IGAS.L Regulatory News (IGAS)

29 June 2012

IGAS ENERGY PLC ("IGas" or "the Company")

RESULTS FOR THE 15 MONTH PERIOD ENDED 31 MARCH 2012

"A leading position in both unconventional and conventional hydrocarbons onshore in Britain"

The Board of IGas is pleased to announce its financial results for the 15 month period ended 31 March 2012.

Highlights

Strategic

·; Acquisition of Nexen Exploration UK Ltd and Star Energy Group Limited leading to majority owned and operated asset base

·; Since the acquisition of Star Energy**:

o 2P reserves upgraded by ca. 1 million boe

o 2P NPV10 materially increased to £173MM

·; Secured both equity and debt (£105.2m) to fund acquisitions and provide working capital

·; Secured staff, equipment and fiscal synergies needed to pursue growing resource base

·; Process commenced to identify suitable farm-in partner for IGas Energy's shale assets; Greenhill, the investment bank, mandated as its advisor

Operational

·; Safety

o One year with no lost time incidents

o RoSPA Gold Medal award

o Attained ISO 9001 and ISO 14001 certification

·; Drilled 3 wells (DG-3, DG-4, Ince Marshes - 1)

o Significant shale resource potential identified

o CBM delivery appraisal on-going

·; Production at year end of 2,700boepd

o 'Chase the barrels' initiative launched

·; Integration of Nexen Exploration UK Ltd and Star Energy Group Limited acquisitions

Financial1

·; Debt of £7.6m will have been repaid in the period from drawdown to 30 June 2012 with an anticipated further debt principal repayment of £12.0m by 31 March 2013, a deleveraging of nearly 25%

Andrew Austin, CEO Said "Hydrocarbons from unconventional sources have transformed the global market. The results of this year's programme, particularly from our well at Ince marshes, are potentially transformational for the Group. Our conventional production assets offer the opportunity to maintain and potentially enhance current production levels. To maximise this opportunity we have launched a 'chase the barrels' initiative to assess the existing fields. Alongside our significant cash flows allowing for rapid deleveraging, I look forward to further progress in the coming months.

** Since acquisition of Star Energy Group Limited; with revision in reserves being due to an updated Competent Persons Report, with IGas now having access to all fields and data.

For further information please contact:

IGas now has a leading position in both unconventional and conventional hydrocarbons on-shore in Britain. The early indications of the potential from the shale resource within our acreage show that it could be large enough to materially reduce Britain's reliance on imported gas.

Hydrocarbons from unconventional sources have transformed the global market. The results of this year's programme, particularly from our well at Ince Marshes, are potentially transformational for the Group. Here we logged and took samples over a c.1,000ft shale section and have now interpreted these results. This has led to a more than doubling of the pre drill estimate of gas initially in place. Following a number of unsolicited expressions of interest, from companies with both significant shale exposure and expertise, we have now appointed investment bank Greenhill to secure industry partners for the development of our acreage in the Bowland Shale.

We continue with the testing of our coal bed methane assets. The wells at Doe Green are currently dewatering.

Our conventional production assets offer the opportunity to maintain and potentially enhance current production levels. To maximise this opportunity we have launched a 'chase the barrels' initiative to assess the existing fields and well stock so as to engineer potential projects based on current production technology and a better understanding of the sub surface.

Chairman's statement

Since 1 January 2011 we have moved from being a non-operated partner having equity interests in CBM licences under appraisal, to delivering material hydrocarbon production, having full control (as operator) and ownership (100% in most cases) of our assets and having early indications of significant shale resource potential.

The potential of IGas as a dedicated upstream oil and gas company to contribute to the energy security of the country has become very much more significant. With our current production and potentially enormous unconventional resources we are set to be a material part of Britain's energy mix going forward. The comments by the chancellor in the budget regarding the importance of gas, by the Prime Minister regarding investigating shale (in a safe manner) and the anticipated agreement by DECC, after an independent review and public consultation into the resumption of hydraulic fraccing of shale, show the renewed commitment of the government to developing a gas based strategy to augment other forms of generation. This strategy is of course in the context of ensuring that domestic resources are fully utilised in a safe and environmentally responsible way; to which we too are fully committed.

Through the two acquisitions made in 2011, the first in March of Nexen Exploration UK Limited and then in December of Star Energy Group Limited, we have transformed our Company into being the largest operator of oil and gas fields onshore Britain. In financing these transactions we have strengthened our shareholder base with Nexen now holding 25% of IGas' equity. We have also raised more than £100million of long-term debt and equity, to finance these transactions and our operations during the period. The Company's healthy production, has enabled debt of £7.6m to have been repaid in the period from drawdown to 30 June 2012 with an anticipated further debt principal repayment of £12.0m by 31 March 2013, a deleveraging of nearly 25%. Looking forward, in addition to healthy production, the coming year should see us starting to realise the synergies made available to us from last year's acquisitions, designed to help unlock the Company's very considerable resource potential. In this regard the announced plan to farm-out some of IGas' shale acreage, subject always to the terms being attractive for the Company and thereby shareholders, should be another important milestone.

With 152 employees at the year end, their health, safety and well-being are of upmost importance to the board. We are pleased to report that we have now had more than a year with no lost time incidents.

Finally, I would like to welcome all of the former employees of Star Energy to IGas. Together, and focused on onshore energy, we are delivering a secure future.

CEO Review

The outlook for 2012 and beyond sees IGas demonstrating the deliverability of our unconventional resources while continuing to deliver from our conventional fields.

The last fifteen months, since January 2011 have seen IGas move to controlling its assets and delivering production in Britain. The acquisition of Star Energy Group has brought us not only material current production and significant sub surface upside potential but the people, skills, equipment and fiscal synergies that are essential to deliver onshore in Britain from both conventional and unconventional resources.

Our plans to demonstrate the deliverability of our unconventional assets continue. We have drilled three wells this year, two at Doe Green into different seams. DG-3 is a c.1,500ft lateral in the London Delph seam. Drilled with the BDF28 rig, the well was completed safely on the 4 October. The rig then drilled DG-4 well into the Plodder seam at a depth of 3,560ftTVSS. Again this well was drilled safely and the rig left the site on 14 February 2012. Both wells were more complicated geologically than anticipated, however we were able to install slotted liners over a total length of c.2,500ft. All three wells (DG-2, DG-3 and DG-4) have now been hooked up to the production facilities on site since mid-March 2012 and we are currently de-watering the wells (this process is taking longer than anticipated). We look forward, post the de-watering process to announcing stabilised production rates from these wells to add to the production history we have from DG-2.

Getting the most from the mature assets in the Weald and East Midlands is a key priority for our Company and we are delighted with production levels, which at the year end were 2,700boepd. To this end, we have launched a 'chase the barrels' initiative which is to seek out opportunities for increasing production and up time and reducing lifting costs. Several projects have already been identified. Following a successful production test at Albury where gas was shown to flow at commercial rates, planning permission has been applied for us to install export equipment. Other areas under consideration include the installation of rod pump controllers to reduce wear and the need for work overs. Further installation of remote monitoring and energy management arrangements are also being considered to reduce operating expenditure. We are looking to carry out another well test in the Weald Basin shortly. This will be to assess the commerciality of previously shut in wells. Following this test a decision will be made on the installation of export facilities at this location.

While the basins have been in production for considerable periods of time, the proportion of in place hydrocarbons to date recovered is still low and using modern techniques we are confident of the future potential of the assets.

Successful appraisal of our unconventional resource potential continued with Ince Marshes-1 well, which was spudded on 4 November 2011. This well was planned to log and core the coals in an area around which less was known than elsewhere in our portfolio. The entire coal sequence was encountered shallower than anticipated and the decision was taken to continue to drill into the deeper horizons to better understand the geology and resource potential of the area. While it was anticipated that shale would be encountered, the results of the drilling, the logs and samples received, completely surpassed our expectations. We encountered and logged a significant Bowland Shale section of approximately 1,000ft. The well was TD'd in the Bowland Shale due to the limitations imposed by the CBM well design criteria. The well was suspended so that it might be re-entered and deepened at a later stage to fully appraise the entire thickness of the Bowland Shale. The logs and samples were sent for independent analysis. These results indicate a resource in excess of twice the pre-drill estimate and with the total organic carbon ("TOC") observed between 1.2 and 6.9 (average 2.7) and initial analysis of the samples support our view that we may have discovered a potentially world class shale resource. Clearly, further wells and analysis are required to fully appraise the shales and critically flow tests need to be performed, however our results combined with those of operators in neighbouring licences in the Bowland Shale are extremely encouraging.

