Interim Results 2012

PRESS RELEASE

FOR 7.00 AM RELEASE

22 August 2012

Interim Results for the six month period ended 30 June 2012

Melrose Resources plc ("Melrose", "the Company" or "the Group") the oil and gas exploration, development and production company with interests in Egypt, Bulgaria, Romania and Turkey, today announces its interim results for the six month period ended 30 June 2012.

Operational highlights

• average production 16.2 Mboepd on a net entitlement basis (28.3 Mboepd on a working interest basis)

• successful high angle development wells completed on the West and South Khilala fields (Egypt)

• positive flow test results (17 MMcfpd) from the shut-in Galata-1 well (Bulgaria)

• 3D seismic interpretation completed on the Galata Block (Bulgaria) confirming unrisked prospective resources of 125 Bcf

• exploration work programme commenced on the Muridava and Est Cobalcescu licences (Romania) with 3D seismic acquisition

• well location selected and preparations made for the Mesaha (Egypt) exploration well to be drilled in Q4 2012

Financial highlights

• revenue $128 million (H1 2011: $156 million)

• EBITDAX $106 million (H1 2011: $134 million)

• profit after tax $33 million (H1 2011: $33 million)

• net debt $263 million (H1 2011: $367 million)

• financial gearing 68 percent (H1 2011: 107 percent)

Robert Adair, Executive Chairman commented

"We recently announced the proposed merger of Melrose with Petroceltic International plc which will blend both companies' assets and resources to form a regionally focused North Africa, Mediterranean and Black Sea independent oil and gas company.

In the context of this potentially transformational event, the Company has continued to deliver good operating performance during the first half of 2012 whilst planning for a multi-well exploration drilling programme in the western Black Sea and Egypt in 2013.

We are pleased to announce that our financial performance remains solid and the Company remains well advanced towards achieving its financial gearing target of around 60% by year end."

For further information please contact:

or visit www.melroseresources.com

CHAIRMAN'S STATEMENT

Introduction

Last week Melrose announced the planned merger of the Company with Petroceltic International plc to create an entity with a regional focus on the North Africa, Mediterranean and Black Sea region and the scale to be competitive in today's industrial environment.

The proposed transaction is consistent with the Company's stated strategy to secure access to business development opportunities and expand the asset portfolio, with a focus on exploration and near term field developments where the Company can leverage its regional relationships and technical and commercial skills.

The combined asset base will represent a balanced portfolio, coupling Melrose's established Egyptian and Bulgarian production with Petroceltic's leading Algerian gas development project. In addition, the merged company will have exploration upside in Romania, Italy and the Kurdistan region of Iraq as well as the existing core producing countries.

The Melrose Directors believe that the proposed merger will allow the Company's shareholders to access upside value potential in Petroceltic's exploration and development assets, reduce investment risks through the effects of asset diversification and potentially enhance the long term sustainability of the business. The Melrose Board also considers that the ancillary benefits of the merger will include near term financial de-gearing and increased share liquidity.

Under the terms of the proposed merger the Melrose shareholders will receive 17.6 Petroceltic shares for each Melrose share, representing a 46 percent ownership position in the enlarged company. In addition, Melrose shareholders will receive a special dividend of 4.7 pence per Melrose share.

The merger announcement has somewhat eclipsed the Interim Results Announcement but the first half of 2012 has been a period of solid progress for the Company, during which our primary focus has been on accelerating the Company's planned financial de-gearing process. Revenues for the period were $128 million with EBITDAX of $106 million and the Company generated a profit after tax of $33 million. As a result, by the end of June the Company's gearing had been reduced to 68 percent from 89 percent at the start of the year.

The Company achieved an average production rate of 28.3 Mboepd on a working interest basis during the first half of the year (equivalent to 16.2 Mboepd on a net entitlement basis). With the recent completion of two new development wells in Egypt, the current production rate is approximately 30.0 Mboepd and we are confident of achieving our full year production guidance of 28.0 Mboepd.

