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Trap Oil Group plc TRAP Half Yearly Report

  Trap Oil Group plc (TRAP) - Half Yearly Report

RNS Number : 1449N
Trap Oil Group plc
26 September 2012




       26 SEPTEMBER2012

                                      

                              TRAP OIL GROUP PLC

                                      

              INTERIM RESULTS FOR THE PERIOD ENDED 30 JUNE 2012

Trap Oil  Group  plc  ("Trapoil"  or the  "Company"  and,  together  with  its 
subsidiaries, the "Group") (AIM: TRAP) the independent oil and gas exploration
and appraisal company focused on the  UK Continental Shelf ("UKCS") region  of 
the North Sea, is pleased to announce its results for the period ended 30 June
2012.



Commenting on  the results,  Mark Groves  Gidney, Chief  Executive Officer  of 
Trapoil, said, "The  Company continues to  be very well  placed: drilling  has 
just started at the first of two high impact wells, either one of which  could 
be  transformational;  we  are  in  the  process  of  completing  the   Athena 
acquisition which together with Lybster moves the Company into production; and
results are shortly expected  from the eight applications  put forward in  the 
27th Licensing Round. These  activities have all  been progressed against  the 
backdrop of one of the more challenging periods for North Sea E&P  businesses. 
As importantly, the  Company is  in a  financially healthy  position with  the 
capacity to fund its near term commercial objectives."





1st Half 2012

· In  March 2012  announced the  proposed acquisition  of a  15 per  cent. 
interest in the Athena Oil Field:

1. Consent  received from  the Secretary  of State  for Energy  and  Climate 
Change for the proposed transfer of  an initial 10 per cent. working  interest 
in the Athena Oil Field from Dyas UK Limited

2. Awaiting final approvals from partners and BW Offshore

3. Production flow rate estimated to be c.11,000 bopd

· First oil achieved from Athena Oil Field and Lybster well

· Raised £4.3m (before expenses) via an institutional placing in June 2012

· Loss before and after taxation reduced to £1.55m



Expected in 2nd Half 2012

· Drilling of  two high  impact wells, Romeo  and Scotney,  either one  of 
which could, if successful, be transformational

· Further progress towards completing the proposed acquisition of a  33.33 
per cent interest in  Trent East, estimated to  contain c.40-60bcf (gross)  of 
resources and Trapoil to become operator

· Results due  from eight applications  made in the  27th Licensing  Round 
where extensive use was made of the Group's access to the unique CGGVeritas 3D
seismic data

Mark Groves Gidney, continued, "Looking ahead, we will continue to stick to
our business model of building an active drilling programme leveraged
primarily by carried interests with leading international partners who are
also targeting wells with near term cash potential and are keen to exchange
higher upfront investment costs for access to our expertise in identifying
high quality exploration opportunities in the UKCS."

Enquiries:

                                                   

Trap Oil Group plc       Mark Groves Gidney, CEO     Tel: 0203 170 5586

                                                   www.trapoil.com
                                                   

Strand Hanson Limited    James Harris                Tel: 0207 409 3494

                         Matthew Chandler            

                         James Spinney

                         
FirstEnergy Capital LLP Hugh Sanderson              Tel: 0207 448 0200

                         David van Erp               
Mirabaud Securities LLP  Peter Krens           Tel: 0207 321 2508

                         
 Cardew Group            Tim Robertson          Tel: 0207 930 0777

                         Shan Shan Willenbrock trapoil@cardewgroup.com

                         Lauren Foster



Notes to editors:



· The  Group  was created  in  2008 by  a  team of  experienced  industry 
executives with  a broad  range  of oil  and  gas technical,  operational  and 
financial expertise and professional skills.



· Trapoil has  developed long  term relationships with  key oil  industry 
partners and  major suppliers  and consultants  including CGGVeritas  Services 
(UK) Limited ("CGGVeritas") and Applied Drilling Technology International  and 
Exploration Geosciences Limited.



· The  Company  utilises  a  research-led,  knowledge-based  approach  to 
identify and deliver promising exploration and appraisal opportunities, and to
this end has secured  extensive long term access  to CGGVeritas' state of  the 
art 3D seismic database  over the majority  of the Central  North Sea area  on 
negotiated terms. CGGVeritas is a  leading pure-play geophysical services  and 
equipment provider. Access to such 3D  seismic data serves to strengthen  the 
group's ability to create opportunities on  both open and held acreage in  the 
UKCS.





