Cabot Energy Regulatory News (CAB)

Cabot Energy Plc

("Cabot Energy", "the Group" or "the Company")

Operational update

and

Interim Results for the six months ended 30 June 2017

Cabot Energy, the AIM quoted oil company focusing on production led growth, provides the following update on operations and announces its unaudited interim results for the six months ended 30 June 2017.

Operational update

§ 2017 summer work programme is now predominantly complete with seven wells successfully worked over

- two side track wells left to drill and regulatory approval for one recompletion well still outstanding

§ Benefits of 2017 work programmes now being realised with current production in Canada of between 600 and 700 barrels of oil per day ("bopd") gross (Company working interest of 75 per cent.)

- successful completion of the side track and recompletion wells should add a further 200 to 250 bopd (gross) by the end of October 2017

- on target to exceed stated aim of additional 300 bopd from summer programme

- year end production is expected to be in line with target of between 800 and 1,000 bopd

§ Civita gas field in Italy continues to produce at approximately 130 barrels of oil equivalent per day ("boepd")

- production revenue accruing to the Group's benefit from 1 January 2017

- net income will be paid as a working capital adjustment on completion of the previously announced acquisition from Rockhopper Exploration Plc ("Rockhopper")

§ Cash balance as at 25 September of approximately $3.5 million

- excludes approximately $3 million of cash due on completion of the previously announced Italian transactions from Rockhopper and High Power Petroleum LLC ("H2P"), forecast to close by year end or shortly thereafter

- excludes $0.5 million held by the Alberta Energy Regulator ("AER") as an abandonment deposit, forecast to be returned later this year or early in 2018

Keith Bush, Chief Executive Officer, commented:

"The current industry operating environment has presented opportunities for those companies positioned to take advantage of them. Through the work programmes in Canada and acquisitions in both Canada and Italy the Company has been able to grow production as forecasted. Having achieved this initial production growth from Rainbow, it has become apparent that there is significantly more production potential from both the Rainbow and Virgo assets.

"The side track wells, to be completed in October, will provide not only valuable production, but will also help validate our reservoir models and refine our plans for the 2018 work programme.

"The growth opportunities in Canada remain very attractive, as demonstrated by our acquisition in March of a processing facility and six shut in wells, five of which are now producing as planned. Increasing production through acquisition and investment in our existing asset base will remain part of our strategy into 2018 and beyond both in Canada and Italy."

Interim Highlights

Operations

§ Successfully planned and completed a 23 well workover campaign in the first half of the year

§ Completed development asset acquisition in Canada with associated facilities and equipment

§ Average gross production for the first six months of the year of 359 bopd

§ Onshore production and development acquisition in Italy with 130 boepd of production and approximately 1 bcf of remaining reserves, due to complete by year end or shortly thereafter

Finance

§ Revenue of $1.8 million for the first six months of the year (2016: $1.5 million)

§ Gross profit of $0.1 million before depletion and amortisation

§ Other operating income of $1.6 million in relation to the bargain consideration which arose on the acquisition in Canada

§ Cash on the balance sheet as at 30 June 2017 of $5.2 million

Corporate

§ Administrative costs maintained at approximately $1 million for the first six months of 2017

§ Completion of strategic refinancing announced in November 2016, with the closing of an oversubscribed open offer and the second tranche of a subscription, realising a combined cash investment of nearly $2 million in addition to $5.4 million received in December 2016 from the initial subscription

§ The Group changed its name and rebranded to Cabot Energy Plc

For further information please contact:

Cabot Energy Plc Tel: +44 (0)20 7469 2900

Keith Bush, Chief Executive Officer

Nick Morgan, Finance Director

Stockdale Securities Limited (Nominated Adviser and Joint Broker) Tel: +44 (0)20 7601 6100

Antonio Bossi

Robert Finlay

FirstEnergy Capital LLP (Joint Broker) Tel: +44 (0)20 7448 0200

Jonathan Wright

FTI Consulting Tel: +44 (0)20 3727 1000

Edward Westropp

Interim Report Management Statement

The Group has been very active during the first six months of 2017 with positive results. The industry continues to prove a difficult environment for many operators, which in turn has provided opportunity for the Group, as proven by two acquisitions which were announced in March and June 2017, one in Canada and one in Italy.

With commodity prices remaining volatile and the timing of any sustained price increase uncertain, the most important aspect of a production business is to be robustly profitable at current price levels, with a focus on reducing operating costs and the economic development of the asset base. The Group continues to target increasing production at competitive investment metrics and with growing production, profitability is expected to increase.

