Half Yearly Report

PetroNeft Resources plc

("PetroNeft" or the "Company")

2013 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 2013.

Highlights:

· H1 production of 445,949 barrels of oil for the period - average of 2,464 bopd

· Encouraging further progress on financing

· Current group production 2,500 bopd

David Golder, Chairman of PetroNeft Resources plc, commented:

"The first half of 2013 was a busy period for the Company. Some production issues were resolved leading to more stable production in recent months.

Since the Annual General Meeting on 11 September we have continued to make good progress on re-financing the Company and I hope to be able to update shareholders in detail on this point in the coming weeks."

For further information, contact:

Dear Shareholder,

I am pleased to report on the activities of the Company for the six months to 30 June 2013 and provide an update on recent activities.

Production and Sales

Production in the six months to 30 June 2013 was 445,949 barrels of oil or an average of 2,464 bopda 13% increase compared to the same period in 2012 where production was 394,652 barrels of oil or an average of 2,168 bopd. We sold 438,350 barrels of oil in the six months to 30 June 2013 (H1 2012:403,674 bbls) and achieved an average oil price of $42.48 (H1 2012: $43.12). The domestic pricing in the second quarter was lower than expected leading to a reduced gross margin in the period but the price has since recovered with record prices achieved in the third quarter.

Two new oil production wells were drilled at Arbuzovskoye in the first quarter in addition to a water source well to provide water for the water injection system at Arbuzovskoye. While we encountered a number of production difficulties in the early months of 2013, we successfully resolved these issues through a programme of re-perforation of wells at Arbuzovskoye.

We are very encouraged by the stability of production in recent months, which is currently steady at 2,500 bopd. The pressure maintenance programme that commenced at Arbuzovskoye in April 2013 is continuing and is working well. In recent weeks, we have seen some positive impact in the production well nearest to the injection well - similar to the response seen earlier at Lineynoye. This should expand to other nearby production wells in the coming months. Production at Lineynoye also remains very stable with little decline evident. We have also benefitted from strong realised oil prices in recent months.

Development drilling programme - Arbuzovskoye oil field

Two new production wells were drilled at Arbuzovskoye in the first half of 2013 achieving initial rates of 140 bopd and 160 bopd. In March 2013, drilling activities were paused at Arbuzovskoye to allow the commencement of the water injection programme the results of which will help guide future well locations.It is likely that at least three additional wells will ultimately be drilled from Arbuzovskoye Pad 1 to fully exploit the area.The drilling rig remains on site at Arbuzovskoye together with supplies to drill three wells.

Financing

In March 2013, we commenced repayments of US$650,000 per month to Macquarie Bank Limited and we continue to make these payments from our own resources. The current balance on this facility, net of cash held by Macquarie in the Debt Service Reserve Account, is US$13.6 million.

To support the Company's developmentaspirations we appointed financial advisors, Evercore Partners LLP, to assist with negotiations in relation to a potential farmout of up to 50% of Licence 61 and are currently in discussions with a number of parties. We are also in active negotiation with a number of Russian and International banks to refinance the Macquarie debt facility with a longer term arrangement which more appropriately reflects the long term production profile and growth potential of our asset base.

Discussions continue on both the re-financing and planned farmout of Licence 61.We have made good progress on concluding a re-financing of the existing Macquarie Bank facility in recent weeks.

Future drilling programme

Subject to the successful completion of re-financing of the bank debt, or a farmout, plans are in place for re-commencement of drilling operations later this year. This plan includes a delineation well at West Lineynoye, commencement of drilling additional production wells at Arbuzovskoye and, in 2014, delineation wells at Tungolskoye and Sibkrayevskoye, where significant upside potential and near-term developments are possible.

Financial results for the period

The net loss after tax for the period was US$10,593,368 (H1 2012: US$6,990,186). The loss includes a foreign exchange loss of US$6,376,921 (H1 2012: US$2,760,623) 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. Net cash flows from operating activities in the period were US$3,143,193 (H1 2012: US$4,685,880).

Conclusion

The first half of 2013 was a busy period for the Company. Some production issues were resolved leading to more stable production in recent months.

Since the Annual General Meeting on 11 September we have continued to make good progress on re-financing the Company and I hope to be able to update shareholders in detail on this point in the coming weeks.

David Golder

Non-Executive Chairman

Interim Consolidated Cash Flow Statement (continued)

1. Corporate information

The interim condensed consolidated financial statements of the Group for the six months ended 30 June 2013 were authorised for issue in accordance with a resolution of the Directors on 27 September 2013.

