Forum, the UK incorporated majority Filipino held Oil and Gas Exploration and Production Company with a focus on the Philippines, today announces its Audited Results for the year ended 31 December 2008.

HIGHLIGHTS

Operational Highlights

• Agreed Work Programme with the Philippine Department of Energy (DOE) for GSEC101, Forum’s principal asset, and continued to finalise conversion of this licence to a full Service Contract;
• Finalised farm-out of a 30% interest in GSEC101 to a local partner Monte Oro Resources & Energy, Inc. (Monte Oro) in which Forum benefited from an immediate cash payment of US$1.7million, securing Monte Oro’s involvement and thereby qualifying the Joint Venture for the Filipino Participation Incentive Allowance (FPIA) which entitles the Company to 7.5% of gross revenues, prior to sharing revenues with the government;
• Galoc production commencement;
• Closing of the sale of Central Cebu Coal Operating Contract 132 (COC132) for $3.5million;
• Initiated Work Programme on Coal Operating Contract 131 (COC131) to further define reserves and enable conversion to full production licence;
• Signed Gas Sale and Purchase Agreement (GSPA) on the development of the Libertad Gas Field in Cebu; and  
• Initiated programme to review multiple international opportunities in view of Company’s enhanced status through Philex Mining Corporation’s investment.

Financial and Corporate Highlights

• Working capital of US$3.9 million as of 31 December 2008 (US$6.4 million – 2007).
• Shareholders’ equity of US$45 million as of 31 December 2008 (US$49 million -2007).
• Revenues of US$0.7 million in 2008 (US$0.9 million – 2007).
• Board re-structured and enhanced with appointment of  Walter Brown as CEO; and
• Fixed overhead costs substantially reduced going forward.

Walter Brown, Chief Executive Officer of Forum, commented:

"Forum Energy made significant progress in 2008 and has been strengthened by the majority shareholding of Philex Mining Corporation who holds 61.44% (directly and indirectly) of the shares in Forum Energy and who brings significant Filipino involvement to the Company as well as the security of a large balance sheet. We look forward to further progress in 2009 with the whole of Forum’s promising portfolio including GSEC101, Forum’s principal asset"

About Forum

The Company’s principal asset is a 70% interest in GSEC101, an offshore petroleum licence situated west of Palawan Island in the South China Sea. In 2006, results from a 248-square kilometre 3D seismic survey over the licence area indicated 3.4TCF gas-in-place (GIP)

In 2008 Philex Mining Corporation, a company listed on the Philippine Stock Exchange, acquired an effective 61.44% controlling stake (held directly and indirectly) in the Company through a tender offer for all shares at 48 pence per share, which expired in September 2008.

The Company’s shares are traded on the Alternative Investment Market (AIM) of the London Stock Exchange under the symbol FEP.

For further information please contact:

Andrew Mullins, Executive Director, Company Secretary, Forum Energy Plc
+44 (0)1932 445 344

Brian Stockbridge Noble & Company Ltd
(Nominated Adviser & Broker)
+44 (0)20 7763 2200

CHIEF EXECUTIVE’S STATEMENT

Dear Shareholder,
Forum Energy made significant progress in 2008 and has been strengthened by the majority shareholding of Philex Mining Corporation which holds 61.44% (directly and indirectly) of the shares in Forum Energy and which brings significant Filipino involvement to the Company as well as the security of a large balance sheet which is available to assist Forum Energy in the development of its projects.   

GSEC101

It is considered that the interest of Philex in Forum, signifies the importance of GSEC101, which is possibly the most prospective hydrocarbon exploration / development prospect in the Philippines at this current point in time. Whilst the licence is still in an exploration phase. Philex and Forum remain committed to its conversion to a full Service Contract and in this respect are pleased that the future Work Programme and structure of the project has now been agreed with the DOE.

The GSEC101 Joint Venture now involves Monte Oro (subject to final DOE approval). Monte Oro holds a 30% interest which qualifies the JV to the Filipino participation incentive allowance (FPIA) equating to 7.5% of any gross revenue prior to sharing revenues with the government. Forum received an addition $1.7million in June 2008 in recognition of partial back costs.

Forum looks forward to disclosing further updates on GSEC101s development throughout 2009.

Coal

Your company also received DOE approval on the Central Cebu sale which resulted in a $3.5million cash injection into Forum Coal Cebu Corporation in Q4 2008. In addition Forum, commenced a thorough exploration programme of the highly promising COC131 project in Southern Cebu which the company will either monetize or develop, depending on the results of the Work Programme.

  Galoc      Production from the Galoc development in which Forum has a nominal working interest (2.27%)  commenced last year but had been temporarily halted between 16th December 2008 and 25th February 2009 due to technical problems. Production is now back online and Forum will therefore anticipate receiving revenues from the project by H2 2009 assuming no further delays. A second phase of development which would provide substantial upside especially when oil prices recover from their recent lows, is set to move forward this year. Forum remain committed to supporting this additional development.

SC40

We have already made significant progress on this block with a development arrangement with DESCO, a well established drilling company in the Philippines, to develop the Libertad Gas Field in Cebu. Under the arrangement we anticipate power production from this proven resource to begin within the year. We also look forward to further developments on this proven block before the end of the year.

Financial Results and Key Financial Indicators

Revenue has declined from $876,000 in 2007 to $706,000 in the current year largely as a result of the decrease in oil prices which the industry as a whole has been affected by. However despite the decrease in world wide oil prices your Board considers the performance of the Group’s producing assets to be inline with their expectations. The Board will continue to seek to maximize the Revenue streams for the Group.

Forum recorded a gross loss of US$0.3 million for the 12 months ended 31 December 2008 compared to US$0.1 million for the previous year; due to the decrease in oil prices during 2008. Total administrative expenses increased to US$4.4 million compared to US$3.1 million in the previous year. The increase was primarily attributable to direct costs in relation to the mandatory offer and changes in key management during the year. The Board will continue to monitor the Group’s expenses in order to ensure value for money is always obtained for services provided to the Group.

Financial income of US$0.3 million shows an increase from US$0.1 million in the previous year due to unrealised gains on a Philippines peso-based long term creditor, compared to a loss of $0.6 million in 2007. The unrealised loss on the Philippines based long term creditor in 2007 is the reason behind financial expenses decreasing to nil from US$0.6 million in 2007.

There were no significant tax charges or provisions for the period due to the emphasis upon investment activities during 2008, generating a loss after tax of US$4.3 million (2007: US$3.9 million). Overall there have been a significant number of changes in the year which have resulted in a loss after minority interest of US$0.152 per share (2007: US$0.122).

Cash Flow and Capital Expenditure

The Company’s working capital has decreased to US$3.9 million from US$6.4 million. This is primarily due to increase in cash based administrative expenses in relation to the mandatory offer and changes in key management during the year. The additional cash based administrative costs were partially offset by the cash inflow of US$1.7 million from the 30% disposal of a participating interest in GSEC101 and the US$0.5 million issue of equity during the year.

Balance Sheet and Financing

The Group has no long-term debt, with the exception of a liability it has recognised to FEI, which will become payable as and when the cost recovery commences from production in SC40.

The minority interest represents the minority shareholder in FEI (33.33%) and reflects its net share in the recognised losses or profits for the period.

Outlook for 2009

Through the involvement of Philex Mining Corporation, we believe Forum is much better positioned to take the fullest advantage of both its own portfolio as well as to capitalise on additional opportunities in the sector both within the Philippines and Internationally. In 2009, we expect to see positive developments on all assets and I will ensure shareholders are kept informed as we move forward.

Summary

We take this opportunity to thank our shareholders, our staff and the board of directors, employees and consultants for their valuable assistance in our endeavors to add value to your investment in our Company.

You have our commitment to continue to exert out best efforts not only to safeguard your investment but to enhance its value.

Walter W. Brown
Chief Executive Officer
9 March 2009

Financial Statements & Notes

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