Volga Gas plc
Annual Report  
and Accounts  
2013
Volga Gas plc Annual Report and Accounts 2013 Karpensky
Urozhainoye-2
Vostochny
Makaroyskoye
Dobrinskoye
Russia
Moscow
Kiev
Karpensky
Urozhainoye-2
Vostochny
Makaroyskoye
Dobrinskoye
BLACK 
SEA
Volga Gas plc is an independent 
oil and gas exploration and 
production company focused 
on the Volga Region of Russia. 
It has 100% interests in four oil 
and gas exploration and 
production licences in the 
Saratov and Volgograd regions.
Contents
Introduction
1 Overview of 2013
2 Volga at a Glance
4 Financial Highlights
Strategic Report
5 Chairman’s Statement
6 Chief Executive’s Report
8 Operational Review
10 Financial Review
12 Principal Risks and Uncertainties
Governance
14 Board of Directors
16 Corporate Governance Statement
18 Report of the Directors
21 Directors’ Remuneration Report
Financial Statements
23 Independent Auditors’ Report
24 Group Income Statement
24 Group Statement of 
Comprehensive Income
25 Group Balance Sheet
26 Group Cash Flow Statement
27 Company Balance Sheet
28 Group and Company Statements 
of Changes in Shareholders’ Equity
29 Notes to the IFRS Consolidated 
Financial Statements
45 Notice of Meeting
47 Glossary of Technical Terms
IBC Corporate Directory
volgagas.com Karpensky
Urozhainoye-2
Vostochny
Makaroyskoye
Dobrinskoye
1
Overview of 201 3
 — Significant increase in throughput achieved at 
Dobrinskoye gas processing plant
 — Increased production from the Vostochny 
Makarovskoye gas/condensate field
 — New oil production from the Sobolevskoye oil field
 — Material growth in revenue and EBITDA
 — Bank debt fully repaid in 2013
VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS  
2 Introduction
Volga at a Glance
Our assets are located in an established oil and gas province. The area 
benefits from the existing rail, road and pipeline infrastructure and 
proximity to Russia’s main energy markets.
The main achievement of 2013 was the gas 
processing plant capacity expansion which 
led to a doubling of daily throughput since 
November 2013 and which will enable full 
exploitation of the Group’s principal gas/
condensate fields.
Oil, gas and condensate reserves
Oil and 
Condensate 
(mmbbl)
Gas 
(bcf)
Total 
(mmboe)
As at 31 December 2012
Proved reserves 14.556 155.9 40.534
Proved plus probable reserves 15.86 166.8 43.66
Production: 1 January–31 December 2013 0.547 3.1 1.069
As at 31 December 2013
Proved reserves 14.009 152.8 39.465
Proved plus probable reserves 15.313 163.7 42.591
Notes:
1. The reserves and production numbers shown exclude all volumes related to the Sobolevskoye field which was 
not included in the Miller and Lents reserve study of 2012. The numbers for Sobolevskoye are estimated by 
management not to be material in the context of total Group reserves.
2. There has been no external reassessment of reserves subsequent to the Miller and Lents reserve study of 2012.
3. The above reserve estimates, prepared in accordance with reserve definitions prepared by the Oil and Gas 
Reserves Committee of the SPE, have been reviewed and verified by Mr Mikhail Ivanov, Director and Chief 
Executive Officer of Volga Gas plc, for the purposes of the Guidance Note for Mining, Oil and Gas companies 
issued by the London Stock Exchange in June 2009. Mr Mikhail Ivanov holds a M.S. Degree in Geophysics from 
Novosibirsk State University. He also has an MBA degree from Kellogg School of Management (Northwestern 
University). He is a member of the Society of Petroleum Engineers. VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
3
Dobrinskoye gas processing plant
2013 Progress
Completed the third phase of the gas plant 
upgrade and received regulatory authorisation. 
Doubled daily throughput in November 2013 to 
over 500,000 cubic metres per day (17.8 million 
cubic feet per day).
2014 Objectives
Complete the final phase of the gas plant 
upgrade and achieve certification of plant 
processing capacity of up to 1 million cubic 
metres per day (35.3 million cubic feet per day).
Vostochny Makarovskoye (“VM”) gas/condensate field
2013 Progress
Workover of the VM#1 well led to a major 
increase in production capacity of the well and 
of the field.
2014 Objectives
Drilling of two new wells, VM#3 and VM#5 to 
increase production capacity and utilise the full 
planned gas plant capacity.
Dobrinskoye gas/condensate field
2013 Progress
Production capacity remained steady. However 
during 2013 the gas plant capacity was 
preferentially utilised for production of gas and 
condensate from the VM field.
2014 Objectives
Manage production from the two existing wells 
to maximise long term extraction of gas and 
condensate.
Uzenskoye and Sobolevskoye oil fields
2013 Progress
Managed Uzenskoye production for the fifth 
year, with production constrained to prevent 
water cut. Started production from the single 
well Sobolevskoye field.
2014 Objectives
Maintain/enhance production profile and 
maximise extraction of oil from existing wells.
Exploration activity
2013 Progress
Completed a review of exploration prospects in 
the Karpenskiy licence area and several material 
prospects have been identified. Decision to 
relinquish Pre-Caspian Licence and of the 
exploration areas of the Urozhainoye-2 Licence.
2014 Objectives
Potential discretionary exploration drilling of 
shallow, supra-salt targets during 2014. Revenue growth
US$34.6m
2013 US$34.6m
2012 US$28.3m
EBITDA growth
US$14.8m
2013 $US14.8m
2012 $US8.0m
Pre-tax proﬁt
US$9.1m
2013 US$9.1m
2012 -US$6.3m
Cash net of bank debt
US$8.1m
2013 $US8.1m
2012 -$US0.9m
4 Introduction
Revenues up 22% to US$34.6 million 
(2012: US$28.3 million)
 — 48% increase in production, mainly of gas, 
hence relatively lower revenue growth
 — Oil prices stable and gas prices increased
EBITDA up 85% to US$14.8 million 
(2012: US$8.0 million)
 — Lower MET rates applicable to gas and 
condensate than on crude oil
 — EBITDA per barrel of oil equivalent up 26%  
to US$13.80/boe (2012: $10.96/boe)
Profit before tax of US$9.1 million  
(2012: loss before tax of US$6.3 million)
 — Exploration and evaluation expense of 
US$2.5 million (2012: US$8.5 million)
 — MET refund of US$1.9 million (2012: nil)
Net operating cash inflow of US$15.4 million  
(2012: US$5.4 million)
 — Cash generation reflecting EBITDA
Bank debt fully repaid at 31 December 2013  
(bank debt of US$8.0 million at 
31 December 2012)
 — Net cash inflow before financing activities  
of US$9.6 million (2012: outflow of 
US$8.3 million)
 — Cash balance at 31 December 2013 of 
US$8.1 million (2012: US$7 .0 million)
Financial Highlights VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
5
Chairman’s Statement
201 3 was a pivotal year for  
Volga Gas, with the main event  
for the Company being the 
significant increase in capacity  
and throughput at the 
Dobrinskoye gas plant.
Dear Shareholder,
2013 was a pivotal year for Volga Gas, with the main event for the 
Company being the significant increase in capacity and throughput 
at the Dobrinskoye gas plant which has enabled full production 
from the existing wells on the Group’s largest field, Vostochny 
Makarovskoye. This has enabled the Group to exit 2013 producing 
at a rate of over 4,500 barrels of oil equivalent per day, an increase 
of 58% over the rate of production at the start of the year. As the 
majority of the increase came in November 2013, the full year 
production, revenue and cash flow numbers in 2013, although well 
ahead of 2012, do not properly reflect the current capabilities of 
the Group’s fields.
With the major portion of production growth in 2013 coming from 
gas rather than condensate and oil, the growth in revenue was not as 
marked as that in volume. However, the relatively lower taxation 
applied in Russia to gas and condensate as opposed to crude oil is a 
benefit to the profit margin and to the economics of gas production.
It is gratifying to report that even though Volga Gas is still very 
much on a growth track in terms of production and development, it 
has remained strongly cash generative. The Group has funded its 
2013 capital expenditures and fully repaid its bank debt with cash 
generated from operations.
The key operational objectives for 2014 will be to complete the 
final stages of the upgrade to the Dobrinskoye gas plant, obtain 
the required permits for full commercial operation at the design 
rate of over 35 million cubic feet per day, and to continue to build 
on the fields’ production capability to make full utilisation of the 
gas plant capacity. Meanwhile, the current production levels 
generate sufficient cash to fund the continuing development of 
the assets which in turn we anticipate will lead to further growth in 
production and cash flow.
We believe Volga Gas is currently in a position to consider providing 
cash returns to shareholders. The Board has initiated a process 
which will enable Volga Gas to have sufficient distributable reserves 
to enable distributions. You will see in the Notice of Annual General 
Meeting for 2014, a Special Resolution that relates to this matter.
The Group maintains significant proven reserves in its three 
principal fields, which were subject to an independent evaluation 
during 2012. These fields form the basis of growth in production in 
the near term. Our fields are advantageously located and our costs 
are sufficiently low for us to achieve good returns at oil and gas 
prices significantly lower than those we currently experience. Most 
importantly, these assets provide a strong platform for the Group 
to grow in the future, both through successful exploration and by 
selective value accretive acquisitions.
Volga Gas has also identified material exploration prospects within 
existing acreage that can be tested at low cost.
The Board believes that Volga Gas has a strong asset base and the 
financial and operational capability to develop and extend these 
assets to provide long term value growth for our shareholders.
Aleksey Kalinin
Chairman
Aleksey Kalinin
Chairman 6 Strategic Report
Chief Executive’s Report
Production in 201 3 increased  
48% and the revenue, EBITDA  
and profitability of the Group  
in 201 3 reflected this increase.
Volga Gas reached another key milestone in 2013 with the approval 
received in November 2013 for the upgrade works on the Group’s 
Dobrinskoye gas processing plant, following which the field output 
was progressively increased to make full use of the production 
capacity in the Group’s existing gas and condensate production 
wells on the Vostochny Makarovskoye (“VM”) and Dobrinskoye 
fields. Consequently towards the end of 2013 production increased 
significantly and reached an average rate of over 4,500 barrels of oil 
equivalent per day in December 2013, an increase of 58% compared 
to the average rate for December 2012. Thus, while Volga Gas has 
realised a significant increase in production rates during 2013, the 
benefit of these increases will continue through 2014 and beyond.
As detailed in the Operational Review below, the majority of the 
work on our producing assets base remained focused on the two 
gas fields. On VM, the Group completed a workover on the main 
producing well, VM#1, the effect of which was to increase 
significantly the production capacity of that well.
For much of 2013, the Group’s gas and condensate production was 
constrained by the requirement to operate the Dobrinskoye gas 
processing plant with a throughput of 250,000 cubic metres 
(8.8 million cubic feet per day). However, in November 2013, after 
receipt of the regulatory approvals detailed below, throughput was 
increased and reached up to 530,000 cubic metres per day 
(18.7 million cubic feet per day) during December 2013. Production 
of condensate, which is separated from the gas stream at the 
processing plant, increased in line with the gas production.
Crude oil production, on the other hand, was lower in 2013 than 
2012. Production from the Uzenskoye field was reduced as wells on 
the edge of the field began to exhibit some water cut. The 
reduction in the Uzenskoye field was partly offset by new 
production from the single well on the Sobolevskoye field.
In aggregate, production in 2013 was 2,958 barrels of oil equivalent 
per day (“boepd”), which represents a 48% increase on 2012. The 
revenue and EBITDA performance of the Group in 2013 reflected 
this increased production, although as the majority of the volume 
growth was in gas, the revenue growth was not as large. 
Nevertheless, as an indication of rising profitability, EBITDA per 
barrel of oil equivalent sold increased 26% from US$10.96 in 2012 to 
US$13.80 in 2013. See the Financial Report on page 10 for details.
In 2013, exploration activity was limited, although a number of 
significant exploration prospects in the Group’s Karpenskiy licence 
area have been identified for future exploration drilling.
Our key operational objectives in 2014 are to complete the 
remaining work on the Dobrinskoye gas plant upgrade, with the 
aim of fulfilling the regulatory requirements to enable the Group to 
operate at a processing capacity of 1 million cubic metres per day 
(35 million cubic feet per day) and to bring the VM field into full 
scale production. The latter involves development drilling of two 
wells during 2014, the first of which is already under way.
Finance
The Group maintained a strong level of cash generation from 
operating activities throughout 2013, enabling it to fund its capital 
expenditure for the year from operating cash flow and to make  
full repayment of its bank loans, which at 31 December 2012 were 
US$8.0 million. As at 31 December 2013, the Group had net cash  
of US$8.1 million and no debt.
Although the planned investments in 2014 are expected to be less 
than operating cash flow, the Group considers a moderate level of 
borrowing to be appropriate as part of the longer-term capital 
structure. As the Group’s assets have established a track record of 
reliable cash generation, with prospects for continued significant 
growth in the near future, the Board believes it appropriate to 
consider distributions to shareholders and is taking measures to 
enable this.
Current trading
In January and February 2014, Group production averaged 
4,563 boepd comprising 1,900 bpd of oil and condensate and 
16.0 mmcf/d of gas and, in spite of some softening in the US dollar 
equivalent realisations for sales as a result of the weakening ruble, 
monthly revenues and gross cash margins are significantly ahead of 
the average run rate for 2013. Higher cash flows have continued to 
drive increases in the Group’s cash balances ahead of the planned 
capital expenditure.
Mikhail Ivanov
Chief Executive Officer VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
7
Outlook
Key activities for 2014 will be focused on delivering increased 
production from the VM field enabling full utilisation of the 
capacity at the Dobrinskoye gas plant. It is our current expectation 
that works on the final stage of the upgrade will be completed 
during H1 2014 when, subject to obtaining the necessary permits, 
we expect to achieve full operation at a capacity of up to 1 million 
cubic metres per day (35.3 million cubic feet per day).
Having mobilised a drilling rig in January, drilling of the new 
development well VM#3 on the VM field has commenced and is 
expected to be completed in the first half of 2014. This will be 
followed by a further well, VM#5 shortly thereafter. The total 
capital expenditure budgeted for 2014 is US$13.8 million and is 
expected to be funded entirely from existing cash resources and 
cash generated from operations.
We look forward to delivering a rising stream of production and 
further financial growth.
Mikhail Ivanov
Chief Executive Officer
Condensate separation unit Dobrinkoye gas plant 8 Strategic Report
Operational Review
VM#1 well workover in operation
Operations overview
The key event for the Group in 2013 was the increase in throughput 
at the Dobrinskoye gas processing plant in November 2013, after 
receipt of the formal approval of the upgrade works. This enabled 
production of gas and condensate towards the end of 2013 to 
reflect the productive capacity of the wells on the Group’s VM and 
Dobrinskoye fields, more than doubling the production rates 
achieved hitherto.
The overall level of production in 2013, at 2,958 boepd, was 48% 
above the 1,995 boepd achieved in 2012. This is a result of a full 
year’s production from the VM field which commenced full time 
production in November 2012 and was further boosted by the 
increase in plant throughput achieved in November 2013. 
Production of condensate followed in line with gas as they are 
extracted simultaneously and separated at the gas processing plant.
Oil production was lower in 2013 than in 2012, averaging 826 bopd 
in 2013 compared to 1,109 bopd in 2012. The reasons for the 
decline in production are detailed below.
As a consequence of the significant increase in production in 2013, 
revenues and EBITDA levels in 2013 were well ahead of 2012, 
although with the rapidly increasing proportion of gas in the mix, 
the revenue growth was not quite as impressive as production 
growth. Full details are discussed in the Financial Review below.
Gas processing plant
The major part of the construction work for the upgrade of the 
Dobrinskoye gas processing plant was undertaken in 2012, 
including enhanced H
2
S extraction, expansions to condensate 
separation and increased condensate storage capacity. During 
2013, the majority of the remaining construction work required to 
increase the processing capacity to the planned level of 1 million 
cubic metres per day (37 mmcf/d) was completed in October 2013.
In November 2013, the Group received regulatory approval for the 
upgrade works on the Dobrinskoye gas processing plant. Following 
the installation of certain additional minor modules, as required by 
the state construction agency, Gosstroi, final approval of the 
completed upgrade will be sought, which will allow GNS to utilise 
the plant at full plant capacity on a permanent basis. Pending this, 
the Company has been operating at test rates utilising the full 
current well capacity.
Since November 2013 the Group increased the output from wells 
on the VM and Dobrinskoye gas fields and during December 2013 
reached an average production rate of 432,000 cubic metres per 
day (15.2 mmcf/d), although during the period production rates of 
up to 530,000 cubic metres per day (18.7 mmcf/d) were achieved.
During 2013, the Group has also been investigating means of 
enhancing the gas processing by the use of alternative chemicals. 
Following successful trials conducted during the year modifications 
to the process are beginning to deliver material savings on the cost 
of chemicals used in the process. As a result of these savings and 
the substantial fixed cost portion of the operating costs, unit 
production costs in the future on the gas production are expected 
to reduce significantly.
The Group spent approximately US$3.6 million on the upgrade 
project during 2013 and the required investment to complete the 
project is expected to be no more than US$2.0 million. The Group is 
currently evaluating the merits of additional processing to extract 
an LPG stream from the gas, primarily propane and butane, which 
currently is delivered into the sales gas pipeline.
Gas/condensate production
The Dobrinskoye and VM fields are managed as a single business 
unit. Production from the fields is processed at the gas plant 
located next to the Dobrinskoye field, extracting the condensate 
and processing the gas to pipeline standards before input into 
Gazprom’s regional pipeline system via an inlet located at the plant. 
Prior to November 2013 the plant was permitted to operate at a 
capacity of 250,000 cubic metres per day (8.8 mmcf/d), so the fields 
were not producing at their full capacity. Moreover, during 2013 the 
continuing upgrade works to upgrade the plant meant that the 
plant’s downtime was slightly higher than would be expected 
under normal operations. However, as mentioned above, since 
November 2013, production has increased to levels that more 
closely reflect the estimated current production capacity of the 
wells which is over 500,000 cubic metres per day (17.8 mmcf/d) of 
gas and 120 tonnes per day (1,050 barrels per day) of condensate.
During 2013, production derived from both fields averaged 8.7 
mmcf/d of gas and 682 bpd of condensate (2012: 3.3 mmcf/d of gas 
and 346 bpd of condensate). In total, there are three producing 
wells on VM and two producing wells on Dobrinskoye.