The development of gas from shale horizons clearly needs to be carried out in a way that engages with and is supported by other stakeholders in the area. In all of our operations to date both from conventional and unconventional reservoirs, our relations with those around us have always been key and will continue to remain so.

It is customary practice at IGas to fully consult with the local community and other relevant stakeholder groups in all the local areas in which we operate.

We believe that gas extracted locally, including shale gas is potentially a very important part of the future energy mix in the UK and provides a number of benefits including local jobs and secure and potentially cheaper energy to local consumers.

The shale horizons we have so far identified underlie existing identified CBM resources. This offers the opportunity to develop both resources in tandem and thereby enhance the economics of both, but particularly of the CBM..

I am particularly pleased to announce that our production division has recently been awarded our 2nd Royal Society for the Prevention of Accidents Gold Medal Award to complement our 4 previous Gold Awards. Receipt of these 6 consecutive Awards is a terrific testament to the dedication and commitment of all employees and our appointed contractors in ensuring we continue to apply the highest safety standards across all of our operations.

The process of integrating both acquisitions made last year is proceeding well. The acquisition of Star Energy required integration of more than 150 people and a significant number of legacy systems. We have been successful in achieving all of our "100 day" goals and now have an integrated HSE, emergency response and IT platform as well as having relocated the head office staff to IGas' offices in London.

Our strategy

IGas has accumulated a significant hydrocarbon resource base from 35 oil and gas exploration licences in the UK. The contingent recoverable resources, totaling some 317 million barrels of oil and gas equivalent (P50), largely from CBM, represent a portfolio of development opportunities which the Company intends to exploit over the medium term, delivering natural gas to the UK's grid, oil to UK refineries and enhanced value to the Company's shareholders.

Using the onshore expertise of the now expanded IGas team, the Company will seek to enhance recovery from its portfolio of mature wells, creating avenues to improve cash flow which will be applied to further develop the Company's resource base, while at the same time seeking synergistic opportunities to acquire new onshore oil and gas acreage.

CFO review

Notes

1. Underlying operating profit excludes the loss on oil price swap contracts of £18.5m and acquisition costs of £3.0m in the period to 31 March 2012

2. Borrowings excludes capitalised transaction costs of £7.6m

The fifteen month period to 31 March 2012 was transformational for the IGas Group, through the acquisitions of Star Energy Group Limited ("Star Energy") and Nexen Exploration U.K. Limited alongside its drilling programme. Through this activity, IGas has become a full cycle oil and gas company with significant experience in operating onshore Britain.

Following the acquisition of Nexen Exploration U.K. Limited in March 2011, IGas became the operator and 100% owner of each of its then licences across Britain and increased its Contingent Recoverable Resource 2C (P50) by 115% to 1,736bcf or 290 million barrels of oil equivalent (boe). In exchange, Nexen received 39,714,290 IGas shares equivalent to 29.9% of the then issued share capital. This accretive transaction laid the foundations for a share placing which raised net proceeds of £19.9m to fund the Company's drilling programme, whilst broadening and improving the Company's shareholder register.

On 14 December 2011, IGas completed the acquisition of Star Energy creating a substantial onshore oil and gas company. As a result, the financial results for the 15 months ended 31 March 2012 incorporate 3.5 months of results from Star Energy. The consideration of £110m was funded through the drawdown of new debt facilities with Macquarie Bank (US$135m), cash generated by Star prior to closing (from the effective date of 1 April 2011) and IGas' existing cash resources.

Income statement

The Group recorded revenues of £22.1m in the period (2010: £0.7m), of which £2.0m (2010:£nil) was generated through the sale of third party oil. Group oil production in the period since 14 December 2011, the date the Star Energy acquisition was completed ("Period Post Completion"), was 280mboe , representing an average of 2,615boepd with production at the year end of 2,700boepd. In the Period Post Completion, the realised price per barrel (pre-hedge) averaged £73.4 (US$117.0) per barrel with narrow discounts to Brent crude prices achieved. After taking into account the effect of long term hedging at US$93.4 the average realised oil price in the Period Post Completion was £65.1 (US$103.2) per barrel. This hedging has the potential to be of considerable benefit if the oil price environment in existence at the time of writing this report continues.

Cost of sales of £12.0m (2010:£0.6m) includes depreciation, depletion and amortisation (D,D&A) of £3.2m (2010: £nil), and operating costs of £8.8m (2010:£0.6m), including £1.8m charged in relation to processing third party oil. Operating costs per barrel of oil equivalent were £19.90 (Operating costs per barrel for Star Energy Group Limited for the 12 months from 1 April 2011 to 31 March 2012 £20.00), excluding the third party costs. These costs include transportation costs of £3.30/boe and the cost of the provision of our well services division of £2.64/boe.

Administrative expenses were £5.0m (2010: 1.8m). Acquisitions costs of £3.0m (2010:£nil) related to the acquisition of Star Energy.

The Group entered into oil price hedging during the period and in accordance with International Auditing Standard (IAS) 39 - "Financial Instruments: Recognition and Measurement" a charge was made of £18.5m in relation to the loss on oil price swap contracts. Most of the loss on these contracts was incurred due to the mark to market cost of the financial derivatives which the Company had in place at the year end, of which £16.1m is non-cash . As at 31 March 2012, the Group had 2.28 million barrels hedged over the period to 31 December 2017 at an average price of US$93.4/barrel (55% being in pounds sterling), of which 0.53m barrels are hedged in the year to 31 March 2013.

Other income amounted to £0.2m and related to agency revenues from the processing and sale of third party oil. Net finance costs amounted to £1.7m (2010: net finance income £0.2m) reflecting the debt drawn down in December 2011 to fund the acquisition of Star Energy and a £1.7m gain on the revaluation of the warrants issued during the period.

Gross profit of £10.1m was recognised in the period (2010: £0.1m), with underlying profit, before the loss on forward oil contracts and acquisition costs of £5.3m (2010: loss £1.7m). Loss attributable to equity shareholders of the Group was £12.1m (2010: £1.5m).

Cash flow

Cash used in operating activities in the period amounted to £2.6m (2010: £1.8m).

On 9 March 2011, the Company raised gross proceeds of £20.6m for 27.5m new ordinary shares when the acquisition of Nexen Exploration U.K. Limited became unconditional on 9 March 2011.

The Group drew down £81.5m (US$135.0m), net of expenses, under new debt facilities with Macquarie Bank to fund the acquisition of Star Energy in December 2011. The Group repaid £3.1m (US$4.95m) of debt principal in the period and will have repaid over £7.6m (US$12.2m) by the end of June 2012.

The Group incurred capital expenditure of £17.8m (2010:£3.6m), of which c.£12.5m related to drilling costs for its three well programme during the period; Ince Marshes-1, Doe Green-3 and Doe Green-4.

Balance sheet

The Group's non-current assets increased by £174.2m during the period to £179.1m and included the acquisitions of Star Energy and Nexen Exploration U.K. Limited as well as expenditure of £19.2m on appraisal drilling on the Group's unconventional assets in the North West.

Net assets increased by £38.3m over the period to £55.0m.

On 9 March 2011, the Group acquired the entire issued share capital of Nexen Exploration UK Limited for a consideration of £29.2m, satisfied through the issue of 39,714,290 IGas shares. The acquisition was aligned to the Group's strategy of securing 100% ownership of assets and operatorship.

On 14 December 2011, the Group acquired the entire issued share capital of Star Energy for a cash consideration of £110 million. The Star acquisition has been accounted for as a business combination by the acquisition method of accounting with an effective date of 14 December 2011, being the date the Group gained control of Star Group. Goodwill of £15.6m (2010: £nil) relates to the acquisition of Star Energy and arises principally due to the intangible value gained by the Group through now benefiting from an experienced team of oil industry professionals operating in the UK onshore market; the relationships and reputation developed with central and local government in Great Britain; the considerable potential for discovery of additional reserves of both conventional and unconventional resources in Star's licence areas; and a deferred tax adjustment arising from the fair value exercise. A deferred tax asset of £18.0m has been recognised at 31 March 2012 for tax losses within the Group, principally in relation to £31.6m of corporation tax losses and £29.0m of supplementary charge losses carried forward, reducing the deferred tax liability to a net £23.2m.

