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         annual report and accounts 2009 lansdowne house
57 berkeley square
london  w1j 6er
united kingdom
t 44 020 7408 9500
f 44 020 7408 9501
wwwregalpetroleumcouk
regal petroleum plc annual report and accounts 2009 17759	 070510	 proof	5 17759	 070510	 proof	5
 
regal petroleum plc
glossary
 company secretary and registered office
	c 	 phillips
lansdowne house
57 berkeley square
london w1j 6er
united kingdom
 auditors
	deloitte 	 llp
2 new street square
london ec4a 3bz
united kingdom
 bankers
	bank 	 of	 scotland	 corporate
london chief office
155 bishopsgate
london ec2m 3yb
united kingdom
 solicitors
	pinsent 	 masons	 llp
city point
1 ropemaker street
london ec2y 9ah
united kingdom
 nominated advisor
	strand 	 hanson	 limited
26 mount row
london w1k 3sq
united kingdom
 
 joint broker
	merrill 	 lynch	 international
merrill lynch financial centre
2 king edward street
london ec1a 1hq
united kingdom
 joint broker
	rbs 	 hoare	 govett
250 bishopsgate
london ec2m 4aa
united kingdom
 joint broker
	mirabaud 	 securities	 llp
21 st james’s square
london sw1y 4jp
united kingdom
 share registry
	computershare 	 investors	 services	 plc
the pavilions
bridgwater road
bristol bs99 6zy
united kingdom
 pr advisors
	citigate 	 dewe	 rogerson
3 london wall buildings
london ec2m 5sy
united kingdom
 km
kilometres
 km
2
square kilometres
 m
3
d
cubic metres per day
 mm
3
thousand cubic metres
 mm
3
d
thousand cubic metres per day
 mmcfd
million cubic feet per day
 bbl
barrel
 boepd
barrels of oil equivalent per day
 mmboe
million barrels of oil equivalent
 
united states dollar
 hp
horsepower
advisors 01
our performance 
chairman’s statement 
chief executives review
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our business 
highlights
realising
potential
regal petroleum plc is an independent
united kingdom based group focused on gas field 
development in ukraine in addition the group has 
oil and gas exploration assets under appraisal in 
romania and egypt
highlights
financial
■ 	 revenues at 199 million are up 74 on the prior year
and gross profit has increased 136
■ 	 gas sales volumes are up 64 on 2008 contributing to
a 120 rise in gas revenue over the previous year
■ 	 1186 million in cash and no debt
operational
■ 	 drilling performance improvement from previous drilling on
the licences
■ 	 production has risen from below 500 boepd in the fourth 
quarter of 2008 to over 2000 boepd by january 2010
■ 	 four new production wells were spud in ukraine
during 2009
■ 	 two million manhours of staff and contractor time
recorded without any lost time incidents to date
contents
our business
02 group at a glance
05 chairman’s statement
06 chief executive officer’s statement
15  chief operating officer’s review
23  finance review
26  operating environment principal 
risks and uncertainties
our governance
30  board of directors
32  corporate governance statement
33  directors’ report
our financials
37  independent auditors’ report
38  consolidated income statement
38  consolidated statement of 
comprehensive income
38  company statement of 
comprehensive income
39  consolidated balance sheet
40  consolidated statement of
changes in equity
41  consolidated cash flow statement
42  company balance sheet
43  company statement of changes
in equity
44  company cash flow statement
45  notes
ibc  advisorsglossary 02
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our business
group at a glance
our
operations
ukraine
■ 5 new generation wells spud to date
■ up to four times faster drilling to equivalent depth
with new rigs
■ more than two years and 2 million manhours without a 
lost time incident
■ gas production 163983 m
3
d 
■ condensate production 425 m
3
d
■ 169 mmboe reserves
■ reserves review in progress
■ positive earnings outlook
romania
■ 1047 km of 2d seismic acquired
■ shallow gas exploration well planned for 2010
egypt
■ further technical evaluation of licence area
■ drilling of an additional well planned for 2010 03
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our business 
group at a glance
uk head o ffice
find out more at
wwwregalpetroleumcouk
ukraine
production and 
appraisal
■ 	 mexgol and
sv fields 
— 100 regal  
owned and  
operated
roman ia
exploration and 
appraisal
■ 	 barlad block 
— 100 regal 
owned and 
operated
■ 	 suceava block 
— 50 non
operated interest
egy pt
exploration and 
appraisal
■ 	 east ras budran 
concession 
— 25 non
operated interest 04
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our performance 
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our business 
chairman’s statement
january 2010 alastair brings a wealth of oil and gas 
experience predominantly from his time with bp where prior to 
his retirement in 2009 he was leader of bp’s russia business 
unit and was bp’s shareholder representative for the tnkbp 
joint venture he holds a phd in geology from the university of 
edinburgh an mba from the university of strathclyde and an 
ma in natural sciences from the university of cambridge 
consequently alastair adds real depth of technical and regional 
knowledge to the nonexecutive team
also in january 2010 lord anthony st john of bletso and  
mr antonio mozetic stepped down as nonexecutive directors 
of the company due to other business and personal 
commitments on behalf of the board i would like to sincerely 
thank both anthony and tony for their valued contributions and 
advice during their tenure and we wish them well in the future
the board now comprises three executive and three non
executive directors whose details and experience are set out 
on pages 30 and 31
outlook
as detailed later in this report the considerable experience gained 
whilst drilling the new generation wells in ukraine and developing 
the novel techniques to improve their perforation has enabled us 
to reevaluate our immediate strategy whereby the majority of our 
resources will be concentrated on developing the bsands two of 
the initial four wells have recently been brought into production 
and the two remaining wells are expected to be completed shortly 
during 2010 we plan to drill two additional wells in ukraine two 
in romania and one in egypt 
although global financial markets are expected to remain 
challenging the team at regal have the skills and experience 
necessary to build on the operational progress recently 
achieved and to continue to grow the company in future years 
the results achieved to date are thanks to the dedication 
professionalism and commitment of our staff and contractors 
and also with the support of our shareholders on behalf of the 
board i would like to offer my sincere appreciation to them all
i am pleased to introduce the 2009 annual report and accounts 
despite a very difficult worldwide financial environment the 
company has continued to pursue its strategy of investment and 
growth through the application of modern technology supported 
by its team of highly experienced industry professionals revenues 
at 199 million are up 74 on the prior year despite a lower 
average condensate price gross profit has increased 136 and 
the net loss after tax has been cut from 508 million in 2008 to 
98 million in 2009 although the quantum of this improvement in 
the company’s financial performance is relatively modest for now 
it is clear that a number of major milestones were successfully 
achieved during 2009 since the year end we have seen 
significant success with the testing of the sv58 well which if 
replicated through the planned 2010 programme offers a positive 
earnings outlook technical challenges remain in accessing the 
deeper reservoirs and we intend to focus our investment 
programme on building production whilst evaluating the 
considerable resource upside in a cost effective manner the first 
four of a series of new generation wells were spud on regal’s 
ukrainian licences during the year using two modern 2000 hp 
topdrive rigs contracted from saipem spa the introduction of 
these new rigs has not only enabled us to substantially reduce the 
time historically taken to drill these wells in ukraine but also 
affords us the opportunity to appraise the deeper potential 
resources our current strategy of focussing in the near term on 
developing the shallower bsands to increase our gas production 
bodes well in a market that is heavily dependent on imported gas 
and where the ukrainian government is keen to encourage the 
growth of domestic production
board changes
i have pleasure in welcoming dr alastair graham to the board 
as a nonexecutive director following his appointment in 
a number of 
milestones 
achieved
our business
chairman’s statement
keith henry 06
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david greer obe
continue to drive the company forward during 2009 four new 
generation wells were spud in ukraine and by january 2010 
production had risen to 2072 boepd following the hookup  
of sv58
health safety environment and security
regal is committed to maintaining the highest standards of 
health safety environment and security hses and the 
effective management of these areas is an intrinsic element of the 
overall business ethos through strict enforcement of the 
company’s hses management system together with regular 
management meetings training and the appointment of dedicated 
safety professionals the company strives to ensure that the 
impact of its business activities on its staff contractors and the 
environment is as low as is reasonably practicable regal reports 
safety and environmental performance in accordance with the 
association of oil and gas producers ogp guidelines
the number of safe manhours worked by staff and contractors 
in 2009 totalled 900549 manhours with no lost time 
incidents reported during the year this brought the cumulative 
total without a lost time incident to over 16 million hours by  
31 december 2009 and since this date the total has exceeded 
20 million hours over two years without a lost time incident  
no environmental incidents were recorded during the year
introduction
2009 was a year of sustained progress in ukraine most notably 
with the spudding of the first wells with the new topdrive drilling 
rigs work on the 3d subsurface model was further refined 
following the completion of seismic acquisition in 2008 and  
with data from the new wells governance procedures were 
strengthened further and historic regulatory matters were finally 
brought to a close the worldwide financial crisis and the resultant 
contraction in availability of investment capital threatened to derail 
regal’s development programme but the support shown by 
shareholders in the 105 million gross capital raising through a 
secondary placing on 1 july 2009 coupled with the funds raised 
in the preceding year has enabled the company to maintain 
momentum and to continue to build upon the achievements of  
last year 
the application of new technology and the appointment of 
experienced professionals with a wealth of industry experience 
driving the 
company  
forward 07
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technological
achievements
reservoir technol ogy
■ acquired processed and interpreted 3d seismic
imagery over entire licensed area
■ acquired advanced petrophysical analysis and
geological modelling software for detailed reservoir 
characterisation  
■ constructed static reservoir model based on 24 wellbores 
integrated with the seismic imagery as a basis for 
volumetric estimation 
■ consequent increase in internal view of initial hydrocarbons 
in place 
■ identified previously undeveloped limestone
reservoir b24
completion technol ogy
■ custom designed and built equipment for rig and coiled 
tubing to enable deployment of high pressure hydraulic 
abrasive jet perforation to ensure reservoir access 
■ wellbore inflow performance enhancement through 
deployment of “minifrac” stimulation of the rock face
■ completion designs allowing for zonal isolation and 
selective production
■ broadened completion strategy to include slotted liners set 
below 5400 metres depth
production technol ogy
■ launched wellhead compression project to increase 
ultimate recovery
■ launched liquid vapour recovery project to monetise
waste gas
■ identified and implemented production enhancement 
project portfolio on existing wells 09
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our business 
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ke y 
fact s and fig ures
105m of new capital raised
year end cash balance 1186m
revenues up 74 on prior year
capital expenditure of 949m
gas realised price 244 per mm
3 10
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our business
chief executive officer’s statement continued
ukrainian
markets
ukraine overview
■ 	 longterm production licence
■ 	 significant existing reserves with clear sizeable
upside potential
■ 	 experience  technology to deliver seasoned industry 
professionals quality ukrainian team
■ 	 strategic location — approximately 80 of russian gas 
exported to the european union crosses ukraine
■ 	 encouraging business environment
■ 	 good fiscal environment encouraging deep
gas exploitation
■ 	 revenues indirectly linked to 
■ 	 structured to repatriate profits
attractive gas pricing 
european market very different to north america
■ 	 higher prices — oil price linked
■ 	 demand rising
■ 	 eastern europe joined eu
■ 	 north sea production decline
■ 	 nearly 80 of ukrainian demand satisfied by imported gas 
from russia domestic production encouraged 11
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however the plan is to modify our forward programme in the 
short term to optimise production 
in romania work continues on both of regal’s licence interests 
on barlad which is 100 regal owned and operated a further 
1047 km of 2d seismic was acquired and is being interpreted 
in advance of a further shallow gas exploration well planned  
for later in 2010 this will discharge the remaining work 
commitment for the licence however additional studies and 
field work are being undertaken to determine whether deeper 
prospects may reside within possible shale deposits of the 
silurian period in the suceava concession which is 50 owned 
by regal and operated by aurelian oil  gas plc 2d seismic 
data acquired during the year has resulted in the identification  
of a gas prospect located 25 km to the east of the vicsani 
discovery in the neighbouring brodina concession which is also 
operated by aurelian oil  gas plc it is intended to drill a well to 
evaluate this gas prospect later in 2010
in the east ras budran licence in egypt in which regal holds a 
25 interest and is operated by apache a workover on well 
erba1x to replace an electrical submersible pump was 
undertaken however technical challenges encountered by 
apache resulted in operations being suspended the 2010 plan 
for egypt includes further technical evaluation of the licence and 
the drilling of an additional well 
ukraine market and regal’s approach to 
unlocking value
ukraine is very well positioned geographically bridging the gas 
supplies of russia and the markets of europe with the 
european union “eu” on ukraine’s western border and russia 
on the east approximately 80 of russian gas exports to the 
eu travel via pipeline across the country and gas infrastructure 
is extensive regal is confident about the domestic demand for 
its gas as the expected production from the mexgol and sv 
licences rises consumption in ukraine over the last 15 years or 
so has been reasonably static with nearly 80 of demand being 
