JKX Oil & Gas Driving Ukraine’s Gas Potential Tom Ree eed CEO EO Oil Oil Cap apit ital, Lo Lond ndon 11 11 May, ay, 20 2017
Disclaimer The information contained in these presentation materials (the “Presentation”) has been prepared by JKX Oil & Gas plc (the “Company”) . This Presentation is being made for information purposes only and does not constitute an offer or invitation for the sale or purchase of securities in the Company or any of the assets described in it nor shall they nor any part of them form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever or otherwise engage in any investment activity (including within the meaning specified in section 21 of the Financial Services and Markets Act 2000 as amended). The information in this Presentation does not purport to be comprehensive and has not been independently verified. While this information has been prepared in good faith, no representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by the Company or any of its officers, employees, agents or advisers as to, or in relation to, the accuracy or completeness of this Presentation, and any such liability is expressly disclaimed. In particular, but without prejudice to the generality of the foregoing, no representation or warranty is given as to the achievement or reasonableness of any management estimates or prospects contained in this Presentation. Such statements, estimates and forecasts reflect various assumptions made by the management of the Company and their current beliefs, which may or may not prove to be correct. A number of factors could cause actual results to differ materially from the potential results discussed in such forward-looking statements, estimates and forecasts including: changes in general economic and market conditions, changes in the regulatory environment, business and operational risks and other risk factors. Past performance is not a guide to future performance. Statements contained in this document regarding past trends or activities should not be taken as a representation or warranty, express or implied, that such trends or activities will continue in the future. No statement in this document is intended to be a profit forecast. You should not place reliance on forward-looking statements, which speak only as of the date of this document. The Presentation is not a prospectus nor has it been approved by the London Stock Exchange plc or by any authority which could be a competent authority for the purposes of the Prospectus Directive (Directive 2003/71/EC). This Presentation has not been approved by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000. The information contained in this Presentation is subject to change, completion or amendment without notice and is subject to verification. Recipients of this Presentation in jurisdictions outside the UK should inform themselves about and observe any applicable legal requirements. This Presentation does not constitute an offer to sell or an invitation to purchase securities in any jurisdiction. You will be taken to have represented, warranted and undertaken to the Company that: (i) you have read and agree to comply with the contents and restrictions of this disclaimer; and (ii) you will conduct your own analysis or other verification of the data and information set out in this Presentation and will bear the responsibility for all or any costs incurred in doing so. 2
JKX Oil & Gas (JKX LN) E&P growth portfolio across Central/Eastern Europe and Russia Cont ntinge gent 20 2016 16 Pro roduc uction Reserve rves Resource urces mmboe Country Lice censes Prod Prod Ex Expl Infr nfras astruc uctur ure Gas Oil Oi Total al mmboe mmcf/d mmc mbbl/d mb mboe/d mb /d 1P 1P 2P 2P 3C 3C ✓ Ukrai kraine Ignativske ✓ Elyzavetivske ✓ Rudenkivske 2 Processing Facilities 18.6 0.9 4.0 15 29 457 ✓ Novomykolaivske 1 LPG Plant ✓ Movchanivske ✓ Zaplavska Russia ✓ Koshekhablskoye 1 Gas Processing 36.1 0.1 6.1 43 80 108 ✓ Hung ngar ary 6 Licenses 1 Gas Processing - - - - - 1 ✓ Slovakia 3 Licenses (25% WI) - - - - - - Total al 54 54.7 1. 1.0 10.1 10 58 58 109 109 565 565 • Ukraine: large-scale field development opportunity • Russ ussia ia: Stable cash-generating operations • Hun Hungary/Slov ovakia: Significant exploration potential • Te Team: New board and executive management focused on modern development approach 3 *Source: Company data, Reserves and Contingent Resources are DeGolyer and MacNaughton estimates as of 31 December 2016
