UEP.L Regulatory News (UEP)

18 September 2013

UMC ENERGY PLC

("UMC" or the "Company")

Interim results for the half year ended 30 June 2013

CHAIRMAN'S STATEMENT

Papua New Guinea

During the period under review the Company engaged independent experts 3D-Geo Pty Ltd of Melbourne Australia ("3D-GEO") to conduct a technical review (the "Technical Review") of geological data relating to the onshore and offshore Petroleum Prospecting Licences ("PPL"), PPL378 West, PPL378 East, PPL405, PPL374 and PPL375, all owned 100 per cent. by Gini Energy Ltd ("Gini"). UMC Energy owns a 30 per cent interest in Gini, with CNOOC owning a 70 per cent interest.

Paua Discovery

The Technical Review resulted in some changes to the contingent resource and prospective resource recoverable estimates of the Paua structure, based on the incorporation of further historical geological data and revised structural modelling, including revised 2D seismic interpretation and mapping over the Paua structure and incorporation of additional well and reservoir data.

The Paua-1X well was drilled in 1996 by BP and is a declared discovery with oil recovered to surface from sands in the Iagifu Formation. The Paua Anticline is part of a major NW-SE fold trend bound to the south-west by a major thrust fault. The structure extends some 12km along strike with up to 450m of vertical closure. It extends outside PPL378 West into adjacent acreage to the northwest and southeast. Independent expert assessment of the data has provided the following contingent resource combined values for potential oil and gas recoverable from the Iagifu sandstones within the PPL378 West portion of the Paua Anticline, prepared in accordance with the definitions and guidelines set out in the Petroleum Resources Management System ("PRMS"):

*Note: MMbbls = million barrels of recoverable oil, Bcf = billion standard cubic feet of recoverable gas

PPL 378 contains a single oil and gas discovery in the Paua-1X well, which proved the presence of hydrocarbons in the Iagifu Sandstone, in a relatively low structural position on the Paua anticline. 3D-GEO has assigned Contingent Resources to the oil and gas found in the Iagifu, although there is a large element of uncertainty as to the relative proportions of oil versus gas in the accumulation. 3D-GEO has assigned Low, Best and High Estimate resource estimates for the oil volumes, with corresponding gas volumes representing the balance of the accumulation updip from the well in each case - resulting in a high gas volume estimate associated with a Low Estimate oil contingent resource (see above).

Recoverable Prospective Resources were also calculated for Toro and Digimu reservoirs within the Paua structure. The Toro C horizon was intersected at a drillers depth of 2845mKB (-1250mSS). A gas only case was conducted for this reservoir using gross rock volumes above the well intersection. Probabilistic calculations were also conducted for the Digimu sandstone with oil-water contacts above the existing well penetration for alternative oil and gas cases. The following table summarises the Paua Anticline recoverable Prospective Resource estimates within PPL378 West, for the potential Toro and Digimu reservoirs over and above the Paua Contingent Resource estimates for the Iagifu reservoir.

*Note: MMbbls = million barrels of recoverable oil, Bcf = billion standard cubic feet of recoverable gas

Prospective Resources for Poro, PPL378 East and PPL405

The Technical Review of PPL378 West and PPL378 East identified four untested structures, Poro, Lead A, Lead A' and Lead B. In relation to PPL405, prospective resource values have previously been reported for the Wasuma prospect, where a 5m gross oil column was intersected in the Iagifu B sands by the Wasuma-1 well, drilled in 2010. The prospectivity review of PPL405 has also identified three untested structures, Lead C, Warra Deep and Lead D. Probabilistic volumes of potential resources calculated by Monte Carlo simulations have provided the following recoverable prospective resources for alternative oil or gas cases for each of these leads within the permits, prepared in accordance with the definitions and guidelines set out in the PRMS:

*Note: MMbbls = million barrels of recoverable oil; assumes all oil with no gas fill in mapped closure

*Note: Bcf = billion standard cubic feet of recoverable gas; assumes all gas with no oil fill in mapped closure

