Interim Results

Xtract Energy plc 28 September 2006 XTRACT ENERGY PLC ('Xtract Energy' or the 'Company') Interim Results for the six months ended 30 June 2006 The Directors have pleasure in presenting the Company's unaudited results for the six months ended 30 June 2006. HIGHLIGHTS •In February 2006 the Company completed the acquisition of the remaining 78.3% of Xtract Oil Limited not already owned. •John Newton appointed to the board of the Company as Chief Executive Officer with effect from 10 March 2006. John Newton has a background in international stockbroking, accounting and corporate finance and has been a director of a number of quoted companies in Australia and Canada. POST PERIOD HIGHLIGHTS •Appointment of WH Ireland Limited as the Company's broker. •The Company becomes a subsidiary of Cambrian Mining Plc. •Xtract Energy agrees to acquire substantial shareholdings in Cambrian Oil & Gas Plc, Wasabi Energy Limited and Aviva Corporation Limited. •Initial validation tests show that recovery of light crude oil products from the Company's Julia Creek oil shale deposits may be much higher than could be achieved using conventional retort methods. For further information, please contact: Sue Wickerson John Newton Xtract Energy Plc Xtract Energy Plc Tel: +44 (0) 20 8466 0406 Tel: +61 (3) 9654 1776 Chairman's Statement For the six months ended 30 June 2006 In February 2006, Xtract Energy completed the acquisition of Australian unlisted company Xtract Oil Limited ('Xtract'). Xtract intends to develop the technology for oil extraction from oil shale minerals. Xtract Energy has a significant portfolio of oil shale resource tenements in Australia and has applied for an exploration permit in New Zealand. Subsequent to the acquisition the name of the Company was changed to Xtract Energy Plc (formerly Resmex plc). Development of new extraction technologies and the rising world demand for oil have re-awakened interest in oil shale. The development of Xtract's technology could produce liquid hydrocarbons to address the global decline of conventional oil reserves with significant environmental benefits and higher yields over previously tried extraction methods. In order for Xtract to bench test and commercially develop a technology for hydrocarbon extraction access to an oil shale is required as this is not a commodity which is commercially traded. Xtract Energy has acquired mining tenements in Queensland from Intermin Resources Limited, mainly in an area known as Julia Creek. The Julia Creek deposits are estimated to contain substantial quantities of oil. Xtract recently announced that initial validation tests have shown that the recovery of light crude oil products from the Company's Julia Creek deposits may be much higher than could be achieved using conventional retort recovery techniques. The tests are being conducted by the Australian national research organisation, the CSIRO, and by Monash University under research agreements entered into with Xtract. The initial validation tests have demonstrated that recovery from Julia Creek shales would be in order of 150 litres of light crude oil per tonne of shale. Applying this yield rate increase to the yields of 50-65 litres per tonne used earlier this year in relation to certain of the Company's Julia Creek leases results in estimated in situ shale oil resources of over 1.6 billion barrels of oil. Subsequent to end of the period the Company agreed to acquire substantial holdings in Cambrian Oil & Gas Plc ('COIL'), Wasabi Energy Limited ('Wasabi') and Aviva Corporation Limited ('Aviva') in September this year. These acquisitions have significantly extended the range of Xtract's energy and resource related investments. COIL has several oil & gas projects in the Kyrgyz Republic including exploration (2D seismic programme recently completed) and water injection (with Kyrgyzneftegas, the state oil company). It has recently acquired a 12.6% interest in Methanol Australia Limited ('MEO'). MEO is an Australian company with a 50% interest in the Tassie Shoal Methanol project and 100% interest in the Timor Sea LNG Project along with exploration licences off the Northern Coast of Australia Wasabi is a diversified energy group with investments in uranium exploration, coal, power generation and renewable energy technology. Aviva is quoted on the ASX market and its main business is an iron, coal and cogeneration project in Western Australia. We are pleased to have Cambrian Mining as the major shareholder of the Company and remain focused on the business of overseeing the development of the Xtract Technology and the related kerogen extraction at the Xtract Tenements and developing and expanding the energy portfolio. With an experienced board and sound investment strategy, we believe there is potential for significant growth in the short to medium term. Robert J. Annells Chairman 27 September 2006 INCOME STATEMENT For the period ended 30 June 2006 Unaudited Unaudited Audited Group Group Group 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000 Administrative and operating expenses Amortisation of intangibles 41 - 21 Consulting fees 15 5 37 Directors fees 26 3 12 Share -based payments expense 108 - 79 Office general 87 - 32 Professional fees 158 8 33 Corporate and advisory fees 29 - - Other 11 6 8 Foreign exchange loss/(gain) 3 - (1) -------- -------- --------- Operating Loss (478) (22) (221) Share of loss of associates - - (24) Investment Revenues 8 7 25 -------- -------- --------- Loss before taxation (470) (15) (220) Income tax expense - - - -------- -------- --------- Loss for the period (470) (15) (220) ======== ======== ========= Basic and diluted loss per share (Note 2) (0.31)p (0.02)p (0.21)p BALANCE SHEET As at 30 June 2006 Unaudited Unaudited Audited Group Group Group As at 30 June As at 30 June As at 31 December 2006 2005 2005 £'000 £'000 £'000 Assets Non-current assets Intangible assets (Note 3) 4,155 - 81 Investment in associates - - 412 -------- -------- --------- 4,155 - 493 -------- -------- --------- Current assets Cash and cash equivalents 348 836 1,321 Trade and other receivables 34 1 13 -------- --------- --------- 382 837 1,334 -------- --------- --------- Total assets 4,537 837 1,827 ======== ========= ========= Equity and liabilities Capital and reserves Share capital (Note 5) 287 142 199 Share premium reserve 4,644 706 1,756 Share based payments reserve 123 - 33 Retained earnings (690) (15) (220) -------- --------- --------- Total equity 4,364 833 1,768 -------- --------- --------- Current liabilities Trade and other payables 173 4 59 -------- --------- --------- 173 4 59 -------- --------- --------- Total equity and liabilities 4,537 837 1,827 ======== ========= ========= CASH FLOW STATEMENT For the period ended 30 June 2006 Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 Operations Operating loss for the period (478) (22) (221) --------- --------- --------- Adjustments for: Amortisation of intangible assets 41 - 21 Share based payment expense 108 - 79 Foreign exchange difference 3 - - --------- --------- --------- Operating cash flows before movement in working capital (326) (22) (121) Changes in working capital Increase in receivables (21) (1) (12) Increase in payables 114 4 59 --------- --------- --------- Net cash used in operating activities (233) (19) (74) ========= ========= ========= Investing activities Interest and similar income received 8 7 25 Acquisition of intangible assets - - (21) Acquisition of associate - - (436) Acquisition of subsidiary (Note 4) (748) - (82) --------- --------- --------- (740) 7 (514) --------- --------- --------- Financing activities Proceeds on issue of shares - 938 2,010 Share issue expenses - (90) (101) --------- --------- --------- Net cash from financing activities - 848 1,909 --------- --------- --------- Net increase in cash and cash equivalents (973) 836 1,321 Cash and cash equivalents at the beginning of the period 1,321 - - --------- --------- --------- Cash and cash equivalents at the end of the period 348 836 1,321 ========= ========= ========= NOTES 1. Preparation The interim financial information has been prepared on the basis of the accounting policies set out in the 2005 statutory accounts. The Interim Report is unaudited and does not constitute statutory financial statements. 2. Net loss per share The calculation of the basic and diluted net deficit per share attributable to the ordinary equity holders of the parent is based on the following data: Earnings Group Group Group 6 Months 6 Months Year ended ended 30 June ended 30 June 31 December 2006 2005 2005 £000 £000 £000 Earnings for the purposes of basic and diluted earnings per share - loss for the period attributable to equity holders of the parent (470) (15) (220) Numbers of shares Group Group Group 6 Months 6 Months Year ended ended 30 June nded 30 June 31 December 2006 2005 2005 Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share: 149,993,385 57,273,617 102,744,761 No adjustment has been made to basic earnings per share because the effect of including the 124,613,634 outstanding warrants (31 December 2005: 97,848,209; 30 June 2005: 55,337,362) would dilute the net loss per share. Since the end of the reporting period an additional 68,500,000 shares were issued as the result of warrants exercised. 3. Intangible assets Group Group Group 6 Months 6 Months Year Ended ended 30 June ended 30 June 31 December 2006 2005 2005 £000 £000 £000 Cost At beginning of period 102 - - Additions - Acquisition of mining rights 338 - 21 - Acquired on acquisition of subsidiary 3,777 - 81 -------- -------- -------- Total 4,217 - 102 -------- -------- -------- Amortisation At beginning of period 21 - - Charge for the period 41 - 21 -------- -------- -------- Total 62 - 21 -------- -------- -------- Carrying amount -------- -------- -------- At end of period 4,155 - 81 ======== ======== ======== Intangible assets acquired as part of an acquisition are capitalised at their fair value where this can be measured reliably. The above intangibles relate to mining exploration rights and are amortised over the tenement period (generally 5 years). 4. Subsidiaries and associates The principal activities and operations of the Group include the investment in oil shale technologies and various exploration mining tenements in Australia and Mexico. Name of Place of incorporation Proportion of Proportion of Principal subsidiary (or registration) and ownership voting power activity operation interest held % % Sermines de Mexico S.A. de Mexico 100 100 Mining C.V. exploration Xtract Oil Ltd Australia 100 100 Mining Exploration & Oil Technologies The net assets acquired with the purchase of the Company's new subsidiary, Xtract Oil Ltd, during the period are as follows: Acquiree's carrying amount Fair value before combination adjustments Fair value £000 £000 £000 Net assets acquired: Trade receivables 69 - 69 Bank and cash balances 65 - 65 Mining rights - 3,777 3,777 ----- ----- ----- 134 3,777 3,911 ===== ===== ===== Net cash outflow arising on acquisition: Cash and cash equivalents acquired 65 Cash consideration paid (813) ----- (748) ===== Xtract Oil Ltd contributed £67,666 to the Group's loss before tax for the period between the date of acquisition and the balance sheet date. 5. Share capital Group 30 June 2006 £000 The issued and fully paid share capital of the Company is as follows: 286,809,800 ordinary shares of 0.1p each 287 ==== The authorised share capital of the Company is as follows: 1,000,000,000 ordinary shares of 0.1p each 1,000 ===== Shareholders' Funds Share Share Premium Share Based Profit & Loss Capital Account Payments Reserve Account £000 £000 £000 £000 Group At 1 January 2006 199 1,756 33 (220) Issue of shares 88 2,870 (18) Share Based Payment Expense 108 Loss for the period (470) -------- --------- ---------- ---------- As at 30th June 2006 287 4,644 123 (690) -------- --------- ---------- ---------- Warrants The following unlisted warrants issued on 29 March 2005 remain outstanding at 30 June: - 184,088,550 exercisable at £0.010 per share - 3,000,000 exercisable at £0.015 per share - 5,000,000 exercisable at £0.055 per share Each warrant expires within three years of issue and entitles the holder to one fully paid share in the Company upon payment of the warrant exercise price per share. 6. Events after the balance sheet date Warrants were exercised at a price of £0.010 per share on 30 July 2006 (46,100,000 shares), 5 August 2006 (14,400,000 shares) and 11 September 2006 (8,000,000 shares). Xtract Energy Plc announced on 27 July 2006 that it allotted 2,000,000 new Ordinary Shares to Intermin Resources Limited in connection with the assignment of certain mining rights. On 1 September 2006 it was announced that Xtract Energy has agreed to acquire substantial shareholdings in Cambrian Oil & Gas plc, Wasabi Energy Limited and Aviva Corporation Limited from Cambrian Mining plc and Cambrian's wholly owned subsidiaries Deepgreen Minerals Corporation Limited and Cambrian Investment Holdings Limited for a total of approximately £3.8 million. This consideration is in the form of an issue to the respective sellers of convertible unsecured loan notes totalling approximately £3.3 million and a payment of £450,000 in cash to Cambrian. 7. Other matters The financial information provided for the year ended 31 December 2005 does not constitute statutory accounts, as defined in Section 240 of the Companies Act 1985, but is based on the statutory accounts for the year then ended. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. The Interim Report for the six months ended 30 June 2006 was approved by the Directors on 27 September 2006 Copies of the interim report are available from the Company's website www.xtractenergy.com or on written request to the Company Secretary, Xtract Energy Plc, 27 Albemarle Street, London, W1S 4DW. This information is provided by RNS The company news service from the London Stock Exchange

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