satisfied by imported gas regal’s predicted increase in 
2009 — a year in review
ukraine continues to be by far the main focus of operational 
activity and investment the thrust of regal’s strategy is to apply 
modern technology supported by highly experienced industry 
professionals in a region that has not hitherto seen such 
widespread application the first of a planned series of new
generation wells was spud in the first quarter of 2009 two new 
topdrive 2000 hp drilling rigs were contracted from saipem 
spa eni group and four wells were spud during the year — 
mex106 sv58 sv61 and sv66 drilling performance has 
outstripped all previous drilling activity on the licences up to four 
times faster for equivalent depth and it is expected that as a 
result of the learning acquired new wells should be drilled faster 
resulting in future cost reductions furthermore the new wells 
have been able to penetrate deeper owing to the capacity of the 
new rigs and the company has started to gain data on possible 
upside from the tournasian and devonian age potential reservoirs 
there has inevitably been some degree of initial teething 
problems and challenges but these are considered to be  
learning curve frustrations rather than fundamental problems  
and are to be expected in the first few wells drilled with such  
new technology these are the initial wells in a planned long term 
programme that is expected to continue into and beyond the  
next decade however given the quality and experience of the 
operations team on the ground supported by senior professionals 
in london solutions have been found most notably in the jet 
perforating technique which was first applied to sv58 following 
an intermittent and poor flow from this well when first perforated 
using local conventional guns a liquidised sandbased jet
perforating process successfully trialled on two thin bsands was 
subsequently rolled out over the remaining target reservoirs this 
was further enhanced with stimtube fracturing again a first in the 
ukraine resulting in significant improvements in production rates 
the field is relatively deep and the stratigraphic nature of the 
reservoirs complex but the structure is large and geographically 
extensive the challenge now is to unlock the upside potential 
that is believed to exist in both the b and tsands with each new 
well providing further refinement of our geological understanding  12
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our business
chief executive officer’s statement continued
amendments to the price cap and correspondingly regal’s 
realised price had been made the realised gas price for regal 
in 2009 was higher than the imported price
future strategy
during 2009 regal continued to pursue the strategy that was 
established during the previous year in the development of its 
ukrainian assets despite the worldwide recession and resultant 
stemming of liquidity in global financial markets that has tested 
many companies regal has continued to follow its initial 
objectives to try to unlock the true value of its ukrainian assets 
this foundation should provide a stable platform for significant 
future growth in production and increased revenues with such 
increasing production giving a positive earnings outlook the 
company continues to have no debt and sufficient cash and 
materials to maintain operating activity into the foreseeable future
however the experience gained in the drilling of the first four new 
generation wells and particularly in drilling to the deeper sections 
in the wells on the sv field where drilling conditions have proven 
to be challenging at depth has caused the company to re
evaluate and refine its objectives for the development of the 
ukrainian field in this regard the company has determined that 
its immediate primary focus should be on securing production 
from the bsands reservoirs in both the mexgol and sv fields 
appraisal of the t and dsands in the mexgol field will be 
carried out on the mex106 well where workover operations are 
planned to complete the perforation of the b t and dsands 
using advanced perforation techniques and to replace the well 
completion it is considered that by focussing on increasing 
production from the bsands and the resultant operational 
revenue in the near term the company will be able to establish 
sustainable business growth by conserving and ultimately building 
its cash position and retaining maximum optionality whilst 
continuing to evaluate the most effective method of appraising 
the potential upside of the deeper t and dsands in the future
accordingly the company has determined to complete the sv66 
well as a bsands production well whilst deferring the appraisal 
of the t and dsands in this and subsequent new wells to allow 
further work to be undertaken in the assessment of the most 
effective method of appraising the deeper t and dsands  
i would like to thank our shareholders for their continued 
support particularly during such a turbulent period regal is also 
indebted to the commitment and hard work of all of its staff and 
contractors who have worked tirelessly and professionally to 
understand the subsurface and thereby begin to realise the true 
potential of our operated assets in ukraine and romania
production as each successful well is brought into production 
could in due course be material in terms of domestic supply but 
will still be small in comparison with imported volumes which 
heavily influence domestic prices importantly ukrainian fiscal 
terms actively encourage exploitation of domestic reserves and 
particularly through the royalty regime the recovery of deep gas 
and condensate
production has risen from below 500 boepd in the fourth 
quarter of 2008 to over 2000 boepd by january 2010 this 
represents the first contributions from the significant drilling 
investment which began in earnest in 2009 the overall 
philosophy of the company is to use modern technology much 
of which has not been applied in ukraine previously to drill wells 
both faster and deeper thereby increasing and accelerating 
production and consequently revenues this approach if 
successful should enhance the economic value of anticipated 
future cash flows and is expected to result in earlier enhanced 
revenues than from conventional local drilling practice in terms 
of investment the bulk of the cost lies in the capital expenditure 
for the drilling and completion of these new wells conversely 
the surface infrastructure and variable operating costs are 
relatively low since the gas and condensate require little surface 
treatment and the sales of gas are made from the licence 
boundary free of additional transportation tariffs or costs
the political situation in ukraine has continued to attract market 
attention in the runup to the presidential elections which 
concluded with the former prime minister mr viktor yanukovych 
taking office as president in february 2010 and a new governing 
coalition being formed regal has operated with the support of 
both regional and national government for a number of years 
including the period when mr yanukovych held the position of 
prime minister prior to the “orange revolution” and accordingly 
the company remains confident in the business environment and 
is committed to supporting the development of ukraine and to 
maintaining a strong relationship with the government at all levels
following the formation of the new government there are 
already indications of an improvement in relations between 
ukraine and russia this is reflected in the recent dialogue 
between their respective governments which has resulted in a 
review of the current imported gas price from russia and a fall in 
the imported gas price from russia to ukraine for the remainder 
of 2010 as a consequence the weighted average anticipated 
price for 2010 is likely to be similar or slightly higher than the 
average price for 2009 because the year to date price for 2010 
has been considerably higher than the 2009 average price it 
should be noted that the imported price is distinct from the 
domestic internal prices that are capped by the ukrainian 
authorities as at the time of preparing this report no  13
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our business 
chief executive officer’s statement
“the application of new technology and the appointment 
of experienced professionals with a wealth of industry 
experience continue to drive the company forward during 
2009 four new generation wells were spud in ukraine 
and by january 2010 production had risen to 2072 boepd 
following the hookup of sv58”  14
regal petroleum plc annual report and accounts 2009
17759	 070510	 proof	5 “the first contribution from the new generation wells 
commenced in october 2009 from mex106 followed by 
sv58 with initial production from this well commencing in 
january 2010 the combination of a rig equipped with high 
performance equipment and specifically designed bits has 
increased the rate of penetration” 
15
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our business 
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our business
chief operating officer’s review
harry verkuil
regal’s assets
regal’s assets are located in three countries ukraine romania 
and egypt 
the primary asset is a large gas and condensate field extending 
over two production licences 100 regal owned and operated 
in north eastern ukraine the reserves were independently 
audited by ryder scott in 2005 who provided an estimate for 
proven and probable “2p” reserves of 169 mmboe 
regal also owns two large exploration licences in romania — 
the barlad and suceava blocks these are held 100 and 
50 respectively by regal gas has been discovered on both 
blocks following exploration drilling
in addition the company owns a 25 nonoperated interest in 
the east ras budran concession in egypt which is an onshore 
block operated by apache
operationally 2009 has been a year of high activity in total four 
wells were spud two of which are now on production despite 
the challenges encountered in drilling these first wells we have 
achieved very considerable speed and efficiency improvements 
we can now also say with some confidence that we have a 
better understanding of the reservoirs and their behaviour key 
contributors to this have been the application of different 
techniques and the use of modern materials and equipment 
specifically imported into the country uppermost is the 
operational team on the ground with their experience and 
resourcefulness production started to rise in autumn 2009 and 
continued through into the first quarter of 2010 with average 
production in 2009 showing a 64 rise on that of 2008 no 
lost time incidents were incurred and a total of 900549 
manhours were recorded for the year over two million 
manhours of staff and contractor time without a lost time 
incident have now been recorded to date
 
speed and 
efficiency 
improvements 16
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our business
chief operating officer’s review continued
project areas
uk rainian 
prog ramm e
■ contracted two new topdrive 2000 hp lewco rigs
■ four wells spud during 2009 mex106 sv58 sv61 
and sv66
■ over two million manhours of staff and contractors time 
without a lost time incident have now been recorded 
to date
■ drilling performance has outstripped all previous drilling 
activity on the licences
■ subsurface model of the field completed by the end
of 2009 17
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project area
ukraine
asset overview
regal petroleum corporation limited a wholly 
owned subsidiary in the regal group holds a 
100 working interest and is the operator of 
the mekhediviskagolotvshinska “mexgol ” 
and svyrydivske “sv” fields that extend over a 
combined area of 269 km² approximately 200 
km east of kiev the two licences are adjacent 
and the interests are operated and managed as 
one field
the field is located geologically towards the 
middle of the dnieperdonets sedimentary 
basin which extends across most of northeast 
ukraine the vast majority of ukrainian gas and 
condensate production lies within this basin 
the reservoir comprises a series of gently 
dipping carboniferous sandstones of visean 
age “bsands” interbedded with shales that 
form stratigraphic traps at around 4700 metres 
below the surface with a gross thickness 
between 800 metres and 1000 metres 
analysis suggests that these deposits range 
from fluvial to deltaic in origin below these 
reservoirs is a thick sequence of shale above 
deeper similar sandstones which are 
encountered at a depth of around 5800 
metres these are of tournasian age 
“tsands” and also sandstones from the older 
devonian period “dsands” 
the field was originally discovered in the 1960s 
during the soviet era with wells being drilled 
sporadically over the years since then by state 
companies only limited investment had been 
made in developing the asset further with 
equally limited consequential production 
between 2000 and 2004 the former regal
chernihivnaftagasgeologia cngg joint 
venture drilled two developmentappraisal 
wells mex102 and sv52 and successfully 
completed three workovers on soviet era wells 
the ukrainian government declared the fields 
commercial in december 2003 and 20 year 
production licences mexgol and sv were 
awarded to regal in july 2004 
over 20 wells had been drilled into the 
bsands prior to 2004 resulting in the ryder 
scott 2p reserves estimate in 2005 of 169 
mmboe however only five wells had managed 
to penetrate the deeper tsands sequence and 
none of the rigs used at the time had the 
capacity to drill all the way through this tsands 
sequence and into the deeper dsands the 
five wells provided at the time a tantalising 
glimpse of potential upside by the discovery of 
gas where in some wells individual tsands 
were tested and flowed at between 20 and 80 
mm³d it was not until the acquisition of 3d 
seismic data and its interpretation in 2008 that 
the huge lateral extent of the tsands and 
underlying dsands became apparent the new 
generation wells in 2009 have targeted 
production from the bsands reservoirs but 
have also been drilled with the intention of 
properly appraising these deeper t and 
dsands deposits for the first time regal 
believes that there is significant upside 
potential from these deeper sands and the  18
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our business
chief operating officer’s review continued
2009 and after reaching td at 6309 metres in september 
2009 was moved to the sv66 location nearby which was 
spud in november 2009 consequently four new production 
wells were spud on the company’s ukrainian licences 
during 2009
drilling performance has been striking previous local rigs had 
typically taken between a year and two years to reach depths 
of 5000 to 5500 metres on regal’s mexgol and sv 
licences mex106 took little more than 120 days to reach 
comparable depth and there has been an improvement in 
drilling performance with each successive well the 
combination of a rig equipped with high performance 
equipment including drilling motors turbines and purposely 
selected and specifically designed bits such as diamond 
impregnated and polycrystalline diamond compact pdc bits 
has increased the rate of penetration dramatically reduced 
the number of bits required and increased the bit on bottom 
time and bit life the new rigs also have the capacity to drill 
deeper with mex106 drilled to 6020 metres inside seven 
months and the successive wells even faster sv58 reached 
6309 metres and the fourth well sv66 reached 5000 
metres in less than 90 days before drilling deeper which is 
more than four times faster than with the previous local rigs 
lessons learned from each successive well should enable 
future wells to be drilled faster resulting in lower drilling time 
and consequent cost reduction the main objective of 
mex106 was to determine the productivity of the bsands 
target and to bring this into production wireline logs identified 
33 metres of net reservoir in the bsands sequence between 
4800 and 5250 metres depth in addition to this a further 11 
metres of net reservoir was identified in the secondary 
tsand objective at 5830 metres the well encountered for 
the first time on this field potential devonian reservoirs and 
27 metres of net reservoir was logged between this depth 
and the bottom of the well however whilst perforating to flow 
the well in the deeper section one of the perforation guns 
became lodged in the production tubing thereby restricting 
company aims to continue to appraise and hopefully produce 
from such deeper sands in the future
production
2009 commenced with a significant production increase from 
mex102 which had been recently worked over and brought 
back on line in late 2008 the first contribution from the 
newgeneration wells commenced in october 2009 from 
mex106 followed by sv58 with initial production from this  
well commencing in january 2010 at present the main 
contribution from both wells is from the bsands sequence in 
mex106 an intervention is required to remove an obstruction 
from the production tubing that is preventing access to the 
lower t and dsand sections of the well and in sv58 high 
pressures in the deeper sections of the well have restricted 
access to those sections 
the company’s average production over the 12 month period 
to 31 december 2009 was 163982 m³d 579 mmcfd of 
gas and 425 m³d of condensate which equates to a 
combined total oil equivalent of 1232 boepd which is a 64 
increase on the previous year the monthly average production 
with both mex106 and sv58 on line increased to 1927 
boepd in january 2010 this growth is significant as it 
represents a real turning point from below 500 boepd in late 
2008 reflecting the tangible effect of investment starting to 
produce results
field development
regal contracted two new topdrive 2000 hp lewco rigs 
from saipem spa in 2008 on a long term basis these rigs 
arrived in the ukraine on schedule to spud the first of the 
newgeneration deep gas and condensate production wells in 
early 2009 the first rig spudded mex106 in the western 
side of the field in january 2009 and after reaching target 
depth td of 6020 metres in july 2009 the rig was 
relocated to the eastern side of the field to spud sv61 in 
september 2009 the second rig spudded sv58 in february 
ukraine continued 19
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access to the lower part of the well only the upper reservoirs 
in mex106 therefore were initially brought on stream flow 
from these reservoirs had built up to approximately 75000 
m³day 26 mmcfd of gas and to 75 boepd of condensate 
towards the end of the year it is the intention to remove the 
obstruction through workover activities in q2 2010
the second well sv58 also encountered potential reservoirs 
in the b t and dsands with estimated net pay of 60 metres 
from the bsands to the t3 sands the available logs from 
the t4 sands to the dsands show an estimated pay 
thickness of 65 metres in addition to similar sands to those 
encountered in the mex106 well a 120 metre thick 
limestone was also discovered towards the lower part of the 
bsands sequence this well proved to be a real challenge as 
several overpressured gaskicks had to be controlled whilst 
drilling with the first encountered upon entering the 
limestone the mudweight was loaded to a specific gravity of 
195 in order to control the well after this well section was 
cased it was decided to defer bringing the lower part of the 
well into production pending further evaluation of the possible 
expected high pressures consequently only the bsands 
sequence was selectively perforated the well test indicated a 
low connectivity with the formation and a higher than 
expected ratio of gas to condensate to increase the 
connectivity and productivity of the well a jet perforating “trial” 
was undertaken whereby perforations were made using an 
abrasive jet slurry of water and sand this technique resulted 
in a significant increase in productivity in the test zone the 
well was taken on production while preparing for a fullscale 
jet perforating intervention in combination with the use of 
other advanced perforation techniques to further enhance 
production
the third well sv61 was spudded in september 2009 and 
drilled to a total depth of 5969 metres which was reached on 
12 january 2010 a total of 22 metres of net pay was logged 
over the bsands b20 to the top of the b23 a slotted 
liner was run to case the 6 hole section the jet perforating 
trial was extended to sv61 where a pipe conveyed jet 
perforating programme was executed to perforate the 7 
casing using the drilling rig equipment 
the fourth well sv66 was spudded on 23 november 2009 
and drilled to a depth of 5894 metres and the fifth well mex 
120 was spudded on 12 april 2010
the subsurface model of the field was completed by the end 
of 2009 the model is being continuously updated with the 
data obtained from the newly drilled wells to refine the model 
and to increase its accuracy  20
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romania
the company has continued to explore its romanian assets the 
barlad block regal 100 and operator and the suceava block 
regal 50 nonoperated
in the barlad block 1047 km of 2d seismic was acquired 
between november 2009 and early january 2010 with an 
interruption due to the severe winter weather the remaining 
licence commitment on this block at year end was the drilling of 
an additional well and this well is scheduled for spud in q3 
2010 a nine month extension on this drilling commitment was 
granted to allow the evaluation of the new seismic data so as to 
more accurately position this exploration well towards the end 
of the year work commenced on assessing the shale gas 
potential of the block the initial reservoir target within the 
concession area is the shallower palaeozoic formation which 
has six potential structural leads that can also be seen in the 
deeper silurian on 2d seismic data  additional confirmation of 
the presence of the silurian formation has been confirmed by 
the regal se1 well in the adjacent suceava block where the 
formation was intercepted at a depth of 1950 metres based on 
the information available all the necessary requirements for a 
successful shale gas play can be found within the barlad block 
in the suceava block the 2d seismic data acquired during the 
year has enabled the identification of a modest sized gas 
prospect 25 km to the east of the vicsani discovery in the 
neighbouring brodina concession also operated by aurelian oil 
 gas plc it is intended to drill a shallow gas well to meet the 
remaining work programme obligations during 2010 work has 
established that the vicsani field in the adjacent brodina 
concession extends into the suceava block and further work to 
assess the relative contribution of reserves from the suceava 
and brodina concessions respectively is currently underway it is 
anticipated that a net share of between 75 and 15 of the 
field’s production will be assigned to regal on settlement of a 
proportional contribution to the historic cost associated with  
this field 
egypt
the company holds a 25 nonoperated interest in the east 
ras budran concession in the gulf of suez egypt through a 
joint venture with apache as operator exploration and appraisal 
work has continued at the concession although the overall level 
of activity has been relatively low this year the main focus has 
been the identification of new prospects data was acquired to 
develop a digital elevation model dem of an area which was 
less accessible to seismic acquisition this was followed by a 
ground control point gcp survey the georectification 
interpretation and field mapping was ongoing at the year end  
in addition a survey was undertaken on the fractured eocene 
carbonates in the east ras budran area to further understand 
reservoir behaviour 
a workover on the erba1x well drilled in 2007 was required 
to replace a failed electric submersible pump esp owing to 
difficulties experienced pulling the esp operations were 
suspended
the 2010 plan for egypt includes the further development of 
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robert wilde
“revenues are up 74 on the prior year and gross profit 
has increased 136 this year’s results begin to 
reveal a real shift in the company’s fortunes as the 
investment to date starts to make a positive impact on
the income statement” 
1822 million this had risen from 878 million the previous 
year end since during 2009 949 million was incurred on 
capital expenditure of which 98 related to development 
expenditure in ukraine at 31 december 2009 the company 
held 201 million in stock being mostly longlead items held for 
future drilling such as casing drill bits and christmas trees the 
receivables include 168 million of purchase tax which is 
recoverable against sales tax on future sales revenue
the majority of regal’s turnover is derived from gas sales from 
its ukrainian gas and condensate field the ukrainian 
government sets the gas price cap typically on an annual basis 
for gas sold to industrial and domestic retail customers such 
gas prices are driven by the imported us dollarbased gas 
price from russia since the majority of ukrainian consumption 
is satisfied by russian imports approximately 20 of ukrainian 
demand is met from domestic production with the balance being 
supplied by gazprom since the fall of communism in 1992 
ukraine has enjoyed a discounted gas price from russia rather 
than the european market price in recent years this discounted 
price has been converging with the european market price 
which when coupled with higher oil prices in recent years has 
driven a higher market price for gas and has led to a dramatic 
year on year increase in ukrainian gas prices this trend 
continued into 2009 where regal realised an average price for 
its gas equivalent to 244 per mm³ being a 31 rise on the 
previous year furthermore gas sales volumes are up 64 on 
2008 the combined effect is a 120 rise in gas revenue over 
the previous year condensate prices are achieved at regular 
overview
in last year’s annual report the emphasis of the finance 
review was on the strength of the balance sheet being focused 
both on cash and development capital expenditure through the 
support of regal’s shareholders 105 million gross of new 
capital was raised by the secondary placing of 104000000 
new shares at 61 pence per share on 1 july 2009 as at  
31 december 2009 regal held 1186 million in cash 201 
million in stock and had no debt whilst the balance sheet 
strength remains the major aspect of the financial statements 
for 2009 this year’s results begin to reveal a real shift in the 
company’s fortunes as the investment to date starts to make a 
positive impact on the income statement revenues are up 74 
on the prior year and gross profit has increased 136 the net 
loss after tax has been cut from 508 million in 2008 to 98 
million in 2009 whilst these numbers are modest when 
compared to future expectations the change is significant 
given the further increase in production following the year end 
2010 appears to be gaining momentum towards a positive 
earnings outlook
operational performance
at 31 december 2009 regal held noncurrent assets of 
towards positive 
earnings 24
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with the provisions of ifrs 2 and relates to share options issued 
to directors and staff the total number of shares under option 
at the end of the year was 7950229 
the income tax expense of 29 million includes a net deferred 
tax charge of 28 million reflecting the accelerated capital 
allowances on expenditure in ukraine 
regal manages its treasury function by forecasting short and 
longer term cash flows by currency these are then used to 
determine estimated functional need by currency denomination 
and deposits are held accordingly such deposits are also placed 
on varying term deposits so as to optimise interest income 
investment revenue of 09 million for 2009 being derived from 
funds held on deposit is significantly lower than for 2008 55 
million whilst this is attributable in part to lower average cash 
balances held it is more notably influenced by the markedly 
reduced interest margins available to depositors as a result of 
the recent financial crisis the foreign exchange gain of 15 
million contrasts sharply with last year’s loss of 289 million 
although the majority of the latter was unrealised and reflected 
the extreme currency movements towards the end of 2008
key performance indicators
the company has devised a strategy to monetise the ukrainian 
gas and condensate assets by means of a detailed field 
development and implementation programme and to assess its 
performance against a set of performance criteria the board 
and management are incentivised to deliver shareholder value in 
line with this strategy under the new long term incentive 
programme ltip options previously included under the 2004 
share option plan have been modified and new options granted 
subject to the satisfactory achievement of a comprehensive set 
of performance criteria over target vesting periods which have 
been established the performance criteria encompasses inter 
alia certain financial operationaldrilling corporate health and 
safety targets and completion of a new independent reserves 
report in this manner the interests of the company’s 
management and staff are aligned to shareholder interests
auctions and are therefore effectively sold at a spot price to a 
number of customers this price is driven by the prevailing oil 
price and fluctuates depending on demand and season 
occasionally such as during the late summer harvest period 
condensate prices can exceed oil prices the average price 
realised for 2009 was 57bbl being a 32 fall on 2008 
following the collapse in oil prices that had seen a peak of over 
140bbl in the summer of 2008 mitigating this condensate 
sales volumes rose 45 and as such overall condensate 
revenue rose 9
cost of sales includes government royalties the ukrainian 
government incentivises the exploitation of deeper resources by 
reducing the royalty rate on production that is sourced from 
below 5000 metres the income statement includes a lower 
combined royalty rate than in the previous year for this reason 
and also because of the lower price realised on the condensate 
sales reflecting the lower oil prices generally consequently 
although sales have risen by 74 cost of sales has risen by 
only 10 thereby delivering a gross profit of 136 million 
being a 136 increase on 2008 variable operating costs 
remain relatively low the paradox of the company’s ukrainian 
field is that the relatively high capital cost of drilling deep wells 
is in the overall field economics somewhat mitigated by the low 
production costs and favourable fiscal regime
the income statement includes other administrative expenses  
of 151 million compared to 180 million in 2008 this  
16 decrease was largely achieved as a result of austere  
costcutting measures particularly with regard to staff and 
related costs legal fees and consultancy arrangements the 
expenses also include a charge of £06 million 1 million 
arising from the aim disciplinary committee’s decision in final 
resolution of the regulatory matters arising during the period 
2003–05 these events predate the appointment of the current 
board who are pleased to have finally divorced themselves from 
this historic episode 
the sharebased charge in the income statement of 76 million 
is a noncash item as calculated for the period in accordance  25
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“this trend continued into 2009 where regal realised an 
average price for its gas equivalent to 244 per mm
3
 being 
a 31 rise on the previous year furthermore gas sales 
volumes are up 64 on 2008 the combined effect is a 
120 rise in gas revenue over the previous year”  26
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operating environment principal risks
and uncertainties
the political situation in ukraine has continued to attract market 
attention in the runup to the presidential elections which 
concluded with the former prime minister mr viktor yanukovych 
taking office as president in february 2010 and a new 
governing coalition being formed whilst regal enjoyed good 
relations with the government when mr yanukovych was 
formerly the prime minister as with any change in government 
there are always shortterm uncertainties as new policies and 
direction take effect 
the ukrainian government is keen to develop the country’s 
domestic production of hydrocarbons since ukraine imports the 
majority of its gas needs from russia whilst this should put 
regal in a wellplaced position there is also the risk of the 
ukrainian government seeking to address this in its fiscal 
structure 
the group’s management has considerable experience of 
operating in countries which were once part of the soviet union 
consequently sharing similar customs and practices the 
operations in ukraine are also managed by a local national 
additionally the group operates within a working agreement 
with local stateowned companies under which terms for 
cooperation in relation to the development of the ukrainian 
fields have been outlined
romania is already a member of the european union and has 
moved a long way down the path of changes to the political and 
economic framework required of such a member state the 
operations in romania are managed by a local national with 
extensive experience of working in the oil and gas sector
egypt has a long and established track record of foreign 
investment into the country’s oil sector whilst the current 
government remains in power the political risks posed in this 
country are not currently considered to be significant
the company has a risk evaluation methodology in place to 
assist in the review of the risks across all material aspects of its 
business this methodology highlights technical operational 
external and fiduciary risks and assesses the level of risk and 
potential consequences it is presented to the board and audit 
committee on a quarterly basis for review to bring to their 
attention potential concerns and where possible suggest 
mitigating action key risks recognised are detailed below
financial markets and global economic outlook 
the performance of the company will be influenced by global 
economic conditions and in particular the conditions prevailing 
in the united kingdom ukraine romania and egypt the 
economies in these regions have all been subject to 
recessionary pressures during the period with the global 
economy experiencing continued difficulties during 2009 
although the financial markets have settled somewhat from the 
turmoil of late 2008 liquidity in the banking and investment 
arenas remains tighter than prior to 2008 if these pressures 
continue worsen abate or recur the company is likely to 
experience difficulty in securing debt finance if required to fund 
its longterm development strategy the group may be exposed 
to increased counterparty risk as a result of business failures in 
the countries in which it operates and will continue to be 
exposed if counterparties fail or are unable to meet their 
obligations to the group the precise nature of all the risks and 
uncertainties the group faces as a result of the current global 
financial crisis and global economic outlook cannot be predicted 
and many of these risks are outside of the group’s control
risks relating to the ukraine romania and egypt
emerging markets are subject to greater risks than those that 
are more developed including in some cases significant legal 
economic and political risks such economies may also be 
subject to rapid change and the group needs to adapt and alter 
itself as needed relatively quickly  27
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operating environment principal risks 
and uncertainties continued
the company’s realised price rising to 242mm³ from 187
mm³ in 2008 however recent political pressures may to some 
degree mitigate the size of anticipated future rises particularly in 
the short term 
given the relatively low production volumes at present 
compared to anticipated future volumes the overall project 
economics being the net present value of the future cash flows 
from the ukrainian project are far more sensitive to long term 
oil and hence gas prices than short term oil price volatility 
however shortterm volatility does affect liquidity risk as in the 
early stage of the project income streams from production 
revenues are outweighed by capital investment
production risks
producing gas and condensate reservoirs are generally 
characterised by declining production rates that vary depending 
upon reservoir characteristics and other factors any future gas 
and condensate reserves of the group production and 
therefore the group’s cash flow and income are highly 
dependent on the group’s success in efficiently developing and 
exploiting any reserves and finding or acquiring additional 
reserves the group may not be able to develop find or acquire 
reserves at acceptable costs the experience gained from the 
drilling so far highlights the increasing risk profile as regal 
targets the appraisal of the deeper potential hydrocarbons and 
consequently the accessibility of the tsands upside 
industry risks
the company’s ability to execute its strategy is subject to risks 
that are generally associated with the oil and gas industry for 
example the group’s ability to pursue and develop its projects 
and development programmes depends on a number of 
uncertainties including the availability of capital seasonal 
conditions regulatory approvals gas oil and condensate prices 
costs and drilling success as a result of these uncertainties it is 
unknown whether potential drilling locations identified on 
proposed projects will ever be drilled or whether these or any 
other potential drilling locations will be able to produce gas oil or 
condensate in addition drilling activities are subject to many 
risks including the risk that commercially productive reservoirs 
will not be discovered drilling for hydrocarbons can be 
unprofitable not only from dry holes but from productive wells 
that do not produce sufficiently to be economic in addition 
drilling and production operations may be curtailed delayed or 
cancelled as a result of other factors 
currency risk
the company’s main activities are i the significant investment 
into the development of the group’s ukrainian gas and 
condensate assets ii the production and sale of gas oil and 
condensate and iii the continued exploration for further 
hydrocarbon reserves the majority of costs and revenues are 
us dollar or euro related but with significant elements of the 
same being exposed to local currencies where possible risks 
relating to local currencies are mitigated contractually by tying 
into the us dollar and euro the placing of new shares in 
february 2008 july 2008 and july 2009 predominantly raised 
new funds in sterling for the company giving us dollar and 
euro exposure where practical a proportion of funds are 
converted into relevant currencies when known to effectively 
hedge against this exposure much of these funds were 
converted soon after receipt 
as the company moves forward with an anticipated rise in 
revenues it becomes more exposed to volatility in the hryvnia 
since revenues are received in this currency currently the 
currency does not enjoy the range of benefits of currency 
hedging instruments that are available in more developed 
economies 
oil and gas price risk
the company currently derives its revenue from the sale of 
ukrainian gas and condensate whilst these revenues are 
relatively modest because of the development stage at which 
regal finds itself these revenues are still subject to oil price 
volatility and political influence a prolonged period of low oil  
or gas prices may impact the group’s ability to maintain its long 
term investment programme with a consequent effect  
on growth rate which may impact the share price or any 
shareholder returns lower gas and condensate prices may not 
only decrease the group’s revenues on a per unit basis but also 
may reduce the amount of gas and condensate that the group 
can produce economically
although set in hryvnia ukrainian gas prices are largely dictated 
by russian us dollarbased import prices because of the 
dependency of ukraine on imported gas following the 
statement by gazprom in 2008 of its intention to converge the 
ukrainian gas prices with the higher market prices of western 
europe which are themselves intrinsically linked to the oil price 
it is likely that this will result in further upward pressure on the 
gas price as was seen with the increase in january 2009 with  29
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risks and uncertainties
risks relating to further development and 
operation of the gas fields in ukraine
the planned development of the ukrainian fields is susceptible 
to appraisal and development risk this could include but is not 
restricted to delays in delivery of equipment into ukraine failure 
of key equipment lower than expected production from the 
wells as they are brought onstream problematic wells or 
complex geology that is difficult to drill or interpret the 
generation of significant operational cash envisaged in the 
coming years from this development is dependent on the 
successful delivery and completion of the development of the 
fields furthermore the optimisation of all of the company’s 
assets is dependent on maintaining constructive relationships 
between all of our business stakeholders 
capital risk management
the group’s objective when managing capital is to safeguard 
the group’s ability to continue as a going concern in order to 
provide returns for shareholders and benefits for other 
stakeholders and to maintain an optimal capital structure to 
reduce the cost of capital 
exposure to credit liquidity and cash flow risk
the group does not currently have any outstanding loans most 
of its gas is paid for monthly in advance based on estimated 
production with a correcting settlement made in the following 
month debtors and risk of nonpayment are therefore not 
particularly significant at present creditors are more relevant as 
the capital investment gathers pace in most cases endeavours 
are made to arrange for delivery before payment for the goods is 
made but this is not always possible and a risk does exist a 
proportion of invoiced sums are often retained until delivery and 
where possible orders are placed with reputable known 
suppliers internal financial projections are regularly made based 
on the latest estimates available and various scenarios to assess 
the robustness of the liquidity of the group are run following 
the capital raised in 2009 the group currently holds sufficient 
cash for the anticipated medium term needs of the business 
whilst much of future capital need is expected to be increasingly 
derived from operational cash generated from production from 
the wells to be drilled there is a risk that insufficient operational 
cash is generated or that additional funding should the need 
arise cannot be secured 
risks relating to key personnel
regal has a relatively small team of executives and senior 
management whilst this is sufficient for a company of this 
nature there is a dependency risk relating to the loss of key 
individuals 
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regal petroleum plc annual report and accounts 2009
our governance
board of directors
1 keith henry
chairman
keith has a wealth of experience gained 
over 35 years in development construction 
and management of projects in the oil  
gas and energy industries he was chief 
executive of national power brown  root 
and kvaerner engineering and construction 
keith also held the roles of nonexecutive 
chairman at burren energy and of 
nonexecutive director at first calgary 
petroleums he was deputy chairman of 
petroleum geoservices asa from 2003 
and led the demerger as chairman of 
petrojarl asa in 2006 keith has also been 
nonexecutive director of south east 
water and enterprise oil he is currently 
chairman of helius enery and the senior 
director of sterling energy keith is a fellow 
of the royal academy of engineering and 
a chartered civil engineer with a bsc from 
london university and an msc from the 
university of birmingham 
3 robert wilde
finance director
robert has 25 years of extensive 
experience in the energy industry having 
worked in both upstream oil and gas and 
in downstream power generation his 
career with phillips petroleum ranger oil 
powergen rwe and baltic oil terminals 
has given him indepth exposure to onshore 
and offshore exploration and production 
ma ipo financial management and 
structured finance activities in the north 
sea portugal germany italy russia and 
eastern europe robert read geology  
geophysics at the royal school of mines 
imperial college london and qualified as a 
chartered accountant with ernst  young 
london
1 2 3 4 5 6
2 david greer obe
chief executive officer
david’s oil and gas career spans over 30 
years almost entirely with shell international 
exploration and production prior to joining 
regal in 2007 he has been the keystone 
to regal’s recent turnaround having 
personally recruited many former business 
colleagues or drawn on his vast network 
of relationships within the industry david 
has held a wide variety of engineering 
commercial production and senior executive 
positions in shell’s operations in the united 
kingdom the netherlands norway canada 
oman argentina the philippines and 
more recently as deputy ceo and project 
director of the sakhalin 2 project in russia 
he read civil and structural engineering at 
the university of edinburgh and is a fellow 
of the institution of mechanical engineers 
david was awarded his obe in the 2003 
new year honours list our performance 
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our governance 
board of directors
5 adrian coates
nonexecutive director
adrian joined the board in july 2008 
following retirement from hsbc bank 
where for 10 years he held the role 
of global sector head resources and 
energy group global banking and markets 
division he has wide investment banking 
experience having held senior roles in ubs 
warrior international and credit suisse 
first boston he specialised in the natural 
resources sector and his city experience 
is extensive having advised on many 
substantial corporate transactions adrian 
also serves as a nonexecutive director in 
kazakhgold group he holds an ma econ 
from cambridge university and an msc 
mba from the london business school
6 dr alastair graham
nonexecutive director
alastair has over 30 years experience in the 
oil and gas industry having held a number of 
senior management roles with bp including 
uk business development manager 
upstream mergers and acquisitions 
manager vp of oao sidanco in russia 
leader of bp’s southern north sea gas 
production business vp of bp exploration 
alaska and most recently leader of bp’s 
russia business unit and its shareholder 
representative for the tnkbp joint venture 
since retirement from bp in march 2009 
dr graham has provided consultant advisory 
services in the oil and gas sector he read 
natural sciences at cambridge university 
holds a phd in geology from the university 
of edinburgh and an mba from the 
university of strathclyde
4 harry verkuil
chief operating officer
harry’s 25 year career with shell 
international exploration and production 
exposed him to a wide variety of 
engineering operational and management 
roles in the netherlands brunei united 
kingdom pakistan india and more recently 
saudi arabia where he held the position 
of acting operations manager with south 
rub al khali company limited harry 
read mechanical engineering at hts 
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regal petroleum plc annual report and accounts 2009
our governance
corporate governance statement
companies on the alternative investment market of the london 
stock exchange are not required to comply with the combined 
code and due to its size the company is not in full compliance 
the directors however support high standards of corporate 
governance and will progressively adopt best practices in line 
with the combined code on corporate governance so far as is 
practicable
the board
the board of the company consists of a chairman three 
executive directors and two nonexecutive directors the 
composition of the board ensures that no one individual or 
group dominates the decision making process
the board is responsible to the shareholders for setting the 
direction of the company through the establishment of strategic 
objectives and key policies the board meets on a regular basis 
and considers issues of strategic direction approves major 
capital expenditure appoints and monitors senior management 
and any other matters having a material effect on the company 
presentations are made to the board by senior management on 
the activities of operations and executive directors undertake 
regular visits to operations
all directors have access to management including the 
company secretary and to such information as is needed to 
carry out their duties and responsibilities fully and effectively
furthermore all directors are entitled to seek independent 
professional advice concerning the affairs of the company at its 
expense 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 reelection by 
shareholders at least once every three years in accordance with 
the company’s articles of association
the chairman and a nonexecutive director are interested in 
ordinary shares and hold options in respect of ordinary shares 
the company does not consider that these interests which 
serve to align their interests with shareholders generally 
adversely affect their independence as nonexecutive directors
remuneration committee
the remuneration committee comprising solely independent 
nonexecutive directors and the chairman who is considered to 
be independent for this role is responsible for establishing and 
developing the company’s general policy on executive and 
senior management remuneration and determining specific 
remuneration packages for executive directors
the remuneration committee presently comprises keith henry 
chairman adrian coates and alastair graham lord st john of 
bletso and antonio mozetic resigned from this committee on  
14 january 2010 in conjunction with their resignation as 
nonexecutive directors of the company
audit committee
the audit committee comprising solely independent non
executive directors and the chairman who is considered to be 
independent for this role meets not less than 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 chief 
executive officer the finance director and a representative of 
the auditors
the audit committee presently comprises adrian coates 
chairman keith henry and alastair graham lord st john of 
bletso and antonio mozetic resigned from this committee on  
14 january 2010 in conjunction with their resignation from  
the company
nomination committee
the directors do not consider that given the size of the board it 
is appropriate to have a nomination committee the 
appropriateness of such a committee will however be kept 
under regular review by the company
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 2009 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 eighth annual meeting of the company will provide an 
opportunity for the directors to present to the shareholders a 
report on current operations and developments and enable the 
shareholders to express their views about the company’s 
business
the annual report together with other information about  
the group is available on the group’s website at  
wwwregalpetroleumcouk our performance 
chairman’s statement 
chief executives review
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33
stockcode rpt
our governance 
corporate governance statement 
directors’ report
directors’ report
the directors present their annual report and the audited 
financial statements for the year ended 31 december 2009
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 ukraine romania and 
egypt the subsidiary undertakings principally affecting the 
profits or net assets of the group are listed in note 13 to the 
financial statements
proposed dividend
the directors do not recommend the payment of a dividend 
2008 nil
policy and practice on payment of creditors 
the group and company’s policy on payment of creditors is to 
settle all amounts with its creditors on a timely basis taking into 
account the credit period given by each supplier
the group and company’s average number of days purchases 
included within trade creditors at the year end was 40 for the 
group and 28 for the company 2008 28 for group and 
company
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 officer’s statement chief operating officer’s review 
and the finance review on pages 5 to 25
capital structure
details of the authorised and issued share capital together with 
details of the movements in the company’s issued share capital 
during the year are shown in note 22 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 
there are no specific restrictions on the size of a holding nor on 
the transfer of shares which are both governed by the general 
provisions of the articles of association and prevailing 
legislation the directors are not aware of any agreements 
between holders of the company’s shares that may result in 
restrictions on the transfer of securities or on voting rights 
details of the employee long term incentive plan and the share 
option scheme are set out in note 22
no person has any special rights of control over the company’s 
share capital and all issued shares are fully paid 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 powers of directors 
are described in the main board terms of reference copies of 
which are available on request and the corporate governance 
statement on page 32
under its articles of association the company has authority to 
issue 600000000 2008 300000000 ordinary shares 
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 officer’s statement on pages 6 to 
13 the financial position of the group its cash flows and 
liquidity position are described in the finance review on pages 
23 to 25 in addition note 26 to the financial statements 
includes the group’s objectives and strategies for managing its 
capital details of its financial instruments and its exposures to 
currency interest rate and liquidity risk 
although the company has a reasonable level of funds held in 
cash and carries no debt at the end of the year it should be 
recognised that in addition to the risks identified under the 
section titled operating environment principal risks and 
uncertainties the company faces further risk and uncertainty 
with regard to the timing and volumes of production from future 
wells whilst it is the company’s intention to fund the majority of 
the planned capital expenditure for the development of its gas 
field in ukraine from future operational cash over the field life 
there is uncertainty over the precise timing and quantum of this 
operational cash this has been highlighted on the first wells 
where challenges have been met whilst accessing the deeper 
horizons 
consequently an alternative strategy to enable the company to 
survive as a going concern has been developed by the board 
whereby focus has been placed on the development of the 
lowerrisk b sands only with a view to more reliably sourcing 
cash flows in the short term and to return to deeper appraisal 
once operational cash has been increased whilst this strategy 
temporarily slows down the anticipated rampup rate in 
production it ensures that the business operates within the cash 
generated from existing production and expected future 
production from the wells currently being drilled this strategy is 
underpinned by a number of assumptions which involve making 
judgements about future events such as gas price a stable  17759	 070510	 proof	5
34
regal petroleum plc annual report and accounts 2009
fiscal regime successful drilling expected future production levels drilling schedule and drilling rig commitments the directors 
consider these assumptions to be reasonable at this time and the group’s forecasts and projections using this alternative strategy 
taking account of reasonable possible changes in the above assumptions show that the group anticipates that it should be able to 
operate within the levels of its available cash balances for the foreseeable future nevertheless circumstances may be subject to 
change both favourable and adversely 
the board’s review of the accounts budgets and forward plans leads the directors to believe that the group has sufficient 
resources to continue in operation for the foreseeable future the financial statements are therefore prepared on the going concern 
basis of accounting
post balance sheet events
post balance sheet events are described in note 29 to the financial statements
directors and directors’ interests
the directors who held office during the year were as follows
   date appointed date resigned
k henry   — —
d j greer   — —
h verkuil   — —
r wilde   — —
a coates   — —
a graham    14 january 2010 —
lord st john of bletso   — 14 january 2010
a mozetic   — 14 january 2010
the directors who held office at the end of the financial year had the following interests in the ordinary shares of the company
  interest at
  start of
  year or if later  interest interest
 class of date of  at end of at date of
 share appointment year this report
d j greer ordinary 110000 110000 510000
k henry ordinary 30000 50000 150000
a coates ordinary — 30578 77245
lord st john of bletso ordinary 106500 106500 106500
h verkuil ordinary — — 230000
r wilde ordinary — — 120000
between year end and the date of this report changes in the interests of directors are due to the exercise of share options which 
were granted under the ltip scheme in 2009
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
according to the register of directors’ interests no rights to subscribe for shares in or debentures of group companies were granted 
to any of the directors or their immediate families or exercised by them during the financial year except as indicated in note 5
directors’ indemnities
the company has made qualifying third party indemnity provisions for the benefit of its directors which were made during the year 
and remain in force at the date of this report 
our governance
directors’ report continued our performance 
chairman’s statement 
chief executives review
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35
stockcode rpt
our governance 
directors’ report
substantial shareholders
as of 23 april 2010 the company had been notified of the following interests of 3 or more in its issued share capital
      of issued
   number of  ordinary share 
substantial shareholder   shares capital
blackrock investment management   31445782 988
safeguard management   21836881 686
pope asset management   21288201 669
capital research and management company   20130202 632
henderson global investors    16052733 504
ceska sporitelna   12636067 397
seb asset management sa   11402669 358
statement of directors’ responsibilities
the directors are responsible for preparing the annual report 
and the financial statements in accordance with applicable law 
and regulations
company law requires the directors to prepare such financial 
statements for each financial year under that law the directors 
are required to prepare the group financial statements in 
accordance with international financial reporting standards 
ifrss as adopted by the european union and article 4 of the 
ias regulation and have also chosen to prepare the parent 
company financial statements in accordance with ifrss as 
adopted by the european union under company law the 
directors must not approve the accounts unless they are 
satisfied that they give a true and fair view of the state of affairs 
of the company and of the profit and loss of the company for 
that period in preparing these financial statements the 
directors are required to 
■ properly select and apply accounting policies
■ present information including accounting policies in a 
manner that provides relevant reliable comparable and 
understandable information
■ provide additional disclosures when compliance with the 
specific requirements in ifrss are insufficient to enable 
users to understand the impact of particular transactions 
other events and conditions on the entity’s financial position 
and financial performance and
■ make an assessment of the company’s ability to continue as 
a going concern
the directors are responsible for keeping proper 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 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
the directors are responsible for the maintenance and integrity 
of the corporate and financial information included on the 
company’s website legislation in the united kingdom 
governing the preparation and dissemination of financial 
statements may differ from legislation in other jurisdictions 
each of the persons who is a director at the date of approval of 
this report confirms that to the best of their knowledge
■ the financial statements prepared in accordance with ifrss 
as adopted by the eu give a true and fair view of the assets 
liabilities financial position and profit or loss of the company 
and the undertakings included in the consolidation as a 
whole and
■ the chairman’s statement chief executive officer’s 
statement chief operating officer’s review and the finance 
review include a fair review of the development and 
performance of the business and the position of the 
company and the undertakings included in the consolidation 
taken as a whole together with a description of the principal 
