FTO.L Regulatory News (FTO)

19 November 2012

FORTUNE OIL PLC

("Fortune Oil" or the "Company")

Third Quarter 2012 Interim Management Statement

Fortune Oil announces its Interim Management Statement for the period 30 June 2012 to date. Unless stated otherwise financial disclosures relate to the third quarter ended 30 September 2012.

Highlights

·; New natural gas supply connections increased by 89 per cent to 21,557 in the third quarter (Q3 2011: 11,427).

·; Liulin coal bed methane ("CBM") remains on track for first gas sales in 2013. Construction of the gas gathering system, nodal compression station and the main export product trunk-line at the CBM Liulin block commenced with construction scheduled for completion by mid 2013. Currently Fortune Oil's best performing well in the field has achieved gas production in excess of 12,500m3/day and production rates are expected to improve as the wells are dewatered.

·; Licence obtained for the first liquefied natural gas ("LNG") dual fuel ship which enables the ship to enter commercial operations on the Yangtze River. This is the first approval of this type in China.

·; Bluesky jet fuel sales volumes increased 16 per cent to 780,000 tonnes year on year (Q3 2011: 671,700 tonnes) with total jet fuel sales of 2.19 million tonnes for the year to date, an increase of 16 per cent compared to the same period in 2011.

·; West Zhuhai Terminal's volume throughput increased 80 per cent to 623,000 tonnes compared to the same period in 2011 (346,000 tonnes). West Zhuhai throughput volume up 9 per cent and Maoming SPM volume up 4 per cent, respectively for the year to date compared to 2011.

·; The feasibility study on the Hrazdan iron ore mine and processing plant has been completed and the regulatory submissions are being finalised for the Armenian approval agencies.

OPERATIONAL OVERVIEW

Natural Gas Operations

The growth of the natural gas business is still strong with new natural gas supply connections increased by 89 per cent to 21,557 in the third quarter (Q3 2011: 11,427). Natural gas sales volumes were 112 million cubic meters in the third quarter as a result of the disposal of a throughput pipeline as part of the transactions to establish the Shijiazhuang joint venture.

The Company has made significant progress on the new natural gas projects announced over the past 18 months and is on track to deliver its growth strategy:

·; The main Petrochina natural gas pipeline to the city of Dashiqiao is complete and gas supply commenced. The local gas distribution network has been installed to key industrial customers in the local economic zone.

·; Shenyang LNG bus refuelling joint venture company is operating with two mobile refuelling stations for a fleet of twenty LNG buses. Negotiations are progressing to supply LNG to buses on additional routes between Shenyang, Liaoyang and Chaoyang.

·; China United Shanxi CBM Company Limited has commissioned the wholesale compressed natural gas ("CNG") station at the Liulin CBM block which will collect, compress and dispatch gas from the Liulin gas gathering system.

·; Fortune Oil has become a substantial shareholder, via a joint venture (China Gas Group Ltd) in China Gas Holdings Ltd ("CGH"), the largest independent natural gas company in China in terms of city network, serving gas to over 150 cities. Fortune Oil is in discussions with its joint venture partner to identify opportunities for cooperation between Fortune Oil and CGH in the natural gas sector in China. As of November 16 2012 the joint venture and its associates hold 836,550,000shares in CGH representing 18.4 per cent of CGH total issued shares making the joint venture and its associates one of the largest shareholders of CGH.

Yangtze River Vessel - LNG Ship refuelling

Fortune Oil has obtained the first approval of its type in China for its LNG dual fuel ship following the successful completion of the river shipping trials and submission of documentation to the Maritime Safety Administration. The license obtained for the first ship is the key step to enable the commercial deployment of LNG dual fuel ships. Fortune Oil is progressing the engineering design for the first two LNG refuelling stations along the Yangtze River which will enter operation in 2013 and 2014. Fortune Oil has received regulatory approval for the LNG pier and LNG receiving terminal for the Chongqing LNG refuelling station which is now under construction. The current plan is to build seven LNG stations along the Yangtze River over the next few years.

Liulin CBM Operations

There continues to be significant progress made at the Liulin CBM block which is on track for first gas sales in 2013. The project is now in the final stages of appraisal with production testing in progress on various vertical and multi-lateral wells drilled by Fortune Liulin Gas ("FLG") and China United Coal Bed Methane Corporation ("CUCBM") and commercial gas flow rates have been achieved. FLG is preparing the overall development plan and will seek relevant government approvals to enable full scale development of the Liulin block together with CUCBM starting in 2013.

