Interim Results

Interim Results

For the six months ended 31 December 2009

Leed Petroleum PLC (collectively, "Leed", the "Company", or the "Group") the oil and gas exploration and production company focused in the Gulf of Mexico, today announces its interim results for the six months ended 31 December 2009.

Highlights

Operational

Financial

Post Period Update

The interim report for the six month period ended 31 December 2009 will be posted to shareholders on Monday 22 March 2010 and will shortly be available on the Company's website at www.leedpetroleum.com.

Howard Wilson, President and Chief Executive of Leed, commented:

"Operationally, the focus of the first half was on the stabilisation of production within financial constraints while planning for the future drilling campaign. The second half will focus on plan execution across our asset base by performing several low cost, high quality projects which we believe will provide production diversity.

We have initiated the next phase of our growth strategy with enthusiasm. Our recent Ship Shoal A-6 well drilling success should more than double the Company's net production from the current level. We look forward to growing shareholder value as we develop our inventory of development, exploitation and exploration opportunities."

For further information:

Chairman's Review

During the period under review the Company was able to raise net proceeds of £19.3 million through the placing of 400 million ordinary shares to institutional and other shareholders. I am very grateful for the continuing support of our shareholders and am pleased to welcome some additional high quality institutional investors to our share register. We look forward to applying these funds to begin exploitation of our asset inventory during the coming year.

The share placing has allowed us to recommence our drilling programme, with extensive preparatory work in the first half allowing us to drill early in the second half with the successful A-6 well at Ship Shoal Block 201, and one further well planned for the remainder of the period. We are now moving forward with the development and exploration of our oil and gas property portfolio, taking advantage of improved prices for oil and gas and more favourable industry costs. Most of the Group's properties are undrilled as reported in Leed's recent reserve auditor's report, which indicates that 74% of our proved and probable (2P) reserves remain undeveloped at the beginning of this financial year.

The collapse in commodity prices, coupled with the global credit crisis, led to a challenging year in 2009. As a consequence of this we suspended our oil and gas development and exploration plans allowing us to conserve cash. Though necessary in the short run, this strategy had an adverse affect on production and financial performance during the period. Leed incurred a pre-tax loss of $10.8 million on revenue of $11.0 million for the first half of the 2010 financial year. However, during this period, Leed strengthened its financial position through the share placing and by reducing bank debt by $6 million.

Capitalising on recent improvements in global commodity prices, and to protect the Group against potential future adverse price movements, we extended the hedged portion of our future oil and natural gas revenues with price floors of $75.00 per BBL of oil and $6.00 per MMBTU of natural gas for much of calendar year 2011 and early 2012. We now have commodity price hedges in place covering approximately 15% of our expected oil and gas production through March 2012 from proved developed reserves.

Leed is gearing up for growth. We recommenced our drilling programme at Ship Shoal 201 where existing infrastructure should allow rapid commencement of production anticipated for mid summer 2010. Our focus for the remainder of calendar year 2010 will be on allocating capital expenditures to lower risk drilling and also increasing diversity within our geographical region of operations. Since much of our costs are fixed, incremental increases in production, revenue and cash flow should have a significant effect on shareholder value. We are excited about the next twelve months as we demonstrate that we can create value for shareholders - we believe that this strategy is repeatable and scalable. I would like to thank all at Leed for their hard work in what has been a tough and bruising period for us all.

Robert Adair

Chairman

18 March 2010

Chief Executive Officer's Review

With a strengthened balance sheet following the capital raising in November 2009, Leed initiated the next phase of its growth strategy with enthusiasm. We look forward to creating significant shareholder value as we explore and develop our inventory of exploitation and investment opportunities in the second half of financial year 2010.

Operationally, the focus of the first half was stabilisation of production within financial constraints while planning for the future drilling campaign. The second half will focus on plan execution across our asset base by performing several low cost, high quality projects which we believe will provide production diversity. During January 2010 Leed averaged net attributable production of approximately 1,036 BOEPD.

Operated production

During the six months ended 31 December 2009, production at Eugene Island 184 platform was hampered by well performance issues and gas flow restrictions.

