Global Petroleum Regulatory News (GBP)

16 March 2011

RNS AIM release

Global Petroleum Limited

Interim Financial Report for the Half Year ended 31 December 2010

The directors of Global Petroleum Limited ("the Company" or "Global") present their report together with the consolidated financial report for the half year ended 31 December 2010.

DIRECTORS

The directors of the Company at any time during or since the end of the half year are:

Mr Mark Savage

Mr Peter Blakey

Mr Peter Taylor

Mr Ian Middlemas

Mr Clint McGhie

REVIEW OF OPERATIONS

Operating Results

During the six months ended 31 December 2010, the consolidated group recorded a loss after tax of $839,737 (six months ended 31 December 2009: loss of $1,098,583).

Principal Activities

Leighton Prospect - Texas, USA (Olmos Reservoir - 15% WI / 11.25% NRI, Eagle Ford Reservoir - 7.595)

Eagle Ford Shale

The first Eagle Ford well at the Leighton Project, Tyler Ranch EFS #1H was completed during December having reached a total depth of 3,252m (10,670ft) and 1,372m (4,500ft) laterally. Good oil and gas shows were encountered during drilling, and following fracture stimulation and testing, the well had an initial flow in late December of 1,267 boepd, representing 1,202 bopd of light sweet crude and 782 mcfgpd of gas on a 16/64" choke.

Texon Petroleum Ltd ("Texon" - ASX: TXN) advised that Tyler Ranch EFS #1H produced 31,099 bo and 40,987 mcfg over the first 60 days on a restricted choke. This represents an average daily oil equivalent rate of 632 boepd (518 bopd and 683 mcfgpd) on the basis that 6mcf equals 1 barrel of oil equivalent. The 30 day rate on the same 6:1 basis was 716 boepd. The restricted choke is used to maintain reservoir pressure, slow the decline in production and potentially enhance oil recovery.

During the last 15 days of the 60 day test time, there were several days when the minimum temperature was below freezing. Texon advised that this may have affected production on those days. Also, there were 5 days where the gas pipeline inlet compressor shut down resulting in reduced oil production (avg. 230 bopd on those days).

With warmer weather and the compressor now functioning properly, the rate is back up to some 650 boepd (550 bopd and 601 mcfgpd).

The Company's share of oil and gas being produced from the well is now part of Global's revenue stream.

Global has a 7.939% working interest in approximately 1,651 acres beneath the Olmos formation including the Eagle Ford Shale and the first Eagle Ford well. This represents a beneficial interest (NRI) in the production of 5.95% or some 37 boepd of the above 60 day production.

Olmos Formation

Global has a 15% working interest (11.25% net revenue interest) in approximately 873 acres from the surface down to the stratigraphic equivalent of the Olmos formation. Global has an interest in 7 producing Olmos wells, including one well drilled during the six months ended 31 December 2010.

Texon advised during the half year that the seventh Leighton well, Tyler Ranch #6, had reached its total depth of 2,774 metres (9,100 feet) and began to flow oil and gas at the gross rate of 350 boepd from the Olmos reservoir (comprising 205 bopd and 880 mcf of gas per day) through a 10/64" choke at 2000 psi.

Tyler Ranch #6 was connected to oil tanks and a gas sales pipeline in September 2010 so that Global is now receiving revenue from the production.

The combined average daily production rate of the seven (7) Leighton wells (Peeler #1, Tyler Ranch #1, Tyler Ranch #2, Tyler Ranch #3, Tyler Ranch #4, Tyler Ranch #5 and Tyler Ranch #6) during the half year was a gross 447 boepd (212 bopd and 1,407mcfgpd) with Global's beneficial interest (11.25% NRI) being 50 boepd.

Texon advised that the eighth well targeting the Olmos reservoir in which Global has a 15% working interest, Peeler #2, was drilled in February 2011 and reached its total depth of 2,774 metres (9,100 feet). The Olmos in Peeler #2 has similar reservoir characteristics to the Olmos in the previous Leighton wells.

Oil and gas shows were also encountered in shallower Wilcox reservoirs. These shows will be evaluated using high resolution log analyses techniques, combined with side wall cores and pressure data to assess their importance.

It is now planned to run production casing in the well after which the Olmos will be fracture stimulated in March and then the well will be connected for oil and gas production.