·; Production rates from the field have continued to improve as the wells are dewatered. Currently the best performing well in the field drilled by FLG has achieved gas production in excess of 12,000m3/day and the total field production from FLG wells is currently approximately 28,000m3/day. Additionally CUCBM has drilled an inseam well currently producing 15,000m3/day. As the wells are further dewatered gas flow rates are projected to continue to improve.

·; Construction of the field gas gathering system, the nodal compression station and the main export product trunk-line commenced with construction scheduled for completion by mid 2013.

·; FLG has completed two more vertical wells and is currently dewatering four horizontal wells. Under the production sharing contract extension FLG has a ten well commitment under the 6th exploration period.

Oil Sector Operations

Bluesky jet fuel sales in Q3 2012 were 780,000 tonnes, representing an increase of 16 per cent over the same period in 2011 (Q3 2011 671,700 tonnes). To date for 2012, Bluesky jet fuel sales volumes are 2.19 million tonnes, representing an increase of 16 per cent over the same period in 2011, underpinned by the continued strong demand for domestic air travel in China.

The Maoming SPM volume throughput in Q3 2012 was 2.3 million tonnes of crude oil, representing a slight decrease of 0.3 per cent relative to the same period in 2011. To date, Maoming SPM volume throughput was 7.9 million tonnes of crude oil, representing an increase of 4 per cent relative to the same period in 2011. Throughput is driven by demand from the Maoming refinery in Guangdong which is driven primarily by downstream transportation fuel consumption. The discussions with the Maoming SPM JV partner to extend the joint venture contract continue to make good progress.

In Q3 2012, West Zhuhai Terminal's volume throughput increased 80 per cent to 623,000 tonnes compared to the same period in 2011 (346,000 tonnes). For the nine months ended 30 September 2012, West Zhuhai Terminal's volume throughput increased by 9 per cent to 1.76 million tonnes over the same period in 2011 (1.62 million tonnes).

Resources Business

Fortune Oil continues to make progress on the development of the Hrazdan and Abovyan mines in Armenia:

·; Sinosteel Engineering & Equipment Co Ltd along with Sinosteel Maashan Institute of Mining Research have completed the feasibility study on the Hrazdan iron ore mine including the preliminary flow sheet, pilot plant test run and the initial process design. This information will be used as the basis for the final investment decision on Hrazdan which is expected in Q1 2013.

·; An Armenian drilling contractor is progressing additional hydrological studies required to complete the Environmental Impact Assessment ("EIA") which is part of the documentation needed to complete the submission for the final approvals of the Hrazdan mine and processing plant. The EIA assesses all of the potential environmental aspects of the mine and process plant development to ensure that these operations will not adversely affect the environment.

·; Fortune Oil is actively engaging and has had constructive dialogue with the local environmental groups and non-government organisations to address their concerns in relation to the mining development.

·; Fortune Oil engaged SRK Consulting to progress the resource certification for the Abovyan iron ore mine from Russian standards to international standards (JORC, Australasia Joint Ore Reserves Committee) which is expected to be completed in 2013.

Trading Business

Year to date the total quantity traded of base oils and petrochemicals was 93,000 tonnes compared to 117,000 tonnes for the same period in 2011, a decrease of 21 per cent. This decline was a result of increased competition reducing the range of profitable trading opportunities in the near term. However, our trading business continues to extend its product offering to specific oils and petrochemicals in China.

In order to expand our oil trading business, Fortune Oil has established two domestic oil companies with wholesale permits and will start domestic oil trading. Fortune Oil will cooperate with local oil companies and will rent shore tankage in Qingdao, Shandong province in East China to import petrochemicals and gasoline purchased from local refineries. This will enable Fortune Oil to grow its petrochemical trading opportunities.

FINANCIAL POSITION

As at 19 November 2012, the Group had a cash balance of £ 77 million. As a result of this, together with the continuous cash inflow from operations, the Board of Fortune Oil envisages no difficulties in meeting both current loan repayment obligations and the Company's investment commitments.

OUTLOOK

Overall business performance is in line with the Board's expectations. The Board remains optimistic with regard to Fortune Oil's prospects in view of the current economic backdrop, the Company's financial strength and market potential.

For further details:

Background on Fortune Oil

Fortune Oil is a leading independent energy company engaged in the investment and operations of oil and natural gas supply projects in China. With over 19 years of operating history in China, Fortune Oil has acquired a unique portfolio of high quality oil and natural gas projects across the country and has formed a strong partnership with domestic and international market leaders. Fortune Oil recently started an expansion outside China securing resource projects. Fortune Oil is listed on the Main Market of the London Stock Exchange with its operational headquarters in Hong Kong.