Interim Results

28 September 2012

Eland Oil & Gas PLC

 ("Eland" or the "Company")

Interim results for the six months to 30 June 2012

Eland Oil & Gas PLC (AIM: ELA), an oil & gas development and exploration company operating in West Africa with an initial focus on Nigeria, today announces its financial results for the six month period to 30 June 2012.

HIGHLIGHTS

Corporate

·; Successful admission to trading on AIM and placing raised gross proceeds of £118 million on 3 September 2012.

·; Completion of acquisition of 45% interest in OML 40, through joint venture company Elcrest, on 31 August 2012.

·; The Company re-registered as a Public Limited Company (PLC) on 28 February 2012.

Operational

·; The Company is currently building infrastructure and increasing its in-house capability.

·; Plans to re-start production on OML 40 have been prepared and are presently being reviewed with NPDC, the operator on the block.

Financial

·; Loss before tax of US$5.4 million for six months to 30 June 2012 (2011: US$9.7 million), compared to US$17.7 million loss for full year 2011.

·; Cash and cash equivalents held as at 30 June 2012 of US$0.3 million (30 June 2011: US$153.9 million) as compared to US$1.4 million as at 31 December 2011.

·; Gross proceeds of placing raised £118 million in September 2012 with £89 million (US$138.6 million) being applied immediately to fund the remaining consideration for the acquisition of the interest in OML 40.

·; Debt facility securing US$22 million post first oil agreed with Standard Chartered Bank in August 2012.

·; As at 20 September 2012 the Group held cash and cash equivalents of US$32.9 million.

Outlook

·; Following approval by NPDC of the OML 40 production plan, Eland will move quickly to re-start production.

·; Production at a rate of approximately 2,500 bopd is expected within six months from September 2012.

Leslie Blair, CEO of Eland, commented:

"Our immediate focus is to bring OML 40 back into production and consequently begin generating cash flow for the Company. This we expect to achieve within six months. We look forward to reporting back to shareholders our progress in this regard."

For further information:

Eland Oil & Gas PLC (+44 (0)1224 737300)

www.elandoilandgas.com

Leslie Blair, CEO

George Maxwell, CFO

Canaccord Genuity Limited (+44 (0)20 7 523 8000)

Henry Fitzgerald O'Connor

Peter Stewart

Rob Collins

Citigate Dewe Rogerson (+44 (0)20 7 638 7571)

Martin Jackson

Jack Rich

Note to Editors

OML 40 Overview

OML (Oil Mining Lease) 40 is an asset lease with production and exploration potential, located onshore Nigeria within the Niger Delta and covers an area of 498 square kilometres. Since it was awarded in 1964, 18 wells have been drilled based on 2D seismic with 15 wells intersecting hydrocarbon reservoirs including one developed oil field (Opuama) and four undeveloped fields of which three are predominantly oil bearing (Abiala, Gbetiokun, Ugbo) and the fourth is a gas discovery (Adagbassa Creek).

The Opuama field was in production from 1975 to 2006 when SPDC JV undertook a controlled shut down of the facility. The field was producing 2,500 bopd at the time of the shut-in. The field facilities consist of a flow station with a nominal capacity of 30,000 bopd and access to the Trans Escravos Pipeline and Forcados Terminal.

OML 40 represents an asset with 71.5 million barrels of gross lease 2P Reserves, 117 million barrels of gross lease 3P Reserves and 16.7 million barrels of gross lease Mean Contingent Resources, as outlined in a report prepared by McDaniel & Associates in August 2012. In addition, there is a significant identified exploration portfolio of 15 prospects and leads based on 3D seismic with total unrisked mean crude oil Prospective Resources of 356 million barrels[1].

INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2012

CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT

The significant events (acquisition of OML 40, fund raising and admission to AIM) since 30 June 2012 need to be taken into account when reading this half year report. The Company has been transformed by these events.

