SEA.L Regulatory News (SEA)

28 September 2012

SeaEnergy PLC

("SeaEnergy" or the "Company")

2012 Interim Results

SeaEnergy (LSE: "SEA"), an innovative energy services group, today announces half year results for the six months ended 30 June, 2012.

Highlights:

Operational

·; Acquisition of Return to Scene Limited ("R2S") completed in August 2012

·; Key appointments of Director of Operations and Head of Project Delivery

·; Consultancy business launched

·; Receipt of pre-tender Request for Information ("RFI") for offshore wind farm O&M vessel

Financial

·; Strong financial position with no debt and cash on the balance sheet

·; £7 million of cash returned in July 2012 to participating shareholders through Tender Offer

·; Group cash balance at 30 June 2012 of £19.0 million (H1 2011 £27.0 million)

·; Loss from continuing operations after tax of £1.7 million for the first six months of 2012 (H1 2011 loss of £4.4 million)

·; Loss per share (basic) 2.53 pence (2011: profit per share 39.48 pence)

·; Loss per share from continuing operations (basic) 2.53 pence (2011: loss per share 5.99 pence)

Commenting on today's announcement David Sigsworth, Chairman, said:

"The first half of 2012 has seen the business build on some excellent foundations. With the new strategy in place the business has grown and we are now in a strong position for the future. We were particularly pleased to be able to return a substantial amount of cash to participating shareholders following the Tender Offer.

The business has developed its capabilities as an energy services company through the acquisition of R2S, the launch of a consultancy business, increased interest in our offshore wind farm O&M vessel and has strengthened the senior executive team. With all these in place SeaEnergy is clearly delivering on its defined strategy and we look forward to announcing further growth in the months to come."

For further information contact:

www.seaenergy-plc.com

www.r2s.co.uk

www.lansdowneoilandgas.com

SeaEnergy PLC

Interim Results for the six months ended 30 June 2012

Chairman's Statement

Dear Shareholder,

In the Annual Report for 2011, the Chief Executive and I described in some detail the changes made to the strategic direction and governance of the Company. In this Interim Report, for the period to 30th June 2012, we are very pleased to be able to inform you of a number of significant steps in the implementation of this new strategy.

Tender Offer

First of all, we are pleased that the Tender Offer successfully returned nearly £7 million of cash to participating shareholders. Earlier this year, we indicated our intention to make a significant distribution and the method adopted, after reviewing the options, allowed shareholders the alternative of participating to receive cash or abstaining to see their percentage interest in the Company increase.

 The Strategy

The operating strategy we described in the Annual Report involves three strands: the acquisition of innovative, growing and complementary businesses, the development of a consulting practice delivering value from our established reputation as "thought leaders", and the operation of offshore wind farm Operations and Maintenance ("O&M") support vessels and provision of related services. We have made significant progress on all of these fronts as described in more detail below.

In addition, our distribution strategy is to divest legacy assets over time to allow shareholders to benefit directly from the realisable value.

Acquisitions

On 24th August 2012, we announced the acquisition of Return to Scene Limited ("R2S"). R2S is an Aberdeen-based company which employs some 25 people. Over the past three years, the company has grown rapidly by deploying its unique and innovative Visual Asset Management ("VAM") software and service to multi-national oil companies in the UK and around the world.

The VAM technology uses 360 degree spherical photographs taken by R2S operators on clients' locations, including oil and gas platforms and vessels. These photographs are used as the basis for three-dimensional virtual models of client sites, and data can then be embedded, indexed and managed within these models. This allows the client to achieve very significant improvements in the management of operations and maintenance information, which in turn can lead to improved uptime, lower costs and safer operations. SeaEnergy believes that this service and technology can be applied in the renewables sector, particularly in offshore wind, and also that it complements SeaEnergy's existing expertise in offshore wind farm operations and maintenance and in asset integrity for all offshore asset classes.

In recent years, R2S has grown turnover and moved into profitability developing a blue chip client list, including BP, BG Group, Chevron, Centrica, Total, Taqa and Technip. As part of the SeaEnergy Group, R2S will be able to increase its capability and market reach far faster than it could by itself. We plan to drive growth further and faster, by increasing levels of activity in the UK, by internationalisation with the existing blue chip clients and by broadening the services offered. In addition, we will capture the strong synergies between R2S and other Group activities.

R2S's positive cashflow will make an immediate contribution to offsetting group costs and will allow the Group to move into profit in the near term as that business expands.