Towards the end of the period, the Eugene Island A-6 well experienced a mechanical failure. The Group is evaluating the economics of bringing the A-6 well back to producing status (currently classified as proved shut in reserves).

During the period under review, the Company depleted the producing sand in the Eugene Island A-7 well having recovered more proved reserves than initially forecast. The well was plugged back to the next of several behind pipe sands in the well. Net attributable production from the a-7 well was approximately 450 BOEPD (60% natural gas) during February 2010.

When the currently producing Mid Tex sand in the Eugene Island A-8 well depletes, a workover will be performed to recomplete the well into the more prolific T-1 sand.

The Eugene Island 184 platform was subject to third party pipeline shut-ins throughout the period, with the longest being 18 days during September when the entire platform was shut-in. To maximise long-term reserve recovery in the Eugene Island field, during December 2009 Leed installed a new three stage natural gas compressor. The new compressor has approximately three times the capacity of the previous unit.

Non-operated production

Production at the non-operated East Cameron field was restored during December 2009 following repairs to a third party pipeline which was damaged by Hurricane Ike in 2008.

Construction of a gas lift supply line serving the Main Pass 64 oil field was completed during August 2009, approximately doubling well production capability. Repairs to the primary third party oil sales line serving the Main Pass 64 field were completed in March 2010.

Outlook

The global economic crisis and the resultant decline in oil and gas commodity prices have undoubtedly had a negative effect on share price. Despite this backdrop Leed was successful in raising £20 million (£19.3 million net of expenses) by issuing 400 million new ordinary shares at 5 pence. At the same time Leed was able to pay down its outstanding debt by $6.0 million.

With a strengthened balance sheet, we are now in a position to exploit a number of our prospects where we have proved reserves, including Ship Shoal 201, South Marsh Island 8, Grand Island 95 and Sorrento Dome. Leed intends to drill a total of two development wells during financial year 2010.

With a view towards accelerating our development programme and shortening the time between drilling and first production, we acquired the Ship Shoal 202 platform and are using it for our Ship Shoal 201 drilling programme. Having this platform in place will expedite the commencement of oil and natural gas production from this project.

The first well in Leed's drilling programme, the Ship Shoal 201 A-6, spudded on 1 February 2010 and reached a total measured depth of 13,341 feet on 17 February 2010. Electric line logs confirmed that the well encountered a total of 65 feet of true vertical thickness pay in the primary sand. Independent reservoir auditing firm, Collarini Associates of Houston, Texas attributed net 1P reserves of 1.1 MMBOE and net 2P reserves of 1.3 MMBOE to the reservoir (84% natural gas). On 4 March 2010, the well flow tested at a stabilised gross rate of 10.4 MMCFD and 423 BOPD (approximately 1,729 net BOEPD). As of the date of this report, the drilling rig has been released and facility completion work is underway to enable the commencement of production during the second quarter of calendar year 2010, when Company production is expected to more than double from the current level.

Oil and gas commodity prices continue to be volatile, but appear to have firmly bottomed and somewhat rebounded from the low points that occurred during calendar year 2009. We continue to believe that the business is well positioned to deliver further strong operational performance and Leed's team of talented earth scientists and engineers are focused on progressing our drilling and development plans for future operations and sourcing strategic asset acquisitions that these difficult economic times are likely to provide.

Howard Wilson

Chief Executive Officer

18 March 2010

Financial Review

Income statement

The Group's net loss after tax in the six months ended 31 December 2009 was $7.4 million as compared to net income of $2.2 million for the same period in 2008.

The Group's pre-tax net loss for the period under review was $10.8 million compared to a gain of $3.6 million for the comparable six month periodended 31 December 2008. The Group adjusts the value of its oil and natural gas derivatives to fair value through other gains and losses. Primarily due to fluctuations in the prices of oil and natural gas during the reported periods, gains and losses from derivatives required by Leed's bank included a loss of $0.4 million for the six month period ended 31 December 2009 and a net gain of $7.6 million for the same period of 2008. Excluding the $7.6 million unrealised gain from derivatives in the first half of financial year 2009, the Group would have reported a $4.0 million pre-tax loss for that period.

