Columbus, the oil and gas producer and explorer focused on onshore Trinidad with the ambition to grow in South America, is pleased to announce it has signed a Sale and Purchase Agreement ("SPA") to acquire Steeldrum Oil Company Inc adding current oil production of approximately 200-250 bopd and reserves of 5.6 mmbbl  and the Cory Moruga development Project adding recoverable reserves of approximately 1.1 mmbbl to the Columbus portfolio. Steeldrum's assets are all located in southern Trinidad and close to Columbus's existing assets, allowing the Company to utilise existing technical expertise and relationships.

The assets acquired through this transaction are:

• 100% operated interest in Innis-Trinity field with production of between 120-150 barrels of oil per day ("bopd") and reserves of 4.0 million barrels of oil ("mmbbl")
• 100% operated interest in South Erin field with production of between 80-100 bopd and reserves of 1.6 mmbbl
• 83% operated interest in Cory Moruga development project expected to have recoverable reserves of approx. 1.1 mmbbl.

(Note: Reserve figures quoted above supplied by Streeldrum)

Highlights:

• The Steeldrum acquisition is further delivery of Columbus' growth strategy as outlined in its roadmap last year and consolidates the Company's extensive, well balanced portfolio of assets across the south and south-west of Trinidad. 
• In addition, the acquisition SPA grants Columbus a first priority use of two rigs at market rates, with one of those rigs being suitable for the Company's planned exploration activities in the South West Peninsula ("SWP").
• The initial consideration for the acquisition of Steeldrum will be paid in Columbus stock through the issuance of 92,743,775 shares, equivalent to 12.5% of the current issued share capital and £4.4 million (approx. US$5.8 million) at the latest closing mid-market price, with certain contingent considerations. 
• New Lind Facility established to provide Columbus with access to additional funds, should they be required over the next six months, to support the integration of Steeldrum and accelerate certain operational activities
• Lind Facility allows Lind to convert any outstanding loans into equity at a share price of 8.1 pence per share. 
• The consolidated group, post the Steeldrum transaction, is expected to remain operationally cash flow positive.
• Near term value opportunities to exploit existing and new assets through exploration, the Cory Moruga development project and growing production and revenues at Innis Trinity and South Erin with the adoption of a similar operational strategy to our existing fields. 
• Trinidad peak production in Q2 2018 of 648 bopd with a steady 530-575 bopd delivered month on month.
• Cash balance of US$2.4 million at the end of Q2 2018 after $1.11 million of capex investment, abandonment fund contributions, M&A and Spain legacy costs during Q2 2018.
• New technical work on the SWP has been commissioned involving specialist exploration consultants to develop a technical roadmap for de-risking 2019 drilling locations.
• Continuing to work actively on a number of additional acquisition opportunities using strict investment screening criteria.

Leo Koot, Executive Chairman of Columbus, commented:
"The acquisition of Steeldrum is further delivery of Columbus' growth strategy and, on completion, the Company will have a large, well balanced portfolio of assets strung across the south and south-west of Trinidad. The portfolio will include low-risk but highly prospective exploration opportunities in the South West Peninsula, a development project in Cory Moruga and 5 producing oilfields (Goudron, Innis Trinity, South Erin, Bonasse and Icacos). This provides the Company with an excellent opportunity to exploit our existing and new assets through operational excellence and also grow organically through exploration and the Cory Moruga development project. We will also be specifically looking at growing production and revenues in Innis Trinity and South Erin in the near future through the adoption of a similar operational strategy to our existing fields. 

"In line with our ongoing focus on capital discipline, we will purchase Steeldrum with shares rather than cash. This also has the benefit of introducing new shareholders to the Company who are experienced investors in oil & gas and who will be aligned with the Company in seeing that the integration of the assets into our portfolio happens in the most efficient way. A final benefit of the transaction is access to a drilling rig suitable for our planned exploration activities in the SWP, a production rig and the integration of a well-respected oil and gas team into the larger Columbus group, a group who are experienced in drilling wells in Trinidad. I am delighted that we have agreed this deal with Steeldrum and we are on track to building a core exploration, appraisal, development and production hub in the south and south-west of Trinidad.

