about and to observe any restrictions contained in this Announcement. Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action. Persons distributing any part of this Announcement must satisfy themselves that it is lawful to do so.

This Announcement is directed at and is only being distributed to: (a) persons in member states of the European Economic Area who are 'qualified investors', as defined in Article 2(e) of the Prospectus Regulation (Regulation (EU) 2017/1129) (the 'Prospectus Regulation') ('Qualified Investors'), (b) persons in the United Kingdom, who are qualified investors, being persons falling within the meaning of Article 2(e) of Prospectus Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (the ' UK Prospectus Regulation'), and who (i) have professional experience in matters relating to investments who fall within the definition of 'investment professionals' in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the 'Order') or are high net worth companies, unincorporated associations or partnerships or trustees of high value trusts as described in Article 49(2)(a) to (d) of the Order and (ii) are Qualified Investors, or (c) otherwise, persons to whom it may otherwise lawfully be communicated (each such person in (a), (b) and (c), a 'Relevant Person'). No other person should act on or rely on this Announcement and persons distributing this Announcement must satisfy themselves that it is lawful to do so. By accepting the terms of this Announcement, you represent and agree that you are a Relevant Person. This Announcement must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this Announcement or the Placing relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.

No offering document or prospectus will be made available in any jurisdiction in connection with the matters contained or referred to in this Announcement or the Placing and no such prospectus is required (in accordance with either the Prospectus Regulation or the UK Prospectus Regulation) to be published.

Certain statements in this Announcement are forward-looking statements with respect to the Company's expectations, intentions and projections regarding its future performance, strategic initiatives, anticipated events or trends and other matters that are not historical facts and which are, by their nature, inherently predictive, speculative and involve risks and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. All statements that address expectations or projections about the future, including statements about operating performance, strategic initiatives, objectives, market position, industry trends, general economic conditions, expected expenditures, expected cost savings and financial results, are forward ‐ looking statements. Any statements contained in this Announcement that are not statements of historical fact are, or may be deemed to be, forward ‐ looking statements. These forward-looking statements, which may use words such as 'aim', 'anticipate', 'believe', 'could', 'intend', 'estimate', 'expect', 'may', 'plan', 'project' or words or terms of similar meaning or the negative thereof, are not guarantees of future performance and are subject to known and unknown risks and uncertainties. There are a number of factors including, but not limited to, commercial, operational, economic and financial factors, that could cause actual results, financial condition, performance or achievements to differ materially from those expressed or implied by these forward ‐ looking statements. Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control or estimate precisely, such as changes in taxation or fiscal policy, future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governments or governmental regulators, or other risk factors, such as changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including inflation, recession and consumer confidence, on a global, regional or national basis. Given those risks and uncertainties, readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of this Announcement. Each of the Company, Peel Hunt and/or Auctus expressly disclaims any obligation or undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless required to do so by applicable law or regulation.

Peel Hunt, which is authorised and regulated by the FCA, and Auctus, which is an appointed representative of Tamesis Partners LLP which is authorised and regulated by the FCA, are acting exclusively for the Company and for no one else in connection with the Placing and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Placing, the Fundraise or any other matter referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for giving advice in relation to the Placing or any other matter referred to in this Announcement.

This Announcement is being issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by or on behalf of Peel Hunt and/or Auctus (apart from the responsibilities or liabilities that may be imposed by the Financial Services and Markets Act 2000, as amended ('FSMA') or the regulatory regime established thereunder) and/or by any of their respective affiliates and/or any of their respective Representatives as to, or in relation to, the accuracy, adequacy, fairness or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or their respective advisers or any other statement made or purported to be made by or on behalf of Peel Hunt, and/or Auctus and/or any of their respective affiliates and/or by any of their respective Representatives in connection with the Company, the Placing Shares or the Placing and any responsibility and liability whether arising in tort, contract or otherwise therefor is expressly disclaimed. No representation or warranty, express or implied, is made by Peel Hunt, and/or Auctus and/or any of their respective affiliates and/or any of their respective Representatives as to the accuracy, fairness, verification, completeness or sufficiency of the information or opinions contained in this Announcement or any other written or oral information made available to or publicly available to any interested party or their respective advisers, and any liability therefor is expressly disclaimed.

The information in this Announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction or disclosure of this Announcement, in whole or in part, is unauthorised. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions.

This Announcement does not constitute a recommendation concerning any investor's options with respect to the Placing. Recipients of this Announcement should conduct their own investigation, evaluation and analysis of the business, data and other information described in this Announcement. This Announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the Placing Shares. The price and value of securities can go down as well as up and investors may not get back the full amount invested upon the disposal of the shares. Past performance is not a guide to future performance. The contents of this Announcement are not to be construed as legal, business, financial or tax advice. Each investor or prospective investor should consult his or her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, business, financial or tax advice.

Any indication in this Announcement of the price at which the Company's shares have been bought or sold in the past cannot be relied upon as a guide to future performance. Persons needing advice should consult an independent financial adviser. No statement in this Announcement is intended to be a profit forecast or profit estimate for any period and no statement in this Announcement should be interpreted to mean that earnings, earnings per share or income, cash flow from operations or free cash flow for the Company for the current or future financial periods would necessarily match or exceed the historical published earnings, earnings per share or income, cash flow from operations or free cash flow for the Company.

All offers of the Placing Shares will be made pursuant to an exemption under the Prospectus Regulation and the UK Prospectus Regulation from the requirement to produce a prospectus. This Announcement is being distributed and communicated to persons in the United Kingdom only in circumstances in which section 21(1) of FSMA does not apply.

The Placing Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than the main market for listed securities of the London Stock Exchange.

The Appendix to this Announcement sets out the terms and conditions of the Placing. By participating in the Placing, each Placee will be deemed to have read and understood this Announcement (including the Appendix) in its entirety, to be participating in the Placing and making an offer to acquire and acquiring Placing Shares on the terms and subject to the conditions set out in the Appendix to this Announcement and to be providing the representations, warranties, undertakings and acknowledgements contained in the Appendix to this Announcement.

Members of the public are not eligible to take part in the Placing and no public offering of Placing Shares is being or will be made.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this Announcement.

This Announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside the United Kingdom.

Solely for the purposes of the product governance requirements of Chapter 3 of the FCA Handbook Product Intervention and Product Governance Sourcebook (the 'UK MiFIR Product Governance Requirements'), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any 'manufacturer' (for the purposes of the UK MiFIR Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, as respectively defined in paragraphs 3.5 and 3.6 of COBS; and (ii) eligible for distribution through all permitted distribution channels (the 'Target Market Assessment'). Notwithstanding the Target Market Assessment, Distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Peel Hunt and Auctus will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Chapters 9A or 10A respectively of COBS; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares. Each distributor is responsible for undertaking its own target market assessment in respect of the Placing Shares and determining appropriate distribution channels.