Final Results

Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas Magnolia Petroleum Plc (`Magnolia' or `the Company') FinalResultsforthe year to 31 December 2012 Magnolia Petroleum Plc, the AIM quoted US focused oil and gas exploration andproduction company, announces its final results for the year ended 31 December2012. Highlights

* $11.1 million capital raised to acquire acreage in proven onshore US

formations such as the Bakken, North Dakota and participate in wells with

leading operators such as Marathon Oil and Statoil * Interests in 101 wells as at 31 December 2012 - 86 producing and 15 drilling/completing - 46% increase year on year * + Production as at 31 December 2012 stood at 122.5 boepd * 194% increase in full year revenues to US$709,395 (2011: US$241,038) *

+ monthly run rate increasing - December 2012 revenues three times higher

than January 2012 * Significant increase in 2P reserves to 1.367 million barrels of oil and condensate and 4,513 MMcf of natural gas (1 January 2013) compared to 68,700 barrels of oil and condensate and 249.8 MMcf (1 October 2011) * 3P reserves valued at US$94million underpinning market valuation - 422% increase since Admission to AIM in November 2011 * + Reserves estimate only includes approximately 5,500 net acres out of a total of 12,700 in proven formations - substantial upside potential

* Over 13,000 net mineral acres with more than 600 potential drilling

locations in producing onshore US plays acquired during the year providing

strong future pipeline of growth

* First well drilled as operator in Oklahoma - awaiting fracture stimulation

Magnolia CEO, Steven Snead said, "The increase in proved and probable (`2P')net reserves to 1.367 million barrels of oil and condensate and 4,513 MMcf ofnatural gas reflects the excellent progress made by the Company in 2012 interms of drilling wells and acquiring leases in proven US onshore formations.This reserve upgrade, which only includes 5,500 of the 13,500 plus acres wehold, highlights both the asset-backing behind our current market valuation, aswell as the tremendous scope within our portfolio of over 600 potentialdrilling locations to create further substantial value for shareholders. Duringthe year, we also significantly increased the number of producing wells inwhich we have an interest, resulting in a three fold increase in full yearrevenues to over US$700,000. In line with our strategy, revenues will bereinvested into more drilling to grow net reserves further, as we look tomonetise the sizeable asset base we have acquired to date."

