Phoenix Global Resources, the upstream oil and gas company offering its investors direct exposure to Argentina's Vaca Muerta shale formation and other unconventional resources, announces the proposed sale of a non-core asset.

Petrolera El Trebol SA, a wholly owned subsidiary of the Company has entered into an agreement with Echo Energy plc ("Echo") to sell its 70 per cent. non-operated working interest in the Santa Cruz Sur package of five mature production blocks (the "Santa Cruz Sur Assets").

The Santa Cruz Sur Assets are located in the Austral Basin, in the Santa Cruz province in southern Argentina.

This transaction represents the sale of a non-core asset, in line with the Company's strategy to restructure Phoenix's portfolio, to focus the Company's resources on the development of its significant unconventional oil and gas portfolio.

Asset Description

• The Santa Cruz Sur Assets have a net current production of approximately 2,507 boepd (1,967 boepd of gas and 540 bpd of oil) net production to a 70 per cent. interest;
• In the H1 2019 unaudited accounts, the Santa Cruz Sur Assets (70 per cent.) generated a netback of approximately US$1.3 million and an EBITDAX of US$0.7 million;
• 1P reserves of 4.3 mmboe and 2P reserves of 13.7 mmboe (net to a 70 per cent. interest) as at 31 December 2018; and
• The Santa Cruz Assets are carried at an historical book value of approximately US$41 million in the H1 2019 financial statements; the disposal will release cash resources that will be redeployed in the development of our unconventional assets, which the Board believes will realise greater value for shareholders.

Sale Consideration

The initial consideration for the sale is US$7 million in cash plus applicable local taxes and a further US$1.5 million, which will be satisfied by the issue of 39,724,576 new ordinary shares of Echo (the "Consideration Shares"), at a price of 2.95 pence per ordinary share being the 20 day volume weighted average price prior to the date of this announcement.

Phoenix has agreed to a three-month lock-in in respect of 100% of the Consideration Shares and a further three-month lock-in in respect of 50 per cent. of the Consideration Shares.

The Sale agreement provides for further contingent deferred cash consideration of US$1.5 million, subject to an increase in the proven reserves attributable to the Santa Cruz Sur Assets as derived from a relevant competent person's report, compared to a 2018 competent person's report.

Echo has also agreed to reimburse 60% of the cost, up to a maximum of US$1.1 million, of the Campo Limite well on one of the Santa Cruz Assets, which is due to be spudded during Q4 2019; US$500,000 in cash and the balance in ordinary shares of Echo.

This transaction is subject to certain conditions being satisfied including the waiver of right of first refusal and tag-along rights by ROCH SA, the minority partner in the Santa Cruz Sur Assets, which must be fulfilled within 14 days. If these conditions are not satisfied the transaction will terminate. Completion must take place within 30 business days or the agreement will also terminate.

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