Gulfsands Petroleum Regulatory News (GPX)

For immediate release 19 September 2011

Gulfsands Petroleum plc

Half-Yearly Financial Report

SIX MONTHS TO 30 JUNE 2011

Unaudited

Half-Yearly Results for the Six Months Ended 30 June 2011

HIGHLIGHTS

Operations

·; Average Group working interest production 10,923 boepd vs. 9,689 boepd in H1 2010

·; Syrian working interest production in August averaged 12,050 bopd vs. 10,300 bopd in January

·; 4 exploration wells drilled in Syria with 2 discoveries

·; 2 development wells successfully drilled : KHE-19H produced a record 5,516 bopd on test

Financial

·; Revenue up by 53% to $78.6 million (H1 2010: $51.4 million)

·; Profit after tax up by 87% to $31.2 million (H1 2010: $16.7 million)

·; Net Cash from Operating Activities up by 103% to $56.6 million (H1 2010: $27.9 million)

·; Third tranche of US assets sold post 30 June realising $10.7 million

·; Net free cash at 30 June of $123.1 million (31 Dec 2010 : $80.6 million)

Outlook

·; 3 more exploration wells to be drilled before year-end : 2 in Syria and 1 in Tunisia (underway)

·; Gulfsands pre-qualified to participate in upcoming bid round for 12 exploration blocks in Iraq

·; Uncertainty exists as to the production outlook for the remainder of the year as the Syrian government adapts to the sanctions imposed by the US and EU

For further information please contact:

Gulfsands Petroleum (London) +44 (0)20 7434 6060

Richard Malcolm, Chief Executive Officer

Andrew Rose, Chief Financial Officer

Kenneth Judge, Director of Corporate Development

Buchanan (London) +44 (0)20 7466 5000

Bobby Morse Ben RomneyHelen Chan

RBC Europe Limited +44 (0)20 7653 4000Josh CritchleyMatthew CoakesMartin Eales

These half-year results, together with a copy of the presentation to be given to analysts at 10am today, will be available on the Gulfsands' website: www.gulfsands.com thereafter.

CHAIRMAN'S STATEMENT

Dear Shareholder,

The first six months of 2011 was a period of considerable operational and financial achievement for Gulfsands Petroleum. As described in the Chief Executive's report, we raised our working interest production, made a commercial discovery in the Khurbet East Butmah reservoir, and we increased both our profitability and our free cash flow substantially. Nor has the momentum abated since 30 June with a further discovery of oil at Yousefieh East.

Our strong financial position is a matter of particular significance at this critical juncture in the Company's affairs. As approved by shareholders at the 15 September Extraordinary General Meeting, some of our free cash will now be put to good use buying-in shares at the substantial discount to net asset value represented by the current market price. We will, nonetheless, be sure to retain cash reserves adequate to weather the continuing period of political uncertainty in Syria and to continue to pursue attractive exploration and production opportunities elsewhere.

Clearly, the continuing political uncertainty in Syria has been the dominant feature of the past few months, at least insofar as media and investor perception of the Company is concerned, and it is appropriate that I offer a few comments on the situation.

First, I wish to emphasise that your Board attaches the highest possible importance to compliance with all applicable sanctions, both those imposed by the European Union and those imposed by the United States. Appropriate legal advice has been taken and is refreshed regularly. For the reasons set out in the Financial Review your Board is satisfied that the Group complies and will continue to comply with all sanctions in force as of the date of writing. It is not appropriate to speculate about further sanctions that may from time to time be imposed on Syria but you may be assured that, in such eventuality, the Board will take whatever steps may be necessary to continue to ensure compliance.

