Highlights

Financial Results
• Loss of £ 1.25 million for 6 months in line with expectation
• Two corporate acquisitions and one farm-in in six months with two associated share placings raising £18 million in total.
• Cash balance of £4.3 million at 31 December 2005 (excluding £10 million raised in the December placing) adequate to meet drilling, technical and other corporate commitments Portfolio Development
• Proven and Probable reserves increased 64% to 64.9 million barrels
• 5 new Blocks secured in the North Sea
• A 27% interest secured in the Mariner licence operated by Chevron
• A foothold in Europe secured through a 22% interest in St Laurent licence, southwest France
• Advanced assessment of prospectivity on key assets - 2006 farm out programme live from early March 2006

The Interim Accounts to 31 December do not fully reflect progress made on business financing because the £10 million December placing programme is excluded .( The new shares were issued in early January 2006 and were therefore not accounted in this period.) The Loss before Taxation for the period was £1.25 million, with cash reserves of over £14 million (including cash received via the December 2005 Placing). Net assets increased in the period from £29.3 million on 30 June 2005 to £52.2 million, reflecting the new reserves acquired.

Outlook

The rapid expansion of interests and opportunity achieved in 2005 has positioned Nautical at considerable advantage for 2006 and beyond. The increased call on resources in the upstream and attendant cost pressures present a challenge to the sector, but should not prejudice the viability of the company’s business model and are significantly mitigated by the company’s strategy.

An interesting feature of the market is the growing interest in heavy oil opportunities on the part of a broad cross section of the industry, from majors to minnows. This has been reflected in the enthusiastic response to the company’s prospects, and bodes well for the quality of participation in the Nautical first half 2006 farm out program.

Nautical aims to retain significant stakes and/or operation of its licences. To this end Nautical was approved (by the DTI) as an Exploration Operator in October and fulfilled all obligations on licence 1077 (Block 9/2b) entering the 3rd and 4th year of the licence. The portfolio was increased with the award of two licences (three blocks) as operator and the purchase of a 22% interest in the St Laurent Permit in South West France; marking the company’s first foothold on mainland Europe.

Review of activities

Nautical now has interests in 8 blocks in the UKCS and one licence in France (seven operated). The company’s main aim during the period was to more tightly define the hydrocarbon volumes in place in both discoveries and exploration prospects. This has been achieved by the careful interpretation of reprocessed seismic data integrated with petrophysical studies resulting in the reduction of risk.

Nautical aims to further mitigate risk by farming down the exploration blocks to respected third parties, who will make a positive contribution to the company’s exploration appraisal ambitions.