Nido Petroleum : Half-Year Financial Report 30 June 2016

Page

Directors' Report 3

Auditor's Independence Declaration 8

Directors' Declaration 9

Condensed Consolidated Statement of Comprehensive Income 10

Condensed Consolidated Balance Sheet 11

Condensed Consolidated Statement of Cash Flows 12

Condensed Consolidated Statement of Changes in Equity 13

Notes to the Half-Year Financial Statements 14

Independent Review Report 26

Corporate Directory 28

Your Directors submit their report of the Group comprising of Nido Petroleum Limited (the Company or Nido) and its subsidiaries, for the half-year ended 30 June 2016.

The Directors of the Company in office during the half-year and until the date of this report are listed below. Directors were in office for this entire period, unless otherwise stated.

William Bloking Chairman

Michael Fischer Managing Director

Andrew Edwards Non-Executive Director

Vichien Usanachote Non-Executive Director

Chaiwat Kovavisarach Non-Executive Director

Krairit Nilkuha Non-Executive Director

The principal activities of the Group during the half-year, which occurred primarily in the Philippines, included:

• Production and sale of oil;

• Appraisal and development of its oil assets; and

• Exploration for oil and gas.

  REVIEW AND RESULTS OF OPERATIONS Summary of Financial Performance

  A summary of key financial indicators for the Group for the half-year, with prior period half-year comparison, is set out in the following table:

  Consolidated 30 June 2016	Consolidated 30 June 2015
  US$'000	US$'000
  Revenue from sale of crude oil	14,990	40,979
  Gross profit / (loss)	(5,333)	2,488
  Net profit / (loss) for the half-year after tax	(11,118)	(834)
  Basic profit / (loss) per share from continuing operations	(25.4) cents	(1.90) cents
  Net cash from / (used in) operating activities	(3,500)	3,023
  Net cash used in investing activities	(899)	(74,853)
  Net cash from / (used in) financing activities	(10,175)	77,090

  The total net loss after tax of the Group for the half-year ended 30 June 2016 is $11.118 million (30 June 2015: loss of $0.834 million), which included the following significant items:

• Oil revenue for the half-year totalled $14.990 million (30 June 2015: $40.979 million), comprised of revenue from the Galoc oil field of $14.622 million (30 June 2015: $40.365 million), and revenue from the Nido and Matinloc oil fields of $0.368 million (30 June 2015: $0.614 million). Oil revenue for the half-year 2016 is lower than for the same period in 2015 due to a significant decline in oil price and fewer cargos being sold;

• Cost of sales for the half-year was $20.326 million (30 June 2015: $38.500 million). The decrease in cost of sales primarily relates to the lower FPSO rate, field operating costs and government taxes in the current market;

• Total financing costs for half-year of $3.460 million is primarily related to the debt facilities with Bangchak Petroleum Public Company Limited ("Bangchak");

• Office and other expenditure totalled $3.285 million (30 June 2015: $4.491 million); and

• Income tax benefit of $1,258 million (30 June 2015: tax expense of $0.090 million) primarily relates to the unwinding of the deferred tax liabilities associated with the different tax and accounting treatments of the Galoc Oil and Gas Property assets.

The following table summarises the Company's equity interests in its permits as at 30 June 2016:

(1) The Philodrill Corporation

(2) Galoc Block

(3) Galoc Production Company WLL, a 100% owned subsidiary of Nido Petroleum Limited

(4) West Linapacan Block

(5) Subject to Nido completing its obligation under its Farm-in Agreement with the PNOC Exploration Corporation

(6) SC 58 operatorship reverts to PNOC Exploration Corporation upon completion of Nido's farm-in obligations

(7) PNOC Exploration Corporation

Indonesia

(1) Lundin Baronang BV

(2) Lundin Cakalang BV

(3) Lundin Gurita BV

(4) Nido exercised its right to acquire an additional 5% working interest but this transfer of interest is yet to receive regulatory approval

(5) Nido is currently in the process of withdrawing from this PSC