Forum Energy (AIM: FEP), the AIM-listed oil, gas, and coal exploration and production company focused in the Philippines, today announces its preliminary results for the year ended 31 December 2006.

HIGHLIGHTS

Operational

• Completed the interpretation of a 248 square kilometre 3D seismic survey over the Sampaguita Gas Discovery, GSEC101, indicating 3.4TCF gas-in-place with upside to 20TCF.
• Initiated process of conversion of GSEC101 to a service contract.
• Completed the acquisition of Basic Petroleum & Minerals Inc, in April 2006 giving the Company its first petroleum revenues.
• Received Galoc Field development approval with first production expected in early 2008.
• Strategy formulated to re-focus the Company to take full advantage of the GSEC101 opportunity.

Financial

• Working capital of US$ 5.2 million as of 31 December 2006.
• Shareholders’ equity of US$ 51.8 million as of 31 December 2006.
• Cash resources anticipated to be adequate through 2009.
• Revenues of US$ 0.5 million in 2006.

Outlook:
The net effect of the developments during 2006 has allowed the Company to reallocate capital to maximum effect and to concentrate efforts on GSEC101, the prime asset within the portfolio. The Company has completed a stringent cost reduction exercise and this, coupled with the forthcoming Galoc production should allow the Company to bring shareholder value. Forum will be actively seeking further opportunities both in the Philippines and outside to broaden its portfolio but only if these do not dilute the impact of the current assets and provide a competitive advantage.

Russell Harvey, Chief Executive commented:

"In 2006 we made substantial progress in consolidating and expanding our portfolio. The development approval of the Galoc field and commencement of production in 2008 means the Company should have sufficient funding through 2009 based on its current work program.

The interpretation of 3D seismic survey over the Sampaguita Gas Discovery has also confirmed Forum’s possession of a potentially world class asset and the Company has been working hard to convert the licence into a service contract. We have made substantial progress in our negotiations and hope to be awarded the contract in the near future.

In 2007 we look forward to further building on shareholder value through our operational programme and continual focus on additional opportunities."

Forum has changed its registrars from Park Circus Limited to Share Registrars Limited, Craven House, West Street, Farnham, Surrey GU9 7EN.

Enquiries:

Russell Harvey, Chief Executive, Forum Energy Plc
+44 (0)1932 445 344

Alan Henderson, Chairman, Forum Energy Plc
+44 (0)1932 445 344
Charles Vivian, Pelham Public Relations
+44 (0)20 7743 6672
+44 (0)7977 297 903

Evgeniy Chuikov, Pelham Public Relations
+44 (0)20 7743 6672
+44 (0)7894 608 606

Chairman's Statement:

I am pleased to report that the Company continues to make progress through a strategic focus on the Philippines and in particular the Sampaguita gas discovery on GSEC101.

The Company, now under new management, dramatically reduced its level of spend and overhead during the second half of 2006, and should be in a position to support itself, with the current portfolio, through 2009, allowing a concentration of effort on GSEC101.

2006 saw the completion of the 3D seismic shot across GSEC101 and a confirmation of the gas-in-place of 3.4TCF. This prompted the commencement of the process to convert the licence to a full service contract, which we are hopeful will be concluded in the near future.

Recognising the potential value in the Sampaguita area, the Company has gone through a process of conserving and redirecting its available cash resources. This has been aided by the development approval for the Galoc Field (part of the 2006 Basic Petroleum acquisition), with first revenues expected in 2008 and a refocusing away from our coal assets which the Company will look to divest to concentrate on its core business.

Economic and Political Outlook for the Philippines

We believe the investment climate in the Philippines continues to be stable and generally very favourable. Last year, the economy grew at 5.4 per cent, up from 5.1 per cent growth the previous year, and is expected to grow even faster in 2008 at 5.5 per cent.

The country’s 2007 budget has been approved by Congress, ensuring that the government will receive funds of around US$23 billion to spend on priority projects on health, education and infrastructure. This is expected to continue to attract foreign and local investments in the country.