Glossary:

bbl: barrel

bo: barrels of oil

boepd: barrels of oil equivalent per day (including gas converted to oil equiv barrels on basis of 6 mcf to 1 barrel of oil equivalent)

bopd: barrels of oil per day

mcf: thousand cubic feet

mcfg: thousand cubic feet of gas

mcfgpd: thousand cubic feet of gas per day

mmbtu: million British thermal units

NRI: Net Revenue Interest

SUBSEQUENT EVENTS

Proposed acquisition of Jupiter Petroleum Limited

In January 2011, the Company entered into a conditional sale and purchase agreement to acquire Jupiter Petroleum Limited ("Jupiter") which holds prospective oil and gas exploration interests in offshore Namibia and in offshore Juan de Nova, a French dependency in the Mozambique Channel.

The acquisition of these interests will enable Global to participate in the prospective and active exploration province of offshore Namibia and position itself as an African focused oil and gas explorer.

Global will acquire 100% of Jupiter, a UK registered company which is owned 50% by Mr Peter Taylor and 50% by Mr Peter Blakey who are both also Directors of Global. The commercial terms of the acquisition, includes the issue of 25 million Global shares at settlement and the reimbursement of reasonable historical expenditure on the Namibian and Juan de Nova interests. The sale and purchase agreement is conditional on the satisfaction of a number of conditions precedent, including due diligence investigations, a report from an independent expert that the transaction is fair and reasonable to Global Shareholders, and Shareholder approval at a general meeting.

Namibian Project

The Namibian Project consists of an 85% interest in Petroleum Exploration Licence Number 29 ("Licence") covering Offshore Blocks 1910B and 2010A in the Republic of Namibia. The Licence, issued on 3 December 2010, covers 11,730 square kilometers and is located in offshore Namibia in water depths ranging from 1,200 meters to 3,000 meters.

A reconnaissance grid of 1995 2D seismic data over both blocks is available for purchase and following completion of the acquisition of Jupiter, is expected to be one of the first steps taken by Global in advancing the project. Preliminary examination suggests the presence of large structural highs and the presence of a significant Early Cretaceous and possibly older section beneath the main highs. Although only a few wells have been drilled in the area, they have established the presence of oil and gas-prone source rocks, good potential reservoirs and migrated hydrocarbons in the region, making this an attractive frontier play.

It is believed that the regional basin or basins were formed in response to thermal subsidence following the rifting preceding the separation of Africa from South America.

The Jupiter blocks lie adjacent to acreage held by Arcadia Petroleum Limited, whose partner Tower Resources recently announced encouraging estimates (from a Competent Person's Report) for finding hydrocarbons in one or more of their prospects.

To the north east of the Jupiter blocks, a well drilled last year by Sintezneftgaz (Nakor Investments) reportedly found a substantial gas column whilst Chariot Oil and Gas has recently announced the identification of new structures and increases in its estimates of gross unrisked mean prospective resources in its licences in offshore Namibia. Chariot have shot 3-D seismic and also have a Competent Person's Report.

The Jupiter blocks represent one of the last remaining opportunities to participate in this prospective and active exploration province in this part of offshore Namibia.

The Licence is governed by a Petroleum Agreement with the Government of the Republic of Namibia, the National Petroleum Corporation of Namibia ("NAMCOR" - wholly owned by the Government) who have a 10% carried interest in the licence and Bronze Investments Pty Limited who have a 5% carried interest in the Licence.

In accordance with the terms of the Petroleum Agreement, the following minimum work and expenditure programme must be undertaken:

(a) Initial Exploration Period (First Four Years of Licence):

Undertake geological, geochemical, geophysical and related studies and review all existing gravity and magnetic data, and other available information, including the purchase of existing relevant and reasonable quality seismic data, and acquire, process and interpret a minimum of 1,000 kms of 2-D seismic data. Minimum exploration expenditure for the Initial Exploration Period: US$1 million.

(b) First Renewal Exploration Period (Two Years):

The drilling of one exploration well. Minimum exploration expenditure for the First Renewal Exploration Period: US$20 million.

(c) Second Renewal Period (Two Years):

Acquisition, processing and interpretation of additional seismic data (if necessary) and the drilling of one exploration well. Minimum exploration expenditure for the Second Renewal Exploration Period: US$20 million, or US$ 21 million if new seismic is required.