Gas continues to be sold to Trans Nafta under contract. An increase 
in the Rouble contract gas sales price took effect on 1 January 2013 
and a further price increase took effect in July 2013. The average 
gas sales price for 2013 was the equivalent of US$2.73 per thousand 
cubic feet, net of VAT (2012: US$2.32). During 2013 the average 
condensate sales price was US$47.00 per barrel (2012, US$45.70 
per barrel).
Average unit production costs on the gas-condensate fields 
remained relatively high at US$8.27 per boe in 2013 (2012: US$10.70) 
primarily as a result of a significant element of fixed plant costs and 
chemicals consumed in the gas processing unit. With the increasing 
plant utilisation, however, the unit costs have reduced compared to 
2012 and with higher utilisation and cost savings on chemicals, 
management anticipates further reductions in unit costs.
During 2013, a workover was conducted on the VM#1 production 
well, perforating an additional 23 metres of the pay zone in the 
well. Following the successful workover operations, a production 
test on a 10 mm choke on the well achieved a higher than expected 
maximum flow rate of 274,000 cubic metres (9.7 million cubic feet) 
per day of gas and 794 barrels per day of condensate. This is 
approximately twice the production level that was previously 
achieved with the well. Estimated production capacity from the  VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
9
Condensate storage tanks
existing wells is now up to 20.0 mmcf/d of gas and over 1,000 bpd 
of condensate.
On the Dobrinskoye field, sidetracks were drilled on both production 
wells during 2011 and 2012 and there were no significant 
development operations conducted on the field during 2013.
In January 2014, the Group mobilised a drilling rig to commence a 
two well development drilling programme on the VM field. The 
first well is VM#3 which is located in the centre of the field. The 
well is expected to reach its target depth in the first half of 2014. 
The second well, to be drilled subsequently is VM#5.
Oil production
Having completed its fifth year of full time production, the Yuzhny 
Uzenskoye oil field is the Group’s longest established field. It 
continues to produce under natural reservoir pressure drive and 
with no water cut. As the oil has been produced, the oil:water 
contact in the reservoir has risen and since the start of 2013, wells 
at the edge of the field have exhibited some water cut and were 
shut in. As a consequence, oil production from the field has been 
managed at lower production rates. In addition, during the spring 
and, exceptionally, during the Autumn of 2013 weather related 
downtime had a further impact on production from the field. 
Consequently, production from Yuzhny Uzenskoye during 2013 
reduced to 735 bopd (2012: 1,109 bopd).
In June 2013, following a successful flow test and workover, the 
Sobolevskaya #11 well in the Urozhainoye-2 licence was put on 
production. Since starting production, this well has produced a 
total of 31,637 barrels of oil (2012: nil). Between August and 
December 2013 the well has been producing steadily at a rate of 
170 bopd. The well was originally drilled by a previous licencee. The 
Group acquired the rights to produce from the well for a nominal 
consideration in 2011.
Production from the Yuzhny Uzenskoye and Sobolevskoye fields, 
whilst of modest scale, remains very profitable for the Group and a 
useful contributor of cash flow.
Exploration
The Group has identified a number of exploration targets in the 
Karpenskiy Licence Area at shallow horizons of between 1,000 and 
2,000 metres depth. These provide low cost opportunities to add 
potentially material oil reserves. The Group’s current priority is the 
development of its gas and condensate fields and a return to active 
exploration is to be considered for 2015 and beyond.
The Group has fulfilled all its licence commitments on the 
Karpenskiy Licence Area and further drilling in the area is 
discretionary. Following completion of exploration activities on the 
Pre-Caspian and Urozhainoye-2 licence areas, the Group decided to 
relinquish the Pre-Caspian licence entirely as well as the exploration 
areas of Urozhainoye-2, although in the latter block an area 
covering the producing Sobolevskoye oil field has been retained.
Oil, gas and condensate reserves as of 1 January 2014
During 2012, an independent evaluation of the Company’s oil, gas 
and condensate reserves was conducted by Miller and Lents Ltd.
The independent assessment of the reserves and net present value 
of future net revenue (“NPV”) attributable to the Company’s three 
principal fields, Dobrinskoye, Vostochny Makarovskoye and 
Uzenskoye, as at 1 August 2012, was prepared in accordance with 
reserve definitions prepared by the Oil and Gas Reserves 
Committee of the Society of Petroleum Engineers (“SPE”).
The table on page 2 shows the Proven and Probable reserves as 
evaluated by Miller & Lents as at 1 August 2012, adjusted by 
management for subsequent production.
Mikhail Ivanov
Chief Executive Officer
Condensate storage tanks 10 Strategic Report
Financial Review
Results for the year
In 2013, the Group generated US$34.6 million in turnover 
(2012: US$28.3 million) from the sale of 547,257 barrels of crude oil 
and condensate (2012: 529,501 barrels) and 3,128 million cubic feet 
of natural gas (2012: 1,193 million cubic feet). Oil and condensate 
sales were made into the domestic market during the period. The 
average price realised for liquids was the equivalent of US$47.63 
per barrel (2012: US$48.21 per barrel). The gas sales price during 
2013 averaged US$2.73 per thousand cubic feet (2012: US$2.32 per 
thousand cubic feet). With sales made exclusively into the regional 
market in the Volga region at the wellhead, our oil and condensate 
sales prices closely reflect international prices, adjusted for export 
taxes and transportation costs. Production activities generated a 
gross profit of US$16.2 million in 2013 (2012: gross profit of 
US$11.7 million).
In 2013, the total cost of production increased to US$5.9 million 
(2012: US$3.8 million), with the incremental costs primarily incurred 
in gas processing expenses. Production based taxes were US$8.1 
million (2012: US$8.9 million) reflecting the increase in the 
proportion of gas in the Group’s production and lower rates of 
Mineral Extraction Tax (“MET”) charged on gas condensate 
compared to crude oil. MET in 2013 represented 23.0% of revenues 
(2012: 31.6% of revenues). The gross profit margin in 2013 was 
46.7% (2012: 41.4%).
Operating and administrative expenses in 2013 were US$4.0 million 
(2012: US$9.9 million, including a provision of US$2.9 million for 
disputed recovery of VAT).
The Group experienced a significant increase in EBITDA (defined as 
operating profit before non-cash charges, including the VAT 
provision, exploration expense, depletion and depreciation) to 
US$14.8 million (2012: US$8.0 million) as a result of the higher 
revenues partly offset by higher expenses. As a reflection of 
increasing cost efficiency with rising throughput at the gas plant 
EBITDA per barrel of oil equivalent sold in 2013 was US$13.80 
(2012: US$10.96).
After recording an exploration and evaluation expense of US$2.5 
million (2012: US$8.5 million), and other non-cash expenses of 
US$1.4 million (2012: US$0.2 million) the Group recorded an 
operating profit for 2013 of US$8.2 million (2012: operating loss of 
US$5.9 million). The exploration and evaluation charge in 2013 was 
primarily related to the write off of the remaining assets associated 
with the Pre-Caspian Licence area which has been relinquished.
After including net interest expense of US$0.2 million (2012: 
US$0.2 million) and other gains of $1.6 million net of foreign 
exchange (2012: net other and foreign exchange losses of US$0.2 
million), the Group recognised a profit before tax of US$9.6 million 
(2012: loss before tax of US$6.3 million) and reported net profit 
after tax of US$8.6 million (2012: net loss after tax of US$7.4 
million) after taking a deferred tax charge of US$1.0 million 
(2012: US$1.1 million).
No dividends have been paid or proposed for the year (2012: nil).
Cash flow
Group cash flow from operating activities was US$15.4 million 
(2012: US$5.4 million). Net working capital movements contributed 
to a cash outflow of US$1.2 million in 2013 (2012: US$2.4 million 
inflow from working capital movements). With reduced capital 
expenditures in 2013, the net outflow from investing activities was 
US$6.2 million (2012: US$13.7 million). Net cash outflow from 
financing activities was US$8.1 million (2012: inflow of 
Financial and  
operational summary
Sales volumes 2013 2012 2011
Oil and condensate 
(barrels) 547,257 529,501 546,818
Gas (mcf) 3,128 1,193 1,348
Total (boe) 1,068,585 728,334 771,479
Operating Results (US$ 000) 2013 2012 2011
Oil and condensate sales 26,067 25,526 25,425
Gas sales 8,554 2,769 3,146
Revenue 34,621 28,295 28,571
Production costs (5,946) (3,776) (3,126)
Production based taxes (8,095) (8,951) (9,537)
Depletion, depreciation 
and other (2,611) (2,280) (2,641)
Other (1,800) (1,562) (991)
Cost of sales (18,451) (16,569) (16,295)
Gross profit 16,170 11,726 12,276
Exploration expense (2,519) (8,475) (200)
Provision for VAT recovery – (2,945) –
Operating and 
administrative expenses (4,029) (6,024) (5,991)
Write-off of  
development assets (1,439) (188) (5,612)
Operating profit/(loss) 8,183 (5,906) 473
Net realisation 2013 2012 2011
Oil and condensate  
(US$/barrel) 47.63 48.21 46.50
Gas (US$/mcf) 2.73 2.32 2.33
Operating data (US$/boe) 2013 2012 2011
Production costs 5.56 5.18 4.05
Production based taxes 7.58 12.29 12.36
Depletion, depreciation 
and other 2.44 3.13 3.42
EBITDA calculation (US$ 000) 2013 2012 2011
Operating profit/(loss) 8,183 (5,906) 473
Exploration expense 2,519 8,475 200
DD&A and other non-cash 
expense 4,050 5,413 8,253
EBITDA 14,752 7,982 8,926
EBITDA per boe (US$/boe) 13.80 10.96 11.57 VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
11
US$4.8 million) as a result of amortisation payments and 
prepayment of the final balance of the bank loan.
Capital expenditure
During 2013 a total of US$6.2 million was utilised in investing 
activities (2012: US$13.7 million). In 2013 all of the capital 
expenditure was on development and producing assets (2012: 
US$10.3 million on producing and development assets and US$3.4 
million on exploration and appraisal). The most significant 
individual components of the capital expenditure in 2013 relate to 
the Dobrinskoye gas plant upgrade.
Balance sheet and financing
As at 31 December 2013, the Group held cash and bank deposits of 
US$8.1 million (2012: US$7.0 million) with no debt (31 December 
2012: US$8.0 million bank debt). The bank loan was drawn during 
2012 and was subject to monthly repayments from October 2012. 
In December 2013 the remaining balance of the bank loan was 
repaid in full. All of the Group’s cash balances are held in bank 
accounts in the UK and Russia.
As at 31 December 2013, the Group’s intangible assets decreased 
to US$6.4 million (2012: US$9.6 million) after the write off of assets 
relating to the PreCaspian Licence. Property, plant and equipment, 
decreased to US$98.3 million (2012: US$103.7 million, primarily 
reflecting the impact of foreign exchange adjustments.
Management believes that the Group’s continuing capital 
expenditures less than cash flow from operations and cash-on-
hand. The Group will consider additional debt facilities to fund the 
longer-term development of its existing licences as appropriate.
The Group’s financial statements are presented on a going 
concern basis.
Tony Alves
Chief Financial Officer
VM #1 well site Condensate loading 12 Strategic Report
Principal Risks and Uncertainties
Oil and gas production taxes
The Group’s sales generated from oil and gas production are 
subject to Mineral Extraction Taxes, which form a material 
proportion of the total costs of sales. The rates of these taxes are 
subject to changes by the Russian government. Changes to rates 
which come into effect during 2014 will increase the rates on crude 
oil, condensate and natural gas.
Exploration and reserve risks
Whilst the Group will seek to apply the latest technology to assess 
exploration licences, the exploration for, and development of, 
hydrocarbons is speculative and involves a high degree of risk. 
These risks include the uncertainty that the Group will discover 
sufficient commercially exploitable oil or gas resources in unproven 
areas of its licences. Unsuccessful exploration efforts may result in 
impairment to the balance sheet value of exploration assets.
During 2012, the Group commissioned a reserve evaluation based 
on reporting standards set by the Society of Petroleum Engineers. 
If the actual results of producing the Group’s fields are significantly 
different to expectations, there may be changes in the future 
estimates of reserves. These may impact the balance sheet values 
of the Group’s Intangible Assets and the Group’s Property, Plant 
and Equipment.
Environmental risk
The oil and gas industry is subject to environmental hazards, such as 
oil spills, gas leaks, ruptures and discharges of petroleum products 
and hazardous substances. These environmental hazards could 
expose the Group to material liabilities for property damages, 
personal injuries, or other environmental harm, including costs of 
investigating and remediating contaminated properties.
The Group is subject to stringent environmental laws in Russia with 
regards to its oil and gas operations. Failure to comply with such 
laws and regulations could subject the Group to material 
administrative, civil, or criminal penalties or other liabilities. 
Additionally, compliance with these laws may, from time to time, 
result in increased costs to the Group’s operations, impact 
production, or increase the costs of potential acquisitions.
The Group liaises closely with the Federal Service of Environmental, 
Technological and Nuclear Resources of the Saratov and Volgograd 
Oblasts on potential environmental impact of its operations and 
conducts environmental studies both as required by, and in 
addition to, its licence obligations to mitigate any specific risk. The 
Group’s operations are regularly subject to independent 
environmental audit.
The Group did not incur any material costs relating to the 
compliance with environmental laws during the period.
Risk of operating oil and gas properties
The oil and gas business involves certain operating hazards, such as 
well blowouts, cratering, explosions, uncontrollable flows of oil, 
gas or well fluids, fires, pollution and releases of toxic substances. 
Any of these operating hazards could cause serious injuries, 
fatalities, or property damage, which could expose the Group to 
liabilities. The settlement of these liabilities could materially impact 
the funds available for the exploration and development of the 
Group’s oil and gas properties. The Group maintains insurance 
against many potential losses and liabilities arising from its 
operations in accordance with customary industry practices, but 
the Group’s insurance coverage cannot protect it against all 
operational risks.
The Group is subject to various risks relating to political, economic, 
legal, social, industry, business and financial conditions.
The following risk factors, which are not exhaustive, are particularly 
relevant to the Group’s business activities:
Volatility of oil prices
The supply, demand and prices for oil are influenced by factors 
beyond the Group’s control. These factors include global and 
regional demand and supply, exchange rates, interest and inflation 
rates and political events. A significant prolonged decline in oil and 
gas prices could impact the profitability of the Group’s activities. 
Additionally, the Group’s production is predominantly sold in the 
domestic Russian markets which are influenced by domestic supply 
and demand factors, the level of Russian export taxes and regional 
transportation costs.
Substantially all of the Group’s revenues and cash flows come from 
the sale of oil, gas and condensate. If sales prices should fall below 
and remain below the Group’s cost of production for any sustained 
period, the Group may experience losses and may be forced to 
curtail or suspend some or all of the Group’s production, at the time 
such conditions exist. In addition, the Group would also have to 
assess the economic impact of low oil and gas prices on its ability to 
recover any losses the Group may incur during that period and on 
the Group’s ability to maintain adequate reserves.
The Group does not currently hedge its crude oil production to 
reduce its exposure to oil price volatility as the structure of taxes 
applied to oil production in Russia effectively reduce the exposure 
to international market prices for oil. VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
13
Foreign currency risk
The Group’s capital expenditures and operating costs are 
predominantly in Russian rubles (“RUR”) while a minority of costs 
are also in US dollars. Revenues are predominantly received in RUR 
so consequently the operating profitability is not materially 
exposed to short-term exchange rate movements. The functional 
currency of the Group’s operating subsidiaries is the RUR and the 
Group’s assets and liabilities are predominantly RUR denominated. 
As the Group’s presentational currency is the US dollar, changes in 
the relative exchange rates among US dollar and RUR could 
positively or negatively affect the Group’s financial statements.
Business in Russia
Amongst the risks that face the Group in conducting business and 
operations in Russia are:
 — Economic instability, including in other countries or the global 
economy that could lead to consequences such as 
hyperinflation, currency fluctuations and a decline in per capita 
income in the Russian economy.
 — Governmental and political instability that could disrupt, delay 
or curtail economic and regulatory reform, increase centralised 
authority or result in nationalisations.
 — Social instability from any ethnic, religious, historical or other 
divisions that could lead to a rise in nationalism, social and 
political disturbances or conflict.
 — Uncertainties in the developing legal and regulatory 
environment, including, but not limited to, conflicting laws, 
decrees and regulations applicable to the oil and gas industry 
and foreign investment.
 — Unlawful or arbitrary action against the Group and its interests 
by the regulatory authorities, including the suspension or 
revocation of their oil or gas contracts, licences or permits or 
preferential treatment of their competitors.
 — Lack of independence and experience of the judiciary, difficulty 
in enforcing court or arbitration decisions and governmental 
discretion in enforcing claims.
 — Unexpected changes to the federal and local tax systems.
 — Laws restricting foreign investment in the oil and gas industry.
Legal systems
Russia, and other countries in which the Group may transact 
business in the future, have or may have legal systems that are less 
well developed than those in the United Kingdom. This could result 
in risks such as:
 — Potential difficulties in obtaining effective legal redress in the 
court of such jurisdictions, whether in respect of a breach of 
contract, law or regulation, including an ownership dispute.
 — A higher degree of discretion on the part of governmental 
authorities.
 — The lack of judicial or administrative guidance on interpreting 
applicable rules and regulations.
 — Inconsistencies or conflicts between and within various laws, 
regulations, decrees, orders and resolutions.
 — Relative inexperience of the judiciary and courts in such 
matters.
In certain jurisdictions, the commitment of local business people, 
government officials and agencies and the judicial system to abide 
by legal requirements and negotiated agreements may be more 
uncertain, creating particular concerns with respect to licences and 
agreements for business. These may be susceptible to revision or 
cancellation and legal redress may be uncertain or delayed. There 
can be no assurance that joint ventures, licences, licence 
applications or other legal arrangements will not be adversely 
affected by the jurisdictions in which the Group operates.
Liquidity risk
At 31 December 2013 the Group had US$8.0 million of cash and 
cash equivalents of which US$7.7 million was held in bank accounts 
in Russia. The Group intends to fund its ongoing operations and 
development activities from its cash resources and cash generated 
by its established operations. At 31 December 2013 the Group has 
had approved capital expenditures of approximately US$14 million 
primarily for the continuing development of gas and condensate 
production. The Board considers that the Group will have sufficient 
liquidity to meet its obligations. All current and planned capital 
expenditures are discretionary.
