Technology Update

12 March 2012

Corac Group Plc

("Corac" or the "Company")

Technology Update:

DGC programme makes strong progress

Corac, the intellectual property, engineering and licensing company specialising in compressor technology, is pleased to provide the following update on recent technology progress for its Downhole Gas Compressor ("DGC") programme.

The DGC programme, which offers the potential for gas field operators to extend the life of gas reservoirs and increase rate of production flow, has achieved a state of readiness across a number of developments and tests following successful re-engineering of the motor control system. This has enabled progress towards the final assembly stages for both the American and Italian field trial systems. Testing and analysis at a module and full systems level will continue at our development and test sites prior to releasing them to our partners for field trials.

Recent milestones successfully achieved since the last Technology update was issued on 13 December 2011 include the following:

·; Successful initial endurance running tests of an end-to-end single compressor system for the American DGC:

o more than 150 successful restarts, five times the expected number that a DGC motor would be subjected to in its lifetime

·; implemented the second generation electronics module, improving reliability when compared to earlier models:

o twice the running hours required to meet the system test protocol

o progress on the second generation electronics module was successfully demonstrated during a recent visit by ENI

·; undergone a more thorough range of testing and analysis at the Group's new Technology Centre in Slough, some of which were not possible previously.

Several leading global organisations in the energy and industrial sectors with whom Corac are in on-going discussions relating to future projects have also visited to verify the technology readiness and capabilities and have provided very positive feedback on the Centre's technology, facilities and environment. The Board believes that this positive feedback is an indicator of greater confidence in potential customers to partner with Corac. 

Commenting, Group Managing Director, Mark Crawford, said:

"These latest milestones demonstrate the strong progress we are making on the DGC programme and mean we can move with greater confidence towards the system build and testing phases.

"In addition, we are now seeing the wider benefits of our fully operational Technology Centre, providing a stronger commercial platform for existing development programmes and demonstrating our readiness to win further partnerships."

ENDS

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