TXO : Final Results for 2013

TXO PLC
("TXO" or the "Company")

Final Results for the Year ended 30 September 2013
Publication of Report and Accounts
Focus now on oil remediation

TXO, the AIM-quoted energy resource and clean technology investment company, announces its final results for the year ended 30 September 2013. TXO has re-positioned itself over the period under review and is now focussed on areas which deal with either waste oils or heavy and contaminated oils. It currently has four investments in this area; the Grand Bahama Group Ltd ("GBG"), Oil Recovery Services ("ORS"), Oil Tech Royalties Inc ("OTR") and Athabasca Resources Limited ("Athabasca"), all of which are complementary. TXO also retains its holding in Tasmanian Oil and Gas Ltd ("TOG") which is non-core.

GBG is developing a waste oil and hydrocarbon recovery facility at Freeport, Grand Bahama, utilising both ORS's and OTR's technologies. The recent investment in OTR further expands the TXO's technical knowledge and offering.

Highlights:

• GBG - enhanced and revised plan for hydrocarbon recovery plant finalised; Barge Martha operational
• Holding in GBG increased from 23% to 30.2%
• 20% holding in Athabasca acquired
• US$1.676 million of equity raised during the period

The loss on ordinary activities after taxation amounted to US$3,380,364 (2012: US$936,985) including impairment charge re Empire Energy loans of US$1,807,085 (2012: nil)

Highlights post year end:

• Holding in GBG increased to 35.67%; Phase 1 operational
• 25.1% holding in ORS concluded
• 30% holding in OTR conclude
• £500,000 equity placing completed, £1,530,000 financing agreed

The Report and Accounts will be posted to Shareholders today and will be available for download on the Company's website: http://www.txoplc.co.uk

Timothy Baldwin, Chairman and CEO of TXO PLC, commented:

"TXO is now firmly established in the rapidly expanding oil remediation market, following the recent investments in two companies offering complementary technologies. GBG's Phase 1 of the Bahamas plant is now operational and has contracts with major international clients in place.

"GBG has finalised the plans for an enhanced facility, with reduced cost and increased potential, and by utilising the ORS and OTR technologies introduced by TXO is looking to expand its waste oil remediation business. All three companies are in negotiations regarding additional new contracts.

"We are in a stronger position both financially and in terms of future prospects than we have been at any time over the last few years.

"We view the investments in GBG, ORS and OTR as having, revenue and profit generating capability in the current year and it remains our expectation that during 2014 TXO will become cash self-sustaining".

31 March 2014

For a copy of the Annual Report end September 2013 click here

For further information, please contact:

TXO PLC Tim Baldwin, Chairman and CEO	[phone]
Northland Capital Partners Limited John Howes / Alice Lane Sales and Broking Edward Hutton / Luke Cairns Nominated Adviser	[phone]
Lothbury Financial Services Limited Michael Padley / Chris Roberts	[phone]

CHAIRMAN'S STATEMENT

In the last 18 months the Company's portfolio of interests has broadened significantly but in complementary areas of activity. We have increased our shareholding in our largest investment to date, The Grand Bahama Group Ltd ("GBG"), to 35.67%. GBG is making good progress in developing its operations in the Bahamas (see under investment review). The recent investments by TXO have been in areas which deal with either waste oils or heavy and contaminated oils and complement our investment in GBG.

Post year end we acquired a 25.1% shareholding in Oil Recovery Services Limited ("ORS"), which has proprietary technology for the reprocessing of contaminated oils and the remediation of dirty water, and just before the year end we opportunistically took a 20% shareholding in Athabasca Resources Ltd ("ARL").

ORS has been invaluable in assisting GBG in the last few months in the Bahamas and also has major international opportunities. ARL was set up to acquire a tar sands lease in Canada and is planning to list on AIM this year. Tar sands have similar properties to contaminated oil lakes and we believe the ORS technology will assist in enhancing the commerciality of this project. Most recently, we have invested in a new joint venture company called Oil Tech Royalties Inc ("OTR"), which has secured a licence to commercially promote an oil technology that uses a proprietary acoustic flow reactor valve, capable of changing the aggregate state of matter, such as heavy crude oil and diesel, in specific regions around the world. Initially, we intend that it will be used by GBG on its Bahamas project, and in conjunction with the ORS technology, in the Middle East in due course.

