San Leon Regulatory News (SLE)

8 July 2022

San Leon Energy plc

("San Leon" or the "Company")

Final results

San Leon, the independent oil and gas production, development and exploration company focused on Nigeria, is pleased to announce its audited final results for the year ended 31 December 2021. The full annual report for the year to 31 December 2021 is available on the Company's website (www.sanleonenergy.com) and will be posted to shareholders in the coming days.

Corporate and financial highlights

Corporate

• Negotiated and announced on 24 June 2021 the proposed Midwestern Reorganisation, which is described in full in the Company's Admission Document, which is being published later today.

• On 24 June 2021 announced the conditional purchase from Walstrand (Malta) Ltd of 1.323% of ELI shares for US$2 million, together with an option to purchase a further 4.302% in ELI for an additional US$6.5 million.

• On 7 July 2021 announced conditional payment waivers (subsequently extended) regarding the approximately US$99.3 million (par value) of payments due from Midwestern Leon Petroleum Limited ("MLPL") to San Leon during the second half of 2021, since the repayable amounts form part of the proposed Midwestern Reorganisation. Payment waivers remain in place at the date of this announcement pending completion of the transactions.

• In January 2022, the Company announced that some of its subsidiaries had successfully concluded their ongoing legal proceedings with TAQA Offshore BV ("TAQA") in relation to San Leon's legacy interests in two royalties on Block Q13A, which is located offshore the Netherlands (the "Amstel Oil Field"). Payments totaling more than €5.9 million for royalties receivable up to November 2021 including a payment in respect of its legal costs, have been received in 2022. From December 2021, the royalties will continue to be payable in accordance with the terms and conditions of the Royalty Agreements, and payments and are not expected to be material.

• On 15 February 2022, the Company announced a further loan of US$2 million to ELI, also enabling the Company to conditionally purchase a further 2% shareholding of ELI for a nominal sum.

• In February 2022, the Company completed its US$5.5 million investment in Decklar Petroleum Limited ("Decklar"), related to the Oza field onshore Nigeria, repayable to the Company as a loan through a cash sweep. The Company also holds 11% equity stake in Decklar.

• Board appointment process previously announced completed with appointment of John Brown as Independent Non-Executive Director and Chair of the Audit and Risk Committee. Alan Campbell resigned from the Board in 2021 as part of a board restructure. Lisa Mitchell left the Company as CFO and Executive Director in October 2021 and Julian Tedder was appointed as CFO and Executive Director in December 2021.

Financial

• Included within the basis of preparation note of the financial statements and Independent Auditor's report are details regarding material uncertainty related to going concern. This is uncertainty is mitigated by the transactions announced today. Cash and cash equivalents as at 31 December 2021 were US$7.6 million (includes US$6.8 million restricted and held in escrow for the Oza transaction) (31 December 2020: US$18.5 million including US$6.8 million restricted and held in escrow for the Oza transaction).

• In 2021, US$2.2 million (31 December 2020: US$46.5 million) in principal and interest payments has been received under the MLPL Loan Notes.

• Outstanding amounts due under the MLPL Loan Notes are now approximately US$105.6 million (par value), which are subject to current repayment waivers pending the completion of the proposed Midwestern Reorganisation, and would be extinguished as part of the consideration if the transaction were to complete.

Operational

An update on OML 18 activity during 2021 is provided below:

• Oil delivered to the Bonny terminal for sales was approximately 4,400 barrels of oil per day ("bopd") in 2021 (21,100 bopd in 2020) and has been affected by combined losses and downtime of approximately 79%. The 2021 figure has also been affected by OPEC oil production quota restrictions, and some Covid-related delays. Field operations to boost production were largely put on hold, pending the start-up of the ACOES barging system. Together, the losses, downtime, OPEC restrictions and Covid-related delays have caused the majority of the difference between gross production when there is minimal disruption to production, and oil is received at Bonny terminal for sales.

• Gas sales averaged 29.6 million standard cubic feet per day ("mmscf/d") in 2021 after downtime (32.7 mmscf/d in 2020).

• Production downtime of 9% in 2021 was caused by third party terminal and gathering system issues. This relates to days when oil production was entirely shut down at OML 18. Historical issues in the third-party export system are expected to be substantially resolved by the implementation of the new ACOES for the purpose of transporting, storing and evacuating crude oil from OML 18 export Pipeline. The pipeline will run from within the OML 18 acreage to a dedicated FSO vessel in the open sea, approximately 50 kilometres offshore. Barging of oil from OML 18 to the FSO is expected to commence in July 2022, with trials already having been completed. Expected timing for the completion of the pipeline component of ACOES is late 2022.

• Pipeline losses by the Bonny Terminal operator have increased markedly over the past year (31 December 2021: 70%; 31 December 2020: 28%), largely due to lower pipeline throughput as a result of OPEC quota restrictions and Covid-related issues. In the medium term, the ACOES is expected to reduce losses significantly.

• Eroton has taken all appropriate precautions for its operations and people, with regards to Covid-19.

· An update on ELI is as follows:

o  Whilst there have been some delays to ACOES principally due to Covid, barging operations from OML 18 to the ELI Akaso FSO are now expected by ELI to commence during July 2022.

o  ELI is in advanced negotiations with other third-party injectors for use of its pipeline and terminalling facilities.

o  Construction of the pipeline continues to progress and hook up with ELI Akaso is expected to take place in late 2022.

Outlook for 2022

• Fuller barging operations from OML 18 to the FSO to commence in July2022.

• Completion of the proposed transactions with Midwestern and ELI expected later in 2022.

• The commissioning of the ACOES pipeline.

• Restarting of field operations on OML 18.

• Export of oil from Oza.

• Continuing to position the Company for further transactions.

On 8 July 2022, the Company entered into the new facility for the purposes of funding its working capital requirements and for financing the Further ELI Investments, details of which can be found in the Admission Document. The new facility is for US$50 million.

