Circle Oil Plc Regulatory News (COP)

13 May 2013

Circle Oil Plc

(The "Company") and its Subsidiaries ("Circle" or the "Group")

Preliminary results for the year ended 31 December 2012

Circle Oil Plc (AIM: COP), the international oil and gas exploration, development and production company, is pleased to announce its results for the year ended 31 December 2012.

Financial Highlights

·; Increase in Group revenue due to increased production and higher oil and gas prices resulting in sustained profitability

·; Significantly improved cash receipts from EGPC during 2012

·; Convertible loan of US$30 million extended for three years to July 2015

·; Two year US$12.5 million secured working capital facility signed with Ahli United Bank Egypt in December 2012

Operational Highlights

·; 100% success in five well Egyptian drilling campaign comprising four producing and one water injection wells

·; Egyptian gross oil production up 13% to 3.17 MMbo from 2.81 MMbo

·; Moroccan gross gas production up 86% to 1.47 bcf from 0.79 bcf

·; Moroccan 8 inch gas pipeline completed early 2012 resulting in increased gas off-take

Post Period End

·; Completion of 12 inch gas pipeline in Egypt facilitating commencement of gas production and associated liquids in early 2013

·; Water injection programme continuing in Egypt which is aimed at improving recoverability

·; Further increases in oil and gas production in Egypt and Morocco during 2013 to date

·; Egyptian gross oil production c. 10,200 bopd and gross gas production 11 MMscf/d in April 2013

·; Moroccan gross gas production at 6.3 to 6.7 MMscf/d since early April 2013

Thomas Anderson, Chairman, said:

"2012 was another successful year for Circle during a challenging period, given the scale of change in our core area of operations. We increased operating profitability, improved cash flow and positioned the Company for expansion in the coming period ."

For further information contact: 

Circle Oil Plc (+44 20 7638 9571)

Professor Chris Green, CEO

Brendan McMorrow, CFO

Investec (+44 (0)20 7597 5970)Chris SimNeil Elliot

Liberum Capital Limited (+44 (0)20 3100 2222)Simon Atkinson

Citigate Dewe Rogerson (+44 (0)20 7638 9571)Martin JacksonJack Rich

Murray Consultants (+353 1 498 0320)Joe MurrayJoe Heron

Chairman's Statement

I am pleased to report another year of increased revenue and sustained profitability with enhanced oil production in Egypt and gas production in Morocco as the business climate in North Africa and parts of the Middle-East continued to evolve.

In Egypt, four successful infill production wells and one water injection well were drilled on the NW Gemsa Concession during 2012. The field development plan continued to prove successful with the drilling of infill production wells and water injection wells and is providing us with a stable, sustainable platform for long-term production. The replacement of temporary rental equipment and facilities with permanent facilities has continued throughout 2012 and is nearing completion. This will have the effect that capital expenditure will decrease and profitability and cashflow should increase during the latter part of 2013.

Oil production averaged 8,673 bopd (gross) throughout 2012 and a total of 3.17 MMbo (gross) was produced. The first quarter of 2013 has seen production levels rising with daily gross oil production reaching 10,200 bopd in April 2013. In addition, the new 12 inch gas pipeline was commissioned on 12 February 2013 and the intial daily gas production of 8 MMscf/d is now standing at approximately 11 MMscf/d. The additional extraction of condensate and natural gas liquids from the gas will further improve the profitability of this facility.

In Morocco, interpretation of the new 3D seismic survey over the Lalla Mimouna permit and planning of the next drilling campaign on both the Sebou and Lalla Mimouna permits has occupied the interpretation and technical team over 2012. The new 8 inch pipeline installed from the Sebou permit area to the industrial centre in Kenitra was commissioned in February 2012. Production rates increased from 2.5 to 4.5 MMscf/d in 2012 and with further increases during Q1 2013 had reached 6.3 to 6.7 MMscf/d by early April 2013. This increasing level of production will express itself in material increases in revenue from Morocco which in 2012 alone saw a 109% increase. With the existing and growing need for energy to support the local industrial infrastructure, our pipeline capacity of over 23 MMscf/d and good fiscal terms, we will be further capitalising on this local energy requirement in the coming twelve months.

