Half Yearly Report

PetroNeft Resources plc

("PetroNeft" or the "Company")

2014 Interim Results

PetroNeft Resources plc (AIM: PTR) owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, is pleased to report its results for the 6 months ended 30 June 2014.

Highlights:

· H1 production average of 2,163 bopd.

· Farmout of Licence 61 to Oil India completed, Company is now debt-free.

· Drilling underway at Tungolskoye and Arbuzovskoye.

David Golder, Chairman of PetroNeft Resources plc, commented:

"The first half of 2014 was a turning point for the Company. The farmout of Licence 61 was agreed with Oil India which lead to the repayment of all debt and the re-commencement of drilling at Licence 61.

Drilling is now underway at both Tungolskoye and Arbuzovskoye and I look forward to providing further updates on these activities in the near future."

For further information, contact:

PetroNeft Resources Plc

Unaudited interim condensed

 consolidated financial statements

For the 6 months ended 30 June 2014

Unaudited interim condensed consolidated financial statements

Table of Contents Page

Group information 3

Chairman's Statement 5

Interim Consolidated Income Statement 8

Interim Consolidated Statement of Comprehensive Income 8

Interim Consolidated Statement of Financial Position 9

Interim Consolidated Statement of Changes in Equity 10

Interim Consolidated Cash Flow Statement 11

Notes to the Financial Statements 12

Forward Looking Statements

This report contains forward-looking statements. These statements relate to the Group's future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as 'believe', 'could', 'envisage', 'potential', 'estimate', 'expect', 'may', 'will' or the negative of those, variations or comparable expressions, including references to assumptions.

The forward-looking statements in this report are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements speak only as at the date of these financial statements.

Directors David Golder (U.S. citizen)

(Non-Executive Chairman)

Dennis Francis (U.S. citizen)

(Chief Executive Officer)

Paul Dowling

(Chief Financial Officer)

David Sanders (U.S. citizen)

(General Legal Counsel)

Gerard Fagan

(Non-Executive Director)

Thomas Hickey

(Non-Executive Director)

Vakha Sobraliev (Russian citizen)

(Non-Executive Director)

Registered Office and Business Address 20 Holles Street

Dublin 2

Ireland

Secretary David Sanders

Auditor Ernst & Young

Chartered Accountants

Harcourt Centre

Harcourt Street

Dublin 2

Ireland

Nominated and ESM Adviser Davy

49 Dawson Street

Dublin 2

Ireland

Joint Brokers Davy Canaccord Genuity

49 Dawson Street 88 Wood Street

Dublin 2 London

Ireland EC2V 7QR

United Kingdom

Principal Bankers KBC Bank Ireland AIB Bank

Sandwith Street 1 Lower Baggot Street

Dublin 2 Dublin 2

Ireland Ireland

Solicitors Eversheds

One Earlsfort Centre

Earlsfort Terrace

Dublin 2

Ireland

White & Case

5 Old Broad Street 4 Romanov Pereulok

London 125009

EC2N 1DW Moscow

United Kingdom Russia

Registered Number 408101

Registrar Computershare

Heron House

Corrig Road

Sandyford Industrial Estate

Dublin 18

Ireland

Dear Shareholder,

I am pleased to report on the activities of the Group for the six months to 30 June 2014 and provide an update on recent progress.

Production and Sales

Production in the six months to 30 June 2014 averaged 2,163 bopd, a 12% decrease compared to the same period in 2013 (2,464 bopd) The decrease was as a result of natural decline and the fact that no new production wells have been drilled since February 2013. We sold 391,379 barrels of oil in the six months to 30 June 2014 (H1 2013: 438,350 bbls) and achieved an average oil price of $44.79 (H1 2013: $42.48).

Licence 61 Farmout

On 17 April 2014 the Company signed a binding contract with Oil India Limited (OIL) to farmout a 50% non-operated interest in Licence 61. Following shareholder approval in May 2014 and the granting of Russian Regulatory Approval on 30 June 2014 the transaction was completed on 3 July 2014. All debt due to Macquarie and Arawak was subsequently repaid from the initial proceeds of US$35 million and the Company is now debt-free.

Under the terms of the Licence 61 Farmout, OIL acquired a 50% non-operated interest in Licence 61 in return for a total Investment of up to US$ 85 million consisting of:

· US$35 million upfront cash payment, enabling PetroNeft to repay in full its debt due to Macquarie and Arawak,

· US$45 million of committed exploration and development expenditure on Licence 61 and

· US$5 million performance bonus, contingent upon average production from the Sibkrayevskoye Field reaching 7,500 bopd within the next 5 years.

Since completion in July 2014, the Joint Venture Working Group made up of OIL and PetroNeft has been formally established and the major work programme and budget items for 2014 and 2015 agreed. Under the terms of the Licence 61 Farmout Agreement, OIL will fund the following work programme from the US$45 million of committed exploration and development expenditures on Licence 61.

Tungolskoye No. 5 delineation well

This well, the first horizontal well to be drilled on Licence 61, was spudded at the end of August 2014. The well will include a vertical pilot hole followed by a horizontal segment in the reservoir. It is planned to core, test and log the J-1 reservoir in the vertical hole before drilling and testing the horizontal section. The data obtained will be used to finalise the pilot development plan to develop the field and tie-back to the Lineynoye processing facilities. The pilot hole is currently drilling ahead at a depth of 2,500 m. The entire well will take an estimated 60 days to drill and complete. Assuming a successful result, additional horizontal and vertical wells will be drilled at Tungolskoye during 2015 and a pipeline will be constructed to the Lineynoye Central Processing Facility.

