3Legs Resources plc 
Annual Report & Accounts 2012
Uncovering 
hidden value   3Legs is listed on the  
Alternative Investment  
Market of the London  
Stock Exchange.
Overview
01  Highlights 2012
02  Business and Asset Overview
04  Our Markets
Business Review
06  Chairman’s Statement
08  Business Model
10  CEO’s Strategic Review
14  Financial Review
16  Risk Management
Governance
18  Board of Directors
20 Senior Management
21 Health, Safety, Environmental  
 and Social Responsibility
22  Directors’ Report
25  Corporate Governance 
 Statement
28  Directors’ Remuneration Report
30  Statement of Directors’ 
 Responsibilities
31  Independent Auditor’s 
 Report
Financial Statements
32  Consolidated Income Statement
32  Consolidated Statement 
 of Comprehensive Income
33  Consolidated Balance Sheet
34  Consolidated Cash Flow 
 Statement
35  Consolidated Statement of  
 Changes in Equity
36  Notes to the Consolidated 
 Financial Statements
WWW.3LEGSRESOURCES.COM 
 
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WWW.3LEGSRESOURCES.COM
Page 02 Page 04 Page 10
Page 14
Page 08
Business 
Model
Page 06
Chairman’s 
Statement
Business 
and Asset 
Overview
Our Markets CEO’s Strategic Review
Financial  
Review 01
Business Review
3Legs Resources
Annual Report & Accounts 2012
Highlights 
2012
Operational highlights















 Financial highlights







Outlook














£39.5m







3Legs Resources plc (the 
“Company” and, together with 
its subsidiaries, the “Group”), 
an independent oil and gas 
group focused on the 
exploration and development 
of unconventional oil and gas, 
is pleased to announce its 
ﬁnancial results for the year 
ended 31 December 201 2. 02
Business Review
3Legs Resources
Annual Report & Accounts 2012
Business 
and Asset 
Overview

ConocoPhillips
We have been working with 
ConocoPhillips in the exploration 
and appraisal of our Baltic Basin 
concessions since 2009. We 
have collaborated closely with 
ConocoPhillips throughout this period, 
both in eld operations, where we 
acted as operator until September 
2012, and in the planning and 
analysis phases.
ConocoPhillips brings outstanding 
shale expertise, acquired through its 
positions in North American shale 
plays including the Bakken, Barnett 
and Eagle Ford. We view their decision 
to exercise their option to take a 70% 
interest in our three western Baltic 
Basin concessions, completed in 
September 2012, as an excellent 
vote of con dence in the commercial 
potential of these concessions.
1 Focus on unconventional oil and gas








2 Continue to progress  
our Baltic Basin assets









 
3 Seek to monetise other licences 








Leveraging its highly experienced US-based technical 
team, Legs seeks to capture the bene ts of North 
American innovations in unconventional oil and gas 
exploration and production and deploy these in the 
Polish market, which o ers a stable macro-economic 
environment and excellent infrastructure.


70%
ConocoPhillips interest in our three western 
Baltic Basin concessions, following exercise 
of its option in September 2013 03
Business Review
3Legs Resources
Annual Report & Accounts 2012








 Two concessions, 630,000 acres gross and net
 Concessions currently undergoing renewal process















 Three concessions, 578,000 acres gross and net
 50 sq km of 3D seismic acquired to date
 One vertical well drilled to date
/01


 Two concessions, 440,000 acres gross and net
 50 sq km of 3D and 70 km of 2D seismic acquired  
to date
/02


 Three concessions, 506,000 acres gross, 152,000  
acres net
 Operated by 3Legs until September 2012, now operated 
by ConocoPhillips
 175 sq km of 3D seismic acquired to date
 Two vertical and two horizontal wells drilled to date
 Further testing of horizontal wells carried out in 2012
 Two or more vertical wells planned for 2013
 Decision on drilling of one or more horizontal wells in 2014, 
as rst stage of a potential pilot development programme 
/01
/03
Lane Energy
Poland
Lane Energy
Exploration

/01
Parkyn Energy
(Germany)


/03
Lane Resources 
Poland


/02
 04
Business Review
3Legs Resources
Annual Report & Accounts 2012
Our 
Markets


What is unconventional  
oil and gas?



















The case for shale oil and gas 



































The case for shale gas in Europe
The supply gap 








 
Natural gas price in 
US, Europe & Japan
15
12
9
6
3
0
US$ per million btu
94 96 95 98 97 00 99 02 01 04 03 06 05 07 08 09 10 11
JAPAN LNG cif
UK NBP
Average German 
Import Price cif
US Henry Hub 05
Business Review
3Legs Resources
Annual Report & Accounts 2012
Gas import  
pipelines & LNG
Existing LNG
Planned LNG
Major feilds
Shale exploration regions
LNG
Pipelines from Russia, Norway , North 
Africa, LNG from Africa and Middle east















Environmental beneﬁts 














Economic beneﬁts – the US experience















1
 IEA, World Energy Outlook 2012
2
 EIA
3
  The Economic and Employment Contributions of Unconventional Gas Development 
in State Economies, prepared for America’s Natural Gas Alliance, June 2012 06
Business Review
3Legs Resources
Annual Report & Accounts 2012
Chairman’s 
Statement
In 2012 3Legs has continued to 
build on its pioneering achievements 
in Poland, where it remains one of the 
leaders in the exploration and appraisal 
of the country’ s shale gas potential. 
Introduction
In 2012 3Legs continued to build on its 
pioneering achievements in Poland, where it 
remains one of the leaders in the exploration 
and appraisal of the country’s shale gas 
potential. We successfully implemented our 
work programme for the year, and continued 
to play an active role in the debate on the 
future development of the shale gas sector 
in Poland. We closed the year with a strong 
cash position, ready to implement our 
exciting 2013 work programme which 
we have agreed with ConocoPhillips, 
as previously announced. 
Strategic review
Our Group strategy continues to focus 
primarily on the further de-risking and 
appraisal of our core Baltic Basin asset. 
In this, we were extremely encouraged by 
the decision by ConocoPhillips to exercise 
its option to acquire a 70% interest in our 
three western Baltic Basin licences, rst 
announced in March 2012 and completed 
in September 2012. We believe the decision 
represents an excellent vote of con dence 
by ConocoPhillips in the future potential of 
these concessions; and we continue to work 
actively in progressing our understanding of 
the basin geology, both with ConocoPhillips 
and through cooperation with other 
operators in the basin.
We have continued to high-grade our assets 
as part of a continual process of portfolio 
appraisal. In the Polish Baltic Basin this has 
resulted in our identifying a high-graded 
area, which we consider not only presents 
the lowest-risk part of our acreage for future 
exploration and appraisal activities, but also 
o ers a higher probability of success than 
was attributed to our Baltic Basin acreage at 
the time of our initial public o ering in June 
201 1. It is this area which represents the 
focus of our 2013 exploration programme. 
The last quarter of the year was marked by 
the issue, in October 2012, of a requisition 
notice by a minority shareholder, calling for 
the convening of an Extraordinary General 
Meeting to propose changes to the Board 
composition and Group strategy. 
The requisitioning shareholder was 
supported by a small number of other 
shareholders, including Damille Investments 
II Limited (“Damille”). However, we 
announced shortly afterwards, following 
discussions with the requisitioning 
shareholder, that the notice calling for the 
convening of an EGM had been withdrawn. 
The Company was able to demonstrate the 
considerable progress that had already 
been made on its Baltic Basin concessions, 
and also rea rmed its existing strategy in 
northern Poland and elsewhere. At the 
same time, the Chief Executive O cer of the 
Group stepped down and Kamlesh Parmar 
was appointed as the new Chief Executive 
O cer. The Company subsequently 
convened an EGM in December, where it 
sought and obtained the discretionary power 
to buy back its shares.
Since the year-end, there have been some 
large movements in the Company’s shares, 
including a disposal of a signi cant 
shareholding by Caithness Limited, as trustee 
for Robert Je cock (at that time one of our 


Vote of 
conﬁdence:




Tim Eggar
Chairman 07
Business Review
3Legs Resources
Annual Report & Accounts 2012
Progress since IPO 
Focus has been on de-
risking and high-grading 
asset portfolio on best 
available terms
 
In Baltic Basin: 

 and tested, Lebien LE-  
 2H and Warblino LE-1H

 further 7 wells in the basin


2012 yielded valuable 
additional data
 
 programme ongoing
 
 
It has enabled 3Legs to 
attribute a higher probability 
of success to the high-graded 
part of its Baltic Basin acreage 
than at the time of its IPO
Directors), and the acquisition of further 
shares by Damille. On 27 February 2013, the 
Group received a second requisition notice, 
this time from Damille, now holding 14.2% of 
the Company’s issued share capital, calling 
for the convening of an EGM. The requisition 
notice proposes a number of ordinary 
resolutions which include: the removal of the 
majority of the Directors (being all of the 
Directors except for Kamlesh Parmar and 
Richard Hills); the appointment of certain new 
Directors being Brett Lance Miller and Rhys 
Cathan Davies (who the Board understands 
are both representatives of Damille); and the 
proposal that the Company adopt a new 
investment strategy as follows “The 
investment objective of the Company is to 
manage the realisation of the Company’s 
existing asset portfolio and to maximise the 
return of invested capital to shareholders 
during the period ending on 30 June 2015. 
During this period the Company shall not 
make any new investments other than to 
support its existing assets.”
The Company intends to post with its 
annual report and accounts a notice to all 
shareholders convening a general meeting, 
together with a shareholder circular in which 
the Board will unanimously advise 
shareholders to reject the proposed 
resolutions.
In recent weeks, we have been in 
discussions with a number of our major 
shareholders with a view to determining an 
appropriate strategy for the Group which 
re ects our current licence portfolio and 
available cash resources. Following those 
discussions, the Board has determined that 
we should limit the geographical focus of our 
activities to Poland, which is already the 
Group’s core area of activity in any case.
Board Changes
A number of Board changes were implemented 
before the end of the year and subsequently . 
Peter Clutterbuck decided to step down as 
Chief Executive O cer in October 2012, in 
order to pursue other business interests.  
Peter joined the Company before its initial 
public o ering on AIM in June 201 1. He helped 
steer the Company through its very successful 
IPO and through the period following the  
IPO, as 3Legs settled into its new life as a 
public company. We are grateful to Peter for 
the skill and experience which he brought  
to bear during a time of signi cant change  
for the Group. 
In Peter’s place, the Board appointed 
Kamlesh Parmar as Chief Executive O cer. 
Kamlesh has been with the 3Legs Group 
since its establishment in 2007 and has 
played an instrumental role in the Group’s 
development since inception. In his previous 
position with the Group, as Poland Country 
Manager and Group Commercial Director, 
he was responsible for overseeing the 
Group’s pioneering activities in Poland, 
as well as managing the very successful 
relationship with ConocoPhillips. Kamlesh 
brings huge energy and excellent judgment 
to his new position and I am sure that he will 
continue to have a very positive impact on 
the business in his new leadership role. 
We also announced the appointment 
of Richard Hills to the Board as a Non-
Executive Director, in December 2012. 
Richard brings over 30 years of experience 
in investment management and nancial 
services. He is also a Non-Executive Director 
of JP Morgan Income & Capital Investment 
Trust plc, Phaunos Timber Ltd., Cinven Ltd. 
and the Aztec Group Ltd. In addition to 
joining the Board, Richard joined the Group’s 
Audit Committee and Remuneration 
Committee. 
Robert Je cock and Clive Needham 
announced their resignations from the 
Board on 22 February 2013, although 
Clive Needham continues to sit on the 
board of a number of the Group’s subsidiary 
companies. Barry Rourke will be retiring by 
rotation at our forthcoming Annual General 
Meeting and has decided not to present 
himself for re-election. Robert was the 
original moving force behind the founding of 
3Legs, and he and Barry have both been 
Directors of the Company since 2007 .  The 
Board would like to record its appreciation 
of the very valuable contributions to the 
Company’s development made by both 
Robert and Barry since inception. 
Conclusion
We thank our shareholders for their 
continued support throughout the year and 
we look forward to sharing with them the 
results of our forthcoming exploration 
and appraisal programme. 
Tim Eggar
Chairman
22 March 2013 08
Business Review
3Legs Resources
Annual Report & Accounts 2012
                           Sustainability
                         T echnical leadership
                  Financial viability
                Government and
05
01
04
02
03
         Industry partnerships
       community relationships
Business 
Model
Our business model
Our business model is built around ve core 
elements: technical leadership; industry 
partnerships; government and community 
relationships; nancial viability; and 
sustainability. By meeting our goals in these 
 ve key areas, we aim to deliver on our 
business strategy and create signi cant 
value for our shareholders.
Core strength
Our location and positioning is key to our 
success. As a ﬁrst mover in Poland, we 
have six exploration licences concessions 
covering approximately 1,084,000 acres 
(4,387 sq. km) gross in the onshore 
Baltic Basin region of northern Poland.  09
Business Review
3Legs Resources
Annual Report & Accounts 2012
01 Technical leadership
Deploying our US-based unconventional resources 
exploration team, we aim to apply innovative but proven 
North American exploration techniques to our asset portfolio, 
with a view to enabling value to be created from pay zones 
which up until now have been either overlooked or non-
commercial. Our technical team has experience of 
exploration and appraisal in numerous frontier 
unconventional resource plays and is strongly placed 
to apply its acquired skills in our Polish operations. 
02 Industry partnerships
We work with leading oil eld service companies from 
Poland and elsewhere, including Schlumberger, MND 
Drilling Services, MI Swaco, Geofysika Torun, NOV, Acoustic 
Geophysical Services and Geokrak. The oil eld services 
market in Poland is undergoing rapid change, as it adapts to 
the increased level of activity in the country, creating excellent 
opportunities for innovation and cost control. We expect to 
develop relationships with an increasing number of industry 
partners as we go forward. 
03 Government and community relationships
We enjoy excellent working relationships with a number of 
Polish government agencies, including the State Treasury, 
the Ministry of Environment, the Polish Geological Institute, 
the Mining Authority and the local regional authorities in the 
areas where we carry on activities. As a member of the Board 
of OPPPW, the Polish Exploration and Production Industry 
Organisation, we are currently engaged in an active dialogue 
with Polish government departments regarding the future 
development of the oil and gas sector in Poland. In 
conjunction with the local regional authorities, we maintain a 
dialogue with local communities in order to ensure that the 
impact of our operations is understood and any concerns are 
listened to. 
04 Financial viability
We manage our balance sheet in a conservative fashion, with 
no debt. We aim to ensure that our core Baltic Basin asset is 
funded through to the next key milestone and beyond, leaving 
su cient headroom to enable us to determine how best to 
maximise value for our shareholders in a timely fashion. 
05 Sustainability
3Legs Resources is committed to sustainability in 
the management of its operations. Principles which the 
Group adheres to in order to promote sustainability include: 
 Ensuring that future work programmes, including 
decommissioning and site restoration commitments, 
are su ciently funded and that safety and environmental 
concerns are not compromised by funding considerations
 Involving joint venture operators and partner companies 
that are international leaders in their eld, and employing 
experienced senior technical sta and consultants to 
assist in the evaluation of its assets
 Enforcing a strict health, safety and environmental policy 
which ensures as a priority that operations are carried on 
in a safe and environmentally sound manner
 Employing and training local sta where possible and 
engaging local communities in planning processes 
The Group aims at all times to act as a responsible operator 
in the eld and elsewhere. 
Our business explained 10
Business Review
3Legs Resources
Annual Report & Accounts 2012
CEO’s 
Strategic
Review
VISIT
WWW.3LEGSRESOURCES.COM
In the  
Baltic Basin
In the Baltic Basin, we have 
initiated a vertical well 
programme scheduled to run 
through 2013 and beyond
Decision in 2014 on the drilling 
of one or more horizontal wells 
as the first stage of a potential 
pilot development programme
Kamlesh Parmar
Chief Executive O cer
As in preceding years, our main focus in 2012 has 
continued to be on the further de-risking of our 
Baltic Basin concessions in northern Poland, 
building on our ground-breaking activity of the 
previous year when we successfully drilled, 
stimulated and tested the ﬁrst two horizontal 
shale gas wells in the country. 
During 2012, we further improved our 
understanding of our Lebien LE-2H and 
Warblino LE-1H horizontal wells, through 
the successful further testing of both wells. 
At the same time we initiated a vertical well 
programme scheduled to run through 2013 
and beyond, designed to enhance further 
our understanding of the basin and its 
productive potential with a view to a 
decision, in 2014, on the drilling of one or 
more horizontal wells as the rst stage of 
a potential pilot development programme. 
Baltic Basin concessions, northern Poland
On 14 September 2012, following exercise 
of its option to farm in to our western 
Baltic Basin concessions, ConocoPhillips 
acquired a 70% equity interest in these 
concessions, becoming operator at the 
same time. ConocoPhillips had already 
been actively involved in operations for 
some time, and the transfer of operatorship 
was completed smoothly.  11
Business Review
3Legs Resources
Annual Report & Accounts 2012
Since the transfer of operatorship, we 
continue to participate actively in all material 
technical and commercial decisions relating 
to the ongoing work programme on the 
concessions, through our participation in the 
Lane Energy Poland operating and technical 
committees and in relevant working groups. 
We see the option exercise by ConocoPhillips 
as a signi cant a rmation of the potential of 
our western concessions and we look 
forward to continuing our highly successful 
collaboration as we continue to focus on 
de-risking our concessions. 
In the case of our three eastern Baltic Basin 
concessions, which we consider to be more 
liquids-prone, ConocoPhillips did not 
exercise its farm-in option prior to its expiry 
on 30 September 2012, with the result that 
3Legs remains 100% owner and operator 
of those concessions. Group activity 
during 2012 has focused on our western 
concessions and will continue to do 
so throughout 2013, while we consider 
our options in relation to our 
eastern concessions. 
Exploration and appraisal activity during 
2012 has continued to focus on further 
re ning our basin model and high-grading 
our signi cant acreage position, so as to 
identify that part of our acreage which o ers 
the highest probability of success, based 
on the depth and thickness of the target 
horizons and their reservoir properties. 
We have had access to well data from a 
signi cant number of other operators in the 
basin through data trades, as is common 
practice in our industry. 
We continue to be encouraged that our 
original acreage selection is validated by 
our updated basin model, reinforcing our 
long-held view that our acreage is in the 
most prospective part of the Baltic Basin. 
Moreover, by de-risking our acreage through 
the data we have acquired, we are, in our 
view, able to attribute a higher probability of 
success to this high graded area than was 
possible at the time of our initial public 
o ering in June 201 1. 
Further testing of existing horizontal wells
After concluding initial testing of the Lebien 
LE-2H and Warblino LE-1H wells in late 201 1, 
these two wells were shut in for an extended 
period in order to monitor pressure build-up 
and to be able to evaluate how the wells 
would perform following the shut-in. 
We conducted further testing of the Warblino 
LE-1H well in August and September 2012, 
using a jet pump to provide arti cial lift to 
remove more of the uid that had been left 
on the formation from the original stimulation 
and test programme. To the best of our 
knowledge, this was the rst time that a jet 
pump assembly has been used in Poland 
for an operation of this kind. The principal 
objectives of the further testing were to 
gather additional data on reservoir 
performance and gas composition in 
the Cambrian section. 
After 20 days of testing, the Warblino LE-1H 
well achieved a ow rate of some ve times 
the rate achieved when the well was rst 
tested in 201 1, owing natural gas at a rate 
of 90 mscf/d, with the assistance of the jet 
pump, as against 18 mscf/d in 201 1 using a 
nitrogen lift. At the conclusion of the further 
testing, some 36% of the uid originally 
injected had been recovered from the 
formation. The well was then suspended 
and gauges inserted to monitor pressure 
build-up, while the results were evaluated. 
We have continued to analyse possible 
explanations for the poor performance of the 
Warblino LE-1H well when it was rst drilled 
and tested in 201 1 since, on the basis of the 
porosity and gas shows recorded while 
drilling, the well was expected to ow at a 
signi cantly higher rate. It seems likely that 
well performance was a ected by a 
mechanical issue arising from the cementing 
of the horizontal section, rather than by 
formation reservoir issues, and also that 
further drilling and testing of the Cambrian 
section will be needed in order fully to 
investigate this issue. However, the Cambrian 
section remains our secondary target, the 
primary target being the Ordovician. 
Following conclusion of the further testing on 
the Warblino LE-1H well, further testing was 
then conducted on the Ordovician interval 
in the Lebien LE-2H well, and was completed 
in December 2012. At the conclusion of the 
testing, we were very pleased to announce 
that the well had owed unassisted for a 
21-day natural ow test, owing natural gas 
at an average rate of 550 mscf/d through 3½ 
inch tubing. The well was continuing to ow 
naturally at a rate of 470 mscf/d when it was 
agreed to suspend the test, in order to 
commence a planned shut-in period and 
conduct a pressure build-up test. The well 
was also continuing to clean up throughout 
the test, and by the end of the test period 
approximately 29% of the uid used during 
the original well stimulation had been 
recovered, up from 15% at the beginning 
of the test period. 
The results from the Lebien LE-2H well 
represent a signi cant improvement on 
the results achieved when the well was rst 
tested in 201 1. On that occasion, the well 
 owed with the assistance of a nitrogen lift 
at a rate of 450-520 mscf/d, over an 8-day 
period before being shut in. Most importantly, 
the well has now demonstrated its ability to 
 ow for a 3-week period, without arti cial 
assistance. We view this as a very positive 
step-up in well productivity, and an 
encouraging starting point when considering 
possible means for achieving further 
improvements in well performance, for 
example through a di erent design of the 
lateral section or the well stimulation 
programme. The lateral section on the 
Lebien LE-2H well is no more than 1,000 
metres in length and involved a 13 stage 
hydraulic fracturing stimulation, whereas it is 
quite possible to envisage future horizontal 
wells with signi cantly longer lateral sections 
and more stages, as is common in the US. 
In December 2012, the Lebien LE-2H well 
was shut in at the end of the 21-day test for 
a planned shut-in period to record pressure 
build-up using surface and down hole 
pressure gauges. The pressure gauges have 
now been removed from the wellbore for 
analysis and a third phase of ow-testing 
on the well is planned to commence shortly, 
as described below. 
2012 drilling programme
The drilling of our fth well in the Baltic 
Basin, Strzeszewo LE-1, was completed in 
December 2012. This vertical test well was 
drilled to 3,060 metres true vertical depth 
into the Middle Cambrian interval. Some 220 
metres of whole core were recovered from 
the Lower Silurian, Ordovician and Cambrian 
intervals, and a full suite of logs was run. 
Preliminary log analysis indicates that the 
well encountered a thicker Ordovician 
section as compared with the Lebien LE-1 
and Warblino LE-1 vertical wells, and that the 
thickness of the Upper Cambrian interval is 
similar to that encountered at the Warblino 
LE-1 vertical well. A rst DFIT test was 
performed on the Cambrian section in the 
well in January 2013 and preparations are 
now being made for a well stimulation to 
be carried out on this Cambrian interval.  12
Business Review
3Legs Resources
Annual Report & Accounts 2012
3Legs’ western Baltic Basin concessions
K
W
 D
3Legs’ high-graded area