In Tunisia, the one exploration well drilled on the Grombalia block in 2012 encountered hydrocarbons in the target Bou Dabbous reservoir, but was classed as a non-commercial discovery, due to high levels of water saturation. Preparations are completed to drill the Sedouikech exploration well on the Ras Marmour permit in 2013 while we await final approvals from the Tunisian authorities to commence drilling. A 3D seismic survey has just been completed over the northern part of the Mahdia block in order to firm up a drilling location on the El Mediouni prospect, which presently carries a third party validated estimate of 125 MMbo gross STOOIP.

In Oman, the additional 2D seismic acquired in 2012 in the south-east of Block 49 is close to final interpretation to define a prospect to drill a well over the coming 15 months. In Block 52 an infill 2D seismic programme over the nearshore area of Sawqirah Bay is at tender for acquisition as soon as possible in 2013. Following the mapping of three very encouraging material leads in this shallow water area, which could be drilled on a sole risk basis, new farm-out efforts have commenced with companies interested to partner in the block. Oman remains an area with good potential for exploration within our existing assets and also for the future. We have recently submitted a bid for further acreage in Oman and await the result over the coming months.

The 2013 Competent Persons Report has been recently completed on Circle's productive assets showing only a minor change overall to the 2012 reserves values, resulting from re-mapping of the Egyptian fields based on the re-processed 3D seismic.

The forthcoming drilling campaign in Morocco on both the Sebou and Lalla Mimouna Nord Permits and continued development drilling in Egypt in 2013 is important for Circle as, if successful, it will significantly increase our reserve base for further production growth. Similarly the drilling in Egypt through H1 2013 will see the Al Amir and Geyad fields reaching a first stage of maturity and the sustainable production and reducing capital expenditure that goes with this will allow for increasing investment in other projects for the future.

Our acreage in Tunisia and Oman has yet to show its true potential, but as operations in these two countries increase over the next period we will await the results with optimism. In both these countries there is definite potential value in increasing Circle's presence as part of our growth strategy and we are optimistic on concluding ongoing negotiations on asset increases to announce to the market in the coming months.

Our task for the coming year is to build on this core groundwork bringing new assets into the Company for expansion and growth to be financed from existing cash flow and senior debt which we are currently negotiating. Certainly we have carefully managed the last 18 months in the best interests of the Company but now seek to break-out and grow the Company over the coming year.

Financial 

I am very pleased to report that Circle has achieved another very positive set of financial results for 2012 with oil and gas revenues up by 26% to US$73.3 million, operating profit up by 41% to US$28.2 million and EBITDA up by 48% to US$39.3 million. Cash receipts from EGPC were up significantly on 2011 and this resulted in cash generated from operations of US$39.3 million, an increase of 243% on 2011.

In May 2012 we extended the US$30 million convertible loan for a further three years to 19 July 2015 and in December 2012 we put into place a two year US$12.5 million working capital facility with Ahli United Bank Egypt.

Full details are set out later in this announcement in the financial review report.

Corporate

As part of the continuing process to strengthen the Board and the Company overall we recently appointed Dr. Keith Morris to the Board and his combined experience in both exploration in the oil industry and financial markets will serve us well. We also appointed Hassan Hataba as our new Country Manager in Egypt. Mr. Hataba has many years of experience of operating in the industry in Egypt. We are aiming to further strengthen the Board in 2013 with the appointment of a respected non-executive Director with the relevant commercial experience. We continue to look to add to our technical and corporate resources within the Company as we continue to grow our operations.

Outlook

In 2013-2014, the work programme of drilling and engineering sees Circle and its partners completing the main elements of the development work in Egypt, to bring the Al Amir and Geyad fields to maturity.

