Results for year ended 30 June 2010

Enegi Oil Plc

('Enegi' or 'the Company')

Results for the year ended 30 June 2010

Enegi, the western Newfoundland focused oil and gas company, today announces its results for the year ended 30 June 2010.

·; The Company raised £2.9 million during the period through the placement of shares in September and December 2009

·; The Company's operating subsidiary, PDI Production Inc. (PDIP), has purchased all of the interest of CIVC Creditor Corp. in its assets

·; The Company entered into a farm-out agreement that will ensure that a C$2.5 million work-over programme is conducted on the PAP#1 well at Garden Hill South

·; PDIP acquired a 100% interest in the St. George's Group play which contains Shoal Point

·; The Company realised £490,000 from the sale of the assets that were acquired as security from an investor that did not provide funds at the Company's IPO

·; The Company has de-listed from the Bourse de Luxembourg

·; The work-over programme on the PAP#1 well began in August 2010

·; The PAP#1 well is currently able to produce at 200bopd part way through the programme and prior to the implementation of the acid frac

·; The Group's financial position has improved after the satisfaction of a number of creditor arrangements

"The past year has been an important one for the Company in securing its long-term future. The initial results from our programme at Garden Hill South have been encouraging, PDIP is in a stronger position than it has been for some time, and we have secured long-term activity on assets other than Garden Hill South.

Enegi can look forward to the year ahead with much optimism and we look forward to updating the market as the workover plan on Garden Hill South is implemented."

23 December 2010

CHAIRMAN'S STATEMENT

I am pleased to report on the progress made by Enegi Oil Plc. ("Enegi Oil" or the "Company" together with its subsidiaries (the "Group")) for the year ended 30 June 2010 and to provide an update on those activities that have occurred since the financial year end.

The last year has been one of consolidation and I feel that the Company is now in a more stable position from which it can generate value from its assets. After the disappointing results from the drilling of the horizontal sidetrack to the PAP#1 well at Garden Hill South ('GHS') management have worked to secure the long-term future of the Group and I believe that the actions taken and decisions made over the last 12 months have gone a long way to achieving that.

During the financial year on which we are reporting the Company raised £2.9m primarily to provide management with the opportunity to stabilise the Group. C$1.0m was provided to CIVC Creditor Corporation to purchase all of its interests in the Group's assets meaning that management had the freedom to enter into the transactions that it feels are appropriate to generate shareholder value. In addition, the Group's operating subsidiary, PDI Production Inc. ("PDIP") entered into an agreement with Canadian Imperial Venture Corporation and Shoal Point Energy to acquire a 100% interest in the more conventional St. George's Group play in exchange for its interest in the less conventional, shallow shale play.

During this calendar year the reasons for these actions have become evident and Enegi has refined its strategy, learning from the events of the past, with the principal change being the avoidance of risk-concentration where a single negative outcome event may significantly impact shareholder value. With that in mind the Board structured a regional development play with Dragon Lance Management Corporation ('DLMC'). The agreement consists of DLMC committing to complete a work-over on the GHS PAP#1 well to obtain a 30% interest in that well, the workover having already commenced. It also includes the drilling of a further well on PL2002-01 and the undertaking of a seismic programme and the drilling of a test well on EL1070. The total cost of these operations will run into tens of millions of Canadian dollars and will secure long-term activity on our assets in western Newfoundland.

At the time of writing we are starting to see the results of the workover at GHS PAP#1 which, due to its importance to the future of the Group is being performed diligently to generate maximum benefit for shareholders. The initial results appear promising and we have been informed by our farm-in partner that after the implementation of the first part of the programme we can reasonably expect the well to be able to produce at a sustainable rate of 200 bopd. Clearly, the results of the well are important to the long-term future of the Group and we are reliant upon achieving commercial production but the sustainable rates notified to us by our farm-in partner are sufficient for the Group to achieve its long-term plans and hence we believe that the Group's assets require no impairment this financial year.

Other benefits of the regional development play are that it will allow management to keep the Group's cost base low and allow the Group to seek new opportunities to expand its portfolio of assets under a second key refinement of its strategy, which is in the short-term to undertake low capital investment approaches to increasing the value of exploration assets. Management will keep the market informed as this strategy is implemented.

In addition to securing the long-term value of the Group's assets we have been working diligently to resolve the financial future of the Group. It was important to hear in October that the creditor arrangements of PDIP have mainly been satisfied, with just a few smaller arrangements remaining. Further, as previously announced the Company had initiated proceedings to exercise its rights under the security arrangement which it had in place with an institution that had failed to meet its obligations under the placing at the time of the Company's IPO. The assets which were held as security were sold in October and the Company received £490,000 adjusted for the year end exchange rate.

