Petrel Resources Regulatory News (PET)

20 June 2013

Petrel Resources plc

("Petrel" or "the Company")

Preliminary Results for the Year Ended 31 December 2012

Petrel Resources announces its results for the year ended 31 December 2012.

Operational Highlights:

·; Technical geological and geophysical work on Petrel's two Licensing Options in the Irish Atlantic Margin has been completed.

·; Petrel has identified major potential prospects within both of its Licence Options.

·; High potential prospects have been mapped in mounded Lower Cretaceous fan sandstones and in Eocene shelf clinoform sheet sands in Quad 35 (Option 11/4).

·; Work on Quad 45 (Option 11/6) has identified prospects at three levels within the Lower Cretaceous and Lower Tertiary.

·; A new management team is operating in Iraq, which has clarified Petrel's relationship with the Iraqi authorities, and is pursuing existing and new opportunities.

·; The authorities in Ghana have been provided with evidence of Petrel's financial and technical ability to conduct the required work programme on Tano 2A Block.

·; Post-period highlight: Petrel is in discussions with prospective partners for an exploration work programme under full Frontier Exploration Licences on the Atlantic Margin acreage.

Enquiries:

www.petrelresources.com

Statement Accompanying the Preliminary Results

It is a pleasure in these tough times for explorers to be able to report good news. Petrel is in the vanguard of positive developments in the Irish offshore exploration sector. I am very hopeful that positive developments will come in our two Irish frontier exploration licence options.

The great recession is coming to a slow and painful end. Green shoots of economic growth are appearing in some countries, notably the United States. The wall of new money created by quantitative easing policies is, as it must, finally having an impact. Asset prices, notably share prices and probably house prices, are beginning to rise. These trends are not of themselves enough to lead to strong economic growth but they are harbingers. Growth needs an increase in demand. Deleveraging continues in households, banks and countries thus depressing demand. But cheap money and growing asset prices will sooner or later result in improved demand.

What has that got to do with a hydrocarbon exploration company you might well ask. Quite a lot. Explorers take risks. Risk taking requires speculative money. In times of recession this money dries up. In times of deep economic recession there is no money for, and no interest in, exploration shares.

Petrel Resources is an old explorer. First formed in the early 1980s to explore offshore Ireland, it failed. It was too early for the technology of the time to succeed in the Atlantic. A reinvention in the 1990s, as an Iraqi explorer, resulted in Petrel doing well for some time but it stalled in the post-Saddam era. Whilst remaining in Iraq the directors of Petrel used their African experience to take a stake in the emerging West African oil industry. For three years we have waited on ratification of Tano 2A onshore/offshore block in Ghana.

Petrel's time has come again. The Irish offshore is fast becoming a focus for international oil companies. Petrel is well placed, as it should be, with interest in two blocks in the Porcupine Basin. For 30 years Petrel leased a warehouse storing extensive seismic and well log data on the Irish offshore. Our Managing Director and two long term consultants maintained an interest in developments relating to Ireland. It is said that due to better technology and more information that exploration begins anew every twenty years. This is certainly true of the Irish offshore. Developments and discoveries in the Atlantic, both North and South, renewed and improved our understanding of offshore Ireland. Enhanced exploration and production technology make working in the North Atlantic less daunting. Finally, high oil prices have improved the economics.

Petrel was very pleased to obtain frontier licence options in two prized quadrants - 35 and 45. In the past two years we have invested significant money in acquiring new information. We believe that there are five good prospects in both blocks. Let me be clear; these are early stage prospects. The Irish Atlantic offshore is unexplored with one gas discovery and few wells. But interest is building. The Dunquin well is a wildcat. Expected drilling on the Spanish Point block would use a 1991 well as well control.

Petrel is in discussions with a number of international oil companies on a joint venture agreement to enter into a full Frontier Exploration Licence on both Licence Options. I am hopeful of a successful conclusion.

Ghana, our second sphere of operations, is fast becoming a major world class oil producer. When we first went there in 2008, with our partner, Clontarf Energy, there was hope but no oil. Now production is in excess of 100,000 barrels a day and is expected to multiply in coming years. We signed a Petroleum agreement in 2008, and a revised agreement in 2010, with the Ghana National Petroleum Corporation (GNPC) over block Tano 2A covering 1,532 sq km in the onshore mangrove swamps and shallow offshore waters of the Tano area. We chose this area because our geologists believe that oil generated in a kitchen deep offshore where the giant Jubilee oil field has been discovered, flows northward through the Tano area.