In Morocco, the drilling campaigns planned for the Lalla Mimouna Nord and Sebou blocks, the tie-in of one further well from our earlier discoveries and the laying of a new 12 kilometre branch line to our new 8 inch pipeline represents a very active programme. Pre-drilling civil engineering work is well underway and the prospects to drill have recently been approved with our State partner, ONHYM, with drilling still expected to commence in H1 2013. Additional exploration drilling sees the drilling of two wells in Tunisia, one each on the onshore Ras Marmour and offshore Mahdia Blocks. The latter may extend into 2014.

In Oman, we will be acquiring additional 2D seismic over Block 52 and have re-launched our efforts to find a partner to join in the drilling of a well on Block 52. Following completion of the seismic interpretation from the new 2D data on Block 49 we are presently planning to commence drilling in the coming 12 months.

The Company, against unparalleled change in the MENA region in the past 18 months has managed to grow assets and production significantly. Managing this change has led to a number of challenges and delays which have been a source of frustration to the Board, staff and shareholders. Despite this backdrop, the Company remains committed to realising the value of its considerable asset base which now has a good spread of upside exploration, growing production and a good reserve base.

Strategically we now aim to grow both within our existing base with more aggressive work programmes and by adding additional projects in the coming months to increase the pace of further growth for the near future. The realisation of the full value potential of our existing exploration portfolio together with the addition of further assets balanced between low and calculated risk will be aimed at achieving the growth and value we are seeking for shareholders in both the short and medium term. We remain focused primarily within the MENA and Sub- Saharan Africa regions.

Within our region of operations the period of change over the last year has continued and we have remained on track both operationally and financially. We continue to remain confident of maintaining this progress and look forward to adding to our asset base over the coming period. I am delighted once again, to thank you our shareholders, for your support and to sincerely thank all our staff, associates and partners for their continued good work and commitment during the past year.

Thomas Anderson

Chairman

Operations Review

2012 has been another successful year for the Company's operations, with the completion of a new larger Moroccan gas pipeline to Kenitra. This greater capacity facilitated an increase in off-take up to 4.5 MMscf/d. In Egypt, we have continued to appraise our assets and bring new wells into production on the Al Amir SE ("AASE") and Geyad fields. We have enjoyed considerable success with water injection wells supporting production and increasing recovery and reserves. 2012 also saw the development of a gas pipeline. This came on stream in early 2013 allowing us to commercialise gas resources from the licence. In Tunisia, one exploration well was drilled on the Grombalia Block, which was a non-commercial oil discovery. In Oman, we completed a 2D seismic programme for onshore Block 49 in late 2012 which has been processed and is being interpreted in early 2013. A programme of additional 2D seismic for the near-shore Sawqirah Bay area leads of Block 52 has been designed for acquisition in 2013.

The 2013 Reserves Certification Report ("RCR") has recently been completed by Bayphase Ltd, an independent consultancy firm specialising in petroleum and gas reservoir evaluation, resulting in 2P Gross Initial Reserves for the Egyptian NW Gemsa and Moroccan Sebou onshore concessions of 50.26 MMboe (21.87 MMboe net to Circle). 2P Gross Remaining Reserves, which accounts for production to date, are estimated to be 40.00 MMboe (17.59 MMboe net to Circle).

Morocco

Circle continues to operate successfully in Morocco and has grown its asset base through a successful strategy of identifying and drilling multiple small, but very economic, onshore gas structures. The favourable local operating and commercial environment allows these discoveries to be monetised via the supply of gas to local industry. Production from its assets in the Sebou Concession in Northern Morocco has seen a marked increase where gas delivery through 2012 rose from between 2.0 and 2.5 MMscf/d (344 to 430 boepd) to 4.5 MMscf/d (774 boepd) and a third small off-taker was added in late December 2012. The off-take has increased further in early April 2013 with daily supplies rising to between 6.3 and 6.7 MMscf/d (1,086 to 1,155 boepd). A further increase is planned for Q4 2013/early 2014 when additional off-take is expected to take production to between 10.0 and 11.0 MMscf/d (1,725 to 1,900 boepd).

