Half-yearly review 2015 29 July 2015 Disclaimer This presentation - PowerPoint PPT Presentation

Half-yearly review 2015 29 July 2015

Disclaimer This presentation contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business. Whilst JKX believes the expectations reflected herein to be reasonable in light of the information available to them at this time, the actual outcome may be materially different owing to factors beyond the Group’s control or within the Group’s control where, for example, the Group decides on a change of plan or strategy. The Group undertakes no obligation to revise any such forward-looking statements to reflect any changes in the Group’s expectations or any change in circumstances, events or the Group’s plans and strategy. Accordingly no reliance may be placed on the figures contained in such forward looking statements 2

In this review Summary Financial review Operations review and outlook 3

Summary Resilience in the face of continuing uncertainty  Focus on sustainability, cash conservation and asset protection  Average production of 8,611 boepd (2014: 10,126 boepd)  Development drilling suspended in Ukraine due to negative investment climate  Award of extension to Elizavetovskoye licence in Ukraine to include West Mashivske prospect  Tubing replacement programme under way in Russia  Russian plant capacity modifications approved by Russian authorities  Hungary production permitting on-going 4

In this review Summary Financial review Operations review and outlook 5

Financial summary 2015 Focus on maintaining liquidity  Revenue down at $44.4m resulting from Key Financials lower oil and gas production and realisations in both Ukraine and Russia: H1 H1 ($m) Change 2014 - 2015 Ukraine: $8.25/Mcf (2014: $9.77/Mcf) % - Russia: $1.68/Mcf (2014: $2.64/Mcf) Group revenue 74.3 44.4 (40.2) Loss from operations before exceptional 5.8 (7.3) >(100)  Loss from operations of $7.3m due to items lower Ukrainian and Russian revenues Cash from operations 31.1 3.5 (88.7) Capital expenditure 21.4 4.2 (80.4)  Capex spend cut significantly to offset the reduced cash generated from Realised gas price 5.64 4.46 (20.9) ($ per Mcf) operating activities Realised oil price 92.39 49.87 (46.0) ($ per bbl) 6

Group revenue Reduction in revenues due to lower Ukrainian and Russian oil and gas sales  Group revenue declined by 40.2% to $44.4m mainly due to lower oil and gas production and realisations in both Ukraine and Russia  Group oil realisations were 46% lower at $49.87/bbl in line with international oil prices  Group gas realisations were 20.9% lower at $4.46/Mcf largely due to the weakening of the Ukrainian Hryvnia and Russian Rouble Group revenue ($m) 80.0 74.3 (9.9) 70.0 (11.7) 60.0 (2.5) (6.3) 50.0 44.4 0.5 40.0 30.0 20.0 10.0 0.0 1HY2014 Ukraine gas price Ukraine oil price Ukraine LPG price Russia price (68%) Hungary and other 1HY2015 (50%) and volume (51%) and volume (72%) and volume and volume (32%) sales (50%) effect (49%) effect (28%) effect effect 7

Loss from operations Impacted by lower realisations and production in Ukraine and Russia  Profit affected by $29.9m decrease in revenues mainly due to lower oil and gas production and realisations in both Ukraine and Russia  Group operating costs down primarily due to reduced manpower costs and field operating costs  DD&A charge reduced by $7m largely as a result of lower production in Ukraine and Russia  Whilst production decreased, production taxes increased by $3.2m due to the large increase in oil and gas tax rates in Ukraine  Administrative expenses reduced by $3.5m largely due to reduced manpower costs  $5.8m gain in foreign exchange movement due to lower volatility in the Rouble/US$ and Hryvnia/US$ rate Profit from operations ($m) 15.0 9.3 10.0 7.0 3.8 5.8 5.0 0.0 -5.0 (3.2) -10.0 (7.3)* -15.0 -20.0 -25.0 -30.0 (29.9) -35.0 Profit from operations Sales Operating costs DD&A Production based Administrative Loss from operations 1HY2014 (before taxes expenses and foreign (before exceptional exceptionals) exchange item) 1HY2015 8 * Difference due to rounding