Oisin Fanning, CEO of San Leon, Commented:

"The last year has been the most significant year in the Company's development. We embarked upon and announced today a transaction which we believe will create a significant West African oil and gas entity which is ideally placed to take advantage of the opportunities available to it and to deliver considerable future value to all our shareholders."

Chairman's Statement

Whilst the Covid-19 pandemic continued to provide industry challenges during 2021, the recovery in oil price during the year and since, has enabled the Company to approach its portfolio with increased confidence. As a result, San Leon has proposed a major scaling up of its interests in OML 18 and ELI.

The Company was proud to announce in June 2021 the proposed transaction to increase its position in OML 18 and ELI significantly, and today we will publish an Admission Document in this respect. I view the proposal as a milestone in San Leon's growth aspirations, and an integral part of our strategy.

The Proposed Transaction

San Leon is committed to the long-term development of its Nigerian assets, with a focus of delivering value to Shareholders. This is driven by its technical expertise and operational capabilities, secured by the close links it forges with governments, joint venture partners and the local communities in which it operates.

The MLPL Reorganisation and the ELI Reorganisation together with the Further ELI Investments would result in San Leon's initial indirect interest in OML 18 increasing from 10.58% to 44.1%, while the MLPL Loan Notes would fall away. In additional transactions, the Company's interest in ELI would increase to approximately 50%, as well as having approximately US$50 million of loan notes receivable from ELI. The transaction is also expected to have the following benefits:

• increasing the Company's economic interest in ELI will complement the Company's proposed 100% interest in MLPL, as the ACOES project is being constructed to provide a dedicated oil export route from OML 18 and therefore for the benefit of MLPL, including the expected reduction of pipeline losses and increasing the uptime of export;

• San Leon's larger presence by virtue of its activities, resources and commitments, will pave the way for the Company to become a significant market participant in Nigeria, thereby better positioning the Company to deliver value for shareholders; and

• increasing the Company's technical and management involvement in the OML 18 asset, serving to help optimise the development of the asset. This will be formalised through an Asset Management Agreement.

Each of these benefits will contribute to the Company's main objectives which are to:

• use the Company's interest in OML 18 as a platform to become a leading independent production and exploration company focused on Nigeria and West Africa - by securing and developing further high potential asset opportunities that yield value for shareholders;

• use the Company's technical and operational expertise in securing production and near-term operating cash flow which will yield value to shareholders whilst continuing to forge close links with governments, partners and the local communities that it operates in; and

• continue to position the Company for further transactions.

The Company's financial position also enabled it to increase its stake in ELI during 2021 and early 2022 to 13.323% with a loan note receivable of US$17 million (par value), and during 2021 and early 2022 to complete an investment of US$5.5 million in Decklar (related to the Oza field). The Company has an option to invest a further US$2.5 million in Decklar by the end of June 2022. Decklar performed a workover and well testing on the Oza-1 well during 2021, and results are discussed in more detail in the CEO's report.

Last year I anticipated that the new oil export system, ACOES, was expected to be operational during H2 2021. While the timing on this has slipped, I am pleased to report that barging operations to the FSO are expected by ELI to commence during the second half of 2022, and that ELI expects to have the pipeline completed to the FSO at the end of 2022.

As discussed in my statement last year, the issues with NCTL export system, Covid-19 delays, infield operational deferrals, and increased production downtime have continued to affect production during 2021 and have some natural delay in achieving future production increases from new well drilling. Alongside the revival in oil prices, and with ACOES becoming operational, I expect Eroton to start to examine restarting well operations with an aim to boosting production on what we consider to be a world-class asset.

West Africa, focusing on Nigeria, is where San Leon's activities and resources will continue to be concentrated, and we expect this focus to continue to deliver value for shareholders.

Our increased investment in ELI, and the further proposed increases, are expected to yield attractive returns to the Company from its loan plus equity components.

The Company still retains two non-Nigerian, non-core interests. These are the Durresi block offshore Albania, for which the Company is seeking to enter the Appraisal phase of the licence and a farm out is being sought, and the Company's Net Profit Interest ("NPI") in the Barryroe field, offshore Ireland, where the operator, Providence Resources plc, continues to work on a funding solution to progress development of the field.

The Company has nearly completed its exit from Poland, with the small amount of remaining activity being administrative. The Company continues to hold certain NPIs in relation to Polish licences.

Staff welfare is of utmost importance to us and as such at San Leon Energy plc we have also been working remotely whenever possible since March 2020 as previously mandated by the different governments in the countries in which we have a presence. All employees and consultants have continued to be actively engaged regardless of the home working conditions. The Company has now started to reduce the proportion of home working, in line with general industry practice.

As at 8 July 2022 San Leon had cash on hand of US$0.2 million. The Midwestern transactions will be transformational for the Company and are expected to be cash flow positive in the near term.

As part of the proposed transactions, the Loan Notes would no longer be in place, and the Company will instead utilise its significantly increased portfolio of other expected cash flow sources.

During 2021, the Company made two Board appointments.

During May, John Brown joined the Board on as an independent Non-Executive Director. Mr Brown has more than 20 years of international experience in oil and gas and related industries, including over nine years of experience with operations in West Africa. He is a Chartered Accountant (ICAS) and was Chief Financial Officer or Group Finance Director for numerous UK listed companies within the oil and gas sector including Gulf Marine Services plc, Bowleven plc and Pittencrieff Resources plc. Mr Brown chairs the audit and risk committee and is a member of the nomination and remuneration committees.

During December 2021 Julian Tedder was appointed as Chief Financial Officer and Executive Director of the Company. Julian is a Chartered Accountant and previously served as Chief Financial Officer of IGas Energy plc and General Manager, Finance of Tullow Oil plc, ad brings with him a wealth of finance and industry experience.

I am delighted to welcome both to the Company. I would also like to thank Lisa Mitchell, who left the Company as previous CFO, in November 2021, for all of her contributions. I am also grateful to Alan Campbell for all of his invaluable work as a Director of the Company since 2016, and who stepped down from the Board in May 2021. Alan has continued as Company Secretary and has remained a key part of the Company's commercial successes and business development.