Secondly, as I have said before, we are an exploration and production company pure and simple. We have no political agenda and we owe no political allegiance. Like any company operating in foreign jurisdictions, we do of necessity interact with the governments, bureaucracies and state oil companies of the countries in which we do business. We do so in full compliance with all relevant laws and regulations, including those of the host countries and the United Kingdom and, as applicable, those of the European Union and the United States. We seek to honour both the letter and spirit of our contractual obligations and to be good corporate citizens of all those countries in which we have a presence. We maintain this approach through good times and bad. We know of no other way to discharge our responsibilities, as Directors and management, to our shareholders and our other key constituencies.

Thirdly, the Board is acutely conscious of its obligations and duties of care to its employees, irrespective of their nationality or place of employment. We monitor the safety and security of our employees on a real-time basis and take all reasonable precautions to ensure their safety and well-being. As of the date of writing, we are not aware that any of our employees located in Syria has been subjected to any harassment or other physical danger as a result of the prevailing political situation.

It is not for me to make predictions about the future. The Middle East is an area of notorious volatility and uncertainty. Events will take their course and the laws of unexpected consequences will no doubt prevail. This is a simple fact of life of being in the oil and gas business in the region and shareholders must make their own assessment. However, that assessment may be facilitated by a few contextual facts.

Syria produces approximately 380,000 barrels of oil per day ("bopd"), of which the Khurbet East and Yousefieh Fields account for approximately 24,000 bopd (or approximately 6%) at full production. Syria exports approximately 150,000 bopd. In the context of overall worldwide oil and gas production and demand, these are modest quantities. While Syria has hitherto exported predominantly to EU markets - and is therefore inevitably suffering some short term disruption to its export patterns by virtue of the EU sanctions - the ability of non-EU markets to absorb the export volume so displaced cannot be in any serious doubt.

Accordingly, while we have realistically to expect and are indeed at the time of writing experiencing some short term fluctuation in the level of daily production from the Khurbet East and Yousefieh Fields, as the Syrian oil transportation and storage infrastructure adapts itself to the disruption of its traditional export profile, on the basis of circumstances prevailing and known to us at the time of writing we do not believe the impact on the Group will be other than relatively modest and short term.

In conclusion, I would like to thank my Board and management colleagues and all the Company's staff for a sterling effort throughout such a difficult period. It is my hope that when I next write to you, at the time of our 31 December 2011 full year results if not sooner, some of the present uncertainties may have resolved themselves.

Yours sincerely,

Andrew West

Chairman

16 September 2011

CHIEF EXECUTIVE'S STATEMENT

The Group has delivered a strong performance in the first half of 2011 with Group working interest production averaging 10,923 barrels of oil equivalent per day (boepd). This performance together with a strong commodity price environment is reflected in a pleasing financial result with revenues up by 53% to $78.6 million and profit after tax increasing to $31.2 million, an 87% increase compared to the first half of 2010.

In Syria, combined production from the Khurbet East and Yousefieh oil fields reached working interest net production of 8.2 million barrels of oil (mmbo) at the end of June and working interest production rate of approximately 12,000 barrels of oil a day (bopd) was reached in early August, achieving the Company's year-end production target some four months ahead of schedule. To date all oil sales invoices have been paid in full. Both fields continue to perform extremely well with minimal pressure decline and water production of less than 1%. Development drilling of two wells, one at Khurbet East (KHE-19H) and one at Yousefieh (Yous-7) were successfully completed, the former being the most productive well yet drilled in Block 26, producing on test at a rate of 5,516 bopd.

Four of six exploration wells planned in Syria for 2011 have now been drilled, two of which have discovered potentially commercial volumes of hydrocarbons. The well KHE-101 discovered a gross oil column of 69 metres, interpreted to be an oil-leg to a gas column previously discovered in KHE-1 in the Triassic Butmah Formation. The well flowed 447 bopd of 34 degree API oil on test, but is interpreted to be capable of production rates over 1,000 bopd. Based on information available to date, in-house estimated P50 working interest reserves are approximately 9.6 million boe, which is above and beyond the Group's existing reserves of 56.9 mmboe as at 31 December 2010. A plan to develop the oil and gas discovered in the Butmah Formation at Khurbet East has been submitted to the Syrian authorities for approval. A net oil column of approximately 13 metres was discovered at Yousefieh East, with interpretation of pressure data indicating the oil to be an extension of the existing field. The well will be tied back as a future producer to the Yousefieh Early Production Facility.

