Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013
Annual Report & Accounts 2013
Building a  
resources factory Welcome to  
Mediterranean Oil & Gas
Mediterranean Oil & Gas Plc (‘MOG’, the ‘Group’ or the 
‘Company’) dedicates the highest standards of best practice 
and full value chain capability to the greater Mediterranean 
region, providing reliable energy through an optimised portfolio 
that adds real value to shareholders, partners, host governments 
and local communities.
Company overview
1  Our 2013 highlights  
and the year ahead
2 At a glance
4 Our strengths for growth
6 Our strategy
Business review
8 Chairman’s statement
10 Chief Executive’s report
16 Financial review
19 Strategic report
20 Principal risks and uncertainties
22 Corporate responsibility
Governance
24 Board of Directors
26 Senior management
27 Corporate governance report
28 Directors’ report
31 Remuneration report
Financial statements
33 Independent auditor’s report
34  Consolidated and Company 
financial statements
41 Notes to financial statements
67 Notice of Annual General Meeting
70 Corporate directory
8–23 67–70
24–32
1–7 33–66 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 1
  
 
   
 
Revenues €m
8.4 down 48% 
Production Bcf
1.0 down 42% 
2010 2011 2012 2013
0.4
1
0.6
1
1.7 1.0
2010 2011 2012 2013
3.5
1
5.6
1
16.3 8.4
1  Includes production from discontinued operations
1  Includes revenue from discontinued operations
  
 
   
 
Revenues €m
8.4 down 48% 
Production Bcf
1.0 down 42% 
2010 2011 2012 2013
0.4
1
0.6
1
1.7 1.0
2010 2011 2012 2013
3.5
1
5.6
1
16.3 8.4
1  Includes production from discontinued operations
1  Includes revenue from discontinued operations
Company overview Business review Governance Financial statements
Corporate and Operational:
 Total production of 1.0 Bcf, a 42% decrease 
relative to the prior year (2012: 1.7 Bcf)
 – Production performance negatively impacted 
by shut-in of two damaged production wells at 
Guendalina 
 Completion in February 2013 of transaction with 
Genel Energy plc (‘Genel’) for the sale of a 75% 
interest in offshore Malta Area 4 for:
 – An immediate cash payment of US$10 million 
 – 100% carry of the cost for the first exploration 
well Hagar Qim 1 
 – 100% carry of the cost for the second 
exploration well up to a maximum of  
US$30 million 
 Technical progress achieved in advancing the 
Production Concession application for Ombrina 
Mare, Italy:
 – Commission charged by the Ministry of 
Environment and of Protection of Land and Sea 
(‘MEPLS’) ruled in favour of MOG’s 
Environmental Impact Assessment (‘EIA’) 
submission 
 – EIA approval delayed pending resolution of 
dispute with MEPLS
Our 2013 highlights and the year ahead
 Entry into new exploration acreage offshore Malta 
Area 3 Blocks 1, 2 and 3
 – Low cost entry into Exploration Study 
Agreement (‘ESA’) 
 – 40% Working Interest with option to proceed 
into Production Sharing Contract after two or 
three years of ESA 
 – Exploring for prospects on the southern margin 
of the proven Sicily/Sicily Channel basin 
 Gas sales agreement with Repower Italia SpA 
renewed for the bulk of the offtake of  
the Company’s gas production until  
30 September 2014
 Continued optimisation of the Group’s 2P reserves 
of 5.3 Bcf of gas and best estimate contingent 
resources of 26.0 MMbbls of oil and 32.4 Bcf of 
gas (at year-end 2013):
 – Completion of new Competent Person Report 
(‘CPR’) for Ombrina Mare establishes baseline 
for development and upside potential 
 – Decision made to develop Aglavizza, onshore 
central Italy where MOG has a 100% interest, 
with first gas forecast in Q3 2015 
 – Value of the portfolio clearly defined with the 
certification of the majority of our fields and 
Prospects by ERC Equipoise Limited (‘ERCE’) 
Financial:
 Revenues from sales of gas and condensate  
and operatorship income decreased from  
€16.3 million in 2012 to €8.4 million
1 
in 2013
 Loss from operations of €4.4 million  
(2012: €4.1 million profit)
1
 Cash and cash equivalents of €12.4 million  
(2012: €8.7 million)
1 Excluding discontinued operations. 1 Includes production from  
discontinued operations
1 Includes production from  
discontinued operations Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 2
07.
01.
02.
03.
04.
05.
06.
08.
At a glance
MOG owns and operates assets  
in the central Mediterranean region
Northern Adriatic
Gas exploration, 
development and 
production
 > Non-operated gas 
production at 
Guendalina
 > Asset delivers positive 
cash flow for the 
Company
 > Non-operated gas 
discoveries with upside 
potential
 > Goal is to increase the 
priority of these 
developments in the 
overall portfolio of ENI
1 2 3
Onshore Italy 
Foredeep
Gas exploration, 
development and 
production
 > Geographically spread 
low-risk production and 
exploration opportunities
 > Goal is to increase returns 
on assets to provide 
greater cover of 
operating costs for  
the Group
Ombrina Mare
Ombrina Mare oil and gas 
development
 > 100% operated oil and 
gas discovery with upside 
potential
 > Goal is to achieve award 
of production concession 
from the Ministry of 
Economic Development Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 3 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 3
1
2
3
4
5 6
Company overview Business review Governance Financial statements
Southern 
Apennines
Monte Grosso oil and 
gas exploration
 > Exploration prospect 
on trend with Val 
D’Agri and Tempa 
Rossa fields
 > Technically 
challenging 
exploration well that is 
currently waiting for 
Environmental Impact 
Assessment approval
4 5 6 7 8
Offshore Malta
Oil and gas exploration
 > Area 4 is a frontier 
exploration play 
offshore Malta similar 
to Libya and Tunisia
 > Area 3 is searching for 
the southern extent of 
the Sicily Channel 
hydrocarbon system
 > Presence of reservoir 
and hydrocarbon 
source are the key 
risks
 > Goal is to spud the 
first exploration well in 
Area 4 in Q1 2014
Onshore France
Gas exploration
 > Triassic Bunter 
Sandstone play 
analogous to North 
Sea southern gas 
basin
 > Structural geometry 
and hydrocarbon 
charge are the key 
risks
 > Goal is to achieve 
extension of the 
exploration period
Genel Area of 
Mutual Interest
Exploration, 
development and 
production
 > Agreement to work 
together in the 
offshore basins of 
Libya, Malta and 
Tunisia
 > Principles are on a first 
right and 20% (MOG) 
to 80% (Genel) split
Resources and Reserves by Asset (MMboe):
Onshore Italy Foredeep
2P – 0.30
2C – 0.16
2E – 7.23
2P – 0.00
2C – 0.00
2E – 381.00
2P – 0.66
2C – 3.94
2E – 1.99
2P – 0.00
2C – 0.00
2E – 35.15
2P – 0.00
2C – 26.81
2E – 15.79
Northern Adriatic Ombrina Mare
7
2P – 0.00
2C – 0.89
2E – 8.28
Onshore France Southern Apennines
Offshore Malta
2P –  Proven plus Probable Reserves
2C –  Contingent Resources most 
likely estimate
2E –  Prospective Resources best 
estimate (unrisked) Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 4
Our strengths for growth
Capable and credible  
from start to finish
Competitive 
Advantage
Financial 
Strength
Resources 
Factory
Regional Operator
Leverage our competitive 
advantage that lies in the 
breadth and depth of our Italy-
based team that manages the 
‘full-value chain’ of our 
Exploration & Production (‘E&P’) 
business together with our AIM-
listing, knowledgeable 
management team and strong 
support from our key 
shareholders.
In 2013 we were able to secure:
 > Renewal of direct off-take 
agreement with Repower Italia 
SpA for the bulk of our Italian 
gas production
 > Access to offshore Malta Area 
3 Blocks 1, 2 and 3
Debt Free
Being debt free, our goal is to use 
the income from our onshore and 
offshore gas production to 
underwrite our operating costs, 
support asset maturation and 
small capital programmes.
In 2013 we were able to:
 > Build our year-end cash position 
to €12.4 million
 > Implemented internal cost and 
financial reporting controls
Balanced Portfolio
Use our Resources Factory to our 
advantage. Grow production and 
move resources to reserves by 
maturing the portfolio in support of 
our production growth targets. 
Balance frontier exploration with 
asset maturation and good 
reservoir management.
In 2013 we were able to:
 > Progress the development of 
Aglavizza
 > Develop a forward plan for the 
Ombrina Mare development
 > Progress preparations for drilling 
offshore Malta Area 4 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 5
Company overview Business review Governance Financial statements
Attractive 
Prospective 
Resources
Growth Opportunity
Prudently invest to de-risk our 
attractive Prospective Resources 
opportunities of approximately 
450 million boe (likely unrisked) 
and look for low entry cost and 
high potential value acreage to 
add to our portfolio.
In 2013 we were able to:
 > Secure funding for two 
exploration wells offshore Malta
 > Enter Area 3 Blocks 1, 2 and 3 
offshore Malta
Case Study
Protecting Shareholders’ Interests
On 1 August 2012 we announced we had bought the 10% interest held by Leni 
Gas & Oil Investments Limited in the PSC covering offshore Malta Area 4 Blocks, 4, 
5, 6, and 7, bringing our holding to 100%.
Leni Gas & Oil plc (‘LGO’) announced on 1 August that ‘LGO has decided as a 
result of its own technical assessment of the project to divest, at no further cost, its 
interest in the Malta venture which is both non-core and non-strategic to LGO’s 
onshore oil development mission. This will allow us to avoid any further 
expenditure on Malta and to focus our management and cash resources on our 
core business of production growth in Trinidad’.
On 23 August 2012 we announced that we had farmed out 75% of our 100% 
working interest in offshore Malta Area 4 PSC.
The following morning at 7:00am, LGO issued an announcement referring to our 
Malta farm out and stating ‘LGO is surprised by the content of the announcement 
and is seeking immediate advice from the Company’s litigation lawyers, Mishcon 
de Reya.’ Following this, notwithstanding the undoubtedly good news of the farm 
out, our share price fell over 20% in the space of 20 days.
Apparently concerned to hear that another party had taken a different view of 
the prospectivity of the Malta asset in which they had just divested their 10% 
interest, LGO proceeded to make various allegations to the effect that they had 
been misled about the prospectivity. There were exchanges of correspondence 
before solicitors and in January 2013 LGO issued proceedings in the High Court 
claiming they had been induced to sell their 10% interest by a comment made 
on a telephone call on 10 July 2012 about MOG opening a data room the 
following week. The comment is alleged by LGO to have been an implied 
representation as to the timing and prospects of the MOG’s farm out process and 
was designed to cause LGO to sell ‘cheaply’ and ‘speedily’.
Throughout the period of this dispute, LGO has made numerous comments 
about the case via Regulatory News Announcements, Twitter, e-mail and even in 
statements made at investor conferences that were then posted on You Tube. 
The nature of the allegations made by LGO became widely known in the sector 
and spawned a profusion of speculation, including on-line investor forums, as to 
the potential impact on MOG.
Although not all of the comments have been adverse to MOG – indeed, many of 
them were supportive, the MOG Board took the view that it could not allow LGO’s 
claim, and often inaccurate information in the public domain, to erode 
shareholder value. The Company took all steps to equip it to defend the claim 
and to set the record straight, where possible, in relation to any misinformation. 
This was not always an easy task, particularly given the ability of commentators 
to post anonymously. The successful defence against LGO’s claim in an open 
court process will ultimately allow us to defend ourselves, and the interests of our 
shareholders to:
a) set the record straight;
b) enhance the reputation of the MOG team;
c) re-establish investor confidence and interest in MOG stock;
d) recover legal defence fees incurred; and
e) demonstrate MOG’s determination to protect itself from speculative 
rumours and legal claims. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 6
Our strategy
We aim to deliver top quartile
1
 
value growth to shareholders 
by maximising the value of the 
Resources and Reserves from 
our core areas of operation, 
while expanding our footprint 
and Resources Factory 
throughout the greater 
Mediterranean region.
1 Defined by performance against all AIM listed E&P Companies.
Corporate Objectives Progress in 2013 Objectives for 2014
Create shareholder value by de-risking 
and maturing the Resources and Reserves 
in our Resources Factory.
 Moved first exploration well offshore Malta 
Area 4 to a drill ready prospect
 Finalised the development strategy for the 
Aglavizza development onshore Italy and 
reached the Final Investment Decision
 Invested in public relations, stakeholder 
engagement, engineering studies and an 
office in Ortona in support of the Ombrina 
Mare development
 Worked with ERCE to review and calibrate 
the Reserves and Resources in our portfolio 
 Drill offshore Malta Area 4 first exploration 
well
 Achieve the award of the production 
concession for Ombrina Mare
 Drill onshore Italy Faseto 1 exploration well
 Prepare to drill Ombrina Mare 3
 Prepare to conduct extended well tests at 
Ombrina Mare
 Acquire 1500km 2D seismic in offshore 
Malta Area 3
 Receive extension for St. Laurent permit
Given the risks and uncertainties inherent 
in our business, maintain and grow the 
financial strength of the Company to 
minimise our overall cost of capital.
 Completed a year of incident-free 
operations
 Production disruption at Guendalina Field 
resulted in 40% lower production than 
forecast
 Balance sheet strengthened by completion 
of farmout of Area 4 to Genel Energy plc
 Year-end 2013 cash balance of €12.4m, 
higher than year-end 2012
 Safe operations
 Deliver 15 million scm production +/- 10%
 Control discretionary expenditure
 Regularly review Risk Register with Board
 Optimise Company general and 
administrative expenses
Successfully complete and integrate 
transactions that add value acreage, 
Resources and Reserves to our Resources 
Factory.
 MOG’s wholly owned subsidiary Melita 
acquired a 40% working interest in the ESA 
relating to offshore Malta Area 3 – Blocks 1, 2 
and 3
 Add one or two business development 
opportunities, which include new 
production or opportunity to start-up 
production within 12 months
 Add Prospective and Contingent Resource 
opportunities that diversify our portfolio 
away from Italy
Empower and support both our direct 
and non-direct employees to make 
brave and transparent decisions that 
create shareholder value. 
 Implemented organisational structure 
required to assure successful execution of 
offshore Malta Area 4 exploration 
programme
 Implemented new internal financial 
reporting system
 Completed staffing programme and 
implemented performance scheme
 Implement organisational changes required 
to support Ombrina Mare development
 Ensure new reporting system is fully 
functioning across the Group
 Implement efficient IT system across the 
Group
 Complete agreed professional 
development/training programme
Be respected by our stakeholders for not 
only what we do but the way we do it.
 Developed Corporate Social Responsibility 
statement
 Launched new brand and website
 Kept the market informed of all material 
developments in a timely manner
 Complied with Corporate Ethics, Health 
Safety and Environment and Anti-Bribery 
policies
 Complete all regulatory reporting at the 
highest quality and on time
 Keep the market informed of all material 
developments in a timely manner
 Comply with Corporate Ethics, HSE and 
Anti-Bribery policies
 Defend our reputation and interests of our 
shareholders from the Leni Gas & Oil plc 
legal claim Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 7
Company overview Business review Governance Financial statements
We aim to deliver top quartile
1
 
value growth to shareholders 
by maximising the value of the 
Resources and Reserves from 
our core areas of operation, 
while expanding our footprint 
and Resources Factory 
throughout the greater 
Mediterranean region.
1 Defined by performance against all AIM listed E&P Companies.
Corporate Objectives Progress in 2013 Objectives for 2014
Create shareholder value by de-risking 
and maturing the Resources and Reserves 
in our Resources Factory.
 Moved first exploration well offshore Malta 
Area 4 to a drill ready prospect
 Finalised the development strategy for the 
Aglavizza development onshore Italy and 
reached the Final Investment Decision
 Invested in public relations, stakeholder 
engagement, engineering studies and an 
office in Ortona in support of the Ombrina 
Mare development
 Worked with ERCE to review and calibrate 
the Reserves and Resources in our portfolio 
 Drill offshore Malta Area 4 first exploration 
well
 Achieve the award of the production 
concession for Ombrina Mare
 Drill onshore Italy Faseto 1 exploration well
 Prepare to drill Ombrina Mare 3
 Prepare to conduct extended well tests at 
Ombrina Mare
 Acquire 1500km 2D seismic in offshore 
Malta Area 3
 Receive extension for St. Laurent permit
Maintain and grow the financial strength 
of the Company to minimise our overall 
cost of capital.
 Completed a year of incident-free 
operations
 Production disruption at Guendalina Field 
resulted in 40% lower production than 
forecast
 Balance sheet strengthened by completion 
of farmout of Area 4 to Genel Energy plc
 Year-end 2013 cash balance of €12.4m, 
higher than year-end 2012
 Safe operations
 Deliver 15 million scm production +/- 10%
 Control discretionary expenditure
 Regularly review Risk Register with Board
 Optimise Company general and 
administrative expenses
Successfully complete and integrate 
transactions that add value acreage, 
Resources and Reserves to our Resources 
Factory.
 MOG’s wholly owned subsidiary Melita 
acquired a 40% working interest in the ESA 
relating to offshore Malta Area 3 – Blocks 1, 2 
and 3
 Add one or two business development 
opportunities, which include new 
production or opportunity to start-up 
production within 12 months
 Add Prospective and Contingent Resource 
opportunities that diversify our portfolio 
away from Italy
Empower and support both our direct 
and non-direct employees to make 
brave and transparent decisions that 
create shareholder value. 
 Implemented organisational structure 
required to assure successful execution of 
offshore Malta Area 4 exploration 
programme
 Implemented new internal financial 
reporting system
 Completed staffing programme and 
implemented performance scheme
 Implement organisational changes required 
to support Ombrina Mare development
 Ensure new reporting system is fully 
functioning across the Group
 Implement efficient IT system across the 
Group
 Complete agreed professional 
development/training programme
Be respected by our stakeholders for not 
only what we do but the way we do it.
 Developed Corporate Social Responsibility 
statement
 Launched new brand and website
 Kept the market informed of all material 
developments in a timely manner
 Complied with Corporate Ethics, Health 
Safety and Environment and Anti-Bribery 
policies
 Complete all regulatory reporting at the 
highest quality and on time
 Keep the market informed of all material 
developments in a timely manner
 Comply with Corporate Ethics, HSE and 
Anti-Bribery policies
 Defend our reputation and interests of our 
shareholders from the Leni Gas & Oil plc 
legal claim Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 8
Chairman’s statement
Keith Henry
Chairman
€12.4m. Net cash flow from operations 
in 2013 was an outflow of €1.2m, down 
from €6.5m inflow in 2012.
We were informed at the start of 2013 
that Italy’s Environmental Impact 
Assessment (’EIA’) Commission, 
charged by the Ministry of Environment 
and of Protection of Land and Sea 
(‘MEPLS’) to rule on the Ombrina Mare 
oil and gas field development EIA, had 
ruled in favour of the Company’s 
submission. This positive news slowly 
turned to disappointment as the year 
progressed, with the Minister declining 
to sign the resulting EIA Decree that 
was presented to him for signature in 
February 2013. The MOG team, 
together with our advisers, have 
invested very considerable time and 
effort, often behind the scenes, to 
engage with all key stakeholders. 
Despite our many attempts at the 
highest levels to resolve this matter, 
ultimately we have been obliged to 
lodge an appeal with the Italian 
courts. Post this reporting period our 
legal appeal against the actions of the 
Minister was heard at a tribunal 
hearing held on 9 January 2014 at the 
Administrative Court in Rome. The 
Company is presently awaiting the 
decision of the appeal. We remain 
Dear Shareholder,
On behalf of the Board of 
Mediterranean Oil & Gas Plc, I am 
pleased to announce the Company’s 
2013 results.
A significant challenge for the 
Company in 2013 was the sudden loss 
of production from two of our key 
production wells at the Guendalina 
Field, offshore Italy, which resulted in us 
missing our production expectations 
by over 40%. I am pleased to report 
that, following a well clean-up 
operation at the start of 2014, 
production has been restored at GUE 
3SS, and that the updated reservoir 
analysis carried out during this exercise 
indicates the reservoir is in better 
condition and less depleted than we 
thought at the time of our Interim 
Results statement. As such, in these 
results, we are able to reverse €1.2 
million of the €1.8 million impairment  
of the Guendalina Field reported in 
September 2013. We look forward to 
continued safe and reliable operations 
at the Guendalina Field, which 
remains our main source of revenue.
Total annual production was 27.6 
MMscm (175,420 boe) and total 
revenue was €8.4m. Cash and cash 
equivalents at the period end was 
‘We have turned  
the corner after  
a challenging year  
and are well placed  
to advance the value 
of our portfolio in the 
year ahead.’ Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 9
Company overview Business review Governance Financial statements
convinced that the development of 
the Ombrina Mare Field will benefit the 
Abruzzo region and we are resolute 
that we will protect our shareholders’ 
interests in what is a very important 
asset within our portfolio.
On a more positive note, we have 
made good progress preparing for our 
upcoming drilling activities offshore 
Malta in Area 4. All of the necessary 
logistics and contracts are in place 
and we are now awaiting arrival of the 
rig and final clearances to start drilling. 
Post this reporting period, we received 
an extension of six months to the first 
exploration period to July 2014, 
enabling sufficient time to complete 
the drilling activities.
In 2012 the Board implemented a 
revised remuneration policy for the 
executives and all staff that more closely 
aligns their total reward based on a 
weighted combination of their individual 
performance, and the overall 
performance of the Company as 
compared with our peers. At the end  
of 2012, the Company was in the top 
quartile in terms of share value growth 
when compared with over 100 E&P 
companies listed on AIM, and this report 
reflects the executive and staff bonuses 
for 2012 performance that were 
awarded in January 2013. As a result of 
the general underperformance of our 
share price during the last twelve 
months, no executive bonuses or 
options were awarded for 2013.
Outlook
There is no doubt that 2014 will be an 
important year in the growth of the 
Company. We are excited to have two 
exploration wells and 1,500km of 2D 
seismic acquisition planned for the 
first half of the year. The drilling of the 
first exploration well, Hagar Qim, 
offshore Malta Area 4, has the 
potential to open up a new 
hydrocarbon basin. The onshore Italy 
Faseto 1 exploration well, while not a 
high-impact well like Hagar Qim, is an 
opportunity for rapid implementation 
as the development options have 
already been pre-approved.
During 2013 significant time, effort and 
resources have been spent by the 
Company in preparing to defend the 
interests of our shareholders against 
the claim and proceedings initiated  
by Leni Gas & Oil plc (‘LGO’) in 
January 2013. The Company continues 
to refute the various claims that have 
been made by LGO. The allegations 
made are unfounded and the 
Company will defend itself and the 
interests of its shareholders rigorously. 
The case is due to come before the 
Commercial High Court in London in 
early March 2014.
Particularly given the production 
challenges of 2013, we have 
maintained a strong focus on the cost 
of our operations, and our corporate 
overheads. At the close of the year we 
moved our four-person London 
head-quarters to a small serviced 
office and, at the beginning of 
January, we announced that two of 
our Non-Executive Directors, Jake 
Ulrich and Matthew Clarke, had 
stepped down from the Board. I am 
very grateful to Jake and Matthew for 
their guidance and I know that they 
remain strong supporters of the 
Company. I am confident we have a 
Board of Directors that is well placed to 
guide the Company through its next 
phase of development.
Mediterranean Oil & Gas continues to 
build up a very experienced technical 
and management team highly 
capable of exploring and developing 
oil and gas assets. To that end the 
Board remains focused and committed 
to growing the Company and we are 
actively seeking additional opportunities 
to expand our current portfolio.
On behalf of the Board, I would like 
thank our shareholders and our 
employees for their continued support.
Keith Henry
Chairman
24 February 2014
Outlook
  Drilling of first exploration 
well, Hagar Qim 1 offshore 
Malta in Area 4 planned for 
Q1 2014
  Continue to actively pursue 
award of EIA and Production 
Concession for Ombrina 
Mare
  Post award of a Production 
Concession, the Company 
plans to drill a pilot appraisal 
well at Ombrina Mare
  Extract value from other 
operating assets and de-risk 
prospective and contingent 
resources
  Continue to actively pursue 
exploration and strategic 
growth opportunities Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 10
Chief Executive’s report
William Higgs
Chief Executive
At the beginning of 2013 we were 
looking forward to another full year of 
production from the Guendalina Field. 
Sadly this was not to be. With 
production being shut-in first at GUE 
2SS in March and then GUE 3SS in 
August our annual production fell over 
40% short of our 2013 expectations. The 
Group delivered total sales revenue of 
€8.4 million and had a cash and cash 
equivalents position of €12.4 million at  
31 December 2013.
We were pleased to note that the GUE 
3SS re-started production after the 
operator (ENI) initiated remedial 
operations on 24 December 2013. 
These operations were hampered  
by difficult weather conditions in  
the Adriatic. The intervention  
was completed successfully on  
11 January 2014 and the well returned 
to low-rate production. The well is  
now on stable production of 
approximately 5,500 scm per day net 
to MOG. In addition, the updated 
analysis of the reservoir by ERCE has 
confirmed our view that the reservoir  
is more substantial and in a better 
condition than we had assumed for 
the 2013 Interim Results statement. 
Building  
a resources 
factory
‘2013 was a tough year 
for the Company. It is 
good that 2014 will see 
us drilling wells and 
shooting seismic for the 
first time since 201 1 – 
these are the activities 
that will progress our 
portfolio’
Using this latest analysis we are able to 
reverse €1.2 million of the €1.8 million 
impairment of the Guendalina Field 
reported in September 2013.