In 2021, San Leon's Board continued to seek ways to improve its Environment, Social and Governance ("ESG") impact. Covid-19 increased the challenges in meeting objectives but the Company was still very proud to deliver on several initiatives during the course of 2021 in Nigeria including the provision of educational support for disadvantaged children, the building of two new schools in Kogi State, and the provision of water infrastructure to villages in Benue and Kogi States. This was in addition to our ongoing support of women-led small enterprises and the supply of much needed basic supplies such as food, clothing and medical care to some highly disadvantaged people.

As part of our ESG strategy, we will continue ongoing engagement with all stakeholders and governments to ensure that we operate our business in a way that is sustainable and benefits the local communities in which we have a presence.

With the improved oil price, the proposed substantial increase in its indirect equity stake in OML 18, the proposed further investments in ELI, and its position in Oza, we believe that San Leon is well placed to continue to realise value for shareholders from Nigeria. Our technical and management expertise in the industry, will be put to work more than ever in these assets. As a result of the near-term expected startup of barging as part of ACOES, and anticipated pipeline completion to ACOES at the end of this year, we anticipate short-term improvements in OML 18 sales.

Our strategy continues to include the delivery of sustainable long-term returns to shareholders. We aim to achieve this through a combination of returns to shareholders and also growth in our asset base.

I look forward with confidence to updating shareholders on the achievement of these aims.

Mutiu Sunmonu

Chairman

8 July 2022

Chief Executive's Statement

2021 heralded the announcement of the intended scaling up of the Company's operations in Nigeria. Macroeconomic factors eased during the year, paving the way for growth on OML 18.

San Leon has long believed in the ability for OML 18 to generate value for its shareholders, and 2021 saw the opportunity for the Company to position itself for a significant scaling up of its interests there. Indeed, the company is today publishing its Admission Document, relating to that proposed transaction. The Chairman's Statement outlines the benefits of the transaction as anticipated by the Company, and the impact this is expected by the Directors to have upon cash flow and growth.

Eroton had a necessarily quiet year, given the continued effects of the Covid-19 pandemic, and operationally the large losses of any oil export using the NCTL. Eroton has been awaiting the availability of the ACOES system, which it expects to significantly reduce the downtime and allocated production losses currently associated with the NCTL. In addition, it is anticipated that the ACOES project will greatly improve overall well uptime. ELI anticipates that the FSO will be officially commissioned and barging operations will begin from OML 18 to the FSO during July 2022, finally providing the new export route for much of OML 18's oil production. It is anticipated that the pipeline component of ACOES will be completed at the end of 2022.

Both gross production at the wellhead and sales oil volumes were lower than expected. This was due to downtime; allocated pipeline losses associated with the use of the NCTL; Covid-related operational delays; prudent reduced operational expenditure and capital expenditure spending as a result of lower oil price; and also, OPEC production quota restrictions. Gross oil production, taking out the effect of NCTL downtime, (but after reductions for OPEC quota production restrictions), was around 21,100 bopd. Sales oil, including the effects of downtime and allocated losses, and of OPEC quota production restrictions, was around 4,400 bopd.

The proposed transaction is expected by San Leon to enable it further to increase its involvement with the subsurface technical input into OML 18, and the Company would have a paid contract to do so. We continue to believe that OML 18 is a world class asset and one that we look forward to developing further with our partners.

Additions to our asset base

I am pleased that our Company was in a position to enhance its portfolio of assets within Nigeria during 2021, in addition to the proposed OML 18 transaction. We had already started to invest in ELI during 2020, and that was augmented with a further US$4 million of investment during 2021 and early 2022. As part of the proposed transaction, we also intend to invest another US$37.5 million to bring our equity holding to approximately 50%, and loan note receipts of US$50 million. I expect ELI to be a value-adding and cash-generative asset, both in the near term and for many years to come.

In February 2022, San Leon completed US$5.5 million of its proposed US$7.5 million investment into Decklar during 2021 and in the first months of 2022, given the 11% equity in Decklar, together with US$5.5 million of loan notes receivables. This transaction involves Decklar, as Risk Service Provider to the operator of the Oza field, performing workover and new well drilling to develop the reserves and contingent resources on what is a proven producing field with existing infrastructure. Under the terms of the financing, SLE have rights to a cash sweep until the loan coupon is repaid. During 2021, Decklar performed the anticipated workover on the Oza-1 well, and successfully flow tested all three target zones. The well has been configured to flow from the uppermost zone, and export of oil produced during the well testing recently began. The Company now has the option to invest a further US$2.5 million to increase its equity holding in Decklar to 15%, and to receive an additional US$2.5 million in loan note receivables with a cash sweep. The option to purchase an additional 15% equity has been relinquished.

Cashflow

The Company has a number of anticipated sources of cash flow, as it builds its portfolio in line with its stated strategy. As of 31 December 2021, cash receipts totaling US$198 million have come from the repayment of MLPL Loan Notes, including interest. The outstanding balance payable as of 24 June 2022 is US$105.6 million at par value (US$102.2 million under IFRS), which continues to accrue interest.

Final payment of the MLPL Loan Notes was anticipated by the end of 2021, however due to issues around Covid-19, volatility in the oil price and demand as well as short-term production issues on OML 18, the Company believes this date is unlikely to be met. The Company is still confident in receiving all repayments and late payment interest, however in line with our accounting policy we have recognised a credit impairment to reflect the uncertainty around timing of repayments. The anticipated transaction described in the Admission Document, would result in the ending of the existing MLPL Loan Notes. Future anticipated cash flow is from loan notes receipts from ELI, dividends from equity holdings in ELI, dividends from Eroton via MLPL (once OML 18 is generating sufficient free cash flow), loan repayments from Decklar (in relation to the Oza field), and equity income from Oza.