Following our recent investments our focus of future investment has changed considerably and whilst our holding in Tasmania Oil and Gas Ltd ("TOG") has been retained for the moment we have no current plans to increase our investment. TOG is exploring third party finance to take its opportunities forward. There are also no current plans to invest in East African Oil Company Limited ("EAOC")..

In the light of the uncertainty of the Tasmanian licence, the Directors of TXO consider that it would be prudent to attribute no value to the loan to Empire Energy Corporation International ("Empire") until such time as that TOG raises funds to recover the licence and commence exploration. Accordingly a provision has been made in the accounts against the full amount of this loan.

Financial Review

Please note that the Company produces its accounts in US Dollars ($); however its share price is quoted in Pence Sterling (p).

The consolidated gross assets were US $3,530,674 and net assets were US $1,829,935 at 30 September 2013.

The loss for the year of US $3,380,364 was mostly a result of the exceptional write down of TXO's loan to Empire which is shown as Impairment of Investment in the accounts on page 26. These loans and interest totalling $1,807,085 form part of TXO's investment in TOG. The Directors recognise that the high risks associated with this investment make valuation difficult and they have therefore provided in full against the amount of those loans. The loss also reflects the Company's administrative costs in running a public listed company and any share of associated profit or loss from its associate interests, primarily GBG. The figures recognise a profit of $271,739 on the deemed disposal in TOG and a share of associated losses of US $596,423 principally relating to GBG and TOG.

The losses also include the interest costs attached to the convertible loan notes issued in October 2012 and some one-off costs relating to capital raising activity. It remains the objective of the Board to achieve aggregate profitability in 2014.

The Company has remained in cash funds throughout the period. The Company raised US$1.676 million of equity during the period under review. A further £500,000 ($750,000) gross was raised in December 2013 and in February 2014 a £1.53m ($2.25m) financing facility was agreed under which £330,000 ($500,000) has been drawn to date. The Directors believe it has adequate cash resources for the foreseeable future.

BOARD

The Company strengthened its Board with the appointment of Christopher Foster, in October 2012, and Spencer Wilson in July 2013 as non-executive Directors. Christopher brings a wealth of management experience across a variety of sectors and has been a director of a number of listed companies whilst Spencer has experience in international finance and has an extensive network of contacts worldwide.

INVESTING STRATEGY

Under the current investment policy, TXO has the mandate to invest in a wide range of hydrocarbon investment opportunities. The Board's strategy has been to consider relatively early stage or high risk opportunities where the risks are warranted by substantial potential value upside. We then seek to mitigate the risks and look to play an active part, where necessary or where requested, to assist investee companies at the operational and financial level.

To date, the Company has taken minority stakes in its investee companies but this does not rule out taking majority control through further investment if it is in shareholders' interests.

TXO has continued to increase its investment in The Grand Bahama Group Ltd ("GBG") and, post year end, it has expanded its activities in the field of remediating waste oils by making investments in Oil Recovery Services Limited ("ORS") and Oil Tech Royalties Inc ("OTR"). The Company expects its future investing activity to remain connected to this field of activity.

Investment Review

THE GRAND BAHAMA GROUP LIMITED ("GBG")

During the year under review the Company increased its shareholding in GBG from 23% to 30.2% and post the year end increased it further to 35.67%.

GBG is a private limited company registered in the Commonwealth of the Bahamas. TXO's relationship relies on the goodwill of the board of GBG to provide regular updates in order to keep its shareholders apprised of developments. GBG has two wholly-owned subsidiaries, namely Morgan Oil Marine (Bahamas) Limited ("MOM") and Morgan Oil USA LLC ("MOUSA").

The board of GBG have expressed to TXO a need to keep their business activities relatively confidential while they develop the business in the Bahamas although they acknowledge the regulatory obligations of TXO. They are conscious that excessive disclosure risks damaging GBG's commercial interests in the region, whilst it is advancing its contractual development plans which by their very nature in a growing business can alter depending on various factors.