The political change process in Egypt is continuing as the country transitions towards a more democratic system. In January, the new Parliament convened and in June, Mr Mohammed Morsi from the Muslim Brotherhood was elected as President. Also in June, the Supreme Constitutional Court ruled that the Parliament should be dissolved due to irregularities in the electoral process but this is being contested by the President. Notwithstanding the political environment, throughout the period the Company has received regular payments from the Egyptian Government for its hydrocarbon sales.

Underpinning the financial results were our producing fields in Egypt and Bulgaria, which are performing well. During the first half of the year, in Egypt we drilled two successful high angle development wells in the West and South Khilala fields and continued to progress the West Dikirnis LPG plant. Most recently, we have also prepared two of our older discoveries, East Dikirnis and West Abu Khadra to be tied back for production.

On the exploration front, the interpretation of the recent Galata Block 3D seismic survey has been completed and eight structures have been identified with a total combined unrisked P50 prospective resource estimate of 125 Bcf. The highest ranked prospect is called Kamchia, which has an estimated P50 prospective resource of 27 Bcf and a chance of success of 40 percent. Preparations are underway to drill this well early 2013.

We were also pleased to commence the exploration work programme on the Company's Muridava and Est Cobalcescu concessions, offshore Romania which have potential. A 3D seismic survey is currently being acquired over both blocks before we embark on a multi-well drilling programme on the licences in 2013 and 2014. Elsewhere, the Company is preparing to drill the first exploration well on the frontier Mesaha block in southern Egypt. 

Egypt

The new Egyptian Parliament convened on 23 January 2012 and began the process of creating a new constitution for the country and preparing for the first presidential elections after the people's revolution. The elections were duly held in May and June with the Muslim Brotherhood's candidate, Mr Mohammed Morsi, emerging as the winner by a small margin.

Mr Morsi has since been duly installed as the President, with the support of the Supreme Council of the Armed Forces, and appears intent on promoting unity in the country with plans to appoint members of minority groups into key positions within his administration. He has also made various public statements to provide encouragement to foreign investors in the country. 

During the election process, the Supreme Constitutional Court ruled that the Parliamentary elections held at the end of 2011 were unconstitutional and the Parliament, which was dominated by an Islamist two thirds majority, was disbanded. Subsequently, on 8 July the new President issued a decree to recall the house but it is unlikely to be an effective body pending new elections.

During the transition period, the Company has continued to receive payment for its gas and oil sales from the Egyptian Government and the receipts are in line with an agreed payment schedule. This has encouraged the Company to continue to pursue an active work programme on its Egyptian acreage including the El Mansoura and South East El Mansoura concessions onshore in the Nile Delta and the Mesaha concession which is a frontier exploration block in Southern Egypt.

The production stream continues to be underpinned by contributions from our two major fields, West Dikirnis and West Khilala, supplemented by nine other fields. The average production rate during the first half of the year was 21.3 Mboepd on a working interest basis, comprising 103.0 MMcfpd of gas and 3,584 bpd of oil, condensate and Liquid Petroleum Gas ("LPG"). Net entitlement production averaged 44.6 MMcfpd of gas and 1,550 bpd of oil, condensate and LPG.

The first half production was slightly affected by industrial action at the Company's South Batra plant in late May by contract security staff. This situation was amicably resolved through negotiation, although the Company was unable to produce from West Dikirnis and some of its smaller gas fields (equivalent to 440 boepd on an average annual basis) for a short period of time.

With respect to the Company's major facilities projects, the West Dikirnis LPG plant expansion is well under way with all major equipment and project service contracts awarded. The plant chiller unit is currently being fabricated in Canada and the turbo expander has been shipped to Egypt pending installation. With the site preparation works well advanced, the project remains on schedule for completion around the end of 2012. The West Khilala front end gas compression project has been tendered and an award made for the supply of two 37.5 MMcfpd capacity compressors. The detailed design work for the ancillary systems is finished and site preparation will commence shortly. The project start-up is due in mid 2013.

