Final Results

27 May 2014

Eland Oil & Gas PLC

("Eland" or the "Company" and, together with its subsidiaries, the "Group")

Final Results for the Year ended 31 December 2013

Eland Oil & Gas PLC (AIM: ELA), an oil & gas development and exploration company operating in West Africa with an initial focus on Nigeria, is today pleased to announce its audited results for the year ended 31 December 2013. The highlights are:

Operational Highlights

· The results of the reserves and resources evaluation by NSAI of OML 40 demonstrated a net 2P reserves increase of 86% and gross 2C resources increase of 192%.

· Opuama flowstation work was successfully completed and flowlines to the producing wells, Opuama 1 and 3, have been fully replaced and cathodic protection has been re-installed.

· The 36km export pipeline to the Otumara custody transfer point was repaired.

· Oil production from the Opuama field commenced in February 2014 following successful re-commissioning of existing infrastructure and the re-opening of two existing wells.

· The latest production period saw oil production rise and stabilise to an average rate of over 3,500 bopd.

· Subsea leak at Shell's Forcados Terminal in early March 2014 resulted in Opuama being shut in for most of March and early April 2014.

· The field is currently shut down whilst one minor pipeline leak is repaired. The repairs are currently ongoing and we expect to recommence production in the next week.

Financial Highlights

· Current cash and cash equivalents increased from the 2013 ending balance of $3.8 million to $22.8 million as at April 2014.

· The Group loss increased during 2013 to $26.1 million from $14.2 million in 2012.

· During 2014 Eland exercised the full balance of options under the Solstice Option Agreement and the Helios Option Agreement, raising a total of £20m at 100 pence per share.

· The debt facility with Standard Chartered Bank for US$22m was extended in February 2014 for 12 months. Currently the facility remains undrawn.

Outlook

· Commence a seven well development drilling programme on the Opuama field to develop the 2P reserves.

· Expected year end gross production exit rate from OML 40 of approximately 7,000 bopd.

· The Company will seek to enter a reserve-based lending facility and increase the debt level above the current $22 million, in line with the revised CPR.

The Company's audited 2013 Annual Report & Accounts have been posted on the Company's website www.elandoilandgas.com.

For further information:

Cautionary statement regarding forward-looking statements

This Results Statement may contain forward-looking statements which are made in good faith and are based on current expectations or beliefs, as well as assumptions about future events. You can sometimes, but not always, identify these statements by the use of a date in the future or such words as "will", "anticipate", "estimate", "expect", "project", "intend", "plan", "should", "may", "assume" and other similar words. By their nature, forward-looking statements are inherently predictive and speculative and involve risk and uncertainty because they relate to events, and depend on circumstances that will occur in the future. You should not place undue reliance on these forward-looking statements, which are not a guarantee of future performance and are subject to factors that could cause actual results to differ materially from those expressed or implied by these statements. The Company undertakes no obligation to update any forward-looking statements contained in this Results Statement, whether as a result of new information, future events or otherwise.

CHIEF EXECUTIVE OFFICER'S REPORT

Eland, from its formation in 2010, has been focused on building a portfolio of upstream oil and gas assets in West Africa, particularly in Nigeria. In September 2012 we completed the acquisition of the initial part of that portfolio when the Group acquired a 45% equity stake in OML 40, through a special purpose vehicle, and listed the Company on the AIM market in London.

Re-commencement of Production

In 2013 our key focus was the restart of production from the two existing wells on the Opuama field. This consisted of relaying the field flowlines from wells 1 and 3 to the Opuama flowstation and the rehabilitation of the flowstation itself.

In addition, the 36km export pipeline from Opuama to Otumara, where it joins the Shell-operated Trans Escravos Pipeline network, was repaired and tested.

In the early part of 2014 we commenced production on OML 40. Our initial production analysis has been encouraging with average production stabilising at over 3,500 bopd.

