Andes Energia PLC Proposed combination with PETSA (9130L)

TIDMAEN

RNS Number : 9130L

Andes Energia PLC

24 July 2017

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.

The information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon publication of this Announcement, this information is now considered to be in the public domain.

24 July 2017

Andes Energia PLC

Proposed combination with PETSA, Mercuria Energy Group Limited's Argentine oil and gas exploration and production business and waiver of obligations under Rule 9 of the City Code

Proposed Board Changes

Proposed change of Company name to Phoenix Global Resources plc

Andes Energia PLC ("Andes" or the "Company") (AIM: AEN; BCBA: AEN) is pleased to announce the conditional combination with Trefoil Holdings, the holding company that indirectly owns over 99.99% of Petrolera El Trébol S.A. ("PETSA"), the operating company for the oil and gas exploration and production business of Mercuria Energy Group Limited ("Mercuria EG") in Argentina. The combination is to be effected through the acquisition of the entire issued share capital of Trefoil Holdings in consideration for the issue of 1,899,106,385 Consideration Ordinary Shares, up to 46,049,727 Deferred Consideration Shares, the Mercuria Warrants and rights to be issued the Settled Claim Shares to Upstream Capital, a subsidiary of Mercuria EG. The Consideration Shares to be issued to Upstream Capital will represent 75.38% of the Enlarged Share Capital with existing Andes Shareholders holding 24.62%. The resulting ownership of Mercuria EG in the Enlarged Group will be approximately 78%.

In addition, the Company announces proposed changes to the Board which will be chaired by Sir Michael Rake and its intention to rename the Enlarged Group as Phoenix Global Resources plc (AIM: PGR; BCBA: PGR).

The combination of the asset bases in Argentina is expected to create a stronger Enlarged Group with the potential to develop conventional and unconventional assets, particularly in Argentina. The Transaction is expected to generate economic, technical and operating synergies that the Directors believe will create one of the leading Argentinian independent exploration and production companies with significant exposure to the Vaca Muerta formation, a world class resource. The Enlarged Group will have the following strengths:

Scale to realise Argentine potential

   --      Over 10 million licenced gross acres in Argentina (of which over 5 million are operated) 

-- 63 million boe net working interest 2P reserves and production of over 11,500 net working interest boepd on average in 2016

-- Balanced portfolio of existing production and near-term production growth potential from identified development opportunities from its conventional asset base as well as further growth potential from its unconventional assets which are predominantly in the Vaca Muerta formation

Strong, independent board

   --      Enlarged Group's Board will be chaired by Sir Michael Rake 

-- In addition, Board will comprise: Chief Executive Officer, Anuj Sharma; Chief Financial Officer, Philip Wolfe; and seven further non-executive directors, of whom four will be independent

-- Directors and Proposed Directors are committed to the highest standards of corporate governance

Financial resources to actively pursue the Vaca Muerta opportunity

-- Work programme to be funded through Bridging and Working Capital Facilities Agreement with an affiliate of Mercuria EG, comprised of a Term Loan in the principal amount of approximately US$87 million and a revolving credit facility in the principal amount of approximately US$73 million, conditional on Completion and Admission

-- Enlarged Group will have an improved financial profile with pro-forma 2016 revenues of US$181.9 million and pro-forma 2016 EBITDA of US$56.9 million

-- Directors and Proposed Directors believe that the Enlarged Group will be in a better position to access additional capital

Highly experienced and qualified management and operating team

-- Enlarged Group will have its corporate head office in London, country head office in Buenos Aires and a regional office in Mendoza

-- Enlarged Group will have approximately 118 employees of whom 112 will be based in Argentina. Directors and Proposed Directors believe this represents one of the leading operating teams in Argentina

-- Directors and Proposed Directors believe that the team has a proven record of success with a track record of growing reserves, production and cash flows - from 2013 to 2016, PETSA achieved a strong production growth record (31 per cent. compound annual growth rate on operated assets) in conventional production

Strong and growing production supporting potential for further growth

   --      Portfolio is diversified across hydrocarbon basins in Argentina 

-- Lower risk and mature proved producing reserves, accounting for 36 per cent. of 2P reserves on a net entitlement basis, provide a stable production base and present an opportunity for further conventional growth in addition to serving as a platform for unconventional growth opportunities

-- Directors and Proposed Directors believe production from Enlarged Group's gas reserves (28 per cent. of 2P reserves on a net entitlement basis), may allow it to benefit from Argentina's attractive pricing mechanisms

-- Directors and Proposed Directors expect many of the combined assets to have lower operating costs following Completion

Significant exposure to the Vaca Muerta formation

-- In first quarter 2017, PETSA made a discovery in the Vaca Muerta formation in the Puesto Rojas area - resource study demonstrated potential of the Puesto Rojas licence, highlighting that it contains more than 400 million boe (best estimate) of recoverable resources

-- Combined position of over 1 million gross acres in various concessions with Vaca Muerta potential with key Vaca Muerta assets in the Puesto Rojas, Corralera, and Mata Mora areas

-- Vaca Muerta formation currently one of the few economically producing shale oil formations outside of North America with production of over 65,000 boepd

-- Vaca Muerta formation is a key global target for upstream investment with approximately US$7 billion of investments confirmed globally in 2017, expectations for US$12-15 billion of investments in 2018 and expected investments in excess of US$20 billion annually thereafter

An active work programme of development and exploration drilling leading to potentially transformative platform

-- Work programme on conventional assets is expected to deliver a doubling of net working interest production by the end of 2021

-- Enlarged Group intends to proactively explore, appraise and make use of the world class potential of its unconventional resource base in the Vaca Muerta formation - current drilling programme in the Vaca Muerta formation includes drilling several wells by the end of 2018

-- Work programme to be funded through existing debt facilities, the new facilities under the Bridging and Working Capital Facilities Agreement and cash flows from existing production and is expected to cost US$165 million on a net working interest basis until the end of 2018

Combination constitutes a reverse takeover under the AIM Rules requiring the approval of Independent Shareholders at a General Meeting - Independent Directors recommend that Independent Shareholders vote in favour of the Resolutions

-- The Independent Directors and Nicolas Mallo Huergo recommend that Independent Shareholders vote in favour of the Waiver Resolution in respect of obligations under Rule 9 of the City Code

-- The Independent Directors who own Ordinary Shares intend to vote in favour of the each of the Resolutions to be proposed at the General Meeting, in addition, Nicolas Mallo Huergo intends to vote in favour of each of the Resolutions (other than the Waiver Resolution). Following this announcement and the publication of the Admission Document, it is expected that the suspension in the trading of the Company's Ordinary Shares will be lifted today. The current arrangements for the trading of the Ordinary Shares on the Buenos Aires Stock Exchange will remain in place. An Admission Document is being posted to shareholders, together with the Notice of General Meeting, and will be available shortly on the Andes Energia website, www.andesenergiaplc.com.ar. A General Meeting will be held at the offices of CMS Cameron McKenna Nabarro Olswang LLP, at Cannon Place, 78 Cannon Street, London EC4N 6AF at 10.00 a.m. on 9 August 2017. Application will be made for the Enlarged Share Capital to be admitted to trading on AIM, conditional on Completion. If Resolutions 1 to 3 are passed at the General Meeting, it is expected Admission will become effective and dealings in the Enlarged Share Capital will commence on AIM on 10 August 2017.

Nicolas Mallo Huergo, current Chairman of Andes Energia and future non-executive Director of Phoenix Global Resources said:

"The Transaction is expected to generate operating synergies and create a leading Argentinian independent exploration and production company with significant exposure to the Vaca Muerta formation, a world class resource play."

"I am delighted that Sir Michael Rake has agreed to succeed me as Chairman of the new Board which is committed to the highest standards of corporate governance."

Sir Michael Rake, proposed Chairman of Phoenix Global Resources said:

"I see great potential in Argentina as the political climate improves and becomes more pro-business. As a country, it is blessed with world class shale resources. With the scale, assets, financial resources and team the combination provides, I am confident the Enlarged Group will benefit from these encouraging trends."

Anuj Sharma, CEO of Andes Energia said:

"I expect the combination to create a stronger independent exploration and production company, and one of the most attractive Vaca Muerta asset positions in Argentina. We have an active work programme of development and exploration drilling which would not only enable us to help deliver attractive growth, by developing the Company's conventional reserve base, but also take forward our substantial unconventional resources including our position in the Vaca Muerta."

Daniel Jaeggi, President of Mercuria Energy said:

"Building upon our long-term view on investment in energy in the Americas, we are pleased to announce this next step in our cooperation with Andes Energia. We first invested in Andes in 2013, and this brings our relationship to the next level. We look forward to the enlarged group developing and expanding its business in Argentina, notably its significant exposure to the world class Vaca Muerta shale. Mercuria is expecting to remain a significant long-term shareholder in Andes, and we have confidence in the Board of directors and management of the Company, under the supervision of Sir Michael Rake, to grow the Enlarged Group using the best corporate governance practices."

For further information, please contact:

 
 Andes Energia            Anuj Sharma,              T: [phone] 
  plc                      CEO                       9920 
                           Philip Wolfe              T: +44 (0)203 
                           Billy Clegg,              757 4983 
                           Head of Communications    T: +44 (0)203 
                                                     757 4983 
 Mercuria Energy          Matthew Lauer             T: [phone] 
  Group 
 
   Stockdale Securities     Antonio Bossi             T: [phone] 
                            David Coaten              6100 
 
   Panmure Gordon           Adam James                T: [phone] 
                            Atholl Tweedie            2500 
 
   Camarco                  Gordon Poole/James        T: [phone] 
                            Crothers                  4980 
 

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY, IS NOT INTED TO AND DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION TO PURCHASE OR SUBSCRIBE FOR, UNDERWRITE, SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE, SELL, ACQUIRE, DISPOSE OF THE ORDINARY SHARES OR ANY OTHER SECURITY IN THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR IN ANY JURISDICTION IN WHICH, OR TO ANY PERSONS TO WHOM, SUCH OFFERING, SOLICITATION OR SALE WOULD BE UNLAWFUL.

THE SECURITIES DESCRIBED HEREIN MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, UNLESS REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMED (THE "SECURITIES ACT"), OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT. NO PUBLIC OFFERING OF THE SECURITIES DISCUSSED HEREIN IS BEING MADE IN THE UNITED STATES, AND THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFERING OF SECURITIES FOR SALE IN THE UNITED STATES. THE COMPANY DOES NOT CURRENTLY INT TO REGISTER ANY SECURITIES UNDER THE SECURITIES ACT. THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES.

THE CONTENT OF THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY AN AUTHORISED PERSON WITHIN THE MEANING OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (AS AMED) ("FSMA"). RELIANCE ON THIS ANNOUNCEMENT FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE AN INDIVIDUAL TO A SIGNIFICANT RISK OF LOSING ALL OF THE PROPERTY OR OTHER ASSETS INVESTED.

Stockdale Securities Limited is authorised and regulated in the United Kingdom by the Financial Conduct Authority ("FCA") and is acting exclusively for the Company in connection with the Transaction and Admission and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for providing advice to any other person in relation to the Transaction and Admission and/or any other matter referred to in this Announcement.

Panmure Gordon (UK) Limited is authorised and regulated in the United Kingdom by the FCA and is acting as joint broker to the Company and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for providing advice to any other person in relation to the Transaction and Admission and/or any other matter referred to in this Announcement.

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Stockdale or Panmure Gordon or any of their respective affiliates or any of their respective directors, officers, employees, advisers or representatives (collectively, "Representatives") as to or in relation to the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefor is expressly disclaimed.

This Announcement contains certain forward-looking statements, beliefs or opinions, with respect to certain of the Company's current expectations and projections about future prospects, developments, strategies, performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan" "estimate", "expect" and words of similar meaning, include all matters that are not historical facts and reflect the Directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. Statements contained in this Announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this Announcement is subject to change without notice and, except as required by applicable law, none of the Company, Stockdale, Panmure Gordon nor any of their respective affiliates nor any of their respective Representatives assumes any responsibility or obligation to update, amend or revise publicly or review any of the forward-looking statements contained in this Announcement. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Announcement. No statement in this Announcement is or is intended to be a profit forecast or profit estimate or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company. Past performance of the Company and PETSA cannot be relied on as a guide to future performance and persons reading this Announcement are cautioned not to place undue reliance on such forward-looking statements.

The price of Ordinary Shares and any income from them may go down as well as up and investors may not get back the full amount invested on disposal of the Ordinary Shares.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.

24 July 2017

LETTER FROM SIR MICHAEL RAKE, NON-EXECUTIVE DIRECTOR OF ANDES ENERGIA PLC

(Registered in England and Wales under company number 5083946)

Registered office:

2nd Floor

Berkeley Square House

Berkeley Square

London W1J 6BD

Directors:

Nicolas Mallo Huergo (Executive Chairman)

German Ranftl (Chief Financial Officer)

Juan Carlos Esteban (VP E&P)

David Jackson (Non-Executive Director)

Nigel Duxbury (Non-Executive Director)

Carolina Landi (Non-Executive Director)

Javier Alvarez (Non-Executive Director)

Matthieu Milandri (Non-Executive Director)

Sir Michael Rake (Non-Executive Director)

Dear Andes Shareholders,

Proposed combination with Trefoil Holdings B.V., approval of a waiver of the obligations under Rule 9 of the City Code, admission of the Enlarged Share Capital to trading on AIM, proposed change of the Company's name to Phoenix Global Resources plc, approval of the Reduction of Capital and the Interoil Demerger by way of distribution in specie, approval of amendments to the Articles, approval of the Andes Energia Long Term Incentive Plan and Andes Energia Deferred Bonus Plan and Notice of General Meeting

   1.       INTRODUCTION 

Further to the announcements of the Company on 29 June 2017 and 30 June 2017, and the suspension of trading of the Ordinary Shares on 29 June 2017, the Company announced today the conditional combination with Trefoil Holdings to be effected through the acquisition of the entire issued share capital of Trefoil Holdings in consideration for the issue of the Consideration Shares, the Deferred Consideration Shares, the Mercuria Warrants and the rights to be issued the Settled Claim Shares to Upstream Capital, a subsidiary of Mercuria EG. Following today's announcement and the publication of the Admission Document, it is expected that the suspension of trading in the Ordinary Shares will be lifted later today.

The Consideration Shares to be issued to Upstream Capital will represent 75.38 per cent. of the Enlarged Share Capital with existing Andes Shareholders holding 24.62 per cent. Following completion of the Transaction, the Mercuria Group will own approximately 78 per cent. of the Enlarged Share Capital (including the Mercuria Group's existing shareholding in Andes and the Share Exchange Shares) and existing Andes Shareholders (excluding the Mercuria Group) will own approximately 22 per cent. Details of the Share Purchase Agreement are set out in paragraph 8 of this Part 1 and in paragraph 13.1(a) of Part 10 of the Admission Document. Conditional on Admission, the name of the Company will be changed to Phoenix Global Resources plc.

Trefoil Holdings owns, through a number of subsidiary companies, over 99.99 per cent. of the interests in an Argentine company, PETSA, which has exploration and production oil and gas assets in the provinces of Mendoza, Santa Cruz and Tierra del Fuego in Argentina. In 2016, PETSA's assets produced an average of 8,811 boepd net to its working interest from 19 concessions. The PETSA Group has certified net working interest 2P reserves of 45.5 million boe as at 31 December 2016 and certified net working interest 2C resources of 35.6 million boe as at 31 December 2016. Further details of PETSA's oil and gas assets are set out in paragraph 6 of Part 1 and in Parts 3 and 7 of the Admission Document.

The Transaction constitutes a reverse takeover under Rule 14 of the AIM Rules for Companies requiring the approval of Andes Shareholders. It is therefore conditional upon, inter alia, the passing of the Transaction Resolutions. The Transaction is also conditional on the approval by the Independent Shareholders of a waiver of Rule 9 of the City Code. Application will be made for the Enlarged Share Capital to be admitted to trading on AIM, conditional on Completion. The current arrangements for the trading of the Ordinary Shares on the Buenos Aires Stock Exchange will remain in place.

The purpose of the Admission Document is to set out the reasons for the Transaction, and to explain why the Independent Directors consider that the Proposals are in the best interests of the Company and the Andes Shareholders and in respect of the Waiver why the Independent Directors and Nicolas Mallo Huergo consider that it is in the best interests of the Company and the Andes Shareholders. the Admission Document also seeks the approval of Andes Shareholders for the Proposals (or Independent Shareholder approval in the case of the Waiver Resolution).

Nicolas Mallo Huergo has separately considered with the other Independent Directors the Waiver elements of the Transaction.

Matthieu Milandri and Nicolas Mallo Huergo are not considered Independent Directors for the purposes of the Transaction because (i) Matthieu is an employee of Mercuria Energy Trading, which is a subsidiary of Mercuria EG and (ii) Nicolas is a director of Integra, which is the beneficiary of the fee payable under the Transaction Fee Services Agreement.

Guillaume Vermersch, a Proposed Director, is not considered independent for the purposes of the Transaction because he is an employee of Mercuria Energy Trading.

You should read the whole of the Admission Document and your attention in particular is drawn to the Risk Factors set out in Part 6 of the Admission Document.

   2.       BACKGROUND TO AND REASONS FOR THE TRANSACTION 

The Independent Board considers the Transaction to be important to both Andes and PETSA, primarily because the combination of the asset bases in Argentina is expected to create a stronger Enlarged Group and the potential to develop conventional and unconventional assets, particularly in Argentina. Subject to: (i) satisfying eligibility criteria; (ii) obtaining any necessary approvals; and (iii) market and trading conditions, the Company intends to make an application to obtain a Premium Listing within 12 months of Completion. The Directors and the Proposed Directors believe that through a Premium Listing, the Enlarged Group would have better access to additional capital from both debt providers and equity investors.

In addition, the Transaction is expected to generate economic, technical and operating synergies, which is expected to provide a stronger platform for future growth for the Enlarged Group, including access to PETSA's operating team which the Directors and the Proposed Directors believe to be one of the leading independent operating teams in Argentina.

Argentina is a prolific hydrocarbon region with a well established exploration and production industry, an improving business environment, and beneficial short term commodity pricing which (over the longer term) the Board expects to trend towards international commodity pricing. In particular, Argentina is a leading unconventional hydrocarbon region with the second largest recoverable shale gas resources and the fourth largest recoverable shale oil resources in the world, much of which sits in the Vaca Muerta formation.

The Directors and the Proposed Directors believe that the Transaction will create one of the leading Argentinian independent exploration and production companies with significant exposure to the Vaca Muerta formation, a world class resource.

In particular, the Enlarged Group will have the following strengths:

Scale to realise Argentine potential

The Enlarged Group will have over 10 million licenced gross acres in Argentina (of which over 5 million are operated by the Enlarged Group), 63 million boe net working interest 2P reserves (assuming 26.01 per cent. of the net reserves attributable to Interoil representing the Company's interest in that company) and production of over 11,500 net working interest boepd on average in 2016 (assuming 26.01 per cent. of the net production attributable to Interoil). The Enlarged Group will have a balanced portfolio of existing production and near-term production growth potential from identified development opportunities from its conventional asset base as well as further growth potential from its unconventional assets which are predominantly in the Vaca Muerta formation.

