Parkmead Regulatory News (PMG)

28 March 2014

The Parkmead Group plc

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

Interim Results for the six-month period ended 31 December 2013

Parkmead, the UK and Netherlands focused oil and gas group, is pleased to report its interim results for the six-month period ended 31 December 2013.

HIGHLIGHTS

Major Growth in Production. Significant Progress with Developments

· Completed the acquisition of Lochard Energy Group PLC, providing Parkmead with a substantial increase in production, revenue and cash flow

· Trebling Parkmead's oil production from the Athena oil field, by acquiring a further 20% interest from EWE VERTRIEB GmbH

· Continued progress with the Greater Perth Area. Joint development study ongoing with Faroe Petroleum plc covering the Perth, Lowlander and Dolphin oil fields

· Platypus Gas Field Development Plan (FDP), preparation underway

· Following the completion of the EWE acquisition, Parkmead's net oil and gas production will have grown by over 700%

Successful Exploration and Appraisal Programme

· New gas discovery made in the UK Southern North Sea by the Pharos exploration well

· Awarded five more oil and gas blocks in the UKCS 27th Licensing Round, resulting in a total award of 30 blocks across the North Sea, West of Scotland and West of Shetlands

· Work being accelerated on the high-impact Skerryvore oil prospect in the UK Central North Sea, with an exploration well planned

· Preparing multiple applications for new licences in the UKCS 28th Licensing Round

Strong Financial Performance delivering Maiden Profit

· Revenue increased by 395% to £9.9 million (2012: £2.0 million)

· Maiden profit before tax of £3.1 million (2012: loss £2.8 million)

· Total assets grew by 104% to £81.5 million at 31 December 2013 (2012: £40.0 million)

· Cash balances of £12.7 million as at 31 December 2013

· Post period-end, raised approximately £40.0 million (US$66.0 million), in an oversubscribed equity issue, to accelerate opportunities to develop the existing asset base and explore valuable M&A opportunities

· In advanced discussion with lenders regarding debt facilities to increase financial firepower and further strengthen the balance sheet

Tom Cross, Executive Chairman of Parkmeadcommented:

"I am delighted to report excellent progress in the period to 31 December 2013. Parkmead has significantly increased its oil and gas production, delivering enhanced cash flow to the Group. This has been achieved through two key acquisitions of UK producing assets and Parkmead has generated a maiden profit before tax of £3.1 million.

Parkmead has also been driving ahead its exploration portfolio, with the successful gas discovery at Pharos and the award of five additional oil and gas blocks under the UK 27th Licensing Round. The discovery at Pharos could add further value to the Platypus gas field, strengthening Parkmead's position in the UK Southern Gas Basin. The award of additional acreage in the UK 27th Round, bringing the total blocks awarded to 30, capped an important year of exploration activity for the Group.

In February 2014, Parkmead completed a highly successful and oversubscribed placing, raising approximately US$66.0 million. The Company was pleased and encouraged by the support it received from a number of high quality institutional investors. This new financing has put Parkmead in a strong position to deliver additional growth."

For further information:

Review of Activities

This has been an excellent period for Parkmead. The Company has delivered considerable growth in its oil and gas operations, continuing to build a high quality portfolio of assets across the entire E&P life cycle in the UK and the Netherlands.

During the six months to 31 December 2013, the Group completed the acquisition of Lochard Energy Group PLC ("Lochard"), which provided Parkmead with a substantial increase in oil and gas production, revenues and cash flow. Lochard's main asset was a 10 per cent. working interest in the Athena oil field, now wholly owned by Parkmead. Production at Athena averaged approximately 9,000 barrels of oil per day in Q2 2013. The Athena Field, located in Licence P.1293 (Block 14/18b), is currently producing at reduced rates following some operational issues with the electric submersible pumps. There is a work programme planned for 2014 to increase production back up to normal levels through a workover of the P4 well. Locations are also being assessed for a potential new production well on the Athena oil field to extend the life of the field.

