Xtract Regulatory News (XTR)

24 May 2013

XTRACT ENERGY PLC

("Xtract" or the "Company")

Final Results for the Year Ending 31 December 2012

Xtract (AIM: XTR) announces its audited results for the year ending 31 December 2012.

Operational Summary

2012 was a year of reorganisation and consolidation for Xtract in which it:

·; Undertook a capital and management reorganisation which was approved at the General Meeting held in September 2012

·; Completed a board re-organisation and appointed Colin Bird as Executive Chairman

·; Divested of its assets in Denmark and the Netherlands

·; Signed an agreement with Santos to pursue an exit from their jointly held interest in KNG Hydrocarbons in the Kyrgyz Republic, realising shares in Equus Mining Limited which were ultimately disposed of in February 2013 for a gross consideration of £0.65m in cash

·; Disposed of its interest in Julia Creek oil shale tenements to Global Oil Shale Group Limited ('GOS') in return for 6 million shares in GOS and a further 1.5 million in the event of an IPO. GOS is committed to carrying out a detailed work program with agreed key milestones

Financial Summary

·; Net loss of £7.59m (2011 loss:£4.31m)

·; Net cash of £0.22m (2011: £4.49m)

·; Net assets of £1.37m (2011: £8.37m)

Commenting, Colin Bird, Chairman of Xtract, said: "Having completed a very challenging 2012, we are now in a position to look forward. The Board is evaluating many opportunities in the resources sector and are confident that 2013 will be a transitional year for the business. Our primary focus is on suitable assets which will ultimately deliver shareholder value. We would like to thank our shareholder for their continued support and look forward to updating you in due course."

AGM

The Company will hold itsAnnual General Meeting on 24 June 2013, at 10.00am at the Pelham Hotel, 15 Cromwell Place, South Kensington, London SW7 2LA.

Chairman's Statement

This is my first annual statement as Chairman of your company following my appointment on 10 September 2012. The Board has carried out a strategic review of the asset base of the Company with the view to maximise return to shareholders, whilst building a significant company in the resource sector.

Your Company had a very diverse portfolio in the oil and gas sector, however during the year under review we have suffered some disappointments in relation to our exploration activities. This has resulted in the decision to undertake a capital and management reorganisation, which is on-going.

As part of the reorganisation and management changes, the Company disposed of its interest in Julia Creek oil shale tenements in Queensland, Australia. This resulted in the Company acquiring 6 million shares in Global Oil Shale Group Limited ("GOS"), a private company which is expected to list in the mid-term. On listing, the Company will receive a further 1.5 million shares.

The small publicly listed resource company sector remains under considerable pressure. New initial public offerings are rare and secondary placings are difficult to procure. In this challenging environment quality assets are easier to identify, but the capability to finance is key, not only to the purchase, but also to unlock value for shareholders.

During the period under review the Company incurred a loss of £7,592K resulting in a loss of 0.42p per share.

Corporate

On 27 June 2012, the Company was notified by Norwegian Energy Company ("Noreco"), the operator of Licences 01/11 and 02/05 in Denmark, of imminent and unanticipated cash calls relating to expenditure on the Luna well, which had been drilled in early 2012. At the same time the Company also received cash calls from Noreco relating to all planned 2012 general, administrative and exploration expenditure on the same licences. These amounts were required to be advanced earlier than anticipated and also exceeded original expectations.

A potential consequence of the cash calls from Noreco was an increased possibility that the Company may become insolvent and, as a direct result, the Company requested that trading in its shares be temporarily suspended.

Following the suspension, the Company:

·; Made payment in full for the cash calls received from Noreco and negotiated a reduction in the 2012 work stream as well as a more manageable payment schedule;

·; Reduced annual running costs of the Company, including a reduction of the Directors' salaries;

·; Entered into Heads of Terms by which GOS would have the potential to earn a controlling interest in the Julia Creek oil shale tenements. In order to obtain this controlling interest, GOS will need to conduct a three year work program covering exploration, development and engineering activities. A more detailed account of the GOS transaction can be found in the Operations Review.

