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

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Volga Gas plc

Mikhail Ivanov, CEO Tony Alves, CFO

FINAL RESULTS 2012

April 2013

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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

r 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

pinions 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.

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OVERVIEW

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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 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

VGAS share price chart

Source: London Stock Exchange

SLIDE 5

Where we operate

Source: Incotec Source: Incotec

Urozhainoye-2

Urozhainoye-2 Dobrinskoye

Dobrinskoye

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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

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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

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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

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Oil and gas reserve evaluation

Miller & Lents reserves evaluation under SPE standards as at 1 August 2011.

Proved Reserves Oil & Condensate Gas Total NPV10% (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 & Condensate Gas Total NPV10% (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.

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9

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)

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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

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Monthly average production rates 2011-2012

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Monthly revenues and cash margins ($k, Jan 2011- Feb 2013)

Monthly revenue by product (US$ 000) Monthly revenue and cash margins (US$ 000)

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Oil and condensate pricing dynamics

20 40 60 80 100 120 140 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13

Uzenskoye field: sales price comparison (US$/bbl)

Sales Price (ex-VAT) Urals minus export tax Urals Net Revenue post MET

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Outlook

Managing oil production at Uzenskoye
Production averaged 1,300 bopd in January and February 2013
Aim to maintain > 1,000 bopd in 2013
Water separation equipment to be installed
Vostochny Makarovskoye/Dobrinskoye
Production levels limited by permitted gas processing throughput of 250 mcm/d
Wellhead capacity estimated at 500 mcm/d with the five existing wells on the VM and Dobrinskoye fields
Aim to increase plant capacity to 1000 mcm/d and to add further VM wells during 2013-14
Capital expenditure programme
Conclusion of gas plant upgrade: $2.0 to $3.0 million
New wells on VM: $5-6 million per new well (2 planned in 2013-14) and $3-4 million for a sidetrack to well VM

#4 (likely in 2H 2013)

Miscellaneous capex on producing fields: $3-4 million (including water separation on Uzen)
Strategy
Priority will be to focus on completing development and achieving higher levels of production and cash

generation

Continuing to take an opportunistic approach to acquisitions

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GAS/CONDENSATE PRODUCTION & DEVELOPMENT

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Dobrinskoye gas plant

GPU is used to process gas from the VM and Dobrinskoye fields

Originally constructed purely for the Dobrinskoye field, the GPU has been upgraded to process the gas from VM and

to increase its throughput capacity

First two phases of the upgrade project completed by October 2012 enabling VM gas is to start flowing
Capital cost of upgrade to date has been US$6.0m enabling increased processing capacity and enhanced sulphur

extraction to process VM gas.

Remaining works to establish 35 mmcf/d capacity is increased condensate storage and upgrade to safety flare

systems.

GPU is currently certified to operate at 250 mcm/d (9 mmcf/d)

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Dobrinskoye field – acquired in April 2011

Acquisition included the Dobrinskoye gas field and the Gas Processing Unit, both at 100% interest
Dobrinskoye 2P reserves of 23.4 bcf of gas and 1.9 million barrels of condensate
Two production wells on the field
Sidetracks on both wells drilled, completed and tested in 2012
Production capacity restored to c. 7 mmcf/d

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Vostochny-Makarovskoye : gas/condensate field development

Location

Located in Zhirnovsk district of the Volgograd oblast

in the northern part of the Volga highlands

Well developed local infrastructure with good road

access and connections into regional oil and gas pipelines

The VM licence area lies approximately 5km from

the gas processing unit (“GPU”) on the Dobrinskoye gas field

Development status

Three production wells drilled, completed and tested.
Wells put on extended test since 2010 – gas flared

and condensate collected for sale at wellhead.

Production through gas plant and gas sales started

in October 2012.

Current plans for three further wells in 2013-14:
Sidetrack of VM#4 (drilled in 2009)
New wells – VM#3 and VM#3

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OIL PRODUCTION UZENSKOYE OIL FIELD

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Oil production from shallow supra-salt field

Eight wells tested oil and five placed on production since

October 2008.