ESG

As discussed in the Chairman's statement ESG is an area of increasing importance. This is an area in which San Leon is committed to meeting high standards of ESG practices across all aspects of the business. The Company is committed to the countries in which it operates and is dedicated to promoting sustainable growth as well as providing support to local communities in Nigeria. The Company firmly believes that by providing the younger generation with the valuable skills and education needed to succeed, the whole country will benefit from growth and prosperity. In 2021 we continued to support health and education in the communities in which we operate and delivered many sustainable projects that have a direct and positive impact on the environment.

Dematerialisation of company shares by 1 January 2023

The company would like to remind shareholders that the impending EU wide dematerialisation of shares is an upcoming event, which will effectively mean, based on current expectations, that share certificates will no longer be accepted as prima facie evidence of ownership from 1 January 2023.

As noted in our circular dated 6 January 2021, pursuant to EU regulations requiring dematerialisation (which means that shares will be registered in book entry form, without share certificates), Irish registered listed public companies are required to convert all holdings to uncertificated form by January 2023 (new issues) and January 2025 (all other securities). However, it is currently expected that a legislative change will be implemented to allow for dematerialisation both in respect of existing shares and new issues from 1 January 2023.

As a consequence, the market is planning to replace its existing infrastructure (where certificated shares are used) by Registrars and other market stakeholders with a dematerialised model, where only book entry will be used. While there will be a cost to the Company, shareholders are not anticipated to be required to have to take any action, unless further legislation is enacted that requires such. The Company will inform shareholders when any legislation is enacted, which is expected in Q4 2022, and will inform shareholders if expectations change and they need to take any action.

Outlook

Recovery of the oil price during 2021 and into 2022 clearly assists the business case for the Company's assets and their continued development. The expected near-term startup of the barging component of the ACOES system is an important step in unlocking the value in OML 18, and we look forward to the pipeline portion of ACOES coming online following anticipated completion at the end of 2022. The proposed transaction is expected by the Company to yield material stakes in both OML 18 and ELI, enabling us to help carve out strategy for these important assets, which of course benefit from each other.

The Company has cash in hand as at 8 July 2022 of US$0.2 million, and anticipates near-term cash flow from ELI loan notes repayments and from its technical management contract with Eroton, while awaiting equity income from its asset portfolio. The Company continues to monitor the performance of OML 18 and its other assets, and is ready to pursue any appropriate opportunities that may arise in the current market.

I look forward to updating shareholders with news of the impact of the ACOES on OML 18, plans for operations on OML 18 and Oza, and how our various expected cash flow streams are performing. The Company is in a good position, with a variety of future cash streams, and together with its professional relationships and people, I believe is well-positioned to grow and add further value to shareholders. I expect to look back on the proposed transaction as being transformational for the Company.

Oisín Fanning

CEO

8 July 2022

Consolidated Income Statement

for the year ended 31 December 2021

The accompanying notes form an integral part of these financial statements.

Consolidated Statement ofOther Comprehensive Income

for the year ended 31 December 2021

The accompanying notes form an integral part of these financial statements.

Consolidated Statementof Changes in Equity

for the year ended 31 December 2021

The accompanying notes form an integral part of these financial statements.

The accompanying notes form an integral part of these financial statements.

Consolidated Statementof Financial Position

as at 31 December 2021

The accompanying notes form an integral part of these financial statements.

Oisín Fanning Julian Tedder

Director Director

8 July 2022

Consolidated Statementof Cash Flows

for the year ended 31 December 2021

The accompanying notes form an integral part of these financial statements.

Notes to the GROUP Financial Statements

for the year ended 31 December 2021

1. Accounting Policies

San Leon Energy plc ("the Company") is a company incorporated and domiciled in the Republic of Ireland. The Company's ordinary shares are admitted to trading on the AIM Market of the London Stock Exchange. The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the "Group"). The registered office address is 2 Shelbourne Buildings, Crampton Avenue, Shelbourne Road, Ballsbridge, Dublin 4.

Statement of compliance

As required by AIM rules and permitted by Company Law, the Group financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU. The IFRS adopted by the EU as applied by the Group in the preparation of these financial statements are those that were effective for accounting periods commencing on or before 1 January 2021 or were early adopted as indicated below.

New standards required by EU companies for the year ended 31 December 2021

The following new standards and amendments were adopted by the Group for the first time in the current financial reporting period.

New standards and interpretations effective that were adopted

The standards listed above, are effective from 1 January 2021 but they do not have a material effect on the Group's financial statements.

New standards and amendments issued by the IASB but not yet effective

There are a number of new standards, amendments to standards and interpretations that are not yet effective and have not been applied in preparing these consolidated financial statements. These new standards, amendments to standards and interpretations are either not expected to have a material impact on the Group financial statements or are still under assessment by the Group.

The principal new standards, amendments to standards and interpretations are as follows:

New standards that came into effect on 1 January 2022 will be applied in the year ending 31 December 2021 first reporting to include these will be for the period ending 30 June 2022. The Directors do not believe that any of these standards will have a significant impact on Group reporting.

Basis of preparation

The Group financial statements are prepared on the historical cost basis, except for financial assets (net profit interests, quoted shares and unquoted shares), which are carried at fair value, and equity settled share option awards and warrants which are measured at grant date fair value.

Going concern

The Directors have prepared a detailed cash flow forecast for the Group for the period from 1 June 2022 to 31 December 2023.