Net debt, being borrowings less cash, at the year end amounted to £74.6m. Transaction costs of £7.6m associated with the debt are offset against the drawn debt within the balance sheet and will be recognised over the life of the loan in accordance with the Group's accounting policies.

IGas is now well positioned to exploit its significant asset base. The substantial cash flows generated by the conventional assets have already enabled the Group to rapidly deleverage with £3.1m (US$4.95m) of debt principal repaid in the period to 31 March 2012, and over £7.6m (US$12.1m) will have been repaid at 30 June 2012, with an anticipated further debt principal repayment of £12.0m (US$19.1m) by 31 March 2013 a deleveraging of nearly 25%.

Corporate Social Responsibility report

At IGas we are committed to the environment, our employees and the communities where we operate. During the period we systematically worked to achieve a greater understanding of who our stakeholders are, on the basis of our current activities and operations. This process will continue as our Company evolves, so that we remain aligned, as far as possible, with the expectations and needs of our stakeholders including readers of this Report. One of our key CSR aims is to engage effectively and report on issues that are material to our stakeholders.

We are aware of a number of recognised CSR standards and sector framework mechanisms, and shall continue to evaluate the most appropriate approaches to continue improving the quality of our future reports. This year we have adopted the approach of the Business in the Community's (BITC) CR framework covering the four pillars of: environment, community, marketplace and workplace.

Feedback can be provided through the contact details noted in this Report or via our website (see http://www.igasplc.com/contactus.aspx). We are keen to solicit feedback on our performance in general and this Report specifically, from a growing number of stakeholders. At the end of 2011 the acquisition of Star Energy resulted in a step-change in our scale, and added a new conventional oil & gas aspect to our previously unconventional business, as well as additional lifecycle activities e.g. road and rail distribution.

During 2011 we developed SMART Objectives, Targets & Management Programmes, and these have evolved into KPIs (Key Performance Indicators). Our aim for future CSR reporting is to focus on tangible metrics, and provide a description of material issues, governance and performance measurement. This year we have provided some case studies to demonstrate our performance.

1. Environment

During 2011 we achieved certification to the Environmental Management standard, ISO 14001 for IGas Energy plc. This certification will be extended during 2012 to all Group companies. For all our sites we undertake initial risk assessments which focus on environmental issues (sensitivity screening reports), and have applied impact mitigation through all phases up to final site restoration. In addition our sites are monitored throughout the life of our developments. An example of effective mitigation is our Ellesmere Port site where we moved the existing grass habitat to a secure area of the site prior to Drilling operations. We continued to support the ecology here through low-impact species control, designed to help the most important species to thrive.

2. Community

Where appropriate we seek to set up Community Liaison Groups. These are designed to allow us to have effective dialogue with local community representatives, from preliminary planning phases through to operational activities. These are further designed to enable all parties to have their voices heard and concerns responded to in a timely fashion. Security and safety of personnel are a top priority. In terms of site safety, we routinely implement facility HSE and ER Plans which include risk assessments and mitigation that extend to considering issues within the local geographic area. To safeguard our sites and localities, we have Emergency Preparedness and Response arrangements (including regular drills and exercises) and Incident Response and Reporting processes.

3. Marketplace

During 2011 we achieved certification to the Quality Management standard ISO 9001 for IGas Energy plc. This certification will be extended during 2012 to all Group companies. We have developed Anti-bribery and Corruption policies and procedures and are actively working to ensure these continue to be thoroughly implemented throughout our supply chain. We operate on the basis of transparent purchasing, and collaborative relationships with contractors. Vendor selection and management includes HSE performance criteria, and as a result we also encourage good performance by our contractors. In addition we are a founder member of the recently reconstituted UKOOG association which represents the onshore oil industry through active engagement with stakeholders and promoting best practice.

4. Workplace

Our Management System is aligned to the requirements of the occupational health and safety standard, OHSAS 18001. Our aim for the future is to achieve certification to this standard. In the meantime we are committed to our responsibilities to provide appropriate working conditions for all our personnel, whether staff, contractor or visitor.

We believe that successful management of potential CSR risks and impacts is a precondition to the continued growth of our Company and this sector of the oil & gas industry within Britain, with positive implications for the supply chain as well as local communities.

One area that IGas has focused on is the establishment of a set of onshore industry guidelines for well integrity and fraccing operations. IGas, as a leading operator of unconventional resources (shale and CBM) has been a founder member of a cross-party work group, conducted under the auspices of UKOOG, drafting these guidelines. A key aim of these guidelines is to demonstrate, that although the industry is highly regulated by the relevant authorities (e.g. DECC/Health & Safety Executive and the Environmental Agency as well as local Planning authorities), it recognises the need to ensure that the concerns expressed regarding such issues as induced seismicity, aquifer protection, chemical transparency, water treatment, fugitive emissions etc. are acknowledged and appropriately addressed by the industry. This commitment to establishing what are effectively "best practice" guidelines is another reflection of the importance IGas places on its' CSR obligations.

Star Energy Group Limited, which we acquired at the end of 2011, had a long history of effective HSE and CSR management. One example is the Albury drilling project (2009 onwards) in Surrey. Over and above the mitigation and restrictions imposed by the planning and other permit conditions, the project team instigated a number of additional measures which, we believe, provided some considerable benefit to the surrounding community. These included:

·; Novel bespoke engineering solutions e.g. acoustic enclosure for rig;

·; Considerate Constructors Scheme membership;

·; Visits for the local village Primary school to site;

·; Financial donations to community projects totaling nearly £35,000;

·; Village enhancement (litter collections, new bus shelter and landscaping); and

·; 24 hour complaint line.

We believe that while bringing any Project to a successful conclusion requires addressing the usual technical challenges, consideration must also be given to societal needs since working with the community towards the declared objective of being a 'good neighbour' forms a fundamental element of any successful company.

IGas at a Glance : From reservoir to refinery

With assets ranging from mature discoveries made more than 50 years ago, to unconventional resources only now recoverable as a result of technical advances in oil field practices, IGas has a very significant position in discovered and potentially deliverable hydrocarbon resources across Britain.

North West / Staffs

In the North West and Staffordshire we have more than 500,000 acres under licence, which are primarily for the development of unconventional resources. The size of the CBM resource has been demonstrated and its delivery potential is currently being appraised. As regards shale, this year's activity has begun the appraisal of the potential.

Within this area we have drilled a total of ten wells and have an extensive library of other borehole data and pre-existing 2D and 3D seismic. With 7 sites already permitted and a similar number being pursued in the area, we are well positioned to develop these resources close to markets and customers once the appraisal phase is completed and repeatable commercial flow rates have been demonstrated from both the coal and shale horizons.

East Midlands

In the East Midlands we have two primary production centres: Welton and Gainsborough / Beckingham.

Hydrocarbons have been produced in the East Midlands since 1959 and current production from this area accounts for approximately 60% of the Group's total current production.

The Welton area is made up of six fields and a gathering centre where the produced oil, gas and water are separated. The produced oil is transported to Conoco Immingham via road tanker, gas is used for power generation and produced water is pumped for reinjection.

The Gainsborough / Beckingham area is made up of eleven fields and a processing facility. Oil is transported to Conoco Immingham via road tanker, gas is piped to Gainsborough-1 for power generation and produced water is pumped for reinjection.

Weald Basin

The Weald basin is the source of approximately 40% of our current production, with 8 fields ranging from Stockbridge in the west, near Winchester, to Palmers Wood near Gatwick in the East. The area has produced more than 29 million barrels of oil to date. Our oil is collected by tanker from our sites and transported to our processing facilities at Holybourne. Here we have storage for more than 20,000 barrels and a rail terminal allowing us to transport our products to local refineries by train. We also handle oil on behalf of other operators in the area, providing IGas with a valuable additional revenue stream.

