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Path Investments Plc ORD GBP0.001

INTERVIEW: Path Investments Plc Agreement with 5P Energy

Path Investments Plc ORD GBP0.001 (LON:PATH) CEO Chris Theis talks to DirectorsTalk about the conditional farm-in agreement with 5P Energy GmbH in relation to the potential acquisition of a 50% participating interest in a producing gas field, the Alfeld-Elze II Licence and Gas Field in Germany. Chris explains the background to the deal, the attraction, the terms and the next steps for the company.

The Alfeld-Elze II Licence, encompasses the Alfeld-Elze / Hildesheimer Wald gas deposit (the “Field”), and covers a total area of 64.6 Km2. The Proposed Transaction meets the Company’s acquisition criteria, namely the acquisition of oil and gas production, or near production, assets which possess a lower risk profile than exploration or appraisal assets.

The Alfeld-Elze II Licence and Gas Field

The Licence on which the Field is situated is a production licence. It was previously split in two and was historically owned and operated by Mobil and Preussag respectively. The Field is a large fractured carbonate reservoir, with 2D seismic coverage, well control and good access to infrastructure. The Field is located onshore, 30 minutes’ drive, south of Hannover.

The Field previously produced 66 billion cubic feet (“Bcf”) of gas, from 9 wells, between 1972 and 1995, when the field was abandoned. The Field was brought back into production in 2015 by 5P Energy through the workover and re-entry of an old well (“Z2”) and the installation of processing facilities at the well site. Since 2015 this well has produced in excess of 2.5 Bcf of gas.

5P Energy has identified another old well candidate for workover and re-opening (“Z4”), located less than 1 km away from the existing producing well site. Drilling operations are underway and, subject to final approvals, commissioning of the second well is anticipated to start early in Q2 2018.

The Farm-in Agreement

The principal terms of the FIA are:

· Path to acquire a 50% participating interest in the Field;

· Path and 5P Energy to enter into a Joint Operating Agreement;

· The consideration payments are as follows:

o €5 million payable in cash on completion of the Proposed Transaction (“Completion”) as partial reimbursement of the Z2 costs;

o subject to Z4 achieving commercial production, a cash payment of €2 million as partial reimbursement of the Z4 costs accrued prior to 1 January 2018;

· Additional payments under the work obligation as follows:

o €10 million towards 100% of the costs of the drilling, logging, testing and completion of one or more new wells and if agreed the acquisition of 3D seismic over the Field;

o 50% of the Z4 costs incurred on or after 1 January 2018.

· Additional cash payments may become payable if certain milestones are successfully met following Completion.

Completion is conditional upon the following:

· Obtaining a legal opinion confirming that approval from the German anti-trust office (the Kartellamt) is not required for the Proposed Transaction or the German cartel authority clearing the Proposed Transaction;

· The Production Licence continuing in full force and effect;

· All approvals, consents and required permissions having been obtained by 5P Energy in respect of the current phase of the re-opening of Z4;

· Agreement by the parties to the 2018 Work Programme and Budget prepared by 5P Energy;

· The publication by Path of an admission document or a prospectus (as applicable) relating to the Proposed Transaction and the readmission of Path’s shares to trading on AIM in accordance with the AIM Rules or the Main Market and the Official List (as applicable) .

Equity fundraising

In order to fund the committed payments due under the Proposed Transaction the Company intends to undertake an equity fundraising (“Placing”).

Temporary Suspension

Completion of the Proposed Transaction is conditional, inter alia, on completion of the Placing, receipt of third party, legal and regulatory approvals or consents in relation to the Proposed Transaction. If completed, the Proposed Transaction would be classified as a reverse takeover in accordance with the Listing Rules of the Financial Conduct Authority. Accordingly, the Company has requested the listing of the ordinary shares of £0.001 each in the Company (“Ordinary Shares”) on the Standard Listed Segment of the Official List and trading in the Ordinary Shares on the Main Market of the London Stock Exchange be suspended with effect from 7:30am today. If the Proposed Transaction completes, the Company intends to seek either admission to trading on the AIM Market of the London Stock Exchange or readmission to trading on the Main Market of the London Stock Exchange. If the Company seeks admission to trading on the AIM Market it will request cancellation from the Official List and trading on the Main Market.

The parties intend to proceed as quickly as possible with the Proposed Transaction. However, there can be no certainty that the Proposed Transaction will be successfully completed.

Path Investments PLC ORD GBP0.001 will make further announcements in due course, as appropriate.