Circle Oil Plc Regulatory News (COP)

CIRCLE OIL PLC

("Circle or the "Company")

2012 INTERIM RESULTS

Circle Oil Plc (AIM: COP), the international oil and gas exploration, development and production company, is pleased to announce its results for the six month period ended 30 June 2012.

Highlights

·; Group turnover increased by 23% to US$35.4 million (H1 2011: US$28.7 million)

·; EBITDA up 60% to US$18.9 million (H1 2011: US$11.8 million)

·; Profit after tax up 53% to US$13.3 million (H1 2011: US$8.7 million)

·; US$30 million convertible loan extended for a further three years to July 2015

·; EGPC receivables have reduced since year-end despite higher sales revenue

·; New pipeline commissioned in Morocco and gas sales doubled to 4.3-4.5 MMscf/d

·; Two new producing wells and one new injector successfully drilled in Egypt

·; Two exploration wells planned in H2 2012 in Tunisia with pre-spud civil engineering works underway in Grombalia

·; New 2D seismic survey currently being acquired onshore Oman

·; Initial results of Lalla Mimouna 3D seismic in Morocco confirms prospects for 3rd drilling campaign which is scheduled to commence late 2012.

Professor Chris Green, CEO, commented:

"Circle's efforts in exploration and development activities have been rewarded with significantly improved profitability in H1 2012. The net profit to Circle has increased to US$13.3 million for the first half of 2012, an increase of 53% over the same period in 2011.

Our daily production in Morocco has risen to 4.3-4.5 MMscf/d with the completion of the new 55 km gas pipeline to Kenitra with further increases expected before the year end and into 2013. Revenue from this increased production has increased accordingly. With our new 3D seismic over the Sebou and Lalla Mimouna blocks showing multiple prospects we plan to start a five well drilling programme towards year end and into next year. The production drilling and water injection programme in Egypt is progressing with a view to adding new production wells and repressurising the reservoirs and improving recovery efficiency. Egyptian production continues to provide a steady income. Two exploration wells are to be drilled in Tunisia with civil engineering works commenced on the first well in the Grombalia permit and we are acquiring additional onshore seismic in Oman to delineate exploration drilling targets."

CHAIRMAN'S STATEMENT

The first half of 2012 has seen Circle make progress and achieve further increases in revenue and profits. We have continued to enjoy success with our drilling activities in Egypt where the focus of activities has shifted to production and resource management. The result of this work has been to both successfully maintain and prepare for increasing production levels. In addition, the independent CPR for Egypt prepared during the first half revealed a 34% increase in reserve estimates, which is an excellent result. The commissioning of a new 55 km pipeline in Morocco has led to an initial doubling of our gas sales. Circle's share of oil and gas production for the first half of 2012 was in the range of 3,500 to 4,000 boepd with 4,200 boepd on average entering the next period. Our plans for further exploration and development activity are well advanced and we hope to continue our success.

OPERATIONS

Morocco

The 3D seismic surveys acquired in 2011 over the Sebou (17 sq km) and Lalla Mimouna (135 sq km) permits have now been processed and are in the interpretation phase to generate ranked drilling locations. Initial results of the latest interpretation are encouraging with the expected initial targets mapped prior to quantitative interpretation, for final ranking ahead of the third drilling campaign. Drilling activity is presently anticipated to commence later this year in a five well programme. Following the completion of the new 8 inch 55 km gas pipeline to Kenitra in late 2011, the daily production rate has risen steadily from 2 MMscf/d to 4.3-4.5 MMscf/d. Current production is from three wells, KSR-8, KSR-9 and CGD-9. The gas handling capacity in the new pipeline is 23.5 MMscf/d and the 2012 drilling programme and negotiations for additional local offtake contracts are designed to assist in filling the current pipeline capacity. The cumulative production from the Circle wells in the Sebou Permit through end June 2012 was 74.7 MMm3 (2.6 Bscf).

The CPR reserve estimates were completed in early 2012 and in the Sebou concession the 2P Gross Initial Gas Reserves were 29.88 Bscf, with 22.11 Bscf net to Circle, very similar to the 2011 resource estimate.

Egypt

Nine wells in the Al Amir SE field (AASE) and three wells in the Geyad field were on production at the end of June 2012, with a combined production rate of 8,800 bopd. Water injection is providing proven pressure support to maximise recovery efficiency and increase voidage replacement, through three wells in AASE and one well in Geyad at a combined injection rate of over 20,000 bwpd. Four wells were successfully completed during the period.

The water injector AASE-10X (spud in December 2011) is located on the central-western flank of the AASE field, downdip of the AASE-4X Rahmi producer. The well's objective was to appraise both the Shagar and Rahmi sands for injection/production in that location. The well was successfully drilled to a total depth of 10,450 feet MD into the Upper Rudeis Formation. The well encountered 34 feet of net pay in the Kareem Shagar sand and 31 feet in the underlying Rahmi oil bearing sands with high water saturation present to the base of the reservoir. The Rahmi zone was perforated from 9,975 to 10,010 feet MD and the well completed in February 2012 as a water injector to support the updip producers.

