Canadian Overseas Petroleum (COPL), an international oil and gas exploration, production and development company with production and development operations focused in Converse and Natrona Counties, Wyoming, USA, provides the following update:

• The Company has signed Purchase Agreements for the issue of two series of convertible bonds with an aggregate principal amount of US$25.2 million (the "Principal Amount"): $12.6 million maturing in 2024 and $12.6 million maturing in 2025.
• The Convertible is anchored by a long term, UK based institutional shareholder and other institutional investors.
• This instrument replaces the previous bridge loan, announced on 19 April 2022 and is structured to accommodate the implementation of a planned Reserve Based Loan ("RBL") facility. The Convertible is initially unsecured and permits the Company to structure new senior debt.
• A 'tap feature' to increase the Convertible allows COPL to draw further development funds, should it require, with the aim of increasing production or for future drilling plans, subject to mutual agreement with the Lead Investor.
• Subscription Proceeds of $19.7 million from the Convertible will be used to finance the cash component of the acquisition of the Cuda Energy assets which will lead from Q3-2022 to an increase in the Company's share of oil production from certain of its Wyoming assets.
• With a bankrupt partner removed from the Wyoming Assets and, those working interests owned by COPL America, the Company believes, it is now optimally positioned for management to achieve its near-term objective of finalising a RBL agreement to refinance its debt structure during 2022.
• COPL believes this instrument offers superior terms for the Company to pursue its corporate objectives for 2022, by providing:
• A longer average maturity of 30 months, with options for COPL to repay in cash or in COPL common shares.
• Flexibility through optional redemption by the Company to call the instrument if certain conditions are met.
• A structure deliberately designed to support COPL and senior lenders with the implementation of an RBL agreement.
• The Lead Investor and COPL have agreed to a 'tap feature' whereby they can mutually agree funding for development and drilling at COPL's Wyoming Assets, in a structure that fits with a RBL or senior debt.
• The Company has also agreed to a moratorium on equity issuances for 90 days from the Issue Date, whilst the Company works to conclude its objective of senior debt refinancing and, not to issue further convertible securities whilst the Bonds are outstanding.
• The Conversion Price was set at 5% premium to the 5-day volume weighted average price prior to signing a binding term sheet agreeing terms in principle with the Investor on 6 July 2022.

Cuda Acquisition

COPL's affiliate, COPL America Inc., intends to close the Cuda Acquisition simultaneously with the closing of the Convertible on 25 July 2022. On closing the Cuda Acquisition:

• COPL America will become the majority owner of its Wyoming Assets with operated interests of 85 - 100% across three oil producing Units in Wyoming, USA.
• COPL will, from Q3-2022, report increased share of oil production reflecting majority interest in its Wyoming Assets, which will benefit COPL America from exposure to 'unhedged' oil production.
• Closing the Cuda Acquisition will remove a bankrupt working interest partner that has constrained COPL America's financial resources and limited the pace of development since COPL America acquired its Wyoming Assets in March 2021. As at 31 May 2022, the Cuda Receivable owed to COPL America had decreased to $1.95 million.

Arthur Millholland, President & CEO, commented:
"We are pleased to have the support of our largest shareholder who approached COPL with an objective of improving COPL's capital structure on closing of the Cuda Acquisition and, the Convertible provides COPL with the cash required to close the Cuda Acquisition.

"COPL plans an active work program for the remainder of 2022 including optimization and facility work at the Barron Flats Shannon Unit, recompletions at the Cole Creek Unit and drilling two horizontal wells at the Barron Flats Deep Unit to target the significant oil discovery COPL has made in the Frontier Formation, 1 and 2 sands. COPL America has well design in hand, and is procuring long lead items to commence drilling at the Deep Unit in Q4 this year."

Ryan Gaffney, CFO, commented further:
"The Cuda Acquisition is a positive step towards COPL America's refinancing process as it provides majority ownership of our Wyoming Assets and increases our bankable borrowing base which should make it easier to achieve a larger refinancing later this year. We are pleased with our shareholders' support to provide a longer-term Convertible with well-defined conversion parameters. Moreover, this Convertible provides a capital structure that is flexible and will fit alongside the planned Reserve Based Loan for our Wyoming Assets. We are now in prime position to progress term sheet negotiations with banks and look forward to updating shareholders on bank re-financing terms as soon as possible this quarter."