The table below sets out the Enlarged Group's pro forma working interest acreage, reserves and resources as at the end of 2016 and 2016 average production by basin:

 
 Basin                Wi          1P          2P          3P           2C           3C          2Pr          3Pr             WI 
                  Acres*   Reserves*   Reserves*   Reserves*   Resources*   Resources*   Resources*   Resources*   Production** 
                Thousand     Million     Million     Million      Million      Million      Million      Million            BOE 
                   Acres         BOE         BOE         BOE          BOE          BOE          BOE          BOE            Per 
                                                                                                                            Day 
 Austral 
  Basin              529        16.2        21.5        23.1          0.0          0.0          0.0          0.0          4,073 
 Cuyo 
  Basin              101         8.5         8.8         9.0          0.0          0.0          0.0          0.0          2,557 
 Neuquen 
  Basin              794        16.9        31.4        43.8         77.7        206.7        565.2      1,379.8          4,615 
 Noroeste 
  Basin            4,590         0.0         0.0         0.0          0.0          0.0         50.2        208.2              0 
 San Jorge 
  Basin              332         0.0         0.0         0.0          0.0          0.0          0.0          0.0              8 
 Interoil***          34         0.8         1.3         2.0          0.0          0.0          0.0          0.0            277 
 Total             6,379          42          63          78           78          207          615        1,588         11,530 
 

* Net working interest as at 31 December 2016

** 2016 average net working interest

*** represents Andes' 26.01% ownership of Interoil

Financial resources to actively pursue the Vaca Muerta opportunity

Following Completion, the Enlarged Group's work programme will be funded through existing debt facilities and the new Bridging and Working Capital Facilities Agreement. The Directors and the Proposed Directors believe that the Enlarged Group will be in a better position to access additional capital from both debt providers and equity investors, recognising that this would be further enhanced through a Premium Listing. Further access to capital may be attractive to the Company for a number of reasons including: (i) to satisfy free float requirements in connection with or in preparation for any application for a Premium Listing; (ii) to pursue an expanded development programme in relation to the assets or other activities not included in the current business plan; or (iii) to refinance existing debt (depending on the Company's balance sheet at the relevant time). In addition, the Directors and the Proposed Directors believe the Enlarged Group will have an improved financial profile with pro-forma 2016 revenues of US$181.9 million and pro-forma 2016 EBITDA of US$56.9 million.

Highly experienced and qualified management and operating team

The Directors and the Proposed Directors believe the Enlarged Group will be one of the leading Argentinian independent exploration and production companies with its corporate head office in London, country head office in Buenos Aires and a regional office in Mendoza. The Enlarged Group will have approximately 118 employees of whom 112 will be based in Argentina. The Directors and the Proposed Directors believe that this represents one of the leading operating teams in Argentina. The Directors and the Proposed Directors believe that the team has an excellent understanding of the local operating environment and business culture including deep long-standing relationships with government, supply chain and other stakeholders which have been developed over many years. The Directors and the Proposed Directors believe that the team has a proven record of success with a track record of growing reserves, production and cash flows.

Strong, independent board

The Enlarged Group will have an experienced and highly qualified Board with a track record of creating value. The Board will comprise the Chief Executive Officer, Anuj Sharma, myself as Chairman, the Chief Financial Officer, Philip Wolfe, and seven further non-executive directors, of whom four will be independent.

The Directors and the Proposed Directors are committed to the highest standards of corporate governance and whilst the Company is not and, upon Admission, will not be, subject to the Corporate Governance Code applicable to companies listed on the Official List, the Company intends to report against, and to substantially comply with, its requirements. Whilst the Directors and the Proposed Directors recognise that immediately following Completion it will not be possible to adopt all the provisions of the Corporate Governance Code, it is the Directors' and the Proposed Directors' intention to adopt the remaining provisions in the short term thereafter. The Directors and the Proposed Directors intend also to take account of institutional shareholder and governance rules and guidance on disclosure and shareholder authorisation.

   3.       KEY HIGHLIGHTS OF THE ENLARGED GROUP 

Strong and growing production supporting potential for further growth

The Enlarged Group's portfolio is diversified across hydrocarbon basins in Argentina, which the Directors and the Proposed Directors believe positions the Enlarged Group to take advantage of potential future opportunities. The Enlarged Group's lower risk and mature proved producing reserves, accounting for 36 per cent. of its 2P reserves on a net entitlement basis, provide a stable production base and present an opportunity for further conventional growth in addition to serving as a platform for unconventional growth opportunities. Furthermore, the Directors and the Proposed Directors believe production from the Enlarged Group's gas reserves (28 per cent. of its 2P reserves on a net entitlement basis), may allow it to benefit from Argentina's attractive pricing mechanisms.

Following Completion, the Directors and the Proposed Directors expect many of the combined assets to have lower operating costs. In addition, PETSA is a proven oil and gas operator in Argentina with over 15 years of operating experience. From 2013 to 2016, it achieved a strong production growth record (31 per cent. compound annual growth rate on operated assets) in conventional production. The Directors and the Proposed Directors believe that these attributes provide considerable resilience to the Enlarged Group's operations in a wide range of oil price environments and may allow for greater cost savings through the Enlarged Group's potential to take over operatorship of some of the non-operated assets in its portfolio.

Significant exposure to the Vaca Muerta formation

Argentina is a leading shale region with the second largest recoverable shale gas resources and the fourth largest recoverable shale oil resources in the world, much of which is located in the Vaca Muerta formation. The Vaca Muerta formation is currently one of the few economically producing shale oil formations outside of North America, with production of over 65,000 boepd and is a key global target for upstream investment with approximately US$7 billion of investments confirmed in 2017, expectations for US$12-15 billion of investments in 2018 and expected investments in excess of US$20 billion annually thereafter. Furthermore, as the entry cost of accessing high quality unconventional shale resources in the US has increased significantly, the Vaca Muerta formation presents an attractive opportunity to invest in a world class unconventional resources play.

In the first quarter of 2017, PETSA made a discovery whilst drilling in shallow horizons in the Vaca Muerta formation as an additional target on a conventional well in the Puesto Rojas area. The discovery well was fracture stimulated successfully and subsequently PETSA commissioned a resource study which demonstrated the potential of the Puesto Rojas licence, highlighting that it contains more than 400 million boe (best estimate) of recoverable resources. The Directors and the Proposed Directors believe that this discovery is the northernmost unconventional economic well in the Vaca Muerta formation, so that there is also potential for unconventional Vaca Muerta development on the acreage south of this discovery area.

The Enlarged Group will have a combined position of over 1 million gross acres in the Vaca Muerta formation with key assets in the Puesto Rojas and Cerro Mollar areas covering approximately 75,000 acres and Mata Mora covering approximately 55,352 acres. The initial development plan for the area is intended to comprise a pilot project utilising vertical drilling into the Vaca Muerta formation. However, a full-field development plan would most likely comprise horizontal drilling in the area. At present, PETSA is in the process of exploring, appraising and delineating unconventional Vaca Muerta resources for determining optimal development on its acreage.

Further analysis of the Puesto Rojas licence was carried out by PETSA using the results of the 3D seismic and modern petrophysical data employed in a resource study, as well as public information on wells drilled in the areas surrounding the block. Based on expected development within the volatile and black oil windows, the Directors and the Proposed Directors believe horizontal wells could provide three times to five times more initial production over vertical wells, based on PETSA's management's and its advisers' observation of numerous historical data points for Vaca Muerta wells in the Neuquén basin. A similar analysis was also carried out on the Mata Mora block using only public information from wells in areas surrounding the block, which suggests that Mata Mora's initial production rates are stronger than those from the average Vaca Muerta well. This presents further opportunities for the Enlarged Group to develop its unconventional operations and expertise in order to better make use of its significant resource potential.

An active work programme of development and exploration drilling leading to potentially transformative platform

The Enlarged Group will have a large and high quality inventory of conventional prospects, infill targets and workover projects, and is expected to pursue an active programme in developing these assets which is expected to focus on the Chachahuen Sur concession, the Santa Cruz Sur area, the Tupungato area and the Puesto Rojas and Cerro Mollar concessions. In aggregate, the work programme on the conventional assets is expected to deliver a doubling of net working interest production by the end of 2021.

In addition to this, the Enlarged Group intends to proactively explore, appraise and make use of the world class potential of its unconventional resource base in the Vaca Muerta formation. The Directors and the Proposed Directors believe that, by utilising its current financial resources and cash flows from operations, the Enlarged Group can continue its exploration and appraisal work in the Vaca Muerta acreage and expand and develop its unconventional resource base. Although conditional upon the success of this appraisal work, the Enlarged Group's current drilling programme in the Vaca Muerta formation includes drilling several wells by the end of 2018. This work programme is expected to build on PETSA's recent success in the Puesto Rojas block and provide exposure to the potentially transformational growth prospects from the Vaca Muerta formation.

The Enlarged Group's work programme is to be funded through existing debt facilities, the new Bridging and Working Capital Facilities Agreement and cash flows from existing production and is expected to cost US$165 million on a net working interest basis until the end of 2018. The Directors and the Proposed Directors believe that one of the strengths of the Enlarged Group is that it will be able to respond promptly to drilling results providing the ability to amend its programme to adapt to changing circumstances. Further successful appraisal and drilling on the unconventional acreage or exploration projects may lead the Enlarged Group to increase drilling in these areas or otherwise modify the drilling order and work programme to optimise it on a risk adjusted return basis. Similarly, any increased availability of capital (in the form of debt or equity) would enable the Enlarged Group to accelerate the development and exploration of its reserve and resource base.

   4.       INFORMATION ON THE COMPANY 

The Company is an oil and gas exploration, development and production company whose Ordinary Shares are admitted to trading on AIM and are also traded on the Buenos Aires Stock Exchange. The Company is headquartered in London with regional offices in Buenos Aires and Mendoza, Argentina.

The Company currently has 19 licences (in addition to 11 licences which are in the process of being or are already relinquished) in Argentina and 11 licences in Colombia. In 2016, the Company produced an average of 3,507 boepd on a working interest basis (including 100 per cent. of the net production attributable to Interoil in which the Company owns a 26.01 per cent. interest but was, in 2016, indirectly controlled by the Company) out of which an average of 2,442 boepd were produced in Argentina from six licences mainly from the Chachahuen area, located in the Mendoza Province. The balance of 1,064 boepd of average production is represented by 100 per cent. Of the working interest production attributable to Interoil. Approximately 14 per cent. of the Company's total production was gas(1) (including 100 per cent. of the net production attributable to Interoil in which the Company owns a 26.01 per cent. interest, but was in 2016, indirectly controlled by the Company), with the balance being oil. As explained in paragraph 21 of Part 1 of the Admission Document, the Company proposes to transfer 513,598 Interoil Shares to the US Andes Shareholders and to demerge the remaining Interoil Shares to Andes Shareholders (other than US Andes Shareholders and any Other US Andes Shareholders) by way of a distribution in specie pursuant to which such Andes Shareholders will receive Exchangeable GuernseyCo Shares. This is in line with the Enlarged Group's strategy to focus on assets in Argentina only.

As at 31 December 2016, the Company's 2P reserves were estimated at 21.1 million boe on a working interest basis (including 100 per cent. of the net reserves attributable to Interoil in which the Company owns a 26.01 per cent. interest, but was in 2016, indirectly controlled by the Company) and approximately 18.0 million boe on a net entitlement basis, of which net entitlement 2P reserves in Argentina were approximately 13.5 million boe. At the same date, best estimate prospective and contingent resources on a net entitlement basis were approximately 229 million, all of which were in Argentina and comprise development and exploration opportunities.

The Company's licences cover over 8 million gross acres across South America of which almost 250,000 working interest acres are in the Vaca Muerta formation, which is the second largest shale oil deposit in the world and one of the few economically producing shale formations outside North America. Overall more than 900 wells have already been drilled and fracked in the Vaca Muerta formation.

The Company's principal oil and gas assets are summarised below:

   4.1     Argentina 

The Company indirectly holds a 20 per cent. non-operating working interest in the Chachahuen field in the Neuquén basin that is being actively developed by its partner, YPF. In the Neuquén basin, the Company also indirectly holds 27 per cent. interests in two blocks which are believed to be highly prospective for the Vaca Muerta formation: the Corralera and Mata Mora blocks, both previously operated by YPF. The Company is in negotiations with the provincial authorities to approve the transfer to the Company of YPF's operating interests in and the subdivision of these blocks so that the Company will indirectly own increased interests and operate the blocks with a third party owning and operating the southern parts of these blocks. The Company also holds interests in four other blocks which are prospective for the Vaca Muerta formation: a 100 per cent. working interest in the Vega Grande and La Brea block, a 20 per cent. working interest in the Malargue block and a 40 per cent. Working interest in the El Manzano block in all formations other than Agrio in which it has 100 per cent. working interest. The Company also holds 100 per cent. working interests in the development and reactivation activities of the La Paloma, Cerro Alquitrán, Mina Baku, Los Buitres, Laguna El Loro, Güemes, Valles Calchaquies and Cobres concessions and 30 per cent. non-operated working interests in the San Bernardo and Confluencia concessions. The Company also holds 49.9 per cent. non-operated working interests in the Chañares Herrados and Puesto Pozo Cercado licences, where PETSA also holds an interest.

   4.2     Colombia 

The Company owns a 70 per cent. non-operated working interest in the LLA2, LLA28, LLA49, LLA79 (suspended), YDLLA5, (request made to relinquish licence), YDLLA2 (request made to relinquish licence), YDLLA8 (request made to relinquish licence), LLA12, LLA51, LLA3 and VMM8 (request made to relinquish licence) exploration and production concessions in Colombia. Additionally, the Company owns 26.01 per cent. of the issued share capital of Interoil which is an Oslo quoted company with interests in the following assets in Colombia: (i) a 90 per cent. working interest in the Altair concession, holding exploration potential: (ii) a 100 per cent. working interest in the LLA47 concession, holding exploration potential; (iii) a 70 per cent. working interest in the Mana and Rio Opia production sharing agreement; and (iv) a 63 per cent. working interest in the Ambrosia production sharing agreement.

As explained in paragraph 21 of Part 1 of the Admission Document, the Company proposes to transfer 513,598 Interoil Shares to the US Andes Shareholders and to demerge the remaining Interoil Shares to Andes Shareholders (other than the US Andes Shareholders and any Other US Andes Shareholders) by way of a distribution in specie pursuant to which such Andes Shareholders will receive Exchangeable Guernsey Co Shares. This is in line with the Enlarged Group's strategy to focus on assets in Argentina only.

Under the Share Purchase Agreement the Company has given certain undertakings to Upstream Capital to use reasonable endeavours to dispose of its Colombian assets following Admission.

Further information on Andes is set out in Part 2 of the Admission Document.

   5.       ANDES' CURRENT TRADING AND PROSPECTS 

On 30 March 2017, Andes announced two new credit facilities totalling US$60 million with Mercuria Energy Trading to finance drilling activities in Chachahuen and Vaca Muerta and for other working capital purposes. As a consequence of the drawdown of US$20 million from these facilities and associated drilling costs, Andes' debt levels have increased significantly since 31 December 2016.

On 18 May 2017, Andes announced that it was unwinding its joint arrangement with Canacol Energy Ltd through which it controlled Interoil. As a consequence, and following changes to the composition of the board and senior management of Interoil, Andes ceased to exert control over Interoil and therefore no longer consolidates Interoil in its accounts with effect from 8 June 2017. Going forward, Andes will account for its 26.01 per cent. interest in Interoil using the equity method of accounting up to the date on which the proposed Interoil Demerger is effective. The Unaudited Proforma Financial Information in Part 8C of the Admission Document provides an illustration of the financial impact of the de-consolidation and the Interoil Demerger on Andes' historical financial statements for the year ended 31 December 2016.

On 26 May 2017, Andes announced results for the year ended 31 December 2016 which included the following outlook statement:

"Operationally, 2017 has started well, with Group production in March 2017 currently at 2,518 bpd in Argentina and 984 boepd in Colombia; a total of 3,502 boepd.

Andes, with its partner YPF, the state Argentine oil company, has 86 new wells planned in 2017, 5 appraisal wells, 55 production wells and 26 injector wells. Additionally, 19 reconversions are expected to be performed. Out of the 86 planned wells, 30 wells have been drilled since the beginning of 2017. The wells will be funded primarily by field production cash flow and available credit facilities.

For Andes' licences in Colombia, an aggressive exploration campaign of geochemical surveys are being conducted as part of the committed investment activities with the Agencia Nacional de Hidrocarburos. In Interoil, a drilling campaign of 1 exploration well on the Altair licence and between 2 and 4 exploration wells on the LLA-47 licence is currently ongoing."

As mentioned in paragraph 4.1 above, Andes is in the process of converting its non-operating interest to operating interests in negotiations with the Neuquén province which may also entail a potential increase in Andes' acreage in this area.

   6.       INFORMATION ON TREFOIL HOLDINGS AND PETSA 

Trefoil Holdings, a wholly-owned subsidiary of Upstream Capital, is the holding company of the PETSA Group. Trefoil Holdings indirectly owns over 99.99 per cent. of the issued share capital of PETSA, through its subsidiaries, Trefoil Limited, Trefoil GmbH, Trefoil Switzerland S.A., San Enrique Petrolera B.V. and Upstream Latino America S.L.

PETSA is an oil and gas exploration, development and production company with high quality assets in leading plays in Argentina. PETSA is headquartered in Buenos Aires, Argentina, with a regional office in Mendoza, Argentina. PETSA holds participating interests in 19 concessions in four basins in Argentina covering almost 1.9 million gross acres and more than 800,000 working interest acres. Of the four basins where PETSA holds participating interests, two basins, Cuyo and Neuquén, are in the centre and northern part of the country while two basins, San Jorge Gulf and Austral, are in the south of the country. In 2016, PETSA's average production was 8,811 boepd on a working interest basis and 7,378 boepd on a net entitlement basis. PETSA is focused on liquid hydrocarbons, with 63 per cent. of PETSA's working interest production consisting of oil on a boe basis with the balance being gas(2) .

PETSA's principal oil and gas assets are summarised below:

6.1 Neuquén basin: PETSA has a 100 per cent. operated working interest in three concessions in the Neuquén basin, a 37.5 per cent. non-operated working interest in one production concession, a 33.33 per cent. non-operated working interest in one exploration concession and a 15 per cent. non-operated working interest in one other exploration concession. The operated concessions with 100 per cent. working interest are Puesto Rojas, Cerro Mollar Norte, and Cerro Mollar Oeste. Among the non-operated concessions, Cajon de los Caballos, in which PETSA has a 37.5 per cent. working interest, is primarily a production asset, while Cajon Oriental, in which PETSA has a 15 per cent. working interest, and Rio Atuel, in which PETSA has a 33.3 per cent. working interest, are primarily exploration assets. In 2016, these assets in the Neuquén basin produced at an average rate of 2,895 boepd on a working interest basis and 2,440 boepd on a net entitlement basis. As at 31 December 2016, these assets had working interest remaining 2P reserves of 17.6 million boe and net entitlement remaining 2P reserves of 14.8 million boe based on the PETSA Reserves CPR included in Part 7 of the Admission Document.

