Half Yearly Report

Spitfire Oil Limited

2nd March 2011

INTERIM STATEMENT FOR THE SIX MONTHS ENDED 31st DECEMBER 2010

Spitfire Oil Limited is pleased to publish its unaudited interim results for the six months ended 31st December 2010, a summary of which is attached.

Introduction

Spitfire Oil Limited ("Spitfire" or "the Company") and its subsidiaries (together "the Group") recorded a loss before tax for the six months ended 31 December 2010 of A$189,684 (2009 A$1,093,816). The decrease in losses arises as a result of action taken in the period to reduce costs. With cash balances of A$8m the Group has benefited from interest receipts of A$178,000 in the period.

In 2010 a thorough review of the Salmon Gums project (the "Project") concluded that a saleable distillate could not be produced economically at prevailing world crude oil prices through the proprietary L2VTM lignite to liquids process. As a consequence, a conscious decision was made to minimize all activities by the Company on the Project including suspending any further work on the L2VTMprocess, minimizing any additional geological work and reducing all overhead costs, including the redundancy of all personnel. These actions have stabilised the Company's finances whilst maintaining the security of its assets, allowing the directors time to pursue options for the development of the Company's Project and the investigation of other energy related projects.

Licence Management

As the exploration licences comprising the Project were due to expire during the reporting period, application was made to extend their term. The Department of Mines and Petroleum has granted a two year "Extension of Term" for the four exploration licences in the main tenement block (E63/934, 035,947 & 961) until the 6th July 2012. Since the applications were approved, and as the exploration licences continue to provide secure title over the lignite resources previously reported, the six mining lease applications were withdrawn to reduce holding costs. The non-contiguous exploration licence to the east of the main tenement area (E63/960) was relinquished on the 7th July 2010 as it was considered to have no further lignite mineralisation potential.

Gold Programme

In the later part of 2009, the potential for the occurrence of gold within Spitfire's Project tenements was recognised and the Company commissioned a reconnaissance gold exploration programme to test the north-eastern part of the Project's license areas. Several zones of anomalous gold values were delineated. These anomalies cover only some 10 kilometres of the 55 kilometres of the regional fault system. These encouraging results will require further drilling to ascertain the extent of the mineralization over the Company's exploration licences. The Company has committed to this further drilling programme in 2011. In the interim, due to the vast area in which the anomalous results occur, the Company has been investigating identifying a joint venture partner to commit the necessary significant resources required for this further exploration work. To date, this search has been unsuccessful. 

Other Business Opportunities

Although Spitfire's primary objective remains the commercialisation of its L2VTM lignite to liquids technology over the large resource at the Project, management continues to evaluate other energy related opportunities and other possible synergistic business opportunities.

Spitfire Oil Limited

Mladen Ninkov - Chairman Telephone: +44(0)20 7629 7774

Roger Goodwin - Director

Panmure Gordon (UK) Limited Telephone: +44 (0) 20 7459 3600

Dominic Morley

Hannah Woodley

Spitfire Oil Limited's shares are quoted on the Alternative Investment Market (AIM)

 of the London Stock Exchange (symbol SRO).

The Company's news releases are available on the Company's web site: www.spitfireoil.com

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

SPITFIRE OIL LIMITED

Notes to the CONDENSED CONSOLIDATED financial statements

NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT

This general purpose financial report for the interim half-year reporting period ended 31 December 2010 has been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Australian Corporations Act 2001.

The summary accounts set out above do not constitute statutory accounts as defined by Section 84 of the Bermuda Companies Act 1981 or Section 435 of the UK Companies Act 2006. The condensed consolidated statement of financial position at 30 June 2010 and the condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the year then ended have been extracted from the Group's 2010 statutory financial statements upon which the auditors' opinion is unqualified. The condensed consolidated statement of comprehensive income has been prepared using information extracted from the Group's 2010 statutory financial statements.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2010 and any public announcements made by Spitfire Oil Limited during the interim period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Copies of this interim report are being sent to all registered shareholders. Additional copies are available from the Company's London office, 60 St James's Street, London, SW1A 1LE.

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current reporting period.

New and revised Standards and amendments thereof and Interpretations effective for the current reporting period that are relevant to the Group include:

·; Amendments to AASB 5, 8, 101, 107, 117, 118, 136 and 139 as a consequence of AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project

AASB 2009-5 introduces amendments into Accounting Standards that are equivalent to those made by the IASB under its program of annual improvements to its standards. A number of the amendments are largely technical, clarifying particular terms, or eliminating unintended consequences. Other changes are more substantial, such as the classification of expenditures on unrecognised assets in the statement of cash flows.

The adoption of these amendments has not resulted in any changes to the Group's accounting policies and have had no affect on the amounts reported for the current or prior periods.

NOTE 2: SEGMENT INFORMATION

The Group operates in predominantly one operating segment, being the exploration and mining for valuable resources that produce energy in Australia.

NOTE 3: DIVIDENDS

The Company has not declared any dividends in the period ended 31 December 2010.

NOTE 4: CONTINGENCIES

There has been no change in contingent liabilities or contingent assets since the last annual reporting date.

SPITFIRE OIL LIMITED

Notes to the CONDENSED CONSOLIDATED financial statements

NOTE 5: ISSUED CAPITAL

NOTE 6: LOSS PER SHARE

Options that are considered to be potential ordinary shares are excluded from the weighted average number of ordinary shares used in the calculation of basic loss per share. Where dilutive, potential ordinary shares are included in the calculation of diluted loss per share.

All the options on issue do not have the effect to dilute loss per share. Therefore they have been excluded from the calculation of diluted loss per share. There have been no other conversions to, call of, or subscriptions for ordinary shares since the reporting date and before the completion of this report.

NOTE 7: NET TANGIBLE ASSETS

NOTE 8: SUBSEQUENT EVENTS

No matter or circumstance has arisen since 31 December 2010, which has significantly affected, or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years.