Nonetheless, GBG have advised us that they are prepared to make the following statement:

"GBG's main operational activity last year was centred on getting Barge Martha operational and commercial as well as assessing the best way to develop the business technically, financially and being ever mindful of the regulatory approvals required. The development plans have altered from the sort of development expectations the company had this time last year. This change is believed to be commercially beneficial for the company. The change was mainly due to TXO's introduction of the ORS technology to the company and it then contracting with ORS late last year as a technical partner. This has led to a business plan requiring less capital expenditure upfront and a modular development programme split into three phases. The company has also been working with all its potential business partners in the Bahamas in assessing their needs for a future phasing of collection contracts.

GBG is now operational in the Bahamas having completed Phase I of its development plans (the collection and reprocessing of waste oils using ORS technology). We are excited by the development plans being implemented for its Phase II development (the scaling up of activity on shore) and further out for Phase III (the further refining of the filtered waste oils) and by the further commercial potential on the islands outside of the Freeport developments. The company is in advanced talks, in conjunction with ORS, with asset finance backers to support any future capital expenditure requirements

Morgan Oil Marine ("MOM")

MOM is a trading subsidiary of GBG that specialises in the collection and reprocessing of used oils and is based in the Commonwealth of the Bahamas.

MOM has been working in partnership with ORS since November 2013 and the two companies have made excellent progress. All relevant international approvals have been granted to MOM to operate the only MARPOL approved (International Convention for the Prevention of Pollution from Ships, 1973 as modified by the Protocol of 1978, Marine Pollution) port reception facility throughout the whole of the wider region.

In addition to several existing contracts already entered into, GBG last year entered into an arrangement with one of the world's largest international fleets to receive their used oils and ships slops under MARPOL Annex 1. MOM also recently entered into a non-binding Heads of Terms in relation to a substantial oil clean-up project in the region, work in respect of which is scheduled to commence soon.

MOM will look to complete all phases of its development over the course of the next twelve months, with construction of Phase II expected to commence next quarter.

In order to cope with the greater than anticipated demand, MOM is looking to secure extra barge capacity.

Finally, MOM has identified sufficient local demand for all of its reprocessed fuel oil for the foreseeable future.

Morgan Oil USA ("MOUSA")

The business made little progress in 2013 as a result of GBG directing its management time to the Bahamas projects. Whilst the gross barrels produced have fluctuated due to on-going maintenance, the average has been approximately 17 barrels of oil per day (bopd). GBG has looked at divesting its interests in Western Kentucky, but it believes that better value can be first obtained by ORS undertaking an enhanced oil recovery programme where the aim will be to increase production to 70 bopd. This programme will commence in the second quarter."

OIL RECOVERY SERVICES LTD. ("ORS")

In November 2013, TXO subscribed for a 15.1% shareholding in Oil Recovery Services Limited ("ORS") for £300,000, which was satisfied through the issue of 100,000,000 new Ordinary Shares in TXO at 0.3p per share. In January, the Company subscribed £200,000 in cash to increase its shareholding to 25.1%. TXO has an option to subscribe for a further 24.8% equity interest in ORS taking its shareholding to 49.9% at a cost of £2.5m in cash or TXO shares.

ORS is an international business based in the UK. It has proprietary technology in offering goods and services for the reprocessing of contaminated oils and the remediation of dirty water. The ORS technology will also act to serve the upstream oil production sector with cost-effective enhanced oil recovery technology. ORS has, since December, continued to develop strategic relationships in the Middle East and has established a strong relationship with one of the largest international engineering groups, as a consortium partner for large scale refinery projects as well as with a major Middle Eastern group to establish a waste oil recovery centre in Abu Dhabi.

Announcements as to the progress of these relationships are planned for release in the second quarter. ORS has submitted contractor qualification programmes to several regional Governments and oil multinationals and has been duly invited to enter into discussions on key projects in the Middle East.

ORS has filed company registration documents to open a Dubai office and discussions with a major asset funding group are also nearing completion, the conclusion of which would greatly assist all capital expenditure requirements on projects associated with ORS, including in the Bahamas.