Commitments to establish new and expand existing business ventures jumped 18.5 per cent from 2005 to 2006. The country’s Department of Trade and Industry said the growth reflected investors’ confidence in the country’s fiscal position, as a result of strict implementation of programs on improving cash flow and revenue collection.

The Philippine stock market closed 2006 at a 10-year high. In fact, it was one of the best performers in Asia. The Philippine peso, on the other hand, is on a six-year high as of year end. These trends are expected to continue in 2007.

Inflation fell to 4.4% year on year last December, bringing average inflation for the whole of 2006 to 6.3%. The fall in inflation over the past year is largely the result of falling food prices, reflecting a rebound in agricultural production. Inflation is expected to remain low in 2007 and 2008.

The search for new oil and gas deposits in the country is expected to continue in 2007 according to the Department of Energy (DOE), with a series of seismic and drilling activities being planned for the year.

We believe Forum is well established to take any opportunities that may arise in the Philippines in the coming years.

Board Developments

The Board of Directors has recently undergone a transition to bring the Board numbers in line with the size of the Company. Consequently the Board has reduced from seven to five members.

Having completed the transition of the Basic Petroleum assets to Forum, Oscar de Venecia stood down as non-executive director, effective 23 January 2007, to pursue other business interests in the sector within the Philippines. The vendor, Basic Consolidated Inc (now called Basic Petroleum Corporation) for whom Oscar remains a director, continues to support the Company and as at 31 May 2007 held 1,333,769 shares or 4.65% of our issued share capital. We would like to thank Oscar for his contributions to the Board.

On 28 February, 2007, Ian Baron resigned from the Board of Directors due to other work commitments. We also extend our thanks to Ian for his contributions to the Board.

Annual General Meeting

The Forum Energy Annual General Meeting will take place at our offices in Chertsey on Monday 23 July 2007. The Directors look forward to meeting our shareholders.

Outlook for 2007

Finally, I should like to thank my fellow Directors for their energetic support in the development of our young company. We are indebted to all our staff in the UK and the Philippines for their continuing commitment and enthusiasm in meeting our objectives.

Having developed a business in the Philippines, the Company will be open to other opportunities which will provide value to shareholders trading from the established platform. The Company will look to diversify and increase the opportunity set while retaining the undoubted competitive advantage it has developed within the Philippines.

Forum Energy’s second year has been both challenging and productive. We look forward to your continued support and will keep you informed of our progress.

Alan Henderson, Chairman
18 June 2007

Chief Executive's Review

Dear Shareholder,

The Company made substantial progress during the year in evaluating its portfolio and focusing upon those assets which have the potential to add material value. This has caused the Company to shift focus with an emphasis on reducing overhead and conserving its cash resources to concentrate on the most material of these assets. I am pleased to say that as a result, and with the start of production from the Galoc Field in 2008, the Company should be self-sustaining through 2009 with our projected work programme.

Having completed the evaluation of the Company’s assets, the next year will see Forum move to realisation of the underlying value while seeking additional involvements which demonstrate accretive value. Major highlights of 2006 were as follows:

• Completion of the GSEC101 3D seismic evaluation, confirming 3.4TCF gas-in-place with upside to 20TCF.
• Commencement of farm-out process and conversion of the GSEC101 licence to a full service contract.
• Completion of an independent evaluation of the NW Palawan interests purchased from Basic Consolidated Inc in April 2006.
• Development approval for the Galoc Field (Forum 2.27% carried interest) with first production due early 2008.
• Farm-out of the Octon Block interest leaving Forum with a 1.67% carried interest, subject to DOE approval.
• Completion of the SC40 2D seismic survey evaluation.
• Continued exploration and development of the Cebu coal assets.

Operational Review

GSEC101 (Reed Bank)
3D Seismic Survey

In July 2006, the Company completed the interpretation of the 3D seismic survey shot in 2005 across the Sampaguita gas discovery in licence area GSEC101 to the West of Palawan Island. Forum holds 100% of this under-explored acreage, which covers 10,630 square kilometres and contains at least eight additional undrilled prospects and leads.