Canada

In January 2017, the Group initiated its winter work programme which was designed to increase production by 300 bopd (gross) through the workover of existing wells. A total of 23 wells were worked over by April and the targeted production gains were achieved.

In March 2017, the Group completed the acquisition of an asset package in the southern Rainbow region, close to its existing wells and facilities. Six wells and an associated production facility with storage and processing equipment were acquired. The facility also has a suspended sales tie-in point directly into the national Plains pipeline system. All the wells had been shut in by the vendor, a larger operator, as being non-core.

Four of the acquisition wells were initially brought into production as part of the winter work programme, however additional work was required following winter break up in May and June to optimise production. Production potential from the six wells is between 150 and 200 bopd (gross) and following the summer work, this potential is now being realised.

During the second quarter of the year, the annual trucking bans came into effect as the winter break up season brought wet and muddy conditions on the lease roads. In April, the access road to a key well, 13-05, was washed out following the spring thaw and repair work could not be completed until September, delaying immediate production gains.

Once the winter work programme was complete the results were used to help plan the summer work programme, which began after the period end in late July.

A subsurface project initiated early in the year is producing encouraging results. The project is aimed at mapping the different hydrocarbon bearing horizons across the Company's acreage in addition to the Keg River reefs which have been targeted to date. The results of the project will be integrated into the development drilling plan for 2018 and the Group's annual reserve report, due to be completed in the final quarter of this year.

Italy

Operations in Italy were dominated by the acquisition of an onshore production and development package in June 2017. The Group acquired the Civita gas field and four additional onshore concessions from Rockhopper. Civita currently produces approximately 130 boepd of gas, with approximately 1 bcf of remaining reserves.

Two of the acquired concessions will be reviewed for potential future development and any remaining wells will be abandoned in the coming years. Rockhopper have agreed to pay $1.6 million to the Group as reverse consideration for the abandonment liabilities. The economic effective date of the acquisition is 1 January 2017 and the transaction is expected to close by the end of the year, or shortly thereafter. The cash received on completion is forecast to be in excess of $2.4 million and is not reflected in the interim results.

The Group continued to work towards acquiring 3D seismic on two permits offshore in the southern Adriatic, with the required pre-seismic monitoring survey expected to occur before the year end with the seismic acquisition occurring in 2018. In March, Shell undertook a consultation exercise before the submission of an application for 2D seismic on the Cascina Alberto permit onshore northern Italy. The Group is carried for 2D seismic operations up to $4 million and for the drilling of a single exploration well up to $50 million.

Corporate

The Group completed the strategic refinancing announced in November 2016 with the closing of an open offer and the second part of a subscription. The open offer was oversubscribed by existing shareholders and total aggregate proceeds received in January 2017 were almost $2 million, in addition to $5.4 million received in December 2016 from the initial subscription.

Financial

With average production at 359 bopd and an average price for WTI, for the first six months of the year, of approximately $50, revenue to 30 June 2017 was $1.8 million. Operating profit was restricted to $0.1 million before depletion and amortisation, reflecting the level of fixed operating costs required to run the two facilities in Rainbow in northern Alberta. With increased production above this base requirement, the fixed costs per barrel will be reduced providing more economic operating profit per barrel.

The Group invested $2.6 million in Canada during the first six months of the year, mainly on the winter work programme which started at the end of January 2017. While the main programme was completed by the end of March, ongoing additional capital was invested in May and June to complete well workovers and further infrastructure improvements in advance of the wells being brought into production.

In March 2017 the Group acquired the 13-06 facility, associated wells and equipment, in return for the assumption of the abandonment liability and the waiving of a separate abandonment liability, relating to a well in which the vendor was the operator and the Group had a minority interest. A commercial assessment of the value of the assets was more than the consideration paid, giving rise to a bargain consideration of $1.6 million, net of deferred tax, being booked in Other Operating Income.

Following the half year, the Group continued to invest in increasing production with a summer work programme which began in July 2017 and is targeted to complete in early October 2017. Planning is underway for the 2017/18 winter work programme. H2P, the Group's 25 per cent. joint venture partner in Canada and largest Group shareholder, has an option to acquire a further 25 per cent. of all the Canadian assets for $4 million in consideration, as announced in December 2016. The option expires on 31 December 2017.

The Group is awaiting regulatory approval in Italy for two previously announced transactions with H2P and Rockhopper which are expected to close by the end of the year or shortly thereafter. Cash received at completion on both these Italian transactions is expected to amount to approximately $3 million. The size and timing of the winter work programme will be dependent upon the timing and receipt of these various payments and in the event of delays or non-completion, other sources of finance may be considered.