Through its ordinary course activities, the Group is exposed to 
legal, operational and development risk that could delay growth in 
its cash generation from operations or may require additional 
capital investment that could place increased burden on the 
Group’s available financial resources.
Capital risk
The Group manages capital to ensure that it is able to continue as a 
going concern whilst maximising the return to shareholders. The 
Group is not subject to any externally imposed capital 
requirements. The Board regularly monitors the future capital 
requirements of the Group, particularly in respect of its ongoing 
development programme. During 2012 management decided that 
having established a track record of reliable cash generation it was 
appropriate to introduce a modest proportion of debt into the 
capital structure and as such a loan of US$10 million was taken and 
which was fully repaid by 31 December 2013. Management expects 
that the cash generated by the operating fields will be sufficient to 
sustain the Group’s operations and planned capital investment for 
the foreseeable future and that in the near term there would be 
scope to provide cash returns to shareholders. Further short-term 
debt facilities may be arranged to provide financial headroom for 
future development activities.
Tony Alves
Chief Financial Officer 14 Governance
Board of Directors
Aleksey Kalinin
Non-Executive Chairman
Appointed to the Board: 14 March 2007
Committee membership: Remuneration
Mr Kalinin is a Senior Partner of Baring Vostok 
Capital Partners. He joined Baring Vostok in 1999 
from Alfa Capital, where he served for six years as 
the Director of the Department for Direct 
Investments. Aleksey represents the interests of 
Baring Vostok’s funds on the Board of Directors 
of a wide range of portfolio companies. 
He has a doctorate from the Moscow Power 
Engineering Institute, where he conducted 
scientific research, lectured for 12 years and 
served as the Director of the Youth Center for 
Scientific and Technical Creativity. Mr Kalinin is 
54 years old.
Mikhail Ivanov
Chief Executive Officer,  
Executive Director
Appointed to the Board: 14 March 2007
Committee membership: n/a
Mr Ivanov is a Partner and Director of Oil and Gas 
Projects at Baring Vostok Capital Partners. 
Mr Ivanov brings with him a long history of 
involvement in the oil sector. Mikhail worked for 
over ten years at Shlumberger, the international 
oil services company, where he served as head of 
its Iran operations and was responsible for 
business development in Russia. 
Prior to joining Shlumberger, he founded and 
headed two companies that focused on oil 
production and service. In 2009 he was appointed 
non-executive director of Zhaikmunai Group 
Limited. Mr Ivanov holds an M.S. degree in 
Geophysics from Novosibirsk State University  
and an M.B.A. from the Kellogg School of 
Management of Northwestern University. He is an 
elected member of SPE. Mr Ivanov is 44 years old.
Antonio Alves
Chief Financial Officer, Executive Director
Appointed to the Board: 12 January 2009
Committee membership: n/a
Mr Alves has had experience with the independent 
oil and gas industry for over 20 years as one of the 
leading equity analysts covering the sector. Prior 
to joining Volga Gas, he was head of oil and gas 
research for KBC Peel Hunt and was closely involved 
with the Company’s 2007 IPO. He previously held 
positions with Investec Securities, The Bell Group 
International and Schroders. 
He is a Member of the Securities Institute and of 
the Petroleum Exploration Society of Great 
Britain. He read mathematics at Cambridge 
University between 1977 and 1983 both as an 
undergraduate and a post-graduate research 
student. Mr Alves is 54 years old.
Ronald Freeman
Non-Executive Director
Appointed to the Board: 14 March 2007
Committee membership: Audit, 
Nomination, Remuneration
Mr Freeman is a non-executive board director of 
Severstal (Cherepovets, Russia) and a member of 
the Supervisory Board of Sberbank. He is also 
Chairman of the Executive Committee of the 
Atlantic Council (Washington DC), a member of 
the International Advisory Committee of 
Columbia Law School (New York); and, 
co‑chairman of the finance committee of the 
UK-US Fulbright Commission (London). From 1973 
to 1991 and from 1997 until his retirement from 
Citigroup as co-head of European Investment 
Banking in 2000, he was an investment banker 
specialising in financing and mergers and 
acquisition for companies in the oil and gas 
industry with Salomon Brothers, now a unit of 
Citigroup. From 1991 to 1997, he was head of the 
Banking Department of the European Bank for 
Reconstruction and Development (London). Prior 
to that, he practiced law with Baker & McKenzie 
(Paris) and served as a management consultant in 
the Paris office of McKinsey & Company. 
Mr Freeman was born in New York and has dual US 
and UK citizenship. He has a B.A from Lehigh 
University and an LL.B. from Columbia Law School 
(1964). He was admitted to the Bar of the State of 
New York. He is 74 years old. VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
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FINANCIAL STATEMENTS
15
Vladimir Koshcheev
Non-Executive Director
Appointed to the Board: 14 March 2007
Committee membership: n/a
Mr Koshcheev currently acts as President of Joint 
Stock Company “NPO POG”. Until 2009 he was 
President of Pervaya Investizionno–Stroitelnaya 
Company LLC, Spinaker LLC. He has been 
Chairman of CJSC AKSM since 2002. Mr 
Koshcheev was President of Privolzhskaya 
Neftyanaya Company LLC between 2003 and 
2005 and was previously a shareholder in and 
acted as President of Vesla. 
Mr Koshcheev received a specialist diploma from 
Moscow State Technical University in 1978 and he 
is a member of the Russian Academy of Natural 
Sciences. Mr Koshcheev is 57 years old.
Stephen Ogden
Non-Executive Director
Appointed to the Board: 14 March 2007
Committee membership: Audit, 
Nomination, Remuneration
Mr Ogden is the Founder and Managing Partner 
of the First Montenegro Stone Property Fund, 
and a non-executive director of shopping mall 
operator Persianas Nigeria. Mr Ogden was 
previously a non-executive director of United 
Confectioneries (Russia), Heineken Russia and 
Metropolis Media (former Yugoslavia). He was 
Chief Financial Officer of the Bochkarev Brewery 
in St. Petersburg from 1997 to 2002. Prior to 
becoming Chief Financial Officer of Bochkarev, 
Mr Ogden was an auditor with KPMG and 
PricewaterhouseCoopers, and Financial 
Controller of CS First Boston (Moscow). 
Mr Ogden has a joint honours degree in 
economics and politics from Durham University, 
England, and is a qualified British chartered 
accountant (‘FCA’). Mr Ogden is active in British 
politics. He is a former Conservative Councillor of 
Altrincham, Cheshire and his name is on the 
approved list of Conservative Parliamentary 
candidates. Mr Ogden is a co-founder and 
treasurer of the charitable Rwanda Cricket 
Stadium Foundation. Mr Ogden is 46 years old.
Michael Calvey
Non-Executive Director
Appointed to the Board: 14 March 2007
Committee membership: Audit, 
Nomination
Mr Calvey is a Senior Partner of Baring Vostok 
Capital Partners and a Director of Baring Private 
Equity International and is on the Boards of 
several of Baring Vostok’s portfolio companies. 
He began working in Moscow in 1994 as one of 
the members of the consulting committee of the 
First NIS Regional Fund. He is a member of the 
investment committees of three Baring Vostok 
funds. He is also a member of the Investment 
Committees of the Baring Asia and Baring India 
funds. Before 1994, Mr Calvey lived in London 
and New York, where he worked at the European 
Bank for Reconstruction and Development 
(“EBRD”) and Salomon Brothers. At EBRD he was 
responsible for investments in the energy sector 
of Central and Eastern Europe. At Salomon 
Brothers Mr Calvey worked on mergers and 
acquisitions and capital market projects in the oil 
and gas sector. He is a member of the Boards of 
the Atlantic Council and the Emerging Markets 
Private Equity Association, and is a member of 
the Advisory Board of the Centre for 
International Business and Management at 
Cambridge University. Mr Calvey is 46 years old. 16 Governance
Corporate Governance Statement
Introduction
The Board’s overriding objective is to ensure that the Group 
delivers long-term capital appreciation for its shareholders.
Compliance
As Volga Gas plc is listed on AIM, it is neither required to comply with 
the UK Corporate Governance Code that was published in September 
2012 by the Financial Reporting Council (the “Code) nor issue a 
statement of compliance with it. Nevertheless, the Board fully 
supports the principles set out in the Code and seeks to follow these 
as best practice wherever this is appropriate; having regard to the size 
of the Company, the resources available to it and the interpretation 
of the Code in the Quoted Companies Alliance Corporate Governance 
Code for Small and Mid-sized Quoted Companies.
Details are provided below of how the Company applies the 
elements of the Code that are deemed appropriate.
Board of directors
Role of the Board
The Board’s role is to provide leadership to the Group within a 
framework of prudent and effective controls which enables risk to 
be assessed and managed. The Board sets the Group’s strategic 
aims and ensures that the necessary financial and human resources 
are in place for the Group to meet its objectives, and reviews 
management’s performance in meeting these objectives. The 
Board sets and monitors the Group’s values and standards and 
ensures that the Group’s obligations to shareholders and other 
stakeholders are understood and met.
The Board has a formal schedule of matters reserved for its 
approval, including:
 — Strategic and policy considerations
 — Annual budget, including capital expenditure
 — Interim and final financial statements
 — Management structure and appointments
 — Mergers, acquisitions, disposals
 — Capital raising
 — Significant changes in accounting policies
 — Appointment or removal of directors or the company secretary
Board composition
The Board currently comprises two executive directors and five 
non-executive directors, of whom three are deemed to be 
independent and two non-independent:
 — Aleksey Kalinin – Non-Executive Chairman
 — Mikhail Ivanov – Executive Director and CEO
 — Tony Alves – Executive Director, CFO and Company Secretary
 — Ronald Freeman – Independent Non-Executive
 — Stephen Ogden – Independent Non-Executive
 — Vladimir Koshcheev – Independent Non-Executive
 — Michael Calvey – Non-Executive
There is a clear division of responsibilities between the executive 
and non-executive directors.
Board balance and independence
The Board recognises that Messrs Kalinin and Calvey are not 
independent by virtue of their direct management responsibilities 
for the limited partnerships comprising Baring Vostok Private 
Equity Funds III and IV, the Company’s controlling shareholder 
(“Controlling Shareholder”). However, in light of the value, 
experience and contacts which they afford to the Company at this 
stage of its development and by virtue of the Relationship 
Agreement, which, inter alia, ensures that the Controlling 
Shareholder does not exercise undue influence over the Company 
or prevent it from acting independently of the Controlling 
Shareholder, the Board believes that the continued presence of 
Messrs Kalinin and Calvey on the board is beneficial for the 
Company. Mr Kalinin also serves as Chairman of the Board and was 
not considered to be independent on his appointment.
Notwithstanding under the provisions of the UK Corporate 
Governance Code as a Smaller Company the Company meets the 
requirements to have at least two independent non-executives on 
the Board.
All directors are permitted access to independent professional 
advice in the course of execution of their duties, at the Company’s 
expense.
The Board has established the following committees:
Audit Committee
The Audit Committee was appointed in March 2007 and comprises 
three directors:
Mr Ogden – Chairman
Mr Freeman
Mr Calvey
The Audit Committee is responsible for selecting the Group’s 
independent auditors, pre-approving all audit and non-audit related 
services, reviewing with management and the independent auditors 
the Group’s financial statements, significant accounting and financial 
policies and practices, audit scope and adequacy of internal audit 
and control systems. The Audit Committee keeps the independence 
and objectivity of the auditor under review and a formal statement 
of independence is received from the external auditor each year. The 
audit committee meets at least twice each year.
Remuneration Committee
The Remuneration Committee was also appointed in March 2007 
and comprises three directors:
Mr Freeman – Chairman
Mr Ogden
Mr Kalinin
The Remuneration Committee is responsible for reviewing the 
performance of the directors and for determining compensation  
of the Company’s key employees, including the chief executive 
officer, chief financial officer, and other key personnel as may be 
determined from time to time by the Remuneration Committee. 
The Remuneration Committee meets at least twice each year.
The Directors’ Remuneration Report is set out on pages 21 to 22.
Nomination Committee
The Nomination Committee was appointed in March 2007 and 
comprises three directors:
Mr Freeman – Chairman
Mr Ogden
Mr Calvey
The Nomination Committee is responsible for reviewing the 
structure, size and composition of the Board, making 
recommendations to the Board concerning plans for succession for 
both executive and non-executive directors including the Chief 
Executive and other senior management, preparing a description 
of the role and capabilities required for a particular appointment 
and identifying and nominating candidates to fill Board positions as 
and when they arise. VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
17
Board meetings
The Board met four times during the year ended 31 December 
2013 (2012: five times) with the following attendance:
2013 2012
Aleksey Kalinin 4 5
Mikhail Ivanov 4 6
Tony Alves 4 6
Ronald Freeman 3 6
Stephen Ogden 4 6
Vladimir Koshcheev 4 4
Michael Calvey 4 6
Indemnification of directors
In accordance with the Company’s Articles of Association and to 
the extent permitted by the law of England and Wales, directors 
are granted an indemnity from the Company in respect of liabilities 
incurred as a result of their office. In respect of those matters for 
which the directors may not be indemnified, the Company 
maintained a directors’ and officers’ liability insurance policy 
throughout the financial year. This policy has been renewed for the 
next financial year.
Re-election of directors
The Company requires that all directors stand for re ‑election at 
intervals of no more than three years. Accordingly Messrs Alves, 
Freeman and Ogden will retire at the forthcoming AGM and will 
seek re-election by shareholders.
Internal controls
The directors acknowledge their responsibility for the system of 
internal controls for the Group and for reviewing its effectiveness. 
Any system of internal control can only provide reasonable, and  
not absolute, assurance that material financial irregularities will be 
detected or that the risk of failure to achieve business objectives 
is eliminated.
The Group’s risk and controls framework covers all material risks 
and controls including those of an operational, financial, and 
compliance nature. Internal control procedures consist, inter alia,  
of formal delegations of expenditure authority by the Board to 
executive management, and controls relating to key stages of 
transactions including supplier approval, contract signature, and 
payment release.
The directors consider that the frequency of Board meetings and 
level of detail presented to the Board for its consideration in 
relation to the operations of the Group provide an appropriate 
process to identify, evaluate and manage significant risks relevant 
to its operations on a continuous basis, and this process is 
considered to be in accordance with the revised guidance on 
internal control published in October 2005 (“Turnbull Guidance”).
In addition to formal Board meetings, management prepare 
detailed financial and operational reports on a monthly basis which 
is disseminated and discussed within the Board.
Investor relations
The Company places considerable importance on communication 
with shareholders and engages them on a wide range of issues.  
The Group has an ongoing programme of dialogue and meetings 
between the executive directors and institutional investors, fund 
managers and analysts. At these meetings a wide range of relevant 
issues including strategy, performance, management and 
governance are discussed within the constraints of the information 
already made public.
The Company is equally interested in the views and concerns of 
private shareholders and to this end ensures that the executive 
directors present the Company at forums where private investors 
are present.
Shareholders have the opportunity to meet and question the Board 
at the AGM which will be held on 6 June 2014, at which the 
chairman, the chairman of the Audit Committee and all executive 
directors will be available. The notice of the AGM is posted to all 
shareholders at least 21 working days before the meeting. Financial 
and other information is available on the Company’s website 
(www.volgagas.com).
By order of the Board
Tony Alves
Company Secretary
31 March 2014 18 Governance
Report of the Directors
The directors present their report together with the Group’s 
audited consolidated financial statements for the period from 
1 January 2013 to 31 December 2013.
Results and dividend
The Group’s results are set out on pages 24 to 28 and show net 
profit of US$8.6 million for the year to 31 December 2013  
(2012: net loss of US$7.4 million). The directors do not propose to 
pay a dividend for the year ended 31 December 2013 (2012: nil).
Principal activities, business review and future developments
Volga Gas is a public limited company registered in England and 
Wales with registered number 5886534, was incorporated in the 
United Kingdom on 25 July 2006 and listed on AIM on 25 April 2007 . 
Volga Gas operates primarily through subsidiary companies as set 
out in Note 2.2 to the accounts. The principal activity of the Group 
is the exploration, development and production of its gas, 
condensate and oil fields in the Volga Region of European Russia. 
During the year, the Group owned 100% interests in five licence 
areas in the Saratov and Volgograd regions: Karpenskiy, Vostochny-
Makarovskoye, Dobrinskoye, Pre-Caspian and Urozhainoye-2. Since 
the year end, the Group has relinquished the Pre-Caspian Licence 
and the exploration areas of the Urozhainoye-2 Licence.
The Group’s business strategy is to continue the development of 
the Vostochny Makarovskoye field and to manage production on 
the Dobrinskoye and Uzenskoye fields whilst at the same time 
exploring the potentially prospective structures on the Group’s 
licence areas. The Group also regularly evaluates acquisition 
opportunities as part of its overall growth strategy.
Highlights of the Group’s activities for the period ended 
31 December 2013 are:
 — Completion of a programme to upgrade the gas processing 
facility at the site of the Dobrinskoye gas/condensate field.
 — Receipt of construction approvals enabling significant increases 
in gas plant throughput.
 — Significant increase in production from the Vostochny 
Makarovskoye field.
The Group’s activities are described in greater detail in the Chief 
Executive’s Report on page 6 and in the Operational Review on 
pages 8 and 9. The principal risks associated with the Group’s 
activities are set out in the Financial Review on pages 10 to 11.
Key performance indicators
Given the nature of the business and that the Group has only two 
operating fields, the directors are of the opinion that further 
analysis using KPI’s is not appropriate for an understanding of the 
development, performance or position of our business at this time. 
The directors are of the opinion that the Operational Review on 
pages 8 and 9 provides the relevant information.
Going concern
Having made appropriate enquiries and having examined the major 
areas that could affect the Group’s financial position, the directors 
are satisfied that the Group has adequate resources to continue in 
operation for the foreseeable future. Accordingly they consider it 
appropriate to adopt the going concern basis in preparing the 
financial statements as described in note 1.
Directors
The directors who served during the year were:
Aleksey Kalinin, Non-Executive Chairman
Mikhail Ivanov, Chief Executive Officer
Michael Calvey, Non-Executive
Tony Alves, Chief Financial Officer
Ronald Freeman, Non-Executive
Vladimir Koshcheev, Non-Executive
Stephen Ogden, Non-Executive
Messrs Kalinin, Koshcheev and Freeman will retire by rotation and 
offer themselves for re‑election in accordance with the Company’s 
Articles of Association.
