Prominence Energy : PRM to acquire interest in multi-TCF Sasanof Prospect

For personal use only

ABN 69 009 196 810

(Incorporated in Western Australia)

Level 2, 30 Richardson Street

West Perth, WA 6005

PO Box 1786, West Perth WA 6872

T+61 8 9321 9886 F [phone]

7 December 2021

ASX Limited

Company Announcements

Level 4, 20 Bridge Street

SYDNEY NSW 2000

PRM TO ACQUIRE INTEREST IN MUTLI-TCF SASANOF PROSPECT

AND RAISES A$12 MILLION

Highlights

Prominence Energy Ltd ("PRM") is pleased to announce that PRM has signed a binding term sheet to acquire a 12.5% interest in the Multi-TCF Sasanof Gas Prospect located in exploration Permit WA-519-P on the Northwest Shelf, Australia.

• PRM will acquire a 12.5% shareholding in the company which is the permit holder of the Sasanof Prospect.
• Once the Sasanof well is fully funded, PRM will issue 90 million PRM shares and 30 million PRMOB options as part of the consideration, subject to shareholder approval and subscribe for US$5.0million in shares in the company which is the permit holder the Sasanof Prospect with such funds to be used to cover part of the costs of drilling the Sasanof well.
• PRM has secured a firm commitment to raise A$12 million before costs via a two-tranche placement. PRM will issue 1.2 billion PRM shares at a price of 1c each with 1 free attaching PRMOB option for every 3 placement shares subscribed for.
• Tranche 1 of 250 million shares will be issued using the company's capacity under 7.1/7.1a
• Tranche 2 of 950 million shares and the Options will be issued subject to Shareholder approval

Sasanof Prospect

The Sasanof prospect is located in exploration permit WA-519-P, in Commonwealth waters approximately 207km northwest of Onslow Western Australia. (Figure-1)

The Sasanof Prospect is located up dip from the liquids rich, low CO2 Mentorc Gas and Condensate field and near to the giant gas fields of Scarborough and Io-Janz in the Carnarvon Basin. The prospect covers an area of approximately 400km2. ERC Equipoise Ltd ("ERCE") independently determined that Sasanof is an estimated 2U Prospective Resource of 7.2 Tcf of gas and 176 million bbls of condensate (P50 recoverable) and a 32% Chance of Success (CoS). The High Case 3U Prospective Resource estimate is 17.8TCF and 449 million bbls of condensate (P10 recoverable). (See Appendix 2).

Resources Net to WG519 Pty Ltd and PRM are shown in the table below.

Net PRM entitlement assuming PRM completes under terms disclossed and earns 12.5% interest
		Recoverable Gas (Bcf)		Recoverable Condensate (MMstb)
Sasanof	1U	2U	3U	Mean	1U	2U	3U	Mean
Net to WG519	600.5	4131.1	9253.1	5177	13.8	100.4	233.7	128.8
Net to PRM (12.5%)	75.1	516.4	1156.6	647.1	1.7	12.6	29.2	16.1

Cautionary Statement - Prospective Resources are the estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) related to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development.

For personal use only

Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

PRM is acquiring a 12.5% shareholding interest in the WA-519-P licence holder, Western Gas (519 P) Pty Ltd (WG519). Western Gas Pty Ltd (Western Gas) is the major shareholder of WG519 and the Operator of the WA-519-P permit and announced on 25 November 2021 that a rig contract had been signed with Valaris for the MS-1semi-submersible rig to drill the well in March/April 2022. Global Oil and Gas Limited (ASX:GLV) is committed to funding 50% of the well for a 25% shareholding interest in WG519. GLV and PRM together are funding 75% of the total well cost of the Sasanof well. Western Gas are in discussions to fund the remaining 25% of the well cost. PRM's participation is conditional on Western Gas securing funding for the full well cost. Sasanof-1 will be a vertical well drilled to a depth of approximately 2,500m in 1,070m of water. Drilling costs are estimated to be in the range of US$20-25 million (US$5-6.25 million PRM share).