Given the significant strengthening of the Canadian dollar and Euro against the US dollar, an exchange profit of $1.6 million was booked in Other Comprehensive Profit.

Outlook

The Group is over half way through its summer work programme with most of the workovers complete, leaving only two side track wells left to be drilled and the regulatory approval of a recompletion well to be obtained. The production gains from the combined winter and summer work programmes are now being realised with rates of production in Canada increasing from 325 bopd (gross) at the beginning of 2017 to a current 600 to 700 bopd (gross). These rates do not include the additional production from the three wells mentioned above, which if successfully drilled and completed, should be on production by the end of October. This will add a further 200 to 250 bopd and allow the Group to achieve its target of exiting the year with 800 to 1,000 bopd of gross production from its Canadian projects.

With the continued development of the Rainbow acreage, it is clear to the Group that there are more significant production gains to be realised in this area at very competitive investment metrics. Combined with the growing belief that the Virgo region to the north can deliver material reserves and production of its own, the Group's Canadian project has a very exciting future.

The Group's onshore gas production acquisition in Italy will hopefully prove to be the first step into this valuable sector, which can provide more cashflow and demonstrable core value for shareholders.

The Group is pleased to work closely with its strategic shareholder, H2P, and looks forward to growing Cabot Energy into a material oil and gas producer in 2018.

Condensed Consolidated Statement of Profit or Lossfor the six months ended 30 June 2017

All results are from continuing activities.

Notes 1 to 9 form an integral part of this report.

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Incomefor the six months ended June 2017

Notes 1 to 9 form an integral part of this report.

Condensed Consolidated Statement of Financial Position

at June 30 2017

Notes 1 to 9 form an integral part of this report.

Condensed Consolidated Cash Flow Statement

for the six months ended 30 June 2017

Condensed Consolidated Statement of Changes in Equity

for the six months ended 30 June 2017

Condensed Consolidated Statement of Changes in Equity for the six months ended 30 June 2016

Notes to the Condensed Consolidated Interim Financial Statementsfor the six months ended 30 June 2017

1. Basis of preparation

This unaudited condensed consolidated interim financial information has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively EU IFRSs). The principal accounting policies used in preparing the interim results are unchanged from those disclosed in the Group's Annual Report for the year ended 31 December 2016. These statutory accounts are available on the Company's website (www.cabot-energy.com) or by application to the Company's registered office.

The financial information for the six months ended 30 June 2017 and 30 June 2016 is unaudited and does not constitute statutory financial statements of Cabot Energy Plc and its subsidiaries. The comparative financial information for the full year ended 31 December 2016 has been derived from the statutory financial statements for that period reported under the Company's former name of Northern Petroleum Plc. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditor reported on those accounts; the report was unqualified and did not contain any statement under section 498(2) or 498(3) of the Companies Act 2006.

Adoption of new and revised standards

A number of amendments to existing standards and new interpretations were applicable from 1 January 2017. The adoption of these amendments and interpretations did not have a material impact on the Group's condensed financial statements for the period ended 30 June 2017.

2. Finance income and costs

3. Earnings per share

Basic earnings per share amounts are calculated by dividing profit or loss for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share amounts are calculated by dividing profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period, plus the weighted average number of shares that would be issued on the conversion of dilutive potential ordinary shares into ordinary shares. The calculation of the dilutive potential ordinary shares related to employee and director share option plans includes only those warrants with exercise prices below the average share trading price for each period.

At 30 June 2017, there were 3,259,005 options and no warrants with exercise prices below the average share trading price for the period, (2016: 666,608), hence the number of potential dilutive ordinary shares is 3,259,005 (2016: 666,608). In 2016 as the Group was loss making, there was no dilution of earnings from potential ordinary shares.

4. Intangible assets

5. Property, Plant and Equipment

6. Business acquisitions

Following the deposit of $0.7 million with the AER, a number of additional Rainbow area leases, northern Alberta, were transferred to the Group's Canadian subsidiary, Cabot Energy Inc. ("Cabot Inc") on 8 March 2017. Cabot Inc assumed a 75 per cent. interest in the leases, with H2P, Cabot Inc's existing Canadian partner, acquiring the other 25 per cent. The payment of an abandonment deposit to the AER was the final step in the regulatory approval required for the acquisition of the leases, following payment of a nominal cash consideration to the vendor. The acquisition of the additional Rainbow leases has enabled the Group to increase its asset base in Alberta and add additional processing and oil handling capacity in the same area as Cabot Inc's existing assets. The acquisition included a total of six operated production wells, a water disposal well and their associated facilities. The wells were suspended at the time of acquisition and the Group has brought, or has plans to bring, all wells back into production. Five of the wells were brought back into production between March and September 2017.