Directors’ interests
The directors serving during the year had the following beneficial 
interests in the shares of the Company:
Ordinary shares of 0.01p each
31 December 
2013
31 December 
2012
Aleksey Kalinin
1
– –
Mikhail Ivanov 1,000,000 1,000,000
Tony Alves 25,000 25,000
Ronald Freeman 55,000 55,000
Stephen Ogden 205,000 105,000
Vladimir Koshcheev
2
469,210 600,000
Michael Calvey
1
– –
1 Mr Calvey and Mr Kalinin are Co-Managing Partners of Baring Vostok Capital 
Partners Limited, a related party to Baring Vostok Nominees Limited and Dehus 
Dolmen Nominees Limited. As such Mr Calvey and Mr Kalinin have an indirect 
beneficial interest in the Company.
2 On 23 January 2014, Mr Koshcheev disposed of 50,000 shares and his beneficial 
interest in the Company consequently reduced to 419,210 shares.
Substantial shareholders
On 28 March 2014 the following parties had notifiable interests of 
3% or greater in the nominal value of the Company’s issued 0.01p 
ordinary shares:
Number  
of shares Percentage
Baring Vostok Nominees Ltd
1
39,620,000 48.90
Dehus Dolmen Nominees Ltd
2
7,906,889 9.76
JP Morgan Asset Management 
(UK) Limited 4,404,600 5.55
BlackRock Investment Management 
(UK) Limited 2,464,008 3.04
BNP Paribas Investment Partners S.A. 2,450,000 3.02
Zürcher Kantonal Bank AG 2,435,000 3.00
1 Baring Vostok Nominees Ltd is a nominee vehicle which holds the interests of the 
limited partnerships which comprise Baring Vostok Private Equity Fund III.
2 Dehus Dolmen Nominees Ltd is a nominee vehicle which holds the interests of the 
limited partnerships which comprise Baring Vostok Private Equity Fund IV. VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
19
Options granted
An Executive Share Option Plan was adopted by the Company in 
July 2008 following which options over a total of 1,706,196 shares 
were granted to Mikhail Ivanov and to Tony Alves. During 2013 no 
further options (2012: options over 379,154 shares) were eligible for 
vesting. The details of these option grants are disclosed in the 
Remuneration Report below.
Interests in contracts
There were no contracts or arrangements during the period in 
which a director of the Company was materially interested and 
which were significant in relation to the business of the Company.
Creditors payment policy and practice
The Group aims to pay all its creditors promptly. For trade creditors 
it is the Group’s policy to:
(i) agree the terms of the payment at the start of the business 
with that supplier;
(ii) ensure that suppliers are aware of the terms of the payment; 
and
(iii) pay in accordance with contractual and other obligations
Political and charitable contributions
No political or charitable contributions were made in the year 
(2012: nil).
Employment policies
The Group is committed to pursuing an equal opportunities 
employment policy, covering recruitment and selection, training, 
development, appraisal and promotion. The Group recognises the 
diversity of its employees, its customers, and the community at 
large and seeks to use employees’ talents to the fullest. This 
approach extends to the fair treatment of people with disabilities, 
in relation to their recruitment, training and development. Full 
consideration is given to staff members who become disabled 
during employment.
Employee communication
The Group is committed to effective communications, which it 
maintains through regular information releases and staff briefings. 
Formal communications with employees take place through these 
channels. With respect to the Group’s operations in Russia and the 
recruitment of Russian employees, announcements, contracts, 
interviews and advertisements are conducted in the English and 
Russian languages, as applicable.
Health, safety and the environment
The Group’s policy and practice is to comply with health, safety and 
environmental regulations and requirements of the countries in 
which it operates, to protect its employees, contractors, assets and 
the environment.
The Company closely monitors its environmental obligations under 
the terms of its licence agreements. In particular, portions of the 
Karpenskiy Licence Area are located in the Saratovskiy Federal 
Nature Reserve and Tulipannaya Steppe Natural Sanctuary, which 
are protected by Russian environmental law. In accordance with 
Russian environmental law, all economic activity within the 
protected area is approved by the Russian government. The 
Company has ensured that all its activities minimise the impact on 
this sensitive environment.
UK Bribery Act
The Company has adopted Anti-Corruption and Anti-Bribery 
Policies and a framework of adequate procedures for managing  
the Volga Gas Group’s responsibilities in relation to the UK Bribery 
Act 2010.
Share capital
The Company has authorised ordinary share capital of 330,720,100 
shares of 1p each. Under a special resolution by the shareholders of 
the Company on 8 June 2013 the directors have authority to allot 
shares up to an aggregate nominal value of £1,000,000 of which 
£150,000 could be issued non-pre-emptively, in accordance with 
sections 570 and 573 of the Companies Act 2006. This authority  
will expire the earlier of (i) 15 months from the passing of the 
Resolution, or (ii) the conclusion of the Annual General Meeting  
of the Company to be held in 2013.
Capital risk management
The Group’s objectives when managing the balance of equity and 
debt capital are (a) to safeguard the Group’s ability to continue as a 
going concern, (b) provide returns for shareholders and benefits for 
other stakeholders and (c) to maintain an optimal capital structure 
to reduce the cost of capital. In order to maintain or adjust the 
capital structure, the Group may adjust the amount of dividends 
paid to shareholders, return capital to shareholders, issue new 
shares or sell assets to reduce debt. To date the Group has been 
funded entirely by equity capital.
Corporate Governance
The Company’s statement on Corporate Governance can be found 
in the Corporate Governance Statement on pages 16 to 17 of these 
financial statements and form part of this report by reference.
Statement of disclosure of information to auditors
As at the date of this report the serving directors confirm that:
 — so far as the directors are aware, there is no relevant audit 
information of which the Company’s auditors are unaware; and
 — they have taken all steps that they ought to have taken as 
directors in order to make themselves aware of any relevant 
audit information and to establish that the Company’s auditors 
are aware of that information.
Auditors
The Group’s auditors, KPMG Audit Plc has instigated an orderly 
wind down of business. The Board has decided to put KPMG LLP 
forward to be appointed as auditors and a resolution concerning 
the appointment will be put forward to the forthcoming Annual 
General Meeting of the Company. 20 Governance
Report of the Directors continued
Statement of directors’ responsibilities in respect of the 
annual report, strategic report and the directors’ report and 
the financial statements
The directors are responsible for preparing the Annual Report, 
Strategic Report and the Directors’ Report and the financial 
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and Parent 
Company financial statements for each financial year. As required by 
the AIM Rules of the London Stock Exchange they are required to 
prepare the Group financial statements in accordance with IFRSs as 
adopted by the EU and applicable law and have elected to prepare 
the Parent Company financial statements on the same basis.
Under company law the directors must not approve the financial 
statements unless they are satisfied that they give a true and fair 
view of the state of affairs of the Group and Parent Company and 
of their profit or loss for that period. In preparing each of the Group 
and Parent Company financial statements, the directors are 
required to:
 — select suitable accounting policies and then apply them 
consistently;
 — make judgements and estimates that are reasonable and 
prudent;
 — state whether they have been prepared in accordance with 
IFRSs as adopted by the EU; and
 — prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the group and the 
Parent Company will continue in business.
The directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the Parent 
Company’s transactions and disclose with reasonable accuracy at 
any time the financial position of the Parent Company and enable 
them to ensure that its financial statements comply with the 
Companies Act 2006. They have general responsibility for taking 
such steps as are reasonably open to them to safeguard the assets 
of the Group and to prevent and detect fraud and other 
irregularities.
The directors are responsible for the maintenance and integrity of 
the corporate and financial information included on the Company’s 
website. Legislation in the UK governing the preparation and 
dissemination of financial statements may differ from legislation in 
other jurisdictions.
Electronic communications
The maintenance and integrity of the Volga Gas plc website 
(www.volgagas.com) is the responsibility of the directors; the work 
carried out by the auditors does not involve consideration of these 
matters and accordingly, the auditors accept no responsibility for 
any changes that may have occurred to the financial statements 
since they were initially presented on the website.
The Company’s website is maintained in compliance with AIM Rule 26.
Legislation in the United Kingdom governing the preparation and 
dissemination of financial statements may differ from legislation in 
other jurisdictions.
On behalf of the Board
Tony Alves
Chief Financial Officer
31 March 2014 VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
21
Directors’ Remuneration Report
In common with the Board’s commitment to compliance with the 
Combined Code, the Company has adopted the Principles of Good 
Governance relating to directors’ remuneration. The Company 
discloses certain information relating to directors’ remuneration in 
this report, which is not audited.
Remuneration Committee
The Company established a Remuneration Committee in April 
2007 , as set out in Corporate Governance on pages 16 to 17.
The Remuneration Committee advises the Board on Group 
compensation policy as it relates to executive directors and other 
key members of management, and may obtain advice from 
independent remuneration consultants appointed by the 
Company. The Remuneration Committee comprises Ronald 
Freeman (Chairman), Stephen Ogden and Aleksey Kalinin, who are 
all deemed to be non-executive directors. Executive directors may 
be invited to attend meetings of the Remuneration Committee but 
do not vote on their own remuneration or incentives. The 
Remuneration Committee meets as required.
Remuneration policy
The Company’s policy is to maintain levels of compensation for the 
Group that are comparable and competitive with peer group 
companies, so as to attract and retain individuals of the highest 
calibre, by rewarding them as appropriate for their contribution to 
the Group’s performance.
Executive Directors’ employment agreement and terms 
of appointment
The terms of each executive director’s appointment are set out in 
their service agreements. Each executive director agreement is 
based on similar terms, with no fixed duration. Each service 
agreement sets out details of basic salary and share options 
as applicable.
All executive director employment agreements can be terminated 
either by the director concerned or by the Company on giving 
six months’ notice during the first 24 months of service and 
thereafter by giving three months’ notice.
The executive directors do not participate in any Group pension 
scheme and their remuneration is not pensionable. However, one 
of the executive directors has elected to receive part of his 
remuneration by way of contributions to a personal pension plan. 
The executive directors are eligible for payment of cash bonuses 
and participation in any share-based incentive plan the Board 
implements.
Basic salaries
The basic salary of each executive director is established by 
reference to their responsibilities and individual performance.
Non-executive Directors’ terms, conditions and fees
The non‑executive directors have been engaged under the terms 
of their letters of appointment. These engagements are for two 
years and can be terminated upon one month’s notice by either 
party. Reappointment is subject to the Company’s Articles of 
Association which provide that one third of the directors shall be 
required to retire each year.
Fees
The fees paid to non‑executive directors are determined by the 
Board and reviewed periodically to reflect current rates and practice 
commensurate with the size of the Company and their roles.
The remuneration of the non‑executive directors is a matter for the 
chairman of the Board and the chief executive officer. In the event 
of the appointment of an independent non-executive chairman his 
remuneration would be a matter for the chairman of the 
Remuneration Committee and the chief executive officer.
Audited Information – Directors detailed emoluments
Salary 
US$ 000
Pension 
Contribution  
US$ 000
Share Based 
Compensation  
US$ 000
Fees  
US$ 000
Aggregate 
Remuneration 
for the Year  
31 December 
2013 
US$ 000
Aggregate 
Remuneration 
for the Year  
31 December 
2012 
US$ 000
Executive Directors
M. Ivanov 398 – – – 398 400
A. Alves 232 78 – – 310 317
Non-Executive
A. Kalinin – – – – – –
R. Freeman – – – 50 50 50
S. Ogden – – – 50 50 50
V. Koshcheev – – – – – –
M. Calvey – – – – – – 22 Governance
Directors’ Remuneration Report continued
Directors’ interests in the share capital of the Company
The Directors’ interests in the share capital of the Company are 
disclosed in the Report of the Directors on page 18. There has been 
no change in the interest of any director between 1 January 2013 
and the date of this report.
Directors’ share options
The Company adopted an Executive Share Option Plan (“ESOP”) on 
14 July 2008, which was subsequently amended on 17 December 
2008. Under the terms of this Plan, a maximum of 2,843,661 shares 
(equivalent to approximately 5% of the then issued share capital) 
may be allocated and subject to performance criteria and vesting 
periods as specified by the Remuneration Committee.
During 2008, the Company granted options to acquire 1,137 ,464 
ordinary shares to Mikhail Ivanov under the terms of the ESOP .  
The options may be exercised at a price of 405p per share and vest 
in equal portions on May 2010, 2011 and 2012 and will remain 
outstanding until May 2017. On 17 December 2008, Tony Alves was 
granted options to acquire up to 568,732 ordinary shares in the 
Company at an exercise price of 100p per share. The options vested 
over a period of up to four years subject to the satisfaction of 
performance conditions related to the market price of the 
Company’s shares. The vested options will remain exercisable until 
eight years from the date of grant. During 2013, options over no 
further shares became eligible for vesting (2012: 379,154 shares).
By order of the Board
Tony Alves
Company Secretary
31 March 2014 VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
23
Independent Auditors’ Report to  
the Members of Volga Gas plc
We have audited the financial statements of Volga Gas plc for the 
year ended 31 December 2013. The financial reporting framework 
that has been applied in their preparation is applicable law and 
International Financial Reporting Standards (“IFRSs”) as adopted  
by the EU and, as regards the Parent Company financial statements,  
as applied in accordance with the provisions of the Companies 
Act 2006.
This report is made solely to the Company’s members, as a body, in 
accordance with Chapter 3 of Part 16 of the Companies Act 2006. 
Our audit work has been undertaken so that we might state to the 
Company’s members those matters we are required to state to 
them in an auditor’s report and for no other purpose. To the fullest 
extent permitted by law, we do not accept or assume responsibility 
to anyone other than the Company and the Company’s members, 
as a body, for our audit work, for this report, or for the opinions we 
have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement 
set out on page 23, the directors are responsible for the 
preparation of the financial statements and for being satisfied that 
they give a true and fair view. Our responsibility is to audit, and 
express an opinion on, the financial statements in accordance with 
applicable law and International Standards on Auditing (UK and 
Ireland). Those standards require us to comply with the Auditing 
Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements  
is provided on the Financial Reporting Council’s website at 
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
 — the financial statements give a true and fair view of the state  
of the Group’s and of the Parent Company’s affairs as at 
31 December 2013 and of the Group’s profit for the year then 
ended;
 — the Group financial statements have been properly prepared in 
accordance with IFRSs as adopted by the EU;
 — the Parent Company financial statements have been properly 
prepared in accordance with IFRSs as adopted by the EU and as 
applied in accordance with the provisions of the Companies Act 
2006; and
 — the financial statements have been prepared in accordance 
with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the 
Directors’ Report for the financial year for which the financial 
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters 
where the Companies Act 2006 requires us to report to you if, in 
our opinion:
 — adequate accounting records have not been kept by the Parent 
Company, or returns adequate for our audit have not been 
received from branches not visited by us; or
 — the Parent Company financial statements are not in agreement 
with the accounting records and returns; or
 — certain disclosures of directors’ remuneration specified by law 
are not made; or
 — we have not received all the information and explanations we 
require for our audit.
Adrian Wilcox (Senior Statutory Auditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
8 Salisbury Square
London
EC4Y 8BB
31 March 2014 24 Financial Statements
Group Income Statement
(presented in US$ 000)
Year ended 31 December Notes 2013
2012 
Restated
Continuing Operations
Revenue 34,621 28,295
Cost of sales 5 (18,451) (16,569)
Gross profit 16,170 11,726
Exploration and evaluation expense 5 (2,519) (8,475)
Operating and administrative expenses 5 (4,029) (8,969)
Write off of development assets 5 (1,439) (188)
Operating profit/(loss) 8,183 (5,906)
Interest income 6 45 185
Interest expense (281) (415)
Other losses – net 7 1,648 (172)
Profit/(loss) for the year before tax 9,595 (6,308)
Current income tax 8 – –
Deferred income tax 8 (1,036) (1,113)
Profit/(loss) for the year 8,559 (7,421)
Attributable to:
The owners of the Parent Company 8,559 (7,421)
Basic and diluted loss per share (in US dollars) 9 0.11 (0.09)
Weighted average number of shares outstanding 81,017,800 81,017,800
The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the Parent Company income 
statement. The loss for the Parent Company for the year was US$1,338,000 (201 1: US$1,432,000)
Year ended 31 December 2013 2012
Profit/(loss for the year attributable to equity shareholders of the Company 8,559 (7,421)
Other comprehensive income:
Currency translation differences (8,242) 6,677
Total comprehensive income (expense) for the year 317 (744)
Attributable to:
The owners of the Parent Company 317 (744)
The accompanying notes on pages 29 to 44 are an integral part of these financial statements.
Group Statement of Comprehensive Income
(presented in US$ 000) VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
25
At 31 December Notes
Group  
2013
Group  
2012
Assets
Non-current assets
Intangible assets 10 6,438 9,646
Property, plant and equipment 11 98,272 103,703
Other non-current assets 12 709 798
Deferred tax assets 8 750 2,062
Total non-current assets 106,169 116,209
Current assets
Cash and cash equivalents 13 8,081 7,049
Inventories 14 1,793 1,235
Other receivables 15 2,869 2,330
Total current assets 12,743 10,614
Total assets 118,912 126,823
Equity and liabilities
Equity
Share capital 16 1,485 1,485
Share premium (net of issue costs) 16 165,873 165,873
Other reserves 17 (21,861) (13,619)
Accumulated loss 21 (30,779) (39,338)
Equity attributable to the shareholders of the parent 114,718 114,401
Non-controlling interests – –
Total equity 114,718 114,401
Non-current liabilities
Asset retirement obligation 325 350
Long-term debt 18 – 1,586
Total non-current liabilities 325 1,936
Current liabilities
Trade and other payables 19 3,869 4,083
Short-term debt 18 – 6,403
Total current liabilities 3,869 10,486
Total equity and liabilities 118,912 126,823
Approved by the Board of Directors on 31 March 2014 and signed on its behalf by
Mikhail Ivanov Tony Alves
Chief Executive Officer Chief Financial Officer
The accompanying notes on pages 29 to 44 are an integral part of these financial statements.
Group Balance Sheet
(presented in US$ 000) 26 Financial Statements
Group Cash Flow Statement
(presented in US$ 000)
Year ended 31 December Notes 2013 2012
Profit/(loss) for the year before tax 9,595 (6,308)
Adjustments to loss before tax:
Depreciation 2,616 2,280
Exploration and evaluation expense 2,519 8,359
Write off of development assets 5 1,188 –
Loan repayment by offset of gas sales – (1,132)
Other non-cash expenses 342 57
Foreign exchange differences 302 (262)
Operating cash flow prior to working capital 16,652 2,994
Working capital changes
Decrease/(increase) in trade and other receivables (870) 3,156
Increase/(decrease) in payables 315 (177)
Increase in inventory (644) (528)
Cash flow from operations 15,363 5,445
Income tax paid – (3)
Net cash flow generated from operating activities 15,363 5,442
Cash flows from investing activities
Expenditure on exploration and evaluation 10 – (3,408)
Purchase of property, plant and equipment 11 (6,229) (10,319)
Net cash used in investing activities (6,229) (13,727)
Cash flows from financing activities
Loans received – 10,124
Loans repaid (8,097) (5,294)
Net cash provided by financing activities (8,097) 4,830
Effect of exchange rate changes on cash and cash equivalents (5) 405
Net decrease in cash and cash equivalents 1,032 (3,050)
Cash and cash equivalents at beginning of the year 13 7,049 10,099
Cash and cash equivalents at end of the year 13 8,081 7,049
The accompanying notes on pages 29 to 44 are an integral part of these financial statements. VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
27
Company Balance Sheet
(presented in US$ 000)
Company registration number: 05886534
At 31 December Notes
Company 
2013
Company 
2012
Assets
Non-current assets
Investments 21 152,234 152,234
Intercompany receivables 15,697 16,040
Total non-current assets 167,931 168,274
Current assets
Cash and cash equivalents 13 201 1,017
Other receivables 29 62
Total current assets 230 1,079
Total assets 168,161 169,353
Equity and liabilities
Equity
Share capital 16 1,485 1,485
Share premium (net of issue costs) 16 165,873 165,873
Other reserves 17 5,233 5,233
Accumulated loss 18 (5,797) (4,610)
Total equity 166,794 167,981
Current liabilities
Intercompany payables 1,357 1,357
Trade and other payables 20 10 15
Total current liabilities 1,367 1,372
Total equity and liabilities 168,161 169,353
Approved by the Board of Directors on 31 March 2014 and signed on its behalf by
Mikhail Ivanov Tony Alves
Chief Executive Officer Chief Financial Officer
The accompanying notes on pages 29 to 44 are an integral part of these financial statements. 28 Financial Statements
Attributable to the equity shareholders of the Company
Share
Capital
Share 
Premium
Currency 
Translation 
Reserves
Share Grant 
Reserves
Accumulated 
Loss
Total
Equity
Opening equity at 1 January 2012 1,485 165,873 (25,529) 5,233 (31,917) 115,145
Loss for the year – – – – (7,421) (7,421)
Transactions with owners
Share capital issued – – – – – –
Share issue costs – – – – – –
Share-based payments – – – – – –
Total transactions with owners – – – – – –
Currency translation differences – – 6,677 – – 6,677
Total comprehensive income – – 6,677 – (7,421) (744)
Closing equity at 31 December 2012 1,485 165,873 (18,852) 5,233 (39,338) 114,401
Opening equity at 1 January 2013 1,485 165,873 (18,852) 5,233 (39,338) 114,401
Profit for the year – – – – 8,559 8,559
Transactions with owners
Share capital issued – – – – – –
Share issue costs – – – – – –
Share-based payments – – – – – –
Total transactions with owners – – – – – –
Currency translation differences – – (8,242) – – (8,242)
Total comprehensive income – – (8,242) – 8,559 317
Closing equity at 31 December 2013 1,485 165,873 (27,094) 5,233 (30,779) 114,718
Group Statement of Changes in Shareholders’ Equity
(presented in US$ 000)
Share  
Capital
Share 
Premium
Share-based 
Payment 
Reserves
Accumulated 
Loss
Total  
Equity
Opening equity as at 1 January 2012 1,485 165,873 5,233 (3,272) 169,319
Loss for the year (1,338) (1,338)
Share capital issued – – – – –
Share Issue costs – – – – –
Share-based payments – – – – –
Closing equity at 31 December 2012 1,485 165,873 5,233 (4,610) 167,981
Opening equity as at 1 January 2013 1,485 165,873 5,233 (4,610) 167,981
Loss for the year – – – (1,187) (1,187)
Share capital issued – – – – –
Share Issue costs – – – – –
Share-based payments – – – – –
Closing equity at 31 December 2012 1,485 165,873 5,233 (5,797) 166,794
The accompanying notes on pages 29 to 44 are an integral part of these financial statements.
Company Statement of Changes in Shareholders’ Equity
(presented in US$ 000) VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
29
1. General information
Volga Gas plc (the “Company” or “Volga”) is a public limited company 
registered in England and Wales with registered number 5886534. 
The Company was incorporated on 25 July 2006. The principal 
activities of the Company and its subsidiaries (the “Group”) are the 
acquisition, exploration and development of hydrocarbon assets 
and production of hydrocarbons in the Volga Region of the Russian 
Federation. Its registered office is at Ground floor, 17-19 Rochester 
Row, London, SW1P 1QT. The Company’s shares are listed on the 
Alternative Investment Market of the London Stock Exchange.
These Group consolidated financial statements were authorised for 
issue by the Board of Directors on 31 March 2014.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of 
these consolidated financial statements are set out below. These 
policies have been consistently applied to all the years presented, 
unless otherwise stated.
2.1 Basis of preparation
Both the Parent Company financial statements and the Group 
financial statements have been prepared in accordance with 
International Financial Reporting Standards (“IFRSs”), as adopted 
by the European Union (“EU”), International Financial Reporting 
Interpretations Committee (“IFRIC”) interpretations, and the 
Companies Act 2006 applicable to companies reporting under IFRS. 
The consolidated financial statements have been prepared under 
the historical cost convention and in accordance with applicable 
accounting standards.
The preparation of financial statements in conformity with IFRSs 
requires the use of certain critical accounting estimates. It also 
requires management to exercise its judgement in the process of 
applying the Group’s accounting policies. The areas involving a 
higher degree of judgement or complexity, or areas where 
assumptions and estimates are significant to the consolidated 
financial statements are disclosed in note 4.
No income statement is presented for Volga Gas plc as permitted 
by Section 408 of the Companies Act 2006.
The Group’s business activities, together with the factors likely to 
affect its future development, performance and position set out in 
the Strategic Report on pages 5 to 13; the financial position of the 
Group, its cash flows, liquidity position and borrowing facilities are 
described in the Financial Review on page 10. In addition, the 
Group’s objectives, policies and processes for measuring capital, 
financial risk management objectives, details of financial 
instruments and exposure to credit and liquidity risks are described 
in note 3. Having reviewed the future cash flow forecasts of the 
Group, the directors have concluded that the Group will continue to 
have access to sufficient funds in order to meet its obligations as 
they fall due for at least the foreseeable future and thus continue 
to adopt the going concern basis of accounting in preparing the 
annual financial statements.
Following a review by management, it was decided, as of 2013, to 
allocate property tax expenses from Other Operating and 
Administrative costs to Cost of Sales as this more accurately 
reflects the nature of the expenses. The respective prior year costs 
have been restated accordingly.
Disclosure of impact of new and future accounting standards
(a) New and amended standards and interpretations adopted by 
the Group:
There are no IFRSs or IFRIC interpretations that are effective for 
the first time for the financial year beginning on 1 January 2013 
that have a material impact on the Group.
(b) Amended standards and interpretations not relevant to 
the Group:
The following new standards, amendments to standards and 
interpretations are mandatory for the first time for the financial 
year beginning 1 January 2013, but are not currently relevant for 
the Group:
 — Amendment to IAS 12,”Income taxes” on deferred tax
(c) Standards, amendments and interpretations to existing 
standards that are not yet effective and have not been early 
adopted by the Group. The following new standards, 
amendments to standards and interpretations have been 
issued, but are not effective for the financial year beginning 
1 January 2012 and have not been early adopted:
 — IFRS 10 “Consolidated financial statements” (effective 1 
January 2014)
 — IFRS 12 “Disclosures of interests in other entities” (effective 
1 January 2014)
 — IFRS 11, “Joint arrangements” (effective 1 January 2014)
 — IAS 27 (revised 2011) “Separate financial statements” (effective 
1 January 2014)
 — IAS 28 (revised 2011) “Associates and joint ventures” (effective 
1 January 2014)
 — IAS 32 “Offsetting financial assets and liabilities” (effective 
1 January 2014)
 — Transition guidance (Amendments to IFRS 10, IFRS 11 and IFRS 
12, effective 1 January 2014). The amendments simplify the 
transition to these new standards and provide additional relief 
from disclosures.
The Group is yet to assess the full impact of these new standards 
and amendments but does not expect them to have a material 
impact on the financial statements.
2.2 Consolidation
(a) Subsidiaries
The consolidated financial statements include the financial 
statements of the Company and its subsidiaries. Subsidiaries are 
entities in which the Group directly or indirectly owns more than  
50% of the voting stock or otherwise has the power to govern the 
financial and/or operating policies. Subsidiaries are fully consolidated 
from the date on which control is transferred to the Group. They 
are deconsolidated from the date that control ceases.
Investments in subsidiaries are accounted for at cost less 
impairment. Cost is adjusted to reflect changes in consideration 
arising from contingent consideration amendments. Cost also 
includes direct attributable costs of investment.
Inter-company transactions, balances and unrealised gains on 
transactions between Group companies are eliminated; unrealised 
losses are also eliminated unless the cost cannot be recovered.
The Company and its subsidiaries outside the Russian Federation 
maintain their financial statements in accordance with IFRSs as 
adopted by the EU. The Russian subsidiaries of the Group maintain 
their statutory accounting records in accordance with the 
Regulations on Accounting and Reporting of the Russian 
Federation. The consolidated financial statements are based on 
these statutory accounting records, appropriately adjusted and 
reclassified for fair presentation in accordance with International 
Notes to the IFRS Consolidated Financial Statements
For the year ended 31 December 201 3
(presented in US$ 000) 30 Financial Statements
Notes to the IFRS Consolidated Financial Statements 
continued
Financial Reporting Standards as adopted by the EU.
A list of the Company’s subsidiaries is provided in Note 21.
2.3 Segment reporting
Segmental reporting follows the Group’s internal reporting structure.
Operating segments are defined as components of the Group where 
separate financial information is available and reported regularly to 
the chief operating decision maker (“CODM”), which is determined to 
be the Board of Directors of the Company. The Board of Directors 
decide how to allocate resources and assesses operational and 
financial performance using the information provided.
The CODM receives monthly IFRS based financial information for 
the Group and its development and production entities. There 
were three development and production entities during both 2012 
and 2013. Management has determined that the operations of 
these production and development entities are sufficiently 
homogenous (all are concerned with upstream oil and gas 
development and production activities) for these to be aggregated 
for the purpose of IFRS 8, “Operating Segments”. The Group has 
other entities that engage as either head office or in a corporate 
capacity or as holding companies. Management has concluded that 
due to application of the aggregation criteria that separate 
financial information for segments is not required.
No geographic segmental information is presented as all of the 
companies operating activities are based in the Russian Federation.
Management has determined therefore that the operations of the 
Group comprise one class of business, being oil and gas exploration, 
development and production and the Group operates in only one 
geographic area – the Russian Federation.
There is no concentration of sales with any major customer that is 
required to be separately disclosed.
2.4 Foreign currency translation
(a) Functional and presentation currency
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, which is the Company’s functional and the Group’s 
presentation currency.
The functional currency of the Group’s subsidiaries that are 
incorporated in the Russian Federation is the Russian rouble 
(“RUR”). It is the Management’s view that the RUR best reflects the 
financial results of its Cyprus subsidiaries because they are 
dependent on entities based in Russia that operate in an RUR 
environment in order to recover their investments. As a result, the 
functional currency of the subsidiaries continues to be the RUR.
(b) Transactions and balances
Foreign currency transactions are translated into the functional 
currency using the exchange rates prevailing at the dates of the 
transactions. Foreign exchange gains and losses resulting from the 
settlement of such transactions and from the translation at year-end 
exchange rates of monetary assets and liabilities denominated in 
foreign currencies are recognised in the income statement.
Foreign exchange gains and losses that relate to cash and cash 
equivalents, borrowings and other foreign exchange gains and 
losses are presented in the income statement within “Other gains 
and losses”.
(c) Group companies
The results and financial position of all the Group entities (none of 
which has the currency of a hyper-inflationary economy) that have a 
functional currency different from the presentation currency are 
translated into the presentation currency as follows:
(i) assets and liabilities for each balance sheet item presented are 
translated at the closing rate at the date of that balance sheet;
(ii) income and expenses for each income statement are translated 
at average exchange rates (unless this average is not a 
reasonable approximation of the cumulative effect of the rates 
prevailing on the transaction dates, in which case income and 
expenses are translated at the rate on the dates of the 
transactions); and
(iii) all resulting exchange differences are recognised in other 
comprehensive income.
The major exchange rates used for the revaluation of the closing 
balance sheet at 31 December 2013 were
 — GBP1.6488 : US$ (2012: GBP1 : US$1.6242)
 — EUR1.374 : US$ (2012: 1.3215)
 — US$1 : 32.729 RUR. (2012: US$1 : RUR. 30.558)
2.5 Oil and gas assets
The Company and its subsidiaries apply the successful efforts 
method of accounting for Exploration and Evaluation (“E&E”) costs, 
in accordance with IFRS 6 “Exploration for and Evaluation of 
Mineral Resources”. Costs are accumulated on a field-by-field basis.
Capital expenditure is recognised as property, plant and equipment 
or intangible assets in the financial statements according to the 
nature of the expenditure and the stage of development of the 
associated field, i.e. exploration, development, production.
(a) Exploration and evaluation assets
Costs directly associated with an exploration well, including certain 
geological and geophysical costs, and exploration and property 
leasehold acquisition costs, are capitalised as intangible assets until 
the determination of reserves is evaluated. If it is determined that a 
commercial discovery has not been achieved, these costs are 
charged to expense after the conclusion of appraisal activities. 
Exploration costs such as geological and geophysical that are not 
directly related to an exploration well are expensed as incurred.
Once commercial reserves are found, exploration and evaluation 
assets are tested for impairment and transferred to development 
assets. No depreciation or amortisation is charged during the 
exploration and evaluation phase.
(b) Development assets
Expenditure on the construction, installation or completion of 
infrastructure facilities such as platforms, pipelines and the drilling of 
development wells into commercially proven reserves, is capitalised 
within property, plant and equipment. When development is 
completed on a specific field, it is transferred to producing assets as 
part of property, plant and equipment. No depreciation or 
amortisation is charged during the development phase.
(c) Oil and gas production assets
Production assets are accumulated generally on a field by field 
basis and represent the cost of developing the commercial reserves 
discovered and bringing them into production together with E&E 
expenditures incurred in finding commercial reserves and 
transferred from the intangible E&E assets as described above.
2. Summary of significant accounting policies continued VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
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FINANCIAL STATEMENTS
31
The cost of production assets also includes the cost of acquisitions 
and purchases of such assets, directly attributable overheads, 
finance costs capitalised and the cost of recognising provisions for 
future restoration and decommissioning.
Where major and identifiable parts of the production assets have 
different useful lives, they are accounted for as separate items of 
property, plant and equipment. Costs of minor repairs and 
maintenance are expensed as incurred.
(d) Depreciation/amortisation
Oil and gas properties are depreciated or amortised using the 
unit-of-production method. Unit-of-production rates are based on 
proved and probable reserves, which are oil, gas and other mineral 
reserves estimated to be recovered from existing facilities using 
current operating methods. Oil and gas volumes are considered 
produced once they have been measured through meters at 
custody transfer or sales transaction points at the outlet valve on 
the field storage tank.
(e) Impairment – exploration and evaluation assets
Exploration and evaluation assets are tested for impairment prior 
to reclassification to development tangible assets, or whenever 
facts and circumstances indicate that an impairment condition may 
exist. An impairment loss is recognised for the amount by which the 
exploration and evaluation assets’ carrying amount exceeds their 
recoverable amount. The recoverable amount is the higher of the 
exploration and evaluation assets’ fair value less costs to sell and 
their value in use. For the purposes of assessing impairment, the 
exploration and evaluation assets subject to testing are grouped 
with existing cash-generating units of production fields that are 
located in the same geographical region.
(f) Impairment – proved oil and gas production properties
Proven oil and gas properties are reviewed for impairment 
whenever events or changes in circumstances indicate that the 
carrying amount may not be recoverable. An impairment loss is 
recognised for the amount by which the asset’s carrying amount 
exceeds its recoverable amount. The recoverable amount is the 
higher of an asset’s fair value less costs to sell and value in use. The 
cash generating unit applied for impairment test purposes is 
generally the field, except that a number of field interests may be 
grouped together where the cash flows of each field are 
interdependent, for instance where surface infrastructure is used 
by one or more fields in order to process production for sale.
(g) Decommissioning
Provision is made for the cost of decommissioning assets at the 
time when the obligation to decommission arises. Such provision 
represents the estimated discounted liability (the discount rate 
used currently being at 10% per annum) for costs which are 
expected to be incurred in removing production facilities and site 
restoration at the end of the producing life of each field. A 
corresponding item of property, plant and equipment is also 
created at an amount equal to the provision. This is subsequently 
depreciated as part of the capital costs of the production facilities. 
Any change in the present value of the estimated expenditure 
attributable to changes in the estimates of the cash flow or the 
current estimate of the discount rate used are reflected as an 
adjustment to the provision and the property, plant and 
equipment. The unwinding of the discount is recognised as a 
finance cost.
2.6 Other business and corporate assets
Property, plant and equipment not associated with exploration and 
production activities are carried at cost less accumulated 
depreciation. These assets are also evaluated for impairment when 
circumstances dictate.
Land is not depreciated. Depreciation of other assets is calculated 
on a straight line basis as follows:
Machinery and equipment 6–10 years
Office equipment in excess of US$5,000 3–4 years
Vehicles and other 2–7 years
2.7 Financial assets
The Group classifies its financial assets in the following categories:
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial 
assets held for trading. This category comprises derivatives unless 
they are effective hedging instruments. The Group had no financial 
assets in this class as at 31 December 2013 or 31 December 2012.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed 
or determinable payments that are not quoted in an active market. 
This category comprises trade and other receivables, term bank 
deposits and cash and cash equivalents in balance sheet.
2.8 Inventories
Crude oil inventories are stated at the lower of cost of production 
and net realisable value. Materials and supplies inventories are 
recorded at average cost and are carried at amounts which do not 
exceed the expected recoverable amount from use in the normal 
course of business. Cost comprises direct materials and, where 
applicable, direct labour plus attributable overheads based on a 
normal level of activity and other costs associated in bringing 
inventories to their present location and condition.
