ODYSSEY GOLD LTD — Interim / Quarterly Report 2012

Mar 8, 2012

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ODYSSEY ENERGY LIMITED ABN 73 116 151 636

Interim Financial Report for the Half Year Ended 31 December 2011

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CORPORATE DIRECTORY

Directors

Mr Ian Middlemas – Chairman Mr Mark Pearce Mr David Cruse

Company Secretary Mr Mark Pearce

Registered and Corporate Office

Level 9, BGC Centre 28 The Esplanade Perth WA 6000

Telephone: +61 8 9322 6322 Facsimile: +61 8 9322 6558

Stock Exchange Listing

Australian Securities Exchange Home Branch – Perth 2 The Esplanade Perth WA 6000

ASX Code

ODY – Fully paid ordinary shares ODYO - $0.05 Listed Options

Solicitors Hardy Bowen, Lawyers

Auditor

Deloitte Touche Tohmatsu

Share Registry

Computershare Investor Services Pty Ltd Level 2 45 St Georges Terrace Perth WA 6000

Bankers

Australia and New Zealand Banking Group Limited

Telephone: 1300 55 70 10 International: +61 8 9321 2000 Facsimile: +61 8 9323 2033

CONTENTS

CONTENTS
	Page
Directors' Report	1
Directors' Declaration	4
Condensed Consolidated Statement of Comprehensive Income	5
Condensed Consolidated Statement of Financial Position	6
Condensed Consolidated Statement of Changes in Equity	7
Condensed Consolidated Statement of Cash Flows	9
Notes to the Financial Statements	10
Auditor's Independence Declaration	14
Auditors’ Review Report	15

Odyssey Energy Limited Financial Report for the Half Year Ended 31 December 2011

DIRECTORS' REPORT

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The Board of Directors of Odyssey Energy Limited present their report on the consolidated entity of Odyssey Energy Limited (“the Company” or “Odyssey”) and the entities it controlled during the half year ended 31 December 2011 (“Consolidated Entity”).

DIRECTORS

The names of the Directors of Odyssey in office during the half year and until the date of this report are:

Mr Ian Middlemas Mr Mark Pearce Mr David Cruse

REVIEW AND RESULTS OF OPERATIONS

Operating Results

Net operating loss after tax for the half year ended 31 December 2011 was $621,448 (half year ended 31 December 2010: $323,673).

The operating loss included the recognition of an impairment loss of $440,000 (half year ended 31 December 2010: $82,500) in relation to the Company’s investment in Marion Energy Limited, which is classified as an available for sale financial asset. Marion Energy did not lodge its 30 June 2011 Annual Financial Statements by 30 September 2011 and accordingly its securities were suspended from trading on the ASX with effect from 3 October 2011. Marion Energy has advised that they are working with consultants to examine a number of options for the restructure of the company and its financial position.

No further announcements have been made by Marion Energy updating the status of the restructure or financial position. The 30 June 2011 Financial Statements have still not been lodged and its securities remain suspended.

As a result the reduction in value of the shares has been treated as an impairment loss and has been recognised as an expense in the Statement of Comprehensive Income rather than being recognised directly in equity.

Review of Operations

During the half-year, Odyssey continued to focus on creating value from the Company’s existing resource assets, as well as pursuing new opportunities in the resources sector. Further. the company has reviewed a number of local and international new business opportunities in the oil and gas sector.

Following completion of the recapitalisation process during the first half of 2011, the Company is continuing the review of its current oil and gas project.

Operators in adjacent counties are currently developing the Woodford Shale as a liquids-rich gas play at depths from approximately 10,000 to 15,000+ feet.

The Company will continue to review and monitor industry activity in the adjacent counties over coming months and also consider the best method to extract value from its McClain County Project (“the Project”). However it is also noted that gas prices in the USA have declined sharply over recent months and are now in the US$2.30 to US$2.50 range.

McClain County Project

In mid-2008 Odyssey acquired a 50% working interest in a new project area in Oklahoma comprising 1,626 gross acres, and targeting gas and associated oil in the Woodford Shale at between 6,000 and 8,000 feet.

Industry activity in the second half of 2011 continued to target the developing Woodford shale-gas play in the Anadarko Basin. Operators in adjacent counties are currently developing the Woodford Shale as a liquidsrich gas play at depths from approximately 10,000 to 15,000+ feet.

Odyssey Energy Limited Financial Report for the Half Year Ended 31 December 2011

1

DIRECTORS' REPORT (Continued)

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While drilling has now extended to Grady County – immediately west of McClain, the evaluation is currently focused on a liquids-rich play at considerably greater depths than the prospective section in the Company’s acreage; which is likely to be oil rather than gas prone.

