Hague and London Oil Regulatory News (HNL)

WESSEX EXPLORATION PLC

(AIM: WSX)

Unaudited Interim Results for the Half Year ended 31 December 2013

Wessex Exploration PLC ("Wessex" or "the Company"), the hydrocarbon exploration company, announces its unaudited Interim Results for the half year ended 31 December 2013.

Key Points

· In the half year to December 2013, the loss before taxation was £6,206,637 (H1 2012: loss £824,051) and loss per share was 0.86p (H1 2012: loss 0.11p).

· Non cash items were £5,704,743 (H1 2012: £241,328) of which our share of the Northpet Joint Venture (JV) operating loss was £5,288,872 (H1 2012: £12,316). This included GM-ES-2, GM-ES-4, GM-ES-5 impaired in full and rig decommissioning costs in the JV.

· Post the impairments, Wessex is carrying the Guyane investment at £3,120,264 (H1 2012: £6,126,417) and Total Equity was £5,971,045 (H1 2012: £14,337,926).

· Cash administration costs were down 44% to £341,469 in the first half of the year compared to the first half of last year. We expect to exceed our original target of a 25% cut in non-project cost reductions in the financial year 2014 if we remain on budget in the second half.

· Wessex opted out of £1.29m of funding requests in respect of operations in Guyane during Q4 2013. Payments were recommenced in February 2014 at the new pro-rata rate of 44.11% of the JV, an effective interest in Guyane Maritime of 1.103%.

· Cash position was £2.4m at the end of December 2013

Commenting on the results, Malcolm Butler, Chairman, said:

"Following the disappointments of the drilling campaign in Guyane, we have been working hard to maintain the option value of the current portfolio and to evaluate other possibilities, both project based and corporately. We expect the Guyane Maritime Partners to complete the evaluation of the prospectivity in the Central Area of the licence shortly. We will then be in a position to execute on the next steps in the Company's evolution."

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Introduction

The period under review saw the completion of the four well campaign in the Guyane Maritime Permit, with the drilling of GM-ES-4 and GM-ES-5, and the Stena Icemax drill ship was released from contract in December. The disappointments in Guyane caused the Board to undertake a wide-ranging exercise to preserve the option value of the Company's remaining portfolio while conserving cash to allow time to evaluate the drilling results and finalise potential prospects for future drilling in Guyane. As part of this exercise, the Company gave notice of election under the Northpet Shareholder Agreement not to fund up to £1.5m of future funding requests on the Guyane Maritime Permit. In addition, a non-project cost reduction programme was instigated.

An application for renewal of the Juan de Nova Est Permit was filed by Jupiter Petroleum Juan de Nova Ltd in August 2013 and Wessex will have the right to request the French Authorities for the assignment of a 50% interest if it is renewed. At the request of the French Authorities, the Company resubmitted an application for the Papillon Permit, covering the bulk of the shallow waters offshore Guyane. Competition for this area is fierce and a decision is expected in May 2014.

The Norwest-operated UK Offshore P1928 group elected to relinquish the Promote Licence a month early to allow the area to be included in the forthcoming 28th Seaward Licensing Round. The group anticipates re-applying for part of this area in the Round. Exploration activity is reaching the drilling stage in the licences awarded by Morocco over SADR waters, with Kosmos planning to drill a well in Q4 2014 close to the Company's Imlili and Guelta blocks. The Company hopes that success will encourage the progress of diplomatic efforts to settle the long-standing territorial dispute which has hampered exploration progress in the past.

The Board is actively pursuing strategic options for the Company and over the coming months, will evaluate a number of opportunities to enable the Company to gain the best value for the assets held and secure value for shareholders in the future.

Financial Review

In the half year, the loss before taxation was £6,206,637 (H1 2012: loss £824,051) and loss per share stood at 0.86p (H1 2012: loss 0.11p).

Administration costs were £921,908 (H1 2012: £913,547), of which actual cash administration costs were £341,469 (H1 2012: £608,721). Non cash items included £201,432 of share option expense and an impairment charge on P1928 of £214,439.

At the time of reporting our final results in October 2013, we set ourselves a target of reducing cash non-project costs by 25% in 2014. In the event, we have been able to reduce our corporate overhead in the first half of this financial year by 44% over H1 2013 and 18% over H2 2013. We expect to exceed our target on non-project cost reductions in the financial year 2014 if we remain on budget in the second half.

As Wessex accounts for exploration activity on a successful efforts basis, we have taken a decision to impair GM-ES-2, GM-ES-4, GM-ES-5 (GM-ES-3 having been impaired last year) and recognize the rig decommissioning costs, which were incurred mostly in December 2013. We have elected to continue to carry the GM-ES-1 costs while the Guyane Maritime partners consider future drilling plans. This partial impairment of our share of the Northpet Joint Venture capitalised costs represents some 85% of the total group loss during the period.