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. Going concern

As noted in the 2012 Annual Report in October 2012 a revised borrowing base was agreed with Macquarie Bank Limited ("Macquarie")which amongst other things led to the commencement of monthly repayments of US$650,000 on 31 March 2013. The Macquarie loan matures in May 2014 at which time a final payment of US$8.4 million (in addition to the US$4 million restricted cash held by Macquarie) will be required.

The Company has entered into discussions with a number of parties and is currently pursuing two independent funding strategies. In consultation with major shareholders and finance providers we have concluded that a farmout of up to 50% of Licence 61, while remaining as operator, represents the best way to provide the necessary finance to strengthen the Group's financial position and allow it to realise the full potential of its substantial asset base. In that regard we have contracted Evercore Partners to run a formal process to seek an industry partner to join in the development and exploration of the licence. We have set up an extensive electronic data room and are in discussions with a number of potential partners. Secondly, we are also in discussions with certain Russian and international banks with a view to re-financing the existing debt facilities,however, the farmout option remains the preference of the Board of Directors. The aim of these discussions is to deliver a long term solution to the Group's finances to enable it to fully exploit its portfolio of reserves and prospects.

While, as at the date of approval of these financial statements, no commitment has been received in respect of either a farmout or re-financing, and there can be no certainty that additional funding will ultimately be received, significant progress has been made and the Directors remain confident about the outcome of these discussions and the resilience of the Group despite the pressures outlined above.

The Group has analysed its cash flow requirements through to 31 December 2014 in detail. The monthly repayments from operating cash flows of US$650,000 to Macquarie commenced in March 2013, however, based on our current cash flow forecasts the Group will need to obtain additional funding in order to repay in full the final amount of US$8.4 million due in May 2014. The cash flow includes estimates for a number of key variables including timing of cash flows of development expenditure, oil price, production rates, and management of working capital. The Directors believe that the Group's cash flow forecasts represent the Group's best estimate of the results over the forecast period as at the date of approval of the financial statements. As part of the Directors' overall consideration of the appropriateness of going concern, the cash flow is stress tested to assess the potential adverse effect arising from reasonable changes in circumstance. It is recognised that the cash flow impact of these changes could result in further funding being required. In addition, under the revised borrowing base the Group has to remain in compliance with certain financial covenants and lender approvals.

These circumstances represent a material uncertainty that may cast significant doubt upon the Group and the Company's ability to continue as a going concern. Nevertheless, after making enquiries, and considering the uncertainties described above, the Directors are confident that the Group and the Company will have adequate resources to continue in operational existence for the foreseeable future. For these reasons, the Directors continue to adopt the going concern basis in preparing the annual report and accounts.

Accordingly, these financial statements do not include any adjustments to the carrying amount or classification of assets and liabilities that would result if the Group or Company was unable to continue as a going concern.

3. Accounting policies

3.1 Basis of Preparation

The interim condensed consolidated financial statements for the six months ended 30 June 2013 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 2012 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 2012.

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.

The net book value at 30 June 2013 includes US$5,952,907(YE2012: US$8,369,828) in respect of assets under construction, which are not yet being depreciated.

Expenditure of US$3,051,992was incurred mainly in connection with the Arbuzovskoye oil field, primarily relating to production wells and oilfield infrastructure.

Exploration and evaluation expenditure represents active exploration projects. These amounts will be written-off to the Consolidated Income Statement as exploration costs unless commercial reserves are established, or the determination process is not completed and there are no indications of impairment. The outcome of ongoing exploration, and therefore whether the carrying value of these assets will ultimately be recovered, is inherently uncertain.

In accordance with IFRS 6, once commercial viability is demonstrated the capitalised exploration and evaluation costs are transferred to oil and gas properties or intangibles, as appropriate after being assessed for impairment.

PetroNeft Resources plchas a 50% interest in Russian BD Holdings B.V., a jointly controlled entity which holds 100% of LLC Lineynoye, an entity involved in oil and gas exploration and the registered holder of Licence 67. The interest in this joint venture is accounted for using theequity accounting method.Russian BD Holdings B.V. is incorporated in the Netherlands and carries out its activities in Russia.

Summarised financial statement information prepared in accordance with IFRS of the equity-accounted joint venture entity is disclosed below:

Summarised Interim Financial statements of equity-accounted joint venture (50% share)