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McClain County Oil & Gas Project, South-Central Oklahoma

Corporate

The Board and Management will continue to focus on creating value from the Company’s existing resource assets, as well as pursuing new opportunities in the resources sector to complement the Company’s current projects. During the period the Company assessed a number of new business opportunities and is continuing to actively pursue a number of opportunities in the resources sector, both domestic and overseas. No agreements have been reached and the Directors are not able to assess the likelihood or timing of a successful outcome of any of these opportunities.

SUBSEQUENT EVENTS AFTER BALANCE DATE

At the date of this report there were no significant events occurring after balance date requiring disclosure.

Odyssey Energy Limited Financial Report for the Half Year Ended 31 December 2011

2

DIRECTORS' REPORT

(Continued)

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AUDITOR'S INDEPENDENCE DECLARATION

Section 307C of the Corporations Act 2001 requires our auditors, Deloitte Touche Tohmatsu, to provide the Directors of Odyssey Energy Limited with an Independence Declaration in relation to the review of the half year financial report. This Independence Declaration is on page 14 and forms part of this Directors' Report.

Signed in accordance with a resolution of Directors.

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MARK PEARCE Director

Perth, 9 March 2012

Odyssey Energy Limited Financial Report for the Half Year Ended 31 December 2011

3

DIRECTORS' DECLARATION

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In accordance with a resolution of the Directors of Odyssey Energy Limited, I state that:

In the opinion of the Directors:

• (a) the financial statements and notes, as set out on pages 5 to 13, are in accordance with the Corporations Act 2001, including:

• (i) complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001; and

• (ii) giving a true and fair view of the consolidated entity's financial position as at 31 December 2011 and of its performance for the half year ended on that date.

• (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

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MARK PEARCE Director

Perth, 9 March 2012

Odyssey Energy Limited Financial Report for the Half Year Ended 31 December 2011

4

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31 DECEMBER 2011

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	Note	Half Year Ended	Half Year Ended
		31 December 2011	31 December 2010
		$	$
Continuing Operations
Revenue
Interest Revenue		57,224	3,856
Other income – foreign exchange gain		-	67,018
Administration costs		(216,046)	(153,835)
Business development		(14,946)	-
Exploration costs		(7,680)	-
Finance costs		-	(158,212)
Other – Impairment losses	3	(440,000)	(82,500)
Loss before income tax expense		(621,448)	(323,673)
Income tax expense		-	-
Net loss for the half year		(621,448)	(323,673)
Other comprehensive income for the half year		-	-
Total comprehensive loss for the half year		(621,448)	(323,673)
Loss attributable to members of Odyssey
Energy Limited		(621,448)	(323,673)
Total comprehensive loss attributable to
members of Odyssey Energy Limited		(621,448)	(323,673)
Earnings/(loss) per share
Basic loss per share (cents per share)		(0.14)	(0.34)
Diluted loss per share (cents per share)		(0.14)	(0.34)

The above Condensed Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

Odyssey Energy Limited Financial Report for the Half Year Ended 31 December 2011

5

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011

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	Note	31 December 2011	30 June 2011
		$	$
ASSETS
Current Assets
Cash and cash equivalents		2,210,407	2,353,959
Trade and other receivables		14,712	31,327
Total Current Assets		2,225,119	2,385,286
Non-current Assets
Property, plant and equipment		1,105	1,228
Available-for-sale financial assets	3	-	440,000
Total Non-current Assets		1,105	441,228
TOTAL ASSETS		2,226,224	2,826,514
LIABILITIES
Current Liabilities
Trade and other payables		60,697	39,539
Total Current Liabilities		60,697	39,539
TOTAL LIABILITIES		60,697	39,539
NET ASSETS		2,165,527	2,786,975
EQUITY
Issued capital	4(a)	25,875,382	25,875,382
Reserves	4(b)	94,859	94,859
Accumulated losses		(23,804,714)	(23,183,266)
TOTAL EQUITY		2,165,527	2,786,975

