Bowleven IFRS Restatement

BowLeven Plc
20 November 2007


20 November 2007

Bowleven Plc ('Bowleven' or 'the Company')

Adoption of International Financial Reporting Standards (IFRS) and the US Dollar
as a presentational currency for the Group's financial statements.


Bowleven, the African focused oil & gas company listed on AIM, today announces
the publication of the restatement of its 2006-07 comparative financial
information under IFRS (previously stated under UK Generally Accepted Accounting
Practices (UK GAAP)) and the adoption of the US Dollar as the presentational
currency for the Group's financial statements with effect from 1 July 2007.


The first results to be prepared under IFRS will be the Company's interim
results to 31 December 2007 and will include comparative information for the six
months to 31 December 2006. The Company will present its first annual report and
accounts under IFRS for the year ended 30 June 2008, which will include
comparative IFRS financial information for the year ended 30 June 2007.


These restatements have been prepared on the basis of revised accounting
policies that have been agreed with Bowleven's auditors. This restated financial
information is presented in this release together with reconciliations from UK
GAAP to IFRS and these revised accounting policies.


The principal differences for Bowleven between reporting on the basis of UK GAAP
and IFRS are as follows:


   • Implementation of IFRS 6, 'Exploration for and Evaluation of Mineral
     Resources', and adoption of successful efforts from the previously applied
     full cost accounting under UK GAAP
   • Expensing pre licence award expenditure previously held within
     exploration assets
   • Retranslation of certain assets and liabilities held by subsidiaries
     with non-US Dollar functional currencies on consolidation
   • Disclosure and presentational adjustments for certain assets held by the
     Group


The overall impact of the shift to IFRS accounting has been to reduce the value
of the Group balance sheet by 13% to $309.4million as at 30 June 2007. This
represents the aggregation of the one-off expensing of certain past exploration
activities and the impact of various foreign currency translations. The Group
loss for the year to 30 June 2007 increases to $20.1million. This is due to the
translational impact of a Sterling inter-company loan now presented in US
Dollars. The value of this loan (and thus the obligation of the fully-owned
subsidiary concerned) will fluctuate in line with the US Dollar/Sterling
exchange rate and, under IFRS, this variation must be expressed in the
consolidated P&L account. No material adjustments to the accounts have arisen
from ongoing operations.



ENQUIRIES

For further information please contact:

Bowleven plc
John Brown, Finance Director     00 44 131 524 5678

Hoare Govett Limited
Andrew Foster                    00 44 207 678 8000



Notes to the Editor:


Bowleven is an African focused oil and gas Group, based in Edinburgh and traded
on AIM since December 2004.


Bowleven holds, through its wholly-owned subsidiary EurOil Limited, a 100%
equity interest in the Etinde Permit area being three shallow water blocks in
offshore Cameroon, West Africa; namely Blocks MLHP 5, MLHP 6 and MLHP 7. In
total Bowleven has approximately 2,300 km2 of exploration acreage located across
the Rio del Rey and Douala basins in the Etinde Permit. Bowleven has operated in
Cameroon since 1999.


The Government of Cameroon has announced a cooperation agreement with the
Government of Equatorial Guinea to investigate a project to export gas from
Cameroon to the gas liquefaction plant on Bioko Island on Equatorial Guinea. It
is proposed that Limbe would be the gathering hub for any such scheme.


Bowleven also holds, through its wholly-owned subsidiary FirstAfrica Oil, a 100%
equity interest in the EOV offshore block in Gabon, which contains an existing
oil discovery that it is seeking to develop, and, subject to government of Gabon
consent of a farm out to Addax Petroleum, a 50% equity interest in the Epaemeno
Block, which is 1,340 km2 of exploration acreage in onshore Gabon that sits
adjacent to a number of recent discoveries in surrounding blocks.



Introduction and Summary of Changes under IFRS


Introduction

Bowleven plc is, as an AIM listed company, required to adopt International
Financial Reporting Standards (IFRS), as adopted by the European Union (EU), for
accounting periods beginning on or after 1 January 2007. The first period to be
reported using these Standards will be the six month period ending 31 December
2007.


In order to fully understand the impact of these changes and provide a
comparative for the new statements, it is necessary to restate the previously
reported Balance Sheets at 1 July 2006, 31 December 2006 and 30 June 2007, and
the Income Statement for the year to 30 June 2007 and Income Statement for the 6
months ended 31 December 2006.


This document sets out how the adoption of IFRS has affected previously reported
results and it has been prepared using IFRS accounting policies. The Group's
auditors have provided an Independent Audit Report for the year ended 30 June
2007 and an Independent Review Report for the six months ended 31 December 2006 
period.



This document also includes a summary of the impact on the Income Statement and 
Balance Sheet, the Group's new accounting policies and a detailed reconciliation
to the previously reported numbers, which were prepared in accordance with UK 
GAAP.

Bowleven also intends to adopt the US dollar as the presentational currency for
the Group's results for the six months ending 31 December 2007. The Group's
existing foreign currencies accounting policy (defined under note j in section 
'Principal Accounting Policies')has been updated to reflect the revised 
translation policy to US Dollar. Restated US dollar balances prepared under this
revised policy have been included in this document for comparative purposes.


