Phoenix Global Resources : Final results for the year ended 31 December 2018

3 May 2019

Phoenix Global Resources plc

('Phoenix' or the 'company')

Final results for the year ended 31 December 2018

Phoenix Global Resources plc (AIM: PGR; BCBA: PGR), the upstream oil and gas company offering its investors direct exposure to Argentina's Vaca Muerta shale formation and other unconventional resources, is pleased to announce its final results for the year ended 31 December 2018 and the publication of its 2018 Annual Report and Accounts.

Highlights

●	Concluded an eight-well completions campaign at Puesto Rojas, results used to prioritise 2019 investment in this stacked play
●	Secured rights to Mata Mora and Corralera licences with operatorship for Phoenix and working interest increased from 27% to 90%
●	Secured fouradditional prospective licence areas in the Neuquén province open bid round and one additional block in the Mendoza bid round
●	The company's first horizontal well spudded at Mata Mora in September2018 with the second well spudded in January 2019 and are now awaiting completion
●	Revenue of US$177.0 million (2017: US$141.8 million)
●	EBITDAX of US$39.2 million (2017, adjusted EBITDAX¹: US$40.6 million)
●	Operating loss of US$34.9 million (2017: US$275.0 million)
●	Average daily production in 2018 of 10,249 boepd (2017: 11,070 boepd)
●	2P reserves volumes independently assessed at 57.1 MMboe (2017: 57.2 MMboe), reserve replacement ratio of 96.2%
●	Contingent resources (3C) increased by 106% to 426 MMboe
●	Contingent and prospective resources (3C+3U) increased 85% to 3,314 MMboe

¹Adjusted EBITDAX excludes non-recurring operating expenses (US$32.9 million)

Kevin Dennehy, CFO, said:

'In 2018, the focus of the company has been on consolidating our ownership positions and on appraising and de-risking our key unconventional assets.

We undertook an important unconventional completions campaign at Puesto Rojas in the second half of 2018 that has de-risked the folded Agrio play in that area and allows us to assess the various prospects present on the block to allocate and sequence investment to those plays. In early 2019, we were awarded a 35-year unconventional concession at Puesto Rojas, the first of its kind issued in Mendoza province. The award of this concession provides clarity and incentive for our unconventional ambitions at Puesto Rojas.

In April 2018, we successfully secured our rights to both the Corralera and Mata Mora concessions and confirmed Phoenix's operatorship. The company's participation in the licence areas has been increased to 90% with GyP, the Neuquén province-owned oil and gas company, as our 10% partner. The award of the Corralera Noroeste licence in early 2019 consolidates all the concessions forming the Corralera block under Phoenix operatorship.

At Mata Mora we concluded drilling of our first two horizontal wells in early 2019 which will be completed in a simultaneous fracture stimulation operation planned for Q2 2019.

We look forward to updating shareholders as we move forward with our unconventional projects in 2019.'

For further information, please contact:

Phoenix Global Resources plc	Kevin Dennehy, CFO	T: [phone]
Stockdale Securities	Antonio Bossi David Coaten	T: [phone]
Panmure Gordon	Charles Lesser	T: [phone]
Camarco	Billy Clegg Owen Roberts James Crothers	T: [phone]

About Phoenix

Phoenix Global Resources is an independent oil and gas exploration and production company focused on Argentina and listed on the London Stock Exchange (AIM: PGR) and Buenos Aires Stock Exchange (BCBA: PGR). The Company has over 1.8 million licensed working interest acres in Argentina (of which over 0.7 million are operated), 57.1 million boe of working interest 2P reserves and average working interest production of approximately 10,249 boepd in 2018. Phoenix has significant exposure to the unconventional opportunity in Argentina through its approximately 700,000 working interest acres with Vaca Muerta and other unconventional potential.

Annual report
The Company will be posting to shareholders on Thursday 9 May 2019a copy of the audited annual report for the year ended 31 December 2018 together with the notice for the Annual General Meeting, to be held at the offices of Phoenix Global Resources at King's House, 10 Haymarket, London SW1Y 4BP at 10.00 am on 25 June 2019. The annual report will be made available on the Company's website atwww.phoenixglobalresources.com.

CHAIRMAN'S STATEMENT

Dear shareholders,

2018 has been an important year in the development of Phoenix as a leading independent player in the Argentine unconventional oil and gas industry. Our company was formed in 2017 based around a significant portfolio of onshore unconventional exploration and appraisal assets in Argentina. Our focus this year has been on securing the foundations for the future growth and success of your company and on de-risking key assets.

On 23 April 2019, Anuj Sharma served a notice on the company, which the company is treating as a notice terminating his employment in accordance with his service agreement and resigning from his position as chief executive officer and a director of the company with immediate effect. Pending the recruitment of a new chief executive officer, Tim Harrington, a non-executive director of the company, will be appointed interim chairman of the executive committee, working closely with the chief financial officer and chief operating officer.

Mendoza province established a regulatory framework for unconventional oil and gas operations that is both environmentally responsible and provides a sensible economic framework for the province, federal government and operators alike. The industry now has a clear set of rules for both the permitting for and the execution of unconventional oil and gas projects in Mendoza.

Related to our licence portfolio, we formalised title to the important Mata Mora and Corralera concessions previously held under memoranda of understanding with Neuquén province. These assets, together with Puesto Rojas, represent the cornerstone assets for the future development of your company.

We have also taken the opportunity to selectively add additional acreage that is complementary to our unconventional portfolio in both the Mendoza and Neuquén province bid-rounds. Importantly, we have now secured all the individual concessions that comprise the Corralera block, acquiring Corralera Noroeste in early 2019.

In late 2018, we successfully divested several licences that we previously held in Colombia, further concentrating our focus on Argentina.

I believe the actions we have taken as a company in 2018 have been important to secure the foundations of the future growth of Phoenix.

The Argentine economy however had something of a turbulent year. In April, Argentina's financial markets came under sudden and significant pressure as several conditions negatively affecting the economy manifested themselves concurrently. In the agriculture sector, a severe drought resulted in lower crop yields and a consequent fall in export revenue. World energy prices increased through the year with the Brent crude benchmark opening the year at a US$65/barrel level and continuing to strengthen through 2018. The consistent increase in Brent pricing through much of the year placed further pressure on Argentina in its current position as a net importer of energy. In addition, financial markets tightened globally as the US Dollar appreciated in value following an upward shift in US interest rates.

The principal impact of these factors was to place significant downward pressure on the Argentine Peso and to increase market anxiety about the ability of the Macri administration to roll over short-term central bank paper. This also led to an increase in the sovereign risk premium.

As a result of this pressure on the Argentine economy, the government approached the International Monetary Fund in May 2018 to discuss potential support. In June 2018, a package of measures aimed at stabilising the economy was announced. The key feature of this package was the provision of a standby loan arrangement of US$50.0 billion that was subsequently upgraded to US$56.0 billion in October 2018.

The provision of the standby arrangement by the IMF underscores the positive progress made under the Macri administration in terms of market reform, continued deregulation, establishing the autonomy of the central bank and other economic measures that have been put in place since the election of the Cambiemos in 2015.

The economic plan for the country that underpins the provision of support by the IMF sees a consistent macroeconomic programme established that puts Argentina's public debt balance on a firm downward trajectory. It also strengthens the plan to reduce inflation by setting more realistic inflation targets and enforces the independence of the central bank. The initial plan put in place also sought to protect society's most vulnerable by maintaining social spending and providing for increases should the economy further deteriorate.

In support of the IMF plan, the government announced a zero-deficit budget for 2019 that was approved by congress in late 2018. The budget is aimed at achieving a primary balance of payments by 2020 where government income and expenditure is balanced before taking account of interest payments on historic debt.

The government has a clear objective of strengthening the credibility of monetary policy and controlling inflation. Whilst we saw some intervention in commodity prices during the year, these measures were short term in nature and focused on specific temporary economic issues. Maintaining the focus on free-market principles will be fundamental to the success or failure of the arrangements in place with the IMF. To date, the Argentine government has responded to market pressure in an open, transparent and consistent manner.

The upcoming national elections that are due to take place in October 2019 bring an element of uncertainty in the coming year, however the response from the administration to economic pressure, with some minor exceptions, has been consistent and has been prosecuted openly and with clarity. This provides Phoenix with the confidence to continue to invest in Argentina.

The coming year is set to be an exciting one for your company with significant evaluation and development projects continuing across our core assets at Puesto Rojas, Mata Mora and Corralera. I look forward to updating you on our progress as this exciting story unfolds during the year.

Sir Michael Rake

Non-executive chairman

2 May 2019

EXECUTIVE management report

De-risking and consolidating Phoenix's asset position

The primary focus for Phoenix in 2018 has been on de-risking and consolidating our unconventional asset and licence positions in Argentina. De-risking is important in terms of geology, subsurface understanding and reserves but also in terms of title and operatorship, and in relation to the regulatory environment in which we operate.

We have consolidated our operated activity in 2018 around our three key prospective licence areas of Puesto Rojas, Mata Mora and Corralera. In addition, we have successfully participated in bid-rounds with the objective of acquiring acreage that is complementary to our unconventional portfolio in Argentina.

Unconventional regulation and permitting in Mendoza province

In the first half of the year, we consulted with Mendoza Province and its advisors as they finalised regulations for unconventional oil and gas activity in the province. While regulations for oil and gas activity had been in place in the province for some time, those regulations did not specifically address the nuances of unconventional activity.

It is important for the Province and for Phoenix that unconventional activity is undertaken economically and in a manner that is both safe and environmentally responsible. The unconventional regulations that were formally issued in March 2018 provide a clear framework for unconventional operations in Mendoza province. A process for obtaining unconventional permits for individual projects has also been established and was followed by Phoenix to obtain the necessary unconventional permits for activity undertaken at Puesto Rojas in the second half of the year.

Securing Mata Mora and Corralera with increased participation

In April 2018, the company successfully renegotiated its interests on both the Mata Mora and Corralera blocks that were previously held under a memorandum of understanding with GyP, the province-owned oil and gas company. Phoenix's interest in the blocks was increased from 27% to 90% and the company was awarded operatorship of the area.

Mata Mora is a particularly important block for the company given it directly neighbours the Sierras Blancas block that is operated by Shell. Sierras Blancas is one of the most prolific blocks currently producing from the Vaca Muerta formation. The proximity to other producing areas can give more options related to access to and development of offtake and transport infrastructure.

In February 2019, the company was awarded the Corralera Noroeste licence. This is the third of three licences comprising the Corralera block. The award unifies all of Corralera under Phoenix operatorship with a 90% working interest.

Puesto Rojas unconventional completions campaign

Following the issuance of the unconventional regulations and establishment of the associated permitting process, the company undertook an eight-well unconventional completions campaign in the Puesto Rojas area. The objective of the campaign was to continue the evaluation work already undertaken at Puesto Rojas and to de-risk the area in respect of technical feasibility and in terms of reserves potential.

Of the eight wells that were completed, four were new wells drilled specifically for evaluation of the unconventional potential and four were from previous campaigns where limited tests of specific stages were undertaken. All the wells are currently on test and producing.

As a result of the work performed at Puesto Rojas, three prospective unconventional opportunities have been identified in this important stacked play. These opportunities are in the Vaca Muerta, where the company found initial success, and in both the folded and the tight Agrio formations. There is also longer-term potential in the organic Chachao formation.

The delineation of these individual significant opportunities plays an important part in de-risking the Puesto Rojas area for development. This work has identified the folded Agrio as the primary near-term unconventional development prospect at Puesto Rojas with the other formations subject to further testing and appraisal before moving to development.

First horizontal well at Mata Mora

The company's first unconventional horizontal well, MMx-1001, was spudded at Mata Mora in September 2018, with drilling of the lateral section concluded in January 2019. The well had a measured depth of 5,259 metres with the lateral section drilled to a total length of 1,969 metres. The lateral section was successfully held within a 7-metre window in the Vaca Muerta across 99.3% of the total length of the well.

The second horizontal well at Mata Mora was spudded in late January 2019 and drilling of the vertical section completed at a total depth of approximately 2,400 metres at the end of February. Drilling of the lateral portion of the well concluded in late March 2019. The well is now awaiting completion together with MMx-1001.

Both wells will be completed in a simultaneous hydraulic fracture operation. Whilst we await the results from the completion of the two wells, the success of the drilling operation is positive for our future operations at Mata Mara, substantially de-risking the drilling process for horizontal wells in the block.

Reserves progression

Reserves volumes remained consistent year-on-year with production almost entirely offset by revisions to estimates on key assets, particularly at Puesto Rojas reflecting the work done there in the year. The reserves replacement ratio achieved was 96.2%, a significant increase on the prior year.

High case contingent resources more than doubled in the year to 426 million barrels of oil equivalent. Substantially all contingent resource gains relate to the Corralera Noreste and Sur concessions and result from both a structured analysis of data in 2018 and the increase in the working interest participation from 27% to 90%. These gains exclude Corralera Noroeste that was awarded in early 2019. High case prospective and contingent resources taken as a whole increased similarly posting gains of 85% over the figure reported in 2017.

Focused evaluation and development plan

The work done in 2018 in de-risking and consolidating the company's interests has focused the evaluation and development plan around three key assets and five specific opportunities within those assets. The Puesto Rojas folded Agrio play is now considered sufficiently de-risked to move to development and represents a lower risk, less capital-intensive project with promising economics, and relatively high initial production.

The results from the completion of the two Mata Mora wells will be used to determine the development decision for that block during 2019.

Our team has worked hard to progress our assets and move our company forward in 2018. Our success through this evaluation stage will be measured in the results of the evaluation work performed on the blocks that should result in the net migration of reserves and an increase in resources.

We have built our acreage position both in terms of new blocks and, importantly, by increasing our working interest on the key Mata Mora and Corralera concessions. We have de-risked acreage through technical evaluation and through drilling to define a succinct population of potentially lucrative development opportunities. We have secured key acreage and have divested non-core Colombian assets to focus on Argentina unconventional development.

Our thanks go to our team for their continued dedication and hard work. We look forward to the challenge of developing our exploration and development opportunities into world class production assets.

kevin dennehy

Chief financial officer

javier vallesi

Chief operating officer

2 May 2019

OPERATING REVIEW

Neuquina basin

Gross km²	8,572
Phoenix WI acres	869,470
Operated WI acres	603,660
2P reserves	34,723
Net WI production (boepd) 2017	5,062
Net WI production (boepd) 2018	4,471

Production

Average daily production from the Neuquina basin was 591 boepd or 11.7% lower in 2018 compared with 2017. The overall decline in average daily production was primarily due to losses at Puesto Rojas of 743 boepd offset by gains at Chachahuen of 343 boepd. The losses at Puesto Rojas were due to a combination of natural decline from conventional wells together with the impact of downtime as production wells were taken offline while hydraulic fracturing operations were carried out nearby as part of the eight-well unconventional completions campaign undertaken in H2 2018.

Business development activity

In April 2018, the company entered three joint venture agreements with GyP, the Neuquén province oil and gas company, related to Corralera and Mata Mora. These agreements formalised the participation of the company in the Mata Mora, Corralera Sur and Corralera Noreste licences that were previously held under memoranda of understanding. In addition to formalising the arrangements, the company's working interest was increased from 27% to 90% with Phoenix as operator. Agreement was also reached with Integra Oil & Gas S.A. related to the relinquishment of its non-participating interest in the licences.

The company also submitted bids on four additional blocks as part of the Q1 2018 Neuquén province bid round. These bids were successful and licences for La Tropilla I, Aguada de Castro I & II and Santo Domingo I were awarded in April 2018. La Tropilla is proximate to unconventional activity being undertaken by Vista and Equinor on offset blocks. The Aguada de Castro and Santo Domingo licences represent a closely grouped series of licences with unconventional exposure. Commitments associated with these licences are modest and mainly comprise seismic reprocessing and other geological and geophysical work on the completion of which the results will be assessed and, pending that assessment, evaluation wells may be drilled on the acreage.

The company is operator of each of the four additional licences obtained in the bid round and participates at a 90% working interest level in all the licences with GyP as 10% partner.

In Q2 2018, the company participated in the Mendoza province bid round where it was successful in obtaining the Loma Cortaderal-Cerra Dona Juaña concession. The company holds a 100% working interest in the licence and is the operator.

In Q3 2018 and as part of the Neuquén province open bid round, the company submitted a bid for the Corralera Noroeste licence which is the third of the three licences comprising the Corralera block. The company was successful in its bid and the licence was awarded by GyP in January 2019, pending ratification by the governor of Neuquén province. This award unifies the three licences comprising Corralera with Phoenix as operator and holding a 90% working interest. The remaining 10% interest in each of the licences is held by GyP.

Neuquina basin: Puesto Rojas area

Licence	Puesto Rojas	Cerro Mollar Norte	Cerro Mollar Oeste
Operator	Phoenix	Phoenix	Phoenix
Production/exploration	Production	Production	Production
Phoenix WI (%)	100	100	100
Area (WI)	46,038	1,186	26,781
2017 production (net WI) (boepd)	2,488	105	107
2018 production (net WI) (boepd)	1,744	91	88
Active production wells	23	3	4
2P reserves (Mboe)	20,234	152	253
Expiry	Jan-27	Jul-22	Jul-27

Production

Production from Puesto Rojas fell 28.8% in the period with 2018 average daily production at 1,923 boepd compared with 2,700 boepd in 2017. The decrease in production year-on-year was primarily due to natural decline on existing production wells that was not offset by production from new wells. This was largely due to the suspension of completion activities by the company in the first half of the year as Mendoza province undertook the process of developing and implementing new unconventional regulations and associated permitting processes.

In addition, certain production wells were temporarily taken offline in the second half of 2018 where unconventional completions were being performed on neighbouring wells. The wells were returned to production on conclusion of the completions activity.

Drilling and completion activity

The company's focus in 2018 was on the unconventional completions campaign at Puesto Rojas. In March 2018, the Mendoza province issued its unconventional oil and gas regulations, providing the framework for unconventional activity in the province.

Two additional wells, CDM-3007 and CDM-3023, were drilled in H1 2018 ahead of the completions campaign that was undertaken in the second half of the year. A comprehensive suite of logging data and core wall samples was obtained during the drilling of these wells. This information was analysed using external specialists to help to determine the optimum completions methodology for the various unconventional horizons. This analysis is important given the stacked nature of the plays in the Puesto Rojas area that gives multiple potential development opportunities.

In August 2018, the company secured the necessary unconventional permits from Mendoza province to allow the unconventional completion of wells already drilled and to undertake further drilling at the Puesto Rojas area.

A total of eight wells were completed in the second half of 2018, comprising four new wells and four wells from previous campaigns. All eight wells are currently on test and are producing. Three of the completed wells are testing the full interval from the base of the Vaca Muerta formation through the shallower tight Agrio formation. The five remaining completions were aimed at productive intervals in the tight Agrio and selective testing in the tight Agrio and Vaca Muerta sections.

The four new wells completed in the period are all located at the Cerro del Medio concession. The initial performance of these completions is summarised as follows:

CDM-3001 flowed back the tight Agrio, organic Agrio, and organic Chachao sections comingled at a rate of 92 bopd and as of 2 January 2019 was flowing back Vaca Muerta stages in the well.

CDM-3007 flowed back the tight Agrio, organic Agrio, and organic Chachao sections comingled at a peak rate of 84 bopd. As of 8 December 2018, the well was flowing back Vaca Muerta stages at a peak rate of 96 bopd. This well also has behind-pipe potential in the folded Agrio section which will be completed later.

CDM-3023 flowed back the folded Agrio and tight Agrio sections together with a peak rate of 351 bopd. The well has been flowing back Vaca Muerta stages since 8 November 2018 with a peak rate of 153 bopd. During the Vaca Muerta flowback, the Agrio stages were allowed to continue producing up the annulus and have continued to flow naturally at over 350 bopd.

CDM-3012 is currently testing the Vaca Muerta formation and has achieved a peak rate to date during pumping operations of 88 bopd. It is likely that the rate will continue to increase as pump rate is increased and water cut decreases.

Based on the very encouraging results of CDM-3023, the folded Agrio has been identified as a target development with vertical unconventional wells. The remaining wells show promise for horizontal development of the formations under test, given that each is flowing from vertical completions at rates in excess of the 40-50 bopd, the approximate economic level for horizontal unconventional development.

The older wells completed in the 2018 campaign were located at the Cerro Pencal, Cerro los Choiques and Puesto Rojas fields. The initial performance of these completions is summarised as follows:

CP-1013 and CP-1017 were limited tests of tight Agrio stages and flowed back at a peak rate of 25 bopd and 20 bopd respectively.

PR-53, an older Chachao well, was completed in the Vaca Muerta section. The well is now currently on test in the Agrio stages, with results pending.

ClCh.x-2001 was a more selective test of tight Agrio and Vaca Muerta stages. The Vaca Muerta stages produced at a peak rate of 30 bopd. On 16 September 2018, the Agrio stages were put online and reached a peak rate of 37 bopd.

Each of these wells provides valuable information related to the formations being tested that will be used to determine the most appropriate drilling and completion methodologies.

In April 2018, the company completed the acquisition of 59,000 acres of 3D seismic data across the south of Puesto Rojas and part of La Brea. The completed suite of seismic volumes from the shoot was delivered in October 2018. The seismic volumes are being analysed by the company to appraise the resource potential of the area and to inform future drilling programmes. The company hopes to find structures similar to those that were found and have been developed in the Cerro Pencal area in the northern portion of the Puesto Rojas block.

Future appraisal and development activity

Up to eight additional unconventional vertical wells are planned for 2019 as part of the initial development of the Puesto Rojas folded Agrio formation.

Neuquina basin: Mata Mora and Corralera

Licence	Mata Mora	Corralera Noreste	Corralera Noroeste	Corralera Sur
Operator	Phoenix	Phoenix	Phoenix	Phoenix
Production/exploration	Exploration	Exploration	Exploration	Exploration
Phoenix WI (%)	90	90	90	90
Area (WI)	51,956	23,469	24,789	26,234
2017 production (net WI) (boepd)	-	-	-	-
2018 production (net WI) (boepd)	-	-	-	-
Active production wells	-	-	-	-
2P reserves (Mboe)	-	-	-	-
Expiry	Aug-21	Aug-21	TBD	Aug-21

Drilling and completion activity

The primary focus at Mata Mora in the year was on the drilling of the two initial horizontal wells on the licence, which also represented the company's first ever unconventional horizontal wells.

The MM.x-1001 well successfully reached its total depth of 5,259 metres on 2 January 2019 and was subsequently cased and cemented. The well was drilled to a total lateral length of 1,969 metres, with 99.3% of the lateral section successfully drilled within a seven-metre window in the Vaca Muerta and a significant portion of the lateral remaining within a narrower three-metre window.

The second horizontal well at Mata Mora, the MM.x-1002 well, was spud in late January 2019 and drilling of the vertical section completed at a depth of approximately 2,400 metres in late February. Drilling of the lateral portion concluded at the end of March 2019 and the well is now awaiting completion together with MMx-1001.

Future appraisal and development activity

MM.x- 1001 and MM.x- 1002 will be completed in a simultaneous hydraulic fracturing operation. This operation is planned for Q2 2019. The performance of these wells will then be evaluated ahead of drilling further wells in the block.

The initial appraisal plan for Corralera contemplates two horizontal wells that will be completed in tandem. The objective of these wells is to move towards the de-risking of the Vaca Muerta and Agrio formations at Corralera. The wells are tentatively planned in the second half of 2019.

Neuquina basin: Chachahuen

Licence	Chachahuen
Operator	YPF S.A.
Production/exploration	Production
Phoenix WI (%)	20
Area (WI)	130,911
2017 production (net WI) (boepd)	2,005
2018 production (net WI) (boepd)	2,348
Active production wells	287
2P reserves (Mboe)	6,778
Expiry	Oct-38

Production

Chachahuen represents the company's most significant non-operated production block in terms of activity and production. Average daily production increased by 17.1% compared with 2017 reflecting the contribution of the 92 production wells that came online in 2017. These wells were accretive to production in 2018. Wells drilled in 2018 were also accretive to production albeit at a lower level, with only 59 wells coming online as producers in 2018 as drilling activity reduces in relation to the main production area which is now substantially drilled out.

Drilling and completion activity

The rate of production drilling at Chachahuen has slowed in 2018 as the main production area is increasingly drilled out. YPF continues to selectively convert certain producing wells to water injectors to improve water-flood performance as well as drilling new water injection wells. Overall recoveries are expected to be greater over time due to improved secondary recovery. This activity is part of the field-wide enhanced recovery efforts and is aimed at improving water-flood conformance that looks at the effectiveness of water injection wells in pushing oil volumes towards producing wells in order to ultimately increase the recovery factor from the area.

Future appraisal and development activity

In December 2018, the province of Mendoza granted the Cerro Morado Este part of the original Chachahuen concession as a separate exploitation concession. YPF is operator of the concession and is currently drawing up plans to develop the concession over the next several years. Any development decision will require the company's approval and the company is in discussion with YPF through a regular programme of operating committee meetings to understand the plans, economics of the play and the associated capital requirements, in advance of any capital investment sanction.

Austral basin

Gross km²	5,625
Phoenix WI acres	529,718
Operated WI acres	-
2P reserves	16,055
Net WI production (boepd) 2017	3,898
Net WI production (boepd) 2018	3,960

Average daily working interest production from the Austral basin was largely flat compared to 2017. Increases in production from the Angostura field in Tierra del Fuego were offset by losses from Las Violetas and Chorillos. We continue to work with the operator ROCH S.A. on options to further develop the South Argentina assets and maximise shareholder value.

Austral basin: Tierra del Fuego area

Licence	Las Violetas	Angostura	Rio Cullen
Operator	ROCH S.A.	ROCH S.A.	ROCH S.A.
Production/exploration	Production	Production	Production
Phoenix WI (%)	12.615	12.615	12.615
Area (WI)	39,394	13,166	11,453
2017 production (net WI) (boepd)	646	50	24
2018 production (net WI) (boepd)	563	352	22
Active production wells	53	3	3
2P reserves (Mboe)	2,382
Expiry	Aug-26	Aug-26	Aug-26

Production

Production gains were made at Angostora due to the success of the LFE-1004 well drilled in the Tobifera formation in October 2018. This added to success seen in the same formation from the SM.x-1002 well that came online in August 2018, adding approximately 1,877 boepd of gross production. Also, during Q3 2018, the newly drilled May.x-1 well was tested at 1,836 Mscfpd (312 boepd). The well is currently awaiting pipeline connection to commence commercial production.

Austral BASIN: Santa Cruz Sur area

Licence	Chorrillos	Campo Bremen	Oceano	Moy Aike	Palermo Aike
Operator	ROCH S.A.	ROCH S.A.	ROCH S.A.	ROCH S.A.	ROCH S.A.
Production/exploration	Production	Production	Production	Production	Production
Phoenix WI (%)	70	70	70	70	70
Area (WI)	111,540	118,935	19,095	124,653	91,373
2017 production (net WI) (boepd)	2,102	573	399	105	-
2018 production (net WI) (boepd)	1,999	538	389	98	-
Active production wells	57	14	10	11	-
2P reserves (Mboe)	13,673
Expiry	Apr-26	Apr-26	Aug-26	Apr-26	Aug-26

Production

Production decreases at Santa Cruz Sur were driven largely by natural decline in the Chorillos area.

Future appraisal and development activity

The continued development plans for both Santa Cruz Sur and Tierra del Fuego remain under discussion between Phoenix and the asset operator, ROCH S.A..

Cuyana basin

Gross km²	528
Phoenix WI acres	83,687
Operated WI acres	70,964
2P reserves	6,303
Net WI production (boepd) 2017	2,136
Net WI production (boepd) 2018	1,819

Average daily working interest production from the Cuyana basin was 15.0% or 318 boepd lower than in 2017 due to the relinquishment of the Puesto Pozo Cercados concession in the prior year that contributed 274 production barrels in 2017.

Licence	Refugio-Tupungato	Atamisqui	Chanares Herrados
Operator	Phoenix	Phoenix	Medanito
Production/exploration	Production	Production	Production
Phoenix WI (%)	100	100	78
Area (WI)	6,781	64,184	7,762
2017 production (net WI) (boepd)	1,014	333	514
2018 production (net WI) (boepd)	1,002	318	499
Active production wells	40	15	22
2P reserves (Mboe)	3,246	751	2,306
Expiry	Jan-26	Sep-25	Nov-27

Production
Production from the Cuyana basin licences is largely flat year-on-year with natural decline managed through pulling jobs and other workover activities. The assets produce relatively stable production and contribute positive cash from operations.

Future appraisal and development activity

In 2018, a single conventional vertical exploration well was drilled at Atamisqui. The well targeted the Rio Blanco formation that had been identified in the 3D seismic survey. Evaluation of the well log and preliminary test data indicated that, while having discovered hydrocarbons and thus being a geologic success, the well is tight and will require fracture stimulation before its commerciality can be determined.

Given that a fracture stimulation is required to fully evaluate the success or otherwise of the well, it has been treated as a suspended well with the costs carried in the balance sheet until such time as this work can be undertaken.

CHIEF FINANCIAL OFFICER'S REVIEW

Overview

The 2018 financial statements include the performance of the combined group for the full year. The comparative financial information for 2017 presents the performance of Trefoil for the full year with the results and performance of the legacy Andes group consolidated from 10 August 2017, being the date of the combination transaction.

Revenue and gross margin

Total revenue increased from US$141.8 million in 2017 to US$177.0 million in 2018, driven primarily by revenue from oil sales of US$154.5 million compared to US$117.0 million in the prior year. Revenue from gas sales was US$22.5 million compared to US$24.8 million in 2017.

The realised price achieved per barrel of oil was US$59.26 in 2018 compared to US$50.46 in 2017, an increase of US$8.80 per barrel and reflecting the uptick in Brent pricing seen in 2018.

The Brent crude benchmark strengthened through the year resulting in an increase in the Argentina domestic price that looks to the Brent benchmark as a reference price. The increase in revenue compared to 2017 that was attributable to the increase in oil prices was US$20.4 million while the increase in volumes of oil sold accounted for US$17.0 million.

Total oil sales volume was greater in 2018 than in 2017 due to the inclusion of legacy Andes sales for the full year. On an average boepd basis however, overall sales volumes were marginally lower in 2018 as natural decline from the existing well portfolio was not fully compensated by production from new wells. This was primarily due to the time taken for Mendoza province to establish its unconventional regulations and permitting processes which delayed the unconventional completions campaign at Puesto Rojas to the second half of the year. The primary focus of the completions campaign was to appraise the unconventional potential at Puesto Rojas with production as a by-product rather than the focus.

Gas revenues were US$2.3 million lower in 2018 at US$22.5 million compared to US$24.8 million in 2017. Substantially all the company's gas production operations are in the Austral basin where ROCH S.A. is the operator. The fall in revenue from gas sales is caused by a decrease in gas production volumes where natural decline from existing wells was not offset by production from new drilling. Realised prices for gas were marginally higher in 2018 at 4.09/MMcf compared to 4.07/MMcf in the prior year.

Netback analysis

Netback is the measure of cash proceeds that, after operating costs and taxes, are retained by the company. The highest netback continues to be generated in the Neuquina basin where the company has most of its production and where oil is the main constituent of the production mix. The mature Cuyana basin continues to generate cash from operations and has benefited from the increase in oil prices in the year. Netback in Cuyana is lower than in Neuquina despite better pricing as a result of higher operating costs associated with maintaining later-life production assets. Production in the Austral basin is similarly cash generative though at a lower level both overall and on a per barrel basis. Like Cuyana, this is due to due to higher operating costs as assets mature but Austral also has a greater proportion of lower value gas in the production mix.

Operating costs used in the netback calculation comprise cost of sales less depreciation and selling expenses.

Operating costs

Operating costs were largely consistent year on year at US$17.66/boe in 2018 compared to US$18.85/boe in the preceding year. Operating cost per boe rose marginally in Neuquina basin as conventional wells experienced natural decline. In addition, several production wells proximate to hydraulic fracturing activity were taken offline for operational and safety reasons while that work was undertaken. This had the effect of reducing production resulting in the fixed element of production costs being spread over lower volumes giving higher operating costs on a per boe basis.

Depreciation in the year was US$15.4 million higher than in 2017 at US$64.7 million for 2018 compared to US$49.3 million in 2017. This was primarily due to the inclusion of a full year's depreciation charge on the legacy Andes assets in 2018 offset by a slight decline in average daily production volumes.

The increase in gross profit from US$8.4 million in 2017 to US$21.3 million in 2018 is mainly due to the impact of the increase in realised oil prices in the year.

Other operating costs

Other operating costs before impairment charges were US$56.2 million in 2018 compared to US$51.0 million in 2017.

Exploration expenses in 2018 primarily relate to the write-off of two unsuccessful exploration wells. Exploration expenses also include costs related to geological and geophysical work that is not specific to a particular asset and was expensed in the period.

In Austral basin, costs of US$3.4 million were expensed that related to the company's share of the unsuccessful Orkeke well drilled by ROCH S.A.. A further US$4.8 million was expensed related to an unsuccessful commitment well at the company's 100% operated Laguna el Loro concession in the Neuquina basin. The well has satisfied the exploration commitment on the block, however.

The decrease in administrative expenses in 2018 compared to 2017 is mainly due to a reduction in professional fees of US$20.6 million compared to 2017 that was offset by increased staff costs of US$5.4 million. The increase in staff costs was due to an increase in headcount resulting from senior appointments made in key technical positions in 2018 together with a full year of costs related to the executive management team. Staff costs in 2018 also include the impact of deal bonuses related to the 2017 combination transaction that were paid in 2018 together with accruals made for normal incentive payments in respect of personal performance in the 2018 calendar year.

In 2017, professional fees included approximately US$24.1 million of advisory and other transaction related costs that did not recur in 2018. These costs included technical and professional consulting costs, legal fees and other deal costs related to the combination transaction, of which US$5.5 million was settled in ordinary shares of the company during 2018.

Other operating expenses in 2018 include US$7.6 million related to realised hedge losses on the Brent crude swap contract entered in January 2018 that expired in December 2018.

Finance income and costs

Finance income was US$4.1 million in 2018 compared to US$2.0 million in 2017. Substantially all the increase year-on-year related to exchange gains recognised on Peso denominated borrowings held in Argentina. The Peso weakened significantly against the US Dollar in 2018 reducing the amount payable under these loans in Dollar terms and giving rise to a gain.

Finance costs were US$30.7 million in 2018 compared to US$13.7 million in 2017, an increase of US$17.0 million. Of this increase US$3.1 million related to an increase in interest cost on borrowings due to the higher average debt balance during 2018 of US$196.4 million compared to 2017 where the average outstanding debt balance was US$118.8 million.

In addition, foreign exchange differences increased by US$10.1 million compared to 2017 and primarily related to exchange losses on Peso related receivable balances. Whilst contracts for oil sales are priced by reference to the US Dollar, they are settled in Peso. The devaluation of the Peso in 2018 resulted in lower collections in Dollar terms from receivables for oil sales. However, it should be noted that Peso collections for sales are used to satisfy in-country Peso related costs with substantially all Peso denominated operating costs satisfied using cash generated from operations at the current level of activity.

Taxation

In 2018, the company recorded a tax charge of US$16.8 million compared to a credit of US$16.6 million in 2017. The principal reason for the change was related to the devaluation of the Peso in the period. The devaluation significantly reduced the Peso denominated tax-deductible value of fixed assets which, when compared to their carrying value for accounting purposes, gave rise to a deferred tax charge for the period of US$17.0 million.

The tax charge also increased due to the non-recognition of deferred tax assets that would have offset tax losses by US$10.9 million. An asset was not recorded for the tax losses because it is not certain that the company will be able to use the tax losses over the period before they expire.

Balance sheet

Net assets are US$336.2 million at 31 December 2018 compared to US$282.5 million at 31 December 2017, representing an increase of US$53.7 million. This is primarily due to the debt to equity conversion where US$100.0 million of the bridging and working capital facility entered into on completion of the combination transaction was converted to equity at a price of £0.37 per share. In addition, new ordinary shares were issued in the period as a result of the exercise of warrants and giving proceeds of US$4.9 million. Offsetting this was the recognised loss for the year of US$78.3 million.

Property, plant and equipment increased by US$12.0 million consisting additions of US$80.1 million offset by depreciation of US$64.7 million and the write-off of exploration costs amounting to US$3.4 million. Additions to property, plant and equipment primarily relate to costs associated with the completions campaign at Puesto Rojas, the initial horizontal well at Mata Mora and ongoing drilling investment at Chachahuen.

Additions to intangible exploration and evaluation assets in the period totalled US$59.0 million and mainly related to licence acquisition costs from the Neuquén and Mendoza province bid rounds, in addition to the costs associated with securing the company's rights related to Mata Mora and Corralera and increasing its participation in these areas.

Working capital

Current assets comprise inventories, trade and other receivables and cash. At 31 December 2018 inventories are US$2.9 million higher than the prior year. This is mainly due to drilling inventory on hand related to the horizontal well at Mata Mora where drilling was underway over the period end. Trade and other receivables primarily consist of receivables from the sale of oil and gas whose value fluctuates related to the timing of payments received for invoices over the year end period.

Current liabilities mostly comprise trade and other payables for equipment and services. Trade and other payables are US$34.9 million lower at 31 December 2018 compared to the prior year. The trade payable balance at 31 December 2017 included costs for drilling undertaken in the second half of 2017 at Puesto Rojas in preparation for the completions campaign undertaken in 2018, together with approximately US$20.0 million related to cash calls due to YPF at Chachahuen which were repaid during 2018.

The other balance sheet movements in the period related to movements in working capital items and borrowings.

Financing and liquidity

On completion of the combination transaction, Mercuria Energy Trading Group advanced a bridging and working capital facility to the company in the amount of US$160.0 million. In February 2018, US$100.0 million of this facility was converted to equity at a price of £0.37 per share with the remaining US$60.0 million restructured as a new convertible rolling credit facility bearing interest at 4% over three-month LIBOR. As part of the restructuring of the facility, new funds of US$100.0 million were made available to the company. In December 2018, the new convertible rolling credit facility was further amended to include a tranche B element of US$25.0 million. In February 2019, tranche B was extended by a further US$50.0 million.

Funds advanced under the credit facilities have been used to invest in exploration, evaluation and development work across the company's core licence areas and to satisfy an element of general corporate costs. At 31 December 2018 the company's net debt position was US$179.2 million compared to US$168.8 million at 31 December 2017.

The balance sheet at 31 December 2018 shows net current liabilities of US$50.3 million. In addition, the company has current commitments under its various licence agreements that require it to invest in drilling and other activities. Failure to do so could result in the termination of those licences.

Funding status and going concern

The company is currently evaluating options for financing its ongoing exploration, evaluation and development activity. Accordingly, the company's major shareholder, Mercuria Energy Group Limited, has provided the company with a letter of support that states that it will provide sufficient funds for the company to meet its obligations over a period of at least 12 months from the date of this annual report or until such time as the company has secured sufficient financing to fund its planned appraisal activities and meet its other obligations, whichever is sooner.

Dividend

Given the company's high growth objectives, the directors do not recommend the payment of a dividend.

Kevin Dennehy

Chief financial officer

2 May 2019

Consolidated income statement

For the year ended 31 December 2018

	Note	2018 US$'000	2017 US$'000
Revenue	2	176,972	141,799
Cost of sales		(155,638)	(133,387)
Gross profit		21,334	8,412
Exploration expenses		(9,359)	(931)
Impairment charge		-	(232,407)
Selling and distribution expenses		(5,758)	(5,036)
Administrative expenses		(24,561)	(39,978)
Other operating expenses		(16,568)	(5,040)
Operating loss		(34,912)	(274,980)
Presented as:
Adjusted EBITDAX		39,173	40,555
Non-recurring expenses		-	(32,900)
EBITDAX		39,173	7,655
Impairment charge		-	(232,407)
Depreciation, depletion and amortisation		(64,726)	(49,297)
Exploration costs written off		(9,359)	(931)
Operating loss		(34,912)	(274,980)
Finance income		4,098	1,976
Finance costs		(30,702)	(13,726)
Loss before taxation		(61,516)	(286,730)
Taxation		(16,797)	16,635
Loss for the year		(78,313)	(270,095)
Loss per ordinary share		US$	US$
Basic and diluted loss per share	6	(0.03)	(0.19)

The above consolidated income statement should be read in conjunction with the accompanying notes.

Consolidated statement of comprehensive income

For the year ended 31 December 2018

	2018 US$'000	2017 US$'000
Loss for the year	(78,313)	(270,095)
Translation differences	(361)	546
Loss for the year	(78,674)	(269,549)

The above items will not be subsequently reclassified to profit and loss. There are no impairment losses on revalued assets recognised directly in equity.

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Consolidated statement of financial position

At 31 December 2018

	Note	2018 US$'000	2017 US$'000
Non-current assets
Property, plant and equipment	3	366,191	354,245
Intangible assets and goodwill	4	261,010	207,231
Other receivables		5,085	8,322
Deferred tax assets		9,001	11,629
Total non-current assets		641,287	581,427
Current assets
Inventories		17,279	14,375
Trade and other receivables		30,407	44,925
Cash and cash equivalents		21,085	23,696
Total current assets		68,771	82,996
Total assets		710,058	664,423
Non-current liabilities
Trade and other payables		3,256	7,168
Borrowings	5	135,919	162,502
Deferred tax liabilities		99,374	81,714
Provisions		16,236	17,215
Total non-current liabilities		254,785	268,599
Current liabilities
Trade and other payables		51,410	82,355
Income tax liability		1,595	654
Borrowings	5	64,365	29,974
Provisions		1,733	367
Total current liabilities		119,103	113,350
Total liabilities		373,888	381,949
Net assets		336,170	282,474
Equity
Share capital and share premium		457,198	329,877
Other reserves		(112,150)	(116,299)
Retained (deficit)/ earnings		(8,878)	68,896
Total equity		336,170	282,474

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Consolidated statement of changes in equity

For the year ended 31 December 2018

Capital and reserves	Called up share capital US$'000	Share premium account US$'000	Retained (deflcit)/ earnings US$'000	Other reserves US$'000	Total equity US$'000
At 1 January 2017	98,414	52,467	(3,376)	(21,961)	125,544
Loss for the year	-	-	(270,095)	-	(270,095)
Other comprehensive income	-	-	-	546	546
Total comprehensive (loss)/profit for the year	-	-	(270,095)	546	(269,549)
Effect of change of functional currency	(19,699)	(9,162)	-	28,861	-
Acquisition of subsidiary	248,803	-	-	136,255	385,058
Capital reduction	-	(50,549)	310,549	(260,000)	-
Transaction with owners	-	-	31,713	-	31,713
Fair value of share-based payments	-	-	105	-	105
Issue of ordinary shares	2,359	7,244	-	-	9,603
At 31 December 2017	329,877	-	68,896	(116,299)	282,474
Loss for the year	-	-	(78,313)	-	(78,313)
Other comprehensive income	-	-	-	(361)	(361)
Total comprehensive loss for the year	-	-	(78,313)	(361)	(78,674)
Fair value of share-based payments	-	-	305	-	305
Issue of ordinary shares	7,271	20,050	-	4,510	31,831
Fair value of warrants	-	-	234	-	234
Debt to equity conversion	27,027	72,973	-	-	100,000
At 31 December 2018	364,175	93,023	(8,878)	(112,150)	336,170

Other reserves	Merger reserve US$'000	Warrant reserve US$'000	Translation reserve US$'000	Deferred consideration US$'000	Total other reserves US$'000
At 1 January 2017	(26,099)	2,105	(2,440)	4,473	(21,961)
Translation differences	-	-	546	-	546
Effect of change of functional currency	29,446	-	-	(585)	28,861
Acquisition of subsidiary	140,143	-	-	(3,888)	136,255
Capital reduction	(260,000)	-	-	-	(260,000)
At 31 December 2017	(116,510)	2,105	(1,894)	-	(116,299)
Translation differences	-	-	(361)	-	(361)
Issue of ordinary shares	4,510	-	-	-	4,510
At 31 December 2018	(112,000)	2,105	(2,255)	-	(112,150)

The above statement of consolidated changes in equity should be read in conjunction with the accompanying notes.

Consolidated statement of cash flows

For the period ended 31 December 2018

		2018 US$'000	2017 US$'000
Cash flows from operating activities
Cash generated from operations		21,014	9,042
Income taxes paid		(842)	(2,006)
Net cash inflow from operating activities		20,172	7,036
Cash flows from investing activities
Payments for property, plant and equipment		(80,531)	(79,539)
Payments for intangibles		(43,188)	(3,148)
Proceeds from sale of non-current assets		39	-
Recovery of restricted cash		377	-
Net cash acquired from acquisition of subsidiary		-	1,062
Net cash outflow from investing activities		(123,303)	(81,625)
Cash flows from financing activities
Proceeds from issues of shares and other equity instruments		4,925	9,603
Proceeds from borrowings		116,210	178,607
Repayment of borrowings		(7,556)	(89,875)
Interest paid		(8,852)	(4,215)
Net cash inflow from financing activities		104,727	94,120
Net increase in cash and cash equivalents		1,596	19,531
Cash and cash equivalents at the beginning of the financial year		23,696	5,243
Effects of exchange rates on cash and cash equivalents		(4,207)	(1,078)
Cash and cash equivalents at end of year		21,085	23,696

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

1. GENERAL INFORMATION
The financial information set out in this announcement does not comprise the group's statutory accounts for the years ended 31 December 2018 or 31 December 2017.

The financial information has been extracted from the audited statutory accounts of the company for the year ended 31 December 2018, which were approved by the directors on 2 May 2019. The auditors reported on these accounts; the report was unqualified and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

The company has produced its statutory accounts for the year ended 31 December 2018 in accordance with International Financial Reporting Standards as adopted by the European Union and in accordance with the group's accounting policies consistent with those set out in the 2017 statutory accounts.

The statutory accounts for the year ended 31 December 2017 have been delivered to the Registrar of Companies and those for the year ended 31 December 2018 will be delivered to the Registrar of Companies in due course.

2. Segment information

The group's executive management team comprising the chief executive officer, the chief financial officer and the chief operating officer has been determined collectively as the chief operating decision maker for the group. The information reported to the group's executive management team for the purposes of resource allocation and assessment of segment performance is focused on the basins in which the group operates. The strategy of the group is focused on the development of the Vaca Muerta shale and other unconventional opportunities in the Neuquina basin while optimising conventional production from that basin. In addition, the group is present in the Austral basin in south Argentina where its operations with its partner, Roch S.A., are targeted at exploiting gas resources in the group's licence areas within the basin. The group also has production activities in the Cuyana basin. Segments that are not currently material to the operations or result of the group are aggregated within 'Corporate - unallocated'.

The Neuquina, Austral and Cuyana basins have been determined by the group to represent the reportable segments of the business based on the level of activity across these basins and the information provided to the executive management.

The group's executive management primarily uses a measure of earnings before interest, tax, depreciation and exploration expenses (EBITDAX) to assess the performance of the operating segments. However, the chief executive officer also receives information about segment revenue and capital expenditure on a monthly basis.

2018	Neuquina basin US$'000	Austral basin US$'000	Cuyana basin US$'000	Corporate - unallocated US$'000	Total US$'000
Revenue	86,435	48,515	42,022	-	176,972
Profit/(loss) for the year	10,162	7	5,042	(93,524)	(78,313)
Add: depreciation, depletion and amortisation	39,849	15,879	8,264	734	64,726
Add: exploration costs written off	5,613	3,377	-	369	9,359
Less: finance income	-	-	-	(4,098)	(4,098)
Add: finance costs	557	178	125	29,842	30,702
Add: taxation	-	-	-	16,797	16,797
EBITDAX	56,181	19,441	13,431	(49,880)	39,173
Oil revenues	86,392	26,061	42,022	-	154,475
bbls sold	1,486,470	422,152	698,133	-	2,606,755
Realised price (US$/bbl)	58.12	61.73	60.19	-	59.26
Gas revenues	43	22,454	-	-	22,497
MMcf sold	17	5,477	-	-	5,494
Realised price (US$/MMcf)	2.58	4.10	-	-	4.10
Capital expenditure
Property, plant and equipment	67,377	9,445	3,752	918	81,492
Intangible exploration and evaluation assets	56,521	345	-	702	57,568
Total capital expenditure	123,898	9,790	3,752	1,620	139,060

Exploration costs incurred in the Neuquina basin include US$4.8 million related to the write off of an unsuccessful exploration well at the Laguna el Loro concession. The well satisfied the commitments associated with the licence which has now been relinquished. The remaining US$0.8 million exploration costs in the Neuquina basin are related to geological or geophysical work that is not related to a specific prospect or area and is general in nature.

Exploration costs incurred in the Austral basin of US$3.4 million related to the company's share of costs related to the unsuccessful Orkeke well drilled by the company's partner, ROCH S.A., during the year.

2017	Neuquina basin US$'000	Austral basin US$'000	Cuyana basin US$'000	Corporate - unallocated US$'000	Total US$'000
Revenue	66,331	41,608	33,860	-	141,799
Loss for the year	(222,801)	(7,716)	(9,146)	(30,432)	(270,095)
Add: depreciation, depletion and amortisation	30,399	8,645	8,791	1,462	49,297
Add: exploration costs written off	931	-	-	-	931
Add: impairment	224,169	-	8,238	-	232,407
Less: finance income	-	(248)	(948)	(780)	(1,976)
Add: finance costs	3,635	-	-	10,091	13,726
Less: taxation	-	-	-	(16,635)	(16,635)
EBITDAX	36,333	681	6,935	(36,294)	7,655
Add: non-recurring expenses	-	-	-	32,900	32,900
Adjusted EBITDAX	36,333	681	6,935	(3,394)	40,555
Oil revenues	66,293	16,878	33,860	-	117,031
bbls sold	1,332,289	327,633	659,262	-	2,319,184
Realised price (US$/bbl)	49.76	51.51	51.36	-	50.46
Gas revenues	38	24,730	-	-	24,768
MMcf sold	8.1	6,076	-	-	6,084
Realised price (US$/MMcf)	4.69	4.07	-	-	4.07
Capital expenditure
Property, plant and equipment	62,037	9,312	9,574	1,882	82,805
Intangible exploration and evaluation assets	3,148	-	-	-	3,148
Total capital expenditure	65,185	9,312	9,574	1,882	85,953

In August 2017, the company relinquished its interest in the Puesto Pozo Cercado block. The accumulated capitalised costs associated with Puesto Pozo Cercado of US$8.2 million were expensed accordingly.

The impairment of US$224.2 million recognised in respect of the Neuquina segment related to goodwill that arose on the combination transaction as a function of the closing share price used to calculate the purchase consideration. The directors determined that the goodwill was not supportable and, accordingly, an impairment charge was recorded. All of the goodwill impairment is attributable to the Neuquina basin assets as all of the goodwill had been allocated to Neuquina basin assets.

Non-recurring expenses of US$32.9 million primarily related to costs incurred in relation to the reverse takeover transaction during 2017, non-recurring professional fees and severance payments made to former employees. The substantial majority of costs incurred related to legal and professional fees associated with the financial and legal diligence and costs related to the preparation of the AIM admission document required for the readmission of the enlarged group to trading on the AIM market. The non-recurring transaction expenses also included advisory fees related to structuring and Argentina market advice associated with the transaction.

There are no intersegment revenues in either period presented. All revenues represent sales to external customers and all sales are made in Argentina. The significant majority of oil and gas sales are made to the Argentinian state-owned oil company, YPF.

3. Property, plant and equipment

Non-current assets	Fixtures, fittings, equipment and vehicles US$'000	Development and production assets US$'000	Assets under construction US$'000	Total US$'000
At 1 January 2017
Cost	4,420	387,209	18,057	409,686
Accumulated amortisation	(4,356)	(217,440)	-	(221,796)
Net book amount	64	169,769	18,057	187,890
Year ended 31 December 2017
Opening net book amount	64	169,769	18,057	187,890
Acquisition of subsidiaries	153	140,613	-	140,766
Transfers from intangible assets	-	319	-	319
Additions	2,747	79,874	184	82,805
Depreciation charge	(252)	(49,045)	-	(49,297)
Impairment charge	-	(8,238)	-	(8,238)
Closing net book amount	2,712	333,292	18,241	354,245
At 31 December 2017
Cost	7,320	608,015	18,241	633,576
Accumulated depreciation and impairment	(4,608)	(274,723)	-	(279,331)
Net book amount	2,712	333,292	18,241	354,245

In August 2017, the company relinquished its interest in the Puesto Pozo Cercado block. Accordingly, the accumulated capitalised costs of US$8.2 million associated with Puesto Pozo Cercado were impaired.

Non-current assets	Fixtures, fittings, equipment and vehicles US$'000	Development and production assets US$'000	Assets under construction US$'000	Total US$'000
At 1 January 2018
Cost	7,320	608,015	18,241	633,576
Accumulated depreciation	(4,608)	(274,723)	-	(279,331)
Net book amount	2,712	333,292	18,241	354,245
Year ended 31 December 2018
Opening net book amount	2,712	333,292	18,241	354,245
Additions	2,111	-	79,381	81,492
Transfers	-	91,552	(91,552)	-
Transfers to intangible assets	-	(1,413)	-	(1,413)
Exploration costs written off	-	(3,407)	-	(3,407)
Depreciation charge	(1,072)	(63,654)	-	(64,726)
Closing net book amount	3,751	356,370	6,070	366,191
At 31 December 2018
Cost	9,431	694,747	6,070	710,248
Accumulated depreciation and impairment	(5,680)	(338,377)	-	(344,057)
Net book amount	3,751	356,370	6,070	366,191

Additions to property, plant and equipment in the year ended 31 December 2018 include US$0.7 million of interest capitalised in respect of qualifying assets (2017: US$0.7 million). The total amount of interest capitalised within property, plant and equipment at 31 December 2018 is US$2.8million (2017: US$2.1 million).

Exploration costs written off in 2018 of US$3.4 million include the company's share of costs related to the unsuccessful Orkeke well drilled by the company's partner, ROCH S.A., in the Austral basin during the year.

The company has assessed its licence interests for potential impairment. The initial assessment is undertaken by comparing the book value of each asset to its respective NPV10 value that is independently assessed by the external reservoir engineers using the Petroleum Resources Management System guidance.

Where the NPV10 value is lower than the carrying value of an asset an impairment test is performed. Assets are tested for impairment by calculating their value-in-use using a discounted cash flow model or their fair value less costs of disposal, whichever is determined to be the higher.

The NPV10 assessment showed that the La Brea concession was potentially impaired. An impairment test was performed using a discounted cash flow model and no impairment charge was considered necessary. The impairment test uses several assumptions but is most sensitive to assumptions related to oil price, discount rate and production volumes. An impairment charge may be required in future periods if actual performance is not consistent with the assumptions used in the discounted cash flow model.

The sensitivity of the model for La Brea to these to specific assumptions is as follows:

Assumption	Sensitivity	Fair value, +/- US$'000
Oil price	+/- 5%	8.3
Discount rate	+/- 1%	2.5
Production	+/- 10%	16.7

4. Intangible assets

Exploration and evaluation assets are primarily the group's licence interests in exploration and evaluation assets located in Argentina. The exploration and evaluation assets consist of both conventional and unconventional oil and gas properties.

Non-current assets	Goodwill US$'000	Exploration and evaluation assets US$'000	Total US$'000
At 1 January 2017
Cost	-	6,804	6,804
Net book amount	-	6,804	6,804
At 31 December 2017
Opening net book amount	-	6,804	6,804
Acquisition of subsidiaries	260,007	161,760	421,767
Additions	-	3,148	3,148
Transfers to property, plant and equipment	-	(319)	(319)
Impairment of goodwill	(224,169)	-	(224,169)
Closing net book amount	35,838	171,393	207,231
At 31 December 2017
Cost	260,007	171,393	431,400
Accumulated amortisation and impairment charges	(224,169)	-	(224,169)
Net book amount	35,838	171,393	207,231

The increase in exploration and evaluation assets of US$161.8 million in 2017 relates to the fair value assessed for the licences acquired and associated exploration upside as part of the combination transaction that completed on 10 August 2017. The fair value of exploration and evaluation acreage acquired in the combination was assessed on a comparative transaction basis by reference to Dollars-per-acre paid in other observable market transactions that took place around the date of the business combination. All of the exploration and evaluation assets recognised as part of the combination related to licence areas in the Neuquina basin.

Non-current assets	Goodwill US$'000	Exploration and evaluation assets US$'000	Total US$'000
At 1 January 2018
Cost	260,007	171,393	431,400
Accumulated amortisation and impairment charges	(224,169)	-	(224,169)
Net book amount	35,838	171,393	207,231
Year ended 31 December 2018
Opening net book amount	35,838	171,393	207,231
Additions	-	57,568	57,568
Transfers to property, plant and equipment	-	1,413	1,413
Exploration cost written off	-	(5,202)	(5,202)
Closing net book amount	35,838	225,172	261,010
At 31 December 2018
Cost	260,007	225,172	485,179
Accumulated amortisation and impairment charges	(224,169)	-	(224,169)
Net book amount	35,838	225,172	261,010

Additions to intangible assets during 2018 relate to amounts paid to secure additional acreage with unconventional exposure as part of open bid rounds held in both the Neuquén and Mendoza provinces. Additions in the period also include costs associated with securing the group's interests in the Mata Mora and Corralera blocks and increasing its working interest participation from 27% to 90%.

Exploration costs written off in 2018 include US$4.8 million related to the write-off of an unsuccessful exploration well at the Laguna el Loro concession. The well satisfied the commitments associated with the licence which has now been relinquished.

Impairment tests for exploration and evaluation assets

Exploration and evaluation assets are subject to impairment testing prior to reclassification as tangible fixed assets where commercially viable reserves are confirmed. Where commercially viable reserves are not encountered at the end of the exploration phase for an area the accumulated exploration costs are written off in the income statement.

Impairment tests for Goodwill

Goodwill is monitored by management at the level of the operating segments identified in note 1.

A segment level summary of the goodwill allocation at the time of the acquisition is presented below.

At acquisition	Neuquina basin US$'000	Austral basin US$'000	Cuyana basin US$'000	Corporate -unallocated US$'000	Total US$'000
Chachahuen	15,223	-	-	-	15,223
Corralera	16,780	-	-	-	16,780
Mata Mora	3,835	-	-	-	3,835
	35,838	-	-	-	35,838

No goodwill was recognised prior to 2017. All goodwill presented relates to the allocation of technical goodwill arising as a result of accounting for deferred tax on the business combination in the prior year. Goodwill of US$224.2 million that was related to the excess of the purchase consideration given over the fair value of assets acquired and liabilities assumed at the acquisition date was impaired in full on completion of the business combination in 2017.

The carrying value of goodwill has been assessed for impairment at the period end. The discount rate used in the carrying value assessment was the group's calculated weighted average cost of capital of 14.0%. Prices used in the assessment were the Energy Information Administration's forecast of Brent crude prices. The assessment determined that fair value of the assets to which goodwill has been allocated was in excess of their carrying values as at 31 December 2018 and consequently no impairment charge has been recorded in 2018.

5. Borrowings

	2018			2017
	Current US$'000	Non-current US$'000	Total US$'000	Current US$'000	Non-current US$'000	Total US$'000
Secured
Bank loans	17,523	-	17,523	19,694	2,502	22,196
Total secured borrowings	17,523	-	17,523	19,694	2,502	22,196
Unsecured
Bank loans	709	-	709	3,802	-	3,802
Loans from related parties	46,090	135,919	182,009	2,616	160,000	162,616
Other loans	43	-	43	3,857	-	3,857
Bank overdraft	-	-	-	5	-	5
Total unsecured borrowings	46,842	135,919	182,761	10,280	160,000	170,280
Total borrowings	64,365	135,919	200,284	29,974	162,502	192,476

Secured liabilities and assets pledged as security

Secured liabilities relate to US Dollar denominated loans totalling US$17.5 million with interest rates ranging from 6.2-8.25% (2017: US$17.2 million). At 31 December 2018 the group held no AR$ denominated loans (2017: US$5.0 million). All AR$ loans were repaid in full during the year.

Loans from related parties

The related party loan at 31 December 2018 relates to a bridging and working capital facility provided to the group by Mercuria Energy Netherlands B.V., a subsidiary of Mercuria Group ('Mercuria'). In February 2018, US$100.0 million of the original Mercuria facility was converted to equity in the company at a price of £0.37 per share. At the same time the facility was restructured as a new convertible rolling credit facility ('RCF') in the amount of US$160.0 million with an additional US$100.0 million of new funds made available to the company. The new convertible RCF bears interest at three-month LIBOR+4% and is repayable by 31 December 2021. The new convertible RCF has a 17-month repayment grace period and will be amortised in eleven equal quarterly repayment instalments from 30 June 2019 until maturity.

In December 2018, Mercuria advanced an additional US$25.0 million as a Tranche B element to the facility. In February 2019, a further US$50.0 million was made available under the RCF facility. The original facility of US$160.0 million became Tranche A.

Mercuria Group has the right to convert all or part of the outstanding principal of Tranche A into additional new ordinary shares of the company at a price of £0.45 per share. This conversion right can be exercised at any time from 30 June 2018 until 10 business days prior to the maturity for Tranche A. A similar conversion feature exists in relation to Tranche B at a price of £0.28 per share. The conversion right under Tranche B is subject to appropriate shareholder resolutions in relation to the authority to allot and disapplication of pre-emption rights in relation to such shares having been approved.

Fair value

For the majority of the borrowings, the fair values are not materially different to their carrying amounts, since the interest payable on those borrowings is either close to current market rates or the borrowings are of a short-term nature. Differences identified between the fair values and carrying amounts of borrowings are as follows:

	2018		2017
	Carrying amount US$'000	Fair value US$'000	Carrying amount US$'000	Fair value US$'000
Bank loans	18,232	17,924	25,998	21,593
Other loans	43	43	3,857	3,306
Bank overdraft	-	-	5	5
Loans from related parties	182,009	182,009	162,616	162,616
	200,284	199,976	192,476	187,520

The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as Level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.

Recognised fair value measurements

The group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1:The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in Level 1.

Level 2:The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Level 3:If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. This is the case for unlisted equity securities.

The group does not currently hold any financial instruments whose fair value is assessed by reference to Level 1 or Level 2 inputs (2017: Nil).

6. Loss per share

Basic and diluted loss per share	2018 US$	2017 US$
From continuing operations attributable to the ordinary equity holder of the company	(0.03)	(0.19)
Total basic loss per share attributable to ordinary equity holders of the company	(0.03)	(0.19)

Basic and diluted loss per share	2018 US$'000	2017 US$'000
Loss attributable to the ordinary equity holders of the company used in calculating basic earnings per share: From continuing operations	(78,313)	(270,095)
	(78,313)	(270,095)

Weighted average number of shares used as the denominator

Number of shares	2018	2017
Adjustments for calculation of diluted earnings per share:
At 1 January	2,537,178	605,505
At 31 December	2,786,645	2,537,178
Potential dilutive ordinary shares	3,325	-
Weighted average number of shares used as the denominator in calculating diluted earnings per share	2,730,364	1,405,794

7. Post balance sheet events

Convertible revolving credit facility extension

On 4 February 2019, the existing convertible revolving credit facility ('RCF') held with Mercuria Group was increased by US$50.0 million to US$235.0 million. This provided immediate additional funds of US$50.0 million bearing interest at a rate of LIBOR+4% and repayable on 31 December 2021. The amended convertible RCF has two tranches, a facility A commitment of US$160.0 million which was entered into in February 2018 and a facility B commitment of US$75.0 million. US$25.0 million of the facility B commitment was agreed in December 2018, with the additional $50.0 million of the total facility B commitment being provided from February 2019.

Salta licence claim

In January 2019, the company received notice from the secretary of energy for Salta province in respect of a claim for compensation in the amount of US$25.0 million related to certain unfulfilled licence obligations. The obligations related to work commitments on three licences that allegedly expired in 2010. The company has refuted the claim.

A similar claim in the amount of US$41.0 million had been received in 2012 related to two further Salta licences that had been relinquished in 2010. The company refuted that claim through a series of administrative appeals, the last of which was filed in 2015. No further notice has been received since then.

No judicial proceedings have been initiated in respect of either claim. The company considers that its legal arguments to defend both claims remains valid.

Directorate changeOn 23 April 2019, Anuj Sharma served a notice on the company, which the company is treating as a notice terminating his employment in accordance with his service agreement and resigning from his position as chief executive officer and a director of the company with immediate effect. Pending the recruitment of a new chief executive officer, Tim Harrington, a non-executive director of the company, will be appointed interim chairman of the executive committee, working closely with the chief financial officer and chief operating officer.