Interim Results

Sound Oil PLC 29 September 2006 Sound Oil plc ("Sound Oil" or the "Company") Unaudited interim results for the six months ended 30 June 2006 Sound Oil plc, the upstream oil and gas company with assets in Indonesia, announces its unaudited interim results for the six month period ended 30 June 2006. Highlights • Successful merger with Mitra Energia, a private Indonesian oil and gas company which has exploration and development acreage in Java and Kalimantan, Indonesia • Kerendan Gas Field, Kalimantan plan of development approved by Indonesian authorities • First exploration well due around year end • Cash balance of £10.3 million as at 30 June 2006 and £10.7 million (net of expenses) of equity finance raised through a share placing approved by the EGM in July 2006, to assure financial resources required for program of exploration wells and the development of Kerendan gas field • Portfolio consists of 34% working interest in the Bangkanai PSC which includes the Kerendan gas field in Kalimantan, Indonesia, and a 20% working interest in the Citarurm PSC in Java, Indonesia • Loss of £441,000 for the period to 30 June 2006, reflecting the pre-merger and production phase of the Company Commenting on the results, Gerry Orbell Chairman of Sound Oil said: "The first six months of 2006 have been eventful and very successful for Sound Oil. We are now in the position where we have an excellent portfolio of interests and the funds to exploit it. We are pushing ahead with the development of the Kerendan gas field and with the exploration opportunities available to the enlarged group in Java and Kalimantan. We expect to drill our first well in Java, Pasundan 1, in December of this year." Further information can be found at www.soundoil.co.uk For further information please contact: Sound Oil 07903 861 145 Gerry Orbell, Chairman Buchanan Communications 020 7466 5000 Tim Thompson Nick Melson CHAIRMAN'S STATEMENT The first six months of 2006 have been eventful and very successful for Sound Oil. Early in the year, we reached agreement in principle to merge, in an all share deal, with Mitra Energia, a private Indonesian oil and gas company which has exploration and development acreage in Java and Kalimantan, Indonesia. In March we requested AIM to suspend dealings in the Company's shares pending a period of due diligence. We were re-admitted to trading in June. As part of this process, we placed 161,500,000 new shares in the market at 7.25p to raise approximately £11.7 million. The merger and share placement were approved at an Extraordinary General Meeting of the Company on 12 July. After all of this legal and commercial activity we are now pushing ahead with the development of the Kerendan gasfield and with the exploration opportunities available to the enlarged group in Java and Kalimantan. We expect to drill our first well in Java, Pasundan 1, around the turn of this year. Four exploration wells are now planned for late 2006 and 2007. Ranhill, our operator in the Citarum license, has been evaluating rigs and ordering long lead items. This process is also getting underway in Kalimantan, where Elnusa, a subsidiary of the state oil company Pertamina, is our operator. All four are onshore wells and, if successful, will each have a major impact on our hydrocarbon reserves. The Kerendan gas accumulation in Kalimantan, where we own 34% equity, has been granted Indonesian Government approval for development. This is an important step towards monetizing this asset. During 2007 we shall be drilling two new production wells and re-entering two existing wells to complete them as gas producers. On the basis of our current schedule, revenues are expected to start to flow from Kerendan in 2008. In all areas we are endeavoring to ensure that the construction of access roads and wellsites has minimal impact on the environment. I have recently visited the location of our first wells and could see for myself that our operator is working with the full cooperation of the local people and the authorities. The next 18 months will therefore be very busy and we are fortunate to have sufficient cash reserves to cover all of our current obligations and activities during that period. In the coming period we expect to continue to examine expansion opportunities in SE Asia and Africa. In the first six months of 2006 the Company, prior to the merger, incurred a net loss of £441,000. Expenditure on investment opportunities and administration was £607,000 and there was an unrealized currency loss of £122,000. These were partly offset by £222,000 of income from bank deposit interest and £66,000 reversal of the 2005 tax provision. Cash balances at 30 June were £10.3 million and shareholders funds £10.2 million. I would like to welcome all the Mitra staff to Sound Oil and wish them a successful future with the company. I would also like to extend a warm welcome to our three new Board members who are based in Jakarta. Jossy Rachmantio heads up the Indonesia operation, and Ilham Habibie and Patrick Alexander are business development specialists in the region. Finally I would like to thank the original members of Sound's Board, Michael Nobbs, Simon Davies and Tony Heath for all their hard work and support. Gerry Orbell Chairman 28 September 2006 PROFIT AND LOSS ACCOUNT Note Six months 27 to 30 June January 2006 to 31 December 2005 £'000's £'000's Exploration expenditure (305) (151) ----- ----- Gross loss (305) (151) Administrative costs (302) (210) ----- ----- Operating loss (607) (361) Interest receivable 222 234 Foreign exchange loss (122) - Loss on ordinary ----- ----- activities before tax (507) (127) Tax 66 (66) ----- ----- Loss after tax (441) (193) ----- ----- Loss per share (pence): basic 3 (0.27) (0.12) Loss per share (pence): diluted 3 (0.27) (0.12) Results for the period reflect ongoing operations which were based in the UK at 30 June 2006. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Six months 27 January to to 30 June 31 December 2006 2005 £'000's £'000's Net loss for the period attributable to members of the company (441) (193) ----- ----- Total recognised losses (441) (193) RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS FUNDS Six months 27 January to to 30 June 31 December 2006 2005 £'000's £'000's Total recognised losses relating to the period (441) (193) New shares issued - 11,115 Costs associated with raising capital - (174) ----- ----- Total movements during the period (441) 10,748 Shareholders' funds at 1 January 10,748 - ----- ----- Shareholders' funds at 31 December 2005 10,748 Shareholders' funds at 30 June 2006 10,307 ----- ----- BALANCE SHEET 30 June 31 December 2006 2005 £'000's £'000's Current assets Deferred expenditure 198 - Debtors 10 24 Cash and short-term deposits 10,304 10,839 ----- ----- Total current assets 10,512 10,863 Creditors: amounts falling due within one year (205) (115) ----- ----- Net current assets 10,307 10,748 ----- ----- Total assets less current liabilities 10,307 10,748 Creditors: amounts falling due after one year - - Provisions for liabilities and charges - - ----- ----- Net assets 10,307 10,748 ----- ----- Capital and reserves Share capital 300 300 Share premium account 10,641 10,641 Profit and loss account (634) (193) ----- ----- Total equity shareholders' funds 10,307 10,748 ----- ----- CASH FLOW STATEMENT Note Six months 27 January to to 30 June 31 December 2006 2005 £'000's £'000's Net cash outflow from operating activities 4(a) (757) (336) Returns on investment and servicing of finance Interest received 222 234 ----- ----- Taxation - - Cash outflow before management of ----- ----- liquid resources and financing (535) (102) ----- ----- Financing Issue of Ordinary Shares - 11,115 Costs associated with raising capital - (174) ----- ----- Net cash from financing - 10,941 ----- ----- Increase/(decrease) in cash (535) 10,839 NOTES TO THE ACCOUNTS 1. Basis of preparation The interim statement does not represent statutory accounts within the meaning of section 240 of the Companies Act 1985. The comparative financial information is based upon the statutory accounts for the year ended 31 December 2005. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. Interim accounts were not prepared for the period from 27 January to 30 June 2005. The interim financial information has been prepared on the basis of the accounting policies set out in the 2005 statutory accounts. 2. Dividends No interim dividend is proposed (30 June 2005: £nil) 3. Loss per share The calculation of basic loss per Ordinary Share is based on the loss after tax and on the weighted average number of Ordinary Shares in issue during the period. Diluted earnings per Ordinary Share reflect the notional exercise of the weighted average number of dilutive Ordinary Share options outstanding during the period. Basic and diluted loss per share are calculated as follows: Weighted average Loss after tax number of shares Loss per share Six months 27 January Six months 27 January Six months 27 January to to to to to to 30 June 31 December 30 June 31 December 20 June 31 December 2006 2005 2006 2005 2006 2005 £'000's £'000's Million Million Pence Pence Basic (441) (193) 165 165 (0.27) (0.12) Diluted (441) (193) 166 166 (0.27) (0.12) 4. Cash flow statement analysis a) Reconciliation of operating loss to net cash flow from operating activities Six months to 30 June 31 December 2006 2005 £'000's £'000's Operating loss (607) (361) Foreign exchange loss (122) - Increase/(Decrease) in debtors 14 (24) Increase in creditors 156 49 Increase in deferred expenditure (198) - Net cash outflow from operating ----- ----- activities (757) (336) ----- ----- b) Reconciliation of net cash flow to movement in net debt £'000's £'000's Opening net cash 10,839 - (Decrease)/Increase in cash in the period (535) 10,839 ----- ----- Closing net cash 10,304 10,839 ----- ----- c) Analysis of Net Cash At At 1 January 30 June 2006 Cash Flow 2006 £'000's £'000's £'000's Cash in hand and at bank 144 225 369 Short term deposits 10,695 (760) 9,935 ----- ----- ----- Total net cash 10,839 (535) 10,304 ----- ----- ----- 5. Post Balance Sheet Events Acquisition and Share Placing On 12 July 2006, following approval at an Extraordinary General Meeting of shareholders on that date, the company acquired the entire issued share capital of Mitra Energia Limited, an unquoted gas exploration and development company with interests in Indonesia comprising a 34% interest in the Bangkanai Block onshore central Kalimantan and a 20% interest in the Citarum Block onshore central Java. On the same date the company raised approximately £10.7 million net of expenses through the placing of 161,500,000 new ordinary shares at 7.25p per share. The consideration for the acquisition of Mitra was the issue of 223,376,623 ordinary shares credited as fully paid which, at the placing price, valued Mitra at £16.2 million. In connection with the acquisition and share placing, the executive directors of the company were awarded bonuses of 1,635,172 ordinary shares to Gerry Orbell and 827,586 ordinary shares to Tony Heath. Furthermore certain advisers to the company were issued a total of 4,795,658 ordinary shares as part of their fees. As a result of these transactions, the issued share capital of the company was increased to 692,427,348 ordinary shares. The former shareholders of Mitra hold approximately 32% of the enlarged share capital of the company. In connection with the acquisition and share placing, Gerry Orbell and Tony Heath were awarded options on 13 July 2006 over 1,400,000 and 700,000 ordinary shares respectively at an exercise price of 7.25p exercisable from six months after award until six years after award. Further details of the acquisition and share placing may be seen in the Admission document on the company's website www.soundoil.co.uk 6. Interim report Copies of the interim report will be sent to shareholders in due course. Further copies will be available from the Company's nominated adviser, Smith & Williamson Corporate Finance Limited, 25 Moorgate, London EC2R 6AY, free of charge and on the Company's website www.soundoil.co.uk This information is provided by RNS The company news service from the London Stock Exchange

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