Revenues were $11.0 million during the six months ended 31 December 2009, a decrease of 27%, as compared to $15.1 million for the same period of 2008. The decrease in revenues was principally due to lower commodity prices and oil production, which was partially offset by higher natural gas and natural gas liquid production.

Summarised commodity price and production data:

Production costs were $4.6 million for the six months ended 31 December 2009, an increase of 57% over $2.9 million for the same period of 2008. The increase in production costs were primarily related to expensed well workovers pertaining to well performance issues at the Group's Eugene Island field.

For the two periods presented, selected administrative expenses of the Group include:

The number of employees and Directors receiving wages or fees remained relatively constant, amounting to 25 and 23 at 31 December 2009 and 2008, respectively. Included in the employee and Directors benefits expense are share based costs of $1.2 million and $1.1 million for the two periods, respectively. During the six months ended 31 December 2009, there were no bonus amounts accrued for, or paid to, any of the Group's Directors, officers, or managers.

Insurance costs were 45% higher during the six months ended 31 December 2009, as compared to the same period of 2008. Increased insurance premiums were the result of an active hurricane season during 2008, when Hurricanes Rita and Ike negatively impacted oil and natural gas infrastructure throughout the US Gulf of Mexico.

For the six months ended 31 December 2009, Earnings before Interest, Taxes, Depreciation, Depletion, Amortisation and Exploration Costs ("EBITDAX ") was negative $1.7 million, as compared to a positive $13.4 million during the same period of 2008. The primary differences between the two periods consisted of $4.1 million of lower revenues, an $8.0 million unfavourable variance in derivative gains and losses, and no adjustment to exploration costs associated with the loss on sale of assets during the six months ended 31 December 2009.

The following table shows the components of EBITDAX for the periods under review:

Financial position

During the six months ended 31 December 2009, the Group capitalised $1.8 million of additional investment in oil and gas properties, including approximately $1.7 million for its proved properties ($1.0 million for Eugene Island 183/184, $0.3 million for Main Pass 64, $0.3 million for East Cameron 318, and $0.1 million for Sorrento) and $0.1 million of evaluation costs pertaining to East Cameron 106.

The Group reduced its outstanding bank debt from $41.0 million at 31 December 2008 to $35.0 million at 31 December 2009. At the end of the reporting period, the Group's cash position was $28.9 million, representing 83% of its total outstanding bank debt of $35.0 million as of that date.

Cash flows and funding

During the six months ended 31 December 2009, the Group placed 400,000 new ordinary shares at 5 pence to raise £20 million gross, £19.3 million net of issuance costs (USD equivalent of $33.2 million gross, $31.6 million net of issuance costs). The Group utilised $6.0 million of the proceeds to pay down its long-term debt and intends to use the remaining proceeds to fund its capital drilling and development programme. The placement was inter-conditional with amending the Group's credit facility with its primary lender. At 31 December 2009, the Group owed $35.0 million under the terms of the amended credit facility. Primary terms include:

James Slatten

Chief Operating Officer

18 March 2010

Independent Review Report

To Leed Petroleum PLC

Introduction

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 31 December 2009 which comprises the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity, and notes 1 to 8. We have read the other information contained in the half-yearly financial report which comprises only the Company overview, the highlights, the Chairman's statement, the Chief Executive Officer's statement, and the financial review, 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 guidance contained in ISRE (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". Our review work has been undertaken so that we might state to the Company those matters we are required to state to them in a 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 conclusion we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors.

As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by the European Union.

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 enquiries, 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 31 December 2009 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union.

Grant Thornton UK LLP

Auditor

Hemel Hempstead

18 March 2010

Consolidated Income Statement

For the six months ended 31 December 2009

Consolidated Balance Sheet

As at 31 December 2009

Consolidated Cash Flow Statement

For the six months ended 31 December 2009

Consolidated Statement of Changes in Equity

For the six months ended 31 December 2009

Notes to the interim accounts

For the six months ended 31 December 2009

1. General information and basis of presentation

Leed Petroleum 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 31 December 2009 comprise the Company and its subsidiaries (together referred to as the "Group").

This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The condensed set of financial statements has been prepared applying the accounting policies that were applied in the preparation of the Company's published consolidated financial statements for the year ended 30 June 2009, except as required by new accounting standards and amendments to standards as noted below.

The comparative figures for the financial year ended 30 June 2009 have been extracted from the Company's statutory accounts which 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 the Companies Act 2006 regarding matters which are required to note by exception.

These condensed consolidated interim financial statements do 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 30 June 2009, which are available on the Company's website, www.leedpetroleum.com.

The interim financial information for the six months ended 31 December 2009 does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and though unaudited, has been reviewed by the auditors. The condensed consolidated interim financial statements were approved by the Board of Directors on 18 March 2010.

The following new standards and amendments to standards are applicable for the financial year commencing 1 July 2009.

IAS 1 Presentation of Financial Statements

The Group applies revised IAS 1 Presentation of Financial Statements, which became effective for the Group as of 1 July 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. This presentation has been applied in these condensed interim financial statements as of and for the six month period ended 30 June 2009 and 2008, respectively. In accordance with IAS 1 Presentation of Financial Statements, the Group has elected to present the combined income statement and statement of comprehensive income. Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

IFRS 8 Operating Segments

IFRS 8 Operating Segments replaces IAS 14 Segment Reporting. The chief operating decision maker has been identified as the Group's Board of Directors. The Board of Directors review the Group's internal reporting in order to assess performance and allocate resources. The information provided to the chief operating decision maker is measured in a manner which is consistent with the financial statements and management has determined the Group has one operating segment based on these reports. The Group's sole operating segment consists of oil, natural gas and natural gas liquid exploration, development and production in the Gulf Coast region of the United States, and derives its revenues from sales of these products to external customers.

IAS 23 Borrowing Costs

The Group early adopted IAS 23 Borrowing Costs for the financial year beginning 1 July 2008, which is mandatory for financial years beginning on or after 1 January 2009. In accordance with IAS 23, the Group capitalises borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset.

2. Dividend

The Directors have not recommended payment of a dividend, since the Group's oil and natural gas properties are in an early stage of development.

3. Income per share

The weighted average number of shares utilised to calculate earnings per share (EPS) is set out in the table below. Dilutive shares were excluded from the EPS calculation for periods in which the Company had a net loss.

4. Borrowings and finance costs

During the interim period ended 31 December 2009, the Group placed 400,000,000 new ordinary shares of 5 pence par value at 5 pence to raise £20 million before expenses ("the "Fundraising"), which was inter-conditional with amending its existing credit facility (the "Amended Facility") with Bayerische Hypo Und Vereinsbank AG (HVB), which changed its name to UniCredit Bank AG in December 2009. The Group expensed fees of $0.5 million in conjunction with the amendment. Primary terms of the Amended Facility are as follows:

The Group's early adoption of IAS 23 Borrowing Costs as of 1 July 2008 resulted in the capitalisation of $nil and $119,000 of interest expense in the interim periods ended 31 December 2009 and 2008, respectively, relative to its drilling programme. During the last six months of 2009, the Group did not drill any new wells or incur significant major construction costs for new projects. The adoption of IAS 23 is mandatory for financial years beginning on or after 1 January 2009.

The Group's borrowings and interest-bearing loans were:

The weighted average effective interest rates on the Group's borrowings were as follows:

The maturity profile of the Group's non-current bank loans was as follows:

5. Derivative financial instruments

Other gains and losses for the six months ended 31 December 2009 include realised gains $1.2 million ($0.3 million gain for the same period of 2008) and realised loss of $1.6 million (gain of $7.2 million for the same period of 2008) on derivative financial instruments.

6. Property, plant and equipment

The Group's property, plant and equipment by category are summarised below. Only balances at 30 June 2009 and 30 June 2008 reflect audited amounts.

7. Issues of equity

On 24 November 2009, the Group issued an additional 400,000,000 ordinary shares of 5 pence par value at 5 pence per ordinary share, to raise £20 million before expenses (£19.3 net of issuance costs), which was inter-conditional with its amended bank credit facility. See Note 4 "Borrowings and finance costs".

