Caspian Sunrise Regulatory News (CASP)

For immediate release 30 April 2013

Roxi Petroleum plc

("Roxi" or "the Company")

Final Results

Roxi Petroleum plc, the Central Asian oil and gas company with a focus on Kazakhstan, announces its audited final results for the year ended 31 December 2012.

Highlights for 2012 and to date in 2013:

Operational

·; First oil production revenues from all three major Contract Areas

·; Five successful producing wells at Galaz (NK-3, 5, 7, 9 & 12)

·; Two successful producing wells at the South Yelemes field of BNG (Well 54 & 805)

·; One successful producing well at Munaily (H1)

·; Current gross production from all Roxi Contract Areas at 1,530 bopd (620 bopd net to Roxi)

·; Extensive deep and shallow drilling campaigns commenced at BNG

Financial

2012

·; Vertom loan facility increased to US$7 million

·; Net asset value per share 10p

·; Loss after taxation of US$10.3 million

2013 to date

·; US$40 million equity commitment secured in January 2013 at 7.4p per share, US$12.5 million of which has been called and received

·; US$2.5 million equity for debt swap in March 2013 at 7.4p per share

Comments

Clive Carver, Chairman commented:

"The past six months have been transformational for the Company. We now have pilot production/production from each of our three main Contract Areas. Additionally the $40 million equity commitment secured in January 2013 has allowed us to increase the scope of the deep and shallow drilling programme already commenced at our most promising asset BNG."

Enquiries

Roxi Petroleum PLC c/o Buchanan

Clive Carver, Chairman +44 (0) 20 7466 5000

WH Ireland plc

James Joyce / James Bavister +44 (0) 20 7220 1666

Buchanan (Financial PR)

Tim Thompson / Tom Hufton +44 (0) 20 7466 5000

www.buchanan.uk.com

Chairman's Statement

Overview

The events in the second half of 2012 and in the first few months of 2013 have transformed the Company from an early stage explorer, regularly looking for partners to fund further development, to a company with early stage production from each of its three principal assets and with funding in place to cover an exciting and extensive drilling programme at our most promising asset, BNG.

Most of the drilling work in 2012 was at Galaz where we drilled 4 wells in the period. At BNG our focus was to complete the preparatory work to allow the current deep and shallow drilling programme to commence.

While we were disappointed that our BNG joint venture with KNOC did not complete, we firmly believe that the subsequent US$40 million equity funding commitment at a price of 7.4p per share is a better outcome for the Company. It will fund a more extensive drilling programme and will be less dilutive to Roxi shareholders.

In March 2013, we achieved one of our prime goals of pilot production from our three principal assets.

Our Assets

BNG

Background

The BNG Contract Area is located in the west of Kazakhstan 40 kilometres southeast of Tengiz on the edge of the Mangistau Oblast, covering an area of 1,561 square kilometres of which 1,376 square kilometres has 3D seismic coverage acquired in 2009 and 2010. Roxi resumed full control of BNG Ltd LLP in the second quarter of 2011 after the announcement of Canamens's withdrawal from the contract.

Our development approach

The BNG Contract Area is approximately the size of the area bounded by the UK's M25 motorway around London.

The Contract Area has both shallow and deep prospects, which Roxi is keen to develop. The optimum approach to develop the asset depends on the funding available. During our partnership with Canamens we worked to target shallower prospects that would be cheaper to develop and quicker to bring on stream. With KNOC we worked to develop deeper prospects that would have significantly greater reserves and production but that would be more expensive and slower to develop.

Following our US$40 million equity funding commitment in January 2013, we are funded for both shallow and deep drilling.

Geology

In January 2011, BNG engaged Gaffney Cline & Associates ("GCA") to undertake a technical audit of the BNG license area and subsequently Petroleum Geology Services ("PGS") to undertake depth migration work, based on the 3D seismic work carried out in 2009 and 2010.

The work of GCA resulted in confirming total unrisked resources of 900 million barrels from 37 prospects and leads mapped from the 3D seismic work undertaken in 2009 and 2010. The report of GCA also confirmed risked resources of 202 million barrels as well as Most-Likely Contingent Resources of 13 million barrels on South Yelemes.

The depth migration work that was carried out by PGS enabled BNG to gain a greater understanding of some of the deeper prospects yet to be explored. BNG plans to drill two pre-salt wells in 2013 into the deeper horizons, where we believe the greater potential exists.

The Company has identified several significant exploration plays on the block.

The prospects mapped in the Lower Permian along the margin of the South Emba High which are direct analogues of neighbouring Tolkyn field with approximately 70 million barrels initial reserves. Roxi has mapped one Tolkyn type prospect (PI-B), which is ready to drill, with two further prospects available.

The Company has also identified the Carboniferous play in the South Yelemes area which has a four way dip closure (P2N-A) below the salt at depths of below 4,500m and have been confirmed, by the Soviet time drilling campaign, to be hydrocarbon bearing.