6.2 Cuyo basin: PETSA has a 100 per cent. operated working interest in two concessions in the Cuyo basin and a 28.08 per cent. non-operated working interest in two other concessions. The operated concessions are Tupungato and Atamisqui, while the non-operated concessions are Chañares Herrados and Puesto Pozo Cercado. In 2016, these assets produced at an average rate of 1,835 boepd on a working interest basis and 1,502 boepd on a net entitlement basis. As at 31 December 2016, these assets had working interest remaining 2P reserves of 6.4 million boe and net entitlement remaining 2P reserves of 5.2 million boe as per the PETSA Reserves CPR.

6.3 Austral basin: PETSA has a 70 per cent. working interest in five concessions in the Austral basin. While PETSA's interest is a non-operated working interest at present, PETSA has the right to take over the operatorship after satisfying certain requirements under the joint venture agreement with the operator of these concessions. One of the main requirements under the joint venture agreement is to provide the current operator, Roch, with 60 days' notice for the change of operatorship. The five concessions include Chorrillos, Moy Aike, Campo Bremen, Oceano and Palermo Aike. In 2016, these assets produced at an average rate of 3,314 boepd on a working interest basis and 2,792 boepd on a net entitlement basis. As per the PETSA Reserves CPR included in Part 7 of the Admission Document, these assets had working interest remaining 2P reserves of 19.6 million boe and net entitlement remaining 2P reserves of 16.2 million boe as at 31 December 2016. PETSA also has 12.615 per cent. Nonoperated working interests in the Las Violetas, Angostura, and Rio Cullen concessions. In 2016, these assets produced at an average rate of 759 boepd on a working interest basis and at 638 boepd on a net entitlement basis. As per the PETSA Reserves CPR included in Part 7 of the Admission Document, these assets had working interest remaining 2P reserves of 1.9 million boe and net entitlement remaining 2P reserves of 1.6 million boe as at 31 December 2016.

6.4 San Jorge basin: PETSA has a 24.9175 per cent. non-operated working interest in one concession in the San Jorge basin, the Sur Rio Deseado Este concession, which is operated by Roch. In 2016, this asset produced at an average rate of 8 boepd on a net working interest basis and 7 boepd on a net entitlement basis. No reserves are presently assigned to this asset.

According to the PETSA Reserves CPR, as at 31 December 2016, PETSA has 2P reserves of 45.5 million boe on a working interest basis and 37.9 million boe on a net entitlement basis. 63 per cent. of these reserves consists of oil with the balance being gas.

In the first quarter of 2017, PETSA made a significant discovery of unconventional shale oil in the Vaca Muerta formation. Subsequent to this discovery, PETSA engaged W.D. Von Gonten, a world renowned unconventional shale expert, for further appraisal of the Vaca Muerta potential on its Puesto Rojas, Cerro Mollar, Cerro Mollar Oeste and Cerro Mollar Norte concessions where PETSA has 100 per cent. working interests. The PETSA Resources CPR produced by W.D. Von Gonten, which is included in Section B of Part 7 of the Admission Document, appraised up to 1 billion working interest boe of recoverable Vaca Muerta resources, of which 93 million working interest boe were appraised as 3C contingent resources on part of the block.

Further information on PETSA is set out in Part 3 of the Admission Document.

   7.       PETSA'S CURRENT TRADING AND PROSPECTS 

In 2017 to date, PETSA's production volumes, revenues and profits have been lower than seen in the comparable period in 2016. Oil sales volumes are approximately 11 per cent. lower as a result of reduced drilling levels on production acreage as capital expenditure for new wells is re directed to the Vaca Muerta appraisal programme. Production drilling is expected to continue in the second half of 2017 and the associated benefits in terms of increased production and sale volumes are expected to be realised in the latter part of 2017. As a result the phasing of production and revenues in 2017 will be significantly different to the phasing in 2016. PETSA plans to further invest in appraisal and development activity of the Vaca Muerta formation in 2017 and into 2018.

Achieved average oil prices in 2017 to date are approximately US$50/bbl compared with US$58/bbl in the same period in 2016. This, combined with the lower production and sales volumes, resulted in a reduction in overall oil revenues of approximately 23 per cent. When compared to the equivalent period in 2016. Gas sales volume and prices have increased when compared to last year, with gas revenues increasing by 40 per cent. However, gas production and sales represent a comparatively small income stream when compared to oil. Operating costs are also slightly increased resulting in overall profits in 2017 to date that are significantly lower than for the same period last year. However, PETSA's management team believes that the benefits of the drilling in the Vaca Muerta area may result in a significant increase in production in the second half of 2017.

   8.       PRINCIPAL TERMS OF THE TRANSACTION 

The Company has entered into the Share Purchase Agreement, pursuant to which it has conditionally agreed to acquire the entire issued share capital of Trefoil Holdings in exchange for the issue of the Consideration Shares, the Deferred Consideration Shares (if applicable) and the Mercuria Warrants, and the granting of the rights in relation to the issue of the Settled Claim Shares, by the Company to Upstream Capital. In addition, on Completion the Company will issue the Share Exchange Shares to Mercuria EAM in accordance with the Share Exchange Agreement and the Share Exchange Termination Agreement.

The Consideration Shares to be issued to Upstream Capital will represent 75.38 per cent. of the Enlarged Share Capital. Following completion of the Transaction, the Mercuria Group will own approximately 78 per cent. of the Enlarged Share Capital (including the Mercuria Group's existing shareholding in Andes and the Share Exchange Shares) and existing Andes Shareholders (excluding the Mercuria Group) will own approximately 22 per cent.

Completion of the Transaction is subject to certain conditions being satisfied, including the passing of the Transaction Resolutions by Andes Shareholders and the Waiver Resolution by the Independent Shareholders at the General Meeting and Admission.

As part of the terms of the Transaction, the Company has agreed to issue the Mercuria Warrants to Upstream Capital to enable the Mercuria Group to maintain its percentage holding in the Company in the event that any new Ordinary Shares are issued following the exercise of any of the Existing Warrants (excluding the Mercuria Existing Warrants), calculated assuming that any of the 8,463,325 Mercuria Existing Warrants which remain unexercised had been exercised and subject to a maximum deemed holding of 78 per cent. for the purpose of calculating Upstream Capital's proportionate entitlement.

Under the terms of the Share Purchase Agreement, Upstream Capital is also entitled to receive (without further payment) such number of Deferred Consideration Shares that would enable Upstream Capital to maintain a percentage holding in the Company equal to the percentage of the Enlarged Share Capital represented by the Consideration Shares (i.e. 75.38 per cent.) in the event that Integra receives the Integra Shares in accordance with the terms of the Transaction Fee Services Agreement (see paragraph 13.1(i) of Part 10 of the Admission Document).

Under the terms of the Share Purchase Agreement, in the event of a Settled Claim in excess of US$5 million, Upstream Capital has the right to elect to receive new Ordinary Shares instead of cash (or a combination of both). If the Settled Claim has been announced by the Company to the market, the issue price for such Ordinary Shares is calculated as the average Closing Price for the five Business Days preceding the date the Settled Claim is to be settled, failing which it is the five Business Days from the date of the announcement of the Settled Claim, in each case subject to a minimum price of 10 pence, being the nominal value of the Ordinary Shares.

In the event of a Settled Claim, Upstream Capital has agreed to consult with the Company prior to electing to receive new Ordinary Shares and act in good faith towards the Company to achieve a mutually acceptable solution in the event of a Settled Claim. Upstream Capital has further undertaken not to elect to receive new Ordinary Shares if it would cause the Company to breach any provision of the AIM Rules or the Listing Rules (if applicable).

Further details of the Share Purchase Agreement, the Share Exchange Agreement, the Share Exchange Termination Agreement and the Mercuria Warrants are set out in paragraph 13.1 of Part 10 of the Admission Document.

   9.       SUMMARY FINANCIAL INFORMATION ON THE ANDES GROUP AND THE TREFOIL HOLDINGS B.V. GROUP 
   9.1     Selected financial information of the Andes Group 

The following tables set forth, for the periods indicated, selected consolidated historical financial information of the Andes Group derived from the historical financial information incorporated by reference in Part 8A of the Admission Document. This information should be read in conjunction with the historical financial information set out in Part 8A of the Admission Document.

 
                              For the years ended 31 December 
                                  2016         2015        2014 
                                US$000       US$000      US$000 
 Revenue                        67,768       66,815      48,229 
 Gross profit                   16,823       21,110      17,599 
 Operating (loss)/profit 
  before interest and 
  tax                          (7,500)        2,837       1,707 
 Loss after tax               (26,276)     (18,385)    (10,919) 
 Net assets                     44,660       83,208     128,558 
 Borrowings                    105,997       99,001      57,663 
 EBITDA                         14,567       16,746       8,755 
 
 
                                For the years ended 31 December 
                                     2016         2015       2014 
                                   US$000       US$000     US$000 
 Operational data: 
 Oil: 
 Revenues                          60,697       61,545     45,296 
 Oil bbls sold                  1,127,320      960,390    620,500 
 Effective price US$/bbl            53.84        64.08         73 
 
 Gas: 
 Revenues                           3,019        2,814        N/A 
 Gas Mm3 sold                      25,440       25,651        N/A 
 Effective price US$/mmbtu           3.21         2.97        N/A 
 
 Other revenues: 
 Revenue                            4,052        2,456      2,933 
 
 Total: 
 Revenues                          67,768       66,815     48,229 
 Boe sold                       1,287,320    1,121,719    620,500 
 Effective price US$/Boe            49.50        57.38      73.00 
 Boe per day                        3,450        3,209      1,700 
 Opex per Boe                       21.60        20.08      31.71 
---------------------------  ------------  -----------  --------- 
 

An operating and financial review for the historical financial information of the Andes Group is set out in the 2016 Annual Report, 2015 Annual Report and 2014 Annual Report.

   9.2     Selected financial information of the Trefoil Holdings B.V. Group 

The following tables set forth, for the periods indicated, selected combined historical financial information of the Trefoil Holdings B.V. Group derived from the historical financial information included in Part 8B of the Admission Document. This information should be read in conjunction with the historical financial information set out in Part 8B of the Admission Document.

 
                              For the years ended 31 December 
                                  2016        2015         2014 
                                US$000      US$000       US$000 
 Revenue                       129,264     120,502      104,238 
 Gross profit                   33,744      21,063       21,173 
 Operating profit before 
  interest and tax              19,671      10,437        6,674 
 Profit after tax                4,016     (8,645)     (10,796) 
 Net assets                    155,829     152,091      154,411 
 Borrowings                     13,320      37,850       32,113 
 EBITDA                         46,550      31,269       22,134 
 
 
 Operational data: 
 Oil: 
 Revenues                       110,362     106,529      89,014 
 Oil bbls sold                1,975,000   1,636,000   1,240,000 
 Effective price US$/bbl           56.0        65.1        71.8 
 
 Gas: 
 Revenues                        18,902      13,973      15,224 
 Gas Mm3 sold                   163,797     163,638     182,436 
 Effective price US$/mmbtu         3.08        2.31        2.26 
 
 Total: 
 Revenues                       129,264     120,502     104,238 
 Boe sold                     2,939,000   2,599,000   2,314,000 
 Effective price US$/Boe           44.0        46.3        45.0 
 Boe per day                      8,052       7,121       6,339 
 Opex per Boe                      20.9        22.2        15.4 
---------------------------  ----------  ----------  ---------- 
 
   9.3     Operating and financial review of the Trefoil Holdings B.V. Group 

PETSA's revenues increased by 16 per cent. in 2015 and by 7 per cent. in 2016 to US$129 million, with oil revenues accounting for 85 per cent., 88 per cent. and 85 per cent. of total revenues in 2014, 2015 and 2016 respectively and gas revenues accounting for the remainder. The 16 per cent. increase in revenue in 2015 as compared to 2014 was driven by oil sales where a 32 per cent. increase in the volume sold was offset by a 9 per cent. decrease in the average oil price achieved.

The increase in oil production was predominantly due to the three new wells which PETSA brought into operation in the Puesto Rojas area in August, November and December 2015. The 4 per cent. increase in oil revenues in 2016 was again driven by further new wells in Puesto Rojas with volumes sold from this area increasing by 78 per cent. due to a full year of production. In 2016, the average oil price achieved declined by 14 per cent. from US$65 per barrel to US$56 per barrel as a result of the Argentinian government seeking to bring local prices in line with international crude oil prices.

Gas revenues declined by 8 per cent. in 2015 due to lower volumes but increased by 35 per cent. in 2016 as, in April 2016, the government fixed gas prices above 2015 levels. PETSA completed two workovers in the main producing area of Santa Cruz Sur to stabilise decreasing production volumes due to the natural production curve.

In 2016, excluding interest, tax, depreciation, amortisation and royalties the majority of PETSA's cost structure consists of fixed expenses. In total approximately 66 per cent. of PETSA's costs are fixed operating expenses. Variable operating expenses, such as trucking and treatment, are approximately 13 per cent. of total costs excluding previously mentioned items. Administrative expense is approximately 12 per cent. of total costs excluding the previously mentioned items. Sales taxes represent a further 6 per cent. of total expenses. The remaining approximately 6 per cent. consists of various minor items such as exploration expenses.

Increased contractor and trucking costs as a result of new operations in Puesto Rojas and the Santa Cruz Sur operational structure led to an increase in operating costs of US$5.7 million in 2015 whilst a decrease in salaries, contractor, land lease and pulling costs led to an US$8.5 million decrease in 2016, or a US$5.2 decrease per barrel.

Administrative expenses decreased across the period from US$9.1 million in 2014 and in 2015 to US$8.1 million in 2016 largely as a result of the decline in the value of the Argentine Peso as compared to the US dollar. Finance costs increased by US$5.5 million in 2015 as a result of an increase in loans in GLACCO due to increased capital expenditure and a reduction in revenue.

Throughout the historical financial period, PETSA held loans in both Argentine Pesos and US dollars, the majority of which were held with local banks. The increase in total borrowings of US$5.7 million to US$37.9 million in 2015 was a result of taking on 11 new loans which were used to fund the drilling campaigns undertaken by PETSA. PETSA also used some of the borrowing proceeds to pay GLACCO suppliers as production costs exceeded revenues in the year. The decrease of US$24.5 million in total borrowings in 2016 was due to the repayment of GLACCO's loans and a partial repayment of PETSA's loans.

In 2016, PETSA used its cash reserves, including US$18 million it received from the repayment of a loan note issued by Mercuria EAM and held by PETSA, to repay a significant portion of both the non-current and current borrowings it had previously taken out.

PETSA's 2P oil reserves increased by 64 per cent. in 2015 and increased by 3 per cent. in 2016. These changes were predominantly as a result of PETSA's plans for future drilling campaigns in the Puesto Rojas area. There was a 45 per cent. increase in the proved oil reserves in 2015 due to the results achieved in the Puesto Rojas area. In 2016, of the total proved oil reserves held by PETSA, 52 per cent. were in the Puesto Rojas concession, making it the largest asset of PETSA by reserves and production.

Probable gas reserves decreased in both 2015 and 2016 as a result of changes in PETSA's expectation of the drilling campaigns in the Santa Cruz Sur area. The 20 per cent. decrease in the proved gas reserves in 2015 was due to the delays associated with the drilling programme in the Santa Cruz Sur area. During 2016, gas reserves decreased 5 per cent. in line with the natural production curve as PETSA did not undertake any significant workovers to arrest the decline in the main producing areas.

   10.     IMPLICATIONS OF THE PROPOSALS UNDER THE CITY CODE 

At the date of the Admission Document, Upstream Capital holds 100 per cent. of the issued share capital of Trefoil Holdings and Mercuria EAM holds 49,421,639 Existing Ordinary Shares representing 8.16 per cent. of the Existing Share Capital. In addition, the Mercuria Group also has rights to subscribe for up to 8,463,325 Ordinary Shares pursuant to the Mercuria Existing Warrants and 14,766,666 Ordinary Shares pursuant to the Share Exchange Agreement and up to 39,704,926 Ordinary Shares (including accrued interest to 31 July 2017) pursuant to the Convertible Loan Agreement as set out below and paragraph 2 of Part 9 of the Admission Document. The Company has undertaken to repay the Convertible Loan Agreement within three Business Days of receipt of the funds under the Bridging and Working Capital Facilities Agreement.

Upstream Capital and Mercuria EAM are each indirectly 100 per cent. owned by Mercuria EG, a Cyprus incorporated company which controls the Mercuria energy trading business with 50 offices worldwide, headquartered in Switzerland and with over 1,000 employees. In turn approximately 79.8 per cent. of the share capital of Mercuria EG, but 100 per cent. of its voting rights, is owned by Mercuria EGH, a BVI incorporated company, with the balance of approximately 20.2 per cent. of the shares in Mercuria EG with no voting rights held by the participants in the Mercuria ESOP.

Mercuria EGH is controlled by the principal partners and founders, together with their holding companies and family trusts, of Mercuria EG. Mercuria EG was co-founded in 2004 by Messrs. Marco Dunand, Daniel Jaeggi, Wiaczeslaw Slawomir Smolokowski, Grzegorz Jankilevitsch and Vadim Linetskiy.

The Mercuria Group and the shareholders of Mercuria EGH are deemed to be acting in concert with Upstream Capital in respect of the Transaction for the purposes of the City Code. All of them are referred in the Admission Document together as the "Concert Party". The members of the Concert Party and their interests in Mercuria EGH are set out in Part 9 of the Admission Document.

The City Code and waiver of Rule 9 of the City Code

Introduction

The Company is incorporated in England and Wales and application will be made, conditional on Completion, for the Enlarged Share Capital to be admitted to trading on AIM. The City Code applies to all companies who have their registered office in the UK, Channel Islands or Isle of Man and whose securities are traded on a regulated market in the UK or a stock exchange in the Channel Islands or Isle of Man or a multilateral trading facility. Accordingly, the City Code applies to the Company.

Under Rule 9 of the City Code, any person who acquires an interest in shares (as defined in the City Code), whether by a series of transactions over a period of time or not, which (taken together with any interest in shares held or acquired by persons acting in concert with him) in aggregate, carry 30 per cent. or more of the voting rights of a company which is subject to the City Code, is normally required by the Takeover Panel to make a general offer to all of the remaining shareholders to acquire their shares.

Similarly, when any person together with persons acting in concert with him is interested in shares which, in the aggregate, carry not less than 30 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. of such voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person which increases the percentage of shares carrying voting rights in which he is interested.

An offer under Rule 9 must be in cash or accompanied by a cash alternative and at the highest price paid during the preceding 12 months for any interest in shares of the Company by the person required to make the offer or any person acting in concert with him.

Under the City Code, a concert party arises where persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate to obtain or consolidate control (as defined below) of a company or to frustrate the successful outcome of an offer for a company. Control means holding, or aggregate holdings, of shares carrying 30 per cent. or more of the voting rights of the company, irrespective of whether the holding or holdings give de facto control.