The seismic interpretation, coupled with the data from the wells drilled in the 1970s and 1980s increased the expected reserves to 3.4TCF gas-in-place (previously independently assessed by PGS Reservoir Ltd. at 2.7TCF gas-in-place). Additionally the evaluation indicated an upside to 20 TCF making this discovery potentially a world-class accumulation. Additional leads were also identified, further adding to the prospectivity of the area.

As a consequence of the positive results Forum commenced the process of converting the licence to a service contract in a form as pre-agreed and appended to the current Geophysical Survey & Exploration (GSEC) licence, allowing the Company to move to the next stage of evaluation through the drilling of an appraisal well.

GSEC101, which is situated in the South China Sea, is surrounded by an area which is likely to be exclusively licensed to the state companies of the Philippines, China and Vietnam. Forum will thus be in a unique position of being the only independent company to have access to this highly prospective area, providing a unique opportunity for our shareholders.

The Company has therefore focussed its efforts on realising this outcome and having the available resources to perform following conversion. The Company has satisfied all the requirements of the DOE, and has received positive support in its application, and is expecting ratification in the near future.

While the Company is hopeful of award of the service contract shortly, with the political sensitivities of the area, the Company needs to be in a position to manage the eventual timeframe.

The Sampaguita discovery will require considerable expenditure to properly evaluate and the Company is considering a number of options to satisfy these requirements.

The potential size and scale of the project open up a number of development options, including both gas export and LNG. This will ultimately be dependant upon the reserves finally defined as a result of future drilling but it is anticipated that both new wells and further seismic will be necessary, and the Company will look to be carried through this programme to declaration of commerciality.

Sampaguita lies 250 kilometres south west of the world-class Malampaya Gas Field, where operator Shell has installed extensive production facilities and pipeline infrastructure that supplies gas to three Philippine power plants.

Basic Petroleum

In April 2006, Forum completed the acquisition of Basic Petroleum & Minerals Inc, a wholly owned subsidiary of Basic Consolidated Inc. This involved the purchase of an interest in a number of fields and discoveries in the NW Palawan area.

Following the acquisition, PGS Reservoir Consultants Limited performed an exclusive remapping and reservoir simulation study on the main producing fields, Nido and Matinloc, to determine the potential for further development. It concluded that while there were additional reserves to be accessed, in particular in the Matinloc Field, these were not currently economic. No further action will be taken in respect of these assets, which currently produce a net 44 barrels of oil per day to Forum.

The main potential was identified in the carried interest in the Galoc Field and interests in West Linapacan and Octon.

Development approval was given for the Galoc Field in May 2006 and production is due to commence in Q1 2008, with Forum holding a net 2.28% carried interest. This field is also the recipient of an extended production test of some six months, during which the joint venture receives 100% of proceeds. A phase 2 development has the potential to add appreciably to reserves.

West Linapacan, a previously suspended producing oil field, is the subject of farm-in discussions. Forum currently has a 9.10% interest in the field, which is located in the same contract as Galoc.

An agreement, subject to DOE approval, was also entered into in Q1 2007 to farm out Forum’s interest in the Octon Block, leaving the Company with a 1.67% carried interest in this block with a discovery which is a potential tieback to Galoc.

An additional asset acquired in this transaction was an interest in SC41. At the time of the acquisition this licence was under farm-out discussion with the licence having only two years to run, the first requiring a seismic commitment and the second period requiring a well. Forum was not a party to this farm-out and would have been required to meet the escalating costs of the proposed seismic data acquisition programme. Due to the increasing financial exposure, minority interest status and the short licence duration the Board determined it was in the best interests of the Company not to participate in the farm-out and to withdraw from the licence.

Service Contract 40

2D Seismic Survey

Forum completed the interpretation of the offshore 2D seismic programme acquired in the Tañon Strait west of Cebu Island in May 2005. Also included in the interpretation were some 1,700 kilometres of vintage data that were reprocessed in 2005.

The evaluation confirmed the presence of the Central Tañon structure, as well as new prospects with a potential for in-place reserves of 680 mmbbl. However, while remaining as a valid prospect, the Jibitnil Island structure was eliminated from further consideration due to faulting and closure risk. Further onshore/offshore leads have also been identified with a potential for in-place reserves of 150 mmbbl which will be matured to prospects.

There is considerable interest in the Tañon Straits area with drilling activity in the block adjacent to SC40 programmed for 2007 that will test a similar play concept to that identified by Forum. With its 66.67% interest in SC40, Forum will actively be seeking a farm-in partner for the offshore area in the near future.

Libertad GTE Project

During 2006, the DOE proscribed that in order for an arms length gas price, and therefore tax reference price, to be determined, Forum should offer the gas to the open market for sale. This tender process is currently ongoing but has delayed the project schedule. Should an attractive gas price be achieved through this process, Forum has determined to sell the gas directly to the successful party and remove itself from the actual downstream development.

Maya

The refurbishment of the Hycalog rig was successfully completed in 2006 and all the necessary materials ordered for the re-entry and completion of the 2003 F2X discovery. The workover commenced in March 2007 and gas was encountered during the process. However the gas failed to flow to surface and the situation is currently being evaluated. It is suspected that the perforating guns failed to fire due to mechanical problems and remedial work has been planned to address the situation.

Coal Operating Contracts

Forum’s 66.7%-owned coal operating contracts (COCs) in Central Cebu (COC132) and Southern Cebu (COC131) are currently being appraised and developed in accordance with the Company’s commitments to the DOE.

In Central Cebu, the first coal shaft was driven to the prognosed depth and incidental production commenced from a minor seam en-route to the main productive seam. This was not however encountered at the prognosed depth and subsequent operations were concentrated on additional exploratory drilling, with three drilling rigs operating at any one time.

The results to date have confirmed the orientation of the main seam but due to the variable geology, the five shaft scenario has been deferred until a smaller scale operation is proven. This has allowed further capital to be diverted to the oil and gas business which is seen as providing more immediate value to shareholders.

There were no operations in our Southern Cebu contract in 2006 whilst all exploratory drilling concentrated on the Central Cebu contract.

Once the scale of the total resource has been determined, the Company will look to optimise value through the divestment of its operation to a company specialising in the coal business.

Coal sales contracts are in place to dispose of any production and the market on Cebu is proven.

Financial Results

Forum recorded a loss of US$3.3 million for the 12 months ended 31 December 2006, compared to US$0.9 million for the previous nine-month period. This was primarily attributable to administrative expenses, share-based payments and the costs of pursuing new opportunities. During the year the level of administrative expenses has been reduced substantially and will be maintained at a level commensurate with the Group’s level of activities. Approximately US$0.8million (2005: US$0.05 million) was recognised as expense attributed to the issue of share options in favour of the executive, Board, management and employees of the Group during the year. The increase from the previous period reflects a greater emphasis on aligning executive rewards with shareholder returns.

Financial income of US$1,066,000 shows an increase of US$806,000 from the previous period reflecting the strengthening of the pound sterling against the US dollar with forex gains of US$736,000 in 2006. There were no significant tax charges or provisions for the period due to the emphasis upon investment activities during 2006. Overall these results are in line with the budgeted expenditures for the Company and resulted in a loss of US$0.115 per share.

Summary and Outlook

The net effect of the developments during 2006 has allowed the Company to reallocate capital to maximum effect and to concentrate efforts on GSEC101, the prime asset within the portfolio. The Company has completed a stringent cost reduction exercise and this, coupled with the forthcoming Galoc production should allow the Company to bring shareholder value. Forum will be actively seeking further opportunities both in the Philippines and outside to broaden its portfolio but only if these do not dilute the impact of the current assets and provide a competitive advantage, something we deem essential to provide shareholder value.

Russell Harvey, Chief Executive
18 June 2007

Financial Statements & Notes

Please see the 2006 Preliminary Results document for financial statements and notes that go with this report.