Unaudited Interim Statement

Petrel Resources plc (AIM: PET) today announces unaudited financial results for the six months ended 30th June 2024.

Chairman's Statement

Petrel is a junior hydrocarbon explorer with interests in Iraq and Ghana. There are now many oil & gas projects available, with promising geology and manageable logistics.

Demand for oil & oil products, as well as LNG, now surpasses preCovid-19 levels. Despite recent softening, prices are reasonable, and the supply-demand balance steadily tightens as majors withdraw from non-core basins, focusing on existing projects - often using cash to pay dividends and buy shares back, rather than make long-term investments.

However, the fiscal terms available from most states reflect those which became normal during times of better market conditions (2004 - 2014), but are sub-optimal for explorers. Many producing countries, including Iraq, are now talking about improved fiscal terms, but these have not yet been implemented. As a result, most successful bidders in international bid-rounds tend to be State Oil Companies, or in some cases majors with excess cash - often bidding uneconomic fiscal terms.

Neither the stock market nor farm-out market have been supportive of juniors or new frontier projects since 2014.

Given the improving supply-demand balance, and the clear need for major new discoveries as existing fields deplete, what explains the negative stance taken in the stock market?

The reason is that official policy (especially in Europe) has been to support a 'Green Transition', and to avoid permitting new projects that might became stranded assets - or lock economies into fossil fuels.

To some extent, this hard line is being reversed with worries over security of supply following the Ukraine war from 2022 to date. The EU's 'Global Gateway' (initially conceived to boost development, especially in Africa - as a response to China's 'Belt and Road' initiative) has now morphed into a means to secure supplies of 34 critical minerals, of which 17 are 'strategic'.

The USA passed its 'Inflation Reduction Act' in 2022, followed by the EU's Critical Resource Minerals Act in 2024. The directors have been working closely with the EU Commission's Critical Resource Minerals initiative since 2023. The opportunity is infinite, due to the paucity of EU companies experienced in exploration and development especially in developing countries, which require special skills that are not easily developed. Infrastructural investment may be funded up to 50% of total through EU, or Member States' lending bodies at circa 3.3% interest over 20 years. For qualifying 'Green Projects' up to 80% is possible. Typically, for new projects in new areas capex comprises 67% infrastructure, with plant, etc. making up the 33% balance.

Petrel Resources plc, which is an Irish and EU company, has been encouraged to apply its skills and contacts to help resolving the EU's critical need to reduce dependency on Chinese-controlled mining and processing of strategic raw materials. Given current market conditions, this makes sense for shareholders and the EU.

Accordingly, our team has invested time and effort, over recent months, in researching qualifying projects that fit within the EU's criteria.

Currently, the most advanced opportunities identified comprise adequate sources of Helium, which is increasingly critical to high-tech and aerospace industries. Though our petroleum contacts, we are aware of bypassed discoveries, in the Former Soviet Union (FSU) and elsewhere, that show large volume, high confidence reserves ideally suited to fulfil EU needs. Historically, most major Helium (and indeed natural Hydrogen) discoveries have been made - largely by accident - via oil & gas exploration. For reasons of prevailing economics and demand at the time, most of these discoveries have yet to be developed.

In light of current sanctions, it is impractical to develop such Helium (or Cobalt or Lithium) deposits in Russia or Iran. However, jurisdictions such as Kazakhstan are considered pro-western, and the EU has recently signed a Strategic Cooperation Agreement with the Kazakh government, so this is now an EU priority. The required gas exploration and production skills are closely related to those familiar to our team from the petroleum industry. There seems to be excellent potential opportunities for Petrel in such assets, subject to securing necessary funding.

Initial review work gives our experts confidence in the reserve and resource numbers. Potential offtake agreements - both for the EU, as well as China and India are economic at current prices. Title is an issue in the FSU, though many projects have proved solid and delivered good returns where the operator is well-partnered and pays attention to local community relations. These are Petrel's strengths.

Based on initial discussions, we do not see offtake, financing, and permitting as insurmountable obstacles in such critical resources.

The EU has funding and needs critical resource minerals. We believe that we have the contacts, skills and experience to deliver them.

Accordingly, it makes sense for Petrel to pivot, at least partially, away from a pure petroleum focus in developing countries, and towards critical resources for which EU support is available.

Financing

The directors and their supporters funded working capital needs, and are prepared to participate in any necessary, future fundings.

The board expects to add another one or more Non-Executive Director with the next major deal.

David Horgan

Chairman

The financial information for the six months ended 30 June 2024 and the comparative amounts for the six months ended 30 June 2023 are unaudited.

The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The interim financial statements have been prepared applying the accounting policies and methods of computation used in the preparation of the published consolidated financial statements for the year ended 31 December 2023.

The interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the audited consolidated financial statements of the Group for the year ended 31 December 2023, which are available on the Company's website www.petrelresources.com

• No dividend is proposed in respect of the period.
• GOING CONCERN

The Group incurred a loss for the period of €229,585 (FY2023: loss of €491,086) and had net current liabilities of €1,022,121 (2023: €973,503) at the balance sheet date. These conditions as well as those noted below, represent a material uncertainty that may cast significant doubt on the Group and Company's ability to continue as a going concern.

Included in current liabilities is an amount of €992,531 (31 December 2023: €947,531) owed to key management personnel in respect of remuneration due at the balance sheet date. Key management have confirmed that they will not seek settlement of these amounts in cash for a period of at least one year after the date of approval of the financial statements or until the Group has generated sufficient funds from its operations after paying its third party creditors.

The Group and Company had a cash balance of €13,248 (31 December 2023: €35,667) at the balance sheet date. The directors have prepared cashflow projections for a period of at least twelve months from the date of approval of these financial statements which indicate that additional finance will be required to fund working capital requirements and develop existing projects. As the Group is not revenue or cash generating it relies on raising capital from the public market.

LOSS PER SHARE

Basic loss per share is computed by dividing the loss after taxation for the year attributable to ordinary shareholders by the weighted average number of ordinary shares in issue and ranking for dividend during the year. Diluted earnings per share is computed by dividing the loss after taxation for the year by the weighted average number of ordinary shares in issue, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year.

The following table sets out the computation for basic and diluted earnings per share (EPS):

Basic and diluted loss per share The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:

Basic and diluted loss per share are the same as the effect of the outstanding share options is anti-dilutive.

INTANGIBLE ASSETS

Exploration and evaluation assets relate to expenditure incurred in exploration in Ghana. The directors are aware that by its nature there is an inherent uncertainty in exploration and evaluation assets and therefore inherent uncertainty in relation to the carrying value of capitalised exploration and evaluation assets.

As ratification has not yet been achieved in the current year the directors, as a matter of prudence, opted to write down a portion of the carrying value of the Tano 2A Block historic expenditure. Accordingly, an impairment charge of €74,653 (FY2023: €186,633) was recorded in the current period.

• Licence obligations;
• Exchange rate risks;
• Uncertainty over development and operational costs;
• Foreign investment risks including increases in taxes, royalties and renegotiation of contracts;
• Financial risk management;
• Going concern and
• Ability to raise finance.

Ordinary Shares -nominal value of €0.0125 Allotted, called-up and fully paid

Movements in issued share capital

On 3 January 2024 and 5 January 2024 a total of 5,000,000 warrants were exercised at a price of 1.8p per warrant.

POST BALANCE SHEET EVENTS

There are no material post balance sheets events affecting the Group.

• The Interim Report for the six months to 30th June 2024 was approved by the Directors on 18 September 2024.
• The Interim Report will be available on the Company's website at www.petrelresources.com.