ORS was engaged by GBG in late 2013 to complete the Environmental Impact Studies and to design, build and operate a suitable plant for Hydrocarbon Recovery in Freeport. It is also working with GBG in the Bahamas on other major contracts.

OIL TECH ROYALTIES INC. ("OTR")

In March 2014 we concluded the acquisition of a 30% shareholding in in a newly-formed joint venture oil technology commercialisation company called Oil Tech Royalties Inc ("OTR") for a cash consideration of US$74,250.

OTR has secured a licence to the intellectual property rights ("IPR") of an oil technology held by one of the JV shareholders to commercially promote the oil technology in specific regions around the world.

The IPR incorporates a proprietary acoustic flow reactor valve ("RAP") which, according to a third party technology report commissioned as part of the due diligence, is capable of changing the aggregate state of matter such as heavy crude oil and diesel by changing the dissolution, diffusion and crystallisation speeds in treatment so as to disperse and emulsify the oil.

The technology is currently being commercialised in Latin America, where it is installed in a power generation plant and in the operations of a heavy oil field. It is also in extensive tests with several operators of heavy oil fields and several major power producers in the region.

It is intended that the JV's first valves will be located in the Bahamas to assist GBG and ORS in the contract works being carried out.

OTR offers the opportunity for us to use an existing technology in areas of the world where we have existing contacts and operations. Our entry cost to this is quite modest yet the market potential is quite significant.

ATHABASCA RESOURCES LIMITED ("ARL")

In September 2013 we announced that the Company had acquired a 20% shareholding in the issued share capital of ARL for an undisclosed sum.

ARL has in place Heads of Agreement to acquire a 50% farm-in interest in certain Alberta Crown Leases covering 7,936 hectares in Chard in the Athabasca Oil Sands in Alberta, Canada ("the Farm In").

The Farm In gives TXO exposure to a potentially substantial oil resource that also can be exploited using the technology held by our other investments, namely ORS and OTR.

Athabasca is a rapidly-emerging oil producing region with high impact heavy oil plays. The geology is well-mapped and tends to be relatively simple and consistent. The Athabasca oil sands account for approximately 45% of Canadian production but 98% of its potential reserves. They represent the world's third largest investible and accessible oil reserves after Saudi Arabia and Venezuela.

ARL's assets are located in a regulated and stable environment with low political risk and an attractive fiscal regime. Canada is the world's sixth largest oil producer.

ARL is currently preparing to list on AIM this year and it has commissioned an update of the CPR report which was previously produced in 2012 for Mercom Oil Sands PLC in its planned farm in of the same asset. Completion of the Farm In will take place on ARL's admission to AIM.

ARL is in discussions with ORS with a view to using its technology to enhance the commercial prospects of the project. We believe success on either or both accounts could add significant shareholder value to TXO.

TASMANIA OIL AND GAS LIMITED ("TOG")

The Company retains a 25% shareholding in this company with a convertible loan of $263,875. TXO has no commitments to make further investments into TOG. TOG has become non-core to the Company's future strategy and we are currently discussing with TOG plans to realise shareholder value for TXO in this venture.

The components to the value of TOG include: 1) debenture over the subsidiary company of Empire, namely Great South Land Minerals, who were the original licence holder ("GSLM"), and 2) claim in litigation against a Chinese company, SmartWin and 3) shareholding in Alpha Prospects PLC.

During the year under review TOG commissioned and received a Competent Person's Report ("CPR") on the GSLM licence area. A summary of the CPR was announced on 29 January 2013. However, the GSLM licence has been revoked following an unsuccessful appeal by GSLM in administration. TOG has been looking at ways it may regain and exploit the licence area in its own right. At this stage the options remain open.

As previously disclosed TOG has a 50% interest in any counterclaim award Empire may receive in its claim against SmartWin. With the depositions now completed this could go to trial or settlement within the next year. If this was successful and enforced then this could be material to TOG but no certainty can be placed on this.

In addition TOG has a 20% shareholding in Alpha Prospects (an investment company quoted on GXG markets). The results of Alpha Prospects for the year ended 31 August 2013 were in line with management expectations. Net Assets of Alpha Prospects increased during the period by more than £1m.