For the purposes of the City Code, all of the members of the Concert Party are deemed to be acting in concert and their interests are to be aggregated. Further information about the Concert Party is set out in Part 9 and paragraph 5 of Part 10 of the Admission Document.

Maximum controlling position of the Concert Party

As at the date of the Admission Document, the members of the Concert Party are interested in 49,421,639 Existing Ordinary Shares, representing approximately 8.16 per cent. of the Existing Share Capital.

Immediately following Admission and the issue of the Consideration Shares and the Share Exchange Shares, the Concert Party will hold, in aggregate, 1,963,294,690 Ordinary Shares, representing approximately 78 per cent. of the Enlarged Share Capital (assuming no exercise of Existing Warrants between the date of the Admission Document and Admission) which, without a waiver of the obligations under Rule 9 of the City Code, would oblige the Concert Party to make a general offer to Andes Shareholders under Rule 9 of the City Code.

Under the terms of the Share Purchase Agreement, in the event of a Settled Claim in excess of US$5 million, Upstream Capital has the right to elect to receive new Ordinary Shares instead of cash or a combination of both. If the Settled Claim has been announced by the Company to the market, the issue price for such Ordinary Shares is calculated as the average Closing Price for the five Business Days preceding the date the Settled Claim is to be settled, failing which it is the five Business days from the date the Settled Claim is announced, in each case subject to a minimum price of 10 pence, being the nominal value of the Ordinary Shares. The Company's maximum liability under the Share Purchase Agreement for a breach of warranty is US$250 million. The Directors and the Proposed Directors consider it unlikely, based on the due diligence that has been undertaken, that a claim will materialise resulting in a Settled Claim in the amount of US$250 million (or an uncapped claim above that amount in respect of certain indemnities in the Share Purchase Agreement), but should there be a Settled Claim for US$250 million, the maximum number of Ordinary Shares that Upstream Capital could elect to receive is approximately 1.923 billion Ordinary Shares assuming the minimum issue price of 10 pence based on the US Dollar/Sterling exchange rate at the Latest Practicable Date. Shareholders should note that the maximum number of Ordinary Shares that might be issued to Upstream Capital as Settled Claim Shares may be more than this amount because: (i) if the US Dollar appreciates against Sterling, the Sterling value of a Settled Claim of US$250 million would be greater than the Sterling value as at the Latest Practicable Date; and/or (ii) as a result of uncapped Settled Claims.

In addition:

-- Mercuria currently holds the Mercuria Existing Warrants which entitle it to subscribe for up to 8,463,325 new Ordinary Shares;

-- Mercuria also has the right to deferred consideration under the Share Exchange Agreement to be satisfied by the issue of the Share Exchange Shares. Pursuant to the Share Exchange Termination Agreement, the Share Exchange Shares will be issued to Mercuria EAM on Completion and the Share Exchange Agreement will terminate; and

-- Mercuria also has the right to convert its loan into approximately 39,704,926 Ordinary Shares pursuant to the Convertible Loan Agreement (including accrued interest to 31 July 2017), however, this right will become irrelevant as the Company has undertaken to repay this facility in cash in full within 3 Business Days of receipt of the advance of funds under the Bridging and Working Capital Facilities Agreement, which advance has to be paid within one Business Day of Admission. Further details of the repayment of this loan and other loans from Mercuria are set out in paragraph 13.1(g) of Part 10 of the Admission Document.

Following Completion, if Mercuria exercises the Mercuria Existing Warrants in full and assuming no other acquisition or disposal of Ordinary Shares, the Concert Party would then own 1,971,758,015 Ordinary Shares representing approximately 78 per cent. of the Company at that time (assuming that the total share capital comprises the Enlarged Share Capital plus the 8,463,325 Ordinary Shares issued pursuant to the exercise of the Mercuria Existing Warrants only).

Following Completion, if Mercuria exercises the Mercuria Existing Warrants in full and in the event that there is a Settled Claim in the amount of US$250 million and Upstream Capital elects to settle the claim by way of receiving Settled Claim Shares for the full amount and in the event that the issue price for the Settled Claim Shares would be 10 pence and that the US$250 million claim value would be converted at the US Dollar/Sterling exchange rate at the Latest Practicable Date (and assuming that no other Ordinary Shares are issued from the date of the Admission Document up to that time, other than the Consideration Shares and the Share Exchange Shares and, in particular, Integra does not receive the Integra Shares and consequently Upstream Capital does not receive any Deferred Consideration Shares), the Concert Party would then own 3,894,834,938 Ordinary Shares, representing approximately 87.51 per cent. of the total voting rights of the Company at that time subject to movements in the Sterling/US Dollar exchange rate and/or if there is an uncapped Settled Claim as referred to above.

Integra is the beneficiary of the fee payable under the Transaction Fee Services Agreement, further details of which are set out in paragraph 13.1(i) of Part 10 of the Admission Document.

In the event that Integra receives the Integra Shares in accordance with the terms of the Transaction Fee Service Agreement six months following Admission (the number of Integra Shares being based on the volume weighted average price post Completion, but subject to a floor and a cap on such price, giving a range of 7,410,254 to 15,041,709 Integra Shares), Upstream Capital will be entitled to receive (without further payment) such number of Deferred Consideration Shares that would enable it to maintain a percentage holding in the Company equal to the percentage of the Enlarged Share Capital represented by the Consideration Shares (i.e. 75.38 per cent.).

Following Completion, if (i) Integra has received the maximum number of Integra Shares and Upstream Capital has received the maximum number of Deferred Consideration Shares, and (ii) Mercuria exercises the Mercuria Existing Warrants in full and (iii) in the event that there is a Settled Claim in the amount of US$250 million and Upstream Capital elects to settle the claim by way of receiving Settled Claim Shares for the full amount and in the event that the issue price for the Settled Claim Shares would be 10 pence and that the US$250 million claim value would be converted at the US Dollar/Sterling exchange rate at the Latest Practicable Date (and assuming that no other Ordinary Shares are issued from the date of the Admission Document up to that time, other than the Consideration Shares and the Share Exchange Shares), the Concert Party will then own 3,940,884,665 Ordinary Shares, representing approximately 87.34 per cent. of the total voting rights of the Company at that time subject to movements in the Sterling/US Dollar exchange rate and/or if there is an uncapped Settled Claim as referred to above.

For further details of the Share Purchase Agreement, the Share Exchange Termination Agreement and the Mercuria Existing Warrants, please refer to paragraph 8 of Part 1 and paragraphs 4.1 and 13.1 of Part 10 of the Admission Document.

The Company also proposes to issue the Mercuria Warrants to Upstream Capital, at Completion, as part of the terms of the Transaction. Under the terms of the Mercuria Warrant Instrument, the Mercuria Warrants are only exercisable following an announcement by the Company through a Regulatory Information Service ("Relevant Announcement") that all or some of the Existing Warrants (excluding the Mercuria Existing Warrants) have been exercised. In these circumstances, Upstream Capital has the right to exercise up to such number of its Mercuria Warrants as to enable the Mercuria Group to maintain its percentage holding in the Company immediately prior to the issue of the new Ordinary Shares referred to in the Relevant Announcement calculated assuming that any of the 8,463,325 Mercuria Existing Warrants which may remain unexercised had been exercised and subject to a maximum deemed holding of 78 per cent. for the purposes of calculating Upstream Capital's proportionate entitlement. For further details of the Mercuria Warrants, please refer to paragraph 15 of Part 1 and paragraph 13.1(d) of Part 10 of the Admission Document.

Waiver of Rule 9 of the City Code

The issue of the Consideration Shares would ordinarily incur an obligation under Rule 9 of the City Code for the Concert Party to make a general offer for the remainder of the entire issued share capital of the Company. Additionally, the issue of the Deferred Consideration Shares, the exercise of the Mercuria Warrants and/or the issue of any Settled Claim Shares (if the aggregate holding of the Concert Party or in some cases, the relevant member of the Concert Party at that time was below 50 per cent) would also ordinarily incur an obligation under Rule 9 of the City Code for the Concert Party to make a general offer for the remainder of the entire issued share capital of the Company.

The Company has applied to the Takeover Panel for a waiver of Rule 9 of the City Code in order to permit the Transaction, the issue of the Consideration Shares, the issue of any Deferred Consideration Shares and the exercise of the Mercuria Warrants and the issue of any Settled Claim Shares without triggering an obligation on the part of the Concert Party to make a general offer for the balance of the Ordinary Shares not held by them. The Takeover Panel has agreed to waive the obligation to make a general offer to Andes Shareholders that would otherwise arise as a result of the issue of the Consideration Shares, or any subsequent issue of the Deferred Consideration Shares, the exercise of any of the Mercuria Warrants or the issue of any Settled Claim Shares, subject to the approval of the Independent Shareholders voting on a poll at the General Meeting. Accordingly, the Waiver Resolution being proposed at the General Meeting will be taken by means of a poll of Independent Shareholders attending and voting at the General Meeting. In addition to Mercuria EAM, the Integra Shareholders are not deemed Independent Shareholders for the purposes of the Waiver Resolution because José Luis Manzano, Integra Capital USA LLC, Vetalir International S.A. and Nicolas Mallo Huergo are connected to Integra, the beneficiary of the fee payable under the Transaction Fee Services Agreement. None of the members of the Concert Party nor any of the Integra Shareholders are permitted to exercise their voting rights in respect of the Waiver Resolution but Mercuria EAM has irrevocably undertaken to exercise its voting rights in favour of the Resolutions (other than the Waiver Resolution) and the Integra Shareholders may exercise their voting rights in respect of the Resolutions (other than the Waiver Resolution).

The City Code requires the Independent Directors to obtain competent independent advice regarding the merits of the transaction which is the subject of the Waiver Resolution, the controlling position which it will create and the effect which it will have on the Andes Shareholders generally. Matthieu Milandri a director of the Company, has been excluded from the consideration of the Waiver Resolution, as he is also an employee of Mercuria Energy Trading, which is a subsidiary of Mercuria EG.

Accordingly, Stockdale, in its capacity as the Company's financial adviser, has provided formal advice to the Independent Directors regarding the Transaction and to the Independent Directors and Nicolas Mallo Huergo regarding the Waiver. Stockdale confirms that it is independent of the Concert Party and has no commercial relationship with any member of the Concert Party.

As noted above, immediately following Admission, the Concert Party will hold more than 50 per cent. of the voting rights of the Company. Rule 9 provides that, where any person, together with persons acting in concert with him, holds more than 50 per cent. of the voting rights of a company then they will not generally be required to make a general offer to the other Andes Shareholders to acquire the balance of their shares, although individual members of the Concert Party will not be able to increase their percentage interest in shares through or between a Rule 9 threshold without the Takeover Panel's consent.

If the Waiver Resolution is passed by the Independent Shareholders at the General Meeting, the Concert Party will be free to acquire further interests in the Company's Ordinary Shares without incurring any further obligation to make a general offer for the Company.

In addition, the Concert Party will not be restricted from making an offer for the Ordinary Shares in the Company which it will not own post-Admission, save that Upstream Capital and Mercuria EAM have agreed, pursuant to the Relationship Agreement, with the Company that they shall not for a period of two years from Admission undertake a transaction in Ordinary Shares which would require these parties or any person acting in concert with them to make a mandatory offer under the Takeover Code without having first obtained prior approval of a majority of the Independent Non-executive Directors and (if applicable) any relevant approval from Andes Shareholders to exempt Upstream Capital and Mercuria EAM, their associates and any person acting in concert with them from any such requirement, subject to certain exceptions if and after (i) any third party makes or announces a firm intention to make an offer to acquire Ordinary Shares carrying (together with shares held by it and those acting in concert with it) 30 per cent. or more of the voting rights (including by way of a scheme of arrangement) or (ii) the Company seeks or announces an intention to seek shareholder approval for an issue of new shares to a third party which would require the grant of a waiver of Rule 9 of the Takeover Code.

   11.     EFFECT OF THE TRANSACTION ON THE ENLARGED GROUP 

The Transaction will not have an immediate effect on the day-to-day business or the assets of either Andes or PETSA. The businesses of Andes and PETSA will continue to be oil and gas exploration and production focusing on Argentina.

The Directors and the Proposed Directors believe that the Transaction will allow the Enlarged Group increased access to the equity capital and debt markets and therefore facilitate further investment in the short term and over the long term the development of the assets of the Enlarged Group. The Directors and the Proposed Directors also believe that significant operational synergies will derive from the Transaction, but have not quantified any such synergies.

   12.     DIRECTORS AND SENIOR MANAGEMENT 

The Board

The Board currently comprises Nicolas Mallo Huergo, German Ranftl, Juan Carlos Esteban, David Jackson, Nigel Duxbury, Carolina Landi, Javier Alvarez, Matthieu Milandri and Sir Michael Rake.

On Completion Sir Michael Rake, currently a non-executive director of the Company will become Non-Executive Chairman and Nicolas Mallo Huergo, currently Executive Chairman, will become a non-executive director.

On Completion, German Ranftl, Juan Carlos Esteban, Nigel Duxbury and Carolina Landi will resign as Directors and Anuj Sharma, Philip Wolfe, Guillaume Vermersch, Garrett Soden and John Bentley will be appointed as new directors of the Company.

Accordingly, the Board immediately following Completion will consist of:

Sir Michael Rake (age 69), Non-Executive Chairman

Sir Michael is Chairman of BT Group plc as well as Chairman of payments processing firm Worldpay Group plc, a director of S&P Global and Chairman of Majid Al Futtaim Holdings LLC.

He was President of the CBI from 2013 to 2015; a member of the Prime Minister's Business Advisory Group from 2010 to 2015; non-executive director of Barclays plc from 2008, becoming Deputy Chairman from 2012 to 2015; Chairman of the private equity oversight group, the Guidelines Monitoring Committee from 2008 to 2013; Chairman of easyJet plc from 2010 to 2013 and the first Chairman of the UK Commission for Employment and Skills from 2007 to 2010. He was a director of the Financial Reporting Council from 2008 to 2011 and Chairman of Business in the Community from 2004 to 2007.

From May 2002 to September 2007, Sir Michael was International Chairman of KPMG. Prior to his appointment as International Chairman, he was Chairman of KPMG in Europe and Senior Partner of KPMG in the UK.

Sir Michael was knighted in 2007. In 2011 he received the British American Business UK Transatlantic Business Award in recognition of outstanding business leadership. In 2013, he received the Channing Award for Corporate Citizenship, was voted the FTSE 100 non-executive director of the year and received the ICAEW outstanding achievement award.

Anuj Sharma (age 44), Chief Executive Officer

Anuj has approximately 20 years' experience in the oil and gas industry and was appointed as nonboard level CEO of Andes in March 2017. Prior to that, he headed Mercuria EG's investments in Argentina. As the head of Mercuria EG's Argentine subsidiaries, he led PETSA, Mercuria Group's upstream oil and gas company in Argentina, to significant exploration and development success, which resulted in more than a doubling of PETSA's production and reserves. Prior to that, he was the Vice President and Director, originating investment opportunities for a multi-billion dollar family office in Houston, USA. Anuj also held positions in upstream equity research and portfolio management for a large commodity investment firm, making principal investments in the upstream oil and gas sector and managing the firm's unconventional shale portfolio in the US. He started his oil and gas career as an engineer for Schlumberger Oil Field Services. Anuj received his Bachelor of Electrical Engineering in India and an MBA from Duke University, USA, where he graduated with the highest honours as a Fuqua Scholar.

Philip Wolfe (age 49), Chief Financial Officer

Philip Wolfe has 27 years' experience working in the oil and gas industry as an adviser and corporate financier. Most recently Philip was Chief Financial Officer and a board member of Soma Oil & Gas, a UK registered independent oil and gas company. Prior to being a CFO, Philip was MD, Head of Oil and Gas, EMEA at UBS Investment Bank and Global Head of Oil and Gas at HSBC. Previously he was a Director at Deutsche Bank's Global Energy & Utilities team in London and a Vice President at Merrill Lynch's Oil and Gas team in Singapore. During his eight years at Merrill Lynch, Philip was based in Singapore from 1996 until 1998 and was previously in London for four years and New York for two years. During his 23 years as an investment banker to the oil and gas industry, his expertise was predominantly in buying and selling assets/companies, including farm-outs and raising equity and debt for oil and gas companies, across the entire energy chain with a particular interest in the E&P sector. Philip has a BSc Honours degree in Economics from the University of Bristol.

Nicolas Mallo Huergo (age 47), Non-Executive Director

Nicolas has been a member of the Company's board since 2007. Nicolas graduated from the Universidad Católica Argentina in 1993 with a law degree and obtained a Master in Law (LLM.) with honours at North-western University School of Law, Chicago, U.S.A, in 1999. Within his area of specialisation, he has advised national and foreign firms on corporate matters, mergers, acquisitions, privatisations and financings, unsolicited bids, tender offers, exchange offers and proxy fights, adoption of stock option plans, leveraged buy-outs, spin-offs, recapitalisations and other restructuring transactions, strategic investments and joint ventures, venture capital transactions and project finance. His advice includes operation structuring, acquisition of telecommunications and media companies, cross border contracts with international corporations. He has been and is a director of a number of local and foreign companies. Previously, he practised as a lawyer at a major law firm in Argentina.

Matthieu Milandri (age 42), Non-Executive Director

Matthieu has been Investment Director at Mercuria Energy Trading since December 2011, with a particular focus on upstream oil and gas assets. Matthieu joined the board of Andes in 2013. Prior to joining the Mercuria Group, Matthieu was CFO of Candax Energy Inc, a TSX-listed upstream company and Business Development and Financing Manager at Geopetrol, a private upstream group. Matthieu spent nine years with BNP Paribas in Frankfurt, Paris, New York, Houston and Geneva working in the oil and gas and commodities groups, providing him with a detailed understanding of junior oil and gas companies across the world. He graduated from ESSEC Business School in 1998 with a degree equivalent to an MBA with a specialisation in finance.

Guillaume Vermersch (age 47), Non-Executive Director

Guillaume serves as the Group Chief Financial Officer of Mercuria Energy Group and Mercuria Energy Trading. He started his career with Arthur Andersen as external auditor in Paris and joined the bank Credit Agricole Indosuez (subsequently in Paris and Geneva) as Account Manager in the Commodity Finance Division - Oil and Energy products desk, where he served until 1997. He then joined the ING/BBL Bank in Geneva as Accounts Chief Officer in the Energy Finance Division. Guillaume left ING/BBL Bank in 2000 to become Head of Credit and Finance for Europe with Sempra Oil Trading SARL, Geneva. He studied at Ecole Supérieure De Commerce De Paris (E.S.C.P., Paris) graduating with a Master's degree in Financial Audit and Consulting with special honours in 1994. In 2003, he studied at the Manchester Business University for MBA in Corporate Finance.

Garrett Soden (age 43), Non-Executive Director (Independent)

Garrett has extensive experience as a senior executive and board member of various public companies in the natural resources sector. He has worked with the Lundin Group for the last decade. He is currently President and CEO of Africa Energy Corp., a Canadian oil and gas exploration company focused on Africa. He is also a Non-Executive Director of Etrion Corporation, Gulf Keystone Petroleum Ltd., Panoro Energy ASA and Petropavlovsk PLC. Previously, he was Chairman and CEO of RusForest AB, CFO of Etrion and PetroFalcon Corporation and a Non- Executive Director of PA Resources AB. Prior to joining the Lundin Group, Garrett worked at Lehman Brothers in equity research and at Salomon Brothers in mergers and acquisitions. He also previously served as Senior Policy Advisor to the U.S. Secretary of Energy. Garrett holds a BSc honours degree from the London School of Economics and an MBA from Columbia Business School.