During the first half of the year the Company also completed some successful development drilling activity on its gas fields. Early in the year, the high angle West Khilala-8 well was drilled by the EDC-9 rig near the crest of the field and encountered 102 feet of net vertical gas pay with good reservoir properties. Most importantly, the open hole logs from the well indicated that the initial field-wide gas water contact has moved up only around 15 feet since field start up in February 2007 indicating weak aquifer influx and re-affirming the field reserves estimate. The well was placed on stream on 8 March and is currently producing at a controlled rate of 8.5 MMcfpd.

Following the operations on West Khilala, the rig was moved to drill the South Khilala-2 development well in the southern area of the field, which was interpreted as being only in partial communication with the single existing production well to the north. The well encountered some 68 feet of net vertical gas pay, slightly better than expected, with high reservoir pressure and the data indicates that the field's total recoverable proved plus probable reserves should increase from 47 Bcf to 60 Bcf. The well has been tied back to the West Khilala facilities and is currently flowing at 14 MMcfpd.

Subsequently, the drilling rig was used to perform completion operations on two old discovery wells which had been made in the Mansoura concession and suspended pending tie back for production. The first of these was East Dikirnis which was drilled in 2009 and encountered 38 feet of gas pay overlying 12 feet of oil and has estimated P50 reserves of 0.3 MMbbl of liquids and 3 Bcf of gas. A field development plan has been approved by the Egyptian authorities and the field is expected to commence production in early 2013. The second was the 5 Bcf West Abu Khadra gas discovery, made in June 2006, which is being tied back to the East Abu Khadra well site for production next year. The combined impact of these wells on 2013 production volumes is estimated at 1.0 Mboepd.

The drill rig is currently being prepared to relocate to southern Egypt to drill the first exploration well on the large (43,000 square kilometre) Mesaha exploration concession. The concession contains a virgin, undrilled sedimentary basin which has major structural features including tilted fault block geometries and intra-basinal highs. The Company has a 40 percent operated interest in the block with three joint venture partners namely Beach Energy, Hellenic and Kuwait Energy. The partnership has agreed a well location which will test one of the most prominent structures and provide information on the regional geology and in particular the possible presence of effective reservoir and hydrocarbon source rocks. The well is expected to spud in October 2012.

The Company is continuing its discussions with the Egyptian authorities regarding a possible extension to the term of the Mansoura exploration concession. The authorities have confirmed a minimum extension of six months, until December 2012, and indicated a willingness to consider further extensions beyond this date. This positive development provides the Company with additional time to review the remaining prospectivity in the concession which is known to be relatively mature. It is not clear, however, at this stage whether the current parliamentary situation will allow the negotiations to be concluded satisfactorily.

Bulgaria

The Company's Kavarna and Kaliakra gas field developments offshore Bulgaria have continued to perform well and produced at a combined average daily rate of 40 MMcfpd during the first half of the year. These production volumes, coupled with an average realised gas price of $8.15 per Mcf have generated significant revenues for the Company, contributing some 55 percent of the cash from operations.

The Bulgarian gas price is now expected to average around $8.30 per Mcf during 2012, compared to our previous forecast of $8.50 per Mcf. The difference is due to two factors, namely, the strengthening US dollar to Euro exchange rate and our independent gas purchaser, Agripolychim, suffering operational issues in its plant resulting in more of the Company's gas being sold to Bulgargaz EAD during the first half of the year. The price realised during the first half is lower than the average annual price forecast due to the structure of the gas sales contracts which provide for increased prices and higher sales volumes to be dedicated to Agropolychim later in the year.

An application has been submitted to the Bulgarian authorities for the Production Concession for the Kavarna East field and once received it will allow the development to proceed. This field lies approximately three kilometres east of the Kavarna field and contains estimated recoverable reserves of 10 Bcf. It is intended to develop the field with a single subsea completion tied back to the Kavarna subsea manifold with a 6 inch flow line.

In April, the Company conducted a reservoir data acquisition programme on the shut-in Galata field wells to confirm the remaining reserves and gather information required to update the gas storage feasibility study. The results of the programme were positive and confirmed reserves of 9 Bcf (compared with 5 Bcf booked at year end 2011) and more limited aquifer movement than previously predicted. Subsequently, the Galata-1 well was flow tested and produced at stable rate of 17 MMcfpd over a 24 hour period. The Company is currently considering the implication of these data on its overall production plan for Bulgaria and particularly the optimum timing of the Kavarna East development.

