20 June 2024

Petrel Resources plc

("Petrel" or the "Company")

Preliminary Results for the Year Ended 31^st December 2023

Petrel Resources, the hydrocarbon explorer with interests in Iraq and Ghana today announces its unaudited preliminary results for the year ending 31 December 2023.

The Company expects to shortly publish its 2023 audited Annual Report & Accounts and Notice of AGM, which will be notified in due course.

For further information please visit http://www.petrelresources.com/  or contact:

Enquiries:

CHAIRMAN'S STATEMENT

Petrel is a hydrocarbon explorer with interests in Iraq and Ghana.

Highlights

Market overview

• 2024 shows record demand for oil and LNG, with high oil prices reflecting emerging supply constraints due to under-investment since 2014.  In normal markets this would drive exploration of new, as well as existing acreage.

•  Recent years should have seen the opening of new petroleum basins, as well as additional acreage in existing basins, and many discoveries which are now economic to develop.

•  Available fiscal terms, however, still reflect the boom conditions between 2003 and 2014 rather than current market conditions.  States have been slow to engineer contractual terms so as to align the interest, and thus maximise value for all parties.  In much of the MENA region, fiscal terms restrict financing ability, especially for juniors.

•  Geopolitical tensions, from Guyana to the Middle East, are positive for oil prices but negative for early-stage exploration and developments.

•  Oil explorers are not yet attracting strong investor interest in western markets.  Producers buy shares back and issue dividends rather than invest the $610bn necessary to supply future demand.  There is still little farm-in interest, especially in new basins, but the attempted 2024 BHP bid for Anglo American may finally signal a shift in industry sentiment.

Assets overview

• In Ghana, ratification discussions on Tano 2A block continue with the Ghanaian authorities - though acreage adjustments are likely, and governance remains an issue.

• In Iraq, an updated Merjan oil field development proposal has been prepared to reflect evolving Ministry guidelines.

• Iraqi oil output was adjusted to 4.2 million barrels daily in Spring 2024, with exports of 3.4 mmbod in line with OPEC+ agreements.

•  Petrel is considering participating in upcoming licencing rounds, subject to qualification and contractual terms necessary for financing partners.  Generally, such bid rounds are expensive and risky compared to direct negotiations - especially for juniors.

Outlook

• The board is considering expansion opportunities for oil & gas in the MENA region, including reviewing oil & gas assets with prospectivity for other gas resources such as helium which the Board believes would offer some beneficial diversification given current market conditions outlined above.  We offer a long-established record and potentially high liquidity and capital appreciation for the right story.  As investors re-focus on 'hard industries' and cash flow, this is a time of opportunity.

Financial Markets are jittery but also cynical.  Oil & LNG (as well as coal) demand reached record highs in 2023/24.  And prices are trending upwards.

This should be excellent news for explorers.  But exploration budgets have been slashed in oil & gas since 2014, and earlier for minerals - even critical minerals necessary for the 'Green transition'.

Have normal market dynamics broken down or are we just passing through a cyclical correction - albeit a long one?

Despite the human tragedies in Gaza and elsewhere the destruction has had little impact on oil output or flows so far.  Major sea-routes need not pass close by - though Red Sea trade is disrupted by re-routing around the Cape and increased insurance and freight rates.  Gaza has no production, while Israeli output is modest.  But that could change if Iranian production and export infrastructure were damaged, especially if Iran retaliated against producers with western links.

Escalation is in nobody's interests, but international leadership seems more dysfunctional than any time since 1914.  The gradually escalating Middle Eastern crises are thus worrying for energy markets.

The USA is not exercising a moderating influence, due to distractions in Ukraine and Taiwan, biased domestic lobbying and, especially, because the US is now largely self-sufficient in oil, gas, and coal - though not in many critical resource minerals.

Due to the success of US fracking, especially from 2003 - 2014, the USA is now less import-dependent.  Together with the C-19 lock-downs, and slowing Asian growth, this has allowed OPEC+ to build up some spare capacity, up to 6mmbod. However, demand growth remains strong at 1.5mmbod yearly, and exploration budgets have been slashed since 2014.  For likely future demand, the sector is expected to need $610bn of investment yearly (depending on rig-rates, etc.), but manage only $360bn - and this is mainly in existing fields and provinces, mostly in the Americas.  There has been little frontier exploration since 2015.  Most of the developing world is starved of investment.

This is part of a general investors' "strike" which has also impacted minerals, such as copper and nickel - which are critical to the 'new economy' - which is why the USA and now EU have passed acts to boost investment in such minerals.  Unfortunately, developers must go where the deposits are - many key resources are in challenging locations, such as in Africa and South America.

Resource nationalists do not understand finance, and politicians frequently worsen difficulties by posturing, or demanding up-front cash, rather than aligning interests.  Former bid rounds, involving up-front fees, qualification criteria better suited to majors, and limited upside, are not the best way to expedite projects, keep cost control and optimise reservoir recovery.  That is why Petrel prefers direct negotiations, where possible, after which we can bring partners via farm-ins.

In the meantime, there is market interest in Petrel's strong shareholder following and liquidity - especially at times of intense news-flow.  Accordingly, and noting my commentary above, your board is considering a number of expansion opportunities in the MENA region.

Financing

The directors and their supporters have funded working capital needs during C-19, and the investors' strike and are prepared to participate in any necessary, future fundings.

David Horgan

Chairman

20 June 2024

PETREL RESOURCES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2023

PETREL RESOURCES PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023

PETREL RESOURCES PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

PETREL RESOURCES PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

NOTES:

1.    ACCOUNTING POLICIES

There were no changes in accounting policies from those used to prepare the Group's Annual Report for financial year ended 31 December 2022.  The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and in accordance with the provisions of the Companies Act 2014.