Another interesting outcome from the 3D seismic was the detailed imaging of the karstified surface of the South Emba High. The seismic has revealed deeply buried sinkholes in the Carbonate platform which are directly analogous to the Bekbolat reservoir underlying Tasym field a few kilometres from the block boundary.

There are also Cretaceous and Jurassic plays above the salt in the northern area of the block. These reservoirs were confirmed by testing of Wells 54 and 805 in the South Yelemes field where pilot production commenced in February 2013.

Events of 2012

In March 2012 we announced that the Korea National Oil Corporation ("KNOC") had agreed to become our partner at BNG, and would upon completion of a farm-in, agree to acquire a 35 per cent interest in the BNG Contract Area for an initial consideration of US$5 million and a US$25 million contribution to the BNG work programme ahead of the next planned Contract Area license extension due in June 2013.

A condition of the agreement that could not be satisfied, principally for regulatory reasons, was to allow KNOC, in certain circumstances, to swap its interest in BNG for an interest in Galaz for an additional payment of US$5 million. Despite best efforts on both sides, it was not possible to reach a mutually acceptable alternative arrangement and in November 2012 we announced that the BNG/KNOC deal would not be progressing.

Nevertheless in the period between March and November 2012, funded by a US$4.2 million advance from KNOC, BNG staff worked together with the KNOC technical team to complete a great deal of preparatory work in assessing well locations and formulating drilling plans. The recent US$40 million equity commitment has allowed us to commence the deep and shallow drilling programme referred to in greater detail below.

Recent development activity

In previous periods we had developed a number of the shallow prospects to the point of testing in the South Yelemes portion of the BNG Contract Area. In March and April 2013, testing took place at Wells 54 and 805 at the gross rate of 219 bopd and 120 bopd respectively.

At present these wells are producing at the rate of 300 bopd gross (175 bopd net to Roxi). We have entered into a pre-sale agreement to sell this oil and will use the proceeds to further develop the South Yelemes portion of the BNG Contract Area.

Drilling programme

The 2013 drilling programme comprises four wells, two shallow wells and two deep pre-salt wells, the first at 4,700 metres and the second at 4,200 metres, with a further two shallow wells of 2,500 metres.

The first of the shallow wells, Well 143, was spudded on 1 April 2013 on the MJ-F structure located towards the North of South Yelemes field. The total depth of the well is planned to be 2,500 metres, with drilling expected to take approximately 45 days. This exploration well is targeted to encounter Jurassic Callovian sands at a depth of 2,170 metres with a secondary objective in the Cretaceous Valanginian limestone at a depth of 1,935 metres.

The first deep well to be drilled to a depth of 4,700 metres, and targeting the Carboniferous reservoir, is due to be spudded in May 2013 and is expected to take approximately 100 days to reach total depth and a further 15 days to log and test.

The second shallow wellwill be a development well in the South Yelemes field, also to be drilled to a depth of 2,500 metres targeting Cretaceous and Jurassic reservoirs, which is scheduled to be spudded soon after the drilling of Well 143.

The second deep pre-salt well to be drilled to a depth of 4,200 metres and is expected to be spudded in September 2013.

The budget for 2013 BNG exploration is some US$25million.

Operator status

At the time of the proposed BNG/KNOC joint venture our expectation was that Roxi would not be the Operator at BNG. Given our US$40 million equity investment commitment and to avoid excessive dilution for Roxi shareholders we have revised this approach and will remain the Operator at BNG.

This requires the recruitment of suitably skilled staff. I am pleased to report that we have already appointed a drilling manager experienced in Kazakhstan and most importantly with relevant pre-salt drilling experience. Further technical staff are expected to be recruited in the coming months.

Galaz

The Galaz block is located in the Kyzylorda Oblast in central Kazakhstan. The Contract Area was extended on 10 January 2011 to 179 square kilometres and now includes significant exploration upside on the east side of the Karatau fault system, as well as the NW Konys development.

Pilot production commenced on 19 January 2012 following approval of the NW Konys Pilot Production Plan from the Ministry of Oil and Gas, with emissions and flaring permits received from the relevant authorities.

The Operator is LGI, the Korean multi-national, which has invested US$34.4 million by way of loans into the project and paid a further US$15.6 million in return for 40 per cent of the asset. A total of 30 square kilometres 3D seismic has been acquired and processed.

Events of 2012

During 2012, 4 wells were drilled:

·; Well NK-7 was spudded on 25 April 2012 and successfully tested oil at a daily rate of 186 bopd at 6mm choke size.

·; NK-13, was spudded on 28 May 2012 and reached a total depth of 1,363m on June 2012. Wireline logging interpretation indicated that there were no intervals for testing, therefore, the well was plugged and abandoned.

·; Well NK-8 was spudded on 25 June 2012 and reached a total depth of 1,378m on 14 July 2012. The well tested and flowed 197 bopd at 6mm choke size and 251 bopd at 7mm choke size in August 2012.

·; NK-12 was drilled on 23 November 2012 and tested at a daily rate of 117 bopd at 8mm choke size in March 2013.

