Interim Results

17 August 2011

Interim Results for the six month period ended 30 June 2011

Melrose Resources plc ("Melrose", "the Company" or "the Group") the oil and gas exploration, development and production company with interests in Egypt, Bulgaria, Romania, France, Turkey and the USA, today announces its interim results for the six month period ended 30 June 2011.

Operational highlights

§ average production increased by 23 percent to 20.2 Mboepd on a net entitlement basis (equivalent to 38.0 Mboepd on a working interest basis)

§ 3D seismic interpretation completed on the South East Mansoura concession (Egypt) confirming Cretaceous oil play potential

§ 2D seismic acquisition completed on the Mesaha (Egypt) and Rhône Maritime (France) frontier exploration concessions

§ operations on the South West Kanun (Turkey) exploration well are nearing completion with no oil shows yet encountered

§ Concession Agreements signed for the Muridava and Est Cobalcescu licences (Romania)

§ entered into a two year extension on the Galata Block exploration concession (Bulgaria)

Financial highlights

§ revenue increased to $155.8 million (H1 2010: $110.0 million)

§ EBITDAX increased to $134.4 million (H1 2010: $86.3 million)

§ profit after tax increased to $33.2 million (H1 2010: $4.1 million)

§ net debt reduced to $367.3 million (H1 2010: $459.6 million)

§ financial gearing of 107 percent (H1 2010: 140 percent)

Robert Adair, Executive Chairman commented

"The first half of 2011 represented an important turning point for the Company, with the production revenues from our two core areas in Egypt and Bulgaria allowing us to progress a number of high potential exploration initiatives.

The Company has delivered a strong financial performance and our underlying profitability has continued to improve whilst we have made a major step towards reducing financial gearing.

We look forward to making further progress in continuing to grow as a diversified, well balanced exploration and production company."

For further information please contact:

or visit www.melroseresources.com

CHAIRMAN'S STATEMENT

Introduction

The first half of 2011 has been a period of strong financial performance for the Company as we began to see the benefits from our new Bulgarian gas field developments which came on stream late last year. Coupled with production from our existing Egyptian assets, the new fields have helped generate significant post tax profits and operating cash flow of $33.2 million and $104.9 million, respectively, and we are on track to reduce our financial gearing towards 100 percent by year end.

The Company achieved an average production rate of 20.2 Mboepd on a net entitlement basis (equivalent to 38.0 Mboepd on a working interest basis) during the first half of 2011. This was somewhat below forecast due to a number of operational factors in Egypt which we are addressing through a remedial drilling and work-over programme. Whilst these considerations should have a minimal impact on reserves, we feel it prudent to reduce our full year production guidance to 36.0 Mboepd on a working interest basis pending completion of the rig activities.

During the period we made good progress on a number of exploration initiatives as we strengthen the Company's focus on high growth opportunities. We completed the interpretation of the 3D seismic data which we acquired over the South East Mansoura concession in Egypt last year and were pleased to confirm significant oil potential in the Cretaceous exploration play. We plan to drill our first test well on this play later this year on a prospect called Al Hajarisah. We also completed the acquisition of key 2D seismic surveys over our high potential frontier exploration blocks in Egypt (Mesaha) and offshore France (Rhône Maritime). Detailed interpretation of these surveys is still ongoing but the preliminary analysis indicates that both blocks contain numerous large structures which could form the basis for hydrocarbon traps. We plan to drill our first well on Mesaha next year and envisage 3D seismic acquisition or drilling on the Rhône Maritime block within the same timeframe.

During the period, the Company was pleased to announce the Concession Agreements for the Muridava and Est Cobalcescu concessions offshore Romania had been signed and we are looking forward to acquiring seismic surveys over these blocks in 2012 with a view to starting a drilling campaign in 2013. In addition, the Company has exercised its option to enter a two year extension of the Galata exploration permit in Bulgaria. Both these shallow water western Black Sea areas are highly prospective, containing a number of plays and have the potential to make a significant contribution to the Company's growth plans.

Egypt

In early 2011, President Mubarak resigned from power following a period of civil unrest in Egypt. The protests were primarily confined to large urban areas and have had no impact on Melrose's operations. The Company has continued to receive payments for its gas and oil sales during the first half of the year and receipts are in line with our budget assumptions.

Since President Mubarak left office, the country has been administered by an interim government which is likely to stay in power until the parliamentary elections, which are currently scheduled to take place in the fourth quarter of this year. These are expected to be followed within a few months by a presidential election. During this transitional period we will continue to monitor the political situation closely and manage our operational and financial position accordingly. 

Melrose has continued to pursue an active work programme on its Egyptian acreage including the Mansoura and South East Mansoura concessions onshore in the Nile Delta and the Mesaha concession which is a large frontier exploration block in Southern Egypt.

The average production rate during the first half of the year was 30.4 Mboepd on a working interest basis, comprising 148.9 MMcfpd of gas and 4,714 bpd of oil, condensate and Liquid Petroleum Gas ("LPG"). Net entitlement production averaged 61.1 MMcfpd of gas and 2,011 bpd of oil, condensate and LPG.

The production stream continues to be underpinned by contributions from our two major fields, West Khilala and West Dikirnis, supplemented by eight other fields. Performance during the first six months of the year was lower than expected due to a number of operational factors. The most material of these was the onset of water production in the North East Abu Zahra-1 production well which ceased to flow in April this year. In order to reinstate production and maintain reserves, the Company is currently drilling a replacement well at the crest of the structure (the original well was located down-dip on the flank of the reservoir). Other factors which are impacting the 2011 production levels include the decision to temporarily complete one of the West Dikirnis horizontal wells with a vertical wellbore to maximise oil recovery, a well integrity work-over programme in West Khilala field and water production at the South Zarqa field.

Development activity in the first half focussed on the West Dikirnis field which is currently producing at a stable rate of around 3,900 bpd of hydrocarbon liquids. During the period one vertical and one horizontal production well have been successfully completed and these are producing at a combined rate of 820 bopd.

The West Dikirnis Gas Reinjection facilities and LPG plant are continuing to perform well, with approximately 28 MMcfpd of gas currently being reinjected into the field and 910 bpd of additional condensate and LPG being recovered from the plant. The liquids yield per unit of gas passing through the LPG plant is exceeding expectations and the rate of decline in the existing oil wells has been significantly reduced, with both observations indicating that the gas reinjection process is working effectively. The gas re-injection process is reducing our short term gas sales volumes in order to maximise the amount of high value oil recovered from the field. The gas is not lost, however, and will be produced later in the field life after the oil reserves have been recovered. The next phase of the development will involve the addition of a refrigeration unit to the LPG plant which, allowing time for design and procurement optimisation, is now scheduled for completion late 2012.

Well testing operations have recently been completed on the West Zahayra-1 well which was a Qawasim formation discovery made in 2008, seven kilometres west of the West Dikirnis field. Prior to testing, the original discovery well was sidetracked and the new wellbore encountered 39 feet of net oil pay with an average porosity of 16 percent. During testing the well flowed good quality black oil (44 degree gravity) with only small amounts of gas. The well was produced for a period of four days but had an unstable flow regime with oil rates fluctuating between 80 and 280 bopd. The Company is currently evaluating whether, with an improved completion design, the well may be completed as a commercial producer and is also reviewing the field appraisal options.

In parallel with the development activity, Melrose has been actively progressing its exploration initiatives. On the South East Mansoura concession, onshore in the Nile Delta, the Company has completed the processing and interpretation of the 3D seismic data recently acquired over the under-explored Cretaceous oil play. These studies have confirmed the play potential and the presence of multiple oil prospects and leads with combined unrisked prospective resources of 54 MMbbl. One prospect, called Al Hajarisah, has been selected for drilling in the fourth quarter 2011 which has prospective resources of 6 MMbbl (working interest basis) and a chance of success of 21 percent.

On the Mesaha frontier exploration concession in southern Egypt, where we have a 40 per cent interest, the Company has completed the acquisition of a second phase of 2D seismic data with a total of 1,844 kilometres of lines acquired. The quality of the new seismic data is much superior to the first phase of 2D data acquired in 2010 and has significantly improved the definition of the sedimentary basin. Based on this encouragement, the scope of the second phase survey was increased from the original plan (which was to acquire 700 kilometres of data) and the interpretation is now expected to be complete around year end. In the interim, the preliminary interpretation has confirmed the presence of major structural features in the basin, in particular tilted fault block geometries and intra-basinal highs, which have the potential to form reservoir structures. The joint venture partnership is preparing to drill the first well on the block in the second half of 2012.

Bulgaria

The Kavarna and Kaliakra offshore gas field developments have continued to exhibit strong production performance during the period and are currently producing at a combined average daily rate of 45 MMcfpd. These sustained production levels, coupled with an average realised gas price in Bulgaria of $7.42 per Mcf during the first six months, have generated a significant new revenue stream for the Company.

With the two new fields now fully commissioned, the Company has turned its attention to developing the Kavarna East discovery and has recently received the Certificate of Commerciality from the Bulgarian authorities. This field was discovered in 2010 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 which will be tied back to the Kavarna subsea development with a short 6 inch line. This operation is presently scheduled to take place in the second half of 2012 and the procurement process for the project is ongoing.

As recently announced, the drilling operations have been completed on the Kaliakra East-1 exploration well and the Palaeocene reservoir interval was found to be eroded at the drilled location. The Company is now moving ahead with plans to shoot 500 square kilometres of 3D seismic over the central area of the Galata Block to the north of the Galata to Kaliakra field trend. Three further explorations leads have been identified in this area on regional 2D seismic data and these have combined prospective resources of 130 Bcf and an average chance of success 23 percent. A contractor has been selected to conduct the seismic survey which is scheduled to commence in September. In order to provide sufficient time to pursue the planned exploration work programme the Company recently received Ministerial approval to extend the Galata Block exploration permit by two years to February 2013.

Romania

In 2010 Melrose was awarded an 80 percent working interest and operatorship of two exploration blocks, Muridava (EX-27) and Est Cobalcescu (EX-28), in the Romanian 10th Licensing Round. 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 the potential to hold 1Tcfe to 2Tcfe of unrisked gross resources.

In March this year, we were pleased to announce that Melrose and the Romanian authorities have now signed the Concession Agreements for both blocks and Melrose, with its partners, is looking forward to initiating a seismic work programme on the acreage in 2012. This is expected to be followed by a multi-well drilling campaign starting in 2013.

Turkey

In May this year, Melrose spudded an exploration well on the frontier exploration licences located in the South Mardin district of southern Turkey. The well is testing a prospect called South West Kanun which was identified on the 2D seismic survey acquired in 2010 and in the event of success the well could open up a new exploration play in the region.

The well has reached a depth of 8,780 feet and has drilled through the shallow Cretaceous target interval and penetrated into the deeper Ordovician reservoir target. It encountered 338 feet of good quality carbonate in the Cretaceous formation which open hole logs indicated to be water bearing. The well is currently 220 feet into the Ordovician sandstone sequence and no oil shows have been observed on the mud log or in the drill cuttings. The wellbore is being conditioned in preparation for open hole logging across this interval and on receipt of the results the Company will decide whether to continue the well operations and/or apply for a two year extension to the exploration licenses.

We believe that Turkey represents an attractive investment environment and we are pursuing additional business development initiatives in the country.

France

During the first half, Melrose and its joint venture partner, Noble Energy, completed the acquisition of a block-wide, 7,500 kilometre 2D seismic survey over the Rhône Maritime concession, offshore southern France, in which Melrose has a 27.5 per cent non-operated interest. The new seismic is of excellent quality and the data set is currently being processed and interpreted. The initial data analysis is focusing on the post-salt Pliocene and the pre-salt Miocene sections, which have yielded material gas discoveries elsewhere in the Mediterranean, and has already indicated the presence of a number of significant structures. Depending on the outcome of the detailed interpretation, the joint venture may opt to acquire 3D seismic data over the most promising areas of the block prior to initiating a drilling programme.

USA

Following the sale of its Permian Basin assets in late 2010, the Company has retained some minor gas field interests in East Texas and we are reviewing our strategic options for these assets with a view to their likely divestment.

Financial Results

We are pleased to be reporting on another period of strong financial performance for the Company, underpinned by the gas production from Bulgaria and better than projected commodity prices in the first half of the year.

Revenues for the period were $156 million and EBITDAX was $134 million, as compared with equivalent figures for the same period in 2010 of $110 million and $86 million, respectively. Profit after tax increased to $33 million compared to $4 million for the period ended 30 June 2010, equating to increased earnings of 28.9 cents per share compared with 3.5 cents per share for the same period in 2010. Cash from operations increased by 39 percent to $105 million compared to $75 million for the comparable period in 2010.

Capital expenditure during the first six months was $30 million and our revised full year forecast for 2011 is $87 million. The full year forecast reflects the planned increase in exploration activity in the second half of the year, with wells in Turkey, Bulgaria and Egypt in addition to Egyptian development costs.

We are also pleased to report a significant reduction in the Company's net debt position from $419 million at year end 2010 to $367 million at 30 June 2011. During the same period, the Company's financial gearing has reduced by some 26 percent to 107 percent, putting us well on track to achieve our target of around 100 percent by year end. It should be noted, however, that due to increased capital expenditure the rate of gearing decline in the second half of the year will not be as rapid as observed in the first half of the year.

No interim dividend is proposed at this time and the final dividend will be assessed as usual following the completion of the Company's Annual Results.

Outlook

The first half of 2011 represented something of a turning point for the Company, with the strong production revenues from our two core areas in Egypt and Bulgaria allowing us to progress a number of high potential growth initiatives whilst simultaneously reducing our financial gearing.

Underpinning our future outlook is the performance of our existing producing assets and we are maintaining a prudent approach to reservoir management. Notwithstanding this, we have experienced some operational challenges in Egypt this year which require remedial drilling and completion activity and we have also chosen to defer some West Khilala and West Dikirnis facilities expenditures. These changes will have minimal impact on recoverable reserves and should smooth the working interest production profile over the next three years. Based on the current forecast the Company is reducing full year production guidance for 2011 to 36.0 Mboepd.

We are currently drilling a well in Turkey and later this year we should be in receipt of the results of the new seismic interpretation for our Mesaha and Rhône Maritime exploration concessions. We will also be drilling our first well to test the Cretaceous oil play in the Egyptian Nile Delta. Looking further ahead to next year, we plan to commence the exploration work programme on our new blocks offshore Romania and will be evaluating the central area of the Galata Block in Bulgaria.

In addition to the growth opportunities presented by our existing portfolio, our strengthening financial position is providing us with the capacity to pursue new business development opportunities and we are focussing on assets in both the exploration and development phase of the asset lifecycle. We are currently evaluating a number of opportunities in our existing areas of operations and also in some new countries which present an attractive combination of good hydrocarbon fundamentals, competitive fiscal terms and sound operating environments.

I would like to thank the Melrose staff, management and board as well as our shareholders for their continued support for the Company. We look forward to the next phase of our evolution with great confidence. 

Robert FM Adair

16 August 2011

FINANCIAL REVIEW

Revenue in the period increased to $155.8 million reflecting production from the Kavarna and Kaliakra fields in Bulgaria of $57.5 million in the period. Operating cash flow increased by 39 percent on the period ended 30 June 2010, enabling the Company to reduce net debt from $418.9 million at 31 December 2010 to $367.3 million at 30 June 2011, taking the gearing level towards the Company's targeted level of 100 percent by year end.

Results for the six months ended 30 June 2011

Revenue in the six months ended 30 June 2011 increased by 42 percent to $155.8 million compared with $110.0 million for the six months ended 30 June 2010. This increase is due to production from the Kavarna and Kaliakra fields of $57.5 million, offset in part by the reduction in the revenues generated in the US due to the sale of the Permian Basin assets at the end of 2010.

Profit from operations in the period increased to $73.0 million compared with $38.1 million for the six months ended 30 June 2010. This is after a ceiling test impairment charge of $12.3 million included in the depletion charge which relates to leases held in East Texas that, due to sustained low gas prices are thought unlikely to be developed. Excluding the impairment, profit from operations would be $85.3 million; an increase of 124 percent on the period ended 30 June 2010 and earnings would increase to 39.6 cents per share.

Profit before taxation in the first six months was $61.8 million (six months ended 30 June 2010: $26.2 million). Profit after taxation was $33.2 million (six months ended 30 June 2010: $4.1 million), increasing earnings to 28.9 cents per share compared with 3.5 cents per share for the six months ended 30 June 2010.

Revenue analysis by segment:

Group cash flow from operations for the six months ended 30 June 2011 was $104.9 million compared with $75.4 million for the same period in 2010, an increase of 39 percent in the period.

EBITDAX for the period was $134.4 million (six months ended 30 June 2010, $86.3 million).

Capital expenditures during the period amounted to $30.0 million (six months ended 30 June 2010, $38.3 million). These expenditures were split geographically between Egypt $25.2 million, Bulgaria $2.1 million, Turkey $2.5 million and other $0.2 million.

Group net debt reduced from $418.9 million at 31 December 2010 to $367.3 million at 30 June 2011 (30 June 2010: $459.6 million). This reduction was funded from cash generated from operations of $104.9 million (June 2010: $75.4 million). Cash balances held at 30 June 2011 were $32.5 million (30 June 2010: $24.5 million) and undrawn loan facilities as at 30 June 2011 were $111.6 million (30 June 2010: $21.8 million). Group gearing reduced to 107 percent at 30 June 2011 from 140 percent at 30 June 2010.

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 M V Fraser

Finance Director

16 August 2011

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 2010. 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 26-27, 35-36 and 69-72 of the 2010 Annual Report and Financial Statements.

Condensed consolidated income statement

for the six months ended 30 June 2011

The profit/(loss) for the period is 100% attributable to equity shareholders.

All activities were continuing activities.

Condensed consolidated statement of comprehensive income

for the six months ended 30 June 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 2011

Condensed consolidated statement of cash flows

for the six months ended 30 June 2011

Condensed consolidated of changes in equity

for the six months ended 30 June 2011

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 2011 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 2010, except for the changes set out below. 

The comparative figures for the financial year ended 31 December 2010 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 2010, 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 16 August 2011.

The following new standards, amendments to standards and interpretations which are mandatory for the first time for financial periods commencing on 1 January 2011 have been adopted. None of these have had a significant impact on the reported results.

·; Revised IAS 24 'Related party disclosures'. Issued in November 2009; and

·; 'Improvements to IFRSs', issued in May 2010.

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 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.

Other Europe comprises Turkey, France and Romania.

Two of the Group's customers accounted for more than 10% of revenue in 2011 and one customer accounted for more than 10% of revenue in 2010. All sales in Egypt in 2010 and 2011 are to a state owned company. The revenue derived from sales to this customer is set out in the table above. Revenue in the period to 30 June 2011 included $52.3 million to a Bulgarian State owned company.

3. Income Tax Expense

The tax charge for the period of $28.6 million gives an effective tax rate of 46.3% based on the forecast tax rate for the current financial year. The tax charge comprises a charge of $28.0 million for current tax and a charge of $0.6 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:

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

5. Capital expenditure

Capital expenditure during the period amounted to $30.0 million (six months ended 30 June 2010, $38.3 million). Capital expenditures were split between Egypt - $25.2 million, Bulgaria - $2.1 million, Turkey - $2.5 million and other - $0.2 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 $450 million and a Subordinate Loan Facility of $70 million. Both facilities have a final repayment date of 31 December 2014. The Group made repayments of $45.9 million during the period against the Senior Loan Facility, and $45 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 the effect of amortisation of loan arrangement fees

The Group is exposed to currency risk arising from purchases, sales, borrowings, cash and cash equivalents that are denominated in currencies other than US Dollars. It is Group policy that borrowings should match the currency of the cash flows from which it is expected that they will be repaid. This has been the case throughout the interim reporting period.

7. Share capital and share premium

During the period 21,115 shares at 78 pence per share were issued under employee share options arrangements (six months ended 30 June 2010: nil shares).

In March 2011, the High Court of England and Wales passed a Special Resolution 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 cancellation 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 2011 was paid on 22 July 2011.

8. Contingent liabilities and capital commitments

The Group has contingent liabilities of $350 million (30 June 2010: $340 million) in respect of guarantees provided to secure the bank loans of subsidiary undertakings.

The Group had capital commitments of $11 million at 30 June 2011 (30 June 2010: $62 million) with associated cash outflows arising over the period ending September 2011.

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 2011 (30 June 2010: 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 2011 (nil in respect of the six months ended 30 June 2010) to Orbis Holding Ltd, a company in which David Archer has a 50% beneficial interest.

DIRECTORS AND ADVISORS

GLOSSARY

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.