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					Melrose Resources plc
Interim Report for the six month period ended 30 June 2011
Melrose Resources plc

Melrose Resources plc is an oil and gas exploration
and production company with interests in Egypt,
Bulgaria, Romania, France, Turkey and the USA.
The Group has a diverse portfolio of production,
development, appraisal and exploration assets
offering a range of investment opportunities.
Melrose is headquartered in Edinburgh and is listed
on the Main Market of the London Stock Exchange.




This interim report may contain forward-looking statements based on
current expectations of, and assumptions and forecasts made by, the
Company’s management team. Various known and unknown risks,
uncertainties and other factors could lead to differences between the
actual future results, financial situation development or performance of
the Company and the estimates and historical results given herein. Undue
reliance should not be placed on forward-looking statements which speak
only as of the date of this document. Melrose accepts no obligation to
publicly revise or update these forward-looking statements or adjust them
to future events or developments, whether as a result of new information,
future events or otherwise, except to the extent legally required.
Highlights




Operational highlights
•        average production increased by 23 percent to 20.2 Mboepd on a net
         entitlement basis (equivalent to 38.0 Mboepd on a working interest basis)
•        3D seismic interpretation completed on the South East Mansoura concession
         (Egypt) confirming Cretaceous oil play potential
•        2D seismic acquisition completed on the Mesaha (Egypt) and Rhône Maritime
         (France) frontier exploration concessions
•        operations on the South West Kanun (Turkey) exploration well are nearing
         completion with no oil shows yet encountered
•        Concession Agreements signed for the Muridava and Est Cobalcescu
         licences (Romania)
•        entered into a two year extension on the Galata Block exploration
         concession (Bulgaria)


Financial highlights
•        revenue increased to $155.8 million (H1 2010: $110.0 million)
•        EBITDAX increased to $134.4 million (H1 2010: $86.3 million)
•        profit after tax increased to $33.2 million (H1 2010: $4.1 million)
•        net debt reduced to $367.3 million (H1 2010: $459.6 million)
•        financial gearing of 107 percent (H1 2010: 140 percent)


Robert Adair, Executive Chairman commented

“The first half of 2011 represented an important turning point for the Company,
 with the production revenues from our two core areas in Egypt and Bulgaria allowing
 us to progress a number of high potential exploration initiatives.

    The Company has delivered a strong financial performance and our underlying
    profitability has continued to improve whilst we have made a major step towards
    reducing financial gearing.

    We look forward to making further progress in continuing to grow as a diversified,
    well balanced exploration and production company.”



                                                                               Melrose Resources plc 2011   01
Chairman’s Statement



Introduction                                    interpretation of these surveys is still      a few months by a presidential election.
                                                ongoing but the preliminary analysis          During this transitional period we will
The first half of 2011 has been a period
                                                indicates that both blocks contain            continue to monitor the political situation
of strong financial performance for the
                                                numerous large structures which could         closely and manage our operational and
Company as we began to see the
                                                form the basis for hydrocarbon traps. We      financial position accordingly.
benefits from our new Bulgarian gas field
                                                plan to drill our first well on Mesaha next
developments which came on stream late                                                        Melrose has continued to pursue an active
                                                year and envisage 3D seismic acquisition
last year. Coupled with production from                                                       work programme on its Egyptian acreage
                                                or drilling on the Rhône Maritime block
our existing Egyptian assets, the new fields                                                  including the Mansoura and South East
                                                within the same timeframe.
have helped generate significant post tax                                                     Mansoura concessions onshore in the Nile
profits and operating cash flow of $33.2        During the period, the Company was            Delta and the Mesaha concession which
million and $104.9 million, respectively,       pleased to announce the Concession            is a large frontier exploration block in
and we are on track to reduce our               Agreements for the Muridava and Est           Southern Egypt.
financial gearing towards 100 percent           Cobalcescu concessions offshore Romania
                                                                                              The average production rate during the
by year end.                                    had been signed and we are looking
                                                                                              first half of the year was 30.4 Mboepd
                                                forward to acquiring seismic surveys
The Company achieved an average                                                               on a working interest basis, comprising
                                                over these blocks in 2012 with a view
production rate of 20.2 Mboepd on
                                                                                              148.9 MMcfpd of gas and 4,714 bpd of
                                                to starting a drilling campaign in 2013.
a net entitlement basis (equivalent to
                                                In addition, the Company has exercised its    oil, condensate and Liquid Petroleum
38.0 Mboepd on a working interest basis)
                                                option to enter a two year extension of the   Gas (“LPG”). Net entitlement production
during the first half of 2011. This was
                                                Galata exploration permit in Bulgaria. Both   averaged 61.1 MMcfpd of gas and
somewhat below forecast due to a
                                                these shallow water western Black Sea         2,011 bpd of oil, condensate and LPG.
number of operational factors in Egypt
                                                areas are highly prospective, containing      The production stream continues to be
which we are addressing through a
remedial drilling and work-over                 a number of plays and have the potential      underpinned by contributions from our
programme. Whilst these considerations          to make a significant contribution to the     two major fields, West Khilala and West
should have a minimal impact on reserves,       Company’s growth plans.                       Dikirnis, supplemented by eight other
we feel it prudent to reduce our full year                                                    fields. Performance during the first six
production guidance to 36.0 Mboepd on a                                                       months of the year was lower than
                                                Egypt
working interest basis pending completion                                                     expected due to a number of operational
of the rig activities.                          In early 2011, President Mubarak resigned     factors. The most material of these was
                                                from power following a period of civil        the onset of water production in the North
During the period we made good progress
                                                unrest in Egypt. The protests were            East Abu Zahra-1 production well which
on a number of exploration initiatives as
                                                primarily confined to large urban areas       ceased to flow in April this year. In order
we strengthen the Company’s focus on
                                                and have had no impact on Melrose’s           to reinstate production and maintain
high growth opportunities. We completed
                                                operations. The Company has continued         reserves, the Company is currently drilling
the interpretation of the 3D seismic data
                                                to receive payments for its gas and oil       a replacement well at the crest of the
which we acquired over the South East
                                                sales during the first half of the year       structure (the original well was located
Mansoura concession in Egypt last year
                                                and receipts are in line with our budget      down-dip on the flank of the reservoir).
and were pleased to confirm significant
                                                assumptions.                                  Other factors which are impacting the
oil potential in the Cretaceous exploration
play. We plan to drill our first test well on   Since President Mubarak left office, the      2011 production levels include the
this play later this year on a prospect         country has been administered by an           decision to temporarily complete one of
called Al Hajarisah. We also completed          interim government which is likely to stay    the West Dikirnis horizontal wells with a
the acquisition of key 2D seismic surveys       in power until the parliamentary elections,   vertical wellbore to maximise oil recovery,
over our high potential frontier exploration    which are currently scheduled to take         a well integrity work-over programme
blocks in Egypt (Mesaha) and offshore           place in the fourth quarter of this year.     in the West Khilala field and water
France (Rhône Maritime). Detailed               These are expected to be followed within      production at the South Zarqa field.