risks and uncertainties that they face 17759	 070510	 proof	5
36
regal petroleum plc annual report and accounts 2009
political and charitable contributions
during the year the group made no charitable donations 2008 
nil and no political contributions 2008 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
auditors
a resolution to reappoint deloitte llp as auditors will be 
proposed at the next annual general meeting
by order of the board
robert wilde
director 
23 april 2010 
our governance
directors’ report continued our performance 
chairman’s statement 
chief executives review
17759	 070510	 proof	5
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37
our financials 
independent auditors’ report
our financials
independent auditors’ report to the  
members of regal petroleum plc
we have audited the financial statements of regal petroleum 
plc for the year ended 31 december 2009 which comprise the 
group income statement the group and parent company 
statements of comprehensive income the group and parent 
company balance sheets the group and parent company 
cash flow statements the group and parent company 
statements of changes in equity and the related notes 1 to 29 
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 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 auditors’ 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 directors’ responsibilities 
statement in the directors’ report 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 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
an audit involves obtaining evidence about the amounts and 
disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free 
from material misstatement whether caused by fraud or error 
this includes an assessment of whether the accounting 
policies are appropriate to the group’s and the parent 
company’s circumstances and have been consistently applied 
and adequately disclosed the reasonableness of significant 
accounting estimates made by the directors and the overall 
presentation of the financial statements
opinion on financial statements
in our opinion
■ the financial statements give a true and fair view of the state 
of the group’s and of the parent company’s affairs as at  
31 december 2009 and of the group’s loss for the year then 
ended
■ the group financial statements have been properly prepared 
in accordance with ifrss as adopted by the european union
■ the parent company financial statements have been properly 
prepared in accordance with ifrss as adopted by the 
european union and as applied in accordance with the 
provisions of the companies act 2006 and
■ the financial statements have been prepared in accordance 
with the requirements of the companies act 2006
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
david paterson senior statutory auditor
for and on behalf of deloitte llp
chartered accountants and statutory auditors 
london united kingdom
23 april 2010 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
38
our financials
consolidated income statement
for the year ended 31 december 2009
        2009 2008
       note 000 000
revenue      2 19872 11450
cost of sales       6230 5667
gross profit       13642 5783
other administrative expenses       15068 18023
sharebased charge      22 7618 9120
total administrative expenses       22686 27143
other operating expenses exploration costs written off    11 95 3467
operating loss       9139 24827
investment revenue      2 939 5501
finance costs      7 144 525
other net gains and losses      4 1514 28888
l oss on ordinary activities before taxation    3 6830 48739
income tax expense      8 2989 2074
l oss on ordinary activities after taxation     9819 50813
l oss per ordinary share cents
basic and diluted       10  37¢   256¢
the income statement has been prepared on the basis that all operations are continuing operations 
consolidated statement of comprehensive income
for the year ended 31 december 2009
        2009 2008
        000 000
equity — foreign currency translation      627 2028
net expense recognised directly in equity      627 2028 
loss for the year       9819 50813
total comprehensive loss for the year      10446 52841
company statement of comprehensive income
for the year ended 31 december 2009
        2009 2008
        000 000
loss for the year       13194 39881
total comprehensive loss for the year      13194 39881 our performance 
chairman’s statement 
chief executives review
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39
our financials 
consolidated income statement 
consolidated balance sheet
consolidated balance sheet
at 31 december 2009
        2009 2008
       note 000 000
assets
noncurrent assets
intangible assets      11 27067 26200
property plant and equipment      12 151492 61588
trade and other receivables      15 3593 —
        182152 87788
current assets
inventories      14 20066 19021
trade and other receivables      15 16752 7507
cash and cash equivalents      16 118592 106078
        155410 132606
total assets       337562 220394
l iabilities
current liabilities
current tax liabilities       — 171
trade and other payables      17 23489 9038
        23489 9209
net current assets       131921  123397
noncurrent liabilities
trade and other payables      19 41 101
provisions       20 3878 2358
deferred tax      21 5892 3093
        9811 5552
total liabilities       33300 14761
net assets       304262 205633
equity
called up share capital      22 27710 19094
share premium account      23  555090 462249
other reserves      23 23772 17383
retained earnings      23 302310 293093
total equity       304262 205633
the financial statements of regal petroleum plc company number 4462555 were approved by the board of directors and 
authorised for issue on 23 april 2010 they were signed on its behalf by 
robert wilde
director 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
40
our financials
consolidated statement of changes in equity
at 31 december 2009
    equity
   share share   foreign 
  share premium option merger capital exchange retained
  capital account reserve reserve contributions reserve earnings total
group 000 000 000 000 000 000 000 000
at 1 january 2008 12378 265899 3845 3204 7477 4563 245303 45655
retained loss for the year — — — — — — 50813 50813 
current year ifrs 2 charge — — 9753 — — — — 9753
issued shares 6716 206390 — — — — — 213106
share issue costs — 10040 — — — — — 10040
exchange differences  — — — — — 2028 — 2028
transfer for options 
exercised or expired — — 3023 — — — 3023 —
at 31 december 2008 19094 462249 10575 3204 7477 2535 293093 205633
    equity
   share share   foreign 
  share premium option merger capital exchange retained
  capital account reserve reserve contributions reserve earnings total
  000 000 000 000 000 000 000 000
at 1 january 2009 19094 462249 10575 3204 7477 2535 293093 205633
retained loss for the year — — — — — — 9819 9819
current year ifrs 2 charge — — 7618 — — — — 7618
issued shares 8616 96494 — — — — — 105110
share issue costs — 3653 — — —  — 3653
exchange differences  — — — — — 627 — 627
transfer for options 
exercised or expired — — 602 — — — 602 —
at 31 december 2009 27710 555090 17591 3204 7477 1908 302310 304262 our performance 
chairman’s statement 
chief executives review
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41
our financials 
consolidated statement of changes in equity 
consolidated cash flow statement
consolidated cash flow statement
for the year ended 31 december 2009
        2009 2008
       note 000 000
operating activities
cash fromused in operations      25 7151 13159
interest paid       144 193
taxation paid       391 302
net cash fromused in operating activities     6616 13654
investing activities
purchase of property plant and equipment      67356 24175
increase in related purchase tax receivable      15040 4173
purchase of intangible assets       838 8244
purchase of materials inventory       16107 18797
proceeds from sale of property plant and equipment     63 —
net cash used in investing activities      99278 55389
financing activities
proceeds from borrowings       — 1500
settlement of borrowings       — 10500
funds received in connection with share options     — 7075
proceeds from issue of shares      23 105110 206030
payment of share issue costs      23 3653 9407
interest received on surplus funds from share issue     1063 5364
net cash from financing activities      102520 200062
net increase in cash and cash equivalents      9858 131019
cash and cash equivalents at beginning of year     106078 5565
effect of foreign exchange rate changes      2656 30506
cash and cash equivalents at end of year    16 118592 106078 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
42
our financials
company balance sheet
at 31 december 2009
        2009 2008
       note 000 000
assets
noncurrent assets
intangible assets      11 151 201
property plant and equipment      12 81 279
investments      13 17279 17279
loans to group undertakings      13 175327 92835
        192838 110594
current assets
trade and other receivables      15 886 1265
cash and cash equivalents      16 116815 103014
        117701 104279
total assets       310539 214873
l iabilities
current liabilities
trade and other payables      17 1035 1250
net current assets       116666  103029
total liabilities       1035 1250
net assets       309504 213623
equity
called up share capital      22 27710 19094
share premium account      23 555090  462249
share option reserve      23 17591 10575
retained earnings      23 290887 278295
shareholders’ funds       309504 213623
these financial statements were approved by the board of directors and authorised for issue on 23 april 2010 they were signed  
on its behalf by
robert wilde
director our performance 
chairman’s statement 
chief executives review
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43
our financials 
company balance sheet 
company statement of changes in equity
company statement of changes in equity
at 31 december 2009
       equity
      share share 
     share premium option retained
     capital account reserve earnings total
company     000 000 000 000 000
at 1 january 2008    12378 265899 3845 241358 40764
retained loss for the year    — — — 39881 39881 
current year ifrs 2 charge    — — 9753 — 9753
issued shares    6716 206390 — — 213106
share issue costs    — 10040 — — 10040
transfer for options exercised or expired   — — 3023 3023 —
other    — — — 79 79
at 31 december 2008    19094 462249 10575 278295 213623
       equity
      share share 
     share premium option retained
     capital account reserve earnings total
      000 000 000 000 000
at 1 january 2009    19094 462249 10575 278295 213623
retained loss for the year    — — — 13194 13194
current year ifrs 2 charge    — — 7618 — 7618
issued shares    8616 96494 — — 105110
share issue costs    — 3653 — — 3653
transfer for options exercised or expired   — — 602 602 —
at 31 december 2009    27710 555090 17591 290887 309504 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
44
our financials
company cash flow statement
for the year ended 31 december 2009
        2009 2008
       note 000 000
operating activities
cash used in operations      25 9908 14595
interest paid       — 160
net cash used in operating activities      9908 14755
investing activities
purchase of property plant and equipment      41 229
investment in group companies       82902 61270
interest received from group companies      2394 —
net cash used in investing activities      80549 61499
financing activities
proceeds from borrowings       — 1500
settlement of borrowings       — 10500
funds received in connection with share options     — 7075
proceeds from issue of shares      23 105110 206030
payment of share issue costs      23 3653 9407
interest received on surplus funds from share issue     1043 5334
net cash from financing activities      102500 200032
net increase in cash and cash equivalents      12043  123778
cash and cash equivalents at beginning of year     103014 2239
effect of foreign exchange rate changes      1758 23003
cash and cash equivalents at end of year    16 116815 103014 our performance 
chairman’s statement 
chief executives review
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45
our financials 
company cash flow statement 
notes
notes 
forming part of the financial statements
 1 accounting policies
regal petroleum plc is a company listed on the alternative investment market and incorporated in the united kingdom under the 
companies act 2006 the registered office is lansdowne house 57 berkeley square london w1j 6er and the company’s 
registered number is 4462555 the principal activities of the group and the nature of the group’s operations are set out in the 
directors’ report the following accounting policies have been applied consistently in dealing with items which are considered 
material in relation to the group’s financial statements
 going concern
the financial statements have been prepared in accordance with the going concern basis of accounting the use of this basis of 
accounting takes into consideration the group’s current and forecast financing position additional details of which are provided in 
the going concern section of the directors’ report 
 basis of preparation 
this is the third year in which the group has prepared its financial statements under international financial reporting standards 
ifrs as issued by the iasb and as adopted by the european union the financial statements are prepared on the historical cost 
basis except for valuation of certain sharebased payments and other financial assets
 new ifrss and interpretations
in preparing the financial statements of the group for the current year the group has adopted the following pronouncements of  
the iasb for the first time these pronouncements have not had a material impact on the results or net assets of the group
 ■ ifrs 8 operating segments was issued in october 2006 and defines operating segments as components of an entityabout 
 which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding 
 how to allocate resources and in assessing performance the new standard sets out the required disclosures for operating 
 segments and is effective for annual periods beginning on or after 1 january 2009 the new standard has had no impact on 
 the group’s reported income or net assets the required disclosures are set out in note 2
 ■ in september 2007 the iasb issued amendments to ias 1 presentation of financial statements — a revised presentation 
 which required separate presentation of owner and nonowner changes in equity by introducing the statement of  
 comprehensive income the revised standard is effective for annual periods beginning on or after 1 january 2009 there has  
 been no effect on the group’s reported income or net assets from the adoption of ias 1 revised
the financial statements have been prepared after adopting the following pronouncements from the iasb which have no effect on 
either the reported results and financial position or the presentation or disclosure within the financial statements
 ■ ias 23 revised 2007 borrowing costs
 ■ amendments to ias 32 financial instruments presentation and ias 1 presentation of financial statements — puttable 
 financial instruments and obligations arising on liquidation
 ■ amendments to ias 39 financial instruments recognition and measurement — eligible hedged items
 ■ embedded derivatives amendments to ifric 9 reassessment of embedded derivatives and ias 39 financial instruments 
 recognition and measurement
 ■ ifric 16 hedges of a net investment in a foreign operation 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
46
our financials
notes continued
forming part of the financial statements
 1 accounting policies continued
 new ifrss and interpretations continued
the following standards amendments and interpretations to existing standards have been published and are mandatory for the 
group’s financial statements from 2010 or later periods but the group has not early adopted them
■ 	 ias 27 amended cost of an investment in a subsidiary jointly controlled entity or associate
■ 	 ifrs 2 amended group cashsettled sharebased payment transactions
■ 	 ifrs 3 revised 2008 business combinations
■ 	 ifrs 9  financial instruments
■ 	 ias 24 revised 2009 related party disclosures
■ 	 ias 27 revised 2008 consolidated and separate financial statements
■ 	 ias 28 revised 2008 investment in associates
■ 	 ias 32 amended classification of rights issues
■ 	 ifric 14 amended prepayment of a minimum funding requirement
■ 	 ifric 17 distributions of noncash assets to owners
■ 	 ifric 18 transfers of assets from customers      
■ 	 ifric 19 extinguishing financial liabilities with equity instruments
             
 not yet endorsed by eu
the directors are still assessing the impact of the adoption of these standards and interpretations but do not believe them to have 
a material impact given the group’s current business plans and operations
 basis of consolidation 
the consolidated financial information incorporates the financial information of the company and entities controlled by the 
company its subsidiaries made up to 31 december each year control is achieved where the company has the power to govern 
the financial and operating policies of an investee entity so as to obtain benefits from its activities 
 subsidiaries
the acquisition of subsidiaries is accounted for using the purchase method on acquisition the assets liabilities and contingent 
liabilities of a subsidiary are measured at their fair values at the date of acquisition any excess of cost of acquisition over the fair 
values of the identifiable net assets acquired is recognised as goodwill any deficiency of the cost of acquisition below the fair 
values of the identifiable net assets acquired ie discount on acquisition is credited to the income statement in the period of 
acquisition the results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement 
from the effective date of acquisition or up to the effective date of disposal as appropriate all intragroup transactions balances 
income and expenses are eliminated on consolidation
 joint ventures
the group’s companies participate in joint ventures which involve joint control of assets used in the group’s oil and gas exploration 
development and producing activities the group accounts for its share of the assets and liabilities of joint ventures classified in the 
appropriate balance sheet heading within each company and at group level upon consolidation
 corporate restructuring
during 2002 the group carried out a corporate restructuring including the introduction of a new holding company as this 
represented a combination of entities under common control and because this was before 1 january 2006 this business 
combination was outside the scope of ifrs 3 business combinations and was therefore accounted for using principles of merger 
accounting as specified under uk gaap
  our performance 
chairman’s statement 
chief executives review
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47
our financials 
notes
 1 accounting policies continued
 commercial reserves
proven and probable oil and gas reserves are estimated quantities of commercially producable hydrocarbons which the existing 
geological geophysical and engineering data show to be recoverable in future years from known reservoirs the proven and 
probable reserves included herein conform to the definition approved by the petroleum resources management system
 oil and gas exploration assets and developmentproducing assets 
the group applies the successful efforts method of accounting for oil and gas assets having regard to the requirements of ifrs 6 
exploration for and evaluation of mineral resources 
all licence acquisition exploration and evaluation costs are initially capitalised as intangible fixed assets in cost centres by field or 
by exploration area as appropriate pending determination of commerciality of the relevant property directly attributable 
administration costs are capitalised insofar as they relate to specific exploration activities as are finance costs to the extent they 
are directly attributable to financing development projects prelicence costs and general exploration costs not specific to any 
particular licence or prospect are expensed as incurred
if prospects are deemed to be impaired ‘unsuccessful’ on completion of the evaluation the associated costs are charged to the 
income statement if the field is determined to be commercially viable the attributable costs are transferred to development
production assets within property plant and equipment in single field cost centres
subsequent expenditure is capitalised only where it either enhances the economic benefits of the developmentproducing asset or 
replaces part of the existing developmentproducing asset 
net proceeds from any disposal of an exploration asset are initially credited against the previously capitalised costs any surplus 
proceeds are credited to the income statement net proceeds from any disposal of developmentproducing assets are credited 
against the previously capitalised cost a gain or loss on disposal of a developmentproducing asset is recognised in the income 
statement to the extent that the net proceeds exceed or are less than the appropriate portion of the net capitalised costs of  
the asset
 depletion and amortisation
all expenditure carried within each field is amortised from the commencement of commercial production on a unit of production 
basis which is the ratio of oil and gas production in the period to the estimated quantities of commercial reserves at the end of  
the period plus the production in the period generally on a field by field basis in certain circumstances fields within a single 
development area may be combined for depletion purposes costs used in the unit of production calculation comprise the net  
book value of capitalised costs plus the estimated future field development costs necessary to bring the reserves into production 
changes in the estimates of commercial reserves or future field development costs are dealt with prospectively
 impairment
at each balance sheet date the group reviews the carrying amount of exploration assets and developmentproducing assets to 
determine whether there is any indication that those assets have suffered an impairment loss this includes exploration and 
appraisal costs capitalised which are assessed for impairment in accordance with ifrs 6 if any such indication exists the 
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss 
recoverable amount is the greater of net selling price less costs to sell and value in use in assessing value in use the estimated 
future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of 
the time value of money and the risks specific to the asset if the recoverable amount of an asset is estimated to be less than its 
carrying amount the carrying amount of the asset is reduced to its recoverable amount impairment losses are recognised as an 
expense immediately  17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
48
our financials
notes continued
forming part of the financial statements
 1 accounting policies continued
impairment continued
should an impairment loss subsequently reverse the carrying amount of the asset is increased to the revised estimate of its 
recoverable amount but so that the increased carrying amount does not exceed the carrying amount that would have been 
determined had no impairment loss been recognised for the asset in prior years a reversal of an impairment loss is recognised as 
income immediately
 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 the amount recognised is the present value of estimated future expenditure 
determined in accordance with local conditions and requirements the cost of the relevant property plant and equipment is 
increased with an amount equivalent to the provision and depreciated on a unit of production basis changes in estimates are 
recognised prospectively with corresponding adjustments to the provision and the associated fixed asset the unwinding of the 
discount on the decommissioning provision is included within finance costs 
 intangible assets other than oil and gas assets 
intangible assets other than oil and gas assets are stated at cost less accumulated depreciation and any provision for impairment 
these assets represent intangible computer software depreciation is charged so as to write off the cost less estimated residual 
value on a straightline basis of 20–25 per annum
 property plant and equipment other than oil and gas assets 
property plant and equipment other than oil and gas assets are stated at cost less accumulated depreciation and any provision for 
impairment depreciation is charged so as to write off the cost less estimated residual value of assets on a straightline basis over 
their useful lives as follows 
 
fixtures fittings and equipment 20–25 per annum straightline 
motor vehicles including vehicles under finance leases 20–25 per annum straightline 
plant and machinery 20–25 per annum straightline 
 inventories 
inventories typically consist of materials and hydrocarbons and are stated at the lower of weighted average cost and net realisable 
value net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in 
marketing selling and distribution 
 revenue recognition 
turnover represents amounts invoiced in respect of sales of oil and gas exclusive of indirect taxes and excise duties and is 
recognised on delivery of product interest income is accrued on a time basis by reference to the principal outstanding and at the 
effective rate applicable which is the rate that exactly discounts estimated future cash receipts through the expected life of the 
financial asset to that asset’s net carrying amount 
 foreign currencies 
the group’s consolidated accounts are presented in us dollars the functional and presentation currencies of some subsidiary 
companies are in currencies other than us dollars  our performance 
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our financials 
notes
 1 accounting policies continued
 foreign currencies continued
the functional currency of individual companies is normally determined by the primary economic environment in which the entity 
operates normally the one in which it primarily generates and expends cash in preparing the financial statements of the individual 
companies transactions in currencies other than the entity’s functional currency “foreign currencies” are recorded at the rates of 
exchange prevailing on the dates of the transactions at each balance sheet date monetary assets and liabilities that are 
denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date nonmonetary assets and 
liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the 
fair value was determined nonmonetary items that are measured in terms of historical cost in a foreign currency are not 
retranslated gains and losses arising on retranslation are included in net profit or loss for the period except for exchange 
differences arising on balances which are considered longterm investments where the changes in fair value are recognised  
directly in equity 
on consolidation the assets and liabilities of the group’s subsidiaries which do not use us dollars as their functional currency are 
translated into us dollars at exchange rates prevailing on the balance sheet date income and expense items are translated at the 
average exchange rates for the period unless exchange rates fluctuate significantly exchange differences arising if any are 
classified as equity and are recognised in the group’s foreign exchange reserve such translation differences are recognised as 
income or as expenses in the period in which the operation is disposed of 
with effect from 1 january 2008 the functional currency of two of the group’s ukrainian subsidiaries was changed from ukrainian 
hryvnia to us dollars the change was triggered by the increasing influence of the us dollar on the subsidiaries’ operations the 
exchange rate used for the revaluation of the closing balance sheet at 31 december 2007 was 1uah0202
 pensions
the group operates a defined contribution pension scheme the assets of the scheme are held separately from those of the group 
in an independently administered fund the amount charged to the income statement represents the contributions payable to the 
scheme in respect of the accounting period
 l eases 
leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of 
ownership to the lessee all other leases are classified as operating leases 
assets held under finance leases are recognised as assets of the group at their fair value or if lower at the present value of the 
minimum lease payments each determined at the inception of the lease the corresponding liability is included on the balance 
sheet as a finance lease obligation lease payments are apportioned between finance charges and reduction of the lease 
obligation so as to achieve a constant rate of interest on the remaining balance of the liability finance charges are charged  
directly against income unless they are directly attributable to qualifying assets in which case they are capitalised in accordance 
with the group’s policy on borrowing costs see below 
rentals payable under operating leases are charged to the income statement on a straightline basis over the term of the relevant 
lease benefits received and receivable as an incentive to enter into an operating lease are also spread on a straightline basis over 
the lease term
 taxation 
the tax expense represents the sum of the tax currently payable and deferred tax 
current tax including uk corporation and overseas tax is provided at amounts expected to be paid or recovered using the tax 
rates and laws that have been enacted or substantially enacted by the balance sheet date  17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
50
our financials
notes continued
forming part of the financial statements
 1 accounting policies continued
 taxation continued
deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities 
in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using 
the balance sheet liability method deferred tax liabilities are generally recognised for all taxable temporary differences and deferred 
tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary 
differences can be utilised such assets and liabilities are not recognised if the temporary difference arises from goodwill or from 
the initial recognition other than in a business combination of other assets and liabilities in a transaction that affects neither the 
tax profit nor the accounting profit 
deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates and 
interests in joint ventures except where the group is able to control the reversal of the temporary difference and it is probable that 
the temporary difference will not reverse in the foreseeable future 
the carrying amount of deferred tax assets is reviewed at each balance sheet date and adjusted to the extent that it is probable 