Juan de Nova Project

Jupiter has a 30% interest in the Juan de Nova Est Permit which was issued by the French Government in December 2008. The Permit covers approximately 9,010 square kilometers and is situated to the east of the small island of Juan de Nova in the Mozambique Channel, immediately to the west of Madagascar (Refer Figure 2).

The permit lies within the exclusive economic zone surrounding Juan de Nova which is under French control. The remainder of the exclusive economic zone is covered by a permit operated by Roc Oil (Madagascar) Pty Ltd which is immediately to the west of Juan de Nova Est.

Water depths range from 200 metres to approximately 1,500 metres, with at least half of the permit lying in shallow water on the continental shelf of the island of Madagascar. The shallow water shelf area is probably underlain by late Paleozic to early Mesozoic rocks, mainly sandstones and shales with interbedded volcanics, whilst the deeper water areas are probably underlain by younger rocks of late Mesozoic and Tertiary age, whose lithology is unknown.

No systematic petroleum exploration has taken place around Juan de Nova and this area is considered to be a frontier province.

Wessex Exploration PLC is the operator and 70% equity holder in the Juan de Nova Est Permit. The current term of the exploration permit runs to 31 December 2013 with three phases of exploration and a production period of 25 years for any discovery made. The work obligations for the current term of the exploration permit include geologic studies, seismic acquisition and reprocessing and a commitment to drill one well with a contingency for a second well. The total financial commitment for this period is €27.92 million with Jupiter's share being €8.38 million.

Preliminary work undertaken on the permit to-date has included an assessment of available data and an extensive review of literature on the North Morondava Basin in which the permit lies.

Commercial Terms

In consideration for the acquisition of 100% of the issued capital of Jupiter, Global will issue Mr Peter Blakey and Mr Peter Taylor ("Vendors") 25 million fully paid ordinary shares on completion. The Vendors are also Directors of Global.

The Company has also loaned A$251,102 to Jupiter to assist meet bank guarantee requirements and other license payments for the Namibian petroleum licence whilst Global performed an initial assessment of Jupiter and its assets and undertook preliminary due diligence. In addition and prior to completion, Global will also reimburse the Vendors for any actual costs incurred in connection with obtaining the licence and other reasonable costs in connection with the agreement, anticipated to be in the order of £250,000 (A$400,000). In accordance with the terms of a loan agreement between Global and Jupiter, these amounts will be fully repayable to Global in the event that the transaction does not complete.

The sale and purchase agreement to acquire Jupiter is subject to the following conditions precedent:

1. Global completing due diligence investigations, including confirmation of title of the Licence and Juan de Nova Est Permit, and due diligence on the Petroleum Agreement, Jupiter and its subsidiaries;

2. Obtaining any necessary consents from governmental authorities or third parties necessary to give effect to the transaction;

3. An independent expert concluding that the issue of shares to the Vendors (as related parties) contemplated by the agreement is fair and reasonable to Global's Shareholders;

4. The independent directors of Global, having consulted with the Company's nominated adviser, concluding that the terms of the acquisition are fair and reasonable insofar as Global's Shareholders are concerned; and

5. Global Shareholders passing all resolutions as are required under the ASX Listing Rules, the constitution and the Corporations Act to give effect to the transaction contemplated by the agreement. Specific approval will be required because the Vendors are related parties who hold substantial interests in Global.

The Vendors have provided warranties in relation to title and Jupiter in general. There are normal commercial warranties provided by both parties.

Due Diligence Requirements and Settlement

Shareholders and potential investors should note that prior to the Company executing the conditional sale and purchase agreement with Jupiter and its Vendors, it conducted a high level review and assessment of the information provided in respect of the projects.

Global is currently undertaking more comprehensive due diligence (including title and other risks) with respect to the acquisition of Jupiter, however, it should be noted that the usual risks associated with junior companies undertaking exploration activities in the oil and gas sector will remain at completion of this due diligence process.

Shareholder and investors should also be aware that the agreement to acquire Jupiter is conditional on an independent expert appointed by Global concluding that the transaction contemplated is in the best interest of Shareholders, Global's Shareholders passing all resolutions as are required under the ASX Listing Rules, the Constitution of the Company and the Corporations Act, and completion of more comprehensive due diligence. Accordingly there is a risk that the conditions may not be satisfied and the transaction contemplated by this announcement may be changed or not be completed before 30 June 2011. Should the transaction not complete, the monies advanced to Jupiter shall be refunded at Global's request.

