Operating and Financial Update

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

15 March 2016

CIRCLE OIL PLC

("Circle" or the "Company")

Operating and Financial Update

Circle Oil plc (AIM:COP) the international oil and gas exploration, development and production company, today provides an operating and financial update, and announces that it has initiated a formal strategic review of the Company's business and assets with a view to considering all options to maximise value for shareholders and stakeholders (the "Strategic Review").

Financial Update

On 14 December 2015, the Company announced that following the redetermination of its Reserve Based Lending ("RBL") borrowing base, it expected its borrowing base to be reduced, potentially giving rise to a shortfall. In the interim, given continuing oil price volatility, Circle has remained in constructive discussions with International Finance Corporation ("IFC"). Circle is pleased to announce that those discussions have culminated in agreement by IFC to suspend the December 2015 redetermination until 15 April 2016 with any repayments required under the RBL facility, which is currently drawn to $57.5 million, being postponed until that date. IFC has indicated its willingness to consider further waivers as may be required to continue the Strategic Review process based on circumstances applying at the time of any application.

As announced on 8 February 2016, the Company's cash flows and financial position remain under significant pressure, primarily due to the uncertainty and irregularity of US dollar receipts from EGPC. As at 31 December 2015 the Company1 had Cash and Cash Equivalents (including restricted Cash) of $10.0 million and receivables from Egypt and Morocco of $21.6 million. Inclusive of the $20.0 million convertible loan held by KGL Investment Company, the total debt position of the Company is $77.5 million and there is a further $14.1 million of trade creditors. Further the Company is reliant on extracting US Dollars from its Moroccan operations to both satisfy its obligations to its creditors and fund operations.

On a separate note, the Company in its Annual Report for Year ended 31 December 2014, disclosed 2P Reserves of 16.23mmboe on a Working Interest basis. Since that date, these reserves are expected to have reduced, principally due to the production of hydrocarbons and the lower oil price environment.

Initiation of Strategic Review

As previously announced the Company has been considering a number of options to reduce debt and ensure that the Company has sufficient cash flows to fund future operations. The scope of the options being considered under the Strategic Review include, but are not limited to, a sale of one or more of the Company's existing assets, a corporate transaction such as a merger with a third party, the sale of the entire issued, and to be issued, share capital of the Company and the raising of capital in the form of a subscription for new ordinary shares in the Company by one or more third parties. There can be no certainty as to whether any such agreement, offer or transaction will be forthcoming or as to the terms of such agreement, offer or transaction, if any, including any requirement for shareholder approval. 

The Board has appointed Investec Bank plc ('Investec') to act as financial advisor to the Company in relation to the Strategic Review.

Operating Update

Egypt

At the end of December 2015 11 wells in the Al Amir SE field (AASE) and 3 wells in the Geyad field were on production, with a combined average gross production rate of 8,871 boe/d for the year. Water injection through 3 wells in field is providing continuing pressure support to maximise recovery efficiency and optimise production levels.

The AASE-23 well was first brought on stream on 6 February 2016 and is now being produced at around 800 boe/d.

Drilling continues at the AASE-24 well, which was spudded on 8 February 2016, and an update will be provided in due course.

Morocco

As noted in the interim financial results, the Group continued to make a number of efficiency improvements in-country over the course of 2015. Led by Lonny Baumgardner, the recently appointed country manager, the focus has been on decreasing costs and improving overall operational efficiency.

The Group also continues to benefit from the use of its own pipeline which means that no tariffs are payable for the transportation of gas. Sales from Sebou for 2015 averaged 5.85mmcf/d (gross), 4.39mmcf/d (net to Circle) utilising less than half of the pipeline capacity. Given the fixed price nature of the contracts and attractive fiscal terms in Morocco, Circle has been shielded from falling commodity prices with the average price realised during 2015 of over US$8.50/Mcf. As noted in the announcement of 8 February 2016, there is potential for a further improvement on these pricing levels as highlighted by the Memorandum of Understanding with SBS Porcher which would represent an increase of approximately 6% of production volumes compared to 2015.