Offshore Permits PPL374 and PPL375

The Technical Review of PPL374 and PPL375 identified eight untested structures. Probabilistic volumes of potential resources calculated by Monte Carlo simulations have provided the following recoverable prospective resources for alternative oil or gas cases for each of these leads within the offshore permits, prepared in accordance with the definitions and guidelines set out in the PRMS:

*Note: MMbbls = million barrels of recoverable oil; assumes all oil with no gas fill in mapped closure

*Note: Bcf = billion standard cubic feet of recoverable gas; assumes all gas with no oil fill in mapped closure

Madagascar

Madagascar continues to experience a period of political upheaval and uncertainty. Despite the fact that the Company has not, in any way, been negatively affected by these events, it has resolved to take a cautious approach to exploration and accordingly has not conducted exploration activities during the current financial half-year. The Company continues to monitor the situation.

Corporate

The Company remains dependent on loan funds being made available to it by Natasa Mining Ltd to meet its working capital and other requirements.

The Proposals to give effect to the re-domiciliation of the Company from the United Kingdom to the Cayman Islands were passed by special resolution at the General Meeting held on 29 August 2013, and the re-domiciliation is expected to become effective on 19 September 2013.

C Kyriakou

Chairman

18 September 2013

CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

For the six months period ended 30 June 2013

 The Group has no recognised gains or losses other than the results for the period as set out above 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

For the six months period ended 30 June 2013

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2013

These interim results were approved by the Board on 18 September 2013 and signed on their behalf by:

C Kyriakou, Chairman.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months period 30 June 2013

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

for the six months period 30 June 2013

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months period ended 30 June 2013

1. General information

UMC Energy Plc is a company incorporated in England and Wales. The Company's registered office is First Floor, 10 Dover Street, London, W1S 4LQ.

The principal activity of the Group is the investment in, and exploration and development of natural resources projects, specifically in a petroleum exploration project in Papua New Guinea and a uranium exploration project in Madagascar.

The Group's principal activity is carried out in US dollars. The interim results are presented in pounds sterling as this is the currency of the country (the UK) where the Company is incorporated and its ordinary shares admitted for trading.

2. Statement of compliance

The condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting".

The condensed consolidated interim financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated annual financial statements of the Group as at and for the year ended 31 December 2012.

The annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

These condensed consolidated interim financial statements were approved by the Board of Directors on 18 September 2013.

3. Significant accounting policies

The accounting policies applied by the Group in these condensed consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2012.

Going Concern

The interim results have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

The directors believe that it is appropriate to prepare the financial report on a going concern basis as they are confident that the Company will be able to raise additional funds through debt or equity raisings when required. The directors are of the opinion that the proposed debt or equity raising measures and the existing cash resources will provide sufficient funds to enable the Company to continue its operations for at least the next twelve months.

4. Segmental analysis

The Group has one reportable segment which is that of the investment directly and indirectly in, and operation of, resource exploration and development projects. The Group's operational activities are wholly focused in Madagascar and Papua New Guinea. The Company's registered office is in London, UK. The Board of Directors review internal management reports at least monthly.

The Group has not yet commenced commercial resource production and has no turnover in the year.

Information regarding the results of the reportable segments is shown below. Performance is measured based on the segment profit before income tax as included in the internal management reports that are reviewed by the Board of Directors. There is no inter-segment pricing.

Information about reportable segments:

Period ended 30 June 2013

Period ended 30 June 2012

Year ended 31 December 2012

Geographical segments

In presenting information on the basis of geographical segments, segment assets are based on the geographical location of the assets.

Non-current assets by geographical area

5. Taxation

No provision for corporation tax has been provided for, due to losses incurred in the current and previous periods.

6. Loss per share

Including share of associate's results

Loss per share has been calculated by dividing the loss for the period after taxation, including share of associate's results, attributable to the equity holders of the parent company of £655,130 (30 June 2012: £384,181) by the weighted average number of shares in issue at the period end of 484,444,763 (30 June 2012: 484,444,763).

