Emerald Energy Plc - 2 September 2004

EMERALD ENERGY PLC (“EMERALD” OR THE “COMPANY”) ANNOUNCES INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2004

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HIGHLIGHTS⁽¹⁾⁽²⁾

• The Campo Rico #1 well spudded in January, put on production in May, bringing current production from the Company’s two wells to about 1700 bopd(3)
• Production for the period of 159,000 bbl of oil, compared to 134,000 bbl of oil in the same period of last year
• EBITDA(4) of $902,000 on revenue of $4,545,000, compared to $251,000 on revenue of $3,006,000 in the same period of last year
• Strong balance sheet with net cash of $6,373,000 as at 30 June 2004
• Further £9.3 million ($16.7 million) before expenses raised in August 2004
• Plans to contract a rig for a 3-well drilling programme in the Campo Rico Block

Commenting on the results, Chairman and Chief Executive, Alastair Beardsall, said:

“We are pleased with the marked improvement in the Company’s performance in the first six months of 2004. The successful start of production from the Campo Rico field supported by strength in the international oil prices demonstrates the potential of the Company’s existing assets. The acceleration of our drilling programmes should earn Emerald recognition as an active and successful player in the Colombian E&P sector.”

Results

In the six months to 30 June 2004, production totalled 159,000 bbl of oil, 19% higher than the total production of 134,000 bbl achieved in the same period of last year. This was a result of bringing the Campo Rico #1 discovery well in the Campo Rico Block into production quickly, in May 2004, and maintaining production from the Gigante #1A well in the Matambo Block at an average rate of 755 bopd.

Prevailing oil prices allowed the Company to achieve an average revenue from oil sales of $28.29 per barrel of produced oil, compared to the figure of $23.91 achieved in the same period of last year(5). Coupled with increased production, this resulted in a 52% increase in revenue from oil sales. This improved revenue helped the Company to achieve an EBITDA of $902,000, compared to $251,000 in the same period of last year.

In the reporting period, administrative expenses totalled $1,634,000, including a $454,000 provision for the UK national insurance contributions relating to the Company’s Share Option Scheme. This provision resulted from a significant appreciation of the Company’s share price in the reporting period and it does not represent a cash payment. Net of this provision, administrative expenses were $1,180,000 compared to a figure of $1,521,000 in the six months to 30 June 2003.

Profit after tax for the period was $1,716,000, compared to the loss of $171,000 in the same period of last year.

Board changes

Mr Keith Henry was appointed to the board on 9 February 2004. All of the directors were re-elected at the annual general meeting of shareholders held on 21 May 2004.

Outlook

The Company is currently delivering about 1700 bopd from its two producing wells, compared to the average 874 bopd achieved in the six months to 30 June 2004. Increased production should contribute positively to the Company’s future financial results, particularly at the prevailing oil prices.

On 1 September 2004, the Company announced that it had successfully raised approximately £9.3 million ($16.7 million) before expenses. The new funds will enable Emerald to accelerate its drilling programmes. Before the end of this year, the Company intends to drill two production wells in the Campo Rico field. Early in 2005, the Company intends to commence drilling two exploration wells within its current Association Contracts: Vigia #1 (formerly known as the Cimarron prospect) only 8 km to the east of the Campo Rico #1 discovery well and Fortuna #1 in the Fortuna Block. Success in these exploration wells would be followed by the drilling of further production wells in these Blocks.

In addition, the Company is also actively evaluating new exploration acreage in Colombia and projects outside Colombia.

Alastair Beardsall
Chairman
2 September 2004

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