The interpretation of the 3D seismic data acquired over the central area of the offshore Galata Block in 2011 has been completed confirming the presence of a number of potential reservoir structures. A revised prospect inventory has been compiled and audited by the Company's independent reserves assessors.

Seven structures have been identified in the area with a total combined unrisked P50 prospective resource estimate of 125 Bcf. The highest ranked prospect is called Kamchia, which has an estimated P50 prospective resource of 27 Bcf and a chance of success of 40 percent. Preparations are underway to drill this well as early as operationally practicable, which is expected to be in early 2013. In the event of drilling success on Kamchia, the discovery would be developed using a low cost subsea tie-back to the Galata field production platform some 13 kilometres away, similar to the approach used for the Kavarna and Kaliakra field developments. 

Romania

During the period, Melrose was pleased to commence its exploration work programme on the Muridava and Est Cobalcescu offshore Romania. Both blocks are located in shallow water and have significant oil and gas potential in exploration plays on trend with existing discoveries elsewhere in Romanian waters. Our preliminary mapping of the area, based on old vintage regional 2D seismic data, has identified a number of leads and prospects with 1 Tcfe to 2 Tcfe of unrisked gross resource potential.

The first stage of the work programme involved the acquisition of 1,930 square kilometres 3D seismic data in 2012 over both blocks and the survey has recently been completed using the Vyacheslav Tikhonov seismic vessel. The seismic data interpretation will be fast tracked in order to prepare for a multi-well drilling programme on the blocks with two wells planned in 2013 and four wells in 2014.

Although the blocks have potential the planned work programme is relatively capital intensive and therefore the Company plans to reduce its equity to 40 percent on both blocks, whilst retaining operatorship. 

In this regard, we were pleased to announce earlier this year that the Romanian National Agency of Mineral Resources had approved the transfer of a 40 percent working interest in the Muridava block to Midia Resources SRL, a wholly-owned subsidiary of Sterling Resources Ltd. Midia holds interests in other nearby licences and the equity transfer will facilitate the capture of regional operating synergies. We are also in advanced discussions with another company who wish to acquire a 30 percent interest in the Est Cobalcescu block which will optimise Melrose's holdings in each block.

France

The Company submitted a request to the French authorities to extend the Rhône Maritime exploration licence but the prescribed time for a response has passed without contact being made. Melrose has applied to the French authorities to assert its rights in connection with the Rhône Maritime licence.

Financial Results

The first half of the year represented a period of solid financial performance for the Company as we continued to focus on our strategic objective of reducing financial gearing to around 60 percent by year end. We remain well advanced towards achieving this objective and by the end of June had reduced gearing to 68 percent compared to 89 percent at the start of the year. The Company's net debt at the end of June was $263 million.

Throughout the period regular monthly cash payments have been received from the Egyptian Government and these have been supplemented by one additional payment in kind. The payments were in line with a new payment schedule agreed between the Company and EGPC and the level of outstanding arrears in Egypt at the end of June was some $105 million.

Revenues for the period were $128 million and EBITDAX was $106 million, as compared with equivalent figures for the same period in 2011 of $156 million and $134 million, respectively. Profit after tax was $33 million which is the same as the period ended 30 June 2011, giving earnings of 28.5 cents per share. Cash from operations was $93 million compared to $105 million for the comparable period in 2011.

Capital expenditure during the first six months was $25 million and our revised full year forecast for 2012 remains at $75 million, which may reduce in the event that the planned farm-out of a 30 percent interest in Est Cobalcescu completes.

The first half capital expenditures primarily relate to the West Dikirnis LPG plant expansion project and development drilling in Egypt with some minor expenditure on long lead time equipment required for the Kavarna East development in Bulgaria. The second half expenditures will cover costs on the West Dikirnis LPG plant and West Khilala compression facilities and two exploration projects, namely, the Mesaha exploration well and Romanian 3D seismic survey.

Outlook

The Company's financial position continues to strengthen as the revenues generated by our Egyptian and Bulgarian fields allow us to accelerate the financial de-gearing process. As such, we are well on track to achieve our objective of a gearing level of around 60 percent by year end.

