UK Oil & Gas Investments PLC Annual Report and …

1 Company Registration No: 05299925 Company Registration No: 05299925 1 UK Oil & Gas Investments PLC Annual Report and Accounts For the year ended 30 September 2017 CONTENTS Strategic Report For The year ended 30 September 2017 .. 1 Report Of The Directors .. 20 Report Of The Independent Auditor To The Members Of Uk Oil & Gas Investments Plc .. 24 Financial Statements .. 28 Consolidated Statement Of Comprehensive Income For year ended 30 September 2017 .. 28 Consolidated Statement Of Financial Position As At 30 September 2017 .. 29 Company Statement Of Financial Position As At 30 September 2017.

2 30 Consoldated Statement Of Changes In Equity For The year ended 30 September 2017 .. 31 Company Statement Of Changes In Equity For The year ended 30 September 2017 .. 32 Consolidated Statement Of Cash Flow For The year ended 30 September 2017 .. 33 Company Statement Of Cash Flow For The year ended 30 September 2017 .. 34 Notes To The Financial Statements .. 35 Company 62 Forward-looking Statement This Annual Report contains forward-looking information , which may include, but is not limited to, statements with respect to the future financial and operating performance of UK Oil & Gas Investments PLC, its subsidiaries, investment assets and affiliated companies, the estimation of oil reserves or resources, the realisation of resource estimates, costs of production, capital and exploration expenditures, costs and timing of the development of new assets.

3 Requirements for additional capital, governmental regulation of operations and exploration operations, timing and receipt of approvals, licenses, environmental risks, title disputes or claims. Often, but not always, forward-looking statements can be identified by the use of words such as plans , expects , is expected , budget , scheduled , estimates , forecasts , intends , anticipates or believes , or variations (including negative variations) of such words and phrases, or state that certain actions, events or results may , could , would , might or will be taken, occur or be achieved.

4 Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of UK Oil & Gas Investments PLC and/or its subsidiaries, investment assets and/or its affiliated companies to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; conclusions of economic evaluations and studies; fluctuations in the value of UK Pounds Sterling relative to the United States Dollar, and other foreign currencies; changes in project parameters as plans continue to be refined; future prices of products; possible variations recovery rates; failure of plant, equipment or processes to operate as anticipated.

5 Accidents, labour disputes and other risks of the oil and gas industry; political instability, adverse weather conditions, insurrection or war; delays in obtaining governmental approvals or financing or in the completion of development or construction activities. Although UK Oil & Gas Investments PLC has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may well be other factors that cause actions, events or results to differ from those currently anticipated, estimated or intended.

6 Forward-looking statements contained herein are made as of the date of this Annual Report and UK Oil & Gas Investments PLC disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein.

7 Nothing in this Annual Report should be construed as a profit forecast. Company Registration No: 05299925 1 STRATEGIC Report FOR THE year ended 30 SEPTEMBER 2017 HIGHLIGHTS Broadford Bridge-1 step-out exploration well was spudded in May 2017 within UK Oil and Gas Investments PLC's ( UKOG s ) 100% owned, 300 km2 PEDL234 Weald Basin licence. A successful sidetrack BB-1z was drilled within 6 days. Oil flowed continuously on pump from the Kimmeridge Limestone ( KL ) 5 test zone together with the recovery of oil and gas to surface from multiple flow tests.

8 Most extensive testing ever of an onshore exploration well conducted over 1000 plus feet of perforations. The oil discovery provides proof of concept for the Kimmeridge continuous oil deposit and proves further evidence to support a regionally extensive natural-fracture network capable of delivering oil to surface from the KL without reservoir stimulation. This financial year s (2018) imminent long-term Portland and KL flow testing and appraisal drilling programme at Horse Hill (operated by Horse Hill Developments Ltd) will follow up on the successful flow test results of early 2016, where an aggregate stabilised natural flow rate of 1,688 barrels of oil per day was achieved from three Portland and KL zones.

9 The Horse Hill testing and subsequent drilling programme is geared towards delivering both conventional Portland oil production and the KL s first commercially viable stable oil production in 2019. UKOG's total gross attributable P50 Kimmeridge Clay Formation ( KCF ) oil in place ( OIP ) increased by 72% to billion barrels in Weald Basin licence interests. Total UKOG net attributable KL OIP increased by 348% to billion barrels via the 100% Broadford Bridge (PEDL234) acquisition. PEDL234 KCF P50 OIP was calculated by Nutech as billion barrels, of which billion barrels lie within the KL.

10 HH-1 Portland oil discovery's OIP increased by 53% to 32 million barrels. Gross 2C contingent resources were estimated as million barrels with further significant recoverable resource upside via early water re-injection. STATEMENT FROM THE CHAIRMAN 2017 has been a transformational year for UKOG. We have continued to build a spread of Investments , focused on UK onshore oil assets centred upon our exciting and industry-leading position in the Weald Basin s Kimmeridge Limestone ( KL ) oil play. These Investments are underpinned by further discovered oil resources outside the KL play contained within five low-risk undeveloped oil and gas discoveries, which alone contain recoverable resources of over 14 million barrels net to the Company.