IGas delivering a secure future

Leading UK Oil & Gas onshore business with:

·; Considerable scale

·; Predominantly 100% owned and operated production and resources

·; Footprint in the prolific producing East Midlands and Weald Basins

·; Extensive acreage in the high potential unconventional basins of the North West / Staffs (including Bowland Shale) and North Wales

·; Portfolio of booked reserves and material resources

·; Significant cash flows, allowing for rapid deleveraging

·; Experienced execution team

·; Opportunity to leverage conventional assets, equipment, personnel and fiscal synergies to unlock unconventional resources potential

Resources and Reserves

- IGas has had its reserves reassessed by Senergy1 with IGas now having access to all fields and data. Adjusted for production, this shows an increase in 2P reserves of almost 1 million boe, as at 1 January 2012, and a reserves replacement ratio, on a 1P basis, of 117% and on a 2P basis of 194%

1 Senergy was requested to provide an update to its 2011 independent evaluation of the recoverable hydrocarbons expected for each asset categorised in accordance with the 2007 Petroleum Resources Management System, Gross reserves or resources are defined as the total estimated petroleum to be produced from the fields evaluated from 1st January 2012

Balanced portfolio of producing and development assets

·; Potential for significant upside to the existing oil production

·; Combined business presents opportunities to grow production profile

·; Considerable fiscal synergies

Experienced operational team

·; 152 personnel experienced in both oil and gas production, development and operations

·; Technical team with a proven track record

·; Highly experienced site operators

·; Operational assets to deliver

o Own well services division including:

§ 3 work over rigs

§ 1 hot oil flush rig

§ 4 pump trucks

§ 6 road tanker tractor units

o Significant oil storage and bunkering including 2 rail heads

Significant cash flows

·; Facilitate rapid deleveraging

·; Debt of £7.6m will have been repaid in the period from drawdown to 30 June 2012 with an anticipated further debt principal repayment of £12.0m by 31 March 2013, a deleveraging of nearly 25%

Period in review

·; Jan 2011 Signing of Nexen Exploration UK Ltd agreement

·; Feb 2011 Announcedjoint venture with Meehan Drilling

·; Mar 2011 Completion of Nexen Exploration UK Ltd acquisition and placing

·; June 2011 Signed second drilling contract. Secured the BDF rig 28 for well programme

·; July 2011 Construction of third well at Doe Green begins (DG-3)

·; Sept 2011 Signed the sale and purchase agreement for acquisition of Star Energy from Petronas

·; Appointed Stephen Bowler as CFO

·; Oct 2011 Drilling at Doe Green-4 (DG-4) commences

·; Nov 2011 Drilling at Ince Marshes-1 commences

·; Dec 2011 Completion of Star Energy Group Limited acquisition

·; Jan 2012 Completion of well at Ince Marshes

·; Appraisal of shale resources

·; Feb 2012 Completion of drilling at Doe Green. Commence de-watering

·; Mar 2012 Analysis of Ince Marshes logs and samples

Corporate governance

The Board of Directors support high standards of corporate governance and the guidance set out in the UK Corporate Governance Code. As a Company that is quoted on AIM, it is not required to comply with the UK Corporate Governance Code but all the Directors intend to comply with its main provisions as far as is practicable having regard to the size and composition of the Group.

The Board and its committees

The Board of the Company consists of three Executive Directors and four Non-Executive Directors; with Mr Armstrong and Mr Bryant being considered to be independent. The Senior Independent Non-Executive Director is John Bryant and biographies of all the Directors are included within this statement.

The Board retains full and effective control over the Group. The Board meets regularly, at least eight times a year, to consider reports on the operational and financial performance of the Group and to decide on matters reserved unto itself, which include reviewing and approving the Group's strategy, budgets, major items of capital expenditure and senior personnel appointments.

The Directors have established separate committees each chaired by a Non-Executive Director as follows:

Audit committee

The committee comprises only Non-Executive Directors; being chaired by Richard Armstrong and having as other members John Bryant and John Hamilton. The Chairman, Chief Executive Officer and Chief Financial Officer may attend only at the invitation of the committee.

The committee receives and reviews reports from management and the Group's auditors relating to the Group's annual report and accounts and to interim results announcements. The committee focuses particularly on compliance with legal requirements, accounting standards and the AIM Rules and on ensuring that effective systems of internal financial and non-financial controls (including for the management of risk and whistle-blowing) are maintained. However, the ultimate responsibility for reviewing and approving the annual report and accounts remains with the Board of Directors. The committee is also responsible for making recommendations to the Board of Directors on the appointment of the external auditors and their remuneration. The committee keeps under review the external auditors' independence and considers the nature, scope, and results of the auditor's work and develops policy on and reviews (reserving the right to approve) any non-audit services that are provided by the external auditors.

The committee normally meets at least three times a year and meets the external auditors at least annually without the presence of the Executive Directors.

Remuneration committee

The committee comprises only Non-Executive Directors, being chaired by John Bryant and having as other members Richard Armstrong and John Hamilton. The committee, which normally meets at least twice a year, has responsibility for making recommendations to the Board of Directors on the Company's policy on the remuneration of the Chairman, Executive Directors and other senior executives (as are delegated to the committee to consider) and for determining, within agreed terms of reference, specific remuneration packages for each of them, including pension rights, any compensation payments and the implementation of executive incentive schemes. In accordance with the committee's terms of reference, no Director may participate in discussions relating to their own terms and conditions of service or remuneration.

Nomination committee

The Nomination committee is chaired by the Senior Independent Non-Executive Director, John Bryant, and its other members are the Non-Executive Director, Richard Armstrong, and the Chairman, Francis Gugen. The committee, which meets as required throughout the year, has responsibility for considering the size, structure and composition of the Board of Directors, retirements and appointments of additional and replacement Directors and making appropriate recommendations to the Board of Directors. The committee is also tasked with ensuring that plans are in place for orderly succession to the Board of Directors and senior management positions, so as to maintain an appropriate balance of skills and experience within the Group and the Board of Directors. The Chief Executive Officer of the Company is invited to attend meetings of the committee when the committee is discussing matters related to executive management and such other matters as the committee chairman deems appropriate.

At each Annual General Meeting at least one-third of the Directors shall retire from office by rotation. The Directors to retire by rotation shall include, firstly, any Director who wishes to retire at the meeting and not offer himself for re-election and, secondly, those Directors who have been longest in office since their last appointment or reappointment, provided always that each Director shall be required to retire and offer himself for re-election at least every three years. Directors appointed by the Board hold office only until the dissolution of the Annual General Meeting of the Company next following such appointment.

Internal control

The Board acknowledges that it is responsible for establishing and maintaining the Group's system of internal controls and reviewing its effectiveness. The procedures that include, inter alia, financial, operational, health & safety, compliance matters and risk management are reviewed on an ongoing basis. The internal control system can only provide reasonable and not absolute assurance against material misstatement or loss. The Board has considered the need for a separate internal audit function but, bearing in mind the present size and composition of the Group, does not consider it necessary at the current time.

UK Bribery Act

IGas has reviewed the appropriate policies and procedures to ensure compliance with the UK Bribery Act. The Company continues actively to promote good practice throughout the Group and has initiated a rolling programme of anti-bribery and corruption training for all relevant employees.

Relations with shareholders

Communications with shareholders are considered important by the Directors. The primary contact with shareholders, investors and analysts is the Chief Executive Officer. The other Executive Directors, however, regularly speak to investors and analysts during the year. Company circulars and press releases have also been issued throughout the year for the purpose of keeping investors informed about the Group's progress.

The Company also maintains a website on the internet (www.igasplc.com) that is regularly updated and contains a wide range of information about the Group.

Directors' remuneration report

This report explains our remuneration policy for Directors and sets out how decisions regarding Directors' pay for the period under review have been taken.

Remit of the Remuneration committee

The remit of the Remuneration Committee is provided in the Corporate Governance section.

The committee has engaged the services of PricewaterhouseCoopers LLP ("PwC") to provide wholly independent advice on executive compensation and to assist the committee in the implementation and evaluation of its long term incentive arrangements. There were no other services provided by PwC to the Group during the period.

Remuneration policy

The Company's policy is to maintain levels of remuneration sufficient to attract, motivate and retain senior executives of the highest calibre who can deliver growth in shareholder value. Executive remuneration currently consists of basic salary, pensions, benefits, annual bonus (based on annually set targets), and long term incentives (to reward long term performance). The Company seeks to strike an appropriate balance between fixed and performance-related reward, therefore, the total remuneration package is structured so that a significant proportion is subject to the achievement of performance targets, forming a clear link between pay and performance. The performance targets are aligned to the key drivers of the business strategy, thereby creating a strong alignment of interest between executives and shareholders.

The committee will continue to review the Company's remuneration policy and make amendments, if necessary, to ensure it remains fit for purpose for the Company, driving high levels of executive performance and remains competitive in the market.

Base salary

When setting the salary of the Directors, the committee has considered the following:

·; levels of salary for similar positions in similar organisations (based on size, complexity and sector);

·; the performance of the individual Director; and

·; the individual Director's experience and responsibilities.