Chief Executive's Statement

We aim to create substantial value for shareholders through the acquisition andsubsequent development of leases in producing US onshore formations, such asthe Bakken in North Dakota and the Mississippi Lime, Hunton and Woodford inOklahoma. By systematically drilling acquired leases both as a partner andoperator, we are focused on proving up and growing the Company's net reserves.Set against this context, I am pleased to report that the year under review hasbeen a transformative period for Magnolia Petroleum, one that has seen a stepup in the scale of our operations culminating in a four fold increase in thevalue of our proved, probable and possible reserves (`3P') to US$94 million, aconsiderable increase in the Company's asset backing. In 2011, with limited capital we successfully proved the potential of our lowrisk/high return business model to generate multiples of the capital employed.In the two years prior to our Admission to AIM, we participated in the drillingof 23 wells, 22 of which generated commercial returns, illustrating therelatively low exploration risk associated with drilling historic US onshoreplays. In aggregate we turned an initial £300,000 capital into a NPV of US$1.5million as valued by Moyes & Co in the Company's AIM Admission document. Having successfully moved to AIM at the end of 2011, we immediately set aboutputting in place the key building blocks, specifically leases and capital thatwould enable us to replicate our previous success on a larger scale. Thenumbers speak for themselves. At the beginning of the year, Magnolia held 1,259net mineral acres in proven US onshore hydrocarbon formations such as theBakken/Three Forks Sanish in North Dakota and the Hunton/Woodford in Oklahoma.By 31 December 2012 this figure had risen to 13,513 net mineral acres.Similarly, over the course of 2012, we raised $11.1 million in five tranches,each at a higher price than previously. Importantly we secured a £10 millionEquity Financing Facility (`EFF') and a £500,000 investment from HendersonGlobal Investors. £4.665 million of the EFF remains available for utilisation. Armed with leases and access to capital, we stepped up our involvement indrilling activity during the period under review with the aim of growingreserves. In January 2012 we had interests in 66 producing properties with afurther three at various stages of drilling/completion. By the end of the year,the number of producing/drilling wells Magnolia had an interest in had risen to101. Drilling serves four main purposes: to grow net production and revenues;to prove up reserves; to increase the number of proven undeveloped reserves;and to hold leases by production. In line with our strategy, revenues generated from production are reinvestedinto new wells. With this in mind, payback (recovery of costs) is a key metricthat we focus on when evaluating initial production rates, as this tells us howquickly we can recycle funds invested into more drilling to prove up ourreserves further. The results of the activity we undertook in 2012 were highlighted in theupdated Reserves Report by our Competent Person, Moyes & Co. (`Moyes'). Thisshows that in the period between our Admission to AIM in November 2011 and 31December 2012, Magnolia's 2P reserves grew from 68,700 barrels of oil andcondensate and 249.8 million cubic feet (`MMcf') of natural gas to 1.367million barrels and 4,513 MMcf. Meanwhile our 3P reserves grew to 2.818 millionbarrels of oil and 9,231 MMcf of gas from 975.6 thousand barrels of oil and1,175 MMcf of gas previously. Moyes has assigned a Net Present Value afterapplying a 10% discount rate of approximately US$94 million to our 3P reserves,a figure that stands at a significant premium to our current marketcapitalisation and highlights the considerable value we have created in ourfirst full year on AIM. As expected, the early stage nature of our recently acquired Montana acreageand limited drilling activity in the area to date meant that it did notcontribute to the reserves upgrade this time round; however, Moyes hasclassified our leases in Montana as prospective resources with a value of overUS$12 million. Our acreage is surrounded by the 320,000 net acres acquired byApache last year. In addition to producing formations such as the Ratcliffe,Apache, like us, view their acreage in Daniels County as having the potentialto be an extension of the Bakken/Three Forks Sanish formations that are soprolific in North Dakota. As Apache press on with their drilling programme inMontana, the prospectivity of our acreage in the area will become moreapparent. We remain highly confident that our entry into Montana will lead toanother substantial increase in Magnolia's net 3P reserves in the future.

Financial Review

During the twelve month period, our net production generated revenues ofUS$709,395 compared to US$241,038 the previous year. Importantly, the monthlyrun rate consistently improved over the course of the year so that December'srevenues were almost three times as much as those of January. We expect thistrend to continue. The growth in revenues has been mirrored by a nearquadrupling in tangible assets to US$3,437,869 at end December 2012 compared toUS$861,975 the previous year. Growth in intangible assets (new leases and wellsthat are drilling but not yet completed) was even stronger having increased toUS$6,200,828 from US$1,111,634 in 2011. At the end of the year we retained$2,293,151 in cash for continued development of our acreage. Administrativecosts continue to be tightly managed, allowing the vast majority of additionalrevenues generated to be recycled into further wells or acquiring additionalleases. In 2012, $8,098,566 was invested in increasing the asset base with only$623,249 used in operating activities.

Outlook

Reflecting the results of activity covering just a little over twelve months,the recently reported 422% growth in 3P reserves is just the beginning. Havingamassed a portfolio of 13,513 net mineral acres with over 600 potentialdrilling locations, considerable scope remains for further substantial reservesgrowth for many years to come just by drilling our existing portfolio alone. Wecontinue to receive multiple proposals to drill new wells, and at the same timewe are constantly working towards increasing our acreage, providing furtheropportunities to create value above and beyond our existing leases. With thisin mind and a considerable pipeline of drilling locations in place, we arehighly excited by the scale of the opportunity in front of us, as we look tobuild a significant US onshore focused oil and gas company.

Finally, I would like to thank the Board, management team and all our advisersfor their hard work during the year and also to our shareholders for theirsupport over the last twelve months.