Commenting on the news, Alex Parks Managing Director of PRM stated: "PRM is delighted to be participating in the drilling of the Sasanof prospect. It is a giant structure with a good chance of finding gas. Success would be transformational for PRM."

Commenting on the news Western Gas Executive Director Will Barker stated: "Western Gas is delighted to welcome Prominence onboard the Sasanof-1drilling program. Prominence joins us, and our existing partner Global Oil and Gas Limited (ASX:GLV), at an exciting time as we continue to achieve key project milestones and progress towards drilling of Sasanof-1in March/April 2022."

The Sasanof Prospect covers an area of up to 400 km2 across three exploration permits and one retention lease, three of which, WA-519-P,WA-390-P & WA-70-R, are operated and owned by Western Gas.

Independent assessment by ERC Equipoise Ltd of the total Sasanof Prospect estimates 2U Prospective Resource (gross) of 7.2 Tcf gas and 176 Million bbls condensate (P50 recoverable), with a 32% Chance of Success. The 3U Prospective Resource estimate (gross) is for 17.8 Tcf gas and 449 Million bbls condensate (Pl0 recoverable).

Resources Net to WG519 Pty Ltd and PRM are shown in the table below.

Net PRM entitlement assuming PRM completes under terms disclossed and earns 12.5% interest
		Recoverable Gas (Bcf)		Recoverable Condensate (MMstb)
Sasanof	1U	2U	3U	Mean	1U	2U	3U	Mean
Net to WG519	600.5	4131.1	9253.1	5177	13.8	100.4	233.7	128.8
Net to PRM (12.5%)	75.1	516.4	1156.6	647.1	1.7	12.6	29.2	16.1

Sasanof is a large seismically defined, amplitude supported prospect in the Cretaceous Lower Barrow Group at a depth of 2,500m. It is an up-dip prospect from the liquids rich Mentorc Gas Field, previously discovered by Hess Corporation. Western Gas has secured the Valaris MS-1semi-submersible drill rig secured with drilling scheduled for March/April 2022 at an estimated cost of US$20-25 million (US$5-6.25 million PRM share).

2

For personal use only

Figure 1 Regional location of Sasanof Prospect and surrounding gas fields.

Deal Terms

PRM will acquire (a total 12.5% of the shares in WG519 via an acquisition of shares from Western Gas and subscription for new shares in WG519 and consequentially a 12.5% beneficial interest in the WA-519-P licence.

In addition PRM, via contractual arrangements with Western Gas and its other subsidiaries which hold the adjacent permits, will also have an economic interest in 12.5% of the Sasanof Prospect that sit outside of WA-519-P, but within other Western Gas exploration permits.

Following completion, WA519 will have 4 Board members (2 from Western Gas, 1 from GLV, 1 from PRM). In the event Western Gas obtains funding for the final 25% of the well cost, the Board will be 5 including 1 from the other funding party. The Board will operate like a typical Oil and Gas Joint Venture voting on the basis of ownership %. In the event of a discovery at Sassanof-1, the parties may choose to take a direct working interest in the permit(s) and operate as an unincorporated Joint Venture based on a standard international AIPN1 Joint Operating Agreement.

Consideration

On Western Gas securing full funding of the well, PRM shareholder approval of the Capital Raise and associated resolutions, and the execution of a shareholders agreement and other agreements as required between the parties.

• PRM will issue Western Gas 30 million PRMOB options
• PRM will issue Western Gas 90 million PRM shares

1 Association of International Petroleum Negotiators - international standard Joint Operating Agreement.

3

For personal use only

• PRM will subscribe for US$5.0 million in shares in WG519 (such amount being equal to 25% of the anticipated well cost of US$20 million) and also loan to WG519 25% of any over runs up to $5 million when cash called. Thereafter, PRM will be required to contribute on a heads-up basis (12.5%).

Issue of the Options and Shares to Western Gas will be subject to PRM shareholder approval at an EGM. PRM will issue 30 million PRM shares to GTT Ventures Pty Ltd (or nominee) as deal facilitator.

Deal Status

The terms of the deal between PRM and Western Gas are established on the same proportional basis to those with GLV. A binding term sheet has been executed between Western Gas and PRM.

