Interim Management Statement

6 Cavendish Square, London W1G 0PD, England, UK,

Tel: +44 (0)20 7323 4464, Fax: +44 (0)20 7323 5258

Web site: http://www.jkx.co.uk

16 October 2012

JKX Oil & Gas Plc

INTERIM MANAGEMENT STATEMENT

INCLUDING DATA FOR THE THIRD QUARTER ENDING 30 SEPTEMBER 2012

Highlights

·; Good progress in increasing Russian gas production with current rates in excess of 50% of plant capacity (40 MMcfd)

·; Award of Rudenkovskoye multi-stage frac contract with preparatory work ongoing for project execution in spring 2013

·; 3D seismic acquisition underway in Zaplavskoye exploration licence in Ukraine following well Z-04 exploration success

·; Commencement of stand-alone development of Elizavetovskoye licence in Ukraine with production planned for the second half of 2013.

JKX Chief Executive, Dr Paul Davies, said:

"We are encouraged by the progress made on the three producing wells at our Russian gas plant and we remain on course to reach plant capacity of 40 MMcfd in the first half of 2013. Preparations for the Rudenkovskoye multi-frac project in Ukraine next spring are on-schedule with results of the initial injectivity test expected next month.

"We are achieving strong oil, gas and LPG realisations in Ukraine and are beginning to see an improving revenue stream from our Russian development. We anticipate average daily production in the fourth quarter to reach 10,000 boepd."

For further information, please contact:

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

Production

Ukraine: Average production in the third quarter was 6,840 boepd comprising 29.2 MMcfd of gas and 1975 bpd of oil and condensate, with LPG sales averaging 56 tons per day.

Russia: Average production in the third quarter was 737 boepd comprising 4.4 MMcfd of gas.

Hungary: Net production from the Hajdunanas Field in the third quarter was 164boepd comprising 0.7 MMcfd of gas and 49 bpd of oil and condensate (JKX share: 50%).

Outlook: We anticipate average production in the fourth quarter to be approximately 10,000 boepd.

Ukraine

Development and Workover Activity: Preparation of the R-103 well for the forthcoming multi-stage frac in spring 2013 was completed in the period utilising the Skytop rig. This comprised the replacement of the 1,200m long slotted liner with a cemented liner, and the subsequent installation of the redesigned production tubing. An initial injectivity test on the formation is planned for the fourth quarter to test the jet perforating system and confirm/refine frac design parameters.

Workover and completion activity continue using the Company's TW-100 rig. Highlights of the third quarter programme include:

·; recompletion of Wedge Zone well M-170 to include additional perforations in the less productive zones of the lower Devonian reservoir. Initial flow was 3.9 MMcfd of gas with 304 bcpd. Current production is 1.5 MMcfd of gas with 100 bcpd.

·; recompletion of exploration well Z-04 to the deeper V-26 reservoir was reported at the end of the last quarter. The well continues to produce at 1.5 MMcfd with a much reduced condensate flow, suggesting some hold up.

·; recompletion of IG-126 as a pilot water injection well in the Ignatovskoye Visean carbonate reservoir. The well is now taking all produced water from the field with the effect expected to be seen in communicating wells by year end. Other water injection schemes are under consideration.

Production Facilities: The processing plant, including the LPG system, is subject to continuous modification to optimise production. The most recent modifications to the K-220 compressor have enabled it to increase production from the lower pressure gas wells. Plans have also been approved to modify the LPG plant to increase the propane yield.

Geology & Geophysics:The original 3D seismic database over the main part of the NovoNikolaevskoye complex has been reprocessed using the latest techniques to aid definition of fault patterns and refine horizon identification. This will be used initially to re-map the Wedge Zone M-170 area and the lower Devonian potential identified there. The other key study area will be the Molchanovskoye North oil and gas reservoirs where defining the individual fault blocks will be the key to effective pressure maintenance.

Acquisition of 40 km2 of 3D seismic began in September in the recently acquired extension of the Zaplavskoye exploration licence, and interpretation of these data will be used to map the extent of the Z-04 Visean discovery and integrate that information with the historical wells database.