This will allow us to dedicate additional funding to business growth initiatives and we are preparing to enter a new phase of exploration drilling in 2013 with three wells planned in the western Black Sea and one or more in Egypt. In the near term, later this year we are also looking forward to obtaining the results from the Mesaha exploration well in southern Egypt. It is rare to have the opportunity to drill the first exploration well in an untested sedimentary basin of this scale.

In addition to the Company's exploration portfolio, we have a growing capacity to pursue new business opportunities and the Melrose Directors believe that the proposed Petroceltic merger will provide the Melrose shareholders with the opportunity to participate in the growth of this exciting combination through direct share ownership. We see the potential to help create a significant combined company with a regional focus, a balanced and diversified asset portfolio, a strong experienced team and the scale to compete in today's international business climate.

I would like to thank the Melrose staff, management and Board as well as our shareholders for their continued support for the Company and we look forward to entering the next exciting phase of its development.

Robert FM Adair

21 August 2012

FINANCIAL REVIEW

During the period, the Group has continued to deliver significant cash flows from operations which in turn have enabled the Company to reduce net debt, maintaining a significant reduction in the Group's gearing ratio. Net debt as at 30 June 2012 was $263.2 million (30 June 2011, $367.3 million) with gearing of 68 percent (30 June 2011, 107 percent), reflecting the Company's commitment to reduce gearing to a level of around 60 percent by the end of 2012.

The Group generated profit after tax of $32.7 million for the period ended 30 June 2012 giving earnings per share of 28.5 cents. Profit after tax from continuing activities in the equivalent period in 2011 was $46.2 million, with the decrease in 2012 as a result of lower production in Egypt during the first half of the year, prior to the completion of two new production wells.

Results for the six months ended 30 June 2012

Revenue in the six months ended 30 June 2012 decreased by 17 percent to $128.4 million compared with $154.6 million from continuing operations for the six months ended 30 June 2011. This decrease is primarily due to lower production in Egypt in the first half of 2012. Revenue by product and country is set out in the table below.

Profit from operations in the period is $60.7 million reduced from $86.1 million from continuing operations for the six months ended 30 June 2011. Profit after tax was $32.7 million (six months ended 30 June 2011, $46.2 million from continuing operations), with earnings of 28.5 cents per share (six months ended 30 June 2011, 40.3 cents per share from continuing operations). The decreases in profit from operations and profit after tax are primarily due to lower revenues from Egypt. 

EBITDAX for the period was $106.5 million (six months ended 30 June 2011, $134.4 million) as set out in the table below.

Capital expenditures during the period amounted to $24.9 million (six months ended 30 June 2011, $30.0 million). These expenditures were split geographically between Egypt $19.6 million, Bulgaria $2.8 million and Romania $2.5 million.

Group net debt continued to reduce and was $263.2 million at 30 June 2012 (30 June 2011, $367.3 million). This is reflected in the Group gearing which reduced to 68 percent at 30 June 2012 from 107 percent at 30 June 2011.

The Group disposed of its remaining US operations in 2011, and these operations are treated as discontinued in 2011.

RESPONSIBILITY STATEMENT

We confirm that to the best of our knowledge:

• the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; and

• the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Diane MV Fraser

Finance Director

21 August 2012

PRINCIPAL RISKS AND UNCERTAINTIES

Melrose is subject to various risks and uncertainties that may impact its business in the remaining six months of the financial year as well as in the more distant future. The principal risks and uncertainties faced by the Group remain unchanged from the disclosures included in the Annual Report as at 31 December 2011. The Board categorises the risks as follows: political, operational, bribery and corruption, financial, strategic and corporate. A more detailed explanation of the risks can be found on pages 23-24, 33-35 and 70-73 of the 2011 Annual Report and Financial Statements.

Condensed consolidated income statement

for the six months ended 30 June 2012

The profit for the period is 100% attributable to equity shareholders.

Discontinued operations relate to the Group's US asset portfolio, the final assets of which were disposed of in December 2011.