2.    LOSS PER SHARE

Basic loss per share is computed by dividing the loss after taxation for the year attributable to ordinary shareholders by the weighted average number of ordinary shares in issue and ranking for dividend during the year. Diluted loss per share is computed by dividing the loss after taxation for the year by the weighted average number of ordinary shares in issue, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year.

The following tables set out the computation for basic and diluted earnings per share (EPS):

3.    GOING CONCERN

The Group incurred a loss for the financial year of €491,086 (2022: loss of €310,813) and had net current liabilities of €973,503 (2022: €689,811) at the balance sheet date. These conditions as well as those noted below, represent a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern.

Included in current liabilities is an amount of €947,531 (2022: €857,531) owed to key management personnel in respect of remuneration due at the balance sheet date. Key management have confirmed that they will not seek settlement of these amounts in cash for a period of at least one year after the date of approval of the financial statements or until the Group has generated sufficient funds from its operations after paying its third party creditors.

The Group had a cash balance of €35,667 (2022: €166,309) at the balance sheet date. The directors have prepared cashflow projections for a period of at least twelve months from the date of approval of these financial statements which indicate that additional finance will be required to fund working capital requirements and develop existing projects. As the Group is not revenue or cash generating it relies on raising capital from the public market.

In January 2024, the Group received £90,000 from the exercise of warrants. Further information is detailed in Note 8 below.

These conditions as well as those noted below, represent a material uncertainty that may cast significant doubt on the Group and Company's ability to continue as a going concern.

As in previous years the Directors have given careful consideration to the appropriateness of the going concern basis in the preparation of the financial statements and believe the going concern basis is appropriate for these financial statements. The financial statements do not include the adjustments that would result if the Group and Company were unable to continue as a going concern.

4.    INTANGIBLE ASSETS

Exploration and evaluation assets relate to expenditure incurred in exploration in Ghana. The directors are aware that by its nature there is an inherent uncertainty in Exploration and evaluation assets and therefore inherent uncertainty in relation to the carrying value of capitalized exploration and evaluation assets.

During 2018 the Group resolved the outstanding issues with the Ghana National Petroleum Company (GNPC) regarding a contract for the development of the Tano 2A Block. The Group has signed a Petroleum Agreement in relation to the block and this agreement awaits ratification by the Ghanian government.

As ratification has not yet been achieved in the current year the directors, as a matter of prudence, opted to write down 20% of the carrying value of the Tano 2A Block historic expenditure.  Accordingly, an impairment charge of €186,633 was recorded in the current year.

Relating to the remaining exploration and evaluation assets at the financial year end, the directors believe there were no facts or circumstances indicating that the carrying value of the intangible assets may exceed their recoverable amount and thus no impairment review was deemed necessary by the directors. The realisation of these intangible assets is dependent on the successful discovery and development of economic reserves and is subject to a number of significant potential risks, as set out below:

·    licence obligations;

·    exchange rate risks;

·    uncertainty over development and operational costs;

·    political and legal risks, including arrangements with Governments for licences, profit sharing and taxation;

·    foreign investment risks including increases in taxes, royalties and renegotiation of contracts;

·    financial risk management; and

·    ability to raise finance.

5.    OTHER PAYABLES

It is the Group's normal practice to agree terms of transactions, including payment terms, with suppliers. It is the Group's policy that payments are made between 30 - 45 days and suppliers are required to perform in accordance with the agreed terms. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

Key management personnel have confirmed that they will not seek settlement in cash of the amounts due to them in relation to remuneration for a period of at least one year after the date of approval of the financial statements or until the Group has generated sufficient funds from its operations after paying its third party creditors.

6.    SHARE CAPITAL

On 21 December 2023 a total of 1,000,000 warrants were exercised at a price of 1.8p per warrant.

7.    SHARE BASED PAYMENTS

The Group issues equity-settled share-based payments to certain directors and individuals who have performed services for the Group. Equity-settled share-based payments are measured at fair value at the date of grant. Fair value is measured by the use of a Black-Scholes valuation model.

Options

The Group plan provides for a grant price equal to the average quoted market price of the ordinary shares on the date of grant. The options vest immediately.

The options outstanding at 31 December 2023 have a weighted average remaining contractual life of 4 years.

Warrants

On 21 December 2023 a total of 1,000,000 warrants were issued at an exercise price of 1.8p per warrant. Further information is detailed in note 6 above.

8.    POST BALANCE SHEET EVENTS

Between 3 and 5 January 2024 a total of £90,000 was received from the exercise of 5,000,000 warrants by warrants holders at the exercise price of 1.8p per share.

9.    ANNUAL GENERAL MEETING

The Company's Annual General Meeting will be held on 25 July 2024 in the Hotel Riu Plaza The Gresham, 23 O'Connell Street Upper, Dublin 1, D01 C3W7 at 12.00 pm.

10.  GENERAL INFORMATION

The financial information prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") as adopted by the European Union included in this preliminary statement does not constitute the statutory financial statements for the purposes of Chapter 4 of part 6 of the Companies Act 2014.  Full statutory statements for the year ended 31 December 2023 prepared in accordance with IFRS, upon which the auditors have given an unqualified report, have not yet been filed with the Registrar of Companies.  The financial information for 2022 is derived from the financial statements for 2022 which have been filed with the Registrar of Companies. The auditors had reported on the 2022 statements; their report was unqualified.

A copy of the Company's Annual Report and Accounts for 2023 will be mailed shortly only to those shareholders who have elected to receive it.  Otherwise, shareholders will be notified that the Annual Report will be available on the website at www.petrelresources.com.  Copies of the Annual Report will also be available for collection from the Company's registered office, 162 Clontarf Road, Dublin 3, Ireland.