Mr. J. Craig Anderson reports

NORTH SEA ENERGY ANNOUNCES SECOND QUARTER 2016 RESULTS AND CORPORATE UPDATE

North Sea Energy Inc. has released its unaudited financial results for the period ended June 30, 2016. The summary of the selected financial information should be read in conjunction with the company's condensed interim consolidated financial statements (unaudited) and the related management's discussion and analysis for the quarter ended June 30, 2016, dated Aug. 29, 2016, which have been filed on SEDAR.

Highlights and subsequent events for the three months ended June 30, 2016

Statoil bottom-hole agreement

North Sea Energy announced on June 6, 2016, that it is a party to a bottom-hole contribution agreement between Statoil (U.K.) Ltd. and Premier Oil U.K. Ltd., in its capacity as the P.1943 operator as agent for the P.1943 group in respect of the 13/25-1 Bagpuss well.

Under the agreement, Statoil will pay up to $260,000 (U.S.) ($338,234) for data recovered from drilling and up to an additional $175,000 (U.S.) ($227,658) for data from testing of the Bagpuss well under certain conditions. The initial amount is to be paid for the well data while drilling the well and the subsequent amount for testing data, if applicable. North Sea Energy (U.K. NO2) Ltd. is to receive payment for these data in proportion to its 15-per-cent working interest in the Bagpuss licence P.1943.

Drilling and results of the Bagpuss well

The spudding of the well occurred on July 18, 2016, although the Bagpuss operations commenced on July 14, 2016, when the Ocean Valiant offshore drilling rig left the Solan development and arrived on site at the Bagpuss prospect on July 16, 2016.

On Aug. 5, 2016, North Sea Energy announced the well results from Premier, the operator. The well, which was targeting the Bagpuss prospect on the Halibut horst in the Outer Moray Firth, reached a total depth of 1,532 feet (TVDSS -- true vertical depth subsea) in granite basement. The well was drilled approximately two kilometres from the 1981 Amoco well in the same structure.

The well encountered 41 feet of hydrocarbon-bearing sands within a 68-foot hydrocarbon column. This is in line with predrill estimates. The sands have porosity of between 25 per cent and 33 per cent, and initial indications were that the oil is heavy, which was expected. The well was plugged and abandoned in accordance to the drilling plan.

Premier's director of exploration commented: "The Bagpuss well has successfully proven a significant volume of oil in place. We will now work with our partners to carry out a full analysis of the hydrocarbons and reservoir encountered with a view to ascertaining whether commerciality can be established."

For further information on the Bagpuss and Blofeld prospects in North Sea Energy's independent prospective resource assessment, please refer to the press release dated June 27, 2013, posted on SEDAR.

North Sea Energy's costs relating to the well have been carried by Maersk Oil U.K. The company is also financed for 50 per cent of its costs on a subsequent Bagpuss well, should one be drilled, subject to a cap, through its farm-in agreement with Maersk Oil U.K.

On Aug. 19, 2016, North Sea Energy provided a further update on the Bagpuss drilling results (see full press release dated Aug. 19, 2016, filed on SEDAR):

Premier's senior management espoused the following concerning the Bagpuss prospect:

• Bagpuss is a heavy oil discovery as anticipated and the well results came in on prognosis in terms of the reservoir;
• The analysis of the geochemistry of the samples collected is still going on; the results will tell more about the flow properties of the oil in due course;
• The Bagpuss well was drilled on the Halibut horst, which is very large granite structure, so the reservoir is hotter when the granite is that close to the surface;
• The Bagpuss well confirmed a significant volume of oil in place;
• The temperature of the well was about the same temperature as the original 1981 Amoco well (44 C/111 F) due to the raised geothermal gradient over the granite horst.

The Bagpuss well, a vertical well, was always planned to be an informational well only, and in accordance with the original well plan, it was plugged and abandoned upon completion. Should development of the Bagpuss field take place, it would most likely be done with horizontal wells.

While North Sea Energy's management believes the information regarding the Bagpuss prospect to be accurate, it will wait until the full technical analysis of the collected data is finalized before commenting on the Bagpuss results.

                                                                       
                             SELECTED QUARTERLY INFORMATION

                           For the three months ended           For the six months ended
                            June 30,          June 30,         June 30,          June 30,
                               2016              2015             2016              2015

Revenues                 $        0        $       27       $        0        $       49
Profit/(loss) before
income tax                 (165,885)          179,837         (485,565)          (40,217)
Net profit/(loss)          (165,885)          179,837         (485,565)          (40,217)
Total comprehensive
profit/(loss)              (197,399)          308,059           76,512          (581,152)
Basic net
profit/(loss) per
share                        (0.003)            0.003           (0.008)           (0.001)
Diluted net
profit/(loss) per
share                        (0.003)            0.002           (0.008)           (0.001)

Corporate update

North Sea Energy's forward plan is to review the analysis of the results of the Bagpuss well with the joint venture partnership to ascertain the viability of the Bagpuss and Blofeld prospects. If the prospects are determined to be viable, North Sea Energy will vote to renew the P.1943 licence for an additional four years commencing on Dec. 31, 2016, as the conditions of the current licence appear to have been met. As the operator releases additional data concerning the results of the Bagpuss well over the coming weeks and any decisions regarding licence renewal, North Sea Energy will announce the finding in accordance with TSX Venture Exchange policy and in accordance with its joint venture agreement (JOA) with the Bagpuss and Blofeld co-venturers.

North Sea Energy plans to open a data room as soon as practically possible should the results of the analysis be positive to either farm out a portion of its Bagpuss and Blofeld assets or to sell a portion or all of its assets. The management and board of North Sea Energy will also look at strategic options to meet liquidity requirements.

We seek Safe Harbor.