Steven Snead

Chief Executive Officer

Chief Operations Officer's Report

The Bakken / Three Forks Sanish Formations, North Dakota

At the time of our Admission to AIM in November 2011, the Company anticipatedparticipating in four new wells on its Bakken/Three Forks Sanish (`TFS')acreage in North Dakota in 2012. In the event, Magnolia elected to participatein ten new wells targeting the Bakken and TFS formations, bringing the totalnumber of wells in which the Company has an interest in these two formations to24, of which 22 are currently producing. Four of the wells brought on stream during the year are producing from theBakken, a reservoir which currently produces over 700,000 bopd and is estimatedto hold mean undiscovered recoverable volumes of 3.65 Bbbls and 1.85 Tcf (2008US Geological Survey). Initial production rates for these four wells were: * Eckelberg 14-23 H well: 1,263 bopd and 625 MCF; * Quill 2-12-3H well: 877 bopd; * Skunk Creek 14H well: 212 bopd; * Stocke 1-4-9H 295 bopd. Post period end, the Company reported initial production rates for two wellsoperated by Marathon Oil: Nicky Kerr 14-8 well (1,501 boepd); and Curtis Kerr24-8H (1,496 boepd). Two further wells, Skunk Creek 15H and Eckelberg 14-23 TF, are producing fromthe Three Forks Sanish formation, a separate reservoir lying directly below theBakken. At 2,303bopd and 1,234bopd and 602MCF respectively, the initialproduction rates for both wells exceeded the directors' expectations and in thecase of Skunk Creek 15H are Magnolia's best rates recorded to date. A statestudy evaluating oil reserves in the Three Forks Sanish formation in westernNorth Dakota concluded that there could be as much as 2 billion barrels ofrecoverable oil in this formation.

The remaining two wells in which Magnolia has an interest where drilling/stimulating operations are on-going are the Jake 2-11 1H and Jake 2-11 TFH,both operated by Statoil.

Magnolia holds leases in respect of 11,520 gross acres across 28 sections,equating to 421 net mineral acres within the boundaries of the Bakken / TFSformations. As the Three Forks Sanish lies beneath the Bakken, the number ofwells which can be drilled per section doubles to eight (four per formation),providing Magnolia with a total of 120 proven development locations on itsacreage, 60 on the Bakken and 60 on the Three Forks Sanish, as set out in theUpdated Reserves Report by Moyes & Co. dated 8 April 2013. In their report,Moyes & Co. estimated Magnolia's Bakken 2P reserves at 153,000 barrels of oiland condensate and 83 MMcf of natural gas to which Moyes has assigned a valueof US$1.35 million.

As expected, the initial production rates from the Skunk Creek 15H andEckelberg 14-23 TF wells have led to an upgrade in Magnolia's Three ForksSanish reserves. In the updated Competent Person's Report, Magnolia's 2Preserves in this formation are estimated at 27,000 barrels of oil andcondensate and 15 MMcf of natural gas which Moyes has assigned a value ofUS$0.673 million.

Mississippi Lime Formation, Oklahoma

At the time of Magnolia's Admission to AIM, the directors identified theMississippi Lime as the next big play in onshore US. In 2012, Magnolia enteredthis historic formation and over the course of the year, acquired 4,319.55 netmineral acres. The acquired acreage includes leases with working interests ofup to 100%, 74 proven undeveloped locations and an additional 222 increaseddensity locations in which Magnolia could propose and/or operate. In total,there are 296 potential drilling locations on the Company's acreage.

Over the course of the year, Magnolia participated in 13 wells targeting theMississippi Lime. Initial production rates for seven of these wells werereported during 2012, all of which were ahead of expectations:

* Brady 17-27-12 1H (702.5 boepd); * Lois Rust 7-27-12 1H (353.75 boepd); * LaDonna 19-28-16 1H (297 boepd); * Thomason 10-27-12 1H (441 boepd); * Westline 30-28-16 1H (403 boepd); * Brandt 31-28-12 1H (499.33); * Otis 2-27-12 1H (341 boepd).

Due to higher than expected recovery rates, production was temporarily shutdown at the Thomason and Lois Rust wells to enable the installation ofadditional sales capacity.

