Prospex Energy PLC (PXEN.L) Posting of Circular and Notice of General Meeting

Prospex Energy PLC, the AIM quoted investment company (AIM:PXEN) focused on European gas and power projects, announces that it will today be posting to Shareholders a circular (the “Circular”), along with accompanying notice of general meeting and form of proxy (together, with the Circular, the “Documents”), in relation to the Requisition, further details of which are set out in the Company’s announcements of 13 and 24 August 2021.

The Circular contains a unanimous recommendation of your Board to vote AGAINST the requisitioned resolutions 1 through 8 inclusive and to vote FOR the Company’s resolutions 11 through 14 inclusive.

The General Meeting will be held at the offices of Charles Russell Speechlys LLP, 5 Fleet Place, London, EC4M 7RD at 9.30 a.m. on 5 October 2021. The Documents will shortly be available on the Company’s website.

The Letter from the Chairman of the Company has been extracted and included in this announcement below.

Unless the context requires otherwise, definitions used in this announcement will have the same meaning as ascribed to them in the Circular.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information visit www.prospex.energy or contact the following:

Mark Routh

Prospex Energy PLC

Tel: +44 (0) 20 7236 1177

To all Shareholders

Notice of General Meeting to be held on 5 October 2021 and Unanimous Recommendation of your Board to vote AGAINST the requisitioned resolutions

Dear Shareholders

This is to inform you of the details of the requisitioned General Meeting which we are holding at the offices of Charles Russell Speechlys LLP, 5 Fleet Place, London, EC4M 7RD at 9.30 a.m. on 5 October 2021.

If you would like to vote on the Resolutions but cannot come to the General Meeting, you can appoint a proxy to exercise all or any of your rights to attend, vote and speak at the General Meeting by using one of the methods set out in the notes to the Notice of General Meeting. Appointing a proxy will not prevent you from attending and voting in person at the General Meeting.

Shareholders unable or unwilling to attend are invited to submit questions to the Company via the following email address shareholderenquiries@stbridespartners.co.uk before 9:30 a.m. on 1 October with “PXEN General Meeting” in the subject. Questions of a similar nature may be grouped and answered as a whole and responses, where permissible, will be published after the meeting.

All votes will be undertaken by way of poll rather than a show of hands to reflect the fact that Shareholders, proxies and corporate representatives may not wish or be unable to attend.

Shareholders are encouraged to vote beforehand as they see fit by using the proxy system. If you would like to vote on the Resolutions you can appoint the meeting’s Chairman as your proxy to exercise all or any of your rights to vote. Simply fill out the proxy card sent as part of this pack.

The purpose of this letter is to explain certain elements of the business to be considered at the meeting. Resolutions 1 to 9 (inclusive) and 11 to 13 (inclusive) will be proposed as ordinary resolutions. Resolutions 10 and 14 will be proposed as special resolutions.

As announced on 24 August 2021, Resolutions 1 to 10 have been proposed as part of a general meeting requisition request received from Jarvis Investment Management Limited, and therefore not by the Directors. Resolutions 11 to 14 are being proposed by the Directors as an alternative to Resolutions 1 to 10.

For the reasons set out below, the Directors recommend voting AGAINST resolutions 1 through 8 and voting FOR resolutions 11 through 14.

This requisitioned General Meeting proposes that shareholders be asked to consider the following resolutions:

RESOLUTIONS 1 TO 4 – APPOINTMENT OF DIRECTORS

Resolutions 1 to 4 deal with the proposed appointment of new directors of the Company.

1. The appointment of Leo Willem Koot to the Board.

2. The appointment of Gordon Bowman Stein to the Board.

3. The appointment of Stephen Boccioli to the Board.

4. The appointment of Michael Douglas to the Board.

RESOLUTIONS 5 TO 8 – REMOVAL OF DIRECTORS

Resolutions 5 to 8 deal with the proposed removal of the Directors from the Board.

5. The removal of William Hartman Smith from the Board

6. The removal of Richard Paul Mays from the Board

7. The removal of Mark Christopher Routh from the Board

8. The removal of Alasdair Ian Buchanan from the Board

At the last Annual General Meeting of the Company held on 27th July 2021, resolutions to grant authorities to allot ordinary shares in the capital of the Company and to disapply pre-emption rights were not passed, so beyond pre-existing share authorities from prior years, the Company has no means to raise capital by issuing shares.

