ADX Energy Ltd has signed an agreement with Reabold Resources Plc to invest US$ 2 million in the recently incorporated Danube Petroleum Limited (Danube), currently a wholly owned ADX subsidiary, which (upon completion of transfers) will hold ADX’ 50% interest in the Parta exploration license (“Parta”), and 100% participating interest in the upcoming Parta Appraisal Program. The Appraisal Program comprises two redrill wells planned in the second half of 2018 to test 33 BCF of prospective and contingent resources defined on recently acquired 3D seismic, spread over a total of 5 gas reservoirs. Upon completion of the US$ 2 million investment Reabold will hold a 29% shareholding in Danube.

Key Investment Highlights are as follows:

• The Reabold investment values ADX’s 71% interest in UK registered Danube at US$ 5 million.
• The US$ 2 million investment will be used to drill the first well of the two well Appraisal Program during the second half of 2018.
• The two appraisal wells will target a combination of tested contingent gas resources and log derived prospective gas resources quantified by recently acquired 3D seismic.
• Excellent economic potential due to low drilling and tie in costs, availability of proximal gas infrastructure, strong gas pricing (approximately US$ 6.2 per MCF) and excellent fiscal terms.
• Multi pay zone potential is expected in both wells. A low case single zone production case from the two well program is expected to deliver approximately US$ 13 million of post-tax NPV10 from 7 BCF recoverable gas; whereas, if all prognosed zones are successful, approximately US$85 million of post-tax NPV10 value may be realised from 33 BCF recoverable gas (assuming a multi well development).
• The Appraisal Program provides ADX with potential access to rapid cash flow.
• Additional un-risked prospective resources of approximately 300 BCF of gas and 45 MMbbl of oil have been identified on the basis of existing 2D seismic in the rest of the Parta permit which can now be targeted with recently permitted 3D seismic program.
• Danube provides ADX with a funding vehicle that is attractive for UK or European investors wanting to participate in low risk, high growth opportunities in Romania and Eastern Europe.
• ADX will provide management services to Danube, continue in its role as Operator of the Parta permit and source further investment opportunities for Danube.
• Reabold is a UK publicly listed company that invests in near-term, high growth upstream oil & gas projects where its injection of capital will facilitate near term activity.

Upon completion of the transfer of the Parta exploration and appraisal interests to Danube, ADX will hold 3,759,400 shares in Danube valued at 1GBP per share (US$ 5,000,000 value) and Reabold will subscribe to a total of 1,503,759 shares in two tranches:

• 375,940 new shares at 1 GBP per share (US$ 500,000)
• 1,127,819 at 1 GBP per share (US$ 1,500,000) upon the issue by ADX (in its capacity as Operator) of an Authorisation forExpenditure (AFE) for the drilling of the first appraisal well. The funds will be held in an escrow account until the AFE is issued.

Reabold has an option to subscribe to a further 375,940 shares in Danube at 1 GBP per share that expires in 6 months following the completion of the transaction.

ADX has appointed Mr Philip Haydn Slater and Mr Ian Tchacos to the Board of Danube. Reabold has the right to appoint a director to the Board of Danube.

It is the intention of ADX to source a further US$ 2 to 3 million investment in Danube by mid 2018, which will provide sufficient funding to drill a second well in the Parta appraisal program. This will also satisfy ADX’s commitment under the agreement with Reabold to subscribe to or procure an investment into Danube Petroleum of at least £375,940 to fund the agreed work program at 1GBP per share or greater.

Ian Tchacos, Executive Chairman of ADX commented,
“The Board of ADX is pleased to secure this significant initial investment in the newly formed Danube Petroleum and welcomes Reabold’s involvement in a vehicle focused on the pursuit of highly prospective opportunities in Romania. Reabold’s investment is confirmation of the value potential of ADX Parta license and enables ADX to bring the Parta Appraisal Program to rapid fruition.”