Arbuzovskoye development wells

A minimum of three additional development wells will be drilled at Arbuzovskoye Pad 1. A second drilling crew has been mobilised to the field to drill these wells and drilling of the Arbuzovskoye 106 well in the north eastern area of the field has commenced.

Sibkrayevskoye

The Sibkrayevskoye No. 373 delineation well will be drilled following completion of the Tungolskoye No. 5 well. Data from this well along with new seismic data will allow for the development of Sibkrayevskoye starting in 2016. The drilling rig for this well is on location and assembly will commence in October in preparation for drilling which is expected to commence early in 2015.

Licence 61 Seismic

Acquisition of 1,000 line kms of high resolution 2D seismic data has been approved. This programme is designed to detail the Sibkrayevskoye oil field and large Emtorskaya High where potential by-passed oil has been identified in two wells drilled in the 1970's. It will also further detail three significant leads in the Northern portion of the Licence area. The seismic crew has already mobilised to the field for surveying and line clearing operations. The data acquisition will occur primarily in Q1 2015 with results due in late summer 2015.

Equity raise

In March 2014 the Company undertook a share issue raising approximately US$5 million net of costs through the issue of 62,325,631 new shares. This enabled PetroNeft to purchase the materials and supplies necessary for the 2014 work programme which were mobilised to the field while winter roads were still in place.

Licence 67

In the first half of 2014 we undertook a 3D seismic programme at Licence 67 to acquire 163 km2 of high quality 3D seismic data at the Ledovoye and Cheremshanskoye oil fields on Licence 67. The data is currently being processed and interpreted and we expect to have the final data package by the end of 2014. This will guide our future plans for Licence 67.

Financial results for the period

The net loss after tax for the period was US$2,728,794 (H1 2013: US$10,593,368). The loss includes a foreign exchange loss of US$2,060,685 (H1 2013: US$6,376,921) on loans denominated in US Dollars and Russian Roubles from PetroNeft to its Russian subsidiaries Stimul-T and Granite Construction whose functional currency is the Russian Rouble. In accordance with IFRS 5, there was no depreciation charge in the period relating to assets held for sale leading to a reduction of US$2,652,966 in the total depreciation charge as compared to the same period in 2013.

Conclusion

The first half of 2014 was a turning point for the Company as we agreed the farmout with Oil India Limited allowing us to clear all our debts and to re-start the development of Licence 61. Since then we have agreed a work programme on Licence 61 with our new partner and recommenced drilling. I look forward to updating shareholders on our progress in the near future.

David Golder

Non-Executive Chairman

25 September 2014

1. Corporate information

The interim condensed consolidated financial statements of the Group for the six months ended 30 June 2014 were authorised for issue in accordance with a resolution of the Directors on 25 September 2014.

PetroNeft Resources plc ('the Company', or together with its subsidiaries, 'the Group') is a Company incorporated in Ireland. The Company is listed on the Alternative Investment Market ('AIM') of the London Stock Exchange and the Enterprise Securities Market ('ESM') of the Irish Stock Exchange. The address of the registered office and the business address in Ireland is 20 Holles Street, Dublin 2. The Company is domiciled in the Republic of Ireland.

The principal activities of the Group are oil and gas exploration, development and production.

2. Important Events after the Balance Sheet Date

On 17 April 2014, the Company entered into a binding agreement with Oil India Limited ("OIL") to farmout a 50% non-operating interest in Licence 61. Under the terms of the Licence 61 Farmout, OIL will make a total Investment of up to US$85 million consisting of:

· US$35 million upfront cash payment, enabling PetroNeft to repay in full its existing debts (the Macquarie Debt Facility and the Arawak Loan) and provide cash for working capital purposes.

· US$45 million of exploration and development expenditure on Licence 61.

· US$5 million performance bonus, contingent upon average production from the Sibkrayevskoye Field reaching 7,500 bopd within the next five years.

The completion of the Licence 61 Farmout was conditional on shareholder approval, which was granted on 9 May 2014 and on Russian Regulatory approval which was received on 30 June 2014.

On 3 July 2014 the Licence 61 Farmout was completed and the Company repaid all of its outstanding debt to Macquarie (US$8.4 million) and Arawak (US$16.5 million). At the date of approval of these financial statements, the Company has no outstanding debt.

Under the terms of the agreement, OIL subscribed for shares in WorldAce Investments Limited ("WorldAce"), the holding company for Stimul-T, the entity which holds Licence 61 and all related assets and liabilities. Following this, PetroNeft and Oil India Limited both hold 50% of the voting shares, and through the joint venture agreement, both parties have joint control of WorldAce with PetroNeft continuing as operator.

As a result of the Licence 61 Farmout the Company is now debt-free as at the date of the approval of these financial statements. The Directors have a reasonable expectation that the Company, and the Group, have adequate resources to further develop its assets and to continue in operational existence for the foreseeable future. For this reason, the Directors consider it appropriate to continue to adopt the going concern basis in preparing the financial statements.

3. Accounting policies

3.1 Basis of Preparation

The interim condensed consolidated financial statements for the six months ended 30 June 2014 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2013 which are available on the Group's website - www.petroneft.com.

The interim condensed consolidated financial statements are presented in US dollars ("US$").

3.2 Significant Accounting Policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2013.

4. Segment information

At present the Group has one reportable operating segment, which is oil exploration and production. As a result, there are no further disclosures required in respect of the Group's reporting segment.

The risk and returns of the Group's operations are primarily determined by the nature of the activities that the Group engages in, rather than the geographical location of these operations. This is reflected by the Group's organisational structure and the Group's internal financial reporting systems.

Management monitors and evaluates the operating results for the purpose of making decisions consistently with how it determines operating profit or loss in the consolidated financial statements.

Geographical segments

All of the Group's sales are in Russia. Substantially all of the Group's capital expenditures are in Russia.