John Bentley (age 69), Non-Executive Director (Independent)

John has over 40 years' experience in the natural resources sector. He is an experienced board member being a past Managing Director of Gencor's Brazilian mining company, Sao Bento Mineracao and Chief Executive of Engen's exploration and production division. In 1996, he was instrumental in floating Energy Africa Ltd on the Johannesburg stock exchange and became Chief Executive for the following five years. More recently he was Executive Chairman of First Africa Oil plc and served on the boards of Rift Oil plc, Adastra Minerals Ltd, Caracal Energy Inc and Scotgold Resources Limited. He is currently on the board of a number of E&P companies including as Chairman of Faroe Petroleum plc, Deputy Chairman of Wentworth Resources Ltd and Non- Executive Director of Africa Energy Corp. John holds a degree in Metallurgy from Brunel University.

Javier Alvarez (age 45), Non-Executive Director (Independent)

Javier is an Agricultural Engineer and has a Masters in Environmental Politics and Globalisation from King's College, University of London. Javier's career, which is based on his skills on building projects with diverse stakeholders and on his experience in fundraising, was developed in the private sector in London; he was Executive Director of the British Argentine Chamber of Commerce BACC from 2007 to 2011 (he is currently Overseas Director and Member of the Board of the BACC) and he was Business Development Director at a family office in Cambridge dealing with investments in the primary sector. In 2012, he joined the board of Andes as a non-executive director.

David Jackson (age 68), Non-Executive Director (Independent)

David has more than 30 years' experience in international banking and finance having held senior positions in investment banking and investment management in Standard Chartered Bank (1990-2008), where he was a Managing Director in London and Hong Kong, Scandinavian Bank (1977-1990) in London, Bahrain, Singapore and Hong Kong where he was an Executive Director and a member of the Bank's General Management Committee and Finance for Industry, now 3i, where he was a Senior Legal Advisor (1973-1977). He retired from Standard Chartered Bank in 2008.

Further information on the Directors and the Proposed Directors, including interests held by them in the share capital of the Company, is given in Part 10 of the Admission Document.

Senior Management

Other members of Senior Management immediately following completion will consist of the following:

Nigel Duxbury (age 58), Company Secretary

Nigel has over 10 years of experience in the oil and gas industry which began with the reverse takeover of the Company in 2007. He has a background in finance and accountancy, having qualified as a chartered accountant with Touche Ross, London. Nigel has extensive experience both as a finance director and senior executive in small and large, quoted and unquoted, companies within Europe, Asia and the Americas. Nigel Duxbury is also currently a Non-Executive Director of the Company, but will step down from the Board upon Admission.

Javier Vallesi (age 50), Chief Operating Officer

Javier Vallesi has more than 22 years of experience in the oil and gas industry. Before his current role as Chief Operating Officer, Javier was Head of Sub-Surface Engineering at PETSA. Previous to PETSA, Javier held various technical and management positions in leading Argentine oil and gas companies such as YPF (Cuyo and Neuquén Basin-Development Manager), ASTRA CAPSA (Cuyo Basin-Senior Reservoir Engineer) and Bridas SAPIC (Golfo San Jorge Basin). Javier holds a degree in Petroleum Engineering from Universidad Nacional de Cuyo in Mendoza and a Post Graduate Management Programme from IAE (Instituto de Altos Estudios Empresariales) in Buenos Aires.

Pablo Varetto (age 51), Head of Finance and Controller (Argentina)

Pablo Varetto has more than 25 years of experience in Finance, Administration and Business development in the oil and gas industry in Argentina. Prior to PETSA, Pablo held CFO positions at President Petroleum S.A., Americas Petrogas Argentina S.A., Occidental Argentina E&P, and Vintage Oil Argentina, Inc. Pablo also served as Manager-Finance and Administration at British Gas Argentina, S.A and started his career in audit and accounting with Arthur Andersen & Co. Pablo is a Certified Public Accountant from Universidad de Buenos Aires and also holds a Master in International Business degree from Universidad de Belgrano, L'Ecole de Ponts et Chausses.

Juan Carlos Esteban (age 59), Senior Manager: Special Operations

Juan Carlos has more than 30 years of experience in the oil and gas industry. Prior to joining the Company in June 2009, he spent 23 years at YPF working in various management positions. At YPF, Juan Carlos was responsible for the production activities of YPF's major fields in the Neuquén

province, North of Mendoza and Malargue. He also served as a District Manager of Repsol-YPF, being responsible for the operations in the fields of Neuquén and Cuyo basins corresponding to Mendoza Province. Juan Carlos was also Production Manager of the technical staff for Argentina and Bolivia at Repsol-YPF. He has significant knowledge and experience in the areas where the Andes Group holds its licences.

Pablo Arias (age 37), Manager: Business Development

Pablo holds a Bs. degree in International Economics, an Msc. in Finance from Universidad Torcuato Di Tella, and an MBA from New York University. He has more than 12 years of experience working in the financial and oil and gas industries, with broad experience, participating and leading, in financial and debt restructuring, capital raisings, M&A, project finance and developing and executing new businesses. Prior to joining the Company, Pablo was an investment banker at JP Morgan. Pablo has been working as Planning Manager at Andes and also served as chief financial officer and interim chief executive officer of Interoil.

Marina Alvarez Toledo (age 41), Manager: Information Technology

Marina has over 14 years of experience in the management of information technology platforms in the oil and gas industry. Prior to joining PETSA in 2017, Marina held different technical and management positions in leading oil and gas companies such as YPF, Pioneer Natural Resources and Apache Corporation. Marina was in charge of IT department at YSUR, which was the local holding company for assets YPF acquired from Apache Corporation, and led the integration of IT infrastructure of YSUR with YPF. She holds a System Analyst degree from the Universidad Abierta InterAmericana.

Greg Easley (age 32), Senior Manager: Reservoir & Engineering

Greg is a Texas Licenced Professional Engineer with over ten years of experience in the oil and gas industry. Greg holds a bachelor's degree from the University of Oklahoma and a Master's Degree from the University of Houston, both in petroleum engineering. Greg began his career at ExxonMobil Development Company, working in the development of offshore international oilfields. He then moved to Marathon Oil where he worked in a variety of roles, from reservoir engineering onshore waterfloods to drilling wells in the unconventional Bakken formation of North Dakota. After Marathon, Greg worked at a multi-billion dollar family office where he evaluated new investment opportunities in the oil and gas sector and also managed their unconventional reserves and exploration portfolio. Since then he has been with Mercuria, working in reserve and reservoir management of their worldwide oil and gas portfolio and advising the company on any new acquisition or divestiture opportunities.

Erico Stahlschmidt (age 67), Senior Manager: Subsurface

Erico Stahlschmidt has more than 37 years of experience in the oil and gas industry. At PETSA, Erico leads a team of geologist and geophysicists. He holds a degree in Geology from Universidad de Buenos Aires (UBA). Prior to PETSA, Erico held different technical positions at Argentine and international oil and gas companies such as Petrolera San Jorge where he was a Development Geologist, Anderson Exploration SA where he was an Exploration Geologist for the Cuyo and Neuquén basins, Petrolera Santa Fe-Devon Energy where he served as a Senior Geologist for their natural gas fields, Petrobras Energía where he served as an evaluation Geologist for new assets in Río de Janeiro, Vintage Oil Argentina where he served as a Geologist in the Reservoir Management Team for the Golfo San Jorge and Cuyo basins and Oxy where he served as asset acquisition and evaluation Geologist in Houston, USA.

Jorge Gonzalez (age 57), Senior Manager: Drilling & Completion

Jorge Gonzalez has more than 26 years of drilling and completions experience in the oil industry, spanning various basins, such as the Cuyo, Neuquén, Golfo San Jorge and Austral basins. Prior to PETSA, Jorge was Drilling Manager at Petroandina Resources and also worked as Drilling

Superintendent and Drilling Engineer for Petrolera Perez Companc, Total, Pioneer NR, Apache and Americas Petrogas. Jorge has extensive experience in conventional drilling operations, directional drilling, tight gas drilling, stimulations and frac operations. Jorge's field experience includes managing operations with 12 rigs where his responsibilities included drilling operations, managing of service contractors, material supplies including purchasing and warehouse. Jorge holds a degree in Petroleum Engineer from Universidad Nacional de Cuyo and he is member of the Technical Commission of LADS Mendoza Chapter (Latin American Drilling Safety - Mendoza).

Nicolas García (age 39), Senior Completion Engineer

Nicolas has more than 14 years of experience in the oil and gas industry. Nicolas holds a degree in Industrial Engineering from Universidad Nacional de Cuyo, Mendoza, Argentina. Before PETSA, he worked for Halliburton for 14 years having responsibilities as field frac engineer, and technical advisor in Buenos Aires, Argentina and Denver, USA, and has extensive experience in tight and unconventional projects. His areas of expertise include the Golfo San Jorge, Neuquén and Cuyo basins in Argentina, and Williston, Denver Julesburg, San Joaquin, Uinta and San Juan basins in the US. As a technical advisor in Argentina, Nicolas participated in various exploratory projects in Vaca Muerta, Molles and Agrio source rocks in the Neuquén basin. In the US, with Halliburton, he was responsible for the petrophysical and geomechanical evaluation of unconventional projects in the Rocky Mountains region. Nicolas is also author of eleven publications and was in charge of teaching petrophysics for unconventional reservoirs at Halliburton's Latin America training centre.

Pablo Prado Zalazar (age 47), Production, Maintenance and Facilities Manager

Pablo has more than 22 years of experience in the oil and gas industry. Prior to PETSA, Pablo held various managerial and supervisory positions with increasing responsibilities within the oil and gas industry. He worked for Petrolera Perez Companc, Petrolera El Trebol, Petrobras Energy and Petrolera Entre Lomas having responsibilities as Field Engineer, Pulling & Workover Rigs Supervisor, Oil and Gas Control and Surveillance Engineer, Production Engineer and Facilities Engineer in the Cuyo and Neuquén basins. At Petrolera Entre Lomas, he held the Production Manager position and also Production Engineering Manager position. He holds a degree in Petroleum Engineering from Universidad Nacional de Cuyo and a masters degree in Energy from Universidad Nacional del Comahue in Neuquén, Argentina.

   13.     NEW EMPLOYEE SHARE PLANS 

The Company's approach to remuneration for its executive directors from Admission will be intended to attract and retain individuals of a high calibre and appropriate experience; to align incentives with the Company's strategic goals and business plans; to deliver rewards for strong and sustainable business performance; and to align the interests of the executive directors with those of the Andes Shareholders over an appropriate period.

Subject to Andes Shareholders' approval of the Waiver Resolution, the Transaction Resolutions, Resolution 5 and Admission, the Board has agreed to adopt the Andes Energia Long Term Incentive Plan and the Andes Energia Deferred Bonus Plan.

The Remuneration Committee is expected to consider granting awards under the New Employee Share Plans following Admission in order to incentivise management.

Further details of the New Employee Share Plans are set out in paragraph 10 of Part 10 of the Admission Document.

   14.     CORPORATE GOVERNANCE 

The Company is not and, upon Admission, will not be, subject to the Corporate Governance Code applicable to companies listed on the Official List. However, the Directors and the Proposed Directors recognise the importance of sound corporate governance and the Company intends to report against, and to substantially comply with, the Corporate Governance Code. Whilst the Directors and the Proposed Directors recognise that immediately following Completion it will not be possible to adopt all the provisions of the Corporate Governance Code, it is the Directors' and the Proposed Directors' intention to adopt the remaining provisions in the short term thereafter. The Directors and the Proposed Directors intend to also take account of institutional shareholder and governance rules and guidance on disclosure and shareholder authorisation.

The Board intends to meet at least eight times a year and may meet at other times at the request of one or more of the directors of the Company.

The Audit and Risk Committee, the Remuneration Committee, the Nomination Committee and the Integration Committee of the Enlarged Group will each have formally delegated rules and responsibilities.

On Admission, the members of each committee (including non-director members for the Integration Committee) and directors with formal observer rights on each committee will be as follows:

 
                         Chairman           Members 
 Audit and Risk          Garrett Soden      Sir Michael Rake 
  Committee                                  David Jackson 
                                             Javier Alvarez 
                                             Guillaume Vermersch* 
 Remuneration            John Bentley       Sir Michael Rake 
  Committee                                  Garrett Soden 
                                             David Jackson 
                                             Matthieu Milandri* 
                                             Nicolas Mallo 
                                             Huergo* 
 Nomination Committee    Sir Michael Rake   Javier Alvarez 
                                             John Bentley 
                                             Nicolas Mallo 
                                             Huergo* 
 Integration Committee   Anuj Sharma        Philip Wolfe 
                                             Matthieu Milandri 
                                             Nicolas Mallo 
                                             Huergo 
                                             Javier Valesi 
                                             Pablo Varetto 
 

*Observer rights only

Audit and Risk Committee

The Audit and Risk Committee will consist of not less than three members, at least one of whom will have recent and relevant financial experience and the quorum for meetings will be two members. The majority of the committee will be Independent Non-Executive Directors. The chairman shall be an Independent Non-Executive Director and shall not be the chairman of the Company. The committee will meet at such time as may be necessary and at least four times a year.

Its responsibilities will include: monitoring the integrity of the Company's financial statements and formal announcements; reviewing financial reporting issues and significant accounting policies and disclosures in financial reports; reviewing the effectiveness of the Company's internal audit function and risk management systems; making recommendations to the Board on the appointment or re-appointment of the Group's external auditors; overseeing the New Board's relationship with the external auditors (including an external reserves auditor) and, where appropriate, the selection of new external auditors; and ensuring that an effective whistle-blowing procedure is in place.

Remuneration Committee

The Remuneration Committee will consist of not less than three members and the quorum for meetings will be two members. All the members of the committee will be independent nonexecutive directors. The chairman shall be an Independent Non-Executive Director and shall not be the chairman of the Company. The committee will meet at such times, as may be necessary and at least three times a year.

The Remuneration Committee will be responsible for determining and agreeing with the Board the remuneration policy for the Chief Executive Officer, Chairman, Chief Financial Officer, Chief Operating Officer/Secretary and Executive Directors, (together, the "Relevant Individuals"); approving the design of, and determining targets for, an incentive plan for the executive directors and senior managers; reviewing the design of share incentive plans for approval by the Board and Andes Shareholders, approving the remuneration policy applicable to the Relevant Individual (no Relevant Individual being involved in any decisions as to their own remuneration); and within the terms of the agreed policy, determining the remainder of the remuneration packages (including pension) for each executive director and senior executive; reviewing and having regard to pay and employment conditions across the Enlarged Group, especially when determining annual salary increases.

Nomination Committee

The Nomination Committee will consist of not less than three members and the quorum for meetings will be two members. A majority of the members will be independent non-executive directors. The chairman of the committee shall be the chairman of the Company or an independent non-executive Director. The chairman of the committee will not however chair the committee when it is dealing with the appointment of a successor to the chairmanship. The committee will meet at such times, as may be necessary and at least twice a year.

The Nomination Committee's responsibilities will include reviewing the structure, size and composition of the Board and making recommendations to the Board with regard to any changes required; succession planning for directors and other senior executives; identifying and nominating, for the Board approval, candidates to fill Board vacancies as and when they arise; reviewing annually the time commitment required of Non-Executive Directors and making recommendations to the Board with regard to membership of the Audit and Risk Committee and Remuneration Committee in consultation with the chairman of each of these committees.

Integration Committee

The Integration Committee will consist of six members comprising the CEO, CFO, two Non- Executive Directors and two senior managers of the Company and the quorum for meetings shall be at least three members to include a majority of members who are Directors. The Chairman of the committee will be Anuj Sharma. The committee shall have an initial fixed term of 12 months from Admission. The committee shall meet at regular intervals and at least twice a month and can be held via a conference call.

The Integration Committee's responsibilities will include reporting and making recommendations to the Board on all aspects of the integration process, reviewing the ongoing appropriateness and relevance of the Company's integration plan; overseeing and reporting on the progress and compliance with the integration plan; reporting to the Board on the post-Completion actions required by the Share Purchase Agreement and any integration measures referred to in other agreements or documents entered into in connection with the Transaction; overseeing and reporting on the integration of day to day operations, employees, IT systems, accounting and financial reporting procedures, IP and real estate within the Enlarged Group.

Other

The Company has adopted a share dealing code for Directors and applicable employees (within the meaning of the AIM Rules for Companies) of the Company for the purpose of ensuring compliance by such persons with the provisions of the Market Abuse Regulation relating to dealings in the Company's securities. The Directors and the Proposed Directors consider that this share dealing code is appropriate for a company whose shares are admitted to trading on AIM.

   15.     WARRANTS 

As at the Latest Practicable Date, the Company has issued 59,187,124 Existing Warrants which remain outstanding and which entitle the relevant warrantholders to subscribe for 59,187,124 Ordinary Shares. The Existing Warrants include the Mercuria Existing Warrants, which entitle certain members of the Mercuria Group to subscribe for up to 8,463,325 Ordinary Shares in aggregate.

Further details of the Existing Warrants are set out in paragraph 4 of Part 10 of the Admission Document.

Mercuria Warrants

As part of the terms of the Transaction, the Company proposes to issue, at Completion, the Mercuria Warrants which would entitle Upstream Capital to subscribe for up to 179,838,924 Ordinary Shares in certain limited circumstances. The purpose of the Mercuria Warrants is to enable the Mercuria Group to maintain its percentage holding in the Company, subject to the caveat described in the next paragraph, in the event that any of the Existing Warrants (other than the Mercuria Existing Warrants) are exercised and new Ordinary Shares are issued.

Under the terms of the Mercuria Warrant Instrument, following an announcement by the Company through a Regulatory Information Service that all or some of the Existing Warrants (excluding the Mercuria Existing Warrants) have been exercised ("Relevant Announcement"), Upstream Capital has the right to exercise up to such number of its Mercuria Warrants as enable it to maintain the Mercuria Group's percentage holding in the Company immediately prior to the issue of the new Ordinary Shares referred to in the Relevant Announcement, calculated assuming that any of the 8,463,325 Mercuria Existing Warrants which remain unexercised had been exercised and subject to a maximum deemed holding of 78 per cent. for the purpose of calculating Upstream Capital's proportionate entitlement. The exercise price shall be the same price as the Existing Warrants which have been exercised.

Further details of the Mercuria Warrants are set out in paragraph 13.1(d) of Part 10 of the Admission Document.

Resolution 2 at the General Meeting will seek Andes Shareholders' approval of, inter alia, the issue of the Mercuria Warrants to Upstream Capital.

