San Leon Energy PLC acquisition of 75 per cent. of Alpay Enerji A.S.

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San Leon Energy, the oil and gas exploration and development company focused on projects in Poland, Albania, Morocco and Ireland is pleased to announce that it has entered into an agreement conditionally to acquire 75 per cent. of the issued share capital of Alpay Enerji AS (the "Acquisition") from Server Fatih Alpay. Completion of the Acquisition is conditional on the Company obtaining the necessary regulatory approvals from the General Directorate of Petroleum Affairs in Turkey.

Alpay Enerji AS ("Alpay") is a Turkish oil and gas company which currently holds a 100 per cent. participating interest in seven conventional oil and gas licences in Turkey (three in the "Hatay" area of the Iskendrun Basin (Blocks 4394, 4395 and 4396), three in the "Adana" sub-basin (Blocks 5098, 5101 and 5102) and one in the "Konya" area of the Tuz Golu Basin (Block 4077)), together covering 842,094 acres) (the "Existing Licences"). The Existing Licences have gross proved and probable gas reserves of 46.6 BCF (8 MMBOE) and the Company believes that additional gross proved and probable contingent gas resources of 140.7 BCF (24.3 MMBOE) can be unlocked with a low-risk drilling programme.

In addition to acquiring 75 per cent. of the issued share capital of Alpay, the Acquisition provides, under the terms of the agreement relating to the Acquisition (the "Acquisition Agreement"), (subject, amongst other things, to obtaining the necessary regulatory approvals from the General Directorate of Petroleum Affairs in Turkey) for the transfer to Alpay of nine additional conventional oil and gas licences in Turkey (three in the "Hatay" area of the Marmara Basin (Blocks 5092, 5093 and 3852), three in the "Adana" sub-basin (Blocks 5082, 5083 and 5084), one in the "Diyarbakir" area of the Anatolia Basin (Block 4226) and two in the "Konya" area of the Tuz Golu Basin (Blocks 4074 and 4075)), which are currently held by ARAR Petrol Ve Gaz Arama Uretim Pazarlama AS, a company incorporated and registered in Turkey, which is controlled by Server Fatih Alpay (the "Additional Licences"). Block 4226 is currently producing 60 BOPD.

Following the transfer of the Additional Licences, Alpay will, following completion of such transfer, hold a 100 per cent. participating interest in sixteen licences in Turkey, making it the second largest private acreage holder in the country. Consequently, the Company will hold an indirect 75 per cent. interest in these same licences.

The Company estimates that production from the Existing Licences and the Additional Licences can be increased from approximately 250 MCFD and 60 BOPD to 10 MMCFD and 100 BOPD by the end of Q1 2014 which would generate monthly revenue of approximately US$ 3 million. The Company further estimates a large upside from the Existing Licences of 440 BCF on a proved plus probable plus possible reserves and contingent resources basis.

The purchase price for the Acquisition is US$ 4,000,000 (the "Purchase Price"), of which US$ 3,464,000 will be paid to Server Fatih Alpay upon completion of the Acquisition. The balance of US$ 536,000 will be contributed by the Company to Alpay as soon as practicable after completion, which amount shall be used by Alpay to repay existing debt owed to Server Fatih Alpay. Following completion of the Acquisition, Server Fatih Alpay will retain a 20 per cent. shareholding in Alpay. The balance of 5 per cent. will be retained (subject to any sale) by Niche Group plc.

The terms of the Acquisition provide that the costs of any work programmes and other costs, including operational, administrative and legal costs, due from Server Fatih Alpay in relation to the Existing Licences and, to the extent transferred, the Additional Licences, and any future licences acquired or transferred to Alpay, are to be carried by the Company. The terms of the Acquisition further provide that from completion of the Acquisition and for the lifetime of the Existing Licences and, to the extent transferred, Additional Licences, and any future licences acquired or transferred to Alpay, Server Fatih Alpay is to receive from the Company a 20 per cent. royalty share of production revenue (after the deduction of any government royalty and consumption tax, but before any deductions for value added tax, profit tax, income tax and any other deductible taxes) in lieu of dividends up to a maximum total amount of GBP85,000,000. If the transfer of Additional Licences has not been completed within six months of the date of completion of the Acquisition (or such later time as the Company and Server Fatih Alpay may agree), the Company will be entitled to a refund from Server Fatih Alpay in respect of each Additional Licence that is not so transferred. The aggregate amount of such refunds shall be limited to US$ 2,000,000 (assuming no Additional Licences are so transferred).