Chief Executive OFFICER's Report

Introduction



In a challenging global macro economic climate, Trapoil has established itself
as a  focused  independent  UK  exploration  and  appraisal  company  offering 
investors participation in one of the  more active drilling programmes on  the 
UK Continental Shelf, with  the majority of  the well opportunities  leveraged 
via carried interests.  We have  intentionally built a  portfolio of  drilling 
opportunities  that   balances   lower  risk/lower   return   prospects   with 
commensurate near  term cashflow  potential, with  higher risk  opportunities, 
which, if  successful, could  generate significant  upside and  transform  the 
Company. It is clearly impossible to  predict with any certainty which of  the 
wells will prove to be successful  and commercially viable, but by pursuing  a 
balanced and prudent portfolio  management policy, we  are confident that  our 
existing assets  and drill  ready opportunities  will ultimately  provide  our 
shareholders with a very attractive return on their investment.



Our progress to date has been achieved against a backdrop of a difficult  year 
for UK North Sea drilling, due inter  alia to fiscal changes announced by  the 
UK  Government  and  the  continuing   weak  global  economic  and   financing 
environment. Challenging equity  markets in  particular have made  it all  the 
more important to have a solid, low cost business model where the Company  can 
fill a niche, working alongside its strong joint venture partners with  proven 
track records.  Trapoil remains  committed to  pursuing attractive  investment 
opportunities in the increasingly mature UK  North Sea region, where the  size 
of prize for  a given  risk profile is  decreasing over  time, underpinned  by 
strong oil and gas prices and growing spare capacity in existing pipelines and
platform facilities. The tight drilling  market however, caused by rigs  being 
redeployed away from the North Sea area, has inevitably led to some delays  to 
our anticipated drilling schedule,  but we are now  drilling the first of  two 
high impact wells. We are also increasing our exposure to lower risk appraisal
wells that we  expect will be  drilled and provide  potential additional  cash 
flow in the short to medium term.



We are close to  completing our acquisition of  an initial equity interest  in 
the producing Athena Oil Field  ("Athena"), as previously announced, which  we 
believe will further  build upon  the solid  foundation of  the Company,  with 
anticipated  significant  tax  efficiencies.  Combined  with  production  from 
Lybster, we will therefore shortly have secured revenue streams to  contribute 
to the funding for our 2013/2014 drilling programme.



Looking ahead to  the remainder  of 2012,  we envisage  several catalysts  for 
further growth.  In  addition  to  the impending  completion  of  the  Athena 
acquisition and  our continuing  drilling programme,  we look  forward to  the 
results of our applications in the  Department of Energy and Climate  Change's 
("DECC's") 27th Licensing  Round in  which we have  been active  participants, 
securing the  Trent  East  opportunity  where we  are  seeking  to  become  an 
operator,  and  we  also  look   forward  to  additional  attractive   farm-in 
opportunities.



Financial results



Our financial results for the first half of 2012 show revenue of £0.77m (2011:
£0.80m) and  a  loss  after  taxation  of  £1.55m  (2011:  £1.80m)  reflecting 
principally exploration and  administrative expenditure. As  at 30 June  2012, 
cash reserves were £33.47m including £3m of restricted cash. These results are
in line with our expectations and do not reflect the acquisition of our equity
interest in Athena, which has  yet to be completed.  We remain well funded  to 
deliver our near term operations.



Drilling schedule



Over the course of  the last 15  months, we have  established an exciting  and 
well balanced portfolio of drilling opportunities, many of which are  expected 
to come to fruition over the course of the next 18 months. Trapoil's  business 
model, of predominantly holding  carried interests in  a range of  exploration 
licences minimises  the risks  to  the business.  The carried  interest  model 
balances the lack of control Trapoil has over the timing and prioritisation of
drilling opportunities with the removal of, or a significant reduction in, the
downside impact of drilling or operational delays, funding exposure or  shifts 
in the focus of its partners.



We drilled one well in H1 2012  - Orchid (Licence P.1556, Block 29/1c) -  that 
resulted in  the discovery  of an  approximate 200ft+  oil column  within  the 
primary Chalk  reservoir.  The  well  characteristics  and  differing  partner 
materiality thresholds, made  it unpalatable  for the consortium,  led by  the 
operator Summit Petroleum  Limited, to  incur the  cost of  testing the  well. 
Trapoil's preference was to test  the well but as  there was no consensus  the 
well was,  as  always  planned,  plugged and  abandoned.  The  partnership  is 
currently evaluating its potential options going forward.



Drilling high impact wells in 2012



Our next wells  are to  be the Suncor  Energy UK  Limited ("Suncor")  operated 
Romeo (Licence P.1666, Block 30/11c) and Scotney (Licence P.1658, Block 20/5b)
prospects where we  are fully carried  by our partners.  These wells will  be 
drilled back to  back, beginning in  September 2012. Both  of these wells  are 
potentially  high  impact  for  Trapoil  if  our  partners'  projections   are 
ultimately realised. The value accretion to Trapoil is significantly  enhanced 
by the carry, where we will pay no costs until first production.