Independent expert reports are in the process of being prepared and the Company expects to issue a Notice of General Meeting following the preparation of an independent expert report.

Other than as outlined above, there were no significant events occurring after the balance sheet date requiring disclosure.

Signed in accordance with a resolution of Directors.

Mark Savage

Chairman

16 March 2011

CONDENSED CONSOLIDATED INTERIM

STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31 DECEMBER 2010

CONDENSED CONSOLIDATED INTERIM

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2010

CONDENSED CONSOLIDATED INTERIM

STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31 DECEMBER 2010

CONDENSED CONSOLIDATED INTERIM

STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 31 DECEMBER 2010

NOTES TO THE INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 DECEMBER 2010

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This general purpose financial report for the interim half year reporting period ended 31 December 2010 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report of Global Petroleum Limited for the year ended 30 June 2010 and any public announcements made by Global Petroleum Limited and its controlled entities during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

(a) Basis of Preparation of Half Year Financial Report

The interim financial report has been prepared on the basis of historical cost, except for the revaluation of available-for-sale investments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars.

The accounting policies and methods of computation adopted in the preparation of the half year financial report are consistent with those adopted and disclosed in the Company's 2010 annual financial report for the year ended 30 June 2010, other than as detailed below.

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2010. The adoption of these new and revised standards has not resulted in any significant changes to the Group's accounting policies or to the amounts reported for the current or prior periods.

(b) Estimates

The preparation of the interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this consolidated interim financial report, the significant judgements made by management in applying the consolidated entity's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report as at and for the year ended 30 June 2010.

2. SEGMENT INFORMATION

The Group has 2 reportable segments as described below, which are Group's strategic business units. The strategic business units undertake the same business activity - oil and gas exploration and development. They are managed separately as they are operated in different geographical areas and require different technology and marketing strategies. For each of the strategic business units, the Directors review internal management reports at least half yearly.

The following summary describes the operations of each of the reportable segments:

·; Africa - Oil and gas exploration in Africa

·; USA - Oil and gas production in USA

The European operations were previously reported as a separate geographical segment. The segment information reported below does not include any separate amounts for European oil and gas exploration operations which have been disposed. Administration costs incurred in the UK are considered to be incidental to the activities of the entity and are not considered to be an operating segment.

There has been no change from the last annual financial statements in the basis of segmentation or in the basis of measurement of segment profit or loss. There has also been no significant change in the allocation of total assets by segment.

3. PROFIT/(LOSS) FROM OPERATIONS

4. EQUITY SECURITIES LISTED

There were no movements in ordinary share capital during the six month periods ended 31 December 2009 and 2010.

No options were outstanding at 31 December 2009 or 2010.

5. OIL AND GAS ASSETS

6. RELATED PARTIES

Arrangements with related parties continue to be in place. For details on these arrangements, refer to the 30 June 2010 annual financial report.

In addition to the arrangements disclosed in the 30 June 2010 annual financial report, during the six month period ended 31 December 2010 the Company loaned funds of $251,102 to a director-related entity, as discussed below.

On 31 January 2011, the Company announced that it had entered into a conditional sale and purchase agreement to acquire Jupiter Petroleum Limited ("Jupiter") which holds prospective oil and gas exploration interests in offshore Namibia and in offshore Juan de Nova, a French dependency in the Mozambique Channel.

In consideration for the acquisition of 100% of the issued capital of Jupiter, Global will issue Mr Peter Blakey and Mr Peter Taylor ("Vendors") 25 million fully paid ordinary shares on completion. The Vendors are also Directors of Global.

The Company has also loaned A$251,102 to Jupiter to assist meet bank guarantee requirements and other license payments for the Namibian petroleum licence whilst Global performed an initial assessment of Jupiter and its assets and undertook preliminary due diligence. In addition and prior to completion, Global will also reimburse the Vendors for any actual costs incurred in connection with obtaining the licence and other reasonable costs in connection with the agreement, anticipated to be in the order of £250,000 (A$400,000).

In accordance with the terms of a loan agreement between Global and Jupiter, no interest is payable and the loan is unsecured. The loan will be repayable on written demand by Global upon either:

(i) Negotiations in relation to the Acquisition between Global and Jupiter ceasing;

(ii) Completion of the acquisition not occurring by 30 June 2011; and

(iii) Any other date agreed between Global and Jupiter.