Our critical commercial objective for 
2013 was to seek the approval of the 
Environmental Impact Assessment 
(‘EIA’) for our Ombrina Mare Field. The 
year started well with the EIA 
Commission, charged by the Ministry 
of Environment and of Protection of 
Land and Sea (‘MEPLS’) to rule on the 
Ombrina Mare oil and gas field 
development EIA, ruling positively in 
favour of MOG’s submission. The 
resulting EIA Decree was presented to 
the MEPLS for signature in February 
2013, where it has remained unsigned, 
despite continued lobbying from the 
Company with all key stakeholders, 
ever since. Once the EIA Decree is 
countersigned by the MEPLS, and by 
the Minister of Heritage and Cultural 
Activities, MOG will be able to seek 
award of the d30 BC MD Ombrina 
Mare Production Concession from the 
Ministry of Economic Development 
(‘MED’). The MED granted technical 
approval of the Field Development 
Plan for Ombrina Mare in June 2009. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 11
Company overview Business review Governance Financial statements
In 2013 we acquired a 40% working 
interest in the Exploration Study 
Agreement for offshore Malta Area 3 
Blocks 1, 2, and 3. We believe that this 
region is a complementary asset to 
offshore Malta Area 4, as it lies on the 
margin of a proven hydrocarbon 
province. We have also made good 
progress in preparing for our 
upcoming drilling activities offshore 
Malta in Area 4. All of the necessary 
logistics and contracts are in place 
and we are now awaiting arrival of the 
Noble rig ‘Paul Romano’, which is 
finalising refurbishments in Malta. Post 
the reporting period we received an 
extension of six months to the first 
exploration period to enable sufficient 
time to complete the drilling activities.
The Company has a broad asset base 
across the exploration, development 
and production phases of the 
business. These assets have significant 
upside potential and we are looking 
ahead to de-risk and mature these 
assets over the coming years, while 
also looking for valuable opportunities 
for asset acquisition.
Gas Production and Prices
All gas production of the Group is 
currently from onshore and offshore Italy.
In 2013, total gas production was 0.97 
Bcf (27.6 MMscm), which represented a 
42% reduction relative to the prior year 
(2012: 1.69 Bcf). This was largely due to 
the reduction in gas production at the 
Guendalina Gas Field caused by the 
shut-in of wells GUE 2SS and GUE 3SS.
During 2012, the Brent oil price has 
fluctuated around $100-110/bbl, while 
the Euro versus US Dollar exchange rate 
has experienced significant volatility 
which has influenced gas prices. The 
average gas sales price achieved  
by the Group during the period was 
€0.30/scm (USD 11.2/Mcf).
The Company’s forecasts for future gas 
prices indicate continued downward 
pressure in 2014 and 2015 and the 
Italian gas price is expected to remain 
between 28.1 and 29.3 Euro cents per 
scm which is below the long run 
average gas price, due to the excess 
of gas supply relative to gas demand 
in the Italian market.
What Happened at Guendalina?
The problems encountered at the 
Guendalina Field in 2013 are still under 
investigation, but appear to have their 
origins in the spring of 2012 when the 
operating conditions of the two wells 
GUE 2SS and GUE 3SS changed in late 
May 2012.
In the case of GUE 2SS, both the 
production rate and the flowing 
wellhead pressure increased, which  
at the time was (correctly) interpreted 
as a cleaning up of the well and the 
unexpected addition of incremental 
production from sand intervals not 
originally connected to the well. In 
September 2012, after a short well 
shut-in, GUE 2SS had a sudden 
deterioration in gas rate as well  
as wellhead tubing pressure. 
Unfortunately on 5 March 2013, after 
several months of decline, GUE 2SS was 
taken offline to determine the cause of 
an influx of water that resulted in the 
well ceasing production. The probable 
cause of the well shut-in is the 
premature water breakthrough from 
the bottom aquifer associated with the 
additional sand intervals that started 
contributing in May 2012. This well is 
currently shut-in and will remain shut-in 
for the foreseeable future. However, the 
gas level completed for production at 
GUE 2SS is being produced from well 
GUE 3LS, which is in an up dip location.
In the case of GUE 3SS, the production 
rate increased and the flowing well 
head pressure decreased. Once 
again, the characteristics of the well 
indicate cleaning up of the completion 
and, in this case, an increase in the 
drawdown of the reservoir. In July and 
August 2013 the production rate on 
GUE 3SS started to decline more rapidly 
and the well was taken offline on  
30 August 2013 due to low pressure at 
the manifold. Subsequent analysis 
indicated that the reservoir was in 
good condition and at a higher static 
pressure than predicted. With these 
new data it was possible to 
demonstrate that the well performance 
had been progressively deteriorating 
since the late May 2012 event and that 
the observed increased ‘skin’ to the 
well was probably the consequence of 
the migration of fine grained material 
towards the wellbore, which 
progressively reduced productivity. This 
was unknowable during the period of 
time that the well was on production. 
With these new data the operator (ENI) 
designed and executed a remedial 
treatment of the well to remove the 
fines. The well was brought back onto 
low-rate production on 11 January 
2014. The well continues to clean up 
and is currently achieving stable 
production of approximately 5,500 scm 
per day net to the Company.
Well GUE 3LS has maintained its 
operating conditions throughout 2012 
and 2013. GUE 3LS has been performing 
in line with expectations and is currently 
producing about 31,000 scm per day 
net to the Company.
The knock-on effects of the damage  
to these two wells cannot be 
understated. We quickly went from a 
cash flow positive to cash flow negative 
business when including all operating 
and capital costs. This has placed 
downward pressure on the share price 
and created sufficient uncertainty in 
our future cash flows that it has been 
very difficult to undertake any 
accretive transactions.
Oil & Gas Reserves and Resources
In 2013 the Company selected ERCE  
to undertake an audit of the Group’s 
reserves and resources. This analysis, 
which has been detailed and robust, 
has resulted in some significant 
movement and reductions on our 
Reserves and Resources ledger. The 
changes year-on-year are highlighted 
below. Importantly, we can now be 
confident in the assessment and 
therefore value of our Reserves and 
Resources.
As at 31 December 2013, the Company 
recorded 2P reserves of 5.3 Bcf (net) of 
gas (1.0 MMboe) and 2,376 boe of 
condensate. Best estimate contingent 
resources were 26 MMbbls oil (net) 
and 32.4 Bcf (net) of gas. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 12
Chief Executive’s report continued
Asset Overview
Exploration, Development and 
Production
Italy – Offshore Northern Adriatic
The Company’s efforts during the 
period under review were mostly 
focused on understanding the 
production challenges at the 
Guendalina gas field offshore Italy  
in the northern Adriatic.
Other North Adriatic Gas Discoveries 
(MOG WI 15%, ENI WI 85% and 
Operator)
The Guendalina project is located in 
one of the most important gas 
exploration and production areas in 
Italy and is situated 70km south of four 
other discovered, but still 
undeveloped, offshore gas fields in 
which the Group has a 15% interest.
These four gas discoveries amount to 
between 10 to 50 Bcf net contingent 
gas resources to the Group and 
represent an important growth 
opportunity for the Company. Their 
reclassification from 2C (Contingent 
Resources) to 2P reserves is expected 
to take place following authorisation of 
the development plans for the fields.
The tables set out on pages 12 and 13 
summarise the evolution of the 
Group’s hydrocarbon Reserves and 
Resources since 2006 and include 
the latest update, as at 31 December 
2013.
 > 2P Oil Reserves were reduced with 
the movement of the Ombrina 
Mare Field into the Contingent 
Resources Category
 > The Company’s 2P RRR was -129%, 
which was caused by a negative 
revision of Reserves
 > The Company’s 2P Reserves to 
Production (‘R/P’) ratio for gas has 
dropped to 5.5
 > Prospective Resources for the 
Monte Grosso prospect have been 
certified as 9.8 MMbbls (1E), 29.9 
MMbbls (2E) and 85.3 MMbbls (3E) 
with a mean of 41.5 MMbbls
 > The Company is committed to 
de-risk and mature resources, to 
progressively replace reserves, 
maintaining the 2P RRR at around 
100% and targeting an R/P ratio of 
approximately 9
Development activity for these fields 
was frozen from 2001, initially pending 
the resolution of environmental 
concerns about subsidence caused 
by developing the offshore region.  
The Italian Government indicated in 
2009 that it is in favour of a positive 
resolution of these issues in this area of 
the Northern Adriatic. As a portion of 
the Company’s AC19 PI concession lies 
within 12 miles of nature reserves it was 
impacted by the 2010 offshore 
restrictions introduced by the Italian 
Government for the offshore E&P 
activities. On 7 August 2012 the Italian 
Parliament issued the Law 134/2012 
containing Article 35, which relates to 
offshore exploration and production 
activities. The Article states that the 
restrictions introduced under Decree 
DLGS 128/2010 would no longer be 
applicable for the pre-existing offshore 
E&P activities such as concession AC19 
PI. The Company can now work with 
ENI to increase the priority of the 
development of the Northern Adriatic 
discoveries within AC19 PI.
Net Oil Reserves & Resources in MMbbls
Reserves 
Proven Plus 
Probable 
(2P) 
MMbbls
Contingent 
Resources 
Best 
Estimate 
MMbbls
Contingent 
Resources 
High 
Estimate 
MMbbls
Prospective 
Resources 
(unrisked) 
Best 
Estimate 
MMbbls
Prospective 
Resources 
(unrisked) 
High 
Estimate 
MMbbls
1 July 2006 0
1
29
2
70
2
1,577
3
4,447
3
30 June 2007 0
1
29
2
70
2
1,291
4
3,614
4
30 June 2008 20
1
12
2
19
2
1,419
4
3,951
4
31 December 2008 20
1
12
2
19
2
1,419
4
3,951
4
31 December 2009 20
1
12
2
19
2
1,419
4
3,951
4
31 December 2010 40
1
12
2
19
2
1,405
4
3,920
4
31 December 2011 40
1
12
2
21
2
1,405
4
3,920
4
31 December 2012 40
1
17
2
31
2
470
6
1,200
6
31 December 2013 0
5
26
5
66
5
424
6
1,200
6
1: Independent certification by Studio di Ingegneria Mineraria.
2: Company assessment.
3: Independent certification by RPS Energy (‘RPS’).
4: Independent certification by RPS.
5: Independent certification by ERCE.
6: Independent certification by ERCE and Company assessment. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 13
Company overview Business review Governance Financial statements
Italy – Onshore Foredeep Gas
In Italy, the Company has focused its 
footprint of onshore production and 
exploration gas assets that target gas 
traps in the Pliocene aged sand 
deposits of the Apennines Foredeep 
with the completion of the sale  
of 13 non-core assets to Canoel 
International Energy Limited. In our 
remaining E&P acreage the existing 
production is not the only value. In fact, 
several interesting development and 
exploration projects are also present, 
mainly within existing production 
concessions that have the potential to 
unlock approximately 26 to 64 Bcf net 
unrisked prospective resources to the 
Group and achieve new near to 
mid-term gas production.
In December 2012, we received the 
award of the Aglavizza Production 
Concession onshore central Italy 
where we have a 100% interest in the 
7km
2
 concession that includes the 
Civita 1 discovery with estimated 
proved and probable reserves close  
to 1 Bcf. Post the award, we safely 
conducted a production test of Civita 
1 that confirmed excellent permeability 
and no near-well bore formation 
damage. In Q3 2013 the Board made 
the final investment decision for the 
Aglavizza development. First gas is 
expected in Q3 2015 and over the 
two-year development cycle the 
Company will invest €2.8 million.  
The asset is expected to start with 
production rates of 18,000 to  
20,000 scm per day.
Italy – Ombrina Mare
Oil & Gas Discovery (MOG WI 100%)
The Ombrina Mare discovery is an 
important asset for the Company that 
represents an important future growth 
opportunity.
Following the successful drilling of two 
exploration/appraisal wells in 2008, the 
completion of a well as an oil producer 
and the set-up of a tripod platform in 
preparation for the development 
phase, the Company applied for a 
production Concession (d 30 B.C-MD) 
in December 2008. In the reporting 
period the Company worked with ERCE 
to complete a revised independent 
certification of Ombrina Mare on the 
expectation that we would be soon 
moving forwards with the development. 
Because of the continued delay to the 
award of the EIA for the project and the 
need for further appraisal drilling to fully 
assess the potential of the asset, ERCE 
certified Ombrina Mare oil and gas into 
the Contingent Resources category 
with 9.8 MMboe oil and 4.03 Bcf gas 
(1C), 25.1 MMboe oil and 8.04 Bcf gas 
(2C), and 62.8 MMboe oil and 17 .2 Bcf 
gas (3C). We plan on drilling a pilot 
development well as soon as 
logistically and safely possible post the 
award of the production concession. 
The goals of the pilot appraisal well 
would be:
 > To assess the potential for a 
hydrodynamic or tilted oil-water 
contact
 > To assess net reservoir distribution  
to the north away from the crest  
of the structure
 > To test the hydrodynamic 
performance of the reservoir
 > To test the potential of the 
Cretaceous interval to contribute to 
the productivity
The year started well with the EIA 
Commission, charged by the MEPLS to 
rule on the Ombrina Mare oil and gas 
field development EIA, ruling positively 
in favour of MOG’s submission. The 
resulting EIA Decree was presented to 
the MEPLS for signature in February 
2013, where it has remained unsigned 
ever since. Significant effort and 
resources have been directed at 
creating the correct environment for 
the Italian authorities to make a 
positive decision. We have engaged 
with the local communities onshore 
from the proposed development 
location including the opening of a 
new office in the important port town 
of Ortona.  
Net Gas Reserves & Resources in Bcf
Reserves 
Proven Plus 
Probable 
(2P) 
(Bcf)
Contingent 
Resources 
Best 
Estimate 
(Bcf)
Contingent 
Resources 
High 
Estimate 
(Bcf)
Prospective 
Resources 
(unrisked) 
Best 
Estimate 
(Bcf)
Prospective 
Resources 
(unrisked) 
High 
Estimate 
(Bcf)
1 July 2006 12
1
21
2
50
2
20
2
44
2
30 June 2007 11
1
25
2
61
2
70
2
138
2
30 June 2008 10
1
25
2
55
2
93
2
158
2
31 December 2008 17
1
25
2
55
2
93
2
158
2
31 December 2009 16.5
1
25
2
55
2
93
2
158
2
31 December 2010 17.6
1
25
2
55
2
48
2
120
2
31 December 2011 18.4
1
22.3
2
48
2
86
2
156
2
31 December 2012 15.3
1
22.3
2
48
2
114
2
216
2
31 December 2013 5.3
3
32.4
4
73.4
4
144
4
286
4
1: Independent certifications by SIM and RPS (Guendalina 2012 only).
2: Company assessment.
3. Independent certification by ERCE.
4: Independent certification by ERCE and Company assessment. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 14
Chief Executive’s report continued
Malta – Offshore Area 4
The Group holds a 25% working interest 
in offshore Malta Area 4, which 
comprises 5,700km
2
 of deep water 
acreage north of the internationally 
recognised border between Malta  
and Libya.
During the period:
 > We completed the sale of a 75% 
interest in offshore Malta Area 4  
to Genel for:
 > US$10 million cash payment 
(received in February 2013);
 > 100% carry on the first exploration 
well, and a 100% carry on the 
second exploration well up to 
US$30 million gross expenditure;
 > At MOG’s option, should the costs 
of the second well exceed US$30 
million, Genel will provide a 
financing arrangement to fund 
MOG’s 25% share of any 
additional expenditure, at an 
interest rate equivalent to 3 
Month LIBOR plus 400 bps.
 > We completed the logistics, 
contract awards and procurement 
required to support the drilling of the 
first exploration well, which is 
expected to spud in Q1 2014.
The area is frontier exploration where 
no drilling activity has occurred and  
it is one of the rare areas that still 
remains to be explored in the 
Mediterranean basin. The transaction 
with Genel means that a minimum of 
two exploration wells are now fully 
funded.
Post period the Company received an 
extension of the first exploration period 
by six months until 17 July 2014 to 
enable completion of the drilling 
activity. In addition, the Company 
modified the terms of its sale to Genel 
such that the two parties are now in a 
Joint Venture partnership, with a Joint 
Operating Agreement.
We have taken all necessary steps, 
including legal action, to protect 
shareholders’ interests. We will 
continue our active dialogue with the 
Italian Government, with a view to 
securing approval of the EIA for 
Ombrina Mare and the award  
of the associated Production 
Concession. Once the EIA Decree is 
countersigned by the MEPLS and the 
Minister of Heritage and Cultural 
Activities, MOG will be able to seek 
the award of the d30 BC MD Ombrina 
Mare Production Concession from 
the MED. The MED has already 
granted technical approval of the 
Field Development Plan for Ombrina 
Mare in June 2009.
Wildcat Exploration
Italy – Southern Apennines
In the Southern Apennines, the Group 
operates the Monte Grosso project, 
holding a 22.89% interest. The project 
is a high quality near field exploration 
opportunity close to one of the 
largest onshore oil producing areas 
in western Europe. The Monte Grosso 
exploration project presently remains 
on hold, pending resolution of 
residual permitting issues, which the 
Group presently believes should be 
positively resolved and allow a 
project start-up in late 2015 (subject 
to rig availability). The Monte Grosso 2 
well is targeting 181 MMbbls of 
unrisked mean Prospective Resources 
(41.5 MMbbls net to the Group) at a 
depth of 6,800m. Permitting and 
existing well site maintenance works 
were the main activities conducted 
during the period.
Offshore Malta Area 4 is a high risk, but 
potentially a high reward, geological 
environment where nine prospects 
and leads have been certified by ERCE 
and RPS with a total of 381 million bbls 
of unrisked prospective oil resources 
net to MOG.
Malta – Offshore Area 3
In June 2013 MOG reached agreement 
with Transunion Petroleum Ltd 
(‘Transunion’) and Nautical Petroleum 
Ltd, a subsidiary of Cairn Energy PLC 
(‘Cairn’), to join Cairn in the 
exploration of offshore Malta Area 3 
– Blocks 1, 2 and 3 (‘Area 3’).
In December 2012 Cairn entered into  
a three-year Exploration Study 
Agreement (‘SA’) with the Government 
of Malta for offshore Area 3, which is 
located in the Sicily Channel covering 
an area of approximately 6,000km
2
 
and containing a number of 
prospective leads. The ESA covers an 
initial two-year period with geological 
studies, the reprocessing of existing 2D 
seismic data, the acquisition of new 2D 
seismic data and limited capital works. 
The agreement provides the right to 
negotiate a production sharing 
contract and it can be extended to a 
third year to acquire 3D seismic. The 
assignment of an interest in the ESA  
to Melita Exploration Company Ltd,  
a wholly owned subsidiary of the 
Company, was approved by the 
Government of Malta in July 2013.
The joint venture has approved the 
acquisition of approximately 1,500km 
broadband 2D seismic in H1 2014  
and the operator is finalising the 
preparation of the seismic campaign.
France – St Laurent
The St Laurent permit is located in 
southern France in a known gas and 
oil prone province. The Company has 
an 11% WI in this asset. There has been 
little activity on the permit in 2013. The 
joint venture partners are seeking an 
extension to the exploration period 
from the French authorities. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 15
Company overview Business review Governance Financial statements
Glossary
Bcf Billion cubic feet of gas
Contingent oil/gas resources Has the meaning ascribed by the SPE/WPC Standard
EIA Environmental Impact Assessment
E&P Exploration and Production
HSE Health, Safety and the Environment
MMbbls Million stock tank barrels of oil
MMboe Million stock tank barrels of oil equivalent
MMscm Million standard cubic metres
P1 & P2 Reserves Proven plus probable reserves as defined in the SPE/WPC Standard
Prospective oil/gas resources Has the meaning ascribed by the SPE/WPC Standard
RRR Reserve Replacement Ratio
R/P Reserves to Production Ratio
Scm Standard cubic metre
SOP Standard Operating Procedure
SPE/WPC Society of Petroleum Engineers/World Petroleum Congress SPE/WPC Standard 
Definitions and methodology for certifying hydrocarbon reserves and resources 
adopted by the SPE/WPC from time to time which presently requires the 
application of the 2007 Petroleum Resources Management System standards
Health, Safety and the Environment
The Company continues to be 
committed to maintaining the highest 
standards in HSE management. No 
safety or environmental incidents have 
been reported for the period under 
review.
Operational Overview
MOG has a broad portfolio of 
production, development and 
exploration assets.
Over the next 12 months, MOG intends 
to progress its key assets and pursue 
attractive and material strategic 
growth opportunities that we expect  
to identify.
One of the strengths of the Company is 
the wide international experience of its 
senior managers, in particular in the 
Mediterranean area and the 
operational capability of its staff  
and organisation.
William Higgs
Chief Executive
24 February 2014
Qualified Person:
In accordance with the guidelines of 
the AIM Market of the London Stock 
Exchange, Dr. Bill Higgs, Chief 
Executive of Mediterranean Oil & Gas 
Plc, a geologist, explorationist and 
reservoir manager with over 24 years’ 
oil and gas industry experience, is the 
qualified person as defined in the 
London Stock Exchange’s Guidance 
Note for Mining and Oil and Gas 
companies, who has reviewed and 
approved the technical information 
contained in this announcement. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 16
  
 
   
 
Revenues €m
8.4 down 48% 
Production Bcf
1.0 down 42% 
2010 2011 2012 2013
0.4
1
0.6
1
1.7 1.0
2010 2011 2012 2013
3.5
1
5.6
1
16.3 8.4
1  Includes production from discontinued operations
1  Includes revenue from discontinued operations
  
 
   
 
Revenues €m
8.4 down 48% 
Production Bcf
1.0 down 42% 
2010 2011 2012 2013
0.4
1
0.6
1
1.7 1.0
2010 2011 2012 2013
3.5
1
5.6
1
16.3 8.4
1  Includes production from discontinued operations
1  Includes revenue from discontinued operations
Financial review
Chris Kelsall
Finance Director
Presentation of 2013 Financial 
Statements
On 6 September 2012, the Group 
announced the divestment of non-
core exploration and production gas 
assets onshore Italy (‘Assets Held for 
Sale’), which belong to the subsidiaries 
Medoilgas Italia SpA and Medoilgas 
Civita Limited, to Canoel International 
Energy Limited (‘CIL’). In July 2013, the 
Company announced completion of 
the divestment of the Assets Held for 
Sale to CIL. In accordance with IFRS 5 
Non-current assets held for sale and 
discontinued operations, the assets 
are presented in the Consolidated 
Statement of Financial Position as 
non-current assets ‘held for sale’ (refer 
Note 6(b) for further information) and 
in the income statements as 
discontinued operations.
On 28 February 2013, the transaction 
that was announced on 23 August 
2012 for Genel Energy plc (‘Genel’)  
to acquire a 75% working interest in 
offshore Malta Area 4 Production 
Sharing Contract (the ‘Malta PSC’) was 
completed. The Group’s total interest in 
Phoenicia Energy Company Limited 
(‘PECL’) was disclosed at the end of 
2012 as an asset held for sale in the 
statement of financial position in 
accordance with the provisions of IFRS 
5. Following the adoption of IFRS 11, 
Joint Arrangements, the Group has 
accounted for this transaction as a 
divestment of a 75% interest of PECL,  
as a disposal of a subsidiary resulting 
in a joint operation (refer Note 6(a) for 
further information). Therefore, all of 
the carrying amount has not been 
de-recognised and a gain on disposal 
of the 75% interest only has been 
recorded. The remaining carrying 
amount, representing 25% of the 
interest in the Malta PSC, has been 
included in Intangible Assets.
2013 highlights
 > Cash and cash equivalents at 
year-end €12.4m (2012: €8.7m)
 > Group revenue from sales of gas 
and gas condensate and 
operatorship income €8.4m, 
excluding discontinued operations 
(2012: €16.3m)
 > Group loss from operations of 
€4.4m, excluding discontinued 
operations (2012: profit of €4.1m)
 > Net cash outflows from operating 
activities of €1.2m, excluding 
discontinued operations  
(2012: inflow €6.5m)
1 Includes 
production 
from  
discontinued 
operations
1 Includes 
production 
from  
discontinued 
operations Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 17
Company overview Business review Governance Financial statements
Revenue
Excluding discontinued operations, as 
noted above, significant reductions in 
gas and gas condensate production 
to 27.6 MMscm (2012: 47.7 MMscm) or 
0.97 Bcf (2012: 1.69 Bcf), resulted in a 
48% decline in revenues to €8.4m 
(2012: €16.3m). Operatorship income 
increased to €0.6m in the period (2012: 
€0.15m) as a consequence of time 
writing for work undertaken in relation 
to the interest held at the Malta PSC. 
This is not expected to be repeated in 
2014, given the latest agreed structure 
with the Company’s joint venture 
partner, Genel, which is the operator  
of the Malta PSC.
The events surrounding the shut in  
of the wells at the Guendalina Field, 
and the subsequent resumption of 
production, are discussed in the  
CEO’s Report on pages 10 to 15.  
The Guendalina Field is currently 
producing approximately 36,000 scm 
per day net to MOG.
The Group’s average realised gas sales 
price in 2013 was €0.30/scm (USD 11.2/
Mcf). The gas sales contract for the 
Guendalina Field, signed in March 
2013 with Repower Italia, has been 
extended to include the bulk of our 
Italian gas production and MOG is 
pleased to have the contract in place 
with Repower Italia until the end of the 
current thermal year, which ends  
on 30 September 2014.