Our initial production has been restricted due to multiple factors. One of the most significant factors was a subsea pipeline leak at Shell's Forcados Terminal in early March. This resulted in Opuama being shut in for most of March and early April. The terminal re-commenced operations in mid-April. As has been widely reported, this affected all oil fields exporting via the Forcados terminal with typical export volumes of approximately 200,000 bopd falling to zero during this period.

As expected with a re-entry and rehabilitation programme there have been a number of teething issues on the field with infrastructure and the 36km export pipeline which has necessitated shut downs of between one and three weeks to carry out repairs.

Despite these enforced delays the commencement of production is a significant step forward for the Company. We are encouraged by the positives of initial production being higher than the previously-announced expectations, the very high crude oil gravity analyses averaging 47° API and that we have proven that the reservoirs and production wells are intact and will produce without any need for artificial lift. The task now is to improve on the reliability of the infrastructure and attain the consistent production levels which are achievable and maximise the value of the ensuing revenue.

The OML 40 Licence

OML 40 is a portfolio in itself, located in a highly prospective oil basin. It has sizeable reserves and a contingent resources base with significant exploration upside. The new competent person's report (CPR), commissioned during the year, was issued by Netherland Sewell & Associates Inc. and contains significantly higher volumes than previously certified following a detailed re-evaluation of the full technical database provided by the previous operator.

The new CPR details gross 1P and 2P reserves of 38.2 mmbbls and 81.8 mmbbls respectively. Furthermore, we have seen an increase in the gross contingent resources (2C) from 15.5 mmbbls to 45.3 mmbbls and an un-risked gross best estimate for prospective resources of 119.5 mmbbls. These details have been determined on 3D seismic interpretation and information from the eighteen wells drilled on the licence.

We anticipate that there are significant gas volumes on the licence particularly at deeper levels. In the future we will look to source commercial opportunities for this gas.

The Nigerian Oil & Gas Landscape

The past few years have seen a period of dramatic change in the onshore licence landscape of Nigeria. The IOCs, which have held the majority of the onshore licences since the inception of oil and gas production in Nigeria, have started divesting many of these interests. The IOCs have either sold, or are in the process of selling, participating interests in licences considered as non-strategic.

The majority of the export pipeline network for the onshore fields in Nigeria was installed in the mid-1970s and will require to be fully replaced in the years ahead. The Nigerian Government has provided significant tax incentives to encourage such regeneration and redevelopment of the onshore oil and gas sector.

Onshore drilling activity has been at a low level in Nigeria for a number of years. The advent of improved drilling technologies provides an opportunity to increase flow rates and maximise recovery from these onshore fields. This opportunity exists within OML 40 as all of the existing wells were drilled in the 1970s. Utilising modern drilling and production technologies allows greater recovery and significantly lower finding and development costs for every barrel produced.

The divestitures by the IOCs that have taken place over the last three years have resulted in the creation of a number of smaller Nigerian based independents. Further divestitures will increase the opportunities for these companies.

Health, Safety, Environmental and Social Responsibility

We owe a duty of care to the communities and the environment in which we operate and we stand to be held accountable for our actions.

We maintain focus in our communities on their right to good health, education and employment in the development of the natural resources.

Some of the key deliverables within our community programmes are the provision of electricity, drinking water, education, medical care and employment, all of which are absent to a large degree throughout much of the Niger Delta.

One of our key planned community projects is the provision of free electricity to the community surrounding the Opuama flowstation. This particular project has the added benefit that the electricity is produced using associated gas from oil production. Utilising the associated gas in this way also significantly reduces the flare gas produced at the flowstation, reducing the impact on the environment. This particular community project creates a mutually beneficial interdependency between the oil company and the local community.

Major activities planned in 2014

Throughout 2013, planning for the 2014 drilling campaign was progressed with the preparation of a Field Development Plan (FDP) on the Opuama Field. This drilling campaign will include significant dredging activities to allow access for the drilling rig which will drill horizontal and directional wells to fully develop the field.

We also plan to replace the export pipeline to allow an increased capacity of up to 100,000 bopd and we are also considering the installation of an additional export route from OML 40. The drilling campaign on Opuama is planned to start during the second half of 2014 and will continue into 2015. With existing production and the planned new wells we expect an approximate exit rate of 7,000 bopd.

Outlook

The oil and gas business has always been very competitive in Nigeria and in West Africa and never more so than in recent years of sustained high oil prices. We continue to evaluate new venture opportunities, but our primary focus remains on maximising the value of our existing assets.

I would like to sincerely thank our management and staff, who with the full support of our Board, business partners and shareholders, have made our significant progress since listing in September 2012 possible. I have no doubt that during 2014 we will continue to develop a business of which we can all be proud and deliver the value that is in OML 40.

Les BlairChief Executive Officer

CHIEF FINANCIAL OFFICER'S REVIEW

Key Financial Highlights

· The Group loss increased during 2013 to $26.1 million from $14.2 million (2012).

· Current cash and cash equivalents of $22.8 million (April 2014) increased from the 2013 ending balance of $3.8 million. A further $6.5 million is due to be received over the next three months from the balance of the shareholder option exercised.

· Maintained positive progress towards production throughout 2013 within existing funding resources.

Review of 2013

During the year we have responded to a number of planned and unplanned changes to the initial budget and plan to restore production on OML 40, which was achieved in 2014. The initial funding plan and budget called for production within the first half of 2013, in order to maintain the drilling programme later in the year. The enforced changes, due to delays in recommencement of production, resulted in numerous reforecasts of the project and changes within the control environment in order to deliver the production plan within the available funding. Funds have been prudently expended to ensure that the progress towards first oil was maintained, despite the delays which were beyond the Company's control.

The Group performance in 2013 was significantly impacted by the delay in securing initial production from OML 40. The delay in production resulted mainly from contracting and procurement issues throughout the year. This also forced a change in planning activity and a change to the original drilling programme. The Company, by effecting the change to the drilling programme, in conjunction with rescheduling of other planned expenditures, managed to conserve cash to focus all resources on returning production to OML 40.

The loss in 2013 of $26.1 million was mainly attributable to the increase in operating expenses during the year. This increase of $12.2 million to $16.5 million related largely to operating expenses in Nigeria. This included technical studies and in-country resources reviewing new opportunities. Administrative expenses in the year of $8.4 million have reduced by $0.3 million from the previous year due to lower consulting costs.

The Group began the year with cash and cash equivalents of $24.5 million and during 2013 used $19.4 million. This is mainly attributable to funding the operating expenses in Nigeria and the capital expenditure for replacement parts and repair enhancements in the flowstation and export pipeline, resulting in capital additions totalling $6.1 million in the year.

The new decommissioning study performed during 2013 by RPS provided the Group with the first updated decommissioning study post-OML 40 acquisition. This study has largely resulted in a reduction in the decommissioning provision of $6.7 million.

During 2013 the Company received a non-cash dividend of $6.5 million from Westport Oil Ltd, a wholly-owned Jersey subsidiary. Payment of this dividend gave rise to a minimal tax charge in 2013 of $0.3 million.

Eland upgraded and installed new accounting and business management software which was rolled out to the whole group and is being used both in the UK and Nigeria. Included within this system are a procurement and management module which has improved the efficiency of the process and visibility of all the transactions. This system has expandable modules providing both project management and contracts management which will be invaluable during the more complex drilling phase of the OML 40 development.

In accordance with the obligations under the Standard Chartered Bank debt facility we rationalised our banking relationships across the group. This has provided greater visibility to all transactions and has improved the speed and efficiency of cross-border money movements.

A review of the functional currency of Eland Oil & Gas PLC was undertaken during 2013 in accordance with IAS 21. The outcome of this review determined that a change in functional currency from Sterling to US Dollars was appropriate, and subsequently the financial statements of Eland Oil & Gas PLC have been prepared on this basis.

In summary 2013 has been a year of challenges and changes as we developed and redeveloped the plans on OML 40 towards establishing production. The key success has been managing the revised programmes within the resources available to the Company.

2014 Financial Outlook

2014 has already delivered the key milestone of production on OML 40 and this delivery is the main testament to the efforts by the Company in 2013.

During the first quarter the Company secured an extension to the debt facility with Standard Chartered Bank. The existing facility of $22 million remains undrawn at this time and subject to the conditions precedent. This facility has been extended through February 2015. This facility and extension provides the additional funding required to allow the commencement of the planned drilling programme in 2014. The Company will seek to replace this facility prior to the expiry date of February 2015 with a reserve-based lending facility and increase the debt level above the current $22 million to be in line with the revised CPR. The revised CPR indicates a 195% increase in discounted net asset value which, in management's opinion, should provide the opportunity to double the debt level subject to market conditions. Securing this new and increased facility will ensure that the drilling programme for 2014/2015 can be completed in full.

The Group has also entered into discussions with relevant government departments in Nigeria about its tax status. Good progress has been made and the Group expects to benefit from a significant reduction in underlying tax rates. This fiscal development will support an increase in the planned investment and accelerated development of the 2P production profile in OML 40.

The Company also exercised the Shareholder options in early 2014. This has provided it with the additional resource of £16 million, with a further £4 million due to be received over the next three months, that is being employed to ensure that the Company can capitalise on opportunities and incentives as they become available.

The recent events within the Nigerian E&P sector ensure that this remains an exciting and vibrant market sector. Eland is well placed for the future as part of this market.

George MaxwellChief Financial Officer

CHAIRMAN'S STATEMENT

I am pleased to introduce Eland's second annual report which has seen your Company make significant progress over the year on a number of fronts. This has not been an easy year but despite experiencing delays in operations on our OML 40 licence we achieved first oil in early 2014, with production from the Opuama field largely as a result of the experienced team we have in Nigeria. We are now starting to see the real value of our Nigerian asset.

The focus during 2013 has been on rehabilitating the Opuama field working with the Operator (NPDC) to put back in production the two wells which were shut-in in March 2006. This has involved re-commissioning the flowstation facilities and wellheads as well as laying new flowlines and repairing the export pipeline. This enabled us to start production in February 2014 somewhat later than hoped for but with very pleasing production rates. We have also undertaken a major review of the prospectivity of the licence largely through the extensive 3D seismic data which has not previously been used to identify drilling targets. This resulted in a significant increase in net 2P reserves and 2C resources in the report by our reserves auditor Netherland Sewell & Associates Inc. We are confident of further increases as the operational work proceeds.

The financial performance for 2013 (a loss of $26.1 million) largely reflects the expected increased costs as our operations in Nigeria gathered pace. At the end of 2013 our cash and cash equivalents were $3.8 million with undrawn bank debt facilities of $22 million which have been extended to February 2015. More recently the two equity options were exercised in full raising a further £20 million. We have also made good progress on securing advantageous tax terms which may result in a five year tax-free period for OML 40 in Nigeria.

I would like to thank all our stakeholders for their support and particularly the management and staff for their hard work and persistence over the year. We have a very experienced Board which ensures that the highest levels of corporate governance are maintained in the conduct of our business. James Ede-Golightly and Gilles Krijger have both stepped down from the Board and I would especially like to thank them for their contribution during the start-up phase of Eland. Our team is still growing and our aspiration is to become the leading international oil company operating in Nigeria.

The strategy of Eland is based on the opportunities that Nigeria offers and the experience of our management team based on the ground. The increasing awareness of Nigeria's potential is reflected in the scramble for assets being disposed of by the majors in recent months. We are of course looking at these and other assets and look forward to updating our shareholders on this front and with further progress on OML 40 over the coming months.

Harry WilsonChairman

Consolidated Income Statement

For the year ended 31 December 2013

All activities relate to continuing operations.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2013

Consolidated Balance Sheet

As at 31 December 2013

Consolidated Cash Flow Statement

Year ended 31 December 2013

For further definitions and detailed accounts, please see our full audited 2013 Annual Report & Accounts on the Company website: www.elandoilandgas.com.