Progress & Priorities Progress provides launch pad for growth 2016 Progress • Completed detailed field development plans (FDPs) for all core assets, identified growth opportunities, 1 and started their implementation • 2 Increased production with minimum capital expenditure • 3 Reduced operating costs and overheads, resulting in an increase in cash flow and profitability • 4 Eliminated short-term financial liabilities (bond repurchase and restructuring) • Completed international arbitration procedure, while actively engaging in dialogue with the Government 5 of Ukraine. 6 • Built a technical team 2017 Priorities Russia: Maintain base Hungary/Slovakia: Resolve legal issues Ukraine: Execute and consider strategic Appraisal and with Ukraine development plan monetization Exploration 4
Achievements to date Our strategy works – next step is to scale it Key Financials • Op Opera erating cas cash flo low Ef Efficie iency: Despite 30% Change ($m) 2015 2016 decline in natural gas prices, operating cash flow % (ex legal, professional, and restructuring fees) Production, boepd 8,996 10,083 12.1 increased 67% to $30 million in 2016 vs $18 Natural gas price million in 2015. 4.20 2.95 (29.8) ($ per Mcf) • Com ompel elli ling CAP APEX EX eff effic iciency: About 20 Oil price 49.75 45.94 (7.7) ($ per bbl) enhancement projects completed from beginning Group revenue 88.5 73.8 (16.6) of 2016 to date added ~1,200 boepd to our production as of April 2017. $2.8 million spent on EBITDA* 16.9 15.8 (6.5) completed enhancements has not only paid back Cash from operations 12.8 17.0 32.8 already, but also generated estimated pre-tax cumulative free cash flow of $7.3 million by April Adjusted cash from 18.0 30.0 66.7 operations** 2017 and expected to generate a total of $15 million – more than five times the initial Capital expenditure 6.2 7.5 19.4 investment. Total debt 34.4 16.8 (51.5) • Success ssful l Deb ebt res restr tructuri ring: Besides achieving a Total cash 26.3 14.3 (45.6) successful bond restructuring, bond repurchases in 2016 generated additional cost savings of $2.6 million and return of 83% for the Company assuming the bonds were put in February 2017 ($5.7 million and 29%, respectively, if bonds were held until maturity in February 2020) 5 * before exceptional items **before legal/professional/restructuring costs
Why Ukraine? Integrated developed European gas market with premium pricing Import dependent Europe’s 4 th largest gas producer Europe’s premium pricing underpins supply & imports 60.0 14.00 50.0 12.00 DEMAND 10.00 40.0 $/Mcf 8.00 BCF/D IMPORTS 30.0 Price,� 6.00 20.0 4.00 EURO� PRODUCTION 2.00 10.0 0.00 0.0 2009 2010 2011 2012 2013 2014 2015 2016 Other United�Kingdom Netherlands Norway Ukraine Total� Consumption�Europe Henry� Hub NBP Ukraine Developed infrastructure supports market access Ukraine’s Attractive Natural Gas Market • 4th largest European producer after Norway, Netherlands and the UK • Premium pricing to Europe & US • Developed pipeline and natural gas infrastructure • Import dependent EU and Ukraine supports pricing and fiscal policies • Ukraine imports 35% of its demand • Ukrai kraine Gover ernment strat trategic gic targ target for r en ener ergy inde depe pende dence by 20 2021 6 Source: IHS, BP , Naftogaz of Ukraine, Bloomberg
Ukraine’s Natural Gas Resources Support Growth 4 Th Largest European supplier with significant scope for growth Ukraine production stable but down 70% since Soviet peak Reserves could support return to previous maximum production 3,000 1,000,000 350 50,00 000+ 150 50,00 000+ 2,500 100,000 34,0 4,000 00 2,000 10,000 Bcf 2,45 450 1,500 Bcf 700 00 1,000 1,000 100 500 10 0 1 Production 2016 Production based Official Reserves Conventional Unconventional on EU R/P ratio resources resources 7
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