Half Yearly Report - Second Interim

14 October 2010

SIRIUS PETROLEUM PLC

("Sirius" or the "Company")

Second Interim Results for the period ended 30 June 2010

Introduction and update

The board of directors of Sirius (the "Board") is pleased to report that it has made significant progress in implementing the Company's core investing strategy to identify oil and gas opportunities, particularly interests in marginal fields in Nigeria (the "Investing Strategy")

The Company will, today release a detailed announcement, AIM Admission Document (the "Admission Document") and Notice of General Meeting in connection with the proposed acquisition of a 40 per cent. interest in the Ke Field and joint operating agreement entered into with Del Sigma Petroleum Nigeria Limited for the development of the Ke Field, as announced on 22 February 2010 and the proposed share placing. The Ke Field is a multiple horizon onshore hydrocarbon reservoir contained within the Ke Farmout Area, which is situated in the Niger Delta, within the boundaries of Oil Mining Lease No. OML 55 held by NNPC and Chevron Nigeria Ltd. The Ke Farmout Area extends to an area of approximately 12,900 acres. The share placing is conditional on the renewal of the award by the Department of Petroleum Resources of Nigeria of the participating interest in the Ke Field to Del Sigma Petroleum Nigeria Limited, from whom the Company will acquire it's 40 per cent. interest.

The Company's shares were suspended from trading on AIM on 22 February 2010 whilst a full Competent Persons Report was prepared and detailed due diligence was completed. These exercises are now complete and an Admission Document has been prepared for circulation to the Company's shareholders. Comprehensive details of the transaction are set out in the Admission Document.

Results

The Board has decided to change the Company's accounting reference date to 31 December in order to report its results by calendar year. Accordingly, these results cover the five and eleven month periods ended 30 June 2010 with comparative figures for the five and eleven month periods ended 30 June 2009 and the year ended 31 July 2009. An interim statement for the six months ended 31 January 2010 has previously been issued. The results relate to a period during which the Company has been developing its Investing Strategy, negotiating partnership agreements and reviewing potential marginal field opportunities. No trading activities took place during this period.

The majority of the Company's future revenue will be generated in US dollars, along with the associated costs. Accordingly, when the Company reported its last final results (for the year ended 31 July 2009) on 21 December 2009, the Board indicated that it proposed to change the Company's presentational currency, historically GBP, to US dollars for future reporting periods. The five and eleven month results have been prepared in accordance with this change.

The Company produced a loss before taxation of $828,000 in the 5 months ended 30 June 2010 and $1,786,000 in the eleven months ended 30 June 2010, (5 months ended 31 June 2009: loss of $348,000, 11 months ended 30 June 2009: loss of $1,508,000, year ended 31 July 2009 loss of $1,650,000).

Outlook

The Board believes that the proposed transaction is in the best interests of the Company and that shareholders will benefit from significant returns in the future.

Babatunde Agboola

Chairman

13 October 2010

independent review report to sirius petroleum plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the period ended 30 June 2010 which comprises the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of financial position, consolidated cash flow statement, and related notes. We have read the Chairman's statement contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the Company those matters we are required to state to it in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The interim financial report is the responsibility of, and has been approved by, the directors.

As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements 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.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the eleven months ended 30 June 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.

EMPHASIS OF MATTER - GOING CONCERN

In forming our conclusion, which is not qualified, we have considered the adequacy of the disclosures made in Note 1 to the financial information concerning the Group's ability to continue as a going concern. The conditions stated in Note 1 indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

GRANT THORNTON UK LLP AUDITOR

Birmingham 13 October 2010

SIRIUS PETROLEUM PLC

NOTES TO THE INTERIM REPORT

FOR THE PERIOD ENDED 30 JUNE 2010

1. BASIS OF PREPARATION

The interim financial statements have been prepared in accordance with applicable accounting standards and under the historical cost convention. This interim report is unaudited and does not constitute statutory accounts within the meaning of Section 498 of the Companies Act 2006. The figures for the year ending 31 July 2009 have been extracted from the 2009 financial statements. The auditor's report on these accounts was unqualified and did not contain a statement under Section 498 of the Companies Act 2006.

