Parkmead Regulatory News (PMG)

16 November 2012

The Parkmead Group plc

("Parkmead", "the Company" or "the Group")

Preliminary Results for the year ended 30 June 2012

The Parkmead Group plc, an emerging independent oil and gas company, is pleased to report its preliminary results for the 12 months ended 30 June 2012.

HIGHLIGHTS

·; Agreed four acquisitions in seven months, creating a balanced portfolio of assets across the UKCS and onshore Netherlands

·; Significant reserves position (2P reserves of 25.1mmboe) with upside potential in core areas

·; First production transaction agreed within one year of establishing the oil and gas team, adding future cash flow to the Group's portfolio

·; Substantial licence awards announced in the UKCS 27th Licensing Round in October 2012, gaining stakes in 25 blocks across the Central North Sea, West of Scotland and West of Shetlands

·; Successful first appraisal well for Parkmead at the UK Platypus field, flowing 27mmscf per day, in August 2012

·; Reported Revenue of £2.9 million for the 12 months to 30 June 2012

·; Total Assets rose 86% to £22.9 million at 30 June 2012 (£12.3 million at 30 June 2011)

·; Cash balances of £7.7 million as at 30 June 2012

·; During the financial year the Group secured a shareholder loan facility of £8 million and raised a further £8.53 million from a successful equity placing

Parkmead's Executive Chairman, Tom Cross commented:

"2012 has been an excellent first full year of E&P operations for The Parkmead Group. Following a successful 2011, which saw the Company bring together its experienced oil and gas team, the Group has generated significant momentum completing a series of acquisitions in the North Sea and onshore Netherlands. Parkmead has built a high quality and balanced portfolio, with a rapid growth in its reserve base, and since the financial year end has achieved first production through the acquisition of assets in the Netherlands.

In October 2012 the Group was awarded interests in a total of 25 offshore blocks across the UKCS, in the 27th Licensing Round. These new licences will significantly increase Parkmead's asset base in the UK and complete what has been an exceptional year for the Company."

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Chairman's Statement

As Parkmead drives forward to become a significant new independent oil and gas company, I am pleased to announce our audited results for the year ended 30 June 2012 and to share with you our progress to date, in what has been a busy and successful year of asset growth.

Operations and Portfolio Growth

The Group has made considerable early progress towards its stated goal of building a significant independent oil and gas company. During 2012, the Company made a number of acquisitions across the UKCS and Netherlands demonstrating the Board's intentions to grow the business rapidly through acquisitions, alongside organic growth. As a result, Parkmead's reserve base has transformed in the last twelve months with the Group reporting a rapid growth in its oil and gas reserves to 25.1 million barrels of oil equivalent (mmboe) of 2P Reserves and 10.3mmboe of 2C Contingent Resources (note 1).

In line with our strategy, Parkmead's team has shown a strong appetite for value accretive transactions, at both asset and corporate level, as we look to add opportunities across the entire spectrum from exploration through to appraisal, development and production. Parkmead is pleased to have added assets at every stage of the lifecycle through the four transactions agreed in 2012, creating a high quality and diverse asset base. In particular, we are delighted to have signed, and subsequently completed in August 2012, a milestone transaction which adds production to the Group's portfolio within the first year of establishing the oil and gas team.

Acquisitions to date have focused on known opportunities in the Group's preferred area of Europe, and have ranged from stakes in oil and gas fields in the UKCS to a corporate transaction, acquiring DEO Petroleum plc, which completed in August 2012. We believe that the Group's high level of activity makes clear both the drive and ambition of our Company, and its staff, and creates a strong platform to become a key E&P player in the North Sea and beyond.

Parkmead is equally focused on building the business through organic growth, through licence applications, seismic and drilling, and via acquisition. During 2012, the Group made a major suite of applications for new UK licences in the UKCS 27th Licensing Round. I am very pleased to report that we have been successful in this licensing round, which was announced in October 2012, with the award of six licences comprising interests in a total of 25 offshore blocks and partial blocks across the Central North Sea, West of Scotland and West of Shetlands. In addition, Parkmead has also applied for certain licences in the 27th Round within the UKCS Southern Gas Basin. These are yet to be awarded by the UK Government due to their location close to, or in, certain Specific Areas of Conservation (SACs) and Special Protection Areas (SPAs). In recognition of the specific expertise of the Parkmead technical team, we will lead the work programme as operator of these newly awarded UK assets, working closely with our joint-venture partners. The Parkmead oil and gas team will continue to utilise its detailed technical knowledge of certain proven and frontier areas to identify and acquire assets, and participate in further UK and international licensing rounds.

In August 2012, the Group was delighted to announce excellent drilling results from the Platypus appraisal well in the UK Southern North Sea. This horizontal well was successfully completed and flowed at 27 million standard cubic feet of gas per day. As we move into 2013, the Group has planned an active seismic and drilling programme across our portfolio of assets.

Results

The Group's revenue for the year ending 30th June 2012 was £2.9m (2011: £3.7m). Administrative expenses were £5.5m (2011: £5.3m). The Group's operating loss for the year increased to £4.7m (2011: £3.6m). The loss after tax was £4.9m (2011: £3.6m). Total comprehensive loss for the year was £5.1m (2011: Income £35k).

The Group's total assets increased to £22.9m (2011: £12.3m), including available-for-sale financial assets of £6.5m (2011: £7.1m). Cash and cash equivalents increased to £7.7m (2011: £1.3m). The total current liabilities increased to £4.2m (2011: £1.1m) mainly due to increased trade and other payables of £4.1m (2011: £0.8m).

The Group net asset value increased to £12.3m (2011: £9.0m). There was a modest equity raising of £8.53m in March 2012, in line with the Group's authority to place 10% of equity for cash. This resulted in a total of 60,960,182 new ordinary shares being issued at a placing price of 14 pence (representing a discount of 8.5 per cent. to the Group's average closing mid market price over a 3 month period prior to the announcement of the placing, being 15.3 pence). In addition, some 4,857,142 new ordinary shares were issued on the exercise of options, bringing the Group's total ordinary shares in issue to 675,419,147 (2011: 609,601,823). Subsequent to the 30th June year-end, the Group completed the acquisition of fellow independent oil and gas company, DEO Petroleum plc. This acquisition was completed by way of a court sanctioned Scheme of Arrangement and offered DEO shareholders two Parkmead shares for every DEO share held. Following these 86,219,860 ordinary shares being admitted for trading, the Group's total ordinary shares in issue increased to 761,639,007.

As at 30 June 2012 Parkmead had drawn £2.9m of its £8.0m shareholder loan facility, which was raised in October 2011 in conjunction with the Group's first acquisition in the UK North Sea.

The Board is not recommending the payment of a dividend in 2012 (2011: nil).

Investments

The Group's principal investment is shares held in Faroe Petroleum plc ("Faroe") (LSE AIM: FPM.L.). As at 30 June 2012 the value of this investment was £6.5m (30 June 2011: £7.1m). The investment is held as available-for-sale and the decrease in its value due to share price movement has been reflected in equity.

Faroe's share price fell from 161p to 148p over the 12 months to 30 June 2012. Faroe reported a significant boost to production, oil and gas reserves and cash flow, together with continued exploration success. However, after an unsuccessful result at the company's first operated well in Norway, targeting the Clapton prospect, the share price dropped to 148p at the 30th June 2012. We remain of the view that Faroe has long-term upside with an ongoing drilling programme and a broad portfolio of exploration licences.

Outlook

The Directors of Parkmead are delighted with the significant progress the Group has made to date in building an exciting, new independent oil and gas company. With a balanced asset base and first production already achieved by the Group, we believe Parkmead has gained considerable momentum in the last twelve months. In addition, we are particularly encouraged by the substantial licence interests we were awarded, as operator, in the UKCS 27th Licensing Round.

Parkmead's wholly-owned subsidiary company, Aupec, continues to perform oil and gas industry benchmarking and petroleum economics for a wide range of energy companies and governments and the Directors believe that the Group benefits from the experience, technical capabilities and relationships that have been built up over 25 years of successful operations within Aupec.

As we look ahead into 2013 and beyond, the Group has a continued appetite for acquisitions and will look to add reserves through its active drilling programme. We believe the Group has created a strong platform to become a key E&P player in the North Sea and elsewhere in Europe. We will continue to update shareholders as we make further progress.

Tom Cross

Executive Chairman

15 November 2012

Notes:

1. Dr Colin Percival, Parkmead's Vice President Exploration and Production, who holds a First Class Honours Degree in Geology and a Ph.D in Sedimentology and has over 30 years' experience in the oil and gas industry, has reviewed and approved the technical information contained in this announcement. Reserves and contingent resources estimates are stated as at 31 October 2012 and includes deals signed during the year that subsequently completed post financial year end. Parkmead's evaluation of reserves and resources was prepared in accordance with the 2007 Petroleum Resources Management System prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers and reviewed and jointly sponsored by the World Petroleum Council, the American Association of Petroleum Geologists and the Society of Petroleum Evaluation Engineers.

Group income statement

For the year ended 30 June 2012

Group and company statement of comprehensive income

for the year ended 30 June 2012

Group and company statement of financial position

As at 30 June 2012

Group statement of changes in equity

For the year ended 30 June 2012

Company Statement of changes in equity

For the year ended 30 June 2012

Group and company statement of cashflows

For the year ended 30 June 2012

Notes to the financial information for the year ended 30 June 2012

1. Basis of preparation of the financial statements

The financial information set out in this announcement does not comprise the Group and Company's statutory accounts for the years ended 30 June 2012 or 30 June 2011.

The financial information has been extracted from the audited statutory accounts for the years ended 30 June 2012 and 30 June 2011. The auditors reported on those accounts; their reports were unqualified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006 and did not include references to any matters to which the auditors drew attention by way of emphasis.

The statutory accounts for the year ended 30 June 2011 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 June 2012 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The accounting policies are consistent with those applied in the preparation of the interim results for the period ended 31 December 2011 and the statutory accounts for the year ended 30 June 2011, which have been prepared in accordance with International Financial Reporting Standards ("IFRS").

2. Loss per share

Loss per share attributable to equity holders of the Company arise from continuing and discontinued operations as follows:

The calculations were based on the following information:

Loss per share is calculated by dividing the loss for the year by the weighted average number of ordinary shares outstanding during the year. Potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of ordinary shares for the purposes of continuing and total operations diluted earnings per share.

Diluted loss per share

Loss per share requires presentation of diluted loss per share when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. For a loss making company with outstanding share options, net loss per share would only be decreased by the exercise of share options.

3. Notes to the statement of cashflows

Reconciliation of operating loss to net cash flow from continuing operations

4. Prior year adjustment

Previously, the Group classified separately an equity reserve called employee benefit trust reserve which represented the debit arising from share-based accounting treatment of a loan from The Parkmead Group plc to the employee benefit trust established in 2006. The Group has reviewed the accounting treatment of this and has reclassified this reserve within the retained earnings reserve.

This has been classified as a prior year adjustment. Therefore 2010, 2011 and 2012 financial position has been corrected to reflect this change. There is no effect on the results of the Group or net asset position in each of these periods.

5. Approval of this preliminary announcement

The preliminary report, including the financial information contained therein, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the report in accordance with the AIM rules issued by the London Stock Exchange.

This announcement was approved by the Board of Directors on 15 November 2012.

6. Posting of annual report and accounts

Copies of the Annual Report and Accounts will be posted to shareholders shortly. The Annual Report and Accounts will be made available to download, along with a copy of this announcement, on the investor relations section of the Company's website www.parkmeadgroup.com