2.9 Trade and other receivables
Trade and other receivables are recorded initially at fair value and 
subsequently measured at amortised cost using the effective 
interest method, less provision for impairment. A provision for 
impairment of trade receivables is established when there is 
objective evidence that the Group will not be able to collect all 
amounts due according to the original terms of the receivables. The 
amount of the provision is the difference between the asset’s 
carrying amount and the present value of estimated future cash 
flows, discounted at the original effective interest rate.
2.10 Cash and cash equivalents
Cash and cash equivalents include cash in hand, and deposits held 
at call with banks.
2.11 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or 
options are shown in equity as a deduction, net of tax, from the 
proceeds.
2.12 Trade payables
Trade payables are recognised initially at fair value and 
subsequently measured at amortised cost using the effective 
interest method.
2. Summary of significant accounting policies continued 32 Financial Statements
Notes to the IFRS Consolidated Financial Statements 
continued
2.13 Current and deferred income tax
The tax expense for the period comprises current and deferred tax. 
Tax is recognised in the income statement, except to the extent 
that it relates to items recognised in other comprehensive income 
or directly in equity. In this case the tax is also recognised in other 
comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax 
laws enacted or substantively enacted at the end of the reporting 
period in the countries where the Company’s subsidiaries operate 
and generate taxable income. Management periodically evaluates 
positions taken in tax returns with respect to situations in which 
applicable tax regulation is subject to interpretation. It establishes 
provisions where appropriate on the basis of amounts expected to 
be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on 
temporary differences arising between the tax bases of assets and 
liabilities and their carrying amounts in the consolidated financial 
statements. However, the deferred income tax is not accounted for 
if it arises from initial recognition of an asset or liability in a 
transaction other than a business combination that at the time of 
the transaction affects neither accounting nor taxable profit or 
loss. Deferred income tax is determined using tax rates (and laws) 
that have been enacted or substantially enacted by the end of the 
reporting period and are expected to apply when the related 
deferred income tax asset is realised or the deferred income tax 
liability is settled.
Deferred income tax assets are recognised to the extent that it is 
probable that future taxable profit will be available against which 
the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a 
legally enforceable right to offset current tax assets against current 
tax liabilities and when the deferred income taxes assets and 
liabilities relate to income taxes levied by the same taxation 
authority on either the same taxable entity or different taxable 
entities where there is an intention to settle the balances on a net 
basis.
2.14 Employee benefits
(a) Share-based compensation
The fair value of the employee services received in exchange for the 
grant of the options is recognised as an expense. The total amount 
to be expensed over the vesting period is determined by reference 
to the fair value of the options granted, excluding the impact of any 
non-market vesting conditions (for example, profitability and sales 
growth targets). Non-market vesting conditions are included in 
assumptions about the number of options that are expected to 
vest. The option plan currently in place for certain of the Directors is 
an equity settled share option plan.
The Company measures the equity instruments granted to 
employees at the fair value at grant date. The fair value of fully-
vested shares is expensed immediately. The fair value of shares with 
vesting requirements is estimated using Black-Scholes’ option pricing 
model. This value is recognised as an expense over the vesting period 
on a straight-line basis. The estimate is revised, as necessary, if 
subsequent information indicates that the number of equity 
instruments expected to vest differs from previous estimates.
(b) Social obligations
Wages, salaries, contributions to the Russian Federation state 
pension and social insurance funds, paid annual leave, sick leave and 
bonuses are accrued in the year in which the associated services are 
rendered by the employees of the Group.
2.15 Revenue recognition
Revenue comprises the fair value of the consideration received or 
receivable for the sale of oil and gas in the ordinary course of the 
Group’s activities. Revenue is shown net of value added tax, 
returns, rebates and discounts and after eliminating sales within 
the Group. Revenue from the sale of oil or gas is recognised when 
the oil/gas is delivered to customers and title has transferred. In 
2013 and 2012 , the Group’s revenue related to sales of crude oil 
and condensate collected directly by customers and gas sales made 
at the entry to the gas distribution system.
2.16 Prepayments
Prepayments are carried at cost less provision for impairment. A 
prepayment is classified as non-current when the goods or services 
relating to the prepayment are expected to be obtained after one 
year, or when the prepayment relates to an asset which will itself 
be classified as non-current upon initial recognition. Prepayments 
to acquire assets are transferred to the carrying amount of the 
asset once the Group has obtained control of the asset and it is 
probable that future economic benefits associated with the asset 
will flow to the Group. Other prepayments are written off to profit 
or loss when the goods or services relating to the prepayments are 
received. If there is an indication that the assets, goods or services 
relating to a prepayment will not be received, the carrying value of 
the prepayment is written down accordingly and a corresponding 
impairment loss is recognised in profit or loss for the year.
2.19 Provisions
Provisions for environmental restoration, restructuring costs and 
legal claims are recognised when: the Group has a present legal or 
constructive obligation as a result of past events; it is probable that 
an outflow of resources will be required to settle the obligation; and 
the amount has been reliably estimated. Restructuring provisions 
comprise lease termination penalties and employee termination 
payments. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that 
an outflow will be required in settlement is determined by 
considering the class of obligations as a whole. A provision is 
recognised even if the likelihood of an outflow with respect to any 
one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures 
expected to be required to settle the obligation using a pre-tax 
rate that reflects current market assessments of the time value of 
money and the risks specific to the obligation. The increase in the 
provision due to passage of time is recognised as interest expense.
3. Financial risk management
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market 
risk (including foreign exchange risk, price risk, and cash flow 
interest rate risk), credit risk, and liquidity risk. The Group’s overall 
risk management programme focuses on the unpredictability of 
financial markets and seeks to minimise potential adverse effects 
on the Group’s financial performance.
(a) Market Risk
(i) Foreign exchange risk
The Group is exposed to foreign exchange risk arising from 
currency exposures, primarily with respect to the Russian Ruble. 
Foreign exchange risk arises from future commercial transactions, 
recognised assets and liabilities.
2. Summary of significant accounting policies continued VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
33
At 31 December 2013, if the US dollar had weakened/strengthened by 5% against the RUR with all other variables held constant, post-tax 
profit for the year would have been US$50,250 (2012: US$40,000) higher/lower, mainly as a result of foreign exchange gains/losses on 
translation of RUR denominated trade payables and financial assets. At 31 December 2013, if the US dollar had weakened/strengthened 
by 5% against the Euro (“EUR”) with all other variables held constant, post-tax profit for the year would have been US$1,200 (2012: 
US$197,000) higher/lower, mainly as a result of foreign exchange gains/losses on translation of EUR denominated interest charges and 
financial liabilities. At 31 December 2013, if the US dollar had weakened/strengthened by 5% against the pound sterling (“GBP”) with all 
other variables held constant, post-tax profit for the year would have been US$1,500 (2012: US$5,000) higher/lower, mainly as a result of 
foreign exchange gains/losses on translation of GBP denominated trade payables and financial assets.
The following table shows the currency structure of financial assets and liabilities:
At 31 December 2013
Rubles 
US$ 000
US Dollars 
US$ 000
Euros 
US$ 000
Sterling 
US$ 000
Total 
US$ 000
Financial assets
Cash and cash equivalents 6,836 1,226 17 2 8,081
Total financial assets 6,836 1,226 17 2 8,081
Financial liabilities (before provision for UK taxes) 2,979 – – – 2,979
At 31 December 2012
Rubles 
US$ 000
US Dollars 
US$ 000
Euros 
US$ 000
Sterling 
US$ 000
Total 
US$ 000
Financial assets
Cash and cash equivalents 2,790 4,165 25 69 7,049
Total financial assets 2,790 4,165 25 69 7,049
Financial liabilities (before provision for UK taxes) 4,068 3,987 4,002 11 12,068
No foreign exchange forward contracts were used in 2013 or 2012.
(ii) Price risk
The Group is not exposed to price risk as it does not hold financial instruments of which the fair values or future cash flows will be affected 
by changes in market prices.
(iii) Cash flow and fair value interest rate risk
As the Group currently has no significant interest-bearing assets and liabilities, the Group’s income and operating cash flows are 
substantially independent of changes in market interest rates.
(b) Credit risk
The Group’s maximum credit risk exposure is the fair value of each class of assets, presented in note 3.1(a)(i) of US$8,081,000 and 
US$7,049,000 at 31 December 2013 and 2012 respectively.
The Group’s principal financial asset is cash and credit risk arises from cash and cash equivalents and deposits with banks and financial 
institutions. It is the Group’s policy to monitor the financial standing of these assets on an ongoing basis. Bank balances are held with 
reputable and established financial institutions.
The Group’s oil and condensate sales are undertaken on a prepaid basis and accordingly the Group has no trade receivables and consequently 
no credit risk associated with the related trade receivables. Gas sales accounting for 24.7% of Group revenues in 2013 (2012: 9.8%) are made 
to OOO Trans Nafta. As at 31 December 2013 there were trade receivables of US$1.8 million (31 December 2012: nil) primarily relating to 
gas sales.
Rating of financial institution (S&P)
31 December 
2013
31 December 
2012
A+ 313 1,147
BBB+ 7,132 5,296
BBB- 489 517
Other 147 89
Total bank balance 8,081 7,049
(c) Liquidity risk
Cash flow forecasting is performed by Group finance. Group finance monitors rolling forecasts of the Group’s liquidity requirements to 
ensure it has sufficient cash to meet operational needs. The Group believes it has at least sufficient liquidity headroom to fund its 
currently planned exploration and development activities.
3. Financial risk management continued 34 Financial Statements
Notes to the IFRS Consolidated Financial Statements 
continued
The Group expects to fund its capital investments, as well as its administrative and operating expenses, through 2013 using a combination 
of cash generated from its oil and gas production activities, existing working capital and, when appropriate, medium term bank 
borrowings. If the Group is unsuccessful in generating enough liquidity to fund its expenditures, the Group’s ability to execute its 
long-term growth strategy could be significantly affected. The Group may need to raise additional equity or debt finance as appropriate 
to fund investments beyond its current commitments.
(d) Capital risk
The Group manages capital to ensure that it is able to continue as a going concern whilst maximising the return to shareholders. The 
Group is not subject to any externally imposed capital requirements. The Board regularly monitors the future capital requirements of the 
Group, particularly in respect of its ongoing development programme. During 2012 management decided that having established a track 
record of reliable cash generation it was appropriate to introduce a modest proportion of debt into the capital structure and as such a 
loan of US$10m was taken and which was fully repaid by 31 December 2013. Management expects that the cash generated by the 
operating fields will be sufficient to sustain the Group’s operations and future capital investment for the foreseeable future. Further 
short-term debt facilities may be arranged to provide financial headroom for future development activities.
3.2 Fair value estimation
Effective 1 January 2009, the Group adopted the amendment to IFRS 7 for financial instruments that are measured in the balance sheet 
at fair value. This requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
 — Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
 — Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or 
indirectly (that is, derived from prices) (level 2).
 — Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The Group has no financial assets and liabilities that are required to be measured at fair value.
4. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal 
the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying 
amounts of assets and liabilities within the next financial year are discussed below.
(a) Carrying value of fixed assets, intangible assets and impairment
Fixed assets are assessed for impairment when events and circumstances indicate that an impairment condition may exist. The carrying 
value of fixed assets is evaluated by reference to their value in use and primarily looks to the present value of management’s best estimate 
of the cash flows expected to be generated from the asset. In identifying cash flows management firstly determine the cash generating 
unit or group of assets that give rise to the cash flows. The cash generating unit is the lowest level of asset at which independent cash 
flows can be generated.
The estimation of forecast cash flows involves the application of a number of significant judgements and estimates to a number of 
variables including production volumes, commodity prices, operating costs, capital investment, hydrocarbon reserves estimates, inflation 
and discount rates. For the purposes of impairment testing, the discount rate used is 15% per annum. In addition, judgement is applied in 
determining the cash generating unit to be assessed for impairment.
(b) Estimation of oil and gas reserves
Estimates of oil and gas reserves are inherently subjective and subject to periodic revision. In addition, the results of drilling and other 
exploration or development activity will often provide additional information regarding the Group’s reserve base that may result in 
increases or decreases to reserve volumes. Such revisions to reserves can be significant and are not predictable with any degree of 
certainty. Management considers the estimation of reserves to represent a significant judgement in the context of the financial 
statements as reserve volumes are used as the basis for assessing the useful life of oil and gas assets, applying depreciation to oil and gas 
assets and in assessing the carrying value of oil and gas assets. Decreases in reserve estimates can lead to significant impairment of oil and 
gas assets where revisions (positive or negative) can have a significant effect on depreciation rates from period to period. Management 
have considered the sensitivity of this key assumption and in order for an impairment issue to present itself to the Group, reserve 
estimates would need to reduce by more than 25%.
(c) Income taxes
Significant judgement is frequently required in estimating provisions for deferred taxes. This process involves an assessment of temporary 
differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets 
and liabilities, which are included within the balance sheet.
3. Financial risk management continued VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
35
5. Cost of sales and administrative expenses – Group
Cost of sales and administrative expenses are as follows:
Year ended 31 December
2013 
US$ 000
2012 
Restated  
US$ 000
Cost of sales 18,451 16,569
Exploration and evaluation expenses 2,519 8,475
Operating and administrative expenses 4,029 9,890
Write-off of development assets 1,439 188
Total operating and administrative expenses 26,438 34,201
Total expenses are analysed as follows:
Year ended 31 December
2013 
US$ 000
2012 
Restated  
US$ 000
Mineral extraction tax 8,095 8,951
Exploration and evaluation 2,519 8,475
Salaries and staff benefits 3,048 3,025
Depreciation and amortisation 2,611 2,280
Directors’ emoluments and other benefits 808 817
Field operating expenses 5,946 3,776
Audit fees 286 257
Taxes other than payroll and mineral extraction 86 79
Legal and consulting 374 994
Write-off of development assets 1,439 188
Provision against VAT recovery – 2,945
Fines and penalties 343 977
Other 883 1,437
Total 26,438 34,201
(a) Exploration and evaluation
The principal component of the 2012 exploration and evaluation expense is the impairment charge on the carrying value of intangible 
assets relating to the two unsuccessful exploration wells completed during 2012 . This includes licence acquisition costs as well as the  
cost of seismic studies and costs of drilling and testing operations. For 2013, the principal component was impairment of the carrying 
value of the Pre-Caspian licence which was relinquished after the year end.
(b) Staff and salaries
The average monthly number of employees (including Executive Directors) employed by the Group was:
Year ended 31 December 2013 2012
Exploration and production 128 121
Administration and support 23 24
Total 151 145
Their aggregate remuneration (excluding executive directors) comprised:
2013 
US$ 000
2012 
US$ 000
Wages and salaries 2,277 2,452
Payroll taxes and social contribution 700 534
Staff benefits 71 39
Total 3,048 3,025 36 Financial Statements
Notes to the IFRS Consolidated Financial Statements 
continued
The average monthly number of employees employed by the Company was:
Year ended 31 December 2013 2012
Administration and support 2 2
Only directors are employed by the Company.
(c) Directors’ emoluments and other benefits
Directors’ emoluments comprised salaries of US$630,000 (2012: US$636,000), pension contributions of US$78,000 (2012: US$81,000) and 
fees of US$100,000 (2012: US$100,000). There were no share grant expenses in 2013 (2012: nil).
(d) Audit Fees – Group and Company
Disclosure of the fees paid to the Company’s auditors and its associates is given in Note 22.
(e) Depreciation
Substantially all depreciation relates to oil and gas assets and is included within cost of sales.
(f) Provision for disputed VAT
During 2012, the Group paid a sum of US$2.9 million in settlement of a disputed VAT claim. Recovery of this is subject to a continuing court 
process in Russia. Management continues to pursue its recovery.
(g) Taxes other than payroll and mineral extraction
In the year ended 31 December 2013 property taxes relating to producing assets were allocated to Field operating expenses rather than 
to Taxes other than payroll and mineral extraction. The 2012 comparative numbers have been restated accordingly.
(h) Write-off of development assets
The write-off of development assets comprises and impairment of US$1.3 million (2012: nil) of amounts of Property Plant and Equipment 
associated with redundant assets (note 11) and costs of US$0.1 million (2012: US$0.2 million) incurred during the year in dismantling and 
site restitution in relation to these assets.
6. Finance income – Group
Finance income comprises interest earned during the period on cash balances with different financial institutions (note 13). Interest 
expense in 2012 relates to a two year amortising debt facility (note 19).
7. Other gains and losses – Group
Year ended 31 December
2013 
US$ 000
2012 
US$ 000
Foreign exchange loss ( 306) ( 234)
Mineral Extraction Tax refund 1,939 –
Other gains/(losses) 15 62
Total other gains and losses 1,648 ( 172)
Mineral extraction tax refund related to amounts over-charged in 2009, 2010 and 2011.
8. Current and deferred income tax – Group
Year ended 31 December 2013 2012
Current tax:
Current income tax – –
Adjustments to tax charge in respect of prior periods – –
Total current tax – –
Deferred tax:
Adjustments to tax charge in respect of prior periods – (500)
Origination and reversal of timing differences ( 1,036) ( 613)
Total deferred tax ( 1,036) ( 1,113)
Total tax credit/(charge) ( 1,036) ( 1,113)
5. Cost of sales and administrative expenses – Group continued VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
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37
The tax charge in the Group income statement differs from the theoretical amount that would arise using the weighted average tax rate 
applicable to profits of the consolidated entities as follows:
Year ended 31 December
2013 
US$ 000
2012 
US$ 000
Profit/(loss) before income tax and minority interest 9,595 (6,308)
Tax calculated at domestic tax rates applicable to (profits)/losses in the respective countries ( 1,972) (1,322)
Tax effect of items which are not deductible or assessable for taxation purposes:
Non-deductible expenses 716 982
Other tax adjustments 220 (773)
Income tax charge (1,036) ( 1,113)
The weighted average applicable tax rate was 19.6% (2012: 19.6%).
