Trinity Regulatory News (TRIN)

14 May 2012

Bayfield Energy Holdings plc

("the Company")

Trinidad: Operational update

Bayfield Energy (Ticker Symbol: BEH), an independent oil and gas exploration and production group with key assets in Trinidad & Tobago and South Africa, provides an operational update on its activities in Trinidad.

Well results from EG7

Well EG7 is drilling ahead, having reached 5,280ft and encountered all the shallow reservoir objectives. In the interval between 1,000ft and 3,000ft, the reservoirs identified as the F,G and H Sands have been found to be predominantly water bearing. Only one reservoir interval was logged as oil bearing and has been sampled and tested with a mini drill stem test (mini-DST). The reservoir intervals encountered had been evaluated to have been oil bearing in the offset well EG1 (1964). Revised mapping, based on results from EG7, now suggests, however, that crestal faults may separate the EG1 oil bearing reservoirs from EG7.

Well data from EG7 will reduce the Contingent Resources volumes assigned to the EG1 structure in the Company's Competent Person's Report (the "CPR"), prepared by Gaffney, Cline & Associates (May 2011). Management has assessed that the Company's net 2C Contingent Resources of 24.67 mmbbl (37.96 mmbbl gross) will be reduced by approximately 5.9 mmbbl (9 mmbbl gross).

In addition, the exploration objectives identified from the EG1 Prospect were classified as Prospective Resources in the CPR. The shallowest of these was the "P Sand" section which has been proven to be water bearing in EG7. Accordingly, management assesses that it will no longer be appropriate to recognise the Unrisked Prospective Resources associated with the "P sands" in the EG1 Prospect.

Following the detailed logging and sampling of the shallow reservoirs, the well has been sidetracked and is drilling ahead to the east to evaluate deeper exploration targets in a structurally optimal position. These targets are located structurally higher than the nearby well COS1 (1985), where sandstone reservoirs exhibited oil shows while drilling but were not evaluated due to mechanical problems. EG7 is planned to drill to a total depth of 6,500ft.

EG8 discovery

On 13 March, Bayfield reported that its exploration well, EG8, had demonstrated development potential of 32 million barrels (mmbbl) of oil and 69 billion standard cubic feet (bcf) of gas in the EG2/EG5/EG8 Central and East fault blocks. Initial interpretation suggested that substantially all of the gas potential lies within the Galeota Licence though the oil potential extends into an adjacent licence in which Bayfield has no participating interest.

Subsequent to this announcement, Bayfield has signed a memorandum of understanding ("MoU") with the operator of the adjacent block, Repsol E&P T&T Limited ("Repsol"). The MoU confirms the intention of Bayfield and Repsol to cooperate in establishing a joint technical team to assess and allow for the potential accelerated development of the accumulations of oil and gas identified by EG8 and may ultimately lead to a reclassification of Prospective and Contingent Resources.

Future rig deployment

Following the completion of EG7, the Gorilla III jack-up unit will return to Niko to drill the second well of its programme and is then expected to return to Bayfield later in the third quarter of 2012 for the next planned two wells in its programme, EG9 and GAL25, which are both structurally independent of EG7.

Bayfield has taken steps to provide greater operational and financial flexibility concerning the timing of fulfilment of its committed seven-well drilling programme. Firstly, it has agreed amendments to the Galeota licence and Farm-out Agreement with Petrotrin, to extend the period in which it was obligated to drill the seven wells out to the end of March 2015. Secondly, it is close to concluding negotiations concerning an assignment of the rig contract which would allow for a break in the drilling programme but ensure that Gorilla III was available to complete Bayfield's commitments in 2013. Thirdly, it is reviewing, with its advisers, alternatives for raising additional finance in the near-term.

2012 Q3 well prospects

EG9 will target a series of stacked sands and shales in the western fault block encountered by EG2 and EG5. Best case gross field oil prospective resources for the C, D and E sands in the fault block are respectively 28.03 mmbbl (18.22 mmbbl net to Bayfield), 10.01 mmbbl (6.51 mmbbl net) and 5.35 mmbbl (3.48 mmbbl net). Best case gross field gas prospective resources for the A, B, F, G and H sands are respectively 14.62 bcf (9.50 bcf net to Bayfield), 17.73 bcf (11.52 bcf net), 4.78 bcf (3.11 bcf net), 5.19 bcf (3.37 bcf net) and 13.55 bcf (8.81 bcf net). The EG8 data will help to optimise the well location.

The location for GAL25 has been determined based upon structural mapping from Bayfield's new 3D seismic data which indicates that the North East Trintes Prospect is the crestal part of the Trintes Field structure. The main prospective targets are the massive sandstones of the M and N units with additional sands in the O and the P sands beneath. Best case gross field oil prospective resources for the M and N sands block are respectively 13.08 mmbbl (8.50 mmbbl net to Bayfield) and 7.38 mmbbl (4.80 mmbbl net).

Trintes field

Following an encouraging start to the year, production for the remainder of the first quarter was constrained by a number of operational and technical factors. This included a catch-up on a backlog of essential maintenance work, particularly with respect to hydraulic rod pump wells, which had been deferred as a result of the extreme weather conditions encountered in December and January. In addition, and following a series of recurring issues with rig #2, a decision was taken to suspend the program of new development wells designed to ramp up production for a 3 week period. Remedial steps undertaken included inspection, repair, audit of operational processes of the rig and a review of the well completion design.

As a consequence, on resumption of operations we have switched to "cased-hole" from "open-hole" completions using perforation techniques to more accurately access the oil bearing sands. The rig has since successfully completed two long sidetrack wells, B6 and B7 on target, in 32 and 25 days respectively. Well B6, the first to be completed using the new completions technique is presently producing around 350 bopd and average gross production for April was 1,650 bopd compared to the 952 bopd for the first quarter. Contribution from B7 is approximately only 200 bopd as it is currently in the process of cleaning up following completion of drilling operations earlier in May.

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In accordance with the AIM Rules - Note for Mining and Oil and Gas Companies, the information contained in this announcement has been reviewed by Brian Thurley, a geologist with over 38 years' experience who has a degree in Geology from the Royal School of Mines, Imperial College, London.