   16.     RELATIONSHIP AGREEMENT 

Upstream Capital and Mercuria EAM have agreed to exercise their votes as Andes Shareholders and to procure the same in respect of any connected person in accordance with certain restrictions set out in the Relationship Agreement entered into between the Company, Upstream Capital, Mercuria EAM and Mercuria EG. The restrictions seek to ensure that the Enlarged Group is capable of carrying on its business and making decisions independently and in the best interests of the Enlarged Group and that any transactions between any member of the Enlarged Group and Upstream Capital or any connected person are made on an arm's length basis.

The main provisions of the Relationship Agreement are conditional upon Admission and the Relationship Agreement will terminate on Upstream Capital, Mercuria EAM and their associates ceasing to hold directly or indirectly Ordinary Shares or instruments capable of converting into Ordinary Shares conferring in aggregate 5 per cent. or more of the Voting Rights.

For so long as Upstream Capital, Mercuria EAM and their associates hold in aggregate not less than 20 per cent. of the Voting Rights, they will be entitled to appoint two directors. For so long as Upstream Capital, Mercuria EAM and their associates hold in aggregate not less than 10 per cent. of the Voting Rights, they will be entitled to appoint one director. For so long as Upstream Capital, Mercuria EAM and their associates hold not less than 5 per cent. of the Voting Rights, they will have the right to appoint an observer to attend Board and Board committee meetings. A director appointed pursuant to the Relationship Agreement will have the right to attend as an observer at any Board committee meeting at which no director appointed pursuant to the Relationship Agreement is a member. Matthieu Milandri and Guillaume Vermersch will be deemed to be appointed on behalf of Upstream Capital and Mercuria EAM upon Admission.

The Company has agreed that Nicolas Mallo Huergo shall remain a Director from Admission, and shall remain appointed as a Director thereafter for a period of three years from Admission when and until he resigns, subject to certain exceptions. Upstream Capital and Mercuria EAM have undertaken to vote in favour of the appointment or reappointment of Nicolas Mallo Huergo if his appointment or reappointment is recommended by the Board during this three year period.

The Company has also agreed to use reasonable endeavours to procure that if Nicolas Mallo Huergo ceases to be a director of the Company for any reason during the period of three years from Admission, the Company via the Chairman at the time will consult with the Minority Shareholders as soon as reasonably practicable and take note of their reasonable comments as to the replacement director and if the Minority Shareholders suggest a suitable nominee, the Company will consider in good faith and acting reasonably, the appointment of such nominee as the replacement director. The provisions summarised in this paragraph and the previous paragraph have been included in the Relationship Agreement for the benefit of the Minority Shareholders, who have the benefit of enforcement rights under the Contracts (Rights of Third Parties) Act in relation to the right in this paragraph.

Further details of the Relationship Agreement are set out in paragraph 13.1(c) of Part 10 of the Admission Document.

   17.        BRIDGING AND WORKING CAPITAL FACILITIES AGREEMENT 

The Company has entered into the Bridging and Working Capital Facilities Agreement with Mercuria Energy Trading pursuant to which Mercuria Energy Trading has conditionally agreed to provide the Company (i) the Term Loan in the principal amount of US$87,015,353 and (ii) a revolving credit facility in the principal amount of US$72,984,647. The making of the loans is conditional on, inter alia, completion of the Transaction and Admission.

The term loan is to be used towards funding the redemption of the Company's existing debt with third parties and financing transaction costs. The Revolving Credit Facility is to be used towards general corporate and working capital purposes.

Further details of the Bridging and Working Capital Facilities Agreement are set out in paragraph 13.1(g) of Part 10 of the Admission Document.

   18.        DIVID POLICY 

It is not the intention of the Enlarged Group to make distributions by way of dividend payments for the foreseeable future following the completion of the Transaction. The Directors and the Proposed Directors consider that it is in the Andes Shareholders' best interests to reinvest the profits of the Enlarged Group in its business growth opportunities. The Board intends to regularly review and potentially adjust the dividend policy as the Enlarged Group's asset portfolio and financial position evolve over the forthcoming years.

   19.        CHANGE OF NAME 

In view of the size and nature of the Transaction, it is proposed that, subject to Andes Shareholders' approval of Resolution 3 as a special resolution and Admission, the name of the Company be changed to Phoenix Global Resources plc.

If Resolution 3 is duly passed at the General Meeting, the Company's AIM symbol will change to PGR and its website address will be changed to www.phoenixglobalresources.com following Admission.

   20.        AMMENT TO THE ARTICLES 

Due to the proposed increase in the number of directors of the Company as part of the Transaction, it is proposed that, subject to the passing of Resolution 3 at the General Meeting, the limit on directors' fees in the Articles is increased from GBP100,000 to GBP750,000. The new threshold will enable the Company to pay the fees of the relevant Directors and Proposed Directors in accordance with their letters of appointment, and give the Company some headroom in relation to any further appointments of directors or increase in directors' fees.

When the Company was admitted to trading on AIM in 2007, the Company's central management and control was deemed to be in Argentina which meant that, at the time, the City Code did not apply to the Company; however the Company chose to include provisions in its Articles which afforded similar protections to the City Code.

The City Code has applied to the Company since 30 September 2013, when new rules on which companies are subject to the City Code came into effect. Since that date, the provisions in Article 165 are no longer required. The Board proposes to take this opportunity to amend its Articles by deleting the now redundant provisions relating to protections similar to the City Code.

Resolution 3 will be proposed at the General Meeting as a special resolution to approve, inter alia, the amendment to the Articles in the manner described above.

   21.        INTEROIL DEMERGER 

The Board believes that it will be in the interests of Andes Shareholders for the Company to focus on oil and gas exploration and production in Argentina only. Outside of Argentina, the Company has interests in Colombia, comprising the Interoil Shares and certain licences in the Llanos Basin and the Valle Magdalena Medio Basin.

In line with this strategy, the Board proposes to transfer 513,598 Interoil Shares to the US Andes Shareholders and to demerge the remaining Interoil Shares, which are currently held by the Company's wholly-owned subsidiary, Andes Interoil, to be effected by way of a distribution in specie to pre-Completion Andes Shareholders (save for the US Andes Shareholders and Other US Andes Shareholders).

The Board has decided to propose the Interoil Demerger for the following reasons:

-- it will help the Company focus on oil and gas exploration and production in Argentina only; and

-- it will allow Andes Shareholders who are on the Andes Share Register at the Interoil Demerger Record Time to benefit from the value of the Interoil Shares before the completion of the Transaction when their percentage holding in the Company will be heavily diluted.

The Interoil Demerger will require the Company to declare a distribution in specie. As the Company does not have sufficient distributable reserves to declare a distribution in specie, the Board proposes the Reduction of Capital to reduce the Company's share premium account by GBP60 million to create sufficient distributable reserves to effect the Interoil Demerger.

In preparation for the proposed Interoil Demerger, the Company has established TrustCo, a Guernsey trust company, and TrustCo has incorporated GuernseyCo, a wholly-owned Guernsey incorporated subsidiary.

The Interoil Demerger will be implemented as follows:

-- the Company will acquire the Interoil Shares from Andes Interoil for book value (such consideration to be left outstanding as an inter-company balance);

-- the Company will seek to reduce its share premium account by GBP60 million pursuant to a Court approved reduction of capital under the Companies Act;

-- following such reduction, the Company will declare a distribution in specie on the Ordinary Shares equal to the book value of the Interoil Shares to be demerged; and

-- the distribution in specie will be satisfied by the transfer by the Company to GuernseyCo of the Interoil Shares. In return for this transfer, GuernseyCo will allot and issue Exchangeable GuernseyCo Shares to the Andes Shareholders (save for the US Andes Shareholders and any Other US Andes Shareholders) who are registered on the Andes Share Register at the Interoil Demerger Record Time, on the basis of one Exchangeable GuernseyCo Share for each Ordinary Share held by them at that time. Following the Interoil Demerger becoming effective, the holders of such Exchangeable GuernseyCo Shares shall be entitled to receive one Interoil Share for every 36 Exchangeable GuernseyCo Shares redeemed (subject to adjustment). Any Exchangeable GuernseyCo Shares remaining which have not been redeemed in the period following six months from the date of completion of the Interoil Demerger are intended to be sold and the net proceeds distributed to the holders of the Exchangeable GuernseyCo Shares on a pro rata basis.

The foregoing requires, among other things, the approval by Andes Shareholders of the Interoil Demerger Resolution to be proposed at the General Meeting and the confirmation of the Reduction of Capital by the Court.

Following the Interoil Demerger becoming effective, the Exchangeable GuernseyCo Shareholders will have six months in which to redeem the Exchangeable GuernseyCo Shares into fully-paid Interoil Shares on the basis of one Interoil Share for every 36 Exchangeable GuernseyCo Shares held (subject to adjustment). If an Exchangeable GuernseyCo Shareholder does not exercise the right to redeem during this period, then GuernseyCo will sell the Interoil Shares as soon as reasonably practicable at the best price reasonably obtainable and the net proceeds will be distributed to the holders of the remaining Exchangeable GuernseyCo Shares on a pro rata basis in accordance with the articles of association of GuernseyCo.

US Andes Shareholders and Other US Andes Shareholders will neither participate in the Interoil Demerger, nor receive Exchangeable GuernseyCo Shares. There will be no public offer of the Exchangeable GuernseyCo Shares or Interoil Shares in the United States.

The US Andes Shareholders have agreed to waive their rights to participate in the Interoil Demerger and to receive any Exchangeable GuernseyCo Shares, and agreed not to vote on Resolution 4 at the General Meeting. In return for this waiver they will receive such number of Interoil Shares that they would have been entitled to receive had they been permitted to receive Exchangeable GuernseyCo Shares pursuant to the terms of the Interoil Demerger. It is proposed that these Interoil Shares be transferred to the US Andes Shareholders prior to completion of the Interoil Demerger. As these US Andes Shareholders will be receiving Interoil Shares for nil consideration, Resolution 4 seeks the approval of the Andes Shareholders (excluding the US Andes Shareholders) in respect of the proposed transfer.

The Company is not aware of any Other US Andes Shareholders as at the Latest Practicable Date. If the Company becomes aware of any Other US Andes Shareholders prior to the Interoil Demerger Record Time then the Company will discuss alternative arrangements with the Other US Andes Shareholders to take account of their non-participation in the Interoil Demerger.

It should be noted that, although it is currently the Company's intention that the Interoil Demerger should be completed, the Company is entitled to terminate the Interoil Demerger Agreement at any time prior to the General Meeting. If the Interoil Demerger does not complete, the percentage interest of the Andes Shareholders (excluding the Mercuria Group) in the voting rights of the Company will be less than would have been the case if the ratio under the Share Purchase Agreement had been calculated on the basis that the Interoil Demerger had not occurred. If the Interoil Demerger is not approved, or if the Interoil Demerger does not proceed for any reason, no Interoil Shares will be transferred to the US Andes Shareholders.

In connection with the Interoil Demerger, the Directors recommend that Andes Shareholders (excluding the US Andes Shareholders) approve Resolution 4 at the General Meeting approving the Interoil Demerger arrangements including the transfer of 513,598 Interoil Shares by the Company to the US Andes Shareholders for nil consideration. If Resolution 4 is not approved at the General Meeting, then Andes will not proceed with the Interoil Demerger.

The Exchangeable GuernseyCo Shares and the Interoil Shares have not been and will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States and may not be offered or sold in or into the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offer of the Exchangeable GuernseyCo Shares in the United States. US Andes Shareholders and Other US Andes Shareholders will not receive Exchangeable GuernseyCo Shares. The Exchangeable GuernseyCo Shares and Interoil Shares have not been approved or disapproved by the US Securities Exchange Commission, any state securities commission in the United States or any US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the distribution of the Exchangeable GuernseyCo Shares or the Interoil Shares or the accuracy or adequacy of the Admission Document. Any representation to the contrary is a criminal offence in the United States.

Further details of the Interoil Demerger are set out in Part 5 of the Admission Document. Andes Shareholders should also read the risk factors under the heading "Risks relating to the Interoil Demerger" in Part 6 of the Admission Document and the tax implications for Andes Shareholders who are tax resident in the UK in paragraph 12.3 of Part 10 of the Admission Document.

   22.     RELATED PARTY TRANSACTION 

The Company has entered into the Transaction Fee Services Agreement with Integra and certain

of its subsidiaries have entered into the Services Agreement with Integra. Intergra is the parent company of Integra Capital USA LLC, which, together with the interests of José Luis Manzano and Vetalir International S.A. (established as a trust, the beneficiaries of which are the family of José Luis Manzano), is interested in 104,289,545 Ordinary Shares, representing approximately 17.2 per cent. of the Existing Share Capital.

The Transaction Fee Services Agreement relates to M&A advisory services provided to the Company by Integra in relation to the Transaction. Under the terms of this agreement, Integra has assisted with sourcing the proposed Transaction and negotiating its terms. In consideration for these services, Integra will receive:

-- a cash payment of GBP4,164,440 to be made in three equal instalments on the fifth day after Completion, 31 October 2017 and 31 January 2018; and

-- a cash payment of GBP4,164,440 to be paid six months following Admission. The Company has the option to either settle this in cash or apply this amount in satisfaction for the issue of new Ordinary Shares at an issue price of the lower of (i) the volume weighted average share price per Ordinary Share for the period of 90 days after Admission and (ii) 68 pence, subject to a floor price of 33.5 pence per share.

The Services Agreement relates to ongoing services to be provided by Integra to Andes Energia Argentina S.A., Kilwer and Ketsal. Under the terms of this agreement, Integra will advise on various matters relating to the Enlarged Group's business, including analysing business opportunities, developing business strategies and improving financial performance and receive a monthly fee of US$15,000.

Further details of the Transaction Fee Services Agreement and Services Agreement are set out in paragraphs 13.1(i) and 13.1(j) in Part 10 of the Admission Document.

The entry into the Transaction Fee Services Agreement and the Services Agreement are considered to constitute related party transactions for the purpose of Rule 13 of the AIM Rules for Companies.

The Independent Directors consider, having consulted with Stockdale, that the terms of the Transaction Fee Services Agreement and the Services Agreement are fair and reasonable insofar as Andes Shareholders are concerned.

   23.     INDEPENT DIRECTORS' VIEW ON THE VALUE OF THE ORDINARY SHARES 

After taking independent advice, the Independent Directors have estimated that the value of the Ordinary Shares (excluding the value of the Interoil Shares and not taking into account the number of the Share Exchange Shares to be issued) is equal to 33.5 pence per Ordinary Share.

The Consideration Shares will represent 75.38 per cent. of the Enlarged Share Capital.

The respective contributions of the Andes Group and the THBV Group, to the Enlarged Group are set out in the table below:

 
 Percentage contribution    Andes Group (%)   THBV Group 
                                               (%) 
 2016 EBITDA                18                82 
 2016 Production            22                78 
 2P Reserves                26                74 
 
   24.     RISK FACTORS 

Prior to making an investment decision in relation to the Ordinary Shares, Andes Shareholders and prospective investors should read the whole of the Admission Document and in particular carefully consider the section entitled "Risk Factors" in Part 6 of the Admission Document.

   25.     TAXATION 

The attention of Andes Shareholders is drawn to the further information regarding taxation set out in paragraph 12 of Part 10 of the Admission Document. These details are, however, intended only as a general guide to the current tax position under UK taxation law and if Andes Shareholders and prospective investors are in any doubt as to their tax position, they should seek independent advice.

   26.     FURTHER INFORMATION 

Andes Shareholders should read the whole of the Admission Document, which provides additional information on the Enlarged Group, the Concert Party, the Interoil Demerger and the Proposals, and should not rely on summaries of, or individual parts only of, the Admission Document. Your attention is drawn, in particular, to Parts 2 to 11 of the Admission Document.

   27.     ADMISSION, SETTLEMENT, DEALINGS AND CREST 

Application will be made for the Enlarged Share Capital to be admitted to trading on AIM, conditional on Completion. If the Resolutions are passed at the General Meeting, it is expected that Admission will become effective and dealings in the Enlarged Share Capital will commence on 10 August 2017. These dates and times may change.

CREST is a paperless settlement system enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by written instrument in accordance with the CREST Regulations. The Ordinary Shares are already admitted to CREST and will continue to be so following Admission. Accordingly, settlement of transactions in Ordinary Shares held in uncertificated form following Admission will take place within the CREST system.

CREST is a voluntary system and holders of Ordinary Shares who wish to receive and retain share

certificates will be able to do so.

   28.     GENERAL MEETING 

Set out at the end of the Admission Document is a notice convening a General Meeting to be held at the offices of CMS Cameron McKenna Nabarro Olswang LLP, at Cannon Place, 78 Cannon Street, London EC4N 6AF at 10.00 a.m. on 9 August 2017 at which the following Resolutions will be proposed:

-- Resolution 1 (the Waiver Resolution): an ordinary resolution to approve the Waiver. The Waiver Resolution must be approved by the Independent Shareholders by way of a poll.

-- Resolution 2 (a Transaction Resolution): subject to the passing of Resolutions 1 and 3, an ordinary resolution to:

   a)   approve the Transaction for the purposes of Rule 14 of the AIM Rules for Companies; 

b) authorise the Directors to allot the Consideration Shares, the Deferred Consideration Shares, the Integra Shares, the Mercuria Warrants and the Settled Claim Shares to the extent necessary;

c) authorise the Directors to allot further Ordinary Shares following Admission, representing up to approximately one-third of the Enlarged Share Capital plus an additional one-third to be used in relation to a rights issue;

   d)   approve the rules of the DBP; and 

e) authorise any steps which may be taken from time to time by the directors of the Company (acting reasonably and subject to relevant statutory directors' duties) in relation to the Company enforcing its rights under the Relationship Agreement.

-- Resolution 3 (a Transaction Resolution): subject to the passing of Resolutions 1 and 2, a special resolution to:

a) dis-apply statutory pre-emption rights in relation to the allotment of (i) the Integra Shares and (ii) further Ordinary Shares, representing approximately 20 per cent. of the Enlarged Share Capital;

   b)   change the name of the Company to Phoenix Global Resources plc; and 

c) amend the Company's articles by (i) amending article 88 of the Articles to increase the limit on directors' fees from GBP100,000 to GBP750,000 per annum; and (ii) deleting article 165 of the Articles which relates to provisions on the City Code.

-- Resolution 4 (the Interoil Demerger Resolution): subject to the passing of Resolutions 1, 2 and 3, a special resolution to approve:

a) the reduction of the share premium account of the Company by GBP60,000,000 and a distribution in specie on the Ordinary Shares, equal to the aggregate book value of the Interoil Shares to be demerged, such distribution to be satisfied by the transfer of the Interoil Shares to GuernseyCo in consideration for the issue of one Exchangeable GuernseyCo Share for every one Ordinary Share held to the Andes Shareholders (excluding the US Andes Shareholders) recorded on the Andes Share Register at the Interoil Demerger Record Time;

b) the transfer of 513,598 Interoil Shares by the Company to the US Andes Shareholders for nil consideration; and

-- Resolution 5: subject to the passing of Resolutions 1, 2 and 3 and Admission, an ordinary resolution to approve the rules of the LTIP.

If any of Resolutions 1, 2 and 3 are not passed, the Transaction will not proceed and the Enlarged Group will not be formed. If Resolution 4 is not passed the Interoil Demerger will not proceed and Resolution 4 is conditional on Resolutions 1, 2 and 3 being passed.