Summary

Changes to the Group's reported financial information for the year ended 30 June
2007 as a result of adopting IFRS are summarised as follows:

                                     UK GAAP         IFRS      IFRS      IFRS
                                              adjustments
                                       £'000        £'000     £'000     $'000
Income Statement
Loss after tax                        (4,768)      (5,403)  (10,171)  (20,147)
---------------------                -------    ---------  --------   -------

Basic and diluted earnings per share  £(0.09)      £(0.10)   £(0.19)   $(0.37)
---------------------                -------    ---------  --------   -------

Balance sheet
Total assets less current            175,355      (22,588)  152,767   309,359
liabilities                          -------    ---------  --------   -------



The adjustments arise due to the adoption of IFRS 6, IAS 21 and IAS 39.


The principal adjustments arise due to the adoption of IFRS 6 'Exploration for
and Evaluation of Mineral Resources'. Under UK GAAP, the Group had previously
adopted the full cost accounting method, as permitted in the provisions of the
UK Oil Industry Accounting Committee's 'Statement of Recommended Practice'
(SORP) 'Accounting for Oil and Gas Exploration Development, Production and
Decommissioning Activities'. The IFRS accounting policy for oil and gas assets
is set out in detail under note f in section 'Principal Accounting Policies'.


The impact of IFRS 6 on the Group's Financial Statements is that, firstly, on
adoption of a successful efforts accounting policy, any unsuccessful exploration
costs are required to be written off in the Income Statement. Secondly, under
IFRS 6, the costs which are incurred prior to the award of licences are also
required to be expensed in the Income Statement. These costs included technical
services and data acquisition necessary for successful licence applications.


On adoption of IAS 39 'Financial Instruments: Recognition and Measurement',
derivative financial assets and liabilities are recognised on the Balance Sheet,
with corresponding adjustments to retained earnings. The exchange loss on the
unwinding of forward foreign exchange contracts is recognised in the Income
Statement for the year ended 30 June 2007.


IAS 21 'The Effects of Changes in Foreign Exchange Rates' requires that the
functional currency for each subsidiary within the Group be determined. A change
of functional currency has been made as at the IFRS transition date to one of
the Group's subsidiaries to reflect the underlying transactions, events and
conditions relevant to that subsidiary.


Cash Flow

IAS 7 - 'Cash Flow Statements' has had no material impact on the net movement in
cash and cash equivalents and therefore a cash flow reconciliation is not
presented in this statement. Some presentational differences exist between the
cash flow statements presented under UK GAAP and IFRS.


First Time Adoption of IFRS

IFRS 1 'First Time Adoption of International Financial Reporting Standards'
establishes the transitional requirements for the preparation of Financial
Statements upon first time adoption of IFRS. IFRS 1 generally requires an entity
to comply with IFRS effective at the reporting date and to apply these
retrospectively to the opening Balance Sheet, the comparative period and the
reporting period. The standard allows certain optional exemptions from
retrospective application, and other elections on transition; the exemptions
which the Group has applied are as follows:


   • IFRS 3 'Business Combinations' - Not to restate financial information
     for business combinations which occurred prior to 1 July 2006; and


   • IFRS 1 - To deem cumulative translation differences arising on
     consolidation of subsidiary undertakings to be zero at 1 July 2006.


Independent Auditor's Report


INDEPENDENT AUDITOR'S REPORT TO BOWLEVEN PLC ON THE PRELIMINARY IFRS FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007


We have audited the accompanying preliminary International Financial Reporting
Standards ('IFRS') financial statements of the Company for the year ended 30
June 2007 which comprise the Group opening IFRS Balance Sheet as at 1 July 2006,
the Group Income Statement for the year ended 30 June 2007 and the Group Balance
Sheet as at 30 June 2007, together with the related accounting policies.


This report is made solely to the Company in accordance with our engagement
letter dated 9 October 2007. Our audit work has been undertaken so that we might
state to the company those matters we are required to state to them in an
auditor's report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility or liability to anyone other than
the Company for our audit work, for this report, or for the opinions we have
formed.


Respective responsibilities of directors and auditors

These preliminary IFRS financial statements are the responsibility of the
company's directors and have been prepared as part of the Company's conversion
to IFRS. They have been prepared in accordance with the basis set out in
Sections 1 and 9 which describe how IFRS have been applied under IFRS 1,
including the assumptions management has made about the standards and
interpretations expected to be effective, and the policies expected to be
adopted, when management prepares its first complete set of IFRS financial
statements as at 30 June 2008.


Our responsibility is to express an independent opinion on the preliminary IFRS
financial statements based on our audit. We read the other information
accompanying the preliminary IFRS financial statements and consider whether it
is consistent with the preliminary IFRS financial statements. This other
information comprises the description of significant changes in accounting
policies. We consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the preliminary IFRS 
financial statements. Our responsibilities do not extend to any other 
information.


Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing 
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the preliminary IFRS financial statements. It also includes an
assessment of the significant estimates and judgements made by the directors in
the preparation of the preliminary IFRS financial statements, and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.


We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the preliminary IFRS
financial statements are free from material misstatement, whether caused by
fraud or other irregularity or error. In forming our opinion we also evaluated
the overall adequacy of the presentation of information in the preliminary IFRS
financial statements.


