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For immediate release

16 October 2008

Nautical Petroleum plc

('Nautical' or 'the Company')

Final Results for the year ended 30 June 2008

Nautical Petroleum (AIM:NPE), the independent exploration and petroleum company focused on the development of heavy oil assets in the UK and Europe today announces its final results for the year ended 30 June 2008.

HIGHLIGHTS

• Drilled 4 wells, including successful Kraken 9/2b-02 well.

• Increased net best estimate contingent resources to 94mmbo from 56mmbo (a 68% uplift on June 2007), primarily on the cornerstone assets of Mariner and Kraken.

• Raised £20.0 million in October 2007.

• Farm outs once again endorsed the asset portfolio, with premium terms being achieved, meaning limited financial exposure on the wells drilled during the period and late 2008.

• Kraken and Mariner on track for Field Development Plan (FDP) submissions in late 2009 / mid-2010.

• Cash resources of £20.1 million to take Company to FDP submissions for Kraken and Mariner.

CORNERSTONE ASSETS

Mariner

• 23mmbo (22mmbo June 2007) net proven and probable reserves

• 44mmbo (14mmbo June 2007) net best estimate contingent resources

• Field Development submission by mid 2010

Kraken

• 37mmbo (24mmbo June 2007) net best estimate contingent resources

• Field development submission by end 2009

Commenting on the results Steve Jenkins, Chief Executive Officer of Nautical said:

'Nautical's progress over the past twelve months has resulted in the creation of a solid asset platform from which reserves and resources, production and revenues are now firmly in sight for our shareholders.

Following the success on Kraken at the end of 2007 and the work carried out on the Mariner field, the Company has reserves of 23 million barrels and resources of a further 94 million barrels, in addition to our £20 million of cash in bank.

We look forward to the future with a high level of confidence.' 

Nautical Petroleum plc	020 7550 4890
Ian Williams, Chairman
Steve Jenkins, Chief Executive Officer
Buchanan Communications	020 7466 5000
Ben Willey Ben Romney
KBC Peel Hunt Ltd, Nominated Advisor and Broker	020 7418 8900
Jonathan Marren
Matt Goode

CHAIRMAN'S STATEMENT

I am pleased to present this Report and Accounts for Nautical Petroleum for the year ended 30 June 2008. 

Introduction 

The Company maintained its specialist focus and has achieved considerable progress through a wide ranging programme of asset appraisal activity aimed at the key objectives of near term production development and early oil flow. 

The prospectivity of the Company's licence portfolio was further endorsed by a series of farmin transactions, which have now completed, on terms which clearly evidence industry partner confidence in the quality of Nautical's assets. 5 wells and 1 seismic acquisition, with a combined cost of £46 million, have been farmed out. Partners will pay £50 million resulting in a £4 million surplus and a significant contribution to Nautical's strong cash position.

In addition to the 23mmbo of net probable reserves in Mariner, the Company has greatly increased net contingent resources, achieving a step change from 56 mmbo in the 2007 Report to 94 mmbo - a 68% increase. This is accounted for primarily by results for the 'cornerstone' Kraken and Mariner discoveries. In oil resource terms, Nautical shareholders have benefited significantly from the exceptional gains associated with the considerable progress made over this period. 

Financial Results

A successful share placing was completed in October 2007 raising £20.0 million ahead of the first Nautical operated well drilled on the Kraken discovery in late 2007. The funds raised, together with the plans for progressive multi-block farm-outs, ensure that sufficient cash exists to cover Nautical's planned equity funding requirements to reach FDP (Field Development Plan) submissions for both these cornerstone projects.

The Company continued to apply outsourcing services and risk sharing policies aimed at limiting overhead and sharing asset appraisal risk to conserve cash resources. 

Success in this respect has been evidenced by the latest farmouts, which have minimised the Nautical share of costs of the substantially expanded appraisal activity programme. Not all drilling has been successful, but where drill results were negative, the impact on Nautical cash resources was negligible. 

The Company continues to be debt free and has also secured a £7.5 million contingency facility. This facility is regarded as fallback for unforeseen events and has not, to date, been drawn. 

Portfolio Management 

Nautical has had exceptional success in attracting industry participation in sharing risk by farming in to the portfolio. The commercial skills of the management team have been demonstrated by the ability to successfully close deals on highly beneficial terms. 