Eland was founded in 2009 with the objective of acquiring near term oil production assets in West Africa, with a particular focus on Nigeria. This strategy began with the Company establishing a partnership with indigenous Nigerian company Starcrest Energy ("Starcrest") and the creation of a Joint Venture Company 'Elcrest Exploration and Production Nigeria Limited' ("Elcrest"). Eland holds a 45% interest in Elcrest which in turn holds the 45% interest in OML 40 situated in the onshore Niger Delta.

The focus for the first half of 2012 was on completing the acquisition of the 45% interest in OML 40 and on the successful admission of Eland to trading on AIM.

On 31 March 2011, Elcrest signed a Sale and Purchase Agreement ("SPA") with Shell, Total and Nigeria Agip Oil Company to acquire the OML 40 interest. This acquisition was finalised on 31 August 2012. In the intervening period, Eland undertook a number of activities to ensure the successful outcome of both the Company's Admission to AIM and completion by Elcrest of the OML 40 acquisition, which was achieved in early September 2012. In particular, Eland, together with our joint venture partner Starcrest performed significant legal, financial and technical due diligence in relation to the IPO and in presenting our investment proposition to a wide range of potential investors. We were delighted with the support we received.

This first asset for the Company represents the most significant step forward in our strategy to become a significant oil & gas production business within Nigeria and we will look to expanding our portfolio further as opportunities become available.

Our immediate objective now is to re-commission OML 40 production facilities with a target of 2,500 bopd within six months of September 2012, and then to increase production through further development, appraisal and exploration to reach our target gross production of 50,000 bopd within four years. The Company will also focus on capitalising management's Nigerian expertise and relationships to secure further opportunities in conjunction with indigenous partners in the prolific and underexploited Niger Delta.

The upstream market in Nigeria is anticipated to change significantly in the coming years with opportunities becoming available to acquire onshore acreage that has been exclusively held by a small number of international oil companies for over 40 years. In part, this is being driven by the aspirations of the Federal Government of Nigeria to increase the level of indigenous participation in the upstream sector.

The onshore areas of the Niger Delta no longer require the financial and technical expertise of the major international oil companies. New independent players, such as Addax and Afren plc, in particular, have enjoyed significant success in Nigeria in recent years and have demonstrated that they can bring the financial and technical expertise, alongside local partners, to develop upstream assets in the Niger Delta quickly and effectively for the benefit of all stakeholders. Indeed the greater flexibility of the smaller companies has been a significant advantage in unlocking the upside potential of the Niger Delta.

We expect that the participation of indigenous companies onshore in the Niger Delta region will grow significantly over the next few years and many will work in partnership with independent international companies. We will look to become the 'partner of choice' for these new companies.

We also expect that the oil price will remain at levels that will encourage active upstream development and that the lower capital and operating costs in the onshore Niger Delta will allow for profitable development of OML 40 and a number of other opportunities.

Eland will, as part of its wider development, also consider other opportunities elsewhere in West Africa.

As we have said above, our immediate focus is to bring OML 40 back into production and begin generating cash flow for the Company. This we expect to achieve within six months. We look forward to reporting back to shareholders our progress in this regard.

Finally, we would like to thank all of our staff and advisers, without whose hard work and support we would not have been able to achieve the successes to date. We expect to grow our staff numbers in line with the development of OML 40 and look forward to establishing the new team. Our stakeholders also deserve thanks for their support over the last 18 months during what has been a challenging journey. We look forward to rewarding your faith in the management of Eland.

Harry Wilson Leslie Blair

Chairman Chief Executive Officer

Forward-looking statements

This report has been prepared to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The Statement should not be relied on by any other party or for any other purpose.

The report contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

INDEPENDENT REVIEW REPORT TO ELAND OIL & GAS PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 8. We have read the other information contained in the half-yearly 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 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. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent 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 conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules of the London Stock Exchange.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with the accounting policies the Group intends to use in preparing its next annual financial statements.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly 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 inquiries, 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 half-yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with the AIM Rules of the London Stock Exchange.

Deloitte LLP

Chartered Accountants and Statutory Auditor

Aberdeen, United Kingdom

28 September 2012

FINANCIAL RESULTS

The Group has not recorded any operating revenue and does not anticipate any operating revenues until the commencement of oil production from OML 40. During the first six months of 2012 the Company has established a new subsidiary in Jersey, 'Westport Oil Limited' which will hold the Loan and associated debtor currently held by Eland. In addition the Company has been in negotiations with Standard Chartered Bank to acquire a Debt facility to finance the initial development phase of OML 40. This was successfully concluded in August 2012, however there are a number of outstanding conditions to satisfy and upon completion of these conditions the facility is available upon first oil production which is expected within six months from September 2012.

CONDENSED CONSOLIDATED INCOME STATEMENT

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED BALANCE SHEET

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

General information

Eland Oil & Gas PLC is a limited liability company incorporated in Scotland and listed on the Alternative Investment Market of the London Stock Exchange. The address of the registered office is 34 Albyn Place, Aberdeen, AB32 6FE, United Kingdom. The principal activities of the Company are oil and gas exploration and development, with a focus on West African opportunities for acquisition and development.

The condensed financial statements for the six months ended 30 June 2012 were authorised for issue in accordance with a resolution of the Board of Directors on 27 September 2012.

The information for the year ended 31 December 2011 contained within the condensed financial statements does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 but has been derived from those accounts. Statutory accounts for the year ended 31 December 2011 were approved by the Board of Directors on 10 February 2012 and delivered to the Registrar of Companies. The auditor reported on those accounts; the report was unqualified but attention was drawn to matters of going concern and carrying value of oil and gas assets by way of emphasis. The report did not contain any statement under section 498(2) or 498(3) of the Companies Act 2006.

The financial information contained in this report is unaudited. The condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and the condensed consolidated cash flow statement for the six months to 30 June 2012, and the condensed consolidated balance sheet as at 30 June 2012 and related notes, have been reviewed by the auditors and their report to the Company is attached.

Basis of preparation

The condensed financial statements for the six months ended 30 June 2012 have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with the accounting policies the Group intends to use in preparing its next annual financial statements and should be read in conjunction with the annual financial statements for the year ended 31 December 2011.

The Group incurred a net loss of $5.36 million during the period to 30 June 2012 and had net current liabilities of $29.68 million as at that date. Currently the Group does not generate any operating revenues and to date its operations have been entirely dependent on financing from investors' funds and the issuance of a series of Loan Note rounds. Subsequent to the period end, the Company raised £118m through a successful IPO in September 2012. On 24 August 2012, the Company also entered into an agreement with Standard Chartered Bank for the provision of a debt facility of up to $22 million, accessible upon first oil production from OML 40 and completion of a number of post signature conditions. The Company also has access to an additional £10 million equity injection from each of two existing investors (£20 million in total), which can be called between September 2013 and September 2014. Following the acquisition of OML 40 and settlement of various outstanding obligations, the Directors have a reasonable expectation that the Company and Group has adequate resources available to it to continue in operational existence for the foreseeable future. Accordingly they have adopted the going concern basis in preparing the condensed interim financial statements.

Accounting policies

The accounting policies applied in these condensed financial statements are consistent with those of the annual financial statements for the year ended 31 December 2011, as described in those annual financial statements. A number of amendments to existing standards and interpretations were applicable from 1 January 2012. The adoption of these amendments did not have a material impact on the Group's condensed financial statements for the half-year ended 30 June 2012.

2. FINANCE COSTS

3. PROPERTY, PLANT & EQUIPMENT

The majority of the capital expenditure relating to the Oil and Gas assets was incurred in April 2011, when the Company paid a deposit of $15.4 million to the Sellers of OML 40.

4. CONVERTIBLE LOAN NOTES

The First Loan Notes and Third Loan Notes were issued on 12 January 2011 and 20 December 2011 respectively. The issue price for the First Loan Notes was £50,000 per note, and for the Third Loan Notes, £10,000 per note. The First Loan Notes and the Third Loan Notes were convertible into ordinary shares of the Company upon completion of the OML 40 acquisition. The loan notes are convertible at par. The Second Loan Notes were redeemed in October 2011. On 11 June 2012 the First Loan Notes were extended to 9 September 2012.

5. SHARE CAPITAL

Share capital as at 30 June 2012 amounted to £2.75 million.

6. RECONCILIATION OF OPERATING LOSS TO OPERATING CASH FLOW

7. DIVIDENDS

No interim dividend is proposed (2011: US$nil).

8. EVENTS AFTER THE BALANCE SHEET DATE

Board Appointments

The Company appointed additional directors on Admission to AIM on 3 September 2012. These Directors are:

Mr Robert Lambert, aged 63 Non-Executive Director, Senior Independent Director and Chair of the Reserves Committee.

Mr Louis Emmanuel Castro, aged 54 Non-Executive Director and Chair of the Audit Committee.

Mr Russell Harvey, aged 60 Non-Executive Director.

Completion of Acquisition of the Interest in OML 40

The Company completed, through the Joint Venture Company Elcrest Exploration and Production Nigeria Limited, the acquisition of a 45% interest in OML 40. This was completed on 31 August 2012, purchasing the 45% interest from Shell Petroleum Development Company (30%), Total Exploration and Production Nigeria Limited (10%) and Nigeria Agip Oil Company (5%). The total consideration for the 45% was $154 million, of which $15.4 million was paid to the sellers as a deposit in March 2011 and the balance $138.6 million (£89 million) was paid in September 2012 on completion of the transaction.

Additional interest in Elcrest

In May 2012, management entered into an agreement to purchase an additional 4% equity interest in Elcrest from Starcrest, thereby increasing the Company's share of Elcrest to 49%. The consideration payable is $5 million and is expected to be settled in 2H 2012.

Initial Public Offering

The Company was successfully admitted to trading on the AIM of the London Stock Exchange on 3 September 2012 having raised gross proceeds of £118 million.

Debt Facility

On 24 August 2012, the Company entered into an agreement with Standard Chartered Bank for the provision of a debt facility of up to $22 million, accessible upon first oil production from OML 40 and completion of a number of post signature conditions.

Equity Movements

The Completion of the acquisition of the interest in OML 40 and the subsequent IPO, have triggered a number of events in relation to the existing Loan Notes and Preference Shares. The First Loan Notes have been converted to Ordinary Shares in the Company as at the date of Completion and Admission. In addition, the holders of the 8% Preference Shares have all elected to convert these shares into Ordinary Shares of the Company as at the date of Completion and Admission. The Company also received a number of elections from the First Loan Note holders to have the accrued interest settled in Ordinary Shares of the Company rather than cash settlement, as per the October 2011 amendment to terms. These terms also applied to the accrued interest on the Second Loan Notes (redeemed in October 2011), and a number of these creditors also elected to receive Ordinary shares in lieu of a cash settlement.

Westport Oil Limited

In August 2011 the Company completed the inaugural meeting of Westport Oil Limited, a company incorporated in Jersey (Channel Islands) and a wholly owned subsidiary of the Company. The Company agreed to transfer the Loan arrangement, associated debtor and securities between the Company and Elcrest Exploration and Production Nigeria Limited to Westport Oil in lieu of Shares issued by Westport to the Company.

Share Option Plan

In August 2012 the Company approved a share option plan. This plan has been limited to 15% of the Company's shares in issue and contains a number of performance and retention criteria. As at August 2012 approximately 12% had been issued under this scheme to Directors, Management and employees of the Company.

Equity Options

The Company negotiated equity options with two key investors in August 2012. These equity options are with Solstice International Investments Inc. and Helios Natural Resources Limited, both substantial shareholders in the Company. The equity options are each for £10 million and are available to the Company from September 2013 to September 2014 in exchange for shares priced at par. These investors also have the option to subscribe for these shares, priced at par from September 2012 through to September 2014. These equity options provide additional working capital for the Company should this be required during the period September 2013 through September 2014.