Volga Gas plc FINAL RESULTS 2012 Mikhail Ivanov, CEO Tony Alves, - PowerPoint PPT Presentation

Volga Gas plc FINAL RESULTS 2012 Mikhail Ivanov, CEO Tony Alves, CFO April 2013

DISCLAIMER This presentation is for information only and does not constitute an offer or invitation for the sale or purchase of securities. Any information or documentation provided as part of the presentation is confidential and is intended solely for use during the presentation and as a personal record thereafter. Any information or documentation provided as part of the presentation may not be reproduced or circulated or used for any other purpose. In particular, no information provided during the presentation may be taken, transmitted or distributed, directly or indirectly, in or into the United States of America, its territories or possessions or passed to US Persons (as defined in Regulation S of the United States Securities Act of 1933 (as amended)), United States residents, corporations or other entities, save pursuant to an applicable exemption. Distribution of this information in the United States may constitute a violation of Unites States securities law. Certain forward-looking statements may be contained in the Presentation Materials. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be accurate. Accordingly, results could differ from those projected as a result of, among other factors, changes in economic and market conditions, changes in the regulatory environment and other business and operational risks. The information provided during the presentation has not been independently verified. No representation or warranty, express or implied, is given as to the accuracy, fairness or completeness of the information or opinions contained in the presentation and no liability is accepted for any such information or opinions (which should not be relied upon) or for any loss howsoever arising, directly or indirectly, from any use of the information provided.

OVERVIEW

Key share data Major shareholders (as disclosed) Baring Vostok Nominees (Baring Vostok PEF III) ...................................... 48.9% Dehus Dolmen Nominees (Baring Vostok PEF IV) ...................................... 9.8% JP Morgan Asset Management ………………………………………………….. 5.4% Blackrock Investment Management …………………………………………….. 3.0% BNP Paribas Investment Partners …..……………………….……………………3.0% Management/Directors ……………….…………………………………..………. 2.2% Debt – $8.0 million (bank debt) as at 31 December 2012 VGAS share price chart Cash – $7.0 million as at 31 December 2012 VGAS share price, UK p: min 37 | max 569 | at 04/04/13 91p Shares in issue: 81,017,800 Market capitalisation: £74 m www.volgagas.com Source: London Stock Exchange

Where we operate Dobrinskoye Urozhainoye-2 Dobrinskoye Source: Incotec Urozhainoye-2 Source: Incotec

Financial highlights  Revenues of US$28.3 million (2011 US$28.6 million).  EBITDA of US$8.0 million (2011 US$8.9 million).  Pre-tax loss of US$6.3 million (2011: pre tax loss US$1.1 million) After exploration expense of US$8.5 million (2011: US$0.2 million)  Provision for VAT recovery of US$2.9 million (2011: nil)  Write-off of development assets US$0.2 million (2011: US$5.6 million)   Net cash flow from operations of US$5.4 million (2011 US$5.7 million). Net of US$1.15 million loan repayment by offset of gas sales (2011: US$3.1 million)  Payment of disputed VAT claim   Capital expenditure of US$13.7 million (2011 US$5.6 million). Exploration and evaluation US$3.4 million (2011: 4.3 million)  Development and production US$10.3 million (2011: 0.8 million)   US$8.0 million of bank debt at 31 December 2012 (US$4.2 million owed to Trans Nafta as at 31 December 2011) Trans Nafta fully repaid in April 2012 

Operational highlights – development and production Gas Plant Upgrade  First two phases completed in September 2012  Operating at capacity of 250 mcm/d (8.8 mmcf/d)  Works for further upgrade continuing in H1 2013  Subject to regulatory permits, aim to increase capacity to 1.0 mmcm/d (35 mmcf/d) Vostochny Makarovskoye gas/condensate field  Production commenced October 2012 from two wells VM#1 and VM#2  Successful workover of well #30 during H1 2012  Three wells tied-in to the gas plant, all capable of full time production  Further drilling in 2013-14 to increase production capacity Dobrinskoye gas/condensate field  Production in 2012 solely from well #26 and subject to shut-ins during gas plant modifications  Sidetracks on well #22 drilled in Q2 2012 and on #26 in Q4 2012  Production from the field re-commenced early in 2013 Uzenskoye oil field  Average production in 2012 was 1,106 bopd (2011: 1,178 bopd)  Four full years of production of water-free oil  Plan to install water separation during 2013 in anticipation of water cut in producing wells

Operational highlights – exploration and evaluation Exploration wells on the Urozhainoye-2 and Pre-Caspian licence areas  Committed exploration drilling  Yuzhno-Romanovskaya-1 exploration well was unsuccessful.  Mirnaya #2 exploration well was completed in November 2012, also unsuccessful Evaluation  Acquired Sobolevskaya #11 oil discovery well. Successful workover conducted on the well late in 2012   Installation of production equipment to start oil production during H1 2013

Oil and gas reserve evaluation Miller & Lents reserves evaluation under SPE standards as at 1 August 2011 . Proved Reserves Oil & Gas Total NPV10% Condensate (mmbbl) (bcf) (mmboe) $m Uzenskoye 4.925 0.0 4.925 49.4 Dobrinskoye 1.927 23.4 5.827 41.6 VM 7.948 133.2 30.148 201.4 Total Proved Reserves 14.800 156.6 40.900 292.4 Proved plus Probable Reserves Oil & Gas Total NPV10% Condensate (mmbbl) (bcf) (mmboe) $m Uzenskoye 5.578 0.0 5.578 52.4 Dobrinskoye 1.927 23.4 5.827 41.6 VM 8.599 144.1 32.622 207.2 Total Proved plus Probable Reserves 16.104 167.5 44.027 301.2 The independent assessment of the reserves and NPV attributable to the Group's Dobrinskoye, Vostochny Makarovskoye and Uzenskoye fields was prepared by Miller & Lents Limited in accordance with reserve definitions adopted by the Society of Petroleum Engineers (SPE). The NPV evaluation was conducted on a constant pricing basis, assuming no future escalations of oil prices, operating expenses, capital, or mineral extraction taxes above the respective 1 August 2012 values. Future net revenues are defined as the total gross revenues less operating costs, Mineral Extraction Tax and capital expenditures. The total gross revenues are the total revenues received at the wellhead. The future net revenues include deductions for other capital and property taxes but do not include deductions for profit taxes. The constant price assumptions used in the calculation of future cash flows were Crude Oil - US$49.53 per barrel; Condensate - US$47.66 per barrel; Natural Gas - US$2.40 per mcf.

Operational and financial summary : 2010-2012 Sales volumes 2012 2011 2010 Oil & condensate (barrels) 529,501 546,818 407,050 Gas (mcf) 1,193 1,348 - Total (boe) 728,334 771,479 407,050 Operating Results (US$ 000) 2012 2011 2010 Oil and condensate sales 25,526 25,425 13,052 Gas sales 2,769 3,146 - Revenue 28,295 28,571 13,052 Production costs (2,855) (2,413) (436) Production based taxes (8,951) (9,537) (5,254) Depletion, depreciation and other (2,280) (2,641) (1,037) Other (1,562) (991) (113) Cost of sales (15,648) (15,582) (6,840) Gross profit 12,647 12,989 6,212 Exploration expense (8,475) (200) (23,937) Provision for VAT recovery (2,945) - - Operating & administrative expenses (6,945) (6,704) (4,733) Write-off of development assets (188) (5,612) - Operating profit/(loss) (5,906) 473 (22,458) 9

Operational and financial summary : 2009-2011 (cont.) Net realisation 2012 2011 2010 Oil & condensate (US$/barrel) 48.21 46.50 32.06 Gas (US$/mcf) 2.32 2.33 n.a. Operating data (US$/boe) 2012 2011 2010 Production costs 3.92 3.13 1.07 Production based taxes 12.29 12.36 12.91 Depletion, depreciation and other 3.13 3.42 2.55 EBITDA calculation (US$ 000) 2012 2011 2010 Operating profit/(loss) (5,906) 473 (22,458) Exploration expense 8,475 200 23,937 DD&A and other non-cash expense 5,413 8,253 1,150 EBITDA 7,982 8,926 2,629 10

Monthly average production rates 2011-2012 3456789:(; 345678-<);=7>?917)@?);(2? &!!! AB?)97</ %"!! %!!! $"!! $!!! #"!! #!!! "!! ! '()*## +,-*## './*## 012*## '()*#$ +,-*#$ './*#$ 012*#$ '()*#%

Monthly revenues and cash margins ($k, Jan 2011- Feb 2013) Monthly revenue by product (US$ 000) Monthly revenue and cash margins (US$ 000) &!!! &!!! 3(4 345 6-78.1297):;7<2< 56)78)4(28 %"!! %"!! ;(<=:3(->9):?@AB7-A:CD+E 09/ %!!! %!!! $"!! $"!! $!!! $!!! #"!! #"!! #!!! #!!! "!! "!! ! ! '()*## +,-*## './*## 012*## '()*#$ +,-*#$ './*#$ 012*#$ '()*#% '()*## +,-*## './*## 012*## '()*#$ +,-*#$ './*#$ 012*#$ '()*#%