Galaz commissioned PM Lucas to undertake a reserve study and a full field development plan. They are now preparing the final report to reflect updated testing result of the 2012 drilling campaign, which is expected to be delivered during May 2013. Following assessment of the report provided by PM Lucas, Galaz will commence the full field development, which includes drilling of production wells and design, procurement and installation of field facilities.

At the date of this report aggregate gross pilot production from five wells is running at 1,150bopd (394bopd net to Roxi).

Munaily

The Munaily field is located in the Atyrau Oblast approximately 70 kilometres southeast of the town of Kulsary. The field was discovered in the 1940's and produced from 12 reservoirs in the Cretaceous through to the Triassic. Roxi acquired 58.41 per cent interest of the 0.67 square kilometres rehabilitation block in 2008 and funded two wells and one well re-entry.

Two further wells are planned in 2013 to develop the 1.2 million barrels of bypassed reserves currently estimated on the field.

In March 2013, Roxi issued 22,654,731 of new Roxi shares at 7.4p to satisfy a US$2.5 million repayment of sums advanced by a potential purchaser of the asset.

Beibars

Roxi acquired a 50 per cent interest in Beibars Munai LLP in 2007, which operates the 167 square kilometer Beibars Contract Area on the Caspian shoreline south of the city of Aktau. While acquiring 3D seismic in 2008, the license was put under Force Majeure when the acreage was allocated as a military exercise area (Polygon), by the Ministry of Defence. Since then no operations have been carried out, and Roxi operates a care and maintenance administrative budget on the project.

The Company expects to resolve the access issue with the army in due course and then seek farm-in partners to explore the Beibars Contract Area.

Reserves and Resources

We recognise that our operating successes at Galaz, BNG and Munaily have not yet been reflected in the reserves table set out below. We intend to review the situation following completion of the 2013 BNG drilling programme and the receipt of the PM Lucas report on Galaz and expect to release a revised reserves summary later in the year.

Licenses

The licenses for the Company's two principal assets, BNG and Galaz, fall due for renewal in the next few months. Applications have been made to extend both licenses on the basis of adequate compliance with previous work programme commitments. The Board has no reason to believe these will not be granted on the terms sought.

At both Galaz and BNG, the license extensions have been applied for on the basis that would mean pilot production oil sales during the extended period would continue to be based on domestic prices.

The license at Munaily is a full production license, with an expiry term of 15 years where production is permitted to be sold at export prices. However, the relatively low production volumes means that the advance oil sales at Munaily, to date, have been conducted nearer domestic prices with the proceeds used to fund the drilling of two additional wells required under the agreed work programme.

Finance

Funding

In contrast to previous periods the finances of the Company are robust.

During 2012, the Company was funded by drawing on the increased US$7 million Vertom facility, which at 31 December 2012 was almost fully drawn. As previously advised Vertom is connected to Kuat Oraziman, Roxi's CEO.

We were delighted to sign the agreement with Kairat Satylganov in January 2013, for the investment of US$40 million for new Roxi shares to be issued at US$0.119 (7.4p) per share. To date we have called down and received the first US$12.5 million under the agreement which is being used to assist with the repayment of funds previously advanced by KNOC, other historic creditors and in connection with the on-going drilling campaign at BNG.

Our intention is to use the bulk of the equity commitment to fund the drilling campaign at BNG during 2013.

There is no current intention to pay a dividend. Revenue from production is being used to fund further development.

Cost reduction programme

For the year under review General & Administrative costs fell from US$8 million in 2011 to US$7.3 million in 2012.

We announced the commencement of a cost reduction programme in May 2012 in last year's financial statements. The full impact of these measures did not come through until Q4 2012. The annual General & Administrative cost run rate at present is some US$5 million and on a like for like basis further cost savings are expected. However, our decision to remain Operator at BNG will result in some additional costs across the Group as we recruit suitably skilled senior staff to discharge these duties.

Simplifying the corporate structure

Work continues to simplify our complex corporate structure, which will also save costs over time.

Financial statements

The financial statements for the year ended 31 December 2012 cover a period when income from oil sales was minimal and the development and administrative costs remained in high in comparison. In consequence we report a significant loss for the year at US$10.4 million (2011: US$86,000).

The US$40 million equity investment commitment has allowed us to increase the extent and pace of our planned development work at BNG. Our objective is to increase the value of our assets and the Company as a whole by increasing production and increasing reserves. Accordingly it may be some time before the Company reports an accounting profit.

The consolidated statements of financial position for the years ended 31 December 2011 and 31 December 2010 as well as consolidated income statement and consolidated statements of cash flows for the year ended 31 December 2011 have been restated to fully consolidate Group's interest in its indirectly held subsidiary companies which were previously proportionately consolidated. This has had a consequential impact on disposal in the effective years and on the share of net assets attributable to the non-controlling interests.

Board changes and responsibilities

In February 2013, we were delighted to welcome Kairat Satylganov to the Board as Chief Financial Officer. He has extensive experience at senior levels of Kazakh enterprises having been Chairman of two of the largest Kazakh banks and Chairman of a large Kazakh investment fund. His experience will be invaluable in steering Roxi to future success.