Integration of these seismic interpretations into the updated field models will define targets for 2013 with drilling expected to recommence in the first quarter of the coming year.

Elizavetovskoye Licence: JKX is the sole licence holder and receives 33.3% of the production under a Joint Production Agreement from the wells which were drilled by the previous licence holder. Production from well M-53 continues at around 2.7 MMcfd and work progresses to add well M-52 production to the separation and metering facilities at the East Machevka gathering point which will also be upgraded.

Details of the stand-alone development and drilling programme are being finalised with permitting of the export line and approval of the development plan expected by year-end. Production is scheduled to commence during the second half of 2013 from the new development well E-301.

Russia

Development and Workover Activity: Progress is being made in bringing the existing production wells up to the expected production rates:

·; the well 27 sidetrack was completed in July and the well was put into production in August as planned, prior to stimulation. Acetic acid stimulation has now been completed using coiled tubing, and the well is currently cleaning up. To date it has doubled its production rate to more than 9 MMcfd. A decision on whether to further enhance production by running hydrochloric acid stimulation will be taken once the well is fully cleaned up.

·; the blockage in well 20 was cleared using coiled tubing and acetic acid. The well was then stimulated successfully using a larger acetic acid squeeze and production is now steady at around 15 MMcfd. However, pressure measurements suggest that there is scope for further enhancement and preparations are being made for hydrochloric acid stimulation of this well.

·; the Geostream rig has now moved onto well 25 and is preparing to drill a sidetrack and recomplete the well.

·; coiled tubing was also run in well 05 and, although good progress was made inside the tubing, it became evident that the annulus was blocked with sediment and/or corrosion products and there was a leak in the tubing. The well will now require a rig intervention to recover the tubing and drill a sidetrack to the Oxfordian reservoir.

·; the Callovian appraisal well 09 will be re-entered in the first half of next year.

Facilities: The gas processing plant has operated steadily despite initial production levels being as low as 10% of design capacity. Minor problems have been encountered, but these have generally been overcome as they arose.

Production is currently exceeding 20 MMcfd (50% of plant capacity) and further improvements are expected during the last quarter. The Company remains on target to achieve full plant capacity during the first half of 2013.

Exploration: The 170.7 sq km Georgievskoye exploration licence was awarded in May and the exploration programme is being finalised for approval by the State authorities. Purchase and processing of existing seismic data on the block should commence in early 2013.

Hungary

Development Activity: The Hadjunanas field (JKX: 50%) produces from two wells. Well Hn-1, having been recompleted as a Miocene oil producer with new separation facilities, began production in June and averaged 80 bopd with 80 bwpd through the third quarter. It continues to produce with a high water cut but a recent rise in reservoir pressure suggests that there is a significant hydrocarbon system supporting the oil production. Well Hn-2 was in production until August averaging 1.5 MMcfd with 35 bcpd and over 100 bwpd when water breakthrough killed the well. A recompletion to another gas horizon is being planned.

Exploration: Hernad licences: JKX holds a 50% equity interest in the two Hernad licences in the northern Pannonian Basin. There was no drilling activity during the period but a number of small prospects are being evaluated for drilling in 2013.

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. The operator is continuing the evaluation of appraisal locations and a further well is under consideration for 2013, following award of the Mining Plot.

Turkeve area: Exploration well Ny-7 (JKX: 50%) made asignificant gas discovery in the Turkeve area in 2011. However, the proportion of CO2 (25%) requires a more complex treatment plant. The operator is evaluating treatment and development options but nothing has been settled and production is unlikely before the second half of 2013.

Bulgaria

Exploration: JKX has an 18% carried interest in the 1,787 sq km Provadia licence operated by Overgas. The 2011 380 km 2D seismic survey has been evaluated and a further 119 km of follow-up 2D data were acquired during the third quarter. Processing is underway and interpretation should start later in the fourth quarter.

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 identified and an extensive aero-gravity survey was acquired during the third quarter. This is now being processed and the results will be incorporated into the well recommendation for a spud date of 2013 or 2014.

ENDS