Mr. Ralph Gillcrist reports

PENTANOVA ENERGY PROVIDES AN UPDATE ON THE SINU-9 AND TIBURON ASSETS

Pentanova Energy Corp. has failed to close the SINU-9 (SN-9) farmout agreement with Panacol Oil & Gas, a wholly owned subsidiary of Latam Oil & Gas, by the agreed upon closing date. Extensions to the closing dates were given, but Panacol was unable to complete the financing commitments required as closing conditions of the agreement. As a consequence, the agreement has been terminated.

Under the terms of the agreement, the $2.4-million (U.S.) security placed by Panacol as guarantee in front of the ANH for the SN-9 licence commitments will remain in place until the commitments are deemed complete by the ANH. These commitments of a minimum of 127.75 square kilometres of 3-D seismic and one exploration well with a minimum spend of $22.4-million (U.S.) have to be completed by Dec. 22, 2020.

The company has offered to continue discussions with Panacol to negotiate an alternative agreement and also intends to initiate discussions with a number of other interested parties.

Additionally, the company received a letter from Clean Energy Resources SAS as party to the SN-9 purchase and sale agreement (SN-9 PSA) by which the company received its 80-per-cent economic beneficial interest in January, 2017, alleging that the company was in breach of certain obligations under the SN-9 PSA and that, as a consequence, the SN-9 PSA was immediately terminated. The company also received an identical letter from ColPan Oil & Gas Ltd. as counterparty to the Tiburon purchase and sale agreement by which the company received its 60-per-cent economic beneficial interest in February, 2017, alleging that the company was in breach of certain obligations under the Tiburon PSA and that, as a consequence, the Tiburon PSA was immediately terminated.

The company, in consultation with legal counsel, considers that the alleged breaches are without merit and that the unilateral termination by Clean Energy Resources and/or ColPan is not legally valid or enforceable. The company has requested that Clean Energy Resources and ColPan retract these letters, and has advised of the consequences of failure to do so (but without success). The company will take all legal measures to make Clean Energy Resources and ColPan fully aware of their inability to terminate the PSAs, that the alleged breaches are without merit, and that Clean Energy Resources and ColPan will be held fully responsible for any and all damages arising from their actions. The company intends to vigorously defend itself and will pursue all means available to protect its interests in the SN-9 and Tiburon blocks.

SN-9 block

The 313,638-acre SN-9 block is located in the northern province of Cordoba (in the Lower Magdalena basin of Colombia).

The company has completed the prior consultation process required to acquire seismic in the block and is currently receiving bids for the acquisition of 140 square kilometres of 3-D seismic and related services. The company expects to delay the acquisition of the 3-D seismic to the dry period starting in January, 2019, which, although being later than initially planned, should result in reduced acquisition costs.

The prior consultation and permitting process required for drilling on the block has started with bidding for the required services. On completion of this process, anticipated for the third quarter of 2019, civil works will commence with a view to spudding the first exploration well before the end of 2019.

Tiburon block

The Tiburon block currently covers an area of approximately 245,850 acres in the northernmost area in the department of La Guajira, Colombia.

The Tiburon E&P (exploration and production) contract is currently in phase 3 of the exploration period, with an existing minimum work obligation to acquire 200 kilometres of 2-D seismic, which can be replaced with an equivalent minimum commitment to acquire 69.75 square kilometres of 3-D seismic. The phase commitment is currently suspended due to force majeure and third party acts.

About Pentanova Energy Corp.

Pentanova Energy is investing in proven leadership and technology to develop oil and natural gas fields it has acquired in areas surrounding some of the key energy-producing areas in Colombia and Argentina. With decades of proven experience in Latin America and global energy development, Pentanova Energy's leadership is working with local partners and service providers, including YPF, Argentina's respected energy producer, to deliver the energy for Latin America's future.

We seek Safe Harbor.