The conditions precedent to completion of the proposed transaction are:

1. completion of due diligence by PRM on the Permit, to the satisfaction of PRM;
2. PRM raising a minimum of A$9,000,000 through the issue of ordinary shares at not less than A$0.01 each (noting that the second tranche of the capital raising will be subject to shareholder approval and PRM confirming the Sasanof Project Well is fully funded)
3. PRM obtaining shareholder approval in a general meeting of the issue the shares and options to Western Gas under the Acquisition and the issue of the shares and options under the Tranche 2 of the placement;
4. Western Gas and PRM negotiating and agreeing the terms of definitive agreements
5. each of the Shareholders of WG519 providing all consents and waivers necessary under the WG519 Shareholders Agreement for the Acquisition to proceed;
6. Western Gas having secured commitments for 100% of the funding to cover the costs of the Sasanof-1 well to PRM's reasonable satisfaction;
7. WG519 making a formal decision to proceed with the drilling of the Sasanof Project Well.

PRM Capital Raising

PRM has firm commitments to place 1.2 billion shares at a price of 1c per share with 1 PRMOB2 attaching option for every three shares subscribed for. The Placement will be made in two tranches with the second tranche (including Directors Participation for $50,000) subject to shareholder approval at an EGM and Western Gas having secured commitments for 100% of the funding to cover the costs of the Sasanof-1 well to PRM's reasonable satisfaction.

The primary use of funds is the drilling of the Sasanof-1 well with PRM's share of these costs expected to be approximately A$6.5-8 million. The balance of the funds will be used for advancing the company's Bowsprit project toward development drilling, business development relating to new projects and working capital.

	No. of PRM	$ before costs	No. of Options	Method
	shares		(PRMOB)
Tranche 1	250,000,000	$2,500,000	83,333,333	Shares - Rule 7.1 and 7.1A capacity
				Options - subject to shareholder approval
Tranche 2	950,000,000	$9,500,000	316,666,667	Subject to shareholder approval
Directors	5,000,000	50,000	1,666,667	Subject to shareholder approval
Total	1,205,000,000	$12,050,000	401,666,667

Capital Raising Fees - PRM will pay 6% in capital raising fees, and issue a total 30 million shares and 60 million PRMOB options to the brokers raising the funds for PRM. The raise will be executed through two brokers, Inyati Capital Pty Ltd (ABN 83 642 351 193) ("Inyati") and GTT Ventures Pty Ltd (ABN 36 601 029

1. ("GTT").

2 Listed PRMOB options with an exercise price of 2c per share and expiry date of 1 September 2023

4

For personal use only

On completion of the transaction the PRM capital structure will be:

					PRMOB
		PRM Shares			Options /			% of post-Placement
				unlisted			undiluted cap structure
					Options
Shares on issue pre-Placement	1,033,858,818		379,562,247		43.28%
Placement	1,200,000,000		400,000,000		50.23%
Sasanof deal PRM equity consideration	90,000,000		30,000,000		3.77%
Facilitator shares	30,000,000					1.26%
Broker Fees/options for Placement	30,000,000		60,000,000		1.26%
Director Participation in Placement	5,000,000		1,666,667		0.21%
Shares on issue post Completion	2,388,858,818		871,228,914		100%

Indicative Timetable to Completion

	Date
Announcement of Sasanof Transaction and Capital Raise	7-Dec 21
Tranche-1 Placement - Issue of Shares	13-Dec-21
Dispatch Notice of Meeting for EGM to approve related resolutions	17-Dec-21
PRM Extraordinary General Meeting (EGM)	19-Jan-22
Issue of Tranche 2 Placement Shares	21-Jan-22
Close Transaction with Western Gas including Issue of Consideration Shares &
Options (Subject to PRM being satisfied the Sasanof Well is fully funded)	25-Jan-22

Authorised by the Board of Prominence Energy Limited

Yours faithfully

Alexander Parks

Managing Director

For further information please contact Prominence Energy at:

Web: www.prominenceenergy.com.au

Phone:	[phone]
Email:	[e-mail]

5