Preliminary work on the Central Production Facility is in progress with Saipem, but civil unrest and recent events in Syria have resulted in delays to the original schedule for construction, commissioning of the project is now expected to be in the second quarter of 2013. As a consequence of this delay and as a result of modifications to the original scope of the project, costs are estimated at around €130 million compared to the original contract price of €94 million.

Exploration activities have finally resumed in Tunisia with the drilling of Sidi Dhaher, an onshore prospect with multi-targets with both gas and oil objectives. The area has several producing oil fields nearby and extensive oil and gas infrastructure. In the event of a commercial discovery, Gulfsands has an option to assume operatorship. In the offshore Kerkouane block studies continue with a view to assessing the commerciality of a potential gas development at Dougga and Lambouka. Work is also progressing on maturing leads at the Birsa formation and around the Kerkouane-1 well, which discovered gas in 1981, to drillable status.

Divestment of assets held in the US has continued with an agreement in August to sell a package of assets for $6 million, removing a significant forward abandonment liability and releasing cash held in escrow of $4.7 million. The intention is to divest the remaining assets by year end.

In Iraq, Gulfsands has successfully pre-qualified to participate in an upcoming bid round for twelve exploration blocks, currently scheduled to take place in January 2012.

Syrian Risk

Some considerable uncertainty now exists in Syria as to how events will unfold over the coming weeks and months with respect to the current civil unrest and the impact of US and EU sanctions on the oil industry. The associated risks confronting Gulfsands are discussed in some detail in the Financial Review section of this report. Gulfsands will continue to comply fully with all applicable regulations and continue to ensure the safety and well being of its employees in Syria, the vast majority of whom are Syrian nationals.

Outlook

Uncertainty now exists as to the production outlook for the remainder of the year as a result of sanctions imposed by the US and the EU. Our Syrian operating company, Dijla Petroleum Company ("DPC"), was directed on 8 September 2011 by the Syrian authorities to reduce gross production from 24,000 bopd and is currently producing at approximately 14,500 bopd. It was emphasised that this was expected to be a temporary arrangement necessary until arrangements are in place for alternative export markets.

We remain focused on our target to pursue new venture opportunities in the region and to discovering 30 million barrels of net reserves in the near term, part of which has been achieved with the two discoveries made so far this year. Subject to events in Syria, we remain on track to drill seven exploration wells, one appraisal well and four development wells this year and plan next year to drill a further four exploration wells and seven development wells.

We also intend to pursue further growth by commercialising our discovered in-place oil and gas volumes of 61.9 million boe. This includes gas resources in the Butmah and Kurrachine Dolomite within the Khurbet East field area, and in offshore Tunisia, where studies are in progress to determine the commerciality of gas accumulations encountered in the Dougga and Lambouka structures.

The Group remains in a very robust position with cash resources in excess of $130 million that are predominantly held outside of Syria, giving us the capability to withstand a prolonged period of economic disruption in Syria, should such a circumstance arise.

Richard MalcolmChief Executive Officer16 September 2011

Operations Review

Production and sales prices (excluding NGLs)

Syria

Operations at Block 26 have continued uninterrupted throughout the year to date, and no disturbances have been experienced at the site despite the unrest in many other parts of the country. The protection and safety of our employees in Syria remains as our highest priority and we will do our utmost to ensure that this remains, no matter how political events unfold in the country.

Development

Gross production from Block 26 increased from approximately 20,600 bopd in January 2011 to 24,100 bopd in August (approximately 21,500 bopd from Khurbet East and 2,600 bopd from Yousefieh), as a result of the tie-in of the KHE-19 production well on Khurbet East and the commissioning of additional capacity at the early production facility, both in August. Gulfsands' share of Block 26 production (50% working interest) averaged 10,355 bopd in H1 2011 compared with 8,412 bopd in H1 2010, an increase of 23%. Water production from both fields continues to be negligible, and Khurbet East continues to demonstrate the presence of a strong aquifer, providing the energy required to maintain production levels.