The remaining six wells were at various stages of drilling/completion orfracture stimulation as at end of December 2012. Post period end, the Companyhas since reported Initial Production Rates for the Montecristo 6-1H well (50boepd). In the updated Reserves Report, Moyes & Co. estimated the Company's MississippiLime 2P reserves at 1.164 million barrels of oil and condensate and 3,857 MMcfwith a value of US$40.592 million. The Mississippi Lime is an historic oil and gas system that has been producingat depths ranging from 4,500 to 7,000 feet from several thousand vertical wellsfor over 50 years. As with the Bakken, new technology and horizontal drillinghas reopened the oil play. Due to the relatively shallow depths and less tightrock formation, drilling costs at between US$2.4 million and US$3.5 million perwell in the Mississippi Lime are considerably lower than those in the Bakken,which should lead to shorter pay-out periods than with the Bakken wells.

Woodford / Hunton Formations, Oklahoma

At the time of the AIM Admission, the Company anticipated participating in fivenew wells on its Woodford/Hunton acreage in 2012. In the event, Magnoliaparticipated in the drilling of ten new wells in the formation, bringing theoverall total to 18. Initial production rates for three wells were madeavailable during the period under review: * Bollinger 1-27XL targeting the Woodford (686.388 boepd); * SPS 6-26 vertical well targeting the Hunton (108 boepd); * Zenyatta 2-6 vertical well targeting the Hunton (17 bopd).

Post period end, initial production for the Beebe 24-W1H in the Woodfordformation was reported at 73 boepd.

In the updated Reserves Report, Moyes & Co. estimated the Company's Woodford /Hunton 2P reserves at 6 million barrels of oil and condensate and 397 MMcfnatural gas with a value of US$387,000.

Like the Bakken, the Woodford / Hunton formations in Oklahoma are establishedreservoirs that have been reopened following the introduction of horizontaldrilling and stimulation technology. As a result the Woodford oil play inparticular is increasingly being drilled by leading operators. Magnolia holdsleases in respect of approximately 67,200 gross mineral acres (800 net mineralacres), giving rights to participate in the drilling of wells in 87 sectionslocated in 26 counties in central Oklahoma.

Montana

In November 2012, Magnolia acquired 6,700 acres in the Montana section of theBakken/Three Forks Sanish formation located in Daniels County and threesurrounding counties in Montana. The acreage lies amongst, and is surroundedby, leases owned by Apache Corporation (`Apache'), a leading international oiland gas exploration and production company. Post period end, Magnolia acquireda further 985 net mineral acres in the Montana section of the Bakken/ThreeForks Sanish formation, bringing the total acreage acquired in the district to7,866. In recent years, activity in the Montana section of the Bakken has beenincreasing. According to oil services company Baker Hughes, as of April 2012,there were 18 rigs active in eastern Montana, compared to 10 the previous yearand zero in July 2009. In addition, the Montana Board of Oil and Gas issued 228oil permits in June 2012, more than the total number issued in 2011. In 2012, Apache acquired 320,000 net acres, an indication of the growinginterest in the Bakken in Montana. Apache believe there are over 1,900potential drilling locations on its 320,000 net mineral acres and that sixteenhorizontal wells, eight for the Bakken and a further eight for the Three ForksSanish, will be required to optimise the recovery of reserves. According toApache, the Estimated Ultimate Recovery (`EUR') of reserves stands at 670MBofor the Bakken and 377MBo for the Three Forks Sanish on each drilling location. Oil production in Montana peaked in 2006 at approximately 100,000 bopd, asimilar level to North Dakota during that year. The figure in Montana has sincedropped and there is currently no horizontal Bakken production in DanielsCounty, Montana, though conventional oil has historically been recovered byvertical wells from the Ratcliff, Madison, Mission Canyon and McGowanformations. In addition to the Bakken/Three Forks Sanish, there is thepotential for unconventional oil to be recovered from the Mississippian agedLodge Pole and Madison formations as well as the deeper Devonian aged Niskumembers. At 7,000-7,400ft, the Bakken in Daniels County lies at a shallower depth thanin North Dakota. As a result costs to drill horizontal wells to the Bakken inMontana are estimated at US$7.5 million compared with US$10 million in NorthDakota. In the updated Reserves Report, Moyes & Co. classified the Company's Montanaleases as prospective resources and estimated these at 5.77 million barrels ofoil and condensate and 2,885 MMcf of natural gas with a value ofUS$12.267million, reflecting the early stage nature of the play.

Summary

In 2012, Magnolia achieved a number of key milestones: the acquisition of over12,000 net mineral acres in Oklahoma and Montana; the participation in wellswith significantly higher working interests; the drilling of a first well asoperator with a 100% working interest; and the securing of a £10 million EFFtogether with the financial backing of Henderson Global Investors. Post periodend, the updated reserves report provides a summary of the progress made duringthe period between the Company's Admission to AIM in November 2011 and 31December 2012: a 422% increase in 3P reserves to 2.8 million barrels of oil and9,231 MMcf of gas with an estimated value of US$94 million. As a result ofthese achievements, Magnolia is well placed for further significant growth inboth net production and reserves in the year ahead.

Rita Whittington

Chief Operations Officer

consolidated Statement of Comprehensive Income

Year ended 31 December 2012 Note Year ended Year ended 31 December 31 December 2011 2012 $ $ Continuing Operations Revenue 709,395 241,038 Operating expenses (240,173) (145,365) Gross Profit 469,222 95,673 Impairment of mineral leases 11 (227,858) (224,892) Administrative expenses 8 (1,314,973) (213,228) Operating Loss (1,073,609) (342,447) Finance income - - Finance costs (1,569) - Loss before Tax (1,075,178) (342,447) Taxation - - Loss for the year (1,075,178) (342,447) Other Comprehensive Income: Exchange differences on translating 173,924 (10,931)foreign Operations Other Comprehensive Income for the 173,924 (10,931)Year, Net of Tax Total Comprehensive Income for the (901,254) (353,378)Year Loss per share for loss attributableto the equity holders of the Companyduring the year Basic and diluted (cents per share) 9 (0.16) (0.09) The loss for the Parent Company for the year was $334,035 (2011: $80,574).

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2012 Note As at As at 31 December 31 December 2012 2011 $ $ ASSETS Non-Current Assets Property, plant and equipment 10 3,437,869 861,975 Intangible assets 11 6,200,828 1,111,634 Total Non-Current Assets 9,638,697 1,973,609 Current Assets Trade and other receivables 208,936 70,308 Cash and cash equivalents 2,293,151 874,037 Total Current Assets 2,502,087 944,345 TOTAL ASSETS 12,140,784 2,917,954 EQUITY AND LIABILITIES Equity attributable to Owners of Parent Share capital 1,390,244 926,128 Share premium 11,888,717 2,218,877 Merger reserve 1,975,950 1,975,950 Share option reserve 66,603 66,603 Reverse acquisition reserve (2,250,672) (2,250,672) Translation reserve 47,300 (126,624) Retained losses (1,577,896) (502,718) Total Equity - Capital and Reserves 11,540,246 2,307,544 Non-Current Liabilities Trade and other payables - 278,431 Total Non-Current Liabilities - 278,431 Current Liabilities Trade and other payables 600,538 331,979 Total Current Liabilities 600,538 331,979 TOTAL EQUITY AND LIABILITIES 12,140,784 2,917,954

CONSOLIDATED Statement of Changes in Equity

Year ended 31 December 2012 Group ($) Share Share Merger Share Reverse Translation Retained Total capital Premium reserve option acquisition reserve losses equity reserve reserve Balance at 587,336 1,347,983 1,867,790 66,603 (2,250,672) (115,693) (160,271) 1,343,0761 January 2011 ComprehensiveIncome Loss for the - - - - - - (342,447) (342,447)period OtherComprehensiveIncome Exchange - - - - - (10,931) - (10,931)differences ontranslatingforeignoperations Total - - - - - (10,931) (342,447) (353,378)ComprehensiveIncome for theYear Transactionswith Owners Proceeds from 338,792 1,524,567 - - - - - 1,863,359share issues Share issue - (653,673) - - - - - (653,673)costs Movements in the - - 108,160 - - - - 108,160year Total 338,792 870,894 108,160 - - - - 1,317,846Transactionswith Owners Balance at 926,128 2,218,877 1,975,950 66,603 (2,250,672) (126,624) (502,718) 2,307,54431 December 2011 Balance at 926,128 2,218,877 1,975,950 66,603 (2,250,672) (126,624) (502,718) 2,307,544 1 January 2012 ComprehensiveIncome Loss for the - - - - - - (1,075,178) (1,075,178)period OtherComprehensiveIncome Exchange - - - - - 173,924 - 173,924differences ontranslatingforeignoperations Total - - - - - 173,924 (1,075,178) (901,254)ComprehensiveIncome for theYear Transaction withOwners Proceeds from 464,116 10,664,377 - - - - - 11,128,493share issue Share issue - (994,537) - - - - - (994,537)costs Movements in the - - - - - - - -year Total 464,116 9,669,840 - - - - - 10,133,956Transactionswith Owners

Balance at 1,390,244 11,888,717 1,975,950 66,603 (2,250,672) 47,300 (1,577,896) 11,540,24631 December 2012

CONSOLIDATED Statement of Cash Flows

Year ended 31 December 2012 Year ended Year ended 31 December 31 December Note 2012 2011 $ $ Cash Flows from Operating Activities Loss before tax (1,075,178) (342,447) Impairment of mineral leases 227,858 224,892 Depreciation 222,033 101,284 Foreign exchange 158,351 (781) (Increase)/Decrease in trade and other (136,925) 19,619receivables (Decrease)/Increase in trade and other (19,388) 147,892payables Net Cash generated (used in)/from (623,249) 150,459Operating Activities Cash Flows from Investing Activities Purchases of intangible assets 11 (5,691,408)

(364,998)

Purchases of property, plant and 10 (2,407,158) (213,593)equipment Net Cash generated used in Investing (8,098,566) (578,591)Activities Cash Flows from Financing Activities Proceeds from issue of ordinary shares 11,128,493 1,863,359 Issue costs (994,537) (653,673) Net Cash generated from Financing 10,133,956 1,209,686Activities Net Increase in Cash and Cash 1,412,141 781,554Equivalents Movement in Cash and Cash Equivalents Cash and cash equivalents at the 874,037 97,523beginning of the period Exchange gain/(loss) on cash and cash 6,973 (5,040)equivalents Net increase in cash and cash 1,412,141 781,554equivalents Cash and Cash Equivalents at the End of 2,293,151 874,037the Period * GENERAL INFORMATION

The condensed Financial Information of Magnolia Petroleum plc ("the Company")consists of the following companies; Magnolia Petroleum plc and MagnoliaPetroleum Inc. (together "the Group").

The Company is a public limited company which is listed on the London StockExchange AIM market and incorporated and domiciled in England and Wales. Itsregistered office address is The Fitzpatrick Building, 188-194 York Way,London, N7 9AS.

* BASIS OF PREPARATION

The condensed Financial Information should be read and have been prepared usingaccounting policies consistent with the annual Financial Statements for theyear ended 31 December 2011, which have been prepared in accordanceInternational Financial Reporting Standards (IFRSs) as adopted by the EU andIFRIC interpretations and the parts of the Companies Act 2006 applicable tocompanies reporting under IFRS. The Directors anticipate that the auditor'sreport, to be issued with the Group's statutory accounts for the year ended 31December 2012 will be unqualified. The comparatives for the year ended 31 December 2011 are derived from thestatutory accounts for the year ended 31 December 2011. These statutoryaccounts, which contained an unqualified audit report under Section 495 of theCompanies Act 2006 and which did not make any statement under Section 498 ofthe Companies Act 2006, have been delivered to the register of companies inaccordance with Section 441 of the Companies Act 2006.

The Company will announce its full audited Financial Statements andaccompanying notes later in May 2013.

* Going concern

The Directors, having made appropriate enquiries, consider that adequateresources exist for the Group to continue in operational existence for theforeseeable future and that, therefore, it is appropriate to adopt the goingconcern basis in preparing the condensed Financial Information for the yearended 31 December 2012.

* Risks and uncertainties

The Board continuously assesses and monitors the key risks of the business. Thekey risks that could affect the Group have not substantially changed from thoseset out in the Group's 2011 Annual Report and Financial Statements, a copy ofwhich is available on the Group's website: www.magnoliapetroleum.com.

* Critical accounting estimates and judgements

The preparation of the condensed Financial Information requires management tomake estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the end ofthe reporting period. Significant items subject to such estimates are set outin note 4 of the Group's Annual Report and Financial Statements. The nature andamounts of such estimates have not changed significantly during the period.

* Significant accounting policies

The condensed Financial Information has been prepared under the historical costconvention.

The same accounting policies, presentation and methods of computation have beenfollowed in these condensed Financial Information as were applied in thepreparation of the Group's Financial Information for the year ended 31 December2011. * segmental information The Group operates in two geographical areas, the United Kingdom and the UnitedStates of America. Activities in the UK are mainly administrative in naturewhilst the activities in the USA relate to exploration and production from oiland gas wells. The reports reviewed by the Board of Directors that are used tomake strategic decisions are based on these geographical segments. Year ended 31 December 2012 USA UK Intra-segment Total balances $ $ $ $ Revenue from external 709,375 - - 709,395customers Gross profit 469,222 - - 469,222 Operating loss (739,574) (334,035) - (1,073,609) Impairment - expired leases 227,858 - - 227,858 Depreciation 222,033 - - 222,033 Capital expenditure 8,098,564 - - 8,098,564 Total assets 11,646,146 14,696,234 (14,574,225) 11,768,155 Total liabilities 11,347,265 44,975 (10,791,702) 600,538 Year ended 31 December 2011 USA UK Intra-segment Total balances $ $ $ $ Revenue from external 241,038 - - 241,038customers Gross profit 95,673 - - 95,673 Operating loss (261,873) (80,574) - (342,447) Impairment - expired leases 224,892 - - 224,892 Depreciation 101,284 - - 101,284 Capital expenditure 578,593 - - 578,593 Total assets 2,314,906 4,867,652 (4,620,820) 2,561,738 Total liabilities 1,275,042 340,280 (1,004,912) 610,410 A reconciliation of the operating loss to loss before taxation is provided asfollows: Year ended Year ended 31 December 31 December 2012 2011 $ $ Operating loss for reportable segments (1,073,609) (342,447) Finance income - - Finance costs (1,569) - Loss before tax (1,075,178) (342,447) The amounts provided to the Board of Directors with respect to total assets aremeasured in a manner consistent with that of the Financial Statements. Theseassets are allocated based on the operations of the segment and physicallocation of the asset. Goodwill recognised by the Group is managed centrallyand is not considered to be a segmental asset.

Reportable segments' assets are reconciled to total assets as follows:

Year ended Year ended 31 December 31 December 2012 2011 $ $ Segmental assets for reportable segments 11,768,155 2,561,738 Unallocated: goodwill 372,629 356,216 Total assets per balance sheet 12,140,784 2,917,954 * EXPENSES BY NATURE * Year ended Year ended 31 December 31 December 2012 2011 Group $ $ Directors' fees 340,423 8,186 Consulting fees 292,418 24,350

Legal, professional and compliance costs 127,431 90,762

Difference due to foreign exchange 263,774 (10,988) Depreciation 145,943 51,113 Other costs 144,984 49,805 Total administrative expenses 1,314,973 213,228 * Loss per Share The calculation of the basic loss per share of 0.16 cents per share (31December 2011 loss per share: 0.09 cents) is based on the loss attributable toordinary shareholders of $1,075,178 (31 December 2011 loss: $342,447) and onthe weighted average number of ordinary shares of 691,240,908 (31 December2011: 363,155,502) in issue during the period.

In accordance with IAS 33, no diluted earnings per share are presented as theeffect on the exercise of share options would be to decrease the loss pershare.

Details of share options and warrants that could potentially dilute earningsper share in future periods are set out in Note16.

* Property, plant and equipment

Group Producing Drilling Motor Total properties costs and vehicles equipment and office $ $ equipment $ $ Cost At 1 January 2011 323,890 398,606 - 722,496 Additions - 213,593 - 213,593 Transferred from intangible 133,758 - - 133,758assets At 31 December 2011 457,648 612,199 - 1,069,847 Additions 405,015 1,986,889 15,254 2,407,158 Transferred from intangible 35,104 364,998 - 400,102assets (14,000) - - (14,000)Impairment At 31 December 2012 883,767 2,964,086 15,254 3,863,107 Depreciation At 1 January 2011 47,787 58,801 - 106,588 Charge for the period 50,171 51,113 - 101,284 At 31 December 2011 97,958 109,914 - 207,872 Charge for the period 39,918 179,266 2,850 222,033 Impairment (4,667) - - (4,667) At 31 December 2012 133,208 289,180 2,850 425,238 Net Book Amount At 1 January 2011 276,103 339,805 615,908 At 31 December 2011 359,690 502,285 - 861,975 At 31 December 2012 750,559 2,674,906 12,404 3,437,869

Transfers from intangible assets represent licence areas where production hascommenced together with drilling costs associated with these licences.

Depreciation expense of $39,918 (2011: $50,171) has been charged in cost ofsales and $182,115 (2011: $51,113) in administrative expenses.

* intangible assets Group Cost Goodwill Drilling Mineral Total $ costs leases $ $ $ At 1 January 2011 360,918 - 749,070 1,109,988 Additions - 364,998 - 364,998 Transferred to property, plant - - (133,758) (133,758)and equipment Exchange movements (4,702) - - (4,702) Impairment - - (224,892) (224,892) At 31 December 2011 356,216 364,998 390,420 1,111,634 Additions - 710,727 4,980,681 5,691,408 Transferred to property, plant - (364,998) (35,104) (400,102)and equipment Exchange movements 16,413 - - 16,413 Impairment - - (218,525) (218,525) As at 31 December 2012 372,629 710,727 5,117,472 6,200,828 Amortisation At 1 January 2011, 31 December - - - - 2011 And 31 December 2012 Net Book Amount At 1 January 2011 360,918 - 749,070 1,109,988 At 31 December 2011 356,216 364,998 390,420 1,111,634 At 31 December 2012 372,629 710,727 5,117,472 6,200,828 Impairment review Drilling costs and mineral leases represent acquired intangible assets with anindefinite useful life and are tested annually for impairment. As disclosedwithin Accounting Policies, expenditure incurred on the acquisition of mineralleases is capitalised within intangible assets until such time as theexploration phase is complete or commercial reserves have been discovered.Exploration expenditure including drilling costs are capitalised on a well bywell basis if the results indicate the existence of a commercially viable levelof reserves.

The Directors have undertaken a review to assess whether circumstances existwhich could indicate the existence of impairment as follows:

* The Group no longer has title to the mineral lease.

* A decision has been taken by the Board to discontinue exploration due to

the absence of a commercial level of reserves. * Sufficient data exists to indicate that the costs incurred will not be fully recovered from future development and participation. Following their assessment the Directors recognised an impairment charge to thecost of mineral leases and producing properties of $218,525 (2011 - $224,892)in respect of expired mineral leases. The Directors believe that no impairment is necessary on the carrying value ofgoodwill. Goodwill arose on the reverse acquisition of Magnolia Petroleum Plc.The goodwill represents the value of the parent company being an AIM quotedentity to Magnolia Petroleum Inc. * * ENDS * *

For further information on Magnolia Petroleum Plc visitwww.magnoliapetroleum.com or contact the following:

Steven Snead Magnolia Petroleum Plc +01 918 449 8750 Rita Whittington Magnolia Petroleum Plc +01 918 449 8750 Jo Turner / James Caithie Cairn Financial Advisers LLP +44 20 7148 7900 John Howes / Alice Lane / Northland Capital Partners +44 20 7796 8800 Luke Cairns Limited Lottie Brocklehurst St Brides Media and Finance +44 20 7236 1177 Ltd Frank Buhagiar St Brides Media and Finance +44 20 7236 1177 Ltd Notes Magnolia Petroleum Plc is an AIM quoted, US focused, oil and gas explorationand production company. Its portfolio includes interests in 104 producing andnon-producing assets, primarily located in the highly productive Bakken/ThreeForks Sanish hydrocarbon formations in North Dakota as well as the oil richMississippi Lime and the substantial and proven Woodford and Hunton formationsin Oklahoma. Summary of Wells Category Number of wells Producing 104 Being Drilled / Completed 12 Elected to participate / waiting to 18spud TOTAL 134 This table excludes four out of six wells acquired as part of the acquisitionof 800 gross acres with a 100% working interest in Osage County, Oklahoma, asannounced on 10 February 2012. These four wells are currently `shut in' andwill require a workover programme at some point in the future to bring backinto production.