The assets acquired are treated in accordance with IFRS 3 "Business combinations". The assets were valued at their "fair value" using an internal financial model based on information from the Group's due diligence. A post tax discount rate of 10 per cent. was used in the fair value calculation. This represents a Level 3 valuation in the IFRS 13 fair value hierarchy as it is based on certain judgements and estimates made by the Directors. The Group calculated that the fair value of the assets and liabilities acquired exceeded the cost of purchasing the assets by $2,229,000, the "bargain consideration". It is likely that the bargain consideration arose because the vendor, who is a large group, had decided to sell a non-core business for strategic reasons, was minded to accept an offer lower than the fair value of the business in order to divest itself of the risks and responsibilities of ownership. On acquisition the assets have been included at their fair value in plant, property and equipment and the value of the bargain consideration has been credited to the income statement as part of other operating income. A deferred tax liability of $602,000 was recognised and offset against the bargain consideration. The liabilities include the provisions for future abandonment of the wells and facilities.

Consideration:

Identifiable assets acquired and liabilities assumed:

No significant acquisition related costs have been incurred.

The revenue generated and expenses incurred by this operation since the date of acquisition (8 March 2017) were $72,000 and $110,000 respectively. Of the $110,000 expenses, $73,000 relates to production costs, $31,000 relates to depletion and amortisation of plant property and equipment and $6,000 relates to finance costs for the unwinding of discount on decommissioning provisions. Cash outflow from the operation post acquisition was $289,000 and comprised net revenue and investments in oil and gas assets. If the acquisition had occurred on 1 January 2017, management estimates that consolidated revenue for the period would have been no higher and the consolidated costs for the period would have been $10,000 higher as the wells were suspended at the start of the period.

7. Post balance sheet events

On 8 June 2017, the Company announced the acquisition of Rockhopper Civita Limited, a UK company with an Italian branch, which owns onshore production and development gas assets (the "Acquisition Assets") in Italy from Rockhopper Mediterranean Limited, a wholly owned subsidiary of Rockhopper Exploration Plc ("Rockhopper").

The Acquisition Assets comprise a 100 per cent. interest in the Aglavizza production concession, which contains the producing Civita gas field and associated processing facilities and pipeline ("Civita"). In addition a local operations base and the following concessions containing suspended wells and an exploration permit were acquired: Scanzano Concession (100% interest), Torrente Celone Concession (50% interest), Monte Verdese Concession (60% interest), San Basile Concession (85% interest) and Civita exploration permit (100% interest).

Civita, which is tied into the national gas network, was commissioned in late 2015 and averaged gas production of 130 boepd during 2016. The field is estimated to contain approximately 1 bcf of recoverable gas according to internal estimates.

Rockhopper will pay $1.6 million on completion of the acquisition. This is subject to inter alia Italian regulatory approval and is expected to occur later in 2017 or shortly thereafter. The acquisition has an economic effective date of 1 January 2017.

Revenue and operating profit, excluding intra-group recharges, depreciation and impairment charges, attributable to the Acquisition Assets for the 12 months ended 31 December 2016 was €1.1 million and €0.7 million respectively. The operating profit from the Civita gas field was €0.9 million.

8. Approval by directors

The interim results for the six months ended 30 June 2017 were approved by the Directors on 27 September 2017.

9. Availability of interim report

The Interim Report will be made available in electronic format on the Company's website, www.cabot-energy.com. Further copies will be available on request by application to the Company Secretary at the Company's registered office, being Chester House, Unit 3.01, Kennington Park, London SW9 6DE.

In Accordance with the AIM Rules - Guidance for Mining and Oil & Gas Companies, the information contained in this announcement has been reviewed and signed off by the CEO of Cabot Energy, Mr Keith Bush, who has 26 years' experience as a petroleum engineer. He has read and approved the technical disclosures in this regulatory announcement. The technical disclosure in this announcement complies with the SPE/WPC standard.

Note to Editors

Cabot Energy is an oil and gas company focused on production led growth. The Company is undertaking a redevelopment and production project in Alberta and has a broader portfolio of exploration and appraisal opportunities in countries of relatively low political risk, primarily Italy. Comprehensive information on Cabot Energy and its oil and gas operations, including press releases, annual reports and interim reports are available from Cabot's website: www.cabot-energy.com