In the period immediately following the share trading suspension, potential investment opportunities with a number of interested parties were explored. Following this process, which was carried out in association with its nominated advisor, the at that time Directors concluded that the Tiger Resource Finance PLC ("Tiger") subscription offered the best opportunity to secure the future of the Company.

Subscriptions

On 1 March 2012 the Company drew down £300K (before expenses) on its Standby Equity Distribution Agreement ("SEDA") with YA Global Master SPV Limited ("Yorkville"). This draw down was undertaken at a price of 2.051p per share and resulted in the issue of 14,627,011 new shares of 0.1p in the Company.

The Company announced on 24 August 2012 that Tiger and, on an individual basis, directors of Tiger (being Colin Bird, Raju Samtani, Michael Nolan and Bruce Rowan), had agreed, subject to certain conditions, to subscribe for a total of 689,655,173 new ordinary shares at a price of 0.0435 pence per share to raise £300K. Following the Subscriptions, Tiger holds 344,827,585 New Ordinary Shares and the members of the board of Tiger each hold 86,206,897 New Ordinary Shares (representing, in aggregate, approximately 29.9 percent of the enlarged share capital of the Company).

Tiger is an investment fund focused on the Resource Sector and is listed on AIM. Xtract Energy PLC ("Xtract") and Tiger share the strategy of seeking active investments in early stage opportunities in the natural resource sector globally.

The Directors of Tiger have a track record of investing in junior natural resource sector companies, both in the mining and minerals industries, and in oil and gas exploration and production companies. Their direct experience in these sectors offers Xtract shareholders a new strategic investor who will proactively participate in the future of the Company.

In addition, Aaron D'Este, an independent investor, agreed, subject to certain conditions, to subscribe for a total of 68,965,517 New Ordinary Shares at a price of 0.0435 pence per share to raise an additional £30K (representing 2.99 per cent on the Enlarged Ordinary Share Capital of the Company).

The subscriptions were conditional upon shareholder approval being given at a General Meeting and admission of the Subscription Shares to trading on AIM.

It was recognised that the subscriptions, if approved, would result in the dilution of the existing shareholders, however, given the financial state of the Company, the Board concluded that a pre-emptive offer to existing shareholders was not feasible both in terms of cost and time. The Directors believed that, following the capital reorganisation and subscription, the financial position of the Company would be more certain.

A circular containing information on the proposal incorporating a notice convening a general meeting on Monday 10 September 2012 was posted to shareholders of the Company. As a result, the suspension of trading in the Company's shares was lifted on 24th August 2012.

Capital Reorganisation

In order to enable the subscriptions to proceed and to allow the Company to carry out share issues in the future, the Company proposed to implement a capital reorganisation, this required shareholder approval and involved each existing ordinary share of 0.1p (£0.001) held by shareholders being divided into 1 new ordinary share of 0.01p (£0.0001) and 1 new deferred share of 0.09p (£0.0009).

Resolutions to approve the capital reorganisation, adopt amended Articles of Association to grant the Directors authorities to issue the subscription shares and additional shares in the future without applying pre-emption rights in accordance with the Act, were proposed and agreed at the General Meeting held on Monday 10 September 2012. A total of 1,547,484,439 deferred shares were issued as part of the capital reorganisation. There are very limited rights attributable to the deferred shares and they effectively have a nil value.

General Meeting and Completion of Capital Reorganisation and Subscriptions

At the General Meeting held on 10 September 2012 all resolutions were passed and as a result the Company completed the capital reorganisation and subscriptions on 11 September 2012. In addition, changes to the Board of Directors and certain Directors' service contracts took effect.

Application was made for 2,306,105,129 new ordinary shares of 0.01p each ("New Ordinary Shares") to be admitted to trading on AIM (comprising 1,547,484,439 New Ordinary Shares being issued pursuant to the Capital Reorganisation and 758,620,690 being issued pursuant to the subscriptions). This admission took place on 11th September 2012.