Opinion

In our opinion, the preliminary IFRS financial statements for the year ended 30
June 2007 have been prepared, in all material respects, in accordance with the
basis set out in Sections 1 and 9, which describes how IFRS have been applied
under IFRS 1, and the policies expected to be adopted, when management prepares
its first complete set of IFRS financial statements as at 30 June 2008.


Emphasis of matter

Without qualifying our opinion, we draw attention to the fact that, under 
IFRS's, only a complete set of financial statements with comparative financial
information and explanatory notes can provide a fair presentation of the
Company's financial position, results of operations and cash flows in accordance
with IFRS's.


BAKER TILLY UK AUDIT LLP
2 Edinburgh Quay
Fountainbridge
EH3 9PU


Independent Review Report


INDEPENDENT REVIEW REPORT TO BOWLEVEN PLC ON THE PRELIMINARY IFRS FINANCIAL
STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006


Introduction

We have been instructed by the company to review the preliminary International
Financial Reporting Standards ('IFRS') interim financial information for the six
months ended 31 December 2006 which comprises the Group Income Statement for the
six months ended 31 December 2006 and the Group Balance Sheet as at 31 December
2007. We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the preliminary IFRS interim financial information.


This report is made solely to the company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extend permitted by the law, we do not
accept or assume responsibility to anyone other than the company for our work,
for this report, or for the conclusions we have formed.


Directors' responsibilities

The preliminary IFRS interim financial information is the responsibility of, and
has been approved by, the Directors. As disclosed, the next annual
financial statements of the Group will be prepared in accordance with those
IFRS's adopted for use in the European Union. This preliminary interim financial
information has been prepared as part of the company's conversion to IFRS in
accordance with the requirements of IFRS 1 'First Time Adoption of International
Financial Reporting Standards' relevant to interim reports. The accounting
policies are consistent with those that the directors intend to use in the next
financial statements.


Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures to the financial
information and underlying financial data, and based thereon, assessing whether
the accounting policies and presentation have been consistently applied, unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with
International Standards of Auditing (UK and Ireland) and therefore provides a
lower level of assurance than an audit. Accordingly we do not express an opinion
on the preliminary IFRS interim financial information.


Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the preliminary IFRS financial information as presented for
the six months ended 31 December 2006.


BAKER TILLY UK AUDIT LLP
2 Edinburgh Quay
Fountainbridge
EH3 9PU



Group IFRS Income Statement for the Year Ended 30 June 2007


                                 UK
                               GAAP    IAS 21   IAS 39        IFRS        IFRS                                         
                              £'000     £'000    £'000       £'000       $'000

Administration expenses      (7,388)        -        -      (7,388)    (15,515)
-------------------        --------  --------  -------    --------    --------

Operating loss
Continuing operations        (6,519)        -        -      (6,519)    (13,774)
Acquisitions                   (869)        -        -        (869)     (1,741)
-------------------        --------  --------  -------    --------    --------
                             (7,388)        -        -      (7,388)    (15,515)

Interest income               2,629         -        -       2,629       5,108
Finance costs                    (9)   (4,848)    (555)     (5,412)     (9,740)
-------------------        --------  --------  -------    --------    --------
Loss before tax              (4,768)   (4,848)    (555)    (10,171)    (20,147)

Tax                               -         -        -           -           -
-------------------        --------  --------  -------    --------    --------
Loss for the year            (4,768)   (4,848)    (555)    (10,171)    (20,147)
-------------------        --------  --------  -------    --------    --------

Basic and diluted earnings
per share                    £(0.09)   £(0.09)  £(0.01)     £(0.19)     $(0.37)
-------------------        --------  --------  -------    --------    --------



Group IFRS Balance Sheet as at 30 June 2007

                                UK          IFRS     
                              GAAP   adjustments      IFRS       IFRS
                              2007                    2007       2007
                             £'000         £'000     £'000      $'000
Non-current assets
Intangible exploration
assets                      95,669      (22,571)    73,098    149,709
Property, plant and
equipment                   31,921          (17)    31,904     63,932
-----------------------    -------     --------     ------    -------
Total non-current assets   127,590      (22,588)   105,002    213,641
-----------------------    -------     --------     ------    -------

Current assets
Inventory                    3,893            -      3,893      7,802
Trade and other
receivables                  1,039            -      1,039      2,080
Cash and cash equivalents   52,550            -     52,550    105,307
----------------------     -------     --------    -------    -------
Total current assets        57,482            -     57,482    115,189
----------------------     -------     --------    -------    -------
----------------------     -------     --------    -------    -------
Total assets               185,072      (22,588)   162,484    328,830
----------------------     -------     --------    -------    -------

Current liabilities
Trade and other payables     9,717            -      9,717     19,471
----------------------     -------     --------    -------    -------
Total current liabilities    9,717            -      9,717     19,471
----------------------     -------     --------    -------    -------

Total assets less current
liabilities                175,355      (22,588)   152,767    309,359
----------------------     -------     --------    -------    -------

Equity
Called-up share capital      7,452            -      7,452     14,377
Share premium              177,750            -    177,750    340,058
Foreign currency
translation                   (913)          13       (900)    13,727
Other reserves               3,986            -      3,986      7,384
Retained earnings          (12,920)     (22,601)   (35,521)   (66,187)
----------------------     -------     --------    -------    -------
Total equity attributable
to the equity holders      175,355      (22,588)   152,767    309,359
----------------------     -------     --------    -------    -------


Group IFRS Income Statement for the Half Year Ended 31 December 2006


                       UK GAAP    IAS 21   IAS 39      IFRS       IFRS   
                         £'000     £'000    £'000     £'000      $'000
Administration
expenses                (3,058)        -        -    (3,058)    (6,758)
------------------    --------  --------  -------   -------   --------

Operating loss          (3,058)        -        -    (3,058)    (6,758)
------------------    --------  --------  -------   -------   --------

Interest income            972         -        -       972      1,845
Finance costs                -    (3,377)    (499)   (3,876)    (6,693)
------------------    --------  --------  -------   -------   --------
Loss before tax         (2,086)   (3,377)    (499)   (5,962)   (11,606)

Tax                          -         -        -         -          -
------------------    --------  --------  -------   -------   --------
Loss for the period     (2,086)   (3,377)    (499)   (5,962)   (11,606)
-------------------   --------  --------  -------   -------   --------


Group IFRS Balance Sheet as at 31 December 2006

                                           IFRS       
                           UK GAAP  adjustments       IFRS       IFRS
                              2006                    2006       2006
                             £'000        £'000      £'000      $'000
Non-current assets
Intangible exploration
assets                      49,218      (20,576)    28,642     58,697
Property, plant and
equipment                      386          (17)       369        724
---------------------     --------    ---------  ---------  ---------
Total non-current assets    49,604      (20,593)    29,011     59,421
---------------------     --------    ---------  ---------  ---------

Current assets
Inventory                    4,199            -      4,199      8,238
Trade and other
receivables                 11,041            -     11,041     21,660
Cash and cash equivalents   79,086            -     79,086    155,153
Other financial assets       9,664         (485)     9,179     18,007
---------------------     --------    ---------  ---------  ---------
Total current assets       103,990         (485)   103,505    203,058
---------------------     --------    ---------  ---------  ---------
---------------------     --------    ---------  ---------  ---------
Total assets               153,594      (21,078)   132,516    262,479
---------------------     --------    ---------  ---------  ---------

Current liabilities
Trade and other payables     4,328            -      4,328      8,492
---------------------     --------    ---------  ---------  ---------
Total current liabilities    4,328            -      4,328      8,492
---------------------     --------    ---------  ---------  ---------

Total assets less current
liabilities                149,266      (21,078)   128,188    253,987
---------------------     --------    ---------  ---------  ---------

Equity
Called-up share capital      6,041            -      6,041     11,420
Share premium              149,969            -    149,969    281,696
Foreign currency
translation                      -           (5)        (5)    12,673
Other Reserves               3,494            -      3,494      5,844
Retained earnings          (10,238)     (21,073)   (31,311)   (57,646)
---------------------     --------    ---------  ---------  ---------
Total equity attributable
to the equity holders      149,266      (21,078)   128,188    253,987
---------------------     --------    ---------  ---------  ---------


Group IFRS Balance Sheet as at 1 July 2006

                                            IFRS      
                           UK GAAP   adjustments      IFRS       IFRS
                              2006                    2006       2006
                             £'000         £'000     £'000      $'000
Non-current assets
Intangible exploration
assets                      40,953       (17,212)   23,741     43,121
Property, plant and
equipment                      381             -       381        692
---------------------     --------   -----------   -------    -------
Total non-current assets    41,334       (17,212)   24,122     43,813
---------------------     --------   -----------   -------    -------

Current assets
Inventory                      810             -       810      1,471
Trade and other
receivables                    435             -       435        790
Cash and cash equivalents   42,453        (9,650)   32,803     59,580
Other financial assets           -         9,664     9,664     17,553
---------------------     --------  ------------   -------    -------
Total current assets        43,698            14    43,712     79,394
---------------------     --------  ------------   -------    -------
---------------------     --------  ------------   -------    -------
Total assets                85,032       (17,198)   67,834    123,207
---------------------     --------  ------------   -------    -------

Current liabilities
Trade and other payables     1,003             -     1,003      1,822
---------------------     --------   -----------   -------    -------
Total current liabilities    1,003             -     1,003      1,822
---------------------     --------   -----------   -------    -------
Total assets less current
liabilities                 84,029       (17,198)   66,831    121,385
---------------------     --------   -----------   -------    -------

Equity
Called-up share capital      2,961             -     2,961      5,378
Share premium               86,002             -    86,002    156,205
Other reserves               3,218             -     3,218      5,845
Retained earnings           (8,152)      (17,198)  (25,350)   (46,043)
---------------------     --------    ----------  --------   --------
Total equity attributable
to the equity holders       84,029       (17,198)   66,831    121,385
---------------------     --------    ----------  --------   --------


Principal Accounting Policies



a) Basis of preparation

These financial statements have been prepared in accordance with IFRS as adopted
by the European Union (EU) and with those parts of the Companies Act, 1985,
applicable to companies reporting under IFRS. The financial statements have been
prepared under the historical cost convention as modified by the revaluation of
certain financial assets and liabilities (including derivative instruments).


The preparation of financial statements requires the use of estimates and
assumptions that affect the reported amount of assets and liabilities at the
date of the financial statements and the reporting amount of income and expenses
during the year. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may differ
from those estimates.


b) Accounting Standards

Bowleven has prepared these financial statements in accordance with applicable
IFRS as adopted by the EU.


c) Functional and Presentational Currency

The currency in which the Group's entities primarily generate and expend cash is
United States Dollars. Thus, in accordance with International Accounting
Standard 21, 'The Effects of Changes in Foreign Exchange Rates', the Group has
adopted US Dollar as its presentational currency.


d) Basis of Consolidation

The consolidated accounts include the results of Bowleven PLC and its subsidiary
undertakings at the Balance Sheet date.


Bowleven allocates the purchase consideration of any acquisition to assets and
liabilities on the basis of fair values at the date of acquisition.


Under a Group reconstruction in a prior year, the Company acquired the whole of
the issued share capital of Bowleven Resources Limited in exchange for shares.
The reconstruction has been accounted for in accordance with the transitional
exemptions of IFRS 1 'First Time Adoption of International Financial Reporting
Standards'.


e) Business Combinations

The acquisition of subsidiaries by the Group is accounted for by using the
purchase method.


On acquisition, the assets, liabilities and contingent liabilities of a
subsidiary are measured at their fair values at the date of acquisition.


Business combinations arising prior to the Group's transition date to IFRS (1
July 2006) have not been revisited under the exemption provided by IFRS 1.


f) Oil and Gas: Intangible Assets - Exploration/Appraisal Assets
and Property, Plant and Equipment - Development/Producing Assets

The Company applies the successful efforts method of accounting for exploration
and appraisal (E&A) costs having regard to the requirements of IFRS 6:
'Exploration for and Evaluation of Mineral Resources'. The impact of applying
this method is to write off £15,915,000 for abortive well costs as at the
transition date (1 July 2006).


Costs incurred prior to obtaining the legal right to explore an area are
expensed directly to the Income Statement as they are incurred. This has
resulted in a write off of £1,297,000 as at the transition date.


All licence acquisition, exploration and appraisal costs (including seismic) are
capitalised initially as intangible assets by well, field or exploration area as
appropriate.


Once commercial reserves are established and technical feasibility for
extraction determined, then the carrying cost, after adjusting for any
impairment that may be required (see below), of the relevant exploration and
appraisal asset is then reclassified as a single field cost centre and
transferred into development and producing assets. In the event that no
commercial reserves have been found, the results of the exploration activity no
longer contribute to ongoing exploration work, or if the company decides not to
continue exploration and appraisal activity in the area, then the costs of such
unsuccessful exploration and appraisal is written off to the Income Statement in
the period in which the determination is made.


The significant components of the development and production assets are the
fields. The fields are aggregated to represent the cost of developing the
commercial reserves discovered, together with the exploration and appraisal
costs transferred from intangible exploration and appraisal assets, and bringing
them into production.


The development and production costs also include:

i.    Costs of assets acquired/purchased;
ii.   Directly attributable overheads;
iii.  Finance costs; and
iv.   Decommissioning and restoration.


Depletion and Depreciation

Bowleven depletes expenditure on development and production assets using the
unit of production method, based on proved and probable reserves on a field by
field basis.


The depletion calculation takes account of the estimated future costs of the
development of recognised proved and probable reserves.


Principal Accounting Policies (continued)


Currently there are no significant items of property, plant and equipment deemed
to have different useful lives.


Other significant items of property, plant and equipment are depreciated
separately over their deemed economic lives. Other significant items of
property, plant and equipment include:

i.  Pipelines; and
ii. Processing facilities.


Impairment

In accordance with IFRS 6, exploration and appraisal assets are reviewed
regularly for indicators of impairment and costs written off where circumstances
indicate that the carrying value might not be recoverable.


Where there has been a charge for impairment in an earlier period that charge
will be reversed in a later period where there has been a change in
circumstances to the extent that the discounted future net cash flows are higher
than the net book cost at the time. In reversing impairment losses, the carrying
amount of the asset will be increased to the carrying value that would have been
determined (net of depletion) had no impairment loss been recognised in prior
periods.


Impairment reviews on development and production assets are carried out on each
cash-generating unit in accordance with IAS 36 'Impairment of Assets'. An
impairment test is performed whenever events or circumstances arising during the
development or production phase indicate that the carrying value of a cash
generating unit may exceed its recoverable amount. An impairment test is also
carried out before the transfer of costs related to assets which are being
transferred to development and production assets following establishment of
commercial reserves.


The cash generating unit for impairment purposes are those assets which generate
largely independent cash flows and are normally, but not always, single
development areas.


Where there are indicators of impairment the carrying value of each cash
generating unit is compared with its recoverable amount, i.e. the associated
expected discounted future net cash flows. If the carrying value is higher than
the recoverable amount, the value is written down to the recoverable amount and
the loss is written off to the Income Statement as an impairment loss.


Forecasted production profiles are determined on an asset by asset basis, using
appropriate petroleum engineering techniques.