While drilling results have been mixed, the execution of drilling projects has been exemplary. Management has demonstrated a consistent ability to plan effectively and complete on time and within agreed budget. This performance has enhanced the Company's standing both in the industry and with the regulatory authorities. 

While the prime focus has been on the discovered 'cornerstone assets', progress has also been made on the extensive portfolio of high graded prospects. The portfolio has been successfully expanded with partners in on-shore Europe, with further additions secured in France. 

Directors, Staff and Associates  

The extended Nautical team comprises a blend of management, expert specialist consultants, independent non-executive directors, partner secondees and contractors. The Company is very appreciative of the commitment and goodwill of all who have contributed to Nautical's progress during the year.

The next phase of development will require additional specialist management capacity and several related changes are planned over the period to December 2008. 

Since formation the company has contracted the services of Hemant Thanawala as CFO and Finance Director, sharing these services with other companies. The increase in business complexity, associated with planned progression to production development, now warrant the appointment of a full time financial management in the direct employ of the Company. 

The appointment of Will Mathers as Chief Financial Officer has been made effective October 2008 and he will also be appointed to the Board as Finance Director. 

The Nautical Board is highly appreciative of the contribution made by Hemant Thanawala from the formation of the Company to the present time and extends their thanks and best wishes to him for his services to the Company. 

It is intended to strengthen the management team by the appointment of a General Manager, Engineering. This appointment is also in preparation for the formulation of Field Development approval over the period to 2010 and subsequent progression to production development and oil flow. 

Share Consolidation

Having sought advice it was felt appropriate and in shareholders best interests that the Company undertake a 1 for 20 share consolidation, which took place on 25 September 2008. The associated effective reduction in the bid to offer spread is expected to reduce volatility, a feature generally supported by the institutional investment sector.

Outlook 

The outlook for Nautical continues to be extremely positive on all parameters which drive and deliver value - the more so given the confirmation of recoverable resources and the strong financial condition of the Company. 

As previously predicted, global trends continue to reflect the progressively heavier production barrel. Although the oil price has come down from the highs of well above $100 per barrel, Nautical believes that a step change to high energy prices has taken place. While expert opinion varies at the extremes, consensus suggests that price should remain well within the range required for viable near term production from Nautical's 'cornerstone' assets.

Aside from the activity programme to move the Kraken and Mariner discoveries to FDP, the Company will continue the active appraisal of its substantial exploration portfolio. Nautical is on the move and is well into transition on the journey from prospects to production. The Company has added considerable value over the past year and intends to continue to do so in the coming year.  

Ian Williams

Chairman 

  CHIEF EXECUTIVE'S REVIEW

Nautical entered into a new exciting phase of its development, drilling its first operated well on the Kraken discovery - a well which confirmed oil in the main reservoir and found further oil in a lower sand, resulting in an increased oil column and increased resources. This was followed by 2 operated exploration wells on Mermaid and Selkie.

We were pleased to welcome a new operator on Mariner (StatoilHydro) and look forward to the development of both Mariner and Kraken. Our focus continues to be to build and manage a portfolio of heavy oil assets, primarily on the East Shetland Platform by means of licensing rounds the most cost effective acquisition route. Nautical will continue to drill both appraisal and exploration wells but has successfully attracted partners which has limited our financial exposure and enabled your company to maintain a healthy cash balance despite the high level of drilling activity, seismic acquisition and driving the Mariner and Kraken developments forward. Nautical maintains its position as the only UK listed company offering significant exposure to a portfolio ranging from heavy oil developments to large exploration prospects.

Managing our Portfolio

The Company's portfolio now has 3 solid opportunity legs, the first and second being developments of Kraken and Mariner and the third an extensive portfolio of appraisal / exploration projects maintaining balance. The combined portfolio is now 17 blocks (13 licences) with Nautical operating 7 blocks (5 licences).

Kraken - Successful appraisal well

Nautical's first operated well (9/2b-2) was the successful well on the Kraken accumulation 2.7 kilometres north of the 9/2-1 well encountering heavy oil in both the main Heimdal sand and lower sands. The result exceeded Nautical's expectations pushing the oil down to (ODT) down 51 meters, giving a gross hydrocarbon column of at least 77m of lower viscosity than predicted oil. The well result indicates a large oil accumulation which the Company and its aligned Joint Venture partners are determined to develop in the shortest possible timeframe. In order to achieve this, both development and technical studies are either completed or ongoing. A further appraisal well was drilled in September / October 2008 on the extreme north-eastern flank of the mapped structure.  Submission of a field development plan is anticipated before the end of 2009.

