Enwell Energy : 2021 Interim Results

16 September 2021

ENWELL ENERGY PLC

2021 INTERIM RESULTS

Enwell Energy plc (the "Company", and with its subsidiaries, the "Group"), the AIM-quoted (ENW) oil and gas exploration and production group, announces its unaudited results for the six month period ended 30 June 2021.

Highlights

Operations

• Aggregate average daily production from the MEX-GOL, SV and VAS fields of 4,917 boepd, which compares with 4,545 boepd during the first half of 2020, an increase of approximately 8%, with record levels of average daily production of 5,254 boepd achieved in Q2 2021
• SV-25appraisal well successfully completed and brought on production in February 2021
• Drilling operations for SV-29 development well completed in late August 2021 and testing operations now underway
• Commencement of drilling of SC-4 appraisal well on the SC licence
• No significant disruption to the Group's operations arising from the COVID-19 pandemic to date

Finance

• Revenue of $41.1 million (1H 2020: $24.7 million), up 66% as a result of higher production rates and much improved gas prices in the period
• Operating profit of $18.1 million (1H 2020: $5.2 million)
• Net profit for the first half of 2021 of $13.8 million (1H 2020: $1.2 million)
• Cash and cash equivalents of $62.9 million at 30 June 2021, and at 14 September 2021 of $54.4 million (31 December 2020: $61.0 million)
• Average realised gas, condensate and LPG prices in Ukraine were much higher, particularly gas prices, at $249/Mm3 (UAH6,897/Mm3), $74/bbl and $66/bbl respectively (1H 2020: $139/Mm3 (UAH3,514/Mm3) gas, $42/bbl condensate and $40/bbl LPG)
• Reduction of capital completed through the cancellation of the Company's entire share premium account which has created distributable reserves, thereby enabling the possibility of the Company making distributions to shareholders in the future

Outlook

• Development work for the remainder of 2021 at the MEX-GOL and SV fields includes: testing of the SV-29 well, and subject thereto, hook-up to production facilities; commencement of drilling of the SV-31 development well; and undertaking an upgrade of the gas processing facilities

• Development work for the remainder of 2021 at the VAS field includes: planning for a new well to explore the VED prospect within the VAS licence area; and maintenance of the gas processing facilities, flow-line network and other field infrastructure
• Development work for the remainder of 2021 at the SC licence area includes: continuing drilling operations on the SC-4 well; acquisition of 150 km2 of 3D seismic; and further planning for the development of the SC licence area
• Development programme for the remainder of 2021 expected to be funded from existing cash resources and operational cash flow

Sergii Glazunov, CEO, commented: "2021 has been an excellent operational year so far, with strong production from the MEX-GOL, SV and VAS fields, coupled with the significant recovery in gas prices, contributing to our much improved profitability in the period. We are looking forward to the results of the SV-29 development well and to further progressing our development programme over the remainder of the year. We are also pleased to have commenced the appraisal of the SC licence, with the spudding of the SC-4 well, our first well on this licence."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014, which forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018.

For further information, please contact:
Enwell Energy plc	Tel: [phone]
Chris Hopkinson, Chairman
Sergii Glazunov, Chief Executive Officer
Bruce Burrows, Finance Director
Strand Hanson Limited	Tel: [phone]
Rory Murphy / Matthew Chandler
Arden Partners plc	Tel: [phone]
Ruari McGirr / Elliot Mustoe (Corporate Finance)
Simon Johnson (Corporate Broking)
Citigate Dewe Rogerson	Tel: [phone]
Elizabeth Kittle

Dmitry Sazonenko, MSc Geology, MSc Petroleum Engineering, Member of AAPG, SPE and EAGE, Director of the Company, has reviewed and approved the technical information contained within this press release in his capacity as a qualified person, as required under the AIM Rules.

Definitions/Glossary
AAPG	American Association of Petroleum Geologists
Arkona	LLC Arkona Gas-Energy
bbl	barrel
bbl/d	barrels per day
boe	barrels of oil equivalent
boepd	barrels of oil equivalent per day
Company	Enwell Energy plc
Group	Enwell Energy plc and its subsidiaries
km	kilometre
km2	square kilometre
LPG	liquefied petroleum gas
MEX-GOL	Mekhediviska-Golotvshinska
m3	cubic metre
Mm3	thousand cubic metres
MMboe	million barrels of oil equivalent
MMscf	million scf
MMscf/d	million scf per day
%	per cent
QHSE	quality, health, safety and environment
SC	Svystunivsko-Chervonolutskyi
scf	standard cubic feet measured at 20 degrees Celsius and one
	atmosphere
SPE	Society of Petroleum Engineers
SPEE	Society of Petroleum Evaluation Engineers
SV	Svyrydivske
$	United States Dollar
UAH	Ukrainian Hryvnia
VAS	Vasyschevskoye
VED	Vvdenska
WPC	World Petroleum Council

Chairman's Statement

I am delighted to present the 2021 Interim Results. Having faced extraordinary times globally as a result of the COVID-19 pandemic, I am pleased to report that the Group has not been significantly affected on an operational level in the first half of 2021, and has achieved an excellent performance.

The Group has continued to make good progress with its development of the MEX-GOL, SV and VAS gas and condensate fields in north-eastern Ukraine, and has delivered a very strong financial performance during the period. Drilling of the SV-25 appraisal well was successfully completed and the well brought on production in February 2021, whilst the SV-29 development well, which was spudded in February 2021, is now being tested, and subject thereto, will be hooked-up to the gas processing facilities. On the SC licence area, the Group's first well, SC-4, was spudded in August 2021.

Aggregate average daily production from the MEX-GOL, SV and VAS fields during the first half of 2021 was 4,917 boepd, which compares favourably with an aggregate daily production rate of 4,545 boepd during the first half of 2020, an increase of approximately 8%. At the VAS field, production was steady, but lower than during the first half of 2020 after a decline in production from the VAS-10 well. Overall, average daily production in Q2 2021 hit a record quarterly level of 5,254 boepd.

The combination of higher production levels and the strong recovery in gas prices resulted in much improved profitability. During the first half of 2021, the Group's operating profit was $18.1 million (1H 2020: $5.2 million), showing a significant increase from the same period last year, and cash generated from operations during the period was also higher at $19.2 million (1H 2020: $11.0 million).

This improved level of cash generation has enabled the Group to progress its multiple work programmes across its broadened asset portfolio, with approximately $26 million invested during the 2021 year to date, with $15 million invested in 1H 2021.

The fiscal and economic environment in Ukraine remains stable (despite the effects of the COVID-19 pandemic resulting in a contraction in GDP and an increase in the rate of inflation) and, following a weakening during 2020, the Ukrainian Hryvnia exchange rate has improved in 2021 to approximately the rate of mid-2020. Nevertheless, future fiscal and economic uncertainties remain in the Ukrainian market and we continue to be vigilant.

The deregulation of the gas supply market, supported by electronic gas trading platforms and improved pricing transparency, has meant that the market gas prices in Ukraine now broadly correlate with the imported gas prices. During the first half of 2021, gas prices recovered significantly, reflecting a similar trend in European gas prices. Similarly, condensate and LPG prices were also higher by comparison with last year.

COVID-19

We continue to closely monitor the volatility in global financial markets, and the implications on the operational, economic and social environment caused by the COVID-19 pandemic. To date, there has been no significant operational disruption arising from the COVID-19 pandemic, and no material impact is currently envisaged on the Group's prospects. However, the Board and management remain acutely aware of the risks, and are taking action to mitigate them where possible, not only to protect our staff and other stakeholders, but also to minimise any potential disruption to our business. We have taken steps to continually monitor the health of our operational staff, including temperature checks for such staff at the commencement of each shift, as well as investing in technology to enable many staff to work from remote locations. We continue to reassess our medium-term forecasts based on current pricing and are highly confident we have the resources to deliver on our plans. Of course, we cannot be certain of the duration of the pandemic's impact but will remain focussed on monitoring and protecting our business through the period of uncertainty. In protecting our stakeholders interests, we are conscious of our wider obligations to

the communities, and country, in which we operate. Accordingly, as previously announced, last year we acted, alongside other corporate entities in Ukraine, to directly acquire critical equipment and supplies from Chinese suppliers to donate to the Ukrainian State to assist its efforts to manage the pandemic in Ukraine.

Capital Reduction

On 25 February 2021, the Company completed a reduction of its share capital through the cancellation of its entire share premium account. This reduction of capital created distributable reserves of the Company, which enables the Company to make distributions to its shareholders in the future, subject to the Company's financial performance. However, the Company is not indicating any commitment, and does not have any current intention, to make any distributions to shareholders.

Outlook

Whilst there are still challenges, the business environment in Ukraine is relatively stable despite the COVID- 19 outbreak. Following the strong operational performance during the first half of 2021, and the increased production output during the period, we are looking forward to the results of the SV-29 development well, which are expected in the near future. We are also looking forward to achieving further success in the development activities planned for the remainder of 2021 and, facilitated by the strong current gas price environment, delivering a steadily increasing production and revenue stream in the future.

In conclusion, on behalf of the Board, I would like to thank all of our staff for the continued dedication and support they have shown during the year to date and especially in the midst of the COVID-19 pandemic.

Chris Hopkinson

Chairman

15 September 2021