Interpretation of the 17 sq km of 3D seismic that fills the gap between the Gaddari and Sebou 3D surveys of 2007-2008, plus 135 sq km of 3D seismic in our Lalla Mimouna Nord block has led to the definition of the drilling targets for the 2013 drilling campaign. This programme will target prospects in Sebou and Lalla Mimouna Nord as well as incorporating a redrill of the KAB-1 well.

The 2013 RCR estimates take account of the results of the drilling and development activity up to ADD-1 well. In the Sebou concession, the 2P value of Gross Initial Gas Reserves is 30.15 bcf (5.2 MMboe) (22.32 bcf (3.85 MMboe) net to Circle). Following production of 3.41 bcf (0.59 MMboe) through to end 2012, the 2P Gross Remaining Reserves are estimated to be 26.74 bcf (4.61 MMboe) (19.89 bcf (3.43 MMboe) net to Circle). The small increase in Initial Gas Reserves is the result of performance based re-assessment of the recovery factors, based on a greater understanding of the asset.

In the Sebou concession, Circle has a 75% share and ONHYM, the Moroccan State oil company, has a 25% share. In the Oulad N'zala concession, Circle has a 60% share and ONHYM has a 40% share. Both concessions include the right of conversion to a production licence in the event of commercial discoveries.

The Lalla Mimouna Permits named Lalla Mimouna Nord and Lalla Mimouna Sud areas also situated in the Rharb Basin and the permits were awarded to Circle in January 2010. The Permits cover an area of over 2,211.3 km3 and are a continuation of the same geology and a similar exploration play to the adjacent Sebou Permit detailed above. The agreement is for a period of 8 years with the right of automatic conversion to an exploitation period for areas agreed to have discovered commercially exploitable hydrocarbons. Under the terms of the agreement the percentage interest in the permit is Circle 75% and ONHYM 25%. Interpretation of 135 sq km of 3D seismic in Lalla Mimouna Nord is being completed and anomalies have been mapped for prospects to be drilled in 2013.

Egypt

In Egypt, excellent operational progress continued on the development of the AASE and Geyad oilfields. Operations continued unaffected and we are now in the final stages of the initial development of these two oilfields. Oil production from the Kareem Shagar and Rahmi sandstones of the AASE and Geyad fields has recently been augmented by the commencement of gas production and in 2012 five successful wells were drilled, comprising four producers and one water injector. 

Appraisal well AASE-11X was spudded on 5 February 2012, and reached a TD of 10,200 feet. Following sidetracking the well encountered 15.5 feet of net pay in the Shagar sand, with oil bearing sands and was perforated and 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.

Water injection well Al Ola-3 was spudded on 15 July 2012 and was successfully drilled to a total depth of 10,550 feet MD into the Upper Rudeis. The well encountered 18 feet of net reservoir in the Shagar sand and 20 feet of net reservoir in the Rahmi sand, with high water saturations present to the base of the reservoir. It was completed as a Shagar and Rahmi water injector.

Infill producer well Geyad-6 was spudded on 10 September 2012 and was side-tracked successfully to a total depth of 6,350 feet MD into the Upper Rudeis. The well encountered 7 feet of net pay in the Shagar sand flowed oil and gas on test at an average rate of 1,559 bopd and 1.346 MMscf/d respectively, on a 24/64" choke and was completed as a Shagar sand producer.

Infill producer well AASE-13 was spudded on 14 October 2012 and reached a TD of 10,350 feet MD in the Upper Rudeis. The well encountered 20 feet of net pay in the Shagar sand and 29 feet of net pay in the Rahmi sand and was perforated and completed as a Shagar sand producer having flow tested oil and gas on test at an average rate of 1,600 bopd and 1.3 MMscf/d respectively, on a 32/64" choke.

Infill production well AASE-14X, was spudded on 26 November 2012 and following sidetracking encountered 16 feet of net pay in the Shagar sand, plus 13 feet of net pay in the Rahmi. The well flowed with an initial test rate was 3,486 bopd and 3.18 MMscf/d through a 48/64" choke and has been completed as a Rahmi producer.

