Petrel Resources Regulatory News (PET)

26th June 2017

Petrel Resources plc

("Petrel" or "the Company")

Preliminary Results for the Year Ended 31 December 2016

Petrel Resources announces its results for the year ended 31 December 2016.

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

ENDS

For further information please visit http://www.petrelresources.com/ or contact:

Petrel Resources

John Teeling, Chairman +353 (0) 1 833 2833

David Horgan, Director

Nominated Adviser and Broker

Northland Capital Partners Limited

Edward Hutton / Gerry Beaney (Corporate Finance) +44 (0) 20 3861 6625

John Howes (Broking)

Public Relations

Blytheweigh +44 (0) 207 138 3204

Nick Elwes +44 (0) 783 185 1855

Camilla Horsfall +44 (0) 787 184 1793

Teneo PSG

Ciaran Flynn +353 (0) 1 661 4055

Alan Tyrrell +353 (0) 1 661 4055

Statement Accompanying the Preliminary Results

Petrel is an oil explorer focused on offshore Ireland and offshore Ghana with legacy interests in Iraq.

After a fallow period there is renewed interest and activity in the Irish Atlantic - particularly the Porcupine Basin. For the first time in recent years a well will be drilled. It is scheduled for July 2017. The past year has seen a number of 3D seismic acquisition programmes including one by our joint venture partner, Woodside Energy of Australia.

The Irish Government in 2015 ran a very successful bid round for new licences. Some 46 were applied for by 17 companies. Petrel was awarded two licences covering 924 km2 in the Porcupine Basin.

Why has this happened at a time of relatively low oil prices? The boom preceding the crash of 2008 had resulted in massive cost increases in offshore exploration. Wells were costing up to $200 million each. Rig rates were millions of dollars a day. The economic crash and subsequent financial crisis in many overleveraged oil companies led to a shuddering halt. Atlantic Ireland is frontier exploration. Deep water, harsh conditions, few wells drilled with no commercial oil discovered. The subsequent two thirds oil price collapse exacerbated the gloom.

What has changed? World oil demand has continued to creep up. The oil price has recovered somewhat. Exploration costs have fallen dramatically as rig supply and services supply are greater than current demand. Technology, particularly seismic and its interpretation continues to improve. Boards of directors looking to a future ten to twenty years out, see the potential of elephant discoveries in the Atlantic. The risk return equation has moved and the Irish Atlantic is once more attractive to some - not many, but some. But note, only one well is being drilled this year and there are only vague plans for wells next year. If the Druid well is successful this year in 2,200 metres of water it will provide a huge boost to the industry. If it fails, and it is a wildcat, then the risk reward equation will be looked at again.

Petrel first had an interest in Irish offshore exploration in 1982. That failed. A watching brief was maintained until the restructured company applied for acreage in 2011. The company was awarded two blocks in the Atlantic. These were farmed out to Woodside Energy in 2013 and converted into two Frontier Exploration Licences FEL3/14 and FEL 4/14 in January 2014. Petrel maintained a 15% interest in each licence and was carried through initial work, seismic and one well.

Woodside has conducted 3D seismic over FEL 3/14 and results are awaited.

Following an analysis of data relating to FEL 4/14 Woodside decided to drop this licence without completing a seismic programme. Petrel believed this to be a breach of an agreement to conduct 900 km2 of seismic over the area. Both sides have been unable to reach agreement over the seismic issue. Arbitration is underway in London. At the same time Woodside announced they were not proceeding with FEL 4/14, they offered Petrel a carry on new ground obtained by Woodside in the 2015 licencing round. Petrel believe they had an agreement but Woodside felt unable to complete. This too will be part of the arbitration proceedings.

We hope for a favourable outcome of arbitration. Woodside are a good partner with excellent technical skills but the board of Petrel have a responsibility to almost 2,000 shareholders.

LO 16/24 and LO 16/25

In June 2016 Petrel was successful in obtaining two Porcupine Basin Licencing blocks over 924 km2. These are prospective blocks. Work is underway on seismic and well data using Petrel's database. We are acquiring additional relevant seismic. The focus of the work is on LO 16/24 particularly the area covering block 35/1. There is known source rock and good reservoir sands. The main risk is seal. Our personnel have evaluated available data on LO 16/25. The main target identified so far is on Block 45/27 within the licence option.

Ghana

Petrel in joint venture with Clontarf Energy (60%) and local interest (10%) holds the 30% balance in a signed Petroleum Agreement covering 1,532 km2 offshore and shallow offshore in the Tano Basin area of Ghana. The licence was first agreed in 2008, clarified in 2010, and subject to a successful court case in 2014.

Subsequent to the court agreement the various parties agreed on revised co-ordinates and an expedited ratification process. Ratification has not taken place.

A change of government in early 2017 brought fresh faces and new thinking to the table. There is now clear leadership on the government side. With goodwill outstanding issues will be clarified and solved. Despite the fall in oil prices we believe that the targets we have identified on the block are attractive.

Iraq

Petrel has been in Iraq since 1997. By 2003 we had negotiated an agreement with the federal authorities over a 10,000 km2 block in the Western Desert of Iraq - an area now controlled by militants. It is not possible to work there. Iraq is so prospective that we were very reluctant to walk away so in 2013 we negotiated a 5% carry through to production on exploration work to be undertaken by Oryx, then a Canadian controlled company, now a Kurdish controlled venture, in the Wasit province of Iraq - a relatively stable Shia controlled province. The expectation was that the Iraqi provinces would proceed to develop their own oil/gas resources as has Kurdistan. To date this has not happened.

Future

Petrel as an exploration venture has been around for 35 years, starting in the Atlantic, lying dormant for years, being revived to obtain interests in Uganda and offshore Namibia, deposing of these to enter Iraq in 1997. We were successful in Iraq obtaining ground conducting details studies on potential oil field and obtaining a $200 million E&P contract in 2005 in Subba and Luhais. The chaos that followed the US invasion of 2003 made it impossible to continue to work. We sold out of the Subba and Luhais project in 2007. We reinvented ourselves once again in 2008 in Ghana and went back to the future in 2011 by obtaining licences in the Irish Atlantic. We took an interest in Iraq once again in 2013.

What does the above demonstrate - resilience, adaptability and persistence. Petrel has seen highs and lows with a market cap ranging from under £1 million to over £100 million. Our projects are risky and fail but over decades we have persisted through wars, political disruptions, legal challenges and geological failures.

So it is with our present projects. Some have problems but all have great potential. We are very hopeful that the revived interest in offshore Ireland will be rewarded with a successful discovery. The money we received from selling our Iraqi interest has sustained Petrel in recent years. Shareholders have not had to provide fresh capital. We have sufficient funds for the near future.

John Teeling

Chairman

23rd June 2017

PETREL RESOURCES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016

2016 2015

€ €

CONTINUING OPERATIONS

Administrative expenses (257,675) (228,393)

OPERATING LOSS (257,675) (228,393)

Investment revenue 1,170 1,159

LOSS BEFORE TAXATION (256,505) (227,234)

Income tax expense - -

LOSS FOR THE FINANCIAL YEAR: all attributable

to equity holders of the parent (256,505) (227,234)

Other comprehensive (expense) Income - -

Items that are or may be reclassified

subsequently to profit or loss - -

Exchange differences 66,830 305,752

TOTAL COMPREHENSIVE LOSS FOR THE FINANCIAL YEAR (189,675) 78,518

Loss per share - basic and diluted (0.26c) (0.23c)

PETREL RESOURCES PLC

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2016

2016 2015

€ €

Assets

Fixed Assets

Intangible assets 2,138,159 1,871,288

Financial Asset 4,211,123 4,211,123

6,349,282 6,082,411

Current Assets

Trade and other receivables 23,003 19,203

Cash and cash equivalents 745,195 1,111,257

768,198 1,130,460

Total Assets 7,117,480 7,212,871

Current Liabilities

Trade and other payables (409,894) (315,610)

Net Current Assets 358,304 814,850

NET ASSETS 6,707,586 6,897,261

Equity

Called-up share capital 1,246,025 1,246,025

Capital conversion reserve fund 7,694 7,694

Share premium 21,416,085 21,416,085

Share based payment reserve 26,871 26,871

Translation reserve 721,319 654,489

Retained deficit (16,710,408) (16,453,903)

TOTAL EQUITY 6,707,586 6,897,261

PETREL RESOURCES PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016

Share premium

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 options 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 and prior financial years.

PETREL RESOURCES PLC

CONSOLIDATED CASH FLOW STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016

2016 2015

€ €

CASH FLOW FROM OPERATING ACTIVITIES

Loss for the financial year (256,505) (227,234)

Investment revenue recognised in loss (1,170) (1,159)

OPERATING CASHFLOW BEFORE

MOVEMENTS IN WORKING CAPITAL (257,675) (228,393)

Movements in working capital:

Increase/(Decrease) in trade and other payables 49,285 (36,221)

(Increase)/Decrease in trade and other receivables (3,800) 25,205

CASH USED IN OPERATIONS (212,190) (239,409)

Investment revenue 1,170 1,159

NET CASH USED IN OPERATING ACTIVITIES (211,020) (238,250)

INVESTING ACTIVITIES

Payments for exploration and evaluation assets (160,699) (110,837)

NET CASH USED IN INVESTING ACTIVITIES (160,699) (110,837)

NET DECREASE IN CASH AND CASH EQUIVALENTS (371,719) (349,087)

Cash and cash equivalents at beginning of financial year 1,111,257 1,330,766

Effect of exchange rate changes on cash held in

foreign currencies 5,657 129,578

Cash and cash equivalents at end of financial year 745,195 1,111,257

NOTES:

1. ACCOUNTING POLICIES

There were no changes in accounting policies from those used to prepare the Group's Annual Report for financial year ended 31 December 2015. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

2. LOSS PER SHARE

Basic loss per share

The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:

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

3. FINANCIAL ASSET

Investment

The Company's investment in financial assets, through its wholly owned subsidiary Petrel Resources (TCI) Limited, consists of a 20 per cent shareholding in Amira Hydrocarbons Wasit B.V.("Amira") which was acquired from Amira Petroleum N.V. on 14 August 2013. Amira is a special purpose vehicle which holds a 25 per cent carried to production interest in an early stage oil opportunity in the large, underexplored and underdeveloped province of Wasit.

Although the company owns 20 per cent of Amira, it does not have significant influence over Amira. Petrel does not have any representation on the Board of Amira. It does not have the right to participate in any financial or operating policy decisions. As a result Amira does not meet the definition of an associate and is treated as an investment.

The consideration for the Acquisition comprised an up-front cash payment of US$500,000 and the issue of 18,947,368 shares in Petrel ("Initial Consideration Shares"), representing 19.82 per cent of the enlarged issued share capital of Petrel. The Initial Consideration Shares are locked-in until the spudding of the first conventional oil well in respect of Amira's interest in the Wasit province. If the Spudding Date has not occurred by 19 August 2018, Petrel may, amongst other things, elect to re-acquire the Initial Consideration Shares for a nominal amount.

Following completion of the Acquisition, a further 21,052,632 shares in Petrel may be issued in two tranches upon the Following completion of the Acquisition, a further 21,052,632 shares in Petrel may 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 Deferred Consideration Shares is to be issued upon notification of a discovery in respect of Amira's interest in the Wasit Province.

As part of the Acquisition, Arman Kayablian, COO of Amira Industries, joined the board of Petrel as a non-executive director with effect from 19 August 2013.

Under the terms of the Acquisition agreement, 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, which are currently being pursued by Amira Industries. The terms of Petrel's participation in such licence are subject to agreement between the parties but are likely to be similar to Amira Industries' arrangement with Oryx Petroleum ("Oryx") in respect of the Wasit licences.

Fair value information for the investment in Amira has not been disclosed as its fair value cannot be reliably measured. As a result the investment is carried at amortised cost. Fair value cannot be reliably measured as the investment is held in a private company. The company's equity instruments do not have a quoted price is an active market.

The recoverability of the group's financial asset is dependent on the discovery and successful development of the economic reserves which is subject to a number of risks as outlined below:

· Licence obligations;

· Funding requirements;

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

· Geological and development risks;

· Exchange rate risk;

· Political risk; and

· Financial risk management.

4. INTANGIBLE ASSETS

Exploration and evaluation assets at 31 December 2016 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.

On March 4th 2014, the company announced that it had finalised an 85% farm-out agreement with Woodside, Australia on its offshore Ireland acreage. The agreement covers all of Petrel's participating interest in licencing option 11/6 (comprising offshore Blocks 45/6, 45/11 and 45/16) and licencing option 11/4 (comprising offshore Blocks 35/23, 35/24 and western half of 35/25). Woodside will be operator of the licencing blocks. Petrel Resources received USD$1,300,000 (€945,214) from Woodside for the 85% farm-out.

Relating to the remaining exploration and evaluation assets at the financial 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.

The Group's exploration activities are subject to a number of significant and potential risks including:

· Licence obligations;

· Funding requirements;

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

· Geological and development risks;

· Exchange rate risk;

· Political risk; and

· Financial risk management.

Directors' remuneration of €30,000 (2015: €30,000) and salaries of €15,000 (2015: €15,000) were capitalised as exploration and evaluation expenditure during the financial year.

5. SHARE CAPITAL

Movements in share capital

There was no movement in share capital in the current year.

6. POST BALANCE SHEET EVENTS

There were no material post balance sheet events affecting the company or group.

7. ANNUAL GENERAL MEETING

The Company's Annual General Meeting will be held on 24th July 2017 in the Shelbourne Hotel, St. Stephen's Green, Dublin at 11:00 am.

8. GENERAL INFORMATION

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2016. The financial information for 2015 is derived from the financial statements for 2015 which have been delivered to the Companies Registration Office. The auditors have reported on 2015 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, investment in subsidiaries and amounts due by group undertakings. The financial statements for 2016 will be delivered to the Companies Registration Office.

A copy of the Company's Annual Report and Accounts for 2016 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.