The principal accounting policies of the Group are consistent with those detailed in the 31 July 2009 financial statements, which are prepared in accordance with International Financial Reporting Standards (IFRSs), as adopted by the European Union except that as reported in these financial statements, the presentational currency has been changed to US dollars and IAS 1 ' Presentation of Financial Statements ( Revised 2007)' and IFRS 8 'Operating Segments' have been adopted.

As a consequence of the change in the presentational currency the consolidated statement of comprehensive income, the consolidated statement of changes in equity and consolidated cash flow statement for the periods ended 30 June 2009 and 31 July 2009 and the statement of financial position as at those dates has been restated to be presented in US dollars.

The adoption of IAS 1 (revised 2007) does not affect the financial position or profits of the Group, but gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged, however some items that were recognised directly in equity are now recognised in other comprehensive income. IAS 1 (Revised 2007) affects the presentation of owner changes in equity and introduces a ' Statement of comprehensive income'.

The adoption of IFRS 8 has required management to review the disclosure of segmental information based on internal management reporting practices, as opposed to the risks and rewards approach as required within IAS 14.

Going concern

The directors have prepared cash flow forecasts through to 31 March 2012 which take account of the proposed strategy following the proposed acquisition of a 40 per cent interest in the Ke field, the share placing and other funding available to the company following this acquisition. The cash flow forecasts demonstrate that the Group will have sufficient funding available to pursue its proposed strategy and continue in operational existence for the foreseeable future.

The share placing is conditional on the renewal of the award by the Department of Petroleum Resources of Nigeria of the participating interest in the Ke Field to Del Sigma Petroleum Nigeria Limited, from whom the Group will acquire it's 40 per cent. interest. The directors are very confident that the renewal will be received. On this basis the Directors continue to adopt the going concern basis in preparing the financial statements.

If the renewal is not forthcoming by 31 December 2010, the placing proceeds will not be received and the Company would need to seek alternative sources of finance. These financial statements do not include the adjustments that would result if the placing proceeds are not received nor alternative sources of finance could be found and the company was not able to continue as a going concern. 

Segmental reporting

An operating segment is a distinguishable component of the Group that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group's chief operating decision maker to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available.

The chief operating decision maker reviews financial information for and makes decisions about the Group's performance as a whole, as the Group has not traded during the period.

Subject to further acquisitions and the future development of the business in Nigeria the Group expects to further review its segmental information during the forthcoming financial year.

2. LOSS per share 

The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. The impact of the options on the loss per share is anti-dilutive.

3. trade and other receivables

Other receivables are usually due within 30 - 60 days and do not bear any effective interest rate. The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation of fair value.

4. trade and other payables

The fair value of trade and other payables has not been disclosed as, due to their short duration, management considers the carrying amounts recognised in the balance sheet to be a reasonable approximation of their fair value.

5. SHARE CAPITAL

On 8 December 2009 the Company placed 18,333,335 new ordinary shares at £0.06 per share. The premium on issue of $1,732,207 has been recognised within the share premium account.

6. CONTINGENT LIABILITIES

At 30 June 2010 and 31 July 2009 there is a contingent liability of $231,000 relating to a fee payable to Taglient Oil. This fee is payable only on completion of a transaction that constitutes a reverse takeover under the AIM Rules of Companies. As a reverse takeover had not occurred by 30 June 2010 no amount has been recognised in the financial statements in respect of this agreement. The Board consider that this fee is only likely to become payable on signing an agreement to acquire a marginal field and completion of the related fund raising.

7. Post balance sheet events

On 22 February 2010 the Company announced it had entered into a conditional agreement to acquire a 40 per cent interest in the Ke Field and had entered into a joint operating agreement with Del Sigma Petroleum Nigeria Limited for the development of the Ke Field. The Ke Field is a multiple horizon onshore hydrocarbon reservoir contained within the Ke Farmount Area, which is situated in the Niger Delta, Nigeria, within the boundaries of Oil Mining Leave No. OML55 held by the National Nigerian Petroleum Corporation and Chevran Nigeria Ltd.

The proposed transaction constitutes a reverse takeover under the AIM Rules for Companies and accordingly is subject to shareholder approval. Accordingly an AIM Admission document will be sent later today to the Company's shareholders, seeking their approval of the proposed transaction.