The above Condensed Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

Odyssey Energy Limited Financial Report for the Half Year Ended 31 December 2011

6

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2011

	Attributable to Equity Holder of the Parent	Attributable to Equity Holder of the Parent	Attributable to Equity Holder of the Parent	Attributable to Equity Holder of the Parent
	Issued	Currency	Share Based	Accumulated	Total Equity
	Capital	Translation	Payment	Losses
		Reserve	Reserve
	$	$	$	$	$
Balance at 1 July 2011	25,875,382	94,859	-	(23,183,266)	2,786,975
Total comprehensive loss for the period:
Net loss for the period	-	-	-	(621,448)	(621,448)
Other comprehensive income
Foreign currencytranslation – continuingoperations	-	-	-	-	-
Total other comprehensive income	-	-	-	-	-
Total comprehensive income/(loss)	-	-	-	(621,448)	(621,448)
Transactions with owners, recorded directly in equity
Share issues	-	-	-	-	-
Total transactions with owners	-	-	-	-	-
Balance at 31 December 2011	**25,875,382 **	94,859	-	(23,804,714)	2,165,527

The above Condensed Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) FOR THE HALF YEAR ENDED 31 DECEMBER 2011

	Attributable to Equity Holder of the	Attributable to Equity Holder of the	Attributable to Equity Holder of the	Parent
	Issued	Currency	Share Based	Accumulated	Total Equity
	Capital	Translation	Payment	Losses
		Reserve	Reserve
	$	$	$	$	$
Balance at 1 July 2010	18,323,288	94,859	-	(22,573,628)	(4,155,481)
Total comprehensive loss for the period:
Net loss for the period	-	-	-	(323,673)	(323,673)
Other comprehensive income
Foreign currencytranslation – continuingoperations	-	-	-	-	-
Total other comprehensive income/(loss)	-	-	-	-	-
Total comprehensive income/(loss)	-	-	-	(323,673)	(323,673)
Transactions with owners, recorded directly in
equity
Issue of ordinary shares	4,549,900	-	-	-	4,549,900
Share issue costs	(105,771)	-	-	-	(105,771)
Total transactions with owners	4,444,129	-	-	-	4,444,129
Balance at 31 December 2010	22,767,417	94,859	-	(22,897,301)	(35,025)

The above Condensed Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 31 DECEMBER 2011

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	Half Year Ended	Half Year Ended	Half Year	Ended
	31 December		31 December
	2011		2010
	$		$
Cash flows from operating activities
Payments to suppliers and employees	(240,815)		(457,068)
Interest received		58,324		1,100
GST refunds received		38,939		3,098
Interest paid		-	(158,212)
Net cash outflows from operating activities	(143,552)		(611,082)
Cash flows from investing activities
Other investing activities		-		-
Net cash outflow from investing activities		-		-
Cash flows from financing activities
Proceeds from issue of shares		-	2,500,000
Payments for share issue costs		-		(96,646)
Proceeds from borrowings		-		100,000
Repayment of borrowings		-	(1,040,000)
Net cash inflow from financing activities		-	1,463,354
Net increase/(decrease) in cash and cash
equivalents held	(143,552)			852,272
Cash and cash equivalents at 1 July	2,353,959			22,596
Cash and cash equivalents at 31 December	2,210,407			874,868

The above Condensed Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

Odyssey Energy Limited Financial Report for the Half Year Ended 31 December 2011

9

NOTES TO THE FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2011

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This general purpose financial report for the interim half year reporting period ended 31 December 2011 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001 .

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report of Odyssey Energy Limited for the year ended 30 June 2011 and any public announcements made by Odyssey Energy Limited and its controlled entities during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

(a) Basis of Preparation of Half Year Financial Report

The condensed financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars.

The accounting policies and methods of computation adopted in the preparation of the half year financial report are consistent with those adopted and disclosed in the Company's annual financial report for the year ended 30 June 2011, other than as detailed below.

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2011. The adoption of these new and revised standards has not resulted in any significant changes to the Group's accounting policies or to the amounts reported for the current or prior periods.

2. SEGMENT INFORMATION

The Consolidated Entity operates in one segment, being the resources sector in the United States of America. This is the basis on which internal reports are provided to the Directors for assessing performance and determining the allocation of resources within the Consolidated Entity.

Odyssey Energy Limited Financial Report for the Half Year Ended 31 December 2011

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NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011 (Continued)

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3. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Consolidated 31 December 2011 $ Consolidated 30 June 2011 $	Consolidated 31 December 2011 $ Consolidated 30 June 2011 $
	17,531,250 17,531,250 (17,531,250) (17,091,250)
Shares in listed company
Less impairment in value
	- 440,000

The Company holds 27.5 million Marion Energy Limited (“Marion Energy”) shares. The Company’s accounting policy is to record these at market value at period end.

Marion Energy did not lodge its 30 June 2011 Annual Financial Statements by 30 September 2011 and accordingly its securities were suspended from trading on the ASX with effect from 3 October 2011. Marion Energy announced on 14 October 2011 that they were working with consultants to examine a number of options for the restructure of the company and its financial position.