Bonus

Executives and employees are eligible to participate in a discretionary bonus plan. The percentage of maximum bonus entitlement received is based on the achievement of challenging corporate and personal targets. The maximum potential bonus entitlement for certain Directors under the plan is to up to 100% of base salary.

The Remuneration Committee reviewed the financial performance of the Company and, in recognition of the performance achieved against agreed targets, determined that bonuses for the period should be at the following levels:

·; Andrew Austin: £86,000 

·; John Blaymires: £33,000 

·; Stephen Bowler: £15,000

Benefits

The Company provides Executive Directors with benefits in kind, with a pension contribution up to 15% of base salary (as well as other less significant benefits in kind).

Long Term Incentives

The Remuneration Committee reviewed the long term element of the remuneration package as it was felt that the LTIP put in place in October 2010 was no longer appropriate. This review resulted in the introduction of the 2011 Long Term Incentive Plan ("2011 LTIP") to support the long term business strategy and drive executive performance. Since all of the Directors chose to waive their outstanding options, the 2011 LTIP is the only long term incentive that will be used for executives.

2011 LTIP

In November 2011, the Company adopted a Long Term Incentive Plan scheme for certain key employees of the Group. Under the LTIP, participants can each be granted two types of award: an Initial Award and an Annual Award. Both types of award are structured as nil cost options. Initial Awards can be granted over up to 300% of base salary and, in any year, Annual Awards can be granted over up to 150% of base salary (subject to an overall limit applying to all employee share plans operated by the Company of 10% of the issued share capital of the Company in any ten year period). To date, only Initial Awards have been granted under the 2011 LTIP. The Initial Awards granted to Directors (see table below) were granted as a retention tool and to ensure that the Directors have a significant performance-related element to their reward package, following the review of incentives referred to above.

The 2011 LTIP has a three year performance period and awards vest subject to share price performance exceeding the Company's weighted average cost of capital of 10%. This target has been selected to focus the executives' behaviour on driving company growth over the performance period. In addition, Annual Awards only vest where an agreed percentage of the participant's net bonus has been used to acquire Company shares which are still held at the end of the vesting period. On a change of control prior to the third anniversary of the grant date, a proportion of the options shall vest. The proportion of the options that vests will be determined by the Remuneration Committee taking into account relevant factors such as the time the Option has been held by the participant and the performance achieved in the period from the grant date.

The Group's share price as at 31 March 2012 was 46.5p per share. The highest price during the period was 84p per share and the lowest share price during the period was 43.5p per share.

Current arrangements

Executive Directors

The Executive Directors are employed under evergreen contracts with notice periods of twelve months or less from the Company or executive.

Directors' emoluments for the period were as follows:

* Part of these emoluments are paid to companies that provide the services

** Payments were made as a consequence of the acquisition of Nexen Exploration UK Limited

Each of the Executive Directors devotes such time as is required to discharge his duties, which in the case of A Austin, J Blaymires and S Bowler is full time.

Each Executive Director is entitled to receive a cash bonus dependent on the achievement of various objective targets and milestones as set by the Remuneration Committee.

As at 31 March 2012, the outstanding long term incentives held by the Directors who served during the period are as set out in the table below:

Long term incentive arrangements:

Non-Executive Directors

The Non-Executive Directors are employed under evergreen contracts with notice periods of three months, under which they are not entitled to any pension, benefits or bonuses.

John Bryant

Chairman Remuneration Committee

29 June 2012

Directors' report

The Directors present their report together with the Group and Parent Company financial statements for the 15 months ended 31 March 2012.

Business review and future developments

A review of the business and the future developments of the Group are presented in the Chairman's statement, the Chief Executive's statement and the Chief Financial Officer's review.

Results and dividends

The Group's profit for the period after taxation but before costs of marking oil price, interest rate derivatives and warrants to market and acquisition costs was £2.6 million. After adjusting for these items amounting to £20.5 million the total loss for the period was £17.9 million (2010: loss £1.5 million). The Directors do not recommend the payment of any dividend.

Going Concern

The Directors consider that, having taken into consideration the factors set out in Note 1(a) in the financial statements, the expected operating cash flows of the group combined with the current borrowing facilities give them confidence that the Group has adequate resources to continue as a going concern. The financial statements have, therefore, been prepared on the going concern basis.

Principal activity

The Group's principal area of activity is exploring for, appraising, developing and producing oil and gas resources in Great Britain.

Share Capital

Details of changes to share capital in the period are set out in Note 24 to the consolidated financial statements.

Directors and their interests

The Directors who served during the year were as follows:

F R Gugen Non-Executive Chairman

A P Austin Chief Executive Officer

J M Blaymires Chief Operating Officer

S D Bowler Chief Financial Officer - Appointed 1 November 2011

B Cheshire Executive Technical Director - Resigned 20 June 2011

J Bryant Non-Executive

R J Armstrong Non-Executive

The interests of the Directors in the shares of the Company at 31 March 2012 were as follows:

31 March 2012 31 December 2010 Ordinary 50p Shares Ordinary 50p Shares

F R Gugen 27,615,764 17.03 27,615,764 29.66

A P Austin 10,659,253 6.57 11,429,253 12.28

J M Blaymires 20,000 0.01 0 0.00

S D Bowler 40,000 0.02 0 0.00

J Bryant 57,870 0.04 50,370 0.05

R J Armstrong 65,960 0.04 58,460 0.06

J A Hamilton 85,000* 0.05 85,000 0.09

* J Hamilton is beneficially interested in 85,000 Ordinary Shares out of a total of 14,454,135 held by Peter Levine and Levine Capital Management Ltd, the latter of whom he is deemed to be associated with for these purposes.

** Former Directors was in relation to B Cheshire who still held the same shares as at 31 March 2012 but these were not reported as he is no longer a Director.

Rotation and re-election of Directors

In accordance with the Articles of Association F Gugen retires by rotation and being eligible offers himself for re-election. S D Bowler was appointed by the Board during the period and, in accordance with the Articles of Association, offers himself for re-election.

Directors' insurance and indemnity provisions

Subject to the conditions set out in the Companies Act 2006, the Company has arranged appropriate directors and officers Insurance to indemnify the directors and officers against liability in respect of proceedings brought by third parties. Such provision remains in force at the date of this report.

The Company indemnifies the Directors against actions they undertake or fail to undertake as Directors or officers of any Group company, to the extent permissible for such indemnities to meet the test of a qualifying third party indemnity provision as provided for by the Companies Act 2006. The nature and extent of the indemnities is as described in Section 60 of the Company's Articles of Association as adopted on 10 July 2009. These provisions remained in force throughout the year and remain in place at the date of this report.

Substantial shareholders

At 28 June 2012, in addition to the director' interests as set out above, the Company had received notification from the following institutions of interests in excess of 3 per cent of the Company'sissued Ordinary Shares with voting rights:

Principal risks and uncertainties

·; The Group is exposed to market price risk through variations in the wholesale price of oil in the context of the production from oil fields it now owns and operates. The Group has entered into a series of oil price swaps until 31 December 2017 which have fixed the price of 1,023,829 barrels of oil at an average Brent price of US$93.40 per barrel and a further 1,251,344 barrels at an average Brent price of GB£58.80 per barrel. The Board will continue to monitor the benefit of such contracts. 

·; The Group is also exposed to market price risk through variations in the wholesale price of gas and electricity in the context of its future unconventional production volumes. Currently the Group has not entered into any forward contracts to fix the prices of these commodities. The Board will continue to monitor the benefit of entering into such contracts at the appropriate time

·; The Group is exposed to exchange rate risk through both its major source of revenue and its major borrowings being priced in US$. The GB£ oil price swaps have been taken out in order to mitigate this risk as it affects the need to fund operating costs fixed in GB£. 

·; The Group is exposed to interest rate risk through its borrowings. This has been mitigated by entering into a series of interest rate swaps to fix the price of 50% of the group's borrowings.

·; The Group is exposed, through its operations, to liquidity risk, which is managed by the Board who regularly review the Group's cash forecasts and the adequacy of available facilities to meet the Group's cash requirements.

·; The Group is exposed to risks associated with geological uncertainty. No guarantee can be given that oil or gas can be produced in the anticipated quantities from any or all of the Group's assets or that oil or gas can be delivered economically. The Group considers that such risks are mitigated given its assets are located in established oil and gas producing areas coupled with the extensive expertise and experience of its operating staff.

·; The Group is exposed to planning, environmental, licensing and other permitting risks associated with its operations and, in particular, with drilling and production operations. The Group considers that such risks are mitigated through compliance with regulations and the expertise and experience of its operating team.

·; The Group is exposed to capital risk resulting from its capital structure. However, the capital structure is continually monitored to ensure it is in line with the business needs and ongoing asset development. Further details of the Group's capital management policy are disclosed in note 23 to the consolidated financial statements.

·; The Group is also exposed to a variety of other risks including those related to:

- operational matters (including cost increases, availability of equipment and successful project execution);

- competition;

- key personnel; and

- litigation.

Financial instruments

The Group's principal financial instruments comprise cash balances, borrowings, derivative instruments and other debtors and creditors that arise through the normal course of business as set out in Note 23 to the consolidated financial statements. The Group's financial risk management objectives are set out in Note 23 to the consolidated financial statements and the Operational review .

Employment policy

It is the policy of the Group to operate a fair employment policy. No employee or job applicant is less favourably treated than another on the grounds of their sex, sexual orientation, age, marital status, religion, race, nationality, ethnic or national origin, colour or disability and all appointments and promotions are determined solely on merit. The Directors encourage employees to be aware of all issues affecting the Group and place considerable emphasis on employees sharing in its success.

Creditor payment policy and practice

It is the Group's normal practice to agree payment terms with its suppliers and abide by such terms. Payment becomes due when it can be confirmed that goods and/or services have been provided in accordance with the relevant contractual conditions. The amount owed by the Company to trade creditors at the end of the financial year represented 44 days of daily purchases for the Company (2010: 15 days).

Charitable and political contributions

During the period, the Group made charitable donations of £600 to local causes (2010: nil). There were no political donations during the period (2010: nil)

Status

The Company is not a close company as defined in the Income and Corporation Taxes Act 1988.

The Company is domiciled in the UK and incorporated and registered in England.

Board committees

Information on the Audit, Remuneration and Nomination committees is included in the Corporate Governance section of the annual report.

Auditors

A resolution to reappoint Ernst & Young LLP as auditor will be proposed at the Annual General Meeting at a fee to be agreed in due course by the Audit Committee and the Board.

Directors' statement as to disclosure of information to the auditors

So far as each person who was a Director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. Having made enquiries of fellow Directors, each Director has taken all the steps that a Director might reasonably be expected to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

By order of the Board

Mofo Secretaries Limited

Secretary

IGas Energy plc

Registered Office:

7 Down Street

London

W1J 7AJ

Registered in the United Kingdom number: 04981279

Statement of directors' responsibilities in relation to the

Group financial statements and Annual Report

The directors are responsible for preparing the Annual Report and the Group financial statements in accordance with applicable United Kingdom law and regulations. Company law requires the directors to prepare Group financial statements for each financial year. Under that law, the directors are required to prepare Group financial statements under IFRSs as adopted by the European Union. Under Company Law the directors must not approve the Group financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period. In preparing the Group financial statements the directors are required to:

·; Present fairly the financial position, financial performance and cash flows of the Group;

·; select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

·; present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

·; make judgements that are reasonable;

·; provide additional disclosures when compliance with the specific requirements in IFRSs as adopted by the European Union is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's financial position and financial performance; and

·; state whether the Group financial statements have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the Group financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are also responsible for preparing the Directors' Report in accordance with the Companies Act 2006 and applicable regulations.

Independent auditor's report to the members ofIGas Energy plc

We have audited the group financial statements of IGas Energy plc for the 15 months ended 31 March 2012 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and the related notes 1 to 28. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's 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 and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors' Statement of Responsibilities, the directors are responsible for the preparation of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report and Accounts to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the group financial statements:

·; give a true and fair view of the state of the group's affairs as at 31 March 2012 and of its loss for the 15 months then ended;

·; have been properly prepared in accordance with IFRSs as adopted by the European Union; and

·; have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the group financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

·; certain disclosures of directors' remuneration specified by law are not made; or

·; we have not received all the information and explanations we require for our audit.

Other matter

We have reported separately on the parent company financial statements of IGas Energy plc for the 15 months ended 31 March 2012.

Daniel Trotman (Senior Statutory Auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

London

29 June 2012

Consolidated income statement

For the 15 months ended 31 March 2012

Consolidated statement of comprehensive income

For the 15 months ended 31 March 2012

Consolidated balance sheet

As at 31 March 2012

These financial statements were approved and authorised for issue by the Board on 29 June 2012 and are signed on its behalf by:

Andrew Austin Stephen Bowler

Chief Executive Officer Chief Financial Officer

Consolidated statement of changes in equity

 For the 15 months ended 31 March 2012

Consolidated cash flow statement

For the 15 months ended 31 March 2012

\* There was a significant non-cash transaction relating to the acquisition of Nexen Exploration UK Limited. Consideration consisted of 39,714,290 new ordinary shares of 50p, further details can be found in note 9. 

Consolidated financial statements - notes

As at 31 March 2012

1 Accounting policies

(a) Basis of preparation of financial statements

The consolidated financial statements of IGas Energy plc (the "Company") and subsidiaries (the "Group") have been prepared under the historical cost convention in accordance with International Financial Reporting Standards, adopted for use by the European Union ("IFRSs") as they apply to the Group for the 15 months ended 31 March 2012 and with the Companies Act 2006. The accounting periods are not comparable with the prior year as this 15 month period represents a long period of account to align the year end with the newly acquired entity Star Energy Group Limited, The accounts were approved by the board and authorised for issue on 29 June 2012. IGas Energy plc is a public limited company incorporated and registered in England and Wales.

The Group financial statements are presented in UK pounds sterling and all values are rounded to the nearest thousand (£000) except when otherwise indicated.

During the period, the Group adopted the following new and amended IFRS which were applicable to the Group's activities as of 1 January 2011.

International Accounting Standards (IFRS/IAS):

New and amended standards and interpretations

The accounting policies adopted are consistent with those of the previous financial year, except for the following new and amended IFRS and IFRIC interpretations effective as of 1January 2011.

·; IAS 24 Related Party Disclosures

·; IAS32 Financial Instruments: Presentation

·; IFRIC 14 Prepayments of a Minimum Funding Requirement

These amendments have no impact on the financial position or performance of the Group.

Certain new standards, interpretations and amendments to existing standards have been published and are mandatory only for the Group's accounting periods beginning on or after 1 April 2012 or later periods and which the Group has not adopted early. Those that may be applicable to the Group in future are as follows:

International Accounting Standards (IFRS/IAS)

\* The effective dates stated above are those given in the original IASB/IFRIC standards and interpretations. As the group prepares its financial statements in accordance with IFRS as adopted by the European Union (EU), the application of new standards and interpretations will be subject to their having been endorsed for use in the EU via the EU endorsement mechanism. In the majority of cases this will result in an effective date consistent with that given in the original standard or interpretation but the need for endorsement restricts the group's discretion to early adopt standards.

The Directors do not anticipate that the adoption of these standards and interpretations will either individually or collectively have a material impact on the Group's financial statements in the period of initial application. The Group does not anticipate adopting these standards and interpretations ahead of their effective date.

 (b) Going concern

The Group's principal activity and principal risks and uncertainties are set out in the Directors' report. The ability of the Group to operate as a going concern is dependent upon the continued availability of bank funding, which in turn is dependent on the Group not breaching covenants, without cure or formal waiver from its bankers. Under its bank facilities the Group drew down US$135m of committed funds in connection with the acquisition of Star Energy Group Limited, which is repayable in tranches over the period of a 5 year term until December 2016. The Group regularly monitors forecasts to determine that breaches are not anticipated to occur in the future. On the basis of the Group's current forecasts, no breaches in covenants are anticipated. However these forecasts are based on certain assumptions particularly in relation to oil prices, production rates, operating costs, capital and general expenditure. The Group is protected to a material degree against volatility in the oil price, by having a significant proportion of its production hedged at above $90 per barrel. Despite this, there can be no certainty that these forecasts will be achieved, in which case the financial covenants could be breached. Should any breach be anticipated to arise, the Group would manage its working capital profile, reduce discretionary expenditure, where necessary and, if applicable, take additional mitigating actions that have already been identified as a precautionary measure. The Directors consider that the expected operating cash flows of the group combined with the current borrowing facilities give them confidence that the Group has adequate resources to continue as a going concern. The financial statements have, therefore, been prepared on the going concern basis.

