Sirius Pet Regulatory News (SRSP)

29 June 2012

Sirius Petroleum Plc

("Sirius" or "the Company")

Annual Results for the Year ended 31 December 2011

Sirius Petroleum (AIM:SRSP), the investing company focussed on oil and gas exploration and development opportunities in Nigeria, announces its results for the year ended 31 December 2011.

Update on Recent Developments

As announced on 21 June 2012, Sirius has entered into a binding pre-farm-in agreement in respect of an Oil Block (the "Block") located in the offshore Niger Delta Basin (the "Agreement"). Existing 2D seismic and an existing third party expert report indicates in excess of 1 billion barrels of prospective resources in the Block. In accordance with the terms of the Agreement, which at this stage is subject to a confidentiality clause with the vendor, Sirius has been granted exclusivity during which it will engage an appropriately qualified expert to complete a Competent Person's Report ("CPR") to further assess the prospective resource, which will form an important element of the Company's decision-making process with regard to entering into a definitive farm-in agreement.

Summary of the Block

·; Located offshore Nigeria, in shallow waters with depths between 50-100m and within a highly prospective zone. This is an area associated with maximum deltaic progradation and sedimentation, evident in the maximum seaward growth of the delta within this region.

·; Seismic data show the Block to be dissected by several synthetic and antithetic faults, some of which are associated with structural closures that could be potential prospects for hydrocarbon accumulations.

In accordance with the terms of the pre-farm-in agreement, on entering into the binding farm-in agreement, Sirius will be entitled to a minimum 25 per cent. economic interest in the Block. Sirius will provide 50 per cent. of the funds required to finance an Initial Work Programme (the "IWP"), with the partners contributing the balance of funding. There is a preferential cash flow of 80% to recover this cost, with the balance to be shared according to the economic interest. The IWP will consist of shooting further 2D and 3D seismic to identify drillable prospects in the Block. In consideration of entering into the farm-in agreement, Sirius has agreed to pay US$3.5m in aggregate to its partners in the Block.

Furthermore, through entry into the Block, Sirius will be entitled to a 20 per cent. interest in the unitisation of an existing producing Field in a neighbouring block (the "Field") whose structure intrudes into the Block.

Sirius does not intend to make any significant capital expenditure in this Block, excluding acquisition costs, until it has completed the 3D seismic and realised revenue from the unitisation of the Field.

The Field

Under the terms of the pre-farm-in agreement, Sirius will have a 20 per cent. economic interest in the Block's as-yet-undetermined share of the Field. The Company will have the right, exercisable at its discretion at any time, to purchase the remaining 80 per cent. interest in the Block's share of the Field at a commercially agreeable rate to be determined according to precedent transactions, depending on the outcome of the unitisation results.

·; The bulk of the Field is located within a neighbouring oil block, approximately 30-40 km offshore in water depth ranging from 55m to 70m.

·; It has been in production for over 20 years, with an average daily production of 10,000 barrels of oil per day ("bopd") and a cumulative production of circa 100 million barrels ("mmbbls").

·; Unitisation will entitle Sirius to an equity share of future production from the Field and a letter confirming the requirement for unitisation of the Field has been received by the Operator from the Department of Petroleum Resources.

The precise share of the unitised revenues from the Field received by Sirius and its partners will depend on the precise volume of the Field deemed to be present in the Block.

Proposed Second Block

Sirius is also pleased to announce that it has signed a confidentiality and exclusivity agreement to assess whether it wishes to proceed with the acquisition of an interest in a second Oil Block located in the shallow waters of the Niger Delta Basin on Nigeria's continental shelf (the "Second Oil Block"). This potential asset exhibits a number of compelling characteristics, including existing wells which have been flow tested and appear to have exciting appraisal and exploration potential. Further announcements will be made in due course with regard to the Second Oil Block.

Ororo Field Update

Sirius' technical team continues to evaluate the 3D seismic data and assess the optimum field development and recovery plan for the Ororo Field. Further progress on this asset remains subject to the completion of that work and the subsequent completion of the CPR which is being compiled by Gaffney Cline & Associates.

Other activities

In addition, the Company continues to review potential marginal field opportunities currently held by oil majors and is confident that it will benefit from involvement in the Marginal Field bid round through its links with Joint Venture partnerships, as previously announced by the Company.

Results

These results cover the year ended 31 December 2011 and include the ongoing costs of the Company's business development strategy, negotiating partnership agreements reviewing potential marginal field opportunities, conducting associated due diligence on potential assets and share option costs. The Group incurred a loss before taxation of $9,301,000, (17 months ended 31 December 2010: loss of $3,959,000).

Share Capital and Total Voting Rights

During the year Sirius issued 233,398,610 ordinary shares, of which 80,500,000 were for cash raising $6,319,000 before expenses. The remaining ordinary shares were issued to satisfy the exercise of warrants and the settlement of costs and outstanding liabilities. Since the year end warrants have been exercised over 60,000,000 ordinary shares at an exercise price equivalent to the par value of the ordinary shares.

Sirius does not hold any shares in treasury and the total number of voting rights in the Company is 814,226,330 ordinary shares of 0.25p each and this figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Service Authority's Disclosure and Transparency Rules.

Finally, I would like to thank our Shareholders for their continuing support as we continue to develop the business.

Jack Pryde

Non-executive Chairman

29 June 2012

Sirius Petroleum Plc

Consolidated statement of comprehensive income

All of the activities of the Group are classed as continuing.