Excluding share of associate's results

Loss per share has been calculated by dividing the loss for the period after taxation, excluding share of associate's results, attributable to the equity holders of the parent company of £641,040 (30 June 2012: £364,292) by the weighted average number of shares in issue at the period end of 484,444,763 (30 June 2012: 484,444,763).

7. Intangible assets

The development expenditure relates to development of the uranium exploration project in the Morondava basin of Madagascar.

The licences relate to uranium exploration licences in the Morondava basin and the petroleum exploration project in Papua New Guinea. The Petroleum Prospecting Licences in Papua New Guinea were deconsolidated following dilution of the subsidiary in March 2012.

The Morondava uranium project has yet to reach a stage of development where a determination of the technical feasibility or commercial viability can be assessed. In addition, as Madagascar is presently experiencing a period of political upheaval and uncertainty, the Company has resolved to take a cautious approach to exploration and accordingly has not conducted exploration activities during the current financial year and does not expect to undertake any material exploration activities in Madagascar whilst this period of uncertainty prevails. In these circumstances, whether there is any indication that the asset has been impaired is a matter of judgement, as is the determination of the quantum of any required impairment adjustment. The directors have resolved that it is not appropriate to capitalise any further expenditure on the intangible asset until circumstances change. The Directors have used their experience to conclude that an impairment adjustment of £nil is required for the six months to 30 June 2013.

The exploration and evaluation expenditure relates to the company's interest in the Papua New Guinea Petroleum Prospecting Licences held by its associated company.

8. Investments in associated undertakings

On 26 March 2012, the Company entered agreements with CNOOC Australia Limited ("CNOOC"), a subsidiary of CNOOC Limited, the Chinese multi-national oil and gas company listed on the New York and Hong Kong Stock Exchanges, whereby CNOOC subscribed for a 70% equity interest in PNG Energy Limited with UMC Energy retaining a 30% equity interest.

As a result of this transaction, the PNG Energy group ceased to be controlled by the Company in March 2012 and became an associate.

The Company has an equity holding in the following associate undertaking:

The country of incorporation of the associate undertaking is the British Virgin Islands and the principal place of business is Papua New Guinea.

The Papua New Guinea petroleum project has yet to reach a stage of development where a determination of the technical feasibility or commercial viability can be assessed. In these circumstances, whether there is any indication that the asset has been impaired is a matter of judgment, as is the determination of the quantum of any required impairment adjustment. The Directors have used their experience to conclude that no impairment adjustment is required in the current year.

Summarised results of the associate undertaking, PNG Energy Group, as translated into sterling are as follows:

9. Post balance sheet events

Since 1 July 2013, the Company has advanced a further US$11,302 (£7,356) to Uramad SA.

Since 1 July 2013, the Company has borrowed a further A$613,258 (£363,075) from Natasa Mining Ltd, for working capital.

On 29 August 2013, a special resolution was passed stating that:

(a) The share premium account of the Company be cancelled and the capital of the Company be reduced by cancelling all of the issued ordinary shares of the Company and that the reduction of capital be effected by the transfer by the Company of all the shares held by it in the issued share capital of UMC Energy Corporation to the members of the Company (or in the case of joint holders to that one joint holder whose name stands first in the register of members of the Company in respect of the joint holding) on the register of members of the Company at the Record time (as defined in the Circular to members dated 5 August 2013) on the basis that the Company transfers one ordinary share in the capital of UMC Energy Corporation for each ordinary share in the Company held and cancelled;

(b) Conditional on the capital reduction referred to in sub-paragraph (a) of this resolution becoming effective, the company shall be re-registered as a private limited Company and the name of the Company be changed to " UMC Energy Limited"; and

(c) Conditional of the capital reduction referred to in sub-paragraph (a) of this resolution becoming effective, the admission of the Company's shares to trading on AIM be cancelled.

Subject to the confirmation of the Court as to the Capital Reduction, the Proposals to give effect to the re-domiciliation of the Company are expected to become effective on 19 September 2013.

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