ADM Energy invests in US oil leases through new subsidiary

LONDON, UK: ADM Energy PLC (AIM: ADME; BER and FSE: P4JC), a natural resources investing company with an existing asset base in Nigeria, has invested in five on-shore US oil leases by way of a Membership Interest Purchase Agreement with OFX Holdings, LLC (formerly Tennessee Black Gold, LLC), a substantial shareholder of the Company.

The Investment has been made by the acquisition of Blade Oil V, LLC (“Blade V”), a Texas limited liability company established as a vehicle for the purpose of facilitating the Investment, for a total maximum consideration of US$1,614,000.

The Investment gives ADM Energy access to a portfolio of interests in oil and gas projects (“the Assets”), the primary focus of which is a 70.0% working interest participation in an initial three well drilling programme to target shallow oil production on the Altoona Lease located in the Midway-Sunset Oilfield, Kern County, California. The interests held by Blade V also include:

· 100.0% working interest in the Schweitzer Lease in Graham County, Kansas where a work-over programme to restore production from two wells is currently in process.

· 50.0% fully funded working interest in a three well workover programme in Texas targeting initiation of production from three wells.

· Total gross and net leasehold acreage associated with the acquisition is 423 acres and 295.5 acres, respectively.

· An Area of Mutual Interest allowing ADM to participate, at cost, in any additional drilling, recompletion or workover opportunities within two miles of any boundary of the leases included in the Investment.

The Investment is subject to ADM Energy shareholder approval which is required for the issue of Consideration Shares and Consideration Performance Rights (each defined below) and the Tranche 2 Placement shares (defined below). The Tranche 1 Placement shares will be issued without shareholder approval.

As a condition of the Investment, ADM Energy has also received firm and irrevocable commitments from professional and sophisticated investors for a capital raising of $1.75 million (before costs) (Placement), to be conducted in two tranches. The first tranche of $1 million will be issued without shareholder approval, while the second tranche of $750,000 will be subject to shareholder approval.

The Investment has been made through a recently formed, wholly owned U.S. subsidiary company, ADM Energy USA, Inc., which will be managed by OFX Holdings under an operating agreement. In conjunction with the Investment, ADM Energy USA, Inc. and OFX have entered into a loan facility (the “USA Loan Facility”) providing for loans of up to US$750,000 to be made available to the Company. The Consideration Loan Notes (defined below) of US$235,720 will be issued as an advance under the USA Loan Facility.

ADM Energy will be a non-operating financial investor in the interests.

Osamede Okhomina, CEO of ADM Energy PLC said: “We are pleased to announce this investment in five on-shore US oil leases through our new subsidiary ADM Energy USA. This investment diversifies our portfolio and provides us with exposure to low-cost oil production opportunities in established basins with existing infrastructure and favourable fiscal terms. We look forward to working with OFX Holdings, our substantial shareholder and partner, to unlock the value of these assets and generate returns for our shareholders.”

According to ADM Energy, the Investment is part of its strategy to build a balanced portfolio of assets across the energy value chain in Africa and other frontier markets. ADM Energy holds a 9.2% profit interest in the oil producing Aje Field, part of OML 113 offshore Nigeria.

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