In December 2013, Parkmead announced the acquisition of a further 20 per cent. interest in the Athena oil field from EWE VERTRIEB GmbH ("EWE"). This acquisition trebles the Group's oil production from Athena, from the 10 per cent. working interest in the field that Parkmead already holds from the acquisition of Lochard. Completion of the EWE acquisition is expected to be announced following the standard partner and government approvals process, which is ongoing. The increased interest in the field will provide the Company with significant growth in production revenues and operating cash flows. The Board believes this to be a key transaction in Parkmead's continued growth trajectory, signalling the Group's intention to build production and drive cash flows. As Parkmead progresses through 2014, the Group will continue to explore acquisitions that add further reserves and production to the Group.

Also during this reporting period, Parkmead has been highly active across its exploration portfolio. A new gas discovery was made in the UK Southern North Sea by the Pharos exploration well. Gas was discovered in a Rotliegendes age sandstone reservoir. Extensive downhole data was gathered, including wireline logs, gas samples, reservoir pressures and substantial coring of the reservoir. Detailed evaluation of data sets from the discovery is being undertaken in order to determine the volume of gas initially in place. The discovery at Pharos is potentially valuable to Parkmead because, depending on the volume of gas in place, it could be jointly developed with the Platypus gas field, which is situated only 14km from the Pharos location. This would increase the value of the already economic development at Platypus. The Platypus gas field was discovered in 2010 and it was successfully appraised by Parkmead and its co-venturers with a horizontal well in 2012. Platypus was flow tested at a rate of 27 million cubic feet of gas per day (approximately 4,600 barrels of oil per day on an equivalent basis). Data obtained from the Pharos gas discovery will, when fully analysed, also provide a greater understanding of the remaining prospectivity in this area. This includes the Blackadder gas prospect in the adjacent block to the south of Pharos.

The Company added a further five oil and gas blocks to its exploration portfolio through the second tranche of awards under the UKCS 27th Licensing Round. This follows on from the six new licences, covering a total of 25 blocks, that Parkmead secured in the first tranche of awards under the 27th Licensing Round. These blocks cover opportunities across the Central North Sea, Southern North Sea, West of Scotland and West of Shetland areas. Parkmead's experienced geoscience team has already begun various work programmes across these licences, with seismic and detailed mapping work underway. Parkmead will continue to invest heavily in licensing round applications as a key element in the Group's strategy to build an attractive and balanced portfolio that offers considerable exploration upside. To this end, the Group is preparing applications for the forthcoming UKCS 28th Licensing Round, which are expected to be submitted in April 2014.

Financial Results

During the six month period to 31 December 2013 the Group generated revenue of £9.9 million, representing a significant increase of 395 per cent. from the revenues generated in the same period in 2012 of £2.0 million. Operating profit increased to £3.9 million (2012: loss £2.7 million), primarily due to oil production revenues from the Athena field. The Group generated profits for the first time, with profit before tax of £3.1 million (2012: loss £2.8 million).

Total assets increased considerably by 104 per cent. to £81.5 million at 31 December 2013 (£40.0 million at end 2012). Net assets rose by 155 per cent. to £55.9 million at 31 December 2013 (£21.9 million at end 2012).

Investments

The Group's largest investment is in Faroe Petroleum plc ("Faroe") (LSE AIM: FPM.L). As at 31 December 2013 this investment was carried at a value of £4.6 million. Faroe has continued to grow its oil and gas exploration and production operations.

Post Balance Sheet Events

A successful equity issue was completed in February 2014, providing finance for future growth of £40.0 million through an oversubscribed placing of 15,686,275 new Ordinary Shares at 255 pence per share.

The proceeds of the placing, when added to the existing resources available to the Group, will be used to finance the ongoing capital commitments of the Company and to explore further opportunities.

Outlook

Parkmead has delivered significant growth in its asset base in the six month period to 31 December 2013. This was achieved through two key acquisitions, successful exploration drilling at Pharos and new licence awards, all within its core areas of the UK North Sea and the Netherlands.

In particular, the Company was delighted to report its first oil revenues from production at the Athena field. As we look forward into 2014 and beyond, we will continue to keep shareholders informed of our progress across our exploration, appraisal, development and production activities. The Board of Directors is pleased with the Group's progress, and firmly believes that the recent acquisitions of the Athena field alongside the successful placing in February 2014 has put Parkmead in an excellent position to drive the business forward and to build upon the momentum already generated.

