Dr. Sotirios Kapotas reports

STREAM ANNOUNCES SECOND QUARTER 2014 RESULTS

Stream Oil & Gas Ltd. has released its financial and operating results for the three and six months ended May 31, 2014.

                             SECOND QUARTER SUMMARY OF RESULTS
                               ($000s (U.S.), except as noted) 
                                                                          Three months ended    Six months ended
                                                                                   May 31,            May 31,
                                                                               2014     2013      2014      2013
Financial                                                                                                       
Revenue                                                                      $8,565  $10,272   $16,098   $19,377
Revenue, net of mineral tax royalty                                           8,174    9,244    14,954    17,440
Net operating income                                                          5,519    6,941     9,794    12,152
Funds from (used in) operations                                               3,980    5,027    11,034    11,044
Net income (loss)                                                             1,174      441     2,951       186
Per share -- basic and diluted                                                 0.02     0.01      0.04      0.00
Cash additions to property and equipment and 
exploration and evaluation assets                                             4,851    3,935    12,413     9,295
Operating                                                                                                       
Average production (boe/d)                                                                                      
Gross production                                                              1,522    1,607     1,523     1,693
Albpetrol share                                                                 548      604       561       619
Net production (Stream's share)                                                 973    1,003       954     1,074
Gross price ($/boe/d)                                                         71.09    71.43     72.21     73.44
Netback ($/boe/d)                                                             47.52    48.48     46.52     47.74

During the three and six months ended May 31, 2014, the company focused its resources on stabilizing production in its oil fields, advancing drilling of its gas field, addressing its financing constraints and finalizing the amending agreements for the royalty neutralization with Albpetrol.

The company was able to sustain its gross oil field production at 1,522 barrels per day, gross, while acquiring comprehensive understanding of weaknesses in its existing operating practices, including field instrumentation constraints, focusing to understand suboptimum utilization of the installed equipment. The discrete knowledge, gained during the operating practices audit, provides the company the basis for further production operations improvements. Following the repairs and improvement of select equipment, constrained to date by capital availability, the company will be able to continue its oil field production growth, leveraging the recently observed production levels exceeding 1,200 bpd net, continuing toward the prior demonstrated net levels of 2,400 barrels of oil equivalent per day.

The company commenced drilling its first horizontal well in its Delvina gas field, spudding in April, 2014. Reaching the depth of approximately 750 metres, following casing and cementing, the company elected to temporarily suspend drilling, to re-examine to-date execution and incorporate any new information prior to recommencing. Fabrication of speciality equipment required for the intervention of the existing vertical well, to clear a tubing obstruction, is nearly complete, enabling field execution in early August. The vertical well has produced in excess of 2.5 million cubic feet per day with 50 barrels per million cubic feet of condensate.

Concurrent with advances in its fields, accounting for the capital constraints, company's management committed considerable efforts toward improving its balance sheet, including pursuing additional capital by way of equity, debt and farm-out considerations. The company continues its corporate development and fundraising focus, expecting to enable the completion of the 2014 program as previously contemplated.

Jointly with its partner Albpetrol (national oil company), the company continued to finalize the amending agreements for the neutralization of the royalty tax, including the elimination of the related share production share obligation resulting from the temporary reversal of the March, 2013, agreement. The agreements have been finalized and have been submitted for final approval and ratification.

Second quarter highlights:

• Gross production remained stable at 1,522 barrels of oil equivalent per day in the three months ended May 31, 2014.
• As a result of lower sales volumes, gross revenue decreased by 17 per cent to $8.6-million compared with $10.3-million for the corresponding period in 2013 (net $8.2-million in 2014 compared with $9.3-million).
• The company paid $700,000 to Albpetrol in service of the outstanding oil production share liability.

Subsequent to the quarter:

• The company paid $4-million to Albpetrol in service of the outstanding oil production share liability.
• In support of its significant efforts focused on improving its working capital, working with its lenders, the company received deferrals of payments of the bank and prepayment facilities.

Outlook

Management's recent refocus to production growth at its oil fields, to get back to previous demonstrated production levels, will be leveraged once more as capital is available to drive further liquids growth in addition to production from the gas field activities. Plans for the balance of 2014 include the following activities:

• Management will continue its efforts on initiatives to address liquidity concerns.
• Cakran-Mollaj:
• • The company will maximize the jet pump systems' productivity by revisiting a well by well planning and production management, including revision and deployment of updated operating practices.
  • It will install the recently received in-country six hydraulic long-lift RRP systems, focus on reduction of water production and evaluate alternative water disposals, eliminating infield reinjection to reduce water production. The objective is to return the field to previously demonstrated production levels and then focus to bring more wells on-line to continue the production growth.
• Gorisht-Kocul:
• • Continue water flood infrastructure expansion along with recompletions with PCPs and hydraulic RRP lift systems.
• Ballsh-Hekal:
• • Finalize the takeover of the rest of the field, revalidate primary targets and commence recompletion with PCPs.
• Delvina:
• • Once drilling of D34H1 is completed and tested, the company will supply increased gas volumes to Thermo's power project and monetize the condensate production.
• The company will continue the evaluation and early preparations for the drilling of infill wells in the oil fields, leveraging the deviated/horizontal drilling approach to access more of the reservoir.
• It will increase port storage facilities to enable larger export cargos with the objective of increasing sales price through decreasing unit transport costs and leveraging increased sales volume.

Additional information

Stream has filed its consolidated financial statements for the three months ended May 31, 2014, and its related management's discussion and analysis with Canadian securities regulatory authorities. Copies of these documents may be obtained on SEDAR or the company's website.

We seek Safe Harbor.