Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012
Annual Report & Accounts 2012
Building a 
resources factory Welcome to 
Mediterranean Oil & Gas
Mediterranean Oil & Gas dedicates the highest 
standards of best practice and full value chain 
capability to the greater Mediterranean region, 
providing reliable energy through an optimised 
portfolio that adds real value to shareholders, 
partners, host governments and local communities.
Business review
1 Our 2012 highlights
2 At a glance
4 Our strategy for growth
6 Chairman’s statement
8 Chief Executive’s report
14 Financial review
16 Principal risks and uncertainties
Corporate governance
18 Board of Directors
20 Senior management
21 Corporate responsibility
24 Directors’ report
26 Remuneration report
Financial statements
28 Independent auditor’s report
29 Consolidated and Company financial statements
36 Notes to financial statements
61 Notice of Annual General Meeting
64 Corporate directory
18-27
28-60
61-64
1-17 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 1
   
 
   
 
Revenues £m
17.0 up 203% 
Production Bcf
1.8 up 200% 
2009 2010 2011 2012
0.5
*
0.4
*
0.6
*
1.8
*
2009 2010 2011 2012
3.7
*
3.5
*
5.6
*
17.0
*
* Includes production from discontinued operations
* Includes revenue from discontinued operations
   
 
   
 
Revenues £m
17.0 up 203% 
Production Bcf
1.8 up 200% 
2009 2010 2011 2012
0.5
*
0.4
*
0.6
*
1.8
*
2009 2010 2011 2012
3.7
*
3.5
*
5.6
*
17.0
*
* Includes production from discontinued operations
* Includes revenue from discontinued operations * Includes production from discontinued operations * Includes revenue from discontinued operations
Corporate and Operational:
 Strong 2012 total production of 1.8 Bcf, a 200% 
increase relative to the prior year (0.6 Bcf in 201 1)
 Completion in February 2013 of sale transaction  
with Genel Energy plc (“Genel”) in Malta Offshore  
Area 4 for: 
 – An immediate cash payment of US$10 million
 – 100% carry of the cost for the first exploration well 
Hagar Qim 1
 – 100% carry of the cost for the second exploration 
well up to a maximum of US$30 million 
 Significant progress achieved in advancing the 
Production Concession application for Ombrina 
Mare, Italy:
 – Italian Parliament approved law giving exemption 
from the offshore E&P ban 
 – Commission charged by the Ministry of 
Environment ruled in favour of MOG’s 
Environmental Impact Assessment (‘EIA’) 
submission
 Gas sales agreement with Repower Italia SpA signed 
and renewed post period end for the offtake of 
Guendalina gas until 30 September 2014
 Continued optimisation of the Group’s 2P reserves 
of 40MMbbls oil and 15.3Bcf of gas and best 
estimate contingent resources of 17MMbbls of oil 
and 22.3 Bcf of gas (at year-end 2012):
 – Agreement with Canoel International Energy 
Limited to divest 13 non-core exploration and 
production concessions, onshore Italy
 – Awarded the Aglavizza Production Concession 
onshore central Italy where MOG has a 100% 
interest 
 Board and management team further 
strengthened with the appointments of Keith Henry 
as Chairman and Bill Higgs as Chief Executive
Financial:
 Revenues from sales of gas and condensate and 
operatorship income increased significantly from  
€4.7 million to €16.3 million
1
 
 Profit from operations increased to €4.1 million  
(201 1: €1.8 million loss)
1
 
 Net cash and cash equivalents of €8.7m (201 1: 
€3.7m), not including US$10 million cash payment 
from Genel received after the period end
1 Excluding discontinued operations
Our 2012 highlights Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 2
06.
01.
02.
03.
04.
05.
07.
At a glance
MOG owns and operates assets 
in the central Mediterranean region
Onshore Italy 
Foredeep
Gas exploration, 
development and 
production
 > Geographically spread  
low risk production and 
exploration opportunities
 > Goal to increase returns 
on assets to provide 
greater cover of operating 
costs for the Group
1 2 3
Northern  
Adriatic
Gas exploration, 
development and 
production
 > Non-operated gas 
production at Guendalina 
providing ~85% of revenues
 > Asset delivers cash flow for 
small capital projects
 > Non-operated gas 
discoveries with upside 
potential
 > Goal is to increase  
the priority of these 
developments in the  
overall portfolio of ENI
Ombrina  
Mare
Ombrina Mare oil and gas 
development
 > 100% operated oil and 
gas discovery with upside 
potential
 > Goal is to achieve award 
of production concession 
from Ministry of Economic 
Development Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 3
1
2
3
6 4
5
Southern 
Apennines
Monte Grosso oil and 
gas exploration
 > Exploration prospect  
on trend with Val 
D’Agri and Tempa 
Rossa fields
 > Technically 
challenging 
exploration well that is 
currently waiting for 
EIA approval
4 5 6 7
Offshore  
Malta
Oil and gas exploration
 > Frontier exploration 
play offshore Malta 
similar to Libya and 
Tunisia
 > Presence of reservoir 
and hydrocarbon 
source are the key risks
 > Goal is to drill first 
exploration well in the 
4th Quarter of 2013
Onshore  
France
Gas exploration
 > Triassic Bunter 
Sandstone play 
analogous to North 
Sea southern Gas 
Basin.
 > Structural geometry 
and hydrocarbon 
charge are the key 
risks
 > Goal is to achieve 
partner alignment on 
way forward for asset
Genel Area of 
Mutual Agreement
Exploration, 
development and 
production
 > Agreement to work 
together in the 
offshore basins of 
Libya, Malta and 
Tunisia
 > Principles are on a first 
right and 20% (MOG)  
to 80% (Genel) split
Resources and Reserves by Asset (MMboe):
Onshore Italy Foredeep
2P - 0.52
2C - 0.00
2E - 8.32
2P - 0.00
2C - 0.00
2E - 392.75
2P - 0.85
2C - 3.41
2E - 2.40
2P - 0.00
2C - 0.00
2E - 64.01
2P - 41.62
2C - 16.59
2E - 14.89
2P - 0.00
2C - 0.89
2E - 8.28
Northern Adriatic Ombrina Mare
Onshore France Southern Apennines
Offshore Malta
MOG – Oil & Gas Reserves & Resources Year end 2012
2P -  Proved plus Probable Reserves
2C -  Contingent Resources most 
likely estimate
2E -  Prospective Resources most likely 
estimate (unrisked) Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 4
Our strategy for growth
Capable and credible 
from start to finish
Competitive 
Advantage
Financial 
Strength 
Resources 
Factory
Regional Operator
Leverage our competitive 
advantage that lies in the 
breadth and depth of our Italy-
based team that manages the 
‘full-value chain’ of our E&P 
business together with our AIM-
listing, knowledgeable 
management team and strong 
support from our key 
shareholders.
In 2012 we were able to secure:
 > Direct off-take agreement with 
Repower Italia SpA for 
Guendalina
 > Operatorship of the first 
exploration well offshore Malta
 > An Area of Mutual Interest 
Agreement with Genel  
Energy plc
Debt Free
Being debt free, we will use the 
steady income from our onshore 
and offshore gas production to 
underwrite our operating costs, 
support asset maturation and 
small capital programmes.
In 2012 we were able to:
 > Build our year-end cash position  
to €8.7m
 > Consolidate our positions 
onshore Italy and offshore Malta
Balanced Portfolio
Use our Resources Factory to our 
advantage. Grow production and 
move resources to reserves by 
maturing the portfolio in support of 
our production growth targets. 
Balance frontier exploration with 
asset maturation and good 
reservoir management.
In 2012 we were able to:
 > Maintain production at 
Guendalina Field
 > Get Ministry of Environment 
Commission approval of 
Ombrina Mare EIA
 > Achieve award of Aglavizza 
Production Concession Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 5
Attractive 
Prospective 
Resources
Case Study
Growth Opportunity
Prudently invest to de-risk our 
attractive Prospective Resources 
opportunities of approximately 450 
million boe (likely unrisked) and 
look for low entry cost and high 
potential value acreage to add to 
our portfolio.
In 2012 we were able to:
 > Finalise funding for two 
exploration wells offshore Malta
 > Grow our gas Prospective 
Resources by 35%
Creating value for shareholders
In December 2012 we elected to acquire 1,012km
2
 of long offset 3D 
seismic data covering part of Area 4 offshore Malta. This decision was 
made on the basis that we were convinced the opportunity merited 
further work, despite being unable to farm out some of our equity in the 
block in the prior two years. In August 2013 we agreed terms with Genel 
Energy plc for them to join us in exploring Area 4. The consideration for 
the transaction is in the order of $25 million, which includes payment of 
back costs and carries on two exploration wells – validation of our 
decision to invest to de-risk prospective resources.
 > Frontier exploration play similar to Libya and Tunisia
 > 1,012km
2
 of long offset 3D seismic acquired in December 2011
 > CPR completed in October 2012
 > Maltese Government approved one year extension of exploration 
period to January 2014
 > Completed sale in February 2013 of 75% of shares in MOG subsidiary 
Phoenicia Energy Company Ltd to Genel Energy plc for consideration of:
 > $10 million cash
 > 100% carry of 1st exploration well
 > 100% carry of 2nd exploration well to cap of $30 million
 > Optional loan facility Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 6
Chairman’s statement
Keith Henry
Chairman
the project received a positive ruling 
from the Commission charged by the 
Ministry of Environment with ruling on 
the Ombrina Mare oil and gas field 
development EIA. We look forward to 
progressing the development of this 
cornerstone asset over the next few 
years.
A second important development was 
the completion of the sale in February 
2013 of 75% of MOG’s wholly owned 
subsidiary Phoenicia Energy Company 
Limited (‘PECL’) to Genel Energy plc 
(‘Genel’). PECL owns the exploration 
and production rights to Area 4 
offshore Malta. MOG was able to 
secure a consideration that returned 
$10 million of prior years’ costs, 
together with a 100% carry of the cost 
for the first exploration well planned to 
be drilled in Q4 2013, plus a 100% carry 
of the cost for the second exploration 
well up to a maximum of US$30 million 
gross expenditure.
Dear Shareholder,
Mediterranean Oil & Gas Plc (‘MOG’, 
the ‘Group’ or the ‘Company’) is 
pleased to announce the Company’s 
2012 results.
After more than a year with the 
Company I am pleased to be able to 
report on behalf of the Board the 
continuation of the transformation of 
the Company that was started in 2011.
A key development for 2012 was the 
introduction of a new law in Italy that 
provides an exemption for the 
Ombrina Mare development from the 
offshore ban to all new exploration 
and production activity that was 
introduced in 2010 after the Macondo 
incident in the Gulf of Mexico. This 
exemption has enabled the Company 
to seek the approval of the 
Environmental Impact Assessment 
(EIA) submitted in 2009. We are 
currently in the final stages of that 
approval, having recently heard that 
‘ We have continued the 
transformation of the 
Company started in 
201 1 and we are 
building on our abilities 
to advance the value 
of our portfolio in the 
year ahead.’ Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 7
Production for the year was 
underpinned by the Guendalina field, 
which produced in-line with our 
expectations, averaging net to MOG 
4.1 million scf/d (116,000 scm/d) and 
accounted for 84% of total net 
production. The field reserves were 
re-certified post the reporting period in 
line with the previous year’s report. As  
a result of the strong revenues from 
Guendalina and our onshore Italy 
assets, the Company has continued to 
strengthen its net assets, which will 
help us to achieve our key commercial 
objectives and growth strategy going 
forwards.
Cash and cash equivalents at the 
period end was €8.7 million, which has 
since been strengthened through the 
receipt of cash equivalent to €7.7 
million from completion of the Genel 
transaction post period end. Net 
cashflow from operations in 2012 were 
€6.5 million, up from €1.1 million in 2011, 
more than covering operating 
expenses.
During 2012 a number of changes 
were made to the membership of the 
Board and the Executive Management 
Team. Jake Ulrich and I joined the 
Company in January 2012 as Non-
Executive Directors, and Dr William ‘Bill’ 
Higgs joined as MOG’s Chief Executive 
in March. During the year Miles 
Donnelly, Michael Seymour and 
Salvatore Russo stepped down from 
the Board and I am very grateful to 
them for their support, particularly to 
Salvatore Russo who had served as a 
Director since the formation of the 
Company in 2005. Chicco Testa and 
Dr Peter Jackson joined the Board in 
October 2012 and in January 2013 
respectively. I am confident we have a 
Board of Directors that is well placed to 
guide the Company through its next 
phase of development.
Outlook
There is no doubt that 2013 will be 
another important year in the growth 
of the Company. During the period we 
expect to receive the approval of the 
EIA and the award of the Production 
Concession for Ombrina Mare, thereby 
enabling the Company to drill a pilot 
appraisal well in early 2014, targeting 
the transformation of 2P reserves into 
1P reserves and contingent resources 
into reserves. We will also continue with 
the preparations to drill the first Hagar 
Qim exploration well offshore Malta, 
which, with our partner Genel, we plan 
to spud before the end of the year.
MOG continues to build up a very 
experienced technical and 
management team highly capable of 
exploring and developing oil and gas 
assets. To that end the Board remains 
focused and committed to growing 
the Company and we are actively 
seeking additional opportunities to 
expand our current portfolio.
On behalf of the Board, I would like 
thank our shareholders and employees 
for their continued support of the 
Company.
Keith Henry
Chairman
21 March 2013
Outlook
  Drill first exploration well, 
Hagar Qim, Malta offshore 
Area 4 planned for late 2013
  Continue to actively pursue 
award of EIA and Production 
Concession for Ombrina 
Mare
  Post award of Production 
Concession, drill a pilot 
appraisal well at Ombrina 
Mare
  Extract value from other 
operating assets and de-risk 
prospective and contingent 
resources
  Actively pursue exploration 
and strategic growth 
opportunities  Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 8
Chief Executive’s report
William Higgs
Chief Executive
The Company has a broad asset base 
across the exploration, development 
and production phases of the 
business. These assets have significant 
upside potential and we now have the 
financial strength to de-risk and 
mature these assets over the coming 
years, while also looking for valuable 
opportunities for asset acquisition.
Gas Production and Prices
All gas production of the Group 
currently occurs in Italy.
In 2012, total gas production was  
1.8 Bcf, which represented a 200% 
increase relative to the prior year  
(2011: 0.6 Bcf). This was largely due  
to a full year of gas production at the 
Guendalina gas field, which 
accounted for 84% of total production 
for the Group.
During 2012, the Brent oil price has 
fluctuated around $111/bbl, while the 
Euro vs US Dollar exchange rate has 
experienced significant volatility  
which has influenced gas prices. The 
average gas sales price achieved by 
the Group during the period, excluding 
production from discontinued 
operations, was €0.33/scm ($12.0 per 
thousand cubic feet).
The year 2012 has set the foundation 
for growth as we achieved strong 
financial, commercial and 
operational performance.
A full year of production from 
Guendalina combined with 
continued production onshore Italy 
delivered total sales revenue for the 
Group of €16.3 million and a cash 
and cash equivalent position of €8.7 
million at 31 December 2012.
The two critical commercial 
objectives for the year were 
achieved. Firstly, our Ombrina Mare 
field was included in an exemption 
from the offshore drilling ban 
introduced in 2010 in Italy. Secondly, 
we were able to secure a new partner 
to fund exploration drilling activities at 
Malta offshore Area 4. The Group is 
now in a strong financial and 
operational position, which will 
enable MOG to actively seek 
strategic growth opportunities while 
progressing its portfolio of production, 
development and exploration assets.
Building 
a resources 
factory
‘ For the first time in our 
history we achieved a 
profit from operations 
and set the foundation 
for growth’
The Company’s forecasts for future gas 
prices indicate that the positive trend 
seen in the last two years is not 
expected to continue in 2013 and 2014 
and the Italian gas price is expected to 
progressively decline by approximately 
2 to 4 Euro cents per scm, due to the 
excess of gas supply relative to gas 
demand.
Oil & Gas Reserves and Resources
The Group’s reserves and resources 
are reviewed on an annual basis  
by independent certifiers (Proven, 
Probable and Possible Reserves)  
and/or by the Company (Contingent 
and Prospective Resources). As at  
31 December 2012, the Company 
recorded 2P reserves of 40 MMbbls oil 
(net) and 15.3 Bcf (net) of gas. Best 
estimate contingent resources were  
17 MMbbls oil (net) and 22.3 Bcf (net) 
of gas. Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 9
February 
2013
Completed the 
sale of 75% 
interest in 
Malta offshore 
Area 4 to 
Genel Energy 
plc
March 
2013
Signed gas sales 
agreement 
with Repower 
Italia SpA for 
the offtake of 
Guendalina 
gas until 
30 September 2014
 
 
 
 
 
 
 
In the last year
October 
2012
ERC Equipoise
completed 
Competent
Persons Report 
on Malta
offshore Area 4 
validating
economic 
potential of
Eocene 
Prospects within
the Licence
September 
2012
Reached 
agreement 
with Canoel 
International 
Ltd to sell 
13 non-core 
exploration and 
production 
concessions
August 
2012
Italian Parliament 
approved law 
giving exemption 
from the offshore 
E&P ban to 
pre-existing 
applications, 
enabling progress 
of Production 
Concession 
application for 
Ombrina Mare
 
January 
2012
42% increase in the 
certiﬁed reserves at 
Guendalina to 
6.7 Bcf net to MOG
The tables set out on pages 10 and 11 
summarise the evolution of the Group’s 
hydrocarbon reserves and resources 
since 2006 and include the latest 
update, as at 31 December 2012.
 > 2P Oil Reserves & Resources 
remained substantially unchanged. 
The reduction in Oil Prospective 
Resources resulted from the sale of 
a 75% interest in Phoenicia Energy 
Company Limited (100% WI in Malta 
offshore Area 4) to Genel 
 > Following a full year of production at 
the Guendalina gas field, 10% of 2P 
gas reserves have been produced. 
The 2P Reserves Replacement Ratio 
(‘RRR’) for the gas is 6%, which 
means that the Company has 
replaced 6% of the 2012 production 
in the reserves ledger 
 > The Company’s Reserves to 
Production (‘R/P’) ratio for gas is  
9.0 (excluding production from 
discontinued activities)
 > 2P Gas reserves decreased due to 
the production from the Guendalina 
gas field 
 > Gas Prospective Resources instead 
increased, approximately 33%, as a 
result of the review of the gas 
exploration potential performed on 
the Italian and French E&P Assets 
 > The Company is committed to 
de-risk and mature resources, to 
progressively replace reserves, 
maintaining the 2P RRR at around 
100% and targeting an R/P ratio of 
approximately 9 
Asset Overview
Exploration, Development and 
Production
Italy – Offshore Northern Adriatic 
The Company’s efforts during the 
period under review were mostly 
focused on maximising the revenues 
from the Guendalina gas field offshore 
Italy in the northern Adriatic.
Guendalina Gas Field (MOG WI 20%, 
ENI WI 80% and Operator)
 > Guendalina produced 1.5 Bcf net to 
MOG for the full year under review 
at an average of 4.1 million scf/d 
(116,000 scm/d) 
 > An independent certification of the 
field gas reserves issued by RPS post 
the reporting date: 
 > revised 2P recoverable reserves to 
23.5 Bcf (4.7 Bcf net to MOG), 
representing no change to the 
prior year estimate when 
accounting for the full year 
production; 
 > estimated P3 reserves of 33 Bcf 
(6.6 Bcf net to MOG).
 > A gas sales contract was completed 
with Repower Italia SpA to cover all 
the Company’s net gas produced 
from the field from 1 April 2012 to  
30 September 2013. Post the 
reporting period this contract was 
extended for an additional year to 
September 2014. 
 > Guendalina generated revenues of 
€13.8 million for the reporting period 
The Guendalina gas field is located 
47km offshore of the north-east coast 
of Italy, in 42m of water. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 10
Chief Executive’s report continued
Development activity for these fields 
was frozen from 2001, initially pending 
the resolution of environmental 
concerns about subsidence caused 
by developing the offshore region.  
The Italian Government indicated in 
2009 that it is in favour of a positive 
resolution of these issues in this area of 
the Northern Adriatic. As a portion of 
the Company’s AC19 PI concession lies 
within 12 miles of nature reserves it was 
impacted by the 2010 offshore 
restrictions introduced by the Italian 
Government for the offshore E&P 
activities. On 7 August 2012 the Italian 
Parliament issued the Law 134/2012 
containing Article 35, which relates to 
offshore exploration and production 
activities. The Article states that the 
restrictions introduced under Decree 
DLGS 128/2010 would no longer be 
applicable for the pre-existing offshore 
E&P activities such as concession AC19 
PI. The Company can now work with 
ENI to increase the priority of the 
development of the Northern Adriatic 
discoveries within AC19 PI.
Italy – Onshore Foredeep Gas
In Italy, the Company has a large 
number of onshore production and 
exploration gas assets that target  
gas traps in the Pliocene aged sand 
deposits of the Apennines foredeep.  
In this E&P acreage the existing 
production is not the only value. In fact, 
several interesting development and 
exploration projects are also present, 
mainly within existing production 
Guendalina has produced in line 
with management expectations for 
the year under review. Recertification 
of the reserves demonstrates that the 
asset has the capability to provide 
revenues for at least the next 3 to 5 
years. Additional opportunities to 
add production at Guendalina 
come from our ability to open up an 
additional completed production 
zone in well Gue 3 and a side track 
of one of the producing wells into a 
deeper target once Gue-2 reaches 
its economic limit.
Other North Adriatic Gas Discoveries 
(MOG WI 15%, ENI WI 85% and 
Operator)
The Guendalina project is located in 
one of the most important gas 
exploration and production areas in 
Italy and is situated 70km to the south 
of four other discovered, but still 
undeveloped, offshore gas fields in 
which the Group has a 15% interest.
These four gas discoveries amount  
to between 19 to 48 Bcf net 
contingent gas resources to the 
Group and represent an important 
growth opportunity for the Company. 
Their reclassification from 2C 
(Contingent Resources) to 2P 
reserves is expected to take place 
following authorisation of the 
development plans for the fields.
concessions that have the potential to 
unlock approximately 12 to 14 Bcf net 
unrisked prospective resources to the 
Group and achieve new near to 
mid-term gas production.
During the period:
Our entire working interest in the 
following 13 non-core exploration and 
production gas assets were sold, 
pending approval from the Italian 
authorities, to Canoel International 
Energy Limited (‘CIL’): 
MOG-operated onshore gas 
production concessions: 
 > Masseria Grottavecchia (WI 20%) 
 > San Teodoro (WI 100%) 
 > Torrente Cigno (WI 45%) 
 > Misano Adriatico (WI 100%) 
 > Sant’Andrea (WI 40%) 
 > Masseria Petrilli (WI 50%)
Non-operated onshore gas production 
concessions:
 > Masseria Acquasalsa (WI 8.8%) 
 > Lucera (WI 13.6%) 
 > San Mauro (WI 18%) 
MOG-operated gas exploration permit: 
 > Montalbano (WI 57.15%)
Exploration permit applications:
 > Serra dei Gatti (WI 100%) 
 > Villa Carbone (WI 50%) 
 > Colle dei Nidi (WI 25%) 
(together, the “Assets”)
Net Oil Reserves & Resources in MMbbls
Reserves
Proven Plus
Probable
(2P)
MMbbls
Contingent
Resources
Best
Estimate
MMbbls
Contingent
Resources
High
Estimate
MMbbls
Prospective
Resources
(unrisked)
Best
Estimate
MMbbls
Prospective
Resources
(unrisked)
High
Estimate
MMbbls
1 July 2006 0
1
29
2
70
2
1,577
3
4,447
3
30 June 2007 0
1
29
2
70
2
1,291
4
3,614
4
30 June 2008 20
1
12
2
19
2
1,419
4
3,951
4
31 December 2008 20
1
12
2
19
2
1,419
4
3,951
4
31 December 2009 20
1
12
2
19
2
1,419
4
3,951
4
31 December 2010 40
1
12
2
19
2
1,405
4
3,920
4
31 December 2011 40
1
12
2
21
2
1,405
4
3,920
4
31 December 2012 40
1
17
2
31
2
470
5
1,200
5
1: Independent certification by SIM.
2: Company assessment.
3: RPS assessment.
4: RPS assessment.
5: ERC Equipoise assessment for Malta offshore Area 4 except for Company assessment of Monteardone and Monte Grosso with total of 74 MMbbls best 
case and 109 MMbbls high case Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 11
Under the terms of the Sale and 
Purchase Agreement, on Completion:
 > CIL will pay to MOG the sum of €100 
as consideration for the acquisition 
of the Company’s working interests 
held in the Assets; 
 > CIL agrees to assume the liability for 
all future plug, abandonment and 
site remediation costs associated 
with the Assets; 
 > MOG will pay €1,250,000 to CIL as  
a partial contribution towards the 
future plug, abandonment and site 
remediation costs for the Assets; 
 > MOG will credit CIL the revenue 
MOG received from the Assets 
during the period between the 
Effective Date of 24 August 2012 and 
the Completion Date (the ‘Interim 
Period’), net of allowable operating 
costs and agreed capital 
expenditure associated with the 
Assets and incurred by MOG during 
the Interim Period. 
During the coming year we will 
continue to progress our exploration 
activities with the drilling of one well 
and final preparations and approvals 
of two additional wells planned for 
drilling in 2014.
In December 2012, we received the 
award of the Aglavizza Production 
Concession onshore central Italy 
where we have a 100% interest in the 
7km
2
 concession that includes the 
Civita 1 discovery with estimated 
proved and probable reserves of more 
than 1 Bcf. Post the award, we safely 
conducted a production test of Civita 
1 that confirmed excellent 
permeability and no near-well bore 
formation damage. We estimate that 
the Aglavizza field can be profitably 
developed, with first gas due in  
early 2015.
Italy – Ombrina Mare
Oil & Gas Discovery (MOG WI 100%)
The Ombrina Mare discovery is an 
important asset for the Company that 
represents an important future growth 
opportunity.
Following the successful drilling of two 
exploration/appraisal wells in 2008, the 
completion of a well as an oil producer 
and the set- up of a tripod platform in 
preparation for the development 
phase, the Company applied for a 
production Concession (d 30 B.C-MD) 
in December 2008. The Company 
obtained in early 2010, an 
independent certification of 40 
MMbbls 2P oil reserves, of which 
proven (P1) oil reserves were just over 
12 MMbbls. These oil reserves establish 
the Ombrina Mare field as a significant 
European oil project.
During the period:
 > Law 35/2012, regarding 
‘simplifications and economic 
growth’ was ratified on 6 April 2012 
clarifying that the limitations 
provided by Decree 128 do not 
apply to either existing mining titles 
or ‘relevant extensions’. 
 > We received a three year extension 
to our exploration permit BR269 GC, 
where the Ombrina Mare field is 
located, in May.
 > Law number 134/2012 was 
published on 11 August 2012 
confirming that restrictions under 
decree DLGS 128/2010 will no longer 
apply to: 
i) applications for production 
concessions that were under 
review at the time DLGS 128/2010 
came into force, and any 
connected or subsequent 
proceedings; 
ii) any titles, including exploration 
licences, that had already been 
issued prior to DLGS 128/2010 
coming into force; and 
iii) any proceedings connected with 
or subsequent to such titles, 
including possible extensions of 
the same. 
 > We re-engaged with the Ministry of 
Environment to seek approval of the 
EIA submitted as part of the 
Concession application in 2008. 
Reserves
Proven Plus
Probable
(2P)
(Bcf)
Contingent
Resources
Best
Estimate
(Bcf)
Contingent
Resources
High
Estimate
(Bcf)
Prospective
Resources
(unrisked)
Best
Estimate
(Bcf)
Prospective
Resources
(unrisked)
High
Estimate
(Bcf)
1 July 2006 12
1
21
2
50
2
20
2
44
2
30 June 2007 11
1
25
2
61
2
70
2
138
2
30 June 2008 10
1
25
2
55
2
93
2
158
2
31 December 2008 17
1
25
2
55
2
93
2
158
2
31 December 2009 16.5
1
25
2
55
2
93
2
158
2
31 December 2010 17.6
1
25
2
55
2
48
2
120
2
31 December 2011 18.4
1
22.3
2
48
2
86
2
156
2
31 December 2012 15.3
1
22.3
2
48
2
114
2
216
2
1: Independent certifications by SIM and RPS (Guendalina 2012 only).
2: Company assessment.
Net Gas Reserves & Resources in Bcf Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 12
Chief Executive’s report continued
Malta – Offshore Area 4
The Group operates Offshore Area 4, 
which comprises 5,700km
2
 of deep 
water acreage north of the 
internationally recognised border 
between Malta and Libya.
During the period:
 > We acquired a 10% interest in the 
Licence from Leni Gas and Oil 
Investments Ltd. 
 > ERC Equipoise (‘ERCE’) completed a 
Competent Persons Report on Malta 
offshore Area 4, validating the 
economic potential of Eocene 
Prospects within the Licence. 
 > We received approval from the 
Maltese Government of a one year 
extension to the first exploration 
period to 18 January 2014. 
 > We completed key documents for 
the sale of a 75% interest in Malta 
offshore Area 4 to Genel for a 
consideration of: 
 > US$10 million cash payment 
(received in February 2013); 
 > 100% carry on the first exploration 
well, and a 100% carry on the 
second exploration well up to 
US$30 million gross expenditure; 
 > At MOG’s option, should the costs 
of the second well exceed US$30 
million, Genel will provide a 
financing arrangement to fund 
MOG’s 25% share of any 
additional expenditure, at an 
interest rate equivalent to 3 
Month Libor plus 400 bps. 
 > MOG will remain operator adviser 
to PECL until completion of the 
first exploration well, at which 
time Genel can elect to become 
the operator, or at such later date 
as the parties may agree.
The Company is continuing its active 
dialogue with the Italian Government, 
with a view to securing approval of 
the EIA for Ombrina Mare and the 
award of the associated Production 
Concession. We currently expect the 
Production Concession will be 
awarded during the third quarter of 
2013. Post award, we will progress the 
drilling of a pilot appraisal well to 
evaluate additional potential in the 
deeper Cretaceous reservoir and to 
set a second production well. This 
activity should enable the most 
flexibility in funding the future 
development of Ombrina Mare.
Wildcat Exploration
Italy – Southern Apennines
In the Southern Apennines, the Group 
operates the Monte Grosso project, 
holding a 22.89% interest. The project 
is a high quality near field exploration 
opportunity close to one of the 
largest onshore oil producing areas 
in Western Europe. The Monte Grosso 
exploration project presently remains 
on hold, pending resolution of 
residual permitting issues, which the 
Group presently believes should be 
positively resolved and allow a 
project start-up in late 2015 (subject 
to rig availability). The Monte Grosso 2 
well is targeting 280 MMbbls of 
unrisked prospective resources (64 
MMbbls net to the Group) at a depth 
of 6,500m. Permitting and existing 
well site maintenance works were the 
main activities conducted during the 
period.
The area is frontier exploration where 
no drilling activity has occurred and it 
is one of the rare areas that still 
remains to be explored in the 
Mediterranean basin. The transaction 
with Genel means that a minimum of 
two exploration wells are now fully 
funded. We expect that the first well will 
be drilled in late 2013 with the second 
to follow within 18 months.
Offshore Area 4 is a high risk, but 
potentially a high reward, geological 
environment where nine prospects 
and leads have been certified by ERCE 
and RPS with a total of 325 million bbls 
of unrisked prospective oil resources 
net to MOG.
France – St Laurent
The St Laurent permit is located in 
southern France in a known gas and 
oil prone province. The Company has 
an 11% WI in this asset. There has been 
little activity on the permit in 2012. The 
joint venture partners have undergone 
some changes with Nautical Petroleum 
plc being acquired by Cairn Energy 
plc and Aquitaine Exploration Ltd 
acquiring an 18.2% interest in the 
licence from Egdon Resources. The 
strategy for the licence is currently 
being finalised by the joint venture 
partners.
Health, Safety and the Environment 
The Company continues to be 
committed to maintaining the highest 
standards in HSE management. No 
environmental incidents have been 
reported for the period under review. 
However, we had one lost time injury 
when one of our employees sustained 
a head injury while inspecting the 
Ombrina Mare tripod. A full route 
cause analysis was conducted and 
the inspection SOP updated. Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 13
Glossary
 
Bcf Billion cubic feet of gas
Contingent oil/gas resources Has the meaning ascribed by the SPE/WPC Standard
EIA Environmental Impact Assessment
HSE Health, Safety and the Environment
MMbbls Million stock tank barrels of oil
MMboe Million stock tank barrels of oil equivalent
MMscm Million standard cubic metres
P1 & P2 Reserves Proven plus probable reserves as defined in the SPE/WPC Standard 
Prospective oil/gas resources Has the meaning ascribed by the SPE/WPC Standard
scm Standard cubic metre
SOP Standard Operating Procedure
SPE/WPC Society of Petroleum Engineers/World Petroleum Congress SPE/WPC Standard 
Definitions and methodology for certifying hydrocarbon reserves and resources 
adopted by the SPE/WPC from time to time which presently requires the 
application of the 2007 Petroleum Resources Management System standards 
RRR Reserve Replacement Ratio
R/P Reserves to Production Ratio
Operational Overview
MOG has a broad portfolio of 
production, development and 
exploration assets and a secure 
financial position. Revenues from gas 
sales are now providing a sound 
financial position going forward.
Over the next 12 months, MOG intends 
to progress its key assets and pursue 
attractive and material strategic 
growth opportunities that we expect to 
identify.
One of the strengths of the Company is 
the wide international experience of its 
senior managers, in particular in the 
Mediterranean area and the 
operational capability of its staff and 
organisation. We have added some 
key members of staff in 2012 and we 
believe that the capability of our 
organisation is a key strength for the 
ambitious growth objectives of the 
Group.
William Higgs
Chief Executive 
21 March 2013
Qualified person:
In accordance with the guidelines of 
the AIM Market of the London Stock 
Exchange, Dr Bill Higgs, Chief Executive 
of Mediterranean Oil & Gas Plc, a 
geologist, explorationist and reservoir 
manager with over 24 years’ oil and 
gas industry experience, is the 
qualified person as defined in the 
London Stock Exchange’s Guidance 
Note for Mining and Oil and Gas 
companies, who has reviewed and 
approved the technical information 
contained in this announcement. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 14
   
 
   
 
Revenues £m
17.0 up 203% 
Production Bcf
1.8 up 200% 
2009 2010 2011 2012
0.5
*
0.4
*
0.6
*
1.8
*
2009 2010 2011 2012
3.7
*
3.5
*
5.6
*
17.0
*
* Includes production from discontinued operations
* Includes revenue from discontinued operations
   
 
   
 
Revenues £m
17.0 up 203% 
Production Bcf
1.8 up 200% 
2009 2010 2011 2012
0.5
*
0.4
*
0.6
*
1.8
*
2009 2010 2011 2012
3.7
*
3.5
*
5.6
*
17.0
*
* Includes production from discontinued operations
* Includes revenue from discontinued operations
* Includes 
production from 
discontinued 
operations
* Includes 
revenue from 
discontinued 
operations
Financial review
Chris Kelsall
Finance Director
In addition, the Group’s interest in 
Phoenicia Energy Company Limited 
(“PECL”) is disclosed as an asset held 
for sale in the statement of financial 
position in accordance with the 
provisions of IFRS 5 (refer Note 6(a) for 
further information). However, as the 
Group is retaining an interest in PECL 
following the completion of the 
transaction with Genel Energy plc, this 
is not considered to be a discontinued 
operation and therefore the results of 
PECL are recorded within the Group 
statement of comprehensive income, 
as continuing operations.
Revenue
Excluding discontinued activities, as 
noted above, gas and gas 
condensate production of 47.7 MM 
scm (1.69 Bcf), together with 
operatorship income, resulted in a 
249% increase in revenues to €16.3m 
(2011: €4.7m). A substantial increase in 
gas production excluding 
discontinued activities, relative to the 
prior 12 month period (2011: 17.6 MM 
scm; 0.62 Bcf), was primarily 
attributable to the full year effect of 
gas production at the Guendalina 
offshore gas field, which commenced 
in late October 2011. 
Excluding production from 
discontinued activities, the Group’s 
average realised gas sales price in 
2012 was €0.33/scm (USD 12.0/Mcf). A 
new gas sales contract for Guendalina 
was signed in April 2012 with Repower 
Italia SpA (“Repower Italia”), covering 
the thermal year ending 1 October 
2013. In March 2013, we were pleased 
to announce a further extension of the 
contract with Repower Italia to cover 
the subsequent thermal year ending  
1 October 2014.
Income From Operations
Profit from operations in 2012 was €4.1m 
(2011: loss of €1.8m). The increase was 
primarily attributable to an increase in 
2012 revenues which significantly 
outpaced the combined effect of an 
increase in the cost of sales to €3.8m 
(2011: €1.0m) and an increase in total 
administrative expenses (including 
depreciation) to €8.5m (2011: €5.7m). 
The increase in total administrative 
expenses arose primarily from an 
elevated depreciation expense of 
€4.5m (2011: €1.4m), attributable 
largely to the Guendalina field going 
into full production. This was partly 
offset by a lower impairment expense 
of €Nil in the year (2011: €1.1m), 
excluding assets held for sale to CIL.
Profit before tax from continuing 
operations was €3.6m (2011: €2.9m). 
The 2011 result was significantly 
increased by a one off finance gain 
2012 highlights
 > Cash and cash equivalents at 
year-end €8.7m (2011: €3.7m) 
 > Group revenue from sales of gas 
and gas condensate and 
operatorship income €16.3m, 
excluding discontinued operations 
(2011: €4.7m) 
 > Group profit from operations of 
€4.1m, excluding discontinued 
operations (2011: loss of €1.8m)
 > Net cash flows from operating 
activities of €6.5m, excluding 
discontinued operations  
(2011: €1.1m)
Presentation of 2012 Financial 
Statements
On 6 September 2012, the Group 
announced the divestment of non-
core exploration and production gas 
assets onshore Italy, which belong to 
the subsidiaries Medoilgas Italia SpA 
and Medoilgas Civita Limited, to 
Canoel International Energy Limited 
(“CIL”). The assets are presented in the 
Consolidated Statement of Financial 
Position as non-current assets “held for 
sale” in accordance with IFRS 5 
Non-current assets held for sale and 
discontinued operations (refer Note 
6(b) for further information) and in the 
income statements as discontinued 
operations.  Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 15
of €5.7m arising on the settlement of 
financial liabilities, as part of the 
Group’s recapitalization undertaken  
in May 2011. Profits after tax from 
continuing operations were €1.8m 
(2011: €6.5m). The elevated 2011 result 
was also influenced by the recognition 
of a €3.7m deferred tax asset 
associated with tax losses brought 
forward (following commencement of 
production at Guendalina) and timing 
differences.
The basic and diluted earnings per 
share on continuing operations was 
0.41 cents per share (2011: earnings of 
2 cents per share). No dividend is 
proposed to be paid for the year 
ended 31 December 2012 (2011: €nil).
Cash Flow
Net Group cash flow generated from 
operating activities was €6.5m (2011: 
€1.1m), which reflects the significant 
increase in production achieved in  
the year at the Guendalina field, 
relative to 2011.
Following completion of capital 
expenditure associated with the 
Guendalina gas field in 2011, net cash 
investments in oil and gas assets 
reduced from €17.8m in 2011 to €1.7m 
in 2012. Exploration costs in 2012 largely 
comprised the acquisition, processing 
and interpretation of 3D seismic data, 
at Area 4 offshore Malta.
In November 2011, the Company 
entered into a short-term secured loan 
facility with affiliated investment funds 
of Och-Ziff Capital Management 
Group (‘Och Ziff’), for up to €3.5m  
(the ‘Loan Facility’). The purpose of  
the Loan Facility was to assist the 
Company in funding the acquisition 
and processing of 3D seismic 
exploration data at Area 4 Offshore 
Malta. On 7 February 2012, the 
Company borrowed €2.0m (the 
‘Principal’) under the Loan Facility. 
Repayment of the entire Principal and 
accrued interest was completed on 26 
April 2012 (For further information, refer 
to Note 25 to the Financial Statements). 
Statement of Financial Position
Cash and cash equivalents at year-
end were €8.7m (2011: €3.7m). Among 
non-current assets, key movements 
from 2011 included a reduction in 
property, plant and equipment to 
€18.3m (2011: €20.5m). This decline 
resulted from the depreciation 
expense associated with the 
Guendalina project, offset partly by a 
€2.2m transfer of the carrying amount 
of Aglavizza from exploration and 
evaluation assets, following the award 
of the production concession in 
December 2012. Exploration and 
evaluation assets were further reduced 
to €19.8m (2011: €30.8m), following the 
reclassification of expenditure incurred 
at Area 4 offshore Malta, as Non-
Current Assets Held for Sale.
Financial liabilities at year end were 
€Nil (2011: €Nil), following repayment  
of the Och-Ziff loan in April, 2012. The 
reduction in provisions to €5.8m (2011: 
€8.4m) was primarily attributable to the 
reclassification of assets held for sale, 
in relation to the agreed divestment of 
onshore Italy gas assets to CIL. At the 
end of 2012, net assets stood at €53.1m 
(2011: €51.6m), and non-current assets 
were €42.0m (2011: €55.8m).
Key Performance Indicators
The Group’s key financial performance 
indicators are revenue and the 
consolidated results. Its key non-
financial performance indicators are 
the level of production and reserve 
and resources replacement (discussed 
in the Chief Executive’s Report – Oil & 
Gas Reserves and Resources on pages 
8 and 9) and the health, safety and 
environmental performance 
(discussed in the Chief Executive’s 
Report – Health, Safety and the 
Environment, on page 12).
The share price movement during the 
12 month period to 31 December 2012 
ranged from an intra-day high of 
15.95p, to an intra-day low of 3.63p. 
The share price at close on  
31 December 2012 was 10.38p.
Events after the Reporting Period
On 21 December 2012, the Group 
announced that it had signed key 
contracts with Genel Energy Plc 
(“Genel”) that enabled Genel’s 
acquisition of a 75% working interest in 
Malta offshore Area 4 PSC (the “PSC”). 
These contracts included a share sale 
agreement in which Genel agreed to 
acquire 75% of the issued share capital 
of the Group’s wholly owned 
subsidiary, Phoenicia Energy 
Company Limited (“PECL”), which 
owns the rights to exploration activity 
in Malta offshore Area 4 (“Share Sale 
Agreement”). 
Under the terms of the Share Sale 
Agreement, Genel agreed to provide: 
an immediate cash payment of US$10 
million; a 100% carry of the cost for the 
first exploration well (Hagar Qim 1), 
which is planned to be drilled to a 
minimum depth of 2,500 metres; and, 
a 100% carry of the cost for the 
second exploration well up to a 
maximum of US$30 million gross 
expenditure. In addition, at the 
Group’s option, should the costs of 
the second well exceed US$30 million, 
Genel will provide a financing 
arrangement to fund the Group’s 25% 
share of any additional expenditure 
above the agreed cap, at an interest 
rate equivalent to 3 Month Libor plus 
400 bps. Completion of the Share 
Sale Agreement occurred on  
28 February 2013.
Other events occurring after the 
reporting period are set out in Notes 
26 and 28 to the Financial Statements.
Hedging
During 2012, the Group did not have 
any oil and gas price derivatives in 
place (2011: no oil and gas price 
derivatives in place).
Cautionary Statement
This financial report contains certain 
forward-looking statements that are 
subject to the usual risk factors and 
uncertainties associated with the oil 
and gas exploration and production 
business. While the Directors believe 
the expectation reflected herein to be 
reasonable in light of the information 
available up to the time of their 
approval of this report, the actual 
outcome may be materially different 
owing to factors either beyond the 
Group’s control or otherwise within the 
Group’s control but, for example, 
owing to a change of plan or 
strategy. Accordingly, no reliance 
may be placed on the forward-
looking statements.
Chris Kelsall
Finance Director 
21 March 2013 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 16
Principal risks and uncertainties
Exploration
There is no assurance that our 
exploration activities will identify a 
commercial discovery among the 
existing portfolio. The Group mitigates 
exploration risk through the experience 
and expertise of our specialists, the 
application of appropriate technology, 
and the selection of prospective 
exploration assets. The Group’s 
objective is to acquire additional 
exploration assets, which will diversify 
exploration risk. Furthermore, we seek to 
employ individuals and contractors with 
strong technical skills and experience in 
the areas in which the Group operates. 
Where appropriate, we work with joint 
venture partners who have 
demonstrable technical skills and 
experience in similar projects. Further 
information on exploration assets is set 
out in Note 5 to the financial 
statements.
Operations
The nature of oil and gas operations 
means that the Group is exposed to the 
risk of equipment failure, well blowouts, 
fire, pollution and bad weather. In order 
to mitigate these risks, we implement 
recognised industry operating and 
safety standards, maintain sufficient 
levels of industry-specific insurance 
cover and work only with joint venture 
partners, operators and contractors 
who can demonstrate similar high 
standards of safety, operating and 
financial capability.
Health, Safety and Environment
The Group conducts operations in 
countries in Europe and the 
Mediterranean region. There is a risk  
of incidents in our operations that have 
the potential to impact the health and 
safety of staff, contractors, and 
communities, and/or the environment. 
Such incidents may have a negative 
impact on the Group’s reputation.  
This risk is mitigated through the 
implementation of our HSE 
management system, training of  
staff, and selection of contractors.
The Group is subject to various risks and 
uncertainties, including those which 
derive from its oil and gas exploration, 
development and production activities. 
These risks and uncertainties may have 
a material impact on our performance 
and could cause future results to differ 
materially from expected and historical 
results.
The Group’s principal risks and 
uncertainties are set out below, 
together with a summary as to how they 
are mitigated. The relative importance 
of the risks faced by the Group is likely to 
change over time as we implement our 
growth strategy and as a consequence 
of external political, regulatory and 
macroeconomic developments. Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 17
We are extremely conscious of the 
environmental risks that are inherent  
in the oil and gas industry. We ensure 
that all relevant environmental impact 
studies are undertaken in advance of 
any proposed seismic or other 
operations it undertakes and best-in-
class industry environmental standards 
and practices are adopted in all of our 
operations. While the Group can never 
fully mitigate the cost, delays and other 
implications of future changes in 
environmental legislation and 
regulation, we establish strong working 
relationships with the local authorities 
in the countries in which we operate, to 
be best able to work through any 
potential significant changes that 
could arise in the future.
Funding and Financing
The nature of the Group’s business 
means that there are significant costs 
associated with seismic, drilling, and 
development campaigns. We manage 
this risk by a number of means. We 
closely monitor the Group’s cash 
position and each month produce 
updated cash flow forecasts to help 
determine appropriate strategies to 
fund short and medium-term 
operations. We also ensure that the 
Group always has adequate levels of 
cash on deposit, with varying terms of 
maturity, to match the items of 
expenditure as they become due. 
Further information on pricing, liquidity 
and credit risk is set out in Note 18 to 
the Financial Statements.
Currencies
The functional currency of the Group 
and its subsidiaries is the Euro and a 
significant proportion of its current 
portfolio of assets and near-term 
forecast revenue and expenditure is 
also in Euro. Certain expenditures are 
required to be funded in Pounds 
Sterling and US Dollars and we monitor 
the forecast expenditure profile and 
maintains sufficient levels of cash 
resources in Pounds Sterling and US 
Dollars to pay these expenses. We do 
not believe, at this moment, that the 
Group is particularly exposed to large 
currency fluctuations. We hold a 
significant proportion of our cash 
reserves with banks which have a 
minimum credit rating of A. Further 
information on currency risk is set out in 
Note 18 to the financial statements.
Regulation
Regulations may change with a 
consequential adverse effect on the 
Group’s exploration and production 
assets. Regulatory risk is mitigated by 
monitoring the regulatory and political 
environment within the countries in 
which we hold assets, engaging in 
constructive dialogue where and 
when appropriate, and introducing 
third-party expertise if this may assist in 
resolution of issues affecting our assets. 
Our objective is to acquire additional 
assets both for the exploration and 
production portfolio, which may assist 
in diversifying country-specific 
regulatory risk.
Risk Management
The Directors regularly monitor the 
principal and other related risks, using 
information obtained or developed 
from external and internal sources, 
and will take action as appropriate  
to mitigate the Group’s exposure.  
The main elements of the risk 
management system include regular 
Board review of the business, a 
defined process for preparation  
and approval of the annual work 
programme and budget, ethical  
and anti-bribery procedures, and  
HSE management systems.
We review the Group’s business risks 
and management systems on a 
regular basis and, through this 
process, the Directors have identified 
the principal risks. We manage some 
risks by maintaining a portfolio of 
projects and ensuring the Group is  
in compliance with the terms of all its 
agreements, through the application 
of appropriate policies and 
procedures and via the recruitment 
and retention of a team of skilled and 
experienced professionals.
The nature of our operations and 
holding structures means that the 
Group may be exposed to potential 
litigation. We are very conscious of our 
legal and regulatory responsibilities in 
all jurisdictions in which we operate 
and seek to ensure that at all times we 
act in accordance with local 
legislation and regulation. The Board 
will take appropriate legal advice from 
reputable legal firms when the need 
arises in order to mitigate such risks 
and, where appropriate to do so, will 
rigorously contest claims made 
against the Group. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 18
1
2
3
4 5
6 7
8 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 19 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 19
3. Mr. Sergio Morandi
Chief Operating Officer
Sergio Morandi was Chief Executive Officer 
of the Company from late 2007 to May 2011.  
He has 31 years’ experience in oil & gas 
geophysics, exploration, development, 
production, operations and E&P business 
management. He has worked at ENI, 
Coparex, ELF, Enterprise Oil, Shell Italia E&P 
and Shell International E&P. From 1997 to 
2003, he was Professor of Applied Seismology 
at Basillicata University in Italy and since 2002 
he is a Board Member of the Italian National 
Upstream Association (Associazione 
Mineraria Italiana). Sergio holds a ‘First Class 
Honor’ Degree in Geological Science from 
the University of Rome and is a registered 
Geologist in Italy.
4. Mr. Chris Kelsall
Finance Director
Chris Kelsall, appointed as Finance Director  
of Mediterranean Oil & Gas Plc in July 2009, 
has spent most of his career in financial 
services, advising clients in relation to capital 
markets, privatisation and corporate finance 
projects in Sydney, London and Hong Kong. 
Most recently he was a Director, Equity 
Capital Markets at Deutsche Bank. He spent 
1991 to 1994 working as a corporate/
commercial solicitor in Perth and Sydney.  
Mr Kelsall holds a Masters in Finance from 
London Business School, and degrees in 
Economics and Law from the University of 
Western Australia. In addition, he holds a 
Graduate Diploma in Applied Finance and 
Investment from the Securities Institute of 
Australia.
5. Mr. Matthew Clarke
Non-Executive Director
Matthew Clarke is a founding partner of 
Merlin Partners LLP, an FSA registered 
corporate finance firm specialising in the 
natural resource sector. He is a qualified 
English lawyer and spent the years 1988-1995 
at Linklaters. From 1995-2001 he was at 
Robert Fleming & Co Limited where he was a 
Director, specialising in equity capital 
markets. He established Merlin Partners in 
2002 and sits on the boards of a number  
of private natural resource companies.
1. Mr. Keith Henry
Non-Executive Chairman
Keith Henry, appointed as Chairman of 
Mediterranean Oil & Gas Plc in January 2012, 
has a wealth of experience gained over 
more than 35 years in the development, 
design, construction and management of 
projects and major companies in the oil and 
gas, power and service industries. During this 
period he was Chief Executive of National 
Power plc, a FTSE 100 company, Brown & 
Root Limited, and Kvaerner Engineering & 
Construction Limited. As a non-executive 
director within the oil and gas sector, Keith 
has held the roles of Chairman of Burren 
Energy plc, director of First Calgary 
Petroleums Limited, senior independent 
director of Emerald Energy plc, Deputy 
Chairman of Petroleum Geo-Services ASA, 
Chairman of Petrojarl ASA, and a director of 
Enterprise Oil plc. Outside of the oil and gas 
sector, Keith has held a number of other non-
executive roles, including Chairman of Helius 
Energy plc, director of South East Water Ltd, 
and Deputy Chairman of Aegis Defence 
Services Limited. Keith is currently the 
Chairman of Regal Petroleum plc, the senior 
independent director of Sterling Energy plc 
and a non-executive director of HPR Holdings 
Limited. A BSc graduate from the University of 
London and holding a MSc from Birmingham 
University, Keith is a Fellow of the Institution  
of Civil Engineers, and a Fellow of the Royal 
Academy of Engineering.
2. Dr. Bill Higgs
Chief Executive
Bill Higgs has over 24 years of global 
exploration, development and operations 
experience working with Chevron. Most 
recently he was Senior Vice President of 
Operations for Saudi Arabian Chevron 
(‘SAC’) in Saudi Arabia/Kuwait. In his role  
Bill was the senior operations representative 
for SAC that, jointly with Kuwait Gulf Oil 
Company, operates exploration, 
development and production activities for 
the onshore Partitioned Zone shared by the 
Kingdom of Saudi Arabia and Kuwait. Prior  
to this, Bill was Chief Strategist for Chevron 
Corporation and the secretary of the 
Corporate Strategy and Planning Committee, 
where he facilitated strategic dialogue and 
strategy setting with Chevron’s executive 
leaders. Bill’s previous roles at Chevron 
include Manager of Reservoir Management 
for Tengizchevroil in Kazakhstan, Asset 
Manager for the BBLT development in 
Angola, Business Development and Planning 
Manager for Sasol Chevron in Australia, 
Geology Manager for WAPET Exploration in 
Australia, senior researcher for Chevron’s 
research company in California, and lead 
exploration and development geologist for 
Chevron UK. Bill is a BSc graduate in 
Geological Science from the University of 
Leeds and holds a PhD in Structural Geology 
from the University of Wales.
6. Dr. Peter Jackson
Non-Executive Director
Peter Jackson is currently Vice President 
Upstream Research at IHS CERA and has 
over 30 years of geoscience, operational, 
asset management, strategic planning, 
research and consulting experience 
covering many of the world’s key 
hydrocarbon producing areas. Prior to 
joining IHS CERA Peter Jackson spent 
22 years working in the international 
exploration and production sector, initially 
with Britoil plc, and then 16 years with 
Enterprise Oil plc where his roles included  
VP of Exploration & Production, and then 
President, for Enterprise Oil USA, Chief 
Geologist in London, and Exploration 
Manager in Italy. Dr Jackson holds a BSc 
with Honours in Geology from St Andrews 
University and a PhD from Edinburgh 
University.
7. Mr. Enrico Testa
Non-Executive Director
Enrico Testa has an extensive background in 
the energy markets and served as the 
Chairman of the Board of Enel S.p.A., the 
leading energy provider in Italy, from 1996 to 
2002. Mr. Testa is presently the Chairman of 
the Board of Telit Communications Plc; 
Chairman of Assoelettrica – the Italian 
Association of Electricity Companies; a 
Director of Idea Capital Fund SGR S.p.A.; 
and a Director of Cadogan Petroleum Plc. 
From 2003 to March 2012, he was a Director 
of Allianz S.p.A. and from 2004 to August 
2012, he was Managing Director of 
Rothschild Italia S.p.A. He was also 
Chairman of the Organising Committee for 
the 20th World Energy Congress held in 
Rome in November 2007, from 2002 to 2005, 
a member of the Advisory Board of Carlyle 
Europe and Chairman of the Italian Nuclear 
Forum, from 2010 to 2011. From 2005 to 2009, 
Mr. Testa was Chairman of Roma 
Metropolitane, the Rome council owned 
company constructing new underground 
lines. Mr Testa was National Secretary and 
President of the Italian environmental 
organisation Legambiente from 1980 to 1987 
and a representative in the Italian Chamber 
of Deputies from 1987 to 1994.
8. Mr. Jake Ulrich
Non-Executive Director
Jake Ulrich was Senior Energy Advisor to Och 
Ziff Management Europe Ltd from 2008 to 
2011. Prior to this role, he was an executive 
director with Centrica plc until 2008, 
responsible for upstream, power generation, 
renewables and trading. Prior to joining 
Centrica he was an executive at NGCH 
(later Dynergy) and also worked for the OXY/
MidCon/Peoples Group. Jake has a degree 
in Engineering from the University of 
Maryland and an MBA from the University of 
Chicago.
Board of Directors Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 20
Mr. Athar Akram 
Chief Financial Controller 
Athar Akram is a UK Chartered 
Accountant with 30 years’ experience 
gained internationally in the energy 
sector with BP. 
He has expertise in transactional 
(M&A) financial due diligence, 
negotiations and contacts, integration 
and change management including 
system implementations, accounting, 
reporting and control, and treasury.
Ms. Floriana Brucia 
Head of Accounting and Finance
Floriana Brucia has over 22 years’ 
experience in the international oil and 
gas business. She has worked for 
various E&P companies which include 
Lasmo UK and Lasmo Mineraria Spa 
Italy, Forest Oil (USA), Vega Oil (CYGAM 
Group – Canada), Grove Energy 
(Stratic Energy Group – UK) covering 
various roles in administration and 
finance and managing onshore and 
offshore joint venture operations. 
She holds a master’s diploma in 
accounting, marketing and 
communication science.
Mr. Paolo Carugno 
Technical & Portfolio Manager
Paolo Carugno is a geologist and 
joined MOG in October 2008 from ENI, 
where he worked for approximately 28 
years in oil and gas exploration and 
production activities. Mr. Carugno has 
extensive experience as an exploration 
geologist in Italy, the Mediterranean 
basin, Africa and in the Caspian 
region. While at ENI, he held several 
positions and, in particular, was new 
venture and exploration project 
manager in Egypt and co-ordinator 
of the reserves validation team of 
worldwide exploration discoveries. 
Mr. Lorenzo Lipparini
Head of Geosciences
Lorenzo Lipparini has over 16 years of 
international experience in oil & gas 
exploration and production activities, 
focused on exploration, geophysical 
disciplines, seismic interpretation and 
reservoir characterisation. He has 
worked with ENI in Italy, Gabon, 
Indonesia and in the USA; since 2007 
he joined MOG. He holds a master’s 
degree in Geology. He is the author of 
several publications and presentations 
given at international conferences.
Mr. Gian Paolo Musu
Head of Operations, Production 
& Development
Gian Paolo Musu is a Petroleum 
Engineer with nine years’ previous 
experience working on international oil 
and gas business projects with Total 
E&P. He has particular experience in 
field operations, maintenance, 
inspection, spare parts supply chain, 
production facilities, refineries and EPC 
project management.
Mr. Antonello Rubino 
Head of Health, Safety and the 
Environment
Antonello Rubino is an Environmental 
Engineer with more than 10 years of 
experience working in Health, Safety 
and the Environment. He has particular 
expertise on hazard recognition and 
assessment, emergency procedures, 
hydrogen sulphide emissions, gas 
detection, personal protection 
equipment, transportation and 
management of hazardous wastes 
and the conduct of HSE compliance 
audits and reporting. Mr. Rubino 
previously worked for two years with 
Saipem (ENI Group) as the HSE 
supervisor, for both onshore and 
offshore hydrocarbon E&P projects.
Ms. Cinzia Salemme
Commercial and Management 
Control Co-ordinator
Prior to joining the Group in 2008, 
Cinzia Salemme had 15 years of broad 
industry experience in financial 
and commercial analysis, strategic 
business support and financial control. 
She is currently responsible for the 
negotiation of commercial contracts, 
including the Group’s gas sales 
agreements. Ms. Salemme holds 
a diploma in accounting, from the 
Vittorio Veneto Commercial Technical 
Institute. 
Senior management Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 21
Corporate responsibility
Building 
a responsible 
business
Code of Ethics/Anti-Bribery
With the corporate Code of Ethics  
and Anti-Bribery Policy, we adopt the 
principles of legitimacy, fairness, 
transparency and verifiability on  
which our conduct, as well as that of 
our subsidiaries, must rest. By making 
such a commitment, we aim to be 
publicly regarded as a responsible 
and reliable enterprise, values which – 
in our view – are key elements to our 
success and to the promotion of our 
image.
The provisions set out in our Code  
of Ethics and Anti-Bribery Policy  
apply, without exception, to anyone 
involved in the activities carried out by 
the Company and therefore to our 
directors, managers, employees, hired 
freelancers, suppliers as well as those 
who work for it directly or indirectly, on 
both a regular basis or temporarily.
Ethical Principles
Our activities must be carried out in full 
compliance with local laws and with 
the principles of impartiality, honesty, 
transparency and fairness towards 
employees, shareholders, partners, 
governments and local communities 
that the Company comes into contact 
with when carrying out its activities.
Our Key Principles
Compliance with laws, rules and 
procedures
We are committed to complying  
with the laws and regulations in force 
in countries in which we operate, 
upholding the Code of Ethics, following 
the Group Anti-Bribery Policy and the 
corporate procedures and observing 
the articles of association.
In no case may the pursuit of 
corporate interests justify the breach  
of our principles and procedures  
and Company’s representatives are 
expected to maintain compliance  
with the letter and spirit of all laws 
governing the jurisdictions in which 
they perform their duties day by day,  
in particular on:
1. Human Rights Laws
2. Privacy Laws
3. Health and Safety Laws
4. Environmental Laws
5. Securities Laws
6. Competition Laws
‘We are committed to 
promote a culture of 
honesty, integrity and 
accountability and to 
operate in accordance 
with the highest  
ethical standards and 
applicable laws and 
regulations.’ Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 22
Conflict of Interest
We will endeavour to avoid any conflict 
of interest during all the activities we 
carry out and in all the relationships 
we establish.
A conflict of interest exists both when: 
(a) either a corporate body or one  
of its members or a shareholder, or  
an employee, holds an interest that 
clashes with the one pursued by  
the Company; and (b) when the 
representatives of commercial 
partners, external consultants, or 
private or public institutions have a  
self-interest that is in contrast with the 
one they hold in relation to their office 
or function.
Confidentiality
We ensure that the information we hold 
is confidential and that no confidential 
data will be collected, disseminated or 
used unless an explicit authorisation by 
the information owner is granted and 
the Regulations in force are fully 
complied with.
Top managers, commercial partners 
and consultants must use maximum 
discretion, even when not in the 
business hours, in order to protect  
the know-how of our Company.
Relationship with Shareholders
MOG promotes equal information and 
protects its interests and the interests of 
its shareholders from any attempt by 
other shareholders or coalitions of 
shareholders to further their personal 
interests before others.
In addition, we do our best so that our 
economic and financial performance 
preserves and increases the 
Company’s value, and shareholders’ 
investments are properly paid back.
The Value of Human Resources
Employees, advisers and consultants 
are key to achieving corporate 
success. For this reason, the Company 
protects and promotes the value of its 
human resources in order to improve 
and increase experience and 
knowledge.
We also guarantee that the Company 
will provide the proper working 
conditions where human dignity 
and personal beliefs and opinions 
are fully respected in a safe and 
secure working environment.
Fairness in Employee Relations
Employee relations must be guided 
by fairness, collaboration, loyalty and 
mutual respect at all levels. Authority 
must be exercised with fairness, 
respect and moderation, avoiding  
any abuse.
In particular, any action which is  
likely to impact on the dignity or 
independence of employees, advisers 
or contractors must be avoided. 
Moreover, any choice regarding work 
planning must always safeguard the 
value of individual contributions.
Non-discrimination
In taking its decisions affecting external 
and internal parties, MOG avoids any 
discrimination based on age, sex, 
sexual orientation, health, race, 
nationality, political opinions, religion 
or any other criteria interfering with the 
fundamental rights and freedoms of 
individuals.
Quality of Services
We aim to satisfy and protect our 
contractual counterparts, while 
holding in high regard any request 
which is likely to improve the quality 
of the services and products supplied.
Environmental Protection
The environment is our main asset and 
we must protect it.
Consistent with this principle, the 
planning of MOG’s activities looks 
forward to striking the right balance 
between the commercial activities of 
the Company and the protection of 
the environment in which we work.
Renouncing Bribery and Corruption
We have implemented an Anti-Bribery 
Policy and we are committed to 
reporting any corruption that we 
encounter during our dealings with 
others.
Protecting People and the 
Environment
The Company has a firm policy of 
adhering to strict industry standards 
relating to the protection of people 
and the environment. We have 
implemented Health, Safety and 
Environment (HSE) management 
systems and policies that govern 
our expectations.
Industry practices to operate safely 
and to protect the environment have 
evolved significantly in the past few 
decades. Improvements in technology 
enable us to conduct many aspects of 
our operations far more efficiently than 
just a decade ago. This efficiency 
translates to smaller ‘footprints’ (the 
amount of surface area disturbed), 
less waste generated, cleaner  
and safer operations, and greater 
compatibility with the environment.
Oil and gas companies have developed 
and implemented sophisticated 
management systems that spell out 
the procedures that are required by 
employees and contractors to operate 
safely and to protect the environment. 
These management systems have  
been extended to include social 
responsibility and ethical considerations. 
The Company pursues a policy of 
sustainable development to balance 
economic, environmental, and 
social challenges.
The industry has shown repeatedly that 
energy production and environmental 
protection are not mutually exclusive. 
The industry can produce the oil and 
gas needed to give consumers the 
freedom and mobility they demand, 
the warmth and light needed to 
survive, and still preserve the natural 
beauty of the environment. We are 
committed to contributing to this  
goal throughout our operations.
We have had two incidents in our 
history, both of which have been 
injuries that required time off work. Our 
most recent injury was a slip, trip and 
fall incident in the first half of 2012.
Corporate responsibility continued Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 23
Safe and Reliable Operations
Safe and reliable operations are  
keys to protecting people and the 
environment as well as producing 
reliable energy for our customers.
We use our management structure, 
operational procedures and 
commitment to the training and 
development of our employees to 
ensure the highest standards of 
operations across our businesses.
Key areas of focus:
 > Meeting or exceeding customers’ 
expectations
 > Implementing and adhering to 
Standard Operating Procedures
 > Developing and disseminating  
our risk management plans
 > Achieving full certification for  
all regulated equipment and 
employee training
Corporate Governance
Companies on the AIM Market of the 
London Stock Exchange are not 
required to comply with the 2012 UK 
Corporate Governance Code and due 
to its size, the Company is not in full 
compliance. While the Company is not 
required to present a Corporate 
Governance Statement, as it is not 
subject to the Listing rules of the 
Financial Services Authority, it has 
disclosed here certain information in 
respect of Corporate Governance.
The Directors, however, support high 
standards of corporate governance 
and intend that the Company will 
comply with the provisions of the 2012 
UK Corporate Governance Code in so 
far as it is practicable for a company of 
its size. In addition, the Directors will 
progressively adopt best practices in 
line with the 2012 UK Corporate 
Governance Code on Corporate 
Governance, so far as is practicable.
Board of Directors
The Company has appointed five 
Non-Executive Directors (including the 
Company’s Chairman) with relevant 
sector experience to complement the 
three Executive Directors and to provide 
an independent view to the Board. The 
composition of the Board ensures that 
no one individual or group dominates 
the decision-making process.
Audit Committee
The Audit Committee comprises three 
non-executive directors, meets at least 
twice a year and considers the 
Company’s financial reporting 
(including accounting policies) and 
internal financial controls. Meetings 
are normally attended, by invitation, by 
the Finance Director and a 
representative of the Auditors. The 
Audit Committee presently comprises 
Matthew Clarke (Chairman), Keith 
Henry and Peter Jackson.
Remuneration Committee
The Remuneration Committee 
comprises four Non-Executive Directors 
and is responsible for establishing and 
developing the Company’s general 
policy on executive, senior 
management and employee 
remuneration and determining specific 
remuneration packages for Executive 
Directors. The Remuneration 
Committee presently comprises: Jake 
Ulrich (Chairman), Keith Henry, Peter 
Jackson and Enrico Testa. The 
Remuneration Committee meets not 
less than twice a year.
Internal Control
The Directors are responsible for the 
Group’s system of internal control and 
reviewing its effectiveness. Any such 
system is designed to manage rather 
than eliminate the risk of failure to 
achieve business objectives and can 
only provide reasonable and not 
absolute assurance against material 
misstatement or loss. Internal controls 
and business risks were monitored in 
the course of 2012 through regular 
Board meetings.
Communication with Shareholders
The Board recognises that it is 
accountable to shareholders for the 
performance and activities of the 
Group. The Annual Report together 
with other information about the Group 
is available on the Group’s website at 
www.medoilgas.com
The Board is responsible to the 
shareholders for setting the direction of 
the Company through the 
establishment of strategic objectives 
and key policies. The Board meets on a 
regular basis and considers issues of 
strategic direction, approves major 
capital expenditure, appoints and 
monitors senior management and any 
other matters having a material effect 
on the Company.
The Board receives regular detailed 
financial and operational reports from 
senior management to enable it to 
carry out its duties. Each Director is 
entitled to independent professional 
advice at the Company’s expense 
provided that the prior approval of the 
Chairman is obtained. All Directors 
have unrestricted access to 
management and to such Company 
information as is needed to carry out 
their duties and responsibilities fully 
and effectively.
All Directors are subject to election by 
shareholders at the first opportunity 
following their appointment. In 
addition, Directors will retire by rotation 
and stand for re-election by 
shareholders at least once every three 
years in accordance with the 
Company’s articles of association. The 
composition of the Board is reviewed 
from time to time to ensure that it has 
an appropriate balance of experience 
and expertise.
Board Committees
The Board may establish committees 
to assist it in carrying out its 
responsibilities in an effective and 
efficient manner. The current Board 
committees are the Audit Committee 
and the Remuneration Committee. The 
Directors do not consider that, given 
the size of the Board, it is appropriate 
to have a Nominations Committee. The 
appropriateness of such a committee 
will, however, be kept under regular 
review by the Company. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 24
Details of share-based payments are set out in Note 22 to 
the Financial Statements.
No person has any special rights of control over the 
Company’s share capital and all issued shares are fully paid.
Going Concern
The Group’s business activities, together with the factors 
likely to affect its future development, performance and 
position, are set out in the Chief Executive’s Report. The 
financial position of the Group, its cash flows and liquidity 
position are described in the Finance Review. The main risks 
encountered by the Group are set out in Principal Risks and 
Uncertainties. In addition, Note 18 to the Financial 
Statements includes the Group’s objectives, policies and 
processes for managing its capital and financial risk, details 
of its financial instruments and its exposures to credit risk 
and liquidity risk.
The Group expects to generate sufficient cash from 
operations for its working capital needs and its committed 
capital expenditure programme for at least the next 12 
months. As a consequence, the Directors believe that the 
Group is well placed to manage its business risks successfully 
despite the current uncertain economic outlook.
The Directors have a reasonable expectation that the Group 
will generate adequate cash from operations to continue in 
operational existence for the foreseeable future. Accordingly, 
they continue to adopt the going concern basis in preparing 
the Annual Report and Financial Statements.
Post Reporting Date Events
Post reporting date events are described in Note 26 to the 
Financial Statements.
Directors
The Directors who held office during the year and 
subsequently were as follows:
  Date appointed Date resigned
Keith Henry 16 January 2012 –
William Higgs 19 March 2012 –
Enrico Testa 10 October 2012 –
Peter Jackson 1 January 2013 –
Sergio Morandi – –
Chris Kelsall – –
Salvatore Russo – 11 October 2012
Michael Seymour – 11 October 2012
Miles Donnelly – 26 June 2012
Matthew Clarke – –
Jacob Ulrich 16 January 2012 –
Biographical details of serving Directors can be found in the 
Board of Directors section of this Annual Report.
Directors’ Election and Rotation
With regard to the appointment and replacement of 
Directors, the Company is governed by its articles of 
association, the Companies Act and related legislation. The 
articles themselves may be amended by special resolution 
of the shareholders.
The Directors present their Annual Report together with  
the audited Financial Statements for the year ended  
31 December 2012.
Principal Activities
The principal activities of the Group are oil and gas 
exploration, development and production. The Group has 
its head office in London and has oil and gas interests in 
Italy, Malta and France.
The head office for operations is located in Rome,  
with a further regional base in Foggia, Italy. Subsidiary 
undertakings are set out in Note 12 to the Financial 
Statements.
Results and Proposed Dividend
The Group profit for the year after tax from continuing 
operations was €1.8m (2011: €6.5m). This resulted in Group 
Retained Losses of €12.9m (2011: €13.8m) to be carried 
forward. The Directors do not recommend the payment  
of a dividend (2011: €nil).
Policy and Practice on the Payment of Creditors
While no formal code is adopted, the Group’s current policy 
concerning the payment of its creditors is to: 
•	 settle the terms of payment with creditors when agreeing 
the terms of each transaction 
•	 ensure that these creditors are made aware of the terms 
of payment by the inclusion of relevant terms in 
contracts, and 
•	 pay in accordance with contractual and other legal 
obligations.
At the reporting date, the Company’s creditor payment 
days are 60 days (2011: 60 days).
Business Review
The Company is required by the Companies Act 2006 to 
include a review of the business and likely future 
developments. This information is contained in the 
Chairman’s Statement, Chief Executive’s Report and the 
Finance Review on pages 6 to 15.
Capital Structure
Details of the issued share capital, together with details of 
the movements in the Company’s issued share capital 
during the year are shown in Note 20 to the Financial 
Statements. The Company has one class of ordinary shares 
which carry no right to fixed income. Each share carries the 
right to one vote at general meetings of the Company. In 
addition, following the Group Recapitalisation in 2011, the 
Company has one class of deferred shares, which do not 
entitle the holder to receive any dividend or other 
distribution, or to vote at general meetings of the Company.
There are no specific restrictions on the size of a holding nor 
on the transfer of shares, which are both governed by the 
general provisions of the articles of association and 
prevailing legislation. The Directors are not aware of any 
agreements between holders of the Company’s shares that 
may result in restrictions on the transfer of securities or on 
voting rights.
Directors’ report
For the year ended 31 December 2012 Business Review Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 25
Corporate Governance
In preparing these 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 IFRSs as adopted by the European Union, subject to 
any material departures disclosed and explained in the 
financial statements;
•	 prepare the financial statements on the going concern 
basis unless it is inappropriate to presume that the 
Company will continue in business.
The directors are responsible for keeping adequate 
accounting records that are sufficient to show and explain 
the Company’s transactions and disclose with reasonable 
accuracy at any time the financial position of the Company 
and enable them to ensure that the financial statements 
comply with the requirements of the Companies Act 2006. 
They are also responsible for safeguarding the assets of the 
Company and hence for taking reasonable steps for the 
prevention and detection of fraud and other irregularities.
Political and Charitable Contributions
During the year the Group made no charitable donations 
(2011: €nil) and no political contributions (2011: €nil).
Statement of Disclosure to Auditors
Each of the persons who is a Director at the date of 
approval of this Annual Report confirms that:
•	 so far as the Director is aware, there is no relevant audit 
information of which the Company’s Auditors are not 
informed; and 
•	 the Director has taken all steps required to make himself 
aware of any relevant audit information and to establish 
that the Company’s Auditors are informed of that 
information. 
This confirmation is given and should be interpreted in 
accordance with the provisions of s418 of the Companies 
Act 2006.
Website Publication
The directors are responsible for ensuring the annual report 
and the financial statements are made available on the 
Company’s website. Financial statements are published on 
the website in accordance with legislation in the United 
Kingdom governing the preparation and dissemination of 
financial statements, which may vary from legislation in other 
jurisdictions. The maintenance and integrity of the 
Company’s website is the responsibility of the directors. The 
directors’ responsibility also extends to the ongoing integrity 
of the financial statements contained therein.
Auditors
BDO LLP have expressed their willingness to continue as 
Auditors and a resolution to reappoint them will be 
proposed at the Annual General Meeting.
By order of the Board
Chris Kelsall
Finance Director  
21 March 2013
In accordance with article 23.2 of the Company’s articles of 
association, Christopher Kelsall will retire from office and 
offer himself for election at the forthcoming Annual General 
Meeting (‘AGM’) on 30 April 2013.
Directors’ Interests
The Directors who held office at the end of the financial year 
and subsequently had the following interests in the ordinary 
shares of the Company:
Interest at date of
this report
31 December
2012
31 December
2011
Keith Henry 1,250,000 1,000,000 n/a
William Higgs 200,000 – n/a
Sergio Morandi – – –
Chris Kelsall 333,333 333,333 333,333
Enrico Testa – – n/a
Peter Jackson 240,000 n/a n/a
Matthew Clarke 5,000,000 5,000,000 3,900,000
Jacob Ulrich – – n/a
None of the Directors who held office at the end of the 
financial year had any disclosable interest in the shares of 
other Group companies. No rights to subscribe for shares in 
or debentures of Group companies were granted to any of 
the Directors or their associates, or exercised by them, 
during the financial year. Beneficial shareholdings include 
the shareholdings of a Director’s spouse or associates.
Substantial Shareholders
As of the date of this report, the Company has been  
notified of the following interests of 3% or more in its issued 
share capital:
Substantial shareholder Number of shares
Percentage of issued
ordinary share 
capital
Och-Ziff Capital
Management Group 125,000,000 29.1%
Investec Wealth and 
Management 25,433,473 5.9%
Lynchwood Nominees 14,193,333 3.3%
Michael Seymour 13,482,000 3.1%
Directors’ Responsibilities
The directors are responsible for preparing the director’s 
report and the financial statements in accordance with 
applicable law and regulations. 
Company law requires the directors to prepare financial 
statements for each financial year. Under that law the 
directors have elected to prepare the group and Company 
financial statements in accordance with International 
Financial Reporting Standards (IFRSs) as adopted by the 
European Union. Under company law the directors must not 
approve the financial statements unless they are satisfied 
that they give a true and fair view of the state of affairs of the 
Group and the Company and of the profit or loss of the 
Group for that period. The directors are also required to 
prepare financial statements in accordance with the rules 
of the London Stock Exchange for companies trading 
securities on AIM.  Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 26
Employee Benefits
Sergio Morandi receives a car and fuel allowance. In 2012, 
pension payments representing 10% of gross base salary 
were made to Bill Higgs and Chris Kelsall. Further details of 
Directors’ remuneration paid in the year under review are 
set out in Note 10 to the Financial Statements.
The Company provides the Company’s Directors and 
Officers with third party indemnity insurance.
Bonus Arrangements
Performance related cash bonuses may be awarded to 
the Company’s employees and Executive Directors by the 
Board, upon recommendation by the Remuneration 
Committee. No cash bonuses were awarded to the 
Executive Directors or staff in 2012. In January 2013, the 
Remuneration Committee recommended and the Board 
approved the award of the following cash bonuses to the 
Executive Directors: Bill Higgs £100,000, Sergio Morandi 
€90,000 and Chris Kelsall £71,250. Further details of Directors’ 
remuneration paid in the year under review are set out in 
Note 10 to the Financial Statements. Cash bonuses were 
paid to the Executive Directors and eligible staff in February 
2013.
Employee Share Plan
On 20 March 2013, the Board approved the implementation 
of a new long term employee share plan (the ‘Share Plan’), 
designed to provide incentives to employees to act in the 
long term best interests of the Group and its shareholders. 
Performance related share awards may be granted under 
the Share Plan to the Company’s employees and Executive 
Directors by the Board, upon recommendation by the 
Remuneration Committee. 
Long Term Share Option Scheme
On 11 March 2010, the Board approved the implementation 
of a new Global Share Option Plan (the ‘Plan’). No options 
were granted under the Plan in 2011. Following a 
recommendation of the Remuneration Committee, on  
19 January 2012, 13,500,000 options were granted under the 
Plan to the employees and Directors over ordinary shares of 
the Company. On 19 March 2012, 6,000,000 options were 
granted under the Plan to William Higgs over ordinary shares 
of the Company. Details of the terms of the options awarded 
to Directors and employees under the Plan are set out in 
Note 22 to the Financial Statements.
Following a recommendation of the Remuneration 
Committee, on 23 January 2013, 6,870,000 options were 
granted under the Plan to the Directors over ordinary shares 
of the Company. 
The Remuneration Committee (the ‘Committee’) is 
comprised of Jake Ulrich (Chairman), Keith Henry, Peter 
Jackson and Enrico Testa. The Committee is responsible for 
determining and making recommendations to the Board on 
the structure and overall remuneration package for Executive 
Directors and reviews the remuneration for the Company’s 
senior employees. It is responsible for determining individual 
remuneration packages including, where appropriate, 
bonuses, incentive payments and share options.
The remuneration of the Non-Executive Directors is set by the 
Board on the basis of a proposal prepared by the 
Remuneration Committee. No Director may participate in 
any meeting at which discussion or any decision regarding 
his own remuneration takes place. The Remuneration 
Committee also administers the Company’s share option 
and share award schemes. The Committee keeps itself fully 
informed of all relevant developments and best market 
practice in the field of remuneration.
The Remuneration Committee is permitted to appoint 
independent advisors to assist in the determination of the 
remuneration.
Remuneration Policy
The Committee, in forming its policy on remuneration, has 
given due consideration to the needs of the Company, the 
shareholders and the provisions of the 2012 UK Corporate 
Governance Code (the ‘Code’). The ongoing policy of the 
Committee is that the overall remuneration package should 
be sufficiently competitive to attract, retain and motivate 
high quality employees capable of achieving the Group’s 
objectives and to incentivise them effectively, so as to 
deliver long-term shareholder value.
It is the aim of the Committee to reward key employees on  
a basis which is linked, to a significant extent, to the 
performance of the individual and of the Company. Also, 
the remuneration is subject to the broader principle that 
their remuneration should be competitive with that received 
by professionals of comparable companies.
There are five main elements of the remuneration package:
•	 Base salary
•	 Employee benefits
•	 Performance-related cash bonus
•	 Performance-related share award
•	 Long-term share options
Base Salary
The policy is to pay a fair and reasonable base salary, 
taking into account comparative salaries for similar roles  
in similar companies. The base salary is reviewed annually 
by the Committee having regard to the performance of  
the Company, individual performance, market data, levels 
of increases applicable to other employees of the Company 
and economic conditions. The most recent salary review  
for Executive Directors and staff was implemented 
in January 2013.
Remuneration report
For the year ended 31 December 2012 Business Review Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 27
Corporate Governance
The grants of options to Directors under the Plan in 2012 and 2013 were as follows:
 
Director
New options 
granted in 2012
New options
granted in 2013
Total number  
of options held at the  
date of this report
William Higgs 6,000,000 2,000,000 8,000,000
Sergio Morandi 2,500,000 850,000 4,265,000
Chris Kelsall 2,000,000 675,000 2,765,000
Keith Henry 2,000,000 675,000 2,675,000
Matthew Clarke 1,000,000 335,000 1,335,000
Enrico Testa – 1,000,000 1,000,000
Peter Jackson – 1,000,000 1,000,000
Jacob Ulrich 1,000,000 335,000 1,335,000
Directors Remuneration
Salary, fees and benefits paid to the Executive and Non-Executive Directors who held office in the year ended 31 December 
2012, are set out below:
 
Fees and 
basic salary
(€’000)
Pension
(€’000) 
Benefits in 
Kind
(€’000)
Total 2012
(€’000)
Total 2011
(€’000) 
Executive Directors
William Higgs (Note 1) 246 21 159 426 –
Sergio Morandi (Note 3) 242 –  3  245 280
Chris Kelsall (Note 2) 234 22 4  260 238
Non-Executive Directors
Keith Henry 96 – –  96 –
Salvatore Russo 30  – – 30 30
Michael Seymour 37  – – 37 22
Miles Donnelly 28  – – 28 22
Jacob Ulrich 36  – – 36 –
Matthew Clarke 38  – – 38 11
Enrico Testa 8  – – 8 –
Aggregate Remuneration 2012 (€’000) 995 43 166 1,204  
1.  William Higgs received benefits in kind comprising reimbursement for relocation expenses upon commencement of employment with the Group, in 
addition to reimbursement for annual health and life insurance cover. 
2.  Chris Kelsall received benefits in kind comprising reimbursement for annual health and life insurance cover. 
3.  Sergio Morandi received benefits in kind comprising allocated car and fuel allowance.
4 In accordance with the Group’s accounting policy, a non-cash share-based charge of €498,000 was incurred in the period in relation to the grant of 
options to Directors of the Company. See Notes 10 and 22 for further information.
Non-Executive Directors
All Non-Executive Directors, including the Chairman, have contracts for services, setting out the terms and conditions of 
their appointment, which are terminable upon the provision of 3 months’ written notice by either party. Their remuneration 
is determined by the Board upon recommendation of the Remuneration Committee. Save for the fees received under the 
letters of appointment, options awarded under the Plan and reimbursement of reasonable expenses incurred in the 
discharge of their duties, the Non-Executive Directors are not entitled to any other benefits or arrangements.
Jake Ulrich
Chairman, 
Remuneration Committee  
21 March 2013 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 28
Independent auditor’s report
to the members of Mediterranean Oil & Gas Plc
We have audited the financial statements of Mediterranean Oil & Gas Plc for the year ended 31 December 2012 which 
comprise the consolidated statement of comprehensive income, consolidated and company statement of changes in 
equity, consolidated and company statement of financial position, consolidated and company statement of cash flows, 
and the related notes. The financial reporting framework that has been applied in their preparation is applicable law 
and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent 
company financial statements, as applied in accordance with the provisions of the Companies Act 2006. 
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies 
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are 
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not 
accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit 
work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the 
financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an 
opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and 
Ireland). Those standards require us to comply with the 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 APB’s website at www.frc.org.uk/apb/
scope/private.cfm.
Opinion on financial statements
In our opinion:
•	 the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs as at 
31 December 2012 and of the group’s profit for the year then ended;
•	 the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
•	 the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the 
European Union and as applied in accordance with the provisions of the Companies Act 2006; and
•	 the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors’ report for the financial year for which the financial statements are 
prepared is consistent with the financial statements. 
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, 
in our opinion:
•	 adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not 
been received from branches not visited by us; or
•	 the parent company financial statements are not in agreement with the accounting records and returns; or
•	 certain disclosures of directors’ remuneration specified by law are not made; or
•	 we have not received all the information and explanations we require for our audit.
Anne Sayers
(senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
Office Location
United Kingdom
21 March 2013
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 29
Note
2012
€’000
2011
€’000
Revenue 7 16,254 4,661
Cost of sales (3,837) (1,000)
Gross profit 12,417 3,661
Other income 152 258
Administrative expenses
 Depreciation, depletion and amortization (4,483) (1,395)
 Impairment – (1,086)
 Other administrative expenses (4,031) (3,236)
Total administrative expenses (8,514) (5,717)
Profit/(loss) from operations 8 4,055 (1,798)
Finance expense 2 (894) (1,454)
Finance income 2 463 6,182
Profit before tax from continuing operations 3,624 2,930
Tax (expense)/credit 11 (1,867) 3,598
Profit for the year after tax from continuing operations 1,757 6,528
(Loss) for the year net of tax from discontinued operations (864) (96)
Profit/(loss) for the year after tax and total comprehensive income attributable to the  
equity holders of the parent 893 6,432
Earnings per share attributable to the equity holders of the parent
– Basic and diluted 3 0.21 cents 2 cents
Earnings per share on continuing operations
– Basic and diluted 3 0.41 cents 2 cents
Earnings/(loss) per share on discontinued operations
– Basic and diluted 3 (0.20) cents –
The notes on pages 36 to 60 form part of these financial statements.
Consolidated statement of comprehensive income
For the year ended 31 December 2012 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 30
Share
Capital
€’000
Deferred
shares
€’000
Share
premium
€’000
Contributed
equity
reserve
€’000
Warrant and
share 
option
reserve
€’000
Convertible
debt reserve
€’000
Retained
Deficit
€’000
Total
€’000
Group
As at 1 January 2011 11,285 – 20,053 – 859 68 (20,440) 11,825
Total comprehensive income for the 
year – – – – – – 6,432 6,432
Shares issued – fundraising (net of issue 
costs) 4,025 – 18,327 – – – – 22,352
Shares issued – settlement of 
convertible debt 469 – 2,331 8,111 – (68) 68 10,911
Share consolidation (10,721) 10,721 – – – – – –
Share-based payment – – – – 39 – – 39
Lapse of options – – – – (169) – 169 –
As at 31 December 2011 5,058 10,721 40,711 8,111 729 – (13,771) 51,559
Total comprehensive income for the 
year – – – – – – 893 893
Shares issued – fundraising (net of issue 
costs) 8 – 41 – – – – 49
Share-based payment – – – – 563 – – 563
Lapse of options – – – – – – – – 
As at 31 December 2012 5,066 10,721 40,752 8,111 1,292 – (12,878) 53,064
The following describes the nature and purpose of each reserve within owners’ equity:
 
Reserve Description and purpose
Share capital
Deferred shares
Amount subscribed for ordinary share capital at nominal value.
Amount representing ordinary 19p shares following split of shares as part 
of recapitalisation exercise.
Share premium Amount subscribed for share capital in excess of nominal value.
Contributed equity reserve An amount representing equity contributed directly by shareholders. 
Warrant and share option reserve Cumulative fair value of warrants and options, adjusted for transfers on 
exercise of share options and warrants.
Convertible debt reserve Equity component of convertible bonds.
Retained deficit Cumulative net gains and losses recognised in the consolidated income 
statement, adjusted for transfers on exercise of share options. 
The notes on pages 36 to 60 form part of these financial statements.
Consolidated statement of changes in equity
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 31
Note
2012
€’000
2011
€’000
Assets
Non-current assets
Property, plant and equipment 4 18,256 20,500
Exploration and evaluation assets 5 19,801 30,848
Available for sale investment 13 34 34
Other receivables 15 804 699
Deferred tax asset 11 3,095 3,742
Total non-current assets 41,990 55,823
Current assets
Inventories 14 2,531 2,533
Trade and other receivables 15 5,339 8,414
Cash and cash equivalents 21 8,668 3,703
Non-current assets classified as ‘Held for Sale’ 6 8,017 –
Total current assets 24,555 14,650
Total assets 66,545 70,473
Liabilities
Current liabilities
Trade and other payables 16 4,884 10,217
Corporation tax liability 16 1,568 321
Non-current liabilities classified as ‘Held for Sale’ 6 1,250 –
Total current liabilities 7,702 10,538
Non-current liabilities
Provisions 19 5,779 8,376
Total non-current liabilities 5,779 8,376
Total liabilities 13,481 18,914
Net Assets 53,064 51,559
Capital and reserves attributable to equity holders of the company
Share capital 20 5,066 5,058
Deferred shares 10,721 10,721
Share premium 40,752 40,711
Warrant and share option reserve 1,292 729
Contributed equity reserve 8,111 8,111
Retained deficit (12,878) (13,771)
Total Equity 53,064 51,559
The financial statements were authorised and approved for issue by the Board of Directors on 21 March 2013 and were 
signed on its behalf by:
Chris Kelsall
Finance Director
The notes on pages 36 to 60 form part of these financial statements.
Consolidated statement of financial position
At 31 December 2012 – Company Number 5323487 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 32
Note
2012
€’000
2011
€’000
Cash flows from operating activities
Profit for the year 1,757 6,528
Adjustments for:
Impairment – 1,086
Depreciation, depletion and amortization 4,483 1,395
Share-based payments expense 563 39
Finance income (463) 1,038
Finance gain on settlement of debt – (5,707)
Tax expense/(credit) 1,867 (3,598)
Foreign exchange loss 403 (245)
Unwinding of discount on provision 491 610
Cash flows from operating activities before changes in working capital and provisions 9,101 1,146
Decrease in inventories 2 70
Decrease/(increase) in trade and other receivables 3,075 (4,496)
(Decrease)/increase in trade and other payables (5,333) 4,692
(Decrease)/increase for provisions and non-current receivables (305) 364
Taxes paid (84) (633)
Net cash flows from operating activities 6,456 1,143
Net cash flows from discontinued operations 454 (96)
Investing activities
Purchase of property, plant and equipment (211) (16,327)
Exploration costs incurred (1,525) (1,440)
Interest received – 15
Net cash flows used in investing activities (1,736) (17,752)
Financing activities
Issue of new shares – cash received 49 22,748
Issue of new shares – cost of issuing – (826)
Interest paid (52) (257)
Drawdown of loan from Och-Ziff 25 2,000 –
Repayment of loan to Och-Ziff 25 (2,000) (3,877)
Net cash generated from financing activities (3) 17,788
Net increase in cash and cash equivalents 5,171 1,083
Cash and cash equivalents at the beginning of the year 3,703 2,810
Foreign exchange losses on cash and cash equivalents (206) (190)
Cash and cash equivalents at the end of the year 21 8,668 3,703
The notes on pages 36 to 60 form part of these financial statements.
Consolidated statement of cash flows
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 33
Share
Capital
€’000
Deferred
shares
€’000
Share
premium
€’000
Contributed
equity
reserve
€’000
Warrant and
share 
option
reserve
€’000
Convertible
debt reserve
€’000
Retained
Deficit
€’000
Total
€’000
Company
As at 1 January 2011 11,285 – 20,053 – 859 68 (18,234) 14,031
Total comprehensive income for the 
year – – – – – – 2,948 2,948
Shares issued – Fundraising (net) 4,025 – 18,327 – – – – 22,352
Shares issued – Settlement of 
Convertible Debt 469 – 2,331 8,111 – (68) 68 10,911
Share Consolidation (10,721) 10,721 – – – – – –
Share-based payment – – – – 39 – 39
Lapse of options – – – – (169) – 169 –
As at 31 December 2011 5,058 10,721 40,711 8,111 729 – (15,049) 50,281
Total comprehensive loss for the year – – – – – – (3,245) (3,245)
Shares issued – Fundraising (net) 8 – 41 – – – – 49
Shares issued – Settlement of 
Convertible Debt – – – – – – – –
Share Consolidation – – – – – – – –
Share-based payment – – – – 563 – – 563
Lapse of options – – – – – – – –
As at 31 December 2012 5,066 10,721 40,752 8,111 1,292 – (18,294) 47,648
The following describes the nature and purpose of each reserve within owners’ equity:
Reserve Description and purpose
Share capital Amount subscribed for ordinary share capital at nominal value.
Deferred shares Amount representing ordinary 19p shares following split of shares as part 
of recapitalisation exercise.
Share premium Amount subscribed for share capital in excess of nominal value.
Contributed equity reserve An amount representing equity contributed directly by shareholders.
Warrant and share option reserve Cumulative fair value of warrants and options, adjusted for transfers on 
exercise of share options and warrants.
Convertible debt reserve Equity component of convertible bonds.
Retained Deficit Cumulative net gains and losses recognised in the consolidated income 
statement, adjusted for transfers on exercise of share options.
The notes on pages 36 to 60 form part of these financial statements.
Company statement of changes in equity
For the year ended 31 December 2012 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 34
Note
2012
€’000
2011
€’000
Assets
Non-current assets
Investments 12 28,938 29,767
Total non-current assets 28,938 29,767
Current assets
Trade and other receivables 15 15,546 19,649
Cash and cash equivalents 21 3,718 2,464
Total current assets 19,264 22,113
Total assets 48,202 51,880
Liabilities
Current liabilities
Trade and other payables 16 554 1,599
Total current liabilities 554 1,599
Total liabilities 554 1,599
Net Assets 47,648 50,281
Capital and reserves attributable to equity holders of the company
Share capital 20 5,066 5,058
Deferred shares 10,721 10,721
Share premium 40,752 40,711
Convertible debt reserve – –
Warrant and share options reserve 1,292 729
Contributed equity 8,111 8,111
Retained deficit (18,294) (15,049)
Total Equity 47,648 50,281
The financial statements were authorised and approved for issue by the Board of Directors on 21 March 2013 and were 
signed on its behalf by:
Chris Kelsall
Finance Director
The notes on pages 36 to 60 form part of these financial statements.
Company statement of financial position
At 31 December 2012 – Company Number 5323487  Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 35
 
 
 
Note
 2012 
€’ 000 
 2011 
€’ 000 
Cash flows from operating activities   
Profit/(loss) for the year (3,245) 2,948 
Adjustments for:  
Realised foreign exchange gains – (361)
Foreign exchange gains/losses – Other – (435)
Share-based payments expense 563 39 
Other net finance expense 52 370 
Finance gain on settlement of debt – (5,707)
Cash flows from operating activities before changes in working capital and provisions (2,630) (3,146)
Decrease/(increase) in trade and other receivables 4,103 (406)
(Decrease) in trade and other payables (1,045) (138)
Cash flows from operating activities 428 (3,690)
Investment activities 
Interest received – 16 
Loans repaid by/(made to) subsidiaries 829 (12,871)
Net cashflows used in investing activities 829 (12,855)
Financing activities  
Issue of new shares – cash received 49 22,748 
Issue of new shares – cost of issuing – (826)
Interest paid (52) (257)
Drawdown of loan from Och-Ziff 25 2,000 –
Repayment of loan to Och-Ziff 25 (2,000) (3,877)
Net cash generated from financing activities (3) 17,788 
Net increase in cash and cash equivalents 1,254 1,243 
Cash and cash equivalents at the beginning of the year 2,464 1,221 
Foreign exchange losses on cash and cash equivalents – –
Cash and Cash Equivalents at the end of the year 21 3,718 2,464 
The notes on pages 36 to 60 form part of these financial statements.
Company statement of cash flows
For the year ended 31 December 2012 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 36
1 Accounting policies
Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies 
have been consistently applied to all the periods presented, unless otherwise stated.
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs and 
IFRIC interpretations) issued by the International Accounting Standards Board (IASB) as adopted by the European Union 
and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS. The 
Company’s functional currency is the Euro and it has adopted the Euro as its presentational currency. The Group has 
adopted the Euro as its presentational currency.
Going concern
The Directors consider that it is appropriate for the accounts to be prepared on a going concern basis. At 31 December 2012, 
the Group had net assets of €53.1m (2011 €51.6m) and net current assets (including Non-current Assets Held for Sale of 
€8.0m) of €16.9m (2011 €4.1m).
On 21 December 2012, Mediterranean Oil & Gas Plc (‘MOG’) signed a share sale and purchase agreement (the ‘Share 
Sale Agreement’) with Genel Energy plc (‘Genel’) which provided for the acquisition by Genel of a 75% interest in MOG’s 
wholly owned subsidiary, Phoenicia Energy Company Limited (‘PECL’). This follows the Government of Malta granting a one 
year extension to January 2014 of the first exploration phase of the Production Sharing Contract (‘PSC’) for Malta offshore 
Area 4. The Share Sale Agreement completed on 28 February 2013, resulting in MOG receiving a US$10 million cash 
payment, 100% carry on the first exploration well, and a 100% carry on the second exploration well, up to US$30 million gross 
expenditure, in relation to the PSC. At MOG’s option, should the costs of the second well exceed US$30 million, Genel will 
provide a financing arrangement to fund MOG’s 25% share of any additional expenditure, at an interest rate equivalent to 
3 Month Libor plus 400 bps (the ‘Transaction’) (Refer to Note 26 for further information).
Management has prepared cash flow projections reflecting the effect of completion of the Transaction, together with the 
effect of other Group operations, which collectively indicate that the Group can continue to meet its liabilities as they fall 
due and meet minimum spend commitments on its licenses for a period of not less than 12 months from the date of the 
financial statements.
Basis of accounting and adoption of new and revised standards 
a) Standards, amendments and interpretations effective in 2012:
The following new standards and amendments to standards are mandatory for the first time for the Group for the financial 
year beginning 1 January 2012. Except as noted, the implementation of these standards did not have a material effect on 
the Group:
 
Standard Impact on initial application Effective date
IFRS 7 (Amendments) Disclosures – transfers of financial assets 1 July 2011
IAS 12 (Amendment) Deferred tax: recovery of underlying assets 1 January 2012*
b) Standards, amendments and interpretations that are not yet effective and have not been early adopted:
 
Standard Impact on initial application Effective date
IAS 1 (Amendment) Presentation of items of other comprehensive income 1 July 2012
*
IFRS 10 Consolidated financial statements 1 January 2013
*1
IFRS 11 Joint arrangements 1 January 2013
*1
IFRS 12 Disclosure of interest in other entities 1 January 2013
*1
IFRS 13 Fair value measurement 1 January 2013
IAS 19 (Amendment 2011) Employee benefits 1 January 2013
*2
IAS 27 (Amendment 2011) Separate financial statements 1 January 2013
*
IAS 28 (Amendment 2011) Investments in associates and joint ventures 1 January 2013
*1
IFRS 7 (Amendment 2011) Disclosures – offsetting financial assets and financial liabilities 1 January 2013
IAS 32 (Amendment 2011) Offsetting financial assets and financial liabilities 1 January 2014
IFRS 9 Financial instruments 1 January 2015
*2
*1 Effective date 1 January 2014 for the EU.
*2 Not yet endorsed by the EU.
The Group is evaluating the impact of the above pronouncements and will consider the potential impact of IFRS 11. 
No other pronouncement is expected to have a material impact on the Group’s earnings or shareholders’ funds.
Notes forming part of the financial statements
For the year ended 31 December 2012  Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 37
Basis of consolidation
Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another 
entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial 
statements present the results of the Company and its subsidiaries (‘the Group’) as if they formed a single entity. 
Intercompany transactions and balances between group companies are therefore eliminated in full.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not 
presented its own income statement in these financial statements. The Group profit for the year includes a loss after tax of 
€3.2m (2011 profit €2.9m) in respect of the Company, this is dealt with in the financial statements of the Parent Company.
Business combinations
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the 
consolidated statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are 
initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the 
consolidated income statement from the date on which control is obtained.
Jointly controlled operations and jointly controlled assets
The Group includes the assets it controls, its share of any income and the liabilities and expenses of jointly controlled 
operations and jointly controlled assets in accordance with the terms of the underlying contractual arrangement.
The Company’s investments in subsidiaries
In its separate financial statements the Company recognises its investments in subsidiaries at cost, less any impairment. 
The cost of acquisition includes directly attributable professional fees and other expenses incurred in connection with the 
acquisition.
Revenue recognition
Revenue is derived from sales of oil and gas to third party customers and fees received from third parties in return for 
services associated with the operation of oil and gas fields owned in conjunction with other parties. Sales of oil and gas 
production are recognised at the time of delivery of the product to the purchaser which is when the risks and rewards of 
ownership pass. Sales of oil and gas services are recognised based on the services provided and the timing of the 
provision of those services.
Interest revenue is accrued on a time basis, by reference to the principal outstanding at the effective interest rate applicable.
Tax
The major components of tax on profit or loss include current and deferred tax.
Current tax is based on the profit or loss adjusted for items that are non-assessable or disallowed and is calculated using 
tax rates that have been enacted or substantively enacted by the reporting date.
Tax is charged or credited to the income statement, except when the tax relates to items credited or charged directly to 
equity, in which case the tax is also dealt with in equity.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of 
financial position differs to its tax base.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available, 
against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the 
reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Oil and gas assets: exploration and evaluation
The Group applies the full cost method of accounting for Exploration and Evaluation (‘E&E’) costs, having regard to the 
requirements of IFRS 6 ‘Exploration for and Evaluation of Mineral Resources’. Under the full cost method of accounting, costs 
of exploring for and evaluating oil and gas properties are accumulated and capitalised by reference to appropriate cash 
generating units (‘CGUs’). Such CGUs are based on geographic areas and are not larger than a segment.
E&E costs are initially capitalised within ‘Intangible assets’. Such E&E costs may include costs of licence acquisition, technical 
services and studies, seismic acquisition, exploration drilling and testing, but do not include costs incurred prior to having 
obtained the legal rights to explore an area, which are expensed directly to the income statement as they are incurred. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 38
1 Accounting policies continued
Plant, Property and Equipment (‘PPE’) acquired for use in E&E activities are classified as property, plant and equipment. 
However, to the extent that such PPE is consumed in developing an intangible E&E asset, the amount reflecting that 
consumption is recorded as part of the cost of the intangible E&E asset.
Intangible E&E assets related to exploration licences are not depreciated and are carried forward until the existence (or 
otherwise) of commercial reserves has been determined. The Group’s definition of commercial reserves for such purpose  
is proven and probable reserves on an entitlement basis.
If commercial reserves have been discovered, the related E&E assets are assessed for impairment on a CGU basis as set out 
below and any impairment loss is recognised in the income statement. The carrying value, after any impairment loss, of the 
relevant E&E assets is then reclassified as development and production assets within property, plant and equipment and are 
amortised on a unit of production basis over the life of the commercial reserves of the pool to which they relate. Intangible E&E 
assets that relate to E&E activities that are not yet determined to have resulted in the discovery of commercial reserves remain 
capitalised as intangible E&E assets at cost, subject to meeting impairment tests as set out below.
E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its 
recoverable amount. Such indicators include the point at which a determination is made as to whether or not commercial 
reserves exist. Where the E&E assets concerned fall within the scope of an established CGU, the E&E assets are tested for 
impairment together with all development and production assets associated with that CGU, as a single cash generating unit. 
The aggregate carrying value is compared against the expected recoverable amount of the pool. The recoverable amount is 
the higher of value in use and the fair value less costs to sell. Value in use is assessed generally by reference to the present 
value of the future net cash flows expected to be derived from production of commercial reserves. Where the E&E assets to be 
tested fall outside the scope of any established CGU, there will generally be no commercial reserves and the E&E assets 
concerned will generally be written off in full. Any impairment loss is recognised in the income statement.
Other intangible assets are held by the Group, being software and other licences. Amortisation is provided to write off the 
cost initially recognised and carried, of other intangible assets, in line with a reducing balance basis over the remaining 
expected useful life. Other intangible assets have been disclosed as part of exploration and evaluation.
Oil and gas assets: development and production
Development and production assets are accumulated on a field-by-field basis and represent the cost of developing the 
commercial reserves discovered and bringing them into production, together with the decommissioning asset (see below) 
and the E&E expenditures incurred in finding commercial reserves transferred from intangible E&E assets as outlined above. 
They are presented as oil and gas properties in Note 4.
The net book values of producing assets are depreciated on a field-by-field basis using the unit of production method by 
reference to the ratio of production in the period to the related commercial reserves of the field, taking into account 
estimated future development expenditures necessary to bring those reserves into production.
An impairment test is performed whenever events and circumstances arising during the development or production phase 
indicate that the carrying value of a development or production asset may exceed its recoverable amount. The aggregate 
carrying value is compared against the expected recoverable amount of the cash generating unit. The recoverable 
amount is the higher of value in use and the fair value less costs to sell. Value in use is assessed generally by reference to 
the present value of the future net cash flows expected to be derived from production of commercial reserves. The cash 
generating unit applied for impairment test purposes is generally the field, except that a number of field interests may be 
grouped as a single cash generating unit where the cash flows of each field are interdependent.
Decommissioning
Where a material liability for the removal of production facilities and site restoration at the end of the productive life of a 
field exists, a provision for decommissioning is recognised from the outset. The amount recognised is the present value of 
estimated future expenditure determined in accordance with local conditions and requirements. Included within the 
relevant asset is an amount equivalent to the provision which is depreciated on a unit of production basis. Changes in 
estimates are recognised prospectively, with corresponding adjustments to the provision and the associated asset.
Impairment of non-financial assets
Non-financial assets and identifiable intangibles, other than oil and gas assets, are reviewed for impairment whenever 
events or changes in circumstances indicate that the carrying amount may not be recoverable. If the expected discounted 
future cash flow from the use of the assets and their eventual disposal is less than the carrying amount of the assets, an 
impairment loss is recognised and measured using the asset’s fair value or discounted cash flows.
Notes forming part of the financial statements continued
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 39
Property, plant and equipment other than oil and gas assets
Depreciation is provided to write off the cost less estimated residual values, initially recognised and carried, of all property, 
on a reducing balance basis over their expected useful lives. Depreciation is calculated at the following rates:
Plant and equipment – 10% per annum range 10% – 12%
Assets held for sale
Where the Company has commenced the sale of a business, any non-current assets and liabilities related thereto are 
classified separately as held for sale in the statement of financial position. This condition is only met when the sale is highly 
probable, assets are available for immediate sale in current condition, the liabilities will be transferred and the management 
is committed to the sale which should be completed within one year of the classification. Property, plant and equipment 
once classified as held for sale are not subject to depreciation or amortisation. The net assets and liabilities of a disposal 
group classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell. In 
accordance with IFRS 5, the Group also assess whether the Assets held for sale constitute discontinued operations. Where 
the Assets held for sale are classified as discontinued operations, the results of such are recorded as a single amount in the 
income statement. Comparative information relating to the discounted operations is also reanalysed into the single 
amount in the comparative income statement and related notes.
Financial assets and liabilities
The Group’s financial assets consist of available for sale assets, and loans and receivables. There are no financial assets 
classified as held to maturity or at fair value through profit or loss.
Available-for-sale: Non-derivative financial assets are classified as available-for-sale and comprise the Group’s strategic 
investments in entities not qualifying as subsidiaries, associates or jointly controlled entities. Unquoted available for sale 
investments whose fair value cannot be reliably valued are carried at cost.
Loans and receivables:
Cash and cash equivalents consist of cash on hand and cash held on current account or on short-term deposits (up to 
90 days) at variable interest rates. Any interest earned is accrued monthly and classified as finance income.
Trade and other receivables are initially measured at fair value and subsequently at amortised cost.
The Group’s financial liabilities consist of financial liabilities held at amortised cost, and held at fair value through profit 
and loss.
Trade and other payables are initially stated at their fair value and subsequently at amortised cost. All interest and other 
borrowing costs are recognised on a time-proportion basis using the effective interest method and expensed as part of 
financing costs in the income statement.
Embedded derivatives are measured at fair value at each reporting date with the movement in fair value being recognised 
in the income statement as they arise.
Convertible bonds
Where a convertible loan meets the definition of a compound financial instrument the component parts are classified 
separately as financial liabilities and equity in accordance with the substance of the contractual arrangements. The fair 
value on issue of the Group’s convertible bonds was split into their liability and equity components on the basis of their fair 
value. The amount initially attributed to the debt component equals the discounted cash flows using a market rate of 
interest that would be payable on a similar debt instrument that did not include an option to convert. Subsequently, the 
debt component is accounted for as a financial liability measured at amortised cost. The difference between the net 
proceeds of the convertible loan note and the amount allocated to the debt component is credited direct to a separate 
equity reserve and is not subsequently re-measured. On conversion, the amount of fair value of shares issued has been 
recognised within share capital and share premium. The excess fair value of the debt settled has been recognised as 
contributed equity as the debt holders are all shareholders who have acted in their capacity as shareholders for the 
benefit of the company. The Group’s convertible bonds were renegotiated in 2007, 2008 and 2009 and accounted for in 
accordance with this accounting policy. All convertible bonds have been settled in 2011.
Foreign currency
Transactions entered into by group entities in a currency other than the currency of the primary economic environment 
in which they operate (the ‘functional currency’) are recorded at the rates ruling when the transactions occur. Foreign 
currency monetary assets and liabilities are translated at the rates ruling at the reporting date.
Share capital is denominated in Sterling and translated at historic rate. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 40
1 Accounting policies continued
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary 
economic environment in which the entity operates (the functional currency). The consolidated financial statements are 
presented in Euro, which is also the functional currency of the Company and its significant subsidiaries.
Transactions and balances
Foreign currency transactions are translated into the relevant functional currency using the exchange rates prevailing at 
the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and 
from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are 
recognised in the statement of comprehensive income in other income and expenses.
Other provisions
A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation 
as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If 
the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects 
current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are 
measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based 
payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will 
eventually vest.
Where equity instruments are granted to persons other than employees, the income statement is charged with the fair 
value of goods and services received.
Options granted by the parent company to employees of subsidiaries are measured as equity-settled share-based 
payments, and expensed in the company receiving employee services.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value.
Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their 
present location and condition. Oil and gas production flows directly into the national grid therefore there are no oil and 
gas inventories held.
Leased assets
Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the 
Group (a ‘finance lease’), the asset is treated as if it had been purchased outright. The amount initially recognised as an 
asset is the fair value of the leased asset or, if lower, the present value of the minimum lease payments payable over the 
term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between 
capital and interest. The interest element is charged to the income statement over the period of the lease and is calculated 
so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed to the lessor.
Where substantially all of the risks and rewards incidental to ownership are retained by the lessor (an ‘operating lease’), 
the total rentals payable under the lease are charged to the income statement on a straight-line basis over the lease term. 
The land and buildings elements of property leases are considered separately for the purposes of lease classification.
Joint Ventures
The Group includes the assets it controls, its share of any income and the liabilities and expenses of jointly controlled 
operations and jointly controlled assets in accordance with the terms of underlying contractual arrangements.
Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the Group’s accounting policies, which are described in Note 1, management has made the 
following judgements that have the most significant effect on the amounts recognised in the financial statements (apart 
from those involving estimations, which are dealt with below).
Under the full cost method of accounting for E&E costs, intangible costs are capitalised as intangible assets by reference to 
appropriate CGUs, and are assessed for impairment on a concession basis when circumstances suggest that the carrying 
amount may exceed its recoverable value and, therefore, there is a potential risk of an impairment adjustment. This 
assessment involves judgement as to: (i) the likely future commerciality of the asset and when such commerciality should 
be determined; (ii) future revenues and costs pertaining to any concession based on proved plus probable, prospective 
and contingent resources; and (iii) the discount rate to be applied to such revenues and costs for the purpose of deriving 
a recoverable value.
Notes forming part of the financial statements continued
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 41
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that 
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next 
financial year, are discussed below.
(a) Impairment reviews
Whilst conducting an impairment review of its assets, the Group exercises judgement in making assumptions about future 
gas prices, reserves, rehabilitation costs, future development and production costs. Changes in estimate can result in 
significant changes to the consolidated statement of comprehensive income. The policy in respect of impairment reviews  
is set out above and details of reviews carried out during the year are set out in Notes 4 and 5.
(b) Decommissioning
Provision was made in the accounts for future decommissioning costs to plug and abandon wells. The cost of provision 
should be added to the value of the development and production asset and depreciated on the unit of production basis. 
The decommissioning liability is stated in the accounts at discounted present value and accreted up to the final liability by 
way of an annual finance charge.
The Group has potential decommissioning obligations in respect of its producing interests in Italy. The extent to which a 
provision is required in respect of these potential obligations depends, inter alia, on the legal requirements at the time of 
decommissioning, the cost and timing of any necessary decommissioning works, and the discount rate to be applied to 
such costs. The decommissioning provision and how the cost is calculated are described in more detail in Note 19.
(c) Reserves
Development and production assets (oil and gas properties) within Property, Plant and Equipment are depreciated on a 
concession basis using the unit of production method at a rate calculated by reference to proven plus probable reserves. 
These reserves have been determined using technical estimates of oil and gas in place and recovery factors. Future 
development costs are estimated using assumptions as to the number of wells required to produce the commercial 
reserves, the cost of such wells and associated production facilities, and other capital costs. The carrying amount of 
development and production assets at 31 December 2012 is shown in Note 4.
(d) Deferred tax
Judgement is applied in making assumptions about future taxable income, including gas prices, production, rehabilitation 
costs and expenditure to determine the extent to which the Group recognises deferred tax assets, as well as the 
anticipated timing of the utilisation of the losses.
(e) Share based payment
Refer to Note 22 for the keys assumptions used in determining the value of Share based payments.
(f) Liabilities
Refer to Note 28 for the contingent liability related to the dispute with Leni Gas & Oil Investments. A provision has not been 
made as the financial impact cannot be determined.
2 Finance income and expense
 
2012
€’000
2011
€’000
Finance income
Finance gain on settlement of debt – 5,707
Foreign Exchange Income 463 435
Bank interest received – 22
Change in fair value of financial instruments (Note 17) – 28
463 6,192
Finance expense
Costs associated with financing transactions – 418
Unwinding of discount on provisions 491 610
Convertible debt – 413
Bank interest paid – 257
Loss on foreign exchange 403 –
894 1,698 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 42
3 Earnings per share
2012
€’000
2011
€’000
Numerator
Profit for the year 893 6,432
Denominator
Weighted average number of shares used in basic EPS 429,211,517 290,140,596
Dilutive effect of share options outstanding at 31 December 2012 4,143,237 –
Weighted average number of shares used in diluted EPS 433,354,754 290,140,596
Potential ordinary shares are excluded on the grounds that they are non dilutive and can be 
found in Notes 17 and 25.
Earnings per share on continuing operations
– Basic
– Diluted
0.41 cents
0.41 cents
2 cents
2 cents
Earnings per share on discontinued operations
– Basic
– Diluted
(0.20) cents
(0.20) cents
–
–
Earnings per share attributable to the equity holders of the parent
– Basic
– Diluted
0.21 cents
0.21 cents
2 cents
2 cents
 
4 Property, plant and equipment
 
Plant and
Equipment
€’000
Oil and Gas
Assets
€’000
Total
€’000
Group
Cost
At 1 January 2011 1,385 11,114 12,499
Additions and transfers 6 18,002 18,008
Movement on decommissioning assets – 1,202 1,202
At 31 December 2011 1,391 30,318 31,709
Additions 76 135 211
Transfers from intangible assets* – 2,176 2,176
Transfer to Assets Held for Sale (note 6) – (184) (184)
Movement on decommissioning assets – 39 39
At 31 December 2012 1,467 32,484 33,951
Depreciation, depletion and impairment
At 1 January 2011 (1,179) (7,724) (8,903)
Charge for the year (10) (1,253) (1,263)
Impairments – (1,043) (1,043)
At 31 December 2011 (1,189) (10,020) (11,209)
Charge for the year (12) (4,474) (4,486)
At 31 December 2012 (1,201) (14,494) (15,695)
Net book value
At 31 December 2012 266 17,990 18,256
At 31 December 2011 202 20,298 20,500
At 1 January 2011 207 3,390 3,597
* PPE increase in 2012 includes €2.176m for transfer of Aglavizza from intangibles due to grant of the production concession. (2011: €2.493m for AC 35 
A.G.,Guendalina).
Notes forming part of the financial statements continued
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 43
The assets affected by impairment losses are oil and gas properties. Management reviewed the carrying values of 
all properties classified as PPE to ascertain the recoverability of values in respect of concessions where facts and 
circumstances suggest that the carrying amount may exceed its recoverable amount. Recoverable amount is based on 
value in use. A discount rate of 10% has been used in the value in use calculation which has been deemed appropriate 
given the risk profile of the Group.
As a result of this exercise, an impairment loss of €Nil was recognised during the year. Also refer note 6 for Assets Held for Sale.
5 Intangible assets
Gas storage
asset
€’000
Exploration
assets
€’000
Total
€’000
Cost
At 1 January 2011 2,693 29,786 32,479
Additions – 4,057 4,057
Transfers to PPE – (2,493) (2,493)
Impairment (43) (43)
Movement on decommissioning asset – (98) (98)
At 31 December 2011 2,693 31,209 33,902
Additions – 1,525 1,525
Transfers to PPE – (2,176) (2,176)
Transfer to Assets Held for Sale (note 6a) – (8,017) (8,017)
Transfer to Assets Held for Sale (note 6b) – (2,219) (2,219)
Movement on decommissioning assets – (119) (119)
At 31 December 2012 2,693 20,203 22,896
Amortisation and Impairment
At 1 January 2011 (2,693) (229) (2,922)
Charge for the year – (132) (132)
At 31 December 2011 (2,693) (361) (3,054)
Charge for the year – (41) (41)
At 31 December 2012 (2,693) (402) (3,095)
Net book value
At 31 December 2012 – 19,801 19,801
At 31 December 2011 – 30,848 30,848
At 1 January 2011 – 29,557 29,557
The intangible assets include all those costs incurred for the exploration and economical evaluation of potentially 
productive fields. In the prior period a gas storage asset held as intangible was written off to nil.
The assets affected by impairment losses are oil and gas exploration and evaluation assets. Management review the 
carrying values of exploration and evaluation assets, classified as intangible assets pending evaluation of commercially 
viable reserves, to ascertain the recoverability of values in respect of concessions where facts and circumstances suggest 
that the carrying amount may exceed its recoverable amount. Recoverable amount is based on value in use. A discount 
rate of 10% has been used in the value in use calculation which is deemed appropriate given the risk profile of the Group.
As a result of this exercise, an impairment loss of €Nil was recognised during the year. Also refer note 6 for Assets Held for Sale.
6 Assets Held for Sale
(a) Non current assets held for sale
2012
€’000
Assets
Exploration and evaluation assets 8,017
Non-current assets held for sale 8,017 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 44
6 Assets Held for Sale continued
The Group has on 21 December 2012, announced that it has signed the two key contracts with Genel Energy plc (‘Genel’) 
that enable Genel’s acquisition of a 75% working interest in Malta offshore Area 4 PSC (the ‘PSC’). These are: (1) a Share 
Sale Agreement which will result in Genel acquiring 75% of the issued share capital of the Group wholly owned subsidiary, 
Phoenicia Energy Company Limited (‘PECL’) on completion, and (2) a Shareholders’ Agreement, which governs the 
operation of PECL in relation to its execution of obligations under the PSC and the rights and obligations of the shareholders 
of PECL, being Mediterranean Oil & Gas Plc and a subsidiary of Genel. Completion of the Share Sale Agreement occurred 
on 28 February 2013.
Non-current assets are classified separately as held for sale in the statement of financial position when their carrying 
amount will be recovered through a sale rather than continuing use. This condition is only met when the sale is highly 
probable, assets are available for immediate sale in current condition, and the management is committed to the sale 
which should be completed within one year of the classification. Liabilities directly associated with the assets classified as 
held for sale and expected to be included as part of the sale transactions are correspondingly also classified separately. 
Property, plant and equipment once classified as held for sale are not subject to depreciation or amortisation. The net 
assets and liabilities of a disposal group classified as held for sale are measured at the lower of their carrying amount 
and fair value less cost to sell.
(b) Non current liabilities held for sale
2012
€’000
Assets
Property, plant and equipment 184
Exploration and evaluation assets 2,219
Impairment of assets to net realisable value (2,403)
Non-current assets held for sale –
Decommissioning provision (2,638)
Release of decommissioning provision 1,388
Non-current liabilities held for sale (1,250)
The Group has on 4 September 2012, entered into a sale and purchase agreement with Canoel International Energy 
Limited (‘CIL’) to transfer to CIL and/or its nominated subsidiary, the Group’s entire working interest in 13 exploration and 
production gas assets onshore Italy (the ‘Sale and Purchase Agreement’) comprising: Masseria Grottavecchia, San 
Teodoro, Torrente Cigno, Misano Adriatico, Sant’Andrea, Masserai Petrilli, Masseria Acquasalsa, Lucera, San Mauro, 
Montalbano, Serra dei Gatti, Villa Carbone and Colle dei Nidi (the ‘Assets’). The Assets are presented in the Consolidated 
Statement of Financial Position as non-current assets ‘held for sale’ in accordance with IFRS 5 Non-current assets held for 
sale and in the income statement as discontinued operations.
Under the terms of the Sale and Purchase Agreement, on Completion CIL will (a) pay to the Group the sum of €100 as 
consideration for the acquisition of the Company’s working interests held in the Assets, and (b) assume the liability for all 
future plug, abandonment and site remediation costs associated with the Assets. Upon Completion, the Group will (a) pay 
€1,250,000 to CIL as a partial contribution towards the future plug, abandonment and site remediation costs for the Assets, 
and (b) pay CIL the revenue received from the Assets during the period between the Effective Date (being 24 August 2012) 
and the Completion Date (the ‘Interim Period’), net of allowable operating costs and agreed capital expenditure 
associated with the Assets incurred by the Group during the Interim Period. Completion of the Sale and Purchase 
Agreement is conditional upon the Group receiving the approval of the Italian Ministry for Economic Development for 
the transfer of the Assets to CIL, and CIL receiving the approval of the Toronto Stock Exchange.
The movements of this operation in the consolidated income statement can be summarised as follows:
2012
€’000
2011
€’000
Revenue* 1,150 988
Cost of sales** (696) (850)
Unwinding of discount on decommissioning provision (259) (234)
Depreciation, depletion and amortisation (44) –
Impairment of assets to net realisable value (2,403) –
Release of decommissioning provision 1,388 –
(Loss) for the year net of tax from discontinued operations (864) (96)
* Revenue for the period 1 January to 23 August 2012 was €777,000.
** Profit attributable to CIL from 24 August to 31 December 2012 is included in the cost of sales.
Notes forming part of the financial statements continued
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 45
7 Segmental reporting
In the opinion of the Directors, the operations of the Group companies comprise three operating segments conducting 
exploration, production, and corporate activities.
The Group operates in one geographic area, being Mediterranean Europe. The Group’s oil and gas revenues are 
generated entirely in Italy and result from sales to European based customers. 92% of Group revenue is generated from 
sales of gas and condensate to four customers (2011: 94%). The reportable segments have been identified on the basis that 
these operating segments form the main identifiable cost centres for the group as reported to the Chief Operating Decision 
Maker (CODM). The CODM is defined as the Board of Directors.
The top four customers contributed the following proportions to Group oil and gas revenues:
2012 2011
Customer 1 60% 47%
Customer 2 15% 25%
Customer 3 13% 19%
Customer 4 4% 3%
The primary financial statements presented reflect all the activities of these three operating segments. For the Group’s 
operating segments these are the key reportable items:
2012
Production
€’000
Exploration
€’000
Corporate
€’000
Total
€’000
Total revenues 16,254 – – 16,254
Profit before tax 5,157 (752) (781) 3,624
Non-current assets 19,804 21,349 837 41,990
Non-current liabilities 3,389 2,278 112 5,779
Capital expenditure 211 1,525 – 1,736
Depreciation 4,483 – – 4,483
Impairment charge – – – –
Taxation 1,867 – – 1,867
2011
Production
€’000
Exploration
€’000
Corporate
€’000
Total
€’000
Total revenues 4,661 – – 4,661
Profit before tax 1,285 (694) 2,339 2,930
Non-current assets 22,448 32,094 1,281 55,823
Non-current liabilities 4,827 3,265 284 8,376
Capital expenditure 17,986 4,078 – 22,064
Depreciation 1,253 – 142 1,395
Impairment charge 1,043 43 – 1,086
Taxation (144) – – (144)
Non-Current Assets comprise investment in oil and gas assets (see Notes 4 and 5) and other non-current receivables (see 
Note 15). Further information related to current and non-current liabilities is included in Note 17. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 46
8 Profit/(Loss) from operations
2012
€’000
2011
€’000
This has been arrived at after charging:
Staff costs (see Note 9) 3,606 2,443
Depreciation, depletion and amortisation 4,483 1,395
Impairment (see Notes 4-5) – 1,086
Operating lease expense – Property including rental under Malta offshore Area 4 PSC 1,225 318
Services provided by the auditor:
 Audit fee for the Company 25 27
 Audit fee for the Group 57 75
 Audit of accounts of associates of the company under legislation 31 11
 Other taxation services 18 –
9 Staff costs
Group
2012
€’000
2011
€’000
Staff costs (including directors) comprise:
Wages and salaries 1,199 934
Directors’ fees and benefits 1,142 882
Defined contribution pension cost 600 495
Social security and other similar taxes 102 93
Share-based payment expense (Note 22) 563 39
3,606 2,443
The average number of Group employees during the period, including Executive Directors and analysis of their roles was 
as follows:
2012
Number
2011
Number
Analysis of employees
General Management 12 11
Administration 10 9
Exploration 7 3
Operations 6 10
35 33
2012
€’000
2011
€’000
Company
Staff costs (including Executive and Non-Executive Directors) comprise:
Wages and salaries 64 –
Directors fees and benefits 948 309
Social security and similar taxes 90 90
Share-based payment expense (Note 22) 563 10
1,665 409
The average number of Company employees during the period, including Executive Directors was 2 (2011: 2).
Notes forming part of the financial statements continued
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 47
10 Directors’ remuneration
The remuneration of the Directors including non-cash share-based payments, who are the key management personnel, 
payable by Group companies, was as follows:
2012
€’000
2011
€’000
Executive Directors
William Higgs 590 –
Sergio Morandi 330 280
Chris Kelsall 328 238
Subtotal 1,248 518
Non-Executive Directors
Keith Henry 145 –
Michael Bonte-Friedheim – 201
Peter Clutterbuck – 14
Salvatore Russo 55 30
Miles Donnelly 52 22
Michael Seymour 62 22
Jake Ulrich 60 –
Matthew Clarke 72 11
Enrico Testa 8 –
Andrew Cochran – 64
Subtotal 454 364
Total 1,702 882
The above table represents the short-term employee benefits being cash remuneration paid to the Group’s directors 
and includes the non-cash share-based payment charge which, in respect of key management personnel was €317,000 
(2011: €19,000). No directors exercised share options in the period. No post employment or long term employee benefits 
were paid to key management personnel in the period (2011: €nil).
11 Taxation
The current year income tax charge includes:
2012
€’000
2011
€’000
Current taxation charge (1,220) (144)
Deferred tax (charge)/credit (647) 3,742
Tax (charge)/credit recognised in income statement (1,867) 3,598
Current tax
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the 
UK applied to profits for the year are as follows:
2012
€’000
2011
€’000
Profit before tax 3,624 2,835
Expected tax charge based on the standard rate of corporation tax in the UK of 24.5% (2010 – 28%) 888 751
Expenses not deductible for tax purposes 379 126
Utilisation of previous tax losses (1,176) (819)
Tax losses carried forward 90 –
Effect of higher rate in other jurisdictions 540 –
Non profit related production taxes and withholding taxes suffered 398 86
Prior period losses not previously recognised – (3,742)
Temporary differences 748 –
Total tax charge/(credit) 1,867 (3,598) Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 48
11 Taxation continued
A deferred tax asset has not been recognised for the following:
Group Company
2012
€’000
2011
€’000
2012
€’000
2011
€’000
Unused tax losses 872 505 872 505
Deferred tax
2012
€’000
2011
€’000
At 1 January 3,742 –
Losses (utilised)/recognised in the year (1,176) 3,742
Temporary differences change 529 –
At 31 December 3,095 3,742
Deferred tax assets of €3.7m recognised in 2011 were in regard to tax losses brought forward, to be utilised against taxable 
profits arising in the foreseeable future from oil and gas production, most notably from the Guendalina asset which 
commenced production in the year ended 31 December 2011. The jurisdiction that these tax losses have arisen in and  
are expected to be used in is Italy.
The amount recognised in 2012 arises for Italy and relates to temporary timing differences.
12 Subsidiaries
The principal undertakings in which the Company’s interest at the period end is 20% or more are as follows:
Subsidiary undertakings
Country of incorporation
or registration
Proportion of voting rights and
ordinary share capital held
2011 and 2012 Nature of business
Malta Oil Pty Limited Australia 100% Oil and gas exploration,
development and production
Medoilgas Italia S.p.A Italy 100% Oil and gas exploration,
development and production
Medoilgas Civita Ltd. UK 100% Oil and gas exploration,
development and production
Phoenicia Energy Company Limited Malta 100% Oil and gas exploration,
development and production
The proportions of voting rights and ordinary share capital held in the entities listed above remains unchanged on the 
prior year.
Group undertakings
Company
2012
€’000
2011
€’000
Cost
At 1 January 40,410 24,399
Decrease in investment in subsidiaries (829) 16,011
At 31 December 39,081 40,410
Provision
At 1 January and 31 December 10,643 10,643
Net book value 28,938 29,767
The provision relates to wholly owned subsidiary Medoilgas Italia S.p.A and when recorded in 2010, brought the investment 
in the subsidiary in line with the net assets of the subsidiary.
Notes forming part of the financial statements continued
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 49
13 Financial assets
Group
2012
€’000
2011
€’000
Available-for-sale investments
–unquoted 34 34
Financial assets represent the Group’s strategic investment of a 13.07% interest in Reggente S.p.A
14 Inventories
2012
€’000
2011
€’000
Materials and supplies 2,531 2,533
The amount of inventories recognised as an expense during the year* 2 70
* Including €nil write down for obsolescence (2011: €54,000)
An impairment test has also been carried out to compare book values with market values.
15 Trade and other receivables
Group Company
2012
€’000
2011
€’000
2012
€’000
2011
€’000
Current Receivables
Trade receivables 2,444 1,994 – –
Amounts due from Group undertakings – – 15,356 19,032
Other receivables 44 1,725 1 –
Tax receivables – VAT 2,485 4,331 59 553
Prepayments 366 364 130 64
5,339 8,414 15,546 19,649
Non-Current Receivables
Other receivables – VAT 804 699 – –
Total Receivables 6,143 9,113 15,546 19,649
The current tax receivable has arisen predominantly from VAT reimbursement which is receivable from the Italian 
government by the Italian subsidiary, Medoilgas Italia S.p.A. The non-current tax receivable relates to VAT recoverable  
in Italy of €804,000 (2011 €699,000), which is not expected to be reimbursed in the next 12 month period.
The recoverability of the current and non-current VAT receivable balances is due to be via a net reduction in taxation 
settlements made with the Italian tax authorities on charges to be incurred in the future as a result of tax liabilities arising 
from production activities.
16 Trade and other payables
Group Company
2012
€’000
2011
€’000
2012
€’000
2011
€’000
Trade payables 3,077 6,572 254 146
Other payables 280 182 45 1,382
Accruals 1,527 3,463 255 71
Tax payable
4,884
1,568
10,217
321
554
–
1,599
–
6,452 10,538 554 1,599 Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 50
17 Financial liabilities
There are no financial liabilities of the Group and Company as these were settled during the year ended 31 December 2011. 
Refer to Related parties transactions Note 25 for borrowings drawn and repaid during the year ended 31 December 2012.
18 Financial instruments – risk management
The principal financial instruments used by the Group and Company in 2012 and 2011 are as follows:
Financial Assets classified as Available for Sale:
•	 Available for sale investments
Financial Assets classified as loans and receivables:
•	 Trade receivables
•	 Other receivables
•	 Cash and cash equivalents
Financial Liabilities all classified as held at amortised cost:
•	 Trade payables
•	 Other payables
Financial assets
Group Company
2012
€’000
2011
€’000
2012
€’000
2011
€’000
Available for sale assets
Available for sale investment 34 34 – –
Loans and receivables
Trade receivables* 2,444 1,994 – –
Other receivables* 44 1,725 – –
Amounts due from Group undertakings* – – 15,356 17,879
Cash and cash equivalents* 8,668 3,703 3,718 2,464
11,190 7,422 19,074 20,343
Financial liabilities
Group Company
2012
€’000
2011
€’000
2012
€’000
2011
€’000
Trade payables* 3,077 6,572 254 146
Other payables and accruals* 1,807 3,645 300 53
4,884 10,217 554 199
* Carried at amortised cost.
Fair value of financial instruments
At 31 December 2012 and 31 December 2011, the fair value and book value of the Group’s financial assets and liabilities 
were materially the same. All financial assets and liabilities indicated above with a * are shown in the statement of financial 
position at their amortised costs, which approximates to underlying fair value. Financial instruments listed above valued at 
fair value are assessed as tier 3. Tier 3 means inputs for the asset or liability that are not based on observable market data.
At 31 December 2012 and 31 December 2011, there were no financial instruments assessed as tier 2 and carried at fair 
value through profit or loss. A tier 2 classification means that inputs are other than quoted prices that are observable for the 
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Notes forming part of the financial statements continued
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 51
Financial risk management
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, 
whilst retaining responsibility for them it has delegated the authority for designing and operating processes that ensure the 
effective implementation of the objectives and policies to the Group’s finance function. The Board receives regular updates 
from accounting and financial management through which it reviews the effectiveness of the processes put in place and 
the appropriateness of the objectives and policies it sets. The overall objective of the Board is to set policies that seek to 
reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. Further details regarding 
these policies are set out below.
The key financial instruments for the Company are the current receivables related to subsidiaries and as a result, Company 
reports are only included where relevant.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or a counter party to a financial instrument fails to meet its 
contractual obligations. The Group is mainly exposed to credit risk from credit sales in relation to gas production. It is Group 
policy, implemented locally, to assess the credit risk of new customers before entering contracts in accordance with best 
local business practices, and seek external credit rating assessments where applicable and when available. Credit risk of 
existing customers is assessed when deemed necessary.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and 
financial institutions, only independently rated parties with an acceptable rating are utilised. It is the Group policy that it 
endeavours to maintain substantial bank deposits and bills with financial institutions with Standard & Poors ‘A’ rating or 
equivalent. The Group holds cash balances with Banca Intesa SanPaolo SpA (Standard & Poors rating BBB+/A-2), to meet 
minimum working capital requirements for the Italian operations.
Interest rates received on deposit accounts held with HSBC, Banca Intesa SanPaolo and Deutsche Bank are between 0.09% 
and 0.20% (31 December 2011: 0.25% to 1.04%), based on bank interest rates.
The Group does not enter into derivatives to manage credit risk, although in certain isolated cases may take steps to 
mitigate such risks if it is sufficiently concentrated.
The financial assets are aged as follows:
Group
2012
€’000
2011
€’000
1 month 10,847 6,673
2/3 months 338 736
4/6 months 5 13
11,190 7,422
The Group has not historically suffered defaults from its customers for onshore gas production. The Group faces credit risk 
through onshore gas sales to Gas Plus Italiana and joint venture cash calls to Edison and Gas Plus Italiana, arising from 
various joint venture projects where Medoilgas Italia S.p.A acts as operator. The Group’s main credit risk exposure through 
its subsidiary Medoilgas Italia S.p.A, is with Repower Italia S.p.A. (‘Repower’) which at present purchases the Group’s entire 
offshore gas production from the Guendalina gas field which commenced gas production in Q4, 2011. Price risk under this 
contract is mitigated by the provision of a bank guarantee in favour of the Group in respect of a material proportion of 
forecast gas purchases under the contract. Management believes the credit risk currently faced by the Group is low given 
the high credit worthiness of Gas Plus Italiana, Edison and Repower. Gas Plus Italiana is a major Italian gas supply company 
listed on the Borsa Italiana and public filings indicate it has good creditworthiness.
The Group from time to time reviews whether a greater utilisation of credit ratings would be appropriate. Given that much 
of the Group’s trade receivables are under joint operating agreements, the security against joint venture assets provided by 
those agreements adequately mitigates any risk of default. At the reporting date, the Group does not envisage any losses 
from non-performance of existing counterparties.
Management considers that given the presently challenging macroeconomic position in the Eurozone and in Italy, credit 
risk remains elevated as at the reporting date, but that this risk has not had a material impact on earnings or shareholders’ 
equity. Management continues to monitor the financial and energy market conditions and will consider any steps required 
to mitigate associated risks to the Group. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 52
18 Financial instruments – risk management continued
The Group seeks to maintain deposit accounts for its cash balances, primarily with banks which hold a high credit rating. 
The applicable interest rate on cash balances is also considered. Current bank deposits are held primarily with HSBC Bank 
plc and Deutsche Bank AG, with funds necessary for adequate working capital availability to the Italian operations held 
on deposit with Banca Intesa SanPaolo.
Funds which are not expected to be required in the near term are placed on short-term (i.e. up to 90 days) deposit 
with fixed interest rates for the relevant term, which reduce the Group’s exposure to interest rate risk. At the same time, 
management reviews the Group’s forecast cashflows in order to ensure that the maximum level of interest is received for 
the available funds but without adversely affecting the working capital flexibility the Group requires. There is no material 
difference between the book value and fair value of the Group’s cash and cash equivalents.
A 1% interest rate movement does not have a material effect on the Group’s financial assets and liabilities therefore no 
sensitivity analysis is provided.
Cash flow interest rate risk
The Group and Company are exposed to cash flow interest rate risk from deposits of cash and cash equivalents with banks. 
The cash and cash equivalents balances maintained by the Group are proactively managed in order to ensure that the 
maximum level of interest is received for the available funds but without affecting the working capital flexibility the Group 
requires.
There is no material difference between the book value and fair value of the Group’s cash and cash equivalents.
Foreign exchange risk
Foreign exchange risk arises because the Group has operations located in various parts of the world and because some  
of its major suppliers utilise contracts denominated in US dollars irrespective of the location where services are provided. 
Although its geographical spread reduces the Group’s operational risk, the Group’s net assets arising from such overseas 
operations are exposed to currency risk resulting in gains and losses on retranslation into Euro. Only in exceptional 
circumstances will the Group consider hedging its net investments in overseas operations as generally it does not consider 
that the reduction in foreign currency exposure warrants the cash flow risk created from such hedging techniques. It is the 
Group’s policy to ensure that individual Group entities enter into local transactions in their functional currency wherever 
possible or acquire the relevant contract currency ahead of the expenditure obligation. The Group considers this policy 
minimises any unnecessary foreign exchange exposure.
The Board continues to monitor the effectiveness of this policy on an ongoing basis through its approval of Group budgets 
and the review of the currency profile of cash balances.
Part of the Group’s borrowings, during the year ended 31 December 2011, was denominated in Sterling and the functional 
currency of the loan counterparty is the Euro. The Group is therefore exposed to changes in exchange rates. A total foreign 
exchange gain of €435,000 was recognised in the year in respect of the translation of monetary assets and liabilities not 
denominated in Euro.
The proportion of cash and cash equivalent balances held in Euro as at 31 December 2012 was 57.1% (2011: 36.4%), 
USD 26.6% (2011: 41.8%), GBP 16.3% (2011: 21.8%).
Notes forming part of the financial statements continued
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 53
At 31 December 2012, the currency exposure of the Group was as follows:
AUD
€’000
USD
€’000
GBP
€’000
EURO
€’000
Total
€’000
At 31 December 2012
Cash and cash equivalents – 2,306 1,415 4,947 8,668
Trade and other receivables – – 1 2,487 2,488
Trade and other payables (103) – (570) (4,211) (4,884)
Other financial liabilities – – – – –
Net financial assets/(liabilities) (103) 2,306 846 3,223 6,272
€ weakens 10%
(
*
)
(114) 2,561 941 3,223 6,611
€ strengthens 10%
(
*
)
(94) 2,095 770 3,223 5,994
At 31 December 2011
Cash and cash equivalents – 1,548 807 1,348 3,703
Trade and other receivables – 330 – 3,389 3,719
Trade and other payables (3) (2,880) (144) (7,190) (10,217)
Other financial liabilities – – – – –
Net financial assets/(liabilities) (3) (1,002) 663 (2,453) (2,795)
€ weakens 10%
(
*
)
(3) (1,102) 729 (2,453) (2,829)
€ strengthens 10%
(
*
)
(3) (902) 597 (2,453) (2,761)
Significant balances are held in foreign currencies. The Directors have considered the exposure resulting from movements 
in foreign exchange rates in relation to these amounts. A movement of 10% would result in the balances to be restated to 
the amounts disclosed in the table above (*).
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments 
on its debt instruments.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. 
To achieve this aim, it seeks to maintain readily available cash balances (or agreed facilities) to meet expected 
requirements. See further information on Going Concern in Note 1.
Cash forecasts identifying the liquidity requirements of the Group are produced monthly. These are reviewed regularly by 
management and the Board to ensure that sufficient financial headroom exists.
The contractual undiscounted amounts of financial liabilities are repayable as follows:
Group Company
2012
€’000
2011
€’000
2012
€’000
2011
€’000
1 month 2,128 3,705 554 1,413
2/3 months 1,610 6,094 – 186
4/6 months – 56 – –
6/12 months 1,146 362 – –
4,884 10,217 554 1,599
In respect of the Company, included in Euro amounts receivable within one year are amounts due from group companies 
totalling €15.4m (2011: €17.0m). Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 54
18 Financial instruments – risk management continued
Price risk
Gas sales revenue is subject to energy market price risk. The Group’s gas revenues are sourced from the sale of gas under 
term supply contracts.
Estimated production volumes for sales of onshore gas production are set out in the contracts. The applicable gas price for 
each month is set according to a formula which is linked to the oil price that applies a constant to the average price from 
fuel oil, gas oil and crude oil (Brent) prices over each of the 9 months prior to the actual month of gas delivery. The oil 
prices which are applied in the formula are sourced from the Platts Oilgram Price Report (average of the highest and lowest 
for each oil type in each of the 9 prior months) in US$ and convertible to Euro value by reference to the average monthly 
US$/€ exchange rate, which is in the actual month of gas supply, as published by the European Central Bank. Given the 
gas price formula for onshore gas sales is based on an oil price formula which takes an average measure of the prior 
9 month period, any short-term material oil price fluctuations are likely to be mitigated. At present, the Group does not 
intend to hedge oil price risk in the short term.
The current offshore gas sale contract in respect of the Group’s interest in the Guendalina gas field has been extended 
from 30 September 2013 to 30 September 2014. This contract is similar to the Group’s contracts for the sale of onshore gas 
production and it is set to a benchmark of Italian energy market prices identified by a specific formula, in which the price  
is calculated by reference to oil-linked benchmarks and the €/$ exchange rate.
Defaults and breaches
There have been no defaults or breaches in respect of current and non-current liabilities recognised at the reporting date.
Capital disclosures
The Group seeks to maintain sufficient capital to fund its growth and safeguard its ability to continue as a going concern. 
The primary objective of the Group is to maximise shareholder value, which from a capital management perspective, is 
achieved by maintaining the capital structure that is most suited to the Group’s size, project and strategic priorities, as well 
as underlying business risk.
Currently, the Group does not pay dividends, focusing instead, on delivering capital growth by developing its exploration 
portfolio and its Italian development assets, to optimise future returns. As at 31 December 2012 and the date of this report, 
the capital employed by the Group to fund projects is comprised solely of equity attributable to shareholders. 
Management will continue to review the scope to apply other sources of capital and equity finance, such as potential farm 
outs, to support key projects. The details and movements in the Company’s share capital are set out in Note 20.
19 Provisions for liabilities and charges
Decommissioning
€’000
Other
provisions
€’000
Total
€’000
At 1 January 2011 6,510 159 6,669
New provisions and changes in estimates 688 364 1,052
Utilisation and other movements – (45) (45)
Unwinding of discount factor 610 – 610
At 31 December 2011 7,808 568 8,376
Changes in estimates (218) 74 (144)
Utilisation (147) (418) (565)
Unwinding of discount factor 750 – 750
Transfer to Assets Held for Sale (note 6b) (2,638) – (2,638)
At 31 December 2012 5,555 224 5,779
The decommissioning provision is the discounted present value of the estimated cost of decommissioning the Group’s  
oil and gas production facilities in Italy. The discount factor used is 10%. The Group makes provision for the cost of 
decommissioning its producing wells at the completion of their useful lives. There are in excess of 30 wells for which 
provision has been made. Individual final decommissioning costs vary. Decommissioning of the wells is anticipated over  
a 10 year period with additional provision to be made as new production wells are brought on stream. The time frame for 
decommissioning is based upon the projected production profile and remaining proved and probable reserves. The costs 
of decommissioning both onshore and offshore wells are certified by independent qualified engineers and specialists.
Other provisions include amounts due to employees for accrued holiday payable when they cease employment.  
The provision for €409,000 recognised in 2011 in relation to the Group’s potential liability through the subsidiary  
Malta Oil Pty Ltd for the relinquishment of the Medjerda licence in Tunisia has been released to income and included  
in the 2012 utilisation charge.
Notes forming part of the financial statements continued
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 55
20 Share capital
Issued and fully paid
2012
Number
2012
€’000
2011
Number
2011
€’000
Ordinary shares of 0.01p each
At 1 January 429,117,710 5,058 38,912,736 11,285
Share consolidation – – – (10,721)
Issued in the period (2011: fundraising) – – 333,333,333 3,866
Issued in the period – settlement of debt – – 40,919,558 469
Issue of shares – commission shares – – 15,952,083 159
Issue of shares – options exercise 666,666 8 – –
At 31 December 429,784,376 5,066 429,117,710 5,058
On 10 May 2011, the Group raised £20m before expenses (approximately £19.1m net of cash transaction expenses) by the 
subscription for 333,333,333 new ordinary shares in the Company (the ‘Subscription’) at 6 pence each (‘Subscription 
Price’). In addition, the Company agreed terms with the Bank of Scotland Plc (‘BoS’), Stark Select Asset Master Limited 
(‘Stark Select’) as holder of the convertible bonds (‘Convertible Bonds’), and with holders of the convertible loan notes 
(‘CLNs’), as a result of which, all outstanding amounts due to the BoS under the BoS bank facility were settled and all 
outstanding Convertible Bonds and CLNs were converted into new ordinary shares (together, the ‘Conversion Shares’)  
of the Company at a price of 24 pence per new ordinary share (together, the ‘Group Recapitalisation’). As a result of  
the Group Recapitalisation, the Group does not have any outstanding financial debt.
The nominal value of the existing ordinary shares as at 31 December 2010, was 20 pence. The issue of new shares at the 
Subscription Price therefore required the adjustment of the nominal value of each of the Company’s ordinary shares to  
1 penny, rather than 20 pence.
Conversion of convertible bonds and convertible notes
The holder of all of the outstanding Convertible Bonds, Stark Select, agreed to convert the whole of the outstanding 
principal amount of its Convertible Bonds into 19,858,333 Conversion Shares at a price of 24 pence per Conversion Share.
With the approval of an extraordinary resolution of the holders of the CLNs, the Company agreed to amend the deed  
poll constituting the CLNs to give the Company the right to convert the outstanding CLNs at its election into 21,061,225 
Conversion Shares, at a price of 24 pence per Conversion Share. The Company elected to convert all of the  
outstanding CLNs.
The original conversion prices of the CLNs and the Convertible Bonds were 40 pence and 50 pence respectively and the 
Company had no right to require conversion. The amendments to the terms and conversion prices of the CLNs and the 
Convertible Bonds were necessary to enable the Subscription and the Debt Cancellation to take place. The Conversion 
Shares were issued credited as fully paid, subject to the memorandum of association and Articles of the Company and 
rank pari passu in all respects with new ordinary shares then in issue, including the right to receive any future dividends  
and other distributions.
Share consolidation
The Subscription Price of 6 pence was below the nominal value of the ordinary shares of the Company, of 20 pence. As 
Company law prohibits the issue of shares at a price less than their nominal value, in order to effect the Subscription, a 
share consolidation was undertaken whereby each ordinary share of the Company was subdivided into one new ordinary 
share with nominal value of 1 penny and one deferred share with nominal value of 19 pence (the ‘Share Consolidation’).
The Share Consolidation resulted in 38,912,736 new ordinary shares and 38,912,736 deferred shares (the ‘Deferred Shares’) 
being in issue immediately following the Share Consolidation but before the completion of the Group Recapitalisation.
After the implementation of the Share Consolidation the nominal value of each new ordinary share was one twentieth of 
that of each existing ordinary share. Each new ordinary share has the same rights (including voting and dividend rights 
and rights on a return of capital) as each ordinary share existing prior to completion of the Group Recapitalisation. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 56
20 Share capital continued
The rights attaching to the Deferred Shares, which have not been admitted to trading on AIM, are minimal, thereby 
rendering them effectively valueless. The rights attaching to the Deferred Shares are summarised as follows:
•	 they do not entitle holders to receive any dividend or other distribution or to receive notice of, attend, speak at or vote  
at general meetings of the Company;
•	 on a return of assets on a winding up, they will only entitle the holder to the amounts paid up on such shares after the 
repayment of £10m per New Ordinary Share;
•	 they authorise the Company to appoint any person to execute on behalf of the holders of the Deferred Shares a transfer 
of such shares to the Company, or such person as the Company may nominate as custodian, without any payment 
therefore and without the sanction of the holders of the Deferred Shares; and
•	 the creation and issue of further shares which rank equally or in priority to the Deferred Shares or the passing of a 
resolution of the Company to cancel the Deferred Shares or to effect a reduction in capital shall not constitute a 
modification or abrogation of their rights.
There are no immediate plans to purchase or cancel the Deferred Shares, but the Company may seek to do so in the 
future.
Share options
The Group’s policy is to utilise options as part of the management reward structure. Option terms are set by agreement with 
an incoming executive or based upon the recommendations of the remuneration committee to the Board of Directors. 
Refer to Note 22 for further details.
21 Cash and cash equivalents
Group Company
2012
€’000
2011
€’000
2012
€’000
2011
€’000
Cash available on demand 8,668 3,703 3,718 2,464
22 Share-based payment
2012
€’000
2011
€’000
The share-based remuneration expense (Note 9) comprises:
Equity-settled schemes 563 39
The remainder of this note is presented in Sterling, unless otherwise stated, as this is the currency in which shares are issued 
and options are priced.
The Company has previously operated an equity-settled share based remuneration scheme for employees and 
contractors in the form of an unapproved scheme. On 11 March 2010, the Company adopted a new Global Share Option 
Plan with the intention that future equity-settled share based remuneration awards will be made under this new plan.
Details of the share option transactions for the year are as follows:
2012
Weighted
Average
Exercise
Price
£
2012
Number
2011
Weighted
average
exercise
price
£
2011
Number
Outstanding at beginning of the year 1.71 1,826,000 1.74 2,177,500
Granted during the year 0.06 19,500,000 – –
Exercised 0.06 (666,666) – –
Lapsed 0.51 (1,817,334) 1.92 (351,500)
Outstanding at the end of the year 0.18 18,842,000 1.71 1,826,000
The exercise price of the options outstanding at the end of the year ranged between £0.06 and £3.00 (2011: £0.45 and 
£3.00) and their weighted average contractual life was 8.49 years (2011: 2.12 years). The weighted average exercise price  
of the options exercised in the year to December 2012 was £0.06 (2011: £1.00). 666,666 options were exercised in 2012  
(2011: nil). At the relevant exercise dates, the market price of the Company’s ordinary shares ranged between £0.1113  
and £0.1213.
Notes forming part of the financial statements continued
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 57
Of the total number of options outstanding at the year end, 4,091,329 were exercisable (2011: 1,826,000). The weighted 
average fair value of each option granted during the period was £0.037 (2011: £nil).
The following is relevant in the determination of the fair value of options granted during the year under the Global Share 
Option Plan operated by the Group.
19 January
2012
£
Equity-Settled
Option pricing model used Black-Scholes
Weighted average share price at grant date (pence) 4.78
Exercise Price 0.06
Weighted average contractual life (years) 10.0
Expected volatility 65%
Expected dividend growth rate –
Risk free rate 2.05%
19 March
2012
£
Equity-Settled
Option pricing model used Black-Scholes
Weighted average share price at grant date (pence) 5.76
Exercise Price 0.06
Weighted average contractual life (years) 9.8
Expected volatility 65%
Expected dividend growth rate –
Risk free rate 2.34%
Volatility has been based on the historic performance of the Company and its peer group companies.
On 19 January 2012, 11,500,000 options were granted to directors over ordinary shares of the Company. The options 
have an exercise price of 6 pence and vest between the date of grant and the third anniversary of the date of grant. 
On 19 January 2012, 2,000,000 options were granted to employees over ordinary shares of the Company. The options 
have an exercise price of 6 pence and vest between the date of grant and the third anniversary of the date of grant. 
On 19 March 2012, 6,000,000 options were granted to William Higgs over ordinary shares of the Company. The options 
have an exercise price of 6 pence and vest between the first and third anniversaries of 19 January 2012.
The grant of options to directors during the period were as follows:
Director New options granted
Total number of
options held at
Period end
Keith Henry 2,000,000 2,000,000
William Higgs 6,000,000 6,000,000
Sergio Morandi 2,500,000 3,415,000
Chris Kelsall 2,000,000 2,090,000
Matthew Clarke 1,000,000 1,000,000
Salvatore Russo 1,000,000 1,000,000
Miles Donnelly 1,000,000 1,000,000
Michael Seymour 1,000,000 1,000,000
Jacob Ulrich 1,000,000 1,000,000
Further options were granted to the directors post 31 December 2012 (refer to Note 26). Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 58
23 Operating lease arrangements
Group
2012
€’000
2011
€’000
Minimum lease payments under operating leases recognised in income statement for the year 424 318
Minimum lease payments under operating leases
Due within one year 424 236
After one year but within two years 271 214
After two years but within five years 448 412
Due after five years 280 359
At 31 December 1,423 1,221
The operating leases relate to office rentals and licence concessions.
24 Non cash transactions
During the period the Group had no transactions that are non cash. In 2011, the Group Recapitalisation required significant 
transactions that did not result in the payment of cash. These are set out below:
a)  Convertible debt (comprising convertible bonds and convertible loan notes) which had a carrying value of €10.9m was 
extinguished by the issue of 40.9m ordinary shares with a fair value of €2.8m. This gave rise to an amount of €8.1m being 
recognised as a capital contribution by current shareholders.
b)  An IFRS 2 charge arose on the issue of 15.9m new nil cost shares to parties involved in the Group Recapitalisation 
transaction that amounted to €2.2m and was recognised in the share premium account as a cost of issuing shares.
25 Related parties
The Company has entered into a number of unsecured related party transactions with its subsidiary undertakings. The 
transactions carried out between the Company and its subsidiary undertakings are for short and long term financing, 
details of such transactions and amounts owed to and from these entities are provided in Notes 15, 16 and 19.
Information regarding the remuneration of key management personnel and their connected persons is disclosed in Note 10.
On 8 November 2011, the Company entered into a short-term secured loan facility with affiliates of certain of its substantial 
shareholders, namely affiliated investment funds of Och-Ziff Capital Management Group (‘Och Ziff’), for up to €3.5m (the 
‘Loan Facility’). The purpose of the Loan was to assist the Company in funding the acquisition of 1,000 sq km of 3D seismic 
exploration data, in relation to its licence commitment at Malta offshore Area 4, under the Malta Production Sharing 
Contract signed with the Maltese Government on 18 July 2008 and its Addendum signed on 17 May 2011 (the ‘Licence’).
Draw downs under the Loan Facility at 31 December 2011 amounted to €nil (31 December 2010: €nil). On 7 February 2012, 
the Company borrowed €2.0m (the ‘Principal’) under the Loan Facility. Repayment of the entire Principal and accrued 
interest thereon was completed on 26 April 2012.
The initial term of the Loan Facility was eight months and the interest rate payable was 12% per annum. The Loan could be 
extended for a further 4 months at a rate of 14% per annum, at the option of the Company. The Loan was secured by a 
pledge over the entire issued share capital of Medoilgas Italia SpA, a wholly owned subsidiary of the Company. The Loan 
constituted a Related Party Transaction pursuant to the AIM Rules. The Directors of the Company considered, having 
consulted with Panmure Gordon (UK) Limited, the Company’s nominated adviser at the time, that the terms of the Loan, as 
set out, to be fair and reasonable insofar as its shareholders are concerned.
Notes forming part of the financial statements continued
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 59
26 Events after the reporting period
Board appointments
Peter Jackson was appointed a Director of the Company on 1 January 2013.
Grant of options to directors
On 23 January 2013, 6,870,000 options were granted to directors over ordinary shares of the Company under the Global 
Share Option Plan. The options have an exercise price of 11.9 pence, have a range of vesting dates of between one to three 
years post the date of grant and a ten year exercise period from the date of grant.
The grant of options to directors was as follows:
Director New options granted
Total number of
options held at the
date of this report
Keith Henry 675,000 2,675,000
William Higgs 2,000,000 8,000,000
Sergio Morandi 850,000 4,265,000
Chris Kelsall 675,000 2,765,000
Matthew Clarke 335,000 1,335,000
Jacob Ulrich 335,000 1,335,000
Enrico Testa 1,000,000 1,000,000
Peter Jackson 1,000,000 1,000,000
Total 6,870,000 22,375,000
Exercise of options
441,500 options were exercised after the year ended 31 December 2012.
Malta offshore Area 4 PSC
On 21 December 2012, the Group announced that it has signed the two key contracts with Genel Energy plc (‘Genel’) that 
enable Genel’s acquisition of a 75% working interest in Malta offshore Area 4 PSC (the ‘PSC’). These are: (1) a Share Sale 
Agreement which will result in Genel acquiring 75% of the issued share capital of the Group wholly owned subsidiary, 
Phoenicia Energy Company Limited (‘PECL’) on completion, and (2) a Shareholders’ Agreement, which governs the 
operation of PECL in relation to its execution of obligations under the PSC and the rights and obligations of the shareholders 
of PECL, being Mediterranean Oil & Gas Plc and a subsidiary of Genel. Completion of the Share Sale Agreement occurred 
on 28 February 2013.
27 Capital commitments
As at 31 December 2012, the Group had committed €2.9m (2011: €1.8m) in operational and exploration expenditure relating 
to various concessions. The above number represents all open/outstanding contracts and purchase orders.
The Group does not have any exploration or work programme commitments as it has the right to withdraw from its license 
areas at any stage. The Group’s share of the planned expenditure as at 31 December 2012, in the near term is subject to 
completion of the transfer of shares to Genel and is as follows:
2012 2011
No later than 1 year 441 –
Less than 1 year and not later than 5 years 241 –
Later than 5 years – –
To be incurred in Italy – –
To be incurred in Malta* 682 –
* Net of the funding under Genel farmout transaction. This includes Group share of the area rental that is due under the Malta Production Sharing Contract in 
January 2013. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 60
28 Contingent liability
On 3 January 2013, Leni Gas & Oil Investments Limited (‘LGOI’) and Leni Gas & Oil plc (collectively, the ‘Claimants’) 
commenced legal proceedings in the Queen’s Bench Division of the Commercial Court of the High Court of Justice in 
England and Wales (the ‘High Court’), against Malta Oil Pty Limited and Phoenicia Energy Company Limited (‘PECL’) 
(together, the ‘Defendants’). The Defendants are both subsidiaries of the Company.
The proceedings relate to the purchase by PECL of LGOI’s 10% interest previously held in the Malta offshore Area 4 PSC (the 
‘PSC’). The Claimants seek: rescission of the sale agreement dated 31 July 2012 under which LGOI sold its 10% interest in the 
PSC to PECL, further or alternatively, damages for fraudulent misrepresentation, and interest on any sums which are found 
to be due.
On 25 February 2013, the Defendants filed a Defence with the High Court. The Defendants and the Company’s Board of 
Directors continue to refute the various claims which have been made by the Claimants. The Group will defend itself and 
the interests of its shareholders rigorously. The outcome of this claim and the potential financial impact cannot be 
determined at this stage and therefore no provision has been made in the financial statements.
The Genel Energy plc transaction announced by the Company on 21 December 2012, which completed on 28 February 
2013, and the proposed Malta work programme, which includes drilling contracts being signed for planned 
commencement of drilling in Q4 2013, are unaffected by this dispute.
Notes forming part of the financial statements continued
For the year ended 31 December 2012 Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 61
Notice of Annual General Meeting
SPECIAL RESOLUTION
7. That the Directors be generally empowered pursuant to 
section 570 of the 2006 Act to allot equity securities (as 
defined in section 560 of the 2006 Act) for cash as if 
section 561(1) of the 2006 Act did not apply to any such 
allotment pursuant to the general authority conferred on 
them by resolution 6 above (as varied from time to time 
by the Company in general meeting) PROVIDED THAT 
such power shall be limited to:
(a)  the allotment of equity securities in connection with 
a rights issue or any other offer to holders of 
ordinary shares in proportion (as nearly as may be 
practicable) to their respective holdings and to 
holders of other equity securities as required by the 
rights of those securities or as the Directors 
otherwise consider necessary, but subject to such 
exclusions or other arrangements as the Directors 
may deem necessary or expedient in relation to 
treasury shares, fractional entitlements, record 
dates, legal or practical problems in or under the 
laws of any territory or the requirements of any 
regulatory body or stock exchange; and
(b)  the allotment (otherwise than pursuant to sub 
paragraph (a) above) of equity securities up to an 
aggregate nominal amount of £1,290,677 
representing approximately 30% of the issued 
ordinary share capital of the Company
and the power hereby conferred shall operate in 
substitution for and to the exclusion of any previous 
power given to the Directors pursuant to section 570 of 
the 2006 Act and shall expire on whichever is the earlier 
of the conclusion of the Annual General Meeting of the 
Company held in 2014 or the date falling 15 months from 
the date of the passing of this resolution (unless renewed 
varied or revoked by the Company prior to or on that 
date) save that the Company may, before such expiry 
make an offer or agreement which would or might 
require equity securities to be allotted after such expiry 
and the Directors may allot equity securities in pursuance 
of such offer or agreement notwithstanding that the 
power hereby conferred has expired.
Registered Office By Order of the Board
33 St James’s Square Keith Henry
London  Chairman
SW1Y 4JS 
22 March 2013
NOTICE IS HEREBY GIVEN that the Annual General Meeting 
of Mediterranean Oil & Gas Plc (‘the Company’) will be  
held at Prince Philip House, The Royal Academy of 
Engineering, 3 Carlton House Terrace, London SW1Y 5DG 
on Tuesday 30 April 2013 at 11.00 a.m. for the following 
purposes.
As Ordinary Business:
To consider and, if thought fit, pass the following resolutions 
which will be proposed as ordinary resolutions. 
1. To receive and adopt the statement of accounts for the 
year ended 31 December 2012 together with the reports 
of the Directors and the Auditors thereon.
2. To elect Peter Jackson, who was appointed since the last 
Annual General Meeting, as a Director of the Company.
3. To elect Enrico Testa, who was appointed since the last 
Annual General Meeting, as a Director of the Company.
4. To re-elect Christopher Kelsall, who retires by rotation, as 
a Director of the Company.
5. To re-appoint BDO LLP as Auditors to act as such until the 
conclusion of the next general meeting of the Company 
at which the requirements of section 437 of the 
Companies Act 2006 (‘the 2006 Act’) are complied  
with and to authorise the Directors of the Company  
(‘the Directors’) to fix their remuneration.
As Special Business:
To consider and, if thought fit, pass the following resolutions 
of which resolution 6 will be proposed as an ordinary 
resolution and resolution 7 will be proposed as a special 
resolution. 
ORDINARY RESOLUTION
6. That the Directors be generally and unconditionally 
authorised in accordance with section 551 of the 2006 
Act to allot Relevant Securities (as defined in this 
resolution) up to an aggregate nominal amount of 
£1,290,677, provided that this authority shall, unless 
renewed, varied or revoked by the Company in general 
meeting, expire on the date falling 15 months from the 
date of the passing of this resolution, or if earlier at the 
Annual General Meeting of the Company to be held in 
2014, save that the Company may at any time before 
such expiry make an offer or agreement which might 
require Relevant Securities to be allotted after such expiry 
and the Directors may allot Relevant Securities to be 
allotted in pursuance of such offer or agreement 
notwithstanding that the authority hereby conferred has 
expired. This authority is in substitution for all previous 
authorities conferred on the Directors in accordance with 
section 551 of the 2006 Act. In this resolution, ‘Relevant 
Securities’ means any shares in the capital of the 
Company and the grant of any right to subscribe for, or 
to convert any security into, shares in the capital of the 
Company (‘Shares’) but does not include the allotment 
of Shares or the grant of a right to subscribe for Shares 
in pursuance of an employee’s share scheme or the 
allotment of Shares pursuant to any right to subscribe 
for, or to convert any security into, Shares. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 62
In order for a proxy appointment or instruction made by 
means of CREST to be valid, the appropriate CREST 
message (a ‘CREST Proxy Instruction’) must be properly 
authenticated in accordance with Euroclear UK & Ireland 
Limited’s specifications and must contain the information 
required for such instructions, as described in the CREST 
Manual. The message must be transmitted so as to be 
received by the Company’s agent, Capita Registrars 
Limited (CREST Participant ID: RA10), no later than  
11.00 am on Friday 26 April 2013. For this purpose,  
the time of receipt will be taken to be the time (as 
determined by the time stamp applied to the message 
by the CREST Application Host) from which the 
Company’s agent is able to retrieve the message by 
enquiry to CREST in the manner prescribed by CREST. 
CREST members and, where applicable, their CREST 
sponsor or voting service provider should note that 
Euroclear UK & Ireland Limited does not make available 
special procedures in CREST for any particular messages. 
Normal system timings and limitations will therefore apply 
in relation to the input of CREST Proxy Instructions. It is the 
responsibility of the CREST member concerned to take 
(or, if the CREST member is a CREST personal member or 
sponsored member or has appointed a voting service 
provider, to procure that his CREST sponsor or voting 
service provider takes) such action as shall be necessary 
to ensure that a message is transmitted by means of the 
CREST system by any particular time. In this connection, 
CREST members and, where applicable, their CREST 
sponsor or voting service provider are referred in 
particular to those sections of the CREST Manual 
concerning practical limitations of the CREST system  
and timings.
The Company may treat as invalid a CREST Proxy 
Instruction in the circumstances set out in Regulation 
35(5)(a) of the Uncertificated Securities Regulations 2001.
6. In the case of joint holders, where more than one of 
the joint holders purports to appoint a proxy, only the 
appointment submitted by the most senior holder will be 
accepted. Seniority is determined by the order in which 
the names of the joint holders appear in the Company’s 
register of members in respect of the joint holding (the 
first-named being the most senior).
7. Except as provided above, members who have general 
queries about the Annual General Meeting should call 
the Capita Registrars’ shareholder helpline on 0871 664 
0300 or, if calling from outside the UK, on +44 20 8639 
3399. Lines are open from 8.30 a.m. to 5.30 p.m., Monday 
to Friday. Calls to Capita Registrars’ 0871 664 0300 
number are charged at 10 pence per minute (including 
VAT) plus any of your service provider’s network extras. 
Calls to Capita Registrars’ +44 20 8639 3399 number from 
outside the UK are charged at applicable international 
rates. Different charges may apply to calls made from 
mobile telephones and calls may be recorded and 
monitored randomly for security and training purposes. 
No other methods of communication will be accepted.
Notes:
1. Pursuant to Regulation 41 of the Uncertificated Securities 
Regulations 2001, the Company specifies that only those 
members registered on the Company’s register of 
members at 6.00 p.m. on Friday 26 April 2013 shall be 
entitled to attend and vote at the Annual General 
Meeting.
2. If you are a member of the Company at the time set out 
in note 1 above, you are entitled to appoint a proxy to 
exercise all or any of your rights to attend, speak and 
vote at the Annual General Meeting. You can only 
appoint a proxy using the procedures set out in these 
notes and the notes to the proxy form.
3. A proxy does not need to be a member of the Company 
but must attend the Annual General Meeting to 
represent you. Details of how to appoint the Chairman of 
the Annual General Meeting or another person as your 
proxy using the proxy form are set out in the notes to the 
proxy form. If you wish your proxy to speak on your behalf 
at the Annual General Meeting you will need to appoint 
your own choice of proxy (not the Chairman) and give 
your instructions directly to them.
4. You may appoint more than one proxy provided each 
proxy is appointed to exercise rights attached to different 
shares. You may not appoint more than one proxy to 
exercise rights attached to any one share. To appoint 
more than one proxy, please contact the Company’s 
registrars on the telephone numbers set out in note 7.
5. The notes to the proxy form explain how to direct your 
proxy how to vote on each resolution or withhold their vote.
To appoint a proxy using the proxy form, the form must be:
(a) completed and signed;
(b)  sent or delivered to Capita Registrars, PXS,  
34 Beckenham Road, Beckenham, Kent BR3 4TU; 
and
(c)  received by Capita Registrars no later than  
11.00 a.m on Friday 26 April 2013.
In the case of a member which is a company, the proxy 
form must be executed under its common seal or signed 
on its behalf by an officer of the company or an attorney 
for the company.
Any power of attorney or any other authority under which 
the proxy form is signed (or a duly certified copy of such 
power or authority) must be included with the proxy form.
CREST members who wish to appoint a proxy or proxies 
through the CREST electronic proxy appointment service 
may do so for the Annual General Meeting to be held 
at 11.00 am on Tuesday April 30, 2013 and any 
adjournment(s) thereof by using the procedures 
described in the CREST Manual. CREST personal 
members or other CREST sponsored members, and those 
CREST members who have appointed a voting service 
provider should refer to their CREST sponsors or voting 
service provider(s), who will be able to take the 
appropriate action on their behalf. 
Notice of Annual General Meeting continued Business Review Corporate Governance Financial Statements
Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 63
8. You may not use any electronic address provided either:
(a) in this Notice of Annual General Meeting; or 
(b)  any related documents (including the proxy form),
 to communicate with the Company for any purposes 
other than those expressly stated.
9. As at 5.00 p.m. on the day immediately prior to the date 
of posting of this Notice of Annual General Meeting, the 
Company’s issued share capital comprised 430,225,876 
ordinary shares of 1p each and 38,912,736 deferred 
shares of 19p each. Each ordinary share carries the right 
to one vote at a general meeting of the Company and, 
therefore, the total number of voting rights in the 
Company as at 5.00 p.m. on the day immediately prior 
to the date of posting of this Notice of Annual General 
Meeting is 430,225,876. The deferred shares do not carry 
the right to vote at a general meeting of the Company. 
 
EXPLANATORY MEMORANDUM
1. Items of business 2 and 3 – Peter Jackson and Enrico 
Testa have each been appointed as Directors since the 
last Annual General Meeting and therefore each of them 
retires from office in accordance with article 23.2 of the 
articles of association of the Company (the ‘Articles’) 
and will stand for reappointment.
2. Item of business 4 – Christopher Kelsall was last 
reappointed by the members at the Annual General 
Meeting of the Company held in 2010. In accordance 
with article 23.2, he will therefore retire from office at the 
Annual General Meeting and offer himself for 
reappointment.
3. Item of business 6 – this resolution, in accordance with 
section 551 of the 2006 Act, permits the Directors to allot 
securities pursuant to a general authority (not restricted 
to allotments for cash on a non pre-emptive basis which 
are regulated by section 570 of the 2006 Act). The 
proposed authority represents an authority to allot 
Relevant Securities with an aggregate nominal value 
of £1,290,677, being approximately 30% of the issued 
ordinary share capital of the Company as at the date 
of the Annual General Meeting. This authority will expire 
at the next Annual General Meeting of the Company.
4. Item of business 7 – this resolution authorises the Directors 
to allot the securities it is authorised to allot pursuant to 
resolution 6 for cash on a non pre-emptive basis. This 
authority represents approximately 30% of the issued 
ordinary share capital of the Company as at the date of 
the Annual General Meeting. This authority will expire at 
the next Annual General Meeting of the Company.
5. The Directors cannot issue securities representing more 
than 30% of issued ordinary share capital of the 
Company pursuant to resolutions 6 and 7. Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012 64
Corporate directory
Annual Report and Financial Statements
For the 12 months ended 31 December 2012
Directors
Mr. Keith Henry Chairman, appointed 16 January 2012
Dr. Bill Higgs Chief Executive, appointed 19 March 2012
Mr. Sergio Morandi Chief Operating Officer, appointed 17 September 2007
Mr. Chris Kelsall Finance Director, appointed 1 July 2009
Mr. Matthew Clarke Non-Executive Director, appointed 13 October 2011
Dr. Peter Jackson Non-Executive Director, appointed 1 January 2013
Mr. Enrico (Chicco) Testa Non-Executive Director, appointed 10 October 2012
Mr. Jake Ulrich Non-Executive Director, appointed 16 January 2012
Country of Incorporation of Parent Company  
and Domicile
Great Britain
Legal Form
Public limited company
Registered Office
33 St James’s Square
LONDON SW1Y 4JS
Company Secretary
Emcee Nominees Limited 
44 Southampton Buildings  
LONDON WC2A 1AP
Nominated Adviser
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
LONDON EC2Y 9LY 
Joint Brokers
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
LONDON EC2Y 9LY
RBC Capital Markets
Thames Court
One Queenhithe (Upper Thames Street)
LONDON EC4V 3DQ
Auditors
BDO LLP
55 Baker Street
LONDON W1U 7EU
PR Agency
FTI Consulting
Holborn Gate
26 Southampton Buildings
LONDON WC2A 1PB
Registrar
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
KENT, BR3 4TU
Legal Advisers
Memery Crystal
44 Southampton Buildings
LONDON WC2A 1AP
Studio Legale
Ughi E Nunziante
via Venti Settembre, 1
00187 ROME FSC Logo  Mediterranean Oil & Gas Plc / Annual Report & Accounts 2012
Registered office
33 St James’s Square 
London UK 
SW1Y 4JS
Contact
Tel: +44 (0)203 178 5807
Email: info@medoilgas.com
www.medoilgas.com
Operations office – Rome
Via Cornelia 498 
Rome 00166 
Italy
London office
33 St James’s Square 
London UK 
SW1Y 4JS