Final Results

Petrel Resources PLC
26 June 2001


PETREL RESOURCES PLC

Preliminary results for the year ended 31 December 2000


CHAIRMAN'S STATEMENT

The desert is cold at 5.30am, cold but very beautiful.  Exiting Iraq involves
a ten-hour drive across the Western Desert from Baghdad to Amman.  The sun
rises as you leave a modern but run down city of 4 million people and drive
into a scene reminiscent of biblical times; poor people leaving ramshackle
homes to tend herds of sheep.  You drive along a modern six-lane highway.  The
highway, like much of the infrastructure in Iraq, was built with the petro
dollars, which enriched the country in the 1970s. Subsequently, war, followed
by UN sanctions, impoverished the people.  The population of Iraq suffer and
die and their national infrastructure crumbles while much of the world's oil
lies below ground.  In the truck, as the hours go by and you watch the harsh
arid desert stretch to infinity, you cannot but question the failure of
diplomacy which results in poverty and deprivation for 20 million people while
the rest of the world suffers from the effects of scarce oil.

When relations between Iraq and the wider international community are
normalised, as they must be, Petrel will be in Iraq ready to cooperate and
participate in the rejuvenation and development of a major world energy
source.  We had to demonstrate to the Iraqi authorities that we were serious
in our intentions.  We did this by chartering a small private plane, filling
it with medicines and flying from Dublin to Baghdad.  We were the first
private plane in ten years to land in Baghdad.  It took tenacity to succeed.
We were frustrated at every stop but we persisted.

Petrel finished the period under review as a well traded, AIM-listed company,
focused on Iraq.  During the year we moved to AIM from the OFEX trading
facility, added over 500 new shareholders, disposed of non-core assets and
brought our Iraqi projects closer to fruition.

In Iraq, we are pursuing three distinct opportunities. We are negotiating the
acquisition of an exploration block covering 10,000 square kms in the Western
Desert between Baghdad and Amman in Jordan.  Petrel has submitted a tender for
an oil field development and refurbishment project to bring into production
two existing oil fields in the South of Iraq.   We have established a trading
house to work within the 'Oil for Food' programme being operated by the UN.
Significant and substantial activity has taken place on all three projects but
in particular on the oil exploration project.

Most of Iraq is unexplored, yet despite this the country holds in excess of
115 billion barrels of oil reserves.  These reserves are located in the
fertile valley between the Tigris and Euphrates rivers but substantial
exploration opportunities exist throughout Iraq. The authorities put nine
exploration blocks up for offer in 1998.  Since that time Petrel has worked to
develop and present a project to explore one of the blocks.  Available seismic
data was examined and extensive discussions undertaken with experts of the oil
ministry in Baghdad.  Once an acceptable technical and geological proposal was
agreed commercial terms were negotiated. The proposal involves significant
seismic reinterpretation, new seismic and drilling commitments.  I believe
that our proposal is at a final stage and awaits approval and ratification by
the various authorities.  Until we finalise any agreements I can say little
about the exploration acreage.  Suffice it to say that the structures already
identified on the block are large.

Our second project is in oil development. In August 2000, Petrel resubmitted a
detailed feasibility study to develop a 200,000-barrel a day oil field on the
site of two former oil producers.  Since then our consultants have been in
negotiation with the authorities on the detail and the verification of the
tender.  Part of the tender involves a joint venture with a major
international engineering firm.

The final thrust of our activities is as a trading house.  Twenty years of
deprivation means that Iraq has many needs.  Iraqi imports are regulated by
the UN under the 'Oil for Food' programme. The way in which bureaucrats have
interpreted the UN rules means that many basic items are in short supply.
Healthcare is one area where the medicines and equipment being used are years
out of date.  The oil industry is an area of substantial opportunity for
supplies and spare parts.  Petrel has created a team to exploit trading
opportunities.


Iraq, oil and sanctions

Iraq is certain to be a key hydrocarbon region in the coming decades.  Largely
unexplored, the country has 115 billion barrels of oil in reserve.  Daily
production, currently 3 million barrels, can grow to 10 million barrels at a
production cost of less than $1 a barrel.  The world needs Iraqi oil. Current
world oil output is expected to decline over time while demand will grow.
Stresses and strains are already appearing with brown outs in California and
shortages in Brazil.  Capacity can be increased, but often at great cost in
such places as offshore Angola and the deepwater of the Atlantic.
Alternatives such as non-fossil fuels are very expensive while the nuclear
option is currently not fashionable.  What of demand?  As the world grows in
wealth the demand for energy grows even faster.  Who will tell billions of
people around the world that they cannot have cars, refrigerators, TVs and the
internet?  Middle East hydrocarbons principally Iraqi, are the pivotal source
of supply to meet new needs.

But what is happening?  Instead of increasing, Iraqi output is declining.  The
reason is simple.  UN sanctions have made it impossible to import parts and
other essential equipment to maintain output.  Restrictions on the investment
of capital and technology have effectively halted new field development.

I have concentrated above on the importance of Iraq to the world economy and
on the deleterious economic effects of UN sanctions, but I must also comment
on the humanitarian aspects of the current UN policy.  UN sanctions are
causing genuine suffering to the ordinary people.  I am sure that the members
of the UN council do not intend this but it is happening.  Bureaucrats in the
UN in New York are interpreting the rules in such ways as to delay or prevent
the importation of products such as medicines and plastic piping used to
provide clean water.  I welcome the current dialogue on the role of sanctions
and hope that solutions acceptable to all parties are close.



Finance

A highlight of the year was our admission to the AIM exchange in London in
August 2000.  The impact was immediate with over 500 new shareholders
acquiring shares.  Petrel is a comparatively liquid share for a company of its
size, regularly trading in excess of 100,000 shares a day through four market
makers.

During the period under review we raised almost £1 million in cash by
disposing of our Ugandan assets for £500,000 and by having a small private
placing prior to listing on AIM.  The funds are being used to advance our
Iraqi projects.



Future

I believe that we are well placed to participate in the development of one of
the world's greatest sources of oil.  It is clear that a workable solution
must be found to enable Iraq to develop its oil resources.  Petrel is one of
the few Western companies active in the country.  We expect Petrel to be an
active participant in the expansion of the industry.




CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2000

                                                         2000              1999
                                                           IR                IR
                                                            £                 £
ADMINISTRATIVE EXPENSES
 - Cost of admission to A.I.M.                      (107,186)                 -
 - Other                                            (155,718)         (107,290)
                                                    (262,904)         (107,290)
EXCEPTIONAL ITEM

Gain on disposal of asset                             294,177                 -

PROFIT/(LOSS) ON ORDINARY ACTIVITIES
BEFORE INTEREST                                        31,273         (107,290)
Interest income                                         8,868            2,707

PROFIT/(LOSS) FOR THE YEAR BEFORE TAXATION             40,141         (104,583)
Taxation                                              (1,774)             (518)

PROFIT/(LOSS) FOR THE YEAR AFTER TAXATION              38,367         (105,101)
Profit and loss account : opening - (deficit)      (1,094,903)        (989,802)
Profit and loss account : closing - (deficit)      (1,056,536)      (1,094,903)


Profit /(loss) per share - basic                        0.10p           (0.30p)
Profit/(loss) per share - fully diluted                 0.09p           (0.27p)





BALANCE SHEETS AS AT 31 DECEMBER 2000


                                Group       Company         Group       Company
                                 2000          2000          1999          1999
                                  IR£           IR£           IR£           IR£

FIXED ASSETS

Tangible assets                 3,254         3,254         3,050         3,050
Intangible assets             396,426       396,426       235,406       235,406
Financial assets                    -             2             -             2
                              399,680       399,682       238,456       238,458

CURRENT ASSETS
Debtors                        13,038        13,038         5,742         5,742
Cash at bank                  518,744       518,744        73,676        73,676
                              531,782       531,782        79,418        79,418
CREDITORS : (Amounts falling
due within one year)         (212,212)     (212,214)      (61,621)      (61,623)

NET CURRENT ASSETS            319,570       319,568        17,797        17,795


TOTAL ASSETS LESS
CURRENT LIABILITIES           719,250       719,250       256,253       256,253

CAPITAL  AND  RESERVES
Called-up share capital       389,844       389,844       354,104       354,104
Share premium               1,385,942     1,385,942       997,052       997,052
Profit and loss account    (1,056,536)   (1,056,536)   (1,094,903)   (1,094,903)
- (deficit)

EQUITY SHAREHOLDERS'
FUNDS                         719,250       719,250       256,253       256,253



CONSOLIDATED CASH FLOW STATEMENT AT 31 DECEMBER 2000

                                                             2000          1999
                                                              IR£           IR£

NET CASH OUTFLOW FROM OPERATING ACTIVITIES               (130,416)      (96,677)

RETURNS ON INVESTMENT AND SERVICING OF FINANCE
Interest received                                           8,868         2,707

NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE                                        8,868         2,707

TAXATION
Corporation tax paid                                         (807)       (9,293)

CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Disposal of intangible fixed asset                        537,736             -
Payments to acquire intangible fixed assets              (393,869)       (7,167)
Payment to acquire tangible fixed asset                    (1,074)       (3,812)

NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING                142,793       (10,979)

FINANCING
Issue of ordinary share capital                           424,630             -

NET CASH INFLOW FROM FINANCING                            424,630             -

INCREASE/(DECREASE) IN CASH                               445,068      (114,242)



NOTES:

1.     The Annual Report and Financial Statements will be sent to all           
       shareholders.  Further copies will be available to the public from the   
       Company Secretary at the company's registered office, 162 Clontarf Road, 
       Dublin 3, Ireland.


2.     The calculation of basic profit/(loss) per share is based on profit of   
       £38,367 (1999: loss of £105,101) and on a weighted average 38,984,388
       (1999: 35,410,388) ordinary shares of IR1p.


3.     The abridged accounts for the years ended 31 December 2000 and 1999 do   
       not constitute statutory accounts and are an extract from the company's
       statutory accounts on which the auditors give an unqualified opinion.