Mariner - A new energised operator

StatoilHydro purchased Chevron's equity in Mariner, East Mariner and Bressay and became operator in October 2007. Nautical is particularly pleased that the new Operator shares its enthusiasm for heavy oil in the East Shetland Platform and endorses Nautical's heavy oil strategy. StatoilHydro is aggressively leading the joint Mariner and East Mariner group to develop both accumulations, a vigour illustrated elsewhere in the drilling and production testing of a Bressay well (directly northeast of Kraken).

Both the new 3D and ocean bottom cable surveys were acquired in the summer with results expected by the end of 2008. This accelerated programme was the first operational activity for 11 years over the Mariner accumulation. 

The Joint Venture will now proceed to submit a field development plan (FDP) covering both reservoirs in mid 2010, heralding the long awaited first oil from Mariner. 

Further Significant Appraisal and Exploration Opportunities

On both our operated blocks and as an active joint venture partner, we continue to acquire seismic data and carry out integrated studies over the blocks to elevate leads to drillable prospects, before releasing the potential through drilling.

The large Jurassic Hydra prospect was confirmed by acquiring our first operated seismic data acquisition and this will be drilled in October 2008, to be followed by a well on Catcher in 2009 (28/9 and 28/10b) postponed from 2008 due to the operators high level of activity elsewhere.

Work continues apace on Merrow in the East Irish Sea basin confirming a large prospect at both Triassic and Permian levels. Contingent resources have increased on the Tudor Rose discovery due to mapping of reprocessed 3D seismic and new seismic is planned over the Scylla channel (contiguous and directly west of the Kraken discovery).

Nautical has been very successful in mitigating risk by farming out both exploration and appraisal wells, first to Celtic Oil Limited, then Canamens Energy Limited and Silverstone Energy. During the period further farmins were agreed with Canamens over blocks 8/25a, 9/2b and 3/27a, thus the impact of the unsuccessful exploration wells on Mermaid and Selkie were minimal with the Company having little financial exposure to the just completed Kraken appraisal well and the forthcoming Hydra exploration well whilst retaining 35% equity interests in both. Nautical will continue to attract new partners to opportunities and aims to retain an equity interest of 30-50% in operated blocks and a meaningful interest in non-operated licences. Portfolio management includes the high grading of the blocks resulting in the relinquishment of non-prospective blocks. However, these will be replaced by new opportunities through farm in and most likely through licence awards.

Our extensive database and understanding of the hydrocarbons systems over the East Shetland Platform has enabled Nautical to attract new partners and retain existing co-venturers in high grading blocks for application in the 25th Seaward Licensing Round. In addition we have joined with our existing operators in making selective applications in the Moray Firth. The blocks are likely to be awarded at the end of 2009 or in the new year. Further successful French permit applications at Pontenx and Gex will augment the portfolio when officially awarded. 

Oil portfolio audit

RPS Energy carried out an audit as at 30 June 2008. A summary of their report is included in supplementary information at the end of this report. The figures in this report for reserves are proven plus probable and all contingent resources and prospective resources are best estimates.

Oil price still high but so are costs

Nautical expects the oil price to remain high despite the recent sharp fall off from record levels. The narrow quality discount is likely to persist since heavy oil production in the UKCS is still in decline and the sources of naphthenic oil are still few and far between.

Operational costs still remain high but rig slots seem to be appearing. The ongoing aim is to control costs through farming down to reduce our financial exposure to upcoming wells. Nautical appears to be making some progress in lobbying the UK Treasury for improved fiscal terms for heavy oil development.

Skill shortages still prevail, however we aim to strengthen the engineering expertise in our core team whilst fostering our relationships with aligned contractors. We have demonstrated our operational capability by drilling 3 wells safely and on budget (2 in the winter). This is a great testament to all involved, including specific expertise from our Joint Venture partners.

The Future

We look forward to progressing both Kraken and Mariner to early FDP submission and drilling up our large appraisal and exploration portfolio to add to these development opportunities. 