RESOLUTION 9 – ALLOTMENT OF SHARE CAPITAL

Subject to resolutions 1 to 8 (inclusive) above being passed, and Resolution 10 being passed, Resolution 9 proposes that authority be granted to allot ordinary shares in the capital of the Company up to a maximum nominal amount of one hundred and twenty-five thousand pounds (£125,000) representing an authority to allot approximately 72.6 per cent of the Company’s issued ordinary share capital as at 7 September 2021 (the latest practicable date before publication of this letter) during the period of two years following the passing of this Resolution.

SPECIAL RESOLUTION 10 – DISAPPLICATION OF STATUTORY PRE-EMPTION RIGHTS

Subject to resolutions 1 to 8 (inclusive) above being passed, and Resolution 9 being passed, Resolution 10 will empower the directors proposed to be appointed pursuant to Resolutions 1 – 4 to allot Ordinary Shares for cash on a non-pre-emptive basis up to a maximum nominal value of one hundred and twenty-five thousand pounds (£125,000), representing an authority to allot approximately 72.6 per cent of the issued ordinary share capital of the Company as at 7 September 2021 (the latest practicable date before publication of this letter).

RESOLUTIONS 11 AND 12 – CONFIRMATION OF THE APPOINTMENT OF DIRECTORS

Subject to resolutions 1 to 10 (inclusive) above not being passed, resolutions 11 and 12 are being tabled to confirm the appointment of Mark Routh and Alasdair Buchanan as directors of the Company.

Neither the Shareholder requisitioning the General Meeting, nor the proposed directors contemplated by resolutions 1 to 4 above, have presented the Company with biographies or credentials of the proposed directors to demonstrate their suitability for the role or their familiarity with the Company’s assets.

Brief biographies for the recently appointed directors are set out below.

Mark Routh

Mark is a Petroleum Engineer with more than 40 years’ experience in the industry, covering executive management, commercial/asset management, area management and technical roles. Mark spent eight years as CEO/Chairman of AIM listed IOG plc. He has more than 15 years’ experience as a board director in executive and non-executive roles in both private and listed companies.

Prior to founding CH4 Energy in 2002, he served 10 years with Hess, six years with BP and five years with Schlumberger in South-East Asia and the North Sea. Mark is currently a Non-Executive Director of Warrego Energy Ltd, the Company’s partner in the El Romeral gas and power operation in Spain. Mark has an MSc in Petroleum Engineering from Imperial College and has been a member of the Society of Petroleum Engineers since 1985.

Alasdair Buchanan

Alasdair has 40 years’ experience in the industry. Most recently he was Global Energy Director at Lloyds Register and was Chief Operating Officer and a director of Senergy Group plc, the global provider of sub-surface drilling and project management services, responsible for 750 employees. Alasdair was also a non-executive director of Warrego Energy UK Limited from 2012-2019 prior to its public listing on the ASX.

Alasdair worked for Halliburton for three years in Aberdeen and Texas, most recently as Vice President UK and worked for BJ Services for 28 years both in the UK and internationally. Alasdair has a BSc (Hons) in Chemical Engineering from the University of Edinburgh and has been a member of the Society of Petroleum Engineers since 1984.

RESOLUTION 13 – ALLOTMENT OF SHARE CAPITAL

Subject to resolutions 1 to 10 (inclusive) not being passed , Resolution 13 proposes that authority be granted to allot ordinary shares in the capital of the Company up to a maximum nominal amount of one hundred thousand pounds (£100,000) representing an authority to allot approximately 62.5 per cent of the Company’s issued ordinary share capital as at 7 September 2021 (the latest practicable date before publication of this letter) during the period of two years following the passing of this Resolution 13. Note that this is a lower level of share authorities being sought by Resolution 9 above by the shareholder group representing the proposed directors.

Proposed use of authorities

The Board believes that Prospex’s current portfolio is a springboard for further growth opportunities. Organic growth is already happening and corporate acquisitions will also be considered. Currently all our assets are onshore. We would look at offshore gas projects – access to infrastructure for gas export is key.

Investment and acquisition size will vary according to the available production linked financing. We will leverage the optimum debt levels, common practice in this industry, in order to increase returns to shareholders with minimal risk. We are looking at onshore asset divestments in Germany, Romania and elsewhere. The Company is talking to debt financiers and others in order to limit the use of equity and shareholder dilution, but future deals are likely to comprise an element of both debt and equity. Therefore, the Company proposes to ask shareholders for the ability to raise funds to grow the Company through the issue of shares to finance future deals that are in line with the Company’s stated vision and strategy.