The sale of these assets took longer to implement than expected, given the current state of global financial markets and, at the same time, management felt it prudent to gather as much information as possible to ensure the maximum effectiveness of the workover so, rather than seek to obtain additional finance from traditional sources, the Board took the decision that I should undertake the interim financing myself and through companies that I control. Until the workover has been completed and the well brought on stream the Company will continue to ensure that its overheads are kept to a minimum. Our intention remains to bring the well on stream as quickly as possible but without jeopardising the integrity of the work programme therefore the Company may require short-term bridging finance and, as shareholders would expect, the Board keeps the funding for the business under constant review. As can be seen from my actions in the past, I have supported the Company through bridging finance when the Board deemed it to have been in the best interests of shareholders. I remain committed to the Company and expect to be in a position to offer similar support to the Board and Company should they be considering their options for bridging finance in the future.

In summary I feel that the past year has been a very important year in terms of securing the long-term future of the Group and given the outcome, a very successful one. I believe that actions speak louder than words and so you will see from the personal risk that I have taken how much I believe in the future of this Company.

Finally, I would like to take this opportunity to thank all the staff for their contributions during the year. 

Alan Minty

Chairman

OPERATIONAL AND FINANCIAL REVIEW

Enegi Oil's principal business activities include the development and operation of hydrocarbon assets in Atlantic Canada. The Company holds the hydrocarbon rights to an onshore petroleum lease, PL 2002-01 (the "lease"), and two offshore exploration licences, EL1070 and EL1116 (the "licences"), in western Newfoundland. The Company was established to exploit prospects identified within the lease and licences.

The lease was issued in April 2002 and has been extended until August 2012 upon the satisfaction of certain conditions, those which have fallen due to date having all been met. The lease covers an area of approximately 160km2 and contains the discovered field, Garden Hill South, as well as two other leads, Garden Hill Central and Garden Hill North.

The licence EL1070 was issued in January 2002 for a total period of nine years and covers an area of approximately 1,000km2. The licence contains the Shoal Point prospect and an unmapped lead, Lourdes.

The licence EL1116 was issued in January 2009 for a total period of nine years and covers an area of approximately 2,120km2.

Garden Hill South

PDI Production Inc. ('PDIP'), the Company's wholly owned Canadian operating subsidiary, took delivery of Nabors Rig 45 during the summer after it had drilled a well at Shoal Point and commenced the re-entry of the PAP#1 well in August 2008, the main objective being the completion of a horizontal sidetrack.

During the drilling, which lasted into December 2008, both oil and gas were encountered. PDIP commenced a flow test on the PAP#1-ST#3 well at Garden Hill South on 21 January 2009 and during the drilling of the well and the subsequent flow test, 6,146 barrels of high quality crude oil (and 3,100 boe of associated gas) were produced. The Board however concluded, from the preliminary results of the flow test, that the well was sub-economic at that time and it was shut in on an extended well test. In November 2009 the well was reopened and initially flowed at 580 to 600 bopd plus associated gas.

The Company has further examined the flow and shut in test data to determine various options for improving the flow rate at the well. The data gained indicates that the well will produce now on an interval basis; whereby the well may be flowed then shut-in, allowing it to recharge the in-contact reservoir pressure, before repeating the process. The period between each interval and the expected production is currently not known. The Company also reviewed the potential for re-entering the sidetrack to physically stimulate the well; an option which is thought to provide a solution. As such PDIP has signed a farm-in agreement for the PAP#1 well. Under the terms of the agreement, the farm-in partner will gain a 30% interest in the well for a maximum expenditure of C$2.5 million (Canadian Dollars). The expenditure is expected to be used to initially log the well and then conduct a foam/acid fraccing operation which is anticipated to improve the production profile of the well. The original farm-out agreement was amended to provide the farm-in partner with a 40% interest in the well after completion of the workover as part of an overall regional development plan which incorporates activity on the remainder of PL2002-01 including the drilling of a further well on the lease the location of which will be decided upon completion of the work-over. The work-over programme has commenced and results indicate that with other components of the programme yet to be implemented the well is able to currently produce at a sustainable rate of 200bopd.

The well has proved the presence of producible oil at the southern end of an identified trend. This trend contains a number of potentially drillable untested leads, including Garden Hill Central and Garden Hill North, within the lease acreage to the north east.

Garden Hill Central and North

Garden Hill Central and North are 100% owned and operated by PDIP. TRACS International has estimated that Garden Hill Central and North have net mean unrisked resources of 24.6 mmboe and 8.3 mmboe respectively.

In August 2007, the Company commenced preparations for a 2D seismic programme covering the Garden Hill Central and Garden Hill North structures. This survey will provide additional information to better understand the two structures and determine initial drilling targets. Due to its size, Garden Hill Central is likely to be the first of these two structures to be drilled.

Although this survey was originally scheduled to take place in the fourth quarter of 2008, weather and technical delays have pushed the programme back. As part of the larger review which the Company is currently undertaking, the timing of this seismic work is now being reconsidered.