EMPIRE ENERGY CORPORATION INTERNATIONAL LOAN

The Company has provided in full in its accounts against the value of its two loans to Empire, these amounts to $1,807,085 including interest. The Company recognises that the high level of uncertainty surrounding the various outcomes of the components of TOG's value suggest that an impairment in the value of the investment in the accounts would be appropriate and accordingly the value has been adjusted.

OUTLOOK

Our intention is to support and progress those activities we are already invested in, which relate to either waste oils or heavy and contaminated oils. Our recent investments complement and assist our largest investment, GBG. They also extend our options beyond the developments in the Bahamas.

It remains our expectation that during 2014 TXO will become cash self-sustaining. We believe we are on course for this with the investments we have taken and the financing we have put in place.
We view the investments in GBG, ORS and OTR as having revenue and profit generating capability in the current year and we have dividend distribution policies established with each of these investee companies.

With regards to ARL and TOG, we see these as potential capital gains opportunities. The former will depend on its planned listing and the latter will depend on the on-going financing talks its major shareholder is conducting. Whilst speculative, success on either of these would be material in relation to our current market capitalisation.

We are in a stronger position both financially and in terms of future prospects than we have been at any time over the last few years. Whilst there are still challenges ahead, we remain optimistic that the investments we have made will deliver significant shareholder value in due course.

Timothy Baldwin
Executive Chairman and CEO

ABBREVIATED NOTES TO THE ACCOUNTS

1. General information

TXO Plc is a public company incorporated in England and Wales and its shares are quoted on the Alternative Investment Market ("AIM") of the London Stock Exchange Plc. The principal activities of the Company and its subsidiaries (the "Group") are described on page 13 of the Directors' Report in the Report and Accounts.

2. Significant accounting policies

The accounts have been prepared in accordance with International Financial Reporting Standards (IFRSs). The accounts fall within the scope of the Statement of Recommended Practice, "Accounting for Oil and Gas Exploration, Development, Production and Decommissioning Activities", issued by the Oil Industry Accounting Committee ("SORP"). The accounts, including disclosures, have been prepared in accordance with the provisions of the SORP currently in effect.

The following accounting policies have been consistently applied:

Basis of preparation and going concern

The measurement basis used in the preparation of the accounts is historical cost.

The group incurred a loss of $3,380,364 during the year ended 30 September 2013. However, at that date, the group had net assets of $1,829,935 including cash reserves of $253,783.

On 5 December 2013, the Company announced a conditional equity placing of 500 million new ordinary shares of 0.1 pence each at a price of 0.1 pence per share, raising £500,000 before expenses. The new ordinary shares rank pari passu in all respects with the existing ordinary shares. As at 31 December 2013 the Company had 2,158,667,589 ordinary shares in issue.

The funds from the Placing are to be used by TXO principally to expand its investment portfolio and for general working capital purposes.

The Directors have prepared a forecast, which includes such monies already received and together with those expected to be received shortly and expected outflows will provide the Company with sufficient funds to settle its current obligations and provide funds required to continue to operate the Company for the next 12 months from the date of signature of these financial statements.

Foreign currencies

Profit and loss items are translated at the average rate for the year. Exchange differences arising from the settlement of monetary items are included in the profit and loss for that period. The rate of exchange that has been applied at 30 September 2013 is £1: $1.614 and an average rate of £1: $1.615 has been applied. US dollars are the functional currency used because it is the currency used by the overseas trading subsidiaries and associates, and the oil and gas industry.

3. Revenue

There was no revenue in 2012 or 2013.

Impairment of investment

The Company has made a provision of $1,807,085 against the value of its two loans to Empire along with accrued interest, which form part of its investment in TOG.

The Company remains of the belief that the potential upside to this investment is high, but recognises that the high risks associated with the investment make valuation difficult. Therefore the balance has been provided for in full against the amount of these loans.

8. Loss per share

The calculation of the basic and diluted loss per share attributable to the ordinary equity holders of the parent company is based on the following data:

Ends