INTERIM REPORT AND FINANCIAL STATEMENTS FOR THE...

PROVIDENCE RESOURCES P.l.c.

     INTERIM REPORT AND FINANCIAL STATEMENTS FOR THE SIX MONTHS
                         ENDED 30 JUNE 2007



FINANCIAL HIGHLIGHTS

* Implementation of IFRS; 2006 comparable numbers are now restated
* Turnover at ¤880,000 (2006: ¤1,014,000)
* Operating Loss of ¤142,000 (2006 as restated: Loss ¤399,000)
* Net Loss of ¤258,000 (2006 as restated: Loss ¤437,000)
* Institutional Placing of shares in April 2007 raised ¤25.7 million



OPERATIONAL HIGHLIGHTS

* Successful appraisal well at Hook Head logged 75 ft of net pay in
  the Celtic Sea (SEL 2/07)
* Hook Head testing programme currently ongoing
* Granted new Licensing Option 07/1, which is adjacent to the Hook
  Head Licence
* Two new wells discovered and now producing at High Island A268 in
  Gulf of Mexico
* Agreed acquisition of majority stake in the Singleton oilfield,
  onshore UK
* Initial farm out and licensing of new seismic data over Spanish
  Point
* Partial farm out of SEL 's 2/07 and 3/07 to Sosina, Dyas, Atlantic
  and Forest Gate
* Extension of Licensing Option 05/3 over Apollo prospect in the St.
  George's Channel
* Decision taken to drill Crosby in East Irish Sea


Commenting on today's Interim Results, Tony O'Reilly Jnr., Chief
Executive of Providence Resources P.l.c., said:

"2007 has already seen a huge amount of successful activity,
including the discovery and production from two new wells at High
Island and increasing, to a majority stake, our holding in the
Singleton oil field, which will enhance future revenue as we move to
increase our daily production to our initial target of 2,000 BOEPD.

"We have also recently commenced our testing programme at Hook Head,
which is a major milestone for the Company as it successfully logged
75 ft of net pay and has a better than expected reservoir quality.
Combined with the data that will be collated from the ongoing testing
programme, these results now move us nearer to a development
programme for Hook Head.  The recent awarding of a new Licensing
Option 07/1, adjacent to Hook Head, is a further step towards
building our acreage position in this new hydrocarbon province.


"Additionally, consistent with our stated objective to ensure that we
have a balanced and diverse portfolio of production, development and
exploration assets, the Company continues to advance its other
various projects. These include Spanish Point, off the west coast of
Ireland, AJE in Nigeria, Crosby in the East Irish Sea and the Irish
exploration prospects at Dunquin, Goban Spur and in the St. Georges
Channel. We also continue to look for new production opportunities in
different territories and look forward to outlining further details
over the coming months.

"Noting all these elements, at a time of robust commodity prices,
shareholders can look to the future with real confidence".



The full Interim Report, Financial Statements and Company Outlook are
                           set out below.



Contacts:

Providence Resources Plc            Tel: [phone]
Tony O'Reilly Jnr., Chief Executive


Powerscourt                         Tel: [phone]
Rory Godson/Elizabeth Rous

Murray Consultants                  Tel: [phone]
Pauline McAlester


Notes to Editors

About Providence

Providence Resources Plc is an independent oil and gas exploration
company listed on the AIM market in London and on Dublin's IEX
market. The Company was founded in 1997, but with roots going back to
1981 when it predecessor company, Atlantic Resources Plc was formed
by a group of investors led by Sir Anthony O'Reilly.

Providence's active oil and gas portfolio includes interests in
Ireland (offshore), the United Kingdom (onshore and offshore), the
United States (offshore) and West Africa (offshore Nigeria).
Providence's portfolio is balanced between production, appraisal and
exploration assets, as well as being diversified geographically.

Comprehensive information on Providence and its oil and gas
portfolio, including all press releases, annual reports and interim
reports are available from Providence's website at
www.providenceresources.com

                     PROVIDENCE RESOURCES P.l.c.
     INTERIM REPORT AND FINANCIAL STATEMENTS FOR THE SIX MONTHS
                         ENDED 30 JUNE 2007


FINANCIAL

Adoption of IFRS

In line with Stock Exchange regulations, the Company is required to
prepare its financial statements in accordance with new accounting
policies under International Financial Reporting Standards ('IFRS'),
with effect from January 1st, 2007.  As explained in the notes to the
financial statements (including the table that reconciles the
Consolidated Balance Sheet from Irish GAAP to IFRS) on the accounting
impact of the adoption of IFRS, the most significant changes that
impact the transition are the expensing of non-licence interests, the
expensing of the warrants issued to Macquarie in the first half of
2006 and the write-down of past drilling costs.


Financial Results for the Half-Year

Turnover for the six month period to 30 June 2007 of ¤880,000 from
the Company's 20% interest in the Singleton oil field was down due to
a lower average oil price in the first half of the year, allied to
weakness in the US Dollar. The Company's 20% share of oil production
in the first half of 2007 averaged 102 barrels of oil per day (BOPD)
at an average price of $63.15 (HI 2006: 105 BOPD at an average price
of $65.69). The Company recorded an operating loss of ¤142,000 for
the first 6 months (2006 as restated: Loss ¤399,000). The loss for
the financial period was ¤258,000 (HI 2006 as restated: Loss
¤437,000).

With the oversubscribed institutional share placing of 368.2 million
new ordinary shares at euro 7 cents raising ¤25.774 million in April
2007, the balance sheet at the half year was strengthened in advance
of the Hook Head drilling Programme. Cash resources were ¤ 23.417
million, with no debt drawn from available financing facilities.


PRODUCTION

Acquisition of Majority Stake in Singleton, Onshore UK

The Company's current strategy to increase production to an initial
target of 2,000 barrels of oil equivalent per day (BOEPD) took a big
step forward in the first half of 2007. In April, your Company
announced that it had reached agreement to acquire the majority stake
(79.125%) of the Singleton field, where your Company has previously
held a 20% stake for the past 17 years. This acquisition is a key
stepping stone for the Company to achieve its production objectives
and should initially contribute to Providence, on a projected
annualised basis, over 600 BOEPD*. Further optimisation
opportunities, including monetising some of the associated gas
production that is currently being flared, will also yield
opportunities for increased production volumes, as will the
deployment of enhanced oil recovery techniques.

(*including associated gas production)


High Island A268, Offshore Gulf of Mexico

Through its affiliation with a private industry grouping in the
United States who identify, procure and execute production and near
production opportunities, your Company became involved in High Island
A268 in the Gulf of Mexico, by taking a 5% share in December 2006.
With an initial well drilled in January 2007, and a follow on well
drilled in July 2007, the High Island A268 gas field has now been
successfully developed and 2 commercial gas wells are now in
production. Projected to produce up to 150 BOEPD**, these production
wells were brought on stream within 8 months from the initial
discovery, clearly demonstrating the benefits of fast track
developments in the Gulf of Mexico.


New Production Opportunities

In addition to looking to increase production from Singleton and High
Island A268, your Company continues to evaluate a number of other
production opportunities, both in existing areas of operation in the
United Kingdom and the Gulf of Mexico, but also in new geographic
areas.  Further news flow is expected in the coming months on this.
Importantly, with existing resources and the ¤50 million Macquarie
Revolving Credit Facility in place, your Company has the financial
capability to invest in appropriate development and production
opportunities as they arise.


DRILLING

Hook Head Drilling

On September 10th, your Company announced that it had logged 75 ft of
net pay at its Hook Head appraisal well.  The important announcement
confirmed that all geological horizons were encountered within the
pre-drill depth prognosis and significant oil and gas shows were
encountered.  The Company confirmed that, based on these results, the
partners elected to immediately move to a testing programme.  This
testing programme is currently ongoing and a further announcement
will be made on completion.


Outline 2008 Drilling

Looking further ahead, your Company is already actively planning for
further drilling in 2008.  The biggest issue, as it is for all oil
and gas E&P companies, is the securing of drilling vessels and this
is no different for Providence.  Obviously, the testing results from
Hook Head will influence future drilling decisions in the Celtic Sea,
but the Company is already examining opportunities to secure drilling
vessels for a multi-well development drilling programme for 2008.

Off the west coast of Ireland, your Company is seeking to secure,
from the market, a drilling vessel capable of appraisal drilling at
Spanish Point. Drilling decisions regarding Dunquin and/or the Goban
Spur Basin drilling will be taken by ExxonMobil, Sosina and the
Company.

Overseas, the partners in the East Irish Sea have agreed, subject to
rig, to drill Crosby in 2008.  In West Africa, your Company continues
to discuss how best to advance drilling opportunities there and will
report back when decisions have been made. Finally, in pursuit of
incremental production from existing producing fields, your Company
is currently looking at drilling additional wells at Singleton and in
the Gulf of Mexico, as well as looking at possible new opportunities
there.

(** operator estimates)
OPERATIONS

Celtic Sea

The results of the Hook Head testing programme, and the securing of a
drilling vessel, will be the key determinants of the future work plan
for the Celtic Sea portfolio in 2008.  Obviously, the Company's
intention will be to move aggressively towards development,
consistent with our pre-drill statements.  The results from Hook Head
will also influence future plans for other Celtic Sea assets at the
Dunmore, Helvick, Ardmore and Blackrock assets and these will be
considered by Providence and its partners.

The recent award of Licensing Option 07/1, in part blocks 49/15,
50/7, 8, 11, 12 & 13, which is adjacent to the Hook Head Field, is
another positive step forward for the Celtic Sea portfolio.  This new
licensing area, covering 375 km², contains a number of significant
mapped leads and prospects at a similar level to those, which are
hydrocarbon bearing in the Hook Head structure.

Following various farm-outs announced earlier this year and
subsequent adjustments, the equity participation in the Celtic Sea
portfolio (held under SEL's 2/07 and 3/07 and Licensing Option 07/1)
is now: Providence 43.5%, Challenger Minerals (Celtic Sea) Ltd.
16.3%, Dyas BV 16.3%, Atlantic Petroleum (Ireland) Ltd. 10.8%, Forest
Gate Resources Inc. 7.5% and Sosina Exploration Limited 5.4%.


St. George's Channel - Pegasus, Dionysus and Apollo

Providence holds its 100% interest in the Pegasus and Dionysus
prospects through SEL 1/07, which was awarded in March of this year.
These prospects are located to the north of Marathon's undeveloped
Dragon Gas Field, approximately 25% of which extends into SEL 1/07.
To the west of Dionysus and Pegasus is the large untested Apollo
Prospect, which was the subject of the just announced extension of
Licensing Option 05/3.

All of these prospects are on trend with other oil and gas
discoveries in the Celtic Sea, and your Company is actively marketing
these prospects to the industry.


Porcupine Basin - Spanish Point & Burren and Dunquin & Goban Spur
Basin

Spanish Point, a proven discovery with estimated 2C resources of 1.4
TSCF and 160 MMBO, is currently the subject of an exclusive marketing
programme to the industry as a pre-cursor to finalising details for a
future drilling programme.  It is hoped that a drilling syndicate can
be assembled with the objective of drilling in 2008, subject to rig
availability.  To further facilitate planned drilling at Spanish
Point and to provide improved imaging of the nearby Burren oil
discovery, the Company licensed part of GX Technology's long offset
North East Atlantic SPAN(TM) Survey.  This was successfully carried
out in July/August, 2007 and the data is now being prepared for
interpretation.

Providence operates the Dunquin Prospect on behalf of its partners,
ExxonMobil and Sosina.  Further de-risking of this prospect continued
with various geological and geotechnical techniques being applied.
Whilst confidentiality conditions between the partners restrict
Providence from commenting specifically on work programmes either in
the past or future, the Company can confirm that it is very pleased
with the status to date and views the future with optimism.
Likewise, working in the Goban Spur Basin, Providence, ExxonMobil and
Sosina continue to advance a number of potential leads in this c.
4,000km² Licensing Option area.

East Irish Sea - West Lennox and Crosby

In the East Irish Sea, your Company continues to work on its West
Lennox and Crosby prospects, where it holds a 10% stake. Encouraging
sub-surface studies have lead the partners to upgrade the estimated
recoverable reserves and accordingly, to move forward with plans to
drill the Crosby Prospect.  Drilling, which is subject to contracting
a rig, could take place in Q2/Q3, 2008.

Additionally, as a further demonstration of your Company's interest
in this highly prolific hydrocarbon producing region, the Company and
its West Lennox/Crosby partners applied for and were awarded a 25%
interest in the adjacent part blocks of 110/9b (Split) and 110/14b
(Split) under the United Kingdom's 24th Seaward Licensing Round.
Sub-surface studies have now commenced in this area.


West Africa - AJE

In Nigeria, forward plans for the potential drilling at AJE continue
to be developed and an announcement will be made as plans are
finalised.


ENERGY AND THE ENVIRONMENT

The Company believes that it has a role to play in addressing energy
supply in an environmentally responsible manner.  In addition to its
ongoing exploration, development and production projects, which are
carried out in accordance with all environmental rules and
regulations, the Company is also a contributing player to the Irish
Government sponsored initiative on new energy sources, including
methane gas hydrates.


OUTLOOK

As this interim report demonstrates, your Company has been
exceptionally busy on all fronts: Exploration, Development/Drilling
and Production.  Happily, we are able to report substantial progress
in all these areas and the future outlook is very positive.  Allied
to the anticipated increased revenue from our producing interests,
the macro-pricing environment for oil and gas remains very healthy,
as does the demand for hydrocarbons, particularly in Europe.

Looking ahead, we expect a continuation of these trends and factors,
thereby positioning your Company for continued further growth.



Tony O'Reilly Jnr
Chief Executive Officer

September 25th, 2007



                     PROVIDENCE RESOURCES P.l.c.

               INTERIM REPORT AND FINANCIAL STATEMENTS
                FOR THE SIX MONTHS ENDED 30 JUNE 2007




Financial Section attached includes the following:


Consolidated Income Statement

Consolidated Balance Sheet

Consolidated Statement of Cash Flows

Notes to the Interim Statement

Provisional Statement of Accounting Policies

Reconciliation of Irish GAAP to IFRS at 30 June 2006



Providence Resources P.l.c.

Consolidated Income Statement
For the six months ended 30 June 2007
Measured in accordance with IFRS accounting
policies set out therein
                                           Unaudited      Unaudited
                                                        As restated
                                             30 June        30 June
                                                2007           2006

                                                ¤000           ¤000

Revenue - continuing operations                  880          1,014

Cost of sales                                  (289)          (285)
                                            --------      ---------
Gross profit                                     591            729

Administration expenses                        (615)          (677)
Pre-licence expenditure                        (118)          (451)
                                            --------      ---------
Loss from operating activities                 (142)          (399)
                                           ---------       --------
Finance income                                   211             32

Finance expenses - interest                    (147)            (1)
Finance expenses - Macquarie loan warrants     (180)           (69)
finance cost
                                           ---------       --------
Net finance expense                            (116)           (38)
                                           ---------       --------
Loss before income tax                         (258)          (437)

Income tax expense                                 -              -
                                            --------      ---------
Loss for the financial period - continuing     (258)          (437)
operations
  - attributable to equity shareholders of     =====          =====
the company

Loss Per Ordinary Share (cent)                0.011c         0.021c
- Basic and fully diluted                     ======         ======




Providence Resources P.l.c.

                                             Unaudited      Unaudited
Consolidated Balance Sheet as at 30 June                  As restated
2007
Measured in accordance with IFRS          30 June 2007 30 June 2006
accounting policies set out therein
                                                  ¤000           ¤000
Assets
Exploration and evaluation assets               15,336         11,393
Development and production assets                1,703          1,363
Property, plant and equipment                      188            123
Available for sale equity investments            1,050              -
Deferred Macquarie financing costs               1,012          1,372
                                             ---------        -------
Total non-current assets                        19,289         14,251
                                             ---------        -------
Trade and other receivables                        693            655
Prepayments for current assets                      15             31
Cash and cash equivalents                       23,417          1,569
                                            ----------     ----------
Total current assets                            24,125          2,255
                                            ----------     ----------
Total assets                                    43,414         16,506
                                                 =====           ====
Equity
Share capital                                   14,228         13,784
Share premium                                   55,029         30,931
Capital conversion reserve fund                    623            623
Foreign currency translation reserve               116           (29)
Retained earnings                             (33,933)       (33,268)
Share based payment reserve                        530            113
Macquarie loan warrants reserve                  1,441          1,441
                                             ---------      ---------
Total equity attributable to equity             38,034         13,595
holders of the Company
                                             ---------      ---------
Liabilities
Deferred income                                      -              1
Provisions                                       1,627          1,622
                                            ----------        -------
Total non-current liabilities                    1,627          1,623
                                             ---------        -------
Trade and other payables                         3,753          1,288
                                             ---------        -------
Total current liabilities                        3,753          1,288
                                             ---------        -------
Total liabilities                                5,380          2,911
                                             ---------        -------
Total equity and liabilities                    43,414         16,506
                                                 =====           ====

Providence Resources P.l.c.


Consolidated Statement of Cash Flows
For the six months ended 30 June 2007                           Unaudited Unaudited
Measured in accordance with IFRS accounting policies set out                     As
therein                                                                    restated
                                                                  30 June   30 June
                                                                     2007      2006

                                                                     ¤000
                                                                               ¤000

Loss before income tax for the period                               (258)     (437)
Adjustments for:
Depletion and Depreciation                                            124       131
Net finance expense                                                   116        38
Equity-settled share-based payment transactions                        60        33
Change in trade and other receivables                               1,771       119
Change in trade and other payables                                  1,164     (173)
Foreign exchange adjustments                                           22      (29)
Interest paid                                                       (147)       (1)
                                                               ---------- ---------
Net cash from operating                                             2,852     (319)
activities
                          (461)

                                                               ---------- ---------
Cash flows from financing activities
Interest received                                                     211        32
Acquisition of exploration and evaluation assets                  (2,813)   (1,136)
Acquisition of equity investments                                 (1,050)         -
                                                               ---------- ---------
Net cash used in investing activities                             (3,652)   (1,104)
                                                               ---------- ---------

Cash flows from financing activities
Proceeds from issue of share capital                               24,516         -
Repayment of borrowings                                           (4,780)         -
                                                               ---------- ---------
Net cash from financing activities                                 19,736         -
                                                               ---------- ---------


Net increase/(decrease) in cash and cash equivalents               18,936   (1,423)
Cash and cash equivalents at 1 January                              4,481     2,992
                                                               ---------- ---------
Cash and cash equivalents at 30 June                               23,417     1,569
                                                                    =====     =====

Providence Resources P.l.c.

Notes to the Interim Statement


1. The results  for the six month periods ended 30 June 2007 and 2006
are neither audited nor reviewed.


2. The accounting policies adopted on transition from Irish Generally
Accepted Accounting Policies (GAAP) as previously adopted, to
International Financial Reporting Standards (IFRS) with effect from
the transition date of 1 January 2006 are set out below in the
provisional statement of accounting policies.  These policies have
been applied consistently to all years presented in these
consolidated unaudited interim financial statements.


3. Explanations of how the transition to IFRS has affected the
previously reported financial position in the period ended 31
December 2006 under GAAP are shown below.

Assets - Oil and gas interests
Under IFRS 6, the Board has reviewed the carrying value of its oil
and gas interests in Helvick and Blackrock within the Group's
portfolio.  In the absence of significant identifiable work
programmes in the near future on these oil and gas prospects the
Board has concluded that it is appropriate to write down the carrying
value of these interests.  The impact of these write down are
presented as prior year adjustments where appropriate. For the period
ended 30 June 2006, the adjustment in the Income Statement is
¤239,000 and the cumulative adjustment to Retained Earnings is
¤8,253,000 at 31 December, 2005.

Under IFRS 6, expenditure on non-licensed oil and gas interests are
expensed as incurred. For the period ended 30 June 2006, the
adjustment in the Income Statement is ¤212,000 and the cumulative
adjustment to Retained Earnings is ¤779,000 at 31 December 2005.  See
attached reconciliation table on Page 19.

4. Macquarie Warrants

In accordance with IAS 39 - Financial Instruments: Recognition and
Measurement, the Group has fair valued warrants issued to Macquarie
bank using an option pricing model. The fair value attributable to
these warrants of ¤1,441,000 has been included within equity under
Macquarie Loan Warrants Reserve with a corresponding Deferred cost
included within non-current assets. The deferred cost is amortised
over the four year life of the revolving credit facility.  In the six
months to 30 June 2007, ¤180,000 has been charged to the income
statement (30 June 2006 ¤69,000) and the cumulative amount to 30
June, 2007 amounts to ¤429,000.

5. The calculation of the loss per share is based on the loss for the
financial period of ¤258,000 divided  by the weighted average  number
of ordinary shares in issue during  the period ended 30 June 2007  of
2,262,720,503  and  during   the  period  ended   30  June  2006   of
2,097,831,000.  There   is  no   material  difference   between   the
computation of basic and diluted earnings per ordinary share.

6. The Interim Statement will be sent to registered shareholders  and
is     available      on      the      Company's      website      at
www.providenceresources.com.  Further copies  will be available  from
the Company's offices at  Airfield House, Airfield Park,  Donnybrook,
Dublin 4.

Providence Resources P.l.c.

Provisional statement of accounting policies

Basis of preparation

European Union (EU)  law and  the IEX  and AIM  stock exchange  rules
require that the next annual consolidated financial statements of the
Group for the year ended 31  December 2007 be prepared in  accordance
with International accounting standards adopted for use in the EU.

The interim financial information for the  period to 30 June 2007  as
has  been  prepared  in   accordance  with  International   Financial
Reporting Standards adopted by the  European Union (EU) (IFRS's)  and
which will be  effective at 31  December 2007 or  are expected to  be
adopted  and  effective  by  that  date,  the  Group's  first  annual
reporting date at which it is required to use IFRS's.

International accounting standards  adopted for  use in  the EU  that
will be effective  in the  annual financial statements  for the  year
ending 31 December 2007 are still subject to change and to additional
interpretations and therefore  cannot be  determined with  certainty.
Accordingly, the accounting policies for  that annual period will  be
determined finally  only when  the  annual financial  statements  are
prepared for the  year ending  31 December  2007, and  those set  out
below are provisional only.

Where estimates had been made under Irish GAAP, consistent  estimates
(after adjustments to reflect any difference in accounting  policies)
have been made  on transition  to IFRS's.   Judgements affecting  the
balance sheets of the Group have not been revisited with the  benefit
of hindsight.    The Group  have  taken advantage  of  the  following
exemptions as  permitted  under  IFRS  1  -  First-time  Adoption  of
International Financial Reporting Standards:

* IAS 21 - The effects of changes in Foreign Exchange Rates, requires
  that on disposal of a foreign operation, the cumulative amount of
  currency translation differences previously recognised directly in
  reserves for that operation be transferred to the income statement
  as part of the profit or loss on disposal.  Providence Resources
  PLC has deemed the cumulative currency translation differences
  applicable to foreign operations to be zero as at the transition
  date as permitted by IFRS 1.  The cumulative currency translation
  differences arising before the transition date have been set to
  zero and adjusted for within retained earnings.

* In accordance with the exemption permitted in IFRS 1, the fair
  value adjustments in respect of share based payments as required by
  IFRS-2 "Share Based Payment", have been applied only in respect of
  share options granted after 7 November 2002, but not fully vested
  by the date of transition to IFRS.

The interim consolidated financial statements are presented in  euro,
rounded  to  the  nearest  thousand  (¤'000)  except  when  otherwise
indicated. Euro  is the  functional currency  of the  parent and  the
majority of  the  Group's subsidiaries.    The interim  statement  is
prepared on a  historical cost  basis except for  the measurement  of
share options and warrants  which are stated at  fair value at  grant
date and available  for sale  assets which are  at fair  value.   The
preparation  of  financial  statements  requires  management  to  use
judgements, estimates and assumptions that affect the application  of
policies and  reported amounts  of  assets, liabilities,  income  and
expenses.  Actual results may differ from those estimates.  Estimates
and  underlying  assumptions  are  reviewed  on  an  ongoing   basis.
Revisions to accounting  estimates are  recognised in  the period  in
which the estimate is revised and in any future periods affected.

The preparation  of  the  financial  statements  under  EU  IFRS  has
resulted in changes to the  accounting policies from the most  recent
annual financial statements prepared under Irish GAAP.

The accounting policies set out below have been applied  consistently
to all  periods  presented  in  this  interim  statement,  except  as
otherwise stated.


Basis of consolidation

The  consolidated   financial   statements  include   the   financial
statements of Providence Resources Plc and its subsidiaries.

Subsidiaries are  entities controlled  by the  Group. Control  exists
when the Group has  the power to govern  the financial and  operating
policies of an entity so as  to obtain benefits from its  activities.
In assessing  control, potential  voting  rights that  presently  are
exercisable are  taken  into  account. The  financial  statements  of
subsidiaries are included  in the  consolidated financial  statements
from the  date that  control commences  until the  date that  control
ceases.

Intra-group balances, and any unrealised income and expenses  arising
from  intra-group  transactions,  are  eliminated  in  preparing  the
consolidated financial  statements.  Unrealised  gains  arising  from
transactions with equity accounted  investees are eliminated  against
the investment to the extent of the Group's interest in the investee.
Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is no evidence of impairment.

Revenue recognition

Revenue is recognised  to the  extent that  it is  probable that  the
economic benefits will  flow to the  Group, that it  can be  reliably
measured, that the product passes out  of the ownership of the  Group
to external  customers pursuant  to enforceable  sales contracts  and
that the  significant risks  and  rewards of  ownership of  oil  have
passed to the  buyer.  Revenue  comprises the invoiced  value of  oil
supplied  by  the  Group  and  excludes  inter-company  sales,  trade
discounts and value added tax.

Employee benefits

(i)   Defined contribution plans

      Obligations for contributions  to defined contribution  pension
plans are recognised as  an expense in profit  or loss when they  are
due.

(ii)  Share based payments

      The Company's "2005 scheme"  falls within the  scope of and  is
accounted for under the provisions of IFRS 2 - Share Based Payment.
Accordingly, the fair value of the options granted under this scheme,
after 7 November 2002 and  which had not yet  vested as at 1  January
2006, is  recognised  as a  personnel  expense with  a  corresponding
increase in the  "Share based payment  reserve".  The  fair value  is
measured using an option pricing model, taking into account the terms
and conditions  upon which  the  options were  granted.   The  amount
recognised as an expense is adjusted to reflect the actual number  of
share options that vest, except where forfeiture is only due to share
prices not achieving the threshold for vesting.

Foreign currency

(i)   Foreign currency transactions

Transactions in foreign currencies  are translated to the  respective
functional currencies  of Group  entities at  exchange rates  at  the
dates  of   the  transactions.   Monetary  assets   and   liabilities
denominated  in  foreign  currencies   at  the  reporting  date   are
retranslated to the functional currency at the exchange rate at  that
date. The foreign  currency gain  or loss  on monetary  items is  the
difference between amortised cost in  the functional currency at  the
beginning of the period, adjusted for effective interest and payments
during the  period,  and  the  amortised  cost  in  foreign  currency
translated  at  the  exchange  rate   at  the  end  of  the   period.
Non-monetary assets and liabilities denominated in foreign currencies
that are measured at  fair value are  retranslated to the  functional
currency at the  exchange rate at  the date that  the fair value  was
determined. Foreign currency differences arising on retranslation are
recognised in profit or loss,  except for differences arising on  the
retranslation of available-for-sale equity instruments or a financial
liability designated as a  hedge of the net  investment in a  foreign
operation (see (ii) below).

(ii) Foreign operations

The assets and  liabilities of foreign  operations are translated  to
Euro at exchange rates at the reporting date. The income and expenses
of foreign operations are translated to Euro at exchange rates at the
dates of the transactions.

Foreign currency differences are recognised directly in equity. Since
1 January  2006,  the  Group's  date  of  transition  to  IFRS,  such
differences have been recognised in the foreign currency  translation
reserve (FCTR). When a foreign operation  is disposed of, in part  or
in full, the relevant amount in the FCTR is transferred to profit  or
loss

Income tax expense

Income tax expense  comprises current  and deferred  tax. Income  tax
expense is recognised in profit or loss except to the extent that  it
relates to items recognised directly in  equity, in which case it  is
recognised in equity.

Current tax is the expected tax payable on the taxable income for the
year, using  tax  rates  enacted  or  substantively  enacted  at  the
reporting date,  and any  adjustment  to tax  payable in  respect  of
previous years.

Deferred tax is recognised using the balance sheet method,  providing
for temporary differences between the carrying amounts of assets  and
liabilities for financial reporting purposes and the amounts used for
taxation purposes. Deferred tax is  not recognised for the  following
temporary differences:  the  initial  recognition  of  goodwill,  the
initial recognition of assets or liabilities in a transaction that is
not a business  combination and that  affects neither accounting  nor
taxable  profit,   and  differences   relating  to   investments   in
subsidiaries and jointly controlled entities to the extent that  they
are unlikely to reverse  in the foreseeable  future. Deferred tax  is
measured at the  tax rates  that are expected  to be  applied to  the
temporary differences when they reverse, based on the laws that  have
been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised to the extent that it is  probable
that future taxable profits will be available against which temporary
difference can be utilised. Deferred tax assets are reviewed at  each
reporting date and  are reduced to  the extent that  it is no  longer
probable that the related tax benefit will be realised.

Additional income taxes that arise from the distribution of dividends
are recognised at the same time  as the liability to pay the  related
dividend is recognised.

Lease payments

Payments made under operating leases are recognised in profit or loss
on a straight-line basis over the term of the lease. Lease incentives
received are  recognised  as an  integral  part of  the  total  lease
expense, over the term of the lease.

Minimum lease  payments made  under  finance leases  are  apportioned
between the  finance expense  and the  reduction of  the  outstanding
liability. The finance expense is allocated to each period during the
lease term so as to produce  a constant periodic rate of interest  on
the remaining balance of the liability. Contingent lease payments are
accounted for  by  revising  the  minimum  lease  payments  over  the
remaining term of the lease when the lease adjustment is confirmed.


Finance income and expenses

Finance income comprises interest income on funds invested,  dividend
income, gains on the disposal of available-for-sale financial  assets
and foreign  currency  gains. Interest  income  is recognised  as  it
accrues, using  the effective  interest  method. Dividend  income  is
recognised on the date that the  Group's right to receive payment  is
established,  which  in  the  case   of  quoted  securities  is   the
ex-dividend date.

Finance expenses comprise interest or finance expense on  borrowings,
unwinding of the discount on provisions, foreign currency losses  and
impairment losses recognised on financial assets. All borrowing costs
are recognised in profit or loss using the effective interest method.

Exploration and evaluation assets and property plant and equipment  -
development and production assets

The Group  has adopted  IFRS  6 "Exploration  for and  Evaluation  of
Mineral Resources" in preparing these financial statements.

(i)      Exploration and evaluation assets

         Expenditure incurred prior to obtaining the legal rights  to
explore an area is written off to the income statement.  Expenditures
incurred on  the  acquisition of  a  licence interest  are  initially
capitalised on a licence by  licence basis considering the degree  to
which  the  expenditure  can  be  associated  with  finding  specific
reserves.   Exploration and  evaluation expenditure  incurred in  the
process of determining exploration targets  is also capitalised.   No
value  is  attributed  to   exploration  licenses  granted.     These
expenditures are held undepleted within the exploration licence asset
until such  time as  the exploration  phase on  the licence  area  is
complete or commercial reserves have been discovered.

         Exploration and  evaluation drilling  costs are  capitalised
within each licence area until the  success or otherwise of the  well
has been established.  Unless further evaluation expenditures in  the
licence area  have been  planned and  agreed or  unless the  drilling
results indicate  that  hydrocarbon reserves  exist  and there  is  a
reasonable prospect  that  these reserves  are  commercial,  drilling
costs are written off.

         Exploration and evaluation assets are initially held at cost
and are not revalued.

(ii)     Property,  plant and equipment - development and  production
oil and gas assets

Following  appraisal  of   successful  exploration   wells  and   the
establishment  of  commercial   reserves,  the  related   capitalised
exploration  and   evaluation   expenditures  are   reclassified   as
development and production oil and gas assets.

Subsequent expenditure is capitalised  only where it either  enhances
the economic benefits  of the  development and  production assets  or
replaces part of the existing development and production assets.  Any
costs associated with the replacement  of assets are expensed to  the
income statement.

(iii)    Depletion

The Group depletes expenditure on developed and producing  properties
on a unit of production basis, based on proved and probable  reserves
on a cost  pool basis.  Capitalised costs  together with  anticipated
future development costs  calculated at  price levels  ruling at  the
balance sheet date,  are amortised on  a unit of  production basis.
Amortisation is  calculated  by  reference  to  the  proportion  that
production for  the  period  bears  to the  total  of  the  estimated
remaining commercial reserves  as at  the beginning of  the period.
Changes in  reserves quantities  and  cost estimates  are  recognised
prospectively.

(iv)    Impairment

         Impairment reviews on developed and producing properties are
carried out  on each  cash-generating unit  identified in  accordance
with IAS  36 "Impairment  of Assets".   The  Group's  cash-generating
units are those assets which generate largely independent cash  flows
and are normally, but not always, single development areas or fields.

         Exploration and evaluation assets are reviewed regularly for
indicators  of   impairment  and   costs   are  written   off   where
circumstances  indicate  that  the   carrying  value  might  not   be
recoverable.  In such  circumstances, the exploration and  evaluation
asset is allocated  to development and  production assets within  the
same cash generating unit and tested for impairment to assess whether
the net book value of capitalised  costs in each pool, together  with
the future costs of development  of undeveloped reserves, is  covered
by the discounted future net  revenues from the reserves within  that
pool, calculated at  prices prevailing  at the  year end.   Any  such
impairment arising  is recognised  in the  income statement  for  the
period.  Where there  are no development  and production assets,  the
impaired costs of exploration and evaluation are charged  immediately
to the income statement.

         Where there has been a  change 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  value at  the
time.  In reversing  impairment losses, the carrying  amount  of  the
asset will be increased to the  lower of its original carrying  value
or the  carrying  value  that  would have  been  determined  (net  of
depletion) had no impairment loss been recognised in prior periods.

(v)    Decommissioning costs

         Provision is made  for the  decommissioning of  oil and  gas
wells and other oilfield facilities.  The cost of decommissioning  is
determined through discounting the amounts expected to be payable  to
their present value  at the  date the  provision is  recorded and  is
reassessed at  each balance  sheet  date.   This amount  is  included
within developed and producing assets by cost pool and the  liability
is included in provisions.   Such cost is  depleted over the life  of
the cost pool on a unit of production basis and charged to the income
statement.  The unwinding of the  discount is reflected as a  finance
cost in the income statement over the remaining life of the well.

Other property, plant and equipment

Other  property,  plant  and  equipment  is  measured  at  cost  less
accumulated depreciation and impairment losses.

Cost includes expenditures that are directly attributable to the
acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other costs
directly attributable to bringing the asset to a working condition
for its intended use, and the costs of dismantling and removing the
items and restoring the site on which they are located. Purchased
software that is integral to the functionality of the related
equipment is capitalised as part of that equipment.

              When parts of an item of property, plant and equipment
have different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.

         The estimated useful lives  for the current and  comparative
periods are as follows:

* buildings                                               3-10 years
* furniture and equipment                         3-10 years


Leased assets

Leases in  terms of  which the  Group assumes  substantially all  the
risks and rewards of ownership are classified as finance leases. Upon
initial recognition the leased asset  is measured at an amount  equal
to the lower of its fair value  and the present value of the  minimum
lease payments.  Subsequent  to  initial recognition,  the  asset  is
accounted for in accordance with the accounting policy applicable  to
that asset.

Other  leases  are  operating  leases  and,  except  for   investment
property, the leased assets are not recognised on the Group's balance
sheet.  Investment  property  held   under  an  operating  lease   is
recognised on the Group's balance sheet at its fair value.

Financial assets

Investments in  subsidiary  undertakings  are  stated  at  cost  less
provision for impairment in the company's balance sheet.

Loans to subsidiary undertakings are initially recorded at fair value
in the company balance sheet and subsequently at amortised cost using
an effective interest rate methodology.

Financial instruments

(i)   Non-derivative financial instruments
                     Non-derivative financial instruments comprise
investments in equity and debt securities, trade and other
receivables, cash and cash equivalents, loans and borrowings, and
trade and other payables.

                     Non-derivative financial instruments are
recognised initially at fair value plus, for instruments not at fair
value through profit or loss, any directly attributable transaction
costs, except as described below. Subsequent to initial recognition
non-derivative financial instruments are measured as described below.

      A financial instrument is recognised if the Group becomes a
party to the contractual provisions of the instrument. Financial
assets are derecognised if the Group's contractual rights to the cash
flows from the financial assets expire or if the Group transfers the
financial asset to another party without retaining control or
substantially all risks and rewards of the asset. Regular way
purchases and sales of financial assets are accounted for at trade
date, i.e., the date that the Group commits itself to purchase or
sell the asset. Financial liabilities are derecognised if the Group's
obligations specified in the contract expire or are discharged or
cancelled.

      Cash and cash equivalents comprise cash balances and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose of the
statement of cash flows.


(ii)  Available-for-sale financial assets
                     The Group's investments in equity securities and
certain debt securities are classified as available-for-sale
financial assets. Subsequent to initial recognition, they are
measured at fair value and changes therein, other than impairment
losses, and foreign exchange gains and losses on available-for-sale
monetary items, are recognised directly in equity. When an investment
is derecognised, the cumulative gain or loss in equity is transferred
to profit or loss.

(iii)                     Compound financial instruments
        Compound financial instruments issued by the Group comprise
borrowings that were drawn down with associated issuance of equity
warrants. As the warrants issued were for a fixed number at a fixed
price, this element of the instrument is recognised within equity
with a corresponding deferred cost within non-current assets which is
amortised over the length of the credit facility.


Trade and other receivables

Trade receivables,  which generally  have  30 to  90 day  terms,  are
recognised and carried at original  invoice amount less an  allowance
for any estimated shortfall in receipt.  An estimate of any shortfall
in receipt is made when there  is objective evidence that a loss  has
been incurred.  Bad debts are written off when identified.


Provisions

A provision is recognised if, as a result of a past event, the  Group
has a present legal or constructive obligation that can be  estimated
reliably, and it  is probable  that an outflow  of economic  benefits
will be required to settle the obligation. Provisions are  determined
by discounting the expected future cash flows at a pre-tax rate  that
reflects current market assessments  of the time  value of money  and
the risks specific to the liability.

Ordinary shares
Incremental costs directly attributable to issue of ordinary shares
and share options are recognised as a deduction from equity.

Earnings per share

The Group presents basic  and diluted earnings  per share (EPS)  data
for its  ordinary shares.  Basic EPS  is calculated  by dividing  the
profit or loss attributable to  ordinary shareholders of the  Company
by the weighted average number of ordinary shares outstanding  during
the period. Diluted EPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number
of ordinary  shares  outstanding  for the  effects  of  all  dilutive
potential ordinary shares, which comprise convertible notes and share
options granted to employees.

Segment reporting

A segment is a distinguishable component of the Group that is engaged
either in providing related products or services (business  segment),
or in providing  products or  services within  a particular  economic
environment (geographical  segment), which  is subject  to risks  and
rewards that are different from those of other segments. The  Group's
primary  format  for  segment  reporting  is  based  on  geographical
segments.

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