Summary of the key terms of the Farmout Agreement (31 Oct 2018)...

Summary of the key terms of the Farmout Agreement (31 Oct 2018)

The Farmout Agreement is conditional on usual regulatory approvals and the consent of a landholder under an existing compensation agreement. Under the terms of the Farmout Agreement:

i. The Joint Venture will commence an Early Work Programme which will include the workover of two of the existing wells at the Mount Horner Oil Field, whereby Triangle and Key are each to contribute 50% of all associated costs

ii. In parallel with the Early Works Programme, Triangle will develop a work programme that will include a 3D seismic survey of at least 50 km2 and a drilling programme of at least two new wells (Farmin Programme)

iii. Triangle shall be responsible for 100% of the cost of the Farmin Programme up to a limit of US$3 million. Costs of developing and completing the Farmin Programme in excess of US$3million will be shared in accordance with the participating interests of Key and the Company (with each currently holding 50% each)

iv. Triangle will earn a 50% equity interest in L7 by completing the Farmin Programme and by carrying Key’s proportional costs associated with the development and execution of the Farmin Programme (Payback Amount)

v. Triangle will recover the Payback Amount through the entitlement of 87.5% (based on Triangle holding a 50% participating interest) of production from L7, after completion of well drilling under the Farmin Programme, for the first two years of commercial production. Triangle shall be entitled to 75% (based on Triangle holding a 50% participating interest) of production in L7 thereafter until the Payback Amount has been recovered

vi. Triangle retains the option of assuming Operatorship of L7 upon completion of the Early Work Programme and Farmin Programme

vii. Key is solely responsible for all activities and costs associated with the decommissioning of the existing Mt Horner wells including removal of the surface facilities and rehabilitation of the facility site and access roads. Triangle and Key will share any decommissioning costs which would arise from new wells and any infrastructure to be added to the L7 permit

viii. Following the completion of the Farmin Programme, Key may elect for its participating interest share of ongoing joint venture costs to be paid for by Triangle. If such an election is made after Triangle has received the Payback Amount, Triangle will be entitled to the receipts of 100% of the production from L7 until the amount that Triangle has paid for on behalf of Key has been recovered by Triangle.