Portfolio

The Xtract strategic review carried out in 2010 decided to rationalise the asset portfolio in order to focus on a more traditional oil and gas portfolio which, if successful, could add value to the Company in the near term. The initial objective was to drill wells on the Dutch and Danish prospects, whilst reducing the financial commitment exposure in Turkey and the Kyrgyz Republic. The exit from both Turkey and the Kyrgyz Republic has allowed the Company to focus its efforts on the Dutch and Danish prospects. Pursuing the sale of the Dutch acreage to Chevron Exploration and Production Netherlands B.V., in exchange for a royalty agreement, allowed the Company to dedicate its financial resources on participating in the drilling of the Luna well. Whilst the Luna well was unsuccessful in discovering a reservoir or hydrocarbons, shareholders have been able to participate in what was a very exciting, potentially high reward, prospect.

In August 2008 the Queensland Premier declared a twenty year moratorium on oil shale mining on a proposed oil shale development in the Whitsunday coastal region. From the same date there was also a two year review period imposed on all proposed oil shale developments throughout the state during which no new mining activity would be permitted. Following this announcement Xtract put its oil shale activity on a care and maintenance basis, which was to continue until the outcome of the moratorium was known.

On 24 March 2012 the Liberal National Party was returned in the Queensland election, replacing the previous Labour administration. It seemed timely for Xtract to seek a partner to help progress the Julia Creek tenements. The finalisation of the Global Oil Shale Group Limited ("GOS") transaction has enabled the Company to secure a strategic partner in GOS who has an excellent management team and expertise in the oil shale business to progress the Julia Creek and Morocco oil shale position. On 13 February 2013, the Newman Government announced that it will allow the development of a commercial oil shale industry in Queensland under strict environmental conditions.

Impairment of Danish Exploration Assets

Following the decision to relinquish licenses 01/11 and 02/05 held by the Danish subsidiary Elko Energy A/S, capitalised exploration expenses totalling £7m were impaired in the Group's financial statements. This represents the full value of the intangible assets held in respect of this project. Elko Energy A/S has been classified in the accounts as a 'dis-continuing' operation.

Outlook

The Company is looking at many options in the resource sector and we are confident that we will identify suitable assets which in the course of time will restore and grow shareholder value.

In conclusion, I would like to thank George Watkins, my predecessor as Chairman, Jeremy Kane and Paul Butcher as Non-Executive Directors for providing the strategic direction to Xtract Energy PLC over the period to the capital reorganisation. I thank Alan Hume, the CFO, for his strong executive guidance and governance. I would also like to thank Peter Moir, our CEO, in particular for his support and efforts during the transitional period, since the capital reorganisation.

Colin Bird

Executive Chairman

22 May 2013

 Operations Review

Denmark

Through its wholly owned Danish subsidiary, Elko Energy A/S, Xtract held a 33% working interest in licence 01/11 and in the adjoining exploration and production licence 02/05 in the central part of the Danish sector of the North Sea. Norwegian Energy Company ("Noreco") was the operator for the licences with the Danish North Sea Fund as the third partner.

The partners selected a location for drilling the 'Luna' prospect on license 01/11, which had been chosen to test the Rotliegendes play in the optimum position in terms of reservoir quality, thickness and hydrocarbon charge for the combined prospective area. The Rotliegendes reservoir was thought to have a high probability of hydrocarbons being present at this location based on seismic interpretation.

In May 2011, it was announced that the Luna well would be drilled by the Maersk Resolve jack up drilling unit. The Maersk Resolve arrived at the Luna location on 10 February 2012 and spudded the Luna well on 12 February 2012.

On 16 March 2012, the Company announced that the Luna well had not encountered hydrocarbons having encountered Zechstein anhydrite and dolomite, lying directly on weathered volcanic conglomerates rather than a Rotliegendes sandstone reservoir as prognosed. The well was drilled to a total depth of 2073 metres below mean sea level, a core was taken, side wall cores collected and extensive wireline log measurements carried out. The well was plugged and abandoned as a dry hole on 24 March 2012.

The partners analysed in detail the extensive new data obtained from drilling the Luna well and concluded that proceeding into the next phase of the 01/11 and 02/05 licence terms with the associated work program commitment was not justified, due to the lack of attractive exploration prospectivity. On 6 February 2013 it was announced that the partners had jointly relinquished licences 01/11 and 02/05 in the Danish sector of the North Sea.

