Salamander Energy announce its full year results for the year ended 31 December 2011

OPERATIONS

• 2P Reserves increased by 13.6% to 75.3 MMboe (2010: 66.3 MMboe)
• Average daily production of 18,600 boepd (2010: 20,300 boepd)
• Bualuang East Terrace oil discovery, 8 MMbo added to 2P reserves
• Matured prospect inventory in North Kutei, independent CPR points to 676 MMboe of gross mean prospective resources in four high-graded prospects

FINANCIAL

• Revenue increased by 26.2% to $408.0 million (2010: $323.4 million)
• Record pre-tax operating cash flow, before working capital changes, increased by 68% to $293.6 million (2010: $174.4 million)
• Record post-tax operating cash flow increased by 82% to $193.9 million (2010: $106.5 million)
• Profit before tax of $112.6 million (2010: loss of $113.7 million)
• Loss after tax of $45.5 million (2010: $169.5 million)
• Year-end cash and funds balance of $85.8 million (2010: $99.2 million)
• Net debt of $210.1 million (2010: $190.2 million)

PORTFOLIO MANAGEMENT

• Re-aligned portfolio to focus on three core areas
• Disposed of mature, low margin, non-core interests in Offshore Northwest Java ("ONWJ") and Southeast Sumatra ("SES") PSCs
• Deepened interest in Kerendan development, Greater Kerendan area, Indonesia
• Expanded acreage position in Greater Bualuang area, Gulf of Thailand through G4/50 farm in

OUTLOOK

• 2012 average daily production rate forecast to be 12,000-13,000 boepd following disposal of non-core producing assets
• Bualuang Bravo Platform on schedule for installation 3Q 2012
• Ensco-53 rig mobilised for development and exploration drilling in Greater Bualuang area
• Tutung Alpha-3 spudded, gas appraisal drilling ahead
• Signed 12 month contract for Atwood Mako jack up rig in Greater Bualuang area from 3Q 2012
• Exploration drilling in North Kutei to commence 4Q 2012

Chief Executive James Menzies commented:

"2011 was an important year for high-grading the portfolio and refining our strategy. We have also materially grown our reserve base through both successful exploration and commercialising gas resources, and are now reporting record levels of revenue, cash flow and pre-tax profit. We have also taken an important step in defining the potential of our North Kutei acreage with recognition of gross prospective resources of over 670 million barrels of oil equivalent independently verified in the top four prospects.

We are now stepping the operational activity up a gear with two rigs running and a third secured under long-term contract. With our focus on drilling in proved basins where we have a competitive edge, the Board sees great opportunities ahead and we look forward to 2012 with a keen sense of anticipation."