K


W

CEO’s 
Strategic
Review
Continued
The rst DFIT test on the Strzeszewo LE-1 
well was completed in the rst quarter of 
2013, and preparations are under way for a 
well stimulation and test to be conducted on 
the Cambrian section in this well, to begin in 
the near future. After completion of a testing 
phase, including a shut-in period, a further 
DFIT and/or well stimulation and test will be 
considered for our primary target, the 
Ordovician section. 
Third phase of testing of Lebien LE-2H 
horizontal well
Following a technical review of the 2012 
testing of the Lebien LE-2H well, we expect 
to conduct a further phase of testing of this 
well, using a narrower velocity string 
assembly. Pressure data retrieved following 
the last test also indicated that the down-
hole pressure gauges may have become 
dislodged, creating an additional choking 
e ect. As a result, we are con dent that the 
next phase of testing, due to commence in 
the second quarter, will yield further 
improved ow data. 
Seismic acquisition
In addition to our drilling programme, a 3D 
seismic survey is planned on our Karwia 
concession, in ful lment of our licence 
obligations. This survey is expected to 
measure approximately 32 sq km and is due 
to commence in the second quarter. We are 
also discussing with ConocoPhillips the 
acquisition of 70 km of 2D seismic data on 
our Lebork concession. This will assist in the 
placement of future horizontal wells in the 
area, following conclusion of our vertical 
well programme. 
Southern Poland; other regions 
In southern Poland we acquired and 
processed approximately 50 sq km of 3D 
data on the Bytom-Gliwice and Glinica-
Psary concessions and approximately 70 km 
of 2D data on the Dabie-Laski concession, 
concluding this process in the rst quarter 
of 2012. Following interpretation of the new 
data, which showed the eastern part of the 
concession area to be more structurally 
complex than previously understood, we 
concluded that there was insu cient 
justi cation for drilling a vertical test well on 
the Dabie-Laski concession. We have now 
surrendered this concession. 
Seismic acquisition
Phase I of the PolandSPAN geological and 
geophysical research project, involving the 
acquisition of 1,090 km of new 2D seismic 
data extending across the Baltic Basin 
region, has now been completed. 
Processing of the new data is due to take 
place in the second quarter of 2013 and 
will further inform our understanding of 
the basin geology in our acreage. 
2013 exploration programme
Drilling and testing of vertical wells
The programme we have announced for 
the remainder of 2013, which we have agreed 
with ConocoPhillips, involves the continuation 
of the testing programme on the Strzeszewo 
LE-1 well, comprising DFIT and/or well 
stimulation and ow testing. We have 
also announced plans to drill two or more 
additional vertical wells on our western Baltic 
Basin concessions, within the high-graded 
area which we have already identi ed. As 
with previous vertical wells, these two wells 
will be extensively cored and logged, to be 
followed by a programme of DFIT and/or well 
stimulation and ow testing, which will run 
on into 2014. The programme is designed 
to enable us to evaluate further the ow-rate 
potential of our high-graded area, with a view 
to a decision, in 2014, on the drilling of one 
or more horizontal wells as the rst stage of 
a potential pilot development programme. 
Being vertical wells, each will o er the option 
to test multiple pay zones. The wells will also 
be designed to allow for lateral sections to 
be drilled and tested at a later date.
Planned activity to end Q2 2014  
Western Baltic Basin concessions
2013 2014
Activity Q1 Q2 Q3 Q4 Q1 Q2
Strzeszewo LE-1
Drilling
DFIT, testing
First well
Drilling
DFIT, testing
Second well
Drilling
DFIT, testing
Optional well
Drilling
  
Drilling
   
DFIT/frac/testing 13
Business Review
3Legs Resources
Annual Report & Accounts 2012
We continue to consider our options 
for our remaining Bytom-Gliwice and 
Glinica-Psary concessions, including 
monetising these concessions if possible. 
We have the option to drill one vertical well 
on each of these two concessions by 
August 2013, or to relinquish the 
concessions. However, we do not currently 
plan to incur any further expenditure on 
these concessions, and we have therefore 
decided to record an impairment against 
them on our balance sheet. 
Our southern German concessions fell due 
for renewal in the second quarter of 2012 
and we have submitted applications for 
extensions. Given that our geographical 
focus is now con ned to Poland, we will 
investigate options for monetising these 
concessions if possible. 
We have had licence applications in process 
in France since 2010 and in late 2010 we had 
received indications that these applications 
would be granted in whole or in part. In 
December 2012 and January 2013, we 
received notices of rejection of these two 
applications, citing the legal moratorium on 
hydraulic fracturing which was recently 
introduced in France. We have led notices 
of appeal against both decisions, although 
we are currently considering whether it is 
appropriate to continue this process. 
Throughout the year we also reviewed a 
number of potential new opportunities for 
possible inclusion in our portfolio. However, 
none of these were pursued as they were not 
seen to meet our criteria. 
Evolution of the Polish oil and gas sector
We continue to participate actively 
in discussions regarding the future 
development of the oil and gas sector in 
Poland, particularly through our membership 
of OPPPW, the Polish Exploration and 
Production Industry Organisation. I sit as one 
of the four members of the Board of OPPPW. 
The Polish government has for some time 
been considering possible modi cations to 
the scal and licensing regime relating to the 
oil and gas sector in Poland, resulting in the 
publication of two draft laws in February 
2013. The draft legislation contemplates a 
number of changes to the existing regime, 
including: the creation of a new state-owned 
entity which would have the right to 
participate in exploration and production 
activities by private sector companies; 
increases in the tax rates applicable to 
oil and gas production; and modi cations 
to the procedures for granting and 
transferring licences.
3Legs, together with other members of 
OPPPW, is actively engaged in dialogue with 
the government in order to ensure that the 
industry’s voice is heard, and that any new 
 scal and regulatory regime that emerges 
does not act as an unnecessary deterrent 
to the development of a successful shale 
hydrocarbons sector in Poland. 
Personnel; planned organisational 
changes
During the year we announced the hiring of 
two new technical personnel, John Blair as 
Exploration Manager and Christie Schultz as 
Engineering Manager. John Blair was most 
recently employed by Knowledge Reservoir 
LLC, a technical consultancy based in 
Denver, where he was responsible for both 
the rm’s unconventional resource practice 
and its acquisition and divestiture practice 
worldwide. While at Knowledge Reservoir 
LLC, John led multi-disciplinary teams that 
assessed more than 100 unconventional 
resource plays around the world. 
Christie Schultz is an unconventional 
reservoir and completions specialist, and 
was most recently employed by Anadarko 
as a lead reservoir engineer and a production 
engineer, where she worked on shale plays 
including the Marcellus and Haynesville. 
John and Christie will provide technical 
leadership as we continue to improve our 
understanding of the Baltic Basin geology. 
Following the adoption of a more narrowly-
de ned geographic focus for the Group’s 
activities, as described in the Chairman’s 
Statement, we have reviewed our existing 
overhead expenditure to see what 
reductions may be made. During the next 
quarter we expect to implement a number 
of changes in the way the Group is 
organised and sta ed which, with e ect from 
1 July 2013, will result in a reduction in our 
cash administrative expenses, before foreign 
exchange movements, of approximately 
50% as compared with 2012.
Conclusion 
In 2012 we were able to build on our already 
signi cant progress in Poland’s Baltic Basin, 
carrying out further testing on the rst two 
horizontal shale gas wells to be drilled 
anywhere in Poland, and achieving a 
materially improved performance from 
our primary target, namely the Ordovician 
section, in our Lebien LE-2H well. While 
there remains more to be done in the 
appraisal of the Baltic Basin shale play, 
we believe we have taken a signi cant step 
forward in the direction of commerciality. 
We have also shown a continued readiness 
to trial innovative techniques in Poland, and 
to introduce best-in-class practices to a 
new market. 
Our primary focus will continue to be 
on our western Baltic Basin concessions, 
where 3Legs Resources together with 
ConocoPhillips will continue to work 
throughout 2013 on further delineating and 
understanding the geology of the target 
Ordovician section and demonstrating 
its improved ow rate potential. Following 
our planned programme of DFIT and/or 
single-stage well stimulation and testing, 
we expect to have su cient data on the likely 
potential of our high-graded area to enable 
us to reach a decision, in 2014, on the drilling 
of one or more horizontal wells as the rst 
stage of a potential pilot development 
programme. 
 
Across the rest of our portfolio, we will 
continue to high-grade our assets with a 
view to deciding which licence interests to 
maintain and pursue and/or monetise and 
which to relinquish. With £39.5 million of 
cash resources at year end, we will continue 
to manage our cash reserves prudently so as 
to ensure that su cient funding is available 
for the further de-risking of our core Baltic 
Basin asset. 
We look forward to an exciting year ahead. 
Kamlesh Parmar
Chief Executive O cer
22 March 2013 14
Business Review
3Legs Resources
Annual Report & Accounts 2012
Financial 
Review
3Legs continues to enjoy a strong 
balance sheet, ensuring that it is 
excellently positioned to meet its 
ongoing commitments in Poland’ s 
Baltic Basin.
Financial highlights
 Cash balances of £39.5 million at year 
end 2012, against £50.9 million at year 
end 201 1, and no debt; fully funded for 
current exploration and appraisal 
programme on the Group’s Baltic 
Basin concessions
 Investment in non-current assets of £17 .7 
million (201 1: £14.9 million), re ecting the 
continuing work programme on the 
Group’s Baltic Basin concessions
 Net loss for the year of £6.0 million (201 1: 
£2.3 million), re ecting lower other income 
following the end of the ConocoPhillips 
carry under the Joint Evaluation 
Agreement, the impairment of the 
Group’s southern Poland concessions 
and the net e ects of exchange 
rate movements


£39.5m


Alexander Fraser
Chief Financial O cer 15
Business Review
3Legs Resources
Annual Report & Accounts 2012
Balance sheet
3Legs continues to enjoy a strong balance 
sheet, ensuring that it is excellently 
positioned to meet its ongoing commitments 
in Poland’s Baltic Basin. 
Investment in the Group’s oil and gas assets 
at year end stood at £17 .7 million (201 1: 
£14.9 million). Following the exercise by 
ConocoPhillips of its option to acquire a 70% 
interest in the three western Baltic Basin 
concessions and the resulting transfer of 
operatorship, completed in September 2012, 
the Group has elected to account for its 
interest in these concessions using the 
equity accounting method, in accordance 
with IAS 31 Interest in Joint Ventures, 
as opposed to applying proportionate 
consolidation which it had done up until 
completion of the option exercise. 
The additional investment in 2012 represents 
primarily the Group’s share of costs incurred 
in connection with exploration and appraisal 
activities on the Group’s western Baltic Basin 
concessions, as described in the CEO’s 
Srategic Review. This additional investment 
has been partially o set by the impairment  
of the Group’s southern Poland licences, to 
the value of £2. 1 million (201 1: £nil), 
discussed below. 
Cash and cash equivalents at year end were 
£39.5 million (201 1: £50.9 million). Foreign 
exchange rate movements during the year 
reduced the sterling equivalent of cash and 
cash equivalents at year end by £1. 1 million 
(201 1: £0.5 million). 
Current liabilities at year end stood at £1.6 
million against £7 .0 million at year end 201 1, 
re ecting the lower level of activity around 
the year end in 2012 as compared with 201 1. 
The Group has no debt, having redeemed 
a £1.2 million convertible loan facility in 
June 2012. 
Income statement
The Group recorded a net loss after tax of 
£6.0 million (201 1: £2.3 million). This loss is 
attributable principally to: a reduction in other 
income in 2012, following the conclusion 
of the carry arrangements agreed with 
ConocoPhillips under the Joint Evaluation 
Agreement; the impairment of the Group’s 
southern Poland concessions as a result of 
its reduced activity on those licences; and 
net exchange losses on the translation of 
foreign currency cash balances. 
Other income of £1. 1 million (201 1: £2.7 
million) arises from the Group’s contractual 
arrangements with ConocoPhillips under 
the Joint Evaluation Agreement and re ects 
principally the release of the call option 
premium of £0.3 million and the receipt of a 
 nal milestone payment of £0.3 million (201 1: 
£0.6 million). Both of these receipts became 
due as a result of the exercise by 
ConocoPhillips, completed in September 
2012, of its option to acquire a 70% interest 
in the Group’s three western Baltic Basin 
concessions pursuant to the Joint 
Evaluation Agreement. 
ConocoPhillips largely completed its carry 
commitments under the Joint Evaluation 
Agreement in 201 1, with the result that in 
2012 it made substantially no further 
payments in respect of seismic and drilling 
costs incurred by the Group (201 1: 
£2. 1 million). 
The Group has no plans to carry out any 
further activity on its two southern Poland 
concessions and accordingly has made an 
impairment for the full carrying cost of these 
concessions, to the value of £2. 1 million 
(201 1: £nil). 
Aggregate administrative expenses of £5.2 
million (201 1: £5.3 million) were slightly lower 
than in 201 1. In 2012, administrative 
expenses were a ected by higher foreign 
exchange losses of £1.6 million (201 1: £1.3 
million), re ecting the impact of foreign 
exchange movements on certain of the 
Group’s foreign currency cash balances and 
intra-Group balances over the year, as well 
as by share-based payments of £0.3 million 
(201 1: £0.2 million), re ecting options 
outstanding at year end. Administrative costs 
in 201 1 were increased by costs incurred in 
connection with the Company‘s initial public 
o ering on AIM, as a result of which £1. 1 
million was charged to the income statement 
in 201 1. 
Before foreign exchange losses and 
share-based payments, administrative 
expenses in 2012 were £3.4 million (201 1: 
£3.8 million). Aggregate sta costs including 
termination payments and share-based 
payments represented £2.0 million (201 1: 
£1. 1 million), as the Group continued to 
strengthen its management and technical 
teams. Sta costs included £0.3 million 
(201 1: £0.2 million) which were capitalised to 
intangible exploration and evaluation assets. 
A proportion of the personnel overhead was 
recoverable under the Joint Evaluation 
Agreement in 2012, equal to £0.3 million 
(201 1: £0.3 million), which were chargeable 
70% to ConocoPhillips and 30% to the 
Group. 
Outlook
The Group looks forward to a continuing and 
successful cooperation with ConocoPhillips 
in northern Poland. The Group’s strong 
balance sheet means that it is well 
positioned to fund its current Baltic Basin 
exploration programme throughout 2013 
and into 2014, when it expects to reach 
a decision on the drilling of one or more 
horizontal wells as the rst stage of a 
potential pilot development programme. The 
Group intends to manage its cash resources 
in a conservative manner so as to ensure 
that it has su cient funding to meet its 
near-term objectives in the Baltic Basin.
Going concern
The Directors have reviewed the Group’s 
budgets and forecast cash ows through 
to June 2014. Taking into consideration the 
risks outlined in this nancial review, the 
Directors are satis ed that the Group has 
adequate resources to continue in business 
for the foreseeable future. It is therefore 
appropriate to adopt the going concern 
basis in the preparation of its 
 nancial statements.
Alexander Fraser
Chief Financial O cer 
22 March 2013 16
Business Review
3Legs Resources
Annual Report & Accounts 2012
Risk 
Management
Risk Detail Likelihood Impact Mitigation
Appraisal risk There is still no certainty that the Group will be 
able to recover any hydrocarbons, on its Baltic 
Basin concessions or elsewhere, at a 
commercially feasible cost. 
High High The Group accepts that the decision to 
focus its activities exclusively on its Baltic 
Basin concessions makes it impossible to 
mitigate this risk by pursuing opportunities 
in other basins.
Concentration risk The decision to eliminate diversi cation in its  
portfolio renders the Group highly exposed to the 
success or otherwise of its principal asset.
High High The Group accepts that currently a 
majority of its shareholders prefer it to 
concentrate its exposure on a single 
opportunity, namely its Baltic Basin 
concessions. 
ConocoPhillips ConocoPhillips’ controlling position in the Group’s 
principal asset in northern Poland exposes the 
Group to ConocoPhillips’ global strategy for the 
allocation of resources to exploration. 
Medium High The Group has a track record of 
working closely and successfully with 
ConocoPhillips in the Baltic Basin. 
Risk of restrictions 
on hydraulic 
fracturing or other 
environmental 
controls
Although the technique has been used safely for 
many years, hydraulic fracturing has recently come 
under intense scrutiny. If increased environmental 
controls were imposed in countries where the 
Group carries on business, this could restrict its 
ability to evaluate its licences. 
High High The Group aims to mitigate this risk 
through its choice of countries where it 
seeks licences and by engaging in an 
active communications strategy to present 
the positive case for the use of modern 
exploration techniques. 
Availability of 
oil eld services 
and supplies
The availability of oil eld services including 
drilling, completion and ancillary services, and of 
oil eld supplies, is more limited than in North 
America. These bottlenecks may limit the Group’s 
ability to carry on oil eld operations within its 
chosen timeframe. 
Medium High The Group expects that the availability of 
oil eld services and supplies will improve 
over time, and in the meantime will seek to 
mitigate any supply bottlenecks by 
leveraging partner relationships and by 
careful operations planning. 
Quality of oil eld 
services
The limited availability of oil eld services in 
Europe may result in greater variations in the 
quality of services provided. The Group is 
dependent on the use of external contractors and 
consultants. 
Medium Medium The Group will ensure that it has su cient 
in-house expertise to ensure that external 
contractors and service providers maintain 
su ciently high standards. 
Gas transportation 
infrastructure
The Group may be restricted from selling any gas 
produced by delays or obstacles encountered in 
constructing an adequate connection to the local 
gas market infrastructure. 
Medium High The Group will seek to mitigate by 
investigating all possible options for 
monetising any gas produced and by 
maintaining an early and active dialogue 
with gas infrastructure operators. 
Dependence on 
key personnel
The Group operates with a small management 
team and has a total sta , including consultants, 
of approximately 10. The loss or unavailability of 
key personnel could adversely impact the 
Group’s business. 
Medium Medium The Group will ensure that appropriate 
retention and incentivisation policies are in 
place; and also that corporate knowledge 
is widely shared within the Group.  17
Business Review
3Legs Resources
Annual Report & Accounts 2012
The Group’s business is exposed to a broad range of risks which are 
capable of having a material effect on the results of its operations. The 
Group seeks to manage these risks through a regular review, by the Audit 
Committee, of risks to which the Group is exposed, and possible means 
of mitigating them. The Audit Committee in turn reports back to the Board. 
A summary of the key risks identiﬁed by the Group is set out below. 
Risk Detail Likelihood Impact Mitigation
Polish scal and 
regulatory regime
The scal regime in Poland relating to oil and gas 
exploration and production is subject to change 
and may be at particular risk of change if the 
shale gas industry in Poland becomes 
successfully established. 
Medium High The Group will seek to mitigate by 
prioritising higher-return opportunities and 
through an active communications 
strategy designed to ensure that the 
commercial risks and rewards of the shale 
gas industry are adequately understood. 
The Group will continue to be actively 
involved in discussions regarding the 
future development of the Polish oil and 
gas sector through its participation in 
OPPPW. 
Access to funding The Group currently nances its operations out of 
its existing cash reserves. If the Group’s access to 
third party funding becomes restricted then this 
could have an adverse e ect on the Group’s 
future prospects. 
High High The Group will adopt a conservative 
approach when considering its capital 
requirements and spending commitments. 
Oil price The economic value of the Group’s projects is 
highly dependent on prevailing oil and gas prices, 
particularly prevailing European gas prices. 
Medium Medium The Group uses conservative assumptions 
where appropriate for evaluating projects. 
Currency risk The Group currently reports its nancial results in 
sterling. A signi cant proportion of the Group’s 
expenditure is, however, incurred in euro and US 
dollars and the Group is consequently exposed to 
currency uctuations when valuing its euro and 
US dollar assets and liabilities. 
Medium Medium The Group seeks to mitigate this exposure 
by holding its reserves primarily in a 
combination of US dollars, sterling and 
euros. 
Financial risk management policies are set out in note 31 to the nancial statements. 3Legs Resources
Annual Report & Accounts 2012
18
Governance


02
03
06 04
05
01
Board of 
Directors 3Legs Resources
Annual Report & Accounts 2012
19
Governance
01/ Tim Eggar, 
Non-Executive Chairman
Tim Eggar was appointed Chairman in 
December 2010. He has over 35 years’ 
experience in the oil and gas industry 
ranging from management to industry 
regulation to strategic and nancial advice. 
He is currently chairman of the board of 
Cape plc, MyCelx Technologies Corporation, 
and Haulfryn Limited. He was a member of 
Parliament in the United Kingdom from 1979 
to 1997 and served in a number of ministerial 
positions including Minister for Industry and 
Energy from 1994 to 1996. Tim graduated 
from Magdalene College, Cambridge and 
the College of Law and is a barrister.
02/ Kamlesh Parmar,
Chief Executive f cer
Kamlesh Parmar was appointed as Chief 
Executive O cer on 18 October 2012. 
He has been with 3Legs since its activities 
commenced in 2007 and has previously held 
the position of Group Commercial Director 
and Poland Country Manager. He has 
overseen all aspects of the Group’s 
operations in Poland since inception 
including, in particular, managing the 
successful relationship with ConocoPhillips.
He has achieved recognition both for the 
Group’s achievements in Poland and for his 
own contribution to the development of the 
shale industry in Poland, being awarded the 
title of “Professional of the Year” at Poland’s 
inaugural Shale Gas Awards gala in 201 1. 
He is also one of the four members of the 
Management Board of OPPPW, the Polish 
Exploration and Production Industry 
Organisation.
03/ Barry Rourke, 
Non-Executive Director,  
Senior Independent Director and  
Chairman of the Audit Committee
Barry Rourke is currently an independent 
non-executive director of New World 
Resources plc, Avocet Mining Plc and OJSC 
RusRailLeasing. Barry was a partner with 
PricewaterhouseCoopers from 1984 until his 
retirement in 2001. Barry Rourke is a Fellow 
of the Institute of Chartered Accountants in 
England and Wales, having quali ed as a 
Chartered Accountant in 1973. Barry Rourke 
will be retiring by rotation at the Company’s 
forthcoming Annual General Meeting and 
has decided not to present himself for 
re-election.
04/ David Bremner, 
Non-Executive Director and Chairman of the 
Technical Committee
David Bremner joined the Board in 
January 201 1, having been involved in 
the international oil and gas business for 
33 years. He was on the board of Indago 
Petroleum from 2005 to 2009, becoming 
Chief Executive O cer in 2007 . From 1999 
to 2007 he was engaged in international 
petroleum consultancy, with a particular 
emphasis on new business development. 
From 1995 to 1999 he worked for Monument 
Oil and Gas, initially as exploration manager 
and subsequently as exploration director. 
He holds an honours degree and a Ph.D. 
in geology from the University of 
Glasgow, Scotland.
05/ Richard Hills, 
Non-Executive Director and 
Chairman-designate of the Audit Committee
Richard Hills was appointed to the Board as 
a non-executive director in December 2012. 
Richard has over 30 years of experience 
in investment management and nancial 
services. Richard has worked at a variety 
of large UK based investment management 
companies, including Aberdeen Asset 
Management Plc, as Head of UK equities 
and Chairman of the Investment Policy 
Committee, and Henderson Global Investors 
Plc, as a Director of Henderson 
Administration Ltd, Henderson Pension Fund 
Management Ltd, Henderson International 
Inc. and a member of the Group Investment 
Policy Committee. Richard is currently the 
Senior Independent Director of both 
Aberdeen New Dawn Investment Trust plc 
and of Henderson Global Trust plc. He is 
also a non-executive director of JP Morgan 
Income & Capital Investment Trust plc, 
Phaunos Timber Ltd, Cinven Ltd and the 
Aztec Group Ltd.
06/ Rod Perry, 
Non-Executive Director, Chairman of the 
Remuneration Committee and designated 
as the new Senior Independent Director
Rod Perry joined the Board in February 201 1. 
He is currently deputy chairman and senior 
independent director of Bwin.Party Digital 
Entertainment Plc. Previously he was the 
chairman of Party Gaming Plc and had been 
a non-executive director of Party Gaming Plc 
since 2005. He is also a non-executive 
director of Ithmar Capital (Dubai), a US$250 
million private equity fund. Rod served as 
a non-executive director of Gulf of Guinea 
Energy, which merged with Seven Energy 
in 2009. He is a chartered electrical engineer 
and holds a BSc Hons Physics (First Class) 
from the University of Salford and a diploma 
in Management Studies from Bristol 
Polytechnic.  3Legs Resources
Annual Report & Accounts 2012
20
Governance
02 01
Senior  
Management
01/ Alexander Fraser, 
Chief inancial f cer
Alexander Fraser joined the Group when it 
was established in January 2007 . From 2003 
to 2006 he was an independent corporate 
 nance consultant. From 1994 to 2003 he 
was an investment banker in emerging 
markets corporate nance and M&A at 
Brunswick-UBS in Moscow and then 
Deutsche Bank and JP Morgan in London, 
advising government and corporate clients in 
a range of sectors including oil and gas. From 
1988 to 1994 he was a lawyer at Fresh elds 
Bruckhaus Deringer LLP advising on general 
corporate law, banking and corporate nance 
from their London, Paris and Moscow o ces. 
He graduated from Magdalen College, 
Oxford and is a quali ed barrister.
02/ Frances Morris-Jones, 
Business Development Director
Frances Morris-Jones joined the Group 
in November 201 1. She was previously 
employed by ConocoPhillips as global 
business development manager for 
unconventional resources, where she was 
responsible for prioritising, selecting and 
accessing unconventional opportunities 
beyond North America, and delivered deals 
in Asia-Paci c and Europe. Frances has over 
25 years’ experience in the industry, originally 
with BP where, as vice-president, renewal 
(2005-2008) she led a multi-disciplinary team 
mandated to screen, rank and access 
unconventional gas opportunities. Prior to 
that, as commercial director, she spent 7 
years (1999-2005) in business development 
in Russia and the Caspian, where she led a 
cross-discipline evaluation of entry options 
to Russia, resulting in the establishment of 
TNK-BP . Frances has also been a non-
executive director on the Board of DNV 
(Det Norske Veritas) since 2009. She has 
an MA (Hons) First Class degree from 
Oxford University. 3Legs Resources
Annual Report & Accounts 2012
21
Governance
Health, Safety, 
Environmental and 
Social Responsibility
The Group maintains a 
health and safety code 
of conduct which is 
focused on improving 
health and safety 
performance and 
enhancing environmental 
stewardship.
During the year, the Group together with 
ConocoPhillips conducted further testing 
of the Warblino LE-1H and Lebien LE-2H 
horizontal wells and drilled one vertical 
well, the Strzeszewo LE-1, on the Lebork 
concession. A full risk assessment was 
performed as part of the planning process 
for each operation.
The Strzeszewo LE-1 well was cased and 
cemented in line with customary industry 
standards, thus isolating the wellbore from 
the surrounding formation, including 
aquifers. Waste uids and solids generated 
or recovered at all three well locations were 
removed and disposed of in accordance 
with applicable Polish and EU regulations, 
and industry best practice. 
In October 2012, a lost time incident (“LTI”) 
occurred on the Lebien location during 
further testing of the Lebien LE-2H well, 
as a result of which an employee su ered 
a fractured metatarsal bone in his foot. 
A detailed inquiry was conducted by 
ConocoPhillips, by then acting as operator, 
to determine any lessons to be learned. No 
other signi cant HSE incidents arose during 
operations at any of the three wells. 
Employee, social and community 
management
The Group seeks to ensure that all activities 
in the countries where it operates are 
undertaken in an open and ethical manner. 
The Group also recognises that it has a 
responsibility to the communities in the areas 
where it carries on activities. Where possible 
it aims to:
 Recruit local sta and ensure procedures 
are in place such that all recruitment is 
undertaken on a fair basis with no 
discrimination between applicants 
 Inform the community about the Group’s 
activities through dialogue and regular 
town hall meetings
 Provide funding to support agreed 
local projects 
 Provide appropriate training for locally 
employed sta Limit the visual impact of the Group’s 
activities by appropriate site location 
and screening 
Health, safety and
Environmental (“HSE”)
The Group maintains a health and safety 
code of conduct which is focused on 
improving health and safety performance 
and enhancing environmental stewardship. 
These objectives are achieved through:
 Ensuring sta are fully aware of their 
responsibility regarding health and safety 
issues and providing adequate training 
where necessary
 Carrying out risk assessments which 
aim to identify HSE risk areas and 
possible consequences
 Establishing reporting routines for 
hazards and incidents, maintenance 
of risk registers and assigning 
responsibilities to senior management
 Using only contractors which comply with 
the Group’s stringent HSE standards and 
providing adequate supervision and 
management
 Complying with relevant local legislation 
and following industry recommendations
 Communicating policy and expected 
standards with third parties, joint venture 
partners and other external associates 
involved in the Group’s operations
 Continued development and 
improvement of health and safety 
performance