Profit for the period Impacted by operations and fair value loss  $10.0m decrease in fair value movement on derivative liability is associated with the convertible bond since its placement on 19 February 2013. As the Company’s share price has increased from 12.00 pence at 31 December 2014 to 27.50 pence at 30 June 2015, a charge of $4.0m versus a credit of $6.0m in 2014 has been recognised  $1.4m increase in taxation mainly due to the change in deferred tax charges recognised in both Ukraine and Russia Profit after tax for the period ($m) 15.0 11.2 10.0 5.0 0.0 (0.5) (1.4) -5.0 -10.0 (10.0) (13.0)* -15.0 (13.8)* -20.0 Profit after tax 1HY2014 Movement in profit from Fair value loss on Net finance charges Increase in taxation Loss after tax (before (before exceptional item) operations 1HY2014 derivative liability exceptional item) 1HY2015 9 * Difference due to rounding

Capital expenditure Reduced investment in order to maintain liquidity  Minimised capex until investment climate First half 2014 Capex: $21.4m improves 0.7  Investment in Ukraine decreased by 4.2 Ukraine 89.7% to $1.7m Russia Rest of the World  Investment in Russia decreased by 45.2% 16.5 to $2.3m First half 2015 Capex: $4.2m 0.2 1.7 2.3 10

Movement in cash Maintaining strong liquidity position  Cash generated from operations of $3.5m  Total cash resources at the end of the period were $22.4m, only slightly below the cash balance at the beginning of the period  Capex programme reduced to offset lower cash generation from operations  Maturity of $2.7m of the treasury bills purchased in 2014  Bond repayment made of $5.7m in February 2015  Credit Agricole facility matured on the 30 June 2015. Discussions are currently underway to renew this facility Movement in cash ($m) 60.0 25.9 22.4* 50.0 40.0 30.0 20.0 2.7 3.5 10.0 1.0 0.9 0.0 (0.6) (1.6) -10.0 (3.6) (5.7) -20.0 31 December Cash from Purchase of Income tax Effect of Interest paid Interest Treasury Bills Bond 30 June 2015 2014 operations property, paid exchange on received repayment plant and cash and equipment cash and intangible equivalents assets 11 * Difference due to rounding

In this review Summary Financial review Operations review and outlook 12

Ukraine Capital investment on hold until conditions improve 13

Ukraine: Key developments Capital investment on hold until conditions improve  The negative investment climate persisted in Novo-Nikolaevskoye Complex Ukraine and all capital investment in Ukraine remains on hold until conditions improve Novo-Nikolaevskoye complex  Average production in H1 down at 2,546 boepd (10.6 MMcfd of gas and 777 bpd of oil and condensate) (H1 2014: 3,353 boepd)  Operations at main production facility and LPG plant continued smoothly with routine work on-going on plant optimisation, re- routing flowlines, and wax clearance of flowlines to enhance production 14

Ukraine: Key developments (cont.) Capital investment on hold until conditions improve Elizavetovskoye Field  Average production of 1,594 boepd (9.4 MMcfd of gas and 28 bpd of condensate) (H1 2014: 1,547 boepd)  Award of a westward extension to the Elizavetovskoye production licence to include the West Mashivske prospect in Q2 2015  No drilling activity during the period, but activities and development will resume should investment climate improve Zaplavskoye Exploration Licence  Work continuing on the evaluation of the Visean V25/26 sandstone traps and the Devonian sandstone and Visean carbonate structural closures with the aim of working these up for future drilling should the economic climate improve 15

Russia Tubing replacements under way and plant expansion approved 16

Russia: Key developments Tubing replacements under way and plant expansion approved  Production remained constrained due to the previously reported tubing failures  Average production at the Koshekhablskoye field in H1 down at 4,470 boepd (26.5 MMcfd of gas and 45.6 bpd of condensate) due to continuing loss of production from well-27 and well-05 (H1 2014: 5,226 boepd)  Periodic acid treatments have been performed during the period to maintain production rates in the three producing wells  First tubing replacement programme (cost covered by insurance) is now underway and making good progress 17

Russia: Key developments (cont.) Tubing replacements under way and plant expansion approved  Government approval received to increase the plant capacity to 60 MMcfd. Upgrade scheduled for H2  The second tubing replacement programme is planned to begin in Q3  The obligation to re-enter and sidetrack well-09 to re-drill the full Callovian reservoir sequence has been deferred until 2017  Russian gas realisations in Roubles have increased by 7.5% from 1 July 2015 18

Group reserves 2P group reserves rose from 94.2 MMboe in 2013 to 97.7 MMboe in 2014 Total remaining reserves as at 30 June 2015 19