Appraisal well AASE-11X ST1 (spud 5 February 2012) is located on the north-western flank of the AASE field, updip of the AASE-7X water injector. The well's objective was to appraise both the Shagar and Rahmi sands for injection/production in that location. The well reached a TD of 9,600 feet MD before being sidetracked to the south for geological reasons and was then successfully drilled to a total depth of 11,160 feet MD into the base Kareem. The well encountered 42 feet of net pay in the Kareem Shagar sand and 22 feet in the underlying Rahmi sand with oil bearing sands present to the base of the reservoir. The completion for the well as a Shagar sand producer was installed and the Shagar zone perforated in the interval 10,730 to 10,780 feet. The well flowed oil and gas on test at an average rate of 3,500 bopd and 2.64 MMscf/d respectively, on a 64/64" choke. The well was put on production at an initial flow rate of 1,635 bopd using a 32/64" choke.

Development well AASE-12X (spud 25 April 2012) is located in the south-central part of the AASE field, updip of the Al Ola-1X producer. The well's objective was to appraise both the Shagar and Rahmi sands production in that location. The well reached a TD of 10,200 feet MD before being sidetracked to the north-east, for geological reasons, as AASE-12X ST1 and was then successfully drilled to a total depth of 10,300 feet MD into the base Kareem. The well encountered 15.5 feet of net pay in the Kareem Shagar sand, with oil bearing sands present to the base of the reservoir. The well was completed as a Shagar sand producer and perforated in the interval 9,669 to 9,684.5 feet MD. The well flowed oil and gas on test at an average rate of 2,595 bopd and 4.7 MMscf/d respectively, on a 48/64" choke. The well was put on production at an initial flow rate of 1,038 bopd using a 28/64" choke.

The appraisal/injection well Al Ola-3, located in the southern part of the AASE field was spud on 15 July 2012 and successfully completed towards the end of August 2012. This will become an injector well targeting the Kareem sands, and it is located to the south and south-east of the Al Ola-1 and Al Ola-2 wells respectively.

The CPR reserves estimates were updated in early 2012 in the NW Gemsa Concession, with the 2P Gross Initial Oil Reserves being 40.4 MMbo and the 2P Gross Initial Raw Gas Reserves estimated to be 45.34 Bscf. This totals a 2P Gross Initial Reserves of 48.21 MMboe (19.28 MMboe net to Circle). This is 34% higher than the P50 estimate of 35.9 MMboe of Ultimate Recoverable Resources announced in 2011, with 14.4 MMboe net to Circle. Following production of 8.48 MMbo gross through to end June 2012, the 2P Gross Remaining Recoverable Reserves are estimated to be 31.92 MMbo. Work on the installation of permanent facilities has continued and completion of the gas pipeline is anticipated early next year.

The appointment by Circle of a highly experienced Country Manager and establishment of a fully staffed office in Cairo, in early 2012, has contributed greatly to improving the interaction with EGPC.

Tunisia

In the Grombalia permit, a 2D seismic programme of 76 km was acquired and processed in the first half of 2012. The interpretation of that seismic led to the final selection of an exploration well location to test a structure for the Bou Dabbous and Abiod formations that are established productive horizons in the area. The Grombalia commitment well, Bou Argoub-1, is to be spudded following completion of the civil engineering works which are now underway following more permitting delays. In addition, the rig will be mobilised to drill the Sedouikch well on the Ras Marmour permit following the completion of the Bou Argoub well. Plans and tendering are also underway for acquiring a 300 km 3D seismic acquisition over the Mahdia block for late 2012. This data will assist in finalising the ranking of prospects for future drilling. As always is the case, the exact timing is likely to be linked to the availability of seismic vessels within the Mediterranean area.

Oman

For our onshore Block 49, a 2D seismic survey of a planned 2,500 km commenced in mid July 2012. This survey is located in the south-eastern part of the permit, north-east of the 2010 survey. The 2D survey is located to cover an area lacking in seismic control to determine any potential drilling targets.

The farm-out process for the deeper water prospects in offshore Block 52 has been very active in the first half of 2012 but has so far not resulted in finalising any agreement. Following encouraging mapping of prospects within the shallow water inshore of Sawqirah Bay it is likely that additional 2D seismic coverage will be acquired to firm up targets for drilling in this shallow water region of the permit. We believe these could be advantageously drilled on a sole risk basis.

FINANCIAL REVIEW

Revenue from oil and gas sales in H1 2012 amounted to US$35.4 million which represented an increase of 23% over the same period in 2011. This was due mainly to a significant increase in gas sold during H1 2012 (up 111% on H1 2011) together with higher prices achieved for both oil and gas sales.