AASE-16 was spudded on 1 March 2013 to a total depth of 11,100 feet MD into the Upper Rudeis Formation. The well encountered 26 feet of water bearing net reservoir in the Shagar sand and in addition, encountered 31 feet in the underlying Rahmi sand in poor quality reservoir facies. The Shagar zone has been completed for water injection.

Additionally, the 12 inch gas pipeline has now been tied-in and gas production commencerd on 12 February 2013. The initial flow rate at start-up was 8 MMscf/d (1,456 boepd) and is currently 11 MMscf/d. The gas is rich in extractable liquids that will add to the income stream for Circle. Gas processing is presently providing an additional 90 bocd and 20 tonnes (circa. 200 boepd) of LNG per day. By mid-April 2013, oil production stood at 10,200 to 10,500 bopd. Fluid offtake from the Geyad and AASE fields has been and will continue to be managed in the light of good oil field practice as the waterflood is initiated and becomes operational and proven effective to maximise recovery. Gross production from start up in February 2009 through to the end of December 2012 was 10.14 MMbo.

The 2013 RCR reserve estimates take account of the results of the drilling and development activity up to AASE-13X well. In the NW Gemsa Concession, 2P Gross Initial Oil Reserves are estimated to be 37.7 MMbo and the 2P Gross Initial Raw Gas Reserves are estimated to be 42.66 bcf. This totals a 2P Gross Initial Reserves value of 45.05 MMboe (18.02 MMboe net to Circle).

Following production of 10.13 MMbo through to the end of 2012, the 2P Gross Remaining Reserves are estimated to be 35.39 MMboe of oil, gas and recoverable liquids (14.16 MMboe net to Circle).

The minor decrease in Initial Oil Reserves is due to additional infill well data and to the re-mapping of the re-processed 3D seismic that resulted in a small reduction of the field area closures, particularly in the Geyad field.

The NW Gemsa Concession containing the Al Amir and Geyad Development Leases, covering an area of over 260 sq km lies approximately 300 kilometres south-east of Cairo, onshore in the prolific hydrocarbon province of the Gulf of Suez Basin. The Basin has an area of approximately 19,000 sq km and is considered as the most prolific oil province rift basin in Africa and the Middle-East. In early 2008, Circle farmed into the Concession acquiring a 40% interest in the licence with operator, Vegas Oil and Gas and partner Sea Dragon Energy Inc. holding 50% and 10% respectively.

Tunisia

Circle has interests in three exploration licences in Tunisia, the Mahdia Permit (offshore) and the Ras Marmour and Grombalia Permits (both onshore), where activity this year has involved seismic interpretation, the drilling of one exploration well and well location planning.

The Mahdia permit covers an area of 3,780 sq km and is bounded by the Nabeul Permit to the north and the territorial boundary with the island of Lampedusa (Italy) to the east. Historically the geology and potential of this and the surrounding offshore area was successfully explored by Shell and Total and previous exploration has resulted in discoveries and commercial oilfields including fields such as Tazerka, Birsa, Oudna, Halk El Menzel and Isis.

A new 3D seismic survey of 300 sq km has recently been acquired from March to early May 2013 to properly locate an exploration well on the El Mediouni prospect planned to be drilled later in 2013/early 2014, as well as to resolve the interpretation over several other leads in the northern part of the Mahdia Block. The primary El Mediouni prospect presently carries a third party validated unrisked resource value of 125 MMbo STOOIP gross. In addition, the permit contains other undrilled prospects identified on legacy and our own 2D data. These targets include the West El Mediouni lead (approx. unrisked resource value 45 MMbo STOOIP gross).

The Ras Marmour permit is located in the South-East of Tunisia covering part of Djerba Island and south of the Gulf of Gabès. Circle holds a 23% partner working interest. A farm-in to the permit was completed in February 2007. The permit covers 1,564 sq km located in an area with multiple hydrocarbon discoveries. Additional 2D seismic included acquisition over the Isle of Djerba firmed up the drilling location for the Sedouikech prospect, which is to be drilled in 2013 in proximity to the existing Robbana Field.

The Grombalia Permit covers an area of 2,792 sq km and it is currently operated by Exxoil, with Circle being a partner holding a 36% working interest. The farm-in was completed in February 2007. A number of other exciting prospects have been identified for future drilling onshore within the permit and include more structures associated with the Abiod and Bou Dabbous formations. These have proven historically to be good for production within structurally controlled faulted closures. An additional 76 kilometres of 2D seismic was acquired in early 2012 to firm up the commitment well drilling location.

The Bou Argoub-1 (BAB-1) commitment exploration well in the South-West Belli area of the Grombalia Permit commenced drilling on 30 October 2012. The expected Bou Dabbous reservoir rock was encountered from 1,109.5 to 1,199.5 metres MD with gas and oil shows. The second target formation, the Abiod, was encountered from 1,432.5 to 1,520 metres with weak oil and gas shows. The initial indications of hydrocarbons in the Bou Dabbous were encouraging, though following full log analysis results showed the limestone at this location were of insufficient reservoir quality and hydrocarbon saturation to produce hydrocarbons at commercial rates.

The past two years in Tunisia have seen a significant number of changes within the internal exploration and production decision making processes for the oil and gas industry and this has resulted in a degree of delay and impact on operations. We remain fully committed to our work programmes and can see definite benefit in furthering our involvement in Tunisia for the future.

Oman

Circle operates two concessions in Oman, the onshore Block 49 and the offshore Block 52.

Circle conducted a large 3D seismic survey over an area of approximately 900 sq km in south western onshore Block 49 in 2010. Following processing, interpretation of the resultant data was completed. This led to the decision to acquire more 2D seismic to the north of the 3D area to better define drillable prospects. Circle was granted an extension of 18 months to the exploration period for the onshore Block 49 from 26 December 2012 to 26 June 2014. Circle acquired an additional 2D dataset of 2,306 line kilometres of closely spaced 2D seismic survey in 2012 in the south-eastern part of the permit, north-east of and adjacent to the 3D survey which was completed in 2010. Interpretation of the processed data is underway in order to plan to commence drilling an exploration well in the next 12 months.

For the offshore Block 52, Circle has interpreted an additional 5,027 line kilometres of 2D seismic data that infilled the leads in three areas of Block 52 and has firmed the outer Sawqirah Bay (a virgin basin) leads into drillable prospects. In addition three large leads were recognised in the inner, nearshore, shallow water part of Sawqirah Bay and additional infill 2D seismic is presently at tender and planned for acquisition in 2013 to firm these leads into drillable prospects. The farm-out process has been re-invigorated, brochures prepared and a data room set up with presentations having taken place at recognised industry events in February and March 2013. Subsequently a number of companies have shown interest and reviews by those companies will be scheduled as necessary with the objective of obtaining a partner to drill an exploration well.

Summary

2012 was another successful year for Circle. We continued to manage our producing assets in a manner which will maximise reserves and long-term recovery. We significantly increased production in both Egypt and Morocco. Through the development of new infrastructure in both of these countries, we have augmented our ability to bring our product to market.

On the exploration front, we have continued to identify new opportunities for future campaigns in Morocco, Egypt and Oman. The diligent work which has been undertaken in collecting and assessing seismic data will help us to plan our activities in each of these territories. We are presently aiming to drill 12 wells in 2013, with an increasing focus on exploration activity.

Our financial strength has improved throughout the year as shown in the financial review for 2012. Significant improvement in the Egyptian receivables position can be seen which is also within the context of rising revenues in 2012. The 2012 Moroccan revenue increase results from the near doubling of production in 2012 and further significant annualised increases in revenue will stem from the 50% uplift in production levels since April 2013.

We remain well funded for our 2013 work programmes with further annualised revenue increases expected through 2013. We continue to advance our plans for senior debt and intend to utilise these proceeds to accelerate work programmes in our existing acreage as well as new assets introduced into the Company.

I wish to thank all our staff in Ireland, the UK, Morocco, Tunisia, Egypt and Oman for their enthusiasm and hard work. I also wish to thank our partner oil companies and our State Oil and Gas partners for their input and support throughout our exploration and production operations. The year has again been challenging as the region continues to evolve and resulting delays have, at times, been a source of frustration to the Board, staff and shareholders both operationally and in terms of enhancing value. Both management and staff have faced these challenges with total commitment and hard work and this has resulted in a successful 2012. We now aim to add additional projects to the Company base in the coming months to further grow and enhance the Company for the future.

Professor C. D. Green

Chief Executive Officer

Financial Review

Highlights

·; Group revenue of US$73.3 million - up by 26% on 2011

·; Operating Profit of US$28.2 million - up by 41% on 2011

·; EBITDA of US$39.3 million - up by 48% on 2011

·; Cash generated from operations of US$39.3 million - up by 243% on 2011

·; Cash at bank at year end of US$20.4 million - up by 42% on 2011

Results for the year

Circle has achieved another very positive set of financial results for 2012, as a result of increased production and revenue from oil in Egypt and gas in Morocco together with increased commodity prices achieved in both areas of operation.

Oil and gas revenues increased to US$73.3 million in 2012 from US$58.0 million in 2011, an increase of 26%. This positive result was due primarily to an increase in the volume of oil and gas sold together with increased prices achieved for both products.

The average oil price achieved for 2012 was US$107.37 per BO versus US$105.46 in 2011, while the average gas price achieved was US$9.40 per Mscf as against US$8.81 in 2011. Circle's share of volume of oil sold from the NW Gemsa permit in Egypt was 1.26 million barrels (2011: 1.09 million barrels) while the volume of gas sold from the Sebou permit in Morocco was 1.1 bcf a 91% increase over 576 MMscf sold in 2011.

Gross profit achieved for the year was US$31.8 million against US$23.4 million for 2011, an increase of 36% year on year.

Total operating costs amounted to US$3.6 million and are up by US$0.3 million on the previous year due mainly to an increased write-off of exploration costs.

Operating profit for the year amounted to US$28.2 million, an increase of over 41% on the previous year.

After net finance costs for the year amounting to US$2.9 million comprising mainly US$1.8 million relating to interest paid on the convertible loan and US$1 million of non-cash costs (2011: US$5.7 million of net finance revenue) the Group recorded a net profit of US$25.2 million for 2012 (2011: US$25.6 million) a marginal decrease on the previous year.

However, the underlying Group profit for 2012 before non-cash adjustments has increased significantly as evidenced by EBITDA which amounted to US$39.3 million (2011: US$26.6 million) an increase of 48% for the year.

Cash flow

Net cash generated from operations for 2012 amounted to US$39.3 million (2011: US$11.5 million) an increase of 243% over the previous year. This increase was due to significantly improved cash receipts from EGPC during 2012 as against 2011, together with an increased operating profit for 2012.

Net cash used in investing activities relating to oil and gas assets amounted to US$34.4 million (2011: US$43.9 million) and comprised mainly of US$11.9 million invested in exploration and evaluation assets in Morocco, Tunisia and Oman while US$22.5 million was invested in production and development assets in Egypt and Morocco.

Net cash used from financing activities totalled US$1.8 million (2011: US$1.8 million used) and related to interest paid on the convertible loan.

Group cash balances at year-end increased by 42% to US$20.4 million (2011: US$14.4 million) of which US$1.6 million was in restricted accounts leaving US$18.8 million available for use.

Statement of financial position

The Groups balance sheet has further strengthened, as a result of the net profit recorded for the year along with an increase in other reserves resulting from the accounting treatment applied to the extended convertible loan.

In May 2012 the Company extended the KGL US$30 million convertible loan for a further three years to July 2015 and in December 2012 a two year working capital facility of US$12.5 million was arranged with Ahli United Bank Egypt. Both facilities attract very competitive interest rates.

Total assets for the Group at 31 December 2012 amounted to US$260.9 million (2011: US$234.1 million) and comprised mainly oil and gas assets of US$200.7 million, US$39.8 million of trade and other receivables and cash at bank of US$20.4 million.

Net assets amounted to US$216.0 million at year end (2011: US$184.5 million) representing an increase of 17% year on year.

Working capital for the Group amounted to US$43.9 million (2011: 37.5 million - after adjustment for the convertible loan) an increase of US$6.4 million over the previous year's figure.

Net financial gearing at end December 2012 amounted to a low 2% (2011: 8%).

Brendan McMorrow

Chief Financial Officer

Circle Oil PLC

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2012

Circle Oil PLC

CONSOLIDATED statement of financial position AT 31 DECEMBER 2012

Circle Oil PLC

CONSOLIDATED cash flow statement

FOR THE YEAR ENDED 31 DECEMBER 2012

Reconciliation to net cash generated from operations

Circle Oil PLC

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2012

NOTES TO THE FINANCIAL STATEMENTS

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and International Financial Reporting Interpretations Committee (IFRIC). They have also been prepared in accordance with the Companies Acts, 1963 to 2012 and are compliant with the rules of the Alternative Investment Market (AIM) of the London Stock Exchange.

The financial statements have been prepared on the historical cost basis.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and all of its subsidiaries made up to the end of the financial year. Subsidiaries are consolidated in the Group financial statements from the dates on which control over financial and operating policies and decisions is obtained. All intercompany transactions, balances, income and expenses have been eliminated in full on consolidation.

Basic and diluted earnings per share

The calculation of the basic earnings/per share attributable to the ordinary equity holders of the parent 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 equity derivatives outstanding. All of the Group's potential ordinary shares were dilutive for the year ended 31 December 2012 which resulted in a decrease in earnings per share. The Group had total potential ordinary shares outstanding of 114,774,268 at 31 December 2012 (2011: 104,216,937).

In accordance with the guidelines of the AIM Market of the London Stock Exchange, Professor Chris Green, Chief Executive Officer of Circle Oil plc, and Dr Stuart Harker both explorationists with over thirty years oil & gas industry experience, are the qualified persons, as defined in the London Stock Exchange's Guidance Note for Mining and Oil and Gas companies, who has reviewed and approved the technical information contained in this announcement.

Glossary of terms

bcf Billion cubic feet

BO Barrel of oil

bocd Barrels of condensate per day

bopd Barrels of oil per day

boepd Barrels of oil equivalent per day

CPR Competent Persons Report

EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation

EGPC Egyptian General Petroleum Company

LNG Liquified Natural Gas

MD Measured depth

MENA Midle-East North Africa

MMbo Millions of barrels of oil

MMboe Millions of barrels of oil equivalent

Mscf Thousand standard cubic feet of gas

MMscf Million standard cubic feet of gas

MMscf/d Million standard cubic feet of gas per day

ONHYM Office National des Hydrodarbures et des Mines

RCR Reserves Certification Report

REC. FAC. Recovery factor

Sq km Square kilometres

STOOIP Stock Tank Oil Originally in Place

TD Target depth

2D Two dimensional

3D Three dimensional

2P Probability of success of 50%

3P Probability of success of 10%

Notes to Editors

Circle Oil Plc (AIM: COP) is an international oil & gas exploration, development and production Company with an expanding portfolio of assets in Morocco, Tunisia, Oman and Egypt with a combination of low-risk near-term production and significant exploration upside potential. The Company listed on AIM in October 2004.

Internationally, the Company has continued to expand its portfolio over the past years and now has assets in the Rharb Basin, Morocco; the Ras Marmour Permit in southern Tunisia; the Mahdia Permit offshore Tunisia; the Grombalia Permit in northern Tunisia and the Zeit Bay area of Egypt. Circle also has the largest licence holding of any company in Oman. In addition to its prospective Block 52 offshore, Circle also has an ongoing exploration program in Block 49 onshore.

Circle's strategy is to locate and secure additional licenses in prospective hydrocarbon provinces and through targeted investment programmes, monetise the value in those assets for the benefit of shareholders. This could be achieved through farm-outs to selected partners who would then invest in and continue the development of the asset into production, or Circle may itself opt to use its own expertise to appraise reserves and bring assets into production, generating sustained cash flow for further investment.

Further information on Circle is available on its website at www.circleoil.net.