Total equity as at 31 December 2013 stood at £5.97m (H1 2012: £14.38m) with the Northpet investment carried in the consolidated balance sheet at £3.12m (H1 2012: £6.13m). The cash position at the same date was £2.4m.

In October 2013, Wessex triggered a contractual right contained in the Northpet Shareholders Agreement to conserve cash resources by opting out of funding requests in respect of operations in Guyane. Wessex opted out of £1.29m of funding requests during Q4 2013 and re-commenced payments at the new pro-rata rate of 44.11% of the JV (an effective interest in Guyane of 1.103%) in February 2014. As the Stena Icemax drill ship was released from contract on 5 December 2013, the Guyane budget for 2014 is significantly reduced and therefore the forward commitment in the medium term is manageable from a Wessex perspective.

Projects

Guyane

To date, Wessex has participated in operations on five wells in the Guyane Maritime Permit (GM) all on the Eastern Slope - the Zaedyus discovery and four unsuccessful wells. This includes GM-ES-4 (Cebus, on the Brazilian border about 50km SE of GM-ES-1), the results of which were announced in July 2013 and GM-ES-5 (Zaedyus down-dip, about 7 km northeast of GM-ES-1) which was announced in November 2013. Both of these wells have now been plugged and abandoned.

In reality, most of the GM permit remains untested, especially the Central Area where some 4,000 sq. km of 3D seismic data was recorded in 2012. The GM partners are currently evaluating the data recorded from the four wells on the Eastern Slope just drilled and interpreting the seismic data over the Central Area. This activity is designed to build a portfolio of leads and prospects in the Central Area during early 2014, and to identify at least one prospect which is suitable for drilling in 2015.

South of England

Wessex holds two onshore exploration licences in the South of England - PEDL 238: 50% interest and PEDL 239: 25% interest. These licences are located on the northern flank of the English Channel Basin, on trend with the prolific Wytch Farm oilfield. These both expire in June 2014.

The Partners are considering their options on PEDL 238 (Christchurch) and PEDL 239 (Isle of Wight). Early relinquishment in order to enable the areas to be included in the 14th Onshore Licencing Round, which is expected to take place in the second half of calendar 2014, may prove beneficial. There has been little activity on PEDL 238 during the half year but evaluation of potential conventional and unconventional plays on PEDL 239 has continued.

After detailed discussions with the Department of Energy & Climate Change (DECC), the Norwest-operated group holding Offshore Promote Licence P1928 (Wessex 35%) elected to relinquish it at the turn of the year. The group had been unable to complete a full evaluation of the new seismic data and bring in a farm-in partner. Continuing the licence into the second period would have required a commitment to drill a well if the interpretation confirmed a viable prospect and also satisfaction of the DECC requirement to demonstrate funds currently in place to pay for such a well. The licence was therefore relinquished a month earlier than required in order to have the area included in the forthcoming licencing Round. The group intends to re-apply for the most prospective parts of the area under the 28th Seaward Licensing Round, which closes on 25 April 2014. If the application is successful, the group will have a further two-year period in which to complete its evaluation, confirm a drilling location and attract a farm-in partner. The costs of licence P1928 (£214,439) have been fully impaired in this half year.

Juan de Nova, Mozambique Channel

A five year licence renewal application was made in August 2013 by Jupiter Petroleum Juan de Nova Ltd ("Jupiter"), a wholly-owned subsidiary of Global Petroleum Limited (AIM: GBP, ASX: GBP). If the renewal application is successful, Wessex has the right to take a 50% interest in the Permit and file a request for legal approval from the French Authorities. Global will become the operator. The first phase of the original licence expired in December 2013 and all costs were fully impaired last year.

In order to allow Jupiter to make the application with a 100% interest, the Prefect requested that the original partners who assigned the beneficial interest to Wessex regularize the legal position on the licence by applying for mutation to Jupiter. Wessex has now arranged the completion of this rather complex process and the mutation application papers were duly delivered to the French Authorities on 12 March 2014. With this hurdle removed, a determination on the renewal can now proceed.

Western Sahara, SADR

Maghreb Exploration Limited, a fully owned subsidiary of Wessex, holds 50% interests in and is designated as operator of three blocks in the Sahawari Arab Democratic Republic (SADR) under Assurance Agreements: Bojador, onshore, and Guelta and Imlili, offshore. While there is still no sign of an early settlement of the dispute between Morocco and the SADR over the Western Sahara, the flurry of activity in Moroccan waters just to the north of our blocks has led to renewed industry interest. Of particular significance is the Cap Boujdour block, awarded to Kosmos by Morocco, which is adjacent to our Imlili and Guelta blocks. Kosmos and its partner Cairn plan to drill the one billion barrel potential Gargaa Prospect in this block during Q4 2014.