The principal assumptions underlying the cash flow forecast and the availability of finance to the Group are as follows:

• The proposed reorganisation to consolidate Midwestern Oil and Gas Company Limited's ("Midwestern") shareholdings in: i) the Company; and ii) Midwestern Leon Petroleum Limited ("MLPL") into a single shareholding in the Company (the "Potential Transaction") completes in the second half of 2022. The Potential Transaction also comprises, inter alia, a proposed consolidation of Midwestern's indirect debt and equity interests in Energy Link Infrastructure (Malta) Limited ("ELI") with those of the Company, as well as further new debt and new and existing equity investments to be made by San Leon in ELI ("Further ELI Investments");

• Eroton Exploration and Production Company Limited ("Eroton") acquires an additional 18% interest in OML 18 from two of the other partners in OML 18, thereby taking Eroton's interest in OML 18 to 45%. This is subject, inter alia, to: i) agreeing documentation; ii) finalising bank financing; and iii) receiving the relevant regulatory consents in Nigeria;

• A loan of US$50.0 million is secured to finance the Potential Transaction;

• Elimination of the MLPL loan notes on completion of the Potential Transaction;

• Under an Asset Management Agreement with Eroton, San Leon receives US$0.5 per month for technical and financial advisory services following completion of the Potential Transaction;

• Repayments from ELI of loan notes of US$37.6 million during 2022 and 2023;

• Repayment from Eroton of a debt from the provision of services under a technical services contract of US$3.0 million during 2022; and

• A further loan of US$2.5 million is given to Decklar Petroleum Limited in relation to its Oza investment as per the option agreement.

Due to the Potential Transaction not having completed at the date of the Annual Report there is an inherent material uncertainty that completion will not occur as anticipated.

The Group has modelled various other scenarios assuming the Potential Transaction does not complete and given the Group's well understood cost base, the principal uncertainty if the Potential Transaction does not complete relates to the quantum and timing of receipt of interest and capital repayments on the Loan Notes with MLPL, which would remain in place, and the loan Notes with ELI.

It was originally envisaged that the MLPL Loan Note payments due to the Group would be sourced by MLPL from the receipt of dividends through its indirect interest in Eroton via Martwestern. These dividends have not been received to date and consequently MLPL has entered into loan arrangements in order to be able to make Loan Note payments to the Company. In the absence of the dividend payments, MLPL will be reliant on further advances under the loan arrangement and in turn being able to make Loan Note payments to the Company. The Company has no obligation arising from the loan arrangements entered into by MLPL.

The loan repayments due from ELI were due to start in 2021 but have been delayed due to operational readiness of the FSO and ACOES project being delayed. The Directors have a reasonable expectation that ELI will be revenue generating imminently with the commencement of barging operations, and while loan repayments have been delayed, they should commence in the second half of 2022.

Due to the uncertainty on timing of future cashflows the MLPL and ELI loan notes have both been credit impaired.

In the ultimate downside scenario where no repayments are received from MLPL and ELI, the US$50.0 million loan secured by the Company to fund the Potential Transaction can be drawn to facilitate completion of the further ELI Investments, with the remaining balance being used for general corporate purposes. In this scenario the working capital requirements of the Group can be met for the 12-month period from the date of approval of the financial statements, although a reduction to administrative costs is required in 2023, which the Directors believe is achievable and within their control.

However, while the working capital requirements of the Group can be met for the 12-month period, the Directors believe that the continued viability of the Group and Company into the future is dependent on the completion of the Proposed Transaction. As such, the completion of the Proposed Transaction creates significant uncertainty upon the Group and Company's ability to continue as a going concern beyond the 12-month period. The Directors' have concluded that this represents a material uncertainty which may cast significant doubt upon the Group and Company's ability to continue as a going concern and that, therefore, the Group and Company may be unable to continue realising its assets and discharging its liabilities in the normal course of business.

Having taken all the above factors into account, the directors continue to believe it is appropriate to prepare

these financial statements on a going concern basis, noting the material uncertainty that exists on the completion of the Potential Transaction and its impact on the Company and Group's ability to continue as a going concern. The financial statements do not include any adjustments that would be necessary if the group were unable to continue as a going concern.

Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). These consolidated financial statements are presented in US Dollars (US$), which is the Group's presentational currency, rounded to the nearest thousand.

Use of estimates and judgements

The preparation of financial statements, in conformity with EU IFRS, requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. In particular, significant areas of estimation uncertainty and critical judgements used in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements include:

Judgements

Going concern (Note 1)

Classification of finance income (Note 7)

Impairment of investment in subsidiary (Note B)

Recoverability of equity accounted investments (Note 13)

Recoverability of financial assets (Note 15)

Estimates

Measurement of equity accounted investments (Note 13)

Measurement of financial assets (Note 15)

Measurement of share-based payments (Note 25)

Recognition of deferred tax asset for tax losses (Note 27)

Basis of consolidation

The financial information incorporates the financial information of the Group. Control is defined as when the Group is exposed to or has the rights to variable returns from its investment with the entity and has the ability to affect these returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date control commences until the date that control ceases. Where necessary, adjustments are made to the financial information of subsidiaries to bring their accounting policies into line with those used by other members of the Group. Intra-group balances and any unrealised gains and losses or income or expenses arising from intragroup transactions are eliminated in preparing the Group financial statements.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is defined as when the Group have the rights to variable returns from its investment with the entity and have the ability to affect these returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights that currently are substantive.

Acquisitions

The Group measures goodwill at the acquisition date as:

• the fair value of the consideration transferred; plus

• the recognised amount of any non-controlling interests in the acquiree; plus, if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less

• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

Intangible assets - exploration and evaluation assets

Expenditure incurred prior to obtaining the legal rights to explore an area is recognised in profit or loss as incurred. All other expenditure relating to licence acquisition, exploration, evaluation and appraisal of oil and gas interests, including an appropriate share of directly attributable overheads, is capitalised on a licence by licence basis.

Exploration and evaluation assets are carried at cost until the exploration phase is complete or commercial reserves have been discovered. The Group regularly review the carrying amount of exploration and evaluation assets for indicators of impairment and capitalised costs are written off where the carrying amount of assets may not be recoverable. Where commercial reserves have been established and development is approved by the Board, the relevant expenditure is transferred to oil and gas properties following assessment of impairment.

Impairment of non-financial assets

The carrying amounts of the Group's assets are reviewed at each reporting date and, if there is any indication that an asset may be impaired, its recoverable amount is estimated. The recoverable amount is the higher of its fair value less costs to sell and its value in use.

Estimates of impairment are limited to an assessment by the Directors of any events or changes in circumstance that would indicate that the carrying amount of the asset may not be recoverable.

