36Operational review Slovakia / BulgariaSvidnik, Medzilaborce and SninaSLOVAKIA (JKX 25%)JKX holds a 25% interest in the Svidnik, Medzilaborce and Snina exploration licences, covering a total area of 2,278sq.km in the Carpathian Fold Belt in north east Slovakia. Acquisition of 500 km of 2D seismic data in 2008 through 2010 provided basic regional information in the two eastern licences, as well as infill data in the western Svidnik licence. During 2011:. acquisition of a further 300km of regional 2D seismic data acquisition was completed. the Cierne-1 exploration well location in the westernmost Svidnik licence was selected and drilling is expected to commence in the fourth quarter of 2012. The well will be drilled to more than 3,500m with multiple targets identified in this sub-thrust play.BULGARIA (JKX 40% and operator)JKX operate the B1 Golitza licence, covering 971sq.km in eastern Bulgaria. Following the lack of success in the 2010 drilling programme JKX and its co-venturers reviewed the information from these wells together with the 3D seismic data and concluded that there was insufficient prospectivity to justify applying for a production licence.There are now no plans for further activity and the licence expires in March 2012.(JKX 18%)JKX has a 18% carried interest in the 1,787sq.km Provadia licence operated by Overgas. The 380 km 2D seismic survey has been completed and the data is now being processed.Martin MillerTechnical DirectorGolitzaProvadia

JKX Oil & Gas plc Annual Report 201137At a glance01-17Board statements18-23Operational review24-36Financial review37-47CSR review48-61Directors' reports62-83Financial statements84-136Financial reviewStrong commodity prices, particularly for Ukrainian gas and LPG sustained our profi tability in 2011 from our Ukrainian subsidiary Poltava Petroleum Company ('PPC') despite reduced production volumes.In 2011 we produced $82.1m in profit from operations compared to $95.0m (before exceptional items) in 2010. This is an extraordinary result given reduced production of 12% and the absorption of the effect of the new tax code which increased our production based taxes in Ukraine by $61.9m from $5.2m in 2010 to $67.1m in 2011. The new tax code is discussed in detail in note 25 of the financial statements. Cash flow from operations of $124.2m (2010: $146.3m) in addition to gross borrowings* of $40.5m has provided us with the required funding to complete construction of our Russian subsidiary's gas processing facility, continue investment in our Ukrainian asset complex, explore in Hungary and to maintain a year-end total cash balance of $28.9m (2010: $62.0m). Profit for the yearThe profit after tax was $59.1m for 2011 (2010: $21.2m). On a comparative basis, this was $22.2m below profit in 2010 of $81.3m Cynthia DubinFinance Director" We have had another capital intensive year funded by operating cash fl ow and new borrowings. Our profi ts and cash fl ow have been rebased by the new production tax burden in Ukraine however we expect the realisations from our oil and gas production to remain strong through 2012 to enable us to pay down our short term borrowings."* Gross Borrowings is Borrowings gross of unamortised effective interest and arrangement fees.(excluding exceptional items). This translates into basic earnings per share of 34.37 cents (2010: 47.56 cents). This is the combined result of a 23% increase in revenues to $236.9m (2010: $192.9m) due to increased oil and gas realisations, despite a 12% overall production decline, maintaining operating and administrative charges at $49.6m (2010: $51.1m) and absorbing a $61.9m additional production tax cost (2011: $67.1m versus 2010: $5.2m).The Group profit before tax of $82.1m was reduced to a $59.1m net profit by a current tax charge of $21.8m (2010: $30.3m) and deferred tax charge of $1.2m (2010: credit $30.7m).RevenueThe Group benefited from high international oil and gas prices. The Group enjoyed a 42.1% improvement in the oil price achieved moving from $69.15/bbl in 2010 to $98.27/bbl in 2011. From a total revenue perspective, the gas Total revenue($m)0708091011236.9196.5192.9207.0184.523%>