02             Melrose Resources plc 2011
Development activity in the first half           had an unstable flow regime with oil rates    reservoir structures. The joint venture
focussed on the West Dikirnis field              fluctuating between 80 and 280 bopd.          partnership is preparing to drill the
which is currently producing at a stable         The Company is currently evaluating           first well on the block in the second half
rate of around 3,900 bpd of hydrocarbon          whether, with an improved completion          of 2012.
liquids. During the period one vertical          design, the well may be completed as
and one horizontal production well               a commercial producer and is also
have been successfully completed and             reviewing the field appraisal options.        Bulgaria
these are producing at a combined                                                              The Kavarna and Kaliakra offshore gas
                                                 In parallel with the development activity,
rate of 820 bopd.                                                                              field developments have continued to
                                                 Melrose has been actively progressing its
The West Dikirnis Gas Reinjection facilities     exploration initiatives. On the South East    exhibit strong production performance
and LPG plant are continuing to perform          Mansoura concession, onshore in the Nile      during the period and are currently
well, with approximately 28 MMcfpd of            Delta, the Company has completed the          producing at a combined average daily
gas currently being reinjected into the field    processing and interpretation of the 3D       rate of 45 MMcfpd. These sustained
and 910 bpd of additional condensate             seismic data recently acquired over the       production levels, coupled with an average
and LPG being recovered from the plant.          under-explored Cretaceous oil play. These     realised gas price in Bulgaria of $7.42
The liquids yield per unit of gas passing        studies have confirmed the play potential     per Mcf during the first six months, have
through the LPG plant is exceeding               and the presence of multiple oil prospects    generated a significant new revenue
expectations and the rate of decline in          and leads with combined unrisked              stream for the Company.

the existing oil wells has been significantly    prospective resources of 54 MMbbl. One        With the two new fields now fully
reduced, with both observations indicating       prospect, called Al Hajarisah, has been       commissioned, the Company has turned
that the gas reinjection process is working      selected for drilling in the fourth quarter   its attention to developing the Kavarna
effectively. The gas re-injection process is     2011 which has prospective resources          East discovery and has recently received
reducing our short term gas sales volumes        of 6 MMbbl (working interest basis)           the Certificate of Commerciality from
in order to maximise the amount of high          and a chance of success of 21 percent.        the Bulgarian authorities. This field was
value oil recovered from the field. The gas                                                    discovered in 2010 approximately three
                                                 On the Mesaha frontier exploration
is not lost, however, and will be produced                                                     kilometres east of the Kavarna field and
                                                 concession in southern Egypt, where we
later in the field life after the oil reserves                                                 contains estimated recoverable reserves
                                                 have a 40 per cent interest, the Company
have been recovered. The next phase of                                                         of 10 Bcf. It is intended to develop the
                                                 has completed the acquisition of a second
the development will involve the addition                                                      field with a single subsea completion
                                                 phase of 2D seismic data with a total of
of a refrigeration unit to the LPG plant                                                       which will be tied back to the Kavarna
                                                 1,844 kilometres of lines acquired. The
which, allowing time for design and                                                            subsea development with a short 6 inch
                                                 quality of the new seismic data is much
procurement optimisation, is now                                                               line. This operation is presently scheduled
                                                 superior to the first phase of 2D data
scheduled for completion late 2012.                                                            to take place in the second half of 2012
                                                 acquired in 2010 and has significantly
                                                                                               and the procurement process for the
Well testing operations have recently been       improved the definition of the sedimentary
                                                                                               project is ongoing.
completed on the West Zahayra-1 well             basin. Based on this encouragement, the
which was a Qawasim formation discovery          scope of the second phase survey was          As recently announced, the drilling
made in 2008, seven kilometres west of           increased from the original plan (which       operations have been completed on
the West Dikirnis field. Prior to testing, the   was to acquire 700 kilometres of data)        the Kaliakra East-1 exploration well and
original discovery well was sidetracked and      and the interpretation is now expected        the Palaeocene reservoir interval was
the new wellbore encountered 39 feet of          to be complete around year end. In the        found to be eroded at the drilled location.
net oil pay with an average porosity of 16       interim, the preliminary interpretation has   The Company is now moving ahead with
percent. During testing the well flowed          confirmed the presence of major structural    plans to shoot 500 square kilometres of
good quality black oil (44 degree gravity)       features in the basin, in particular tilted   3D seismic over the central area of the
with only small amounts of gas. The well         fault block geometries and intra-basinal      Galata Block to the north of the Galata
was produced for a period of four days but       highs, which have the potential to form       to Kaliakra field trend. Three further