Any impairment loss arising from the review is recognised in profit or loss to the extent the carrying amount of the asset exceeds its recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is provided at rates calculated to write off the cost less residual value of each asset over its expected useful life. The residual value is the estimated amount that would currently be obtained from disposal of the asset if the asset were already of the age and in the condition expected at the end of its useful life. The annual rate of depreciation for each class of depreciable asset is:

Office equipment 25% Straight line

Motor vehicles 20% Reducing balance

Plant and equipment 20% - 33% Straight line

Leased assets Shorter of the term of lease or useful life of the asset as defined under IFRS 16

Inventories

Inventories are valued at the lower of cost and net realisable value.

Joint ventures

The Group has also entered into a joint venture arrangement which is operated through a joint venture. The Group accounts for its interest in this entity on an equity basis, with Group share of profit or loss after tax recognised in the Income Statement and its share of Other Comprehensive Income ("OCI") of the joint venture recognised in OCI.

Financial assets and financial liabilities

i. Recognition and initial measurement

Financial assets are classified at initial recognition and subsequently measured at amortised cost, Fair Value through Other Comprehensive Income ("FVOCI") or Fair Value Through Profit or Loss ("FVTPL"). The classification of financial assets is determined by the contractual cash flows and where applicable the business model for managing the financial assets.

A financial asset or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue.

ii. Classification and subsequent measurement

Financial assets

On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI - debt investment; FVOCI - equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets.

A financial asset is measured at amortised cost if the objective of the business model is to hold the financial asset in order to collect contractual cash flows and the contractual terms give rise to cash flows that are solely payments of principal and interest. Subsequently the financial asset is measured using the effective interest method less any impairment. The amortised cost is reduced by impairment losses in accordance with Group policy set out below. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

The business model in which a financial asset is held is assessed at an individual asset level for assets that are individually material, and otherwise at a portfolio level. Financial assets that are held as part of a long-term strategic investment are considered within a business model to collect contractual cash flows.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment's fair value in OCI (FVOCI - equity investment). This election is made on an investment‑by‑investment basis. These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial liabilities

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held‑for‑trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

iii. Impairment (including receivables)

The Group recognises loss allowances for expected credit losses ("ECL's") on financial assets measured at amortised cost.

A provision for 12-month ECL is recognised in respect of low risk assets. A provision for the lifetime ECL is recognised in respect of higher risk assets that are not credit impaired. If an asset is credit impaired, the carrying amount of the asset is reduced by its lifetime ECL.

The 12-month ECL represents the weighted average of credit losses that result from default events on a financial instrument that are possible within the 12 months after the reporting date. This requires a number of outcomes to be considered, a probability assigned to each, and a resulting credit loss applied to each. ECLs are discounted at the effective interest rate of the financial asset.

12-month ECL is determined based on forward looking analysis where a range of outcomes have been considered taking into account the size and timing of the contractual cashflows, the risk of late payment and the risk of default leading to less than full recovery of the amounts due. Lifetime ECL is calculated the same way, but over the relevant period.

At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit‑impaired. A financial asset is 'credit‑impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. The Group considers a financial asset to be in default and presumed credit impaired when contractual payments are outstanding 90 days after their due date, unless there is reasonable information that amounts will be recovered; or when the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security including guarantees (if any is held).

The Group has determined that MLPL is likely to meet its credit obligations as evidenced by the preparation of a Competent Persons Report in relation to San Leon's interest in OML 18, however are uncertain of the timing of when these obligations will be met. The Group has therefore credit impaired the asset.

The Group has determined that ELI is likely to meet its credit obligations as evidenced by recent management information in relation to San Leon's interest in ELI.

Write-off

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due.

iv. Derecognition

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire.

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

On derecognition of a financial asset or financial liability, the difference between the carrying amount removed or extinguished and the consideration received or paid is recognised in profit or loss.

Decommissioning provision

A provision is made for decommissioning of oil and gas wells. The cost of decommissioning is determined through discounting the amounts expected to be payable to their present value at the date the provision is recognised and reassessed at each reporting date. This amount is regarded as part of the total investment to gain access to economic benefits and consequently capitalised as part of the cost of the asset and the liability is recognised in provisions. Such cost is depleted over the life of the asset on the basis of proven and probable reserves and charged to the Income Statement. The unwinding of the discount is reflected as a finance cost in the Income Statement over the life of the field or well.

Taxation

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the Consolidated Income Statement except to the extent that it relates to items recognised directly in Other Comprehensive Income or equity, in which case it is recognised in Other Comprehensive Income or equity.

i. Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty relates to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.

Current tax assets and liabilities are offset only if certain criteria are met.

ii. Deferred tax

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they are controlled and probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unrecognised deferred tax assets are reassessed as each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax assets and liabilities are offset only if certain criteria are met.

Foreign currencies

Transactions in foreign currencies are initially translated to the respective functional currencies of Group entities at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency at the exchange rates ruling at the reporting date with gains or losses recognised in profit or loss. Non-monetary items are translated using the exchange rates ruling as at the date of the initial transaction.

Foreign currency differences are generally recognised in profit or loss and presented within finance costs. However, foreign currency differences arising from the translation of the following items are recognised in OCI:

· an investment in equity securities designated as at FVOCI (except on impairment, in which case foreign currency differences that have been recognised in OCI are reclassified to profit or loss);

· a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; and

· qualifying cash flow hedges to the extent that the hedges are effective.

Foreign operations

The assets and liabilities of foreign operations are translated into US Dollars at the exchange rate at the reporting date and the income and expenses of foreign operations are translated at the actual exchange rates at the date of the transaction or at average exchange rates for the year where this approximates to the actual rate. Exchange differences arising on translation are recognised in Other Comprehensive Income and presented in the foreign currency translation reserve in equity. Details of exchange rates used are set out in Note 30.