Later in  2012, we  anticipate drilling  the Magnolia  (Licence P.1610,  Block 
13/23a) well, operated by Dana Petroleum (BVUK) Limited ("Dana"), where we are
again fully carried.



Planned 2013 / 2014 drilling campaign



The drilling of the  Magnolia well will  be followed, using  the same rig,  by 
Norwegian Energy Company  UK Limited's  ("Noreco's") high  impact Crazy  Horse 
(Licence P.1650, Block  14/13) well,  where we  are partially  carried. It  is 
currently anticipated that the Crazy Horse well will spud in H2 2013 as we are
subject to the rig's other third party commitments and the timing of its  five 
year inspection, early next  year. We are also  involved, via a small  working 
interest, in  the pending  decision to  appraise the  Dana Petroleum  operated 
Surprise (Licence P.1267, Blocks 12/25a & 13/21b) discovery, however there are
ongoing discussions regarding the likelihood of this well being drilled. 



We also have a  number of appraisal opportunities  that have the potential  to 
deliver near  term  organic cashflow.  Over  the  course of  the  last  year, 
together with our  partner Noreco, we  have completed a  3D seismic  programme 
over the  Bordeaux  and Brulé  (Licence  P.1768,  Blocks 14/14b,  18c  &  19c) 
discoveries. This  seismic has  enhanced our  understanding and  view of  the 
discoveries and we continue our  technical work to increase our  understanding 
of the numerous prospects  prior to drilling.  At this time,  it looks like  a 
bold step out around one of the discoveries could be drilled in 2013 or  early 
2014 in order to establish a commercially viable volume of oil. A  development 
in this area will lead to several more wells as tie in options are plentiful.



In 2013 we  also have two  wells scheduled  to be drilled  with Caithness  Oil 
Limited ("Caithness")  as operator  - the  Knockinnon (Licence  P.1270,  Block 
11/24) appraisal well followed by the potentially large Forse (Licence P.1286,
Block 11/23)  exploration prospect.  These  wells were  originally due  to  be 
drilled in  2012 and  2011 respectively,  but have  beendelayed to  2013  due 
tovarious force majeure events raised  by Caithness. Trapoil are working  on 
these issues  with Caithness.  DECC  is fully  cognisant  of the  delays  and 
Caithness is  currently in  the process  of finalising  the necessary  licence 
extensions. A further update will be provided once Trapoil has clarity on  the 
revised timetable to be proposed by Caithness.



Further drilling opportunities



There is currently a possibility that two further wells will be drilled next
year, but at this stage they are more likely opportunities for 2014. We are in
discussions with a number of parties, with a view to seeking a commitment to
drill Inverewe (Licence P.1864, Block 9/24d), formerly known as the Kew
prospect but as this is a long lead High Temperature High Pressure ("HTHP")
well it will take the best part of a year to plan, once an operator's
commitment to drill has been gained. We understand that JX Nippon remains
supportive of drilling an appraisal well, subject to the involvement of a new
partner to replace Centrica. We have until the end of the year to secure an
operator for this well. Finally Suncor has already committed to drill the
Niobe (Licence P.1889 Blocks 12/26b & 27) prospect that has a similar time
frame.





Portfolio enhancement and anticipated operatorship



As outlined at our AGM in May 2012, we are pursuing the acquisition of a 33.33
per cent. interest in Trent East (Licence P.685, Block 43/24a) that would lead
to our first well as an operator and would ultimately involve a potential  tie 
in to Perenco UK Limited's nearby Trent platform. We are close to agreeing the
requisite sale and  purchase agreement and  supporting documentation, but  the 
proposed acquisition will be conditional on obtaining DECC's permission to act
as an operator; deal completion is therefore currently targeted for the end of
this year with drilling of  the appraisal well planned  for in 2013. At  Trent 
East we will be targeting 40 to 60bcf (gross) of gas where we will be drilling
close to an early discovery well which tested at 50mmcfgpd.



We have  been very  active in  DECC's 27th  Licensing Round  submitting  eight 
applications in  total, of  which seven  were made  in conjunction  with  long 
standing partners, in order to potentially enhance our existing portfolio with
promising new  assets.  Many  of  the applications  stemmed  from  our  team's 
analysis of state of the art 3D seismic data sourced from CGGVeritas  Services 
(UK) Limited's database and, if successful, we will receive carried  interests 
from our contracted partners. We  also submitted a further application,  close 
to Trent  East, with  a major  utility as  our partner.  Awards for  the  27th 
Licencing Round are currently anticipated in the latter part of 2012.



Approval of Trapoil as an operator is one of our stated goals and we currently
expect to achieve  this before  the end of  the year.  The necessary  staffing 
levels are  close to  being  finalised in  order to  be  able to  operate  the 
drilling of wells; all our HSE and Environmental policies are now in place and
are currently being certified.



We also have a team constantly working on new ventures since many of the North
Sea's best assets reside in acreage held  by third parties. We are focused  on 
continuing to source low  cost opportunities and have  a number of  attractive 
targets under consideration at the current time.



Production



We expect to complete the acquisition of the first 10 per cent. equity tranche
in Athena (Licence P.1293, Block 14/18b) from  Dyas UK Limited in Q4 2012.  At 
present, Athena is achieving  a production rate  of approximately 11,000  bopd 
gross. Looking ahead, the oil price appears  to be fairly robust at around  or 
slightly above  the $100/bbl  level  that is  the  benchmark we  applied  when 
assessing our acquisition of an equity interest in Athena.



Our other  source  of production  income  is Lybster  (Licence  P.1270,  Block 
11/24-3v2), which is currently producing at  a rate of approximately 450  bopd 
gross, being slightly ahead of our  expectations. This equates to 90 bopd  net 
to Trapoil, because although we hold a nominal 35 per cent. carried  interest, 
our economic interest is effectively 20 per cent. since the terms of the  Farm 
In Agreement allow our partner to recover all of the development and operating
costs attributable to Trapoil's interest.





Share Price and Recent Fund Raising



It is  clearly most  disappointing that  our share  price does  not  currently 
reflect the  significant  intrinsic  potential value  within  our  exploration 
portfolio that has been carefully assembled  both prior and subsequent to  our 
IPO in March 2011. We are fortunate to have the support of major institutional
shareholders and it was particularly pleasing to note the arrival of a  number 
of new  institutions and  other investors  at the  time of  our £4.3m  (gross) 
placing completed in June 2012. In July 2012, we were also pleased to announce
the appointment of  FirstEnergy Capital LLP  as a joint  broker alongside  our 
existing broker, Mirabaud  Securities LLP.  I am confident  that our  imminent 
drilling campaign, and some of the  new ventures outlined above, will  deliver 
significant value and hope that  this will be reflected  in a rerating of  our 
shares.



I would like to thank all of  our shareholders for their patience and  loyalty 
and  we  remain  focused,  as  a  management  team,  on  creating   meaningful 
shareholder returns within a sensible time frame. I would also like to  thank 
our  dedicated  staff  for  their  unwavering  support  and  acknowledge   our 
appreciation of  the valuable  assistance  and guidance  provided by  our  non 
executive directors.



Mark Groves Gidney

Chief Executive Officer



26 September 2012



GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE2012




                                        6 months to  6 months to    Period to

                                           30/06/12     30/06/11     31/12/11

                                        (unaudited)  (unaudited)    (audited)
                                                   £            £            £
CONTINUING OPERATIONS              Notes
Revenue                                      770,789      804,166      807,044
Cost of sales                              (953,828)    (323,650)    (786,309)
GROSS (LOSS) / PROFIT                      (183,039)      480,516       20,735
Other operating income               6       174,860            -            -
Administrative expenses                  (1,608,435)  (2,125,809)  (4,501,659)
OPERATING LOSS                           (1,616,614)  (1,645,293)  (4,480,924)
Finance costs                               (32,595)    (269,670)    (291,099)
Finance income                                97,417      119,704      245,727
LOSS BEFORE TAX                          (1,551,792)  (1,795,259)  (4,526,296)
Tax                                  4             -            -            -
LOSS FOR THE PERIOD                      (1,551,792)  (1,795,259)  (4,526,296)
TOTAL COMPREHENSIVE LOSS FOR THE         (1,551,792)  (1,795,259)  (4,526,296)
PERIOD
Total comprehensive loss
attributable to:
Owners of the parent                     (1,551,792)  (1,795,259)  (4,526,296)
Loss per share expressed in pence    5
per share:
Basic                                         (0.75)       (0.99)       (2.74)
Diluted                                       (0.75)       (0.99)       (2.74)







GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE2012







                                         6 months to  6 months to    Period to

                                            30/06/12     30/06/11     31/12/11

                                         (unaudited)  (unaudited)    (audited)
                                                   £            £            £
ASSETS                             Notes
NON CURRENT ASSETS
Intangible assets - Exploration      7    31,759,832      173,464   30,085,588
costs
Intangible assets - Data licence     7     2,083,332    2,583,332    2,333,332
costs
                                                                             
Tangible assets                      8     2,049,051       21,511       23,539

                                                                             
                                          35,892,215    2,778,307   32,442,459
CURRENT ASSETS
Trade and other receivables                  967,828    1,055,741    1,102,100

                                                                             
Cash and cash equivalents           13    33,465,340   53,814,970   32,418,234

                                                                             
                                          34,433,168   54,870,711   33,520,334
TOTAL ASSETS                              70,325,383   57,649,018   65,962,793
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital                    2,259,104    1,821,697    2,053,731
Share premium account              11    68,101,922   54,463,015   64,222,583
Share options reserve                      2,057,977    1,280,124    1,774,310
Retained earnings/(deficit)              (7,675,771)  (3,392,942)  (6,123,979)
Reorganisation reserve                     (382,543)    (382,543)    (382,543)
TOTAL EQUITY                              64,360,689   53,789,351   61,544,102
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables       9     3,321,260    3,268,412    3,291,101
Provisions for liabilities and      10     1,334,745            -            -
charges
                            4,656,005    3,268,412    3,291,101
CURRENT LIABILITIES
Trade and other payables             1,308,689      591,255    1,127,590
TOTAL LIABILITIES                          5,964,694    3,859,667    4,418,691
TOTAL EQUITY AND LIABILITIES              70,325,383   57,649,018   65,962,793







GROUP CONSOLIDATED STATEMENT OF CHANGES OF EQUITY FOR 6 MONTHS ENDED 30
JUNE2012







For the six
months ended
30 June 2012
               Called up     Retained       Share      Share           Re-
                   share    earnings/     premium    options  organisation        Total
                 capital    (deficit)     account    reserve       reserve       equity
                       £            £           £          £             £            £
At
1January2012 2,053,731  (6,123,979)  64,222,583  1,774,310     (382,543)   61,544,102
Proceeds from
the issue of
share capital

(note 11)        205,373            -   4,107,460          -             -    4,312,833
Cost of issue
of share
capital                -            -   (228,121)          -             -    (228,121)
Loss for the
period and
total
comprehensive
income                 -  (1,551,792)           -          -             -  (1,551,792)
Transactions
with owners            -            -           -    283,667             -      283,667
At 30 June
2012           2,259,104  (7,675,771)  68,101,922  2,057,977     (382,543)   64,360,689





GROUP CONSOLIDATED STATEMENT OF CASHFLOWS FOR 6 MONTHS ENDED 30 JUNE2012







                                                      6 months to  6 months to     Period to

                                                         30/06/12     30/06/11      31/12/11

                                                      (unaudited)  (unaudited)     (audited)
                                                                £            £             £
                                                Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Cash used in operations  13     (748,483)  (1,705,500)   (2,438,520)
Net cash used in operations                            (748,483)  (1,705,500)   (2,438,520)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangible assets          (3,405,972)     (87,250)  (32,729,100)
Purchase of tangible fixed                               (64,827)     (20,828)      (27,359)
assets
Sale of intangible assets                               1,084,259            -     2,727,600
Interest received                      97,417      119,704       245,727
Net cash (used in) / provided by investing           (2,289,123)       11,626  (29,783,132)
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Loan notes repaid                                             -    (992,700)     (992,700)
CGGV Loan repaid                               -            -   (1,000,000)
Share issue / reorganisation          4,084,712   56,194,093    66,325,135
Net cash generated from financing activities            4,084,712   55,201,393    64,332,435
INCREASE/(DECREASE) IN CASH AND CASH                    1,047,106   53,507,519    32,110,783
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF        13    32,418,234      307,451       307,451
PERIOD
                                              
CASH AND CASH EQUIVALENTS AT END OF              13    33,465,340   53,814,970    32,418,234

PERIOD





NOTES TO GROUP CONSOLIDATED FINANCIAL STATEMENTS FOR 6 MONTHS ENDED 30
JUNE2012







1. GENERAL INFORMATION



Trap Oil  Group  plc ('the  Company')  and its  subsidiaries  (together,  'the 
Group') are involved in the exploration, development and production of oil and
gas reserves from the UK Continental Shelf and during the period under  review 
production of hydrocarbons commenced from the Lybster field.



 The Company is a public limited  company and is listed on AIM,  a 
market operated by London Stock  Exchange plc, and incorporated and  domiciled 
in the  United  Kingdom.  The address  of  its  registered office  is  10  The 
Triangle, ng2 Business Park, Nottingham, NG2 1AE.



2. BASIS OF PREPARATION



These consolidated interim financial statements  have been prepared under  the 
historic cost convention, using the  accounting policies that will be  applied 
in the Group's statutory financial information for the year ended 31  December 
2012. The condensed interim financial statements should be read in conjunction
with the annual  financial statements  for the  year ended  31 December  2011, 
which have been prepared  in accordance with IFRS  as adopted by the  European 
Union.



The reports  for the  six months  ended  30 June  2012 and  30 June  2011  are 
unaudited and do not constitute statutory accounts as defined by the Companies
Act 2006. The financial  statements for 31 December  2011 have been  prepared 
and delivered to  the Registrar of  Companies. The auditors'  report on  those 
financial statements  was  unqualified,  did  not draw  attention  by  way  of 
emphasis of matter and did  not contain a statement  under section 498 of  the 
Companies Act 2006.



3. Accounting Policies



These accounting policies adopted  are consistent with  those in the  previous 
financial year.



Revenue recognition

Revenue is measured at the fair value of consideration received or  receivable 
and represents  amounts  receivable  for  services  supplied,  stated  net  of 
discounts, returns  and  value  added  taxes. Revenue  is  derived  from  the 
principal activities of the Group. The  Group is involved in the analysis  of 
seismic data and information for the  exploitation and development of oil  and 
gas reserves in the UK Continental  Shelf. Revenue is derived from  strategic 
partners on the identification of opportunities for application for a  licence 
to explore further and is recognised at the point the invoice is raised or the
date a trigger event occurs if this is later.

The Group  also receives  revenue  from the  production of  hydrocarbons  from 
licences held by the Group that is  recognised at the end of each month  based 
upon the quantity and price of oil and gas delivered to the customer.



Exploration and evaluation costs

Such costs are initially capitalised as Intangible Assets and include payments
to acquire the  legal right  to explore,  together with  the directly  related 
costs of  technical services  and  studies, seismic  acquisition,  exploratory 
drilling and testing.



Exploration costs  are not  amortised  prior to  the conclusion  of  appraisal 
activities.



Exploration costs included in Intangible  Assets relating to each  exploration 
licence and prospect are carried forward until the existence (or otherwise) of
commercial reserves  have  been  determined  subject  to  certain  limitations 
including review for  indications of  impairment. If  commercial reserves  are 
discovered the  carrying value,  after  any impairment  loss of  the  relevant 
assets, is then reclassified as a  Tangible Asset under Production Interest  & 
Fields Under Development. If, however, commercial reserves are not found,  the 
capitalised  costs  are  charged  to  the  income  statement.  If  there   are 
indications of impairment prior to  the conclusion of exploration  activities, 
an impairment test is carried out.



Production interest and fields under development

Such assets are accumulated generally on a field by field basis and  represent 
the cost of developing  the commercial reserves  discovered and bringing  them 
into production,  together  with the  exploration  costs incurred  in  finding 
commercial reserves transferred from Intangible Assets.



The costs also include the acquisition  and purchase of such assets,  directly 
attributable overheads  and  the cost  of  recognising provisions  for  future 
restoration and decommissioning.



Amortisation, depletion and impairment of oil and gas assets

All expenditure carried within each  field is amortised from the  commencement 
of production on a unit of production basis, which is the ratio of oil and gas
production in the period to the estimated quantities of commercial reserves at
the end of the period plus the production  in the period, on a field by  field 
basis. Costs used in the unit of production calculation comprise the net book
value of capitalised costs plus  the estimated future field development  costs 
to access  the  related  commercial  reserves. Changes  in  the  estimates  of 
commercial  reserves  or  future  field  development  costs  are  dealt   with 
prospectively.



Where there has been a change in economic conditions that indicate a  possible 
impairment in an oil and gas asset,  the recoverability of the net book  value 
relating to that field is assessed by comparison with the estimated discounted
future cash flows  based on management's  expectations of future  oil and  gas 
prices and future costs.  Any impairment identified is  charged to the  income 
statement as additional  depletion and amortisation.  Where conditions  giving 
rise to impairment subsequently reverse,  the effect of the impairment  charge 
is also reversed as a credit to the income statement, net of any  depreciation 
that would have been charged since the impairment.



Decommissioning and site restoration

Provision for decommissioning and site restoration is recognised in full  when 
the related facilities  are installed  and the field  commences production.  A 
corresponding amount equivalent to the provision is also recognised as part of
the cost of  the related  Production Interest.  The amount  recognised is  the 
estimated cost of decommissioning and site restoration, discounted to its  net 
present value  and  is  reassessed  each  year  in  accordance  with  existing 
conditions and requirements. Changes in the estimated timing of cost estimates
are dealt  with  as  an  adjustment  to  the  provision  and  a  corresponding 
adjustment to the Production  Interest. The unwinding of  the discount on  the 
decommissioning provision is included as a finance cost.



4. TAXATION

Trap Oil Group plc is a trading company but no liability to UK corporation tax
arose on the ordinary activities for the period ended 30 June 2012 due to  the 
losses incurred.



5. LOSS PER SHARE



Basic loss  per share  is  calculated by  dividing  the loss  attributable  to 
ordinary shareholders  by  the  weighted average  number  of  ordinary  shares 
outstanding during the period.



Diluted loss per  share is  calculated using  the weighted  average number  of 
shares adjusted to assume  the conversion of  all dilutive potential  ordinary 
shares.



                                      Loss  Weighted Average  Per-Share amount
                                            Number of Shares             pence
                                         £                 £                 £
Period ended 30June2012
Basic & Diluted EPS
Loss attributable to ordinary  (1,551,792)       206,840,066            (0.75)
shareholders
                                                          





6.  OTHER OPERATING INCOME



On 9 February 2012, the sale of  the Group's 10 per cent. working interest  in 
its Lacewing asset  (P.1181, Block  23/22b) to ConocoPhillips  (U.K.) Ltd  was 
completed for cash consideration  of £1 million realising  a gain on  disposal 
which is shown in the Consolidated Statement of Comprehensive Income as  Other 
operating income.



7. INTANGIBLE ASSETS





                                     Exploration Data Licence      Total

                                           Costs        Costs
COST                                           £            £          £
At 1 January 2012                     30,087,654    4,000,000 34,087,654
Additions                              3,405,972            -  3,405,972
Disposals                              (909,401)            -  (909,401)
Transfer to tangible assets (note 8)   (817,599)            -  (817,599)
At 30 June 2012                       31,766,626    4,000,000 35,766,626
AMORTISATION
At 1 January 2012                          2,066    1,666,668  1,668,734
Amortisation for the period                4,728      250,000    254,728
At 30 June 2012                            6,794    1,916,668  1,923,462
NET BOOK VALUE
At 30 June 2012                       31,759,832    2,083,332 33,843,164
                                                                    
                                                                    

8. TANGIBLE ASSETS





                                    Development and Office Equipment     Total
                                  Production Assets
                                                    
COST                                              £                £         £
At 1 January 2012                                 -           30,015    30,015
Additions                                 1,332,311           64,827 1,397,138
Transfer from intangible assets             817,599                    817,599
(note 7)
At 30 June 2012                           2,149,910           94,842 2,244,752
AMORTISATION DEPLETION,
IMPAIRMENT AND DEPRECIATION
At 1 January 2012                                 -            6,476     6,476
Amortisation for the period                 174,102           15,123   189,225
At 30 June 2012                             174,102           21,599   195,701
NET BOOK VALUE
At 30 June 2012                           1,975,808           73,243 2,049,051
                                                                           



9. TRADE AND OTHER PAYABLES



Included in Non-Current Liabilities - Trade and other payables of the Group is
£3,000,000  and  capitalised  interest  of  £321,260  which  relates  to   the 
consideration for the data licence obtained from CGGVeritas Services (UK)  Ltd 
which has been capitalised under Intangible  Assets. The term of the  licence 
is for 8 years and the final liability is due on expiry of the licence, August
2016. On each and every success fee that is acquired from using the data from
the licence,  £300,000 -  £350,000  becomes due  immediately  as part  of  the 
consideration. Any balance remaining when the licence expires is due on  that 
date and shall attract interest at LIBOR plus 1% per annum.



Trap Oil Ltd has a £2  million overdraft limit with National Westminster  Bank 
plc which is  secured by  a debenture in  the name  of Trap Oil  Ltd, a  cross 
guarantee within the Group and on the shares of Trap Oil Ltd held by  Predator 
Oil Ltd. The  overdraft is  currently undrawn. The  overdraft limit  currently 
expires on 31 May 2013.







10. PROVISIONS FOR LIABILITY AND CHARGES



                             Site         

                      Restoration         

                        Provision     Total

                                £         £
PROVISION
At 1January2012               -         -
New provision           1,332,311 1,332,311
Unwinding of discount       2,434     2,434
At 30June2012         1,334,745 1,334,745

This provision relates to the future decommissioning of producing fields.



11. ISSUE OF SHARE CAPITAL



During the period, Trap Oil Group  plc issued 20,537,300 ordinary shares  from 
which it raised  £4,312,833 (gross)  in additional capital.  The net  proceeds 
from the share issue were £4,084,712.



12. SHARE BASED PAYMENTS



The Group operates several  share option schemes.  Options are exercisable  at 
prices set  out in  the table  below. Options  are forfeited  if the  employee 
leaves the Group  through resignation  or dismissal before  the options  vest. 
Equity-settled share based payments are measured at fair value at the date  of 
grant. The fair value determined at the date of grant of equity-settled  share 
based payments is expensed on a  straight line basis over the vesting  period, 
based upon the Group's estimate of shares that will eventually vest.



The total  expense  included  within  the  operating  results  in  respect  of 
equity-based share-based payments was £283,667. For the period ended 30  June 
2011 the amount was  £745,286 and for  the period ended  31 December 2011  was 
£1,239,472. For the period ended 30 June 2011 and 31 December 2011 the  amount 
included within  the share  premium account  as part  of the  cost of  raising 
capital was £534,838.



The Group share option schemes are for directors and employees and details  of 
outstanding options are set out in the table below:



Pre-IPO Options                                                 
                                                           
                                                                 No. of shares
         Exercise                  No. of shares for    Options      for which
            price Period within        which options    granted        options
Year of           which options     outstanding at 1 during the outstanding at
  Grant per share   exercisable         January 2012     period   30 June 2012
                                                           
                  March 2012 to
 2011      1p      March 2021              3,672,750          -      3,672,750



Under the Trap Oil Group plc Unapproved Share Option Plan 2011
and Individual Option Agreements:                               
                                                                 No. of shares
                                                                     for which
                                 No. of shares for     Options        options
                                      which options     granted outstanding at
   Year of  Exercise     Date of   outstanding at 1  during the
     Grant     price     Vesting       January 2012      period   30 June 2012
   2011       43p    March 2012           1,998,062           -      1,998,062
   2011       43p    March 2013           1,998,062           -      1,998,062
   2011       43p    March 2014           1,998,062           -      1,998,062
   2011       43p     July 2012             736,434           -        736,434
   2011       43p     July 2013             736,434           -        736,434
   2011       43p     July 2014             736,434           -        736,434
   2011       1p     March 2013             641,975           -        641,975
                      December
   2011     27.12p      2012              1,056,667           -      1,056,667
                      December
   2011     27.12p      2013              1,056,667           -      1,056,667
                      December
   2011     27.12p      2014              1,056,667           -      1,056,667
Weighted
average     28.22p                                      Total     15,688,214







The  weighted  average  fair  value  of  options  granted  during  the  period 
determined using the Black-Scholes valuation model was 28.22p per option.  The 
significant inputs into the  model were mid-market share  price on the day  of 
grant or  1p,  the exercise  price  as shown  above  and an  annual  risk-free 
interest rate of 1.1%.  The volatility measured at  the standard deviation  of 
continuously compounded  share returns  is based  on statistical  analysis  of 
daily share prices from the date of admission  to AIM to the date of grant  on 
an annualised basis.



13.               NOTES TO THE CONSOLIDATED STATEMENT OF CASHFLOWS

                  

                  RECONCILIATION OF LOSS BEFORE TAX TO CASH USED IN OPERATIONS
                                   6 months to      6 months to    Period to

                                      30/06/12         30/06/11     31/12/11 

                                   (unaudited)      (unaudited)    (audited)
                                             £                £            £ 
Loss for the period before tax     (1,551,792)      (1,795,259)  (4,526,296) 
Adjusted for:                                                                
Depreciation charges                   189,225            1,088        5,591 
Amortisation charges                   254,728        502,066 
                                                        250,000
Profit on disposal                   (174,860)                -            - 
Share based payments (net)             283,667          745,286    1,239,467 
Finance costs                           32,595          269,670      291,099 
Finance income                        (97,417)        (119,704)    (245,727) 
                                                                             
                                   (1,063,854)        (648,919)  (2,733,800) 
                                                                             
Decrease / (Increase) in trade         134,272        (479,491)    (525,850) 
and other receivables
Increase/(Decrease) in trade and       181,099        (577,090)      821,130 
other payables
                                                                             
Cash used in operations              (748,483)      (1,705,500)  (2,438,520) 
                                                                             







CASH AND CASH EQUIVALENTS



The amounts disclosed on the consolidated  statement of cash flows in  respect 
of cash and cash equivalents are in respect of these consolidated statement of
financial position amounts:





                                              

                            30/06/12      1/1/12

                                   £           £
Period ended 30June2012
Cash and cash equivalents 30,465,340  32,418,234
Restricted cash (note 14)  3,000,000           -
Total                     33,465,340  32,418,234



14. POST BALANCE SHEET EVENT



On 16 March 2012, Trap  Oil Ltd, a wholly owned  subsidiary of Trap Oil  Group 
plc, entered into a conditional Sale  and Purchase Agreement with Dyas UK  Ltd 
to initially acquire a 10% working interest followed by a potential further 5%
working interest in UK Seaward Production Licence P.1293 (Athena) for a  total 
cash consideration of approximately £34.5 million with an effective date of  1 
January 2012,  subject  inter alia  to  government (DECC)  and  joint  venture 
partners' approvals.



As at 30 June 2012,  the only part of the  overall transaction that had  taken 
place was the payment of £3 million into a solicitor's escrow account and this
amount has been included in Current Assets, Cash and cash equivalents.



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IR BLGDCLBDBGDU -0- Sep/26/2012 06:00 GMT