Deferred taxation is attributable to the temporary differences that exist between the carrying amounts of assets and liabilities for 
financial reporting purposes and the amounts used for tax purposes. The tax effects of temporary differences that give rise to deferred 
taxation are presented below:
31 December 
2013 
US$ 000
Differences 
recognition 
and reversal 
US$ 000
31 December 
2012 
US$ 000
Differences 
recognition 
and reversal 
US$ 000
31 December 
2011 
US$ 000
Tax effects of taxable temporary differences:
Exploration and production assets ( 6,488) ( 257) ( 6,488) ( 5,829) ( 659)
Property, plant and equipment ( 2,571) ( 106) ( 2,465) ( 2,465) –
Inventories – 8 ( 8) 4 ( 12)
Total ( 9,316) ( 355) ( 8,961) ( 8,290) ( 671)
Tax effect of deductible temporary differences:
Tax losses carry forward 10,153 ( 437) 10,590 4,874 5,716
Trade and other receivables ( 87) ( 362) 275 ( 48) 323
Property, plant and equipment – ( 158) 158 ( 27) 185
Share grant expenses – – – ( 7) 7
Total 10,066 ( 957) 11,023 4,792 6,231
Net tax effect of temporary differences 750 ( 1,312) 2,062 ( 3,498) 5,560
Deferred income tax assets are recognised for tax loss carry forwards to the extent that the realisation of the related tax benefit through 
the future taxable profits is probable. Tax losses in respect of Cyprus and the UK do not expire. The Group has not recognised a deferred 
tax asset of US$1,461k in respect of tax losses and other short-term timing differences in the UK (2012: US$1,224k).
9. Basic and diluted profit/(loss) per share – Group
Profit per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of 
ordinary and diluted shares in issue during the year excluding ordinary shares purchased by the Company and held as treasury shares.
Year ended 31 December 2013 2012
Net profit/(loss) attributable to equity shareholders (US$ per share) 0.11 (0.09)
Net profit/(loss) attributable to equity shareholders (US$ 000) 8,559 ( 7,421)
Basic weighted number of shares 81,017,800 81,017,800
8. Current and deferred income tax – Group continued 38 Financial Statements
Notes to the IFRS Consolidated Financial Statements 
continued
10. Intangible assets – Group
Intangible assets represent exploration and evaluation assets such as licenses, studies and exploratory drilling, which are stated at 
historical cost.
Work in 
progress: 
exploration 
and 
evaluation 
US$ 000
Exploration 
and 
evaluation 
US$ 000
Development 
and 
producing 
assets 
US$ 000
Total 
US$ 000
At 1 January 2012 7,158 5,749 31,072 43,979
Additions 3,643 28 427 4,098
Impairments (7,347) (136) – (7,483)
Transfers (3,238) 3,238 – –
Transfers to PP&E – – (31,499) (31,499)
At 31 December 2012 216 8,879 – 9,095
Accumulated amortisation
At 1 January 2012 – – – –
Depreciation – – – –
At 31 December 2012 – – – –
Exchange adjustments 134 417 – 551
At 31 December 2012 350 9,296 – 9,646
Work in 
progress: 
exploration 
and 
evaluation 
US$ 000
Exploration 
and 
evaluation 
US$ 000
Development 
and 
producing 
assets 
US$ 000
Total 
US$ 000
At 1 January 2013 350 9,296 – 9,646
Additions – 17 – 17
Impairments (67) (2,452) – (2,519)
At 31 December 2013 283 6,861 – 7,144
Accumulated amortisation
At 1 January 2013 – – – –
Depreciation – – – –
At 31 December 2013 – – – –
Exchange adjustments (25) (681) – (706)
At 31 December 2013 258 6,180 – 6,438
During 2012 management undertook a review of the cost pool allocation of its assets. Following this review the licence acquisition costs 
and other intangible assets associated with producing oil and gas fields were transferred to Property, plant and equipment (note 11). As a 
result of this transfer all producing assets are allocated to the same financial statement caption and are therefore consistent with how the 
results are monitored.
During 2012 certain costs relating to the drilling of appraisal and exploration wells were transferred from PP&E Work in Progress to 
Intangible Assets Work in Progress: Exploration and Evaluation, in line with the clarified accounting policy on exploration and evaluation 
assets (see note 2.5(a)). The opening balances and movements in the relevant portions of Intangible Assets and PP&E have been restated 
to reflect this. As the related costs were expensed entirely in 2012, there was no restatement in the closing balances as at 31 December 2012. VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
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FINANCIAL STATEMENTS
39
11. Property, plant and equipment – Group
Movements in property, plant and equipment, for the years ended 31 December 2013 and 2012 are as follows:
Cost
Development 
assets 
US$ 000
Work in 
progress 
US$ 000
Land and 
buildings 
US$ 000
Producing 
assets 
US$ 000
Other 
US$ 000
Total 
US$ 000
At 1 January 2012 20,675 1,079 1,128 39,989 790 63,661
Additions 10,236 – 65 3,574 – 13,875
Disposals (144) (984) – (238) (18) (1,384)
Transfers (18,051) (367) – 18,404 14 –
Transferred from Intangible assets – – – 31,499 – 31,499
At 31 December 2012 12,716 (272) 1,193 93,228 786 107,651
Accumulated depreciation
At 1 January 2012 – – – (6,147) (391) (6,538)
Transferred from Intangible assets – – – (786) – (786)
Depreciation – – – (2,188) (113) (2,301)
Disposals – – – 107 16 123
At 31 December 2012 – – – (9,014) (488) (9,502)
Exchange adjustments 1,057 169 69 4,237 22 5,554
At 31 December 2012 13,773 (103) 1,262 88,451 320 103,703
Cost
Development 
assets 
US$ 000
Work in 
progress 
US$ 000
Land and 
buildings 
US$ 000
Producing 
assets 
US$ 000
Other 
US$ 000
Total 
US$ 000
At 1 January 2013 13,773 (103) 1,262 97,465 808 113,205
Additions 5,579 – 274 73 – 5,926
Impairments (1,302) – – (17) – (1,319)
Transfers (7,872) 103 – 7,872 – –
At 31 December 2013 10,178 – 1,536 105,290 808 117,812
Accumulated depreciation
At 1 January 2013 – – – (9,014) (488) (9,502)
Depreciation – – – (2,545) (63) (2,608)
At 31 December 2013 – – – (11,559) (551) (12,110)
Exchange adjustments (1,008) – (90) (6,309) (23) (7,430)
At 31 December 2013 9,170 – 1,447 87,422 234 98,272
The opening balance at 1 January 2012 and movements during 2012 of Work in Progress have been restated to allocate costs of certain 
exploration and appraisal drilling to Intangible Assets Work in Progress: Exploration and Evaluation. See note 10 above.
Impairment of US$1.3 million in 2013 relate to amounts of Property Plant and Equipment associated with redundant assets (note 5). 
Impairments of US$7.3 million in 2012 relate to the costs of an unsuccessful exploratory well .
12. Non-current assets – Group
As at 31 December
2013 
US$ 000
2012 
US$ 000
VAT recoverable 633 716
Other non-current assets 76 82
Total other non-current assets 709 798
Management believes that it may not be able to recover all VAT specific to license and exploration and evaluation contractors’ payments 
within the 12 months of the balance sheet date. Therefore this VAT is classified as a non-current asset. 40 Financial Statements
Notes to the IFRS Consolidated Financial Statements 
continued
13. Term deposits, cash and cash equivalents – Group and Company
Group Company
At 31 December
2013 
US$ 000
2012 
US$ 000
2013 
US$ 000
2012 
US$ 000
Cash at bank and on hand 2,836 4,484 201 1,017
Short term bank deposits 5,245 2,565 – –
Total cash and cash equivalents 8,081 7,049 201 1,017
An analysis of Group deposits, cash and cash equivalents by bank and currency is presented in the table below:
Group Company
At 31 December
Bank Currency
2013 
US$ 000
2012 
US$ 000
2013 
US$ 000
2012 
US$ 000
United Kingdom
Barclays Bank PLC USD 311 1,078 199 948
Barclays Bank PLC GBP 2 69 2 69
Russian Federation
Transcredit Bank RUR – 71 –
Unicreditbank RUR 206 234 –
Unicreditbank USD 283 283 –
ZAO Raiffeisenbank RUR 6,485 2,466 –
ZAO Raiffeisenbank USD 629 2,805 –
ZAO Raiffeisenbank EUR 17 25 –
Other banks and cash on hand RUR 148 19 –
Total cash and cash equivalents 8,081 7,049 201 1,017
14. Inventories – Group
At 31 December
2013 
US$ 000
2012 
US$ 000
Production consumables and spare parts 1,713 1,124
Crude oil inventory 80 111
Total inventories 1,793 1,235
15. Other receivables – Group
At 31 December
Group 
2013 
US$ 000
2012 
US$ 000
VAT receivable 138 697
Prepayments 835 1,520
Trade receivables 1,812 –
Other accounts receivable 84 113
Total other receivables 2,869 2,330
Prepayments are to contractors and relate to initial advances made in respect of drilling, construction and other projects. Trade 
receivables relate to sales of gas and condensate. A significant increase in sales volumes occurred during the latter months of 2013. The 
receivables were settled on schedule subsequent to the balance sheet date. VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
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FINANCIAL STATEMENTS
41
16. Share capital and share premium – Group
The following summarises the movement in the share capital and share premium of the Company for the years ended 2012 and 2013.
Number of 
shares
Share capital 
US$ 000
Share 
premium 
US$ 000
At 1 January 2012 81,017,800 1,485 165,873
Issues of shares – – –
At 31 December 2012 81,017,800 1,485 165,873
At 1 January 2013 81,017,800 1,485 165,873
Issues of shares – – –
At 31 December 2013 81,017,800 1,485 165,873
The total number of authorised ordinary shares is 330,720,100 (2012: 330,720,100) with a par value of £ 0.01 per share (2012: £ 0.01 per share).
Share-based compensation
Share options and other share-based awards have been granted to certain directors. There were no shares issued to directors under such 
schemes during 2013 (2012: nil).
2008 Executive Share Option Plan
On 15 July 2008 the Group announced a new Executive Share Option Plan (“ESOP”). During 2008, the Company granted options to 
acquire 1,137,464 ordinary shares to Mikhail Ivanov under the terms of the ESOP. The options may be exercised at a price of 405p per share 
and vest in equal portions on May 2010, 2011 and 2012 and will remain outstanding until May 2017. In January 2009, the Company granted 
568,732 share options to Tony Alves under the ESOP. The options vested in eight semi-annual tranches over a period of four years 
providing certain performance conditions related to the Company’s share price are met. The options have an exercise price of £1.00. 
Under the terms of the plan, during 2012 no further options (2012: 379,154 shares) were eligible for vesting. There were no share grant 
expenses in 2013 (2012: nil).
The fair value of share options granted and of restricted shares issued is measured by use of the Black-Scholes pricing model with the 
following assumptions:
Year ended 31 December 2013
2009 Executive Share
Option Plan
Share price 99.7p
Exercise price 100.0p–405.0p
Expected volatility 35.0%
Expected life 0–2 years
Risk free rate 2.5%
17. Other reserves – Group
At 31 December
2013 
US$ 000
2012 
US$ 000
Currency translation adjustment (27,094) (18,852)
Share grant expense 5,233 5,233
Total other reserves (21,861) (13,619)
18. Accumulated loss – Group and Company
Group Company
At 31 December
2013 
US$ 000
2012 
US$ 000
2013 
US$ 000
2012 
US$ 000
Retained losses (39,338) (31,917) (4,610) (3,272)
(Loss)/profit for the year 8,559 (7,421) (1,187) (1,338)
Accumulated (loss)/profit 31 December (30,779) (39,338) (5,797) (4,610) 42 Financial Statements
Notes to the IFRS Consolidated Financial Statements 
continued
19. Debt – Group
On 26 March 2012, the Group entered into a loan agreement to provide up to US$10 million by way of a two year amortising credit facility. 
The balance of the loan was repaid in full by 31 December 2013.
20. Trade and other payables
Group Company
At 31 December
2013 
US$ 000
2012 
US$ 000
2013 
US$ 000
2012 
US$ 000
Trade payables 432 771 10 15
Taxes other than profit tax 2,547 1,864 – –
Customer advances 890 1,448 – –
Total 3,869 4,083 10 15
The maturity of the Company’s financial liabilities are all between 0 to 3 months. The maturity period of the Group’s financial liabilities, 
comprising only trade and other payables at 31 December 2013 and 2012 is as follows:
Maturity period at 31 December 2013
0 to 3  
months
3 to 12 
months
Over  
1 year Total
Trade and other payables 3,869 – – 3,869
Maturity period at 31 December 2012
0 to 3  
months
3 to 12 
months
Over  
1 year Total
Trade and other payables 4,058 25 – 4,083
Bank debt – principal amounts 1,600 4,803 1,586 7,989
Bank debt – interest 111 190 16 317
21. Investments – Company
Investments in subsidiaries, comprising ordinary share capital, are accounted for at cost. The Company’s subsidiaries are as follows:
Name Jurisdiction Nature of Operations % Owned From
Woodhurst Holdings Ltd. Cyprus Intermediate Holding Company 100% October 2005
Pre-Caspian Gas Company Russia Oil and gas exploration and production 100% May 2006
Gaznefteservice Russia Oil and gas exploration and production 100% September 2006
Shropak Investments Ltd Cyprus Dormant 100% June 2007
Volga Gas (Cyprus) Ltd. Cyprus Intermediate Holding Company 100% August 2007
Gazservice Russia Special purpose entity 99% October 2008
Volga Gas Finance Ltd. UK Intermediate Holding Company 100% March 2010
To avoid certain legal restrictions on land ownership in October 2008 Pre-Caspian Gas Company acquired a 99% shareholding in ZAO 
Gazservice. Subsequently, Pre-Caspian Gas Company sold an unimproved plot of land to ZAO Gazservice at cost basis.
Company
31 December 
2012 
US$ 000
Additions 
US$ 000
Disposals 
US$ 000
31 December 
2013 
US$ 000
Investments in Woodhurst Holdings 150,683 – – 150,683
Investments in Volga Gas (Cyprus) 1,551 – – 1,551
Total investments 152,234 – – 152,234
The Company funds its activities in the Russian Federation via Woodhurst Holdings, the Company’s Cyprus registered subsidiary. VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
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43
22. Audit fees – Group and Company
During the year the Group (including its overseas subsidiaries) obtained the following services from the Company’s auditors and 
associates:
Year ended 31 December
2013 
US$ 000
2012 
US$ 000
Fees payable to Company’s auditor for the audit of Parent Company and consolidated financial statements 235 215
– audit of the Company’s subsidiaries pursuant to legislation 19 27
– Other services pursuant to legislation – 154
Total 254 396
23. Related Party Transactions – Group and Company
The Group is controlled by Baring Vostok Private Equity Funds III and IV, which respectively own 48.9% and 9.76% (in aggregate 58.66%) of 
the Company’s shares. The Baring Vostok Private Equity Funds exercise their control through a number of nominee holding companies. 
The remaining 41.34% of the shares are widely held.
The following transactions concerning purchases of goods and services were carried out by the Group with related parties:
Year ended 31 December
Related party Relationship Nature of transactions 2013 2012
Baring Vostok Cyprus Limited Affiliated with controlling shareholder Rent, services 127 137
Baring Vostok Holding Limited Affiliated with controlling shareholder Travel expenses – 6
Year-end balances arising from transactions with related parties
Due to related parties
31 December 
2013 
US$ 000
31 December 
2012 
US$ 000
Baring Vostok (Cyprus) Limited 12 12
All transactions with related parties were made on commercial basis.
The following transactions were carried out between the Company and its wholly-owned subsidiaries:
Year ended 31 December
Group Company Relationship Nature of transactions 2013 2012
Woodhurst Holdings Limited 100% directly-owned subsidiary Reduction of/(increase in) 
of receivables due from 
Woodhurst
343 (91)
Year-end balances arising from transactions with subsidiaries
31 December 
2013 
US$ 000
31 December 
2012 
US$ 000
Accounts receivable from subsidiaries
Woodhurst Holdings Limited 15,697 16,040
Accounts receivable to subsidiaries
Woodhurst Holdings Limited 1,357 1,357
Key management
Key management of the Company is considered to be the directors. Details of key management compensation are presented in the 
Directors’ Remuneration Report and in note 5 (d) above. 44 Financial Statements
Notes to the IFRS Consolidated Financial Statements 
continued
24. Contingencies and Commitments
24.1 Capital commitments
Pre-Caspian Licence Area
In accordance with the license agreement for the Pre-Caspian license area, PGK was required to commence drilling one additional well 
before 31 December 2013. Subsequent to 31 December 2013, the licence has been relinquished.
As of the balance sheet date all other licence commitments have been met.
24.2 Taxation
Russian tax, currency and customs legislation is subject to varying interpretations and changes which can occur frequently. Management’s 
interpretation of such legislation as applied to the transactions and activity of the Group may be challenged by the relevant regional and 
federal authorities. Recent events within the Russian Federation suggest that the tax authorities may be taking a more assertive position 
in their interpretation of the legislation and assessments, and it is possible that transactions and activities that have not been challenged 
in the past may be challenged. As a result, significant additional taxes, penalties and interest may be assessed. Fiscal periods remain open 
to review by the authorities in respect of taxes for three calendar years preceding the year of review, but under certain circumstances, 
reviews may cover longer periods.
At 31 December 2013, management believes that its interpretation of the relevant legislation is appropriate and the Group’s tax, currency 
and customs positions will be sustained.
24.3 Restoration, rehabilitation, and environmental costs
The Group operates in the upstream oil industry in the Russian Federation and its activities may have an impact on the environment. The 
enforcement of environmental regulations in the Russian Federation is evolving and the enforcement posture of government authorities 
is continually being reconsidered. The Group periodically evaluates its obligation related thereto. The outcome of environmental liabilities 
under proposed or future legislation, or as a result of stricter interpretation and enforcement of existing legislation, cannot reasonably be 
estimated at present, but could be material.
Under the current levels of enforcement of existing legislation, management believes there are no significant liabilities in addition to 
amounts which are already accrued and which would have a material adverse effect on the financial position of the Group.
24.4 Oilfield licences
The Group is subject to periodic reviews of its activities by governmental authorities with respect to the requirements of its oilfield 
licences. Management of the Group correspond with governmental authorities to agree on remedial actions, if necessary, to resolve any 
findings resulting from these reviews. Failure to comply with the terms of a licence could result in fines, penalties, licence limitation, 
suspension or revocation. The Group’s management believes any issues of non-compliance would be resolved through negotiations or 
corrective actions without any materially adverse effect on the financial position or the operating results of the Group.