The senior management team comprises Kuat Oraziman, CEO, who has overall responsibility for managing the company's affairs in Kazakhstan; Kairat Satylganov, CFO, with responsibility for the Company's finances in Kazakhstan; Hyunsik Jang, COO, with responsibility for technical and geological matters in Kazakhstan and Clive Carver, Executive Chairman and Company Secretary, who is responsible for the Company's activities in the UK, including the activities stemming from Roxi being a publicly listed company.

Edmund Limerick is the Company's senior non-executive director, and chairman of the audit and remuneration committees.

Staffing

The core staff located in Kazakhstan is now 91, all but one of whom are Kazakh nationals. This is set to rise approximately to 100 as we take on further operational staff at BNG.

As in previous years I would like to thank our employees for their sustained hard work and commitment during what have been difficult times.

Social Programmes

Under Kazakh regulations part of our obligations under various work programmes on the assets in which we have an interest are paid in the form of contributions to local social programmes. In 2012 Roxi, made significant contributions to:

·; The Mangistau regional social obligation fund US$1.2 million, (BNG).

·; The Kyzylorda region social fund US$0.6 million (Galaz).

These contributions, while mandatory, help secure the good standing of the Company with the local regional authorities and with centrally based regulators. Roxi is pleased to have assisted in the developments of these projects.

Environmental

No significant environmental issues have arisen at any of the properties acquired to date.

Kazakhstan

Kazakhstan continues to develop and is constantly amending its legal framework and tax legislation to achieve the right balance between the State and the need to encourage new investment from existing companies who conduct business in Kazakhstan. Operating in Kazakhstan in such times of evolution can from time to time present difficulties.

As a Kazakh based operation, with a majority of Kazakh investors we believe we are ideally placed to deal with any regulatory issues as they arise and see this as a competitive advantage compared to some of the difficulties encountered by other less integrated international companies.

Outlook

We are delighted to start 2013 with production/pilot production from all three of our four principal assets with an exciting and extensive drilling campaign underway at BNG.

We believe that the progress at Galaz and Munaily underpins the existing market valuation of the group but that any positive results from the BNG drilling campaign have yet to be reflected in the market's assessment of the Groups value.

We are now evaluating acquisition opportunities where your board believes Roxi's involvement will add to shareholder value.

Key Objectives

Set out below are the objectives we have set ourselves for 2013:

·; Renewal the BNG and Galaz licenses.

·; Completion of the 2013 BNG drilling programme.

·; Increased production from Galaz from existing and new wells.

·; Increased production from Munaily from existing and new wells.

·; Aggregate production across Group assets at the rate of 2,000bopd by the year end.

·; General and Administrative costs below US$6 million for the year ending 31 December 2013.

·; If appropriate, adding to our asset portfolio through acquisition.

Clive Carver,

Chairman

30 April 2013

All of the results of the Group during the year relate to continuing activities.

Consolidated Statement of Comprehensive Income

Consolidated Statement of Changes in Equity

Reserve Description and purpose

Share capital The nominal value of shares issued

Share premium Amount subscribed for share capital in excess of nominal value

Deferred shares The nominal value of deferred shares issued

Cumulative translation reserve Gains/losses arising on retranslating the net assets of overseas operations into US Dollars

Other reserves Fair value of warrants issued

Capital contribution reserve Capital contribution arising on discounted loans

Retained earnings Cumulative losses recognised in the consolidated income statement

Non-controlling interest The interest of non-controlling parties in the net assets of the subsidiaries

Parent Company Statement of Changes in Equity

Reserve Description and purpose

Share capital The nominal value of shares issued

Share premium Amount subscribed for share capital in excess of nominal value

Deferred shares The nominal value of deferred shares issued

Other reserves Fair value of warrants issued

Capital contribution reserve Capital contribution arising on discounted loans

Retained earnings Cumulative losses recognised in the income statement

Consolidated and Parent Company Statement of Financial Position

These financial statements were approved and authorised for issue by the board of Directors on 30 April 2013 and were signed on its behalf by:

Clive Carver

Chairman of the Board

There were no significant non-cash transactions during the year except as disclosed in note 14 (loans transferred), note 21 (borrowings converted to equity) and note 25 (change in estimates and increase in provisions)

Notes to the Financial Statements

General

Roxi Petroleum Plc ("the Company") is a public company incorporated and domiciled in England and Wales. The address of its registered office is Suite A, 6 Honduras Street, London, EC1Y 0TH. These consolidated financial statements were authorised for issue by the Board of Directors on 30 April 2013.

The principal activities of the Group are exploration and production of crude oil.

1 Principal accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.

1.1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRSs.

The financial statements have been prepared on a going concern basis based upon projected future cash flows and planned work programmes.

On 8 January 2013 the Company secured an additional US$40 million equity investment. The Directors consider this together with income from the Group's producing assets to be sufficient to cover the expenses of running the Group's business for the foreseeable future.

The Company has taken advantage of section 408 of the Companies Act 2006 and has not included its own income statement in these financial statements. The Group loss for the year included a loss on ordinary activities after tax of US$6,704,000 in respect of the Company.