7. CONTINGENCIES

There have been no changes in contingent liabilities since 30 June 2010.

8. COMMITMENTS

On 31 January 2011, the Company announced that it had entered into a conditional sale and purchase agreement to acquire Jupiter Petroleum Limited which holds prospective oil and gas exploration interests in offshore Namibia and in offshore Juan de Nova, a French dependency in the Mozambique Channel. Upon completion of the acquisition, in order to maintain current rights of tenure to the exploration licences, Global will be required to perform minimum exploration work to meet the minimum expenditure requirements specified in the Namibian Petroleum Exploration Licence and the Juan de Nova Permit. The obligations include:

Namibian Petroleum Exploration Licence:

(a) Initial Exploration Period (First Four Years of Licence):

Undertake geological, geochemical, geophysical and related studies and review all existing gravity and magnetic data, and other available information, including the purchase of existing relevant and reasonable quality seismic data, and acquire, process and interpret a minimum of 1,000 kms of 2-D seismic data. Minimum exploration expenditure for the Initial Exploration Period: US$1 million.

(b) First Renewal Exploration Period (Two Years):

The drilling of one exploration well. Minimum exploration expenditure for the First Renewal Exploration Period: US$20 million.

(c) Second Renewal Period (Two Years):

Acquisition, processing and interpretation of additional seismic data (if necessary) and the drilling of one exploration well. Minimum exploration expenditure for the Second Renewal Exploration Period: US$20 million, or US$ 21 million if new seismic is required.

Jupiter Petroleum Limited has a 85% interest in the Petroleum Exploration Licence, however, it is responsible for 100% of the expenditure requirements with its joint venture partners holding a total of 15% free carried interest.

Juan de Nova Permit:

The work obligations for the current term of the Juan de Nova exploration permit include geologic studies, seismic acquisition and reprocessing and a commitment to drill one well with a contingency for a second well. The total financial commitment for the current term ending 31 December 2013 is €27.92 million with Jupiter's 30% share being €8.38 million (A$11.5 million).

9. SUBSEQUENT EVENTS

On 31 January 2011, the Company announced that it had entered into a conditional sale and purchase agreement to acquire Jupiter Petroleum Limited ("Jupiter") which holds prospective oil and gas exploration interests in offshore Namibia and in offshore Juan de Nova, a French dependency in the Mozambique Channel.

Commercial Terms

In consideration for the acquisition of 100% of the issued capital of Jupiter, Global will issue Mr Peter Blakey and Mr Peter Taylor ("Vendors") 25 million fully paid ordinary shares on completion. The Vendors are also Directors of Global.

The Company has also loaned A$251,102 to Jupiter to assist meet bank guarantee requirements and other license payments for the Namibian petroleum licence whilst Global performed an initial assessment of Jupiter and its assets and undertook preliminary due diligence. In addition and prior to completion, Global will also reimburse the Vendors for any actual costs incurred in connection with obtaining the licence and other reasonable costs in connection with the agreement, anticipated to be in the order of £250,000 (A$400,000). In accordance with the terms of a loan agreement between Global and Jupiter, these amounts will be fully repayable to Global in the event that the transaction does not complete. Refer to note 6 for further details.

The sale and purchase agreement to acquire Jupiter is subject to the following conditions precedent:

1. Global completing due diligence investigations, including confirmation of title of the Licence and Juan de Nova Est Permit, and due diligence on the Petroleum Agreement, Jupiter and its subsidiaries;

2. Obtaining any necessary consents from governmental authorities or third parties necessary to give effect to the transaction;

3. An independent expert concluding that the issue of shares to the Vendors (as related parties) contemplated by the agreement is fair and reasonable to Global's Shareholders;

4. The independent directors of Global, having consulted with the Company's nominated adviser, concluding that the terms of the acquisition are fair and reasonable insofar as Global's Shareholders are concerned; and

5. Global Shareholders passing all resolutions as are required under the ASX Listing Rules, the constitution and the Corporations Act to give effect to the transaction contemplated by the agreement. Specific approval will be required because the Vendors are related parties who hold substantial interests in Global.

The Vendors have provided warranties in relation to title and Jupiter in general. There are normal commercial warranties provided by both parties.

Other than as outlined above, there were no significant events occurring after the balance sheet date requiring disclosure.

The full version of the Interim Financial Report is available on Global Petroleum Limited's website:

www.globalpetroleum.com.au

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