No further announcements have been made by Marion Energy updating the status of the restructure or financial position. The 30 June 2011 Financial Statements have still not been lodged and its securities remain suspended.

As a result, during the period an amount of $440,000 (half-year ended 31 December 2010: $82,500) has been recognised as an expense due to impairment in the value of these shares.

4. ISSUED CAPITAL

	Consolidated	Consolidated	Consolidated	Consolidated
	31 December 2011		30 June	2011
	$		$
(a) Issued and Paid Up Capital
436,707,977 (30 June 2011: 436,707,977) fully paid
ordinary shares	25,875,382		25,875,382
(b) Reserves
Share based payment reserve		-		-
Foreign currency translation reserve		94,859		94,859
Total Reserves		94,859		94,859

Odyssey Energy Limited Financial Report for the Half Year Ended 31 December 2011

11

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011 (Continued)

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4. ISSUED CAPITAL AND RESERVES (Continued)

(c) Movements in Ordinary Share Capital were as follows:

Half Year Ended 31 December 2010

Date	Details	Number of	Issue Price	$
		Shares
1 July 2010	Opening Balance	59,904,791		18,323,288
3 Dec 2010	Share Placement	125,000,000	$0.02	2,500,000
3 Dec 2010	Conversion of Convertible Notes into
	equity	102,494,993	$0.02	2,049,900
	Share issue costs			(105,771)
31 Dec 2010	Closing Balance	287,399,784		22,767,417

Half Year Ended 31 December 2011

There were no movements in Ordinary Share Capital during the six month period ended 31 December 2011.

(d) Movements in Options were as follows:

Half Year Ended 31 December 2010

Date	Details	Number of
		$0.05	$
		Options
1 Jul 10	Opening Balance	-		-
22 Dec 10	Issue of unlisted options	20,257,500		-
31 Dec 10	Closing Balance	20,257,500		-

Half Year Ended 31 December 2011

Date	Details	Number of
		$0.05	$
		Options
1 Jul 11	Opening Balance	185,489,080		-
31 Dec 11	Closing Balance	185,489,080		-

There were no movements in Options during the six month period ended 31 December 2011.

Odyssey Energy Limited Financial Report for the Half Year Ended 31 December 2011

12

NOTES TO THE FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2011 (Continued)

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5. CONTINGENT ASSETS AND LIABILITIES

At the last annual reporting date, the Consolidated Entity did not have any contingent assets or liabilities. There has been no material change in contingent assets and liabilities of the Consolidated Entity during the half year.

6. DIVIDENDS PAID OR PROVIDED FOR

No dividend has been paid or provided for during the half year.

7. SUBSEQUENT EVENTS AFTER BALANCE DATE

At the date of this report there were no significant events occurring after balance date requiring disclosure.

Odyssey Energy Limited Financial Report for the Half Year Ended 31 December 2011

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Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

The Board of Directors Odyssey Energy Limited Level 9, BGC Centre 28 The Esplanade PERTH WA 6000

Tel: +61 8 9365 7000 Fax: +61 8 9365 7001 www.deloitte.com.au

9 March 2012

Dear Board Members

Odyssey Energy Limited

In accordance with section 307C of the Corporations Act 2001 , I am pleased to provide the following declaration of independence to the directors of Odyssey Energy Limited.

As lead audit partner for the review of the half-year financial statements of Odyssey Energy Limited for the half year ended 31 December 2011, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

(ii) any applicable code of professional conduct in relation to the review.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

Conley Manifis Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

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Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

Tel: +61 8 9365 7000 Fax: +61 8 9365 7001 www.deloitte.com.au

Independent Auditor’s Review Report to the Members of Odyssey Energy Limited

We have reviewed the accompanying half-year financial report of Odyssey Energy Limited, which comprises the condensed statement of financial position as at 31 December 2011, and the condensed statement of comprehensive income, the condensed statement of cash flows and the condensed statement of changes in equity for the half-year ended on that date, selected explanatory notes and, the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the end of the half-year or from time to time during the half-year as set out on pages 4 to 13.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2011 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Odyssey Energy Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Auditor’s Independence Declaration

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of Odyssey Energy Limited , would be in the same terms if given to the directors as at the time of this auditor’s review report.

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Odyssey Energy Limited is not in accordance with the Corporations Act 2001 , including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2011 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

DELOITTE TOUCHE TOHMATSU

Conley Manifis Partner Chartered Accountants Perth, 9 March 2012