10240581858175673SNO HOLE567310239102441033310247102581024511792H1033410102WITH HOLE10335117921010011903-11096NO HOLE 1095AWITH HOLE102331042510424102491025412249100111001210035123841180010053P10125101241027310053ST 231©2005FRANKMORROWCOMPANY800.556.7688 . 401.941.3900website:www.frankmorrow.come-mail:sales@frankmorrow.comfax:401.941.3810creative ideas in metals since 192918Chairman's statementAs I complete my fi rst year as Chairman of your Company, I refl ect on a year which has demanded in full the capabilities of the organisation in order to bring to fruition our large development project in Russia which has depended on the cash fl ow from our Ukraine operations, albeit a cash fl ow depleted by the increase in taxation. A year of demand I am pleased to report that commercial production is imminent in Russia and we have met our 2011 revenue targets in Ukraine. We have benefitted from strong and stable oil and condensate realisations during the period which are projected to continue during 2012. The Ukrainian gas market also remained buoyant in 2011 although concern has been evident in the market that the current level of gas realisations may need to ease during 2012. Gas realisations in Russia are forecast to continue their annual upward movement towards European netback convergence following the recent presidential elections, although the date for this convergence is now anticipated towards the end of the decade.StrategyThe Company remains committed to its strategy of acquiring and developing production assets in eastern and central Europe. Ukraine and Russia remain our primary markets and we are actively seeking to broaden our development and operational footprint in both countries. Acquisition of new assets in Ukraine remains difficult, although we have been successful in extending our exploration acreage in Poltava in the period; we are excited about the possibilities of this large area which is contiguous to our existing production licences. The independent gas sector in Russia continues to grow and, following the start-up of our production at Koshekhablskoye, provides a number of opportunities for us to pursue in southern Russia.Performance A key factor in the growth of our operating capability is the continuous improvement of the quality and expertise of our personnel, particularly at our Ukrainian and Russian operating centres. The rapid increase in the last 18 months in the Russian workforce has placed additional demands on our supervisory staff and they are to be commended for their resilience and professionalism. In particular, I would highlight the outstanding record for health, safety, environmental matters and community liaison that we have achieved in 2011 with zero lost time injuries in more than 2.3 million manhours of safety exposure, and an all injury frequency rate which is well below the industry benchmark.Production in Ukraine again underpinned the operations of the Group. The development drilling programme at Poltava has continued on schedule and has achieved success in finding additional reserves within our licence areas. Strong product prices and the successful start-Sir Ian ProsserChairman" With production from our Russian gas plant imminent we are entering one of the fastest growing gas markets and are well positioned for growth."

JKX Oil & Gas plc Annual Report 201119At a glance01-17Board statements18-23Operational review24-36Financial review37-47CSR review48-61Directors' reports62-83Financial statements84-136All Injury Frequency Rate (AIFR)Earnings per share (basic, cents)09101107080910110.1734.370.6247.561.5054.2347.9749.8573%28%up of our LPG facility at mid-year in Poltava have both contributed to a record Company revenue generation of $236.9m for the period. Delays on completion of our large Russian project have pushed initiation of gas sales into this year, and this together with our cost of borrowings, has continued to put pressure on our cash position. This is forecast to ameliorate during the second half of 2012 with the reduction of capital spend in Russia and inflow of Russian production revenues. Progress has been made in our exploration programme with a successful well on our new Ukrainian acreage and a gas discovery in Hungary. We have also initiated a review of available exploration prospects in Russia in the vicinity of our Koshekhablskoye licence.We have completed a reserve review of our licence portfolio as of 31 December 2011, and I am pleased to announce that, after a total 2011 production of 3.3 MMboe, we have increased our 2P reserves to 90.7 MMboe (a reserves replacement ratio of 2.7).Your BoardThis year has seen a number of changes in the composition of the Board. I noted in my Interim Statement that your Board supports the longer term aspirations of Lord Davies's report on gender diversity on appointment of directors to boards. I would have been indeed prescient if I had been aware that we were shortly to appoint a woman as Finance Director who met our criteria for ".the highest quality people with the most appropriate experience for the requirements of the business, be they men or women." Cynthia Dubin joined the Company as Finance Director in November and brings with her a wide experience of the oil and gas and energy sectors. Cynthia has a strong project finance and banking background and is an invaluable addition to the management team. November also saw Alastair Ferguson join the Board as a Non-Executive Director. Alastair has held a wide range of senior positions with BP during his 33 years in the oil and gas industry, culminating in an eight year assignment in Moscow leading the gas and power business of TNK-BP in Russia and Ukraine. Alastair's extensive knowledge of the specific area in which we are working will be of great benefit to the Company. Bruce Burrows retired as Finance Director at the end of September and I thank him and wish him well for the future.Michel-Marc Delcommune retired from the Board in December and I thank him on behalf of the Board and all staff and shareholders for his contribution to the Company over the last three and a half years. Lord Oxford has stepped down as Senior Independent Director (SID), but I am delighted that he has agreed to remain as a member of the Board. Nigel Moore, the Chairman of the Audit Committee, has taken over the role of SID, effective 1 November 2011. DividendIn my Interim Statement, I highlighted the impact on available cash flow of the combination of a significant increase in taxation in Ukraine in 2011, the delay in start-up of the Russian project and the attendant increased project costs. This led to our decision to forgo an interim dividend for 2011. These pressures continue. Your Board recognises that we will need the rest of this year to pay down >>