The Netherlands

In The Netherlands sector of the North Sea, Xtract currently holds an overriding royalty agreement with Chevron Exploration and Production Netherlands B.V. ("Chevron") and TAQA Energy ("TAQA") over their respective 48% and 12% working interests in the Dutch offshore blocks P1 and P2.

Chevron decided to drill the first well on the P2 block since the acquisition of the two licences from Elko Energy Inc ("Elko"). The P2-10 appraisal well targeted an existing gas discovery on the P2 block (P2-7, with low levels of CO2) and one of the main objectives was to evaluate commercial hydrocarbon flow rates from an extended reach horizontal well within the Rotliegendes sandstone reservoir.

The P2-10 well was drilled by the Noble Byron Welliver jack up drilling unit, commencing on 9 January 2012. The well was designated by Chevron as a "tight hole" in order to protect their proprietary technology being used to drill the well ("tight hole" meaning information regarding specific activity and progress is strictly confidential to the working interest partners). The well was side-tracked in April 2012 and well operations were completed in July 2012. The well remains classified as "tight hole" by Chevron and as such, no information regarding the outcome of the drilling activity has been released to the Company.

Kyrgyz Republic

In 2008, Xtract assigned a 75% share in former subsidiary Zhibek Resources Limited ("Zhibek") to Santos International Holdings Pty Ltd ("Santos") in return for Santos providing amongst other deliverables funding towards a well in the Tash Kumyr licence which Zhibek held in the Kyrgyz Republic. (Zhibek is an oil and gas exploration company which has a 72% interest in the close joint stock company, KNG Hydrocarbons which holds the Tash Kumyr exploration licence in the Kyrgyz Republic).

During the three and a half years since Santos acquired its interest in Zhibek, KNG Hydrocarbons acquired and processed approximately 100km of new 2D seismic data and a new prospect was identified. However, given the lack of material prospects identified in the exploration licences held by KNG Hydrocarbons and the decision by Santos to exit the Kyrgyz Republic, Xtract also made the decision to pursue a withdrawal from the Kyrgyz Republic.

On 3 May 2012, Xtract announced that it had signed agreements in relation to the Farm-in Subscription Agreement executed amongst Santos International Holdings Pty Ltd ("Santos"), Xtract International Ltd ("Company") and Xtract Energy PLC on 17 November 2008 for an interest in Zhibek. The signing of these agreements provides the basis for Santos and Xtract to pursue an exit from their jointly owned Zhibek and their indirect interest in KNG Hydrocarbons. This allowed previously committed Company funds to be diverted to other Company activities.

Pursuant to the agreements, Xtract International Ltd acquired from Santos 140,000,000 ordinary shares in Caspian Oil and Gas Ltd ("Caspian"), an oil producer and explorer listed on the Australian Securities Exchange. The consideration for that transfer is a release by Xtract of Santos and its related parties from certain funding obligations under the Farm-in Subscription Agreement. Caspian subsequently changed its name to Equus Mining Limited ("Equus") following a 10 to 1 share consolidation. The shares in Equus were classified by the Company as an asset held-for-sale. On 14 February 2013 the Company announced that it had disposed of its entire holding in Equus. The Company's 14 million shares were sold at a price of 7 Australian cents per share, resulting in a gross consideration of AUS$ 980K (£503K) before dealing costs. The shares are currently trading between 4 and 4.5 Australian cents per share.

Australia and Morocco

Xtract acquired its oil shale exploration rights over mining tenements at Julia Creek, Queensland, Australia in two tranches in late 2005 and early 2006. Xtract acquired the rights to extract oil shale from these tenements whilst Intermin Resources Ltd ("Intermin") holds rights to extract minerals such as Vanadium and Molybdenum from the same tenements.

The Julia Creek tenements cover an area of 709 square kilometres and contain JORC defined indicated and inferred resources of 2.18 billion barrels of shale oil.

Xtract assigned its oil shale rights in Julia Creek to Global Oil Shale Group Limited ("GOS") in exchange for:

·; Strategic equity stake in GOS of 6 million shares on signing the Share Purchase Agreement and satisfying all closing commitments, and up to a further 1.5 million shares in GOS in the event of its planned IPO;

·; Long term interest in the Julia Creek project through a 1% net smelter royalty;

·; An initial cash payment of AUD$ 50K payable on signing the Share Purchase Agreement and prior to GOS commitment to a full work program on Julia Creek; and

·; Xtract to gain a single project risk mitigating exposure to GOS' multi-oil shale project development portfolio and access to their leading knowhow in the sector.