Two development wells have been drilled since the start of the year: KHE-19 on Khurbet East and Yous-7 on Yousefieh. KHE-19 was first drilled as a vertical well but only encountered a small oil column and was subsequently side-tracked horizontally to the KHE-19H location where it subsequently flowed oil on test at 5,516 bopd, which is the highest daily rate yet encountered within the Khurbet East field area. Yous-7, the northernmost well on the field, tested at 528 bopd, but will require artificial lift facilities to produce at this rate on a continuous basis. Two further development wells are planned for the remainder of the year, one on each field.

The project to construct a Central Production Facility (CPF) has been adversely affected by recent events in Syria, causing delays to the original schedule and cost escalations. Extensive negotiations have taken place with the lead contractor Saipem, and whilst these have not been finally concluded Gulfsands' current estimate is that the final cost of the project will be around €130 million ($185 million) and that the plant will not be operational until Q2 2013. This revised cost estimate includes power generation facilities which are additional to the original project scope. When completed the CPF will be capable of processing 50,000 barrels of fluid per day.

Exploration and Appraisal

A total of four exploration wells have been drilled in 2011 to date, and three more are planned before year-end, one of which is currently being drilled.

The Abu Ghazal exploration well, spudded in January and targeting multiple Cretaceous and Triassic objectives, encountered hydrocarbon columns in the Triassic aged Butmah and Kurrachine formations but only recovered small sub- commercial quantities of viscous heavy oil.

Conversely, the KHE-101 appraisal well, drilled at the same time as Abu Ghazal and targeting the Triassic aged Butmah and Kurrachine formations beneath the Khurbet East field that had been encountered in the original KHE-1 discovery well, did find commercial hydrocarbons. A drill stem test achieved a stabilized flow rate of 447 bopd of 34° API oil plus associated gas from the Butmah reservoir. After extensive in-house analysis, the Khurbet East Butmah reservoir has now been determined to contain potentially commercial oil and gas working interest P50 reserves of 9.6 mmboe (working interest). An application for commercial development has been submitted to the Syrian authorities and it is anticipated that approval will be granted within the next few months. Subject to approval being received in sufficient time an appraisal well (KHE-102) will be drilled on the northern flank before the end of the year.

The Safa exploration well, spudded in July to target a Cretaceous age prospect on trend with the Khurbet East field, encountered non-commercial heavy oil and has been plugged and abandoned.

The Yousefieh East exploration well which was spudded on 20 July 2011, on the other hand, did encounter a commercial oil column of 12.8 metres net, which produced approximately 250 bopd of 20° API oil on test with no associated water, and is interpreted to represent an eastern flank extension of the Yousefieh field. It is likely to require acid stimulation and the installation of artificial lift facilities in order to be placed on production.

Encouraged by the success of Yousefieh East, the Al Khair prospect is planned to be drilled before year-end targeting the same reservoir as at Yousefieh East but in an up-dip stratigraphic trap approximately 3 km to the south-east.

The Wardieh exploration well, targeting a new Cretaceous age exploration play to the south of the SPC-operated Soudieh field, was spudded at the end of August and results are likely to be available in October.

The 3D seismic data acquired last year over a 1060 km² area has been processed and is undergoing interpretation. A further 250 km² of 3D data is to be acquired around the Maghlouja prospect: acquisition is due to commence imminently and should be completed by year-end.

Tunisia

The Sidi Dhaher well on the onshore Chorbane block (Gulfsands interest 40%) was finally spudded at the end of August, having been delayed by more than six months by logistical and supply issues that arose in the aftermath of the Tunisian revolution. The well is expected to take around 33 days to drill. Gulfsands will pay 80% of the well costs up to a cap of $5 million. For well costs in excess of the cap, Gulfsands will pay its 40% working interest share.