Consulting

As we announced on 25 September 2012, SeaEnergy has recruited Donald Brown as Head of Project Delivery, to lead our activities in this area. Donald has joined SeaEnergy after 22 years at Det Norske Veritas ("DNV"), the leading international classification society and independent consulting organisation, where he was involved in renewables, marine and oil & gas. His extensive experience will enhance and accelerate SeaEnergy's capacity and reputation for thought leadership and innovative problem solving for clients across the energy sector. He has already secured the first contracts for SeaEnergy's consulting activities.

Over the coming months, the Group will be securing additional consulting resources to develop this aspect of the business. We expect initially to focus our strategic consulting in the areas of operations, maintenance and asset integrity strategy management, before broadening the services further.

We have already identified synergies between the consulting activities, R2S's Visual Asset Management and the operation and maintenance of offshore wind farms, and will begin to capture these over the coming months.

Offshore wind farm O&M vessels

The market for vessels to provide accommodation and access for technicians working on offshore wind farms continues to develop, with strong and specific expressions of interest received from both wind turbine manufacturers and wind farm developers. Over the past weeks, SeaEnergy has received a formal pre-tender Request for Information ("RFI") from a turbine manufacturer for a project and notification of another RFI to be issued imminently, as well as enquiries from two others. We are also responding to a request for a full logistics scope, including vessels, logistics support, and O&M strategy from another turbine manufacturer and have other enquiries pending. We are very encouraged that the SeaEnergy O&M solution is attracting significant attention from a number of interested parties and we believe that we are world leaders in defining the industry standard in this sector. We are currently compiling priced proposals including detailed commercial terms in response to the formal RFI, which we expect to lead to a full tender over the coming months.

SeaEnergy is now in advanced discussions with a major vessel owner and operator to finalise the scope of a Cooperation Agreement that will strengthen our offering in this area, combining the financial and operational capacity of our partner with SeaEnergy's detailed designs, strategies and technical understanding of the requirements of offshore wind farm operators.

Legacy assets

It remains our plan to realise the value of our legacy oil & gas assets over time and, unless compelling investment opportunities exist within the Group, to return a proportion of that realised value to shareholders. We note that Lansdowne Oil & Gas plc successfully raised £10 million in the markets earlier this year, and as a result, our holding has reduced from approximately 25% to just over 21%. The current value of this stake is £17 million per the closing mid market price quote on AIM on 27 September 2012 and has a historic cost net book value of £4.3 million. The appointment of John Aldersey-Williams to Lansdowne's Board, where his experience in generating and realising value from exploration assets will support Lansdowne's current strategy, demonstrates the importance SeaEnergy attributes to maximising the value of these investments.

Building the Team

The recent appointments of Mike Comerford as Director of Operations and Donald Brown as Head of Project Delivery have strengthened the management team.

Outlook

SeaEnergy has started to implement a coherent and deliverable business strategy, and has taken the first significant steps to generating sustainable shareholder value. Two out of the three strands of the business are now in full operation: R2S is already contributing revenues and profits to the Group and we are working to identify and capture the synergies which arise through the integration of R2S; the consulting activities are also already generating cashflow, and we are identifying ways to generate benefit for other parts of the Group. Our participation in tenders in the coming months for offshore wind farm O&M vessels reflects our acknowledged expertise and thought leadership in this market.

We believe that SeaEnergy's strategy can deliver sustainable growth in shareholder value through further development of trading activities and the return over time of a significant proportion of proceeds from legacy assets to shareholders.

Financial review

Operating expenses increased from £1.5 million in the prior period to £1.8 million in the current period. Net finance income was £0.2 million (6 months to 30 June 2011; income of £0.1 million). Share of associates' results, and other related movements, decreased from a gain of £0.3 million to a loss of £0.1 million. Loss from continuing operations was £1.7 million (6 months to 30 June 2011: £1.1 million). Profit from discontinued operations was £nil (6 months to 30 June 2011: gain 28.1 million). The Group recorded a loss after tax of £1.7 million for the first six months of 2012 compared to a profit of £26.7 million for the first six months of 2011.

Group cash balances at 30 June 2012 were £19.0 million (30 June 2011: £27.0 million).

Cash outflows from operating activities totalled £5.3 million (6 months to 30 June 2011: £2.3 million). The increase being largely explained by the payment of contractual bonuses associated with the disposal of SERL and associated employer's national insurance totalling £3.3 million.

Cash inflows from investing activities totalled £2.4 million (6 months to 30 June 2011: £31.5 million), including £2.2 million from the disposal of SERL (6 months to 30 June 2011: £32.3 million). A further amount of £0.8 million remains due on the disposal of SERL and is the subject of a warranty claim which is in dispute between the Company and the purchasers of SERL.