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts in the financial statements. The areas involving a higher degree of judgement or complexity, or areas where assumptions or estimates are significant to the financial statements are disclosed in note 2.

1.2 Restatement

The consolidated statements of financial position for the years ended 31 December 2011 and 31 December 2010 as well as consolidated income statement and consolidated statements of cash flows for the year ended 31 December 2011 have been restated to fully consolidate the Group's interest in its indirectly held subsidiary companies which were previously proportionately consolidated. This has had a consequential impact on disposal in the effective years (notes 14 and 15) and on the share of net assets attributable to the non-controlling interests.

The consolidated statement of financial position for the years ended 31 December 2010 and 31 December 2011, and the consolidated income statement and the consolidated statement of cash flows for the year ended 31 December 2011 were restated to reflect the accounting noted above. For the reconciliation between the previously reported financial position for the years ended 31 December 2011 and 31 December 2010 and the restated financial position refer to note 32.

1.3 Accounting standards issued but not adopted

The IFRSs financial information has been drawn up on the basis of accounting policies consistent with those applied in the financial statements for the year to 31 December 2011. The following new standards and amendments to standards are mandatory for the first time for the Group for the financial year beginning 1 January 2012. Except as noted, the implementation of these standards did not have a material effect on the Group:

No other IFRS issued and adopted but not yet effective are expected to have an impact on the Group's financial statements.

1.3 Accounting standards issued but not adopted (continued)

The following standards, amendments and interpretations that are not yet effective and have not been early adopted:

* Not yet endorsed by the EU.

The Group is currently evaluating the impact of IFRS 11. Other pronouncements are not expected to have a material impact on the Group's earnings or shareholders' funds.

1.4 Basis of consolidation

Subsidiary undertakings are entities that are directly or indirectly controlled by the Group. Control exists where the Group has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The purchase method of accounting is used to account for the acquisition of subsidiary undertakings by the Group. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill.

Where the Group holds interests in jointly controlled entities, it accounts for its interests using proportionate consolidation. The share of each of the jointly controlled entity's assets, liabilities, income and expenses are combined on a line-by-line basis with those of the Group. The results of joint ventures are included from the effective dates of acquisition and up to the effective dates of disposal.

Profits and losses arising on transactions between the Group and jointly controlled entities are recognised only to the extent of unrelated investors' interests in the entity. The investor's share in the jointly controlled entity's profits and losses resulting from these transactions is eliminated against the asset or liability of the jointly controlled entity arising on the transaction.

The Group includes the assets it controls, its share of any income and the liabilities and expenses of jointly controlled operations and jointly controlled assets in accordance with the terms of the underlying contractual arrangement.

1.5 Operating Loss

Operating loss is stated after crediting all operating income and charging all operating expenses, but before crediting or charging the financial income or expenses.

1.6 Foreign currency translation

1.6.1 Functional and presentational currencies

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in US Dollars ("USD"), which is the Group's presentational currency. Beibars Munai LLP, Munaily Kazakhstan LLP, BNG Ltd LLP, Roxi Petroleum Kazakhstan LLP, Roxi Petroleum Services LLP and RS Munai LLP, subsidiary undertakings of the group and Galaz and Company LLP being jointly controlled entities, undertake their activities in Kazakhstan and the Kazakh Tenge is the functional currency of these entities. The functional currency for the Company, RS Munai BV, Beibars BV, Ravninnoe BV, Galaz Energy BV and BNG Energy BV is USD as the significant transactions and assets and liabilities of these companies are in USD.

1.6.2 Transactions and balances in foreign currencies

In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency ("foreign currencies") are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items, including the parent's share capital, that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in profit or loss in the period in which they arise.

1.6.3 Consolidation

For the purpose of consolidation all assets and liabilities of Group entities with a foreign functional currency are translated at the rate prevailing at the reporting date. The income statement is translated at the exchange rates approximating to those ruling when the transaction took place. Exchange difference arising on retranslating the opening net assets from the opening rate and results of operations from the average rate are recognised directly in equity (the "cumulative translation reserve").

1.7 Current tax

Current tax is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

1.8 Deferred tax

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax liabilities are generally recognised for all taxable temporary differences. A deferred tax asset is recorded only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised.

1.9 Unproven oil and gas assets

The Group applies the full cost method of accounting for exploration and unproven oil and gas asset costs, having regard to the requirements of IFRS 6 'Exploration for and Evaluation of Mineral Resources'. Under the full cost method of accounting, costs of exploring for and evaluating oil and gas properties are accumulated and capitalised by reference to appropriate cost pools. Such cost pools are based on license areas. The Group currently has four cost pools.

Exploration and evaluation costs are initially capitalised within 'Intangible assets'. Such exploration and evaluation costs may include costs of license acquisition, technical services and studies, seismic acquisition, exploration drilling and testing, but do not include costs incurred prior to having obtained the legal rights to explore an area, which are expensed directly to the income statement as they are incurred.