For generations oil seepages are known on the Tano block. Indeed there was small production in the early 20th century. Ghana offers good fiscal terms, a stable political environment and excellent potential. As an early entrant our contract with GNPC was favourable. It required both cabinet and parliamentary approval. While awaiting approval the consortium, Petrel 30%, Clontarf Energy 60% and local interests 10%, has acquired all available historical data, reprocessed it and identified a number of good leads. A series of significant oil discoveries in Ghana and increased exploration interest from oil majors has caused severe backlogs in licence approvals. New licence applicants face different terms than those offered in 2010. We have worked with GNPC to assist them in preparing our submission to cabinet. A significant concession by our consortium was the provision of confirmation of insurance cover for half the three year work programme of $25 m. We remain hopeful that ratification of our application together with many others held up will proceed in the near future.

When we first went to Iraq in 1999 we were the only western oil company in the country. In 2002 we agreed a deal with the Oil Ministry to explore a 10,000 sq km block in the western desert between Baghdad and Jordan. Sanctions meant we could not obtain essential equipment. We also conducted detailed and expensive evaluation of two fields Merjan and Dhufriya. In 2005 we were awarded a €200m Engineering, Procurement and Construction contract on the Subba and Luhais oil fields. This worked well until 2007 when contract and payment difficulties arose mainly between the authorities and our local partner. We exited the contract with a payment of $7m in 2009.

Despite a strong local presence in Iraq for 14 years and proven expertise we failed to be awarded any development contracts in four licencing rounds. This may have been a blessing in disguise as there is, as yet, no hydrocarbon law and the operating terms agreed by successful applicants would not have been profitable for Petrel. But the failure raised questions. In mid 2012 we appointed a new team to re-establish our presence. Their first task was to establish our standing which had clearly been damaged by the Subba and Luhais debacle. As operators of record, though our local partner was operator, we suffered reputational damage. Our team clarified our position and began discussions on potential investments. Of particular interest is the Merjan field in Karbala province. This was not applied for in the last licencing round. A major strategic decision needs to be made. The lack of a hydrocarbon law continues to bedevil the Iraqi oil industry. Other groups have signed agreements with provincial authorities, especially with the KRG in Iraqi Kurdistan. Discussions are on-going.

Future:

The future for Petrel is bright. This is a rare positive statement in a sector enveloped in gloom. We have exciting prospects in the Irish offshore, we are well-placed in Ghana and there will be development in Iraq. We also have funds for our current activities.

John Teeling

Chairman

20 June 2013

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PETREL RESOURCES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2012

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2012

STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2012

Share premium

The share premium comprises of the excess of monies received in respect of the issue of share capital over the nominal value of shares issued.

Capital conversion reserve fund

The ordinary shares of the company were renominalised from €0.0126774 each to €0.0125 each in 2001 and the amount by which the issued share capital of the company was reduced was transferred to the capital conversion reserve fund.

Share based payment reserve

The share based payment reserve represents share based payments granted which are not yet exercised and issued as shares.

Translation Reserve

The translation reserve comprises of foreign exchange movement on translation from US Dollars (functional currency) to Euro (presentation currency).

Retained deficit

Retained deficit comprises accumulated losses in the current year and prior years.

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2012

Notes:

1. Accounting Policies

There were no changes in accounting policies from those used to prepare the Group's Annual Report for the financial year ended 31 December 2011. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRSs as adopted by the European Union.

2. Loss per share

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

3. Intangible Assets

Exploration and evaluation assets at 31 December 2012 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 year 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 €150,000 (2011: €110,378) and salaries of €110,000 (2011: €50,000) were capitalised as exploration and evaluation expenditure during the year.

4. Annual General Meeting

The Company's Annual General Meeting will be held on Friday 26 July 2013 in the Westbury Hotel, Grafton Street, Dublin 2 at 11:00 am.

5. General Information

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2012. The financial information for 2011 is derived from the financial statements for 2011 which have been delivered to the Companies Registration Office. The auditors have reported on 2011 statements; their report was unqualified with an emphasis of matter in respect of considering the adequacy of the disclosures made in the financial statements concerning the valuation of intangible assets. The financial statements for 2012 will be delivered to the Companies Registration Office.

A copy of the Company's Annual Report and Accounts for 2012 will be mailed shortly only to those shareholders who have elected to receive it. Otherwise shareholders will be notified that the Annual Report will be available on the website at www.petrelresources.com. Copies of the Annual Report will also be available for collection from the Company's registered office, 162 Clontarf Road, Dublin 3, Ireland.