The principal licences of the Group and their expiry dates are:
Field Licence Holder Licence expiry date
Karpenskiy OOO Pre-Caspian Gas Company 2021
Pre-Caspian OOO Pre-Caspian Gas Company 2031
Urozhainoye-2 OOO Pre-Caspian Gas Company 2032
Vostochny-Makarovskoye OOO Gaznefteservice 2026
Dobrinskoye OOO Gazneftedobycha 2026
Following a review during 2013 of the exploration and evaluation activity conducted to date on the Pre-Caspian licence area, the decision 
was taken to relinquish the licence. The relinquishment was effective in March 2014. VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
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FINANCIAL STATEMENTS
45
Notice is hereby given that the annual general meeting (the “AGM”) 
of Volga Gas plc (the “Company”) will be held at the London office 
of Akin Gump Strauss Hauer & Feld at Ten Bishops Square, London 
E1 6EG on 6 June 2014 at 10.00 a.m. for the following purposes:
Ordinary Resolutions
1. To receive and adopt the Company’s accounts for the  
year ended 31 December 2013 and the directors’ report.
2. To reappoint Antonio Alves, who retires by rotation,  
as a director.
3. To reappoint Ronald Freeman, who retires by rotation,  
as a director.
4. To reappoint Stephen Ogden, who retires by rotation,  
as a director.
5. To appoint KPMG LLP as auditors of the Company until the 
conclusion of the next general meeting at which accounts  
are laid before the Company.
6. To authorise the directors to determine the remuneration  
of the auditors of the Company.
7. That the directors be and they are hereby generally and 
unconditionally empowered to exercise all the powers of the 
Company to allot shares in the Company and/or to grant rights 
to subscribe for or to convert any security for shares in the 
Company (together “Relevant Securities”) up to a maximum 
aggregate nominal amount of £1,000,000 to such persons and 
at such times and on such terms as they think proper, provided 
that this authority shall expire the earlier of (i) 15 months from 
the passing of this resolution, or (ii) the conclusion of the AGM 
of the Company to be held in 2015 (unless renewed, varied or 
revoked by the Company prior to or on such date), save that this 
authority shall allow the Company to make offers or agreements 
before the expiry of such authority which would or might require 
Relevant Securities to be allotted after such expiry and the 
directors shall be entitled to allot Relevant Securities pursuant 
to any such offer or agreement as if this authority had not 
expired; and all unexercised authorities previously granted  
to the directors to allot Relevant Securities be and are  
hereby revoked.
Special Resolutions
8. That the directors be and they are hereby empowered pursuant 
to Sections 570 and 573 of the Companies Act 2006 (the “Act”) 
to allot equity securities (as defined in Section 560 of the Act) 
for cash; pursuant to the authority conferred by resolution 7 
set out in this Notice convening the AGM (the “Notice”) as if 
Section 561 of that Act did not apply to any such allotment, 
provided that this power shall be limited to:
(a) the allotment of equity securities in connection with a 
rights issue, open offer or other offer of securities in favour 
of the holders of ordinary shares on the register of 
members at such record date(s) as the directors may 
determine where the equity securities respectively 
attributable to the interests of the ordinary shareholders 
are proportionate (as nearly as may be) to the respective 
numbers of ordinary shares held by them on any such 
record date(s), subject to such exclusions or other 
arrangements as the directors may deem necessary or 
expedient to deal with fractional entitlements or legal or 
practical problems arising under the laws of any overseas 
territory or the requirements of any regulatory body or 
stock exchange or by virtue of shares being represented by 
depositary receipts or any other matter; and 
(b) the allotment (otherwise than pursuant to sub-paragraph 
(a) above) to any person or persons of equity securities up 
to an aggregate nominal amount of £150,000.
 And the power conferred hereby shall expire upon the expiry of 
the general authority conferred by resolution 7 set out in this 
Notice (unless renewed, varied or revoked by the Company 
prior to or on such date), save that the Company shall be 
entitled to make offers or agreements before the expiry of 
such power which would or might require equity securities to 
be allotted after such expiry and the directors shall be entitled 
to allot equity securities pursuant to any such offer or 
agreement as if the power conferred hereby had not expired. 
9. That, subject to the confirmation of the High Court of Justice, 
the share premium account of the Company be cancelled in its 
entirety and that a corresponding amount be transferred to the 
credit of the Company’s profit and loss account.
10. That the Company be generally and unconditionally authorised 
for the purposes of section 701 of the Act, to make market 
purchases (within the meaning of section 693 of the Act) of 
fully-paid ordinary shares of 1p each (“Shares”) on such terms 
and in such manner as the directors of the Company may decide 
provided that:
(i)  the maximum number of Shares that may be purchased by 
the Company pursuant to this authority is 12,144,000 
(representing approximately 14.99% of the Company’s 
issued ordinary share capital at the date of this Notice;
(ii) the minimum price (exclusive of expenses) which may be 
paid for any such Shares shall not be less than the nominal 
value of that Share at the time of purchase;
(iii)  the maximum price (exclusive of expenses) which may be 
paid for any Shares purchased pursuant to this authority is 
an amount equal to the higher of (a) an amount equal to 
105% of the average of the middle market prices shown in 
the quotations for the Company’s Shares in the London 
Stock Exchange Daily Official List for the five business days 
immediately preceding the day on which that share is 
contracted to be purchased; and (b) an amount equal to the 
higher of the price of the last independent trade of an 
ordinary share and the highest current independent bid for 
an ordinary share as derived from the London Stock 
Exchange; and
(iv)  unless previously varied, revoked or renewed, the authority 
conferred by this resolution shall expire on the earlier of 30 
June 2015 or at the end of the next annual general meeting 
of the Company to be held in 2015, but the Company may 
make a contract to purchase Shares under this authority 
before its expiry which will or may be completed wholly or 
partly after the expiry of this authority, and may complete 
such a purchase as if this authority had not expired.
Registered Office: BY ORDER OF THE BOARD
Ground Floor Antonio Maria Alves
17-19 Rochester Row Company Secretary
London 17 April 2014
SW1P 1QT
Notice of Meeting 46 Financial Statements
Notice of Meeting continued
Notes:
1. Resolutions 1-7 are ordinary resolutions. For these resolutions 
to be passed, a simple majority of the votes cast at the 
Company’s AGM must be in favour of the resolutions. 
Resolutions 8, 9 and 10 are special resolutions. For these 
resolutions to be passed, at least three-quarters of the votes 
cast at the AGM must be in favour of the resolution.  
2. Reduction of capital (Resolution 9).  The purpose of this 
resolution 9 is to create distributable reserves for the Company 
which will enable it to make distributions to shareholders 
whether in the form of dividends or by buying back shares  
for cancellation.
3. Share buy-back (Resolution 10).  The purpose of this Resolution 
10 is to permit the Company to purchase its own shares in the 
market under the terms described therein.  Shares so 
purchased would be cancelled and the issued share capital  
of the Company accordingly reduced.
4. Only those members entered on the register of members of 
the Company at 6.00 p.m. on 4 June 2014 or, in the event that 
this meeting is adjourned, in the register of members as at  
6.00 p.m. on the day two days before the date of any adjourned 
meeting, shall be entitled to attend and vote at the meeting in 
respect of the number of ordinary shares registered in their 
names at that time. Changes to the entries on the register of 
members after 6.00 p.m. on 4 June 2014 or, in the event that 
this meeting is adjourned, in the register of members after  
6.00 p.m. on the day two days before the date of the adjourned 
meeting, shall be disregarded in determining the rights of any 
person to attend or vote at the meeting.
5. A member entitled to attend, speak and vote at the meeting 
convened by the notice set out above is entitled to appoint a 
proxy to attend, speak and, on a poll, to vote in his place. To 
appoint more than one proxy you may photocopy this form. 
Please indicate the proxy holder’s name and the number of 
shares in relation to which they are authorised to act as your 
proxy (which, in aggregate, should not exceed the number of 
shares held by you). Please also indicate if the proxy instruction 
is one of multiple instructions being given. All forms must be 
signed and should be returned together in the same envelope.
6.	 A 	 f orm 	 of 	 pr o x y 	 i s 	 e ncl osed. 	 T o 	 be 	 eff ectiv e , 	 i t 	 m u s t 	 be 	
de pos i ted 	 at 	 the 	 offic e 	 of 	 the 	 C ompan y ’ s 	 r eg i s trars 	 ( Capi ta 	
Asset Services, PXS 1, The Registry, 34 Beckenham Road, 
Beckenham, Kent BR3 4ZF) so as to be received not later than 
48 hours before the time appointed for holding the AGM. 
Completion of the proxy does not preclude a member from 
subsequently attending and voting at the meeting in person if 
he or she so wishes.
7. To change your proxy instructions simply submit a new proxy 
appointment using the methods set out in notes 4 and 5 above. 
Note 	 th at 	 the 	 cu t - off 	 ti me 	 (i n 	 not e 	 4 	 abo v e ) 	 f or 	 r ec e i pt 	 of 	 pr o x y 	
appointments also apply in relation to amended instructions; 
any amended proxy appointment received after the relevant 
cu t - off 	 ti me 	 wi l l 	 be 	 d i s r eg ar ded. 	
 Where you have appointed a proxy using the hard-copy proxy 
form and would like to change the instructions using another 
hard-copy proxy form, please contact the Company’s registrars. 
If you submit more than one valid proxy appointment, the 
appointment received last before the latest time for the receipt 
of proxies will take precedence.
8. In order to revoke a proxy instruction you will need to inform 
the Company using one of the following methods:
(a) by sending a signed hard copy notice clearly stating your 
intention to revoke your proxy appointment to the 
C ompan y ’ s 	 r egi s te r ed 	 offic e 	 add r ess. 	 In 	 the 	 case 	 of 	 a 	
member which is a company, the revocation notice must be 
executed under its common seal or signed on its behalf by 
an 	 offic e r 	 of 	 the 	 c ompan y 	 or 	 an 	 att orne y 	 f or 	 the 	 c ompan y . 	
Any power of attorney or any other authority under which 
the 	 r e v ocation 	 notic e 	 i s 	 s i g ned 	 ( or 	 du l y 	 a 	 c e rtificated 	 c op y 	
of such power of authority) must be included with the 
revocation notice; or 
(b) by sending an email to info@volgagas.com.
 In either case, the revocation notice must be received by the 
C ompan y ’ s 	 r eg i s trars 	 no 	 lat e r 	 th an 	 the 	 cu t - off 	 ti me 	 se t 	 ou t 	 i n 	
note 4 above.
9. The register of interests of the directors and their families in 
the share capital of the Company and copies of contracts of 
service of directors with the Company or with any of its 
subsidiary undertakings will be available for inspection at the 
r eg i s te r ed 	 offic e 	 of 	 the 	 C ompan y 	 du ri ng 	 norm al 	 bu s i ness 	 hou rs 	
(Saturdays and public holidays excepted) from the date of this 
notice until the conclusion of the AGM.
10. To appoint a proxy or to give or amend an instruction to a 
previously appointed proxy via the CREST system, the CREST 
message must be received by the issuer’s agent RA10 no later 
than forty eight hours before the meeting date. For this 
purpose, the time of receipt will be taken to be the time (as 
determined by the timestamp applied to the message by the 
CREST Applications Host) from which the issuer’s agent is able 
to retrieve the message. After this time any change of 
instructions to a proxy appointed through CREST should be 
communicated to the proxy by other means. CREST Personal 
Members or other CREST sponsored members, and those 
CREST Members who have appointed voting service provider(s) 
should contact their CREST sponsor or voting service 
provider(s) for assistance with appointing proxies via CREST. 
For further information on CREST procedures, limitations and 
system timings please refer to the CREST Manual. We may treat 
as invalid a proxy appointment sent by CREST in the 
circumstances set out in Regulation 35(5) (a) of the 
Unc e rtificat ed 	 Secu ri ties 	 Regu lations 	 2 00 1 . 	 In 	 an y 	 case 	 y ou r 	
proxy form must be received by the Company’s registrars no 
later than forty eight hours before the meeting date.
11. Any corporation which is a member can appoint one or more 
corporate representatives who may exercise on its behalf all of 
its powers as a member provided they do not do so in relation 
to the same shares. 
12. Under section 319A of the 2006 Act, the Company must cause 
to be answered any question relating to the business being 
dealt with at the Annual General Meeting put by a member 
attending the meeting unless answering the question would 
interfere unduly with the preparation for the meeting or 
i n v ol v e 	 the 	 d i scl os u r e 	 of 	 c onfide nti al 	 i nf orm ation, 	 or 	 the 	
answer has already been given on a website in the form  
of an answer to a question, or it is undesirable in the interests 
of the Company or the good order of the meeting that the 
question be answered. 
 Members who have any queries about the Annual General 
Meeting should contact the Company Secretary by email on 
info@volgagas.com.  Members may not use any electronic 
address or fax number provided in this notice or in any related 
documents (including the Form of Proxy) to communicate  
with the Company for any purpose other than those  
expressly stated.
13. Information regarding the Annual General Meeting, including 
information required by section 311A of the 2006 Act, and a 
copy of this notice of Annual General Meeting is available  
from www.volgagas.com. VOLGA GAS PLC 
ANNUAL REPORT AND ACCOUNTS 2013
INTRODUCTION
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
47
Glossary of T echnical T erms
2-D seismic geophysical data that depicts the subsurface strata in two dimensions
3-D seismic geophysical data that depict the subsurface strata in three dimensions. 3-D seismic typically provides 
a more detailed and accurate interpretation of the subsurface strata than 2-D seismic
abandonment application of a cement plug to close a well and welding of a steel plate to the top of the well; the 
well is then plugged and abandoned
bbl the standard barrel of crude oil or other petroleum product is 42 US gallons (approximately 159 
litres)
bcf billion cubic feet
bcm billion cubic metres
Best estimate the term “best estimate” is used here as a generic expression for the estimate considered to be the 
closest to the quantity that will actually be recovered from the accumulation between the date of 
the estimate and the time of abandonment
boe barrels of oil equivalent, being for natural gas the energy equivalent on one barrel of oil. The usual 
ratio is to equate 6,000 cubic feet to one barrel of oil equivalent
condensate liquid hydrocarbons associated with the production from a primarily natural gas reservoir
field means an area consisting of either a single reservoir or multiple reservoirs, all grouped on or related 
to the same individual geological structural feature and/or stratigraphic condition
gas natural gas
gas processing facilities together with the laboratory, gathering pipelines and storage facilities (if any), a plant comprising 
one or more units such that after conditioning the gas will be of pipeline quality as, specified by 
Gazprom, such units may include dehydration, sweetening and separation of natural gas liquids
gas-water contact bounding surface in a reservoir above which predominantly gas occurs and below which 
predominantly water occurs
hydrocarbons compounds formed from the elements hydrogen (H) and carbon (C) and existing in solid, liquid or 
gaseous forms
Kungurian Salt a layer of salt laid down during the lower Permian age which occurs in the Northern Caspian 
Petroleum Province
licence area the particular subsoil plot specified in the subsoil licence issued by the applicable Russian federal 
authority, which the licence holder has the right to use for the purpose and on the terms specified in 
the subsoil licence. A licence area may contain one or more fields or may encompass only a portion of 
a field
liquidation Abandonment
mmbbls million barrels
mcm thousand cubic metres
mmBOE million barrels of oil equivalent
natural gas hydrocarbons that are gaseous at one atmosphere of pressure at 20°C. It can be divided into lean 
gas, primarily methane but often containing some ethane and smaller quantities of heavier 
hydrocarbons (also called sales gas) and wet gas, primarily ethane, propane and butane as well as 
smaller amounts of heavier hydrocarbons; partially liquid under atmospheric pressure
petroleum naturally occurring liquids and gasses which are predominantly comprised of hydrocarbon 
compounds
possible reserves are those unproven reserves that, on the available evidence and taking into account technical and 
economic factors, have a 10.0% chance of being produced 48 Financial Statements
Glossary of T echnical T erms continued
probable reserves are those reserves in which hydrocarbons have been located within the geological structure with a 
lesser degree of certainty because fewer wells have been drilled and/or certain operational tests 
have not been conducted. Probable reserves are those reserves that, on the available evidence  
and taking into account technical and economic factors, have a better than 50.0% chance of  
being produced
prospective resources Are those quantities of hydrocarbons which are estimated, on a given date, to be potentially 
recoverable from undiscovered accumulations
proved reserves include reserves that are confirmed with a high degree of certainty through an analysis of 
development history and/or volume method analysis of the relevant geological and engineering 
data. Proved reserves are those that, based on the available evidence and taking into account 
technical and economic factors, have a better than 90.0% chance of being produced
proved plus probable reserves sum of the proved reserves and the probable reserves calculated in accordance with SPE standards
reserves quantities of petroleum which are anticipated to be commercially recoverable from known 
accumulations from a given date forward
reservoir a porous and permeable underground formation containing a natural accumulation of producible 
natural gas and/or oil that is confined by impermeable rock or water barriers and is separate from 
other reservoirs
risk factor for contingent resources means the estimated chance, or probability, that the volumes will be 
commercially extracted; for prospective resources means the chance or probability of discovering 
hydrocarbons in sufficient quantity for them to be tested to the surface, this, then, is the chance or 
probability of the prospective resource maturing into a contingent resource
SPE standards reserves definitions consistent with those approved in March 1997 by the Society of Petroleum 
Engineers and the World Petroleum Congresses
sub-salt below the Kungurian salt layer
supra-salt above the Kungurian salt layer Karpensky
Urozhainoye-2
Vostochny
Makaroyskoye
Dobrinskoye
Corporate Directory
Registered Office
Ground Floor, 17-19 Rochester Row
London SW1P 1QT
United Kingdom
Company Secretary
Tony Alves
of the registered office
Nominated Adviser and Joint Broker
Oriel Securities Limited
150 Cheapside
London EC2V 6ET
United Kingdom
Auditors
KPMG Audit plc
8 Salisbury Square
London EC4Y 8BB
United Kingdom
Lawyers and Solicitors to the Company as to English and Russian Law
As to English law:
Akin Gump Strauss Hauer & Feld
8th Floor, Ten Bishops Square
London E1 6EG
United Kingdom
As to Russian law:
Akin Gump Strauss Hauer & Feld LLP
Geneva House 7 Petrovka Street
Moscow 107031
Russian Federation
Registrar
Capita Registrars
The Registry
34 Beckenham Road, Beckenham
Kent BR3 4TU
United Kingdom
Corporate Communications/PR
FTI Consulting
200 Aldersgate, Aldersgate Street
London EC1A 4HD
United Kingdom
volgagas.com Volga Gas plc
Ground Floor
17–19 Rochester Row
London 
SW1P 1QT
www.volgagas.com
Volga Gas plc Annual Report and Accounts 2013