Management Resource Solutions Regulatory News (MRS)

FOR IMMEDIATE RELEASE

18 November 2010

Melrose Resources plc

Interim Management Statement

Melrose Resources plc (LSE: MRS) ("Melrose" or "the Company") the oil and gas exploration, development and production company, today issues its Interim Management Statement to cover the period 1 July 2010 to 30 September 2010 ("the third quarter") and an operations update. This information is provisional and unaudited and may be subject to further review.

Field Developments

Melrose was pleased to announce first production from the Kavarna and Kaliakra gas fields, offshore Bulgaria, on 4 November. Both fields were developed using subsea wells tied back to the Company's existing Galata field platform and the gas is being processed at the onshore gas plant near Varna. Production from the two fields is currently averaging 45 MMcfpd, which is the planned production plateau rate, and the initial performance data indicate that both fields have higher system deliverability than expected. The majority of the gas produced is being sold to Bulgargaz, the state owned gas distribution company, with the balance of the gas being sold directly to a local industrial user.

In Egypt, plans are underway to install booster compressors for the West Dikirnis Gas Re-injection facilities and increase the gas injection rate from 21 MMcfpd to 30 MMcfpd. This will allow selected wells to be produced at higher rates and increase the current total liquids (oil, condensate and LPG) production from the field to approximately 4,500 boepd. It will also provide support for the two new horizontal development wells planned to be drilled in the first half of 2011.

Exploration

On 30 July, Melrose announced that the Kavarna East No.1 exploration well in the Bulgarian Black Sea had been successfully drilled yielding a 12 Bcf gas discovery. The field will be developed using a low cost subsea tie-back to the Kavarna field flow line and has the potential to extend the Bulgarian production plateau to the end of 2013.

With respect to the Rhône Maritime concession, offshore France, during the reporting period Melrose signed a fully termed farm-in agreement with a subsidiary of Noble Energy Inc ("Noble") under which Noble will farm-in to a 72.5 percent operated interest in the block with Melrose retaining a 27.5 percent interest. A seismic survey vessel has been placed on contract by the joint venture and is currently mobilizing to the concession area where it will acquire an 8,000 kilometre 2D seismic survey covering the entire block later this month. The survey will take approximately three months to complete. The cost of the seismic acquisition program will be funded by Noble under the terms of the Farm-in Agreement.

In Turkey, the 2D seismic survey acquired over the Company's South Mardin concessions earlier this year yielded encouraging results and confirmed the South West Kanun structure as a drillable prospect with estimated gross mean reserves of 85 MMbbl and a chance of success of 20 percent. In order to advance its drilling plans, the Company has now secured a rig, GYP No.7, to drill the prospect and it is expected that the well will spud in March 2011 and take approximately three months to complete.

In Egypt, the South East Mansoura seismic acquisition program is progressing on schedule and to date some 240 square kilometres of 3D seismic data (66 per cent of the planned survey) and 140 kilometres of 2D seismic data (100 percent of the planned survey) have been obtained. The main objective of the program is to evaluate a geologic trend which contains a number of Cretaceous oil leads identified on historical seismic data as having significant resource potential.

The Company has also recommenced its exploration drilling operations in the Nile Delta and the EDC-9 rig is currently drilling the South East Dikirnis prospect which has prospective resources of 16 Bcf of gas and 1 MMbbl of oil and a chance of success of 32 per cent.

Business Development Initiatives

On 6 July, Melrose was pleased to announce the award of two new licenses, EX-27 Muridava and EX-28 Est Cobalcescu, in the Romanian 10th Licensing Round. The Company is in the process of finalising the Concession Agreements for these new blocks with the Romanian authorities and expects to commence the initial three year exploration programme in the first half of 2011.

Also in Romania, Melrose announced on 1 November that its proposed partner in the Midia and Pelican blocks, Sterling Resources Ltd, had decided to withdraw its application to the Romanian authorities to assign a 32.5 percent interest in the blocks to Melrose.

Production and Product Prices

Melrose's production in the third quarter 2010 averaged 41.0 Mboepd on a working interest basis, which was approximately 6 percent lower than achieved during the same period in 2009. The Company's Egyptian gas fields continue to produce strongly at approximately 200 MMcfpd of gas but in order to maximize the West Dikirnis field reserves, liquids production has been restricted pending optimisation of the Gas Re-injection scheme. The total working interest production volumes were 18.4 Bcf of gas and 597 Mbbl of oil, condensate and LPG. On a net entitlement basis, the third quarter production totalled 7.8 Bcf of gas and 292 Mbbl of oil and condensate, equating to an average daily rate of 17.8 Mboepd.

