Winchester Energy Limited (Winchester or the Company) advised it has executed an agreement with Westex Resources Inc. (Westex) that allows Winchester to farm-in to the Group Prospect which is contiguous with its 100%-owned Whiteside Prospect in Nolan County, Texas. With a modest upfront cost of USD 411,400, the farm-in provides Winchester with an entry into an oil play contiguous to its existing land holding and will deliver an immediate incremental increase in the Company's oil production for minimal operational outlay. The Group Prospect work programme commences 29 June 2022 and will provide consistent news-flow as four shallow workovers at existing well bores, one deep-entry recompletion and the drilling of three new wells are to be completed within the next three months.

On top of the farm-in work commitments, Winchester can conduct further workovers and drill additional wells across the Group Prospect on a 75% (Winchester) /25% (Westex) `heads up' basis. This represents significant upside for Winchester should initial work prove successful. Following recent work completed at the White Hat 2106 and White Hat 3902 wells in the region, Winchester has a workover rig currently engaged at the project area allowing for work to commence immediately at the first workover well.

Crucially, Chapman 1 was a former Ellenburger Formation producer meaning it is a deep well providing access to all the oil-bearing formations prevalent in the area, including the Strawn and Cisco Sands. Winchester will test several highly prospective zones in Chapman 1 which, as well as potentially generating significant production in its own right, will be highly informative as to identifying one or more `plays' that may have significant potential across the Group Prospect and the adjoining Whiteside Prospect. In short, the Chapman 1 workover will enable Winchester to cheaply assess the stratigraphy and potential of the area that includes the Company's critical Whiteside acreage.

An Area of Mutual Interest (AMI), incorporating all areas within one mile of the Group Prospect has been agreed between Winchester and Westex. The AMI stipulates where either party acquires leases within the AMI, that party must offer to the other party (within 30 days) the leases on a 75% Winchester /25% Westex basis. Upon payment of the initial USD 411,400 Winchester will immediately take ownership of 75% of the Group Prospect, which has a gross acreage position of 1,760 acres (1,320 net acres to Winchester).

If Winchester does not comply with the work commitments, Winchester will pay fees of: USD 50,000 for failure to commence Workover 1 by 1 July 2022 (complied - work commenced); USD 25,000 for each subsequent workover not commenced within 10 days of completion of prior workover; USD 100,000 for failure to commence any new well. The farm-in agreement includes provisions advantageous to Winchester including force majeure (i.e. no fees payable) in the event, amongst other things, of: acts or delays of suppliers or other vendors in supplying labor, equipment or consumables; general supply chain interruptions; and causes other than those events or occurrences specified above of a similar nature or effect. Further, Winchester will have 60 days after receipt of a default notice (i.e. failure to commence work) to (a) cure the default so specified which can feasibly be cured within such 60 day period, or (b) commence reasonable efforts to cure any default so specified which cannot feasibly be cured within such 60 day period and shall continue such efforts thereafter with due diligence provided that any default must be cured within 120 days.

The Group Oil Field was discovered in 1953 and by 1959 had over 50 wells drilled and has produced over 3.5 million barrels of oil from the shallow Breckenridge Lime, Cisco sand series and the Massive sands over the life of the field. Geologically this field sits on a local four-way dip closure structurally trapping the three reservoirs. Group Field was unitised in September 1966 for the Cisco Sands which resulted in producers plugging off the Massive completions and accessing production from the zones above on 40-acre spacing.

Beginning in 1990, a successful 10-well infill drilling was conducted in which all the wells collectively produced over 461,000 barrels of oil and 228 million cubic feet of gas. Westex currently has nine usable wellbores of which four have current H-5's (disposal permit) allowing produced water to be injected.