Cash outflows from financing activities totalled £6,000 (6 months to 30 June 2011: £2.3 million) relating entirely to interest. The prior period figure included proceeds from derivatives £0.5 million, proceeds from borrowings £1.3 million, repayment of borrowings of £3.9 million and interest paid of £75,000.

Total equity attributable to the equity holders of the Company has decreased by £2.5 million from £28.5 million at 30 June 2011 to £26.0 million as at 30 June 2012. The decrease arises from losses of £2.8 million and other movements on retained earnings of £0.3 million.

David Sigsworth

Chairman

Consolidated Interim Balance Sheet

Consolidated Interim Statement of Comprehensive Income

Consolidated Interim Statement of Cash Flows

Consolidated Statement of Changes in Equity

Notes to the Interim Statement

1. Basis of Presentation

Accounting Policies

The interim financial information for the six months ended 30 June 2012 has been prepared on the basis of the accounting policies which will be adopted in the 2012 Annual Report and Accounts, and IAS 34, "Interim Financial Reporting" as adopted by the European Union.

The interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The results for the six months to 30 June 2012 and the comparative results for six months to 30 June 2011 are unaudited. The comparative figures for the year ended 31 December 2011 do not constitute the statutory financial statements for that year. The interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2011, which have been prepared in accordance with IFRSs as adopted by the European Union. Those financial statements have been delivered to the Registrar of Companies and include the auditor's report which was unqualified and did not contain a statement under Section 498 of the Companies Act 2006.

Going Concern

The Directors have prepared the interim financial information on the going concern basis which assumes that the Group and Company and its subsidiaries will continue in operational existence for the foreseeable future.

Principal Risks and Uncertainties

The management of the business and the execution of the Group's strategy are subject to a number of risks. Risks are reviewed by the Board and appropriate processes put in place to monitor and mitigate them. If more than one event occurs, it is possible that the overall effect of such events would compound the possible adverse effects on the Group. Further details of the Group's risk profile analysis can be found on pages 16 to 18 of our Annual Report for 31 December 2011, available from the website: www.seaenergy-plc.com. The receipt of the proceeds from the sale of SERL has significantly improved the Group's funding position. With the exception of funding, there has been no change in the risk profile since the Annual Report.

2. Discontinued Operations

(a) SeaEnergy Renewables Limited

On 29 June 2011, the Company sold its 80.13% interest in SeaEnergy Renewables Limited ("SERL") in return for a cash consideration of £38.6 million. After transaction costs the Group recorded a gain on disposal of £32.8 million. As a result of this gain the Group reported a substantial profit for the period to 30 June 2011. Contractual bonuses, including employer's National Insurance, payable to the Executive Directors, on the after tax results of the Group were provided for totalling £3.3 million. Of the total cash consideration £3.0 million was retained by the purchaser. Of this amount £2.15 million was received in June 2012 and the balance of £0.85 million is the subject of a warranty claim in dispute between the Company and the purchaser.

(b) Schlumberger Debt

On 18 July 2011 the Company agreed with Schlumberger to settle a debt by cash payment of £950,000. The interest accrued on the debt for the six months to 30 June 2011, amounting to £15,000 was classified within discontinued operations.

3. (Loss) / Earnings per Share

Earnings / (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.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume

conversion of all dilutive potential ordinary shares. At the reporting date the Company had one class of potential ordinary shares; share options. As a loss was recorded in the current period, the issue of potential ordinary shares would have been anti-dilutive.

In the prior period, based on the number of shares required to settle the debt and the interest expense accrued in the year, the debt deferral agreement was considered dilutive. Only share options that were exercisable at the reporting date were potential ordinary shares. The lowest exercise price of exercisable share options was 34 pence per share. This was above the average market price of the shares in issue for the prior period.

4. Trade and Other Payables

* Other payables includes an amount of £1.3 million as at 30 June 2011 due to Schlumberger Offshore Services Limited, which had the right to have the debt settled through the issue of new shares in the Company. The debt was settled for £0.95 million in cash in July 2011.

5. Reconciliation of (Loss) / Profit for the Period to Net Cash Used in Operating Activities

6. Related Party Transactions

(a) Directors

Prior to his appointment as Chief Executive Officer on 23 February 2012, J H Aldersey-Williams undertook consultancy in addition to his role as a Non-Executive Director. The fees for consultancy from 1 January 2012 to 23 February 2012, included in the results from 1 January 2012 to 30 June 2012, totalled £34,000 (6 months to 30 June 2011: £55,000).

In addition to his role as a Non-Executive Director, D K Laing is a partner in Ledingham Chalmers, legal advisers to the Company. From 1 January 2012 to 30 June 2012 the Company incurred legal fees of £15,000 (6 months to 30 June 2011 £140,000) for services provided by Ledingham Chalmers.

 (b) Associates

During the period to 30 June 2012 the Group made payments for administrative expenses on behalf of its associate company Mesopotamia Petroleum Company Limited ("MPC"). The balance owed by MPC to the Group as at 30 June 2012 is £378,000 (30 June 2011: £315,000). In January 2011 the Company, along with all other MPC creditors, agreed to defer the amount owed by MPC until January 2013. It is unsecured, no interest is charged and no guarantee has been given. The Company has made full provision against this debt.

During the period to 30 June 2012 the Group made payments for administrative expenses on behalf of its associate company Lansdowne Oil & Gas plc. The balance owed by Lansdowne to the Group as at 30 June 2012 is £47,000 (30 June 2011: £4,000).

7. Post Balance Sheet Events

(a)Tender Offer

On 26 July 2012 the Company confirmed that the Tender Offer announced by the Company on 6 July 2012 had been completed. Under the terms of the Tender Offer, Investec Bank plc purchased 19,197,345 Ordinary Shares at a price of 36 pence per share. Such shares were subsequently acquired from Investec Bank plc by the Company under the terms of the Option Agreement at a price of 36 pence per share. The purchased shares have been cancelled by the Company. Following the above transaction, the Company's issued share capital consisted of 49,913,445 Ordinary Shares, all of which carry voting rights. The Company does not hold any shares in treasury.

(b) Implementation of Long Term Incentive Plan ("LTIP")

On 27 July 2012 the Company implemented a Long Term Incentive Plan ("LTIP"). The LTIP takes the form of joint ownership of (in aggregate) 5,545,938 new Ordinary Shares, representing 10 per cent. of the Company's enlarged issued share capital following the Tender Offer and the implementation of the LTIP. The participating executives and the Company's Employee Benefit Trust ("EBT") will own such shares ("Incentive Shares") jointly. The Company's Remuneration Committee approved the issue of Incentive Shares. The new ordinary shares rank pari passu with the Company's existing issued ordinary shares and dealings in the new ordinary shares commenced on 2 August 2012. Following the cancellation of the Tender Offer shares and admission of the Incentive Shares, the Company's issued share capital consists of 55,459,383 Ordinary Shares, all of which carry voting rights.

(c) Acquisition of Return to Scene Limited ("R2S")

On 23 August, 2012 the Company acquired the entire issued share capital of R2S for an initial cash consideration of £5.0 million. A further cash payment of £0.5 million will be due to the vendors in March 2013 subject to revenue targets for the period ending on 28 February 2013 being met. Additional earn-out consideration of up to a maximum of £4.6 million may become payable in March 2014 subject to the achievement by R2S of certain profit targets (the "Earn-out Consideration"). For the maximum Earn-out Consideration of £4.6 million to become payable R2S would have to report annual earnings before interest, tax, depreciation, and amortisation ("EBITDA") in excess of £2.5 million. The Earn-out Consideration can be settled through the issue of shares in SeaEnergy, subject to certain restrictions, at the sole election of SeaEnergy.

8. Contingent Liability

Under the terms of a Joint Venture ("JV") agreement, dated 26 February 2009, between the Iraqi Drilling Company ("IDC") and the Company's Associate, Mesopotamia Petroleum Company ("MPC"), there was a requirement on MPC to confirm its share of the initial joint venture funding by an agreed date. Failure to do so may have required MPC to pay a penalty of US$2,205,000. After the confirmation deadline had passed IDC unilaterally terminated the JV in July 2009. The MPC Board believe that they are entitled to an extension of the funding confirmation date under the JV. The Company and another MPC shareholder, and an associate of that shareholder, jointly and severally guaranteed the penalty amount.

In October 2011 IDC commenced an action against MPC in the Specialised Commercial Court in Baghdad claiming payment of the penalty sum. MPC has responded on the basis that the JV agreement provides for arbitration of all JV disputes by international arbitration in Cairo. In August 2012 the Court ruled against MPC and upheld the first decision that MPC is liable to pay a penalty of US$2,205,000. The Directors of MPC are reviewing the Court's latest decision and considering, with their legal advisers, the actions available to MPC.

9. Copies of the Interim Report

Copies of the interim report can be obtained from the Company Secretary, SeaEnergy PLC, Britannia House, Endeavour Drive, Arnhall Business Park, Westhill, Aberdeenshire, AB32 6UF and from the Company's website www.seaenergy-plc.com.