To be passed:

-- the Waiver Resolution requires a simple majority of Independent Shareholders voting in person or by proxy to vote in favour by way of a poll;

-- Resolution 2 requires a simple majority of Andes Shareholders voting in person or by proxy to vote in favour;

-- Resolution 3 requires a majority of not less than 75 per cent. of Andes Shareholders voting in person or by proxy to vote in favour;

-- the Interoil Demerger Resolution requires a majority of not less than 75 per cent. of Andes Shareholders (excluding the US Andes Shareholders) voting in person or by proxy in favour; and

-- Resolution 5 requires a simple majority of Andes Shareholders voting in person or by proxy to vote in favour.

29. IRREVOCABLE UNDERTAKING TO VOTE IN FAVOUR OF THE RESOLUTIONS (OTHER THAN THE WAIVER RESOLUTION)

Mercuria EAM has given an irrevocable undertaking to the Company to vote in favour of the Resolutions (other than the Waiver Resolution) (or, where relevant, to procure that such action is taken by the relevant registered holders of its existing Ordinary Shares) in respect of its holding totalling, in aggregate, 49,421,639 Existing Ordinary Shares, representing approximately 8.16 per cent. of the Existing Share Capital.

   30.     ACTION TO BE TAKEN BY ANDES SHAREHOLDERS 

Andes Shareholders will find enclosed with the Admission Document a Form of Proxy to enable them to vote at the General Meeting. Whether or not Andes Shareholders intend to be present at the General Meeting, they are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon to Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR so as to arrive no later than 10.00 a.m. on 7 August 2017.

Completion and return of the Form of Proxy will not affect Andes Shareholders' rights to attend and vote at the meeting, if they so wish.

Following the publication of the Admission Document, the Company will notify Andes Shareholders resident in Argentina of the procedure to participate at the General Meeting through notices to be published on the Argentine Securities Commission website and on the Buenos Aires Stock Exchange Bulletin.

If you are in any doubt as to the action you should take, you are recommended to seek your own personal financial advice immediately from your own stockbroker, bank manager, solicitor, accountant, fund manager or other independent financial adviser authorised under FSMA if you are in the United Kingdom, or, if you are not, from another appropriately authorised independent financial adviser.

   31.     RECOMMATION 

The Independent Directors and Nicolas Mallo Huergo, who have been so advised by Stockdale, consider the Waiver to be fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In providing this financial advice to the Independent Directors and Nicolas Mallo Huergo, Stockdale has relied upon the commercial assessment of the Directors (other than Matthieu Milandri).

The Independent Directors, who have been so advised by Stockdale, consider the Transaction to be fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In providing this financial advice to the Independent Directors, Stockdale has relied upon the commercial assessment of the Directors (other than Matthieu Milandri).

Accordingly, the Independent Directors and Nicolas Mallo Huergo recommend that Independent Shareholders vote in favour of the Waiver Resolution and the Independent Directors recommend that all Andes Shareholders vote in favour of the Transaction Resolutions.

Matthieu Milandri has not taken part in the consideration of the Waiver Resolution by the Independent Directors and Nicolas Mallo Huergo. Both Matthieu Milandri and Nicolas Mallo Huergo have not taken part in the consideration of the Transaction Resolutions by the Independent Directors. This is because (i) Matthieu is an employee of Mercuria Energy Trading which is a subsidiary of Mercuria EG, which is a member of the Concert Party, and (ii) Nicolas is a director of Integra, which is the beneficiary of the fee payable under the Transaction Fee Services Agreement.

In addition, all Directors recommend that all Andes Shareholders vote in favour of the Interoil Demerger Resolution (other than the US Andes Shareholders) and Resolution 5 (approval of the LTIP).

The Independent Directors who own Ordinary Shares intend to vote in favour of the each of the Resolutions to be proposed at the General Meeting in respect of their own beneficial holdings, comprising 3,560,324 Ordinary Shares in aggregate, representing approximately 0.59 per cent. of the Existing Share Capital.

In addition, Nicolas Mallo Huergo intends to vote in favour of each of the Resolutions (other than the Waiver Resolution) in respect of his beneficial holding, comprising 863,323 Ordinary Shares, representing approximately 0.14 per cent. of the Existing Share Capital.

Yours faithfully,

Sir Michael Rake

Non-Executive Director

(1) Source: Argentine Ministry of Energy and Mines

(2) All production figures in this paragraph are sourced from the Argentine Ministry of Energy and Mines

In accordance with Schedule Four (g) of the AIM Rules, below is an extract from the Admission Document setting out details of the service contracts of the Proposed Directors:

Proposed Directors

Details of titles and dates of appointment of the Proposed Directors are set out below:

 
 Name                  Title/function    Date of appointment 
--------------------  ----------------  -------------------- 
 Anuj Sharma           Chief Executive   Admission 
                        Officer 
--------------------  ----------------  -------------------- 
 Philip Wolfe          Chief Financial   Admission 
                        Officer 
--------------------  ----------------  -------------------- 
 Guillaume Vermersch   Non-Executive     Admission 
                        Director 
--------------------  ----------------  -------------------- 
 Garrett Soden         Non-Executive     Admission 
                        Director 
--------------------  ----------------  -------------------- 
 John Bentley          Non-Executive     Admission 
                        Director 
--------------------  ----------------  -------------------- 
 

The Proposed Directors have entered into the following service agreements and appointment letters with the Company, conditional on Admission:

(a) On 24 July 2017, Anuj Sharma entered into a service agreement with the Company, conditional on Admission. Mr Sharma is entitled to a base salary of US$620,000, which is subject to annual review plus a payment of another further 10 per cent. of Mr Sharma's base salary into a 401(k) scheme for Mr Sharma (or a payment of cash in lieu). The agreement is conditional on Admission. The agreement is terminable on not less than twelve months' prior written notice, save in the event the Company serves an immediate termination notice, in specified circumstances of constructive dismissal, where Mr Sharma can terminate the employment with immediate effect and receive pay in lieu of base salary for this twelve month notice period. Save with the consent of the Company, Mr Sharma is during the continuance of his employment, prohibited from being employed, engaged by, or holding an office with, any other business (although the Board shall not unreasonably withhold its consent to a non-executive, non-competitive director appointment from 1 January 2019). In addition, Mr Sharma is eligible to participate in any discretionary bonus scheme or long term incentive arrangements operated by the Company for senior executives. The agreement further permits Mr Sharma to participate in all employee benefit plans put in place or operated for the benefit of employees in the United States and that the Company shall put in place as soon as reasonably practicable after Admission, medical and dental insurance for the Executive and his dependent family. He is entitled to 25 days' annual vacation leave, plus public holidays. The agreement also contains: (i) six month post termination restrictive covenants against competing with the Company in the defined restricted areas and (ii) 12 month post termination restrictive covenant against soliciting key employees and/or customers or clients. Mr Sharma will be based in Houston, Texas.

(b) On 24 July 2017, Philip Wolfe entered into a service agreement with the Company, conditional on Admission. Mr Wolfe is entitled to a base salary of GBP300,000, which is subject to annual review plus an allowance of 10 per cent. of base salary in lieu of pension. Mr Wolfe is entitled to a one off sign-on bonus of GBP40,000 on Admission in recognition of the support and significant time commitment he has provided without remuneration in the lead-up to Admission. The agreement is conditional on Admission. The agreement is terminable on not less than twelve months' prior written notice, save in the event the Company serves an immediate termination notice in specified circumstances. The agreement contains provisions entitling the Company to pay Mr Wolfe in lieu of some or all his notice period on termination to the value of his basic salary at the time of termination. Save with the consent of the Company, Mr Wolfe is during the continuance of his employment, prohibited from being employed or engaged by or holding any office with, any other business (although the Board shall not unreasonably withhold its consent to a non-competitive, non-executive appointment from 1 January 2019). In addition, Mr Wolfe is eligible to participate in any discretionary bonus scheme or long term incentive arrangements operated by the Company for senior executives. Mr Wolfe is also entitled to participate in any private medical insurance, life assurance, permanent health insurance schemes operated by the Company from time to time in the United Kingdom (or for payment of the equivalent amount of the cost of providing the life assurance scheme in respect of Mr Wolfe to Mr Wolfe's private life assurance scheme provider). He is entitled to 25 days' annual leave, plus public holidays. The agreement also contains: (i) 6 month post termination restrictive covenants against competing with the Company and against soliciting key employees and/or customers or clients in defined restricted areas. Mr Wolfe will be based in London, England.

(c) On 24 July 2017, Guillaume Vermersch, Garrett Soden and John Bentley, each entered into a letter of appointment with the Company, conditional on Admission. Each of them is entitled to an annual fee of GBP50,000. Garrett Soden and John Bentley are each entitled an additional fee of GBP10,000 per year for chairing the Audit and Risk Committee and Remuneration Committee respectively. Each non-executive director is expected to attend a minimum of eight board meetings per year, and devote at least four full days per month to the Company. Each letter is terminable on one months' prior written notice (and the appointment shall terminate forthwith if the director is removed from office pursuant to the Articles or law, or is not re-elected (with letters requiring the Director to stand for annual re-election). There are restrictions on the engagement with, or having any financial interests in any company that operates in competition (directly or indirectly) with the business of the Company, without prior written approval (although the Directors are not prevented from holding not more than 5 per cent. Of shares in a listed company which does not carry on a business similar to or competitive with any business of the Company). The letters anticipate a minimum of eight board meetings per year and a time commitment of at least four full days per month. The role and duty of each non-executive director is in line with Part 10 of the Companies Act.

Going forward, the Proposed Directors intend to have their appointments approved annually at the Company's annual general meeting.

All the Proposed Directors since a short period prior to the publication of this document have been covered by the Company's directors' and officers' liability insurance from the date of their appointment and which will also cover preparatory work in advance of Admission and are entitled to be reimbursed for reasonable expenses incurred in carrying out their duties.

All Proposed Directors must also comply with the requirements relating to conflicts of interests in the Companies Act and other applicable rules.

GLOSSARY OF TECHNICAL TERMS

The following definitions apply throughout this document unless the context requires otherwise:

 
 "2P reserves"         proven and probable reserves 
--------------------  ------------------------------- 
 "2C resources"        contingent resources 
                        with best estimate scenario 
--------------------  ------------------------------- 
 "3C resources"        contingent resources 
                        with high estimate scenario 
--------------------  ------------------------------- 
 "bbls"                barrels 
--------------------  ------------------------------- 
 "bbls/day" or "bpd"   barrels of oil per day 
--------------------  ------------------------------- 
 "boe"                 barrel of oil equivalent 
--------------------  ------------------------------- 
 "boepd"               barrels of oil equivalent 
                        per day 
--------------------  ------------------------------- 
 "MMbtu" or "MMBTU"    million British thermal 
                        units 
--------------------  ------------------------------- 
 "Net Entitlement"     the production that the 
                        contractor or concession 
                        holder is entitled to 
                        physically receive. In 
                        a concession, this equates 
                        to concessionaire's working 
                        interest production excluding 
                        any royalty payments 
--------------------  ------------------------------- 
 

DEFINITIONS

The following definitions apply throughout this document unless the context requires otherwise:

 
 "2016 Annual               the annual report and accounts 
  Report"                    of the Andes Group for the financial 
                             year ended 31 December 2016 
-------------------------  --------------------------------------------- 
 "2015 Annual               the annual report and accounts 
  Report"                    of the Andes Group for the financial 
                             year ended 31 December 2015 
-------------------------  --------------------------------------------- 
 "2014 Annual               the annual report and accounts 
  Report"                    of the Andes Group for the financial 
                             year ended 31 December 2014 
-------------------------  --------------------------------------------- 
 "acting in concert"        has the meaning given to it in 
                             the City Code 
-------------------------  --------------------------------------------- 
 "Admission"                admission of the Enlarged Share 
                             Capital of the Company to trading 
                             on AIM becoming effective in accordance 
                             with the AIM Rules 
-------------------------  --------------------------------------------- 
 "AIM"                      AIM, a market of the London Stock 
                             Exchange 
-------------------------  --------------------------------------------- 
 "AIM Rules"                the AIM Rules for Companies and 
                             the AIM Rules for Nominated Advisers, 
                             as applicable 
-------------------------  --------------------------------------------- 
 "AIM Rules for             the rules for AIM companies published 
  Companies"                 by the London Stock Exchange, 
                             as amended or re-issued from time 
                             to time 
-------------------------  --------------------------------------------- 
 "Andes Group"              the Company and its subsidiaries 
                             as at the date of the Admission 
                             Document 
-------------------------  --------------------------------------------- 
 Andes Interoil             Andes Interoil Limited, a wholly-owned 
                             subsidiary of Andes, being a company 
                             incorporated in England and Wales 
                             with registered number 09659955 
-------------------------  --------------------------------------------- 
 "Andes Shareholders"       holders of the Ordinary Shares 
                             in issue immediately prior to 
                             Admission 
-------------------------  --------------------------------------------- 
 "Articles"                 the articles of association of 
                             the Company, a summary of certain 
                             provisions of which is set out 
                             in paragraph 6 of Part 10 of the 
                             Admission Document 
-------------------------  --------------------------------------------- 
 "Board"                    the board of directors of the 
                             Company as constituted from time 
                             to time 
-------------------------  --------------------------------------------- 
 "Bridging and              the bridging and working capital 
  Working Capital            facilities agreement dated 24 
  Facilities Agreement"      July 2017 entered into between 
                             the Company and Mercuria Energy 
                             Trading, further details of which 
                             are set out in paragraph 13.1(g) 
                             of Part 10 of the Admission Document 
-------------------------  --------------------------------------------- 
 "Business Day"             a day (other than Saturday or 
                             Sunday) on which banks are generally 
                             open for business in London 
-------------------------  --------------------------------------------- 
 "Canacol"                  Canacol Energy Ltd, a company 
                             incorporated in Bolivia with registered 
                             number 2011382880 
-------------------------  --------------------------------------------- 
 "certificated"             the description of a share or 
  or "in certificated        other security which is not in 
  form"                      uncertificated form (that is, 
                             not in CREST) 
-------------------------  --------------------------------------------- 
 "City Code"                the City Code on Takeovers and 
                             Mergers in the United Kingdom 
-------------------------  --------------------------------------------- 
 "Closing Price"            the middle market price of an 
                             Ordinary Share at the close of 
                             business on the day to which such 
                             price relates, as derived from 
                             the AIM Appendix of the Daily 
                             Official List of the London Stock 
                             Exchange for that day 
-------------------------  --------------------------------------------- 
 "Companies Act"            the Companies Act 2006, as amended 
  or "Act" 
-------------------------  --------------------------------------------- 
 "Company" or               Andes Energia plc, a company incorporated 
  "Andes"                    in England and Wales with registration 
                             number 05083946 
-------------------------  --------------------------------------------- 
 "Completion"               completion of the Transaction 
-------------------------  --------------------------------------------- 
 "Concert Party"            the Mercuria Group (including 
                             Upstream Capital) and the shareholders 
                             of Mercuria EGH. Further details 
                             of which are set out in paragraph 
                             2 of Part 9 of the Admission Document 
-------------------------  --------------------------------------------- 
 "Consideration             the 1,899,106,385 Ordinary Shares 
  Shares"                    to be issued to Upstream Capital 
                             on Completion 
-------------------------  --------------------------------------------- 
 "Convertible               the convertible loan agreement 
  Loan Agreement"            dated 31 May 2013 between the 
                             Company and Mercuria EAM, as more 
                             particularly described in paragraph 
                             13.1(r) of Part 10 of the Admission 
                             Document 
-------------------------  --------------------------------------------- 
 "Corporate Governance      the UK Corporate Governance Code, 
  Code"                      published by the Financial Reporting 
                             Council 
-------------------------  --------------------------------------------- 
 "CREST"                    the computerised settlement system, 
                             facilitating the paperless settlement 
                             of trades and the holding of uncertificated 
                             shares administered by Euroclear 
                             UK & Ireland Limited, the operator 
                             of CREST 
-------------------------  --------------------------------------------- 
 "CREST Regulations"        the Uncertificated Securities 
                             Regulations 2001 of the UK (SI 
                             2001/3755) 
-------------------------  --------------------------------------------- 
 "Court"                    the High Court of Justice of England 
                             and Wales 
-------------------------  --------------------------------------------- 
 "DBP"                      the Andes Energia Deferred Bonus 
                             Plan details of which are set 
                             out in paragraph 10.3 of Part 
                             10 of the Admission Document 
-------------------------  --------------------------------------------- 
 "Deferred Consideration    the new Ordinary Shares to be 
  Shares"                    issued to Upstream Capital under 
                             the terms of the Share Purchase 
                             Agreement in the event that the 
                             Integra Shares are issued, as 
                             more particularly described in 
                             paragraph 13.1(i) of Part 10 of 
                             the Admission Document 
-------------------------  --------------------------------------------- 
 "Directors"                the current directors of the Company, 
                             whose names are set out on page 
                             5 of the Admission Document 
-------------------------  --------------------------------------------- 
 "E&P"                      exploration and production 
-------------------------  --------------------------------------------- 
 "EBITDA"                   earnings before interest, tax 
                             depreciation and amortisation 
-------------------------  --------------------------------------------- 
 "Enlarged Group"           Andes and its subsidiaries following 
                             Completion 
-------------------------  --------------------------------------------- 
 "Enlarged Group            the Board as it will be constituted 
  Board"                     on Completion 
-------------------------  --------------------------------------------- 
 "Enlarged Share            the enlarged share capital of 
  Capital"                   the Company upon Admission, comprising 