Income From Operations
Loss from operations in 2013 was €4.4m 
(2012: profit of €4.1m). The decline was 
primarily attributable to the combined 
effect of a reduction in 2013 revenues, 
an increase in the cost of sales to 
€4.2m (2012: €3.8m) and an increase  
in total administrative expenses to 
€9.2m (2012: €8.5m). This arose as  
a consequence of the decline in  
the depreciation, depletion and 
amortisation charge to €2.6m  
(2012: €4.5m) being more than offset 
by a combination of the €600,000 
impairment charge (2012: €nil)  
arising at the Guendalina Field and  
an increase in other administrative 
expenses to €6.0m (2012: €4.0m).
Although Guendalina production 
royalties and gas treatment costs were 
lower, in line with the lower 2013 
production, other operating costs 
associated with the onshore Italy 
concessions were stable, while 
incremental maintenance costs 
associated with work undertaken to 
resume production at the Guendalina 
Field were higher, at €1.4m in 2013 
(2012: €0.6m). Total staff costs (refer 
Note 9), including those attributed to 
cost of sales, were €4.5m (2012: €3.6m) 
included a cash and share-based 
bonus payment to employees, in 
respect of a robust corporate 
performance in 2012, that was paid 
and therefore recognised, in 2013.
Other administrative expenses 
included legal fees of €1.0m, up from 
€0.2m in 2012, that were incurred by 
the Company in relation to the 
defence of the legal claim brought by 
Leni Gas & Oil Plc (‘LGO’) and Leni Gas 
& Oil Investments Limited (‘LGOI’).
The reduction in depreciation, depletion 
and amortisation charge to €2.6m (2012: 
€4.5m) arose primarily a consequence 
of lower production at Guendalina 
which is depreciated on a unit of 
production basis. As a result of the 
production interruptions at the 
Guendalina Field, an impairment 
charge of €1.8 million was recognised in 
the six month period ended 30 June 
2013. Following issuance of independent 
analysis by ERC Equipoise in February 
2014 which identified additional gas 
bearing intervals and a larger reservoir 
profile than had previously been 
estimated, management have partly 
written back the value of the asset by 
€1.2m, resulting in a net impairment of 
Guendalina in the period of €0.6m  
(2012: €nil).
The Group has recorded a gain of 
€2.8m from the disposal of the 75% 
interest in the Malta PSC (refer Note 
6(a) for further information).
The basic and diluted earnings  
per share on continuing operations 
were a loss of 1.41 cents per share 
(2012: earnings of 0.41 cents per 
share). No dividend is proposed  
to be paid for the year ended  
31 December 2013 (2012: €nil).
Cash Flow
Net Group cash outflow from 
operating activities was €1.2m  
(2012: €6.5m inflow), which reflects the 
significant decline in production at 
the Guendalina Field, relative to 2012.
The €8.9m proceeds for the disposal 
of the 75% interest in the Malta PSC  
to Genel were received in 2013. 
Following completion of the sale of 
non-core onshore assets to CIL in 
June, a payment of €1.25m was 
made and is reported as part of the 
cash flows from discontinued 
operations.
The Group’s total capital expenditure 
on assets of €2.5m (2012: €1.7m)  
was mainly related to development  
of the Aglavizza field, geological  
and geophysical studies and other 
activities for Ombrina Mare, and the 
acquisition of a 40% working interest 
in offshore Malta Area 3.
Statement of Financial Position
Cash and cash equivalents at 
year-end were €12.4m (2012: €8.7m). 
Among non-current assets, key 
movements from 2012 included a 
reduction in property, plant and 
equipment to €16.7m (2012: €20.4m). 
This decline resulted from the 
depreciation and impairment charge 
associated with the Guendalina Field. 
Exploration assets increased to 
€24.1m (2012: €19.8m), reflecting 
investments and the inclusion of the 
carrying amount of the 25% interest  
in the Malta PSC. Financial liabilities  
at year end were €nil (2012: €nil).  
At the end of 2013, net assets stood  
at €50.5m (2012: €53.1m), and 
non-current assets were €43.3m  
(2012: €44.1m).
Key Performance Indicators
The Group’s key financial 
performance indicators are revenue 
and the consolidated results. Its key 
non-financial performance indicators 
are the level of production and 
reserve and resources replacement 
(discussed in the Chief Executive’s 
Report – Oil & Gas Reserves and 
Resources on page 11) and the 
health, safety and environmental 
performance (discussed in the Chief 
Executive’s Report – Health, Safety 
and the Environment, on page 15). Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 18
Financial review continued
Hedging
During 2013, the Group did not have 
any oil and gas price derivatives in 
place (2012: no oil and gas price 
derivatives in place).
Cautionary Statement
This financial report contains certain 
forward-looking statements that are 
subject to the usual risk factors and 
uncertainties associated with the oil 
and gas exploration and production 
business. While the Directors believe 
the expectation reflected herein to be 
reasonable in light of the information 
available up to the time of their 
approval of this report, the actual 
outcome may be materially different 
owing to factors either beyond the 
Group’s control or otherwise within the 
Group’s control but, for example, 
owing to a change of plan or strategy. 
Accordingly, no reliance may be 
placed on the forward-looking 
statements.
Chris Kelsall
Finance Director
24 February 2014
The share price movement during the 
twelve month period to 31 December 
2013 ranged from an intra-day high of 
13.00p, to an intra-day low of 4.77p. 
The share price at close on  
31 December 2013 was 5.50p.
Events after the Reporting Period
On 9 January 2014, the Company 
entered an agreement with the 
Government of Malta for a six month 
extension to the Malta PSC covering 
offshore Malta Area 4. This extension will 
enable the contractors to the Malta 
PSC to have sufficient time to complete 
the exploration drilling activities that are 
forecast to start in Q1 2014. With this 
extension, the expiry of the first 
exploration period to the Malta PSC is 
now 17 July 2014. The Maltese 
Government also gave its consent for 
Phoenicia Energy Company Ltd 
(‘PECL’), which wholly owned the rights 
to the Malta PSC, to assign 25% of its 
interest in the Malta PSC to Melita 
Exploration Company Ltd (‘MECL’),  
a wholly owned subsidiary of MOG. 
Concurrently with this assignment, 
MOG transferred its remaining 25% 
interest in PECL to Genel Energy 
Holdings Ltd. Consequently, PECL is now 
a wholly owned subsidiary of Genel 
Energy Holdings Ltd. MECL and PECL 
have entered into a Joint Operating 
Agreement, in which PECL has been 
appointed Operator on behalf of the 
joint venture parties. Following these 
transfers, PECL will hold a 75% working 
interest in Area 4 and MECL a 25% 
working interest in Area 4 and are jointly 
the contractors to the Malta PSC.
Other events occurring after the 
reporting period are set out in Note 
25 to the Financial Statements. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 19
Company overview Business review Governance Financial statements
Strategic report
Section 414C of the Companies Act 
2006 (the ‘Act’) requires that the 
Company inform members as to how 
the Directors have performed their  
duty to promote the success of the 
Company, by way of a Strategic Report.
Set out below are the applicable 
reporting requirements under the Act 
for the purposes of the Strategic 
Report, together with guidance to 
other applicable sections of the 2013 
Annual Report, which are incorporated 
by reference into the Company’s 
Strategic Report.
Fair review of the business 
(Section 414C (2) (a) of the Act)
This information is contained in pages 
8 and 9 of the Chairman’s Statement, 
pages 10 to 15 of the Chief Executive’s 
Report and the Finance Review on 
pages 16 to 18.
Principal risks and uncertainties 
(Section 414C (2) (b) of the Act)
This information is contained in the 
Principal Risks and Uncertainties, on 
pages 20 and 21.
Analysis of the development and 
performance of the business 
(Section 414C (3) of the Act)
This information is contained in pages 
8 and 9 of the Chairman’s Statement, 
pages 10 to 15 of the Chief Executive’s 
Report and the Finance Review on 
pages 16 to 18.
Analysis of the position of the business 
(Section 414C (3) of the Act)
This information is contained in page 8 
and 9 of the Chairman’s Statement, 
pages 10 to 15 of the Chief Executive’s 
Report and the Finance Review on 
pages 16 to 18.
Analysis using key financial 
performance indicators 
(Section 414C (4) (a) of the Act)
This information is contained in the 
Finance Review on pages 16 to 18.
Analysis using other key performance 
indicators 
(Section 414C (4) (b) of the Act)
This information is contained in the 
Chief Executive’s Report on pages 10 
to 15 and on Our strategy section on 
pages 6 and 7.
Approval of the Board 
(Section 414D (1) of the Act)
This strategic report contains certain 
forward-looking statements that are 
subject to the usual risk factors and 
uncertainties associated with the oil 
and gas exploration and production 
business. While the Directors believe 
the expectation reflected herein to be 
reasonable in light of the information 
available up to the time of their 
approval of this report, the actual 
outcome may be materially different 
owing to factors either beyond the 
Group’s control or otherwise within the 
Group’s control but, for example, 
owing to a change of plan or strategy. 
Accordingly, no reliance may be 
placed on the forward-looking 
statements.
By order of the Board.
William Higgs
Chief Executive
24 February 2014 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 20
Principal risks and uncertainties
Exploration
There is no assurance that our 
exploration activities will identify a 
commercial discovery among the 
existing portfolio. The Group mitigates 
exploration risk through the experience 
and expertise of our specialists, the 
application of appropriate technology, 
and the selection of prospective 
exploration assets. The Group’s 
objective is to acquire additional 
exploration assets, which will diversify 
exploration risk. Furthermore, we seek 
to employ individuals and contractors 
with strong technical skills and 
experience in the areas in which the 
Group operates. Where appropriate, 
we work with joint venture partners who 
have demonstrable technical skills and 
experience in similar projects. Further 
information on exploration assets is set 
out in Note 5 to the Financial 
Statements.
Operations
The nature of oil and gas operations 
means that the Group is exposed to 
the risk of equipment failure, well 
blowouts, fire, pollution and bad 
weather. In order to mitigate these 
risks, we implement recognised 
industry operating and safety 
standards, maintain sufficient levels of 
industry-specific insurance cover and 
work only with joint venture partners, 
operators and contractors who can 
demonstrate similar high standards of 
safety, operating and financial 
capability.
Health, Safety and Environment (‘HSE’)
The Group conducts operations in 
countries in Europe and the 
Mediterranean region. There is a risk of 
incidents in our operations that have 
the potential to impact the health  
and safety of staff, contractors, and 
communities, and/or the environment. 
Such incidents may have a negative 
impact on the Group’s reputation.  
This risk is mitigated through  
the implementation of our HSE 
management system, training of  
staff and selection of contractors.
The Group is subject to various risks 
and uncertainties, including those 
which derive from its oil and gas 
exploration, development and 
production activities. These risks and 
uncertainties may have a material 
impact on our performance and could 
cause future results to differ materially 
from expected and historical results.
The Group’s principal risks and 
uncertainties are set out below, 
together with a summary as to how 
they are mitigated. The relative 
importance of the risks faced by the 
Group is likely to change over time as 
we implement our growth strategy and 
as a consequence of external political, 
regulatory and macroeconomic 
developments. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 21
Company overview Business review Governance Financial statements
We are extremely conscious of the 
environmental risks that are inherent in 
the oil and gas industry. We ensure 
that all relevant environmental impact 
studies are undertaken in advance of 
any proposed seismic or other 
operations it undertakes and best-in-
class industry environmental standards 
and practices are adopted in all of our 
operations. While the Group can never 
fully mitigate the cost, delays and other 
implications of future changes in 
environmental legislation and 
regulation, we establish strong working 
relationships with the local authorities 
in the countries in which we operate,  
to be best able to work through any 
potential significant changes that 
could arise in the future.
Funding and Financing
The nature of the Group’s business 
means that there are significant costs 
associated with seismic, drilling, and 
development campaigns. We manage 
this risk by a number of means. We 
closely monitor the Group’s cash 
position and each month produce 
updated cash flow forecasts to help 
determine appropriate strategies to 
fund short and medium-term 
operations. We also ensure that the 
Group always has adequate levels of 
cash on deposit, with varying terms of 
maturity, to match the items of 
expenditure as they become due. 
Further information on pricing, liquidity 
and credit risk is set out in Note 18 to 
the Financial Statements.
Currencies
The functional currency of the Group 
and its subsidiaries is the Euro and a 
significant proportion of its current 
portfolio of assets and near-term 
forecast revenue and expenditure is 
also in Euro. Certain expenditures are 
required to be funded in Pounds 
Sterling and US Dollars and we monitor 
the forecast expenditure profile and 
maintain sufficient levels of cash 
resources in Pounds Sterling and  
US Dollars to pay these expenses. 
Although in the period ended  
31 December 2013, we accrued a 
foreign exchange loss of €674,000 in 
the Euro value of our cash balances, 
we do not believe, at this moment, that 
the Group is particularly exposed to 
large currency fluctuations. We hold  
a significant proportion of our cash 
reserves with banks which have a 
minimum credit rating of A. Further 
information on currency risk is set out 
in Note 18 to the financial statements.
Regulation
Regulations may change with a 
consequential adverse effect on the 
Group’s exploration and production 
assets. Regulatory risk is mitigated by 
monitoring the regulatory and political 
environment within the countries in 
which we hold assets, engaging in 
constructive dialogue where and 
when appropriate, and introducing 
third-party expertise if this may assist in 
resolution of issues affecting our assets. 
Our objective is to acquire additional 
assets both for the exploration and 
production portfolio, which may assist 
in diversifying country-specific 
regulatory risk.
Risk Management
The Directors regularly monitor the 
principal and other related risks, using 
information obtained or developed 
from external and internal sources, 
and will take action as appropriate  
to mitigate the Group’s exposure.  
The main elements of the risk 
management system include regular 
Board review of the business, a 
defined process for preparation and 
approval of the annual work 
programme and budget, ethical and 
Anti-Bribery procedures, and HSE 
management systems.
We review the Group’s business risks 
and management systems on a 
regular basis and, through this 
process, the Directors have identified 
the principal risks. We manage some 
risks by maintaining a portfolio of 
projects and ensuring the Group is in 
compliance with the terms of all its 
agreements, through the application 
of appropriate policies and 
procedures and via the recruitment 
and retention of a team of skilled and 
experienced professionals.
The nature of our operations and 
holding structures means that the 
Group may be exposed to potential 
litigation. We are very conscious of 
our legal and regulatory 
responsibilities in all jurisdictions in 
which we operate and seek to ensure 
that at all times we act in accordance 
with local legislation and regulation. 
The Board will take appropriate legal 
advice from reputable legal firms 
when the need arises in order to 
mitigate such risks and, where 
appropriate to do so, will rigorously 
contest claims made against  
the Group. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 22
Corporate responsibility
Building  
a responsible 
business
Code of Ethics/Anti-Bribery
With the corporate Code of Ethics  
and Anti-Bribery Policy, we adopt the 
principles of legitimacy, fairness, 
transparency and verifiability on which 
our conduct, as well as that of our 
subsidiaries, must rest. By making such 
a commitment, we aim to be publicly 
regarded as a responsible and reliable 
enterprise, values which – in our view 
– are key elements to our success and 
to the promotion of our image.
The provisions set out in our Code of 
Ethics and Anti-Bribery Policy apply, 
without exception, to anyone involved 
in the activities carried out by the 
Company and therefore to our 
Directors, managers, employees, hired 
freelancers, suppliers as well as those 
who work for it directly or indirectly, on 
both a regular basis or temporarily.
Ethical Principles
Our activities must be carried out in full 
compliance with local laws and with 
the principles of impartiality, honesty, 
transparency and fairness towards 
employees, shareholders, partners, 
governments and local communities 
that the Company comes into contact 
with when carrying out its activities.
Our Key Principles
Compliance with Laws, Rules and 
Procedures
We are committed to complying with 
the laws and regulations in force in 
countries in which we operate, 
upholding the Code of Ethics, following 
the Group Anti-Bribery Policy and the 
corporate procedures and observing 
the articles of association.
In no case may the pursuit of 
corporate interests justify the breach  
of our principles and procedures and 
Company’s representatives are 
expected to maintain compliance  
with the letter and spirit of all laws 
governing the jurisdictions in which 
they perform their duties day by day,  
in particular on:
1. Human Rights Laws
2. Privacy Laws
3. Health and Safety Laws
4. Environmental Laws
5. Securities Laws
6. Competition Laws
‘We are committed to 
promote a culture of 
honesty, integrity and 
accountability and to 
operate in accordance 
with the highest ethical 
standards and 
applicable laws and 
regulations.’ Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 23
Company overview Business review Governance Financial statements
Conflict of Interest
We will endeavour to avoid any conflict 
of interest arising when undertaking 
any of our activities and in all the 
relationships we establish.
A conflict of interest exists both when: 
(a) either a corporate body or one of its 
members or a shareholder, or an 
employee, holds an interest which 
contrasts with the one pursued by the 
Company; and (b) when the 
representatives of commercial partners, 
external consultants, or private or public 
institutions have a personal interest 
which contrasts with the one they hold 
in relation to their office or function.
Confidentiality
We ensure that the information we hold 
is confidential and that no confidential 
data will be collected, disseminated or 
used unless an explicit authorisation by 
the information owner is granted and 
the Regulations in force are fully 
complied with.
Top managers, commercial partners 
and consultants must use maximum 
discretion, even when not within 
business hours, in order to protect the 
know-how of our Company.
Relationship with Shareholders
MOG promotes equal information and 
protects its interests and the interests of 
its shareholders from any attempt by 
other shareholders or coalitions of 
shareholders to further their personal 
interests before others.
In addition, we undertake best efforts 
so that our economic and financial 
performance preserves and increases 
the Company’s value, and our 
shareholders’ investments achieve 
appropriate returns.
The Value of Human Resources
Employees, advisers and consultants 
are key to achieving corporate success. 
For this reason, the Company protects 
and promotes the value of its human 
resources in order to improve and 
increase experience and knowledge.
We also guarantee that the Company 
will provide the proper working 
conditions where human dignity and 
personal beliefs and opinions are fully 
respected in a safe and secure 
working environment.
Fairness in Employee Relations
Employee relations must be guided by 
fairness, collaboration, loyalty and 
mutual respect at all levels. Authority 
must be exercised with fairness, respect 
and moderation, avoiding any abuse.
In particular, any action which is  
likely to impact on the dignity or 
independence of employees, advisers 
or contractors must be avoided. 
Moreover, any choice regarding work 
planning must always safeguard the 
value of individual contributions.
Non-discrimination
In taking its decisions affecting external 
and internal parties, MOG avoids any 
discrimination based on age, sex, sexual 
orientation, health, race, nationality, 
political opinions, religion or any other 
criteria interfering with the fundamental 
rights and freedoms of individuals.
Quality of Services
We aim to satisfy and protect our 
contractual counterparts, while 
holding in high regard any request 
which is likely to improve the quality of 
the services and products supplied.
Environmental Protection
The environment is our main asset  
and we must protect it.
Consistent with this principle, the 
planning of MOG’s activities looks 
forward to striking the right balance 
between the commercial activities of 
the Company and the protection of 
the environment in which we work.
Renouncing Bribery and Corruption
We have implemented an Anti-Bribery 
Policy and we are committed to reporting 
any corruption that we encounter during 
our dealings with others.
Protecting People and the Environment
The Company has a firm policy of 
adhering to strict industry standards 
relating to the protection of people and 
the environment. We have implemented 
Health, Safety and Environment (‘HSE’) 
management systems and policies that 
govern our expectations.
Industry practices to operate safely 
and to protect the environment have 
evolved significantly in the past few 
decades. Improvements in technology 
enable us to conduct many aspects of 
our operations far more efficiently than 
just a decade ago. This efficiency 
translates to smaller ‘footprints’ (the 
amount of surface area disturbed), 
less waste generated, cleaner and 
safer operations, and greater 
compatibility with the environment.
Oil and gas companies have developed 
and implemented sophisticated 
management systems that spell out the 
procedures that are required by 
employees and contractors to operate 
safely and to protect the environment. 
These management systems have been 
extended to include social responsibility 
and ethical considerations. The 
Company pursues a policy of sustainable 
development to balance economic, 
environmental, and social challenges.
The industry has shown repeatedly that 
energy production and environmental 
protection are not mutually exclusive. 
The industry can produce the oil and 
gas needed to give consumers the 
freedom and mobility they demand, 
the warmth and light needed to 
survive, and still preserve the natural 
beauty of the environment. We are 
committed to contributing to this goal 
throughout our operations.
We have had two incidents in our 
history, both of which have been 
injuries that required time off work. Our 
most recent injury was a slip, trip and 
fall incident in the first half of 2012.
Safe and Reliable Operations
Safe and reliable operations are key  
to protecting people and the 
environment as well as producing 
reliable energy for our customers.
We use our management structure, 
operational procedures and 
commitment to the training and 
development of our employees to 
ensure the highest standards of 
operations across our businesses.
Key areas of focus:
 > Meeting or exceeding customers’ 
expectations
 > Implementing and adhering to 
Standard Operating Procedures
 > Developing and disseminating our 
risk management plans
 > Achieving full certification for all 
regulated equipment and 
employee training Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 24 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 24
1
2
3
4
5
6
Board of Directors Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 25 25
Company overview Business review Governance Financial statements
3. Mr. Sergio Morandi
Chief Operating Officer
Sergio Morandi was Chief Executive Officer 
of the Company from late 2007 to May 2011. 
He has over 30 years’ experience in oil & gas 
geophysics, exploration, development, 
production, operations and E&P business 
management. He has worked at ENI, 
Coparex, ELF, Enterprise Oil, Shell Italia E&P 
and Shell International E&P. From 1997 to 
2003, he was Professor of Applied Seismology 
at Basillicata University in Italy and since 2002 
he is a Board Member of the Italian National 
Upstream Association (Associazione 
Mineraria Italiana). Sergio holds a ‘First Class 
Honor’ Degree in Geological Science from 
the University of Rome and is a registered 
Geologist in Italy.
4. Mr. Chris Kelsall
Finance Director
Chris Kelsall, appointed as Finance Director 
of Mediterranean Oil & Gas Plc in July 2009, 
has 23 years’ commercial and corporate 
experience, which includes 14 years in 
financial services, advising clients in relation 
to capital markets, privatisation and 
corporate finance projects in Sydney, 
London and Hong Kong. Prior to joining 
Mediterranean Oil & Gas Plc he was a 
Director, Equity Capital Markets at Deutsche 
Bank. He spent 1991 to 1994 working as a 
corporate/commercial solicitor in Perth and 
Sydney. Mr Kelsall holds a Masters in Finance 
from London Business School, and degrees 
in Economics and Law from the University of 
Western Australia. In addition, he holds a 
Graduate Diploma in Applied Finance and 
Investment from the Securities Institute  
of Australia.
5. Dr. Peter Jackson
Non-Executive Director
Peter Jackson is currently Vice President 
Upstream Research at IHS CERA and has 
over 30 years of geoscience, operational, 
asset management, strategic planning, 
research and consulting experience 
covering many of the world’s key 
hydrocarbon producing areas. Prior to 
joining IHS CERA Peter Jackson spent 
22 years working in the international 
exploration and production sector, initially 
with Britoil plc, and then 16 years with 
Enterprise Oil plc where his roles included  
VP of Exploration & Production, and then 
President, for Enterprise Oil USA, Chief 
Geologist in London, and Exploration 
Manager in Italy. Dr. Jackson holds a BSc 
with Honours in Geology from St Andrews 
University and a PhD from Edinburgh 
University.
1. Mr. Keith Henry
Non-Executive Chairman
Keith Henry, appointed as Chairman of 
Mediterranean Oil & Gas Plc in January 2012, 
has a wealth of experience gained during 
more than 35 years in the development, 
design, construction and management of 
projects and major companies in the oil and 
gas, power and service industries. During this 
period he was Chief Executive of National 
Power plc, a FTSE 100 company, Brown & 
Root Limited, and Kvaerner Engineering & 
Construction Limited. As a non-executive 
director within the oil and gas sector, Keith 
has held the roles of Chairman of Burren 
Energy plc, director of First Calgary 
Petroleums Limited, senior independent 
director of Emerald Energy plc, Deputy 
Chairman of Petroleum Geo-Services ASA, 
Chairman of Petrojarl ASA, and a director of 
Enterprise Oil plc. Outside of the oil and gas 
sector, Keith has held a number of other non-
executive roles, including Chairman of Helius 
Energy plc, director of South East Water Ltd, 
and Deputy Chairman of Aegis Defence 
Services Limited. Keith is currently the 
Chairman of Regal Petroleum plc, the 
Chairman of Greenko Group Plc, the senior 
independent director of Sterling Energy plc, 
and a non-executive director of HPR Holdings 
Limited. A BSc graduate from the University of 
London and holding a MSc from Birmingham 
University, Keith is a Fellow of the Institution of 
Civil Engineers, and a Fellow of the Royal 
Academy of Engineering.
2. Dr. Bill Higgs
Chief Executive
Bill Higgs has over 25 years of global 
exploration, development and operations 
experience working with Chevron. Prior to 
joining Mediterranean Oil and Gas Plc he was 
Senior Vice President of Operations for Saudi 
Arabian Chevron (‘SAC’) in Saudi Arabia/
Kuwait. In his role Bill was the senior operations 
representative for SAC that, jointly with Kuwait 
Gulf Oil Company, operates exploration, 
development and production activities for the 
onshore Partitioned Zone shared by the 
Kingdom of Saudi Arabia and Kuwait. Prior to 
this, Bill was Chief Strategist for Chevron 
Corporation and the secretary of the 
Corporate Strategy and Planning Committee, 
where he facilitated strategic dialogue and 
strategy setting with Chevron’s executive 
leaders. Bill’s previous roles at Chevron 
include Manager of Reservoir Management 
for Tengizchevroil in Kazakhstan, Asset 
Manager for the BBLT development in Angola, 
Business Development and Planning 
Manager for Sasol Chevron in Australia, 
Geology Manager for WAPET Exploration in 
Australia, senior researcher for Chevron’s 
research company in California, and lead 
exploration and development geologist for 
Chevron UK. Bill is a BSc graduate in 
Geological Science from the University of 
Leeds and holds a PhD in Structural Geology 
from the University of Wales.