EL1116

In December 2008, PDIP was informed that it had been awarded further hydrocarbon exploration rights in the 2008 Call for Bids offered by the Canada - Newfoundland Offshore Petroleum Board (C-NLOPB). The successful bid was for an offshore parcel comprising 211,985 hectares which is adjacent to PL 2002-01 which PDIP currently holds.

The successful bid was based upon the Company committing to expenditure of C$600,000 in exploring the parcel during the initial five-year period of a nine-year Exploration Licence. PDIP has lodged a deposit equal to 25% of this work commitment with the C-NLOPB which will be offset against future expenditure. If significant quantities of petroleum resources are discovered as a result of exploration work, PDIP may then seek a Significant Discovery Licence from the C-NLOPB. Any Significant Discovery Licences issued in respect of lands resulting from the Exploration Licence will be subject to rentals which will escalate over time.

As stated in Enegi's Competent Persons Report at the time of the IPO, TRACS International believes that two of the structures that it has identified under Petroleum Lease 2002-01, Garden Hill South and Garden Hill Central, extend offshore. Management are currently considering the best way to advance the development of EL1116 and will update shareholders once the plan has been determined.

Shoal Point

In November 2009, the Group's operating subsidiary, PDIP, entered into an interest swap agreement with Canadian Imperial Venture Corporation and Shoal Point Energy on EL1070. Under the agreement, PDIP acquired a 100% interest in the more conventional St. George's Group play in exchange for its interest in the less conventional, shallower shale play. 

In August 2010, as part of the aforementioned regional development plan, PDIP agreed to enter into a farm-out agreement on Shoal Point. Under the terms of the agreement, the farm-in partner will commence a seismic programme that will cover the prospective areas of EL1070. The intention is for a minimum of 40% of the seismic to be shot in 3D, although this will be subject to environmental considerations and permitting issues. The farm-in partner will also drill a new well to test the productivity of the Aguathuna Formation located offshore, which contains the conventional Shoal Point prospect, assuming 100% of the total cost, risk and expense associated with the seismic programme and the drilling of the new well in return for a 70% interest in EL1070.

EL1070 is due to expire in 2011 but will remain in force until such time as the drilling of a well is being diligently pursued and for so long afterward as may be necessary to determine the existence of a significant discovery based on the results of that well. Management believe that the other companies with interest in the well will have commenced the drilling of a well before the expiry of the licence and management believe that the well will provide the necessary data to ensure that a Significant Discovery Licence ('SDL') will be awarded that covers the St. George's Group play in general and Shoal Point in particular.

PDIP

In February 2009, the Company announced that the financial position of PDIP had deteriorated significantly. Weather delays, technical issues and logistical problems led to significant delays in the drilling programme on Garden Hill South. As a result, PDIP had current liabilities in excess of its current assets. PDIP subsequently entered into largely successful discussions with its creditors to reschedule its liabilities and has recently informed the Company that the majority of these creditor arrangements have been satisfied.

Financial Highlights

As part of the continuing well testing at Garden Hill South, Enegi Oil generated production revenues during the year ended 30 June 2010 of £107,000 (2009: £140,000).

Losses before tax for the year were £1,256,000 (2009: £17,238,000). The decrease in losses in 2010 is due to two main factors. Firstly, in 2009, as a result of the poor outcome from drilling activities, the Group took an impairment charge of £13,350,000 on its fixed assets and no impairment was deemed necessary in 2010. Secondly, the Group's operating subsidiary, PDIP Production Inc., realised discounts of £874,000 upon satisfaction of a number of its creditor arrangements.

Group net assets at 30 June 2010 were £4,525,000 (2009: £2,099,000). The raising of funds totaling £2,928,000 is mainly responsible for this movement.

CONSOLIDATED INCOME STATEMENT

For the year ended 30 June 2010

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

For the year ended 30 June 2010

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2010

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2010

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 June 2010

Basis of presentation

The attached consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRSs as adopted by the EU"), IFRIC interpretations and the Companies Act 2006 applicable to Companies reporting under IFRS. The attached consolidated financial statements have been prepared under the historical cost convention.

Basis of consolidation

On 18 March 2008, Enegi acquired PDIP via a share for share exchange. Under IFRS 3 'Business Combinations', this acquisition has been accounted for as a reverse acquisition, whereby PDIP is treated as the acquirer of Enegi. Arising from this treatment was the reverse acquisition reserve within consolidated shareholders' equity and the merger relief reserve within the legal parent Company's shareholders' equity. 

The attached consolidated financial statements, therefore, represent the consolidated financial statements of PDIP combined with Enegi.

The merger reserve created in 2008 was written down during 2009 through the impairment charge relating to the Group's principal trading subsidiary, PDIP.

The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All intra-group balances, transactions, revenues, expenses and gains and losses resulting from intra-group transactions that are recognised in assets, have been eliminated on consolidation.

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.