Interim Management Statement

JKX Oil & Gas plc

INTERIM MANAGEMENT STATEMENT

 FOR THE FIRST QUARTER ENDING 31 MARCH 2013

WITH DATA FOR APRIL 2013

Highlights

·; Russian production exceeds nominal gas plant capacity of 40 MMcfd following successful hydrochloric acid treatment of Koshekhablskoye production wells

·; Ongoing de-bottlenecking of Russian gas plant targeted to increase throughput from 50MMcfd to 60 MMcfd by year-end

·; Preparations for 9-stage multi-frac at Rudenkovskoye field in Ukraine progressing on schedule for June execution

·; Initiation of 5-well Elizavetovskoye field development in Ukraine with first gas scheduled for fourth quarter

·; LPG plant upgrade in Ukraine increases LPG yield by 25%.

JKX Chief Executive, Dr Paul Davies, said: "The first four months of the year have seen a step change in our production profile with Russian gas delivery now exceeding our nominal plant capacity. Good progress has also been made on all our Ukrainian projects, notably on the new Elizavetovskoye project and on final preparations for the large multi-frac project on the Rudenkovskoye field in June.

"Oil, gas and LPG prices in Ukraine remain strong. We have experienced a three per cent reduction in regulated gas prices in Russia in April, but we anticipate gas realisations to move higher after the mid-year. Improving levels of production are anticipated to continue through the next reporting period."

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Production

Ukraine: Average production in the first quarter was 4,783 boepd comprising 20.3 MMcfd of gas and 1,402 bpd of oil and condensate, with LPG sales averaging 36.7 tonnes per day. Average production in April was 4,352 boepd comprising 18.9 MMcfd of gas and 1,200 bpd of oil and condensate, with LPG sales averaging 40.2 tonnes per day.

Russia: Average production in the first quarter was 2,129 boepd comprising 12.7 MMcfd of gas and 16 bpd of condensate. Average production in April was 7,331 boepd comprising 43.6 MMcfd of gas and 63 bpd of oil and condensate.

Hungary: Gross production from the Hajdunanas Field in the first quarter was 150 boepd comprising 0.86 MMcfd of gas and 6.6 bpd of condensate (JKX share: 50%). Gross production from the Hajdunanas Field in April was 24 boepd comprising 0.06 MMcfd of gas and 1.0 bpd of condensate (JKX share: 50%). The Hajdunanas-2 well had limited production during the period.

Outlook: We anticipate average production in the second quarter to be in excess of 11,000 boepd.

Ukraine

Development and Workover Activity:

First quarter drilling and workover activity was limited with the Skytop N-75 rig farmed out until mid-March and the TW-100 workover rig farmed out from mid-February. The Skytop is now drilling the sidetrack of the M-166 horizontal well, a further horizontal side-track shallower in the Devonian sandstone to maximise recovery of the remaining oil in the reservoir.

The rig will then move to drill IG-132, a Tournaisian carbonate/sandstone extension to the existing play on the north-western end of the Molchanovskoye North Field. The next target will be a Visean/Tournaisian carbonate well IG-107 on the north-eastern flank of the Ignatovskoye field; the location is down-dip from the main field and will appraise a 1971 discovery made in well 23-N. These targets have been developed following reprocessing and re-interpretation of the 188.5 sq km full-field 3D seismic data set. The rig is now anticipated to relocate to the Elizavetovskoye field early in the third quarter to drill the first of five new wells, ahead of completion of the new gas processing facility.

Workovers using the TW-100 rig in the early part of the period included replacing worn tubing in well IG-105 and recompleting well M-164 to the Tournaisian carbonate. Reservoir pressures encountered in M-164 indicated that the interval was in good communication with other carbonate wells in Molchanovskoye North and consequently was depleted. The well is now scheduled for abandonment. The workover rig is expected to return to PPC at the end of May to re-commence its 2013 workover programme.

Other well work has included recompletion of Wedge Zone discovery well M-170 to make additional perforations in the productive zones of the lower Devonian reservoir. Initial flow was 3.9 MMcfd of gas with 304 bcpd. In addition, the installation of gas-lift facilities on well M-169 has restored production to around 1.6 MMcfd with 97 bopd.

Rudenkovskoye R-103 Frac: Preparations continue for the multi-stage frac on the R-103 horizontal well. This is expected to commence in late June. The 4.5 hectare site is ready; the proppant and other materials are due to reach Ukraine before the end of May and the frac fleet is being assembled. Results from the frac should be available in the third quarter.

