Investor Presentation January 2013 Disclaimer This presentation has - - PDF document

Investor Presentation January 2013

Disclaimer

This presentation has been prepared by JKX Oil & Gas Plc (JKX) solely for use by you at the presentation held in connection with the proposed

• ffering and sale of convertible bonds (the Offering). The information contained in this document has not been independently verified and no

representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. JKX is under no obligation to update or keep current the information contained in this

• presentation. None of JKX or any of its respective affiliates, advisers or representatives shall have any liability whatsoever (in negligence or
• therwise) for any loss whatsoever arising from any use of this presentation or its contents.

The information in this presentation is given in confidence and may not be reproduced or redistributed to any other persons. The recipients of this presentation should not base any behaviour in relation to qualifying investments or relevant products (as defined in the Financial Services and Markets Act 2000 (FSMA) and the Code of Market Conduct made pursuant to FSMA) which would amount to market abuse for the purposes of FSMA on the information in this presentation until after the information has been made generally available. Nor should the recipient use the information in this presentation in any way which would constitute "market abuse". Certain statements in this presentation constitute "forward-looking statements". These statements reflect beliefs and expectations and are subject to risks and uncertainties that may cause actual results to differ materially. As a result, you are cautioned not to place undue reliance on such forward-looking statements. JKZ disclaims any obligation to update its view of such risks and uncertainties or to publicly announce the result of any revisions to the forward-looking statements, except where it would be required to do so under applicable law. This presentation is being communicated in the United Kingdom only to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) and to persons to whom it may otherwise be lawful to communicate it to (all such persons being referred to as relevant persons). This presentation is

• nly directed at relevant persons and any investment or investment activity to which the presentation relates is only available to relevant persons or

will be engaged in only with relevant persons. Solicitations resulting from this presentation will only be responded to if the person concerned is a relevant person. Other persons should not rely or act upon this presentation or any of its contents. This presentation and the information contained herein are not an offer of securities for sale in the United States and are not for publication or distribution to persons in the United States (within the meaning of Regulation S under the United States Securities Act of 1933, as amended (the Securities Act)). The securities proposed to be offered have not been and will not be registered under the Securities Act and may not be offered or sold in the United States except to qualified institutional buyers as defined in Rule 144A in reliance on Rule 144A or another exemption from, or transaction not subject to, the registration requirements of the Securities Act.

• 2

3

Contents Introduction 4 Operations Review 8 Financial Review 15 Summary 20 Appendix 22

Introduction Who we are?

• We are an upstream oil and gas

company focused on central and eastern Europe

• Our portfolio consists of 17 licence

interests with activities spanning the full-cycle E&P value chain from exploration through to production

• Established in Ukraine since 1994,

we own and operate mature assets which generate solid cash flows

• We entered the fast growing

independent gas market in Russia in

• 2007. Our Koshekhablskoye field

came on-stream in 1H12

• 2P reserves of 90.7MMboe as of

31/12/11*

• Cash generated from operations in

2011 - $124m (1H 2012: $60m)

*Reviewed by independent engineer Senergy (GB) Limited

4

5

Ukraine

• Attractive price environment in the Ukrainian gas market due to domestic

production deficit; solid cash flows from existing production

• Recent entry of multinational E&P firms in the country illustrates geological

potential; lack of local capital and expertise will create opportunities

• Fracking program in Ukraine at the Rudenkovskoye field in 1H13 to extend

Novo-Nikolaevkoye complex life; offers significant production upside if successful Russia

• Workover programme at Koshekhablskoye on-going to increase gas production

to plant capacity of 40MMcfd in 1H13

• Sidetrack and testing of existing well to deeper Callovian formation in 2013;

potential for rapid monetization if successful

• Potential to increase plant throughput with debottlenecking and workover of

additional well

• Positioned to benefit from long term gas price appreciation in Russia

Hungary

• Existing licences and production in the very attractive Hungarian gas market;

exploration potential exists in conjunction with local partner

Introduction Investment Opportunity

Introduction Our oil and gas assets

6 Asset life cycle Country Reserves (Mmboe) UKRAINE RUSSIA HUNGARY Proved and Probable reserves as of 31 December 2011 JKX has 100% working interest in its licences except fot the following * JKX has 50% interest in this licence area ** JKX has 25% interest in this licence area Licence area Georgievskoye Exploration Appraisal Development Production Molchanovskoye Wedge Zone Elizavetovskoye Zaplavskoye Koshekhablskoye Oxfordian Koshekhablskoye Callovian Ignatovskoye Molchanovskoye North Molchanovskoye Main Novo‐Nikolaevskoye Rudenkovskoye Hajdunanas* Gorbehaza* Turkeve* Hernad l, ll* Veszto**

28.5 61.2 1.0

People Management Team

Paul Davies Chief Executive Officer Co-founder of JP Kenny Exploration & Production Ltd, the forerunner of JKX Oil & Gas

• plc. Extensive experience of business in the

former Soviet Union Nigel Moore Chairman Formally a London-based partner of Ernst & Young where he was responsible for the Ernst & Young operations in Russia and Eastern Europe Cynthia Dubin Finance Director 27 years of experience in the oil, gas and energy

• sector. Project finance expertise combined with

an international banking background Martin Miller Technical Director Chartered Engineer with over 35 years of experience in the oil and gas industry, including senior positions with Mobil and BP Peter Dixon Commercial Director 27 years of experience in the upstream oil and gas industry in particular in Ukraine and former Soviet Union countries Tim Kaunov General Director - Ukraine Joined PPC, our Ukrainian subsidiary, in 1996 as Technical Director and in 1999 he was appointed PPC General Director Gene Palenka Finance Director, CIS Region Finance Director of our Ukrainian operations since 1998; the role was extended in 2011 to become Finance Director of our CIS Region, which includes our Russian subsidiary Alexander Bogdanov “Sasha” General Director - Russia Appointed as General Director of Yuzhgazenergie in October 2011, Sasha was previously General Director of a large Russian construction company 7

Operations Review

8

JKX Oil & Gas plc Operations map

Ukraine Hungary Southern Russia Bulgaria Slovakia 9

Group Proved and Probable Reserves

10

Ukraine On-going development, appraisal and exploration

History

• In country since 1994, 100% interest in the Novo-

Nikolaevskoye Complex and Elizavetovskoye exploration licence

• Cumulative revenues in Ukraine in excess of $1.4bn
• Production with more than 40 producing wells

Highlights

• A leading independent gas production company in the

domestic market for 15 years

• New LPG production installed in 2011 with strong margins
• Initiation of production from existing well in

Elizavetovskoye licence, data acquisition leading to sanction of new development project

• Award of multi-frac contract for Rudenkovskoye field to

Schlumberger

• Exploration successes at Zaplavskoye with Z-4 well in

1Q12 Forward Programme

• Fracking of well R-103 in 1H13
• Acquisition of 3-D seismic over Zaplavskoye
• Multi-well and facilities program at Elizavetovskoye

11

Ukraine Production and margin upside

Multi-stage frac program at Rudenkovskoye

• Contract signed with Schlumberger. Work

scheduled for the spring of 2013

• Largest on-shore multi-stage frac in Europe
• Successful outcome would enable production

and monetization of 21MMboe 2P reserves

Elizavetovskoye exploration license

• Stand-alone development, final design and

work program to be completed in 4Q12

• Drilling of first new well, E-301, and installation
• f additional facilities to start in 1Q13
• Production ramp-up planned for 2Q13

Zaplavskoye

• Initial Z-04 flow rates of 20.8 MMcfd of gas and

1,040 bpd of condensate

• Z-05 appraisal well expected 2Q13
• Increased opportunity for multi-well program
• n the back of newly acquired 3D seismic

12

Russia Koshekhablskoye field in production

History

• Purchased licence for the redevelopment of the

Koshekhablskoye gas field in 2007

• Formerly producing for Gazprom

Highlights

• Initiation of production and gas sales in 1H12 with

2 currently producing wells

• 12 existing wells, workover program in progress to
• ptimize production from selected wells

Forward Programme

• Acidizing 2 current producing wells (wells 20,27)

workover of existing well-25 and future workover of well-05

• Workover of well-09 and extend to Callovian
• Engineering of intermediate expansion project to

increase plant capacity by 20%+

• Seismic acquisition and reprocessing on

Georgievskoye exploration licence

13

Hungary Low production, exploration potential

History

• 50% equity in the northern Pannonian Basin

Hernad licences in a joint venture with the

• perator, Hungarian Horizon Energy

Highlights

• Hajdunanas field produces oil and gas from

two wells to a single separator and then via a 14.5km export line to an existing facility for input to the Hungarian grid

• Gas quality is excellent and requires minimal

processing before export

• Very attractive gas pricing in domestic market,

with realisations of $11.60/Mcf in 2011 Forward Programme

• Evaluation of exploration and appraisal options

for Hungarian licence portfolio

14

Financial Review

15

Average Realisations Ukraine remains robust and Russia strengthening

• Since the opening of the domestic

gas market in Ukraine in 2003 we have focused on increasing production to benefit from rising domestic gas prices

• In September 2011 the Russian

government decided to increase gas sector tariffs by 15% per annum up to 2015

• We believe that the Russian

domestic gas price will converge with net-back gas prices in western Europe by 2020

• All of JKX gas production is in

regions that are short of domestic supply

16

Source: Annual Report 2011, Company estimates Source: Annual Report 2011, (1) Programme of Energy Efficiency to 2020 – Government of Adygea; (2) Presentation of gas supply-demand – Krasnodar Mezhriongas; (3) USA Energy Information Administration.

Russian Gas Supply/Demand The role of independents

• Historical Gazprom fields now

all in decline

• To replace lost production,

Gazprom is investing into development of Yamal peninsula

• Resulting increase in

production cost will continue to drive gas prices in Russia

• Emergence of new

independent producers of gas, JKX being one of them

Source: General Scheme, Ministry of Energy Russian Federation bcm

Nadym-Pur-Taz Ob and Taz Yamal onshore Yamal offshore New developments

2010 2020 2030

1000 900 800 700 600 500 400 300 200 100

17

18

Financial Highlights Solid revenue and underlying operating profit*

• Revenue essentially flat at

$103.0m with only minor revenue contribution from Russian project in period

• Underlying operating profit*

steady at $31.3m

• Lower Ukrainian production taxes
• Strong operating cash flow
• f $60.0m
• Reduced capital expenditure with

completion of Russian project

• Cash of $20.3m at 30 June 2012
• Retire short-term Credit Suisse

facility by year-end

Key Group Figures

1H 2011 1H 2012 Change % Production (boepd) 9,476 7,481

• 21.0%

Group revenue ($m) 107.8 103.0

• 4.5%

Operating profit* ($m) 32.9 31.3

• 4.9%

Effective all-in tax rate 58.2% 56.8%

• 1.4%

Cash from operations ($m) 58.9 60.0 +1.9% Capex ($m) 101.0 45.6

• 54.9%

Realised gas price ($ /Mcf) 8.68 11.85 +36.5% Realised oil price ($ /bbl) 97.92 97.82

• 0.1%

* before exceptional item 18

Capital Expenditure* Targeting producing assets

• Limited remaining licence commitments

following start-up of gas plant in Russia and LPG facility in Ukraine

• Capital to be deployed in Russia to

increase production

• Acidization of current producing wells

to fill gas plant capacity

• Deepen well-09 to potential new

reserves

• Debottleneck gas plant
• Workover additional well-05
• In Ukraine
• Fracking of R-103 well
• Elizavetovskoye drilling program
• Zaplavskoye appraisal well(s)
• Limited exploration capex foreseen in

Hungary and Slovakia although

• pportunities are being reviewed with

local partners

Drilling & Wells 2013 US$m 2014 US$m Russia 20 5 Ukraine 24 53 Hungary 2

• Slovakia
• 4

Facilities Russia 5 10 Ukraine 23 13 Total 74 85

19

*Subject to proposed capital raising

Summary

20

Summary Consolidation with progress

• Russian gas plant on-stream with gas

being sold into a fast growing market

• Additional wells to increase throughput in

2013

• Well-09 to test the Callovian play
• Seismic acquisition and reprocessing on

the Georgievskoye licence

• Progress in Ukraine with Elizavetovskoye

development and Rudenkovskoye frac award

• Zaplavskoye licence appraisal drilling

2Q13

• Cash generated from operations in 2011

$124m (1H 2012: $60m)

• Underlying operating profits remain firm

with tight control of costs

• Oil and gas realisations expected to

remain firm in the next year

21

Appendix

22

Russia Award of Georgievskoye exploration licence

Licence

• 170 sq km licence surrounding the

Koshekhablskoye field

• Access to 30-90 Bcf of Oxfordian and 140-

180 Bcf of Callovian contingent resources associated with Koshekhablskoye field

• Lead identified in south of field with

estimated P50 unrisked gas resources of 30 Bcf Forward Programme

• Purchase existing seismic, re-process and

interpret

• Acquire additional infill 2-D seismic
• Extend Koshekhablskoye 3-D seismic to

selected prospects

• Drill 2 exploration/appraisal wells

23

Slovakia – Bulgaria Limited activity in 2013

Highlights

• Evaluation of 380sq km 2-D seismic over

Provadia licence in Bulgaria

• n-going

Forward Programme

• Acquisition of additional 2-D seismic
• ver the Provadia licence
• Aero-gravity survey over Slovakian

licences in H2 to finalise location of Cierne-1 well to be drilled in 2014

Slovakia Hungary Bulgaria

24