Dr. Ming Wang reports

PRIMELINE ENERGY ISSUES BONDS AND SHARES TO VICTOR HWANG

Primeline Energy Holdings Inc. has issued $11.3-million (U.S.) principal amount of bonds to Primeline International (Holdings) Inc. (PIHI), a company wholly owned by Victor Hwang, Primeline's president, chairman and majority shareholder; and, pursuant to payment of interest on the new bonds, the company will issue 294,619 new ordinary shares of Primeline to PIHI. As announced in Primeline's press release of Aug. 15, 2018, on Aug. 14, 2018. Mr. Hwang lent Primeline the sum of $11.3-million (U.S.) ($14,483,210 at the Bank of Canada's daily exchange rate for U.S. dollars of 1.2817 as of Oct. 2, 2018) in order to finance repayment by Primeline of $10-million (U.S.) principal amount of tranche A bonds issued to GRF Prime Ltd. in 2015, which matured on Aug. 14, 2018. The loan was to be secured by the issuance of bonds in the principal amount of $11.3-million (U.S.) having the same terms as the tranche A bonds with a deemed issue date of Aug. 14, 2018, subject to receipt of acceptance of the issuance of the new bonds from the TSX Venture Exchange.

TSX-V acceptance has been obtained, and Primeline issued the new bonds on Oct. 3, 2018, with a deemed issue date of Aug. 14, 2018. As noted in Primeline's Aug. 15, 2018, press release, the new bonds are for an initial term of one year, extendable for a further year at the option of the holder. Interest is payable on the new bonds quarterly on Sept. 15, Dec. 15, Mar. 15 and June 15 of each year of the term at 7 per cent per year, of which 4.5 per cent is payable in cash and 2.5 per cent in shares issued at a deemed price per share equal to the higher of: (i) the closing price of the shares on the TSX-V on the day before; and (ii) the volume-weighted average trading price of the shares on the TSX-V for; the 10 days preceding the interest payment date. On maturity, the new bonds must be redeemed for their principal amount together with a premium, which will result in the bondholder receiving interest equal to 10 per cent per year, less cash interest paid and 50 per cent of the lower of: (a) the aggregate of all share interest paid; and (b) the product of (A) the number of shares actually issued in satisfaction of share interest on or prior to the redemption date; and (B) the arithmetic mean of the volume-weighted average price for one share for the 10 consecutive trading days ending on the trading day immediately prior to the redemption date. The new bonds are convertible, at the option of the bondholder, at any time during the period commencing four months and a day following the date of issuance up to the date that is 10 days prior to the date of maturity of the new bonds, into shares at a conversion price of 70 cents per share.

The 294,619 shares will be issued to PIHI in payment of the Sept. 15, 2018, instalment of share interest at a deemed price of 10.2 cents per share, the volume-weighted average TSX-V trading price of the shares for the 10 days preceding the interest payment date. Prior to the issuance of the new bonds, Mr. Hwang had ownership, directly and indirectly through PIHI, and control of a total of 125,213,470 shares, or 64.02 per cent of the issued and outstanding shares. At the Bank of Canada rate for conversion of Canadian dollars to U.S. dollars of 1.2817 as of Oct. 2, 2018, 20,690,300 shares were issuable upon conversion of the new bonds and, assuming such conversion, and the issuance of the interest shares and of 1,521,536 shares as interest to GRF which are the subject of a separate press release, Mr. Hwang had ownership, directly and through PIHI, and control of 146,198,389 shares, or 67.04 per cent of the issued and outstanding shares, representing a change in Mr. Hwang's securityholding percentage in the shares of 3.02 per cent.

Mr. Hwang, through PIHI, will acquire beneficial ownership of further shares as share interest and may convert new bonds, or purchase or sell shares in the market, in the future depending on market conditions and other factors relevant to his investment decisions. Mr. Hwang has no plans or future intentions by himself or with any joint actors which relate to or would result in: a corporate transaction, such as a merger, reorganization or liquidation, involving Primeline or any of its subsidiaries; a sale or transfer of a material amount of Primeline's assets or those of any of its subsidiaries; a change in the board of directors or management of Primeline, including any plans to change the number or term of directors or fill any existing vacancy on the board; a material change in the present capitalization or dividend policy of Primeline; a material change in Primeline's business or corporate structure; a change in Primeline's articles or another action which might impede the acquisition of control of Primeline by any person or company; any class of Primeline's securities being delisted from the TSX-V; Primeline ceasing to be a reporting issuer in any jurisdiction of Canada; a solicitation of proxies from Primeline's securityholders; or any action similar to those enumerated herein.

A copy of Mr. Hwang's early warning report relating to the transactions described herein can be obtained from Robin Cook at FronTier Merchant Capital Group. Mr. Hwang's address is Hong Kong Parkview, 88 Tai Tam Reservoir Rd., Hong Kong.

About Primeline Energy Holdings Inc.

Primeline is an exploration and production company focusing exclusively on China's natural resources to become a major supplier of gas and oil to the East China market. Primeline has a 100-per-cent contractor interest in, and is the operator of, the petroleum contract with CNOOC for block 33/07 (5,877 square kilometres) and a 49-per-cent interest in the producing LS36-1 gas field in block 25/34, together with CNOOC (51-per-cent interest and acting as operator). Both blocks are located in the East China Sea. LS36-1 has been in production since July, 2014.

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