6. Mr. Enrico Testa
Non-Executive Director
Enrico Testa has an extensive background in 
the energy markets and served as the 
Chairman of the Board of Enel S.p.A., the 
leading energy provider in Italy, from 1996  
to 2002. Mr. Testa is presently the Chairman 
of the Board of Telit Communications Plc; 
Chairman of Assoelettrica – the Italian 
Association of Electricity Companies; a 
Vice-Chairman of Idea Capital Fund SGR 
S.p.A.; and a Director of Cadogan Petroleum 
Plc. From 2003 to March 2012, he was a 
Director of Allianz S.p.A. and from 2004 to 
August 2012, he was Managing Director of 
Rothschild Italia S.p.A. He was also Chairman 
of the Organising Committee for the  
20th World Energy Congress held in Rome  
in November 2007, from 2002 to 2005, a 
member of the Advisory Board of Carlyle 
Europe and Chairman of the Italian Nuclear 
Forum, from 2010 to 2011. From 2005 to 2009, 
Mr. Testa was Chairman of Roma 
Metropolitane, the Rome council owned 
company constructing new underground 
lines. Mr. Testa was National Secretary and 
President of the Italian environmental 
organisation Legambiente from 1980 to 1987 
and a representative in the Italian Chamber 
of Deputies from 1987 to 1994. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 26 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 26
Mr. Athar Akram
Group Financial Controller
Athar Akram is a UK Chartered 
Accountant with more than 30 years’ 
experience gained internationally in 
the energy sector with BP. He has 
expertise in transactional (M&A) 
financial due diligence, negotiations 
and contacts, integration and change 
management including system 
implementations, accounting, 
reporting and control, and treasury.
Ms. Floriana Brucia
Head of Accounting and Finance
Floriana Brucia has over 23 years’ 
experience in the international oil and 
gas business. She has worked for 
various E&P companies which include 
Lasmo UK and Lasmo Mineraria Spa 
Italy, Forest Oil (USA), Cygam Energy 
Italia (CYGAM Group – Canada), 
Grove Energy (Stratic Energy Group – 
UK) covering various roles in 
accounting and finance, reporting 
and managing onshore and offshore 
joint venture operations. She holds a 
masters diploma in accounting, 
marketing and communication 
science.
Mr. Paolo Carugno
Phoenicia Country Manager and 
Melita Exploration General Manager
Paolo Carugno is a geologist and 
joined Mediterranean Oil & Gas Plc 
from ENI, where he worked for 
approximately 28 years in oil and gas 
exploration and production activities. 
He has extensive experience as an 
exploration geologist in Italy, the 
Mediterranean basin, Africa and in the 
Caspian region. While at ENI, he held 
several positions and in particular, was 
new venture and exploration project 
manager in Egypt and coordinator of 
the reserves validation team of 
worldwide exploration discoveries. 
From June 2013, Paolo was seconded 
to Phoenicia Energy Company Ltd, in 
Malta, as Country Manager and to 
Melita Exploration Company Ltd (100% 
owned subsidiary of Mediterranean Oil 
& Gas plc), as General Manager.
Mr. Lorenzo Lipparini
Exploration and Reservoir Manager
Lorenzo Lipparini has over 17 years’ of 
international experience in oil and gas 
exploration and production activities, 
focused on exploration, geophysical 
disciplines, seismic interpretation and 
reservoir characterisation. He has 
worked with ENI in Italy, Gabon, 
Indonesia and in the USA. He 
commenced employment at 
Mediterranean Oil & Gas Plc in 2007. 
He holds a masters degree in Geology 
and is the author of several 
publications and presentations given 
at international conferences.
Mr. Gian Paolo Musu
Production and Development Team 
Manager
Gian Paolo Musu is a Petroleum 
Engineer with 10 years’ previous 
experience working on international oil 
and gas business projects with Total 
E&P. He has particular experience in 
field operations, maintenance, 
inspection, supply chain 
management, oil and gas treatment 
facilities till downstream and EPC 
project management.
Mr. Antonello Rubino
Head of Health, Safety and the 
Environment
Antonello Rubino is an Environmental 
Engineer with more than 10 years’ 
experience working in HSE. He has 
particular expertise on hazard 
recognition and assessment, 
emergency procedures, hydrogen 
sulphide emissions, gas detection, 
personal protection equipment, 
transportation and management of 
hazardous wastes and the conduct of 
HSE compliance audits and reporting. 
Antonello previously worked for two 
years with Saipem (ENI Group) as the 
HSE supervisor, both for onshore and 
offshore hydrocarbon E&P projects.
Ms. Cinzia Salemme
Commercial and Management 
Control Coordinator
Prior to joining Mediterranean Oil & 
Gas Plc in 2008, Cinzia Salemme had 
15 years’ broad industry experience in 
financial and commercial analysis, 
strategic business support and 
financial control. She is currently 
responsible for the negotiation of 
commercial contracts, including the 
Group’s gas sales agreements. Cinzia 
holds a diploma in accounting, from 
the Vittorio Veneto Commercial 
Technical Institute and a master in 
Contract Administration from LUISS 
Guido Carli.
Senior management Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 27
Company overview Business review Governance Financial statements
Corporate governance report
Companies on the AIM Market of the London Stock 
Exchange are not required to comply with the 2012 UK 
Corporate Governance Code (the ‘Code’) and due to its 
size, the Company does not seek to comply in full with the 
Code. While the Company is not required to present a 
Corporate Governance Statement, as it is not subject to the 
Listing rules of the Financial Conduct Authority, it has 
disclosed here certain information in respect of 
Corporate Governance.
The Directors support high standards of corporate 
governance. The Company has identified areas of the 
Code it considers relevant to the current size and nature  
of its operations and these are set out below.
Board of Directors
The Company has appointed three Non-Executive Directors 
(including the Company’s Chairman) with relevant sector 
experience to complement the three Executive Directors 
and to provide an independent view to the Board. The 
composition of the Board ensures that no one individual or 
group dominates the decision-making process.
The Board is responsible to the shareholders for setting the 
direction of the Company through the establishment of 
strategic objectives and key policies. The Board meets on  
a regular basis and considers issues of strategic direction, 
approves major capital expenditure, appoints and monitors 
senior management and any other matters having a 
material effect on the Company.
The Board receives regular detailed financial and 
operational reports from senior management to enable it to 
carry out its duties. Each Director is entitled to independent 
professional advice at the Company’s expense provided 
that the prior approval of the Chairman is obtained. All 
Directors have unrestricted access to management and to 
such Company information as is needed to carry out their 
duties and responsibilities fully and effectively.
All Directors are subject to election by shareholders at the 
first opportunity following their appointment. In addition, 
Directors will retire by rotation and stand for re-election by 
shareholders at least once every three years in accordance 
with the Company’s articles of association. The composition 
of the Board is reviewed from time to time to ensure that it 
has an appropriate balance of experience and expertise.
Board Committees
The Board may establish committees to assist it in carrying 
out its responsibilities in an effective and efficient manner. 
The current Board committees are the Audit Committee 
and the Remuneration Committee. The Directors do not 
consider that, given the size of the Board, it is appropriate 
to have a Nominations Committee. The appropriateness  
of such a committee will, however, be regularly reviewed 
by the Directors.
Audit Committee
The Audit Committee comprises three Non-Executive 
Directors, meets at least twice a year and considers the 
Company’s financial reporting (including accounting 
policies) and internal financial controls. Meetings are 
normally attended, by invitation, by the Finance Director 
and a representative of the Company’s auditors. The Audit 
Committee presently comprises Peter Jackson (Chairman), 
Keith Henry and Enrico Testa.
Remuneration Committee
The Remuneration Committee comprises three 
Non-Executive Directors and is responsible for establishing 
and developing the Company’s general policy on 
executive, senior management and employee 
remuneration and determining specific remuneration 
packages for Executive Directors. The Remuneration 
Committee presently comprises: Enrico Testa (Chairman), 
Keith Henry and Peter Jackson. The Remuneration 
Committee meets not less than once a year.
Internal Control
The Directors are responsible for the Group’s system of 
internal control and reviewing its effectiveness. Any such 
system is designed to manage rather than eliminate the risk 
of failure to achieve business objectives and can only 
provide reasonable and not absolute assurance against 
material misstatement or loss. Internal controls and business 
risks were monitored in the course of 2013 through regular 
Board meetings.
Communication with Shareholders
The Board recognises that it is accountable to shareholders 
for the performance and activities of the Group. The Annual 
Report together with other information about the Group is 
available on the Group’s website at www.medoilgas.com. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 28
Directors’ report
For the year ended 31 December 2013
The Directors present their Annual Report together with  
the audited Financial Statements for the year ended 
31 December 2013.
Principal Activities and Risks
The principal activities of the Group are oil and gas 
exploration, development and production. The Group has 
its head office in London and has oil and gas interests in 
Italy, Malta and France.
The head office for operations is located in Rome, with a 
further regional base in Foggia, Italy. Subsidiary 
undertakings are set out in Note 12 to the Financial 
Statements.
Note 18 to the Financial Statements includes the Group’s 
objectives, policies and processes for managing its capital 
and financial risk, details of its financial instruments and its 
exposures to credit risk and liquidity risk.
Results and Proposed Dividend
The Group loss for the year after tax from continuing 
operations was €6.1m (2012: €1.8m). This resulted in Group 
retained losses of €15.5m (2012: €12.9m) to be carried 
forward. The Directors do not recommend the payment  
of a dividend (2012: €nil).
Policy and Practice on the Payment of Creditors
While no formal code is adopted, the Group’s current policy 
concerning the payment of its creditors is to:
•	 settle the terms of payment with creditors when agreeing 
the terms of each transaction
•	 ensure that these creditors are made aware of the terms 
of payment by the inclusion of relevant terms in 
contracts, and
•	 pay in accordance with contractual and other legal 
obligations.
At the reporting date, the Company’s creditor payment 
days are 60 days (2012: 60 days).
Capital Structure
Details of the issued share capital, together with details of 
the movements in the Company’s issued share capital 
during the year are shown in Note 20 to the Financial 
Statements. The Company has one class of ordinary shares 
which carry no right to fixed income. Each share carries the 
right to one vote at general meetings of the Company. In 
addition, following the Group Recapitalisation in 2011, the 
Company has one class of deferred shares, which do not 
entitle the holder to receive any dividend or other 
distribution, or to vote at general meetings of the Company.
There are no specific restrictions on the size of a holding nor 
on the transfer of shares, which are both governed by the 
general provisions of the articles of association and 
prevailing legislation. The Directors are not aware of any 
agreements between holders of the Company’s shares that 
may result in restrictions on the transfer of securities or on 
voting rights.
Details of share-based payments are set out in Note 22 to 
the Financial Statements.
No person has any special rights of control over the 
Company’s share capital and all issued shares are 
fully paid.
Going Concern
The Group’s business activities, together with the factors 
likely to affect its future development, performance and 
position, are set out in the Chief Executive’s Report. The 
financial position of the Group, its cash flows and liquidity 
position are described in the Finance Review. The main risks 
encountered by the Group are set out in Principal Risks and 
Uncertainties. The Directors consider that it is appropriate for 
the accounts to be prepared on a going concern basis.  
At 31 December 2013, the Group had net assets of €50.5m 
(2012: €53.1m) and net current assets of €13.0m (2012: €6.7m 
excluding Non-current Assets Held for Sale of €8.0m 
reported within the total of €14.7m).
Key in our assessment of going concern is the financial 
effect of the transaction with Genel Energy Plc (‘Genel’)  
on which more information is given below.
On 21 December 2012, Mediterranean Oil & Gas Plc 
(‘MOG’) signed a share sale and purchase agreement  
(the ‘Share Sale Agreement’) with Genel which provided for 
the acquisition by Genel of a 75% interest in MOG’s wholly 
owned subsidiary, Phoenicia Energy Company Limited 
(‘PECL’). The Share Sale Agreement completed on 28 
February 2013, resulting in MOG receiving a US$10 million 
cash payment, 100% carry on the first exploration well, and 
a 100% carry on the second exploration well, up to US$30 
million gross expenditure, in relation to the PSC (the 
‘Transaction’). A decision on the timing to drill the second 
well will be made after the first well has reached total depth.
On 9 January 2014, following the issuance of Maltese 
Government consent, PECL which wholly owned the rights  
to the PSC, assigned a 25% working interest in the PSC to 
Melita Exploration Company Ltd (‘MECL’), a wholly owned 
subsidiary of MOG. Concurrently with this assignment,  
MOG transferred its remaining 25% interest in PECL to Genel 
Energy Holdings Ltd. Following these transfers, PECL holds 
75% working interest in the PSC and MECL a 25% working 
interest.
As previously reported, on 3 January 2013, Leni Gas & Oil 
Investments Limited (‘LGOI’) and Leni Gas & Oil plc 
(collectively, the ‘Claimants’) commenced legal 
proceedings in the Queen’s Bench Division of the 
Commercial Court of the High Court of Justice in England 
and Wales (the ‘High Court’), against Malta Oil Pty Limited 
(‘MOL’) and Phoenicia Energy Company Limited (‘PECL’) 
(together, the ‘Defendants’). MOL is a subsidiary of the 
Company. The Company held a 25% interest in PECL, as at 
period end. The proceedings relate to the purchase by PECL 
of LGOI’s 10% interest previously held in the Malta Offshore 
Area 4 PSC (the ‘PSC’). The Claimants seek: rescission of the 
sale agreement dated 31 July 2012 under which LGOI sold 
its 10% interest in the PSC to PECL, further or alternatively, 
damages for fraudulent misrepresentation, and interest on 
any sums which are found to be due. The Defendants and  Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 29
Company overview Business review Governance Financial statements
the Company’s Board of Directors continue to refute the 
various claims which have been made by the Claimants. 
The Group will defend itself and the interests of its 
shareholders rigorously. The outcome of this claim and the 
potential financial impact cannot be determined at this 
stage and therefore no provision has been made in the 
financial statements. The High Court hearing is scheduled  
to commence on 3 March 2013 (Refer to Note 27 for  
further information).
In drawing its conclusion of the going concern assessment 
performed, management has prepared cash flow 
projections reflecting the effect of completion of the 
Transaction on its future funding needs, together with the 
known effect of the cashflow requirements of other Group 
operations and development plans along with the Directors’ 
expectations, based on professional advice, relating to the 
contingencies facing the Group. The detailed assessment 
performed by the Directors indicates that the Group can 
continue to meet its liabilities as they fall due and meet its 
minimum spend commitments on its licenses for a period of 
not less than 12 months from the date of the financial 
statements.
Post Reporting Date Events
Post reporting date events are described in Note 25 to the 
Financial Statements.
Directors
The Directors who held office during the year and 
subsequently were as follows:
Date appointed Date resigned
Keith Henry 16 January 2012 –
William Higgs 19 March 2012 –
Enrico Testa 10 October 2012 –
Peter Jackson 1 January 2013 –
Sergio Morandi 17 September 2007 –
Chris Kelsall 1 July 2009 –
Matthew Clarke – 8 January 2014
Jacob Ulrich 16 January 2012 8 January 2014
Biographical details of serving Directors can be found in the 
Board of Directors section of this Annual Report.
Directors’ Election and Rotation
With regard to the appointment and replacement of 
Directors, the Company is governed by its articles of 
association, the Companies Act and related legislation. The 
articles themselves may be amended by special resolution 
of the shareholders.
In accordance with article 23.2 of the Company’s articles of 
association, Sergio Morandi will retire from office and offer 
himself for election at the forthcoming Annual General 
Meeting (‘AGM’) on 2 April 2014.
Qualifying Indemnity Provisions
The Company provides the Company’s Directors and 
Officers with third party indemnity insurance.
Directors’ Interests
The Directors who held office at the end of the financial year 
and subsequently had the following interests in the ordinary 
shares of the Company:
Interest at date 
of this report
31 December 
2013
31 December 
2012
Keith Henry 1,400,000 1,400,000 1,000,000
William Higgs 454,838 454,838 –
Sergio Morandi – – –
Chris Kelsall 333,333 333,333 333,333
Enrico Testa – – –
Peter Jackson 400,000 400,000 n/a
Matthew Clarke 5,000,000 5,000,000 5,000,000
Jacob Ulrich – – –
None of the Directors who held office at the end of the 
financial year had any disclosable interest in the shares of 
other Group companies. No rights to subscribe for shares in 
or debentures of Group companies were granted to any of 
the Directors or their associates, or exercised by them, 
during the financial year. Beneficial shareholdings include 
the shareholdings of a Director’s spouse or associates.
Substantial Shareholders
As of the date of this report, the Company has been notified 
of the following interests of 3% or more in its issued share 
capital:
Substantial shareholder
Number of 
shares
Percentage 
of issued 
ordinary 
share 
capital
Och-Ziff Capital
Management Group 125,000,000 29.0%
Investec Wealth and Management 21,278,286 4.9%
Lynchwood Nominees 14,193,333 3.3%
Michael Seymour 13,482,000 3.1%
Directors’ Responsibilities
The Directors are responsible for preparing the Strategic 
Report, the Directors’ Report and the Financial Statements in 
accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial 
Statements for each financial year. Under that law the 
Directors have elected to prepare the Group and Company 
Financial Statements in accordance with International 
Financial Reporting Standards (IFRSs) as adopted by the 
European Union. 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 the Company and of the profit or loss of the 
Group for that period. The Directors are also required to 
prepare Financial Statements in accordance with the rules 
of the London Stock Exchange for companies trading 
securities on AIM. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 30
In preparing these financial statements, the Directors are 
required to:
•	 select suitable accounting policies and then apply them 
consistently;
•	 make judgments and accounting estimates that are 
reasonable and prudent;
•	 state whether they have been prepared in accordance 
with IFRSs as adopted by the European Union, subject to 
any material departures disclosed and explained in the 
financial statements; and
•	 prepare the Financial Statements on the going concern 
basis unless it is inappropriate to presume that the 
Company will continue in business.
The Directors are responsible for keeping adequate 
accounting records that are sufficient to show and explain 
the Company’s transactions and disclose with reasonable 
accuracy at any time the financial position of the Company 
and enable them to ensure that the financial statements 
comply with the requirements of the Companies Act 2006. 
They are also responsible for safeguarding the assets of the 
Company and hence for taking reasonable steps for the 
prevention and detection of fraud and other irregularities.
Political Contributions
During the year the Group made no political contributions 
(2012: €nil).
Statement of Disclosure to Auditors
Each of the persons who is a Director at the date of 
approval of this Annual Report confirms that:
•	 so far as the Director is aware, there is no relevant audit 
information of which the Company’s Auditors are not 
informed; and
•	 the Director has taken all steps required to make himself 
aware of any relevant audit information and to establish 
that the Company’s Auditors are informed of that 
information.
This confirmation is given and should be interpreted in 
accordance with the provisions of s418 of the Companies 
Act 2006.
Website Publication
The Directors are responsible for ensuring the Annual Report 
and the Financial Statements are made available on the 
Company’s website. Financial Statements are published on 
the website in accordance with legislation in the United 
Kingdom governing the preparation and dissemination of 
financial statements, which may vary from legislation in 
other jurisdictions. The maintenance and integrity of the 
Company’s website is the responsibility of the Directors. The 
Directors’ responsibility also extends to the ongoing integrity 
of the Financial Statements contained therein.
Auditors
BDO LLP have expressed their willingness to continue as 
Auditors and a resolution to reappoint them will be 
proposed at the AGM.
By order of the Board
Chris Kelsall
Finance Director
24 February 2014
Directors’ report continued
For the year ended 31 December 2013 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 31
Company overview Business review Governance Financial statements
Remuneration report
For the year ended 31 December 2013
The Remuneration Committee (the ‘Committee’) is 
comprised of Enrico Testa (Chairman), Keith Henry and 
Peter Jackson. The Committee is responsible for determining 
and making recommendations to the Board on the 
structure and overall remuneration package for Executive 
Directors and reviews the remuneration for the Company’s 
senior employees. It is responsible for determining individual 
remuneration packages including, where appropriate, 
bonuses, incentive payments and share options.
The remuneration of the Non-Executive Directors is set by  
the Board on the basis of a proposal prepared by the 
Remuneration Committee. No Director may participate in  
any Board discussion or any decision regarding his own 
remuneration. The Committee also administers the Company’s 
share option and share award schemes. The Committee 
keeps itself fully informed of all relevant developments and 
best market practice in the field of remuneration.
The Committee is permitted to appoint independent 
advisers to assist in the determination of the remuneration.
Remuneration Policy
The Committee, in forming its policy on remuneration, has 
given due consideration to the needs of the Company, the 
shareholders and the provisions of the 2012 UK Corporate 
Governance Code (the ‘Code’). The ongoing policy of the 
Committee is that the overall remuneration package should 
be sufficiently competitive to attract, retain and motivate 
high quality employees capable of achieving the Group’s 
objectives and to incentivise them effectively, so as to 
deliver long-term shareholder value.
It is the aim of the Committee to reward key employees  
on a basis which is linked, to a significant extent, to the 
performance of the individual and of the Company. Also, 
the remuneration is subject to the broader principle that 
their remuneration should be competitive with that received 
by professionals of comparable companies.
There are five main elements of the remuneration package:
•	 Base salary;
•	 Employee benefits; 
•	 Performance-related cash bonus;
•	 Performance-related share award; and
•	 Long-term share options.
Base Salary
The policy is to pay a fair and reasonable base salary, taking 
into account comparative salaries for similar roles in similar 
companies. The base salary is reviewed annually by the 
Committee having regard to the performance of the Company, 
individual performance, market data, levels of increases 
applicable to other employees of the Company and economic 
conditions. The most recent salary review for Executive Directors 
and staff was implemented in January 2013.
Employee Benefits
Sergio Morandi receives a car and fuel allowance. In 2013, 
pension payments representing 10% of gross base salary 
were made to William Higgs and Chris Kelsall. Further details 
of Directors’ remuneration paid in the year under review are 
set out in Note 10 to the Financial Statements.
The Company provides the Company’s Directors and 
officers with third party indemnity insurance.
Bonus Arrangements
Performance-related cash bonuses may be awarded to the 
Company’s employees and Executive Directors by the 
Board, upon recommendation by the Committee. No cash 
bonuses were awarded to the Executive Directors or staff in 
2012. In January 2013, the Remuneration Committee 
recommended and the Board approved the award of the 
following cash bonuses to the Executive Directors: William 
Higgs £100,000, Sergio Morandi €90,000 and Chris Kelsall 
£71,250. Cash bonuses were paid to the Executive Directors 
and eligible staff in February 2013. No cash bonuses were 
awarded to the Executive Directors or eligible staff in relation 
to the 12 months ended December 2013. Further details of 
Directors’ remuneration paid in the year under review are 
set out in Note 10 to the Financial Statements. 
In 2013, the Board upon recommendation of the 
Remuneration Committee, adopted a procedure whereby 
the value of the potential bonus pool awarded to 
employees for the year ended 2012 was set having regard 
to the Company’s performance relative to the listed AIM E&P 
peer group in the 12 months ended 31 December 2012. The 
allocation to eligible staff was in turn dependent on their 
individual 2013 performance ranked against a peer group 
of Company employees. All awards to employees were split 
in the ratio 30% cash and 70% shares under the Employee 
Share Plan, so as to provide a sustained incentive to provide 
enhanced individual performance over a three-year vesting 
period (refer Employee Share Plan section below, for further 
details). The Board intends to continue this procedure in 
those years in which the Company’s corporate 
performance justifies the award of a bonus to employees.
Employee Share Plan
On 20 March 2013, the Board approved the implementation 
of a new long-term employee share incentive plan (the 
‘Share Plan’), designed to provide incentives to employees 
to act in the long-term best interests of the Group and its 
shareholders. Performance-related share awards may be 
granted under the Share Plan to the Company’s employees 
and Executive Directors by the Board, upon 
recommendation by the Remuneration Committee.
On 26 April 2013 (‘Award Date’), 2,532,778 shares were 
awarded to eligible employees under the Share Plan. No 
shares were awarded to Executive Directors. Each individual 
award vests in respect of:
•	 one-third of the shares awarded (rounded down) on the 
first anniversary of the Award Date (26 April 2014);
•	 one-third of the shares awarded (rounded down) on the 
second anniversary of the Award Date (26 April 2015); and
•	 the remaining shares awarded on the third anniversary of 
the Award Date (26 April 2016).
Vesting in each case is subject to the terms of the Share Plan, 
including the requirement for each recipient to remain in 
employment with the Group until vesting (provided that 
vesting may occur if employment ceases in certain limited 
circumstances specified under the terms of the Share Plan). 
The terms of each Award include a ‘claw-back’ provision that 
means, in specified circumstances, a recipient of an Award 
can be required to transfer back the shares which have been 
received or repay a cash equivalent amount, or the number of 
shares subject to any other Award made under the Share Plan 
may be reduced by the amount of the required claw-back. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 32
Long-Term Share Option Scheme
On 11 March 2010, the Board approved the implementation of a new Global Share Option Plan (the ‘Plan’), and the award 
of options to eligible employees and Directors over ordinary shares of the Company. No options were granted under the 
Plan in 2011. Following a recommendation of the Remuneration Committee, on 19 January 2012, 13,500,000 options were 
granted under the Plan to the employees and Directors over ordinary shares of the Company. On 19 March 2012, upon 
commencement of employment with the Company, 6,000,000 options were granted under the Plan to William Higgs over 
ordinary shares of the Company. Details of the terms of the options awarded to Directors and employees under the Plan  
are set out in Note 22 to the Financial Statements. On 23 January 2013, 6,870,000 options were granted under the Plan  
to the Directors over ordinary shares of the Company relating to the corporate and personal performance during 2012.  