No income tax arises on the change in fair value of cash flow hedges since the deferred tax asset on these losses is not recognised in the Company.

Condensed consolidated balance sheet

as at 30 June 2012

Condensed consolidated statement of cash flows

for the six months ended 30 June 2012

Condensed consolidated of changes in equity

for the six months ended 30 June 2012

Note 1: In March 2011, the High Court of England and Wales approved a special resolution passed by the Company's shareholders to reduce the share capital of the Company by cancelling the Share Premium Account. The total amount was transferred to distributable reserves on 7 March 2011 following registration of the court order by the Registrar of Companies for England and Wales.

Notes to the interim condensed financial statements

1. Accounting policies and basis of preparation

Melrose Resources plc is a company domiciled in the United Kingdom. The Condensed Consolidated Interim Financial Statements of the Company as at and for the six months ended 30 June 2012 comprise the Company and its subsidiaries (together referred to as the "Group").

This condensed set of financial information has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed set of financial information has been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2011. There are no new standards, amendments to standards or interpretations which have been endorsed by the EU and are mandatory for the first time for financial periods commencing on 1 January 2012 which have a significant impact on the reported results. 

The comparative figures for the financial year ended 31 December 2011 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was i) unqualified, ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

This condensed consolidated interim financial information does not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2011, which are available on the Company's website, www.melroseresources.com.

The interim financial information for the six months ended 30 June 2011 is unaudited and has not been reviewed by the auditors.

The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the financial information. The condensed consolidated interim financial information was approved by the Board of Directors on 21 August 2012.

2. Operating segments

The chief operating decision maker has been identified as the executive directors. The executive directors review the Group's internal reporting in order to assess performance and allocate resources and the Group has determined the operating segments based on this reporting.

The executive directors consider the business from a geographic perspective, and assess the performance of the following regions: Bulgaria, Egypt, USA (discontinued in 2011) and other Europe. All of the operating segments derive their revenues from the sale of oil, associated liquids and gas to external customers.

The executive directors consider the performance of the operating segments based on profit from operations. The information provided to the chief operating decision maker is measured in a manner which is consistent with the financial statements.

2. Operating segments (continued)

Two of the Group's customers accounted for more than 10% of revenue in 2011 and 2012. All sales in Egypt in 2011 and 2012 are to a state owned company. The revenue derived from sales to this customer is set out in the tables above. Revenue in the period to 30 June 2012 included $44.7 million to a Bulgarian state owned company (6 months to 30 June 2011, $52.3 million; 12 months to 31 December 2011, $105.3 million).

3. Income tax expense

The tax charge for the period of $19.4 million (6 months ended 30 June 2011, $28.6 million) gives an effective tax rate of 37.2% based on the forecast tax rate for the current financial year (6 months ended 30 June 2011, 46.3%). The tax charge comprises a charge of $21.0 million for current tax and a credit of $1.6 million for deferred tax.

The effective tax rate reflects that a significant proportion of the Group's profits arise in Egypt, where the standard rate of tax is 40.55%. There are also expenses incurred by the Group which do not qualify for tax relief in the relevant countries, increasing the effective rate of the tax charge. Due to uncertainty on recovery against future profits, certain tax losses have not been recognised in deferred tax.

4. Earnings per share

The calculation of basic and diluted earnings per share is based upon the following data:

The weighted average number of ordinary shares used in the calculation of basic and diluted earnings/(loss) per share for each period was calculated as follows:

5. Capital expenditure

Capital expenditure during the period amounted to $24.9 million (six months ended 30 June 2011, $30.0 million). Capital expenditures were split between Egypt - $19.6 million, Bulgaria - $2.8 million and Romania - $2.5 million.

6. Bank loans and financial instruments

The Group's interest-bearing loans and borrowings are as follows:

The Company has a Senior Loan Facility of $325 million and a Subordinate Loan Facility of $60 million. Both facilities have a final repayment date of 31 December 2014. The Group made a repayment of $104.5 million during the period against the Senior Loan Facility, and made a drawdown of $28.0 million against the Subordinate Loan Facility.

The following table indicates the effective interest rates of interest-bearing liabilities at the balance sheet date and the period in which the principal amounts fall due:

Note 1: Excluding capitalised loan arrangement fees

7. Share capital and share premium

No shares were issued during the period under employee share options arrangements (six months ended 30 June 2011: 21,115 shares).

In March 2011, the High Court of England and Wales approved a special resolution passed by the Company's shareholders to reduce the share capital of the Company by cancelling the Share Premium Account at that date. The amount was transferred to distributable reserves on 7 March 2011 following registration of the court order by the Registrar of Companies of England and Wales.

Dividends

The following dividends were declared and approved by the Group:

The dividend declared and approved in the six months ended 30 June 2012 was paid on 20 July 2012.

8. Contingent liabilities and capital commitments

The Company has contingent liabilities of $200 million (30 June 2011: $350 million) in respect of guarantees provided to secure the bank loans of subsidiary undertakings.

The Group had capital commitments of $86.6 million at 30 June 2012 (30 June 2011: $11 million) with associated cash outflows arising over the period ending October 2014.

9. Related party transactions

Controlling related party

The directors consider that the immediate and ultimate parent company of Melrose Resources plc is Skye Investments Limited, which is registered in England and Wales, as it owns over 50% of the ordinary share capital. Skye Investments Limited is controlled by the Adair Trusts. Skye Investments Limited is the parent company of the largest group of companies for which group accounts have been drawn up. Copies of the group accounts of Skye Investments Limited are available from No. 1 Portland Place, London W1B 1PN.

Identity of related parties

The Company has a related party relationship with its subsidiaries and its directors.

Related Party Transactions

With the exception noted below, there are no related party transactions during the six months ended 30 June 2012 (30 June 2011: nil).

Contract of significance

Under the terms of a Net Profit Interest Agreement relating to the Galata gas field and originally entered into in 1998 an amount of nil is payable in respect of the six months ended 30 June 2012 (nil in respect of the six months ended 30 June 2011) to Orbis Holding Ltd, a company in which David Archer has a 50% beneficial interest.

DIRECTORS AND ADVISERS

Directors

Robert F M Adair

James D Agnew

David F Archer

Diane M V Fraser

Ahmed L Kebaili

Alan J Parsley

Anthony E Richmond-Watson

David H Thomas

William P Wyatt

Company Secretary

Alasdair N Robinson

Registered Office

No. 1 Portland Place

London, W1B 1PN

Registered in England

No. 3210072

Head office

Exchange Tower

19 Canning Street

Edinburgh, EH3 8EG

Telephone: +44 (0) 131 221 3360

Egyptian office

3C/5 Lasilky Zone

Ahmed Kamel Street

New Maadi

Cairo 11431

Egypt

Bulgarian offices

Melrose Resources S.à r.l.

Office 10

2 Nikolai Haitov Street

Iztok, Sofia 1113

Melrose Resources S.à r.l.

32 Marko Balabanov Street

Varna 9010

Bulgaria

Auditors

KPMG Audit Plc

Saltire Court

20 Castle Terrace

Edinburgh, EH1 2EG

Solicitors

Tods Murray LLP

Edinburgh Quay

133 Fountainbridge

Edinburgh, EH3 9AG

DLA Piper UK LLP

3 Noble Street

London, EC2V 7EE

Principal bankers

Lloyds Banking Group

New Uberior House

11 Earl Grey Street

Edinburgh, EH3 9BN

International Finance Corporation

2121 Pennsylvania Avenue NW

Washington, DC 20433

USA

Registrars

Share Registrars Limited

9 Lion & Lamb Yard

Farnham

Surrey, GU9 7LL

Stockbrokers

N+1 Brewin

7 Drumsheugh Gardens

Edinburgh, EH3 7QH

Cannacord Genuity

88 Wood Street

London, EC2V 7QR

Glossary:

Factor used to convert Mcf to bbl is 5.8

Disclaimer

This announcement contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business. While Melrose believes the expectations reflected herein to be reasonable, the actual outcome may be materially different owing to factors either within or beyond Melrose's control, and accordingly no reliance may be placed on the figures contained in such forward looking statements.