Outlook

With our ongoing cost reduction initiative proceeding well and £2.4m cash in hand at the end of December 2013, the Board is confident that the Company is well placed to evaluate all available options in order to recommend a course of action in the best interests of shareholders.

Notes to Editors on WSX

Guyane

Wessex holds an effective net interest of 1.103% in the deep water Exclusive Exploration Licence (EEL) covering an approximate 24,100 sq.km offshore area of Guyane (French Guiana). The EEL interest is held via a 44.11% interest in a joint venture between Wessex and Northern Petroleum Plc, using Northpet Investments Limited as the holding company with a total interest of 2.5%. The other partners in Guyane are Shell (45% and operator), Tullow (27.5%) and Total (25%).

Juan de Nova

An application has been made for a five year renewal of the Juan de Nova Est Permit, lying on the edge of the continental shelf to the east of Juan de Nova island in the Mozambique Channel. If the application is successful, the licence area will be around 4,000 sq.km and Wessex will have the right to take a 50% interest in the Permit. Global Petroleum Limited (AIM: GBP, ASX: GBP) will retain a 50% interest through its wholly-owned subsidiary, Jupiter Petroleum Juan de Nova Limited.

South of England

Wessex holds an interest in two onshore licences in southern United Kingdom, PEDL 238: 50% and PEDL 239: 25%. The remaining interests are held by the operator, NWE Mirrabooka (UK) Pty. Ltd (a fully owned subsidiary of ASX listed Norwest Energy NL).

Western Sahara (Saharawi Arab Democratic Republic "SADR")

Wessex holds three blocks, Bojador (39,983 sq.km), Guelta (15,760 sq.km) and Imlili (16,955 sq.km), under Assurance Agreements which cause Production Sharing Contracts to come into effect once the SADR government is able to take control of the territory. Wessex is the designated operator and holds a 50% interest; Tower Resources (AIM: TRP) has the other 50% interest.

Unaudited Condensed Consolidated Income Statement

for the six months ended 31 December 2013

Unaudited Condensed Consolidated Statement of Comprehensive Income

for the six months ended 31 December 2013

Unaudited Condensed Consolidated Balance Sheet

as at 31 December 2013

Unaudited Condensed Consolidated Cash Flow Statement

for the six months ended 31 December 2013

Notes to the Unaudited Financial Information for the six months ended 31 December 2013

1 Accounting Policies

Basis of preparation

These condensed Half Yearly financial statements are for the six month period ended 31 December 2013.

The financial information for the 6 months ended 31 December 2013 and 31 December 2012 is unaudited.

The interim financial information in this report has been prepared on the basis of the accounting policies set out in the audited financial statements for the year ended 30 June 2013, which complied with International Financial Reporting Standards as adopted for use in the European Union ("IFRS"). The Group adopted the following standard during the current financial period:

IFRS 13 'Fair Value Measurement'. The standard defines fair value and provides a single IFRS framework for measuring fair value. The adoption of this standard has not had a material effect on the Group's loss for the period or equity.

IFRS is subject to amendment and interpretation by the International Accounting Standards Board ("IASB") and the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission.

The financial information has been prepared on the basis of IFRS that the Directors expect to be applicable as at 30 June 2014.

Financial information contained in this document does not comprise the Group's statutory financial statements as defined in section 434 of the Companies Act 2006.

The statutory financial statements for the year ended 30 June 2013 have been delivered to the Registrar of Companies. The auditors reported on these financial statements:

Their report was unqualified, did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006, and did not include references to any matters to which the auditor drew attention by way of emphasis.

2 Loss per Share Attributable to the Equity Shareholders of the Company

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.Given the Group's reported loss for the year share options are not taken into account when determining the weighted average number of ordinary shares in issue during the year and therefore the basic and diluted loss per share are the same.

If the Company's share options were taken into consideration in respect of the Company's weighted average number of ordinary shares for the purposes of diluted loss per share, it would be as follows:

3 Taxation

There was no tax charge for the Half Yearly period due to the loss incurred (2012: £ nil). A deferred tax asset in respect of trading losses and share based payments has not been recognised due to the uncertainty over timing of future profits. The trading tax losses are recoverable against suitable future trading profits.

4 Share Capital

There has been no change in the company's share capital during the period.

5 Copies of the Half Yearly Report

A copy of this Half Yearly Report is available on the Company's website at http://www.wessexexploration.com