core sector communique

Clontarf Energy Plc [AIM:CLON] - Interim Report 2011

30 September 2011


Clontarf Energy PLC

Interim Statement for the period ended 30 June 2011


Clontarf Energy successfully listed on AIM in April 2011. It was formed by a merger of Hydrocarbon Exploration an unlisted company with projects in Bolivia, Ghana and the US and Persian Gold with a project in Ghana and dormant mineral projects in Iran.

The new venture raised £2.7 million upon listing. While going through the listing procedure, Clontarf was successful in obtaining concessions over two onshore hydrocarbon exploration blocks in Peru.

We completed the acquisition of these licences with the official signing on Wednesday 28th September 2011 in Lima, Peru. Block 183, located in the Marañon basin, covers almost 400,000 hectares in Central Peru. We have acquired, from previous owners, 1,700 km of high quality seismic data which is being re-interpreted, as are the logs of three wells previously drilled in the 1970s. This region has a number of producing oil fields.

The second block, 188, covers almost 600,000 hectares in the Ucayali basin, an area we know well from our previous exploration venture in Peru. Block 188 is near the world-class Camisea gas and condensate field, and the Directors believe that it is prospective for both oil and gas. While awaiting final signatures we worked with local communities in each area and put together a team to prepare a rigorous environmental impact assessment.

Peru is a priority area for oil multinationals due to its attractive fiscal terms, a stable government and a relatively unexplored hydrocarbon system. We did well to be awarded these two blocks in the October 2010 Licencing Round. The Company expects to have joint venture partners working with us in exploring the blocks.

Progress is also being achieved in Ghana which is fast becoming a major oil province. Since signing an agreement with the Ghanaian National Petroleum Company (GNPC) in 2010 on the 1,532 sq km Tano 2A onshore/offshore block, the attractiveness of Ghana has increased. Clontarf holds 60% of the concession with Petrel Resources holding 30% and Ghanaian interests 10%. The giant Jubilee oil field owned by Kosmos/Tullow Oil, not far from Tano, is now producing. In recent days, Tullow Oil has announced a significant oil discovery on their Tano offshore block which is close to Tano 2A. Ongoing work by Clontarf on data relating to the Tano 2A block has identified a number of areas which need follow up.

In common with many countries Ghana requires cabinet and parliamentary approval of all concessions awarded. This process takes time but we are working our way through the system. Tano 2A is a good block with both onshore and shallow offshore possibilities. New seismic is needed to better define targets, but the ultimate test is a well or two. We are eager to begin exploration.

Our third sphere of activity is in Bolivia, a country with significant mineral and hydrocarbon potential. Clontarf inherited a company which has been active in Bolivia for over 20 years. The acquisition brought interests in two producing fields. The Monteagudo oil/gas field (30% Clontarf, 30% Repsol, 20% Petrobras, 20% Andina which is owned by the state), has been producing for 40 years and is in decline. There is a well defined deep target (4,000 metres) in the Block, in the Devonian Formations. Giant gas discoveries, of trillions of cubic feet, have been made in the Huamapampa and Santa Rosa Formations on adjacent blocks by Total, Petrobras and Repsol. Agreement has been reached and formalised with operating partner Repsol, as well as Petrobras, for both to sell their stakes, subject to normal state approvals. Operatorship will be transferred to our new partner, Latinoamericana de Energia, which will result in significantly lower operating costs and hence, profitability, fo r the Monteagudo Field. This restructuring will also facilitate early drilling of the deep gas play. Approvals by the Bolivian Government and Legislature are expected by the end of first quarter 2012.

Clontarf also holds a 10% interest in the producing El Dorado gas field near Santa Cruz in Bolivia. There is a legal dispute with our operating partner, YPFB Chaco which is 100% owned by the state. Negotiations are ongoing and, based on legal advice received, we believe that we can resolve the outstanding legal and financial issues. Clontarf, due to its 100% ownership of Bolivian company Petrolex S.A., has been involved in the El Dorado field for over a decade. Early drilling suggested a field in excess of 0.4 trillion cubic feet of gas. Plans to exploit this gas in the early 2000s were frustrated by low gas prices. Recently, the majority owner YPFB Chaco, has drilled additional wells, constructed a modern gas-processing plant and is producing 21 million cubic feet of gas and 500 barrels of condensate daily.

This is a challenging time for exploration ventures and financial markets generally. We successfully raised money and listed Clontarf Energy during a period when equity financing was difficult to obtain. Clontarf is funded for all immediate needs. I am confident that the patience of shareholders will be well rewarded. The signing of the Peruvian blocks is a significant milestone and is the first of what I hope will be a series of positive announcements.