Light (45 API) sweet crude oil. Water cut < 1%. High

permeability reservoir (0,6 Darcy)

2P reserves of 5.6 mmbbls as at 1 August 2012
Produced to date ~ 1.6 mmbbl
Average production 2012: 1,106 bopd (2011 1,178 bopd)
Jan/Feb 2013 average 1,055 bopd
Plan to install water separation equipment (capex <$1.0m) in

2013 to maintain production.

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EXPLORATION

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Karpenskiy, Pre-Caspian and Urozhainoye-2 Licence Areas

YUZHNY ERSHOVSKOYE

Grafovskaya#1 sub-salt

exploration well drilled and tested.

Non-commercial hydrocarbon

shows YUZHNY MOKROUSOVSKOYE

New supra-salt and intra-salt

prospects evaluated

Total C3 Prospective

Resources of 187 mmboe

Well planned in 2011

UZENSKOYE OIL FIELDS

Discovered in 2007/8
Developed 2008/9
Producing c1,350 bopd

Source: Wood Mackenzie

PRE-CASPIAN LICENCE

80 sq km of 3-D seismic
Significant sub-salt

exploration targets UROZHAINOYE-2 LICENCE

Sobolevskaya #1 well –

workover of oil discovery seeking to re-establish production

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Summary Group Financial Statements

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Income statement (US$ ‘000)

Year ended 31 December 2012 2011 Revenue 28,295 28,571 Cost of sales (15,648) (15,582) Gross profit 12,647 12,989 Exploration and evaluation expense (8,475) (200) Operating and administrative expenses (9,890) (6,704) Write off of development assets (188) (5,612) Operating profit/(loss) (5,906) 473 Interest income 185 219 Interest expense (415)

Other gains and losses – net

(172) (1,810) Loss for the year before tax (6,308) (1,118) Current income tax

Deferred income tax

(1,113) (18) Loss for the year before non-controlling interests (7,421) (1,136) Attributable to: The owners of the parent Company (7,421) (1,136) Basic and diluted profit/(loss) per share (in US dollars) (0.09) (0.01) Weighted average number of shares outstanding 81,017,800 81,017,800

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Balance sheet (US$’000)

At 31 December 2012 2011 Intangible assets 9,646 39,522 Property, plant and equipment 103,703 60,794 Other non-current assets 798 1,855 Deferred tax assets 2,062 5,560 Total non-current assets 116,209 107,731 Cash and cash equivalents 7,049 10,099 Inventories 1,235 1,851 Other receivables 2,330 2,409 Total current assets 10,614 14,359 Total assets 126,823 122,090 EQUITY AND LIABILITIES Total equity 114,401 115,146 Asset retirement obligation 350 330 Long term debt 1,586

Total non-current liabilities

1,936 330 Trade and other payables 4,083 6,614 Short term debt 6,403

Total current liabilities

10,486 6,614 Total equity and liabilities 126,823 122,090

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Cash flow (US$’000)

Year ended 31 December 2012 2011 Profit/(loss) for the before tax (6,308) (1,118) Total effect of adjustments for non-cash items 9,302 6,884 Decrease/(increase) in long-term assets

1,678

Operating cash flow prior to working capital 2,994 7,444 Net movement in working capital 2,451 (1,789) Cash flow from operations 5,445 5,655 Income tax paid (3)

Net cash flow from operating activities

5,442 5,655 Exploration expenditure (3,408) (4,307) Purchase of property, plant and equipment (10,319) (784) Net cash used in investing activities (13,727) (5,091) Cash flows from financing activities Change in loans 4,830 (15,737) Net cash provided by financing activities 4,830 (15,737) 405 (846) Net increase/(decrease) in cash and cash equivalents (3,050) (16,500) Cash and cash equivalents at beginning of the year 10,099 26,599 Cash and cash equivalents at end of the year 7,049 10,099 Effect of exchange rate changes on cash and cash equivalents