 22
Governance
3Legs Resources
Annual Report & Accounts 2012
Directors’ Report
Introduction
The Directors present their report and nancial statements for the 
Group for the year ended 31 December 2012.
Principal activity
The Group’s principal activity is the exploration and development 
of unconventional oil and gas resources in Poland, where the 
Directors believe the Group is well positioned to bene t from the 
emergence of a regional unconventional oil and gas sector. 
Business and nancial review and future developments
Details of the Group’s 2012 operations are included in the Chairman’s 
Statement and CEO’s Strategic Review. A review of the current year’s 
 nancial activities is set out in the Financial Review. 
Results and dividends
The Group’s loss for the year after taxation was £6.0 million (201 1: loss 
of £2.3 million). The Directors do not recommend the payment of a 
dividend for the year.
Key performance indicators
Given the early stage of development of the Group’s operations, 
the key measures used by management for monitoring the Group’s 
progress and achievement of its strategic objectives for the business 
relate to:
 Seismic and drilling operations completed within scope 
and budget
 Selectively strengthening the management team
 Cash balance management
Details of the Group’s operational performance during the year are 
covered in the CEO’s Strategic Review. The Group has maintained a 
healthy cash balance to cover its immediate work programme. The 
appointment of a new Chief Executive O cer, Exploration Manager 
and Engineering Manager has further strengthened the management 
and technical teams. The Group will continue to monitor the 
management and technical expertise required to enable the Group 
successfully to carry on its activities, as the Group evolves.
Directors
The Directors of the Group that served during the year and 
subsequently were as follows:
Tim Eggar, Non-Executive Chairman
Kamlesh Parmar, Chief Executive O cer (appointed 18 October 2012)
Peter Clutterbuck, Chief Executive O cer (resigned 17 October 2012)
Barry Rourke, Non-Executive Director and Senior 
Independent Director
David Bremner, Independent Non-Executive Director 
Rod Perry, Independent Non-Executive Director 
Richard Hills, Independent Non-Executive Director 
(appointed 1 December 2012)
Robert Je cock, Non-Executive Director (resigned 22 February 2013)
Clive Needham, Independent Non-Executive Director 
(resigned 22 February 2013)
Biographical details of serving Directors can be found in the Board 
of Directors and Senior Management section. 
The interests of the Directors in o ce at year end in the share capital 
of the Company (including under the 201 1 Restricted Share Award 
Plan) are set out in the table below. 
Director
31 December 
2012
31 December 
2011
Tim Eggar 420,000 420,000
Kamlesh Parmar 3,411,916 3,411,916
David Bremner 60,000 60,000
Richard Hills – –
Robert Jeffcock
1,2
12,816,560 17,116,560
Clive Needham
3
7,000 7,000
Rod Perry 60,000 60,000
Barry Rourke 443,860 443,860
Note: 
1.  This gure included: 7 ,402,008 Ordinary Shares held by or on behalf of Caithness Limited as trustee for Robert Je cock (2011: 7 ,402,008); 2,409,352 (2011: 8,709,352) Ordinary Shares 
held in the name of Lynchwood Nominees Limited on behalf of Robert Je cock’s son, William Je cock; 2,000,000 (2011: 0) Ordinary Shares held in the name of Forest Nominees 
Limited on behalf of Robert Je cock’s son, William Je cock; 900,000 (2011: 900,000) Ordinary Shares held by Robert Je cock’s children; and 105,200 Ordinary Shares (2011: 105,000) 
held by CM Skye Trustees Limited in favour of members of Robert Je cock’s family. 
2.  On 22 February 2013, Robert Je cock resigned as a Director of the Company. 
3.  On 22 February 2013, Clive Needham resigned as a Director of the Company.  23
Governance
3Legs Resources
Annual Report & Accounts 2012
2011 Restricted Share Award Plan
The interests of the Directors in o ce at year end under the 201 1 Restricted Share Award Plan of the Company are set out in the table below. 
Director
31 December 
2012
31 December 
2011
Tim Eggar 40,000 60,000
Kamlesh Parmar – –
David Bremner 40,000 60,000
Richard Hills – –
Robert Jeffcock – –
Clive Needham – –
Rod Perry 40,000 60,000
Barry Rourke 13,333 20,000
During the year, one third of each of the original awards made under the Plan vested and thus became free from restrictions under the Plan. 
Directors share options
Details of share options granted to the Directors in o ce at year end are as set out in the table below. 
2007 Share Option Plan
Director At 1 Jan 2012
Granted in 
year
Exercised in 
year
At 31 Dec 
2012 Exercise price Expiry date
Kamlesh Parmar 800,000 – – 800,000 25p N/A
Long Term Incentive Plan
Director At 1 Jan 2012
Granted in 
year
Exercised in 
year
At 31 Dec 
2012 Exercise price Expiry date
Kamlesh Parmar 94,736 – – 94,736 Nil 7 Jun 2021
Kamlesh Parmar – 500,000 – 500,000 41. 1p
17 Oct
 2022
Details of the Restricted Share Award Plan, Share Option Plans, LTIP and Directors’ remuneration can be found in the Directors’ Remuneration 
Report. 
Annual General Meeting and re-election of Directors
The Annual General Meeting will be held on 19 April 2013. Kamlesh Parmar, Richard Hills and Barry Rourke will retire at the Annual General 
Meeting, following which Kamlesh Parmar and Richard Hills will o er themselves for election. 
Transactions involving Directors
During the year, David Bremner and Robert Je cock had consultancy agreements with the Company to provide technical and advisory 
services. During the year David Bremner charged fees of £101,500 (201 1: £71,000) and Robert Je cock charged no fees (201 1: £nil). 
As at 31 December 2012, the amount outstanding to David Bremner under his consultancy agreement was £32,218 (201 1: £27 ,337).
Directors insurance and indemnity provisions
Subject to the conditions set out in the Companies Act 2006 and the Company’s Articles of Association, the Company has arranged 
appropriate Directors’ insurance to indemnify the Directors against liability in respect of proceedings brought by third parties. The annual cost 
of the cover is not material to the Group.  24
Governance
3Legs Resources
Annual Report & Accounts 2012
Signi cant shareholders
As at 19 March 2013, the Company had been noti ed that the following were holders of 3% or more of the Company’s issued Ordinary Share 
capital:
Number of 
Shares %
Damille Investments II Limited 12,000,000 14.15
Morgan Stanley Securities Limited 11,398,440 13.44
Weiss Asset Management LP 11,010,000 12.99
BlackRock, Inc. 9,302,348 10.97
JP Morgan Chase & Co 4,600,848 5.43
Kamlesh Parmar
1
 3,411,916 4.02
1. Includes 3,398,916 Ordinary Shares held by Ferlim Nominees Limited on behalf of Kamlesh Parmar.
Except for the holdings of Ordinary Shares listed above, the Directors 
are not aware of any person holding 3% or more of the issued share 
capital at the date of this Report.
Share capital
Details of the issued share capital, together with details of the 
movements in issued share capital during the year, are shown in note 
25 to the nancial statements.
Political donations
There were no political donations made by the Group in the current 
or prior year. 
Payment of suppliers
It is the Group’s policy that payments to suppliers are made in 
accordance with terms and conditions agreed between the Group 
and its suppliers. The average payment period for creditors for the 
year was 35 days (201 1: 33 days). 
Post balance sheet events
Events after the balance sheet date have been disclosed in note 33 to 
the nancial statements.
Statement as to disclosure of information to the auditor
Each Director in o ce at the date of this report has con rmed, as far 
as he is aware, that there is no relevant audit information of which the 
auditor is unaware. Each such Director has con rmed that he has 
taken all the steps that he ought to have taken as a Director in order to 
make himself aware of any relevant audit information and to establish 
that the auditor is aware of that information.
Corporate governance
The Company’s policy on corporate governance can be found in 
the Corporate Governance Statement. The Corporate Governance 
Statement forms part of this Directors’ report and is incorporated into 
it by cross-reference.
Auditor
A resolution to reappoint Baker Tilly UK Audit LLP as auditor at a fee 
to be agreed by the Company will be proposed by the Board. 
The Directors’ Report was approved by the Board of Directors and 
signed on its behalf by:
Rod Perry
22 March 2013
Directors’ Report 
continued 25
Governance
3Legs Resources
Annual Report & Accounts 2012
Corporate Governance 
Statement
The Board’s corporate governance policy is to apply best practice 
and materially to comply with the UK Corporate Governance Code 
(the “Code”) applicable to FTSE 350 companies to the extent that the 
Board considers is appropriate for a company of the size, nature and 
stage of development of the Company. The Company is an AIM-listed 
company and is not required to comply with any provision in those 
codes for so long as it remains listed on AIM. In addition, the 
Company proposes to follow, to the extent practicable, the 
recommendations on corporate governance in the Quoted 
Companies Alliance guidelines. 
The Board considers that the Company has been in compliance  
with the Code since its IPO with the exception of the following Code 
provisions where it has either not complied or has complied only  
in part:
Provision of the Code Company position
B 2.3 Non-Executive Directors should be appointed for speci ed 
terms 
The Non-Executive Directors are not appointed for speci ed terms 
but are subject to three months’ notice. 
B 4. 1 The Chairman should regularly review and agree with each 
Director their training and development needs
There is no formal process for reviewing and agreeing Director 
training and development but Directors are o ered the opportunity 
to receive training if they wish. 
E 1. 1 The Senior Independent Director should attend su cient 
meetings with a range of shareholders to understand the issues and 
their concerns
The Senior Independent Director has not attended any meetings 
with shareholders. 
E 1. 1 The Chairman should discuss governance and strategy with 
major shareholders 
The Chairman is available to major shareholders who wish to 
discuss any matters regarding the Company’s strategy and matters 
of governance.
Further details are given below of how the Company addresses the 
principles set out in the Code.
The Board
Since the Company’s listing on AIM, the Board’s structure and 
composition has complied with the provisions of the Code which 
recommends that at least half the Board of Directors of a listed 
company (excluding the Chairman) should comprise independent 
Non-Executive Directors. The Board of the Company currently 
consists of one Executive and ve Non-Executive Directors, all of 
whom are considered by the Board to be independent. The Company 
is therefore compliant with the recommendation, as a smaller 
company, for at least two members of the Board to be independent 
Non-Executive Directors. In determining whether these Directors 
should be considered to be independent, whilst the Board noted 
that certain Directors had shareholdings, those were not considered 
su ciently material to a ect the independence of the Directors 
concerned. The Board also noted that David Bremner had entered 
into a consultancy agreement with the Company but considered that, 
notwithstanding this agreement, David Bremner was and remains 
independent in character and judgment. 
The Board has appointed a quali ed Company Secretary, and Barry 
Rourke acts as Senior Independent Director pursuant to the Code’s 
recommendations. In addition to the Board, the Company has an 
experienced senior management team ensuring that it has the 
appropriate expertise and experience for the management of its 
business. Alexander Fraser is Chief Financial O cer (CFO) and 
Frances Morris-Jones is Business Development Director.
There is a clearly de ned organisational structure with lines of 
responsibility and delegation of authority to executive management. 
The Board meets regularly throughout each nancial year and there 
is a schedule of matters reserved for its approval, ensuring that it 
exercises control over the Group’s strategy, performance, key 
 nancial and compliance issues, approval of any major capital 
expenditure and the framework of internal controls. The matters 
reserved for the Board include, amongst others, approval of the 
Group’s long term objectives, policies and budgets, changes relating 
to the Group’s management structure, approval of the Group’s 
 nancial statements and ensuring maintenance of sound systems of 
internal control. The Company Secretary ensures that the Board and 
its Committees are supplied with comprehensive papers of su cient 
quality to enable them to consider matters in good time for meetings 
and to discharge their duties properly. 26
Governance
3Legs Resources
Annual Report & Accounts 2012
Corporate Governance 
Statement 
continued
Since the year end, an evaluation of the performance of the Board, 
its Committees and the Chairman has been conducted. The Board 
performance appraisal consisted of a questionnaire and discussions 
between individual Directors and the Chairman. The results of the 
appraisal were considered at a Board meeting and a number of 
actions were agreed. The appraisal of the Chairman’s performance 
was conducted by the Senior Independent Director. 
Directors are permitted to undertake ongoing training and education 
relating to their duties and access is given to independent legal 
advice at the Company’s expense if a Director considers that this 
is required. 
Audit, Remuneration and Nomination Committees
The terms of reference of the Committees have been approved by 
the Board and are available to view on the Company’s website. 
1. Audit Committee
The Audit Committee comprises Barry Rourke, Rod Perry and 
Richard Hill and is chaired by Barry Rourke. David Bremner stood 
down on the appointment of Richard Hill to the Audit Committee on 
6 December 2012. The Board considers the members of the Audit 
Committee to be independent and is satis ed that all three members 
of the Audit Committee have recent and relevant nancial experience. 
The external auditor and the Chief Financial O cer are invited to 
meetings where appropriate. The composition of the Audit 
Committee complies with the Code.
The main responsibilities of the Audit Committee are to review and 
report to the Board on matters relating to:
(i) the integrity of the nancial statements of the Group, including 
its annual and interim accounts;
(ii) the e ectiveness of the Group’s internal controls and risk 
management systems;
(iii) the accounting policies and practices of the Group; 
(iv) audit plans and auditors’ reports; and
(v) the terms of appointment and remuneration of the auditor. 
The Audit Committee is responsible for notifying the Board of any 
signi cant concerns that the external auditor may have arising from 
their audit work, any matters that may materially a ect or impair the 
independence of the external auditor, any signi cant de ciencies or 
material weaknesses in the design or operation of the Group’s internal 
controls and any serious issues of non-compliance. No such 
concerns were identi ed during the year.
The Audit Committee reviews the scope of all audit services and 
permitted non-audit services undertaken by the external auditor, the 
principal purpose of which is to ensure that the independence of the 
external auditor is not impaired. In general, the external auditor will 
only be used for audit, audit related and tax services. Other services 
need speci c authorisation from the Audit Committee. During the 
year, no non-audit-related services, apart from tax advice, were 
provided. The Chief Financial O cer monitors the status of all 
services being provided by the external auditor and is satis ed that 
there were no con icts during the year. The Audit Committee was 
satis ed throughout the year that the objectivity and independence of 
the external auditor were not in any way impaired by the nature of the 
non-audit work undertaken, the level of non-audit fees charged 
for such work or any other factors.
The Audit Committee has considered whether it is appropriate for the 
Group to have an internal audit function. The Audit Committee took 
account of the fact that an external company is used to provide 
accounting services and concluded that, in the light of this and the 
size of the Group, there is no need at present for a dedicated internal 
audit resource.
The Audit Committee has held four formal meetings during the year 
and other informal discussions were also held both with, and without, 
management present. Following each meeting, the Chairman of the 
Audit Committee reports to the Board on the principal matters 
covered at the meeting. The Audit Committee intends to review 
its performance and the appropriateness of its terms of reference 
following the conclusion of the 2012 audit. 
2. Remuneration Committee 
The Remuneration Committee comprises Rod Perry, Tim Eggar, 
David Bremner and Richard Hills and is chaired by Rod Perry. 
Richard Hills joined the Remuneration Committee on 6 December 
2012. The Chief Executive O cer is invited to attend from time to 
time. All the members of the Remuneration Committee are 
considered to be independent. 
The principal role of the Remuneration Committee is to consider, 
on behalf of the Board, the remuneration of the Chairman, Chief 
Executive O cer and certain senior executives. The remuneration 
of the Non-Executive Directors is a matter for the Board. No Director 
or manager is involved in any decision relating to his or her own 
remuneration. The Remuneration Committee is responsible for 
awards under share option and other equity incentive plans and 
other bonus plans. The Remuneration Committee has agreed 
a remuneration structure for the various levels of management 
and set parameters for the annual salary review.
The Remuneration Committee takes independent advice from 
remuneration specialists as deemed necessary. The Remuneration 
Committee had four formal meetings during the year. The 
Remuneration Committee reviewed its performance and the 
appropriateness of its terms of reference during the year and 
con rmed these both to be satisfactory. 27
Governance
3Legs Resources
Annual Report & Accounts 2012
3. Nomination Committee
The Nomination Committee comprises Tim Eggar and David 
Bremner. Robert Je cock resigned from the Nomination Committee 
on 22 February 2013. Both members are considered to be 
independent. The Nomination Committee’s remit is to prepare 
selection criteria and appointment procedures for members of the 
Board and to review on a regular basis the structure, size and 
composition of the Board. In undertaking this role, the Nomination 
Committee will refer to the skills, knowledge and experience required 
of the Board given the Group’s stage of development and will make 
recommendations to the Board as to any changes. The Nomination 
Committee will also make recommendations regarding the 
membership of the Audit and Remuneration Committees. 
The Nomination Committee will meet at least once a year. It met prior 
to the Company’s 2012 Annual General Meeting in May 2012 and for 
the purposes of the appointment of the new Chief Executive O cer 
in October 2012.
Internal controls and risk management
The Board is responsible for establishing and maintaining the Group’s 
system of internal controls and importance is placed on maintaining 
a robust control environment. Procedures which the Board maintains 
with a view to ensuring e ective internal controls include:
- a management reporting process to enable the Board to monitor 
the performance of the Group on a regular basis; 
- preparation, adoption and monitoring of an annual budget for 
the Group;
- maintaining appropriate treasury management policies;
- reviewing the major business risks faced by the Group and 
determining the appropriate courses of action to manage 
those risks;
- preparation of consolidated management information on a 
regular basis.
The Board monitors the e ectiveness of the system of internal 
controls operated by the Group to ensure that they remain 
appropriate as the Group develops. 
Share dealing
The Company complies with Rule 21 of the AIM Rules for companies 
regarding dealings in the Company’s shares and has adopted a code 
on dealing in securities to ensure compliance by the Directors, 
employees and certain consultants.
Shareholder relationships
During the year the Chairman, Chief Executive O cer and members 
of the senior management team met with shareholders and analysts. 
This included formal presentations, one-to-one meetings, analyst 
brie ngs and press interviews. The Board receives regular brie ngs 
on feedback from meetings with investors and trading activity from 
the Chief Executive O cer and the Company’s NOMAD. In addition, 
copies of analysts’ research reports and other relevant material are 
circulated to all Directors.
Directors’ attendance
The Directors’ attendance at scheduled Board meetings and Board 
Committees for the period is detailed in the table below:
Director Board Audit Remuneration Nomination
T.J.C. Eggar 5
*
1
+
42
*
P.R. Clutterbuck
1
 41
+
3
+
–
K. Parmar
2
 1– 1
+
–
D.L. Bremner 5 4 4 2
R. Hills
3 
11
+
1–
R.P. Jeffcock 5 – – 2
C. Needham 4 –––
R.W. Perry 5 4 4
*
–
B. Rourke 5 4
*
––
Total meetings held 5 4 4 2
 Chairman 
+
 Invitee
Notes:
1. Peter Clutterbuck resigned as a member of the Board on 17 October 2012.
2.  Kamlesh Parmar was appointed as a member of the Board on 18 October 2012.
3.  Richard Hills was appointed as a member of the Board on 1 December 2012 and 
his appointment rati ed at the Board meeting held on 6 December 2012. 28
Governance
3Legs Resources
Annual Report & Accounts 2012
Directors’ Remuneration 
Report
The remuneration policy for the Chief Executive O cer and senior 
management is determined by the Remuneration Committee with 
input from the Chief Executive O cer as appropriate in relation to 
individual performance. The performance of the Chief Executive 
O cer is assessed by the Chairman of the Company and approved 
by the Remuneration Committee.
The Remuneration Committee aims to provide the Chief Executive 
O cer and senior management team with remuneration packages 
which are su ciently competitive to attract, retain and motivate 
individuals of the quality required to achieve the objectives of the 
Group and thereby enhance shareholder value. In the case of the 
Chief Executive O cer and senior management, the remuneration 
package consists of:
 a basic salary;
 eligibility for an annual bonus of up to 100% of salary payable two 
thirds in cash and one third in deferred shares, subject to 
achievement of personal and corporate targets; the deferred share 
portion of the bonus is subject to certain share price performance 
conditions and is deferred for a period of one year; 
 eligibility to participate in the Long-Term Incentive Plan; 
 contribution to a personal pension plan; and
 private health insurance. 
During 2013, the Remuneration Committee plans to engage external 
remuneration consultants to carry out a complete and comparative 
review of salary, bonus terms and long term incentive plans for the 
Chief Executive O cer and senior management.
The Directors’ remuneration for the year ended 31 December 2012 
was as follows:
Non-Executive Directors
Fees  
£
Bonus 
£
Pension 
£
Total 
2012 
£
Total
 2011 
£
Tim Eggar 60,000 – – 60,000 60,000
David Bremner 134,795 – – 134,795 104,000
Richard Hills (appointed 1 Dec 2012) 2,292 – – 2,292 –
Robert Jeffcock 27,500 – – 27,500 45,000
Clive Needham
1
––– – –
Rod Perry 32,500 – – 32,500 29,000
Barry Rourke 32,500 – – 32,500 31,000
Total 289,587 – – 289,587 269,000
Notes: 
1. The Company paid CM Management Limited (of which Clive Needham is a director) a xed annual fee of £10,000 for certain services including his services as a Director.
The fees of the Non-Executive Directors excluding the Chairman have been set at £27 ,500 per annum plus an additional £5,000 per annum for 
Directors chairing the Audit Committee, Remuneration Committee or Technical Committee. 
Executive Director
Salary/fees  
£
Bonus 
£
Pension 
£ Health-care
Total 
2012 
£
Total 
2011 
£
Peter Clutterbuck
1
192,000 63,316 19,000 4,000 278,316 360,000
Kamlesh Parmar
2
 50,00023,0485,0001,000 79,048 N/A
Notes:
1. For the period up to Peter Clutterbuck’s resignation on 17 October 2012
2. For the period since Kamlesh Parmar’s appointment on 18 October 2012 29
Governance
3Legs Resources
Annual Report & Accounts 2012
In addition to the remuneration set out above, Peter Clutterbuck 
received a payment of £184,600 upon his resignation, including 
£120,000 by way of payment in lieu of notice. These payments were 
determined in accordance with the provisions of his Service 
Agreement and legal advice received by the Remuneration 
Committee. 
The level of bonus paid to both the outgoing and incoming Chief 
Executive O cers for the year ended 31 December 2012 was 
determined according to achievement of corporate targets and 
individual performance. The Remuneration Committee determined 
the extent to which the corporate targets had been achieved and 
considered the individual’s performance. 
The Remuneration Committee agreed that a nal cash bonus of 
£63,316 (201 1: £106,000) would be paid to Peter Clutterbuck upon 
his resignation, which represented 26% (201 1: 46%) of the maximum 
bonus potential. The Remuneration Committee further agreed that 
a nal cash bonus of £88,504 would be paid to Kamlesh Parmar 
(including £23,048 in respect of the period since his appointment 
as Chief Executive O cer), which represented 46% of the maximum 
bonus potential. 
In consultation with the Board, the Remuneration Committee sets 
the corporate targets which will be used to assess the bonus payable 
to the Chief Executive O cer, senior managers and other employees 
and consultants. The Remuneration Committee has determined that 
the proportion of the Chief Executive O cer’s potential bonus 
allocated to corporate targets for 2013 will be 60% (2012 - 60%). 
The notice period for the Chief Executive O cer is six months and 
for the Non-Executive Directors is three months, which is in line with 
other companies of a similar size and is considered to be appropriate 
for the size of the Group.
Share schemes
The Company has a number of share schemes in place. 
a)  2007 Share Option Plan 
The 3Legs Resources plc 2007 Share Option Plan (the “2007 
SOP”) was adopted by the Company on 23 May 2007 . The Board 
has determined that no further grants will be made under the 
2007 SOP .
b)  2009 Share Option Plan 
The 3Legs Resources plc 2009 Share Option Plan (the “2009 
SOP”) was adopted by the Company on 7 December 2009. In all 
material respects the terms and conditions of the 2009 SOP are 
the same as those of the 2007 SOP . The Board has determined 
that no further grants will be made under the 2009 SOP . 
 
Outstanding options under the 2007 SOP and the 2009 SOP 
will only be exercisable on the attainment of speci ed conditions 
and to the extent that they have vested in accordance with any 
vesting schedule.
c)  Long-Term Incentive Plan 
The primary long-term incentive arrangement for the Chief 
Executive O cer and members of senior management of the 
Company is the Long-Term Incentive Plan (the “LTIP”). The LTIP 
is intended to drive the performance of the management team 
and awards have been made to the Chief Executive O cer, senior 
managers, other employees and certain consultants providing 
services to the Group. Under the LTIP , participants are granted 
options over the Company’s issued share capital exercisable at nil 
cost, in the case of options granted at the time of the IPO, or at the 
most recent publicly quoted price, in the case of options granted 
after the IPO. In the case of the Chief Executive O cer and other 
senior managers, the proportion of the award which vests is 
subject to the Company’s share price performance exceeding the 
Retail Price Index by various bands over a performance period of 
three years. The Remuneration Committee considers annually 
whether to make additional awards under the LTIP and what 
performance conditions should attach to those awards.  
 
During 2012, awards totalling 1,822,408 shares were made to 
1 1 persons, exercisable between 2015 and 2022.
d)  201 1 Restricted Share Award Plan 
The 201 1 Restricted Share Award Plan is a restricted share plan 
which was used to make one o awards to ve Non-Executive 
Directors prior to the IPO. The shares are subject to restrictions 
on dealing until the awards vest, which occurs in equal tranches of 
one third on each of 31 July 2012, 31 July 2013 and 31 July 2014. 
Vesting may occur early, and award holders may also be required 
to transfer their award shares back to the Company, in certain 
de ned circumstances.  3Legs Resources
Annual Report & Accounts 2012
30
Governance
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law 
and regulations.
The Directors have elected to prepare Group financial statements in accordance with International Financial Reporting Standards 
(“IFRS”) as adopted by the European Union (“EU”).
 In preparing the Group financial statements, the Directors are required to:
 select suitable accounting policies and then apply them consistently;
 make judgements and accounting estimates that are reasonable and prudent;
 state whether they have been prepared in accordance with IFRS as adopted by the EU;
 prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue  
in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s 
transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that 
the financial statements comply with the Isle of Man Companies Act 2006. They are also responsible for safeguarding the assets 
of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 3Legs Resources
Annual Report & Accounts 2012
31
Governance
Independent Auditor’s Report to the 
Members of 3Legs Resources plc
We have audited the Group financial statements of 3Legs Resources plc for the year ended 31 December 2012 which comprise the 
Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated 
Cash Flow Statement, Consolidated Statement of Changes in Equity 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.
This report is made solely in accordance with section 80C of the Isle of Man Companies Act 2006. Our audit work has been 
undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report 
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the 
Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditor
As more fully explained 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 Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
We read the other information contained in the annual report and consider the implications for our report if we become aware of any 
apparent misstatements within them.
Scope of the audit 
A description of the scope of an audit of financial statements arising from the requirements of International Standards on Auditing 
(UK and Ireland) is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on the ﬁnancial statements
In our opinion the financial statements:
 give a true and fair view of the state of the Group’s affairs as at 31 December 2012 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; and
 the Group financial statements have been prepared in accordance with the requirements of the Isle of Man Companies Act 2006.
BAKER TILLY UK AUDIT LLP, Auditor 
Chartered Accountants and Registered Auditors
2 Whitehall Quay
Leeds
LS1 4HG 32
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Consolidated Income Statement
For the year ended 31 December 2012
Consolidated Statement of 
Comprehensive Income
For the year ended 31 December 2012
Notes
2012
£’000
2011
£’000
Continuing operations
Revenue – –
Other income 6 1,067 2,747
Administrative expenses (5,192) (5,285)
Impairment of intangible exploration and evaluation assets 7 (2,077) –
Operating loss (6,202) (2,538)
Share of results of joint venture 8 (123) –
Investment income 9 296 210
Loss before tax (6,029) (2,328)
Tax 13 (1) –
Loss for the year 10 (6,030) (2,328)
Attributable to:
Equity holders of the parent (6,030) (2,328)
(6,030) (2,328)
Loss per Ordinary Share
Basic and diluted, pence per share 14 (0.07p) (0.03p)
2012
£’000
2011
£’000
Loss for the year (6,030) (2,328)
Other comprehensive income
Exchange differences arising on translation of foreign operations 805 (657)
Total comprehensive income for the year attributable to owners of the parent company (5,225) (2,985) 33
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Consolidated Balance Sheet 
As at 31 December 2012
Notes
2012
£’000
2011
£’000
Assets
Non-current assets
Intangible exploration and evaluation assets 15 2,839 14,850
Investment accounted for using the equity method 16 14,905 –
17,744 14,850
Current assets
Trade and other receivables 18 977 3,400
Cash and cash equivalents 19 39,531 50,930
40,508 54,330
Total assets 58,252 69,180
Liabilities
Current liabilities
Trade and other payables 20 (986) (5,499)
Shareholder borrowings 21 – (1,165)
Financial instruments 22 – (324)
Provisions 23 (573) –
(1,559) (6,988)
Non-current liabilities
Provisions 23 – (528)
Total liabilities (1,559) (7,516)
Net assets 56,693 61,664
Equity
Share capital 25 21 21
Share premium account 68,330 68,330
Share-based payment reserves 26 790 652
Accumulated deﬁcit (12,055) (6,141)
Cumulative translation reserves (393) (1,198)
Total equity 56,693 61,664
The financial statements of 3Legs Resources plc were approved by the Board of Directors and authorised for issue on 22 March 2013. 
They were signed on its behalf by:
Rod Perry
22 March 2013
Notes 1 to 33 form part of these financial statements.  34
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Consolidated Cash Flow Statement
For the year ended 31 December 2012
Notes
2012
£’000
2011
£’000
Net cash outﬂow from operating activities 28 (4,863) (1,185)
Investing activities
Interest received 296 210
Purchases of intangible exploration and evaluation assets (1,807) (8,477)
Investment in joint venture (2,742) –
Net cash used in investing activities (4,253) (8,267)
Financing activities
Issue of share capital – 59,296
Repayment of shareholder borrowings (1,171) –
Net cash (outﬂow)/inﬂow from ﬁnancing activities (1,171) 59,296
Net (decrease)/increase in cash and cash equivalents (10,287) 49,844
Effect of foreign exchange rate changes on cash and cash equivalents (1,060) (511)
Effect of equity accounting (52) –
Cash and cash equivalents at beginning of year 50,930 1,597
Cash and cash equivalents at end of year 39,531 50,930 35
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Consolidated Statement of  
Changes in Equity 
For the year ended 31 December 2012
Share
capital
£’000
Share
premium
account
£’000
Share-based 
payment 
reserves
£’000
Accumulated 
deﬁcit
£’000
Cumulative
 translation
reserves
£’000
Total
£’000
As at 1 January 2011 12 8,662 461 (3,829) (541) 4,765
Transactions with owners in their capacity as owners:
Issue of equity shares 9 62,934––– 62,943
Expenses of issue of equity shares – (3,266) – – – (3,266)
Total transactions with owners in their capacity as owners 9 59,668––– 59,677
Loss for the year (2,328) (2,328)
Other comprehensive income:
Currency translation differences (657) (657)
Total comprehensive income for the year – – – (2,328) (657) (2,985)
Share-based payments – – 207 – – 207
Transfer to retained earnings in respect of exercised share options – – (16) 16 – –
As at 1 January 2012 21 68,330 652 (6,141) (1,198) 61,664
Loss for the year (6,030) (6,030)
Other comprehensive income:
Currency translation differences 805 805
Total comprehensive income for the year – – – (6,030) 805 (5,225)
Share-based payments – – 254 – – 254
Transfer to retained earnings in respect of lapsed warrants – – (116) 116 – –
As at 31 December 2012 21 68,330 790 (12,055) (393) 56,693 36
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Notes to the Consolidated Financial 
Statements 
For the year ended 31 December 2012
1 General information
3Legs Resources plc (the “Company” and, together with its subsidiaries, the “Group”) is incorporated in the Isle of Man, British Isles 
under the Isle of Man Companies Act 2006. The address of the registered office is Commerce House, 1 Bowring Road, Ramsey, 
Isle of Man, British Isles, IM8 2LQ. 
The nature of the Group’s operations and its principal activities are the exploration, evaluation and development of oil and gas 
targets, primarily from unconventional resource plays.
These financial statements are presented in pounds sterling. Foreign operations are included in accordance with the policies set out 
in note 3.
2 Adoption of new and revised Standards
Standards affecting presentation and disclosure
In the current year, the following new and revised Standards have been adopted but have not had any material impact on the 
amounts reported in these financial statements.
IFRS 7 (amended 2011) Financial instruments disclosures: transfers of ﬁnancial assets
IAS 12 (amended 2011) Income taxes: deferred tax: recovery of underlying assets
At the date of authorisation of the financial statements, the following Standards and Interpretations which have not been applied 
in the financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
IFRS 7 (amended 2011) Financial instruments disclosure: offsetting ﬁnancial assets and ﬁnancial liabilities
IFRS 9 Financial instruments
IFRS 10 Consolidated ﬁnancial statements
IFRS 11 Joint arrangements
IFRS 12 Disclosure of interests in other entities
IFRS 13 Fair value measurement
IAS 1 (amended 2011) Presentation of items of other comprehensive income
IAS 19 (amended 2011) Employee beneﬁts
IAS 27 (amended 2011) Separate ﬁnancial statements
IAS 27 (amended 2012) Separate ﬁnancial statements: Investment Entities
IAS 28 (amended 2011) Investments in associates and joint ventures
IAS 32 (amended 2011) Financial instruments presentation: offsetting ﬁnancial assets and ﬁnancial liabilities
Improvements to IFRS (May 2012)
The Directors do not expect that the adoption of these Standards or Interpretations in future periods will have a material impact 
on the financial statements of the Group. In particular there will be no material impact arising from the adoption of IFRS 11 Joint 
arrangements due to the events which have occurred during year ended 31 December 2012. All subsidiary companies of the Group 
are 100% owned and the Group’s only joint venture is accounted for using the equity method, which is consistent with the required 
treatment under IFRS 11.
3 Signiﬁcant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued 
by the International Accounting Standards Board (“IASB”) and as adopted by the European Union (“EU”), and therefore the Group 
financial statements comply with Article 4 of the EU IAS Regulation. 
The financial statements have been prepared on the historical cost convention basis. Historic cost is generally based on the fair 
value of the consideration given in exchange for the assets. The principal accounting policies adopted are set out below. 
Going concern
The Group’s business activities, together with the factors likely to affect its future development and position, are set out in the 
Chief Executive Officer’s Review. 
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the 
foreseeable future. The Directors therefore consider it appropriate to prepare the financial statements on a going concern basis. 37
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company 
(its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial 
and operating policies of an investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the 
effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to 
the financial statements of subsidiaries to bring accounting policies used into line with those used by the Group. All intra-Group 
transactions, balances, income and expenses are eliminated on consolidation. 
A joint venture is an entity in which the Group holds an interest on a long-term basis and which is jointly controlled by the Group and 
one or more other venturers under a contractual arrangement. 
Prior to the exercise by ConocoPhillips of its option to acquire a 70% interest in the Group’s three western Baltic Basin concessions, 
completed in September 2012, the Group recognised its interest in its joint venture activities using proportionate consolidation. 
With effect from this date and the resulting transfer of operatorship to ConocoPhillips, the Group has elected to recognise its 
interest using the equity method in accordance with IAS31 Interest in Joint Ventures. The Group recognises its investment in joint 
ventures at cost, with subsequent adjustments for its share of any profits or losses incurred by the joint venture since acquisition. 
Leasing
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.
Benefits received and receivable under operating leases are charged to income on a straight-line basis over the lease term.
Foreign currencies
The individual financial statements of each Group company are presented in the currency of the primary economic environment 
in which it operates (its functional currency).
For the purpose of the consolidated financial statements, the results and financial position of each Group company are 
expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated 
financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the functional currency of 
each Group company (“foreign currencies”) are recorded in the functional currency at the rates of exchange prevailing on the dates 
of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are 
retranslated into the functional currency at the rates prevailing on the balance sheet date. Non-monetary assets and liabilities 
carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value 
was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Foreign exchange differences are recognised in the income statement in the period in which they arise except for foreign exchange 
differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely 
to occur, which form part of the net investment in a foreign operation, and which are recognised in the foreign currency translation 
reserve and recognised in the income statement on disposal of the net investment. 
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations 
are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average 
exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates 
at the date of transactions are used. 
Foreign exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. 
Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign 
entity and translated at the closing rate. 
Operating loss
Operating loss is stated after charging impairment of intangible exploration and evaluation assets but before share of results of joint 
venture activities accounted for using the equity method, investment income and other gains and losses.
3 Signiﬁcant accounting policies continued 38
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Investment Income
Investment income comprises bank interest income on funds invested. Interest income is recognised on an accrual basis.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income 
statement because it excludes items of income or expense that are taxable or deductible in other years, and it further excludes 
items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted 
or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities 
in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using 
the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and 
deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible 
temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the 
initial recognition of goodwill, or from the initial recognition (other than in a business combination) of other assets and liabilities 
in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, 
and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable 
that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer 
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. 
Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, 
in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax 
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax 
assets and liabilities on a net basis. 
Intangible exploration and evaluation assets
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 mineral resources are accumulated by reference to appropriate cost centres being the appropriate 
licence area, but are tested for impairment on a cost pool basis as described below. 
E&E assets comprise costs of (i) E&E activities that are on-going at the balance sheet date, pending determination of whether or 
not commercial reserves exist and (ii) costs of E&E that, whilst representing part of the E&E activities associated with adding to the 
commercial reserves of an established cost pool, did not result in the discovery of commercial reserves.
Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to the income statement as they 
are incurred.
Exploration and evaluation costs
All costs of E&E are initially capitalised as E&E assets. Payments to acquire the legal right to explore, costs of technical services and 
studies, seismic acquisition, exploratory drilling and testing are capitalised as intangible E&E assets.
Intangible costs include directly attributable overheads together with the cost of other materials consumed during the exploration 
and evaluation phases. 
E&E costs are not amortised prior to the conclusion of appraisal activities.
Notes to the Consolidated Financial 
Statements continued
For the year ended 31 December 2012
3 Signiﬁcant accounting policies continued 39
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Treatment of E&E assets at conclusion of appraisal activities
Intangible E&E assets related to each exploration licence/prospect are carried forward, until the existence (or otherwise) of 
commercial reserves has been determined. If commercial reserves have been discovered, the related E&E assets are assessed 
for impairment on a cost pool 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.
Intangible E&E assets that relate to E&E activities that are determined not to have resulted in the discovery of commercial reserves 
remain capitalised as intangible E&E assets at cost less accumulated amortisation, subject to meeting a pool-wide impairment test 
in accordance with the accounting policy for impairment of E&E assets set out below. Such E&E assets are amortised on a unit-of-
production basis over the life of the commercial reserves of the pool to which they relate.
Impairment of E&E assets
E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its 
recoverable amount. Such indicators include, but are not limited to, those situations outlined in paragraph 20 of IFRS 6 Exploration 
for and Evaluation of Mineral Resources and include the point at which a determination is made as to whether or not commercial 
reserves exist. 
Where there are indications of impairment, the E&E assets concerned are tested for impairment. Where the E&E assets concerned 
fall within the scope of an established full cost pool, the E&E assets are tested for impairment together with all development and 
production assets associated with that cost pool, as a single cash generating unit. 
The aggregate carrying value is compared against the expected recoverable amount of the pool, generally by reference to the 
present value of the future net cash flows expected to be derived from production of commercial reserves. Where the E&E assets 
to be tested fall outside the scope of any established cost pool, 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 as additional depreciation and amortisation, and separately disclosed. 
The Group considers each set of licences (Baltic Basin, southern Poland and southern Germany), to be a separate cost pool and 
therefore aggregates all location specific assets for the purposes of determining whether impairment of E&E assets has occurred. 
Financial instruments
Recognition of ﬁnancial assets and ﬁnancial liabilities
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the 
contractual provisions of the instrument. 
Derecognition of ﬁnancial assets and ﬁnancial liabilities
The Group derecognises a financial asset only when the contractual rights to cash flows from the asset expire, or it transfers the 
financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers 
nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises 
its retained interest in the asset and an associated liability for the amount it may have to pay. If the Group retains substantially all the 
risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also 
recognises a collateralised borrowing for the proceeds received.
The Group derecognises financial liabilities when the Group’s obligations are discharged, cancelled or expired. 
Trade and other receivables
Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost less 
any provision for impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and on-demand deposits, and other short-term highly liquid investments that are 
readily convertible to a known amount of cash with three months or less remaining to maturity and are subject to an insignificant risk 
of changes in value.
Trade and other payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest 
rate method.
3 Signiﬁcant accounting policies continued 40
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable 
that an outflow of economic resources will result and that outflow can be reliably measured.
Financial assets and liabilities at fair value through proﬁt or loss
Financial assets are classified as at fair value through profit or loss (“FVTPL”) where the financial asset is either held for trading 
or it is designated as at FVTPL.
A financial asset is classified as held for trading where:
 It has been acquired principally for the purposes of selling in the near future;
 It is a part of an identified portfolio of financial instruments that the Group manages together and has a recent pattern of 
short-term profit-taking; or
 It is a derivative that is not designated and effective as a hedging instrument.
A financial asset or liability other than a financial asset or liability held for trading may be designated as at FVTPL upon initial 
recognition if:
 Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
 The financial asset or liability forms part of a group of financial assets or financial liabilities or both, which is managed and the 
performance of which is evaluated on a fair value basis, in accordance with the Group’s documented risk management or 
investment strategy, and information about such group is provided internally on that basis; or
 It forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and 
Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.
Decommissioning
Provision for decommissioning is recognised in full when the related facilities are installed. The decommissioning provision is 
calculated as the net present value of the Group’s share of the expenditure expected to be incurred at the end of the producing life 
of each field in the removal and decommissioning of the production, storage and transportation facilities currently in place. The cost 
of recognising the decommissioning provision is included as part of the cost of the relevant asset and is thus charged to the income 
statement on a unit-of-production basis in accordance with the Group’s policy for depletion and depreciation of tangible non-
current assets. 
Share-based payments
The Group has applied the requirements of IFRS 2 Share-based Payment for all grants of equity instruments. 
The Group operates an equity-settled share option plan and also issued warrants to certain shareholders (which have since lapsed). 
The fair value of the service received in exchange for the grant of options and warrants is recognised as an expense. Equity-settled 
share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. 
The fair value determined at the grant date of equity-settled share-based payment is expensed on a straight-line basis over the 
vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted for the effect of non-market based 
vesting conditions. 
Fair value is measured by use of the Black-Scholes model and the Monte-Carlo model. The expected life used in the model has 
been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural 
considerations.
A liability equal to the portion of the goods or services received is recognised at the current fair value determined at each balance 
sheet date for cash-settled share-based payments.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. 
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating 
segments and making strategic decision, has been identified as the Board of Directors. 
4 Critical accounting judgements and key sources of estimation and uncertainty
In the application of the Group’s accounting policies, which are described in note 3, the Directors are required to make judgements, 
estimates and assumptions about the carrying amounts of the assets and liabilities that are not readily apparent from other sources. 
The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. 
Actual results may differ from these estimates. 
Notes to the Consolidated Financial 
Statements continued
For the year ended 31 December 2012
3 Signiﬁcant accounting policies continued
40
Financial Statements
3Legs Resources
Annual Report & Accounts 2012 41
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised 
in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods 
if the revision affects both the current and future periods.
The following are the critical judgements and estimations that the Directors have made in the process of applying the Group’s 
accounting policies and that have the most significant effect on the amounts recognised in the financial statements:
Recoverability of exploration and evaluation assets
Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators 
of impairment, including by reference to specific impairment indicators prescribed in IFRS 6 Exploration for and Evaluation of Mineral 
Resources. If there is any indication of potential impairment, an impairment test is required based on value in use of the asset. The 
value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a 
suitable discount rate in order to calculate present value. The carrying amount of exploration and evaluation assets at the balance 
sheet date was £2.8 million (2011: £14.9 million) and impairments of £2.1 million (2011: £nil) were identified and recognised in the 
period.
Provisions for liabilities
As a result of exploration activities the Group is required to make provision for decommissioning. Significant uncertainty exists 
as to the amount of decommissioning obligations which may be incurred due to the impact of possible changes in environmental 
legislation. A provision of £0.6 million has been recognised at 31 December 2012 (2011: £0.5 million).
Share-based payments
The Group has an equity-settled share option scheme available to certain Directors, employees and consultants. In accordance 
with IFRS 2 Share-based payment, in determining the fair value of options granted, the Group has applied the Black-Scholes and 
the Monte Carlo model. As a result, the Group makes assumptions for expected volatility and expected life. The fair value of options 
granted in the years reported is shown in note 27.
Joint Venture
In March 2012, ConocoPhillips gave notice of exercise of its option, under the Joint Evaluation Agreement, to acquire 70% of the 
issued share capital of Lane Energy Poland Sp. z o.o. Completion of the option exercise occurred in September 2012. 
Following exercise of the option, the Group retains joint control of the venture under the terms of a Shareholders Agreement entered 
into with ConocoPhillips. In accordance with IAS27 Consolidated and Separate Financial Statements, the Group has continued to 
recognise its interest in Lane Energy Poland Sp. z o.o. as a 30% interest in a joint venture for purposes of consolidation.
Prior to the exercise of the option, the Group recognised its interest in joint venture activities using proportionate consolidation. 
With effect from this date and the resulting transfer of operatorship to ConocoPhillips, the Group has elected to recognise its 
interest using the equity method, in accordance with IAS31 Interest in Joint Ventures. The Group recognises its investment in joint 
ventures at cost, with subsequent adjustments for its share of any profits or losses incurred by the joint venture since acquisition. 
5 Business and geographical segments
The Directors consider there to be only one business segment, namely the exploration and development of oil and gas resources. 
The Directors consider there to be one material operating segment, being Poland. 
6 Other income 
2012
£’000
2011
£’000
30% funding of exploration programme 27 2,123
Completion payment 798 624
Net foreign exchange gain on equity accounting for joint venture 235 –
External rent recharged 7 –
1,067 2,747
Under the terms of the Joint Evaluation Agreement, ConocoPhillips committed to fund an exploration programme on the Group’s 
concessions in the Baltic Basin in northern Poland, in exchange for an option to acquire a 70% interest in Lane Energy Poland 
Sp. z o.o. Other income includes ConocoPhillips’ funding of the Group’s 30% interest in that exploration programme up to the 
date of option exercise.
4 Critical accounting judgements and key sources of estimation and uncertainty continued
41
Financial Statements
3Legs Resources
Annual Report & Accounts 2012 3Legs Resources
Annual Report & Accounts 2012
The completion payment includes the final retention of US$0.5 million due under the terms of the Joint Evaluation Agreement upon 
exercise of the call option. In addition, the call option premium of US$0.5 million, previously classified as a designated financial 
instrument held at FVTPL, was released through the profit and loss during the year. 
Following exercise of the option, a foreign exchange gain has arisen as a result of the transfer of operatorship to ConocoPhillips 
and the subsequent use of the equity accounting method to recognise the Group’s interest in Lane Energy Poland Sp. z o.o.
7 Impairment of intangible exploration and evaluation assets
2012
£’000
2011
£’000
Southern Poland (Krakow) 2,077 –
During the year, the Group relinquished one of its three concessions in southern Poland, held by Lane Resources Poland Sp.  
z o.o. The Group currently has no plans to incur any further expenditure on the remaining two concessions and consequently 
the related exploration and evaluation cost has been impaired in full.
8 Share of results of joint venture
2012
£’000
2011
£’000
Lane Energy Poland Sp z o.o. 123 –
9 Investment income
2012
£’000
2011
£’000
Interest on bank deposits 296 210
10 Operating loss 
The operating loss for the year has been arrived at after charging:
2012
£’000
2011
£’000
Property lease payments 89 104
Staff costs (note 12) 1,712 838
IPO costs – 1,149
Share-based payments (note 27) 254 207
Impairment of intangible exploration and evaluation assets 2,077 –
Audit fees 76 90
Net foreign exchange losses 1,587 1,257
11 Auditor’s remuneration 
Amounts payable to Baker Tilly UK Audit LLP and its associates in respect of both audit and non-audit services:
2012
£’000
2011
£’000
Audit fees
Fees payable to the Group’s auditor for the non-statutory audit of the subsidiaries’ annual accounts – 42
Fees payable to the Group’s auditor for the statutory audit of the Group’s annual accounts 76 48
Total audit fees 76 90
Amounts payable to associates of Baker Tilly UK Audit LLP
Non-audit fees
Tax services 22 67
Other services 11 12
Corporate ﬁnance – initial public offering – 210
Total non-audit fees 33 289
Notes to the Consolidated Financial 
Statements continued
For the year ended 31 December 2012
6 Other income continued
42
Financial Statements
3Legs Resources
Annual Report & Accounts 2012 43
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
12 Staff costs 
The average monthly number of employees (including Executive Directors) was:
2012
Number
2011
Number
Executive Directors (of 3Legs Resources plc) 1 1
Executive Directors (of 3Legs Management Services Limited) 2 2
Other employees 4 2
7 5
Their aggregate remuneration comprised:
2012
£’000
2011
£’000
Wages and salaries 1,436 899
Termination payments 185 –
Social security costs 204 132
Beneﬁts in kind 103 56
Share-based payments 105 56
2,033 1,143
Included within wages and salaries is £0.3 million (2011: £0.2 million) capitalised to intangible exploration and evaluation assets.
13 Tax
The tax assessed for the year is at the standard rate of corporation tax in the Isle of Man of 0% (2011: 0%) and is calculated 
as follows:
2012
£’000
2011
£’000
Loss on ordinary activities before tax (6,029) (2,328)
Loss on ordinary activities by the standard rate of tax – –
Foreign tax (1) –
Tax charge for the year (1) –
14 Loss per Ordinary Share 
Basic loss per Ordinary Share is calculated by dividing the net loss for the year attributable to Ordinary equity holders of the parent 
by the weighted average number of Ordinary Shares outstanding during the year. The calculation of the basic and diluted loss per 
Ordinary Share is based on the following data:
Losses
2012
£’000
2011
£’000
Loss for the purposes of basic loss per share being net loss attributable to equity holders of the parent (6,030) (2,328)
Number of shares
2012
Number
2011
Number
Weighted average number of Ordinary Shares for the purposes of basic loss per share 84,782,544 69,657,716
Loss per Ordinary Share 
2012
£
2011
£
Basic and diluted pence per share (0.07)p (0.03)p
Diluted loss per Ordinary Share equals basic loss per Ordinary Share as, due to the losses incurred in 2011 and 2012, there is 
no dilutive effect from the subsisting share options. 
43
Financial Statements
3Legs Resources
Annual Report & Accounts 2012 44
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
15 Intangible exploration and evaluation assets
£’000
Cost
At 1 January 2011 4,830
Additions 10,076
Provision for decommissioning 488
Exchange differences (544)
At 1 January 2012 14,850
Additions 1,807
Impairment (Note 7) (2,077)
Equity accounting adjustment (12,337)
Exchange differences 596
At 31 December 2012 2,839
16 Investment accounted for using the equity method
The Group had an interest in the joint venture listed below as at 31 December 2012, which it has accounted for using the equity 
method. The joint venture has a share capital consisting solely of ordinary shares, which are held as to 70% by ConocoPhillips 
and as to 30% by a wholly-owned subsidiary of the Group. The country of incorporation or registration is also its principal place 
of business. 
Name
Country of 
incorporation 
and operation
Proportion 
of ownership 
and voting 
interest %
Measurement 
method
Lane Energy Poland Sp. z o.o. Poland 30 Equity
Lane Energy Poland Sp. z o.o. is a private company and there is no quoted market price for its shares.
In March 2012 ConocoPhillips gave notice of exercise of its option to acquire a 70% interest in the Group’s three western Baltic 
Basin concessions, pursuant to the Joint Evaluation Agreement and ancillary documents. Completion of the option exercise  
took place in September 2012. The Group retains a net 30% interest in the three western Baltic Basin concessions, as a non-
operating partner. 
Prior to the exercise by ConocoPhillips of its option to acquire a 70% interest in the Group’s three western Baltic Basin concessions, 
completed in September 2012, the Group recognised its interest in its joint venture activities using proportionate consolidation. With 
effect from this date and the resulting transfer of operatorship to ConocoPhillips, the Group has elected to recognise its interest 
using the equity method in accordance with IAS31 Interest in Joint Ventures. The Group recognises its investment in joint ventures 
at cost, with subsequent adjustments for its share of any profits or losses incurred by the joint venture since acquisition. 
The aggregate amounts related to the joint venture included within the consolidated accounts are:
2012
£’000
2011
£’000
Current assets n/a 732
Long-term assets 14,905 12,803
Current liabilities n/a (438)
Long-term liabilities n/a (528)
Expenses (123) (230)
Investment in joint venture
2012
£’000
2011
£’000
Lane Energy Poland Sp. z o.o. 14,905 –
The Group has the following commitments relating to its joint ventures.
Commitments and contingent liabilities in respect of joint ventures
2012
£’000
2011
£’000
Commitment to provide funding if called 8,943 –
The Group has entered into commitments to fund its 30% share of the 2013 exploration and appraisal programme planned by 
Lane Energy Poland Sp. z o.o.  
Notes to the Consolidated Financial 
Statements continued
For the year ended 31 December 2012
44
Financial Statements
3Legs Resources
Annual Report & Accounts 2012 45
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
17 Subsidiaries 
The Company had investments in the following subsidiary undertakings as at 31 December 2012, which principally affected the 
losses and net assets of the Group:
Name Country of incorporation and operation
Proportion of ownership 
and voting interest % Activity
Directly held
3Legs Management Services Ltd England and Wales 100 Service company
3Legs Management Services US LLC United States of America 100 Service company
3Legs Oil and Gas plc Isle of Man 100 Holding company
Indirectly held
Diell Trading Ltd Cyprus 100 Holding company
Lane Energy Holdings plc Isle of Man 100 Holding company
Lane Resources Holdings plc Isle of Man 100 Holding company
Lane Resources Poland Sp. z o.o. Poland 100 Exploration
Lane Energy Exploration Sp. z o.o. Poland 100 Exploration
Moorfoot Trading Ltd Cyprus 100 Holding company
Parkyn Energy (Germany) Ltd Republic of Ireland 100 Exploration
Parkyn Energy Holdings plc Isle of Man 100 Holding company
Joint venture
On 4 August 2009, the Group entered into a Joint Evaluation Agreement (the “JEA”) with ConocoPhillips. Under the JEA and 
ancillary documents, ConocoPhillips committed to fund an exploration programme on the Group’s six concessions in the Baltic 
Basin in northern Poland, in exchange for an option to acquire a 70% interest in Lane Energy Poland Sp. z o.o. ConocoPhillips gave 
notice of exercise of its option on 20 March 2012 and completion of the option exercise occurred on 17 September 2012. Under IAS 
27 Consolidated and Separate Financial Statements, the Group now recognises Lane Energy Poland Sp. z o.o. as a 30% interest 
in a joint venture for purposes of consolidation (see note 16). 
In order to enable the development of a separate strategy for the three eastern Baltic Basin concessions, these concessions were 
divested by Lane Energy Poland Sp. z o.o. into a separate Polish legal entity, Lane Energy Exploration Sp. z o.o., prior to completion of the 
option exercise in September 2012. Lane Energy Exploration Sp. z o.o. is a wholly-owned subsidiary of the Group. ConocoPhillips initially 
retained an option to acquire a 70% interest in the three eastern Baltic Basin concessions, but this lapsed on 30 September 2012.
18 Trade and other receivables
2012
£’000
2011
£’000
Trade receivables 2 1,754
Other receivables 801 227
Amounts due from joint venture 12 –
VAT recoverable 35 859
Prepayments and accrued income 127 560
977 3,400
The average credit period for trade receivables is 6 days (2011: 11 days).
Other receivables represents an amount due from ConocoPhillips of £0.6 million (2011: £nil) in respect of payment for certain 
decommissioning operations under the terms of the JEA and an amount of £0.2 million (2011: £0.2 million) due in respect of a loan 
to Cowley Mining plc, a related party (see further note 32).
The Directors consider that the carrying amount of the other receivables approximates their fair value. None of the other receivables 
are past due or impaired. 
19 Cash and cash equivalents
Cash and cash equivalents as at 31 December 2012 of £39.5 million (2011: £50.9 million) comprise cash held by the Group. The Directors 
consider that the carrying amount of these assets approximates to their fair value.
45
Financial Statements
3Legs Resources
Annual Report & Accounts 2012 46
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
20 Trade and other payables
2012
£’000
2011
£’000
Trade payables 235 1,150
Other taxes and social security 30 43
Other payables – 3,487
Accruals 721 819
986 5,499
Trade payables and accruals principally comprise amounts outstanding for trade purchases and on-going costs. The average credit 
period taken for trade purchases is 35 days (2011: 33 days). The Group has financial risk management policies to ensure that all 
payables are paid within the credit timeframe.
The Directors consider that the carrying amount of trade and other payables approximates to their fair value. No interest is generally 
charged on balances outstanding. 
21 Shareholder borrowings
2012
£’000
2011
£’000
Convertible loan notes – 1,165
On 2 July 2010, the Company completed a placing of convertible loan notes for a value of US$2,418,000. The notes were non-
interest bearing and convertible into Ordinary Shares in the Company at any time within two years of the issue date at a price of 
US$6.00 per share, adjusted to US$1.50 per Ordinary Share following the share split referred to in note 25. On 21 February 2011, 
US$618,000 of the convertible loan notes was converted into 412,000 Ordinary Shares in the Company. On 30 June 2012, the 
outstanding balance was repaid in full.
22 Financial instruments
2012
£’000
2011
£’000
Fair value through proﬁt and loss (FVTPL)
Call option premium – 324
On 4 August 2009, Moorfoot Trading Ltd and ConocoPhillips Poland BV entered into a call option agreement pursuant to the JEA. 
In consideration of an option premium of US$500,000, Moorfoot Trading Ltd granted ConocoPhillips an option to purchase 70% 
of the issued share capital of Lane Energy Poland Sp. z o.o. ConocoPhillips gave notice of exercise of its option on 20 March 2012 
and completion of the option exercise occurred on 17 September 2012. 
Under IAS 39 Financial Instruments: Recognition and Measurement, the call option agreement was classified as a designated financial 
instrument held at fair value through profit and loss. The call option premium was recognised through the profit and loss in the year 
ended 31 December 2012 as part of the completion payment due on exercise of the call option.
23 Provisions
Decommissioning
Current
£’000
Non-current
£’000
At 1 January 2011 –40
Additions – 488
At 1 January 2012 – 528
Foreign exchange –28
Transfer from non-current 109 –
Transfer to current (109)
Additions 230 –
Equity accounting adjustment – (447)
Equity accounting adjustment 234 –
As at 31 December 2012 573 –
In accordance with the Group’s environmental policy and applicable legal requirements, the Group expects to restore sites where 
it has carried on activities, following final conclusion of those activities.
Notes to the Consolidated Financial 
Statements continued
For the year ended 31 December 2012 47
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
The provision for decommissioning recognised by management reflects management’s estimate of the net present value to the 
Group of its expected expenditure on decommissioning. These estimates are based on established oilfield decommissioning 
methods and technology at prices forecast to exist at the time of decommissioning. The current provision for decommissioning will 
be covered in full by the remaining receivable due from ConocoPhillips.
24 Deferred tax
Differences between IFRS and statutory tax rules (in the Isle of Man, the United Kingdom or elsewhere) give rise to temporary 
differences between the carrying values of certain assets and liabilities for financial reporting purposes and for income tax purposes.
At 31 December 2012, the Group has additional deferred tax assets of £0.4 million (2011: £0.5 million) in respect of tax losses. 
No deferred tax asset has been recognised in respect of this amount due to the unpredictability of future profit streams.
25 Share capital
Authorised and issued equity share capital
2012
Number
’000 £’000
2011
Number
’000 £’000
Authorised
Ordinary Shares of £0.00025 each 440,000 110 440,000 110
Issued and fully paid
Ordinary Shares of £0.00025 each 84,783 21 84,783 21
The Company has one class of Ordinary Shares, which carry no right to fixed income. 
Issued equity share capital
Ordinary 
Shares of 
£0.00025
Number
At 1 January 2011 12,639,991
Exercise of convertible loan notes 103,000
Restricted share award plan 155,000
Exercise of share options 73,961
Balance before sub-division 12,971,952
Share sub-division – see below 38,915,856
Balance after sub-division 51,887,808
Initial public offering 32,894,736
At 1 January 2012 and 31 December 2012 84,782,544
On 30 May 2011, each Ordinary Share of £0.001 each in the capital of the Company was subdivided into four Ordinary Shares 
of £0.00025 each.
The information shown above has been restated to reflect the share subdivision which took place on 30 May 2011.
26 Share-based payment reserves
Warrants
£’000
Options
£’000
Total
£’000
At 1 January 2011 116 345 461
Share-based payments – 207 207
Exercise of share options – (16) (16)
At 1 January 2012 116 536 652
Share-based payments – 254 254
Lapse of warrants (116) – (116)
At 31 December 2012 – 790 790
23 Provisions continued 48
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
27 Share-based payments
Equity settled share option plans 
The Directors recognise the need to attract, incentivise and retain key employees. Accordingly the Group has Share Option 
Plans in place under which options to subscribe for the Company’s shares have been granted to certain Directors, employees 
and consultants. 
2007 and 2009 Share Option Plans
The 3Legs Resources plc 2007 Share Option Plan was adopted by the Company on 23 May 2007. The 3Legs Resources plc 2009 
Share Option Plan was adopted by the Company on 7 December 2009. 
The Group has no legal or constructive obligation to repurchase or settle the options in cash. The options are forfeited if the 
employee or consultant leaves the Group before the options vest. 
Details of the share options under these plans outstanding at the end of the year were as follows:
2012 2011
Number
Weighted 
average 
exercise 
price
£ Number
Weighted 
average 
exercise price
£
Outstanding at 1 January 3,543,388 0.37 3,839,232 0.36
Granted during the year –– ––
Lapsed during the year –– ––
Exercised during the year –– (295,844) 0.22
Outstanding at 31 December 3,543,388 0.37 3,543,388 0.37
Exercisable at 31 December 3,143,424 1.48 2,671,463 0.20
The information shown above has been restated to reflect the share subdivision which took place on 30 May 2011.
The options outstanding at 31 December 2012 had an exercise price ranging between £0.12 and £1.00 (2011: £0.12 and £1.00), 
and an estimated weighted average remaining contractual life of 1.5 years (2011: 2.5 years). The Board has determined that 
no further options will be granted under either of these plans.
The Board has determined that no further options will be granted under either of these plans.
Long-Term Incentive Plan
During 2011 the Group adopted a new Long-Term Incentive Share Option Plan (the “LTIP”) under which certain Directors, members 
of senior management, employees and consultants have been granted options to subscribe for the Company’s shares. Under the 
LTIP, participants are granted options over the issued share capital of the Company. The LTIP has a three year performance period 
and, in the case of the CEO and other senior managers, the proportion of an option award vesting is dependent on the amount by 
which the Company’s share price outperforms the Retail Price Index over the vesting period. If the performance conditions are 
not satisfied, then the award will immediately lapse.
Awards under, and pursuant to the terms of, the LTIP have been made to the Chief Executive Officer, senior managers, other 
employees and certain consultants providing services to the group. Awards were made in January, June and October 2012.
Details of the share options outstanding under the LTIP at the end of the year were as follows:
2012 2011
Number
Weighted 
average 
exercise 
price
£ Number
Weighted 
average 
exercise price
£
Outstanding at 1 January 708,348 0.48 ––
Granted during the year 2,204,643 – 708,348 0.48
Lapsed during the year (142,538) ––
Exercised during the year –– ––
Outstanding at 31 December 2,770,453 0.37 708,348 0.48
Exercisable at 31 December –– ––
Notes to the Consolidated Financial 
Statements continued
For the year ended 31 December 2012 49
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
The options outstanding at 31 December 2012 had an exercise price ranging between £nil and £1.54, and an estimated weighted 
average remaining contractual life of 3.5 years. The fair value of the options has been calculated using the Monte Carlo model. The 
significant inputs into the model for the IFRS 2 valuation were as follows:
Grants
Jan 2012 Jun 2012 8 Oct 2012 18 Oct 2012
Exercise price £0.71 £0.37 £0.40 £0.41
Expected volatility (%) 50 50 51 – 52 50
Expected life (years) 6 6 6 6.5
Risk free rates (%) 0.93 – 1.11 0.78 – 0.86 0.72 – 0.95 1.14
Expected dividends ––––
RPI growth n/a n/a n/a 2.7%
Performance condition None None None
Share price 
growth  
over RPI
Expected volatility is normally determined by calculating the historic volatility of the share price over the most recent period that is 
commensurate with the expected award term. As the Company’s shares had not been publically traded for a sufficiently long period 
at any of the grant dates, it is not possible to estimate volatility by considering historical price movements. Therefore volatility has 
been determined using the average share price volatility of 12 listed oil and gas exploration companies. Expected term has been 
determined by estimating that the participants will on average exercise at the mid-point between vesting and the last date possible 
to exercise. 
Warrants
In July 2010, the Company issued 120,900 warrants which were convertible into Ordinary Shares of the Company. The warrants 
were convertible at any time within two years of the issue date at a price of US$2.50 per Ordinary Share. The warrants lapsed 
without exercise in June 2012.
Valuation of share-based payments
In the year ended 31 December 2012 the Group recognised a total expense of £0.3 million (2011: £0.2 million) related to equity-
settled share-based payment transactions. Of this expense, £0.1 million (2011: £0.1 million) relates to the 2007 and 2009 share 
option plans and £0.2 million (2011: £0.1 million) relates to the LTIP. 
28 Notes to the cash ﬂow statement
2012
£’000
2011
£’000
Loss before tax (6,029) (2,328)
Adjustments for:
Effect of foreign exchange rate changes 901 380
Impairment of E&E assets 2,077 –
Investment income (296) (210)
Share-based payments 254 207
Share of results of joint venture 123
Fair value gains on ﬁnancial instrument (316) –
Operating cash ﬂows before movements in working capital (3,286) (1,951)
Decrease in receivables 2,837 368
(Decrease)increase in payables (4,413) 397
Increase in ﬁnancial instruments – 1
Cash used in operations (4,862) (1,185)
Taxation paid (1) –
Net cash outﬂow from operating activities (4,863) (1,185)
Cash and cash equivalents (which are presented as a single class of assets on the balance sheet) comprise cash at bank and short 
term bank deposits with an original maturity of three months or less. The carrying value of these assets is approximately equal 
to their fair value. 
27 Share-based payments continued 50
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
29 Operating lease arrangements
At 31 December 2012, the Group had outstanding commitments for future minimum lease payments under non-cancellable 
operating leases, which fall due as follows:
2012
£’000
2011
£’000
Within one year 20 12
Operating lease payments represent rentals payable by the Group for properties located in London, UK and Warsaw, Poland.
30 Capital Commitments
Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:
2012
£’000
2011
£’000
Capital expenditure contracted for but not provided for in the ﬁnancial statements 8,943 –
The full amount of the above commitment is in relation to the Group’s joint venture obligations.
31 Financial instruments 
Capital risk management
The Group manages its capital resources so as to ensure that entities in the Group will be able to continue as a going concern, 
while maximising the return to shareholders. Until it achieves positive cash-flow, the Group expects to fund its operations through 
a combination of equity capital raised from the market, asset disposals and, where appropriate, debt finance.
The capital resources of the Group consists of cash and cash equivalents arising from equity attributable to equity holders of the 
parent, comprising issued capital, reserves and retained earnings as disclosed in the Consolidated Statement of Changes in Equity. 
Externally imposed capital requirement
The Group is not subject to externally imposed capital requirements. 
Signiﬁcant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement, 
the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity 
instrument are disclosed in note 3. 
Categories of ﬁnancial instruments
2012
£’000
2011
£’000
Financial assets
Cash and cash equivalents 39,531 50,930
Trade receivables 2 1,754
Other receivables 813 227
40,346 52,911
Financial liabilities
Trade payables 235 1,150
Other payables – 1,975
Shareholder borrowings – 1,165
Financial instruments (FVTPL) – 324
235 4,614
Financial risk management objectives
Management provides services to the business, co-ordinates access to domestic and international financial markets, and monitors 
and manages the financial risks relating to the operations of the Group. These risks include foreign currency risk, credit risk, liquidity 
risk and cash flow interest rate risk. The Group does not enter into or trade financial instruments, including derivative financial 
instruments, for speculative purposes.
As the Group has no committed borrowings, the Group is not exposed to any risks associated with fluctuations in interest rates on 
loans. A two per cent increase in interest rates applied to cash balances held at the balance sheet date would result in an increase 
in interest earned by the Group of approximately £0.8 million over a twelve month period.
Notes to the Consolidated Financial 
Statements continued
For the year ended 31 December 2012 51
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Foreign exchange risk and foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies, with the result that exposures to exchange rate 
fluctuations arise.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date 
are as follows:
Liabilities Assets
2012
£’000
2011
£’000
2012
£’000
2011
£’000
Sterling (“GBP”) – – 1 20
Euros (“EUR“) – 101 7,855 21,179
Polish zloty (“PLN“) 107 – 7 55
US dollars (“USD“) – 1,501 19,962 13,827
Foreign currency sensitivity analysis
The functional currencies of the Group companies are Pounds Sterling (GBP), US dollars (USD), Polish Zloty (PLN) and Euros (EUR). 
The financial statements of the Group’s foreign subsidiaries are denominated in foreign currencies.
The Group’s joint venture is funded in USD, PLN and EUR. Funding commitments are generally settled on a monthly basis following 
cash calls prepared using rates of exchange published by the National Bank of Poland. The Group considers this arrangement helps 
to mitigate its exposure to exchange rate movements on foreign currency transactions, since the rates obtained are likely to be 
materially in line with the expected currency purchase rates on the date of settlement.
The Group is exposed to foreign currency risk arising from recognised assets and liabilities as well as commitments arising from 
future trading transactions. 
Sensitivity analyses have been performed to indicate how the profit or loss would have been affected by changes in the exchange 
rate between GBP, EUR, PLN and USD. The analysis is based on a weakening and strengthening of GBP by ten per cent against 
EUR, PLN and USD, in which the Group has significant assets and liabilities at the end of each respective period. A movement of 
ten per cent reflects a reasonably possible sensitivity when compared to historical movements over a three to five year timeframe. 
The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at 
the period end for a ten per cent change in foreign currency rates. 
The table below details the Group’s sensitivity to a 10 per cent decrease in GBP against USD, EUR and PLN. A positive number 
below indicates an increase in profit where GBP weakens ten per cent against USD, EUR and PLN. For a ten per cent strengthening 
of GBP against the three currencies, there would be an equal and opposite impact on the profit, and the balance below would 
be negative.
2012
£’000
2011
£’000
Increase in proﬁt 3,964 4,636
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss to the Group. 
The Group has minimal trade receivables at the year end, and other receivables are mostly amounts due under the terms of the 
Joint Evaluation Agreement from ConocoPhillips. The Directors do not consider that this poses a significant credit risk given that 
ConocoPhillips has an investment grade credit rating, based on information as supplied by an independent rating agent.
The Group makes allowances for impairment of receivables where there is an identified event which, based on previous experience, 
is evidence of a reduction in the recoverability of cash flows. 
The credit risk on liquid funds (cash) is considered to be limited because the counterparties are financial institutions with good 
credit ratings assigned by international credit-rating agencies in the Isle of Man, UK and Poland, respectively. The carrying amount 
of financial assets recorded in the financial statements represents the Group’s maximum exposure to credit risk.
31 Financial instruments continued 52
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity 
risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management 
requirements. The Group manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring forecast 
and actual cash flows. 
All financial liabilities held by the Group are non-interest bearing. Further information relevant to liquidity risk management is 
included in note 3. 
32 Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are 
not disclosed in this note. 
Trading transactions
During the year, Group companies entered into the following transactions with related parties who are not members of the Group:
Recharge of costs 
and services Amounts owing
2012
£’000
2011
£’000
2012
£’000
2011
£’000
Lane Energy Poland Sp. z o.o. 938 2,930 9 1,567
Lane Energy Poland Sp. z o.o. is a related party of the Group as it is a joint venture, in which the Group holds 30% of the issued 
share capital.
Sale of consultancy services Amounts owing
2012
£’000
2011
£’000
2012
£’000
2011
£’000
Darley Energy plc ––– 55
Darley Energy plc is a related party of the Group because it has Directors and shareholders in common with the Company. As at 31 
December 2011, Darley Energy had no means of repaying its outstanding debt to the Company, which was unsecured. On 19 March 
2012, the Company agreed to assign the outstanding debt to one of the Directors for 20% of its face value. The transaction was 
approved by the Board, the Director concerned absenting himself from the Board discussion and decision. 
Payment for services Amounts owing
2012
£’000
2011
£’000
2012
£’000
2011
£’000
CM Management (IOM) Limited 50 90 – 46
CM Management (IOM) Limited is a related party of the Group because a Director of that company was during the year ended 
31 December 2012 also a Director of the Company and he remains a Director of a number of subsidiaries of the Company.
Payment for services Amounts owing
2012
£’000
2011
£’000
2012
£’000
2011
£’000
David Bremner 102 71 32 28
David Bremner is a Director of the Group and thus a related party.
Notes to the Consolidated Financial 
Statements continued
For the year ended 31 December 2012
31 Financial instruments continued
52
Financial Statements
3Legs Resources
Annual Report & Accounts 2012 53
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Amounts owing
2012
£’000
2011
£’000
Cowley Mining plc 227 227
Cowley Mining plc is a related party of the Group because it has Directors and shareholders in common with the Company.
On 23 November 2012, the Company entered into a Deed of Variation with Cowley Mining. The Company agreed to vary its right to 
a partial repayment of its loan to Cowley Mining, in exchange for an improved right to the repayment of the loan in full and an issue 
of warrants by Cowley Mining. The transaction was approved by a committee of independent Directors on behalf of the Board. 
Shareholder borrowings
During 2010 the Company placed US$2,418,000 of convertible loan notes to a syndicate led by certain shareholders of the 
Company. On 21 February 2011, US$618,000 of these loan notes was converted into 412,000 Ordinary Shares in the Company. 
The outstanding balance of US$1,800,000 was repaid prior to the balance sheet date. Please see note 21 for further detail.
Remuneration of key management personnel
The remuneration of the Non-Executive Directors, Executive Directors and senior management, who are the key management 
personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures. 
2012
£’000
2011
£’000
Short-term employee beneﬁts 1,608 1,349
Termination beneﬁts 185 –
Share based payments 68 61
1,861 1,410
33 Events after the balance sheet date 
On 22 February 2013, Caithness Limited as trustee for Robert Jeffcock notified the Company that it had disposed of 5,000,000 
Ordinary Shares in the Company. On the same date, Robert Jeffcock and Clive Needham resigned as Directors of the Company. 
Clive Needham remains a Director of a number of the Group’s subsidiaries. 
On 27 February 2013, the Company received a notice on behalf of Damille Investments II Limited (“Damille”), a shareholder in the 
Company holding 14.2% of the Company’s issued share capital, requisitioning a meeting of the Company’s shareholders pursuant 
to section 67(2) of the Isle of Man Companies Act 2006 (the “Requisition”). The Requisition proposes a number of ordinary 
resolutions which include: the removal of the majority of the Board of Directors (being all of the Directors except for Kamlesh Parmar 
and Richard Hills); the appointment of certain new Directors to the Board being Brett Lance Miller and Rhys Cathan Davies (who the 
Board understands are both representatives of Damille); and the proposal that the Company adopt a new investment strategy as 
follows “The investment objective of the Company is to manage the realisation of the Company’s existing asset portfolio and to 
maximise the return of invested capital to shareholders during the period ending on 30 June 2015. During this period the Company 
shall not make any new investments other than to support its existing assets.” On the basis that the Requisition is not withdrawn, 
the Company intends to post, with its annual report and accounts, a notice to all shareholders convening a general meeting.
32 Related party transactions continued 54
Financial Statements
3Legs Resources
Annual Report & Accounts 2012
Notes  WWW.3LEGSRESOURCES.COM 
 
3Legs Resources plc
Commerce House,
1 Bowring Road,
Isle of Man, IM8 2LQ
+44 1624 811 611
info@3legsresources.com