(c) Basis of consolidation

The consolidated financial statements present the results of IGas Energy plc and its subsidiaries as if they formed a single entity. The financial statements of subsidiaries used in the preparation of consolidated financial statements are based on consistent accounting policies to the parent. All intercompany transactions and balances between Group companies, including unrealised profits arising from them, are eliminated in full. Where shares are issued to an Employee Benefit Trust, and the Company is the sponsoring entity, it is treated as an extension of the entity.

At 31 March 2012 the Group comprised the Company and entities controlled by IGas Energy plc (its subsidiaries) made up to the reporting period at this date. The results of subsidiaries acquired during the period are included in the consolidated income statement from the date that control passed to the Company.

(d) Business combinations

Business combinations are accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in the income statement. Acquisition costs are expensed and shown as a separate line in the Income Statement.

(e) Interest in associates

An associate is an entity in which the Group has a long-term equity interest and over which it has significant influence, but not control, through participation in the financial and operating policy decision of the investee. Significant influence can change if, for example, the entity goes into administration or liquidation.

This results in assets and liabilities of associates being incorporated in these financial statements using the equity method of accounting. Interests in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of individual investments. Where the Group's share of any retained loss in an associate exceeds its investment, the Group's investment is capped at zero. Should the associate subsequently report profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised. The Group's Income Statement reflects the share of the associate's results after tax. Where a group entity transacts with an associate of the Group, unrealised profits and losses are eliminated to the extent of the Group's interest in the relevant associate.

 (f) Joint ventures

A small proportion of the Group's licence interests are held jointly with others under arrangements whereby unincorporated and jointly controlled ventures are used to explore, evaluate and ultimately develop and produce from its oil and gas interests. Accordingly, the Group accounts for its share of assets, liabilities, income and expenditure of these jointly controlled assets, classified in the appropriate balance sheet and income statement headings, except where its share of such amounts remain the responsibility of another party in accordance with the terms of the carried interests as described at (j) below. Where the Group enters into a farm-up agreement involving a licence in the exploration and evaluation phase, the Group records all costs that it incurs under the terms of the joint operating agreement as amended by the farm-up agreement as they are incurred.

(g) Significant accounting judgements and estimates

The preparation of the Group's consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.

In particular, the Group has identified the following areas where significant judgements, estimates and assumptions are required, and where if actual results were to differ, this could materially affect the financial position or financial results reported in future periods. Further information on each of these and how they impact the various accounting policies are described in the relevant notes to the financial statements.

.

·; Carrying value of intangible exploration and evaluation assets:

The Group has capitalised intangible exploration and evaluation assets in accordance with IFRS 6, which are evaluated for impairment as described at (j) below. Any impairment review, where required, involves estimates and assumptions related to matters (when appropriate), such as recoverable reserves, production profiles, review of forward oil, gas and electricity prices, development, operating and off-take costs, nature of land access agreements and planning permissions, application of taxes and other matters. Where the final outcome or revised estimates related to such matters differ from the estimates used in any earlier impairment reviews, the results of such differences, to the extent that they actually affect any impairment provisions, are accounted for when such revisions are made. Details of the Groups Intangible exploration and evaluation assets are disclosed in note 11.

·; Carrying value of property, plant and equipment

Management reviews the Group's property, plant and equipment periodically for impairment indicators. The determination of recoverable amounts in any impairment test requires judgement around key assumptions. Key assumptions in the impairment models include those related to prices, that are based on forward curves and long-term corporate assumptions thereafter, discount rates, that are risked to reflect conditions specific to individual assets, future costs, both capital and operating, that are based on management's estimates having regard to past experience and the known characteristics of the individual assets and production and reserves, discussed further below.

·; Proved and probable reserves

The volume of proven and probable oil and gas reserves is an estimate that affects the unit of production depreciation of producing gas and oil property, plant and equipment as well as being a significant estimate affecting decommissioning provisions and impairment calculations. Proved and probable reserves are estimated using standard recognised evaluation techniques. Estimates are reviewed at least annually and are regularly estimated by independent consultants. Future development costs are estimated taking into account the level of development required to produce the reserves by reference to operators, where applicable, and internal engineers.

·; Decommissioning costs

The estimated cost of decommissioning at the end of the producing lives of fields is reviewed periodically and is based on proven and probable reserves, forecast price levels and technology at the balance sheet date. Provision is made for the estimated cost at the balance sheet date, using discounted cash flow methodology and a risk free rate of return.

·; Business combinations

When the Group acquires a business, it assesses the fair value of the assets and liabilities assumed by reference to the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. Those petroleum reserves and resources that can be reliably measured are recognised in the assessment of fair values on acquisition by reference to independent assessments of reserves and discounted cash flow models to reflect the revenues and expenditures related to the extraction of those reserves. Other assets and liabilities are valued by reference to market-based observations or independent valuations where possible, but where this is not feasible, a degree of judgement is required in establishing fair values.

·; Functional currency

The determination of functional currency often requires significant judgement where the primary economic environment in which a company operates may not be clear. This can have a significant impact on the consolidated results of the Group based on the foreign currency translation methods used.

(h) Exceptional items

Exceptional items are material items of income or expenditure which, in the opinion of the Directors, due to their nature and infrequency require separate identification on the face of the income statement to allow a better understanding of the financial performance in the year. A full explanation of such items is given, where applicable, in the notes to the financial statements

(i) Revenue

Revenue comprises the invoiced value of goods and services supplied by the Group, net of value added tax and trade discounts. Revenue is recognised in the case of oil, gas and electricity sales when goods are delivered and title has passed to the customer. This generally occurs when the product is physically delivered to the customer's premises or transferred into a vessel, pipe or other delivery mechanism.

Revenue from the production of oil, in which the Group has an interest with other producers, is recognised based on the Group's working interest and the terms of the relevant production sharing contracts. Where oil produced by third parties is processed and delivered to a refinery by the Group, the measurement of the revenue depends upon whether physical title to the oil passes to the Group or whether the Group simply acts an agent for the producer.

Revenue from services rendered is recognised only once a legally binding contract is in place. Amounts billed for services where the contract provides for their delivery over a period of time are recognised evenly over the relevant period; amounts due for all other services are recognised as the services are provided.

(j) Non-current assets

Goodwill

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised over the fair value of the identifiable net assets acquired and liabilities assumed.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is tested for impairment annually (as at 31 March) and when circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. Where the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.

Intangible exploration and evaluation assets

The Group accounts for exploration and evaluation costs in accordance with the requirements of IFRS 6 "Exploration for and Evaluation of Mineral Resources" as follows:

·; Exploration and evaluation assets are carried at cost less any impairment and are not depreciated or amortised.

·; Expenditures recognised as exploration and evaluation assets comprise those related to acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling (including coring and sampling), activities in relation to evaluating the technical feasibility and commercial viability of extracting hydrocarbons (including appraisal drilling and production tests) and any land rights acquired for the sole purpose of effecting these activities. These costs include employee remuneration, materials and consumables, equipment costs and payments made to contractors.

·; Any costs incurred prior to obtaining the legal rights to explore an area are expensed immediately to the Income Statement. Expenditures related to development and production activities are not recognised as exploration and evaluation assets.

·; Tangible assets acquired for use in exploration and evaluation activities are classified as property, plant and equipment. However, to the extent that such tangible assets are consumed in developing an intangible exploration and evaluation asset, the amount reflecting that consumption is recorded as part of the exploration and evaluation asset.

·; Expenditures recognised as exploration and evaluation assets are initially accumulated and capitalised by reference to appropriate geographic areas.

·; Expenditure recognised as exploration and evaluation assets are transferred to property plant and equipment, interests in oil and gas properties when technical feasibility and commercial viability of extracting hydrocarbons is demonstrable. Exploration and evaluation assets are assessed for impairment (on the basis described below), and any impairment loss recognised, before reclassification.

Property plant and equipment - interests in oil and gas properties

Property plant and equipment, interests in oil and gas properties are accounted for as follows:

·; Expenditure relating to interests in oil and gas properties includes both expenditure which is depleted on a unit-of-production basis, commencing at the start of commercial production and expenditure which is depreciated on a straight line basis over the relevant asset's estimated useful life. Where expenditure is depreciated on a unit of production basis, the depletion charge is calculated according to the proportion that production bears to the recoverable reserves for each property.

·; The Group's interests in oil and gas properties are assessed for indications of impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, when impairment is computed on the basis as set out below. Any impairment in value is charged to the Income Statement as additional depreciation.

