Crown Energy AB: Year-end report 2015

Fourth quarter 2015

• No sales were recognised.
• Operating income came in at SEK 140 thousand (0) and the operating loss totalled SEK -2,361 thousand (-3,370), consisting primarily of employee benefit expenses and other external costs.
• Loss after tax was SEK -3,733 thousand (-6,489), corresponding to SEK -0.07 per share (-0.23).
• Investments exploration and evaluation assets totalled SEK 655 thousand (515).

Full year 2015

• No sales were recognised.
• Operating income for 2015 totalled SEK 73 thousand (0). Operating expenses totalled SEK -8,644 thousand (-9,448), consisting primarily of employee benefit expenses and other external costs.
• Loss after tax was SEK –15,577 thousand (-21,859), corresponding to SEK -0.35 per share (-0.76).
• Investments in exploration and evaluation assets for the period amounted to SEK 3,688 thousand (3,830), excluding translation differences and investments in the form of acquisitions.
• In Q1 2015, the Company took over the shares of the British company Simbo Petroleum No.2 Ltd, which holds 40.5 per cent of the Block 2B licence in South Africa. The acquisition increased the Company’s exploration and evaluation assets in the form of licences by a total of SEK 55,355 thousand.

CEO statement

Dear shareholders and investors,

For Crown Energy, 2015 was a very eventful year, and the world market price for crude oil has been challenging to say the least. We acquired the company holding shares in licence block 2B in South Africa over the year and proceeded to farm out this asset to the Lundin group company Africa Energy in a transaction with exciting ramifications for Crown Energy.  I also took office as CEO of the Company during the year. Focus on staying the course and concentration on innovation should ensure that Crown Energy's journey will remain an exciting one. We are constantly adapting to current market conditions and working on finding more interesting transactions involving our assets. We are also assessing options for creating a cash flow generating segment in the future.

The oil price is slowing down the oil industry in general, but creates scope for new transactions as well. The price collapse began in 2014 and initially put a major check on transactions within the industry. But we have been able to see some light at the end of the tunnel on the basis of a couple of transactions that directly or indirectly affected us. One example is Maersk, which farmed in Africa Oil's assets in a major transaction announced in Q4 last year. But our transaction with Africa Energy in Block 2B is in any event, a sign that several transactions between oil industry companies are starting to be made again.

Business decisions that affected the Company’s performance

Since Q3, we have worked hard to take a second look at Crown Energy’s existing business model. We are adapting to the current climate, and are prepared to be capable of operating both in the event of lower oil prices and/or if they are back on the rise. As a result, we are assessing options for incorporating cash flow generating operations as well as continuing improvements to find farm-in partners for existing assets. The activities undertaken with respect to our capital structure in Q2, the farm-out in Q4 and finally the capitalisation now in the New Year enabled us to continue our efforts to take the next step in strengthening the Company’s financial position going forward. It will be extremely important to have a strong financial position in these times of continuing oil price uncertainty. We want to have our place in the market, where the appetite from major oil companies has been low over the past one- to two-year period, but where we are now seeing signs of some changes in attitude. It is too soon to call it a trend reversal, but we expect an increase in the level of activity in 2016 and we want to be prepared for both purchases and sales. We will be on the scene when things get moving again, as we have positioned ourselves accordingly now.

Outlook

Crown Energy is well positioned with a balanced portfolio of exciting projects that have great potential for development. We have continued our process of change with cost cuts on things that are not absolutely necessary, but we are also picking up the pace in areas which may lead to new financiers or partners. In our contact with companies in our sphere of influence, we are now seeing a clear change in the view of the future, mainly on the oil price outlook. Many people we are talking to forecast an oil price upswing in 2016 or early 2017. For that reason, there are several stakeholders who think that interesting investments can be made in oil and gas at this time. If you speculate that we are at or close to the bottom when it comes to oil prices, then you can get good prices on transactions. We are noticing a major change in attitude across the industry at the moment. And that is why we think those who will farm in, or invest in our projects in another way, will improve them and identify their potential value, and together we can enjoy common gains when and if a reversal of the current occurs as some are speculating. We continue to be well equipped with assets located in geologically attractive areas with more reasonable development costs than many other projects around the world.

We have just finished raising some capital, and our immediate capital needs are therefore met. In addition, we are continuing to conduct several processes in parallel which should be capable of leading to substantial financial breakthroughs for Crown Energy. These processes must fit in well with the slightly revised strategy the Company is pursuing. We will continue to work on wrapping up one or more of these ongoing processes and thus create solid prospects for a long-term and robust Crown Energy. We hope to have some concrete news for the market and our shareholders in the near future. As with all business, nothing is a done deal until it is on paper and money is in the system.

We think 2016 will be an interesting and exciting year and we continue to have confidence in our assets, as well as confidence that we will be able to capitalise on them. We believe we will be able to create value for you, our shareholders.

Andreas Forssell

CEO, Crown Energy AB (publ)

Crown Energy AB (publ) discloses above information pursuant to the Swedish Securities Market Act and/or the Swedish Financial Instruments Trading Act. The information was released for publication on February 11, 2016, 8:30 AM.

MORE INFORMATION

Please contact Andreas Forssell, CEO, Crown Energy AB

+46 8 400 207 20

+46 707 51 41 84

ABOUT CROWN ENERGY

Crown Energy is an international oil and gas company engaged in exploration in Africa and Middle East. Growth is created by developing assets in early stages and then maximizing value by introducing appropriate industry partners in the development and production stages. For more information please visit www.crownenergy.se