"The Company believes it will be able to assimilate Steeldrum into Columbus using our existing cash resources and the revenues we are generating from our ongoing operations. Nevertheless, the Board considered it prudent to ensure we have access to additional funds to cover any short-term issues that may come our way when integrating the two organisations and when we are seeking to optimise our new assets over the next few months.   We are very grateful that Lind has provided a short-term loan facility of up to $3.25 million to support the Steeldrum transaction. This drawdown facility, where Lind can convert any outstanding loans into ordinary shares at 8.1 pence per share, provides us with financial flexibility to optimise the new organisation and deal with any un-expected financial issues and once again demonstrates their confidence in the future potential of our Company.  As a result, and due to the financial terms we have agreed, we believe the Lind Facility is accretive for our shareholders as it minimises any equity dilution whilst providing real financial flexibility at minimal cost.     

"On the operational front, we have seen steady production performance in Trinidad in Q2 2018 with production averaging 553 bopd, peaking at 648 bopd during the quarter.  We have continued to face certain challenges in growing production at Goudron, notably sand production issues which we are actively seeking to address through new artificial lift applications. Our water injection pilot campaign can now be ramped-up through the availability of increased water volumes  As well as Goudron production, we have now commenced the reactivation of the Bonasse field with a rig arriving on site within the past few days. We hope to see increasing production in Bonasse throughout 2H 2018 and with the recent signature of the SPA on the Icacos field, we plan to commence a reactivation programme on some shut-in wells in that field in the near future. These are exciting times for Columbus as we expand our production activities on our assets in Trinidad and the Steeldrum acquisition will allow us to expand our programmes even further.   We would hope to see gross production across all of our fields grow continually throughout 2H 2018 and continue to grow well beyond that.  This will give us much greater financial firepower to progress our exploration portfolio in the SWP in 2019 and beyond.    

"We continue to consider a number of other M&A opportunities in Trinidad and elsewhere in South America; these include some small opportunities and others more material in size.  We continue to have ambitious growth plans and are hugely excited by our increasing potential as our footprint expands.   I believe we have come a long way in the past year on many fronts.  

"I look forward to providing our shareholders with further information on the benefits of the Steeldrum acquisition, the Lind Facility and our recent business performance at our AGM which takes place later today." 

The Steeldrum Acquisition:

Steeldrum is the parent company for the West Indian Energy Group Ltd and is the owner of the Innis-Trinity field (100% and operator), South Erin field (100% and operator) and the Cory Moruga development project (83.8% and operator), all located in southern Trinidad and close to Columbus's existing assets.

The Innis-Trinity field and South Erin field are currently producing between 120-150 bopd and 80-100 bopd respectively, with remaining 2P reserves of approximately 4 mmbbl and 1.6 mmbbl respectively. The Cory Moruga development is expected to have recoverable reserves of approximately 1.1 mmbbl.

The consideration for the purchase of Steeldrum is the issuance to the Sellers of 92,743,775 shares in Columbus

Outlook

• All planned 2018 activities fully funded from production revenues and available cash, although impact of Steeldrum acquisition may introduce additional financial pressures in the short term. The new Lind Facility will provide an ability to drawdown funds to deal with any such pressures if they arise. 
• Bonasse field reactivation of production has recently commenced in earnest with the mobilisation of a workover rig to site to perform further re-activations and production enhancements on the 10 available wells. Rig activities commencing week beginning 16 July 2018.
• Following acquisition of 100% of Icacos Field, assumption of operations duties is in progress from the Operator, to allow well optimisation activities and planning for legacy well missed-pay, oil production testing activities to commence in Q3. 
• Goudron Field Water Injection is set to increase to over 1,000 barrels of water per day ("BWPD") in 2H 2018 from produced water resources, allowing enhanced speed of pressure responses at target wells to achieve faster oil production response evaluation during the pilot phase.
• Goudron Field well responses to optimisation programmes continues to justify expectations of the growth potential of the field. Managing sand production in successful well stimulations has led to a shift in completion technology away from conventional rod pumps with a multi-strand approach including Progressive Cavity Pump installation and new sand screen technology applications being deployed.    
• New technical work on the SWP has been commissioned involving specialist exploration consultants to develop a technical roadmap for de-risking 2019 drilling locations.
• Continuing to work actively on a number of additional acquisition opportunities using the following strict investment screening criteria which is not exclusive: onshore; operatorship, easy export routes, mature oil provinces in the Caribbean or South America; close to infrastructure; funded in a manner which is accretive for Columbus' current shareholders.