                                                                                                           Melrose Resources plc 2011       03
Chairman’s Statement
(continued)




explorations leads have been identified in     licences located in the South Mardin            yielded material gas discoveries elsewhere
this area on regional 2D seismic data and      district of southern Turkey. The well is        in the Mediterranean, and has already
these have combined prospective resources      testing a prospect called South West            indicated the presence of a number of
of 130 Bcf and an average chance of            Kanun which was identified on the 2D            significant structures. Depending on the
success 23 percent. A contractor has           seismic survey acquired in 2010 and in          outcome of the detailed interpretation,
been selected to conduct the seismic           the event of success the well could open        the joint venture may opt to acquire 3D
survey which is scheduled to commence          up a new exploration play in the region.        seismic data over the most promising
in September. In order to provide sufficient                                                   areas of the block prior to initiating a
                                               The well has reached a depth of 8,780
time to pursue the planned exploration                                                         drilling programme.
                                               feet and has drilled through the shallow
work programme the Company recently
                                               Cretaceous target interval and penetrated
received Ministerial approval to extend
                                               into the deeper Ordovician reservoir target.
the Galata Block exploration permit by two                                                     USA
                                               It encountered 338 feet of good quality
years to February 2013.                                                                        Following the sale of its Permian Basin
                                               carbonate in the Cretaceous formation
                                               which open hole logs indicated to be            assets in late 2010, the Company has
                                               water bearing. The well is currently 220        retained some minor gas field interests
Romania                                                                                        in East Texas and we are reviewing our
                                               feet into the Ordovician sandstone
In 2010 Melrose was awarded an 80              sequence and no oil shows have been             strategic options for these assets with
percent working interest and operatorship      observed on the mud log or in the drill         a view to their likely divestment.
of two exploration blocks, Muridava (EX-       cuttings. The wellbore is being conditioned
27) and Est Cobalcescu (EX-28), in the         in preparation for open hole logging
                                                                                               Financial Results
Romanian 10th Licensing Round. Both            across this interval and on receipt of the
blocks are located in shallow water and        results the Company will decide whether         We are pleased to be reporting another
have significant oil and gas potential in      to continue the well operations and/or          period of strong financial performance
exploration plays on trend with existing       apply for a two year extension to the           for the Company, underpinned by gas
discoveries elsewhere in Romanian waters.      exploration licenses.                           production from Bulgaria and better than
Our preliminary mapping of the area,                                                           projected commodity prices in the first
                                               We believe that Turkey represents
based on old vintage regional 2D seismic                                                       half of the year.
                                               an attractive investment environment
data, has identified a number of leads
                                               and we are pursuing additional business         Revenues for the period were $156 million
and prospects with the potential to hold
                                               development initiatives in the country.         and EBITDAX was $134 million, as
1Tcfe to 2Tcfe of unrisked gross resources.
                                                                                               compared with equivalent figures for the
In March this year, we were pleased                                                            same period in 2010 of $110 million and
to announce that Melrose and the               France                                          $86 million, respectively. Profit after tax
Romanian authorities have now signed                                                           increased to $33 million compared to $4
                                               During the first half, Melrose and its joint
the Concession Agreements for both                                                             million for the period ended 30 June 2010,
                                               venture partner, Noble Energy, completed
blocks and Melrose, with its partners,                                                         equating to increased earnings of 28.9
                                               the acquisition of a block-wide, 7,500
is looking forward to initiating a seismic                                                     cents per share compared with 3.5 cents
                                               kilometre 2D seismic survey over the
work programme on the acreage in 2012.                                                         per share for the same period in 2010.
                                               Rhône Maritime concession, offshore
This is expected to be followed by a multi-                                                    Cash from operations increased by 39
                                               southern France, where Melrose has a
well drilling campaign starting in 2013.                                                       percent to $105 million compared to $75
                                               27.5 per cent non-operated interest.
                                                                                               million for the comparable period in 2010.
                                               The new seismic is of excellent quality and
                                               the data set is currently being processed       Capital expenditure during the first six
Turkey
                                               and interpreted. The initial data analysis is   months was $30 million and our revised
In May this year, Melrose spudded an           focusing on the post-salt Pliocene and the      full year forecast for 2011 is $87 million.
exploration well on the frontier exploration   pre-salt Miocene sections, which have           The full year forecast reflects the planned




04            Melrose Resources plc 2011
increase in exploration activity in the        recoverable reserves and will smooth
second half of the year, with wells in         the working interest production profile
Turkey, Bulgaria and Egypt in addition         over the next three years. Based on the
to Egyptian development costs.                 current forecast the Company is reducing
                                               full year production guidance for 2011
We are also pleased to report a significant
                                               to 36.0 Mboepd.
reduction in the Company’s net debt
position from $419 million at year end         We are currently drilling a well in
2010 to $367 million at 30 June 2011.          Turkey and later this year we should be
During the same period, the Company’s          in receipt of the results of the new seismic
financial gearing has reduced by some          interpretation for our Mesaha and Rhône
26 percent to 107 percent, putting us well     Maritime exploration concessions. We will
on track to achieve our target of around       also be drilling our first well to test the
100 percent by year end. It should be          Cretaceous oil play in the Egyptian Nile
noted, however, that due to increased          Delta. Looking further ahead to next year,
capital expenditure the rate of gearing        we plan to commence the exploration
decline in the second half of the year will    work programme on our new blocks
not be as rapid as observed in the first       offshore Romania and will be evaluating
half of the year.                              the central area of the Galata Block
                                               in Bulgaria.
No interim dividend is proposed at this
time and the final dividend will be assessed   In addition to the growth opportunities
as usual following the completion of the       presented by our existing portfolio,
Company’s Annual Results.                      our strengthening financial position is
                                               providing us with the capacity to pursue
                                               new business development opportunities
Outlook                                        and we are focussing on assets in both the
The first half of 2011 represented             exploration and development phase of the
something of a turning point for the           asset lifecycle. We are currently evaluating
Company, with the strong production            a number of opportunities in our existing
revenues from our two core areas in Egypt      areas of operations and also in some new
and Bulgaria allowing us to progress a         countries which present an attractive
number of high potential growth                combination of good hydrocarbon
initiatives whilst simultaneously reducing     fundamentals, competitive fiscal terms
our financial gearing.                         and sound operating environments.

Underpinning our future outlook is the         I would like to thank the Melrose staff,
performance of our existing producing          management and board as well as our
assets and we are maintaining a prudent        shareholders for their continued support
approach to reservoir management.              for the Company. We look forward to the
Notwithstanding this, we have experienced      next phase of our evolution with great
some operational challenges in Egypt this      confidence.
year which require remedial drilling and
completion activity and we have also
chosen to defer some West Khilala and
West Dikirnis facilities expenditures. These   Robert FM Adair
changes should have minimal impact on          16 August 2011




                                                                                              Melrose Resources plc 2011   05
Financial Review



Revenue in the period increased to $155.8 million reflecting production from the Kavarna and Kaliakra fields in Bulgaria of $57.5 million
in the period. Operating cash flow increased by 39 percent on the period ended 30 June 2010, enabling the Company to reduce net
debt from $418.9 million at 31 December 2010 to $367.3 million at 30 June 2011, taking the gearing level towards the Company’s
targeted level of 100 percent by year end.


Results for the six months ended 30 June 2011
Revenue in the six months ended 30 June 2011 increased by 42 percent to $155.8 million compared with $110.0 million for the six
months ended 30 June 2010. This increase is due to production from the Kavarna and Kaliakra fields of $57.5 million, offset in part by
the reduction in the revenues generated in the US due to the sale of the Permian Basin assets at the end of 2010.
Profit from operations in the period increased to $73.0 million compared with $38.1 million for the six months ended 30 June 2010. This
is after a ceiling test impairment charge of $12.3 million included in the depletion charge which relates to leases held in East Texas that,
due to sustained low gas prices, are thought unlikely to be developed. Excluding the impairment, profit from operations would be $85.3
million; an increase of 124 percent on the period ended 30 June 2010 and earnings would increase to 39.6 cents per share.
Profit before taxation in the first six months was $61.8 million (six months ended 30 June 2010: $26.2 million). Profit after taxation was
$33.2 million (six months ended 30 June 2010: $4.1 million), increasing earnings to 28.9 cents per share compared with 3.5 cents per
share for the six months ended 30 June 2010.


Revenue analysis by segment:
                                            6 months ended                     6 months ended                                    12 months ended
                                              30 June 2011                      30 June 2010                                    31 December 2010

                                Gas       Oil & liquids       Total    Gas   Oil & liquids        Total               Gas        Oil & liquids                Total
Revenue                         $m                  $m          $m     $m              $m          $m                 $m                   $m                  $m

Bulgaria                     57.5                    -        57.5       -              -            -          16.9                          -             16.9
Egypt                        43.5               53.6          97.1    51.1        48.8           99.9          105.4                  96.8                202.2
USA                            1.0                0.2          1.2     2.2          7.9          10.1             4.2                 17.1                  21.3
Total                      102.0                53.8         155.8    53.3        56.7          110.0          126.5                113.9                 240.4

Group cash flow from operations for the six months ended 30 June 2011 was $104.9 million compared with $75.4 million for the same
period in 2010, an increase of 39 percent in the period.

EBITDAX for the period was $134.4 million (six months ended 30 June 2010, $86.3 million).
                                                                                                    6 months ended          6 months ended         12 months ended
                                                                                                       30 June 2011           30 June 2010        31 December 2010
EBITDAX                                                                                                        $000                   $000                    $000

Profit before taxation                                                                                     61,760               26,187                   29,824
Add back:
Depreciation of other assets                                                                                  199                    270                     542
Depreciation and depletion                                                                                 59,823               39,702                   83,236
Decommissioning charge                                                                                      1,315                    982                  1,946
Unsuccessful exploration costs                                                                                    -               7,226                  10,843
Net financing cost                                                                                         11,281               11,889                   24,305
EBITDAX                                                                                                   134,378               86,256                 150,696
Write-back loss on disposal of oil and gas assets                                                                 -                       -              38,190
Adjusted EBITDAX                                                                                          134,378               86,256                 188,886

Capital expenditures during the period amounted to $30.0 million (six months ended 30 June 2010, $38.3 million). These expenditures
were split geographically between Egypt $25.2 million, Bulgaria $2.1 million, Turkey $2.5 million and other $0.2 million.

Group net debt reduced from $418.9 million at 31 December 2010 to $367.3 million at 30 June 2011 (30 June 2010: $459.6 million).
This reduction was funded from cash generated from operations of $104.9 million (June 2010: $75.4 million). Cash balances held at
30 June 2011 were $32.5 million (30 June 2010: $24.5 million) and undrawn loan facilities as at 30 June 2011 were $111.6 million
(30 June 2010: $21.8 million). Group gearing reduced to 107 percent at 30 June 2011 from 140 percent at 30 June 2010.

06           Melrose Resources plc 2011
Responsibility statement



We confirm that to the best of our knowledge:

•     the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted
      by the EU; and

•     the interim management report includes a fair review of the information required by:

(a)   DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six
      months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks
      and uncertainties for the remaining six months of the year; and

(b)   DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months
      of the current financial year and that have materially affected the financial position or performance of the entity during that period;
      and any changes in the related party transactions described in the last annual report that could do so.



Diane MV Fraser
Finance Director

16 August 2011




Principal risks and uncertainties



Melrose is subject to various risks and uncertainties that may impact its business in the remaining six months of the financial year as well
as in the more distant future. The principal risks and uncertainties faced by the Group remain unchanged from the disclosures included
in the Annual Report as at 31 December 2010. The Board categorises the risks as follows: political, operational, bribery and corruption,
financial, strategic and corporate. A more detailed explanation of the risks can be found on pages 26-27, 35-36 and 69-72 of the 2010
Annual Report and Financial Statements.




                                                                                                             Melrose Resources plc 2011    07
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2011




                                                                                                   6 months ended    6 months ended    12 months ended
                                                                                                      30 June 2011     30 June 2010   31 December 2010
                                                                                            Note              $000             $000               $000

Revenue                                                                                       2        155,766          110,033            240,381


Depletion and depreciation                                                                             (59,823)         (39,702)            (83,236)
Decommissioning charge                                                                                   (1,315)             (982)           (1,946)
Unsuccessful exploration costs                                                                                   -        (7,226)           (10,843)
Other cost of sales                                                                                    (10,824)         (13,382)            (28,601)
Total cost of sales                                                                                    (71,962)         (61,292)          (124,626)
Gross profit                                                                                            83,804           48,741            115,755
Administrative expenses                                                                                (10,763)         (10,665)            (23,436)
Loss on disposal of oil and gas assets                                                                           -               -          (38,190)
Profit from operations                                                                        2         73,041           38,076              54,129
Financing income                                                                                              30                 5            1,529
Financing costs                                                                                        (11,311)         (11,894)            (25,834)
Profit before taxation                                                                                  61,760           26,187              29,824
Tax release on disposal of oil and gas assets                                                                    -               -            6,338
Income tax expense                                                                            3        (28,610)         (22,137)            (47,847)
Profit/(loss) for the period                                                                            33,150             4,050            (11,685)


Earnings/(loss) per share (cents)
Basic                                                                                         4             28.9              3.5              (10.2)
Diluted                                                                                       4             28.9              3.5              (10.2)

The profit/(loss) for the period is 100% attributable to equity shareholders.
All activities were continuing activities.




Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2011

                                                                                                   6 months ended    6 months ended    12 months ended
                                                                                                      30 June 2011     30 June 2010   31 December 2010
                                                                                                              $000             $000               $000

Profit/(loss) for the period                                                                            33,150             4,050            (11,685)
Total other comprehensive profit as a result of changes in fair value of cash flow hedges                    533             321              1,625
Total comprehensive income/(loss) for the period                                                        33,683             4,371            (10,060)

No income tax arises on the change in fair value of cash flow hedges since the deferred tax asset on these losses is not recognised in the
Company.




08           Melrose Resources plc 2011
Condensed consolidated balance sheet
as at 30 June 2011




                                                                          As at                  As at               As at
                                                                   30 June 2011          30 June 2010    31 December 2010
                                                            Note           $000                  $000                $000

Non-current assets
Goodwill                                                             52,976                 52,976              52,976
Intangible assets                                             5      79,166                 85,446              87,383
Property, plant and equipment                                 5     491,005               614,244              513,855
Deferred tax asset                                                            -               3,343               1,267
                                                                    623,147               756,009              655,481

Current assets
Inventories                                                          26,220                 27,047              25,235
Trade and other receivables                                         148,913               115,582              159,396
Cash and cash equivalents                                            32,469                 24,498              70,353
                                                                    207,602               167,127              254,984
Total assets                                                  2     830,749               923,136              910,465


Current liabilities
Trade and other payables                                            (37,931)               (48,073)             (55,103)
Provisions                                                               (831)                  (784)              (524)
                                                                    (38,762)               (48,857)             (55,627)

Non-current liabilities
Other payables                                                                -                 (329)              (181)
Bank loans                                                    6    (399,751)             (484,056)             (489,215)
Deferred tax liability                                              (31,462)               (41,400)             (32,166)
Provisions                                                          (17,526)               (19,860)             (18,281)
                                                                   (448,739)             (545,645)             (539,843)
Total liabilities                                             2    (487,501)             (594,502)             (595,470)
Net assets                                                          343,248               328,634              314,995


Total equity attributable to equity holders of the parent
Issued capital                                                7      20,702                 20,699              20,699
Share premium                                                 7            23             209,225              209,225
Hedging reserve                                                               -              (1,837)               (533)
Retained reserves                                                   322,523               100,547               85,604
Total equity                                                        343,248               328,634              314,995




                                                                                  Melrose Resources plc 2011             09
Condensed consolidated statement of cash flows
for the six months ended 30 June 2011




                                                                     6 months ended    6 months ended    12 months ended
                                                                        30 June 2011     30 June 2010   31 December 2010
                                                                                $000             $000               $000

Cash flows from operating activities
Profit from operations                                                    73,041           38,076              54,129


Adjustments for:
Depreciation of other assets                                                   199             270                 542
Depreciation, depletion and decommissioning charge                        61,138           40,684              85,182
Unsuccessful exploration costs                                                     -         7,226             10,843
Excess cost of decommissioning                                             (1,243)              (52)              (335)
Loss on disposal of oil and gas assets                                             -               -           38,190
Non cash expense relating to share-based payment                               768             884              1,597
Income tax charge on Egyptian revenue                                    (27,728)         (26,470)            (53,067)
Operating cash flow before changes in working capital                    106,175           60,618            137,081
(Increase)/ decrease in inventory                                             (985)          5,448              7,260
Decrease/(increase) in trade and other receivables                          3,454          16,421             (17,752)
(Decrease)/increase in trade and other payables                            (3,788)          (7,063)             3,979
Cash generated from operations                                           104,856           75,424            130,568
Income taxes paid                                                              (48)         (1,140)            (1,058)
Net cash inflow from operating activities                                104,808           74,284            129,510

Cash flows from investing activities
Proceeds from sale of property, plant and equipment                         9,068                  -           63,322
Interest received                                                               30                 5                19
Acquisition of property, plant and equipment and intangible assets       (46,880)         (43,994)          (108,437)
Net cash outflow from investing activities                               (37,782)         (43,989)            (45,096)


Cash flows from financing activities
Proceeds from the exercise of share options                                     26                 -                   -
Interest paid                                                            (14,028)          (15,069)           (21,852)
Borrowings raised                                                                  -       10,000              18,181
Repayment of borrowings                                                  (90,857)           (7,658)           (11,901)
Dividends paid                                                                     -               -           (5,561)
Net cash (outflow)/inflow from financing activities                     (104,859)         (12,727)            (21,133)


Net (decrease)/increase in cash and cash equivalents                     (37,833)          17,568              63,281
Cash and cash equivalents at start of period                              70,353             6,467              6,467
Effect of exchange rate fluctuations on cash held                              (51)            463                 605
Cash and cash equivalents at end of period                                32,469           24,498              70,353




10              Melrose Resources plc 2011
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2011




                                                                            Attributable to Owners of the Company
                                                            Share          Share           Hedging                Retained              Total
                                                           capital      premium             reserve               earnings             equity
For the six months ended 30 June 2011              Note      $000           $000               $000                   $000              $000

Balance at 1 January 2011                                 20,699      209,225                (533)               85,604             314,995
Profit for the period                                            -             -                   -             33,150              33,150
Transfer from share premium to retained earnings     7           -    (209,225)                    -           209,225                     -
Share options exercised                              7          3           23                     -                      -              26
Change in fair value of cash flow hedges                         -             -              533                         -            533
Dividends to equity holders                          7           -             -                   -              (6,247)            (6,247)
Equity settled transactions                                      -             -                   -                  791               791
Balance at 30 June 2011                                   20,702            23                     -           322,523              343,248



                                                                              Attributable to Owners of the Company
                                                             Share         Share            Hedging                Retained             Total
                                                            capital     premium              reserve               earnings            equity
For the six months ended 30 June 2010              Note      $000          $000                $000                   $000              $000

Balance at 1 January 2010                                 20,699      209,225              (2,158)             101,307              329,073
Profit for the period                                            -             -                   -               4,050              4,050
Change in fair value of cash flow hedges                         -             -              321                         -            321
Dividends to equity holders                          7           -             -                   -              (5,561)            (5,561)
Equity settled transactions                                      -             -                   -                  751              751
Balance at 30 June 2010                                   20,699      209,225              (1,837)             100,547              328,634



                                                                              Attributable to Owners of the Company
                                                             Share         Share            Hedging                Retained             Total
                                                            capital     premium              reserve               earnings            equity
For the year ended 31 December 2010                Note      $000          $000                $000                   $000              $000

Balance at 1 January 2010                                 20,699      209,225              (2,158)             101,307              329,073
Loss for the year                                                -             -                   -            (11,685)            (11,685)
Change in fair value of cash flow hedges                         -             -            1,625                         -           1,625
Dividends to equity holders                          7           -             -                   -              (5,561)            (5,561)
Equity settled transactions                                      -             -                   -               1,543              1,543
Balance at 31 December 2010                               20,699      209,225                (533)               85,604             314,995




                                                                                                       Melrose Resources plc 2011           11
Notes to the interim condensed financial statements
for the six months ended 30 June 2011




1.   Accounting policies and basis of preparation

     Melrose Resources plc is a company domiciled in the United Kingdom. The Condensed Consolidated Interim Financial Statements
     of the Company as at and for the six months ended 30 June 2011 comprise the Company and its subsidiaries (together referred to
     as the “Group”).

     This condensed set of financial information has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted
     by the EU. As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed set of financial
     information has been prepared applying the accounting policies and presentation that were applied in the preparation of the
     Company’s published consolidated financial statements for the year ended 31 December 2010, except for the changes set
     out below.

     The comparative figures for the financial year ended 31 December 2010 are not the Company’s statutory accounts for that
     financial year. Those accounts have been reported on by the Company’s auditors and delivered to the registrar of companies.
     The report of the auditors was i) unqualified, ii) did not include a reference to any matters to which the auditors drew attention
     by way of emphasis without qualifying their report, and iii) did not contain a statement under section 498 (2) or (3) of the
     Companies Act 2006.

     This condensed consolidated interim financial information does not include all of the information required for full annual financial
     statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year
     ended 31 December 2010, which are available on the Company’s website, www.melroseresources.com.

     The interim financial information for the six months ended 30 June 2011 is unaudited and has not been reviewed by the auditors.

     The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of
     not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing
     the financial information.

     The condensed consolidated interim financial information was approved by the Board of Directors on 16 August 2011.

     The following new standards, amendments to standards and interpretations which are mandatory for the first time for financial
     periods commencing on 1 January 2011 have been adopted. None of these have had a significant impact on the reported results.

     •    Revised IAS 24 ‘Related party disclosures’, issued in November 2009; and

     •    ‘Improvements to IFRSs’, issued in May 2010.




12          Melrose Resources plc 2011
2.   Operating segments

     The chief operating decision maker has been identified as the executive directors. The executive directors review the Group’s
     internal reporting in order to assess performance and allocate resources and the Group has determined the operating segments
     based on this reporting.

     The executive directors consider the business from a geographic perspective, and assess the performance of the following regions:
     Bulgaria, Egypt, USA and other Europe. All of the operating segments derive their revenues from the sale of oil, associated liquids
     and gas to external customers.

     The executive directors consider the performance of the operating segments based on profit from operations. The information
     provided to the chief operating decision maker is measured in a manner which is consistent with the financial statements.

                                                                      Bulgaria         Egypt          USA         Other Europe           Consolidated
     Six months ended 30 June 2011                                       $000           $000          $000                $000                   $000

     Revenues                                                        57,459         97,115          1,192                      -          155,766
     Operating profit/(loss) by segment                              37,147         56,444        (13,028)                (706)             79,857
     Corporate expenses                                                                                                                     (6,816)
     Operating profit                                                                                                                       73,041
     Financing income                                                                                                                             30
     Financing costs                                                                                                                       (11,311)
     Profit before taxation                                                                                                                 61,760

                                                                       Bulgaria        Egypt           USA          Other Europe          Consolidated
     Six months ended 30 June 2010                                       $000          $000           $000                 $000                  $000

     Revenues                                                                -      99,907         10,126                      -          110,033
     Operating (loss)/profit by segment                               (1,976)       53,705         (8,047)                (596)             43,086
     Corporate expenses                                                                                                                      (5,010)
     Operating profit                                                                                                                       38,076
     Financing income                                                                                                                               5
     Financing costs                                                                                                                       (11,894)
     Profit before taxation                                                                                                                 26,187


                                                                       Bulgaria        Egypt           USA          Other Europe          Consolidated
     Year ended 31 December 2010                                         $000          $000           $000                 $000                  $000

     Revenues                                                        16,866       202,216          21,299                      -          240,381
     Operating profit/(loss) by segment                               7,939       107,452         (47,346)             (3,836)              64,209
     Corporate expenses                                                                                                                    (10,080)
     Operating profit                                                                                                                       54,129
     Financing income                                                                                                                        1,529
     Financing costs                                                                                                                       (25,834)
     Profit before taxation                                                                                                                 29,824

     Other Europe comprises Turkey, France and Romania.




                                                                                                            Melrose Resources plc 2011               13
Notes to the interim condensed financial statements
(continued)




2.   Operating segments (continued)
                                                                    6 months ended                   6 months ended                       12 months ended
                                                                       30 June 2011                    30 June 2010                      31 December 2010
                                                                         Oil/liquids/                    Oil/liquids/                           Oil/liquids/
                                                             Gas        Condensate            Gas       Condensate                Gas          Condensate
     Revenues                                               $000                $000         $000               $000             $000                  $000

     Bulgaria                                           57,459                     -            -                  -        16,866                        -
     Egypt                                              43,460            53,655         51,085          48,822            105,378              96,838
     USA                                                  1,014                178         2,263           7,863              4,205             17,094
     Total                                             101,933            53,833         53,348          56,685            126,449            113,932

     Two of the Group’s customers accounted for more than 10% of revenue in 2011 and one customer accounted for more than
     10% of revenue in 2010. All sales in Egypt in 2010 and 2011 are to a state owned company. The revenue derived from sales to
     this customer is set out in the table above. Revenue in the period to 30 June 2011 included $52.3 million to a Bulgarian state
     owned company.
                                                                                                                          Unallocated
                                                                                                             Other         Corporate
                                                         Bulgaria             Egypt          USA            Europe          Balances                  Total
     As at 30 June 2011                                     $000               $000          $000             $000               $000                 $000

     Total segment assets                              155,151          645,848            6,044           6,279            17,427            830,749
     Total segment liabilities                        (211,197)          (62,240)       (149,730)              (57)        (64,277)          (487,501)

     As at 30 June 2010
     Total segment assets                              115,285          649,703         137,071            4,771            16,306            923,136
     Total segment liabilities                        (156,100)          (74,415)       (200,793)              (98)       (163,096)          (594,502)

     As at 31 December 2010
     Total segment assets                              161,569          647,627          32,318            3,593            65,358            910,465
     Total segment liabilities                        (165,523)          (72,460)       (191,599)              (39)       (165,849)          (595,470)


3.   Income tax expense

     The tax charge for the period of $28.6 million gives an effective tax rate of 46.3% based on the forecast tax rate for the current
     financial year. The tax charge comprises a charge of $28.0 million for current tax and a charge of $0.6 million for deferred tax.

     The effective tax rate reflects that a significant proportion of the Group’s profits arise in Egypt, where the standard rate of tax is
     40.55%. There are also expenses incurred by the Group which do not qualify for tax relief in the relevant countries, increasing
     the effective rate of the tax charge. Due to uncertainty on recovery against future profits, certain tax losses have not been
     recognised in deferred tax.


4.   Earnings per share
     The calculation of basic and diluted earnings/(loss) per share is based upon the following:
                                                                                                    6 months ended      6 months ended    12 months ended
                                                                                                       30 June 2011       30 June 2010   31 December 2010
                                                                                                               $000               $000               $000

     Profit/(loss) for the period attributable to
     ordinary shareholders (basic and diluted)                                                           33,150               4,050            (11,685)

     Earnings/(loss) per share (cents)
     Basic                                                                                                   28.9                3.5               (10.2)
     Diluted                                                                                                 28.9                3.5               (10.2)




14              Melrose Resources plc 2011
     The weighted average number of ordinary shares used in the calculation of basic and diluted earnings/(loss) per share for each
     period was calculated as follows:
                                                                                                          6 months ended          6 months ended      12 months ended
                                                                                                             30 June 2011           30 June 2010     31 December 2010
                                                                                                             No. of shares           No. of shares        No. of shares

     Issued ordinary shares at start of period                                                            114,668,063 114,668,063 114,668,063
     Shares issued during the period                                                                            21,115                          -                    -
     Shares in issue at end of period                                                                     114,689,178 114,668,063 114,668,063
     Weighted average number of ordinary shares at end of period                                          114,678,679 114,668,063 114,668,063
     Effect of share options in issue                                                                         124,082              2,370,366                         -
     Weighted average number of ordinary shares at
     end of period – for diluted earnings per share                                                       114,802,761 117,038,429 114,668,063


5.   Capital expenditure

     Capital expenditure during the period amounted to $30.0 million (six months ended 30 June 2010, $38.3 million). Capital
     expenditures were split between Egypt - $25.2 million, Bulgaria - $2.1 million, Turkey - $2.5 million and other - $0.2 million.



6.   Bank loans and financial instruments

     The Group’s interest-bearing loans and borrowings are as follows:
                                                                                                                    As at                   As at                As at
                                                                                                             30 June 2011           30 June 2010     31 December 2010
                                                                                                                     $000                   $000                 $000

     Non-current liabilities
     Bank loans                                                                                               399,751                484,056               489,215

     The Company has a Senior Loan Facility of $450 million and a Subordinate Loan Facility of $70 million. Both facilities have a final
     repayment date of 31 December 2014. The Group made repayments of $45.9 million during the period against the Senior Loan
     Facility, and $45 million against the Subordinate Loan Facility.

     The following table indicates the effective interest rates of interest-bearing liabilities at the balance sheet date and the period in
     which the principal amounts fall due:
                                                                                                                Repayable               Repayable            Repayable
                                                                             Effective Rate      Total1      within 1 year1             1-2 years1           3-5 years1
                                                                                         %       $000                 $000                   $000                 $000

     As at 30 June 2011
     Secured bank loans                                                              3.4      406,500                    -             74,500              332,000
     As at 30 June 2010
     Secured bank loans                                                              4.3      493,419                    -             36,419              457,000
     As at 31 December 2010
     Secured bank loans                                                              4.3      497,356                    -             47,356              450,000
     Note 1: Excluding the effect of amortisation of loan arrangement fees

     The Group is exposed to currency risk arising from purchases, sales, borrowings, cash and cash equivalents that are denominated in
     currencies other than US Dollars. It is Group policy that borrowings should match the currency of the cash flows from which it is
     expected that they will be repaid. This has been the case throughout the interim reporting period.




                                                                                                                             Melrose Resources plc 2011               15
Notes to the interim condensed financial statements
(continued)




7.   Share capital and share premium

     During the period 21,115 shares at 78 pence per share were issued under employee share options arrangements (six months ended
     30 June 2010: nil shares).

     In March 2011, the High Court of England and Wales passed a Special Resolution to reduce the share capital of the Company by
     cancelling the Share Premium Account at that date. The amount was transferred to distributable reserves on 7 March 2011
     following registration of cancellation by the Registrar of Companies of England and Wales.



     Dividends

     The following dividends were declared and approved by the Group:
                                                                                                        Pence       Total cost     Total cost
                                                                                                     per share          £000           $000

     In the six months ended 30 June 2011                                                            3.40p          3,899          6,247
     In the six months ended 30 June 2010                                                            3.10p          3,555          5,561
     In the twelve months ended 31 December 2010                                                     3.10p          3,555          5,561

     The dividend declared and approved in the six months ended 30 June 2011 was paid on 22 July 2011.



8.   Contingent liabilities and capital commitments

     The Group has contingent liabilities of $350 million (30 June 2010: $340 million) in respect of guarantees provided to secure the
     bank loans of subsidiary undertakings.

     The Group had capital commitments of $11 million at 30 June 2011 (30 June 2010: $62 million) with associated cash outflows
     arising over the period ending September 2011.



9.   Related party transactions

     Controlling related party
     The directors consider that the immediate and ultimate parent company of Melrose Resources plc is Skye Investments Limited, which
     is registered in England and Wales, as it owns over 50% of the ordinary share capital. Skye Investments Limited is controlled by the
     Adair Trusts. Skye Investments Limited is the parent company of the largest group of companies for which group accounts have been
     drawn up. Copies of the group accounts of Skye Investments Limited are available from No. 1 Portland Place, London W1B 1PN.


     Identity of related parties
     The Company has a related party relationship with its subsidiaries and its directors.


     Related Party Transactions
     With the exception noted below, there are no related party transactions during the six months ended 30 June 2011 (30 June 2010: nil).


     Contract of significance
     Under the terms of a Net Profit Interest Agreement relating to the Galata gas field and originally entered into in 1998 an amount of
     nil is payable in respect of the six months ended 30 June 2011 (nil in respect of the six months ended 30 June 2010) to Orbis
     Holding Ltd, a company in which David Archer has a 50% beneficial interest.




16            Melrose Resources plc 2011
Directors and advisers



Directors                                          USA office                                   Solicitors
Robert F M Adair                                   Melrose Energy Company                       Tods Murray LLP
James D Agnew                                      20333 State Highway 249                      Edinburgh Quay
David F Archer                                     Suite 310                                    133 Fountainbridge
Diane M V Fraser                                   Houston, TX 77070                            Edinburgh, EH3 9AG
Ahmed L Kebaili                                    USA
                                                                                                DLA Piper UK LLP
Alan J Parsley
                                                                                                3 Noble Street
Anthony E Richmond-Watson                          Egyptian office
                                                                                                London, EC2V 7EE
David H Thomas                                     3/C Lasilky Zone
William P Wyatt                                    Ahmed Kamel Street
                                                                                                Principal bankers
                                                   New Maadi
                                                                                                Bank of Scotland Plc
Company Secretary                                  Cairo 11431
                                                                                                New Uberior House
Alasdair N Robinson                                Egypt
                                                                                                11 Earl Grey Street
                                                                                                Edinburgh, EH3 9BN
Registered Office                                  Bulgarian offices
No. 1 Portland Place                               Melrose Resources S.à r.l.                   International Finance Corporation
London, W1B 1PN                                    Office 10                                    2121 Pennsylvania Avenue NW
                                                   2 Nikolai Haitov Street                      Washington, DC
Registered in England                              Iztok, Sofia 1113                            USA 20433
No. 3210072                                        Bulgaria
                                                                                                Registrars
                                                   Melrose Resources S.à r.l.
Head office                                                                                     Share Registrars Limited
                                                   32 Marko Balabanov Street
Exchange Tower                                                                                  9 Lion & Lamb Yard
                                                   Varna 9010
19 Canning Street                                                                               Farnham
                                                   Bulgaria
Edinburgh, EH3 8EG                                                                              Surrey, GU9 7LL
Telephone: +44 (0) 131 221 3360
                                                   Auditors
                                                                                                Stockbrokers
                                                   KPMG Audit Plc
                                                                                                Brewin Dolphin
                                                   Saltire Court
                                                                                                48 St. Vincent Street
                                                   20 Castle Terrace
                                                                                                Glasgow, G2 5TS
                                                   Edinburgh, EH1 2EG
                                                                                                Collins Stewart Europe Limited
                                                                                                88 Wood Street
                                                                                                London, EC2V 7QR




Glossary
bbl                  barrel of oil or condensate   bwpd            barrels of water per day     Mbpd           thousand barrels per day
Bcf                  billion cubic feet of gas     EBITDAX         earnings before interest,    Mcf            thousand cubic feet of gas
Bcfe                 billion cubic feet of                         taxation, depletion,         Melrose        the Company or the Group,
                     gas equivalent                                depreciation, amortisation                  as appropriate
                                                                   and exploration costs
bcpd                 barrel of condensate                                                       Mm3            thousand cubic
                     per day                       GRI             gas re-injection                            metres of gas
bpd                  barrels per day               the Group       the Company and              MMbbl          million barrels of oil
                                                                   its subsidiaries                            or condensate
boe                  barrel of oil equivalent
                                                   LPG             liquid petroleum gas         MMboe          million barrels of oil
boepd                barrel of oil equivalent
                     per day                       Mbbl            thousand barrels of oil                     equivalent
                                                                   or condensate                MMcf           million cubic feet of gas
the Company          Melrose Resources plc
                                                   Mboe            thousand barrels of          MMcfpd         million cubic feet of gas
Bm³                  billion cubic metres of gas
                                                                   oil equivalent                              per day
bopd                 barrel of oil or condensate
                                                   Mboepd          thousand barrels of          MMcfepd        million cubic feet of gas
                     per day
                                                                   oil equivalent per day                      equivalent per day

The factor used to convert Mcf to bbl is 5.8
Melrose Resources plc
www.melroseresources.com




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