GOS will carry out a detailed work program for Julia Creek with key milestone deliverables:

·; Mining plan and resource testing

·; Pre-feasibility plan for choice of processing approach for Julia Creek;

·; Bankable feasibility plan and small scale pilot testing of production;

·; GOS to fund all of Julia Creek ongoing holding and development costs.

In a related, but separate transaction, Xtract also agreed to sell its entire 70% interest in Xtract Energy (Oil Shale) Morocco SA to GOS, subject to satisfaction of certain closing conditions, including in particular seeking and obtaining the consent of the Office National des Hydrocarbures et des Mines ("ONHYM") and other regulatory approvals in the Kingdom of Morocco as well as the consent (or buy out) of the other shareholder in Xtract Energy (Oil Shale) Morocco S.A. Xtract and GOS are currently following up with the relevant parties in order to meet the above conditions.

On 13 February 2013, the Newman Government announced that it would allow the development of a commercial oil shale industry in Queensland under strict environmental conditions. Natural Resources and Mines Minister, Andrew Cripps, said the Government's new oil shale policy would:

·; recognise the strategic importance of oil shale to contribute to energy security, and encourage private sector investment in high quality oil shale extracting technologies;

·; ensure project proponents must first demonstrate their oil shale technology will meet high environmental standards and community expectations;

·; allow, in general, the consideration and development of oil shale deposits in Queensland, pending thorough environmental assessment on a project by project basis;

·; continue the existing 20-year moratorium suspending development of the McFarlane oil shale deposit near Proserpine until 2028.

GOS have advised Xtract that it has prepared a mining plan for the Julia Creek oil shale project comprising of an up to 35,000m reverse circulation drilling program involving in stages up to 700 boreholes being drilled and air-cored over an area of approximately 150km². GOS expect the drilling program to commence in the summer of 2013 and are in the process of securing appropriate approvals to execute the program.

GOS has also prepared an extensive testing program for the oil shale samples from Julia Creek for its process of oil concentration and thermal processing of the oil shale. GOS is working in co-operation with some of the leading companies in minerals processing in its testing program.

Furthermore GOS has commenced evaluating its processing approach for Julia Creek and an associated pre-feasibility for this purpose, which are made in co-operation with its strategic partners Neste Jacobs and TTU Limited for engineering and processing. The aim of GOS is to prepare detailed input data for its oil shale process modelling and simulation that also can be used for a Julia Creek bankable feasibility study and pilot scale oil shale testing.

The Company also announces the publication of its 2012 Annual Report and Financial Statements, which will be posted to shareholders on 31 May 2013 and will also be available on the Company's website: www.xtractenergy.co.uk.

Peter Moir

Chief Executive Officer

22 May 2013

Financial Review

Income Statement Analysis

The Group reported a net loss after tax from continuing operations of £1,580K (2011: £3,303K) and basic loss per share of 0.09p (2011: basic loss per share of 0.30p).

Administrative and operating expenses from continuing operations amounted to £1.57 million for the year ended 31 December 2012 (2011: £2.97 million).

Other losses from continuing operations totalled £0.16 million in the year (2011: £0.14 million).

Finance income/costs include foreign exchange gains arising predominantly on Group intercompany loans in the year and non-Pound Sterling cash balances translated, amounting to £151K (2011: loss of £304K).

Investment Activity

In May 2012 Xtract signed agreements in relation to the Farm-in Subscription Agreement executed amongst Santos International Holdings Pty Ltd ("Santos"), Xtract International Limited ("Xtract International") and Xtract Energy PLC on 17 November 2008 in relation to Zhibek Resources Limited ("Zhibek"), which holds a majority interest in the Kyrgyz company KNG Hydrocarbons. The signing of these agreements provided the basis for Santos and Xtract to pursue an exit from their investment in Zhibek. In consideration for the release by Xtract of Santos from certain funding obligations under the Farm-in Subscription Agreement, Xtract International received 140,000,000 ordinary shares in Caspian Oil and Gas ("Caspian"), valued at AU$ 560K (£ 357K).