No options are to be granted to the Directors relating to corporate or personal performance for 2013.
The grants of options to Directors under the Plan in 2012 and 2013 were as follows:
Director
New options 
granted in 2012
New options 
granted in 2013
Total number of 
options held at 
the date of this 
report
William Higgs 6,000,000 2,000,000 8,000,000
Sergio Morandi 2,500,000 850,000 3,515,000
Chris Kelsall 2,000,000 675,000 2,765,000
Keith Henry 2,000,000 675,000 2,675,000
Matthew Clarke 1,000,000 335,000 1,335,000
Enrico Testa – 1,000,000 1,000,000
Peter Jackson – 1,000,000 1,000,000
Jacob Ulrich 1,000,000 335,000 1,335,000
Directors’ Remuneration
Salary, fees and benefits paid to the Executive and Non-Executive Directors who held office in the year ended 31 December 
2013, are set out below:
Fees and 
basic salary
(€’000)
Pension
(€’000)
2012 Bonus
(Note 1)
(€’000)
Benefits in 
Kind 
(€’000)
Total  
2013
(€’000)
Total  
2012
(€’000)
Executive Directors
William Higgs (Note 2) 311 31 116 10 468 426
Sergio Morandi (Note 3) 255 – 90 3 348 245
Chris Kelsall (Note 4) 229 23 82 4 338 260
Non-Executive Directors
Keith Henry 94 – – – 94 96
Jacob Ulrich 35 – – – 35 36
Matthew Clarke 35 – – – 35 38
Enrico Testa 38 – – – 38 8
Peter Jackson 35 – – – 35 –
Aggregate Remuneration 2013 (€’000) 1,032 54 288 17 1,391 –
Aggregate Remuneration 2012 (€’000) 995 43 – 166 – 1,204
1.  The 2012 Bonus which was paid in January 2013, was based on and related to the performance of the Executive Directors in 2012. 
2. William Higgs received benefits in kind comprising reimbursement for annual family private health and personal life insurance cover.
3.  Sergio Morandi received benefits in kind comprising allocated car and fuel allowance.
4.  Chris Kelsall received benefits in kind comprising reimbursement for annual family private health and personal life insurance cover.
5.  In accordance with the Group’s accounting policy, a non-cash share-based charge of €586,000 (2012: €498,000) was incurred in the period in relation to 
the grant of options to Directors of the Company in 2013. See Notes 10 and 22 for further information.
Non-Executive Directors
All Non-Executive Directors, including the Chairman, have contracts for services, setting out the terms and conditions of 
their appointment, which are terminable upon the provision of three months’ written notice by either party. Their 
remuneration is determined by the Board upon recommendation of the Remuneration Committee. Save for the fees 
received under the letters of appointment, options awarded under the Plan and reimbursement of reasonable expenses 
incurred in the discharge of their duties, the Non-Executive Directors are not entitled to any other benefits or arrangements.
Enrico Testa
Chairman
Remuneration Committee
24 February 2014
Remuneration report continued
For the year ended 31 December 2013 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 33
Company overview Business review Governance Financial statements
We have audited the financial statements of Mediterranean 
Oil & Gas Plc for the year ended 31 December 2013 which 
comprise the consolidated statement of comprehensive 
income, the consolidated statement of changes in equity, 
the consolidated statement of financial position, the 
consolidated statement of cashflows, the Company 
statement of changes in equity, the Company statement of 
financial position and the Company statement of cashflows 
and the related notes. The financial reporting framework 
that has been applied in their preparation is applicable law 
and International Financial Reporting Standards (IFRSs) as 
adopted by the European Union 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 auditors
As explained more fully in the statement of directors’ 
responsibilities, 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 Financial 
Reporting Council’s (FRC’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 FRC’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 the parent company’s affairs as 
at 31 December 2013 and of the Group’s loss for the year 
then ended;
•	 the Group financial statements have been properly 
prepared in accordance with IFRSs as adopted by the 
European Union;
•	 the parent company financial statements have been 
properly prepared in accordance with IFRSs as adopted 
by the European Union 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.
Independent auditor’s report
to the members of Mediterranean Oil & Gas Plc
Opinion on other matters prescribed by the Companies 
Act 2006
In our opinion the information given in the strategic report 
and 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.
Anne Sayers (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
24 February 2014
BDO LLP is a limited liability partnership registered in 
England and Wales (with registered number OC305127). Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 34
Consolidated statement of comprehensive income
For the year ended 31 December 2013
Note
2013
€’000
2012
€’000
Revenue 7 8,416 16,254
Cost of sales (4,168) (3,837)
Gross profit 4,248 12,417
Other income 8 569 152
Administrative expenses
 Depreciation, depletion and amortisation 4, 5 (2,596) (4,483)
 Impairment 4 (600) –
 Other administrative expenses (6,023) (4,031)
Total administrative expenses (9,219) (8,514)
(Loss)/Profit from operations 8 (4,402) 4,055
Finance expense 2 (1,234) (894)
Finance income 2 43 463
(Loss)/Profit before tax from continuing operations (5,593) 3,624
Tax expense 11 (514) (1,867)
(Loss)/Profit for the year after tax from continuing operations (6,107) 1,757
Gain on disposal of ‘Held for sale’ non current assets net of tax 6(a) 2,754 –
Profit/(Loss) on discontinued operations net of tax 6(b) 103 (864)
(Loss)/Profit for the year after tax and total comprehensive income attributable 
to the equity holders of the parent (3,250) 893
Loss/(earnings) per share on continuing operations
– Basic 3 (1.41) cents 0.41 cents
– Diluted 3 (1.41) cents 0.41 cents
Earnings/(loss) per share on discontinued operations
– Basic 3 0.66 cents (0.20) cents
– Diluted 3 0.66 cents (0.20) cents
Loss/(earnings) per share attributable to the equity holders of the parent
– Basic 3 (0.75) cents 0.21 cents
– Diluted 3 (0.75) cents 0.21 cents
The notes on pages 41 to 66 form part of these financial statements. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 35
Company overview Business review Governance Financial statements
Consolidated statement of changes in equity
For the year ended 31 December 2013
Share
Capital
€’000
Deferred
shares
€’000
Share
premium
€’000
Contributed
equity
reserve
€’000
Warrant and
share 
option
reserve
€’000
Retained
Deficit
€’000
Total
€’000
Group
As at 1 January 2012 5,058 10,721 40,711 8,111 729 (13,771) 51,559
Total comprehensive income for the year – – – – – 893 893
Shares issued – fundraising (net of issue costs) 8 – 41 – – – 49
Share-based payment – – – – 563 – 563
As at 31 December 2012 5,066 10,721 40,752 8,111 1,292 (12,878) 53,064
Total comprehensive income for the year – – – – – (3,250) (3,250)
Shares issued – fundraising (net of issue costs) 9 – 46 – – – 55
Share-based payment – – – – 620 – 620
Lapse of options – – – – (664) 664 – 
As at 31 December 2013 5,075 10,721 40,798 8,111 1,248 (15,464) 50,489
The following describes the nature and purpose of each reserve within owners’ equity:
Reserve Description and purpose
Share capital Amount subscribed for ordinary share capital at nominal value.
Deferred shares Amount representing ordinary 19p shares following split of shares  
as part of recapitalisation exercise undertaken in May 2011.
Share premium Amount subscribed for share capital in excess of nominal value.
Contributed equity reserve An amount representing equity contributed directly by shareholders. 
Warrant and share option reserve Cumulative fair value of warrants, options and share awards under 
employee share plan, adjusted for transfers on exercise or lapse of the 
shares, options and warrants.
Retained deficit Cumulative net gains and losses recognised in the consolidated income 
statement, adjusted for transfers on exercise or lapse of share options and 
shares awarded under the employee share plan. 
The notes on pages 41 to 66 form part of these financial statements. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 36
Consolidated statement of financial position
At 31 December 2013 – Company Number 5323487
Note
2013
€’000
2012
€’000
Assets
Non-current assets
Property, plant and equipment 4 16,730 20,379
Exploration and evaluation assets 5 24,132 19,801
Available for sale investment 13 34 34
Other non-current receivables 15 466 804
Deferred tax asset 11 1,925 3,095
Total non-current assets 43,287 44,113
Current assets
Inventories 14 405 408
Trade and other receivables 15 3,860 5,339
Cash and cash equivalents 21 12,353 8,668
Non-current assets classified as ‘Held for Sale’ 6 – 8,017
Total current assets 16,618 22,432
Total assets 59,905 66,545
Liabilities
Current liabilities
Trade and other payables 16 3,594 4,884
Corporation tax liability 16 – 1,568
Non-current liabilities classified as ‘Held for Sale’ 6 – 1,250
Total current liabilities 3,594 7,702
Non-current liabilities
Provisions 19 5,822 5,779
Total non-current liabilities 5,822 5,779
Total liabilities 9,416 13,481
Net Assets 50,489 53,064
Capital and reserves attributable to equity holders of the Company
Share capital 20 5,075 5,066
Deferred shares 10,721 10,721
Share premium 40,798 40,752
Warrant and share option reserve 1,248 1,292
Contributed equity reserve 8,111 8,111
Retained deficit (15,464) (12,878)
Total Equity 50,489 53,064
The financial statements were authorised and approved for issue by the Board of Directors on 24 February 2014 and were 
signed on its behalf by:
Chris Kelsall
Finance Director
The notes on pages 41 to 66 form part of these financial statements. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 37
Company overview Business review Governance Financial statements
Consolidated statement of cash flows
For the year ended 31 December 2013
Note
2013
€’000
2012
€’000
Cash flows from operating activities
Profit for the year (6,107) 1,757
Adjustments for:
Non cash income and adjustments (246) –
Impairment 600 –
Depreciation, depletion and amortisation 2,596 4,483
Share-based payments expense 620 563
Finance income (43) (463)
Tax expense 514 1,867
Bank interest 21 –
Foreign exchange loss 674 403
Unwinding of discount on provision 539 491
Cash flows (used in)/from operating activities before changes in working capital and 
provisions (832) 9,101
Decrease in inventories 3 2
Decrease) in trade and other receivables 1,479 3,075
(Decrease) in trade and other payables (1,290) (5,333)
Increase/(decrease) for provisions and non-current receivables 94 (305)
Taxes paid (650) (84)
Net cash flows (used in)/from operating activities (1,196) 6,456
Net cash flows (used in)/from discontinued operations 6(b) (1,147) 454
Investing activities
Purchase of property, plant and equipment 4 (620) (211)
Exploration costs incurred 5 (1,853) (1,525)
Proceeds from disposal of assets ‘Held for Sale’ 8,902 –
Net cash flows from/(used in) investing activities 6,429 (1,736)
Financing activities
Issue of new shares – cash received 55 49
Interest received – –
Interest paid (21) (52)
Drawdown of loan from Och-Ziff 24 – 2,000
Repayment of loan to Och-Ziff 24 – (2,000)
Net cash generated (used in)/from financing activities 34 (3)
Net increase in cash and cash equivalents 4,120 5,171
Cash and cash equivalents at the beginning of the year 8,668 3,703
Foreign exchange losses on cash and cash equivalents (435) (206)
Cash and cash equivalents at the end of the year 21 12,353 8,668
The notes on pages 41 to 66 form part of these financial statements. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 38
Company statement of changes in equity
For the year ended 31 December 2013
Share
Capital
€’000
Deferred
shares
€’000
Share
premium
€’000
Contributed
equity
reserve
€’000
Warrant and
share 
option
reserve
€’000
Retained
Deficit
€’000
Total
€’000
Company
As at 1 January 2012 5,058 10,721 40,711 8,111 729 (15,049) 50,281
Total comprehensive income for the year – – – – – (3,245) (3,245)
Shares issued – (net of issue costs) 8 – 41 – – – 49
Share-based payment – – – – 563 – 563
As at 31 December 2012 5,066 10,721 40,752 8,111 1,292 (18,294) 47,648
Total comprehensive loss for the year – – – – – (6,116) (6,116)
Shares issued – (net of issue costs) 9 – 46 – – – 55
Share-based payment – – – – 620 – 620
Lapse of options – – – – (664) 664 –
As at 31 December 2013 5,075 10,721 40,798 8,111 1,248 (23,746) 42,207
The following describes the nature and purpose of each reserve within owners’ equity:
Reserve Description and purpose
Share capital Amount subscribed for ordinary share capital at nominal value.
Deferred shares Amount representing ordinary 19p shares following split of shares as part 
of recapitalisation exercise.
Share premium Amount subscribed for share capital in excess of nominal value.
Contributed equity reserve An amount representing equity contributed directly by shareholders.
Warrant and share option reserve Cumulative fair value of warrants, options and share awards under 
employee share plan, adjusted for transfers on exercise or lapse of the 
shares, options and warrants.
Retained Deficit Cumulative net gains and losses recognised in the consolidated income 
statement, adjusted for transfers on exercise or lapse of share options and 
shares awarded under the employee share plan.
The notes on pages 41 to 66 form part of these financial statements. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 39
Company overview Business review Governance Financial statements
Company statement of financial position
At 31 December 2013 – Company Number 5323487 
Note
2013
€’000
2012
€’000
Assets
Non-current assets
Investments 12 28,732 28,938
Property, plant & equipment 20 –
Total non-current assets 28,752 28,938
Current assets
Trade and other receivables 15 6,498 15,546
Cash and cash equivalents 21 7,627 3,718
Total current assets 14,125 19,264
Total assets 42,877 48,202
Liabilities
Current liabilities
Trade and other payables 16 670 554
Total current liabilities 670 554
Total liabilities 670 554
Net Assets 42,207 47,648
Capital and reserves attributable to equity holders of the Company
Share capital 20 5,075 5,066
Deferred shares 10,721 10,721
Share premium 40,798 40,752
Warrant and share options reserve 1,248 1,292
Contributed equity 8,111 8,111
Retained deficit (23,746) (18,294)
Total Equity 42,207 47,648
The financial statements were authorised and approved for issue by the Board of Directors on 24 February 2014 and were 
signed on its behalf by:
Chris Kelsall
Finance Director
The notes on pages 41 to 66 form part of these financial statements. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 40
Company statement of cash flows
For the year ended 31 December 2013
 Note
 2013
€’000 
 2012
€’000 
Cash flows from operating activities   
Profit/(loss) for the year (6,116) (3,245)
Adjustments for: 
Impairment 12 2,711 –
Foreign exchange losses  507 –
Share-based payments expense 620 563
Other net finance expense – 52
Cash flows from (used in)/operating activities before changes in working capital and 
provisions (2,278) (2,630)
Decrease in trade and other receivables 9,048 4,103
Increase/(decrease) in trade and other payables 116 (1,045)
Cash flows from operating activities 6,886 428
Investment activities 
Purchase of property, plant and equipment (20) –
Loans repaid (made to)/by subsidiaries (2,505) 829
Net cash flows (used in)/from investing activities (2,525) 829
Financing activities 
Issue of new shares – cash received 55 49
Interest paid – (52)
Drawdown of loan from Och-Ziff 24 – 2,000
Repayment of loan to Och-Ziff 24 – (2,000)
Net cash generated from financing activities 55 (3)
Net increase in cash and cash equivalents 4,416 1,254
Cash and cash equivalents at the beginning of the year 3,718 2,464
Foreign exchange losses on cash and cash equivalents (507) –
Cash and Cash Equivalents at the end of the year 21 7,627 3,718
The notes on pages 41 to 66 form part of these financial statements. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 41
Company overview Business review Governance Financial statements
Notes forming part of the financial statements
For the year ended 31 December 2013
1 Accounting policies and significant accounting 
judgments, estimates and assumptions
(a) Accounting policies
Basis of preparation
The principal accounting policies adopted in the 
preparation of the financial statements are set out below. 
The policies have been consistently applied to all the 
periods presented, unless otherwise stated.
These financial statements have been prepared in 
accordance with International Financial Reporting 
Standards (IFRSs and IFRIC interpretations) issued by the 
International Accounting Standards Board (IASB) as 
adopted by the European Union and with those parts of the 
Companies Act 2006 applicable to companies preparing 
their accounts under IFRS. The Company’s functional 
currency is the Euro and it has adopted the Euro as its 
presentational currency. The Group has adopted the Euro 
as its presentational currency.
Going concern
The Directors consider that it is appropriate for the accounts 
to be prepared on a going concern basis. At 31 December 
2013, the Group had net assets of €50.5m (2012: €53.1m) 
and net current assets of €13.0m (2012: €6.7m excluding 
Non-current Assets Held for Sale of €8.0m reported within 
the total of €14.7m).
Key in our assessment of going concern is the financial 
effect of the transaction with Genel Energy plc (‘Genel’)  
on which more information is given below.
On 21 December 2012, Mediterranean Oil & Gas Plc 
(‘MOG’) signed a share sale and purchase agreement (the 
‘Share Sale Agreement’) with Genel Energy plc (‘Genel’) 
which provided for the acquisition by Genel of a 75% interest 
in MOG’s wholly owned subsidiary, Phoenicia Energy 
Company Limited (‘PECL’). The Share Sale Agreement 
completed on 28 February 2013, resulting in MOG receiving, 
among other things, a US$10 million cash payment, 100% 
carry on the first exploration well, and a 100% carry on the 
second exploration well, up to US$30 million gross 
expenditure, in relation to the PSC (the ‘Transaction’).  
A decision on the timing to drill the second well will be 
made after the first well has reached total depth.
On 9 January 2014, following the issuance of Maltese 
Government consent, PECL which wholly owned the rights to 
the PSC, assigned a 25% working interest in the PSC to Melita 
Exploration Company Ltd (‘MECL’), a wholly owned subsidiary 
of MOG. Concurrently with this assignment, MOG transferred 
its remaining 25% interest in PECL to Genel Energy Holdings 
Ltd. Following these transfers, PECL holds 75% working interest 
in the PSC and MECL a 25% working interest. 
As previously reported, on 3 January 2013, Leni Gas & Oil 
Investments Limited (‘LGOI’) and Leni Gas & Oil plc 
(collectively, the ‘Claimants’) commenced legal 
proceedings in the Queen’s Bench Division of the 
Commercial Court of the High Court of Justice in England 
and Wales (the ‘High Court’), against Malta Oil Pty Limited 
(‘MOL’) and Phoenicia Energy Company Limited (‘PECL’) 
(together, the ‘Defendants’). MOL is a subsidiary of the 
Company. The Company held a 25% interest in PECL, as at 
period end. The proceedings relate to the purchase by 
PECL of LGOI’s 10% interest previously held in the Malta 
Offshore Area 4 PSC (the ‘PSC’). The Claimants seek: 
rescission of the sale agreement dated 31 July 2012 under 
which LGOI sold its 10% interest in the PSC to PECL, further 
or alternatively, damages for fraudulent misrepresentation, 
and interest on any sums which are found to be due. The 
Defendants and the Company’s Board of Directors 
continue to refute the various claims which have been 
made by the Claimants. The Group will defend itself and 
the interests of its shareholders rigorously. The outcome of 
this claim and the potential financial impact cannot be 
determined at this stage and therefore no provision has 
been made in the financial statements. The High Court 
hearing is scheduled to commence on 3 March 2013 
(Refer to Note 27 for further information).
In drawing its conclusions of the going concern assessment 
performed, management has prepared cash flow 
projections reflecting the effect of completion of the 
Transaction on its future funding needs, together with the 
known effect of the cashflow requirements of other Group 
operations and development plans along with the Directors’ 
expectations, based on professional advice, relating to the 
contingencies facing the Group. The detailed assessment 
performed by the Directors indicates that the Group can 
continue to meet its liabilities as they fall due and meet its 
minimum spend commitments on its licenses for a period  
of not less than 12 months from the date of the financial 
statements. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 42
Notes forming part of the financial statements continued
For the year ended 31 December 2013
1 Accounting policies and significant accounting judgments, estimates and assumptions continued
Basis of accounting and adoption of new and revised standards
a) Standards, amendments and interpretations effective in 2013:
The following new standards and amendments to standards are mandatory for the first time for the Group for the financial 
year beginning 1 January 2013. Except as noted, the implementation of these standards did not have a material effect on 
the Group:
Standard Impact on initial application Effective date
IAS 1 (Amendment) Presentation of items of other comprehensive income 1 July 2012
IFRS 13 Fair value measurement 1 January 2013
IAS 19 (Amendment 2011) Employee benefits 1 January 2013
IFRS 7 (Amendment 2011) Disclosures – offsetting financial assets and financial liabilities 1 January 2013
IAS 16 (improvements) Classification of servicing equipment 1 January 2013
IAS 16 changes for classification of items such as spare parts, stand-by or servicing equipment as part of property, plant  
and equipment have been applied and part of the inventory transferred to property, plant and equipment (Notes 4 and 14). 
The effect of this is to increase noncurrent assets and reduce current assets by €2.123m at 31 December 2012 and 1 January 
2012. There is no impact on the income statement in 2013 or 2012.
b) Standards, amendments and interpretations that are not yet effective and have not been early adopted:
Standard Impact on initial application Effective date
IAS 32 (Amendment 2011) Offsetting financial assets and financial liabilities 1 January 2014
IFRS 11 Joint arrangements 1 January 2014*
IFRS 10 Consolidated financial statements 1 January 2014*
IFRS 12 Disclosure of interest in other entities 1 January 2014*
IAS 27 (Amendment 2011) Separate financial statements 1 January 2014*
IAS 28 (Amendment 2011) Investments in associates and joint ventures 1 January 2014*
IFRIC 21 Levies 1 January 2014
IFRS 9 Financial instruments n/a
* Effective date 1 January 2014 for the EU.
The Group does not expect the pronouncements to have a material impact on the Group’s earnings or shareholders’ funds.
Basis of consolidation
Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another 
entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial 
statements present the results of the Company and its subsidiaries (the ‘Group’) as if they formed a single entity. 
Intercompany transactions and balances between group companies are therefore eliminated in full.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not 
presented its own income statement in these financial statements. The Group profit for the year includes a loss after tax of 
€6.1m (2012 profit €3.2m) in respect of the Company. This is dealt with in the financial statements of the Parent Company.
Business combinations
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the 
consolidated statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are 
initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the 
consolidated income statement from the date on which control is obtained.
Jointly controlled operations and jointly controlled assets
The Group includes the assets it controls, its share of any income and the liabilities and expenses of jointly controlled 
operations and jointly controlled assets in accordance with the terms of the underlying contractual arrangement.
The Company’s investments in subsidiaries
In its separate financial statements the Company recognises its investments in subsidiaries at cost, less any impairment. 
The cost of acquisition includes directly attributable professional fees and other expenses incurred in connection with 
the acquisition. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 43
Company overview Business review Governance Financial statements
Revenue recognition
Revenue is derived from sales of oil and gas to third party 
customers and fees received from third parties in return for 
services associated with the operation of oil and gas fields 
owned in conjunction with other parties. Sales of oil and 
gas production are recognised at the time of delivery  
of the product to the purchaser which is when the risks  
and rewards of ownership pass and are included in the 
statement of comprehensive income as Revenue.
Sales of oil and gas services are recognised based on the 
services provided and the timing of the provision of those 
services and are included in the statement of 
comprehensive income as Other income.
Interest revenue is accrued on a time basis, by reference 
to the principal outstanding at the effective interest 
rate applicable.
Royalties, resource rent-tax and revenue-based taxes
Royalties or taxes based on production quantities or 
calculated as a percentage of revenue are included in  
cost of sales together with any resource rent-tax.
Tax
The major components of tax on profit or loss include 
current and deferred tax.
Current tax is based on the profit or loss adjusted for items 
that are non-assessable or disallowed and is calculated 
using tax rates that have been enacted or substantively 
enacted by the reporting date.
Tax is charged or credited to the income statement, except 
when the tax relates to items credited or charged directly to 
equity, in which case the tax is also dealt with in equity.
Deferred taxation
Deferred tax assets and liabilities are recognised where the 
carrying amount of an asset or liability in the statement of 
financial position differs to its tax base.
Recognition of deferred tax assets is restricted to those 
instances where it is probable that taxable profit will be 
available, against which the difference can be utilised.
The amount of the asset or liability is determined using tax 
rates that have been enacted or substantively enacted by 
the reporting date and are expected to apply when the 
deferred tax liabilities/(assets) are settled/(recovered).
Oil and gas assets: exploration and evaluation
The Group applies the full cost method of accounting for 
Exploration and Evaluation (‘E&E’) costs, having regard to 
the requirements of IFRS 6 ‘Exploration for and Evaluation  
of Mineral Resources’. Under the full cost method of 
accounting, costs of exploring for and evaluating oil and 
gas properties are accumulated and capitalised by 
reference to appropriate cash generating units (‘CGUs’). 
Such CGUs are based on geographic areas such as a 
concession and are not larger than a segment.
E&E costs are initially capitalised within ‘Intangible assets’. 
Such E&E costs may include costs of licence acquisition, 
third party technical services and studies, seismic 
acquisition, exploration drilling and testing, but do not 
include costs incurred prior to having obtained the legal 
rights to explore an area, which are expensed directly to the 
income statement as they are incurred.
Plant, Property and Equipment (‘PPE’) acquired for use in 
E&E activities are classified as property, plant and 
equipment. However, to the extent that such PPE is 
consumed in developing an intangible E&E asset, the 
amount reflecting that consumption is recorded as part  
of the cost of the intangible E&E asset.
Intangible E&E assets related to exploration licences are not 
depreciated and are carried forward until the existence (or 
otherwise) of commercial reserves has been determined. The 
Group’s definition of commercial reserves for such purpose is 
proven and probable reserves on an entitlement basis.
If commercial reserves have been discovered, the related 
E&E assets are assessed for impairment on a CGU basis as 
set out below and any impairment loss is recognised in the 
income statement. The carrying value, after any impairment 
loss, of the relevant E&E assets is then reclassified as 
development and production assets within property, plant 
and equipment and are amortised on a unit of production 
basis over the life of the commercial reserves of the pool to 
which they relate. Intangible E&E assets that relate to E&E 
activities that are not yet determined to have resulted in the 
discovery of commercial reserves remain capitalised as 
intangible E&E assets at cost, subject to meeting impairment 
tests as set out below.
E&E assets are assessed for impairment when facts and 
circumstances suggest that the carrying amount may 
exceed its recoverable amount. Such indicators include the 
point at which a determination is made as to whether or not 
commercial reserves exist. Where the E&E assets concerned 
fall within the scope of an established CGU, the E&E assets 
are tested for impairment together with all development 
and production assets associated with that CGU, as a 
single cash generating unit. The aggregate carrying value 
is compared against the expected recoverable amount of 
the pool. The recoverable amount is the higher of value in 
use and the fair value less costs to sell. Value in use is 
assessed generally by reference to the present value of the 
future net cash flows expected to be derived from 
production of commercial reserves. Where the E&E assets to 
be tested fall outside the scope of any established CGU, 
there will generally be no commercial reserves and the E&E 
assets concerned will generally be written off in full. Any 
impairment loss is recognised in the income statement.
Oil and gas assets: development and production
Development and production assets are accumulated on a 
field-by-field basis and represent the cost of developing the 
commercial reserves discovered and bringing them into 
production, together with the decommissioning asset (see 
below) and the E&E expenditures incurred in finding 
commercial reserves transferred from intangible E&E assets 
as outlined above. They are presented as oil and gas 
properties in Note 4. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 44
Notes forming part of the financial statements continued
For the year ended 31 December 2013
1 Accounting policies and significant accounting 
judgments, estimates and assumptions continued
The net book values of producing assets are depreciated 
on a field-by-field basis using the units of production (UOP) 
method by reference to the ratio of production in the period 
to the related commercial reserves of the field, taking into 
account estimated future development expenditures 
necessary to bring those reserves into production.
An impairment test is performed whenever events and 
circumstances arising during the development or 
production phase indicate that the carrying value of a 
development or production asset may exceed its 
recoverable amount. The aggregate carrying value is 
compared against the expected recoverable amount of the 
cash generating unit. The recoverable amount is the higher 
of value in use and the fair value less costs to sell. Value in 
use is assessed generally by reference to the present value 
of the future net cash flows expected to be derived from 
production of commercial reserves. The cash generating 
unit applied for impairment test purposes is generally the 
field, except that a number of field interests may be 
grouped as a single cash generating unit where the cash 
flows of each field are interdependent.
Decommissioning
Where a material liability for the removal of production 
facilities and site restoration at the end of the productive life 
of a field exists, a provision for decommissioning is 
recognised from the outset. The amount recognised is the 
present value of estimated future expenditure determined  
in accordance with local conditions and requirements. 
Included within the relevant asset is an amount equivalent 
to the provision which is depreciated on a unit of 
production basis. Changes in estimates are recognised 
prospectively, with corresponding adjustments to the 
provision and the associated asset.
Over time, the discounted provision for decommissioning is 
increased for the change in present value based on the 
discount rate that reflects current market assessments. The 
periodic unwinding of the discount is recognised in the 
statement of comprehensive income as a finance cost.
The Company does not include the result of any timing 
differences resulting from the decommissioning asset or the 
decommissioning provision in determining deferred taxation.
Property, plant and equipment other than oil and gas assets
Property, plant and equipment includes Inventory such as 
spare parts, stand-by or servicing equipment that meet the 
criteria for recognition as property, plant and equipment.
Depreciation is provided to write off the cost less estimated 
residual values, initially recognised and carried, of all 
property, on a reducing balance basis over their expected 
useful lives. Depreciation is calculated at the following rates:
Plant and equipment – range 10% – 12% per annum
Assets held for sale
Where the Company has commenced the sale of a 
business, any non-current assets and liabilities related 
thereto are classified separately as held for sale in the 
statement of financial position. This condition is only met 
when the sale is highly probable, assets are available for 
immediate sale in current condition, the liabilities will be 
transferred and the management is committed to the sale 
which should be completed within one year of the 
classification. Property, plant and equipment once 
classified as held for sale are not subject to depreciation or 
amortisation. The net assets and liabilities of a disposal 
group classified as held for sale are measured at the lower 
of their carrying amount and fair value less cost to sell. In 
accordance with IFRS 5, the Group also assess whether the 
Assets held for sale constitute discontinued operations. 
Where the Assets held for sale are classified as discontinued 
operations, the results of such are recorded as a single 
amount in the income statement. Comparative information 
relating to the discounted operations is also reanalysed into 
the single amount in the comparative income statement 
and related notes.
Financial assets
Financial assets are recognised at initial recognition at fair 
value plus, in the case of financial assets not recorded at 
fair value through profit and loss, transaction costs that are 
attributable to the acquisition of the financial asset. The 
Group’s financial assets consist of available for sale 
investments, and loans and receivables. There are no 
financial assets classified as held to maturity or at fair value 
through profit or loss.
All financials assets, other than the available for sale 
investments and cash and cash equivalents are initially 
measured at fair value and subsequently at amortised cost.
Available-for-sale investments comprise the Group’s 
strategic investments in entities not qualifying as 
subsidiaries, associates or jointly controlled entities. 
Unquoted available for sale investments whose fair value 
cannot be reliably valued are carried at cost.
Cash and cash equivalents comprise cash on hand or held 
on current account or on short-term deposits (up to 
90 days) at variable interest rates. Any interest earned is 
accrued monthly and classified as finance income.
Financial liabilities
All financial liabilities are recognised initially at fair value 
and, in the case of loans and borrowings and payables, net 
of directly attributable transaction costs. The Group’s 
financial liabilities include trade and other payables, loans 
and borrowings including bank overdrafts and derivative 
financial liabilities.
All financial liabilities are initially stated at their fair value 
and subsequently at amortised cost. Interest and other 
borrowing costs are recognised on a time-proportion basis 
using the effective interest method and expensed as part of 
financing costs in the statement of comprehensive income. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 45
Company overview Business review Governance Financial statements
Foreign currency
Transactions entered into by group entities in a currency other 
than the currency of the primary economic environment in 
which they operate (the ‘functional currency’) are recorded 
at the rates ruling when the transactions occur. Foreign 
currency monetary assets and liabilities are translated at the 
rates ruling at the reporting date.
Share capital is denominated in Sterling and translated at 
historic rate.
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 Euro, which is also the functional 
currency of the Company and its significant subsidiaries.
Transactions and balances
Foreign currency transactions are translated into the 
relevant functional currency using the exchange rates 
prevailing at the date 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 statement of 
comprehensive income in other income and expenses.
Other provisions
A provision is recognised in the statement of financial 
position when the Group has a present legal or constructive 
obligation as a result of a past event, and it is probable that 
an outflow of economic benefits will be required to settle  
the obligation. If the effect is material, provisions are 
determined by discounting the expected future cash flows 
at a pre-tax rate that reflects current market assessments of 
the time value of money and, where appropriate, the risks 
specific to the liability.
Share-based payments
The Group issues equity-settled share-based payments to 
certain employees. Equity-settled share-based payments 
are measured at fair value at the date of grant. The fair 
value determined at the grant date of the equity-settled 
share-based payments is expensed on a straight-line basis 
over the vesting period, based on the Group’s estimate of 
shares that will eventually vest.
Where equity instruments are granted to persons other than 
employees, the income statement is charged with the fair 
value of goods and services received.
Options granted by the parent company to employees of 
subsidiaries are measured as equity-settled share-based 
payments, and expensed in the Company receiving 
employee services.
Inventories
Inventories are initially recognised at cost, and subsequently 
at the lower of cost and net realisable value.
Cost comprises all costs of purchase, costs of conversion 
and other costs incurred in bringing the inventories to their 
present location and condition. Oil and gas production 
flows directly into the national grid therefore there are no oil 
and gas inventories held.
Leased assets
Where substantially all of the risks and rewards incidental to 
ownership of a leased asset have been transferred to the 
Group (a ‘finance lease’), the asset is treated as if it had 
been purchased outright. The amount initially recognised 
as an asset is the fair value of the leased asset or, if lower, 
the present value of the minimum lease payments payable 
over the term of the lease. The corresponding lease 
commitment is shown as a liability. Lease payments are 
analysed between capital and interest. The interest element 
is charged to the income statement over the period of the 
lease and is calculated so that it represents a constant 
proportion of the lease liability. The capital element reduces 
the balance owed to the lessor.
Where substantially all of the risks and rewards incidental to 
ownership are retained by the lessor (an ‘operating lease’), 
the total rentals payable under the lease are charged to the 
income statement on a straight-line basis over the lease 
term. The land and buildings elements of property leases 
are considered separately for the purposes of 
lease classification.
(b) Significant accounting judgements, estimates 
and assumptions
In the process of applying the Group’s accounting policies, 
which are described in Note 1, management has made the 
following judgements that have the most significant effect on 
the amounts recognised in the financial statements (apart 
from those involving estimations, which are dealt with below).
(a) Joint arrangements
Judgement is required to determine when the Group has joint 
control over an arrangement, which requires an assessment 
the relevant activities and when the decisions in relation to 
those activities require unanimous consent. Judgement is 
also required to classify a joint arrangement requiring the 
Group to assess the respective rights of the parties to the 
arrangement. These assessments require significant 
judgement, and a different conclusion may materially impact 
the accounting.
(b) Contingencies
The assessment of the existence, and potential quantum, of 
contingencies inherently involves the exercise of significant 
judgement and the use of estimates regarding the 
outcome of future events. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 46
Notes forming part of the financial statements continued
For the year ended 31 December 2013
1 Accounting policies and significant accounting 
judgments, estimates and assumptions continued
The key assumptions concerning the future, and other key 
sources of estimation uncertainty at the reporting date, 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) Exploration and evaluation expenditures
The Group’s policy for E&E expenditure requires an 
assessment of both the future likely economic benefits from 
future exploitation or sale and whether the activities are at a 
stage that permit a reasonable assessment of the existence 
of reserves. Any such assessment may change as new 
information becomes available. If after capitalisation, 
information becomes available suggesting that the 
recovery of the carrying amount is unlikely, the relevant 
capitalised amount is written off in the statement of 
comprehensive income in the period when the new 
information becomes available.
(b) Impairment reviews
Whilst conducting an impairment review of its assets, the 
Group exercises judgement in making assumptions about 
future gas prices, reserves, rehabilitation costs, future 
development and production costs. Changes in estimate 
can result in significant changes to the consolidated 
statement of comprehensive income. The policy in respect 
of impairment reviews is set out above and details of reviews 
carried out during the year are set out in Notes 4 and 5.
(c) Decommissioning
Provision was made in the accounts for future 
decommissioning costs to plug and abandon wells. The cost 
of provision should be added to the value of the development 
and production asset and depreciated on the unit of 
production basis. The decommissioning liability is stated in 
the accounts at discounted present value and accreted up 
to the final liability by way of an annual finance charge.
The Group has potential decommissioning obligations in 
respect of its producing interests in Italy. The extent to which 
a provision is required in respect of these potential 
obligations depends, inter alia, on the legal requirements at 
the time of decommissioning, the cost and timing of any 
necessary decommissioning works, and the discount rate to 
be applied to such costs. The decommissioning provision 
and how the cost is calculated are described in more detail 
in Note 19.
(d) Reserves
Development and production assets (oil and gas 
properties) within Property, Plant and Equipment are 
depreciated on a concession basis using the unit of 
production method at a rate calculated by reference to 
proven plus probable reserves. These reserves have been 
determined using technical estimates of oil and gas in 
place and recovery factors. Future development costs are 
estimated using assumptions as to the number of wells 
required to produce the commercial reserves, the cost of 
such wells and associated production facilities, and other 
capital costs. The carrying amount of development and 
production assets at 31 December 2013 is shown in Note 4.
(e) Units of production (UOP) depreciation of oil and 
gas assets
Oil and gas assets are depreciated using the UOP method 
over total proved developed and undeveloped 
hydrocarbon reserves. This results in a depreciation/
amortisation charge proportional to the depletion of the 
anticipated remaining production from the field. The life of 
each item, which is assessed at least annually, has regard 
to both its physical life limitations and present assessments 
of economically recoverable reserves of the field at which 
the asset is located. These calculations require the use of 
estimates and assumptions, including the amount of 
recoverable reserves and estimates of future capital 
expenditure. The calculation of the UOP rate of 
depreciation/amortisation could be impacted to the extent 
that actual production in the future is different from current 
forecast production based on total proved reserves, or 
future capital expenditure estimates change.
(f) Deferred tax
Judgement is applied in making assumptions about future 
taxable income, including gas prices, production, 
rehabilitation costs and expenditure to determine the extent 
to which the Group recognises deferred tax assets, as well 
as the anticipated timing of the utilisation of the losses.
(g) Share-based payment
Refer to Note 22 for the keys assumptions used in 
determining the value of Share-based payments.
(h) Liabilities
Refer to Note 27 for the contingent liability related to the 
dispute with Leni Gas & Oil Investments Limited and Leni 
Gas & Oil plc. A provision has not been made as the 
financial impact cannot be determined. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 47
Company overview Business review Governance Financial statements
2 Finance income and expense
2013
€’000
2012
€’000
Finance income
Foreign Exchange Income 43 463
43 463
Finance expense
Unwinding of discount on provisions 539 491
Bank interest paid 21 –
Loss on foreign exchange 674 403
1,234 894
3 (Loss)/earnings per share
2013
€’000
2012
€’000
Numerator
(Loss)/Profit for the year (3,250) 893 
Denominator
Weighted average number of shares used in basic (LPS)/EPS 430,397,609 429,211,517
Dilutive effect of share awards and options outstanding at 31 December 6,564,280 4,143,237
Weighted average number of shares used in diluted (LPS)/EPS 436,961,889 433,354,754
(Loss)/Earnings per share on continuing operations
– Basic (1.41) cents 0.41 cents
– Diluted (1.41) cents 0.41 cents
Earnings per share on discontinued operations
– Basic 0.66 cents (0.20) cents
– Diluted 0.66 cents (0.20) cents
(Loss)/Earnings per share attributable to the equity holders of the parent
– Basic (0.75) cents 0.21 cents
– Diluted (0.75) cents 0.21 cents Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 48
Notes forming part of the financial statements continued
For the year ended 31 December 2013
4 Property, plant and equipment
Plant and
Equipment
€’000
Oil and Gas
Assets
€’000
Total
€’000
Group
Cost
At 1 January 2012 1,391 30,318 31,709
Transfers from inventory*
1
– 2,123 2,123
Revised balance at 1 January 2012 – 32,441 33,832
Additions 76 135 211
Transfers from intangible assets*
2
– 2,176 2,176
Transfer to Assets Held for Sale (Note 6) – (184) (184)
Movement on decommissioning assets – 39 39
At 31 December 2012 1,467 34,607 36,074
Additions 38 582 620
Adjustment for exchange differences and other items – (347) (347)
Movement on decommissioning assets – (753) (753)
At 31 December 2013 1,505 34,089 35,594
Depreciation, depletion and impairment
At 1 January 2012 (1,189) (10,020) (11,209)
Charge for the year (12) (4,474) (4,486)
At 31 December 2012 (1,201) (14,494) (15,695)
Charge for the year (30) (2,539) (2,569)
Impairments – (600) (600)
At 31 December 2013 (1,231) (17,633) (18,864)
Net book value
At 31 December 2013 274 16,456 16,730
At 31 December 2012 266 20,113 20,379
At 1 January 2012 202 20,298 20,500
*1 Following the revision to IAS 16, the Group has reclassified inventory as PPE and adjusted the opening balance as at 1 January 2012 by €2.123m. There is no 
impact on the income statement in any period. 
*2 PPE increase in 2012 includes €2.176m for transfer of Aglavizza from intangibles due to grant of the production concession.
The assets affected by impairment losses are oil and gas properties. Management reviewed the carrying values of all 
properties classified as PPE to ascertain the recoverability of values in respect of concessions where facts and 
circumstances suggest that the carrying amount may exceed its recoverable amount. Recoverable amount is based on 
value in use. A discount rate of 10% post tax has been used in the value in use calculation which has been deemed 
appropriate given the risk profile of the Group. Refer Note 1(b) for the significant accounting judgements, estimates and 
assumptions underlying this assessment.
As a result of this exercise, an impairment loss of €0.6m was recognised on Guendalina during the year (2012: €nil). Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 49
Company overview Business review Governance Financial statements
5 Intangible assets
Gas storage
asset
€’000
Exploration
assets
€’000
Total
€’000
Cost
At 1 January 2012 2,693 31,209 33,902
Additions – 1,525 1,525
Transfers to PPE – (2,176) (2,176)
Transfer to Assets Held for Sale (note 6a) – (8,017) (8,017)
Transfer to Assets Held for Sale (note 6b) – (2,219) (2,219)
Movement on decommissioning asset – (119) (119)
At 31 December 2012 2,693 20,203 22,896
Additions – 1,853 1,853
Transfer from Assets Held for Sale (note 6a) – 2,505 2,505
Movement on decommissioning assets – – –
At 31 December 2013 2,693 24,561 27,254
Amortisation and Impairment
At 1 January 2012 (2,693) (361) (3,054)
Charge for the year – (41) (41)
At 31 December 2012 (2,693) (402) (3,095)
Charge for the year – (27) (27)
At 31 December 2013 (2,693) (429) (3,122)
Net book value
At 31 December 2013 – 24,132 24,132
At 31 December 2012 – 19,801 19,801
At 1 January 2012 – 30,848 30,848
The intangible assets include all those costs incurred for the exploration and economic evaluation of potentially productive 
fields. In the prior periods a gas storage asset held as intangible was written off to nil.
Management review the carrying values of exploration and evaluation assets, classified as intangible assets pending 
evaluation of commercially viable reserves, to ascertain the recoverability of values in respect of concessions where facts 
and circumstances suggest that the carrying amount may exceed its recoverable amount. Recoverable amount is based 
on value in use. A discount rate of 10% post tax has been used in the value in use calculation which is deemed appropriate 
given the risk profile of the Group. Refer Note 1(b) for the significant accounting judgements, estimates and assumptions 
underlying this assessment.
Detail of our exploration activities in the period, developments and the legal and regulatory status of these assets is 
included in the Chief Executive’s report.
6 Assets Held for Sale
(a) Non current assets held for sale
2013
€’000
2012
€’000
Assets
Exploration and evaluation assets – 8,017
Income
Gain on disposal 2,754 –
On 21 December 2012, the Group announced that it had signed the two key contracts with Genel Energy plc (‘Genel’) that 
enabled Genel’s acquisition of a 75% working interest in Offshore Malta Area 4 Production Sharing Contract (the ‘PSC’). 
These contracts were: (1) a Share Sale Agreement which resulted in Genel acquiring 75% of the issued share capital of the 
Group wholly owned subsidiary, Phoenicia Energy Company Limited (‘PECL’) on completion, and (2) a Shareholders’ 
Agreement, which governs the operation of PECL in relation to its execution of obligations under the PSC and the rights and 
obligations of the shareholders of PECL, being Mediterranean Oil & Gas Plc and a subsidiary of Genel. Completion of the 
Share Sale Agreement occurred on 28 February 2013. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 50
Notes forming part of the financial statements continued
For the year ended 31 December 2013
6 Assets Held for Sale continued
Detail of our exploration activities in the period, developments and the legal and regulatory status of these assets is 
included in the Chief Executive’s report.
Under IFRS, non-current assets are classified separately as ‘Held for Sale’ in the statement of financial position when their 
carrying amount will be recovered through a sale rather than continuing use. This condition is only met when the sale is 
highly probable, assets are available for immediate sale in their current condition, and the management is committed to 
the sale which should be completed within one year of the classification. Liabilities directly associated with the assets 
classified as held for sale and expected to be included as part of the sale transactions are correspondingly also classified 
separately. Property, plant and equipment once classified as held for sale are not subject to depreciation or amortisation. 
The net assets and liabilities of a disposal group classified as held for sale are measured at the lower of their carrying 
amount and fair value less cost to sell.
At 31 December 2012, the total carrying amount related to the PSC was classified as ‘Held for sale’. The Group has in 
accounting for this transaction concluded that all of the carrying amount should not be de-recognised and therefore a 
gain on disposal of the 75% interest only has been recorded and the remaining carrying amount, €2,505m included in 
Intangible Assets. Further information is provided in Note 25.
(b) Non-current liabilities held for sale
2013
€’000
2012
€’000
Assets
Property, plant and equipment – 184
Exploration and evaluation assets – 2,219
Impairment of assets to net realisable value – (2,403)
Non-current assets held for sale – –
Decommissioning provision – (2,638)
Release of decommissioning provision – 1,388
Non-current liabilities held for sale – (1,250)
On 6 September 2012, the Group had entered into a sale and purchase agreement with Canoel International Energy 
Limited (‘CIL’) to transfer to CIL and/or its nominated subsidiary, the Group’s entire working interest in 13 exploration and 
production gas assets onshore Italy (the ‘Sale and Purchase Agreement’) comprising: Masseria Grottavecchia, San 
Teodoro, Torrente Cigno, Misano Adriatico, Sant’Andrea, Masserai Petrilli, Masseria Acquasalsa, Lucera, San Mauro, 
Montalbano, Serra dei Gatti, Villa Carbone and Colle dei Nidi (the ‘Assets’). As part of this agreement the Group was 
required to pay €1.25m to CIL at completion as partial contribution towards future plug, abandonment and site 
remediation cost for these assets. In June 2013, the Italian Ministry of Economic Development issued preliminary 
authorisation to CIL and MOG to sign the notarised transfer of the interest to CIL. CIL and MOG received the final decree 
authorising the transfer from the Ministry of Economic Development on 28 June 2013, as published in the Official 
Hydrocarbon Gazette on 30 June 2013.
At 31 December 2012, the Assets are presented in the Consolidated Statement of Financial Position as non-current assets 
‘held for sale’ in accordance with IFRS 5 Non-current assets held for sale and in the income statement as discontinued 
operations.
The movements of this operation in the consolidated income statement can be summarised as follows:
2013
€’000
2012
€’000
Revenue 558 1,150
Cost of sales (455) (696)
Unwinding of discount on decommissioning provision (125) (259)
Depreciation, depletion and amortisation – (44)
Impairment of assets to net realisable value – (2,403)
Release of decommissioning provision 125 1,388
Profit/(Loss) for the year net of tax from discontinued operations 103 (864) Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 51
Company overview Business review Governance Financial statements
The cash flow on discontinued operations is summarised as follows:
2013
€’000
2012
€’000
Profit/(Loss) on discontinued operations net of tax 103 (864)
Non-cash adjustments (125) 1,015
Payment to CIL (1,250) –
Unwinding of discount on decommissioning provision 125 259
Depreciation, depletion and amortisation – 44
Net cash flows from discontinued operations (1,147) 454
7 Segmental reporting
In the opinion of the Directors, the operations of the Group companies comprise three operating segments conducting 
exploration, production, and corporate activities.
The Group operates in one geographic area, being Mediterranean Europe. The Group’s oil and gas revenues are 
generated entirely in Italy and result from sales to European based customers. 99% of Group revenue is generated from 
sales of gas and condensate to two customers (2012: 92% from four customers). The reportable segments have been 
identified on the basis that these operating segments form the main identifiable cost centres for the Group as reported to 
the Chief Operating Decision Maker (‘CODM’). The CODM is defined as the Board of Directors.
The top four customers contributed the following proportions to Group oil and gas revenues:
2013 2012
Customer 1 85% 60%
Customer 2 14% 15%
Customer 3 – 13%
Customer 4 – 4%
The primary financial statements presented reflect all the activities of these three operating segments. For the Group’s 
operating segments these are the key reportable items:
2013
Production
€’000
Exploration
€’000
Corporate
€’000
Total
€’000
Total revenues 8,416 – – 8,416
Profit before tax 327 (259) (5,661) (5,593)
Non-current assets 17,300 24,883 1,104 43,287
Non-current liabilities 3,413 2,294 115 5,822
Capital expenditure 620 1,853 – 2,473
Depreciation 2,596 – – 2,596
Impairment charge 600 – – 600
Taxation 514 – – 184
2012
Production
€’000
Exploration
€’000
Corporate
€’000
Total
€’000
Total revenues 16,254 – – 16,254
Profit before tax 5,157 (752) (781) 3,624
Non-current assets 19,804 21,349 837 41,990
Non-current liabilities 3,389 2,278 112 5,779
Capital expenditure 211 1,525 – 1,736
Depreciation 4,483 – – 4,483
Taxation 1,867 – – 1,867
Non-Current Assets comprise investment in oil and gas assets (see Notes 4 and 5) and other non-current receivables (see 
Note 15). Further information related to current and non-current liabilities is included in Note 16. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 52
Notes forming part of the financial statements continued
For the year ended 31 December 2013
8 (Loss)/profit from operations 
2013
€’000
2012
€’000
This has been arrived at after charging:
Other income from sales of oil and gas services 569 152
Royalties 215 945
Gas treatment and transport costs 470 586
Development and production costs excluding staff costs 1,445 611
Depreciation, depletion and amortisation 2,596 4,483
Impairment (Notes 4 and 5) 600 –
Staff costs total – including those allocated to Cost of Sales (Note 9) 4,464 3,606
Legal costs for the dispute with LGOI (Note 27) 971 165
Operating lease expense 432 424
Services provided by the auditor:
 Audit fee for the Company 22 25
 Audit fee for the Group 51 57
 Audit of accounts of associates of the Company under legislation 43 31
 Other taxation services 13 18
9 Staff costs
Group
2013
€’000
2012
€’000
Staff costs (including Directors) comprise:
Wages and salaries 1,657 1,199
Directors’ fees and benefits 1,338 1,142
Defined contribution pension cost 715 600
Social security and other similar taxes 134 102
Share-based payment expense (Note 22) 620 563
4,464 3,606
The average number of Group employees during the period, including Executive and Non-Executive Directors and analysis 
of their roles was as follows:
2013
Number
2012
Number
Analysis of employees
General Management 7 6
Administration 10 9
Exploration 8 7
Operations 5 6
30 28
Non-Executive Directors 5 7
35 35
2013
€’000
2012
€’000
Company
Staff costs (including Directors) comprise:
Wages and salaries 155 64
Directors’ fees and benefits 990 904
Defined contribution pension cost 54 44
Social security and similar taxes 146 90
Share-based payment expense (Note 22) 620 563
1,965 1,665 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 53
Company overview Business review Governance Financial statements
The average number of Company employees during the period, including Executive Directors and analysis of their roles 
was as follows:
2013
Number
2012
Number
Analysis of employees
General Management 3 2
Administration 1 –
4 2
10 Directors’ remuneration
The remuneration of the Directors, who are considered to be the key management personnel. including non-cash share-
based payments, payable by Group companies, was as follows:
2013
€’000
2012
€’000
Executive Directors
William Higgs 686 590
Sergio Morandi 419 330
Chris Kelsall 395 328
Subtotal 1,500 1,248
Non-Executive Directors
Keith Henry 158 145
Peter Jackson 94 –
Salvatore Russo – 55
Miles Donnelly – 52
Michael Seymour – 62
Jake Ulrich 68 60
Matthew Clarke 63 72
Enrico Testa 99 8
Subtotal 482 454
Total 1,982 1,702
The above table includes short-term employee benefits being cash remuneration paid to the Groups’ Directors, benefits in 
kind such as pension contributions and non-cash share-based payment charge (relating to the grant of options in prior 
years and in 2013) which, in respect of the Executive Directors in the period was in aggregate €346,000 (2012: €317,000). 
Three of the Directors exercised share options in the period for a total of 741,500 shares at £0.06 per share making a 
potential gain of £35,200 at the date of exercise. No post employment or long term employee benefits were paid to key 
management personnel in the period (2012: €nil).
11 Taxation
The current year income tax charge includes:
2013
€’000
2012
€’000
Current taxation credit/(charge) 656 (1,220)
Deferred tax (charge) (1,170) (647)
Tax (charge) recognised in income statement (514) (1,867) Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 54
Notes forming part of the financial statements continued
For the year ended 31 December 2013
11 Taxation continued
Reconciliation of tax
The reasons for the difference between the actual tax charge for the year recognised in the income statement and the 
standard rate of corporation tax in the UK applied to losses for the year are as follows:
2013
€’000
2012
€’000
(Loss)/Profit before tax (5,246) 3,624
Expected tax charge based on the standard rate of corporation tax in the UK of 23% (2012: 24.5%) (1,207) 888
Expenses not deductible for tax purposes 80 379
Utilisation of previous tax losses (50) (1,176)
Tax losses carried forward 696 90
Effect of higher rate in other jurisdictions 266 540
Effect of restating deferred tax balances to current tax rate 313 –
Non profit-related production taxes and withholding taxes suffered – 398
Exempt gains 633 –
Unrecognised temporary differences (217) 748
Total tax charge/(credit) 514 1,867
A deferred tax asset has not been recognised for the following:
Group Company
2013
€’000
2012
€’000
2013
€’000
2012
€’000
Unused tax losses 4,697 3,794 4,697 3,794
Unused capital allowances 3,607 3,606 – –
Total 8,304 7,400 4,697 3,794
Deferred tax
2013
€’000
2012
€’000
At 1 January 3,095 3,742
Losses (utilised) in the year (50) (1,176)
Temporary differences change (1,120) 529
At 31 December 1,925 3,095
Deferred tax assets of €3.7m recognised in 2011 were in regard to tax losses brought forward, to be utilised against taxable 
profits arising in the foreseeable future from oil and gas production, most notably from the Guendalina asset which 
commenced production in the year ended 31 December 2011. The jurisdiction that these tax losses have arisen in and are 
expected to be used in is Italy.
The amount recognised in 2013 and in 2012 arises for Italy and relates to temporary timing differences. The Company also 
has available tax losses of €4.7m (2012 €3.8m) which can be utilised against future taxable profits which may arise on the 
profits/gains arising on transactions, from production or from other taxable income streams. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 55
Company overview Business review Governance Financial statements
12 Subsidiaries
The principal undertakings in which the Company’s interest at the period end is 20% or more are as follows:
Proportion of voting 
rights and ordinary share 
capital held
Subsidiary undertakings
Country of incorporation
or registration 2013 2012 Nature of business
Malta Oil Pty Limited Australia 100% 100% Oil and gas exploration,
development and production
Medoilgas Italia S.p.A Italy 100% 100% Oil and gas exploration,
development and production
Medoilgas Civita Ltd. UK 100% 100% Oil and gas exploration,
development and production
Phoenicia Energy Company Limited Malta 25% 100% Oil and gas exploration,
development and production
Melita Exploration Company Limited Malta 100% – Oil and gas exploration,
development and production
The Company transferred 75% of its interest in the shares of Phoenicia Energy Company Limited to Genel Energy Plc on 
28 February 2013. The remaining 25% interest is to be transferred upon completion of the asset exchange agreement 
referred to in Note 25.
Melita Exploration Company Limited was incorporated on 27 February 2013.
Group undertakings
Company
2013
€’000
2012
€’000
Cost
At 1 January 39,081 40,410
Increase/(Decrease) in investment in subsidiaries 2,505 (829)
At 31 December 41,586 39,081
Provision
At 1 January 10,143 10,143
Increase in provision 2,711 –
At 31 December 12,854 10,143
Net book value 28,732 28,938
Phoenicia Energy Exploration Company Ltd was recapitalised in 2013 in readiness for the transaction with Genel Energy plc 
as described in Note 6(a).
A provision of €2.111m was made in 2013 to recognise the reduced net assets of the wholly owned subsidiary, Malta Oil Pty 
Ltd. The prior provision relates to wholly owned subsidiary Medoilgas Italia S.p.A and when recorded in 2010, brought the 
investment in the subsidiary in line with the net assets of the subsidiary.
13 Financial assets
Group
2013
€’000
2012
€’000
Available-for-sale investments
–unquoted 34 34
Financial assets represent the Group’s strategic investment of a 13.07% interest in Reggente S.p.A Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 56
Notes forming part of the financial statements continued
For the year ended 31 December 2013
14 Inventories
2013
€’000
2012
€’000
Materials and supplies 405 408
The amount of inventories recognised as an expense during the year* 4 2
* Including €nil write down for obsolescence (2012: €nil)
Inventory of €2.123m for spare parts, stand-by or servicing equipment qualifying as property, plant and equipment has 
been transferred to property plant and equipment. An impairment test has also been carried out to compare book values 
with market values.
15 Trade and other receivables and Other non-current receivables
Group Company
2013
€’000
2012
€’000
2013
€’000
2012
€’000
Trade and Other Receivables
Trade receivables 1,171 2,444 41 –
Amounts due from Group undertakings – – 6,112 15,356
Other receivables 22 44 – 1
Tax receivables – VAT 2,245 2,485 134 59
Prepayments 422 366 211 130
3,860 5,339 6,498 15,546
Other Non-Current Receivables
Other receivables – VAT 466 804 – –
466 804 – –
The current tax receivable has arisen predominantly from VAT reimbursement which is receivable from the Italian 
government by the Italian subsidiary, Medoilgas Italia S.p.A. The non-current tax receivable relates to VAT recoverable in 
Italy of €0.466m (2012: €0.8m), which is not expected to be reimbursed in the next 12 month period.
The recoverability of the current and non-current VAT receivable balances is due to be via a net reduction in taxation 
settlements made with the Italian tax authorities on charges to be incurred in the future as a result of tax liabilities arising 
from production activities.
The net movement in amounts due from Group undertakings of €9.2m represents a €10.1m reduction on account of the 
Genel transaction and a €0.9m increase in funding to the Group’s subsidiaries. 
16 Trade and other payables
Group Company
2013
€’000
2012
€’000
2013
€’000
2012
€’000
Trade payables 1,657 3,077 149 254
Other payables 211 280 18 45
Accruals 1,562 1,527 473 255
Tax payables
3,430
164
4,884
1,568
640
30
554
–
3,594 6,452 670 554
17 Financial liabilities
There are no financial liabilities of the Group and Company as these were settled during the year ended 31 December 2013. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 57
Company overview Business review Governance Financial statements
18 Financial instruments – risk management
The principal financial instruments used by the Group and Company in 2013 and 2012 are as follows:
Financial Assets classified as Available for Sale:
•	 Available for sale investments
Financial Assets classified as loans and receivables:
•	 Trade receivables
•	 Other receivables
Cash and cash equivalents
Financial Liabilities all classified as held at amortised cost:
•	 Trade payables
•	 Other payables
Financial assets
Group Company
2013
€’000
2012
€’000
2013
€’000
2012
€’000
Available for sale assets
Available for sale investment 34 34 – –
Loans and receivables
Trade receivables* 1,171 2,444 41 –
Other receivables* 22 44 – –
Amounts due from Group undertakings* – – 6,112 15,356
Cash and cash equivalents* 12,353 8,668 7,627 3,718
13,580 11,190 13,780 19,074
Financial liabilities
Group Company
2013
€’000
2012
€’000
2013
€’000
2012
€’000
Trade payables* 1,657 3,077 149 254
Other payables and accruals* 1,773 1,807 491 300
3,430 4,884 640 554
* Carried at amortised cost.
Fair value of financial instruments
At 31 December 2013 and 31 December 2012, the fair value and book value of the Group’s financial assets and liabilities 
were materially the same. All financial assets and liabilities indicated above with a * are shown in the statement of financial 
position at their amortised costs, which approximates to underlying fair value. Financial instruments listed above valued at 
fair value are assessed as tier 3. Tier 3 means inputs for the asset or liability that are not based on observable market data.
At 31 December 2013 and 31 December 2012, there were no financial instruments assessed as tier 2 and carried at fair 
value through profit or loss. A tier 2 classification means that inputs are other than quoted prices that are observable for the 
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Financial risk management
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, 
whilst retaining responsibility for them it has delegated the authority for designing and operating processes that ensure the 
effective implementation of the objectives and policies to the Group’s finance function. The Board receives regular updates 
from accounting and financial management through which it reviews the effectiveness of the processes put in place and 
the appropriateness of the objectives and policies it sets. The overall objective of the Board is to set policies that seek to 
reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. Further details regarding 
these policies are set out below. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 58
Notes forming part of the financial statements continued
For the year ended 31 December 2013
18 Financial instruments – risk management continued
The key financial instruments for the Company are the current receivables related to subsidiaries and as a result, Company 
reports are only included where relevant.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or a counter party to a financial instrument fails to meet its 
contractual obligations. The Group is mainly exposed to credit risk from credit sales in relation to gas production. It is Group 
policy, implemented locally, to assess the credit risk of new customers before entering contracts in accordance with best 
local business practices, and seek external credit rating assessments where applicable and when available. Credit risk of 
existing customers is assessed when deemed necessary.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and 
financial institutions, only independently rated parties with an acceptable rating are utilised. It is the Group policy that it 
endeavours to maintain substantial bank deposits and bills with financial institutions with Standard & Poors ‘A’ rating or 
equivalent. The Group holds cash balances with its primary banks that have a Standard & Poors (‘S&P’) rating as noted: 
HSBC (S&P: A-1/A+), Banca Intesa SanPaolo SpA (S&P: BBB/A-2) and Deutsche Bank (S&P: BBB/A-1), to meet minimum 
working capital requirements for the Italian operations.
Interest rates received on deposit accounts held with HSBC, Banca Intesa SanPaolo and Deutsche Bank are between 0.01% 
and 0.20% (31 December 2012: 0.09% to 0.20%), based on bank interest rates.
The Group does not enter into derivatives to manage credit risk, although in certain isolated cases may take steps to 
mitigate such risks if it is sufficiently concentrated.
The financial assets are aged as follows:
Group
2013
€’000
2012
€’000
1 month 13,151 10,847
2/3 months 93 338
> 4 months 336 5
13,580 11,190
The Group has not historically suffered defaults from its customers for onshore gas production. The Group faces credit risk 
through onshore and offshore gas sales to Repower Italia and joint venture cash calls to ENI, Total, Edison, and Gas Plus 
Italiana arising from various joint venture projects where Medoilgas Italia S.p.A acts as operator. The Group’s main credit risk 
exposure through its subsidiary Medoilgas Italia S.p.A, is with Repower Italia which at present purchases the Group’s entire 
gas production. Price risk under this contract is mitigated by the provision of a bank guarantee in favour of the Group in 
respect of a material proportion of forecast gas purchases under the contract. Management believes the credit risk 
currently faced by the Group is low given the high credit worthiness of Repower Italia ENI, Total, Edison, Gas Plus Italiana.
The Group from time to time reviews whether a greater utilisation of credit ratings would be appropriate. Given that much of 
the Group’s trade receivables are under joint operating agreements, the security against joint venture assets provided by 
those agreements adequately mitigates any risk of default. At the reporting date, the Group does not envisage any losses 
from non-performance of existing counterparties.
Management considers that given the presently challenging macroeconomic position in the Eurozone and in Italy, credit 
risk remains elevated as at the reporting date, but that this risk has not had a material impact on earnings or shareholders’ 
equity. Management continues to monitor the financial and energy market conditions and will consider any steps required 
to mitigate associated risks to the Group.
The Group seeks to maintain deposit accounts for its cash balances, primarily with banks which hold a high credit rating. 
The applicable interest rate on cash balances is also considered. Current bank deposits are held primarily with HSBC Bank 
plc and Deutsche Bank AG, with funds necessary for adequate working capital availability to the Italian operations held on 
deposit with Banca Intesa SanPaolo.
Funds which are not expected to be required in the near term are placed on short-term (i.e. up to 90 days) deposit with 
fixed interest rates for the relevant term, which reduce the Group’s exposure to interest rate risk. At the same time, 
management reviews the Group’s forecast cashflows in order to ensure that the maximum level of interest is received for the 
available funds but without adversely affecting the working capital flexibility the Group requires. There is no material 
difference between the book value and fair value of the Group’s cash and cash equivalents. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 59
Company overview Business review Governance Financial statements
A 1% interest rate movement does not have a material effect on the Group’s financial assets and liabilities therefore no 
sensitivity analysis is provided.
Cash flow interest rate risk
The Group and Company are exposed to cash flow interest rate risk from deposits of cash and cash equivalents with banks. 
The cash and cash equivalents balances maintained by the Group are proactively managed in order to ensure that the 
maximum level of interest is received for the available funds but without affecting the working capital flexibility the Group 
requires.
There is no material difference between the book value and fair value of the Group’s cash and cash equivalents.
Foreign exchange risk
Foreign exchange risk arises because the Group has operations located in various parts of the world and because some of 
its major suppliers utilise contracts denominated in US dollars irrespective of the location where services are provided. 
Although its geographical spread reduces the Group’s operational risk, the Group’s net assets arising from such overseas 
operations are exposed to currency risk resulting in gains and losses on retranslation into Euro. Only in exceptional 
circumstances will the Group consider hedging its net investments in overseas operations as generally it does not consider 
that the reduction in foreign currency exposure warrants the cash flow risk created from such hedging techniques. It is the 
Group’s policy to ensure that individual Group entities enter into local transactions in their functional currency wherever 
possible or acquire the relevant contract currency ahead of the expenditure obligation. The Group considers this policy 
minimises any unnecessary foreign exchange exposure.
The Board continues to monitor the effectiveness of this policy on an ongoing basis through its approval of Group budgets 
and the review of the currency profile of cash balances.
The proportion of cash and cash equivalent balances held in Euro as at the year end was 39.4% (2012: 57.1%), USD 38.8% 
(2012: 26.6%), GBP 21.8% (2012: 16.3%).
The Group is exposed to changes in exchange rates. At 31 December 2013, the currency exposure of the Group was 
as follows:
AUD
€’000
USD
€’000
GBP
€’000
EURO
€’000
Total
€’000
At 31 December 2013
Cash and cash equivalents – 4,794 2,688 4,871 12,353
Trade and other receivables – – 109 3,751 3,860
Trade and other payables – – (194) (3,236) (3,430)
Net financial assets/(liabilities) – 4,794 2,603 5,386 12,783
€ weakens 10%
(*)
– 5,327 2,893 5,836 14,056
€ strengthens 10%
(*)
– 4,358 2,367 5,386 12,111
At 31 December 2012
Cash and cash equivalents – 2,306 1,415 4,947 8,668
Trade and other receivables – – 1 5,338 5,339
Trade and other payables (103) – (570) (4,211) (4,884)
Net financial assets/(liabilities) (103) 2,306 846 6,074 9,123
€ weakens 10%
(*)
(114) 2,561 941 6,074 9,462
€ strengthens 10%
(*)
(94) 2,095 770 6,074 8,845
Significant balances are held in foreign currencies. The Directors have considered the exposure resulting from movements 
in foreign exchange rates in relation to these amounts. A movement of 10% would result in the balances to be restated to 
the amounts disclosed in the table above (*). Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 60
Notes forming part of the financial statements continued
For the year ended 31 December 2013
18 Financial instruments – risk management continued
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments 
on its debt instruments.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. 
To achieve this aim, it seeks to maintain readily available cash balances (or agreed facilities) to meet expected 
requirements. See further information on Going Concern in Note 1.
Cash forecasts identifying the liquidity requirements of the Group are produced monthly. These are reviewed regularly by 
management and the Board to ensure that sufficient financial headroom exists.
The contractual undiscounted amounts of financial liabilities are repayable as follows:
Group Company
2013
€’000
2012
€’000
2013
€’000
2012
€’000
1 month 1,301 2,128 577 554
2/3 months 669 1,610 56 –
4/6 months 31 – 7 –
6/12 months 1,429 1,146 – –
3,430 4,884 640 554
In respect of the Company, included in Euro amounts receivable within one year are amounts due from group companies 
totalling €6.1m (2012: €15.4m).
Price risk
Gas sales revenue is subject to energy market price risk. The Group’s gas revenues are sourced from the sale of gas under 
term supply contracts.
Estimated production volumes for sales of onshore gas production are set out in the contracts. The applicable gas price for 
each month is set according to a formula which is linked to the oil price that applies a constant to the average price from 
fuel oil, gas oil and crude oil (Brent) prices over each of the nine months prior to the actual month of gas delivery. The oil 
prices which are applied in the formula are sourced from the Platts Oilgram Price Report (average of the highest and lowest 
for each oil type in each of the nine prior months) in US$ and convertible to Euro value by reference to the average monthly 
US$/€ exchange rate, which is in the actual month of gas supply, as published by the European Central Bank. Given the 
gas price formula for onshore gas sales is based on an oil price formula which takes an average measure of the prior 
nine-month period, any short-term material oil price fluctuations are likely to be mitigated. At present, the Group does not 
intend to hedge oil price risk in the short term.
MOG presently sells its net gas volumes from both onshore and offshore producing gas fields in which it holds a working 
interest, under one gas sale contract. This contract governs the offtake of gas volumes for one ‘thermal year’, which 
currently runs from 1 October 2013 to 30 September 2014. The applicable gas sales price for each month under the 
contract is set having regard to: (a) an average of the European Market price of Gas Oil, BTZ, and Crude Oil (Brent) over 
each of the nine months prior to the actual month of gas delivery; and (b) the USD/Euro exchange rate average applying 
in the month of gas supply.
Defaults and breaches
There have been no defaults or breaches in respect of current and non-current liabilities recognised at the reporting date.
Capital disclosures
The Group seeks to maintain sufficient capital to fund its growth and safeguard its ability to continue as a going concern. 
The primary objective of the Group is to maximise shareholder value, which from a capital management perspective, is 
achieved by maintaining the capital structure that is most suited to the Group’s size, project and strategic priorities, as well 
as underlying business risk.
Currently, the Group does not pay dividends, focusing instead, on delivering capital growth by developing its exploration 
portfolio and its Italian development assets, to optimise future returns. As at 31 December 2013 and the date of this report, 
the capital employed by the Group to fund projects is comprised solely of equity attributable to shareholders. 
Management will continue to review the scope to apply other sources of capital and equity finance, such as potential farm 
outs, to support key projects. The details and movements in the Company’s share capital are set out in Note 20. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 61
Company overview Business review Governance Financial statements
19 Provisions for liabilities and charges
Decommissioning
€’000
Other
provisions
€’000
Total
€’000
At 1 January 2012 7,808 568 8,376
Changes in estimates (218) 74 (144)
Utilisation and other movements (147) (418) (565)
Unwinding of discount factor 750 – 750
Transfer to Assets Held for Sale (Note 6b) (2,638) – (2,638)
At 31 December 2012 5,555 224 5,779
Changes in estimates (501) 5 (496)
Utilisation – – –
Unwinding of discount factor 539 – 539
At 31 December 2013 5,593 229 5,822
The decommissioning provision is the discounted present value of the estimated cost of decommissioning the Group’s oil 
and gas production facilities in Italy. The discount factor used is 10%. The Group makes provision for the cost of 
decommissioning its producing wells at the completion of their useful lives. There are in excess of 30 wells for which 
provision has been made. Individual final decommissioning costs vary. Decommissioning of the wells is anticipated over a 
10-year period with additional provision to be made as new production wells are brought on stream. The time frame for 
decommissioning is based upon the projected production profile and remaining proved and probable reserves. The costs 
of decommissioning both onshore and offshore wells are certified by independent qualified engineers and specialists.
Other provisions include amounts due to employees for accrued holiday and for staff in Italy, leaving indemnity, that will 
become payable when they cease employment.
20 Share capital
Issued and fully paid
2013
Number
2013
€’000
2012
Number
2012
€’000
Ordinary shares of 0.01p each
At 1 January 429,784,376 5,066 429,117,710 5,058
Issue of shares – options exercised 774,834 9 666,666 8
At 31 December 430,559,210 5,075 429,784,376 5,066
Share options
The Group’s policy is to utilise share awards and options as part of the management reward structure. Option terms are set 
by agreement with an incoming executive or based upon the recommendations of the remuneration committee to the 
Board of Directors. Refer to Note 22 for further details.
Deferred shares
On 10 May 2011, the Group raised £20m before expenses (approximately £19.1m net of cash transaction expenses) by the 
subscription for 333,333,333 new ordinary shares in the Company (the ‘Subscription’) at 6 pence each (‘Subscription 
Price’). In addition, the Company agreed terms with the Bank of Scotland Plc (‘BoS’), Stark Select Asset Master Limited 
(‘Stark Select’) as holder of the convertible bonds (‘Convertible Bonds’), and with holders of the convertible loan notes 
(‘CLNs’), as a result of which, all outstanding amounts due to the BoS under the BoS bank facility were settled and all 
outstanding Convertible Bonds and CLNs were converted into new ordinary shares (together, the ‘Conversion Shares’)  
of the Company at a price of 24 pence per new ordinary share (together, the ‘Group Recapitalisation’). As a result of the 
Group Recapitalisation, the Group does not have any outstanding financial debt.
The nominal value of the existing ordinary shares as at 31 December 2010, was 20 pence. The issue of new shares at the 
Subscription Price therefore required the adjustment of the nominal value of each of the Company’s ordinary shares to 
1 penny, rather than 20 pence. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 62
Notes forming part of the financial statements continued
For the year ended 31 December 2013
20 Share capital continued
Conversion of convertible bonds and convertible notes
The holder of all of the outstanding Convertible Bonds, Stark Select, agreed to convert the whole of the outstanding 
principal amount of its Convertible Bonds into 19,858,333 Conversion Shares at a price of 24 pence per Conversion Share.
With the approval of an extraordinary resolution of the holders of the CLNs, the Company agreed to amend the deed poll 
constituting the CLNs to give the Company the right to convert the outstanding CLNs at its election into 21,061,225 Conversion 
Shares, at a price of 24 pence per Conversion Share. The Company elected to convert all of the outstanding CLNs.
The original conversion prices of the CLNs and the Convertible Bonds were 40 pence and 50 pence respectively and the 
Company had no right to require conversion. The amendments to the terms and conversion prices of the CLNs and the 
Convertible Bonds were necessary to enable the Subscription and the Debt Cancellation to take place. The Conversion 
Shares were issued credited as fully paid, subject to the memorandum of association and Articles of the Company and 
rank pari passu in all respects with new ordinary shares then in issue, including the right to receive any future dividends and 
other distributions.
Share consolidation
The Subscription Price of 6 pence was below the nominal value of the ordinary shares of the Company, of 20 pence. As 
Company law prohibits the issue of shares at a price less than their nominal value, in order to effect the Subscription, a 
share consolidation was undertaken whereby each ordinary share of the Company was subdivided into one new ordinary 
share with nominal value of 1 penny and one deferred share with nominal value of 19 pence (the ‘Share Consolidation’).
The Share Consolidation resulted in 38,912,736 new ordinary shares and 38,912,736 deferred shares (the ‘Deferred Shares’) 
being in issue immediately following the Share Consolidation but before the completion of the Group Recapitalisation.
After the implementation of the Share Consolidation the nominal value of each new ordinary share was one twentieth of 
that of each existing ordinary share. Each new ordinary share has the same rights (including voting and dividend rights 
and rights on a return of capital) as each ordinary share existing prior to completion of the Group Recapitalisation.
The rights attaching to the Deferred Shares, which have not been admitted to trading on AIM, are minimal, thereby 
rendering them effectively valueless. The rights attaching to the Deferred Shares are summarised as follows:
•	 they do not entitle holders to receive any dividend or other distribution or to receive notice of, attend, speak at or vote at 
general meetings of the Company;
•	 on a return of assets on a winding up, they will only entitle the holder to the amounts paid up on such shares after the 
repayment of £10m per New Ordinary Share;
•	 they authorise the Company to appoint any person to execute on behalf of the holders of the Deferred Shares a transfer 
of such shares to the Company, or such person as the Company may nominate as custodian, without any payment 
therefore and without the sanction of the holders of the Deferred Shares; and
•	 the creation and issue of further shares which rank equally or in priority to the Deferred Shares or the passing of a 
resolution of the Company to cancel the Deferred Shares or to effect a reduction in capital shall not constitute a 
modification or abrogation of their rights.
There are no immediate plans to purchase or cancel the Deferred Shares, but the Company may seek to do so in the future.
21 Cash and cash equivalents
Group Company
2013
€’000
2012
€’000
2013
€’000
2012
€’000
Cash available on demand 12,353 8,668 7,627 3,718
22 Share-based payment
2013
€’000
2012
€’000
The share-based remuneration expense (Note 9) comprises:
Equity-settled schemes 620 563
The remainder of this note is presented in Sterling, unless otherwise stated, as this is the currency in which shares are issued 
and options are priced. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 63
Company overview Business review Governance Financial statements
Employee Share Plan
On 20 March 2013, the Board approved the implementation of a new long-term employee share incentive plan (the 
‘Employee Share Plan’), designed to provide incentives to employees to act in the long-term best interests of the Group and 
its shareholders. Performance related share awards may be granted under the Employee Share Plan to the Company’s 
employees and Executive Directors by the Board, upon recommendation by the Remuneration Committee.
On 26 April 2013 (‘Award Date’), 2,532,778 shares were awarded to eligible employees under the Share Plan. No shares were 
awarded to Executive Directors. Each individual award vests in respect of:
•	 one-third of the shares awarded (rounded down) on the first anniversary of the Award Date (26 April 2014);
•	 one-third of the shares awarded (rounded down) on the second anniversary of the Award Date (26 April 2015); and
•	 the remaining shares awarded on the third anniversary of the Award Date (26 April 2016).
Vesting in each case is subject to the terms of the Share Plan, including the requirement for each recipient to remain in 
employment with the Group until vesting (provided that vesting may occur if employment ceases in certain limited 
circumstances specified under the terms of the Share Plan). The terms of each Award include a ‘claw-back’ provision that 
means, in specified circumstances, a recipient of an Award can be required to transfer back the shares which have been 
received or repay a cash equivalent amount, or the number of shares subject to any other Award made under the Share 
Plan may be reduced by the amount of the required claw-back.
The weighted average fair value of each award granted during the period was £0.07 (2012: nil).
Details of the share awarded in the year are as follows:
2013
Number
2012
Number
Outstanding at beginning of the year – –
Granted during the year 2,532,778 –
Forfeited – –
Exercised – –
Lapsed – –
Outstanding at the end of the year 2,532,778 –
The following is relevant in the determination of the fair value of awards granted during the year under the Employee Share 
Plan operated by the Group. Under the terms of the award, recipients are required, when their award vests, to ensure that 
an amount equal to £0.01 is paid for each share in respect of which vesting occurs (the ‘Award Price’).
26 April 2013
Pricing model used Black-Scholes
Weighted-average share price at grant date (pence) 7.94
Award Price (pence) 1.00
Weighted average contractual life (years) 2.0
Expected volatility 65%
Expected dividend growth rate –
Risk-free rate 2.27%
Long-Term Share Option Scheme
On 11 March 2010, the Board approved the implementation of a new Global Share Option Plan (the ‘Plan’), and the award 
of options to eligible employees and Directors over ordinary shares of the Company. Following a recommendation of the 
Remuneration Committee, on 19 January 2012, 13,500,000 options were granted under the Plan to the employees and 
Directors over ordinary shares of the Company. Upon commencement of employment with the Company, on 19 March 2012, 
6,000,000 options were granted under the Plan to William Higgs over ordinary shares of the Company. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 64
Notes forming part of the financial statements continued
For the year ended 31 December 2013
22 Share-based payment continued
Details of the share option transactions for the year are as follows:
2013
Weighted
Average
Exercise
Price
£
2013
Number
2012
Weighted
average
exercise
price
£
2012
Number
Outstanding at beginning of the year 0.18 18,842,000 1.71 1,826,000
Granted during the year 0.119 6,870,000 0.06 19,500,000
Exercised 0.06 (774,833) 0.06 (666,666)
Lapsed and forfeited 2.41 (853,500) 0.51 (1,817,334)
Outstanding at the end of the year 0.09 24,083,667 0.18 18,842,000
The exercise price of the options outstanding at the end of the year ranged between £0.06 and £0.45 (2012: £0.06 and 
£3.00) and their weighted average contractual life was 8.18 years (2012: 8.49 years). The weighted average exercise price of 
the options exercised in the year to December 2013 was £0.06 (2012: £0.06). At the relevant exercise dates, the market price 
of the Company’s ordinary shares ranged between £0.086 and £0.123.
Of the total number of options outstanding at the year end, 8,613,661 were exercisable (2012: 4,091,329). The weighted 
average fair value of each option granted during the period was £0.085 (2012: £0.037).
The following is relevant in the determination of the fair value of options granted during the year under the Global Share 
Option Plan operated by the Group.
23 January 2013
Option pricing model used Black-Scholes
Weighted-average share price at grant date (pence) 11.78
Exercise Price (pence) 11.9
Weighted-average contractual life (years) 10.0
Expected volatility 65%
Expected dividend growth rate –
Risk-free rate 2.055%
Volatility has been based on the historic performance of the Company and its peer group companies.
The grant of options to Directors during the period with the exercise price state above and vesting between the first and 
third anniversaries of the grant date were as follows:
Director
23 January 2013
New options 
granted
Total number of
options held at
Period end
Keith Henry 675,000 2,675,000
William Higgs 2,000,000 8,000,000
Sergio Morandi 850,000 3,515,000
Chris Kelsall 675,000 2,765,000
Matthew Clarke 335,000 1,335,000
Jacob Ulrich 335,000 1,335,000
Enrico Testa 1,000,000 1,000,000
Peter Jackson 1,000,000 1,000,000
6,870,0000 21,625,000 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 65
Company overview Business review Governance Financial statements
23 Operating lease arrangements
Group
2013
€’000
2012
€’000
Minimum lease payments under operating leases recognised in income statement for the year 432 424
Minimum lease payments under operating leases
Due within one year 275 424
After one year but within two years 205 271
After two years but within five years 214 448
Due after five years 125 280
At 31 December 819 1,423
The operating leases relate to office rentals and licence concessions.
24 Related parties
The Company has entered into a number of unsecured related party transactions with its subsidiary undertakings. The 
transactions carried out between the Company and its subsidiary undertakings are for short and long-term financing, 
details of such transactions and amounts owed to and from these entities are provided in Notes 15 and 16.
Information regarding the remuneration of key management personnel and their connected persons is disclosed in Note 10.
On 8 November 2011, the Company entered into a short-term secured loan facility with affiliates of certain of its substantial 
shareholders, namely affiliated investment funds of Och-Ziff Capital Management Group (‘Och Ziff’), for up to €3.5m (the 
‘Loan Facility’) to assist the Company in relation to its licence commitment at Area 4 Offshore Malta.
On 7 February 2012, the Company borrowed €2.0m (the ‘Principal’) under the Loan Facility. Repayment of the entire 
Principal and accrued interest thereon was completed on 26 April 2012. The Loan constituted a Related Party Transaction 
pursuant to the AIM Rules. The Directors of MOG consider, having consulted with Panmure Gordon (UK) Limited, MOG’s 
nominated adviser, that the terms of the Loan, as set out, are fair and reasonable insofar as its shareholders are 
concerned.
25 Events after the reporting period
Board appointments
Mathew Clarke and Jake Ulrich, both Non-Executive Directors of the Company, resigned down from the Board on 
8 January 2014.
Malta offshore Area 4 PSC
On 9 January 2014, the Company entered an agreement with the Government of Malta for a six month extension to the 
Production Sharing Contract (‘PSC’) covering Area 4 Blocks 4, 5, 6 & 7 (‘Area 4’). This extension will enable the contractors 
to the PSC to have sufficient time to complete the exploration drilling activities that are forecast to start in Q1 2014. With this 
extension, the expiry of the first exploration period to the PSC is now 17 July 2014. The Maltese Government also gave its 
consent for Phoenicia Energy Company Ltd (‘PECL’), which wholly-owned the rights to the PSC, to assign 25% of its interest in 
the PSC to Melita Exploration Company Ltd (‘MECL’), a wholly owned subsidiary of MOG. Concurrently with this assignment, 
MOG transferred its remaining 25% interest in PECL to Genel Energy Holdings Ltd. Consequently, PECL is now a wholly-owned 
subsidiary of Genel Energy Holdings Ltd. MECL and PECL have entered into a Joint Operating Agreement, in which PECL has 
been appointed Operator on behalf of the joint venture parties. Following these transfers, PECL will hold 75% working interest 
in Area 4 and MECL 25% working interest in Area 4 and are jointly the contractors to the PSC.
Ombrina Mare (Italy) Exploration Permit
On 13 January 2014, the Company announced that, further to the appeal filed on the 8 August 2013 (the ‘Appeal’) aimed 
at obtaining the annulment of the letter dated 9 July 2013 from Ministry of the Environment and of Protection of Land and 
Sea (‘MEPLS’) requesting the Company to apply for and obtain an Integrated Environmental Authorisation (‘AIA’) as a 
precondition for MEPLS’ approval of the Environmental Impact Assessment (‘EIA’) for Ombrina Mare, a tribunal hearing was 
held on 9 January 2014 at the Administrative Court in Rome. The Company is now awaiting the decision of the Appeal and 
a further update will be provided in due course. The Company is in continuing dialogue with the Italian Government and 
other key stakeholders to seek resolution on a way forward for the project outside of the Courts. In the Board’s view, such 
discussions are not hindered by the Appeal. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 66
Notes forming part of the financial statements continued
For the year ended 31 December 2013
26 Capital commitments
As at 31 December 2013, the Group had committed €2.6m (2012: €2.9m) in operational and exploration expenditure 
relating to various concessions. The above number represents all open/outstanding contracts and purchase orders that 
are not met under any partner ‘carry’.
27 Contingent liability
LGOI
On 3 January 2013, Leni Gas & Oil Investments Limited (‘LGOI’) and Leni Gas & Oil plc (collectively, the ‘Claimants’) 
commenced legal proceedings in the Queen’s Bench Division of the Commercial Court of the High Court of Justice in 
England and Wales (the ‘High Court’), against Malta Oil Pty Limited (‘MOL’) and Phoenicia Energy Company Limited 
(‘PECL’) (together, the ‘Defendants’). MOL is a subsidiary of the Company. The Company held a 25% interest in PECL, as at 
period end.
The proceedings relate to the purchase by PECL of LGOI’s 10% interest previously held in the Malta Offshore Area 4 PSC (the 
‘PSC’). The Claimants seek: rescission of the sale agreement dated 31 July 2012 under which LGOI sold its 10% interest in the 
PSC to PECL, further or alternatively, damages for fraudulent misrepresentation, and interest on any sums which are found 
to be due. 
On 25 February 2013, the Defendants filed a Defence with the High Court. The Defendants and the Company’s Board of 
Directors continue to refute the various claims which have been made by the Claimants. The Group will defend itself and 
the interests of its shareholders rigorously. The outcome of this claim and the potential financial impact cannot be 
determined at this stage and therefore no provision has been made in the financial statements. The High Court hearing is 
scheduled to commence on 3 March 2014.
The Genel Energy Plc transaction announced by the Company on 21 December 2012, which completed on 28 February 2013 
and the proposed Malta work programme are unaffected by this dispute. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 67
Company overview Business review Governance Financial statements
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Annual General Meeting 
of Mediterranean Oil & Gas Plc (the ‘Company’) will be held 
at Prince Philip House, The Royal Academy of Engineering, 3 
Carlton House Terrace, London SW1Y 5DG on Wednesday 
the 2nd of April 2014 at 11:00am for the following purposes.
As Ordinary Business
To consider and, if thought fit, pass the following resolutions 
which will be proposed as ordinary resolutions.
1. To receive and adopt the statement of accounts for the 
year ended 31 December 2013 together with the reports 
of the Directors and the Auditors thereon.
2. To re-elect Sergio Morandi, who retires by rotation, as a 
Director of the Company.
3. To reappoint BDO LLP as Auditors to act as such until the 
conclusion of the next general meeting of the Company 
at which the requirements of section 437 of the 
Companies Act 2006 (the ‘2006 Act’) are complied with 
and to authorise the Directors of the Company (the 
‘Directors’) to fix their remuneration.
As Special Business
To consider and, if thought fit, pass the following resolutions 
of which resolution 4 will be proposed as an ordinary 
resolution and resolution 5 will be proposed as a special 
resolution.
Ordinary Resolution
4. That the Directors be generally and unconditionally 
authorised in accordance with section 551 of the 2006 
Act to allot Relevant Securities (as defined in this 
resolution) up to an aggregate nominal amount of 
£1,291,677, provided that this authority shall, unless 
renewed, varied or revoked by the Company in general 
meeting, expire on the date falling 15 months from the 
date of the passing of this resolution, or if earlier at the 
Annual General Meeting of the Company to be held in 
2015, save that the Company may at any time before 
such expiry make an offer or agreement which might 
require Relevant Securities to be allotted after such expiry 
and the Directors may allot Relevant Securities to be 
allotted in pursuance of such offer or agreement 
notwithstanding that the authority hereby conferred has 
expired. This authority is in substitution for all previous 
authorities conferred on the Directors in accordance with 
section 551 of the 2006 Act. In this resolution, ‘Relevant 
Securities’ means any shares in the capital of the 
Company and the grant of any right to subscribe for, or 
to convert any security into, shares in the capital of the 
Company (‘Shares’) but does not include the allotment 
of Shares or the grant of a right to subscribe for Shares in 
pursuance of an employee’s share scheme or the 
allotment of Shares pursuant to any right to subscribe for, 
or to convert any security into, Shares.
Special Resolution
5. That the Directors be generally empowered pursuant to 
section 570 of the 2006 Act to allot equity securities (as 
defined in section 560 of the 2006 Act) for cash as if 
section 561(1) of the 2006 Act did not apply to any such 
allotment pursuant to the general authority conferred on 
them by resolution 4 above (as varied from time to time 
by the Company in general meeting) PROVIDED THAT 
such power shall be limited to:
(a) the allotment of equity securities in connection with a 
rights issue or any other offer to holders of ordinary 
shares in proportion (as nearly as may be 
practicable) to their respective holdings and to 
holders of other equity securities as required by the 
rights of those securities or as the Directors otherwise 
consider necessary, but subject to such exclusions or 
other arrangements as the Directors may deem 
necessary or expedient in relation to treasury shares, 
fractional entitlements, record dates, legal or 
practical problems in or under the laws of any 
territory or the requirements of any regulatory body or 
stock exchange; and
(b) the allotment (otherwise than pursuant to sub 
paragraph (a) above) of equity securities up to an 
aggregate nominal amount of £645,838 representing 
approximately 15% of the issued ordinary share 
capital of the Company
 and the power hereby conferred shall operate in 
substitution for and to the exclusion of any previous 
power given to the Directors pursuant to section 570 of 
the 2006 Act and shall expire on whichever is the earlier 
of the conclusion of the Annual General Meeting of the 
Company held in 2015 or the date falling 15 months from 
the date of the passing of this resolution (unless renewed 
varied or revoked by the Company prior to or on that 
date) save that the Company may, before such expiry 
make an offer or agreement which would or might 
require equity securities to be allotted after such expiry 
and the Directors may allot equity securities in pursuance 
of such offer or agreement notwithstanding that the 
power hereby conferred has expired.
Registered Office By Order of the Board
68 King William Street Keith Henry
EC4N 7DZ Chairman
London
25 February 2014 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 68
Notes
1. Pursuant to Regulation 41 of the Uncertificated Securities 
Regulations 2001, the Company specifies that only those 
members registered on the Company’s register of 
members at 6:00pm on Monday 31 March 2014 shall be 
entitled to attend and vote at the Annual General Meeting.
2. If you are a member of the Company at the time set out 
in Note 1 above, you are entitled to appoint a proxy to 
exercise all or any of your rights to attend, speak and 
vote at the Annual General Meeting. You can only 
appoint a proxy using the procedures set out in these 
notes and the notes to the proxy form.
3. A proxy does not need to be a member of the Company 
but must attend the Annual General Meeting to 
represent you. Details of how to appoint the Chairman of 
the Annual General Meeting or another person as your 
proxy using the proxy form are set out in the notes to the 
proxy form. If you wish your proxy to speak on your behalf 
at the Annual General Meeting you will need to appoint 
your own choice of proxy (not the Chairman) and give 
your instructions directly to them.
4. You may appoint more than one proxy provided each 
proxy is appointed to exercise rights attached to different 
shares. You may not appoint more than one proxy to 
exercise rights attached to any one share. To appoint 
more than one proxy, please contact the Company’s 
registrars on the telephone numbers set out in Note 7.
5. The notes to the proxy form explain how to direct your 
proxy how to vote on each resolution or withhold their 
vote.
 To appoint a proxy using the proxy form, the form must 
be:
(a) completed and signed;
(b) sent or delivered to Capita Asset Services, PXS, 34 
Beckenham Road, Beckenham, Kent BR3 4TU; and
(c) received by Capita Asset Services no later than 
11:00am on Monday 31 March 2014.
 In the case of a member which is a company, the proxy 
form must be executed under its common seal or signed 
on its behalf by an officer of the company or an attorney 
for the company.
 Any power of attorney or any other authority under which 
the proxy form is signed (or a duly certified copy of such 
power or authority) must be included with the proxy form.
 CREST members who wish to appoint a proxy or proxies 
through the CREST electronic proxy appointment service 
may do so for the Annual General Meeting to be held at 
11:00am on Wednesday 2 April 2014 and any 
adjournment(s) thereof by using the procedures 
described in the CREST Manual. CREST personal 
members or other CREST sponsored members, and those 
CREST members who have appointed a voting service 
provider should refer to their CREST sponsors or voting 
service provider(s), who will be able to take the 
appropriate action on their behalf.
 In order for a proxy appointment or instruction made by 
means of CREST to be valid, the appropriate CREST 
message (a ‘CREST Proxy Instruction’) must be properly 
authenticated in accordance with Euroclear UK & Ireland 
Limited’s specifications and must contain the information 
required for such instructions, as described in the CREST 
Manual. The message must be transmitted so as to be 
received by the Company’s agent, Capita Asset Services 
(CREST Participant ID: RA10), no later than 11:00am on 
Monday 31 March 2014. For this purpose, the time of 
receipt will be taken to be the time (as determined by the 
time stamp applied to the message by the CREST 
Application Host) from which the Company’s agent is 
able to retrieve the message by enquiry to CREST in the 
manner prescribed by CREST.
 CREST members and, where applicable, their CREST 
sponsor or voting service provider should note that 
Euroclear UK & Ireland Limited does not make available 
special procedures in CREST for any particular messages. 
Normal system timings and limitations will therefore apply 
in relation to the input of CREST Proxy Instructions. It is the 
responsibility of the CREST member concerned to take 
(or, if the CREST member is a CREST personal member or 
sponsored member or has appointed a voting service 
provider, to procure that his CREST sponsor or voting 
service provider takes) such action as shall be necessary 
to ensure that a message is transmitted by means of the 
CREST system by any particular time. In this connection, 
CREST members and, where applicable, their CREST 
sponsor or voting service provider are referred in 
particular to those sections of the CREST Manual 
concerning practical limitations of the CREST system  
and timings.
 The Company may treat as invalid a CREST Proxy 
Instruction in the circumstances set out in Regulation 
35(5)(a) of the Uncertificated Securities Regulations 2001.
6. In the case of joint holders, where more than one of the 
joint holders purports to appoint a proxy, only the 
appointment submitted by the most senior holder will be 
accepted. Seniority is determined by the order in which 
the names of the joint holders appear in the Company’s 
register of members in respect of the joint holding (the 
first-named being the most senior).
7. Except as provided above, members who have general 
queries about the Annual General Meeting should call 
the Capita Asset Services’ shareholder helpline on 
+44(0)871 664 0300 or, if calling from outside the UK,  
on +44(0)20 8639 3399. Lines are open from 8:30am to 
5:30pm, Monday to Friday. Calls to Capita Asset Services’ 
0871 664 0300 number are charged at 10 pence  
per minute (including VAT) plus any of your service 
provider’s network extras. Calls to Capita Asset Services’ 
+44(0)20 8639 3399 number from outside the UK are 
charged at applicable international rates. Different 
charges may apply to calls made from mobile 
telephones and calls may be recorded and monitored 
randomly for security and training purposes. No other 
methods of communication will be accepted.
Notice of Annual General Meeting continued Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 69
Company overview Business review Governance Financial statements
8. You may not use any electronic address provided either:
(a) in this Notice of Annual General Meeting; or
(b) any related documents (including the proxy form),
 to communicate with the Company for any purposes 
other than those expressly stated.
9. As at 5:00pm on the day immediately prior to the date of 
posting of this Notice of Annual General Meeting, the 
Company’s issued share capital comprised 430,559,210 
ordinary shares of 1 pence each and 38,912,736 deferred 
shares of 19 pence each. Each ordinary share carries the 
right to one vote at a general meeting of the Company 
and, therefore, the total number of voting rights in the 
Company as at 5:00pm on the day immediately prior to 
the date of posting of this Notice of Annual General 
Meeting is 430,559,210. The deferred shares do not carry 
the right to vote at a general meeting of the Company.
EXPLANATORY MEMORANDUM
1. Item of business 2 – Sergio Morandi was last reappointed 
by the members at the Annual General Meeting of the 
Company held on 29 June 2011. In accordance with 
article 23.2, he will therefore retire from office at the 
Annual General Meeting and offer himself for 
reappointment.
2. Item of business 4 – this resolution, in accordance with 
section 551 of the 2006 Act, permits the Directors to allot 
securities pursuant to a general authority (not restricted 
to allotments for cash on a non pre-emptive basis which 
are regulated by section 570 of the 2006 Act). The 
proposed authority represents an authority to allot 
Relevant Securities with an aggregate nominal value of 
£1,291,677 being approximately 30% of the issued 
ordinary share capital of the Company as at the date of 
the Annual General Meeting. This authority will expire at 
the next Annual General Meeting of the Company.
3. Item of business 5 – this resolution authorises the Directors 
to allot the securities it is authorised to allot pursuant to 
resolution 5 for cash on a non pre-emptive basis. This 
authority represents approximately 15% of the issued 
ordinary share capital of the Company as at the date of 
the Annual General Meeting. This authority will expire at 
the next Annual General Meeting of the Company.
4. The Directors cannot issue securities representing more 
than 30% of issued ordinary share capital of the 
Company pursuant to resolutions 4 and 5. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013 70
Corporate directory
Annual Report and Financial Statements
For the 12 months ended 31 December 2013
Directors
Mr. Keith Henry Chairman, appointed 16 January 2012
Dr. Bill Higgs Chief Executive, appointed 19 March 2012
Mr. Sergio Morandi Chief Operating Officer, appointed 17 September 2007
Mr. Chris Kelsall Finance Director, appointed 1 July 2009
Mr. Matthew Clarke Non-Executive Director, resigned 8 January 2014
Dr. Peter Jackson Non-Executive Director, appointed 1 January 2013
Mr. Enrico (Chicco) Testa Non-Executive Director, appointed 10 October 2012
Mr. Jacob Ulrich Non-Executive Director, resigned 8 January 2014
Country of Incorporation of Parent Company  
and Domicile
Great Britain
Legal Form
Public Limited Company
Registered Office
68 King William Street
LONDON EC4N 7DZ
Company Secretary
Emcee Nominees Limited
44 Southampton Buildings
LONDON WC2A 1AP
Nominated Adviser
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
LONDON EC2Y 9LY
Joint Brokers
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
LONDON EC2Y 9LY
RBC Capital Markets
Thames Court
One Queenhithe (Upper Thames Street)
LONDON EC4V 3DQ
Auditors
BDO LLP
55 Baker Street
LONDON W1U 7EU
PR Agency
FTI Consulting
Holborn Gate
26 Southampton Buildings
LONDON WC2A 1PB
Registrar
Capita Asset Services
The Registry
34 Beckenham Road
BECKENHAM BR3 4TU
Legal Advisers
Memery Crystal
44 Southampton Buildings
LONDON WC2A 1AP
Studio Legale Ughi & Nunziante
Via Venti Settembre, 1
ROME 00187 Front cover: image courtesy of Mr Joseph Farrugia.
FSC Logo  Mediterranean Oil & Gas Plc / Annual Report & Accounts 2013
Head Office (Registered Office)
68 King William Street
London EC4N 7DZ UK
Contact
Tel: +44 (0)20 7959 2322
Email: info@medoilgas.com
www.medoilgas.com
Operations Office
Via Cornelia 498
Rome 00166 IT