Corporate Update

For Immediate Release

21 December 2016

LGO ENERGY PLC

("LGO" or the "Company")

Corporate Update

LGO today announces further information on the Company's operational and corporate plans for the first quarter of 2017.

Operational Plans

The recent loan re-financing and equity placement have positioned the Company for an early return to drilling in the Goudron Field with the imminent signing of an initial two well contract, including options to extend for further wells, in order to drill production wells to the ubiquitous Mayaro Sandstone oil pay interval. After retendering the rig and services it has been possible to obtain a small footprint conventional drilling rig on a turnkey basis, which is considered to offer a lower risk and lower cost solution compared to previously proposed solutions using large conventional or heavy workover rigs. The Company owned workover rig, Columbus #1, is now expected to be deployed to routine well service operations.

This initial Mayaro drilling program will get underway as soon as practical in 2017 and is expected to be followed by further drilling to the Mayaro Sandstone oil pay where up to 70 infill target locations have been identified of which 45 wells have already received outline approval. During the proposed work program the Company expects to issue regular updates on progress, including the spudding and results of each well. The Company will continue to announce Group production on a quarterly basis once oil sales volumes have been fully fiscalised and audited.

The Company's Goudron subsidiary, Goudron E&P Limited, also expects to submit the formal application for a waterflood enhanced oil recovery ("EOR") project to the competent authorities in Trinidad during early 2017 with a view to commencing the initial phase of waterflood in the C-sands at Goudron in late 2017. The proposed initial scheme involves the use of existing C-sand wells (two injectors and six producers) and the results of this EOR pilot will determine the detailed form of the wider EOR development in future years.

Reductions of discretional spending and headcount during the last year, as well as deferral of director's fees, have resulted in a marked reduction in the general and administration ("G&A") costs of the Company. The Board will be continuing the program of cost reduction to further reduce the corporate overhead in line with its 2017 operational plan. Given the recent re-financing, G&A will be in line with the sustainable financial capacity the Company expects to have in the next few years.

Neil Ritson, LGO's Chief Executive, commented:

"After a difficult period with low oil prices and a senior debt facility that was difficult to service effectively from field operations, which themselves were constrained by limited available funds, we can now look forward to the imminent return to development drilling and the deployment of capital to increase production at the Company's flagship Goudron Field. During the recovery period some very difficult decisions had to be made on the deployment of funds and shareholder equity and we appreciate the commitment and support of our shareholders during this process."

Proposed General Meeting

Following the recent replacement of the Company's senior debt facility with the new funding agreement (the "Facility") with Lind Partners, LLC ("Lind"), the Company can now confirm that it plans to hold a General Meeting in first quarter 2017 to enable the additional share allotments associated with the Facility.

Having elected to make the first payment on the Facility in cash, LGO will be transferring US$94,500 to Lind on 8 January 2017, after which a total of US$2.17 million in cash payments will be outstanding over the remaining life of the 24 month facility. It remains LGO's intention to make all future payments by way of cash generated through its Goudron Field oil production.

As announced on 7 December the new Facility with Lind requires the Company to issue a further 84 million share options to Lind following a future General Meeting. The Company must also have available the necessary authority to issue shares to Lind in proportion to the outstanding balance of the funds drawn. This is required in the event that Lind choose to convert their convertible security to equity, which is at the agreed fixed price of 0.15p. Conversion by Lind has a restriction in the first 6 months of the Facility, with a maximum of 25 per cent of the outstanding convertible security in the first 90 days and a further 25 per cent in the second 90 days. To comply with those requirements the Board feel it appropriate to seek shareholder approval for the additional share allotments.

In addition, the Board wishes to bring forward proposed amendments to the Company's Articles of Association, such as the use of electronic communication with shareholders, so as to bring the Company's Articles in line with modern best practice for similar companies in these areas.

A Notice to Shareholders is expected to be issued in early 2017 to schedule a General Meeting in a timely and efficient fashion.

Directors Deferred Remuneration

As referred to in the Company's Annual Report and Accounts on 6 June 2016 the salaries to Directors were suspended over a large part of the last 15 months. With the re-financing now in place, the Company has resumed payment of salaries on an ongoing basis. A gross cost of £397,000 has been accrued in the Company's books for these unpaid directors' fees, excluding the Company's Chairman, since September 2015 and it has now been agreed to convert these historic net amounts due to Directors to equity at the same price as the Company's senior convertible debt of 0.15p per share, a premium of approximately 35% to yesterday's closing price. The Directors have also voluntarily agreed that any conversion will occur after the next General Meeting at which time details of the actual proposed conversions will be announced.

It is estimated that once statutory tax and National Insurance is accounted for, those Directors involved will, in aggregate, be issued with approximately 120 million shares, of which those converted and held by Mr Neil Ritson, the Company's Chief Executive, will be approximately 75 million shares (approximately 1 percent of the issued share capital). Mr Ritson currently holds 17.5 million shares.

The arrangement with Directors, which is being treated as a Related Party Transaction under the AIM Rules, have been approved by Steve Horton, non-executive Chairman and member of the Remuneration Committee, who is not participating in the issue of shares and is therefore the independent director under the AIM Rules. Having consulted the Company's Nominated Adviser, Beaumont Cornish Limited, Mr Horton considers the terms of the transaction to be fair and reasonable insofar as the Shareholders of the Company are concerned.

Steve Horton, Non-executive Chairman, commented:

"Following a prolonged period when the salaries of directors were suspended to preserve cash while the Company was in default on its senior debt, it is now important that the Company resolves this last material creditor group and also fulfils its contractual commitment to its Directors. The agreed arrangements will further align the key Directors to the Company and will continue to help preserve cash in order that the Company can invest capital in its production drilling operations in Trinidad."

MAR Disclosure

Some of the information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory News Service ("RNS"), this inside information is now considered to be in the public domain.

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