Assets acquired for use in exploration and evaluation activities are classified as property, plant and equipment. However, to the extent that such asset is consumed in developing an intangible exploration and evaluation asset, the amount reflecting that consumption is recorded as part of the cost of the intangible asset.

The amounts included within unproven oil and gas assets include the fair value that was paid for the acquisition of partnerships holding subsoil use in Kazakhstan. These licenses have been capitalised to the Group's full cost pool in respect of each license area.

Exploration and unproven intangible assets related to each exploration license/prospect are not amortised but are carried forward until the existence (or otherwise) of commercial reserves have been determined.

Commercial reserves are defined as proved oil and gas reserves.

Proven oil and gas properties

Once a project reaches the stage of commercial production and production permits are received, the carrying values of the relevant exploration and evaluation asset are assessed for impairment and transferred as proven oil and gas properties and included within property plant and equipment.

Proven oil and gas properties are accounted for in accordance with provisions of IAS 16 "Property Plant and Equipment" and are depleted on unit of production bases based on commercial reserves of the pool to which they relate.

Impairment

Exploration and unproven intangible assets are reviewed for impairments if events or changes in circumstances indicate that the carrying amount may not be recoverable as at the reporting date. Intangible exploration and evaluation assets that relate to exploration and evaluation activities that are not yet determined to have resulted in the discovery of the commercial reserve remain capitalised as intangible exploration and evaluation assets subject to meeting a pool-wide impairment test as set out below.

Such indicators include the point at which a determination is made as to whether or not commercial reserves exist. Where the exploration and evaluation assets concerned fall within the scope of an established full cost pool, the exploration and evaluation assets are tested for impairment together with all development and production assets associated with that cost pool, as a single cash generating unit. The aggregate carrying value is compared against the expected recoverable amount of the pool, generally by reference to the present value of the future net cash flows expected to be derived from production of the commercial reserves. Where the exploration and evaluation assets to be tested fall outside the scope of any established cost pool, there will generally be no commercial reserves and the exploration and evaluation assets concerned will generally be written off in full. Any impairment loss is recognised in the income statement as impairment and separately disclosed.

Workovers/Overhauls and maintenance

From time to time a workover or overhaul or maintenance of existing proven oil and gas properties is required, which normally fall into one of two distinct categories. The type of workover dictates the accounting policy and recognition of the related costs:

Capitalisable costs - cost will be capitalised where the performance of an asset is improved, where an asset being overhauled is being changed from its initial use, the assets' useful life is being extended, or the asset is being modified to assist the production of new reserves.Non-capitalisable costs - expense type workover costs are costs incurred as maintenance type expenditure, which would be considered day-to-day servicing of the asset. These types of expenditures are recognised within cost of sales in the statement of comprehensive income as incurred. Expense workovers generally include work that is maintenance in nature and generally will not increase production capability through accessing new reserves, production from a new zone or significantly extend the life or change the nature of the well from its original production profile.

1.10 Abandonment

Provision is made for the present value of the future cost of the decommissioning of oil wells and related facilities. This provision is recognised when the asset is installed. The estimated costs, based on engineering cost levels prevailing at the reporting date, are computed on the basis of the latest assumptions as to the scope and method of decommissioning. The corresponding amount is capitalised as a part of property, plant and equipment and is amortised on a unit-of-production basis as part of the depreciation, depletion and amortisation charge. Any adjustment arising from the reassessment of estimated cost of decommissioning is capitalised, while the charge arising from the unwinding of the discount applied to the decommissioning provision is treated as a component of the interest charge.

1.11 Restricted use cash

Restricted use cash is the amount set aside by the Group for the purpose of creating an abandonment fund to cover the future cost of the decommissioning of oil and gas wells and related facilities and in accordance with local legal rulings.

Under the Subsoil Use Contracts the Group must place 1% of the value of exploration costs in an escrow deposit account. At the end of the contract this cash will be used to return the field to the condition that it was in before exploration started.

1.12 Property, plant and equipment

All property, plant and equipment assets are stated at cost or fair value on acquisition less depreciation. Depreciation is provided on a straight-line basis, at rates calculated to write off the cost less the estimated residual value of each asset over its expected useful economic life. The residual value is the estimated amount that would currently be obtained from disposal of the asset if the asset were already of the age and in the condition expected at the end of its useful life. Expected useful economic life and residual values are reviewed annually.

The annual rates of depreciation for class of property, plant and equipment are as follows:

- motor vehicles over 7 years

- buildings over 10 years

- other over 2-4 years

The Group assesses at each reporting date whether there is any indication that any of its property, plant and equipment has been impaired. If such an indication exists, the asset's recoverable amount is estimated and compared to its carrying value.

1.13 Investments (Company)

Non-current asset investments in subsidiary undertakings are shown at cost less allowance for impairment.

1.14 Financial instruments

The Group classifies financial instruments, or their component parts on initial recognition, as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual agreement.

The Group's financial assets consist of cash, available for sale financial assets and other receivables. Cash and cash equivalents are defined as short term cash deposits which comprise cash on deposit with an original maturity of less than 3 months. Other receivables are initially measured at fair value and subsequently at amortised cost.