Facilities: Installation of the LPG plant upgrade was completed successfully just after the end of the period. The upgrade was intended to increase LPG recovery by around 15% mostly through improving the propane recovery mechanism. Early results indicate a 25% increase in LPG recovery overall (of which the propane content is now around 51%), thereby increasing the LPG yield from 1.94 tonnes/MMcf to 2.43 tonnes/MMcf.

Operations at the main production facility and the LPG plant continued smoothly through the period. Work continues on plant optimisation, re-routing flowlines to reduce back pressure, and wax clearance to enhance production from the available well stock.

Exploration: Work is nearing completion on interpretation of the new Zaplavskoye 3D data and a number of targets are under consideration for drilling later in 2013.

Elizavetovskoye Licence: The data acquired from well EM-53 and the subsequent reserves upgrade have justified a stand-alone development. Approval has been received from the authorities to install a pilot production plant and drill the initial wells within the existing exploration licence conditions.

A hot tap to the nearby gas trunkline was completed in late 2011 and preparatory work for installation of the 11 km export line from the plant is advancing.

Drilling of the first new well E-301 and installation of the new Elizavetovskoye gas processing facility is scheduled to commence in mid-2013 with production start-up planned for the fourth quarter. JKX will retain 100% of the revenue from all new wells on the field.

Russia

Development and Workover Activity:

The first quarter of 2013 has seen significant changes in well performance as the hydrochloric acid treatment programme has progressed. The treatment utilised a coiled tubing unit to slowly introduce up to 20 cubic metres of acid to the carbonate reservoir section in each well. Care has been taken to keep the pressure well below the fracture limits to ensure that the acid reacts with the whole reservoir interface. The programme will be repeated for those wells where well performance analysis has indicated that further treatment should be beneficial.

Crestal well-20 has peaked at 21 MMcfd with a flowing wellhead pressure (FWHP) of around 3,800 psi and crestal well-27 has peaked at 17.5 MMcfd with a FWHP of around 2,000 psi. The north flank well-25 has been maintaining a steady 13.5 MMcfd with a FWHP of 1,550 psi, and the deep east flank well-15, originally thought to have been tight, has tested at a preliminary 3.2 MMcfd with a FWHP of 1,300psi.

The repeat acidisation programme is in progress on wells 15, 20 & 25.

Work on crestal well-05 has also restarted; the Geostream rig is back on the well and will continue to fish out the remaining tubing until it reaches the sidetrack point. It will then drill and complete a fresh hole through the reservoir, as in our other recompletions.

Facilities: The Gas Processing Facility reached its design throughput of 40 MMcfd at the end of the first quarter and since then has peaked at just over 50 MMcfd with very little plant modification required. The plant performance is under review to ensure that all the components are handling this throughput comfortably before the next stage of throughput expansion is undertaken.

Exploration: YGE was awarded the 170.7 sq km Georgievskoye exploration licence in 2012. The largest part of the licence lies adjacent to, and immediately south, of the Koshekhablskoye production licence but a significant part of it also runs to the northwest of the Koshekhablskoye field as well as covering the western and eastern flanks of the field. Recovery, reprocessing and interpretation of all the existing 2D seismic is now in progress in preparation for further seismic acquisition in 2014.

Under the Koshekhablskoye licence commitment, YGE is obliged to evaluate the deeper Callovian reservoir potential using an approved technical institute. Data input and evaluation is in progress.

Hungary

Development Activity

Hadjunanas and Gorbehaza fields (JKX 50%). Production last year was affected by water influx and the operator temporarily shut-in both fields. Well Hn-2 was restarted in February 2013 has been producing at around 0.5 MMcfd with 4 bopd and about 800 bwpd.

Sarkad I Mining Plot (JKX 25%) JKX retains its 25% interest in the 15.6 sq. km farm-in area around the Nyekpuszta-2 gas condensate discovery well.

Turkeve IV Mining Plot (JKX 50%)The Turkeve IV Mining Plot of 10 sq. km has been approved for the productive area around the Ny-7 well.

Exploration: Hernad licences (JKX 50%): A shallow prospect, Tisvaszvari-15, has been identified for possible drilling in 2013.

Slovakia

Exploration: Svidnik, Medzilaborce and Snina explorationlicences (JKX 25%) The operator has decided to defer drilling the Cierne-1 exploration well until late 2013 or early 2014.

Bulgaria

Exploration: Provadia licence (JKX 18%):JKX has initiated its withdrawal from the licence which is expected to complete during the second quarter of 2013

ENDS