Gross profit for the period amounted to US$16.4 million (H1 2011: US$9.9 million) while operating profit at US$14.7 million (H1 2011: US$8.3 million) was up by 78% on the same period in 2011. EBITDA amounted to US$18.9 million for the period which represented an increase of 60% over H1 2011.

After allowing for net financing costs of US$1.4 million the Group recorded a net profit of US$13.3 million (H1 2011: US$8.7 million) an increase of 53%.

Net cash generated by operations before working capital changes amounted to US$19.0 million (H1 2011: US$8.6 million negative). Following working capital movements net cash generated in H1 2012 amounted to US$14.2 million (H1 2011: US$1.7 million).

At 30 June 2012 Group total assets amounted to US$245.5 million (H1 2011: US$212.9 million) while net assets amounted to US$204.1 million (30 June 2011: US$167.6 million).

Cash balances at 30 June 2012 amounted to US$13.8 million and this position has improved post period end as a result of increasing payments received from EGPC resulting in a cash balance at the end of August of US$15.5 million. Despite increased sales levels in Egypt as a result of increases in both volume and oil prices the EGPC receivables as at 31 August 2012 have reduced since year-end.

Thomas Anderson

Chairman

3 September 2012

Glossary

In accordance with the guidelines of the AIM Market of the London Stock Exchange, Professor Chris Green, Chief Executive Officer of Circle Oil Plc, an explorationist and geophysicist with over thirty years oil & gas industry experience, and Dr Stuart Harker, VP Geology, also with over 30 years experience, are the qualified persons as defined in the London Stock Exchange's Guidance Note for Mining and Oil and Gas companies, who have reviewed and approved the technical information contained in this announcement. In relation to Egypt Professor Green and Dr Harker have relied on primary information supplied by the operator in carrying out their review.

Circle Oil PLC

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2012 - UNAUDITED

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2012 - UNAUDITED

Circle Oil PLC

CONDENSED CONSOLIDATED statement of financial position

AT 30 JUNE 2012 - UNAUDITED

 Circle Oil PLC

CONDENSED CONSOLIDATED cash flow statement

FOR THE SIX MONTHS ENDED 30 JUNE 2012 - UNAUDITED

Circle Oil PLC

consolidated STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2012 - UNAUDITED

Circle Oil PLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2012

1. Basis of preparation

The condensed consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) and in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.

The accounting policies and methods of computation used in these interim financial statements are consistent with those used in the most recent annual audited financial statements and those envisaged for the year ended 31 December 2012 financial statements, with the exception of the following:

Adoption of new and revised Standards

The following new and revised Standards have been mandatorily adopted by the Group during the period. Their adoption is not expected to have any material impact on the Group.

IFRS 7 (amended) Financial Instruments: Disclosures (effective for accounting periods beginning on or after 1 July 2011).

IAS 12 Deferred Tax: Recovery of Underlying Assets (effective for accounting periods beginning on or after 1 January 2012) (not yet endorsed by EU).

At the date of these interim financial statements the following Standards were effective but not relevant to the Group

IFRS 1 (amended) Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters (effective for accounting periods beginning on or after 1 July 2011) (not yet endorsed by EU).

2. Basic and diluted earnings per share

The calculation of basic earnings per share attributable to the ordinary equity holders is based on the following data:

Diluted earnings per share is calculated using the weighted average number of ordinary shares assuming the conversion of its potential dilutive ordinary shares outstanding which relate to the convertible loan, warrants and employee share options. All of the Group's potential ordinary shares were dilutive for the period ended

30 June 2012 which resulted in a decrease in earnings per share. The Group had total potential ordinary shares outstanding of 105,429,005 at 30 June 2012 (2011: 103,354,685).

3. Segmental reporting

Sales revenue in Africa of US$35.36million (H1 2011: US$28.69million) consists of US$30.43 million in oil sales in Egypt and US$4.93 million in gas sales in Morocco. Corporate comprises mainly corporate expenses, cash and other assets and liabilities not directly attributable to an operating segment.

4. Exploration and evaluation assets

The movement on exploration and evaluation assets which relate to oil and gas interests during the period was:

Oil and gas interests at 30 June 2012 represent exploration and related expenditure on the Group's licences & permits in the geographical areas noted above. The realisation of these intangible assets by the Group is dependent on the development of economic reserves and the ability of the Group to raise sufficient funds to develop these interests. Should the development of economic reserves prove unsuccessful, the carrying value in the statement of financial position will be written off.

The Directors have considered whether facts or circumstances exist that indicate that exploration and evaluation assets are impaired and consider that no impairment loss is required to be recognised as at 30 June 2012. Exploration and evaluation assets have been assessed for impairment having regard to the likelihood of further expenditures and ongoing appraisal for each geographical area.

5. Production and development assets

The movement on production and development assets which relate to oil and gas interests during the period was: