Eland Oil & Gas Regulatory News (ELA)

30th September 2015

Eland Oil & Gas PLC

 ("Eland" or the "Company" and, together with its subsidiaries, the "Group")

Interim results for the six months to 30 June 2015

Eland Oil & Gas PLC (AIM: ELA), an oil & gas development and exploration company operating in West Africa with an initial focus on Nigeria, today announces its financial results for the six month period to 30 June 2015.

H1 2015 HIGHLIGHTS

Operational

· Average Opuama Field gross production for first half of 2015 of 2,830 bopd (1,273 bopd net to Elcrest Exploration and Production Nigeria Ltd ("Elcrest"), Eland's joint venture company) based on production days.

· Opuama field recorded average production uptime of 81% for the first half of 2015. Production from OML 40 was halted for 14% of the first half of 2015 due to planned maintenance of the Trans Escravos Pipeline network by SPDC and a further 5% of the period due to industrial action at NNPC and NPDC. Current average Opuama uptime for second half of 2015 of 90%.

· Elcrest recorded total liftings of 163,095 bbls of crude oil in the first half of 2015. Elcrest has completed the loading and sale of 75,226 bbls gross of crude oil so far in the third quarter of 2015.

· Opuama-5 wellhead and christmas tree maintenance activities were successfully completed. The well was reperforated, with the perforation interval increased to 24ft. Work-over activities are continuing. The well will be subjected to an additional swabbing operation to improve the flow of oil after which the hook-up to the flow station facilities will be completed.

· Additional Work-over opportunities are currently under review. Work on Opuama-1 long string, which will be a newly producing string, will be carried out in early October (subject to contracting). There will be minimal interruption to current production with results due later in October.

Financial

· Cash and cash equivalents held as at 30 June 2015 of US$13.1 million (30 June 2014: US$19.7 million, 31 December 2014 US$15.0 million).

· In the first half of 2015 the Group sold 163,095 bbls of crude oil, generating revenues of $9.9m.

· Loss after tax of US$10.3 million for six months to 30 June 2015 (1H 2014: US$12.0 million loss, Full year 2014: US$16.3 million loss).

· A Reserve Based Lending (RBL) facility of up to $75 million was signed with Standard Chartered Bank to fund development of OML 40. Of this amount, $35 million has been committed and syndication for the remaining $40 million continues. As at 30 June 2015, $10m had been drawn from the RBL.

Outlook

· Continue evaluation and execution of work-over opportunities on OML 40.

· Commence a seven well development drilling programme on the Opuama field with drilling planned to begin in Q4 2015.

· Expected year end gross production exit rate from OML 40 of approximately 5,000 bopd, which has reduced due to the delay in getting a rig on location.

George Maxwell, CEO of Eland, commented:

"The excellent production performance from Opuama 1 and Opuama 3 experienced during 2014 has continued throughout the 1st half of 2015. We have initiated our work over program, beginning with Opuama 5, which although delayed due to contracting issues, will be connected to the flow line once the swabbing operation is complete.

The additional workover opportunity on Opuama 1 LS workscope has been completed and we are now engaging with our partners and contractors. Furthermore, we plan to have a rig on location in Q4 to commence the drilling programme on Opuama. However, the exact timing of this remains subject to completion of the Joint Operating Agreement with our partner NPDC.

With the new administration's continued support in offering a transparent, level playing field for positive foreign investment in Nigeria, we remain committed to investing in and commencing a multi-well drilling programme on OML 40 for many years to come."

For further information:

Eland Oil & Gas PLC (+44 (0)1224 737300)

www.elandoilandgas.com

George Maxwell, CEO

Louis Castro, CFO

Edward Cozens, IR

Canaccord Genuity Limited (+44 (0)20 7 523 8000)

Henry Fitzgerald O'Connor

Wei Loon Yap

Citigate Dewe Rogerson (+44 (0)20 7 638 7571)

Martin Jackson

Shabnam Bashir

Forward-looking statements

This report has been prepared to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The Statement should not be relied on by any other party or for any other purpose.

The report contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

CONDENSED CONSOLIDATED INCOME STATEMENT

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED BALANCE SHEET

CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Year ended 30 June 2015

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

General information

Eland Oil & Gas PLC is a limited liability company incorporated in Scotland and listed on the AIM of the London Stock Exchange. The address of the registered office is 34 Albyn Place, Aberdeen, AB10 1FW, United Kingdom. The principal activities of the Company are oil and gas exploration and development, with a focus on West African opportunities for acquisition and development.

The condensed financial statements for the six months ended 30 June 2015 were authorised for issue in accordance with a resolution of the Board of Directors on 29 September 2015

The information for the 6 months ended 30 June 2015 contained within the condensed financial statements does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006 but has been derived from those accounts. Statutory accounts for the year ended 31 December 2014 were approved by the Board of Directors on 21 May 2015 and delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying. The report did not contain any statement under section 498(2) or 498(3) of the Companies Act 2006.

The financial information contained in this report is unaudited and has not been reviewed.

Basis of preparation

The condensed financial statements for the six months ended 30 June 2015 have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with the accounting policies the Group intends to use in preparing its next annual financial statements and should be read in conjunction with the annual financial statements for the year ended 31 December 2014.

The Group incurred a net loss of $10.3 million during the period to 30 June 2015 and had net assets of $159.5 million as at that date.

After making reasonable enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue operations for the foreseeable future. For that reason, they continue to adopt the going concern basis in the preparation of the accounts.

Accounting policies

The accounting policies applied in these condensed financial statements are consistent with those of the annual financial statements for the year ended 31 December 2014, as described in the 2014 Annual Report. There has been no new IFRS's come into effect during the period.

2. LOSS BEFORE TAX

3. FINANCE COSTS

4. TAXATION

The Group has recognised a deferred tax asset of $2.2 million as at 30 June 2015 in relation to the temporary difference that arises between the net book value and the tax written down value of the oil and gas assets. Capital allowances can be deferred during the Pioneer tax relief period and will be available following the tax relief period, whilst the book value of the asset is depreciated following commencement of production in July 2014.

As at 30 June 2015, the Group has taxable losses of $147 million (31 December 2014: $130 million) for which no deferred tax asset has been recognised. It is forecast that there will be future taxable profits within the Pioneer tax relief period.

During the Pioneer tax relief period existing accumulated tax losses are required to be offset against taxable profits prior to applying the benefit of the tax relief period. The Group expects that the existing available tax losses will be fully utilised during the relief period and therefore no deferred tax asset has been recognised on the taxable losses.

5. EARNINGS / (LOSS) PER SHARE

From continuing operations

The calculation of the basic and diluted earnings/ (loss) per share is based on the following data:

6. INTANGIBLE OIL AND GAS ASSETS

The Group's oil and gas exploration and evaluation assets at 30 June 2015 relate to the Group's and All Grace carried interest in the Ubima marginal field in Nigeria.

The other intangible asset relates to the approval fee paid on grant of Pioneer tax status in 2014. The cost is being amortised on a straight line basis over the maximum expected tax relief period of three years with two further annual periods of extension and the charge for the period has been included within operating expenses in the income statement for the period ended 30 June 2015.

7. PROPERTY, PLANT AND EQUIPMENT

The Group's oil and gas development and production assets at 30 June 2015 entirely relate to the Group's interest in OML40 in Nigeria.

8. DECOMMISSIONING PROVISIONS

The provision for decommissioning is in respect of OML 40. The provision represents the present value of amounts that are expected to be incurred to the end of licence term, discounted to the present value using a 2.75% discount rate.

9. OTHER PROVISIONS

The short-term provision as at 30 June 2015 of $2.55 million represents managements best estimate of the groups liability under an agreement with a service provider for logistical and general support services from 2011 to 30 June 2015 (see note 2) and is expected to be settled within 12 months.

10. SHARE CAPITAL

A reduction in the nominal value of the Company's ordinary shares through a consolidation and sub-division of its share capital was approved at the Company's AGM held on 19 June 2015. Under the Share Capital Reorganisation the existing voting ordinary shares of £1 each were sub-divided into voting ordinary shares and deferred shares. The effect of the reorganisation was to decrease the nominal value of the voting ordinary shares of £1 each to £0.10 each. The creation of a class of deferred shares of £0.90 each was to ensure that the reorganisation did not result in an unlawful reduction of capital in the Company.

Each New Voting Ordinary Share has the same rights and benefits as the previous voting ordinary shares. There was no change in the number of voting ordinary shares in issue as a result of the Share Capital Reorganisation and each shareholder's proportionate interest in the Company's voting ordinary share capital remained unchanged. It is only the nominal value of the ordinary shares that was reduced.

The deferred shares have minimal rights which renders them effectively valueless. The deferred shares do not entitle holders to receive notice of or attend and vote at any general meeting of the company or to receive a dividend or other distribution or to participate in any return on capital on a winding up or other than the nominal amount paid on such shares following a substantial distribution to the holders or ordinary shares in the company.

Additionally, the Share Capital Reorganisation had an identical effect to that described above on the Company's 10,000,000 non-voting ordinary shares, the effect of which was to decrease the nominal value of the non-voting ordinary shares to £0.10 each, with all other rights and benefits remaining unchanged.

There were no share issues during the period.

11. RECONCILIATION OF LOSS FOR THE PERIOD/YEAR TO OPERATING CASH FLOW

12. OPERATING LEASE ARRANGEMENTS

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

13. SHARE BASED PAYMENTS

The Company operates an employee share option plan. Initially, share options were granted on 3 September 2012 to all Directors and key personnel of the Group comprising of 2,669,763 Founder options are exercisable at £1.00 each; 8,210,000 share options are exercisable at £1.00 each and 368,500 share options are exercisable at £1.13 each. On 29 May 2014 1,315,000 share options were granted to employees at £1.16 each. The options will be exercisable in full if the average closing price per Share over any continuous thirty (30) day period, ignoring any days which are non-dealing days for AIM, occurring wholly during the period of 10 years from the date of grant, is equal to or greater than one hundred and fifty percent (150%) of the Placing Price. Management has determined a 70% probability of this condition being satisfied. All of the share options, except for Founder Options which had a vesting period of two years, have a vesting period of three years from the date of grant. The founder options become exercisable during the year and to date no options have been exercised. The £1.00 Founder options are exercisable for a period of eight years (less one day) from the second anniversary of the date of the grant. The other options are exercisable for a period of seven years (less one day) from the third anniversary of the date of grant. If the options remain unexercised after the day preceding the tenth anniversary of the date of the grant the options expire. Details of the share options outstanding during the year are as follows:

The options outstanding at 30 June 2015 had a weighted average exercise price of £1.02, and a weighted average remaining contractual life of seven years and two months.

The inputs into the Black-Scholes model were as follows:

Expected volatility was determined by calculating the historical volatility of the Company's share price from the date of admission to AIM to the period end June 2015. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

The Group recognised total expenses of $574,000 related to equity settled share based payment transactions for the six months ended June 2015. (Six months ended 30 June 2014: $806,000, Full Year 2014: $1,508,000).

14. BANK LOANS GREATER THAN 1 YEAR:

Under the terms of the RBL on-loan facility the Company applied the first drawdown of $10 million towards the payment of legal fees associated with the facility. The on-loan facility effective interest rate is calculated on an ongoing basis after each drawdown and is 21% per annum for the period to 30 June 2015. The calculation is based on future cash flows for the interest and commitment fees that are due on a quarterly basis and the admin fee that is due on a yearly basis.

15. BORROWINGS:

The RBL facility of up to $75 million with Standard Chartered Bank ("SCB"), was entered into on 31 December 2014 and is available to the Company to fund, amongst other things, the advancement of loans to Elcrest to meet its capital expenditure obligations in respect of its participating interest in OML 40. The facility has a maturity of four and a half years from 31 December 2014 and is repayable semi-annually from September 2016.The facility, to which SCB has committed an initial $35 million as at 31 December 2014, is a secured revolving loan facility and SCB has been mandated to syndicate a further $40 million to take the facility to $75 million in 2015. Interest is payable on amounts outstanding on a quarterly basis at a rate equivalent to USD Libor plus a margin of 7.75%. The facility is secured over the Company's rights under a new on-loan agreement with Elcrest (under which amounts borrowed under the RBL may be onward lent to Elcrest). The size of the facility is subject to a cap determined by the borrowing base of OML 40 and the cap, which is currently $75 million, is re-determined every six months.

16. DIVIDENDS

No interim dividend is proposed and no dividend has been paid in the period to 30 June 2015 (Full Year 2014: $nil).

17. POST BALANCE SHEET EVENTS

As at September 2015, there were no significant post-balance sheet events other than those disclosed below:

· Completion of the loading and sale of 75,226 bbls of crude oil through three cargos to Shell after the reporting during the 3rd quarter of 2015.