·; Net proceeds from any disposal of development/producing assets are compared to the previously capitalised costs for the relevant asset or group of assets. A gain or loss on disposal of a development/producing asset is recognised in the Income Statement to the extent that the net proceeds exceed or are less than the appropriate portion of the net capitalised costs of the asset or group of assets.

Impairment

Impairment reviews, when required as described above, are carried out on the following basis:

·; By comparing the sum of any amounts carried in the books as compared to the recoverable amount.

·; The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. The Group generally relies on fair value less cost to sell assessed either by reference to comparable market transactions between a willing buyer and a willing seller or on the same basis as used by willing buyers and sellers in the oil and gas industry. When assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

·; Where there has been a charge for impairment in an earlier period that charge will be reversed in a later period where there has been a change in circumstances to the extent that the recoverable amount is higher than the net book value at the time. In reversing impairment losses, the carrying amount of the asset will be increased to the lower of its original carrying value and the carrying value that would have been determined (net of depletion) had no impairment loss been recognised in prior periods.

Decommissioning

Where a liability for the removal of production facilities or site restoration exists, a provision for decommissioning is recognised. The amount recognised is discounted to its present value and is reflected in the Group's non-current liabilities. A corresponding asset is included in the appropriate category of the Group's non-current assets (intangible exploration and evaluation assets and property plant and equipment), depending on the accounting treatment adopted for the underlying operations/asset leading to the decommissioning provision. The asset is assessed for impairment and or depleted in accordance with the Group's policies as set out above.

Carried interests

Where the Group has entered into carried interest agreements in exploration and evaluation projects and the Group's interest is being carried by a third party, no amounts are recorded in the financial statements where expenditure incurred under such agreements is not refundable. Where expenditure is refundable, out of what would but for the carry agreements have been the Group's share of production, the Group records amounts as non-current assets, with a corresponding offset in current liabilities or non-current liabilities, as appropriate, but only once it is apparent that it is more likely than not that future production will be adequate to result in a refund under the terms of any carry agreement; the Group records refunds only to the extent that they are expected to be repayable.

Other property plant and equipment

Other property plant and equipment is stated at cost to the Group less accumulated depreciation. Depreciation is provided on such assets, with exception of freehold land at rates calculated to write off the cost of fixed assets, less their estimated residual values, over their estimated useful lives at the following rates, with any impairment being accounted for as additional depreciation:

Equipment used for exploration and evaluation - between six and twelve years on a straight line basis

Freehold Land - indefinite useful life

Buildings/leasehold property improvements - over five to ten years on a straight line basis/over the period of the lease

Fixtures, fittings and equipment - between three and twenty years on a straight line basis

Motor Vehicles - over four years on a straight line basis

The Group does not capitalise amounts considered to be immaterial.

(k) Financial instruments

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and cash held on current account or on short-term deposits at variable interest rates with original maturity periods of up to three months. Any interest earned is accrued monthly and classified as interest income within finance income.

Trade and other receivables

Trade receivables are initially recognised at fair value when related amounts are invoiced, then carried at this amount less any allowances for doubtful debts or provision made for impairment of these receivables.

Trade and other payables

These financial liabilities are all noninterest bearing and are initially recognised at the fair value of the consideration payable.

Derivative financial instruments and hedge accounting

The Group has entered into swaps to manage its exposure to variability in the price and foreign exchange rate of a proportion of its newly acquired crude oil production for the next 6 years and its exposure to interest rates in respect of a proportion of its debt.

All derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value at each period end. Apart from those derivatives designated as qualifying cash flow hedging instruments, all changes in fair value are recorded as financial income or expense in the year in which they arise, otherwise they are recognised in other comprehensive income.

Fair value is the amount for which a financial asset, liability or instrument could be exchanged between knowledgeable and willing parties in an arm's length transaction. It is determined by reference to quoted market prices adjusted for estimated transaction costs that would be incurred in an actual transaction, or by the use of established estimation techniques such as option pricing models and estimated discounted values of cash flows. The fair value of derivative financial instruments has been calculated on a discounted cash flow basis by reference to forward market prices and risk free returns adjusted in the case of derivative financial liabilities by an appropriate credit spread.

Impairment of financial assets

In relation to financial assets, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of receivables is reduced through use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectible.

(l) Borrowings

Borrowings are measured initially at fair value. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate ("EIR") method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the income statement.

Derivatives embedded in host contracts, such as warrants attached to loans, are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in the Income Statement.

Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of these assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the profit or loss in the period in which they are incurred.

(m) Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date including whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset.

Operating leases

Rentals are charged to the Income Statement on a straight line basis over the period of the lease.

Finance leases

Assets under finance leases are included under tangible fixed assets at their capital value and depreciated over their useful lives. Capital value is defined as the amount equal to the fair value of the leased property or, if lower the present value of the minimum lease payments, each determined at the inception of the lease. Lease payments consist of capital and finance charge elements; the finance charge element is charged to the income statement.

(n) Inventories

Inventories, consisting of crude oil, drilling materials and maintenance materials, are stated at the lower of cost and net realisable value. Costs comprise all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Weighted average cost is used to determine the cost of ordinarily inter-changeable items.

 (o) Taxation

The tax expense represents the sum of current tax and deferred tax.

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered or paid to the tax authorities. Taxable (loss)/profit differs from the (loss)/profit before taxation as reported in the Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date. Temporary differences arise from differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are not discounted. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.

The carrying amount of deferred tax is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the assets is realised or the liability is settled, based on the tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

(p) Share based payments

Where share options or warrants are awarded to employees (including Directors), the fair value of the options or warrants at the date of the grant is recorded in equity over the vesting period. Non-market vesting conditions, but only those related to service and performance, are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. All other vesting conditions, including market vesting conditions, are factored in to the fair value of the options or warrants granted. As long as all other vesting conditions are satisfied, the amount recorded is computed irrespective of whether the Market vesting conditions are satisfied. The cumulative amount recognised is not adjusted for the failure to achieve a Market vesting condition; although equity no longer required for options or warrants may be transferred to another equity reserve.

Where the terms and conditions of options or warrants are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also recorded in equity over the remaining vesting period.

When an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognised or the award is recognised immediately.

Where equity instruments are granted to persons other than employees, the amount recognised in equity is the fair value of goods and services received.

Charges corresponding to the amounts recognised in equity are accounted for as a cost against profit and loss unless the services rendered qualify for capitalisation as a non-current asset. Costs may be capitalised within non-current assets in the event of services being rendered in connection with an acquisition of intangible exploration and evaluation assets or property plant and equipment.

Where shares are issued to an Employee Benefit Trust, and the Company is the sponsoring entity, the value of such shares at issue will be recorded in share capital and share premium account in the ordinary way, but will not affect shareholders' funds since this same value will be shown as a deduction from shareholders' funds by way of a separate component of equity.

(q) Post retirement benefits

A subsidiary within the Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The amount charged to the income statement represents the contributions payable to the scheme in respect of the accounting period.

(r) Equity

Equity instruments issued by the Company are usually recorded at the proceeds received, net of direct issue costs, and allocated between called up share capital and share premium accounts as appropriate.

(s) Foreign currency

The consolidated financial statements are presented in UK pound sterling, which is the parent company's and its subsidiaries' functional currency. The Group does not have any foreign operations. Transactions denominated in currencies other than the functional currency are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-translated at the rate of exchange ruling at the balance sheet date. All differences that arise are recorded in the income statement.

2 Revenue and segment information

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance, and for which financial information is available. In the case of the Group the CODM are the Chief Executive Officer and the Board of Directors and all information reported to the CODM is based on the consolidated results of the Group as one operating segment as the Group's activities relate to UK oil and gas. Therefore the Group has one operating and reportable segment as reflected in the Group's consolidated financial statements.

All revenue which represents turnover arises within the United Kingdom and relates to external parties. £21.9 million of the Group's revenue was derived from two customers (2009: £0.6 million).

All the Group's non-current assets are in the United Kingdom.

3 Operating loss

4 Employee information

At 31 March 2012 the Group had 152 employees. In the 15 months to 31 March 2012 £703 thousand (2010 - £39 thousand) of the Group's remuneration costs has been capitalised in accordance with the Group's accounting policy.

5 Directors' emoluments

The remuneration of the Directors for the period was as follows:

* Part of these emoluments are paid to companies that provide the services

** Payments were made as a consequence of the acquisition of Nexen Exploration UK Limited

Directors' share schemes/warrants

At 31 March 2012 the Executive Directors held the following awards under the Long Term Incentive Plans and the Share Option scheme as follows;

6 Finance income and costs