Petrel Resources Regulatory News (PET)

24 September 2013

Petrel Resources plc

("Petrel" or the "Company")

Interim Statement for the period ended 30 June 2013

Highlights:

· Iraqi investment enhanced through 20 per cent shareholding acquisition in Amira Hydrocarbons Wasit B.V. This deal gives Petrel an immediate effective 5 per cent carried interest through to production in exploration and production licences operated by Oryx Petroleum in Wasit.

· Heads of Agreement with Woodside, Australia's largest gas exporter, which will become operator and 85 per cent partner in Petrel's operations in the Porcupine Basin.

· Steps are being taken to expedite the licences on the Tano 2A onshore/offshore block in Ghana, in which Petrel holds a 30 per cent interest in a signed 2010 agreement.

John Teeling, Chairman of Petrel Resources, said: "The last 10 months have been a period of rapid progress and share price appreciation for Petrel Resources: We now have momentum, good partners in Ireland and Iraq and have plans to drive forward."

Iraq

Petrel has strengthened its Iraqi investment and added another string to its Iraqi bow, by acquiring a 20 per cent shareholding in Amira Hydrocarbons Wasit B.V.("Amira"). Amira, is the holder of a 25 per cent carried interest in oil and gas exploration and production licences in the Wasit Province of central Iraq. The ultimate operator and funder of the work programme is Oryx Petroleum of Canada, established by the team which built and sold Addax for US$7.3 billion.

This strategic partnership strengthens Petrel's position in Iraq, where it has had a presence since 1999, and allows Petrel to benefit from Amira Industries' reputation and local capability. Amira Industries has been at the forefront of licence acquisitions in the Iraqi provinces and was the first oil company to sign oil and gas exploration and production contracts with the provincial governments of Salah ad Din and Wasit. The Amira deal gives Petrel an immediate effective 5 per cent carried interest through to production in exploration and production licences operated by Oryx Petroleum in Wasit.

Arman Kayablian, COO of Amira Industries N.V., has joined the board of Petrel as a non-executive director. Arman has over 10 years' experience in project finance and development operations in the energy, utilities and telecommunications industries.

The acquisition is in line with Petrel's strategy of reinforcing its interests in Iraq. The shareholding in Amira's assets expands Petrel's programme scheduled for the next 18 months, with the potential to drill one or two additional wells.

The investment in Amira is essentially a US$500,000 option price. The initial consideration comprised an up-front cash payment of US$500,000 and the issue of locked in 18,947,368 shares in Petrel.

A further 10,526,316 shares in Petrel will be issued when the first conventional oil well spuds. When a well is spudded these initial shares become tradeable. A second tranche of 10,526,316 shares will be issued when there is a commercial discovery. If no drilling takes place within 5 years the deal expires and all share agreements cease.

Petrel is also given a right of first refusal to participate or acquire an operated interest in any future exploration and production licences that Amira Industries secures in the Iraqi provinces of Muthanna, Karbala, Babil and Najaf. The terms of Petrel's participation in such licences are likely to be similar to Amira Industries' arrangement with Oryx Petroleum in respect of the Wasit licences.

Wasit Overview

Wasit is a large, relatively underexplored province in east central Iraq close to the giant East Baghdad field. Amira holds a 25 per cent carried interest in three contracts with the Wasit Provincial Government to explore and develop hydrocarbons in the Wasit province: an Asphalt Exploration Contract, Seismic Option Agreement and Risk Exploration Contract. The Wasit Government has a back-in right in respect of the licences which, if exercised in full, will reduce Amira's interest to 20 per cent (equivalent to a 4 per cent carried interest for Petrel).

The operator of the Wasit Licence is Oryx, a Canadian E&P independent listed on the TSX with a market capitalisation of US$1.4 billion. To date, Oryx has identified five principal leads in the province containing 1,010 million barrels of unrisked prospective oil resources. Amira's interest in the Wasit Licence is carried to production by Oryx.

Oryx plans to commence a seismic data acquisition program in 2013 and to drill an exploration well in the first half of 2014.

Ireland

Woodside, Australia's largest gas exporter, is farming in to Petrel's Porcupine Basin acreage. Under our Heads of Agreement, Woodside will become operator and 85 per cent partner. The Irish authorities have welcomed this development. Official approval for the Woodside farm in to the existing licence options 11/4 and 11/6 was received within 12 days of our application.

The partners are proposing a comprehensive field work programme for a full 'Frontier Exploration Licence'. The technical work programme under consideration compares very well with those being pursued by other leading companies in this province. The partners do not believe it is appropriate to disclose these plans prior to consideration and agreement with the proper authorities.

The work programme required under Petrel's existing two Licences in the Irish Atlantic Margin was completed by July 2013. The conclusions were encouraging: there are thick sedimentary sections (10km of stratigraphy) in the Porcupine Basin. The Seismic database has responded well to analysis, and further reprocessing and a more detailed programme of fresh 3D seismic is now technically justified. We believe 800 to 1,000 metres of water requires 3D seismic to identify drilling sites.

Petrel'stechnical team has worked up 2 main plays in our Licence Option 11/4 in Quad 35: A Lower Cretaceous fan mound resting on the Jurassic which has good, proven source rocks. Overlying this are inclined delta clinoforms (slopes) of Lower Tertiary age, which show potential sands offering potential targets. The eastern Quad 35 offers 3 potential prospect levels - another Lower Cretaceous mound on the Jurassic surface, well defined Lower Tertiary deltaic clinoforms, and a Tertiary shelf-edge mound.

In our Licence Option 11/6 in Quad 45 Petrel's technical team has identified 3 potential sand pinch-out plays. The Quad 45 prospects are not geologically comparable to or in any way affected by the recent ExxonMobil operated well at Dunquin, in neighbouring Quad 44. The Dunquin well was a true "wildcat" in that there was no 3D seismic or historic well control closeby. While that well did not flow oil, it confirmed that extensive oil had been generated in this part of the Porcupine Basin and a 144 foot residual oil column was logged. This confirmed Petrel's long-standing hypothesis that this part of the Porcupine Basin was oil prone.

Ghana (30 per cent Interest in Pan Andean Resources Ltd)

The oil industry in Ghana continues to grow and develop. Petrel holds a 30 per cent interest in a signed 2010 agreement over the Tano 2A onshore/offshore block in a highly sought after area of Ghana. We continue to press on with ratification. In the past two years we have been asked to provide certain guarantees which are not required in the agreement with the Ghanaian National Petroleum Corporation (GNPC). We have provided all reasonable evidence of financial and technical capability. We have fully complied with all obligations under the signed Petroleum Agreement, and spent with our partners, over US$1.0 million to date. We are pressing GNPC to submit the agreement to the Cabinet and Parliament. Petrel is not alone in awaiting licence ratification; many other agreements are also in the queue.

Finance

Petrel is well financed going forward. Iraq and Ireland will be largely self-funding while there will be little expense in Ghana until ratification is obtained.

Petrel currently holds cash balances of US$2.2 million and will receive over US$1.3 million of back costs from Woodside once the formal exploration licences are issued.

Future

We expect activity to speed up in the coming months. Early 2014 will see preparations for drilling on the Spanish Point licence offshore Ireland. While not directly affecting Petrel it should lead to investor interest. Oryx and Amira are actively seeking permits to conduct seismic in the Wasit province. Steps have been taken in Ghana to expedite licences on the Tano 2A block.

ENDS

Enquiries:

www.petrelresources.com

Notes:

1. INFORMATION

The financial information for the six months ended June 30th, 2013 and the comparative amounts for the six months ended June 30th, 2012 are unaudited. The financial information above does not constitute full statutory accounts within the meaning of section 148 of the Companies Act 1963.

The Interim Financial Report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The accounting policies and methods of computation used in the preparation of the Interim Financial Report are consistent with those used in the Group 2012 Annual Report, which is available at www.petrelresources.com

The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.

2. No dividend is proposed in respect of the period.

3. LOSS PER SHARE

Basic and diluted loss per share are the same as the effect of the outstanding share options is anti-dilutive.

4. INTANGIBLE ASSETS

Exploration and evaluation assets at 30 June 2013 represent exploration and related expenditure in respect of projects in Ireland, Iraq and Ghana. The directors are aware that by its nature there is an inherent uncertainty in relation to the recoverability of amounts capitalised on the exploration projects. In addition, the current economic and political situation in Iraq is uncertain.

In 2012, the directors decided to impair in full the Morocco and Guinea exploration and evaluation assets to nil, amounting to a total impairment charge of €20,066. The decision was taken as the projects were terminated during the year.

Relating to the remaining exploration and evaluation assets at the period end, the directors believe there were no facts or circumstances indicating that the carrying value of the intangible assets may exceed their recoverable amount and thus no impairment review was deemed necessary by the directors. The realisation of these intangible assets is dependent on the successful discovery and development of economic reserves and is subject to a number of significant potential risks, as set out below:

· Licence obligations;

· Funding requirements;

· Political and legal risks, including title to licence, profit sharing and taxation; and

· Geological and development risks.

Directors' remuneration of €75,000 (Dec 2012: €150,000) and salaries of €55,000 (Dec 2012: €110,000) were capitalised as exploration and evaluation expenditure during the period.

Regional Analysis

5. The Interim Report for the six months to June 30th, 2013 was approved by the Directors on 23 September 2013.

6. On 14th August 2013 Petrel Resources announced that it has agreed to acquire a 20 per cent shareholding in Amira Hydrocarbon Wasit B.V. which is the holder of a 25 per cent carried interest in certain oil and gas exploration and production licences in the Wasit Province of Iraq.

The consideration for the Acquisition comprises an up-front cash payment of US$500,000 and the issue of 18,947,368 shares in Petrel representing 19.82 per cent of the enlarged issued share capital of Petrel.

Following completion of the Acquisition, a further 21,052,632 shares in Petrel are to be issued in two tranches upon the occurrence of certain events (Deferred Consideration Shares). The first tranche of 10,526,316 Deferred Consideration Shares is to be issued upon the Spudding of the first conventional oil well. The second tranche of 10,526,316 of Deferred Consideration Shares is to be issued upon notification of a discovery in respect of Amira's interest in the Wasit Province.

7. Copies of the interim report will be mailed shortly only to those shareholders who have elected to receive it. Otherwise shareholders will be notified that the Interim Report will be available on the website at www.petrelresources.com. Copies of the Interim Report will also be available for collection at the Company's Registered Office at 162 Clontarf Road, Dublin 3, Ireland.