Interim Management Statement

Interim Management Statement

19 November 2010

Exillon Energy plc ("Exillon Energy", the "Company" or the "Group") (EXI.LN), a British independent oil company with upstream operations in two oil-rich regions of northern Russia, Timan-Pechora ("Exillon TP") and West Siberia ("Exillon WS"), today issues its Interim Management Statement for the period beginning 30 June 2010. The financial and production data are for the period from 30 June 2010 to 30 September 2010 and all other information, including details on operations, is as at 18 November 2010.

Key highlights

Exillon Energy

·; Secured US$50 million loan facility at an interest rate of LIBOR + 7%.

·; Admitted to the FTSE All-Share Index and the FTSE Small Cap Index.

Exillon TP

·; Successfully completed installation of the Gas Power Generator with 1MW capacity.

Exillon WS

·; Successfully completed the first stage of oil processing facility, allowing production of commodity oil.

·; Completed additional 11km of the pipeline, bringing the total pipeline length to 39 km.

·; Completed a permanent oil filling station next to the interstate road, shortening the transportation distance and allowing utilization of higher capacity trucks.

Production

·; The average daily production rate reached 5,985 bbl/day in the period from 30 June 2010 to 30 September, an increase of 201% from 1,991 bbl/day during the comparable period in 2009. 

·; Exillon Energy is currently producing 7,250 bbl/day and is expected to increase combined production to 9,000 bbl/day in December 2010.

Financial

·; Group cash balance of US$17.7 million at 30 September 2010 and debt of US$0.97 million.

MATERIAL EVENTS AND TRANSACTIONS

Inclusion to the FTSE UK Index

On the 17 September 2010, Exillon Energy was included in the FTSE All-Share Index and in the FTSE Small Cap Index.

Loan Facility

Exillon Energy agreed a term loan facility by its wholly owned subsidiary Exillon Finance Limited with Credit Suisse on 10 September 2010. The US$50 million facility has a LIBOR plus 7% interest rate, a term of 3.5 years, and is free of any equity related components.

The loan facility was drawn in full by the Company on 18 October 2010.

Production

Gross production for the period from 30 June 2010 to 30 September 2010 averaged 5,985 bbl/day. This represents a 201% increase over the comparable period in 2009 when the average daily production rate was 1,991 bbl/day.

Exillon Energy is currently producing 7,250 bbl/day and the unlocking of the EWS II field in December 2010 will increase production to approximately 9,000 bbl/day

FINANCIAL POSITION AND PERFORMANCE

Cash and cash equivalents and term deposits   

The cash and cash equivalents and term deposits at 30 September 2010 were approximately US$17.7 million (30 September 2009: US$1.6 million).

Capital expenditure 

Capital expenditure in the period to 30 September 2010 was around US$26.9 million (2009: US$4.1 million). Of the total capital expenditure, approximately 75% was attributable to infrastructure with the balance spent on drilling. The infrastructure spend included pipeline construction, completion of the first stage of oil processing facility, installation of gas power station, construction of oil filling station, in-field pipelines and infrastructure.

Realised prices

The average realised crude oil price during the period 30 June 2010 to 30 September 2010 was approximately US$52.43 per barrel, 14.1% higher than the corresponding period last year when it was US$45.96 per barrel. The Group's realised crude oil prices achieved a discount of about 3.78% to Brent during the first four months of the year.

CURRENT OPERATIONS AND OUTLOOK

In December 2010 the Group expects to begin production of an additional 1,750 bbl/day from Exillon WS, bringing the Group total to approximately 9,000 bbl/ day.

The Group has resumed construction of all season roads to EWS I and EWS II oil fields in Exillon WS. This will allow the EWS II field to be brought into production and the behind the pipe capacity from that field to be unlocked by the end of this year. The presence of all season roads will also allow year round access to major fields in Exillon WS.

The Group intends to use the net proceeds it received from the loan facility to fund drilling and infrastructure. With the additional investment, the Group intends to reach a target of 17,000 barrels per day in the second half of 2011. The Group also expects additional infrastructure to improve its economic efficiency.

Alessandro Manghi, CEO, commented:

"In just over ten months since the IPO, the Company has delivered outstanding performance in all areas of its operations, including the completion of seven successful wells, increasing production over 200% and optimising efficiency. The Group has secured additional financing and is now prepared for another busy year ahead, with over 20 wells to be drilled in 2011, 250 square km of 3D seismic to be shot and interpreted, and key infrastructure projects to be completed to optimize efficiency further. Key capital expenditures for the 2011 development program have already been negotiated, with the cost of drilling in Exillon WS being an important example where the Company has secured 2009 prices despite increase in metal costs in 2010. We believe that this extensive operational programme demonstrates our commitment both to grow output and also to increase reserves in a cost efficient and effective manner."

For further information please contact:

Contact details:

About Exillon:

Exillon Energy is a British independent oil producer with assets in two oil-rich regions of Northern Russia: Exillon TP in Timan-Pechora and Exillon WS in West Siberia. Exillon Energy plc is incorporated in the Isle of Man, with head office in Urai, Russian Federation. For further information please visit: www.exillonenergy.com 

Disclaimer

This statement may contain forward-looking statements concerning the financial condition and results of operations of the Group. Forward-looking statements are statements of future expectations that are based on the management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. No assurances can be given as to future results, levels of activity and achievements and actual results, levels of activity and achievements may differ materially from those expressed or implied by any forward-looking statements contained in this report. The Company does not undertake any obligation to update publicly or revise any forward-looking statement as a result of new information, future events or other information.