The Group's financial liabilities are non-interest bearing trade and other payables, other interest bearing borrowings and warrants. Non-interest bearing trade and other payables and other interest bearing borrowings are stated initially at fair value and subsequently at amortised cost. Warrants are recognised and measured at fair values through profit or loss.

There are long-term loans between Group entities and from related parties which bear interest at a rate lower than that which the Directors consider the Group would bear if the facility had been granted by a third party. Such borrowings are recognised initially at fair value, net of transaction costs incurred, and are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Fair value is calculated by discounting the non-current borrowings and receivables using a market rate of interest.

1.14 Financial instruments (continued)

Share capital issued to extinguish financial liabilities is fair valued with any difference to the carrying value of the financial liability taken to the income statement.

1.15 Inventories

Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition.

1.16 Other provisions

A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

1.17 Share capital

Ordinary and deferred shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds.

1.18 Share-based payments

The Group has used shares and share options as consideration for services received from employees.

Equity-settled share-based payments to employees and others providing similar services are measured at fair value at the date of grant. The fair value determined at the grant date of such an equity-settled share-based instrument is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest.

Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods or services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. The fair value determined at the grant date of such an equity-settled share-based instrument is expensed since the shares vest immediately. Where the services are related to the issue of shares, the fair values of these services are offset against share premium.

Fair value is measured using the Black-Scholes model. The expected life used in the model has been adjusted based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

1.19 Warrants

The warrants are separated from the host contract as their risks and characteristics are not closely related to those of the host contracts. Due to the exercise price of the warrants being in a different currency to the functional currency of the Company, at each reporting date the warrants are valued at fair value with changes in fair values recognised through profit or loss as they arise. The fair values of the warrants are calculated using the Black-Scholes model.

1.20 Revenue

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for oil and gas products provided in the normal course of business, net of discounts, VAT and other sales related taxes to third party customers. Revenues are recognised when the risks and rewards of ownership together with effective control are transferred to the customer and the amount of the revenue and associated costs incurred in respect of the relevant transaction can be reliably measured. Revenue is not recognised unless it is probable that the economic benefits associated with the sales transaction will flow to the Group.

1.21 Cost of sales

During test production cost of sales cannot be reliably estimated and therefore a cost of sales equal to revenue is recognised and credited to the unproven oil and gas assets.

1.22 Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments and making strategic decisions, has been identified as the Board of Directors. The Group has one operating segment being oil exploration and production in Kazakhstan.

1.23 Interest receivable and payable

Interest income and expense are recognised using the effective interest rate method.

1.24 Accounts not presented in sterling

For reference the year end exchange rate from sterling to US$ was 1.62 and the average rate during the year was 1.58.

2 Critical accounting estimates and judgements

In the process of applying the Group's accounting policies, which are described in note 1, management has made the following judgements and key assumptions that have the most significant effect on the amounts recognised in the financial statements.

2.1 Recoverability of exploration and evaluation costs

Under the full cost method of accounting for exploration and evaluation costs, such costs are capitalised as intangible assets by reference to appropriate cost pools, and are assessed for impairment on a concession basis when circumstances suggest that the carrying amount may exceed its recoverable value and, therefore, there is a potential risk of an impairment adjustment. This assessment involved judgment as to: (i) the likely future commerciality of the asset and when such commerciality should be determined; (ii) future revenues and costs pertaining to any concession based on proved plus probable, prospective and contingent resources; and (iii) the discount rate to be applied to such revenues and costs for the purpose of deriving a recoverable value.

2.2 Income taxes

The Group has significant carried forward tax losses in several jurisdictions. Significant judgement is required in determining deferred tax assets based on an assessment of the probability that taxable profits will be available against which carried forward losses can be utilised.

Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income statement in the period in which such a determination is made.

2.3 Decommissioning

Provision has been made in the accounts for future decommissioning costs to plug and abandon wells. The costs of provisions have been added to the value of the unproven oil and gas asset and will be depreciated on the unit of production basis. The decommissioning liability is stated in the accounts at discounted present value and accreted up to the final liability by way of an annual finance charge.

The Group has potential decommissioning obligations in respect of its interests in Kazakhstan. The extent to which a provision is required in respect of these potential obligations depends, inter alia, on the legal requirements at the time of decommissioning, the cost and timing of any necessary decommissioning works, and the discount rate to be applied to such costs.

2.4 Share-based compensation

In order to calculate the charge for share-based compensation as required by IFRS 2, the Group makes estimates principally relating to the assumptions used in its option-pricing model as set out in note 28.

2.5 Profit oil royalty liability

The profit oil royalty liability is initially recognised at the fair value based on the independent valuation and is accounted as a derivative financial liability at fair value through profit or loss on the basis that future amount of royalty payable will change depending on the oil field production levels and the future oil prices. The Group revalues its royalty position annually with changes in fair values recognised in the income statement.

3 Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing the performance of the operating segments and making strategic decisions, has been identified as the Board of Directors.