On 5 August 2008, the Group issued an additional 25,000,000 ordinary shares of 5 pence par value at 60 pence per ordinary share to raise £15 million before expenses.

A recap of movement in issued shares is presented below. Only balances at 30 June 2009 and 30 June 2008 reflect audited amounts.

8. Subsequent events

Ship Shoal 201 Development Programme

Pursuant to the terms of Leed's 2005 "Byron Scouting Agreement", on 21 January 2010, Byron Energy Pty Ltd ("Byron") elected to retain its 1.625% overriding royalty interest and not participate as a working interest owner in the Group's Ship Shoal 201 A-6 well. As a consequence of its decision not to participate as a working interest owner, Byron agreed to convey its 25% interest in the Ship Shoal 202 "A" Platform to Leed. The Ship Shoal 202 "A" Platform is adjacent to Leed's Ship Shoal 201 interest and is being utilised as a drilling platform for the development and exploration of Ship Shoal 201.

On 19 January 2010, the Group entered into a turnkey contract with Applied Drilling Technologies Inc. (ADTI) to drill the Ship Shoal 201 A-6 well. Under terms of the contract, the Group advanced ADTI $5.6 million as of the date of this report. The Group owns 100% of the working interest in this well. Drilling of the Ship Shoal 201 A-6 well commenced on 1 February 2010 and reached a total measured depth of 13,341 feet on 17 February 2010 after encountering 65 feet of true vertical thickness pay in the primary sand objective. Independent reservoir auditing firm, Collarini Associates of Houston, Texas attributed net 2P reserves of 1.3 MMBOE to the reservoir (84% natural gas). As of the date of this report, the drilling rig has been released and operations on the Ship Shoal A-6 well have been suspended pending the completion of production facilities.

Oil and Gas Derivatives

During January and February 2010, the Group purchased derivative PUT option contracts at a cost of $555,695 from UniCredit Bank AG to hedge the following future production:

Glossary

The following technical terms apply throughout this document, unless the context requires otherwise:

"1P"

proved reserves.

"2P"

the combined total of proved and probable reserves.

"3P"

the combined total of proved, probable and possible reserves.

"BBL"

one 42 gallon barrel of crude oil, the standard unit for measuring volumes of crude oil in the US.

"BOE"

barrels of crude oil equivalent, determined using the ratio of one barrel of crude oil, condensate or natural gas liquids to six MCF of natural gas. "MBOE" refers to one thousand barrels oil equivalent and "MMBOE" refers to a million barrels oil equivalent.

"BOEPD"

barrels of crude oil equivalent per day, referring to BOE produced per day.

"EBITDAX"

earnings before interest, taxes, depreciation, depletion, amortisation and exploration expenses.

"MCF"

one thousand cubic feet of natural gas, the standard unit for measuring volumes of natural gas in the US.

"MCFE"

one thousand cubic feet of natural gas equivalent, determined using the ratio of six MCF of natural gas to one BBL of crude oil, condensate or natural gas liquids. "MCFPD" refers to MCF produced per day. "MMCFE" refers to one million MCFE.

"MMCFD"

one million cubic feet of natural gas per day, referring to MCF produced per day.

"MMBTU"

one million British thermal units of natural gas, broadly equivalent to the energy content of one thousand cubic feet of natural gas.

"Natural Gas Liquids" or "NGL"

those hydrocarbons in natural gas that are separated from the natural gas stream as liquids. 42 gallons of NGL equals one BBL.

"Possible reserves"

reserves which geologic and engineering data demonstrate are less certain than probable reserves and can be estimated with a low degree of certainty, insufficient to indicate whether they are more likely to be recovered than not.

"Probable reserves"

those reserves which geologic and engineering data demonstrate with a degree of certainty sufficient to indicate they are more likely to be recovered than not.

"Proved reserves"

estimated volumes of crude oil, condensate, natural gas and natural gas liquids which, based upon geologic and engineering data, are reasonably certain to be commercially recovered from known reservoirs under existing economic and political/regulatory conditions and using conventional or existing equipment and operating methods.

"Shut-in"

a well or facility that is closed down temporarily for repair, building up of reservoir pressure, lack of market, lack of an available pipeline outlet, or for some other reason.