Sirius Petroleum Plc

Consolidated statement of changes in equity

  Sirius Petroleum Plc

Consolidated statement of financial position

Sirius Petroleum Plc

Consolidated cashflow statement

1 Accounting policies

a) Basis of preparation

The Group financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS).

The Group's shares are listed on the AIM market of the London Stock Exchange.

The principal accounting policies of the Group, which have been applied consistently, are detailed in the Group's annual report and consolidated financial statements.

b) Going concern

The directors have prepared cashflow projections through to 30 June 2013. The projections only take account of the on-going management costs of the Group, the costs of investigating the various acquisition opportunities available to the Group as detailed in the Chairman's statement and the clearance of all payables outstanding at the date of this report. The projections do not assume any income from oil trading nor do they assume any acquisitions take place or that any assessment of the prospective resources is undertaken. The acquisitions or assessment of the prospective resources will only take place once the Group has undertaken a sufficient public share issue to fund these costs.

On 27 June 2012 the Company signed a private placement term sheet to raise funds for the Group to settle its on-going management costs, the costs of investigating acquisition opportunities and the clearance of all outstanding payables. The term sheet is not a definitive agreement, which the directors expect to finalise and sign shortly. The terms of this private placement are:

·; it lasts for 12 months;

·; the amount to be funded is up to £10 million ($15.8 million);

·; the investor will purchase a minimum £200,000 ($316,000) of shares each month at 90% of the average five daily volume - weighted average prices chosen by the investor, during the 20 days before the issuance date;

·; the investor may increase the shares purchased up to £1 million ($1.58 million) per month;

·; in the first month the investor will also acquire an interest free unsecured convertible note for £300,000 ($474,000);

·; the Company can refuse to issue the shares if the purchase price of the shares is less than 2.7 pence per share;

·; the Company can also terminate the agreement after six months at no cost, and at any time if it pays a cancellation fee of £80,000 ($126,000);

·; if the volume-weighted average price of the shares falls below 2 pence for two consecutive trading days the investor can suspend share purchases by up to 60 days. If this was the case the directors recognise the risk that they may not be able to fund the on-going costs of the Group. However, they are confident that, based on historic experience, the share price will not fall below 2 pence; and

·; the investor will be issued with options over 5,800,000 shares.

The directors are confident that the formal agreement will be signed on these terms but recognise there is a risk that these terms may be varied or the agreement may not be signed.

On the basis of the minimum funding under this term sheet being raised, the cash flow projections indicate a minimum cash balance of $1,042,000 being available through to 30 June 2013.

On this basis the financial statements have been prepared on a going concern basis. The financial statements do not include any adjustments that would result if the assumptions detailed above are not met.

2 segmental reporting

The chief operating decision maker has defined that the Group's only material business segment during the year is oil trading. The Group has a licence from the Department of Petroleum Resources of the Nigerian Ministry of Petroleum Resources to import refined oil products into Nigeria. It has undertaken one such import and sale during the year and intends to continue to use this licence in future years.

Subject to further acquisitions the Group expects to further review its segmental information during the forthcoming financial year.

Segment profit or loss is reported to the Board on a monthly basis and consists of earnings before interest and tax.

As defined under International Financial Reporting Standard 8 (IFRS 8), management have defined that the Group operates in the UK and the rest of the world.

3 tax

There is no tax charge for the year (17 months ended 31 December 2010: $nil).

Unrelieved tax losses of approximately $15,968,000 (2010: $7,051,000) remain available to offset against future taxable trading profits. The unprovided deferred tax asset at 31 December 2011 is $4,229,000 (2010: $1,904,000) which has not been provided on the grounds that it is uncertain when or in what tax jurisdiction taxable profits will be generated by the Group to utilise those losses.

The tax assessed for the year differs from the standard rate of corporation tax in the UK as follows:

4 LOSS PER SHARE

The calculation of the basic loss per share is based on the consolidated loss attributable to the equity holders of the company of $9,301,000 (17 months ended 31 December 2010: $3,959,000) divided by the weighted average number of ordinary shares in issue during the year of 690,830,208 (17 months ended 31 December 2010: 516,226,690). There are no dilutive equity instruments in issue

5 PUBLICATION

The financial information set out in this preliminary announcement does not constitute statutory accounts.The consolidated statement of financial position at 31 December 2011 and the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated cashflow statement and enclosed notes for the year then ended have been extracted from the Group's 2011 statutory financial statements upon which the auditors opinion is unmodified, although readers should note that an emphasis of matters was raised by the auditors as follows:

EMPHASIS OF MATTER - GOING CONCERN

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosures made in the principal accounting policies concerning the Group's ability to continue as a going concern.

The Group incurred a net loss of $9,268,000 during the year ended 31 December 2011. As explained in the principal accounting policies the Group's ability to meet its liabilities as they fall due is dependant on the funding to be provided by a third party investor under a private share placement arrangement. However, the terms of this agreement have been to date only agreed under a term sheet and the formal agreement confirming these terms has yet to be concluded and signed. In addition the terms currently allow the investor to suspend share purchases for up to 60 days if the parent Company's volume-weighted average share price falls below 2 pence for two consecutive trading days.

These matters indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

The Annual Report for the year ended 31 December 2011 will be posted to shareholders shortly.

The Annual General Meeting of the Group will be held at the offices of Fladgate LLP, 16 Great Queen Street, London WC2B 5DG on 26 July 2012 at 11.00am BST.

Copies of the report will be available on the company's website, www.siriuspetroleum.com.