Steve Jenkins

Chief Executive Officer

OPERATIONAL REVIEW

OUR PORTFOLIO

As at September 2008

Kraken: Block 9/2b

(Licence P1077 - 35% interest)

• A successful appraisal well was drilled in October 2007 on the Kraken discovery. A deeper oil-down-to (ODT) was encountered and the oil is of a higher API with less viscosity then predicted. 

• A further appraisal well was drilled (Sept/Oct 08).

• Aim to submit FDP before end 2009.

• Contingent resources of 106mmbo (gross,) 37mmbo (net).

Mariner: Block 9/11a

(Licence P335 - 26.67% interest)

• This highly appraised field has produced 662,000 barrels of oil on extended test at a maximum rate of 14,991bopd (14.5 API) from the Maureen Formation sands and has flowed up to 1,800bopd from the shallower Heimdal reservoir.

• 3D seismic and an Ocean Bottom Cable (OBC) survey were acquired mid 2008 to better image the large Heimdal Sandstone reservoir. 

• No more drilling is required and FDP submission is planned for mid 2010.

• Reserves of 94 mmbo (gross), 23mmbo (net)

• Contingent resources of 180mmbo (gross), 44mmbo (net).

Hydra: Block 3/27a

(Licence P1203 - 35% interest)

• High density, high resolution 2D seismic was acquired in 2007 and a potentially large prospect has been defined.

• Drilling will commence in October 2008. 

Scylla: Blocks 8/5 and 9/1

(Licence P1277 - 100% interest)

• High resolution 2D seismic was acquired in September and October 2008.

• Results to be integrated with previous data to ascertain if there are drillable prospects. 

Tudor Rose: Block 14/30a

(Licence P1463 - 20% interest)

• The block contains the Tudor Rose discovery.

• Interpretation of 208 km2 of 3D seismic has yielded encouraging results.

• Engineering studies are underway on the 14/30a-2 discovery well to determine the case for further drilling.

• Contingent resources of 49mmbo (gross,) 10mmbo (net).

Catcher: Blocks 28/9 and 28/10b

(Licence P1430 - 15% interest)

• The blocks contain several leads and prospects including the Catcher and Catcher East prospects.

• Catcher is to be drilled in 2009.

• Prospective resources of 21.8mmbo (gross,) 3.3mmbo (net).

Merrow: Blocks 113/29c and 113/30

(Licence P1475 - 50% interest)

• The blocks lie on the edge of the East Irish Sea basin.

• Evaluation of seismic and other data has confirmed the large Merrow prospect, adjacent to Walney Island.

• This offshore prospect can be tested by a well from a site onshore.

Mermaid: Block 9/11c 

(Licence P979 - 50% interest)

• An unsuccessful well was drilled in November 2007. 

• Remaining prospectivity will be determined by the work on the adjacent Mariner block, with a possible field extension into 9/11c.

Selkie: Block 8/25a 

(Licence P976 - 30% interest)

• An unsuccessful well was drilled in May 2008 on the Selkie prospect. The block also contains the Kelpie prospect and is being further evaluated.

Dragon: Blocks 2/3a and 2/4b 

(Licence P1492 - 33.33% interest)

• Following evaluation of the blocks the group has decided to relinquish the licence.

St Laurent: France 

(22% interest)

• Located in Aquitaine Basin, SW France, the Grenade-Sur-Ardour well produced 8,000 barrels in a series of tests. 

• An appraisal well drilled in January 2008 failed to find viable reservoir and hydrocarbons. Evaluations are being undertaken on the oil bearing reservoir to determine the feasibility of drilling a production well.

• Following 2D seismic reprocessing on the large Audignon Ridge, subsalt gas prospect in the block, we will seek to farmout prior to drilling a well.

• Grenade has contingent resources of 12.8mmbo (gross,) 2.8mmbo (net).

 Pontenx: France 

(20% interest)

• Located in the Parentis Basin, SW France, the permit application was successful, with official award expected in October 2008.

• The permit contains the abandoned Mimizan Nord field which produced 3.5 mmbls of 12 API oil and a number of high potential prospects.

GEX: France 

(20% interest)

• Located in the Eastern France near the Swiss border, the permit application was successful, with official award expected in October 2008.

• Previous drilling on the block encountered shallow oil and the initial work programme will be to reprocess and interpret existing seismic and carry out geological studies.

FINANCE DIRECTOR'S REVIEW

Introduction

The prime focus for the Group and its management during the year was to engage in substantial exploration and appraisal drilling activity to progress the business towards first oil and revenue. This involved the drilling of Nautical's first operated appraisal well on the Kraken discovery as well as 2 operated exploration wells on the Mermaid and Selkie prospects. In addition, a further non-operated well was drilled by Egdon Resources on the Grenade discovery in South West France. The results of these drilling programmes are covered in more detail in the Chief Executive Officer's review. 

In keeping with the established business strategy, Nautical has been successful in minimising the call on its own resources in the exploration drilling programme during the year by entering into further farm-out arrangements. Whilst these have not only carefully conserved the existing financial resources of the Group during the drilling programme undertaken, they have in fact provided further capacity for the programme going forward. The management firmly believe that on the execution of the latest farm-out agreement with Canamens, the Group now has sufficient cash resources to take both its key assets, Kraken and Mariner, through to field development plan approvals during the course of 2009/early 2010.

The farm-out arrangements that Nautical has been able to secure over the last 3 years not only demonstrate the quality of the assets within its portfolio but also the management's ability and determination to manage risks effectively, secure strong industry partners and provide the means to take the core assets to production on a planned and timely basis. With Statoil Hydro coming in as the operator of the Mariner field during the year through the acquisition of Chevron's interest in it, Nautical is assured of the commitment to bring this field into production on a faster track.

Results for the year

The after-tax loss for the year to 30 June 2008 is £4.5m (2007 £0.4m). This includes a write off of exploration costs of £3.2m (2007 £Nil), general and administrative expenses of £1.7m (2007 £1.3m) and bank deposit interest income of £1.0m (2007 £0.5m). The charge for the share options, included in the general and administrative expenses, is £0.5m (2007 £0.4m).

Exploration costs written off principally comprised costs associated with the unsuccessful well drilled on the Mermaid prospect during the year. 

Basic and diluted loss per share is 0.37p (2007 - 0.05p).

Balance sheet

At 30 June 2008, the Group had net assets of £65.5m (30 June 2007 £50.6m). The most significant balances are intangible exploration and evaluation assets of £56.4m (2007 £49.8m) and cash and short-term deposits of £20.1m (2007 £8.9m).

The net movement in the total exploration and evaluation assets of £6.6m comprises £10.5m of expenditures less £0.7m of exchange effects and £3.2m of write-offs. The significant components of spend in the year included £7.2 million on the Kraken, Mermaid, Selkie and Grenade licences, primarily for drilling; £0.6 million on Hydra, principally for seismic and £2.6 million on the Mariner field, including development preparation work. £2.2 million of costs were reimbursed post year end, following conclusion of the farm out of the Selkie well.

Cashflow

The Group ended the year with £20.1m of cash and short-term deposits (2007 £8.9m). The Group remains debt free, although it has at its disposal an undrawn standby loan facility with Bank of Scotland for £7.5m expiring in May 2009. 

On 17 October 2007 the Group placed 190,476,191 ordinary shares of 1p each at 10.5p each, raising £19.2m net of expenses.

During the year, the Group spent £1.7m funding the operations, of which £0.9m related to staff costs. £7.2m was spent on intangible exploration and evaluation assets after adjustments for working capital movements. Post year end, in addition to the £2.2 million for the drilling of the Selkie well, a further £4.8 million was received as part of the farm out of Kraken, Hydra and Selkie.

All the Group's cash is held with Bank of Scotland and BNP Paribas and at 30 June 2008, £15m was held on short-term deposits.

Capital structure

The Group had 1,268,165,810 ordinary shares of 1p each in issue, out of its authorised share capital of 2,000,000,000 ordinary shares, at 30 June 2008. Following a 20:1 share consolidation on 25 September 2008, there are currently 63,408,291 ordinary shares of 20p each in issue out of 100,000,000 authorised. Taking into consideration the outstanding options, warrants & committed shares, the Board presently has a remaining authority to issue 25,000,000 ordinary shares under section 80 and 4,267,723 ordinary shares under section 89 of the Companies Act 1985. These authorities will be reviewed at the next AGM, as appropriate.

Treasury and financial risk management

Control over treasury and risk management is exercised by the board and its Audit committee through the setting of policy and the regular review of forecasts and financial exposures. Presently, the Group's financial instruments comprise principally of cash and liquid resources and other items, such as accounts receivable and payable, which arise directly from its operations. It is still the Group's policy not to undertake any trading activity in financial instruments, including derivatives.

The board and management are actively monitoring the current turmoil in the financial markets and have already taken measures to reduce credit and liquidity risk by ensuring cash deposits are not all held with one financial institution.

Taxation

At 30 June 2008, the Group has tax losses of approximately £3.5m (2007 £2.9m) arising in the UK that are available indefinitely against future taxable profits under current legislation. Deferred tax assets of approximately £1.9m (2007 £1.1m) have not, however, been recognised in the financial statements as a result of the uncertainties of their realisation in the foreseeable future. 

A deferred tax liability of £6.4m (2007 £6.6m) has been recognised in the financial statements on the acquisition of a subsidiary company prior to the transition date for IFRS (1 January 2005). The tax rate applicable for the periods after April 2007 has been reduced to 28% for this purpose.

Outlook

The Group has firmly adhered to its core business strategy during the year under review and will continue to do so going forward. We believe that in following this strategy, the Group is well positioned to reach its primary goal of taking its core assets, Kraken and Mariner, right through to their field development plan approvals without the call for any further financial support from our shareholders. At the same time, the Group should be able to continue with its exploration activity on a number of its assets, on a selective basis, in conjunction with its partners.

The management continues to place a strong emphasis on both our financial strategy and risk management strategy in order to ensure not only a rapid but a carefully managed progression to revenue. As noted in the Chairman's statement, steps have already been taken in the new year to further strengthen the financial management function within the Group not only to support these strategies but also the anticipated increase in the level of activity in the foreseeable future.

Hemant Thanawala

Finance Director

Consolidated income statement 

For the year ended 30 June 2008

                             

		2008 £'000	2007 £'000
Operating costs		(157)	(161)
Gross loss		(157)	(161)
Administrative expenses		(1,711)	(1,269)
		(1,868)	(1,430)
Exploration costs written off		(3,244)	-
Operating loss	note 1	(5,112)	(1,430)
Finance income		1,130	741
Finance costs		(538)	(174)
Loss before tax		(4,520)	(863)
Tax		-	472
Loss for the year		(4,520)	(391)
Attribute to:
Equity holders of the Company		(4,505)	(490)
Minority Interests		(15)	99
		(4,520)	(391)
		Pence	Pence
Basic and diluted loss per share	Note 2	(0.37)	(0.05)

The results above were entirely derived from continuing operations.

Consolidated balance sheet 

As at 30 June 2008

		At 30 June 2008 £'000	At 30 June 2007 £'000
Non-current assets	Note 3
Intangible assets		56,400	49,768
Property, plant and equipment		2,446	2,588
		58,846	52,356
Current assets
Trade and other receivables		604	290
Short term deposits	Note 4	15,000	-
Cash and cash equivalents	Note 4	5,118	8,943
		20,722	9,233
Total assets		79,568	61,589
Current liabilities
Trade and other payables		(4,658)	(1,386)
Non-current liabilities
Deferred tax		(6,431)	(6,609)
Other payables		(3,024)	(2,974)
		(9,455)	(9,583)
Total liabilities		(14,113)	(10,969)
Net assets		65,455	50,620
Equity attributable to equity holders
Called up share capital		11,588	9,683
Share premium		37,748	20,491
Other reserves		29,169	29,169
Cumulative translation reserve		(1,659)	(1,330)
Accumulated losses		(11,391)	(11,612)
Equity attributable to equity holders		65,455	46,401
Minority interests		-	4,219
Total equity		65,455	50,620

The financial statements were approved by the Board on 15 October 2008 and were signed on its behalf by:

I Williams    H Thanawala

Chairman    Finance Director

Consolidated statement of changes in equity 

For the year ended 30 June 2008

            

	Share capital £'000	Share premium £'000	Other reserves £'000	Cumulative translation reserve £'000	Retained earnings £'000	Minority interests £'000	Total equity £'000
At 1 July 2006	9,627	20,116	29,169	(12)	(11,513)	4,537	51,924
Currency translation adjustments	-	-	-	(1,318)	-	(417)	(1,735)
Total expenses recognised directly in equity	-	-	-	(1,318)	-	(417)	(1,735)
Loss for the year	-	-	-	-	(490)	99	(391)
Total recognised income and expense for the year	-	-	-	(1,318)	(490)	(318)	(2,126)
Share-based payments	-	-	-	-	391	-	391
New shares issued	56	375	-	-	-	-	431
At 30 June 2007	9,683	20,491	29,169	(1,330)	(11,612)	4,219	50,620
Currency translation adjustments	-	-	-	(329)	-	72	(257)
Total expenses recognised directly in equity	-	-	-	(329)	-	72	(257)
Loss for the year	-	-	-	-	(4,505)	(15)	(4,520)
Total recognised income and expense for the year	-	-	-	(329)	(4,505)	57	(4,777)
Share-based payments	-	-	-	-	450	-	450
New shares issued	1,905	18,095	-	-	-	-	20,000
Costs associated with issuance of shares	-	(838)	-	-	-	-	(838)
Effect of change in minority interest	-	-	-	-	4,276	(4,276)	-
At 30 June 2008	11,588	37,748	29,169	(1,659)	(11,391)	-	65,455

Consolidated cash flow statement

For the year ended 30 June 2008

		2008  £'000	2007  £'000
Net cash outflow from operating activities	Note 5	(1,684)	(677)
Cash flows from investing activities
Finance income		988	493
Expenditure on intangible assets		(7,222)	(2,695)
Net cash flow from investing activities		(6,234)	(2,202)
Cash flows from financing activities
Proceeds from issue of ordinary shares		19,162	-
Increase in amounts due to JV Partners		562	-
Repayment of loans		-	(360)
Finance expense		(366)	-
Increase in cash placed on short term deposit		(15,000)	-
Decrease in balances due to related undertakings		(265)	(118)
Net cash flow from financing activities		4,093	(478)
Decrease in cash and cash equivalents		(3,825)	(3,357)
Cash and cash equivalents at beginning of year		8,943	12,300
Cash and cash equivalents at end of year		5,118	8,943

Note 1 Operating loss
	2008  £'000	2007  £'000
Operating loss is stated after charging:
Exploration costs written off	3,244	-
Depreciation of property, plant and equipment	142	144
Foreign exchange losses / (gains)	171	(267)

Note 2  Loss per share	2008	2007
Loss for the year attributable to equity holders (£'000)	(4,505)	(490)
Basic weighted average number of shares in issue  in the year (thousands)	1,211,806	1,075,450
Basic and diluted loss per ordinary share (pence)	(0.37)	(0.05)

                                

On 25th September 2008 a 1 for 20 share consolidation took place. Applying this to the above numbers would have resulted in a loss per share of 7.44p in 2008 and 0.91p in 2007.

Note 3

Intangible assets and property, plant and equipment

Movements during the year were as follows:        

                    

	Intangible assets. Exploration and evaluation assets £'000	Property, plant and equipment. Extended well test equipment. £'000	Other £'000	Total £'000
Cost
At 1 July 2006	49,279	2,796	7	52,082
Additions	3,125	-	-	3,125
Exchange adjustments	(2,636)	-	-	(2.636)
At 30 June 2007	49,768	2,796	7	52,571
Additions	10,566	-	-	10,566
Exchange adjustments	(690)	-	-	(690)
Written off	(3,244)	-	-	(3,244)
As at 30 June 2008	56,400	2,796	7	59,203
Depletion and Depreciation
At 1 July 2006	-	70	1	71
Provided in year	-	140	4	144
At 30 June 2007	-	210	5	215
Provided in year	-	140	2	142
At 30 June 2008	-	350	7	357
Net book value
At 30 June 2008	56,400	2,466	-	58,846
At 30 June 2007	49,768	2,586	2	52,356

        

Note 4 Cash and short term deposits	30 June 2008 £'000	30 June 2007 £'000
Cash at bank and in hand	3,649	556
Deposits of 3 months or less	1,469	8,387
Cash and cash equivalents	5,118	8,943
Short-term deposits	15,000	-

Note 5

Net cash flows from operating activities	2008 £'000	2007 £'000
Loss for the year	(4,521)	(391)
Finance income	(1,130)	(741)
Finance costs	538	174
Taxation	-	(472)
Exploration costs written off	3,244	-
Share-based payment charges	450	391
Depreciation	142	144
Foreign exchange movements	171	(267)
Operating cash flow before working capital movements	(1,106)	(1,162)
(Increase)/Decrease in trade and other receivables	(432)	443
(Decrease)/Increase in trade and other payables	(146)	42
Net cash outflow from operating activities	(1,684)	(677)

ENDFR UVSBRWSRRAAA