The Group operates in one operating segment (exploration for and production of oil in Kazakhstan). All revenues from test production are generated domestically in Kazakhstan.

4 Operating loss

5 Group Auditor's remuneration

Fees payable by the Group to the Company's auditor and its associates in respect of the year:

6 Employees and Directors

The Directors are the key management personnel of the Company and Group. Details of Directors' emoluments and interests in shares are shown in the Remuneration Committee Report. The highest paid director had emoluments totalling US$510,276 (2011: US$671,397). For further details on Directors emoluments see note 31.3.

7 Finance cost

8 Finance income

Other finance income relates to loan provided to Baverstock (note 19).

9 Taxation

10 (Loss)/earnings per share

Basic (loss)/earnings per share is calculated by dividing the (loss)/earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year including shares to be issued.

In order to calculate diluted (loss)/earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. Dilutive potential ordinary shares include share options granted to employees and Directors where the exercise price is less than the average market price of the Company's ordinary shares during the year. During the year the potential ordinary shares were anti-dilutive and therefore diluted earnings per share has not been calculated. At the reporting date there were 71,821,429 (2011: 72,821,429) potential ordinary shares consisting of share options and warrants (notes 28 and 29).

The calculation of earnings per share is based on:

11 Unproven oil and gas assets

Unproven oil and gas assets represent license acquisition cost and subsequent exploration expenditure in respect of four licenses held by Kazakh group entities. The carrying values of those assets at 31 December 2012 were as follows: Beibars Munai LLP US$ nil (2011: US$ nil), BNG Ltd LLP US$93,970,000 (2011: US$93,360,000), Galaz and Company LLP 58% share US$52,442,000 (2011 58% share: US$49,158,000) and Munaily Kazakhstan LLP US$ nil as was reclassified to property, plant and equipment (2011: US$2,157,000).

The Directors have carried out an impairment review of these assets on a field by field basis. In carrying out this review the Directors have taken into account the potential net present values of expected future cash flows and values implied by farm-in agreements/sale and purchase agreements ("SPA") entered into in the previous years. The Directors consider the values implied by the third party transactions related to BNG Ltd LLP and Galaz and Company LLP disposals to be the best indicator of value currently available. Accordingly where the value implied by these SPAs is below the net book value, a provision has been made to reduce the carrying value of that asset to the value implied by the relevant SPA.

As a result of military training activities the Group currently cannot access the Beibars license area which resulted in a force-majeure situation. Due to this ongoing force-majeure situation and the uncertainties surrounding the Beibars asset the Directors made a full provision against this asset in the prior year.

During 2012 the Directors did not create additional impairment to its unproven oil and gas assets. As a result of the impairment review, during 2011 the Directors have made provisions of US$75,041,000 in respect of the BNG asset, with an offsetting release of deferred tax of US$14,816,000 resulting to the net effect on impairment expense of US$60,225,000.

12 Property, plant and equipment

Following the commencement of commercial production in December 2012 the Group reclassified its Munaily assets from unproved oil and gas assets to proved oil and gas assets.

13 Investments (Company)

13 Investment (Company) (continued)

Indirect investments held by Eragon Petroleum Limited

*Galaz Energy BV is a jointly controlled entity and it has been proportionately consolidated within the Group (notes 15 and 17).

Indirect investments held by RS Munai BV and Beibars BV

RS Munai LLP and Bebibars Munai LLP are subsidiary undertakings as the Group is considered to have control over the financial and operating policies of these entities. Their results have been consolidated within the Group.

Indirect investment held by Ravninnoe BV

Ravninnoe Oil LLP was disposed on 27 December 2011 (note 16). The Group consolidated the results of Ravninnoe Oil LLP up to the date of disposal.

14 BNG reacquisition (restated)

During 2009 the Company entered into a sale and purchase agreement to dispose of 35% of its interest in BNG Ltd LLP to Canamens BNG BV ("Canamens"). The deal subsequently was terminated and on 10 May 2011, the Group received back its 35% interest in BNG Ltd LLP from Canamens which increased its net effective share in BNG Ltd LLP from 23.41% to 58.41%. In addition, Canamens assigned back to BNG Energy BV its share of loans receivable from the operating entity of US$23.6 million, representing Canamens share of funding provided to BNG Ltd LLP in 2009 and 2010. In return for the reassignment of the loan Roxi Petroleum Plc agreed to pay Canamens a royalty equivalent to 1.5% of the future gross revenues generated from the BNG operating asset. In January 2012 Canamens share of funding transferred to BNG Energy BV was assigned by BNG Energy BV to Roxi Petroleum Plc.

Following the reacquisition, Roxi Petroleum Plc regained control of BNG Ltd LLP and subsequently BNG Ltd LLP has been fully consolidated within the Group. Prior to the reacquisition the Group shared joint control over BNG Ltd LLP with Canamans and therefore the results of BNG Ltd LLP were proportionately consolidated.

The fair values of the assets and liabilities as at the date the interest was transferred back to the Group and the gain arising on reacquisition was as follows: