3Legs Resources plc
Annual Report & Accounts 2013
3Legs Resources plc Annual Report & Accounts 2013
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WWW.3LEGSRESOURCES.COM
 
Existing LNG import terminal 
Major gas eld 
Major gas import pipeline 
Planned LNG import terminal
Major shale exploration region 
Pipelines from Russia, Norway, North Africa, 
LNG from Africa and Middle East
Source: 3Legs Resources 
Gas import 
pipelines and LNG
LNG
Business 
and Asset 
Overview
Page 2
Our Markets
Page 4
Financial 
Review
Page 18
Our 
Business 
Model
Page 10
CEO’s Strategic 
Review
Page 12
Chairman’s 
Statement
Page 6
www.3legsresources.com
3Legs is listed on the 
Alternative Investment 
Market of the London 
Stock Exchange
Overview
1 Highlights 2013
2 Business and Asset Overview
4 Our Markets
Strategic Report
6 Chairman’s Statement
8 Our Activity 2013
10 Our Business Model
12 CEO’s Strategic Review
18 Financial Review
20 Risk Management
Governance
22 Board of Directors and
 Senior Management
24 Health, Safety, Environmental  
 and Social Responsibility
25 Directors’ Report
28 Corporate Governance 
 Statement
31 Directors’ Remuneration Report
33 Statement of Directors’ 
 Responsibilities
Financial Statements
34 Independent Auditor’s Report
36 Consolidated Income Statement
36 Consolidated Statement 
 of Comprehensive Income
37 Consolidated Balance Sheet
38 Consolidated Cash Flow 
 Statement
39 Consolidated Statement of  
 Changes in Equity
40 Notes to the Consolidated 
 Financial Statements 3Legs Resources plc
Annual Report & Accounts 2013
1
Overview
Highlights 2013
Operational highlights
• Continued primary focus, with ConocoPhillips, on our three western 
concessions in the Polish Baltic Basin, which we believe represent 
some of the most prospective shale acreage in Poland
• Further testing of the Lebien LE-2H lateral well on the Lebork 
concession for a 60-day natural flow test, following a 21-day natural 
flow test in 2012 and initial stimulation and testing in 2011
• Successful stimulation and testing of both target shales, the Piasnica 
and Sasino formations, in the Strzeszewo LE-1 vertical well on the 
Lebork concession, producing gas to surface from both zones
• 32 sq km 3D seismic survey on the Karwia concession, meeting 
licence commitments, plus 67 km 2D survey on the Lebork 
concession for future lateral well placement
• In order to reduce our expenditure elsewhere, we have allowed our 
two remaining southern Poland concessions to lapse, and we have 
sold our German concessions to Rose Petroleum plc in exchange for 
a €400,000 contribution to past costs and a 2% royalty interest
Financial highlights
• Group cash balances of £26.8 million at year end 2013, against  
£39.5 million at year end 2012, with no debt; fully funded for the current 
exploration and appraisal programme on our Baltic Basin concessions
• Net oil and gas assets of £25.9 million (2012: £17 .7 million), reflecting 
the continuing work programme on the Group’s western Baltic Basin 
concessions and consistent with our stated strategic plan
• Net loss for the year of £4.3 million (2012: £6.0 million), reflecting  
the Group’s share of JV losses in Poland, other non-capitalised 
exploration expenses and the (largely unrealised) net effects of 
exchange rate movements
Outlook
• The 2013/14 work programme agreed with ConocoPhillips is well 
under way, and proceeding on time and on budget; the two planned 
vertical pilot wells have now been drilled in the high-graded area within 
our concessions in order to further delineate the extent of the Piasnica 
and Sasino horizons and to determine the optimum placement for the 
planned lateral well 
• The programme will culminate in a long lateral well, to be drilled in the 
Sasino formation by way of a side-track from the vertical well at our 
Lublewo location, and then completed with a multi-stage stimulation 
and test, over the period Q2/Q3 2014
•  The significant learnings to date will help calibrate well and 
completion designs for the planned long lateral well, which is 
expected to provide a good indication of the commercial potential  
of our western Baltic Basin concessions
• The cost of the 2013/14 committed work programme is 
approximately US$63 million gross, or approximately US$19 million 
net to the Group; based on the budget agreed with ConocoPhillips, 
we currently anticipate a Group cash position of approximately £17 
million at end Q3 2014, equivalent to approximately 20 pence a share
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 2013. 
£26.8m
cash balances at year end, 
with no debt
Fully funded for current 
exploration and appraisal 
programme in one of the 
most prospective parts of 
Poland’s leading shale basin 3Legs Resources plc
Annual Report & Accounts 2013
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2
Overview
Leveraging its highly experienced US-based technical 
team, 3Legs seeks to capture the benefits of North 
American innovations in unconventional oil and gas 
exploration and production and deploy these in the 
Polish market, which offers an excellent market 
and infrastructure.
Business and  
Asset Overview
Our strategy
1. Focus on unconventional oil 
and gas
3Legs Resources is an independent oil and 
gas group focused on the exploration and 
production of unconventional oil and gas 
resources in Poland, where the Directors 
believe the Group is well positioned to 
benefit from the emergence of a regional 
unconventional oil and gas sector. 
2. Continue to progress our Baltic 
Basin assets
The Group’s principal exploration assets are 
its interests in six Baltic Basin concessions 
in northern Poland. Working in conjunction 
with ConocoPhillips, a global leader in shale 
exploration and production, we will continue 
to progress our understanding of our three 
western concessions in particular, through 
an active drilling and testing programme, 
backed up by detailed technical analysis. 
We continue to explore possible options for 
our three eastern Baltic Basin concessions. 
3. Evaluate other opportunities  
at limited cost
We will continue to review other 
unconventional oil and gas opportunities 
where we may deploy our expertise at 
limited cost to the Group. No significant 
capital or operational expenditure is 
currently committed or planned for  
any such opportunities. 
70%
ConocoPhillips’ interest in our 
three western Baltic Basin 
concessions, following 
exercise of its option in 
September 2012
Our relationship with 
ConocoPhillips
We have been working with 
ConocoPhillips in the exploration 
and appraisal of our Baltic Basin 
concessions since 2009. We have 
collaborated with ConocoPhillips 
throughout this period, both in field 
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. ConocoPhillips 
continues to commit significant 
resources to the further exploration 
and appraisal of our western Baltic 
Basin concessions and we see this 
as an excellent vote of confidence 
in the commercial potential of 
these concessions. 
We look forward to working with 
ConocoPhillips in applying the 
knowledge we have gained from 
our activities to date to our 
2013/14 drilling programme.  3Legs Resources plc
Annual Report & Accounts 2013
3
Overview
Gdansk
Poznan
Warsaw
Katowice
Krakow
Wroclaw
Gdansk
Lane Energy 
Poland 
Lane Energy 
Exploration The further evaluation of our western 
Baltic Basin concessions is the focus of 
our current strategy. During the year we 
have made good progress in progressing 
our understanding of these concessions, 
following the transfer of operatorship to 
ConocoPhillips in September 2012.
Asset overview
Poland
Lane Energy Poland Sp. z o.o.
• Three concessions, 506,000 acres 
gross, 152,000 acres net
• Operated by 3Legs until September 
2012, now operated by 
ConocoPhillips
• 200 sq km of 3D and 70 km of 2D 
seismic acquired to date
• Two vertical and two lateral wells 
drilled and completed to date; all four 
wells have produced natural gas
• Further testing of long lateral wells 
carried out in 2012 and 2013
• Two further vertical wells drilled in 
preparation for planned 2014 long 
lateral well and test 
• Decision on further activity following 
result of testing of planned  
lateral well
Poland
Lane Energy Exploration Sp. z o.o.
• Three concessions, 578,000 acres 
gross and net
• 50 sq km of 3D seismic acquired  
to date
• One vertical well drilled to date 4
Overview
3Legs Resources plc
Annual Report & Accounts 2013
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Natural gas price in 
US, Europe and Japan
15
12
9
6
3
0
US$ PER MILLION BTU
95 97 96 99 98 01 00 03 02 05 04 07 06 08 09 10 11 12
JAPAN LNG cif
UK NBP
Average German 
import price cif
US Henry Hub
Source: BP
Our Markets
What is unconventional oil and gas?
• Unconventional oil and gas typically 
includes shale oil and shale gas, 
tight oil and tight gas, and coal  
bed methane. 
• Shale oil and gas and tight oil  
and gas occur in very fine grained 
sedimentary rocks with low 
permeability, such that the 
hydrocarbons cannot be extracted 
in commercial quantities using 
conventional methods alone. 
• To flow oil or gas commercially from 
shale normally requires the drilling  
of extended horizontal sections,  
to obtain the maximum possible 
contact between the well and the 
shale source rock. Sections of the 
shale are then stimulated using 
hydraulic fracturing to create 
additional exit pathways, to 
encourage the hydrocarbons  
to migrate to the well and then  
to surface.
The case for shale oil and gas 
• With modern drilling techniques,  
an increasing number of horizontal 
wells – as many as 10 or more – can 
be drilled from the same location, 
thus enabling an increasingly large 
area – up to several hundred 
hectares – to be drained from a 
single well pad. Well locations can 
also be sited away from urban or 
other sensitive areas, to minimise 
disturbance. 
• While a considerable amount of 
water is required for drilling and 
stimulating shale wells, energy 
generated from shale gas requires 
only a small proportion of the 
amount of water required to produce 
the same amount of energy from 
coal or oil, and even less to produce 
the same amount of energy from 
ethanol, or biodiesel. 
• Hydraulic fracturing fluid is typically 
98%-99% water and sand, with a 
small amount of other additives. 
Most of these additives are found in 
everyday items such as cosmetics, 
shampoo and household cleaning 
products. Use of these additives in 
Poland is regulated under the EU 
REACH regulations.
• The oil and gas industry has a 
strong track record of innovation in 
unconventional oil and gas, resulting 
in continuing improvements in well 
integrity, well productivity and cost 
reductions. Other methods of 
stimulation which do not involve  
the use of water are either  
under development or already  
being trialled. 
The case for shale gas in Europe
The supply gap 
• Global demand for natural gas is 
forecast by the IEA
1
 to grow steadily 
over the period 2010 to 2035 – the 
only fossil fuel for which this is the 
case – at rates of 1.6%-1.9% per 
annum. In the EU, demand for 
natural gas is forecast to grow at 
approximately 0.7% per annum. 
• Conventional gas production in  
the EU is expected to continue  
its long-term downward trend, 
declining at an annual rate of 1.4%. 
• Net gas imports into the EU are 
forecast to rise from 302 bcm (11 
tcf) in 2011 to 525 bcm (19 tcf) in 
2035, representing an increase  
from 63%-85% of total EU 
consumption of natural gas. 
• EU member countries have a strong 
incentive to develop alternative 
sources of supply of natural gas, 
including LNG and unconventional 
gas, to reduce their dependence on 
any one supplier. 
• The EU market for natural gas 
further benefits from the prevailing 
trend for long-term gas supply 
contracts linked to the oil price,  
in contrast to the US where a large 
proportion of gas sales are at spot 
prices, which have in recent years 
been significantly lower than the 
oil-linked price. 
Environmental benefits 
• Carbon emissions from natural gas 
are approximately half those of coal. 
Natural gas leaves no ash residue 
requiring disposal, its main by-
products being water vapour  
and carbon dioxide.
• In the US, the increased use of 
natural gas has resulted in carbon 
emissions declining by 12%  
since 2007, more than in any EU 
member state
2
. 
• Generating capacity powered from 
natural gas can be brought on 
stream quickly and cheaply, as 
compared to other fossil fuels or 
nuclear power, and thus represents 
the ideal back-up capacity to meet 
fluctuations in renewable power.  5
Overview
3Legs Resources plc
Annual Report & Accounts 2013
 
Existing LNG import terminal 
Major gas eld 
Major gas import pipeline 
Planned LNG import terminal
Major shale exploration region 
Pipelines from Russia, Norway, North Africa, 
LNG from Africa and Middle East
Source: 3Legs Resources 
Gas import 
pipelines and LNG
LNG
Economic benefits – the US 
experience
• According to a recent report by 
IHS-CERA
3
, the share of US natural 
gas produced from unconventional 
sources will increase to 67% by 
2015, rising to 79% by 2035. 
Increased unconventional gas 
activity will contribute to capital 
investment, employment and 
Government revenue across the 
country, thus:
  Nearly US$3.2 trillion in 
investments in the development 
of unconventional gas are 
expected to spur the increase  
in production between 2010  
and 2035.
  In 2010, unconventional gas 
activity supported 1 million jobs; 
this is expected to grow to nearly 
1.5 million jobs in 2015 and to 
over 2.4 million in 2035.
  By 2015, unconventional gas 
activities will contribute an 
estimated US$50 billion in 
federal, state and local 
Government tax and federal 
royalty revenue; between  
2010 and 2035, continued 
development of unconventional 
gas will generate a cumulative 
estimated total of nearly  
US$1.5 trillion in federal, state 
and local tax and royalty revenue.
1 World Energy Outlook 2012, IEA
2 EIA
3 The Economic and Employment Contributions  
of Unconventional Gas Development in State 
Economies, prepared for America’s Natural Gas 
Alliance, June 2012 6
Strategic Report
3Legs Resources plc
Annual Report & Accounts 2013
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We have long believed, and continue to believe, that  
the area of our western Baltic Basin concessions 
represents the most prospective region of Poland  
for shale gas exploration. 
Chairman’s Statement
Introduction
During 2013 we have continued to  
progress our core strategy of evaluating  
the shale gas potential of our three western 
concessions in the Baltic Basin in northern 
Poland, which represent the more gas-
prone part of our Baltic Basin acreage.  
We have long believed, and continue to 
believe, that the area of our western Baltic 
Basin concessions represents the most 
prospective region of Poland for shale  
gas exploration. ConocoPhillips acts  
as operator of the three concessions, 
following the exercise of its option to acquire 
a 70% interest in these concessions in 
September 2012. 
Strategic overview
During the year under review, together with 
ConocoPhillips we drilled one vertical well 
on our concessions and performed three 
rounds of testing on two other wells, namely 
a third round of testing on the Lebien LE-2H 
horizontal well and two single-stage 
stimulations and tests on the Strzeszewo 
LE-1 vertical well. Towards the end of the 
year we agreed with ConocoPhillips, and 
subsequently announced, our 2013/14 
drilling programme, which comprised the 
drilling of two vertical wells and is planned 
to culminate in the drilling of a long-length 
lateral well in the Sasino (or Ordovician O3) 
horizon, our primary shale target. This 
lateral section is planned to be stimulated 
with a multi-stage gel frac programme and 
tested for up to 90 days, in the third quarter 
of 2014. The design and execution of the 
lateral well programme will incorporate all 
our extensive learnings to date and we are 
looking forward to achieving a significant 
improvement over the rates achieved from 
the Lebien LE-2H lateral well, which was 
drilled in 2011 and was the last lateral well 
we drilled which targeted the Sasino shale. 
In our 2012 Annual Report we announced 
that, following discussions with major 
shareholders, the Board had determined 
that we should limit the geographical focus 
of the Group’s activities to Poland – which 
was already the Group’s core area of 
activity in any case – so as to be able to  
give sufficient priority to our appraisal 
programme in the Polish Baltic Basin. We 
have therefore proceeded to reduce our 
commitments elsewhere and to restructure 
our overhead to reflect our more focused 
strategy. Further details are contained in the 
Chief Executive Officer’s Strategic Review. 
Changing political climate
We have been encouraged by more positive 
signals across Europe, suggesting that the 
shale gas sector may be winning greater 
acceptance in the region than it had 
previously enjoyed. In the UK, the coalition 
Government has put considerable effort into 
promoting shale gas as an important 
opportunity for the country to diversify its 
sources of energy, while at the same time 
bringing jobs and other benefits to the 
economy. In Brussels, the European 
Commission has recently adopted a 
recommendation designed to ensure  
that proper environmental safeguards  
are in place for hydraulic fracturing, while 
encouraging member states to develop  
their own regimes for the regulation of shale 
gas exploration and related activities. 
In Poland, there has been an active debate 
between policymakers and industry for over 
a year now regarding the future taxation, 
licensing and regulation of shale gas 
activities. We were very pleased when the 
Government was effectively able to ease the 
deadlock which had developed, as was 
evidenced by some supportive statements 
from Prime Minister Tusk and the 
announcement of two new senior ministerial 
appointments. Since then, the Government 
has made it clear that it has no intention of 
placing obstacles in the way of the 
development of a shale gas industry in 
Poland, when the commercial potential of 
the Polish shale gas sector has yet to be 
demonstrated. The existing fiscal regime is 
expected to be maintained for the time 
being, while modifications to other aspects 
of the licensing and regulatory regime for 
shale activities in Poland are expected to 
address a number of the concerns raised 
by investors.
Tim Eggar
Chairman 7
Strategic Report
3Legs Resources plc
Annual Report & Accounts 2013
Our Chief Executive Officer has recently 
been re-elected as President of OPPPW, 
the Polish upstream industry group, placing 
him in an ideal position to ensure industry 
concerns are heard. 
Extraordinary General Meeting
In February 2013, we received a requisition 
notice from a minority shareholder calling 
for an Extraordinary General Meeting 
(“EGM”) to discuss possible changes to the 
Board composition and to Group strategy. 
The requisition notice proposed a number 
of resolutions, including: the removal of the 
majority of the Directors (being all of the 
Directors except for Kamlesh Parmar and 
Richard Hills); the appointment of two new 
Directors, whom the Board understood to 
be representatives of the requisitioning 
shareholder; 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.”
As required by the requisitioning 
shareholder, an EGM was duly convened 
and held on 19 April 2013, to coincide with 
our Annual General Meeting. The Board 
unanimously advised shareholders to  
reject the proposed EGM resolutions, and 
they were indeed rejected by majorities  
of a minimum of 56% of votes cast. The 
Board welcomed this affirmation by 
shareholders of the Group’s existing  
Board and corporate strategy. 
Board changes
A number of Board changes took  
effect during the first half of the year, as 
announced in last year’s Annual Report. 
Robert Jeffcock 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 retired by rotation 
at the Annual General Meeting on 19 April 
2013 and decided not to present himself for 
re-election to the Board. 
This year David Bremner will retire from  
the Board by rotation and will present 
himself for re-election. We continue to  
keep the composition of the Board under 
regular review. 
Conclusion
We thank our shareholders for their 
continued support throughout the year and 
we look forward to sharing with them the 
results of our current drilling programme. 
Tim Eggar
Chairman
20 March 2014
Progress to date
Our focus has been on de-risking and high-grading our Baltic Basin 
concessions in the most cost-effective manner. 
• Two lateral wells drilled, stimulated and tested, Lebien LE-2H and Warblino 
LE-1H
• A further six vertical wells drilled and logged, of which five were cored
• 255 sq km of 3D seismic and 70 km of 2D seismic acquired
• 2013/14 exploration programme ongoing
3Legs, with ConocoPhillips, has been a leader in the exploration and appraisal 
of the Baltic Basin shale play.  8
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Annual Report & Accounts 2013
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Activity to date
3Legs’ high-graded area
Damnica Lebork
Karwia
Strzeszewo LE-1
Slawoszyno LEP-1
Lublewo LEP-1
Lublowo LEP-1ST1H
Lebien LE1 & LE-2H
Warblino LE-1H
3D seismic survey
Key:
Existing well
Existing well and planned well 
3Legs/ConocoPhillips concession
In 2013 our field activity has focused on further 
delineating our high-graded area, which extends across 
the northern two thirds of our western Baltic Basin 
concessions, and on deepening our understanding of 
the properties of our target shales and their likely 
response to a multi-stage stimulation. 
Our Activity in 2013
Target formations 
• We have two separate target zones 
on our concessions: the Sasino (or 
Ordovician O3) shale and the 
deeper Piasnica (or Cambrian 
Alum) shale
• Only the Sasino horizon was 
included in the Competent Persons 
Report prepared for 3Legs’ IPO in 
June 2011
• Gas has been flowed to surface 
and flared from both formations 
and all four wells on our  
western concessions 9
Strategic Report
3Legs Resources plc
Annual Report & Accounts 2013
Activity on 3Legs’ Baltic 
Basin concessions
2009-2011
225 sq km of 3D seismic acquired in 
three shoots across three concessions
2010
Two vertical wells, Lebien LE-1 and 
Legowo LE-1, drilled for coring, 
logging and analysis
2011
Drilled the first two lateral shale gas 
wells in Poland, testing two different 
pay-zones:
• Lebien LE-2H, completed in Sasino 
shale
• Warblino LE-1H, completed in 
Ordovician O1 horizon (not the 
Piasnica shale as intended)
2012
Further testing of Warblino LE-1H and 
Lebien LE-2H lateral wells
• Significantly improved flow rate on 
Lebien LE-2H well, 550 mscf/d
New vertical well, Strzeszewo LE-1, 
drilled in December 2012 for coring 
and analysis
Current year activity 
Strzeszewo LE-1 vertical well 
• First stimulation and test executed in Piasnica formation in Q2 2013; natural 
gas flowed to surface and flared 
• Second stimulation and test in the Sasino formation in Q4 2013; natural gas 
flowed to surface and flared 
Lebien LE-2H lateral well 
• Further natural flow test commenced 21 July 2013 at 470 mscf/d, similar  
to when second phase of testing was suspended 
• Continuing to flow at 230 mscf/d at end of 60-day natural flow test period, 
when well was shut in for pressure build-up 
Preparations for 2013/14 drilling programme 
• 30 sq km of 3D data acquired on Karwia concession and 70 km of 2D data 
acquired on Lebork concession
• First well, Lublewo LEP-1, spudded in December 2013 and reached target 
depth in January 2014 10
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Sustainability
Financial viability
Government and
community relationships
Industry partnerships
Technical leadership
05
01
04
02
03
Our business model
Our business model is built around five core elements: 
technical leadership; industry partnerships; Government 
and community relationships; financial viability; and 
sustainability. By meeting our goals in these five key 
areas, we aim to deliver on our business strategy and 
create significant value for our shareholders. 
Our Business Model 11
Strategic Report
3Legs Resources plc
Annual Report & Accounts 2013
Our business model explained
01 Technical leadership
Deploying our US-based unconventional 
resources capability, we aim to apply 
innovative, proven North American 
exploration techniques to our asset 
portfolio, with a view to enabling value to  
be created from shale pay zones which  
up until recently have been considered 
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 oilfield service 
companies from Poland and elsewhere, 
including Schlumberger, United Oilfield 
Services, MND Drilling Services, MI Swaco, 
Geofysika Torun, NOV, Viking and Geokrak. 
The oilfield services market in Poland is 
evolving, as it adapts to an increased level 
of activity in the country, creating 
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. Through 
our leadership position in 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. Through our operations and  
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 work programme is 
funded through to the next key milestone 
and beyond, leaving sufficient 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 sufficiently 
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 field, and employing 
experienced senior technical staff 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 staff where 
possible and engaging local 
communities in planning processes 
The Group aims at all times to act as a 
responsible operator in the field and 
elsewhere. 
Core Strengths
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.  12
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We continue, with ConocoPhillips, to lead the way in the 
Baltic Basin in northern Poland and are now preparing to 
drill, stimulate and test our third long lateral well in the 
Basin, which will be our eighth well in total. 
CEO’s Strategic Review
Introduction
2013 has seen the Group further 
consolidate and progress its activities in the 
Baltic Basin in northern Poland. Following 
the adoption of a narrower geographical 
focus in early 2013, we have disposed of 
our commitments in southern Poland and  
in southern Germany, while continuing to 
channel our resources into the exploration 
and appraisal of our western Baltic Basin 
concessions, working closely with US oil 
major ConocoPhillips. 
Through the detailed analysis of data 
gathered from our seismic and drilling 
programmes and, where appropriate, from 
data exchanges with other operators, we 
continue to deepen our understanding of 
our target shales on our concessions and  
of how best to optimise our drilling and 
completion strategies. Our 2013/14 work 
programme is planned to culminate in the 
drilling, multi-stage stimulation and testing 
of a long lateral well on our concessions in 
the second and third quarters of this year, 
and we are confident that we are well 
placed to apply the lessons we have 
learned to date to this important well. 
Baltic Basin concessions, 
northern Poland
Throughout the year we have focused our 
activities on our three western Baltic Basin 
concessions in northern Poland, which 
extend over some 500,000 acres and,  
we believe, represent some of the most 
prospective shale acreage in the onshore 
Baltic Basin and indeed in Poland as a 
whole. We hold a 30% interest in the three 
concessions, the remaining 70% interest 
being held by ConocoPhillips, which has 
acted as operator since September 2012. 
We have continued to collaborate with 
ConocoPhillips in all aspects of the design 
and implementation of our agreed 2013/14 
work programme. 
Both of our target shales, the Ordovician-
age Sasino formation and the deeper 
Cambrian-age Piasnica formation, are 
believed to extend across substantially all of 
the three concessions. Our geological 
modelling indicates that the Sasino 
formation thickens towards the north of our 
concessions, while the Piasnica formation 
thickens towards the north and west. It is 
those areas of greater thickness that form 
the primary basis of our high-graded area, 
which will be a priority focus in any future 
development programme. 
Further testing of Lebien LE-2H lateral well
The Lebien LE-2H lateral well was originally 
drilled into the Sasino formation in 2011 and 
was tested in 2011 and again in 2012. When 
tested on the second occasion, in the fourth 
quarter of 2012, the well had flowed at an 
average rate of 550 mscf/d during a 21-day 
natural flow test, flowing at approximately 
470 mscf/d immediately prior to that test 
being suspended. 
A third phase of testing was initiated in July 
2013, using a 2 
3
/8 inch tubing string as 
opposed to the 3 
1
/2 inch string that was 
used on the previous occasion when the 
well was tested. Down-hole gauges were 
placed in the well, to collect pressure data, 
and pressurised samples of the produced 
fluids were also collected. These data had 
not, to our knowledge, been gathered from 
any previous testing in the Baltic Basin,  
and have assisted our understanding of 
reservoir conditions in the stimulated  
target formation. 
Following the placing of down-hole gauges, 
the well was put on a 60-day natural flow 
test. The well flowed initially at 470 mscf/d, 
i.e. the same rate as when the second 
phase of testing was suspended, and at the 
end of the 60-day test period the well was 
continuing to flow at approximately 230 
mscf/d. The well continued to clean up 
during the test and by the end of the test 
period approximately 45% of the frac fluid 
used during the hydraulic fracturing 
operation on the well in 2011 had been 
recovered. Down-hole gauges were then 
left in place in order to collect valuable 
bottom hole pressure data.
Kamlesh Parmar
Chief Executive Officer 13
Strategic Report
3Legs Resources plc
Annual Report & Accounts 2013
The intention in using a smaller diameter 
tubing string on the third phase of testing 
had been to provide additional flow-rate 
velocity during the test, and thereby achieve 
an improved liquid unloading. In the event, 
the use of the smaller diameter tubing string 
did not have a significant impact on flow 
rate, although it did enable the well to flow 
at more stable rates. 
On the other hand, analysis of the flow test 
data obtained on both the second and third 
phases of testing indicated an area of 
apparent low fracture conductivity, 
potentially impeding the flow of natural gas 
into the wellbore. This area of apparent low 
fracture conductivity may be explained by a 
number of factors, many of which are being 
addressed in subsequent well and 
completion design.
Testing of Strzeszewo LE-1 vertical well
The Strzeszewo LE-1 well was drilled in late 
2012 as a vertical well within our high-
graded area in order to enable us to 
evaluate and test both our target formations, 
the Sasino shale and the deeper Piasnica 
shale, in a key part of our acreage. 
Following completion of coring and logging 
of the well in 2012, a first DFIT (Diagnostic 
Fracture Injectivity Test) was performed in 
the Piasnica formation, followed by a 
single-stage hydraulic frac treatment in May 
2013. Cleaning up commenced in August 
2013, using a nitrogen lift as planned.  
After a temporary shut-in to enable the 
perforations to be checked and to set 
down-hole pressure gauges, the well flowed 
natural gas and a flare was lit for a short 
period. The well was eventually shut in after 
15 days of testing in September 2013, by 
which time some 22.5% of the frac fluid 
originally injected had been recovered. The 
well flowed natural gas periodically during 
the test and gas samples were obtained. A 
pressure build-up test was then conducted. 
The Strzeszewo LE-1 well is currently the 
only well where we have tested the Piasnica 
shale on our concessions, since our most 
recent core and log analysis, discussed 
below, now indicates that our Warblino 
LE-1H lateral well, drilled in 2011, did not in 
fact test this zone. As we have indicated 
previously, the excellent hydrocarbon 
generation properties of the Piasnica (or 
Cambrian Alum) shale in this region of 
Europe are well known, as has been 
confirmed by the encouraging total organic 
carbon (TOC), shale porosities and gas 
shows recorded when we have drilled 
through this formation on our concessions. 
These parameters would appear to indicate 
that the formation is potentially as 
prospective as the Sasino shale, and we 
continue with ConocoPhillips to consider 
possible strategies for demonstrating  
its potential. 
Following a further DFIT, a second single-
stage hydraulic frac treatment was 
successfully executed in the Sasino shale  
in the Strzeszewo well in December 2013. 
Cleaning up of the well commenced in 
December 2013, again using a nitrogen lift. 
The well continued to clean up for a period 
of 19 days, during which time the well 
flowed natural gas at modest rates and 
some 63% of the frac fluid originally injected 
was recovered. The well was shut in on  
12 January 2014 and a pressure build-up 
test was conducted. 
On both occasions, the stimulation was 
carried out using a cross-linked gel fluid, 
and post-frac evaluations indicated that in 
each case the proppant was successfully 
delivered into the target formation. Data 
gathered from the programme will help 
calibrate the completion programme to be 
used on our long lateral well, planned to  
be drilled in the second quarter of 2014.
Legowo LE-1 well
We drilled the Legowo LE-1 vertical well in 
2010 on our Cedry Wielkie concession (one 
of our eastern Baltic Basin concessions), 
where we remain 100% owner and 
operator. The well was then cored, logged 
and tested with a DFIT. Following the 
decision to prioritise our western Baltic 
Basin concessions for further exploration 
activity, it was decided to plug and abandon 
this well and to reinstate the well location to 
In the Baltic 
Basin:
Our 2014 programme 
incorporates the learnings from 
our five years of continuous 
activity in the Baltic Basin. 
Planned activity to end 2014 – all on western Baltic Basin concessions
2013 2014
Activity Q4 Q1 Q2 Q3 Q4
Strzeszewo LE-1
DFIT/frac/testing
Lublewo LEP-1
Drilling/coring/logging
Slawoszyno LEP-1
Drilling/coring/logging
Lublewo LEP-1ST1H
Drilling
Frac/testing
 Drilling/coring/logging  DFIT/frac/testing 14
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Annual Report & Accounts 2013
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2013/14 programme
A single stage stimulation and test of the Sasino horizon was carried out in the 
Strzeszewo LE-1 well, during December and January 2013
• Used a cross-linked gel fluid delivering over 300,00lbs of sand 
• Well flowed gas and is now shut in for pressure-build up data
• Test data and pressure-build up data will assist in calibration of completion 
design for planned long lateral well
67 km of 2D seismic acquired on our Lebork concession in January 2014, to assist 
in the design and implementation of any future pilot development programme
Drilling of two new vertical wells, Lublewo LEP-1 and Slawoszyno LEP-1 (both 
now concluded)
• Further improve understanding of our two target formations in our high 
graded area, including depth, thickness and shale reservoir properties
• Determine the optimum placement of the planned lateral section
CEO’s Strategic Review Continued
its original condition. The plug and abandon 
work has now been completed and the well 
location has been re-instated and returned 
to the landowner. The cost of this work is 
funded in full by ConocoPhillips under the 
terms of the Joint Evaluation Agreement 
signed in 2009. 
Core and log analysis 
As in the case of previous vertical wells 
drilled on our concessions, a programme of 
extensive coring and logging was carried 
out on the Strzeszewo LE-1 well and, 
following the year end, on the Lublewo 
LEP-1 and Slawoszyno LEP-1 vertical wells 
(the latter being logged only). 
Some 220 metres of core were taken from 
across the entire prospective section in the 
Strzeszewo LE-1 well and this, in 
combination with the well logs, has 
undergone detailed analysis. Further 
analysis has also been carried out on cores 
and logs taken from the Lebien LE-1 well 
and from the vertical pilot well drilled at 
Warblino LE-1. The analysis has enabled  
a significantly improved understanding of 
our principal target zones, including their 
reservoir properties and materiality. 
Analysis of cores and logs from the 
Warblino LE-1 vertical well, drilled in 2011, 
now indicates that the lateral section 
sidetracked from this well, and tested in 
2011 and 2012, in fact tested the overlying 
Sluchowo (or Ordovician O1) shale 
formation, instead of the Piasnica shale as 
originally intended. Log analysis also 
appears to confirm the very promising 
hydrocarbon generation properties of the 
Piasnica shale in this area, consistent  
with the strong gas shows which we  
have recorded when drilling through  
this formation. 
Our primary objective on our concessions 
remains the Sasino shale interval, which is 
estimated to have a thickness of 25 to 40 
metres across our high-graded area. The 
Piasnica shale interval represents a 
potentially important additional objective. 
This zone, which was not included in our 
Competent Person’s Report at the time of 
our IPO, is estimated to have a thickness of 
15 to 20 metres across the high-graded 
area. Each interval is being separately 
evaluated on the basis that either might 
potentially justify a field development. 
Seismic acquisition
The acquisition of 32 sq km of 3D seismic 
data on the Karwia concession was 
completed in July 2013 and the new  
data have undergone processing and 
interpretation. This seismic survey was 
conducted both to meet existing licence 
commitments on the concession and to 
support future drilling activity. 
A second campaign, involving the 
acquisition of 67 km of 2D seismic data on 
our Lebork concession, was completed in 
January 2014. This seismic programme, 
together with data gathered from the recent 
Lublewo LEP-1 and Slawoszyno LEP-1 
vertical wells and the results of the planned 
long lateral well, will assist in the placement 
of a second long lateral well and ultimately 
will assist in the location and implementation 
of any future pilot development programme. 
2013/14 drilling programme
During discussions on the 2013/14  
drilling programme, we concluded with 
ConocoPhillips that although the testing  
of our target zones in a vertical well, as in 
Strzeszewo LE-1, could yield valuable data, 
it was nevertheless unlikely to provide 
sufficient information to enable flow rates 
from a long lateral section to be reliably 
projected. We therefore agreed to include in 
this programme a long-length lateral well, to 
be stimulated with a multi-stage treatment 
and then tested for up to 90 days. We 
agreed also that our primary target remains 
the Sasino horizon, while the Piasnica 
horizon remains an important secondary 
objective. The 2013/14 well programme is 
designed both to meet current licence 
commitments and to progress the 
exploration of our target shales.  15
Strategic Report
3Legs Resources plc
Annual Report & Accounts 2013
Slawoszyno LEP-1
Lebork
Karwia
Damnica
Warblino LE-1
Lublewo LEP-1
Strzeszewo LE-1
Lebien LE-1 & LE-2H
0.0
5
10
15
20
25
30
35
40
45
50
55
60
Existing well and planned well
3D seismic survey
Existing well
Key:
Lublewo LEP-1ST1H
3Legs/ConocoPhillips 
concession
The first stage of the 2013/14 programme 
comprised the drilling of two new vertical 
wells, the Lublewo LEP-1 and the 
Slawoszyno LEP-1. These wells are 
intended to improve our understanding  
of our two target formations in our high-
graded area, including depth, thickness and 
shale reservoir properties, and hence to 
determine the optimum placement of the 
planned lateral section. The wells also 
enabled a decision on the location of the 
planned lateral well to be taken following an 
evaluation of our primary target, the Sasino 
horizon, at both locations.
Learnings to be applied
An important factor in maximising 
productivity from our target formations will 
be managing their sensitivity to water. 
Based on our core analysis, we are 
continually improving the mud programme 
and the choice of stimulation fluids. 
Our completion designs are now based on 
a cross-linked gel, rather than a slickwater 
fluid as was used on the initial stimulation of 
the Lebien LE-2H lateral well in 2011. Using 
a cross-linked gel will effectively stimulate 
the target horizon while reducing the 
amount of water needed for each stage and 
optimising the amount of proppant delivered 
into the target formation. 
Ongoing core analysis and testing from our 
wells is helping us to prepare for and 
manage other rock sensitivities with a view 
to optimising completion design. Test data 
have indicated that an optimum strategy for 
improving formation productivity is to 
stimulate a larger number of smaller 
fractures, but using high volumes of 
proppant in each case (i.e. significantly 
higher than those used in our Lebien LE-2H 
lateral well). We have also concluded that 
the most suitable proppant for the main  
part of the stimulation programme is a 
30/50 mesh high-quality white sand as 
opposed to, for example, a ceramic or 
resin-coated proppant. 
Drilling of Lublewo LEP-1 and Slawoszyno 
LEP-1 vertical wells
The Lublewo LEP-1 vertical well was 
spudded in December 2013, reaching 
target depth in January 2014. The well was 
drilled to 2,924 metres true vertical depth 
into the Middle Cambrian interval. Some  
141 metres of full-diameter 4-inch core were 
recovered from the well over the Lower 
Silurian, Ordovician, and Cambrian intervals, 
and an extensive suite of logs was also run 
on the well at total depth. The cores and 
logs are now undergoing processing  
and analysis.
Drilling of the Slawoszyno LEP-1 vertical 
well, the second well in our programme, 
was commenced on 15 February 2014 and 
has now been completed. The well was 
drilled to 2,819 metres true vertical depth 
into the Middle Cambrian interval. An 
extensive suite of logs has been run on the 
well over the Lower Silurian, Ordovician, and 
Upper Cambrian intervals, which are now 
undergoing processing and analysis. Both 
wells have been cased and cemented and 
temporarily suspended at intermediate 
casing depth. 
Preliminary analysis confirms our earlier 
modelling of the Piasnica and Sasino 
formations across the northern portions of 
our western Baltic Basin concessions, and 
hence the extent of the high-graded area 
which we have previously identified. While 
the precise thicknesses of the two 
formations will be determined following final 
processing and analysis, the data indicate 
that both wells encountered a Sasino 
section of similar thickness to that seen in 
the Strzeszewo LE-1 vertical well, and a 
Piasnica horizon which is slightly thinner 
than the same formation encountered at  
the Strzeszewo LE-1 vertical well, thus 
confirming our earlier modelling in  
both cases.
Sasino isopach map
3Legs’ high 
graded area
Source: 3Legs Resources 16
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3Legs Resources plc
Annual Report & Accounts 2013
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2013/14 programme, continued
• Drill a long lateral well of up to 1,600 metres in the Sasino shale, by way of a 
sidetrack from the Lublewo well
• The long lateral well, Lublewo LEP-1ST1H, will be treated with a multi-stage 
stimulation using a cross-linked gel fluid, and flow-tested for up to 90 days
• A decision on the drilling and testing of a second long lateral well, most likely 
in the Piasnica shale, will be taken following first results from the test of the 
Lublewo LEP-1ST1H well
• If we achieve positive results from the tests of one or both lateral wells, we 
will consider with ConocoPhillips the possible design and implementation of 
a pilot development programme 
• Programme meets current licence commitments and will progress 
exploration of target shales 
CEO’s Strategic Review Continued
Planned lateral well
Following a review of the data gathered from 
both the Lublewo LEP-1 and the Slawoszyno 
LEP-1 wells, and of the 2D seismic recently 
acquired in the Lublewo area, we have 
agreed with ConocoPhillips to select the 
Lublewo LEP-1 well as the location for the 
planned long lateral well, which is the third 
and final well in the 2013/14 drilling 
programme. This lateral well, Lublewo 
LEP-1ST1H, is planned to be drilled by way of 
a side-track in the Sasino shale and is 
expected to involve a long lateral section of 
up to 1,600 metres, as compared to the 
lateral section of 1,000 metres at the Lebien 
LE-2H well. The well will then be completed 
with a multi-stage stimulation using a 
cross-linked gel fluid. The completion 
programme is also expected to involve a 
larger number of perforations per stage, and 
larger volumes of proppant per stage, as 
compared with the Lebien LE-2H well. 
We expect our refined completion design to 
yield a significant improvement in flow rates 
as compared with flow rates achieved to 
date. Once stimulated and cleaned up, 
the well will be put on test for up to 90 days. 
We expect testing of the planned long 
lateral well to take place in the third quarter 
of 2014. 
We are pleased to report that our 2013/14 
programme is to date proceeding on time 
and on budget. A decision on the drilling, 
stimulation and testing of a second long 
lateral well, most likely in the underlying 
Piasnica shale horizon, will be made 
following the receipt of results from the test 
of the first lateral well. If we achieve positive 
results from the tests of one or both lateral 
wells, we will then consider with 
ConocoPhillips whether to proceed to 
design and implement a pilot production 
programme. 
Balance sheet impact
The cost of the 2013/14 work programme 
which we have committed to is expected  
to be approximately US$63 million gross,  
or approximately US$19 million net to the 
Group. We anticipate that following 
implementation of the programme outlined 
above and based on the budget we have 
agreed with ConocoPhillips, we will have 
cash reserves of approximately £17 million 
at the end of the third quarter of 2014, 
equivalent to approximately 20 pence  
a share. 
While we are committed to the programme 
outlined above, we will not commit to any 
further expenditure on our western Baltic 
Basin concessions in the absence of 
positive initial results from the planned 
lateral well. If such positive initial results do 
not materialise, we will consider all options 
at that stage including discussing with 
ConocoPhillips alternative options for the 
further exploration and appraisal of the 
western Baltic Basin concessions, which 
may include reviewing our continued 
participation in these concessions. In 
addition, 3Legs has agreed to a one-time 
right to cease its participation in these 
concessions at the point that 3Legs’ 
expenditure on this work programme 
reaches US$19 million on or before 
31 December 2014. 
Other assets
Following discussions with our 
shareholders, we committed last year to 
limit the geographical focus of our activities 
to Poland in order to enable us to maximise 
our focus on our Baltic Basin concessions, 
in particular our western Baltic Basin 
concessions. Since then, we have decided 
to relinquish our two remaining concessions 
near Krakow in southern Poland, rather than 
incur any further expenditure on these 
concessions. This follows the earlier 
surrender, in 2012, of one of our three 
concessions there.
In August 2013 we entered into a contract 
for the sale of our two German concessions 
(then undergoing renewal) to Rose 
Petroleum plc, in exchange for a 2% royalty 
interest and a €400,000 contribution to past 
costs, of which €300,000 was paid at 
signing. Renewal of the concessions was  17
Strategic Report
3Legs Resources plc
Annual Report & Accounts 2013
completed in December 2013 and the  
sale to Rose Petroleum was completed  
in January 2014, when the remaining 
€100,000 was paid. We continue to 
investigate possible options for our three 
eastern Baltic Basin concessions, and are  
in active discussions with potential partners 
in relation to these.
Polish oil and gas sector 
Throughout the year we have played an 
active role in discussions relating to the 
future development of the oil and gas sector 
in Poland. In June 2013 I was elected 
President of the Management Board of 
OPPPW, the Polish exploration and 
production industry organisation, and in 
March 2014 I was re-elected for a further 
term as both a member of the Management 
Board and President. 
The Polish Government continued 
throughout most of 2013 to advocate its 
previously announced proposals for the 
modification of the fiscal and licensing 
regime relating to the Polish oil and gas 
sector. At the same time, industry 
representatives, including OPPPW, 
continued to express serious concerns 
about a number of aspects of the proposed 
reforms, including increases in the 
applicable tax and royalty rates, provisions 
for mandatory state participation in private 
sector exploration and production  
activities, and changes to the rules for 
granting and/or extending exploration  
and production licences. 
It was pleasing to see the Government 
signal a change of policy in recent months, 
concluding that it was premature to create 
excessive fiscal and regulatory barriers to 
the development of a domestic shale gas 
sector, before its commercial viability had 
yet been demonstrated. As a result, there  
is now a good prospect that a number  
of the more contentious parts of the 
Government’s proposals will be either 
dropped or postponed. We welcome the 
change of approach adopted by the 
Government, which we believe was to a 
large degree facilitated by the coordinated 
but collaborative attitude adopted by  
the OPPPW in its dialogue with the  
relevant ministries. 
Overhead reduction
In our last Annual Report, we committed to 
make a number of changes in the way the 
Group is organised and staffed, with a view 
to tightening the Group’s focus and 
reducing our cash administrative expenses, 
before foreign exchange movements, by 
approximately 50%. These changes were 
implemented so that, with effect from  
1 July 2013, we are on track to achieve  
the targeted savings. 
Conclusion
Although we have yet to demonstrate 
commercial flow rates, we believe that our 
activity in 2013 has enabled us to make 
substantial advances in our understanding 
of our target formations on our western 
Baltic Basin concessions, and of the 
techniques required to enhance the 
effectiveness of our stimulation and 
completion techniques in future wells.  
We look forward to continuing to improve 
our understanding as we proceed with the 
rest of our 2013/14 programme, with a view 
to applying the lessons learned to our long 
lateral well test planned for the third quarter 
of this year. 
We thank our shareholders for their 
continued support and look forward to 
sharing with them information on the 
progress of our 2013/14 work programme 
as we go forward. 
Kamlesh Parmar
Chief Executive Officer
20 March 2014
Key:
Slawoszyno LEP-1
Lebork
Karwia
Damnica
Warblino LE-1
Strzeszewo LE-1
Lebien LE-1 & LE-2H
0.0
2.5
5.0
7.5
10.0
12.5
15.0
17.5
20.0
22.5
25.0
27.5
30.0
Lublewo LEP-1
Lublewo LEP-1ST1H
Existing well and planned well
Existing well
3D seismic survey
3Legs/ConocoPhillips 
concession
Source: 3Legs Resources
3Legs’ high 
graded area
Piasnica isopach map 18
Strategic Report
3Legs Resources plc
Annual Report & Accounts 2013
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3Legs continues to maintain a strong balance sheet, 
with sufficient funding to see it through its decisive 
2013/14 exploration programme and the period beyond.
Financial Review
Alexander Fraser
Chief Financial Officer
Financial highlights 
• Group cash balances of £26.8 
million at year end 2013, against 
£39.5 million at year end 2012, with 
no debt; fully funded for the current 
exploration and appraisal 
programme on our Baltic Basin 
concessions
• Net oil and gas assets of £26.2 
million (2012: £17 .7 million), 
reflecting the continuing work 
programme on the Group’s 
western Baltic Basin concessions 
and consistent with our stated 
strategic plan
• Net loss for the year of £4.3 million 
(2012: £6.0 million), reflecting the 
Group’s share of JV losses in 
Poland, other non-capitalised 
exploration expenses and the 
(largely unrealised) net effects  
of exchange rate movements
Balance sheet
Cash and cash equivalents at year end 
were £26.8 million (2012: £39.5 million), and 
the Group has no debt. Foreign exchange 
rate movements during the year increased 
the sterling equivalent of cash and cash 
equivalents at year end by £0.1 million 
(2012: foreign exchange loss of £1.2 million). 
Investment in the Group’s oil and gas  
assets at year end stood at £25.9 million 
(2012: £17.7 million). The additional 
investment in 2013 represents 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 Chief Executive Officer’s 
Strategic Review. 
Trade and other payables at year end 
declined to £0.4 million against £1.0 million 
at year end 2012, as a result primarily of a 
reduction in staff bonuses. Provisions 
reduced to £nil million at year end, from 
£0.6 million at year end 2012, as the Group 
discharged its liability for decommissioning 
at the Legowo LE-1 well. The cost of this 
decommissioning is covered in full by 
ConocoPhillips. 
Income statement
The Group recorded a net loss after tax of 
£4.3 million (2012: £6.0 million). This loss is 
attributable in part to: share of JV losses of 
£0.9 million (2012: £0.1 million); foreign 
exchange losses on the translation of 
foreign currency cash balances of £0.6 
million (2012: £1.6 million); non-capitalised 
exploration expenses of £0.5 million (2012: 
£nil); the impairment of the Group’s interest 
in its German concessions of £0.1 million 
(2012: £nil); and the impairment of a loan  
to Cowley Mining plc of £0.2 million  
(2012: £nil). 
The Group recorded nil other income in 
2013 (2012: £1.1 million), as no further 
payments were due from ConocoPhillips 
under the Joint Evaluation Agreement. The 
share of JV losses represents the Group’s 
share of expenditure incurred by Lane 
Energy Poland on the western Baltic Basin 
concessions which cannot be capitalised 
under IFRS 6. 19
Strategic Report
3Legs Resources plc
Annual Report & Accounts 2013
In previous years substantially all of the 
Group’s exploration expenses incurred  
in connection with the Baltic Basin 
concessions have been capitalised as 
intangible exploration and evaluation assets, 
reflecting common industry practice. 
Following the transfer, in 2012, of 
operatorship of the three western Baltic 
Basin concessions to ConocoPhillips, the 
Group elected to account for its interest in 
the three concessions using the equity 
accounting method, in accordance with IAS 
31 Interest in Joint Ventures. Consequently, 
exploration expenses incurred directly by 
the Group in connection with its western 
Baltic Basin concessions can no longer  
be capitalised as before. These expenses 
are therefore recorded separately in the 
income statement as non-capitalised 
exploration expenses. 
In August 2013 the Group entered into a 
contract for the sale of its two German 
concessions to Rose Petroleum plc, in 
exchange for a 2% royalty interest and a 
€400,000 contribution to past costs, of 
which €300,000 was paid at signing. The 
sale to Rose Petroleum was completed in 
January 2014, when the remaining 
€100,000 was paid. The Group has 
recorded an impairment equal to the excess 
of the carrying value of the concessions 
over the disposal proceeds.
£26.2m
net oil and gas assets
Cowley Mining plc was demerged from the 
Group in 2010, before the Group’s initial 
public offering on AIM in 2011. Under the 
demerger terms, Cowley Mining retained an 
unsecured, non-interest bearing loan of 
£226,500 from the Group, later varied to an 
interest-bearing loan with warrants. In 
January 2014, Cowley Mining announced its 
intention to negotiate a restructuring with its 
shareholders and creditors. The Group has 
recorded an impairment for the full value of 
the loan. 
The Group recorded aggregate 
administrative expenses of £2.1 million in 
2013, against £3.6 million in 2012. Cash 
administrative expenses, i.e. excluding 
share-based payments, were £2.0 million in 
2013 (2012: £3.4 million). Staff costs 
including share-based payments declined 
to £1.0 million (2012: £2.0 million), reflecting 
the staff reorganisation which was 
implemented following the adoption of a 
narrower focus for the Group’s activities. 
Foreign exchange losses in 2013 of  
£0.6 million (2012: £1.6 million) represent 
almost entirely the impact of unrealised 
foreign exchange movements on the 
Group’s long-term intra-group funding 
arrangements, whereas in 2012 foreign 
exchange losses resulted primarily from 
translation losses on foreign currency  
bank balances. 
Going concern
The Directors have reviewed the Group’s 
budgets and forecast cash flows through  
to June 2015. Taking into consideration  
the risks outlined in this financial review,  
the Directors are satisfied 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 
financial statements.
Outlook
The Group is well funded for the rest of its 
2013/14 Baltic Basin exploration 
programme, which will see it through the 
drilling, stimulation and testing of a long 
lateral well, as described in the Chief 
Executive Officer’s Strategic Review. 
Following the testing of the planned long 
lateral well, the Group will review its funding 
requirements in the light of its operational 
objectives in the Baltic Basin. The Group will 
continue to manage its cash resources in a 
conservative manner so as to ensure that  
it has sufficient funding to meet its near-
term objectives.
Alexander Fraser
Chief Financial Officer
20 March 2014 20
Strategic Report
3Legs Resources plc
Annual Report & Accounts 2013
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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 Management
Risk Detail Likelihood Impact Mitigation
Appraisal risk There is still no certainty that the Group will 
be able to recover any hydrocarbons, from 
its Baltic Basin concessions or elsewhere, 
at a commercially feasible cost. 
High High The Group seeks to enable its shareholders 
to mitigate this risk by explaining its 
strategy to them. 
Concentration risk Decision to eliminate diversification in 
portfolio renders the Group highly exposed 
to the success or otherwise of its principal 
asset.
High High The Group seeks to mitigate by aligning 
its corporate strategy with preferences of 
major shareholders.
ConocoPhillips The Group is exposed to ConocoPhillips’ 
approach to exploration and appraisal and 
to its high cost base.
Medium High The Group will maintain an active dialogue 
with ConocoPhillips on key issues. 
Shareholder discord Risk of further disruption by minority 
shareholders wishing to pursue a different 
agenda to that of the Board. 
High High The Group seeks to mitigate by measures 
to support the share price and to offer 
an exit through the market to dissident 
shareholders.
Access to funding The Group currently finances its operations 
out of its existing cash reserves. If the 
Group’s access to third-party funding were 
to become restricted then this could have 
an adverse effect on the Group’s future 
prospects. 
High High The Group maintains a conservative 
approach when considering its capital 
requirements and spending commitments. 
Polish fiscal and 
regulatory regime
The fiscal 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 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. 
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 Poland, this could restrict the 
Group’s ability to evaluate its licences. 
Medium High The Group aims to mitigate this risk by 
engaging in an active communications 
strategy to present the positive case for the 
use of modern exploration techniques.  21
Strategic Report
3Legs Resources plc
Annual Report & Accounts 2013
Risk Detail Likelihood Impact Mitigation
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. 
Availability of 
oilfield services and 
supplies
The availability of oilfield services including 
drilling, completion and ancillary services, 
and of oilfield supplies, is more limited than 
in North America. 
Medium High The Group expects that the availability of 
oilfield services and supplies will improve 
over time. In the meantime, ConocoPhillips 
will seek to mitigate any supply bottlenecks 
by leveraging partner relationships and by 
careful operations planning. 
Quality of oilfield 
services
The limited availability of oilfield 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 access 
to sufficient expertise to enable a degree 
of monitoring of contractors and service 
providers. 
Dependence on key 
personnel
The Group operates with a small 
management team and has a total staff, 
including consultants, of eight. 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. 
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. 
Financial risk management policies are set out in note 31 to the financial statements. 22
Governance
3Legs Resources plc
Annual Report & Accounts 2013
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Board of Directors and  
Senior Management
Board of Directors
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 financial 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.
Board of Directors
Kamlesh Parmar,
Chief Executive Officer
Kamlesh Parmar was appointed as Chief 
Executive Officer 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 2011.  
In 2013 he was elected to the post of 
President of the Management Board of 
OPPPW, the Polish exploration and 
production industry organisation, and was 
re-elected as Management Board member 
and President in March 2014.
Board of Directors
David Bremner, 
Non-Executive Director and Chairman of 
the Technical Committee
David Bremner joined the Board in  
January 2011, 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 Officer 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. 23
Governance
3Legs Resources plc
Annual Report & Accounts 2013
Board of Directors
Richard Hills, 
Non-Executive Director and Chairman of 
the Audit Committee
Richard Hills was appointed to the Board as 
a Non-Executive Director in December 2012. 
He has substantial investment experience, 
having held senior positions at Henderson 
Global Investors plc and Aberdeen Asset 
Management plc. He chairs the Aztec Group 
Ltd, which is one of the largest Channel 
Islands private equity fund administrators, 
and is on the board of Cinven Ltd, a major 
European private equity house. He is 
currently a director of three investment trusts: 
JP Morgan Income & Capital plc, Henderson 
Global Trust plc and Strategic Equity Capital 
plc, where he will take over the Chair with 
effect from September 2014. He also sits on 
the board of Phaunos Timber Fund Limited, 
a major global timber fund.
Senior Management
Alexander Fraser, 
Chief Financial Officer
Alexander Fraser joined the Group when  
it was established in January 2007. From 
2003 to 2006 he was an independent 
corporate finance consultant. From 1994  
to 2003 he was an investment banker in 
emerging markets corporate finance 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 Freshfields Bruckhaus 
Deringer LLP advising on general corporate 
law, banking and corporate finance from 
their London, Paris and Moscow offices. He 
graduated from Magdalen College, Oxford 
and is a qualified barrister.
Board of Directors
Rod Perry, 
Non-Executive Director, Chairman of the 
Remuneration Committee and Senior 
Independent Director
Rod Perry joined the Board in February 
2011. 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.  24
Governance
3Legs Resources plc
Annual Report & Accounts 2013
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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.
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 staff are fully aware of their responsibilities regarding 
health and safety issues and providing adequate training  
where necessary
• Carrying out risk assessments which aim to identify HSE risk 
areas and possible issues
• 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, providing adequate supervision and 
management and replacing those that fail to adhere to the 
required standards
• 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 
During the year, the Group, together with ConocoPhillips, conducted 
further testing of the Lebien LE-2H horizontal well and carried out 
two stimulations and tests on one vertical well, the Strzeszewo LE-1, 
all on the Lebork concession. Drilling of a further vertical well, 
Lublewo LEP-1, was also commenced during the period and 
completed in January 2014. A full risk assessment was performed 
as part of the planning process for each operation. 
Waste fluids 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. 
During the year no Lost Time Incidents incidents (“LTI”) occurred on 
operations at the three wells. Some 450,000 man hours were spent 
on operations during that period. 
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 staff 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 staff
• Limit the visual impact of the Group’s activities by appropriate 
site location and screening  25
Governance
3Legs Resources plc
Annual Report & Accounts 2013
Directors’ Report
Introduction
The Directors present their report and financial statements for the 
Group for the year ended 31 December 2013.
Principal activity
The Group’s principal activity is the exploration and development  
of unconventional oil and gas resources, with a primary focus on 
Poland, where the Directors believe the Group is well positioned  
to benefit from the emergence of a regional unconventional oil and 
gas sector.
Business and financial review and future developments
Details of the Group’s 2013 operations are included in the 
Chairman’s Statement and Chief Executive Officer’s Strategic 
Review. A review of the current year’s financial activities is set  
out in the Financial Review.
Results and dividends
The Group’s loss for the year after taxation was £4.3 million (2012: 
loss of £6.0 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
• Cash balance management
Details of the Group’s operational performance during the year  
are covered in the Chief Executive Officer’s Strategic Review.  
The Group will continue to monitor the management and technical 
expertise required to enable it to successfully carry on its activities, 
as it evolves. The Group has maintained a healthy cash balance to 
cover its immediate work programme.
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 Officer
Barry Rourke, Non-Executive Director and Senior Independent 
Director (retired 19 April 2013)
David Bremner, Independent Non-Executive Director
Rod Perry, Independent Non-Executive Director
Richard Hills, Independent Non-Executive Director
Robert Jeffcock, 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 office at year end in the share capital 
of the Company (including under the 2011 Restricted Share Award 
Plan) are set out in the table below.
Director
31 December 
2013
31 December 
2012
Tim Eggar 494,420 420,000
Kamlesh Parmar 3,448,916 3,411,916
David Bremner 103,227 60,000
Richard Hills 28,227 –
Rod Perry 123,227 60,000
2011 Restricted Share Award Plan
The interests of the Directors in office at year end under the 2011 Restricted Share Award Plan of the Company are set out in the table below.
Director
31 December 
2013
31 December 
2012
Tim Eggar 20,000 40,000
Kamlesh Parmar – –
David Bremner 20,000 40,000
Richard Hills – –
Rod Perry 20,000 40,000
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. 26
Governance
3Legs Resources plc
Annual Report & Accounts 2013
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Directors’ Report Continued
Directors’ share options
Details of share options granted to the Directors in office at year end are as set out in the table below.
2007 Share Option Plan
Director
At  
1 January 
2013
Granted  
in year
Exercised  
in year
At 
31 December 
2013
Exercise  
price
Expiry  
date
Kamlesh Parmar 800,000 – – 800,000 25.0p n/a
Long-Term Incentive Plan (“LTIP”)
Director
At  
1 January  
2013
Granted  
in year
Exercised  
in year
At  
31 December 
2013
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 plan, LTIP and remuneration can be found in the Remuneration Report.
Annual General Meeting and re-election of Directors
The Annual General Meeting will be held on 8 May 2014. David Bremner will retire at the Annual General Meeting and will offer himself for 
election.
Transactions involving Directors
During the year, David Bremner had a consultancy agreement with the Company to provide technical and advisory services. During the year 
David Bremner charged fees of £50,000 (2012: £102,000). As at 31 December 2013, the amount outstanding to David Bremner under his 
consultancy agreement was £18,000 (2012: £32,000).
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.
Significant shareholders
As at 19 March 2014, the Company had been notified that the following were holders of 3% or more of the Company’s issued Ordinary 
Share capital:
Number of shares %
Weiss Asset Management 12,890,000 15.20
Damille Investments II Limited 12,735,000 15.02
BlackRock, Inc. 9,302,348 10.97
Quantum Partners LLP 7,978,111 9.41
JP Morgan Chase & Co 4,600,848 5.43
Kamlesh Parmar
1
3,448,916 4.07
Castellain Capital LLP 2,578,073 3.04
Notes:
1. Includes 3,398,916 Ordinary Shares held by Ferlim Nominees Limited on behalf of Kamlesh Parmar.
Except for the holding 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 movement in issued share capital during the year, are shown in note 25 to the 
financial statements.
Political donations
There were no political donations made by the Group in the current or prior year. 27
Governance
3Legs Resources plc
Annual Report & Accounts 2013
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 28 days (2012: 35 days).
Post balance sheet events
Events after the balance sheet date have been disclosed in note 33 to the financial statements.
Statement as to disclosure of information to the auditor
Each Director in office at the date of this report has confirmed, as far as he is aware, that there is no relevant audit information of which the 
auditor is unaware. Each such Director has confirmed 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 will be proposed by the Board.
The Directors’ Report was approved by the Board of Directors and signed on its behalf by:
Rod Perry
20 March 2014 28
Governance
3Legs Resources plc
Annual Report & Accounts 2013
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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 
specified terms.
The Non-Executive Directors are not appointed for specified 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 offered the opportunity 
to receive training if they wish.
E 1.1 The Senior Independent Director should attend sufficient 
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 four 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 sufficiently material to affect 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 judgement.
The Board has appointed a qualified Company Secretary, and Rod 
Perry 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 Officer (“CFO”).
There is a clearly defined organisational structure with lines of 
responsibility and delegation of authority to executive management.
The Board meets regularly throughout each financial year and there 
is a schedule of matters reserved for its approval, ensuring that it 
exercises control over the Group’s strategy, performance, key 
financial 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 financial 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 sufficient quality to enable them to consider matters in 
good time for meetings and to discharge their duties properly.
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. 29
Governance
3Legs Resources plc
Annual Report & Accounts 2013
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 Richard Hills and Rod Perry and is 
chaired by Richard Hills. The Board considers the members of the 
Audit Committee to be independent and is satisfied that both 
members of the Audit Committee have recent and relevant financial 
experience. The external auditor and the CFO 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 financial statements of the Group, including its 
annual and interim accounts;
(ii) the effectiveness 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 
significant concerns that the external auditor may have arising from 
their audit work, any matters that may materially affect or impair the 
independence of the external auditor, any significant deficiencies 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 identified 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 specific authorisation from the Audit Committee. During the 
year, no non-audit services, apart from tax advice, were provided. 
The Chief Financial Officer monitors the status of all services being 
provided by the external auditor and is satisfied that there were no 
conflicts during the year. The Audit Committee was satisfied 
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 
reviewed its performance and the appropriateness of its terms of 
reference during the year and confirmed these to be satisfactory.
2. Remuneration Committee
The Remuneration Committee comprises Rod Perry, Tim Eggar and 
David Bremner and is chaired by Rod Perry. The Chief Executive 
Officer 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 Officer 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 
confirmed these both to be satisfactory.
3.  Nomination Committee
The Nomination Committee comprises Tim Eggar and David 
Bremner. 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 meets at least once a year. It met prior 
to the Company’s 2013 Annual General Meeting to consider and 
approve the composition of the Board and its committees.
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 effective 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; and
• preparation of consolidated management information on a 
regular basis. 30
Governance
3Legs Resources plc
Annual Report & Accounts 2013
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Corporate Governance 
Statement Continued
The Board monitors the effectiveness 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 Officer and 
members of the senior management team met with shareholders 
and analysts. This included formal presentations, one-to-one 
meetings, analyst briefings and press interviews. The Board 
receives regular briefings on feedback from meetings with investors 
and trading activity from the Chief Executive Officer 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
Tim Eggar 5* 4+ 4 1*
Kamlesh Parmar 5 4+ 4+ –
David Bremner 5 – 4 1
Richard Hills 5 4* – –
Robert Jeffcock
1
 – – – –
Clive Needham
2
– – – –
Rod Perry 5 4 4* –
Barry Rourke
3
 1 1 – –
Total meetings held 5 4 4 1
* Chairman
+ Invitee
Notes:
1. Robert Jeffcock resigned as a member of the Board on 22 February 2013.
2. Clive Needham resigned as a member of the Board on 22 February 2013.
3. Barry Rourke retired as a member of the Board on 19 April 2013 and did not present 
himself for re-election. 31
Governance
3Legs Resources plc
Annual Report & Accounts 2013
Directors’ Remuneration Report
The remuneration policy for the Chief Executive Officer and senior management is determined by the Remuneration Committee with input 
from the Chief Executive Officer as appropriate in relation to individual performance. The performance of the Chief Executive Officer is 
assessed by the Chairman of the Company and approved by the Remuneration Committee.
The Remuneration Committee aims to provide the Chief Executive Officer and senior management team with remuneration packages which 
are sufficiently 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 Officer 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.
The Directors’ remuneration for the year ended 31 December 2013 was as follows:
Non-Executive Directors
Fees 
£
Bonus 
£
Pension 
£
Total  
2013 
£
Total  
2012 
£
Tim Eggar 51,999 – – 51,999 60,000
David Bremner 77,348 – – 77,348 134,795
Richard Hills 26,499 – – 26,499 2,292
Robert Jeffcock (resigned 22 February 2013) 4,010 – – 4,010 27,500
Clive Needham
1
 (resigned 22 February 2013) – – – – –
Rod Perry 27,922 – – 27,922 32,500
Barry Rourke (retired 19 April 2013) 9,817 – – 9,817 32,500
Total 197,595 – – 197,595 289,587
Notes:
1. The Company paid CM Management Limited (of which Clive Needham is a director) a fixed 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.
In April 2013, the Non-Executive Directors, including the Chairman, agreed with effect from 1 May 2013 to reduce their fees by 20% and to 
take one-third of the balance in Ordinary Shares in the Company. Issues of Ordinary Shares in lieu of fees are made quarterly at the 
prevailing market price. Details of the issues of Ordinary Shares made in lieu of fees are as follows.
Period for which issue made
1 May 2013– 
30 June 2013
1 July 2013– 
30 September 2013
1 October 2013– 
31 December 2013
Share price 28p 26.85p 21.8p
Director Number of new Ordinary Shares issued
Tim Eggar 9,523 14,897 18,348
David Bremner 5,158 8,069 9,938
Richard Hills 5,158 8,069 9,938
Rod Perry 5,158 8,069 9,938
Executive Director
Salary/fees 
£
Bonus 
£
Pension 
£
Healthcare
£
Total  
2013 
£
Total  
2012 
£
Kamlesh Parmar 229,600 – 24,000 3,018 256,618 79,048
1
Notes:
1. For the period since Kamlesh Parmar’s appointment on 18 October 2012. 32
Governance
3Legs Resources plc
Annual Report & Accounts 2013
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In April 2013 the Chief Executive Officer agreed with effect from 
1 May 2013 to accept a 10% reduction in salary and to forgo any 
bonus entitlement for 2013.
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 Officer, senior managers and other 
employees and consultants. The Remuneration Committee has 
determined that the proportion of the Chief Executive Officer’s 
potential bonus allocated to corporate targets for 2014 will be 100% 
(2012: n/a).
The notice period for the Chief Executive Officer 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.
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 specified 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 
Officer 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 Officer, 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 Officer and other senior managers, the proportion of 
the award vesting is subject to 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.
No LTIP awards were made during 2013.
d) 2011 Restricted Share Award Plan
The 2011 Restricted Share Award Plan is a restricted share plan 
which was used to make one-off awards to five 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 
defined circumstances.
Directors’ Remuneration 
Report Continued 33
Governance
3Legs Resources plc
Annual Report & Accounts 2013
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 the 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; and
• 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. 34
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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We have audited the Group financial statements of 3Legs Resources plc for the year ended 31 December 2013 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.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at http://www.frc.org.
uk/Our-Work/Codes-Standards/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Scope-of-audit/
UK-Private-Sector-Entity-(issued-1-December-2010).aspx
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 2013 and of the Group’s loss for the year then ended;
• the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• the Group financial statements have been prepared in accordance with the requirements of the Isle of Man Companies Act 2006.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the ISAs (UK and Ireland) we are required to report to you if, in our opinion, information in the annual report is:
• materially inconsistent with the information in the audited financial statements; or
• apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing 
our audit; or
• is otherwise misleading.
In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit 
and the Directors’ statement that they consider the annual report is fair, balanced and understandable and whether the annual report 
appropriately discloses those matters that we communicated to the audit committee which we consider should have been disclosed.
Our assessment of risks of material misstatement
We identified the following risks as being those that had the most significant impact on our audit strategy and set out below how each of 
these were addressed by the scope of our audit:
• The valuation and ownership of the investment accounted for using the equity method (Lane Energy Poland Sp Zoo) and, in particular, the 
need for impairment provisions to be made based on the results of the drilling activity and also how the introduction of IFRS11 may impact 
on the accounting for this investment.
• We confirmed the ownership of the share capital and the share issues in the year to public record in Poland. In the absence of audited 
financial statements for the investment, we also reviewed the management accounts for this entity and the nature of any historical 
differences between these and the previously audited financial statements. We considered the capital injections made by the Group 
against the committed drilling programme for the current and previous period and reviewed the accounting records for the investment to 
confirm the nature of the investment (capital or revenue expenditure) was in line with the expected drilling programme. We also discussed 
with management the potential impact of the implementation of IFRS11 and the nature of the arrangement as part of the consideration of 
the early adoption of this standard.
• The capitalisation policy for exploration and evaluation expenditure incurred by the Group and in particular the treatment of costs that are 
general in nature and cannot be specifically applied to licence acreage held by the Group.
• We reconfirmed our understanding of the basis of the nature and scope of costs to be capitalised by the Group and reviewed the split 
made by management between those costs capitalised as intangible assets and those that are expensed to the income statement. We 
tested a sample of these costs to source documentation to determine whether the treatment was appropriate. 
Independent Auditor’s Report 
to the Members of 3Legs Resources plc 35
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
• The consideration of the existence of any impairment in the intangible exploration and evaluation assets capitalised in the balance sheet 
and, where necessary, the results of the formal impairment reviews undertaken.
• We reviewed the impairment documentation approved by the Board and considered this in relation to the individual cost pools used for 
capitalisation, the transactions undertaken during the year and following the year end which may impact on the holding of the licences 
and any indicators of impairment that the Board may not have considered.
• The accounting for the cost of decommissioning of exploration sites and the need for the creation of and subsequent use of a 
decommissioning provision including consideration of the specific obligations under individual licence agreements.
• We reviewed the restoration work undertaken during the year on the one site where a decommissioning provision was currently required 
and also the activity subsequent to the year end. We tested a sample of expenditure to source documentation and reviewed post year 
end records for omitted liabilities and / or evidence that the need for the provision had been alleviated.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit 
procedures and to evaluate the effects of misstatements, both individually and on the financial statements as a whole. During planning we 
determined a magnitude of uncorrected misstatements that we judge would be material for the financial statements as a whole (“FSM”). 
During planning FSM was calculated as £499,000, which was not changed during the course of the audit.
We agreed with the Audit Committee that we would report to them all unadjusted differences in excess of £25,000, as well as differences 
below those thresholds that, in our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
Our Group Audit Approach focused on the Parent Company and the two main trading subsidiaries, one being based in the UK and the other 
based in Poland, together with the investment accounted for under the equity method also based in Poland. The Isle of Man registered 
parent entity is not subject to a local statutory audit requirement but the two main trading subsidiaries are which have been completed to the 
Group reporting timetable. The investment accounted for under the equity method is controlled by a separate Group and is subject to a 
statutory audit requirement in Poland which is undertaken to the controlling parties reporting timetable which falls outside of the Group’s 
timetable. As this entity is equity accounted, a review of the year end management accounts to consider the movement in net assets from 
the prior year and the result for the year in conjunction with the audit of the funds provided by the Group as part of the contractually 
committed exploration budget to Group materiality has been undertaken. The review of this entity and the local audit of the Polish subsidiary 
was undertaken in the UK assisted by a team based in Poland.
The Group has generated no turnover in the year. The audits undertaken account for 100% of the consolidated net assets of the Group and 
99% of its operating result which are accounted for as a single segment.
BAKER TILLY UK AUDIT LLP, Auditor
Chartered Accountants and Registered Auditor
2 Whitehall Quay
Leeds
LS1 4HG
20 March 2014 36
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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Consolidated Income Statement
For the year ended 31 December 2013
Notes
2013 
£’000
2012 
£’000
Continuing operations
Revenue – –
Other income 6 – 1,067
Administrative expenses (2,133) (3,605)
Foreign exchange losses (632) (1,587)
Non-capitalised exploration and evaluation expense 7 (451) –
Impairment of intangible exploration and evaluation assets 8 (135) (2,077)
Impairment of loan 9 (226) –
Operating loss 12 (3,577) (6,202)
Share of results of joint venture 10 (902) (123)
Investment income 11 172 296
Loss before tax (4,307) (6,029)
Tax 15 – (1)
Loss for the year (4,307) (6,030)
Attributable to:
Equity holders of the parent (4,307) (6,030)
(4,307) (6,030)
Loss per Ordinary Share
Basic and diluted, pence per share 16 (0.05p) (0.07p)
2013 
£’000
2012 
£’000
Loss for the year (4,307) (6,030)
Other comprehensive income
Exchange differences arising on translation of foreign operations 62 805
Total comprehensive income for the year attributable to owners of the Parent Company (4,245) (5,225)
Consolidated Statement of 
Comprehensive Income
For the year ended 31 December 2013 37
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
Notes
2013 
£’000
2012 
£’000
Assets
Non-current assets
Intangible exploration and evaluation assets 17 2,357 2,839
Investment accounted for using the equity method 18 23,515 14,905
25,872 17,744
Current assets
Trade and other receivables 20 323 977
Cash and cash equivalents 21 26,792 39,531
27,115 40,508
Total assets 52,987 58,252
Liabilities
Current liabilities
Trade and other payables 22 (398) (986)
Provisions 23 (25) (573)
(423) (1,559)
Non-current liabilities
Provisions 23 – –
Total liabilities (423) (1,559)
Net assets 52,564 56,693
Equity
Share capital 25 21 21
Share premium account 68,347 68,330
Share-based payment reserves 26 889 790
Accumulated deficit (16,362) (12,055)
Cumulative translation reserves (331) (393)
Total equity 52,564 56,693
The financial statements of 3Legs Resources plc were approved by the Board of Directors and authorised for issue on 20 March 2014. They 
were signed on its behalf by:
Tim Eggar
20 March 2014
Notes 1 to 33 form part of these financial statements.
Consolidated Balance Sheet
As at 31 December 2013 38
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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Notes
2013 
£’000
2012 
£’000
Net cash outflow from operating activities 28 (2,783) (4,863)
Investing activities
Interest received 172 296
Purchases of intangible exploration and evaluation assets (40) (1,807)
Proceeds of disposal of intangible exploration and evaluation assets 250 –
Investment in joint venture (10,148) (2,742)
Net cash used in investing activities (9,766) (4,253)
Financing activities
Issue of share capital 17 –
Repayment of shareholder borrowings – (1,171)
Net cash inflow/(outflow) from financing activities 17 (1,171)
Net decrease in cash and cash equivalents (12,532) (10,287)
Effect of foreign exchange rate changes on cash and cash equivalents (207) (1,060)
Effect of equity accounting – (52)
Cash and cash equivalents at beginning of year 39,531 50,930
Cash and cash equivalents at end of year 26,792 39,531
Consolidated Cash Flow Statement
For the year ended 31 December 2013 39
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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 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 1 January 2013 21 68,330 790 (12,055) (393) 56,693
Transactions with owners in their capacity as owners:
Issue of equity shares – 17 – – – 17
Total transactions with owners in their capacity as owners – 17 – – – 17
Loss for the year – – – (4,307) – (4,307)
Other comprehensive income:
Currency translation differences – – – – 62 62
Total comprehensive income for the year – – – (4,307) 62 (4,245)
Share-based payments – – 99 – – 99
As at 31 December 2013 21 68,347 889 (16,362) (331) 52,564
Consolidated Statement of  
Changes in Equity
For the year ended 31 December 2013 40
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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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
IFRS 13 Fair value measurement
IAS 1 (amended 2011) Presentation of items of other comprehensive income
IAS 19 (amended 2011) Employee benefits
IAS 32 (amended 2011) Financial instruments presentation: offsetting financial assets and financial liabilities
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 9 Financial instruments
IFRS 10 Consolidated financial statements
IFRS 11 Joint arrangements
IFRS 12 Disclosure of interests in other entities
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
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 2013. 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 Strategic 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.
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.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2013 41
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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 IAS 31 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.
Investment income
Investment income comprises bank interest income on funds invested. Interest income is recognised on an accrual basis.
3 Significant accounting policies continued 42
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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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 ongoing 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.
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.
3 Significant accounting policies continued
Notes to the Consolidated Financial Statements 
Continued
For the year ended 31 December 2013 43
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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 its Baltic Basin licences to be a single 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.
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.
3 Significant accounting policies continued 44
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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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 models 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 decisions, 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.
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:
3 Significant accounting policies continued
Notes to the Consolidated Financial Statements 
Continued
For the year ended 31 December 2013 45
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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 £2.4 million 
(2012: £2.8 million) and impairments of £0.1 million (2012: £2.1 million) 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 £nil has been recognised at 31 December 2013 (2012: £0.6 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 
models. 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.
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
2013 
£’000
2012 
£’000
30% funding of exploration programme – 27
Completion payment – 798
Net foreign exchange gain on equity accounting for joint venture – 235
External rent recharged – 7
– 1,067
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.
The completion payment includes the final retention of $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 $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 Non-capitalised exploration and evaluation expenditure
2013 
£’000
2012 
£’000
Baltic Basin expenditure 451 –
8 Impairment of intangible exploration and evaluation assets
2013 
£’000
2012 
£’000
Germany 135 –
Southern Poland (Krakow) – 2,077
During the year, the Group entered into an agreement for the sale of the German concessions in exchange for a contribution of €400,000 
towards past costs and a 2% royalty. The two licences were renewed for terms of two years each on 20 December 2013 and the sale was 
completed on 20 January 2014. The related exploration and evaluation cost has been impaired down to the value of the disposal proceeds. 
4 Critical accounting judgements and key sources of estimation and uncertainty continued 46
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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9 Impairment of loan
2013 
£’000
2012 
£’000
Cowley Mining plc 226 –
The loan to Cowley Mining plc, a related party (see further note 32) was impaired in full at 31 December 2013. The Directors consider this to 
approximate the fair value at the balance sheet date.
10 Share of loss of joint venture
Share of loss of joint venture represents the Group’s share of exploration expenditure incurred on its western Baltic Basin concessions which 
is not capitalised on the balance sheet of Lane Energy Poland Sp. z o.o.
2013 
£’000
2012 
£’000
Lane Energy Poland Sp. z o.o. 902 123
11 Investment income
Investment income comprises interest earned on the Group’s cash reserves. 
2013 
£’000
2012 
£’000
Interest on bank deposits 172 296
12 Operating loss
The operating loss for the year has been arrived at after charging:
2013 
£’000 
2012 
£’000
Property lease payments 114 89
Staff costs (note 14) 1,033 1,712
Share-based payments (note 27) 99 254
Impairment of intangible exploration and evaluation assets 135 2,077
Audit fees 65 76
Net foreign exchange losses 632 1,587
In the year ended 31 December 2012, a further £0.3 million of staff costs was capitalised to intangible exploration and evaluation assets.
Foreign exchange losses reflect the impact of exchange rate movements on certain of the Group’s foreign currency balances and  
intra-Group balances over the year, as detailed below. The only realised foreign exchange losses or gains are losses or gains on foreign 
currency receivables and payables.
2013 
£’000
2012
£’000
Bank deposits (3) (1,152)
Intra-Group loans (626) (385)
Receivables and payables 13 (50)
Translation of foreign operations (16) –
(632) (1,587)
Notes to the Consolidated Financial Statements 
Continued
For the year ended 31 December 2013 47
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
13 Auditor’s remuneration
Amounts payable to Baker Tilly UK Audit LLP and its associates in respect of both audit and non-audit services:
2013 
£’000
2012 
£’000
Audit fees
Fees payable to the Group’s auditor for the statutory audit of the Group’s annual accounts 65 76
Total audit fees 65 76
Amounts payable to associates of Baker Tilly UK Audit LLP
Non-audit fees
Tax services 15 22
Other services 11 11
Total non-audit fees 26 33
14 Staff costs
The average monthly number of employees (including Executive Directors) was:
2013 
Number
2012 
Number
Executive Directors of Group companies 2 3
Other employees 3 4
5 7
Their aggregate remuneration comprised:
2013 
£’000
2012 
£’000
Wages and salaries 794 1,436
Termination payments – 185
Social security costs 116 204
Benefits in kind 90 103
Share-based payments 33 105
1,033 2,033
In the year ended 31 December 2013, £0.3 million of staff costs were attributable to non-capitalised exploration and evaluation expense, 
following the Group’s election to account for its interest in its three western Baltic Basin concessions using the equity accounting method in 
accordance with IAS 31 Interest in Joint Ventures. In the year ended 31 December 2012, £0.3 million of staff costs were capitalised to 
intangible exploration and evaluation assets.
15 Tax
The tax assessed for the year is at the standard rate of corporation tax in the Isle of Man of 0% (2012: 0%) and is calculated as follows:
2013 
£’000
2012 
£’000
Loss on ordinary activities before tax (4,307) (6,029)
Loss on ordinary activities by the standard rate of tax – –
Foreign tax – (1)
Tax charge for the year – (1) 48
Financial Statements
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Annual Report & Accounts 2013
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16 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
2013 
£’000
2012 
£’000
Loss for the purposes of basic loss per share being net loss attributable to equity holders of the parent (4,307) (6,030)
Number of shares
2013 
Number
2012 
Number
Weighted average number of Ordinary Shares for the purposes of basic loss per share 84,804,650 84,782,544
Loss per Ordinary Share
2013 
£
2012 
£
Basic and diluted, pence per share (0.05)p (0.07)p
Dilutive loss per Ordinary Share equals basic loss per Ordinary Share as, due to the losses incurred in 2012 and 2013, there is no dilutive 
effect from the subsisting share options.
17 Intangible exploration and evaluation assets
£’000
Cost
At 1 January 2012 14,850
Additions 1,807
Impairment (note 8) (2,077)
Equity accounting adjustment (12,337)
Exchange differences 596
At 1 January 2013 2,839
Additions 40
Impairment (note 8) (135)
Disposals (338)
Reversal of provision (75)
Exchange differences 26
At 31 December 2013 2,357
18 Investment accounted for using the equity method
The Group had an interest in the joint venture listed below as at 31 December 2013, 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. 
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, held by Lane Energy Poland Sp. z o.o., 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 IAS 31 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.
Notes to the Consolidated Financial Statements 
Continued
For the year ended 31 December 2013 49
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
18 Investment accounted for using the equity method continued
The aggregate amounts related to the joint venture included within the consolidated accounts are:
2013 
£’000
2012 
£’000
Current assets n/a n/a
Long-term assets 23,515 14,905
Current liabilities n/a n/a
Long-term liabilities n/a n/a
Expenses (902) (123)
Investment in joint venture
2013 
£’000
2012 
£’000
Lane Energy Poland Sp. z o.o. 23,515 14,905
19 Subsidiaries
The Company had investments in the following subsidiary undertakings as at 31 December 2013, 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
On 1 August 2013 the Group entered into an agreement for the sale of Parkyn Energy Holdings plc, the holding company of Parkyn Energy 
(Germany) Ltd, which in turn held the Group’s two German concessions, to Rose Petroleum plc. This agreement was completed on 
20 January 2014.
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. 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.
20 Trade and other receivables
2013 
£’000
2012 
£’000
Trade receivables 5 2
Other receivables 178 801
Amounts due from joint venture 46 12
VAT recoverable 34 35
Prepayments and accrued income 60 127
323 977
The average credit period for trade receivables is 11 days (2012: 6 days). 50
Financial Statements
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20 Trade and other receivables continued 
Other receivables includes an amount due from ConocoPhillips of £nil (2012: £0.6 million) in respect of payment for certain decommissioning 
operations under the terms of the Joint Evaluation Agreement. Other receivables also includes the remaining consideration of €100,000 due 
under the share purchase agreement entered into in connection with the sale of the Group’s German concessions.
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.
21 Cash and cash equivalents
Cash and cash equivalents as at 31 December 2013 of £26.8 million (2012: £39.5 million) comprise cash held by the Group. The Directors 
consider that the carrying amount of these assets approximates to their fair value.
22 Trade and other payables
2013 
£’000
2012 
£’000
Trade payables 178 235
Other taxes and social security 18 30
Accruals 202 721
398 986
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period 
taken for trade purchases is 28 days (2012: 35 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.
23 Provisions
Decommissioning
Current 
£’000
Non-current 
£’000
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 –
At 1 January 2013 573 –
Reduction in provision (82) –
Utilised (466) –
At 31 December 2013 25 –
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.
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 2013, the Group has additional deferred tax assets of £0.5 million (2012: £0.4 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.
Notes to the Consolidated Financial Statements 
Continued
For the year ended 31 December 2013 51
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
25 Share capital
Authorised and issued equity share capital
2013 2012
Number 
’000 £’000
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 84,847 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 2012 and 31 December 2012 84,782,544
Issue of Ordinary Shares 64,101
At 31 December 2013 84,846,645
26 Share-based payment reserves
Warrants 
£’000
Options 
£’000
Total 
£’000
At 1 January 2012 116 536 652
Share-based payments – 254 254
Lapse of warrants (116) – (116)
At 1 January 2013 – 790 790
Share-based payments – 359 359
Lapse of options – (260) (260)
At 31 December 2013 – 889 889
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:
2013 2012
Number
Weighted 
average 
exercise 
price 
£ Number
Weighted 
average 
exercise  
price 
 £
Outstanding at 1 January 3,543,388 0.37 3,543,388 0.37
Granted during the year – – – –
Lapsed during the year – – – –
Exercised during the year – – – –
Outstanding at 31 December 3,543,388 0.37 3,543,388 0.37
Exercisable at 31 December 3,543,388 0.37 3,143,424 1.48 52
Financial Statements
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Annual Report & Accounts 2013
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The options outstanding at 31 December 2013 had an exercise price ranging between £0.12 and £1.00 (2012: £0.12 and £1.00), and an 
estimated weighted average remaining contractual life of 0.5 years (2012: 1.5 years). 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 CEO, 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:
2013 2012
Number
Weighted 
average 
exercise 
price 
£ Number
Weighted 
average 
exercise  
price 
£
Outstanding at 1 January 2,769,603 0.37 708,348 0.48
Granted during the year – – 2,203,793 –
Lapsed during the year (1,484,073) – (142,538) –
Exercised during the year – – – –
Outstanding at 31 December 1,285,530 0.37 2,769,603 0.37
Exercisable at 31 December – – – –
The options outstanding at 31 December 2013 had an exercise price ranging between £nil and £1.54, and an estimated weighted average 
remaining contractual life of 2.5 years (2012: 3.5 years). The fair value of the options has been calculated using the Monte Carlo and 
Black-Scholes models. The significant inputs into the model for the IFRS2 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 50.8–52 50.4
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 publicly 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 2013 the Group recognised a total expense of £0.1 million (2012: £0.3 million) related to equity-settled 
share-based payment transactions. Of this expense, £0.04 million (2012: £0.1 million) relates to the 2007 and 2009 share option plans and 
£0.06 million (2012: £0.2 million) relates to the LTIP.
27 Share-based payments continued
Notes to the Consolidated Financial Statements 
Continued
For the year ended 31 December 2013 53
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
28 Notes to the cash flow statement
2013 
£’000
2012 
£’000
Loss before tax (4,307) (6,029)
Adjustments for:
Effect of foreign exchange rate changes 879 901
Impairment of E&E assets 135 2,077
Reversal of provision for E&E licences 75 –
Investment income (172) (296)
Share-based payments 99 254
Share of results of joint venture 902 123
Fair value gains on financial instrument – (316)
Operating cash flows before movements in working capital (2,389) (3,286)
Decrease in receivables 194 2,837
Decrease in payables (588) (4,413)
Cash used in operations (2,783) (4,862)
Taxation paid – (1)
Net cash outflow from operating activities (2,783) (4,863)
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.
29 Operating lease arrangements
At 31 December 2013, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating 
leases, which fall due as follows:
2013 
£’000
2012 
£’000
Within one year 35 20
Within 2-5 years 3 –
38 20
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:
2013 
£’000
2012 
£’000
Capital expenditure contracted for but not provided for in the financial statements 11,162 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 consist 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. 54
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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Categories of financial instruments
2013 
£’000
2012 
£’000
Financial assets
Cash and cash equivalents 26,792 39,531
Trade receivables 5 2
Other receivables 400 813
27,197 40,346
Financial liabilities
Trade payables 179 235
Other payables – –
Shareholder borrowings – –
Financial instruments (FVTPL) – –
179 235
Financial risk management objectives
Management provides services to the business, coordinates 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 2% 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 12 month period.
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
2013 
£’000
2012 
£’000
2013 
£’000
2012 
£’000
Sterling (“GBP”) – – – 1
Euros (“EUR”) – – 3,726 7,855
Polish zloty (“PLN”) – 107 9 7
US dollars (“USD”) 83 – 13,573 19,962
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 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 also holds sufficient deposits of both USD and EUR and therefore 
this eliminates the need to purchase currency for the cash calls.
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 10% against EUR, PLN and USD, in 
which the Group has significant assets and liabilities at the end of each respective period. A movement of 10% 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 10% change in foreign currency rates.
31 Financial instruments continued
Notes to the Consolidated Financial Statements 
Continued
For the year ended 31 December 2013 55
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
The table below details the Group’s sensitivity to a 10% decrease in GBP against USD, EUR and PLN. A positive number below indicates an 
increase in profit where GBP weakens 10% against USD, EUR and PLN. For a 10% 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.
2013 
£’000
2012 
£’000
Increase in profit 3,751 3,964
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 and other receivables at the year end.
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.
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
2013 
£’000
2012 
£’000
2013 
£’000
2012 
£’000
Lane Energy Poland Sp. z o.o. 190 938 47 9
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.
Recharge of  
costs and services Amounts owing
2013 
£’000
2012 
£’000
2013 
£’000
2012 
£’000
Darley Energy plc and group 5 – 5 –
Darley Energy plc and its group companies are a related party of the Group because they have Directors and shareholders in common with 
the Company.
Payment for services Amounts owing
2013 
£’000
2012 
£’000
2013 
£’000
2012 
£’000
LJ Management (IOM) Limited 31 50 – –
LJ Management (IOM) Limited is a related party of the Group because a Director of that company is also a Director of a number of 
subsidiaries of the Company.
31 Financial instruments continued 56
Financial Statements
3Legs Resources plc
Annual Report & Accounts 2013
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Payment for services Amounts owing
2013 
£’000
2012 
£’000
2013 
£’000
2012 
£’000
David Bremner 50 102 18 32
David Bremner is a Director of the Group and thus a related party.
Amounts owing
2013 
£’000
2012 
£’000
Cowley Mining plc – 227
Cowley Mining plc is a related party of the Group because certain Directors of the Group are shareholders in the company. The loan to 
Cowley Mining plc was impaired in full as at 31 December 2013. The Directors believe this constitutes the fair value at the balance sheet 
date. 
Remuneration of key management personnel
The remuneration of the 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.
2013 
£’000
2012 
£’000
Short-term employee benefits 879 1,608
Termination benefits – 185
Share-based payments 64 68
943 1,861
33 Events after the balance sheet date
On 20 January 2014 the Group completed the sale to Rose Petroleum plc of Parkyn Energy Holdings plc, the holding company of Parkyn 
Energy (Germany) Ltd., which in turn held the Group’s two German concessions, and received payment of the remaining €100,000 due 
under the share purchase agreement. This completed the disposal of these two concessions.
32 Related party transactions continued
Notes to the Consolidated Financial Statements 
Continued
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3Legs Resources plc
Commerce House,
1 Bowring Road,
Isle of Man, IM8 2LQ
+44 1624 811 611
info@3legsresources.com
3Legs Resources plc Annual Report & Accounts 2013