Disposals

Net proceeds from any disposal of an exploration/appraisal asset or development/
production asset are credited initially against the previously capitalised cost.
Any surplus proceeds are credited to the Income Statement.


Any surplus gain or loss arising on disposal of a development/production asset
is recognised in the Income Statement to the extent that the net proceeds exceed
or are less than the appropriate portion of the net capitalised cost of the
asset.

g) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost
includes all costs incurred in bringing each product to its present location and
condition as follows:


Materials and equipment inventory -- purchase cost on a first-in, first-out
basis.


h) Financial Instruments

Financial assets and financial liabilities are recognised on the Group's Balance
Sheet when the Group becomes party to the contractual provisions of the
instrument. The Group does not currently have any existing derivative financial
instruments in place, but has used them during the reported periods to manage
its exposure to fluctuations in foreign exchange rates.


Derivative financial instruments are stated at fair value and are re-measured
each period and where measurement differences occur, the gain or loss arising
from the re-measurement in fair value is recognised immediately in the Income
Statement.


Trade and Other Receivables

Trade receivables are recognised and carried at the original invoice amount less
any provision for impairment. Other receivables are recognised and measured at
nominal value. Trade and other receivables are recognised when invoiced.


Cash and Cash Equivalents

Cash and cash equivalents comprise cash at bank and short term deposits with an
original maturity of three months or less.


Trade Payables and Other Creditors

Trade payables and other creditors are non-interest bearing and are measured at
cost.


i) Decommissioning

The Group recognises the full discounted cost of decommissioning when the
obligation to rectify environmental damage arises principally on development
sanction. The amount recognised is the present value of the estimated future
expenditure.


A corresponding development and production asset of an amount equivalent to the
provision is also created.


This is subsequently depreciated as part of the capital cost of the development
and production asset. Any change in the present value of the estimated
expenditure is reflected as an adjustment to the provision and the asset.


The unwinding of the discount on the decommissioning provision is included as a
finance cost.


j) Foreign Currencies

Transactions entered into in a currency other than the functional currency are
translated into the functional currency using the exchange rates prevailing at
the dates of the transactions.


At each Balance Sheet date, the monetary assets and liabilities of the Group's
entities that do not use US Dollars as their functional currency are translated
into US Dollar at exchange rates prevailing on the Balance Sheet date and rates
at the date of transactions for Income Statement accounts.


Non-monetary assets are translated at historic rate with gains or losses on
retranslation being recognised in the Income Statement. The resulting exchange
differences are classified as a separate component of equity until disposal of
the subsidiary. On disposal the cumulative amounts of exchange differences are
recognised in the Income Statement.


In accordance with the transitional provisions of IFRS 1, cumulative foreign
exchange translation differences for all subsidiaries that do not use US Dollar
as a functional currency have been set to zero at the date of transition to
IFRS.


The exchange rate used for the retranslation of the closing Balance Sheet at 30
June 2007 is £1/$2.00 (2006: £1/$1.82).



Reconciliation of Group Equity as at 30 June 2007

                                    IFRS 6       IAS 21       IAS 39   Total IFRS       
                      UK GAAP  adjustments  adjustments  adjustments  adjustments       IFRS       IFRS
                        £'000        £'000        £'000        £'000        £'000      £'000      $'000
See notes on reconciling                 a            b            c
items below                 

Intangible
exploration
assets                 95,669      (17,212)      (4,818)        (541)     (22,571)    73,098    149,709
Property,
Plant and
Equipment              31,921            -          (17)           -          (17)    31,904     63,932
-------------------  --------     --------     --------     --------     --------    -------   --------
Total
non-current
assets                127,590      (17,212)      (4,835)        (541)     (22,588)   105,002    213,641
-------------------  --------     --------     --------     --------     --------    -------   --------

Inventory               3,893            -            -            -            -      3,893      7,802
Trade and
other
receivables             1,039            -            -            -            -      1,039      2,080
Cash and cash
equivalents            52,550            -            -            -            -     52,550    105,307
-------------------  --------     --------     --------     --------     --------    -------   --------
Total current
assets                 57,482            -            -            -            -     57,482    115,189
-------------------  --------     --------     --------     --------     --------    -------   --------
-------------------  --------     --------     --------     --------     --------    -------   --------
Total assets          185,072      (17,212)      (4,835)        (541)     (22,588)   162,484    328,830
-------------------  --------     --------     --------     --------     --------    -------   --------

Trade and
other payables          9,717            -            -            -            -      9,717     19,471
-------------------   -------     --------     --------     --------     --------    -------   --------
Total current
liabilities             9,717            -            -            -            -      9,717     19,471
-------------------  --------     --------     --------     --------     --------    -------   --------

-------------------  --------     --------     --------     --------     --------    -------   --------
Total assets
less current
liabilities           175,355      (17,212)      (4,835)        (541)     (22,588)   152,767    309,359
-------------------    --------     --------     --------     --------     --------    -------   --------

Equity
Share capital           7,452            -            -            -            -      7,452     14,377
Share premium         177,750            -            -            -            -    177,750    340,058
Foreign currency
translation              (913)           -           13            -           13       (900)    13,727
Other reserves          3,986            -            -            -            -      3,986      7,384
Retained earnings     (12,920)     (17,212)      (4,848)        (541)     (22,601)   (35,521)   (66,187)
-------------------  --------     --------     --------     --------     --------    -------   --------
Total equity          175,355      (17,212)      (4,835)        (541)     (22,588)   152,767    309,359
------------------   --------     --------     --------     --------     --------    -------   --------

Reconciling Items between UK GAAP and IFRS for the Year Ended 30 June 07



a) IFRS 6 adjustments

The previous impact of IFRS 6 on the Group's Financial Statement is to write off
£15,915,000 ($28,906,000) of abortive exploration costs, upon adoption of the
successful efforts accounting method, from intangible assets to retained
earnings. These costs were previously capitalised under UK GAAP using the full
cost accounting method. Pre licence award costs capitalised under UK GAAP are
also required to be written off to the Income Statement under IFRS 6. The
decrease in intangible exploration assets following the write off of pre-licence
award costs is £1,297,000 ($2,356,000) at June 2007.


b) IAS 21 adjustments

IAS 21 requires that the functional currency for each subsidiary within the
Group be determined. Where the functional currency is different from the Group's
US Dollar presentational currency, all assets and liabilities of those
subsidiaries should be converted to US Dollars at closing rates on
consolidation.


The majority of the Group's subsidiary undertakings now have a US Dollar
functional currency. The primary effect of applying this policy retrospectively
from the transition date is an exchange loss of £4.8 million on the
retranslation of the intangible assets previously recorded in Sterling into
their functional currency of US Dollars.


In accordance with IAS 21, cumulative exchange differences are now recognised as
a separate component within equity. The retranslation of inter company loans
from functional to presentational currency for subsidiaries resulted in exchange
losses which have been recognised in the Group Income Statement.


Bowleven has taken advantage of the exemptions offered under IFRS 1 and deemed
cumulative translation differences to be zero at 1 July 2006.


An exchange gain of $13.7 million has primarily arisen on retranslation of share
premium into US Dollars as the functional currency of the parent company is
Sterling.


There are no other significant elements in the foreign currency reserve.


For the year ending 30 June 2008, Bowleven is intending to present its financial
results in US Dollars with the associated accounting policies being updated
accordingly.


c) IAS 39 adjustments

On adoption of IAS 39 derivative financial assets and liabilities are recognised
on the Balance Sheet and corresponding adjustments to retained earnings.
Accordingly, the intangible exploration assets and cash and cash equivalents
have been adjusted by £541,000 in respect of a foreign currency derivative (the
purpose of the forward contract was to manage the Dollar expenditure on
intangible assets).


Reconciliation of Group Equity as at 31 December 2006


                                 IFRS 6       IAS 21       IAS 39   Total IFRS       
                   UK GAAP  adjustments  adjustments  adjustments  adjustments       IFRS       IFRS
                     £'000        £'000        £'000        £'000        £'000      £'000      $'000
See notes on                          a            b            c
reconciling 
items below

Intangible
exploration
assets              49,218      (17,212)      (3,364)           -      (20,576)    28,642     58,697
Property, plant and
equipment              386            -          (17)           -          (17)       369        724
----------------  --------     --------     --------     --------     --------    -------   --------
Total
non-current
assets              49,604      (17,212)      (3,381)           -      (20,593)    29,011     59,421
----------------  --------     --------     --------     --------     --------    -------   --------

Inventory            4,199            -            -            -            -      4,199      8,238
Trade and other
receivables         11,041            -            -            -            -     11,041     21,660
Cash and cash
equivalents         79,086            -            -            -            -     79,086    155,153
Other financial
assets               9,664            -            -         (485)        (485)     9,179     18,007
----------------  --------     --------     --------     --------     --------    -------   --------
Total current
assets             103,990            -            -         (485)        (485)   103,505    203,058
----------------  --------     --------     --------     --------     --------    -------   --------
----------------  --------     --------     --------     --------     --------    -------   --------
Total assets       153,594      (17,212)      (3,381)        (485)     (21,078)   132,516    262,479
----------------  --------     --------     --------     --------     --------    -------   --------

Trade and
other payables       4,328            -            -            -            -      4,328      8,492
----------------  --------     --------     --------     --------     --------    -------   --------
Total current
liabilities          4,328            -            -            -            -      4,328      8,492
----------------  --------     --------     --------     --------     --------    -------   --------
----------------  --------     --------     --------     --------     --------    -------   --------
Total assets
less current
liabilities        149,266      (17,212)      (3,381)        (485)     (21,078)   128,188    253,987
----------------  --------     --------     --------     --------     --------    -------   --------

Equity
Share capital        6,041            -            -            -            -      6,041     11,420
Share premium      149,969            -            -            -            -    149,969    281,696
Foreign
currency
translation              -            -           (5)           -           (5)        (5)    12,673
Other Reserves       3,494            -            -            -            -      3,494      5,844
Retained
earnings           (10,238)     (17,212)      (3,376)        (485)     (21,073)   (31,311)   (57,646)
----------------  --------     --------     --------     --------     --------    -------   --------
Total equity       149,266      (17,212)      (3,381)        (485)     (21,078)   128,188    253,987
----------------  --------     --------     --------     --------     --------    -------   --------


Reconciling Items between UK GAAP & IFRS for the 6 Months Ended 31 Dec 2006



a) IFRS 6 adjustments


The impact of IFRS 6 on the Group's Financial Statement is to write off
£15,915,000 ($28,906,000) of abortive exploration costs, upon adoption of the
successful efforts accounting method. These costs were previously capitalised
under UK GAAP using the full cost accounting method. Pre licence award costs
capitalised under UK GAAP are also required to be written off to the Income
Statement under IFRS 6. The decrease in intangible exploration assets following
the write off of pre-licence award costs is £1,297,000 ($2,356,000) at December
2006.

b) IAS 21 adjustments

IAS 21 requires that the functional currency for each subsidiary within the
Group be determined. Where the functional currency is different from the Group's
US Dollar presentational currency, all assets and liabilities of those
subsidiaries should be converted to US Dollars at closing rates on
consolidation.


The majority of the Group's subsidiary undertakings now have a US Dollar
functional currency. The primary effect of applying this policy retrospectively
from the transition date is an exchange loss on the retranslation of the
intangible assets previously recorded in Sterling into their functional currency
of US Dollar.


In accordance with IAS 21, cumulative exchange differences are now recognised as
a separate component within equity. The retranslation of inter company loans
from functional to presentational currency for subsidiaries has resulted in 
exchange losses which have been recognised in the Group Income Statement.


Bowleven has taken advantage of the exemptions offered under IFRS 1 and deemed
cumulative translation differences to be zero at 1 July 2006.


An exchange gain of $12.6 million has primarily arisen on retranslation of share
premium into US Dollars as the functional currency of the parent company is
Sterling.


There are no other significant elements in the foreign currency reserve.


For the year ending 30 June 2008, Bowleven is intending to present its financial
results in US Dollars with the associated accounting policies being updated
accordingly.


c) IAS 39 adjustments

On adoption of IAS 39 derivative financial assets and liabilities are recognised
on the balance sheet and corresponding adjustments to retained earnings.
Accordingly the other financial assets have been adjusted by £485,000 in respect
of a foreign currency derivative.

Reconciliation of Group Equity as at 1 July 2006



                                IFRS 6       IAS 39   Total IFRS      
                  UK GAAP  adjustments  adjustments  adjustments      IFRS       IFRS
                    £'000        £'000        £'000        £'000     £'000      $'000
See notes on                         a            b
reconciling items
below

Intangible
exploration
assets             40,953      (17,212)           -      (17,212)   23,741     43,121
Property,
plant and
equipment             381            -            -            -       381        692
---------------- --------     --------     --------     --------   -------   --------
Total
non-current
assets             41,334      (17,212)           -      (17,212)   24,122     43,813
---------------- --------     --------     --------     --------   -------   --------

Inventory             810            -            -            -       810      1,471
Trade and
other
receivables           435            -            -            -       435        790
Cash and cash
equivalents        42,453            -       (9,650)      (9,650)   32,803     59,580
Other
financial
assets                  -            -        9,664        9,664     9,664     17,553
---------------- --------     --------     --------     --------   -------   --------
Total current
assets             43,698            -           14           14    43,712     79,394
---------------- --------     --------     --------     --------   -------   --------

Total assets       85,032      (17,212)          14      (17,198)   67,834    123,207
---------------- --------     --------     --------     --------   -------   --------

Trade and
other payables      1,003            -            -            -     1,003      1,822
---------------- --------     --------     --------     --------   -------   --------
Total current
liabilities         1,003            -            -            -     1,003      1,822
---------------- --------     --------     --------     --------   -------   --------

---------------- --------     --------     --------     --------   -------   --------
Total assets
less current
liabilities        84,029      (17,212)          14      (17,198)   66,831    121,385
---------------- --------     --------     --------     --------   -------   --------

Equity
Share capital       2,961            -            -            -     2,961      5,378
Share premium      86,002            -            -            -    86,002    156,205
Other reserves      3,218            -            -            -     3,218      5,845
Retained
earnings           (8,152)     (17,212)          14      (17,198)  (25,350)   (46,043)
---------------- --------     --------     --------     --------   -------   --------
Total equity       84,029      (17,212)          14      (17,198)   66,831    121,385
---------------  --------     --------     --------     --------   -------   --------


Reconciling Items between UK GAAP and IFRS as at 1 July 06


a)  IFRS 6 adjustments

The impact of IFRS 6 on the Group's Financial Statement is to write off
£15,915,000 ($28,906,000) of abortive exploration costs, upon adoption of the
successful efforts accounting method. These costs were previously capitalised
under UK GAAP using the full cost accounting method. Pre licence award costs
capitalised under UK GAAP are also required to be written off to the Income
Statement under IFRS 6. The decrease in intangible exploration assets following
the write off of pre-licence award costs is £1,297,000 ($2,356,000) at June
2007.


b) IAS 39 adjustments

On adoption of IAS 39 derivative financial assets and liabilities are recognised
on the balance sheet and corresponding adjustments to retained earnings.
Accordingly £9,650,000 within cash and cash equivalents has been reclassified as
other financial assets in respect of a forward Dollar currency contract that
was used as a hedge against drilling costs. Calculation of the fair market value
as at 30 June 2006 resulted in a gain of £14,000, which has been carried to
reserves.


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