On the offshore Kerkouane Block (Gulfsands interest 30%), preliminary economic studies as well as discussions with the local authorities are ongoing regarding the potential commercial development of the Dougga Gas Field. In addition, two exploration leads within the block are being matured to drillable prospectus status. The first is the North Dougga Lead, which is a four way dip closure covered by recent vintage 3D seismic data. The second involves the Kerkouane structure, where we recently acquired additional 2D seismic data by taking advantage of a vessel that was acquiring data in an adjacent block.

USA: Gulf of Mexico

Working interest production in H1 2011 was 568 boepd, of which 341 boepd was oil and natural gas liquids ("NGLs") and the rest gas. Working interest production in the corresponding period of 2010 was 1,277 boepd. The sale of a package of assets announced in December 2010 reduced production by approximately 195 boepd. Adjusting for these asset disposals the net working interest production declined by approximately 48% due to operational outages and natural decline.

The sale of a further package of assets for US$6.0 million was agreed at the end of August and is expected to close at the end of September. An additional $4.7 million of cash collateral backing abandonment bonds is expected to be released as a result of the sale. Negotiations are under way with the aim of selling all the remaining assets by the end of the year.

Financial Review

Key performance indicators

Selected Financial Data

The H1 10 results have been restated to reflect the change of accounting policy to the successful efforts method made in the financial statements for the year end 31 December 2010. These adjustments are more fully described in note 11 to the Half-Yearly Financial Report.

Revenue and Profit

Revenues grew by 53% to $78.6 million (H1 10: $51.4 million), primarily as a result of increases in underlying oil and gas prices. Average working interest production in H1 11 was 10,923 boepd (10,355 bopd from Syria, 568 boepd from the US, including NGLs) compared with 9,632 boepd in H1 10 (8,412 bopd from Syria and 1,277 boepd from the US). Group entitlement production was 4,489 boepd, an increase of 6% over that in H1 10 (4,250 boepd). The entitlement production as a percentage of working interest production in Syria remained constant at 39% as the Group has now recovered all historic costs associated with the initial exploration phase of the Block 26 Production Sharing Agreement. All production was sold in the period.

The average realised price during the period was $100.0/bbl for oil sales and $4.4/mcf for gas. Syrian oil production realised an average price of $100.0/bbl, representing an $11.2/bbl discount to average Brent. US oil sales yielded an average price of $100.7/bbl, a $2.7/bbl premium to the average WTI price of $98.0/bbl. US gas sales realised a small premium of $0.1/mcf to the average Henry Hub price of $4.3/mcf.

Excluding depletion and impairment charges, cost of sales decreased from $8.3 million in H1 10 to $7.0 million. The total production cost, excluding decommissioning costs, fell to $3.4/boe from $4.5/boe in H1 10 on a working interest basis, largely owing to the lower proportion of US production. The production cost in Syria on the same basis was $1.6/bbl (H1 10: $1.7/bbl). Depletion charges increased to $8.5 million (H1 10: $7.6 million): the unit depletion charge per boe on an entitlement interest basis increased slightly to $10.4/boe (H1 2010 $9.6/boe). Gross profit amounted to $63.1 million, almost double the gross profit of $33.0 million in H1 10.

General administrative expenses were down marginally at $11.8 million compared to $11.9 million in H1 10.

Exploration costs of $19.0 million were written off during the period in respect of the Lambouka well, offshore Tunisia ($13.8 million) and Abu Ghazal in Syria ($5.2 million), in accordance with the Group's successful efforts accounting policy. Although gas has been discovered at Lambouka-1, uncertainty remains as to the nature of this gas and the viability of its commercialisation, in addition to which the majority of the bore-hole is deemed to be unusable for future operations. The Group continues to carry the costs of the Khurbet East-101 well in exploration and evaluation assets pending the confirmation of commerciality by the Syrian government. The Twaiba-1 well is also included in exploration and evaluation assets pending further work which is expected to be completed during H2 2011.

The operating profit for the period was $31.6 million compared with $17.3 million in H1 10. Syria made an operating profit of $53.9 million (H1 10: $26.5 million), Tunisia lost $13.8 million (H1 10: loss of $0.2 million), the US made a loss of $1.8 million (H1 10: loss of $2.4 million), and general Group expenses were unchanged at $6.7 million.

Financial Position and Cash Flow

Net cash generated by operations was $56.4 million compared with $27.4 million in H1 10. The increase in cash generated was driven principally by higher oil prices. Working capital balances increased by approximately $5.0 million due primarily to the timing of the invoicing and payments on the contract for the construction of the Block 26 central production facility. After interest and tax, the net cash from operating activities amounted to $56.6 million (H1 10: $27.9 million).

Capital expenditure was $24.1 million (H1 10: $17.9 million) of which $21.8 million was in Syria, $1.5 million was in Tunisia and other capital expenditure was $0.8 million. $14.0 million out of the total capital expenditure was on exploration. In the US sales proceeds of $4.5 million were received following the sale of properties and decommissioning payments of $1.3 million (H1 10: $1.1 million) were made. Restricted cash balances were reduced by approximately $6.1 million following the release of certain bonds for decommissioning liabilities on the properties sold in the US.

The Group received $0.9 million as a result of the exercise of options during the period (H1 10: $2.0 million) and paid $0.2 million to cash-settle certain restricted share awards. Overall the Group increased its cash balances over the period by $42.5 million (H1 10: $10.9 million), leaving cash balances at 30 June 2011 of $123.1 million (excluding $9.1 million of cash held in escrow accounts). The cash held at 31 December 2010 was $80.6 million (excluding $15.2 million of cash held in escrow accounts). The Group has no outstanding debt.

Risks and uncertainties

A full review of the principal risks and uncertainties facing the Group as at 1 April 2011, and the steps taken to mitigate those risks and uncertainties, was included in the 2010 Annual Report and Accounts.

The principal risks and uncertainties noted therein comprised the following:

Since that time the situation in Syria has deteriorated significantly with continuing widespread civil unrest and ongoing action by the military. This creates potential material risks for Gulfsands personnel (and the personnel of our contractors), for the continuity of operations and ultimately for the value of the business as a whole were the current government to change and be replaced by one less favourably disposed to foreign oil companies and unwilling to continue to honour its contractual obligations.

The imposition of sanctions by the USA and the European Union ("EU") against certain Syrian individuals and entities, coupled with the recent US and EU embargos on purchasing, transporting or trading in Syrian crude oil or petroleum products, also gives rise to potentially material risks. As these sanctions have only been imposed recently there is still significant uncertainty as to their potential impact on the legal and commercial arrangements of the Group, from both an international (i.e. EU/US) and local Syrian perspective. There is also a risk that additional, more punitive, sanctions are imposed in the future. We continue to monitor the situation and liaise closely with our legal advisors and, while we have summarised below our understanding of the impact of the current sanctions regime, the range of potential outcomes is quite wide and could have a significant effect on the Group.

The Group disclosed publicly in August 2011 the extent of its relationships with Mr. Rami Makhlouf, one of the individuals named in both the US and the EU sanctions, and corporate entities connected with him and his family, and confirmed that it was fully compliant with all sanctions having suspended all payments under the relevant commercial agreements. This remains the case at the date of this report and we will continue to take steps to remain compliant in future periods.

The Group's crude oil production is sold within Syria to the General Petroleum Corporation (GPC): we play no part in the export of crude from the country and have no knowledge as to whether any of our production is ultimately exported. The Directors have taken legal advice on the effect of the sanctions upon the Group's activities and while some aspects of the legislation are not clearly worded the Directors are satisfied the Company continues to be compliant with applicable sanctions. The Directors will continue to monitor and take advice on any additional sanctions that may be promulgated.

In any event, GPC's ability to continue to pay foreign oil companies for their share of production under production sharing contracts will depend on Syria's ability to find alternative purchasers for its crude exports, which have hitherto been predominantly purchased by EU buyers. Gulfsands, along with other producers in Syria, has had to reduce production in September owing to the lack of sufficient crude storage capacity in the country as a result of the cessation of exports to the EU. Previous production levels are unlikely to be restored unless and until Syria secures alternative export routes for its crude.

The Group has recently encountered reluctance among some banks in the EU to process Euro payments emanating from, or going to, Syria for internal policy reasons, resulting in a ten day delay in the receipt of payment from GPC for its most recent oil sales invoice. The Group has historically been paid for its oil in Euros, which it generally sells for US dollars upon receipt. Discussions are in process with GPC with a view to establishing more reliable alternative payment routes. Clearly if this were proved not to be possible the Group's ability to pay its international suppliers and contractors after a certain period would be compromised.

Going Concern

The Group's liquidity in the medium to long term is clearly dependent on the extent to which it is able to secure payment for its share of production in Syria, as noted above. However, the Group had cash and bank balances available for immediate use of over $120 million at 30 June 2011 (of which $109 million was held in the UK) and no debt. Having reviewed the Group's forecasts for the period to 31 December 2012 and after making enquiries, the Directors expect the Group to remain cash positive for at least 12 months from the date of approval of this Half-Yearly Financial Report even if recent sanctions prevent the Group from being paid for its Syrian production with immediate effect. Accordingly, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Consequently the Directors believe that the Group is able to manage its financial and operational risks and they therefore continue to adopt the going concern basis in preparing the Half-Yearly Financial Report.

Andrew RoseChief Financial Officer16 September 2011

INDEPENDENT REVIEW REPORT TO GULFSANDS PETROLEUM PLC

We have been engaged by the Company to review the condensed set of financial statements in the half year financial report for the six months ended 30 June 2011 which comprises the condensed consolidated income statement, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 12. We have read the other information contained in the half year financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half year financial report is the responsibility of, and approved by, the directors. The directors are responsible for preparing the half year financial report in accordance with the AIM rules of the London Stock Exchange.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half year financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half year financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half year financial report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM rules of the London Stock Exchange.

Emphasis of matter - possible impact of Syria sanctions

In forming our conclusion on the condensed set of financial statements for the six months ended 30 June 2011, which is not qualified, we have considered the adequacy of the disclosures made in note 12 to the half-yearly financial report concerning the potential impact of the sanctions imposed by the USA and the European Union during 2011. As highlighted in these disclosures, as some aspects of the sanctions are not clearly worded, there is significant uncertainty as to the potential impact of these sanctions on the Group's financial position and future financial prospects.

Deloitte LLP

Chartered Accountants and Statutory AuditorLondon, United Kingdom16 September 2011

CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2011

*See note 11

The results shown above relate entirely to continuing operations. Comprehensive income for all periods shown relates solely to the profit or loss shown above.

CONDENSED CONSOLIDATED BALANCE SHEETAS AT 30 JUNE 2011

CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2011

*See note 11

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2011

*See note 11

NOTES TO THE HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2011

1. Basis of preparation

This half-yearly financial report, which includes a condensed set of financial statements of the Company and its subsidiary undertakings ("the Group") has been prepared using the historical cost convention and in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS") including IAS 34 'Interim Financial Reporting' as adopted by the European Union ("EU").

This condensed set of financial statements for the six months ended 30 June 2011 is unaudited and does not constitute statutory accounts as defined by the Companies Act. They have been prepared using accounting bases and policies consistent with those used in the preparation of the audited financial statements of the Group for the year ended 31 December 2010 and those to be used in the year ending 31 December 2011. The information for the year ended 31 December 2010 does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006.

The financial statements for the year ended 31 December 2010 have been delivered to the Registrar of Companies and the auditors' report on those financial statements was unqualified, did not draw attention to any matters by way of emphasis of matter and did not contain a statement made under Section 498 of the Companies Act 2006.

The condensed set of financial statements included in this half-yearly financial report has been prepared on a going concern basis of accounting for the reasons set out in the Financial Review section of this report.

This half-yearly financial report was approved by the Board of Directors and authorised for issue on 16 September 2011.

NOTES TO THE HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2011

2. Segmental information

The Group operated in three geographical areas, Syria, Tunisia and the USA. All segments are involved with production and exploration of oil and gas. Other represents management fee recharges and corporate and head office costs.

The total revenue of the Group, as defined by IAS 18, was $78,725,000 (2010: $51,522,000) comprising sales of hydrocarbons and incidental income of $78,598,000 (2010: $51,430,000) and interest income of $127,000 (2010: $92,000).

The Group's revenue and results for the period is analysed by reportable segment as follows: 

Central costs have not been apportioned to the reportable segments and are included within "Other" above.

NOTES TO THE HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2011

2. Segmental information (continued)

NOTES TO THE HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2011

2. Segmental information (continued)

The segment assets and liabilities as at 30 June 2011 and the segment capital expenditure during the period were as follows:

NOTES TO THE HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2011

3. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following shares in issue:

The calculation of basic earnings per share is based on the profit attributable to equity shareholders and the weighted average number of ordinary shares in issue during the period. The diluted earnings per share is calculated using the weighted average number of ordinary shares in issue on the assumption of conversion of all dilutive potential ordinary shares.

4. Property, plant and equipment

On 20 December 2010 the Group signed an agreement to sell its interests in the Eugene Island 57/58, South Pelto 13 and Vermilion 379 fields for a price of $4.2 million with an effective date of 1 May 2010. The completion date for the transaction was 31 January 2011. These assets were classified as held for sale as at 31 December 2010. The profit on disposal of the assets in the period was $0.2 million.

NOTES TO THE HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2011

5. Intangible assets

6. Trade and other receivables

Underlift represents a right to future economic benefits (through entitlement to receive equivalent future production), which constitutes an asset and of which the timing of recovery is uncertain.

Advances on contracts represent the total amount invoiced by contractors on long-term projects in excess of the value of work completed at the balance sheet date. At 30 June 2011 and 31 December 2010 this balance related entirely to the contract for the construction of the CPF.

Amounts due from oil and gas partners represents the excess of the Group's loans and advances to jointly controlled entities over its share of the assets less liabilities of those entities.

7. Cash and cash equivalents

NOTES TO THE HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2011

7. Cash and cash equivalents (continued)

Restricted cash balances represents (i) amounts held in escrow to cover decommissioning expenditures under the requirements of the regulatory authorities that manage the oil and gas and other mineral resources in the Gulf of Mexico, (ii) a bank guarantee that is required under the terms of the Production Sharing Contract with the Syrian Petroleum Company and which is reduced quarterly as the obligation under the required work programmes are completed, and (iii) amounts held in escrow to secure a line of credit for forward foreign currency trading.

8. Trade and other payables

9. Provision for decommissioning

The provision for decommissioning relates to the expected future costs of plugging and abandoning the oil and gas properties held by Gulfsands Petroleum Tunisia Limited, Gulfsands Petroleum USA, Inc and Darcy Energy LLC. At 30 June 2011 the oil and gas properties have estimated plugging and abandonment dates up to 2026. The Group has no material decommissioning obligations relating to its operations in Syria. The portion of the provision for decommissioning expected to be settled within a year totalling approximately $6.2 million is included in current liabilities and the remainder totalling approximately $22.3 million is included in non-current liabilities in the consolidated balance sheet at 30 June 2011.

NOTES TO THE HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2011

10. Share capital

The movements in share capital, share options and restricted shares were as follows: