Half Yearly Report

24 July 2014

Forum Energy Plc

("Forum" or "the Company")

Interim results for the six months ended 30 June 2014

Forum, the UK incorporated oil and gas exploration and production company with a focus on the Philippines, today announces its unaudited interims for the six months ended 30 June 2014.

Operational Highlights

· On 9 July 2014 a one year extension of Sub-Phase 2 of SC72 was announced from the Department of Energy. Forum now has until August 2016 to drill the two commitment wells under the sub-phase. Preparations are underway for possible drilling in late 2015 or early 2016, subject to rig availability. During 2014 a block-wide geological and geophysical study will be initiated to map other leads outside the Sampaguita Field

· Galoc Phase II development completed in November 2013, which has increased production from an average 4,720barrels of oil per day (bopd) gross to an average 8,980 bopd gross

· Ongoing technical evaluation of the SC40 onshore area to determine any potential drilling targets and

· Continued preparation to re-develop the West Linapacan Field by the operator RMA West Linapacan Pte Ltd; Forumwill not have to cover any of the costs of the exploration programme until first commercial oil production

Financial Highlights

· Revenues for the period were US$4.5 million, twice the level generated in the corresponding period ended 30 June 2013 of US$2.2 million;

· Gross profit of US$2.0 million, compared to US$0.4 million in the first half of 2013;

· Administrative expenses were reduced to US$0.9 million due to staff restructuring costs incurred in 2013, comparedto US$1.6 million in the first half of 2013;

· Profit before tax of US$0.6 million, compared to a loss of US$2.2 million in the first half of 2013;

· Net profit of US$0.5 million, compared to a loss of US$2.8 million in the first half of 2013;

· Operating cash-flow of US$3.5 million, compared to operating cash-flow of US$0.5 million in first half of 2013;

· Repaid the US$2.5 million BNP finance facility on 30 June 2014, 18 months ahead of schedule; and

· Cash of US$0.4 million at 30 June 2014, compared to US$2.8 million at 30 June 2013, and US$0.2 million at 31 December 2013.

For further information please contact:

Forum Energy Plc

Andrew Mullins, Executive Director Tel: +44 (0) 1932 445 344

Execution Noble & Company Limited,

Trading as Espirito Santo Investment bank

Harry Stockdale / John Llewellyn-Lloyd Tel: +44 (0) 20 7456 9191

Or visit the Company's website:

www.forumenergy.com

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period ended 30 June 2014

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INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2014

* Certain amounts shown here do not correspond to the 2012 financial statements and reflect adjustments made, refer to Note 14.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 30 June 2014

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Certain amounts shown here do not correspond to the 2012 financial statements and reflect adjustments made, refer to Note 14.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the period ended 30 June 2014

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* Certain amounts shown here do not correspond to the 2013 financial statements and reflect adjustments made, refer to note 14.

UNAUDITED NOTES FORMING PART OF THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the period ended 30 June 2014

1. Basis of preparation and accounting policies

Basis of preparation

The annual financial statements of Forum Energy are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The unaudited condensed consolidated financial information for the six months ended 30 June 2014 included in this interim financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting", as adopted by the European Union.

The interim financial report does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the consolidated financial statements in the Forum Energy Annual Report and Accounts for the year ended 31 December 2013. The accounting policies adopted in the preparation of the interim financial report, the significant judgments made by management in applying the Group's accounting policies, and the key sources of estimation uncertainty are consistent with those followed in the preparation of the Group's financial statements for the year ended 31 December 2013.

2. Segment Analysis

For management purposes, the operations of the Group are organised based on geographical regions. The Group currently operates in only one geographical region which is the Philippines. No other operating segments have been aggregated to form reportable operating segments.

Geographical information

All of the revenues (30 June 2013: 100%) (31 December 2013: 100%) were generated from Philippine based assets including the Galoc, Libertad, Nido and Matinloc fields.

3. Financial reporting period

The interim financial information for the period from 1 January 2014 to 30 June 2014 is unaudited. In the opinion of the Directors, the interim financial information for the period presents fairly the financial position, and results from operations and cash flows for the period and are is in conformity with generally accepted accounting principles consistently applied. The accounts incorporate comparative figures for the interim period 1 January 2013 to 30 June 2013 and the audited financial year to 31 December 2013.

The financial information contained in this interim report does not constitute statutory accounts as defined by section 435 of the Companies Act 2006.

The comparatives for the full year ended 31 December 2013 are not the Company's full statutory accounts for that year. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

4. Expenses by nature

5. Finance expenses

* The comparative balances for the year ended 31 December 2013 do not correspond to the 2013 financial statements and reflect the reclassification of $70,000 made, refer to Note 14.

6. Income Tax

The income tax charge in 2013 is due to income tax on other income of US$1,804,000 received in 2012.

7. Profit/(loss) per share

The calculation of basic and diluted profit per share has been based on the profit for the period attributable to equity holders of the Company of US$577,000 (30 June 2013 - Loss US$2,803,000) (31 December 2013 - Loss US$2,938,000).

The basic and diluted weighted average number of equity shares in issue for the period is 35,549,533 ordinary shares (30 June 2013: 35,549,533) (31 December 2013: 35,549,533).

8. Exploration, evaluation and development assets

The net book values of assets included within exploration, evaluation and development assets are as follows:

9. Oil and Gas properties

10. Loans

11. Functional Currency

All amounts have been prepared in US dollars, this being the Group's functional currency and its presentational currency.

12. Going Concern

The Directors are of the opinion that the Group currently has sufficient funds to meet their obligations and commitments as they fall due in the foreseeable future and has therefore adopted the going concern basis in preparing the interim financial statements.

The Group is currently conducting exploration and development activities using existing funds including those generated by the Group's interests in producing assets, principally Galoc. The Directors are currently reviewing various funding options to fund the continued development of SC72.

The Group considers that it retains the strong support of its ultimate controlling shareholder, Philex Mining Corporation as exercised through its shareholdings in Philex Petroleum Corporation.  

13. Related Party Transactions

During the period the following related party transactions occurred within the Group.

Philex Mining Corporation is the majority shareholder and ultimate controlling party of the Group.

On 24 November 2010, Forum Philippines Holdings Ltd, a wholly-owned subsidiary of the company, entered into a US$10 million Facility Agreement ("the Facility") with Philex Mining Corporation. The facility was increased to US$15 million during 2012. The Facility was available for a three year period from 24 November 2010 and funds were borrowed at an interest rate of US LIBOR + 4.5%. As at 31 December 2012, the full US$15 million was drawn down to enable the company to fund its 70% share of the work programme over Service Contract 72 (SC72).

On 21 November 2013, the following amendments were made to the Facility:

- Increased the Facility to US$18 million

- Extended the repayment date to 24 November 2016, and

- Philex Mining Corporation assigned the facility to Philex Petroleum Corporation, a major shareholder of the company and wholly owned subsidiary of Philex Mining Corporation.

All other terms of the Facility agreement remain the same.

Under the amended Facility agreement an additional US$200,000 was drawn down during the year to 31 December 2013 and an additional $300,000 was drawn down during the six months to 30 June 2014.

The following transaction in relation to the Facility occurred during the year:

14. Retrospective restatement

The comparative period of consolidated statement of financial position has been adjusted to reflect the following:

1) The reduced costs of the acquisition of Basic Petroleum and Minerals Inc. (BPMI) in 2006 which was subsequently renamed as Forum Energy Philippines Corporation (FEPCO). The acquisition element paid in Forum Energy Plc, shares should have been based on market value as date of acquisition and the post-acquisition legal and other costs should have been included in the consolidated statement of comprehensive income.

2) The reduced costs of the acquisition of SC72, the post-acquisition cost should have been included in the consolidated statement of comprehensive income.

The effect of these adjustments on the consolidated statement of financial position and consolidated statement of changes in equity are set out below:

The comparative period of consolidated statement of cash flows has been adjusted due to presentation errors in the consolidated statement of cash flow for the year ended 31 December 2013 to reflect the following:

1) The amount of net hedging losses of $149,000 was not paid during 2013 and therefore the presentation in the operating and financing activities has been corrected to reflect the actual payments made ($70,000) which was previously included within interest paid.

In addition, the hedging losses of $70,000 were previously presented within interest charge and finance costs on loan facility. The losses have now been correctly included within Hedging losses and charges increasing the total charge for year to $219,000 after reclassification. The overall net impact on Finance expenses line in the Consolidated Statement of Comprehensive Income is $nil.

The corresponding lines in operating activities of the Consolidated Statement of Cash Flows (Interest charge on loan facility and Hedging (gains)/losses and charge) have now been updated to reflect the reclassification of the $70,000 hedging losses and charges payment made during 2013.

2) The loss on sale of exploration equipment in the amount of $569,000 has been presented separately within the operating activities of the cash-flow to present it separately from the impairment charge in the prior year.

3) The disposal proceeds from the sale of exploration equipment in the amount of $1,294,000 was previously presented net of the amounts paid for the purchase of exploration equipment for $1,863,000. The disposal proceeds have now been presented separately within investing activities of the cash-flow.

The effect of these adjustments on the consolidated statement of cash flows is set out below:

15. Additional Information

Copies of the Interim Statement are available from the Company Secretary, Forum Energy plc, 16 High Holborn, London WC1V 6BX United Kingdom, Tel: +44 (0)208 616 7297 E-mail: [email protected] or downloaded from the website: www.forumenergyplc.com.

End