A summary of the Company's working interest and net entitlement production by country in the third quarter is as follows:

Working Interest

Net Entitlement

The average product prices realised by the Company in the third quarter were as follows:

Financial Position

Total capital expenditure in the third quarter amounted to $28.5 million of which $21.0 million related to Bulgaria, ($14 million for the Kavarna and Kaliakra developments and $7 million for the exploration well Kavarna East), with the balance deployed in Egypt and the USA.

There have been no major changes in the Company's balance sheet since the publication of the 2010 Half-Yearly Results. Group net debt at 30 September was $477.0 million. The Company loan facilities remain unchanged at $520 million, comprising a senior facility of $450 million and a subordinated facility of $70 million. The combined margin on the facilities is competitive, equating to 3.3 percent above US$ LIBOR assuming the loans were fully drawn. Both facilities are committed until December 2014.

The Company will immediately benefit from significantly increased cash generation from its new Bulgarian gas field developments. This, combined with the Egyptian revenues and the availability on existing loan facilities, provides a level of capital headroom which will ensure that the Company is able to finance its planned investment programme.

Business Outlook

Strong performance from Melrose's Egyptian fields has underpinned production volumes during 2010 and, notwithstanding some minor delays experienced with the new Bulgarian field developments, the Company is increasing its 2010 production guidance from 40.0 to 40.7Mboepd.

The firm 2010 capital expenditure forecast remains unchanged at $115 million, of which over 70 percent is dedicated to field development activity and the remainder to exploration seismic and drilling programmes. Approximately 37 percent of the capital expenditure will be spent in Egypt, 56 percent in Bulgaria, 5 percent in the USA and 2 percent in Turkey.

Further details of the Company's 2011 budget and work plans will be provided in a subsequent press release but in summary the capital budget is expect to be similar to 2010 expenditure but with a higher proportion, around 45 percent, dedicated to exploration activities as compared to 30 percent in 2010. The production forecast is likely to reflect at least a 5 percent increase relative to 2010 on a working interest basis.

The main components of the work plan will include; in Egypt, the West Dikirnis LPG plant expansion and West Khilala compression projects, completion of the South East Mansoura 3D seismic programme and exploration drilling on the Cretaceous oil play in South East Mansoura; in Bulgaria, the acquisition of 3D seismic data on Block Galata, drilling the Kaliakra East prospect and procurement for the Kavarna East development; in Romania, signature of the concession agreements for the two new licenses and thereafter a 2D/3D seismic acquisition programme; in Turkey drilling the South West Kanun exploration well; and in France, completion of the Rhône Maritime 2D seismic survey.

Commenting on this report, David Thomas, Chief Executive, said:

"Achieving first production from Kavarna and Kaliakra was a significant event for the Company and we have now established a strong production base in two core areas, Egypt and Bulgaria. The increased revenues will be used to fund a well balanced work programme including a number of exciting near term exploration initiatives coupled with production enhancement projects in our existing fields.

Next year approximately 50 percent of the Company's capital budget will be dedicated to exploration, with key wells planned for the South Mardin Basin in Turkey, the Cretaceous oil play in South East Mansoura in Egypt and the Kaliakra East prospect in Bulgaria, as well as seismic surveys offshore Southern France and on our new blocks offshore Romania.

At the same time as pursuing the work programme, the Company has the capability to accelerate its financial de-gearing plans and we currently forecast our net debt to equity ratio reducing to below 60 percent by the end of 2012. The de-gearing may be accelerated in the event that the Company receives an acceptable offer for its US Permian Basin assets and the outcome from the ongoing sales process should become clearer by around year-end.

Given the improving financial outlook, we also have a growing capacity to undertake new business development opportunities providing they are consistent with the Company's strategic tenets. The pace at which these are introduced to the portfolio will be governed by the quality and attributes of the individual opportunities."

For further information please contact:

or visit www.melroseresources.com

Glossary:

bbl - barrel

Bcf - billion cubic feet of gas

Mbbl - thousand barrels

MMbbl - million barrels

Mbopd - thousand barrels of oil per day

Mboepd - thousand barrels of oil equivalent per day

Mcf - thousand cubic feet

MMcfpd - million cubic feet per day

MMcfepd - million cubic feet of gas equivalent per day

Disclaimer

This announcement contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business. While Melrose believes the expectations reflected herein to be reasonable, the actual outcome may be materially different owing to factors either within or beyond Melrose's control, and accordingly no reliance may be placed on the figures contained in such forward looking statements.