                             the Existing Ordinary Shares, 
                             the Consideration Shares and the 
                             Share Exchange Shares 
-------------------------  --------------------------------------------- 
 "EU"                       European Union 
-------------------------  --------------------------------------------- 
 "Exchangeable              a holder of the Exchangeable GuernseyCo 
  GuernseyCo Shareholder"    Shares 
-------------------------  --------------------------------------------- 
 "Exchangeable              exchangeable redeemable shares 
  GuernseyCo Shares"         of no par value in the share capital 
                             of GuernseyCo 
-------------------------  --------------------------------------------- 
 "Existing Ordinary         the Ordinary Shares in issue as 
  Shares"                    at the date of the Admission Document 
-------------------------  --------------------------------------------- 
 "Existing Share            the issued share capital as at 
  Capital"                   the date of the Admission Document 
-------------------------  --------------------------------------------- 
 "Existing Warrants"        the existing warrants over Ordinary 
                             Shares granted under the Existing 
                             Warrant Instruments 
-------------------------  --------------------------------------------- 
 "FCA"                      the United Kingdom Financial Conduct 
                             Authority 
-------------------------  --------------------------------------------- 
 "Form of Proxy"            the form of proxy to be used at 
                             the General Meeting and enclosed 
                             with the Admission Document 
-------------------------  --------------------------------------------- 
 "FSMA"                     the UK Financial Services and 
                             Markets Act 2000 (as amended) 
                             including any regulations made 
                             pursuant thereto 
-------------------------  --------------------------------------------- 
 "General Meeting"          the general meeting of the Company 
                             to be held on 9 August 2017 (and 
                             any adjournment thereof) for the 
                             purposes of considering the Resolutions, 
                             notice of which is set out at 
                             the end of the Admission Document 
-------------------------  --------------------------------------------- 
 "GLACCO"                   GLACCO Compania Petrolera S.A., 
                             a company incorporated in Argentina 
                             with registered number 9418, Book 
                             98 of National Stock Corporations' 
                             Bylaws, dated 30 December 1982 
-------------------------  --------------------------------------------- 
 "GuernseyCo"               IOX Investments Limited, a company 
                             incorporated in Guernsey with 
                             registered number 63781 
-------------------------  --------------------------------------------- 
 "IFRS"                     International Financial Reporting 
                             Standards 
-------------------------  --------------------------------------------- 
 "Independent               the Directors, other than Matthieu 
  Directors" or              Milandri and Nicolas Mallo Huergo 
  "Independent 
  Board" 
-------------------------  --------------------------------------------- 
 "Independent               the non-executive directors of 
  Non-Executive              the Company who are deemed independent 
  Directors"                 for the purposes of the Corporate 
                             Governance Code 
-------------------------  --------------------------------------------- 
 "Independent               the Andes Shareholders save for 
  Shareholders"              Mercuria EAM and the Integra Shareholders 
-------------------------  --------------------------------------------- 
 "Integra"                  Integra Capital S.A., a company 
                             incorporated in Argentina with 
                             registered number 15071 and registered 
                             office at Maipu1252, Piso 2, Buenos 
                             Aires, CP1006 
-------------------------  --------------------------------------------- 
 "Integra Shareholders"     (i) José Luis Manzano, (ii) 
                             Nicolas Mallo Huergo, being a 
                             director of Integra, (iii) Integra 
                             Capital USA LLC being a subsidiary 
                             of Integra and (iv) Vetalir International 
                             S.A., being a family trust of 
                             Jose Luis Manzano of which he 
                             is not a beneficiary, all being 
                             Andes Shareholders who are connected 
                             to Integra, the beneficiary of 
                             the fee payable under the Transaction 
                             Fee Services Agreement 
-------------------------  --------------------------------------------- 
 "Integra Shares"           the new Ordinary Shares to be 
                             issued at the Company's election 
                             to Integra pursuant to and subject 
                             to the terms of the Transaction 
                             Fee Services Agreement, comprising 
                             a minimum of 7,410,254 and a maximum 
                             amount of 5,041,709 Ordinary Shares 
-------------------------  --------------------------------------------- 
 "Interoil"                 Interoil Exploration and Production 
                             ASA, a company incorporated in 
                             Norway with registered number 
                             988247006 
-------------------------  --------------------------------------------- 
 "Interoil Demerger"         the proposed demerger of the 
                              Interoil Shares from the Andes 
                              Group to be effected by way of 
                              the Reduction of Capital and an 
                              indirect distribution in specie 
                              on the terms and subject to the 
                              conditions set out in the Interoil 
                              Demerger Agreement as described 
                              in the Admission Document 
-------------------------  --------------------------------------------- 
 "Interoil Demerger         the agreement relating to the 
  Agreement"                 Interoil Demerger entered into 
                             between the Company and GuernseyCo 
                             on 24 July 2017, as more particularly 
                             described in paragraph 13.1(h) 
                             of Part 10 of the Admission Document 
-------------------------  --------------------------------------------- 
 "Interoil Demerger         the special resolution numbered 
  Resolution"                4 set out in the Notice of General 
                             Meeting 
-------------------------  --------------------------------------------- 
 "Interoil Shares"          (i) prior to the Interoil Demerger 
                             Effective Time, all of the 
                             ordinary shares in the capital 
                             of Interoil held by Andes Interoil 
                             or Andes; and (ii) following the 
                             Interoil Demerger Effective Time, 
                             the ordinary shares in the capital 
                             of Interoil held by GuernseyCo 
-------------------------  --------------------------------------------- 
 "Ketsal"                   Ketsal S.A., a company incorporated 
                             in Argentina with resolution No 
                             1107, dated 4 July 2005 
-------------------------  --------------------------------------------- 
 "Kilwer"                   Kilwer S.A., a company incorporated 
                             in Argentina with Number 10005, 
                             Book 110, Volume "A" of Stock 
                             Corporations, dated 26 November 
                             1991 
-------------------------  --------------------------------------------- 
 "Latest Practicable        20 July 2017, being the latest 
  Date"                      practicable date prior to the 
                             publication of the Admission Document 
-------------------------  --------------------------------------------- 
 "London Stock              London Stock Exchange plc 
  Exchange" 
-------------------------  --------------------------------------------- 
 "LTIP"                     the Andes Energia Long Term Incentive 
                             Plan, details of which are set 
                             out in paragraph 10.2 of Part 
                             10 of the Admission Document or 
                             following the Interoil Demerger 
                             Effective Time, all of the ordinary 
                             shares in the capital of Interoil 
                             held by GuernseyCo or an Andes 
                             Shareholder 
-------------------------  --------------------------------------------- 
 "Mercuria EAM"             Mercuria Energy Asset Management 
                             B.V., a company registered in 
                             the Netherlands with registration 
                             number 30240949 and holder of 
                             49,421,639 Existing Ordinary Shares 
                             at the date of the Admission Document 

-------------------------  --------------------------------------------- 
 "Mercuria EG"              Mercuria Energy Group Limited, 
                             a company registered in Cyprus 
                             with registration number HE253486 
-------------------------  --------------------------------------------- 
 "Mercuria EGH"             Mercuria Energy Group Holding 
                             Limited, a company registered 
                             in the British Virgin Islands 
                             with registration number 1890203 
                             which holds a 79.8 per cent. Economic 
                             interest and 100 per cent. of 
                             the voting rights in Mercuria 
                             EG 
-------------------------  --------------------------------------------- 
 "Mercuria ESOP"            the Mercuria Employee Stock Ownership 
                             Programme 
-------------------------  --------------------------------------------- 
 "Mercuria Energy           Mercuria Energy Trading S.A., 
  Trading"                   a company registered in Switzerland 
                             with registration number CHE-111.729.324 
                             and a subsidiary of Mercuria EG 
-------------------------  --------------------------------------------- 
 "Mercuria Existing         (i) the existing warrants to subscribe 
  Warrants"                  for 4,000,000 Ordinary Shares 
                             held by Mercuria Asset Holdings 
                             (Hong Kong) Limited, (ii) the 
                             existing warrants to subscribe 
                             for 3,000,000 Ordinary Shares 
                             held by Mercuria Holdings (Cyprus) 
                             Limited and (iii) the existing 
                             warrants to subscribe for 1,463,325 
                             Ordinary Shares held by Mercuria 
                             EAM, as more particularly described 
                             in paragraph 2.6 of Part 9 of 
                             the Admission Document 
-------------------------  --------------------------------------------- 
 "Mercuria Group"           Mercuria EG and its subsidiaries, 
  or "Mercuria"              including, among others, Mercuria 
                             EAM, Mercuria Energy Trading, 
                             Upstream Capital but excluding 
                             the THBV Group (pre-Admission) 
                             and excluding the Enlarged Group 
                             (following Admission) 
-------------------------  --------------------------------------------- 
 "Mercuria Warrants"        the warrants to be issued at Completion 
                             pursuant to the Mercuria Warrant 
                             Instrument entitling the holder 
                             to subscribe for up to 179,838,924 
                             Ordinary Shares pursuant to the 
                             Mercuria Warrant Instrument 
-------------------------  --------------------------------------------- 
 "Mercuria Warrant          the warrant instrument to be entered 
  Instrument"                into at Completion by the Company, 
                             further details of which are set 
                             out in paragraph 13.1(d) of Part 
                             10 of the Admission Document 
-------------------------  --------------------------------------------- 
 "Minority Shareholders"    Vetalir International S.A. (established 
                             as a trust, the beneficiaries 
                             of which are the family of José 
                             Luis Manzano), Portstart Business 
                             Corp, Prifen S.A. and Mirage Partners, 
                             Inc. 
-------------------------  --------------------------------------------- 
 "New Board"                the board of Directors of the 
                             Company on Admission 
-------------------------  --------------------------------------------- 
 "New Employee              the LTIP and the DBP 
  Share Plans" 
-------------------------  --------------------------------------------- 
 "Nominated Adviser"        Stockdale Securities Limited, 
  or "Stockdale"             the Company's nominated adviser 
                             and broker 
-------------------------  --------------------------------------------- 
 "Notice"                   the notice convening the General 
                             Meeting set out at the end of 
                             the Admission Document 
-------------------------  --------------------------------------------- 
 "Official List"            the Official List of the UK Listing 
                             Authority 
-------------------------  --------------------------------------------- 
 "Ordinary Shares"          Ordinary Shares in the share capital 
                             of the Company each with a par 
                             value of 10 pence 
-------------------------  --------------------------------------------- 
 "Other US Andes            Andes Shareholders with registered 
  Shareholders"              addresses in the United States 
                             or who are located or resident 
                             in the United States other than 
                             the US Andes Shareholders 
-------------------------  --------------------------------------------- 
 "Overseas Andes            Andes Shareholders who are not 
  Shareholders"              resident in the UK 
-------------------------  --------------------------------------------- 
 "Panmure"                  Panmure Gordon (UK) Limited, the 
                             Company's joint brokers 
-------------------------  --------------------------------------------- 
 "peso" or "AR$"            Argentine peso, the lawful currency 
                             of Argentina 
-------------------------  --------------------------------------------- 
 "PETSA"                    means Petrolera El Trébol 
                             S.A., a company registered in 
                             Argentina with company number 
                             8094, Book 50, Stock 
                             Corporations, dated 9 June 1999 
                             the registered office of 
                             which is Suipacha IIII, 18th Floor, 
                             Buenos Aires, Argentina 
-------------------------  --------------------------------------------- 
 "PETSA Reserves            the competent person report prepared 
  CPR"                       by Gaffney, Cline & Associates 
                             in respect of PETSA's conventional 
                             oil and gas reserves, as set out 
                             in Section A of Part 7 of the 
                             Admission Document 
-------------------------  --------------------------------------------- 
 "PETSA Resources           the competent person report prepared 
  CPR"                       by W.D. Von Gonten & 
                             Co. in respect of PETSA's unconventional 
                             oil and gas 
                             resources, as set out in Section 
                             B of Part 7 of the Admission Document 
-------------------------  --------------------------------------------- 
 "PETSA Group"              PETSA and its subsidiaries from 
                             time to time 
-------------------------  --------------------------------------------- 
 "Premium Listing"          an inclusion on the premium listing 
                             segment of the Official List 
                             of the FCA in relation to the 
                             Ordinary Shares 
-------------------------  --------------------------------------------- 
 "Proposals"                the proposals set out in the Admission 
                             Document, including the 
                             Transaction, the Reduction of 
                             Capital, the Interoil Demerger, 
                             the LTIP, the DBP, the amendments 
                             to the Articles, the 
                             change of the Company's name and 
                             Admission 
-------------------------  --------------------------------------------- 
 "Proposed Directors"       the proposed directors of the 
                             Company, who will be appointed 
                             to the Board of the Company with 
                             effect from Completion, 
                             namely, Anuj Sharma, Philip Wolfe, 
                             Guillaume Vermesch, 
                             Garrett Soden and John Bentley 
-------------------------  --------------------------------------------- 
 "Reduction of              the proposed reduction of the 
  Capital"                   Company's share premium 
                             account by GBP60 million, as described 
                             in the Admission Document 
-------------------------  --------------------------------------------- 
 "Registrar"                Share Registrars Limited 
-------------------------  --------------------------------------------- 
 "Regulatory                a service approved by the FCA 
  Information                for the distribution to the 
  Service"                   public of regulatory announcements 
                             and included within the 
                             list maintained on the FCA's website 
-------------------------  --------------------------------------------- 
 "Relationship              the relationship agreement dated 
  Agreement"                 24 July 2017 entered into between 
                             the Company, Upstream Capital, 
                             Mercuria EAM and Mercuria EG, 

                             further details of which are set 
                             out in paragraph 13.1(c) of Part 
                             10 of the Admission Document 
-------------------------  --------------------------------------------- 
 "Resolutions"              the resolutions set out in the 
                             Notice 
-------------------------  --------------------------------------------- 
 "Revolving Credit          the US$72,984,647 million revolving 
  Facility"                  credit facility being made available 
                             to the Company pursuant to the 
                             Bridging and Working Capital Facilities 
                             Agreement 
-------------------------  --------------------------------------------- 
 "Roch"                     Roch S.A. a company incorporated 
                             in Argentina with registered number 
                             2360, Book 107, Volume "A" of 
                             Stock Corporations, dated 26 April 
                             1990 
-------------------------  --------------------------------------------- 
 "Rule 9"                   Rule 9 of the City Code 
-------------------------  --------------------------------------------- 
 "Securities                the United States Securities Act 
  Act"                       of 1933, as amended, and the rules 
                             and regulations promulgated thereunder 
-------------------------  --------------------------------------------- 
 "Services Agreement"       the services agreement dated 24 
                             July 2017 entered into between 
                             Integra Capital S.A. and Andes 
                             Energia Argentina S.A., Kilwer 
                             and Ketsal., further details of 
                             which are set out in paragraph 
                             13.1(j) of Part 10 of the Admission 
                             Document 
-------------------------  --------------------------------------------- 
 "Settled Claim"            an amount determined to be owed 
                             by the Company to Upstream Capital 
                             in relation to a warranty or indemnity 
                             claim under the Share Purchase 
                             Agreement or a claim under the 
                             Tax Deed 
-------------------------  --------------------------------------------- 
 "Settled Claim             the Ordinary Shares to be issued 
  Shares"                    to Upstream Capital under the 
                             Share Purchase Agreement in respect 
                             of a Settled Claim (if applicable) 
-------------------------  --------------------------------------------- 
 "Share Exchange            the share exchange agreement dated 
  Agreement"                 31 May 2013 entered into between 
                             the Company and Mercuria EAM, 
                             as more particularly described 
                             in paragraph 13.1(p) of Part 10 
                             of the Admission Document 
-------------------------  --------------------------------------------- 
 "Share Exchange            the 14,766,666 new Ordinary Shares 
  Shares"                    to be allotted and issued to Mercuria 
                             EAM pursuant to the Share Exchange 
                             Termination Agreement 
-------------------------  --------------------------------------------- 
 "Share Exchange            the share exchange termination 
  Termination                agreement dated 24 July 2017 entered 
  Agreement"                 into between the Company and Mercuria 
                             EAM, as more particularly described 
                             in paragraph 13.1(e) of Part 10 
                             of the Admission Document 
-------------------------  --------------------------------------------- 
 "Share Purchase            the agreement dated 24 July 2017 
  Agreement"                 between the Company, Upstream 
                             Capital and Mercuria EG in relation 
                             to the Transaction, further details 
                             of which are set out in paragraph 
                             13.1(a) of Part 10 of the Admission 
                             Document 
-------------------------  --------------------------------------------- 
 "Takeover Panel"           the UK Panel on Takeovers and 
  or "Panel"                 Mergers 
-------------------------  --------------------------------------------- 
 "Tax Deed"                 the tax deed dated 24 July between 
                             the Company, Upstream Capital 
                             and Mercuria EG in connection 
                             with the Sale and Purchase Agreement, 
                             further details of which are set 
                             out in paragraph 13.1(b) of Part 
                             10 of this Document 
-------------------------  --------------------------------------------- 
 "Term Loan"                means the US$87,015,353 million 
                             term loan being made available 
                             to the Company pursuant to the 
                             Bridging and Working Capital Facilities 
                             Agreement 
-------------------------  --------------------------------------------- 
 "Transaction"              the Company's proposed combination 
                             with Trefoil Holdings, further 
                             details of which are set out in 
                             paragraph 8 of Part 1 of this 
                             Document 
-------------------------  --------------------------------------------- 
 "Transaction               the transaction fee services agreement 
  Fee Services               dated 24 July 2017 entered into 
  Agreement"                 between the Company and Integra, 
                             further details of which are set 
                             out in paragraph 13.1(i) of Part 
                             10 of this Document 
-------------------------  --------------------------------------------- 
 "Transaction               resolutions 2 and 3 to be proposed 
  Resolutions"               at the General Meeting as 
                             set out in the Notice of the General 
                             Meeting 
-------------------------  --------------------------------------------- 
 "Trefoil Holdings          Trefoil Holdings and its subsidiaries 
  B.V. Group"                from time to time, including the 
  or "THBV Group"            PETSA Group 
-------------------------  --------------------------------------------- 
 "TrustCo"                  Gentoo Trustees Limited, a company 
                             incorporated in Guernsey with 
                             registered number 53535 
-------------------------  --------------------------------------------- 
 "UK Listing                the FCA acting in its capacity 
  Authority"                 as the competent authority for 
                             the purposes of Part VI of FSMA 
-------------------------  --------------------------------------------- 
 "uncertificated"           recorded on the relevant register 
  or                         of the share or security concerned 
  "uncertificated            as being held in uncertificated 
  form"                      form in CREST and title to which 
                             may be transferred by means of 
                             CREST 
-------------------------  --------------------------------------------- 
 "United Kingdom"           the United Kingdom of Great Britain 
  or "UK"                    and Northern Ireland 
-------------------------  --------------------------------------------- 
 "United States",           the United States of America, 
  "United                    its territories and possessions, 
  States of America"         any state of the United States 
  or "US"                    of America and the District of 
                             Columbia 
-------------------------  --------------------------------------------- 
 "Upstream Capital"         Upstream Capital Partners VI Limited, 
                             a company incorporated in the 
                             Netherlands with registration 
                             number HE253486, being a wholly-owned 
                             subsidiary of Mercuria EG 
-------------------------  --------------------------------------------- 
 "US Andes Shareholders"    Andes Shareholders at the Latest 
                             Practicable Date with registered 
                             addresses in the US who satisfy 
                             certain investor qualification 
                             requirements 
-------------------------  --------------------------------------------- 
 "US$" or "US               the US dollar, the lawful currency 
  dollar"                    from time to time of the 
                             United States 
-------------------------  --------------------------------------------- 
 "Voting Rights"            voting rights attaching to Ordinary 
                             Shares which are generally 
                             exercisable at meetings of shareholders 
                             of the Company 
-------------------------  --------------------------------------------- 
 "Waiver"                   the waiver by the Panel of obligations 
                             under Rule 9 of the City 
                             Code described in paragraph 10 
                             Part 1 of the Admission Document 
-------------------------  --------------------------------------------- 
 "Waiver Resolution"        the first resolution set out in 
                             the Notice 

-------------------------  --------------------------------------------- 
 "YPF"                      YPF S.A., a company incorporated 
                             in Argentina with registered number 
                             404, Book 108, Volume "A" of Stock 
                             Corporations, dated 5 February 
                             1991 
-------------------------  --------------------------------------------- 
 "GBP" or "Sterling"        pounds sterling, the lawful currency 
                             from time to time of the 
                             United Kingdom 
-------------------------  --------------------------------------------- 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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(END) Dow Jones Newswires

July 24, 2017 09:00 ET (13:00 GMT)