Circle CEO, Mitch Flegg said

"The agreement we have reached with IFC to defer the December 2015 redetermination and to provide a waiver in relation to any immediate repayments is a welcome development and one which gives us the headroom to progress the Strategic Review and to put in place a sustainable long term financing structure for the business. Circle has excellent assets across our regions of operation and our aim, mindful of the sustained low oil price environment and the Company's stressed financial position is to maximise the value from these assets for the benefit of all stakeholders"

For further information contact: 

Circle Oil Plc (+44 20 7182 4913)

Mitch Flegg, CEO

Investec (+44 20 7597 5970)Chris SimGeorge Price

James Rudd

Jonathan Wynn

Murray (+353 1 498 0300)Joe Heron

Pat Walsh

Glossary

mmboe - million barrels of oil equivalent

boe/d - barrels of oil equivalent per day

EGPC - Egyptian General Petroleum Corporation

mmcf/d - million cubic feet per day

Mcf - thousand cubic feet

Notes to Editors

Circle Oil plc (AIM: COP) is an international oil & gas exploration, development and production company holding a portfolio of assets in Morocco, Tunisia, and Egypt with a combination of low-risk, near-term production, and significant upside exploration potential. The Company's shares were admitted to trading on AIM in October 2004.The Company has assets in the Rharb Basin, Morocco; the Ras Marmour Permit in southern Tunisia; the Beni Khalled permit in northern Tunisia, the Mahdia Permit offshore Tunisia and the NW Gemsa permit in Zeit Bay area of Egypt.

Circle's strategy is to locate and secure additional licences in prospective hydrocarbon provinces and, through targeted investment programmes, monetise the value in those assets for the benefit of shareholders. This could be achieved through farm-outs to selected partners who would then invest in and continue the development of the asset into production, or Circle may opt to use its own expertise to appraise reserves and bring assets into production, generating sustained cash flow for further investment.

Further information on Circle is available on its website at www.circleoil.net.

Investec is authorised in the United Kingdom by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority and is acting exclusively for the Company and no one else in connection with the matters referred to in this announcement and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the matters referred to In this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Investec for providing advice in relation to the matters referred to in this announcement.

Investec is authorised and regulated in Ireland by the Central Bank of Ireland and is acting exclusively for the Company and no one else in connection with the matters referred to in this announcement and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the matters referred to in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Investec or for providing advice in relation to the matters referred to in this announcement.

The Directors of Circle Oil plc accept responsibility for the information contained in this announcement. To the best of their knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

Parties with a possible interest in making a proposal should contact Investec, at the contact details set out above. Any party wishing to participate in the formal sales process will be required to enter into a non-disclosure agreement with the Company on reasonable terms satisfactory to the Board and on the same terms, in all material respects, as other interested parties before being permitted to participate in the process. Following execution of such an agreement, the Company intends to provide interested parties with information on the Company, following which, such parties will be invited to submit proposals to Investec. The Board reserves the right to alter any aspect of the process as outlined above or to terminate it at any time and will make further announcements when appropriate. The Board reserves the right to reject any approach or terminate discussions with any interested party or participant at any time.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise. The distribution of this announcement in jurisdictions outside Ireland or the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Forward-Looking Statements

This announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's plans and its current goals and expectations, financial condition and performance and which involve a number of risks and uncertainties. The Company cautions readers that a forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", or other words of similar meaning. Examples of forward looking statements include, amongst others, statements regarding the Group's probable, inferred or contingent oil resources or reserves, future financial position, income growth, impairment charges, business strategy, projected costs, estimates of capital expenditure, and plans, dividend growth and objectives for future operations of the Group and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, UK, Irish, Moroccan, Egyptian, Tunisian and global economic and business conditions, the effects of continued volatility in credit markets, market-related risks such as changes in commodity prices, interest rates and foreign exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards ("IFRS") applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of pending and future litigation or regulatory investigations, the success of future exploration, appraisal, development, acquisitions and other strategic transactions and the impact of competition. A number of these factors are beyond the Company's control. As a result, the Company's actual future results may differ materially from the plans, goals, and expectations set forth in the Company's forward-looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements which are not guarantees of future performance.

Any forward-looking statements made in this announcement by or on behalf of the Company speak only as of the date they are made. The Company does not undertake any obligation nor does it intend to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement (except, in the case of the Company, to the extent required by the London Stock Exchange or by applicable law or regulation).

Forward-looking statements in this announcement are current only as of the date on which such statements are made. None of the future projections, expectations, estimates or prospects in this announcement should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in the announcement. As a result of these risks, uncertainties and assumptions, the recipient should not place undue reliance on these forward-looking statements as a prediction of actual results or otherwise.