AIM listed Reabold Resources today announced the signing of a conditional equity exchange agreement between Daybreak Oil and Gas, a US OTC traded oil and gas operator with assets in California. The Transaction will result in Reabold becoming a major shareholder of Daybreak via the issuance of new Daybreak shares to Reabold, in exchange for Daybreak acquiring Reabold California LLC, Reabold's subsidiary which holds, inter alia, Reabold's licence interests in California.

As per the terms of the Equity Exchange Agreement, Reabold California will become a wholly-owned subsidiary of Daybreak, which, in exchange, will issue 160,964,489 Daybreak shares to Gaelic Resources Limited, a Company wholly-owned by Reabold.

Per the conditions of the Equity Exchange Agreement, prior to completion of the Transaction, Daybreak is required to raise a minimum of US$2.5 million via an equity raise; the proceeds of which will be used to grow production across Daybreak's enhanced portfolio. In addition, Daybreak will be required to complete a conversion of certain of its debt into equity. Reabold will hold up to 46.5 per cent. of the Daybreak's share capital as enlarged by the completion of the Transaction. The longstop date in the Equity Exchange Agreement is 14 February 2022.

Transaction Rationale:

• Creates a self-funded, OTC traded, Californian oil and gas operator, with a strong balance sheet, in which Reabold will have a major shareholding
• Daybreak will utilise its existing in-state management team and expertise to grow the portfolio through development of existing licences as well as considering strategic acquisition opportunities
• Daybreak's management team have 12 years' experience operating in California
• Daybreak is led by James F. Westmoreland
• With a clear focus in California, Daybreak can utilise significant market opportunities for consolidation in the state, creating further opportunities for synergistic growth
• As a result of the transaction, Reabold's interests in California will be exchanged for shares of an OTC traded entity, creating flexibility and funding opportunities for the Daybreak going forward

Sachin Oza, co-CEO of Reabold, commented:
"This transaction creates liquidity for Reabold and forms a new, cash flow producing business with the skills and capability to capitalise on growth opportunities from its existing portfolio, and attractive acquisitions presented by the market dynamics in California."

"Our Californian portfolio has been a significant deliverer for Reabold, with 5 discoveries over 5 wells since we began our drilling program. With a dedicated management team with significant in-state expertise now at the helm, we look forward to the next phase of its development as a large shareholder."