At the end of this financial year the fair value of these shares was AU$ 840K (£503K), this investment has subsequently been sold for a gross consideration of AU$ 980K (£650K).

On 17 December 2012 Xtract signed an agreement with Global Oil Shale Group Limited ("GOS"), whereby Xtract assigned its oil shale rights in Julia Creek to GOS for an equity share in GOS of 6 million shares valued at 0.12p and a cash payment of AU$ 50K (£33K). On listing, the Company will receive a further 1.5 million shares.

In a related transaction, Xtract also sold its entire 70% interest in Xtract Energy (Oil Shale) Moroccan SA to GOS for a cash consideration of AU$ 35K (£23K).

Consolidated and Company statements of financial position

As at 31 December 2012

Consolidated and Company statements of financial position (continued)

As at 31 December 2012

Peter Moir

Director

Consolidated and Company statements of changes in equity

Consolidated and Company statements of changes in equity

Consolidated and Company cash flow statements

For the year ended 31 December 2012

Notes to the consolidated financial statements

For the year ended 31 December 2012

1. General information

Xtract Energy PLC is a company incorporated in Great Britain under the Companies Act 2006. The address of the registered office is 4th Floor, 2 Cromwell Place, South Kensington, London, SW7 2JE. The nature of the Group's operations and its principal activities are set out in the operating and financial review on pages 4 to 8.

These financial statements are presented in Pound Sterling. Foreign operations are included in accordance with the policies set out in note 3.

2. Adoption of new and revised Standards

In the current year a number of new and revised standards and interpretations were adopted by the Group including amendments to IAS 1 ('Presentation of Items of Other Comprehensive Income'). None of these had any material impact on the financial statements.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

IFRS 9 Financial Instruments- Classification and Measurement

IFRS 10 Consolidated Financial Statements

IFRS 11 Joint Arrangements

IFRS 12 Disclosure of Interests in Other Entities

IFRS 13 Fair Value Measurement

IAS 19 (revised) Employee Benefits

IAS 28 (revised) Investments in Associates and Joint Ventures

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine

The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group.

3. Significant accounting policies

Basis of accounting

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). The financial statements have also been prepared in accordance with IFRSs adopted by the European Union and therefore the Group financial statements comply with Article 4 of the EU IAS Regulations.

The financial statements have been prepared under the historical cost convention modified for certain items carried at fair value, as stated in the accounting policies. The principal accounting policies adopted are set out below.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and entities controlled by the Company (its subsidiaries). These consolidated financial statements are made up for the year ended 31 December 2012.

Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

3. Significant accounting policies (continued)

The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where

necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and their share of changes in equity since the date of the combination. Losses applicable to the non-controlling interest in excess of the non-controlling party's interest in the subsidiary's equity are allocated against the interests of the Group except to the extent that the non-controlling interest has a binding obligation and is able to make an additional investment to cover the losses.

Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.

Going concern

Following a period of uncertainty earlier in the year which resulted in the Company suspending its existing ordinary shares on 27 June 2012 pending clarification of its financial situation, the Directors secured an offer by Tiger Resource Finance PLC and its Board to participate in a placing to acquire, between them, 29.9% of the total share capital for a combined investment of £300K. In addition an independent investor agreed to subscribe for new ordinary shares (representing 2.99% of the total share capital) raising a further £30K.

The Group held 14 million Equus Mining (formerly Caspian Oil & Gas Limited) shares which as at 31 December 2012 had a market value of £503K. On 14 February 2013 these shares were sold for a cash consideration of AUD$980K (c£650K).

The Group also holds 6 million Global Oil Shale shares with a market value of £720K as at 31 December 2012. On listing, the Company will receive a further 1.5 million shares.

The Group has in place a drawdown equity facility distribution agreement with Y A Global Master SPV to provide potential funding of up to £12.5 million from an equity line facility over a period of up to three years from the inception of the agreement. To date there have been two drawdowns both raising approximately £300K.

The Group is not currently generating revenues from its operations and would not have sufficient cash to make further investments in its existing and new projects in line with the Group's strategy.