Tom Cross

Executive Chairman

28 March 2014

Notes:

1. Dr Colin Percival, Parkmead's Technical Director, who holds a First Class Honours Degree in Geology and a Ph.D in Sedimentology and has over 30 years of experience in the oil and gas industry, has reviewed and approved the technical information contained in this announcement. Reserves and contingent resource estimates are stated as at 31 December 2013 and these include 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.

Notes to the Interim financial statements

1 Accounting policies

Basis of preparation

The interim financial information in this report has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) as adopted by the European Union and IFRS Interpretations Committee (IFRIC) interpretations. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and IFRIC and there is an ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the Directors expect to be adopted by the European Union and applicable as at 30 June 2014.

The Group has chosen not to adopt IAS34 - Interim Financial Statements, in preparing these financial statements.

Non-statutory accounts

The financial information set out in this interim report does not constitute the Group's statutory accounts.

The financial information for the year ended 30 June 2013 has been extracted from the audited statutory accounts. The statutory accounts for the year ended 30 June 2013 have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, 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 auditor drew attention by way of emphasis.

The financial information for the 6 months ended 31 December 2013 and 31 December 2012 is unaudited.

2 Profit/(loss) per share

Profit/(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:

Notes to the Interim financial statements

Profit/(loss) per share is calculated by dividing the profit/loss for the period by the weighted average number of ordinary shares outstanding during the period.

On 16 December 2013, there was a Share Consolidation based on every 15 Existing Ordinary Shares being consolidated into 1 New Ordinary Share.

Following the Share Consolidation, Shareholders still hold the same proportion of the Company's ordinary share capital as before the Share Consolidation. Other than a change in nominal value, the New Ordinary Shares carry equivalent rights under the Articles of Association to the Existing Ordinary Shares.

The comparative weighted average number of shares in issue have been restated at 31 December 2012 and 30 June 2013 accordingly.

Diluted loss per share

Profit/(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 Business combinations

Acquisition of Lochard Energy Group PLC

On 26 July 2013, the Group acquired 100% of the issued share capital of Lochard Energy Group PLC ("Lochard"), a company listed on the AIM Market of the London Stock Exchange. Lochard is an independent oil and gas company with exploration and production assets in the UK.

Lochard's principal asset is its 10 per cent. interest in the producing Athena oil field. In addition, Lochard has interests in exploration licences which were awarded as part of the UKCS 26th Licensing round.

The enlarged group will increase the Group's production and therefore provide it with a significantly enhanced cash flow profile. The acquisition will create a stronger and more diverse portfolio of assets balanced across the UK and the Netherlands. The cash flow from Athena will assist the combined entity in pursuing further growth.

Additional information about the acquisition is available in the Rule 2.7 Announcement issued 23 May 2013 and approved by shareholders on 25 July 2013; this document is available on the Group's website (www.parkmeadgroup.com). The acquisition has been accounted for using the acquisition method of accounting.

Details of net assets acquired and goodwill are as follows:

* Following Share Consolidation on 16 December 2013, shares issued equivalent to 7,670,884 New Ordinary Shares of 1.5p

A gain of £5,003,464 as a result of a bargain purchase has been recognised within the statement of profit or loss. The transaction resulted in a gain because of the relative financial and management strengths of The Parkmead Group plc.

Notes to the Interim financial statements

As required under IFRS3, a provisional fair value review has been carried out at 31 December 2013. A final fair value review will be completed at 30 June 2014. The assets and liabilities arising from the acquisition are as follows:

Transaction costs of £333,614 relating to the acquisition of Lochard were recognised as an administrative expense in the income statement during the period.

4 Notes to the statement of cashflows

Reconciliation of operating profit/(loss) to net cash from continuing operations

5 Post period end date events

Placing

On 14 February 2014, The Parkmead Group plc issued 15,686,275 new Ordinary Shares being issued pursuant to the Placing announced on 28 January 2014. The Company raised £40.0 million (gross) through the placing at 255 pence per share.