Revenue recognition

For the year ended 31 December 2021 the Group used the five-step model as prescribed under IFRS 15 on the Group's revenue transactions. This included the identification of the contract, identification of the performance obligations under same, determination of the transaction price, allocation of the transaction price to performance obligations and recognition of revenue. The point of recognition arises when the Group satisfies a performance obligation by transferring control of promised drilling services and royalty income to the customer, which could occur over time.

Finance income and expenses

Interest income is accrued on a time basis by reference to the principal on deposit and the effective interest rate applicable.

The 'effective interest rate' is the rate that at initial recognition exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

the gross carrying amount of the financial asset; or

the amortised cost of the financial liability.

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit‑impaired) or to the amortised cost of the liability. However, for financial assets that have become credit‑impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset net of impairment provision. If the asset is no longer credit‑impaired, then the calculation of interest income reverts to the gross basis.

Finance expenses comprise interest or finance costs on borrowings and unwinding of any discount on provisions using the effective interest rate.

Share capital

Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity.

Share based payments

The Group has applied the requirements of IFRS 2 'share based payments'. The Group issues share options as an incentive to certain key management and staff (including Directors), which are classified as equity settled share based payment awards. The grant date fair value of share options granted to Directors and employees under the Group's share option scheme is recognised as an expense over the vesting period with a corresponding credit to the share-based payments reserve. The fair value is measured at grant date and spread over the period during which the awards vest.

The options issued by the Group are subject to both market-based and non-market based vesting conditions. Market conditions are included in the calculation of fair value at the date of the grant. Non-market vesting conditions are not taken into account when estimating the fair value of awards as at grant date; such conditions are taken into account through adjusting the number of the equity instruments that are expected to vest.

The proceeds received will be credited to share capital (nominal value) and share premium when options are converted into ordinary shares.

Where the terms of an equity-settled transaction are modified, an additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

Dividends

The Group has elected to classify cashflows from dividends paid as financing activities.

Earnings per share

The Group present basic and diluted earnings per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes, share options granted to employees and warrants.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand on demand.

Leases:

As a lessee

The Group recognises right-of-use assets representing its right to use the underlying assets and lease liabilities representing its obligation to make lease payments at the lease commencement date. The right-of-use assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or to restore the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

- Lease payments included in the measurement of the lease liability comprise the following:

- fixed payments, including in-substance fixed payments;

- variable lease payments that depend on an index or rate, initially measured using the index or rate as at the commencement date;

- amounts expected to be payable under a residual value guarantee; and

- the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group presents right-of-use assets that do not meet the definition of investment property in 'property, plant and equipment' and lease liabilities in 'loans and borrowings' in the Statement of Financial Position.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Segmental reporting

A segment is a distinguishable component of the Group that is engaged in business activities from which it may earn revenues and incur expenses which is subject to risks and rewards that are different from those of other segments and for which discrete financial information is available.

All operating segments and results are regularly reviewed by the Board of Directors to make decisions about resources to be allocated to each segment and to assess its performance.

Full details of the Group's operating segments all of which are involved in oil and gas exploration and production are set out in Note 2 to the financial statements.

Fair value movement

The Group has an established process with respect to the measurement of fair values. The finance team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified.

Significant valuation issues are reported to the Board.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

For further detail on assumptions made in measuring Level 3 fair values see the following notes:

• Note 15 Financial Assets

• Note 20 Derivative

Assets and liabilities measured at fair value

In accordance with IFRS 13, the Group discloses its assets and liabilities held at fair value after initial recognition in the following categories: FVOCI - equity instrument and FVTPL.

With the exception of shares held in quoted entities, which are classified as Level 1 items under the fair value hierarchy, all assets and liabilities held at fair value are measured on the basis of inputs classified as Level 3 under the fair value hierarchy on the basis that the inputs underpinning the valuations are not based on observable market data as defined in IFRS 13.

Where derivatives are traded either on exchanges or liquid over-the-counter markets, the Group uses the closing price at the reporting date. Normally, the derivatives entered into by the Group are not traded in active markets. The fair values of these contracts are estimated using a valuation technique that maximises the use of observable market inputs, e.g. market exchange and interest rates. All derivatives entered into by the Group are included in Level 3 and consist of share warrants issued.

2. Revenue and Segmental Information

Operating segment information is presented on the basis of the geographical areas as detailed below, which represent the financial basis by which the Group manages its operations. The Board of Directors, which has been recognised as the Chief Operating Decision Maker ("CODM"), regularly receive verbal or written reports at board meetings for each of the segments based on the below criteria which management consider to be appropriate in evaluating segment performance relative to other entities that operate in the industry.

Revenue and Segmental Information

Revenue relates to the provision of drilling services in Nigeria. It also relates to the settlement of the TAQA claim, please see Other income (Note 3).

3. Other income

(i) TAQA settlement

In December 2021, the Group successfully concluded their ongoing legal proceedings with TAQA Offshore B.V. ("TAQA") in relation to its legacy interests in two royalties on Block Q13A , which is located offshore the Netherlands (the "Amstel Oil Field"), including an Overriding Royalty Agreement entered into with Encore Oil as part of a sale and purchase agreement entered into in 2007 (the "Royalty Agreements").

TAQA had subsequently purchased the interest from Encore Oil. Production from the Amstel Field started in 2014 but no royalties had been received. The Royalty Agreements became the subject of separate legal proceedings in the Netherlands and the UK.

The royalties will continue to be payable in accordance with the terms and conditions of the Royalty Agreements. The Royalty Agreements represent legacy interests and any potential net future benefit to the Group going forward from the Amstel Oil Field on a monthly basis is not expected to be particularly material to San Leon.

The total TAQA settlement amounted to approximately US$6.8 million of which approximately US$2.7 million has been recognised as revenue in 2021 as this amount had not been previously provided for by the Company.

(ii) Other

Relates to the disposal of property, plant and equipment that had been fully impaired or depreciated to US$Nil in prior periods.

4. PROFIT / (LOSS) on disposal of subsidiaries

(i) Other

In 2021 the Group liquidated certain foreign operations that held non-core assets. The Group's investment in the assets held by the subsidiaries has been fully impaired in prior periods. The liquidation of the foreign operations has resulted in the realisation of cumulative foreign currency gains of US$16.6 million (2020: losses of US$1.0 million), that had previously been recognised in equity. The realisation of the cumulative foreign currency gains and losses do not impact the consolidated assets or liabilities.

5. Statutory information

During the year, the Group (including its overseas subsidiaries) obtained the following services from KPMG, the Group Auditor:

Auditor's remuneration

During the year, the Group (including its equity accounted investment) obtained the following audit services, excluding the Group Auditor, KPMG:

6. Finance expense

7. Finance income

All interest income is in respect of assets measured at amortised cost.

8. Expected credit losses

9. Personnel expenses

Number of employees

The average monthly number of employees (including the Directors) during the year was:

Employment costs (including Directors)

The Group contributes to a defined contribution pension scheme for certain Executive Directors and employees. The scheme is administered by trustees and is independent of the Group finances. Total contributions by the Group to the pension scheme, including contributions for Directors amounted to US$0.5 million (2020: US$0.2 million).

10. Income tax

The difference between the total tax shown above and the amount calculated by applying the applicable standard rate of Irish corporation tax to the loss before tax is as follows:

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Liabilities for uncertain tax treatments are recognised in accordance with IFRIC 23 and are measured using either the most likely amount method or the expected value method - whichever better predicts the resolution of the uncertainty.

11. PROFIT / (LOSS) per share

Basic profit / (loss) per share

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year as follows:

The weighted average number of shares in issue is calculated as follows:

Diluted profit / (loss) per share

Diluted loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding after adjustment for effects of all dilutive potential ordinary shares as follows:

The diluted weighted average number of shares in issue is calculated as follows:

The number of options which are anti-dilutive and have therefore not been included in the above calculations is 21,161,627 (2020: 41,221,627).

12. Intangible assets

(i) The following geographical exploration areas in the Group were impaired / written off during the year:

(ii) This is the net amount incurred by San Leon Energy and excludes amounts attributable to joint operating partners of US$Nil in 2021 (2020: US$Nil).

The Directors have considered the carrying value at 31 December 2021 of capitalised costs in respect of its exploration and evaluation assets. These assets have been assessed for impairment indicators and in particular with regard to remaining licence terms, likelihood of licence renewal, likelihood of further expenditures and on-going appraisals for each area. Based on internal assessments from the latest information available, the Directors fully impaired the exploration and evaluation assets in 2021.

13. Equity accounted investments

The Group's only joint venture entities and associates at 31 December 2021 were as follows:

2021

A summary of the financial information of the equity investments is detailed below.

(i) Midwestern Leon Petroleum Limited

During 2016 the Company acquired a 40% non-controlling interest in MLPL as part of the OML 18 transaction. Full details of the OML 18 transaction are set out in Note 15(i). The movement during 2021 reflects a share of the profit of MLPL being administrative costs of US$6.4 million (2020: US$9.7 million), other income of US$0.2 million (2020: US$Nil), net finance income of US$8.0 million (2020: US$3.3 million), profit on investment of US$44.0 million (2020: US$12.2 million loss), net profits on financial assets of US$1.2 million (2020: US$0.3 million losses) and a tax charge of US$10.0 million (2020: US$7.9 million).

The above interest is accounted for as an equity accounted investment as San Leon does not have control over the entity, which is governed under a Joint Venture Agreement requiring the approval of both parties to the Joint Venture Agreement in respect of all operating decisions.

The Group identified potential impairment indicators, being that MLPL is yet to receive a dividend from Eroton, US$2.9 million of a US$10.0 million repayment due on 6 October 2020 was still outstanding at year end, and MLPL has entered into a loan to be able to make Loan Note repayments to the Group. To test for a potential impairment the carrying value of the equity interest in MLPL was compared against the fair value less cost of sale. This was estimated using a discounted cashflow model of the expected future cashflows from MLPL's share of the underlying OML 18 asset. Future cashflows of OML 18 were estimated using the following price assumptions of US$69/bbl in 2023 and a subsequent long term price of US$66/bbl escalated at 2% annually, with the cashflows discounted using a post-tax discount rate of 10%. Assumptions involved in the impairment assessment include estimates of commercial reserves, production rates, future oil prices, discount rates and operating and capital expenditure profiles, all of which are inherently uncertain. This analysis identified that the carrying value of the equity interest in MLPL is not impaired.

If the recoverable amount was estimated taking into account a reduction in the oil price of 30% over the same period and an increase in the discount rate to 25%, then the carrying value of the equity interest in MLPL would still not be impaired.

The Directors recognise that the future realisation of the equity accounted investment is dependent on future successful exploration and appraisal activities and subsequent production of oil and gas reserves.

(ii) Energy Link Infrastructure (Malta) Limited

In August 2020 the Company acquired a 10% non-controlling interest in Energy Link Infrastructure (Malta) Limited (See Note 15(ii)). The movement during 2021 reflects a share of the loss of ELI being sales income of US$1.4 million (2020: US$5.7 million), other income of US$0.1 million (2020: US$0.1 million), cost of sales of US$7.4 million (2020: US$4.9 million) and operating expenses including administrative costs of US$3.2 million (2020: US$3.7 million).

San Leon does not have control over the entity, however it has been determined to have significant influence. On this basis, the above interest is recognised as an equity accounted investment. Significant influence has been determined based on the Company having 10% of voting rights, a board position and a Shareholder Agreement requiring a majority, and in some instances a super majority (meaning 70% of votes are required to pass a resolution), to approve all operating decisions.

Under the terms of ELI's senior debt facility, the lender has a charge over all of the company's assets and, as further security, each shareholder (including San Leon Energy) has pledged their shares to the lender. The terms of the pledge are that the shares cannot be transferred or otherwise utilised without the lender's consent.

The Directors recognise that the future realisation of the equity accounted investment is dependent on completion of the pipeline and subsequent throughput of oil from various customers.

14. Property, plant and equipment