Interim Management Statement

JKX Oil & Gas plc

INTERIM MANAGEMENT STATEMENT

INCLUDING DATA FOR

THE THIRD QUARTER ENDING 30 SEPTEMBER 2011

Highlights

·; Construction and commissioning of the Gas Processing Facility (GPF) at the Koshekhablskoye field in Russia is nearing completion. The project remains on-track for production start-up by year-end, with gas sales expected to commence in the first quarter 2012.

·; Liquefied petroleum gas (LPG) production and sales commenced on schedule and on budget in July at Poltava, Ukraine. LPG prices are yielding higher returns than expected.

·; Good progress has been made in the preparations for the multi-stage frac operation at Rudenkovskoye field, Ukraine in spring 2012.

·; Recent workover activity in Hungary indicates that production rates should be restored to around 1,300 boepd gross this month following the temporary shut-in of the field due to water influx.

·; Interpretation of newly acquired seismic data in Hungary, Bulgaria and Slovakia continues with exploration drilling scheduled for late 2011 and early 2012 in Ukraine, Hungary and Slovakia.

JKX Chief Executive, Dr Paul Davies, said:

"The focus in the period has been on the completion and commissioning of our Russian project. Good progress has been made, with schedule slippage halted and cost over-runs curtailed. First gas through the plant by year-end will permit initiation of gas sales in the first quarter of 2012, subject to regulatory approval by the Russian authorities.

"The development drilling programme at Poltava in Ukraine has continued with a recent notable success in the Molchanovskoye field. Appraisal drilling on the new reservoir in the Wedge Zone is scheduled for the fourth quarter, and will be followed by the first exploration well on the recently awarded extension to the Zaplavskoye licence.

"We are benefitting from buoyant commodity prices in Ukraine with gas realisations currently in excess of $11.5 per Mcf, and from the additional revenue stream from our new LPG facility."

For further information please contact:

Anthony Cardew / Nadja Vetter / Alexandra Stoneham, Cardew Group T: 020 7930 0777

Production

Ukraine: Average production in the third quarter was 8,557 boepd comprising 39.6 MMcfd of gas and 1,954 bpd of oil and condensate.

Hungary: Gross production from the Hajdúnánás Field in the third quarter was 442 boepd comprising 2.3 MMcfd of gas and 58 bpd of oil and condensate (JKX share: 50%). The 35% decrease on the average for the second quarter 2011 is due to water encroachment which is currently being remedied.

Outlook: We anticipate average production in the fourth quarter to be approximately 9,000 boepd.

Ukraine

Development and Workover Activity: Third quarter activity has continued to produce the field at optimum rates whilst adding reserves in the outlying, underlying or flank structures. During the third quarter, two new development wells were completed and two wells worked-over.

Development well IG-137 (Bis) was a re-drill of the 2009 well on the Ignatovskoye field which was abandoned for technical reasons. The well has been completed in the Tournasian carbonate and, after acidizing, is currently producing approximately 100 bopd and 100 Mcfd gas.

Development well M-166ST in the Molchanovskoye North field was drilled as a recompletion of the 600m long horizontal well M-166 which was rapidly watering out. Well M-166ST was completed with a shorter 170m horizontal section in the Devonian sandstone, offset and some 11m higher than the original well and close to the overlying gas-water contact. After testing, the well was choked back to stabilise the gas-oil ratio and commenced production at 1,616 bopd with 3.2 MMcfd gas at a FWHP of 874 psi.

The Skytop rig is currently drilling well NN-77, a development well on the NovoNikolaevskoye structure. This will be followed by the two remaining wells planned for 2011:

o well M-172 which is an offset well to the M-170 Wedge Zone deep Devonian discovery, and

o well Zaplavskoye-04, the first well in the exploration licence extension to the north-east of the NovoNikolaevskoye field where the targets will be the V-25 and V-26 sandstone reservoirs.

Preparations for the multi-stage frac in the Rudenkovskoye long horizontal well R-103 are well under way with the technical evaluation completed and bids received for the frac operation. This is scheduled to be carried out as soon as conditions permit in spring 2012.

The TW-100 workover rig prepared well R-102 in the Rudenkovskoye field for additional perforations in the Tournasian sandstone. Following perforation, there was a small increase in gas rate but the well has been suspended because the pressure was insufficient for completion. Workover of well M-162 in the Tournasian sandstone was more successful, restoring gas production to a rate of more than 1 MMcfd. The workover rig subsequently underwent an extended period of maintenance and has now been remobilised to well I-105 and completed the re-installation of the rod pump.

Facilities: The highlight of the third quarter was the commencement of LPG processing and delivery. The facility was commissioned on time and on budget with first LPG sale and delivery on 5 July and stabilised production achieved by 8 July. Average LPG sales through the quarter were 61 tonnes per day.

Work continued in the period on debottlenecking the plant, enhancing the compressor capacity, re-routing flowlines to reduce back pressure and wax clearance to enhance production from the available well stock.

Exploration: Following the success of the Wedge Zone well M-170 in the deeper Devonian sandstone, the seismic data was reviewed to determine the possible extent of this new reservoir. Early results are encouraging and the first offset well M-172 will be drilled in the fourth quarter. A programme of appraisal drilling has been developed which will continue through 2012 to investigate the extent of the reservoir throughout the Molchanovskoye block. No additional reserves have been attributed to this area of the field complex to date.

Drilling is also planned for the fourth quarter in the recently acquired extension to the Zaplavskoye exploration licence, targeting the Visean V25/26 sands to the northeast of the Novo-Nikolaevskoye field. These sands were tested briefly in the nearby well 2N some 20 years ago and the first location is close to this well.

Development of the Elizavetovskoye Field is expected to commence in 2012.

Russia

Development and Workover Activity: Initial testing of Well-25 provided an unstabilised flow rate of 6 MMcfd before acidizing of the carbonate reservoir. Problems with the coiled tubing and subsequently the downhole completion have led to the Geostream rig being re-mobilised to recover and replace the completion. Once this is complete, the well will be stimulated and tested.

Preparations for the sidetrack of the Callovian Well-09 and the deepening of Well-22 to the Callovian sandstone reservoir have been completed by smaller capacity rigs. The Geostream rig will return to complete operations on these wells once operations on Well-25 are complete.

Facilities: Construction of the GPF is nearing completion with commissioning of the plant proceeding on a step by step basis. Outstanding items include an upgrade to the wellhead piping to meet revised regulatory specifications and final installation and termination of cables to the various field devices within this highly automated plant. The final phase will be the commissioning and detailed approval of each element of the equipment before gas can enter the system.

First gas delivery to the commissioned GPF is on track for year-end, with gas sales expected in the first quarter of 2012 following receipt of all regulatory permissions to operate.

Hungary

Development Activity: The Hadjunanas and Gorbehaza fields produce from three wells to a single separator, and then via a 14.5 km export line to an existing facility for input to the Hungarian gas pipeline system. Production has been affected by water influx and the operator shut-in both fields in August. Remedial work in September brought well Hn-2 back into production at 3.5 MMcfd and 80 bcpd (gross) and work is currently in progress on well Hn-1.

The wellhead pressure on Gorbehaza Gh-1 fell below the line back pressure (which tends to be higher in the summer months) and the well has been suspended until a small compressor can be sourced and fitted. JKX holds a 50% equity interest in the field.

Exploration: Hernad licences: JKX holds a 50% equity interest in the two Hernad licences in the northern Pannonian Basin. The 200 sq km 3D seismic data acquisition in the Jaszsag area to the south of the Hernad II licence is complete and interpretation of the preliminary data has indicated a number of small but low risk prospects. These are being reviewed and prioritised ahead of selection for a two well drilling programme planned for late in the fourth quarter.

Nyírseg Licence: A second production well is under consideration but is contingent on re-commencing production from well Gh-1 in the Gorbehaza field.

Veszto Licence: JKX holds a 25% equity interest in a 15.6 sq km part of the Veszto exploration licence in the east Hungarian Pannonian Basin. Following the extended well test production in 2010, a Mining Plot (development and production licence) is under application and is expected to be granted in the first quarter of 2012. The Operator is continuing the evaluation of appraisal locations and a further well is planned for the second quarter of 2012, following award of the Mining Plot.

Turkeve Acreage: JKX has drilled seven wells in the Turkeve area of north east Hungary in 2011 (JKX: 50%). There has been one significant discovery but the presence of 25% CO2 has meant that a more complex treatment plant is required and an economical solution has taken time to source. The Operator intends to make a technical recommendation for the treatment facilities by the end of the year.

Bulgaria

Exploration: JKX holds a 40% interest in the B1 Golitza licence and is Operator. There are now no plans for further activity and the licences are due to expire in March 2012.

JKX has a 16% carried interest in the 1,787 sq km Provadia licence operated by Overgas. Two-thirds of a 380 km 2D seismic survey has been completed and initial data are now being processed.

Slovakia

Exploration: JKX holds a 25% equity interest in the Svidnik, Medzilaborce and Snina exploration licences in the Carpathian fold belt in north east Slovakia. The Cierne-1 exploration well location in the westernmost Svidnik licence has been selected and site preparation will commence when conditions permit in early 2012. The well will be drilled to more than 3,500m with a number of additional targets identified in this sub-thrust play.

Acquisition of a further 300km of regional 2D seismic data acquisition was completed in the second and third quarters and processing is now in progress

ENDS