Despite this, management believes the Company has adequate resources to continue in operational existence for the foreseeable future and through a combination of future fund raising and realising cash from non-core assets it will be able to invest in new projects in line with its strategy. The Company has sufficient funds to settle current liabilities when due, in addition to meeting overheads for the next twelve months without gaining access to additional funds. Therefore, the Directors continue to adopt the going concern basis of accounting in preparing these financial statements.

3. Significant accounting policies (continued)

Parent only income statement

Xtract Energy PLC has not presented its own income statement as permitted by section 408 of the Companies Act 2006. The loss for the year ended 31 December 2012 was £18,473K (2011: loss £5,478K).

Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRSs. Changes in the fair value of contingent consideration classified as equity are not recognised.

Where a business combination is achieved in stages, the Group's previously-held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 (2008) are recognised at their fair value at the acquisition date, except that:

·; deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;

·; liabilities or equity instruments related to the replacement by the Group of an acquiree's share-based payment awards are measured in accordance with IFRS 2 Share-based Payment; and

assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete

Information about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year.

3. Significant accounting policies (continued)

Investment in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held-for-sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets-Held-for-Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate.

Joint ventures

Jointly controlled entities

A jointly controlled entity involves the establishment of a separate legal entity in the form of a partnership, corporation or other entity. The entity controls the assets of the joint venture, incurs liabilities and expenses, and earns income. It maintains its own accounting records, enters into contracts in its own name and, generally, has an existence of the ventures, including the preparation of financial statements. The Group accounts for jointly controlled entities using the equity method as discussed above, except when the investment is classified as held-for-sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held-for-Sale and Discontinued Operations.

Non-current assets held-for-sale

Non-current assets (and disposal groups) classified as held-for-sale are measured at the lower of carrying amount and fair value less costs to sell.

Non-current assets and disposal groups are classified as held-for-sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

3. Significant accounting policies (continued)

Foreign currencies

The individual financial statements of each Group company are maintained in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in Pounds Sterling, which is the functional currency of the Company, and the presentational currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the

date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to non-controlling interest as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. The Group has elected to treat goodwill and fair value adjustments arising on acquisitions before the date of transition to IFRSs as Sterling denominated assets and liabilities.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

3. Significant accounting policies (continued)

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are

generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Property, plant and equipment and intangible assets

Oil and gas properties and leases

The costs of oil and gas properties and leases include the cost of acquiring and developing oil and gas properties and leases, together with any costs reclassified from intangible exploration and evaluation. Oil and gas properties and leases are amortised from the commencement of production in proportion to the ratio of production in the year to remaining reserves as at the start of the year. There were no amounts capitalised in respect of this category at either 31 December 2012 or 31 December 2011.Intangible exploration and evaluation expenditure assets

The costs of exploration properties and leases, which include the cost of acquiring prospective properties and exploration rights, are capitalised as intangible assets. Exploration and evaluation expenditure is capitalised within exploration and evaluation properties until such time that the activities have reached a stage which permits a reasonable assessment of the existence of commercially exploitable reserves when they are transferred to oil and gas properties and leases. Capitalised exploration and evaluation expenditure is assessed for impairment in accordance with the indicators of impairment as set out in IFRS 6 Exploration for and Evaluation of Mineral Reserves. In circumstances where a property is abandoned, the cumulative capitalised costs relating to the property are written off in the year.

Other Property, Plant and Equipment

Other tangible fixed assets represent office and computer equipment and are recorded at cost, net of accumulated depreciation. Depreciation is provided on all such tangible fixed assets at rates calculated to write off the cost or valuation of each asset on a straight-line basis over its expected useful life or the life of the relevant licence, whichever is less, as follows:

3. Significant accounting policies (continued)

Average life in years

Office and computer equipment 3-5

Plant and machinery 7-20

Until they are brought into use, fixed assets and equipment to be installed are included within assets under construction.

The cost of maintenance, repairs and replacement of minor items of tangible fixed assets are charged to the income statement as incurred. Renewals and asset improvements are capitalised. Upon sale or retirement of tangible fixed assets, the cost and related accumulated depreciation are eliminated from the financial statements. Any resulting gains or losses are included in the income statement.

Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other

assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does

not exceed the carrying amount that would have been determined had no impairment loss been recognised

for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

3. Significant accounting policies (continued)

Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL), 'held-to-maturity' investments, 'available-for-sale' (AFS) financial assets and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Available-for-sale financial assets ('AFS')

Listed shares and listed redeemable notes held by the Group that are traded in an active market are classified as being AFS and are stated at fair value. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the investments revaluation reserve with the exception of impairment losses which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the investment revaluation reserve is reclassified to profit or loss.

Dividends on AFS equity instruments are recognised in profit or loss when the Group's right to receive the dividends is established.

The fair value of AFS monetary assets denominated in a foreign currency is determined in the foreign currency and translated at the spot rate at the balance sheet date. Other foreign exchange gains and losses are recognised in other comprehensive income.

Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For listed and unlisted equity instruments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets objective evidence of impairment could include:

·; significant financial difficulty of the issuer or counterparty; or

·; default or delinquency in interest or principal payments; or

·; it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in the national or local economic conditions that correlate with default on receivables.

3. Significant accounting policies (continued)

Financial instruments (continued)

Impairment of financial assets (continued)

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.

With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the profit or loss to the extent that

the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income.

De-recognition of financial assets

The Group de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks or rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset, and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks

and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset, and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of contractual arrangements.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial instruments'.

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

3. Significant accounting policies (continued)

Financial instruments (continued)

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash flow payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

De-recognition of financial liabilities

The Group de-recognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.

Share-based payments

Equity-settled share-based payments to certain directors, employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 26.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.

Employee Benefits

Defined Contribution plan

The Group's funding of the defined contribution plan is charged to the income statement in the year that the service is provided.

Termination payments

Termination payments are payable when employment is terminated before the normal retirement age or when an employee accepts voluntary redundancy. Payments falling due more than twelve months after the end of the reporting period are discounted to their present value.

Finance Income

Finance income comprises interest income on funds invested (including available-for-sale financial assets). Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Operating Leases

Operating lease payments are recognised as an operating expense in the income statement on a straight-line basis over the lease term.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer (CEO). The CEO is responsible for allocating resources and assessing performance of the operating segments.

Comparative figures

Certain prior year's amounts have been reclassified from statements previously presented to conform to the presentation of 2012 consolidated Financial Statements.

4. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group's accounting policies, which are described in note 3, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The 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 if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.

The following are the critical judgements that the directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

Impairment of intangible assets and investments

The assessment of intangible assets for any indications of impairment involves judgement. If an indication of impairment, as defined in IFRS 6 or IAS 36 as appropriate, exists, a formal estimate of recoverable amount is performed and an impairment loss recognised to the extent that carrying amount exceeds recoverable amount. Recoverable amount is determined as the higher of fair value less costs to sell and value in use. The calculation of recoverable amount requires an estimation of the value in use of the cash-generating units to which the intangible assets are allocated. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

Share-based payments

The estimation of share-based payment costs requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The Group has made estimates as to

the volatility of its own shares, the probable life of options granted and the time of exercise of those options. The model used by the Group is the Black-Scholes model.

5 Investment revenue and other gains and losses

An analysis of the Group's investment revenue and other gains and losses is as follows:

6. Segmental Analysis

For management purposes, the Group is currently organised into operating divisions - oil & gas exploration, evaluation and development and oil shale exploitation. These divisions are the basis on which the Group reports its primary segment information to its CEO, to allocate resources to the segments and to assess their performance.

Principal activities are as follows:

·; investment and other - in various listed resource companies including held-for-sale assets;

·; oil & gas exploration, evaluation and development - of the Group's interests in Turkey, the Netherlands and Denmark (this is a discontinuing activity);

·; oil shale exploitation - of the Group's interests in Queensland, Australia and Tarfaya. The group discontinued its operations in this sector during the year.

6. Segmental Analysis (continued)

6. Segmental Analysis (continued)

Geographical information

The Group's operations are located in Europe, Central Asia and Australia.

The following table provides information about the Group's segment assets by geographical location:

7. Loss from continuing operations

Loss from continuing operations for the year has been arrived at after charging: