Interim report, January-September 2016

Third quarter– July-September 2016

• No sales were recognised.
• The operating loss totalled SEK -1,907 thousand (-1,975), consisting primarily of employee benefit expenses and other external costs.
• Profit after tax was SEK -1,283 thousand (-2,418), corresponding to SEK -0.01 per share (-0.04), both before and after dilution.
• Investments in exploration and evaluation assets totalled SEK 262 thousand (2,491).

Nine-month period – January-September 2016

• No sales were recognised.
• The operating loss totalled SEK -6,253 thousand (-6,283), consisting primarily of employee benefit expenses and other external costs.
• Profit after tax was SEK -632 thousand (-11,844), corresponding to SEK -0.01 per share (-0.29), both before and after dilution.
• Investments in exploration and evaluation assets totalled SEK 2,737 thousand (7,891).

Key events during the quarter

• Crown Energy's activities during the quarter were focused on completing the directed issue to Cement Fund SCSp.
• On 7 July Crown Energy published its latest resource report of the Company’s assets. This report was prepared as a result of the directed issue.
• The prospectus prepared as a result of the directed issue was approved by the Swedish Financial Supervisory Authority on 15 July 2016. As a result of this approval, 31,500,000 shares were admitted to trading on NGM Equity and a short time later delivered to Cement Fund. This made Cement Fund the largest owner of Crown Energy.

CEO statement

Dear shareholders and investors,

These are very exciting times for Crown Energy. The fact that we have now entered an agreement to acquire a service company in the oil industry broadens our operations to include both exploration and service with significant operating cash flows. This has been the strategy of the owners, the Board and management for over a year. Through this transaction, we managed to realise this strategy, making us a well-financed and profitable company that has very interesting assets with strong growth potential and a diversified risk profile. We believe this will be very attractive to shareholders and the market going forward.

During the third quarter, we published a prospectus for the directed share issue, which means that Cement Fund came into the Company and brought with it much-needed capital. We subsequently began the work that led to the acquisition agreement with ESI Group in November. After the end of the reporting period the farm-out of Block 2B in South Africa was finalised, so we are now formally partners with Africa Energy and look forward to this collaboration and future activities under this licence.

The acquired business’ concept is to develop and offer customised solutions as regards homes and offices along with ancillary services primarily to companies in the oil and gas industry. Their process includes everything from project planning and construction to administration and other value-added services, such as security, transportation, telecommunications, catering and recreational facilities. Customers include some of the world’s leading oil and gas companies.

As part of the acquisition, entrepreneur Yoav Ben-Eli will also join the Company, and as the largest shareholder through his company YBE Ventures Ltd., we will gain a strong character who built ESI Group into a well-run business with stable cash flows.

After the acquisition, Crown Energy will consist of two business areas: Energy and Property Development and Services. The acquisition makes Crown Energy a major player in the oil and gas industry while creating significant growth potential for both business areas through expansion in existing and new markets.

We are now looking forward to an extra general meeting that is scheduled to be held on 12 December to decide on the issue of the shares pledged as payment for the acquired company. After that, we will continue to work on completing the transaction, which is planned for the end of the first quarter or during the second quarter of 2017. We will keep you informed regularly as developments arise.

Business decisions that affected the Company’s performance

We will acquire a well-run company that is profitable and has great growth potential. The strong cash flow also increases our ability to develop existing operations in Crown Energy, as the end market in exploration operations and in the property services business consists largely of the same companies and customers, i.e. the oil and gas industry. As a larger joint company, we see new opportunities for generating future business in both business areas.

Outlook

The Company now continues its progress towards a larger and more stable foundation to stand on. Through the merger with ESI Group, we can reap the benefits of prominent contacts in the oil industry, and future cash flows should guarantee faster development of the Company’s existing assets. Our capital and organisation are adapted to accommodate an exciting continuation of Crown Energy’s development efforts.

An important part of incorporating ESI Group in a listed company in Europe is to have better access to the international capital market, which is important for faster growth and further expansion of the business.

We can now continue to take an active approach to our assets and assume a position of strength when new transactions arise going forward. This ensures a bright future for the Company.

Financing

The issue of shares and warrants to Cement Fund earlier this year means the Company will continue to have adequate working and investment capital going forward.

We look forward to continuing our efforts to capitalise on our assets, thus creating value for you, our shareholders.

Andreas Forssell

CEO, Crown Energy AB

This information constitutes such information as Crown Energy AB (publ) is required to disclose under the EU Market Abuse Regulation and the Securities Markets Act. The information was released for publication on 11 November 2016 on behalf of the contact person listed below at 8:30 CET.

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