SPECIAL RESOLUTION 14 – DISAPPLICATION OF STATUTORY PRE-EMPTION RIGHTS

Subject to resolutions 1 to 10 (inclusive) not being passed , Resolution 14 will empower the Directors to allot Ordinary Shares for cash on a non-pre-emptive basis up to a maximum nominal value of seventy-five thousand pounds (£75,000), representing an authority to allot approximately 46.9 per cent of the issued ordinary share capital of the Company as at 7 September 2021 (the latest practicable date before publication of this letter) and shall expire upon the expiry of the general authority conferred by Resolution 13. Note that this is also a lower level of share authorities being sought by Resolution 10 above by the shareholder group representing the proposed directors.

Proposed use of authorities

As described above under Resolution 13, the Company is seeking authority to be able to raise funds, if and when needed, through the issue of equity without pre-emption in order to be able to execute transactions, if and when needed, without having to call a further general meeting.

DUE DILIGENCE ON PROPOSED DIRECTORS

None of the proposed directors put forward as part of the requisition notice has been subject to due diligence, or been approved by Strand Hanson, the Company’s Nominated Adviser. Strand Hanson will now commence this process in line with its requirements under the AIM Rules for Companies and AIM Rules for Nominated Advisers. Should the information to be requested not be provided within a sufficient period to allow Strand Hanson to make an informed assessment of the proposed appointees by the time of the General Meeting, or should external third party due diligence reports be required to be commissioned and such due diligence reports are not commissioned, or should Strand Hanson determine that any of the proposed directors are not suitable to act as directors of the Company, Strand Hanson may be forced to consider its position as nominated adviser to the Company. In the event that Strand Hanson were to resign as nominated adviser, the Company’s ordinary shares would be suspended from trading immediately and, under the AIM Rules for Companies, the Company would then have one month to replace Strand Hanson as nominated adviser, failing which the Company’s admission to trading on AIM would be cancelled.

ACTION TO BE TAKEN

Shareholders will find a Form of Proxy enclosed for use at the General Meeting. You are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible. To be valid, completed Forms of Proxy must be received by the Company’s Registrars, not later than 9.30 a.m. on 1 October 2021, being 2 business days before the time appointed for holding the General Meeting. Your attention is drawn to the notes to the Form of Proxy. As noted above, Shareholders are encouraged to vote in advance by proxy and to appointment the Chairman as their proxy.

RECOMMENDATION

The CEO of the Company published Prospex’s strategy and its future plans in the shareholder letter published on 23 August 2021, released on the Company’s website, which can be found here: bit.ly/3kdxE4E . It is this vision for the Company which the current Board of directors is supporting. At the time of this notice being posted, neither the requisitioning shareholder, nor the proposed directors named in Resolutions 1 through 4, have provided the Company in writing with any proposed alternative strategy, nor has the Company been provided with any information on the proposed directors.

The Board of directors considers Resolutions 1 to 8 (inclusive) are not in the best interests of the Company and the majority of its shareholders. The proposed alternative directors have no specific experience or knowledge of the Company’s assets, operations, or joint venture partners, have not put forward a viable alternative strategy and are instead aligned with a shareholder group acting in their own best interests and not that of the Company and the shareholder base as a whole. As a result, the Board unanimously recommend that you vote against resolutions 1 to 8 (inclusive), and that therefore resolutions 9 and 10 above will not be tabled.

The Board of directors considers Resolutions 11 to 14 (inclusive) are likely to promote the success of the Company and are in the best interests of the Company and its Shareholders as a whole. The Directors therefore unanimously recommend that you vote in favour of Resolutions 11 to 14 (inclusive) as they intend to do so in respect of their own beneficial holdings which amount in aggregate to 5,602,543 Ordinary Shares representing approximately 3.50 per cent of the existing issued Ordinary Share capital of the Company.

The outlook for Prospex is extremely positive with a new CEO Mark Routh at the helm. With an increasing income stream from the current production already in our portfolio and a significant boost to our near-term production forecast with the recent proposed acquisition to increase our share in the Podere Gallina permit in Italy by 20%, we are well positioned to grow this company to multiples of its current valuation with a new CEO with a clear vision and strategy for the Company point forward.

Yours sincerely

BILL SMITH

Chairman


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