that sufficient taxable profits will be available to allow all or part of the asset to be recovered 
deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised 
deferred tax is charged or credited in the income statement except when it relates to items charged or credited directly to equity in 
which case the deferred tax is also dealt with in equity 
 dividends payable
accounting for dividends payable is in accordance with ias 10 “events after the balance sheet date” accordingly dividends 
proposed or declared on equity instruments after the balance sheet date are not recognised as a liability at the balance sheet date
 financial instruments 
financial assets and financial liabilities are recognised on the group’s balance sheet when the group becomes a party to the 
contractual provisions of the instrument the group does not currently utilise derivative financial instruments
 trade receivables 
trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated 
irrecoverable amounts 
 investments
investments are recognised and derecognised on a trade date where a purchase or sale of investment is under a contract whose 
terms require delivery of the investment within the timeframe established by the market concerned and are initially measured at 
cost including transaction costs
investments are classified as either heldfortrading or availableforsale and are measured at subsequent reporting dates at fair 
value where securities are held for trading purposes gains and losses arising from changes in fair value are included in net profit 
or loss for the period for availableforsale investments gains and losses arising from changes in fair value are recognised directly 
in equity until the security is disposed of or is determined to be impaired at which time the cumulative gain or loss previously 
recognised in equity is included in the net profit or loss for the period impairment losses recognised in profit and loss for equity 
instruments classified as availableforsale are not subsequently reversed through profit and loss
investments in subsidiaries are stated at cost and reviewed for impairment if there are indications that the carrying value may not  
be recoverable
 trade payables 
trade payables are not interest bearing and are stated at their nominal value  our performance 
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our financials 
notes
 1 accounting policies continued
 financial instruments continued
 bank borrowings and loan notes 
interestbearing bank borrowings and loan notes are recorded at the proceeds received net of direct transaction costs direct 
transaction costs are accounted for on an amortised cost basis in profit and loss using the effective interest method and are  
added todeducted from the carrying amount of the instrument to the extent that they are not settled in the period in which  
they arise
 equity instruments
equity instruments issued by the company and the group are recorded at the proceeds received net of direct issue costs
 finance costs and debt
borrowing costs directly attributable to the acquisition construction or production of qualifying assets which are assets that 
necessarily take a substantial period of time to get ready for their intended use or sale are added to the cost of those assets until 
such time as the assets are substantially ready for their intended use or sale 
finance costs of debt are allocated to periods over the term of the related debt at the effective interest rate on the carrying  
amount directly attributable transaction costs are deducted from the debt proceeds on initial recognition of the liability and are 
amortised and charged to the income statement as finance costs over the term of the debt
all other borrowing costs are expensed as incurred
 cash and cash equivalents
cash and cash equivalents comprise cash on hand and demand deposits and other shortterm highly liquid investments that are 
readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value
included in cash and cash equivalents are amounts relating to financial guarantees entered into by the group to collateralise future 
commitments as per standard industry practice these cash balances include both funds held in a separate bank account and 
deposits made as security for certain thirdparty obligations
 sharebased transactions 
the group has applied the requirements of ifrs 2 “sharebased payments” in accordance with the transitional provisions of that 
standard this standard has not been applied to those awards that were granted on or before 7 november 2002 in addition the 
standard has not been applied to awards that were granted after 7 november 2002 that vested before 1 january 2005  
however in contrast to the transitional provision of ifrs 2 the standard has been applied for those awards that were granted  
after 7 november 2002 and that vested between 1 january 2005 and 1 january 2006 in order to be consistent with the 
transitional rules adopted under uk gaap in the 2006 annual report in respect of frs 20 sharebased payments
all sharebased awards of the group outstanding at 31 december 2009 have been treated as equity settled as defined by ifrs 2 
the fair value of these awards has been determined at the date of grant of the award allowing for the effect of any marketbased 
performance conditions the fair value adjusted by the group’s estimate of the number of awards that will eventually vest as a 
result of nonmarket conditions is expensed uniformly over the vesting period
the fair values of options under the 2004 share option plan were calculated using a binomial option pricing model whilst the fair 
values of options under the longterm incentive plan introduced during 2009 were calculated using the black–scholes model 
with suitable modifications to allow for employee turnover after vesting and early exercise the inputs to the models include the 
share price at date of grant exercise price expected volatility expected dividends riskfree rate of interest and patterns of  
exercise of the plan participants
the group has also issued warrants relating to equity raisings the fair value of which has been treated as a cost of the equity 
raising and recognised against the share premium account 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
52
our financials
notes continued
forming part of the financial statements
 1 accounting policies continued
 share options
in accordance with ias 37 “provisions contingent liabilities and contingent assets” the company provides in full for the employer’s 
national insurance liability estimated to arise on the future exercise of share options granted
 critical accounting estimates and assumptions
the group makes estimates and assumptions concerning the future the resulting accounting estimates will by definition seldom 
equal the related actual results the estimates and assumptions that have a risk of causing material adjustment to the carrying 
amounts of assets and liabilities within the next financial year are discussed below
 recoverability of intangible oil and gas costs
costs capitalised as intangible assets are assessed for impairment when circumstances suggest that the carrying value may exceed 
its recoverable value this assessment involves judgement as to the likely commerciality of the asset the future revenues and costs 
pertaining and the discount rate to be applied for the purposes of deriving a recoverable value
 decommissioning
the group has decommissioning obligations in respect of its ukraine asset the full extent to which the provision is required depends 
on the legal requirements at the time of decommissioning the costs and timing of any decommissioning works and the discount rate 
applied to such costs
 depreciation of oil and gas assets
oil and gas assets held in property plant and equipment are mainly depreciated on a unit of production basis at a rate calculated by 
reference to proven and probable reserves and incorporating the estimated future cost of developing and extracting those reserves 
future development costs are estimated using assumptions as to the number of wells required to produce those reserves the cost of 
the wells future production facilities and operating costs together with assumptions on oil and gas realisations and are revised on an 
annual basis the reserves estimates used are determined using estimates of oil in place recovery factors and future oil prices
 sharebased payments
management is required to make assumptions in respect of the inputs used to calculate the fair values of sharebased payment 
arrangements further details of which are provided in note 22
 2 segmental information
following the introduction of ifrs 8 effective for accounting periods beginning on or after 1 january 2009 the group has made the 
following considerations to arrive at the disclosures made in these financial statements
ifrs 8 requires consideration of the chief operating decision maker “codm” within the group in line with group’s internal 
reporting framework and management structure the key strategic and operating decisions are made by the board of directors who 
review internal monthly management reports budget and forecast information as part of this accordingly the board of directors is 
deemed to be the codm 
the group’s only class of business activity is oil and gas exploration development and production the group’s primary operating 
segments are geographical and are located in ukraine romania and egypt with its head office in the united kingdom these 
geographical regions are the basis on which the group reports its segment information and are consistent with the primary 
segments reported in the prior year under ias 14 our performance 
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our financials 
notes
2 segmental information continued
 ukraine united kingdom romania egypt  total
   2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
   000 000 000 000 000 000 000 000 000 000
turnover
gas sales 14589 6625 — — — — — — 14589 6625
condensate sales 5283 4825 — — — — — — 5283 4825
total sales incl sales  
to third parties 19872 11450 — — — — — — 19872 11450
segment result 12612 3037 10534 12569 160 2971 351 1182 1567 13685
depreciation and 
amortisation         3088 2022
sharebased charge         7618 9120
operating loss         9139 24827
segment assets 191236 88654 118109 104658 22815 22273 5402 4809 337562 220394
capital additions 93048 29984 78 229 1028 4361 696 2036 94850 36610
there are no intersegment sales within the group and all products are sold in the geographical region they are produced in the 
group’s gas sales of 14589000 2008 6625000 are with one single external party with which the group has an agreement 
total of revenue generated from operating and interest revenue is 20811000 2008 16951000
 3 l oss on ordinary activities before taxation
        2009 2008
         000 000
l oss on ordinary activities before taxation is stated after chargingcrediting
auditors’ remuneration see below      328 289
depreciation        2998 1964
amortisation of intangible assets      90 58
production based taxes       1865 2328
cost of inventories recognised as an expense      460 457
staff costs       15181 17578
        2009 2008
         000 000
audit services
fees payable to the company’s auditors for the audit of the parent company and consolidated accounts 196 146
fees payable to the company’s auditors and their associates for the audit of the company’s 
subsidiaries pursuant to legislation      41 67
         237 213
other services
other services pursuant to legislation — interim review     56 25
other services relating to taxation      35 51
         91 76
total audit and other services       328 289
all amounts shown as auditors’ remuneration were payable to deloitte llp except for the 2008 interim review fee which was 
payable to uhy hacker young llp 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
54
our financials
notes continued
forming part of the financial statements
 4 other net gains and l osses
        2009 2008
        000 000
unrealised foreign exchange gainslosses      914 23337
realised foreign exchange gainslosses      600 5551
        1514 28888
unrealised foreign exchange gains and losses include amounts arising on the revaluation at year end of cash and cash equivalents 
held in currencies other than the functional currency of the relevant entity the group holds currencies to match the expected 
underlying currencies of anticipated capital and operational expenditure 
realised foreign exchange gains and losses arise due to the multicurrency nature of the group’s trading activities
 5 remuneration of directors
        2009 2008
         000 000
directors’ emoluments       2141 2526
the emoluments of the individual directors were as follows
         
   basic  benefits aggregate pension total total
  salary and fees bonus in kind emoluments contributions emoluments emoluments
    2009 2009 2009 2009 2009 2009 2008
    000 000 000 000 000 000 000
k henry  156 — — 156 — 156 105
d j greer   470 188 7 665 86 751 1330
h verkuil  316 112 17 445 43 488 512
r wilde  294 108 18 420 42 462 338
lord st john of bletso  116 — — 116 — 116 89
a mozetic  115 — — 115 — 115 119
a coates  63 — — 63 — 63 21
f scolaro  — — — — — — 12
    1530 408 42 1980 171 2151 2526
aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the 
company granted to or held by directors
no options to acquire ordinary shares in the company granted to or held by directors were exercised during the year 2008 
500000 
in 2008 frank scolaro received 23190 in consulting fees in recognition of additional services performed while a director which 
are not included in the table above our performance 
chairman’s statement 
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our financials 
notes
 5 remuneration of directors continued
according to the register of directors’ interests no rights to subscribe for shares in or debentures of group companies were 
granted to any of the directors or their immediate families or exercised by them during the financial year except as indicated 
below
   share replacement new  exercise date from
  at start options l tip l tip at end price which
name of director of year surrendered grant grant of year  £ exercisable expiry date
keith henry 250000 250000 100000 41667 141667 005  31122009 13072014
  250000 250000 100000  — 100000 005  15042010 13072014
  — — — 41667 41667 005  31032011 13072014
  250000 250000 100000 — 100000 005  15042011 13072014
  — — — 41667 41667 005  31032012 13072014
david greer 1000000 1000000 400000 250000 650000 005  31122009 13072014
  500000 500000 150000 — 150000  005  31122009 13072014
  1000000 1000000 400000 — 400000 005  — 13072014
  — — — 250000 250000 005  31032011 13072014
  — — — 250000 250000 005  31032012 13072014
harry verkuil 500000 500000 200000 109375 309375 005  31122009 13072014
  500000 500000 150000 — 150000 005  31122009 13072014
  500000 500000 165000 — 165000 005  — 13072014
  — — — 109375 109375 005  31032011 13072014
  — — — 109375 109375 005  31032012 13072014
robert wilde 500000 500000 200000 109375 309375 005  31122009 13072014
  500000 500000 165000 — 165000 005  — 13072014
  — — — 109375 109375 005  31032011 13072014
  500000 500000 150000 — 150000 005  01052011 13072014
  — — — 109375 109375 005  31032012 13072014
adrian coates 83334 83334 30000 16667 46667 005  31122009 13072014
  83333 83333 30000 — 30000 005  18072010 13072014
  — — — 16667 16667 005  31032011 13072014
  83333 83333 30000 — 30000 005  18072011 13072014
  — — — 16667 16667 005  31032012 13072014
antonio mozetic  350000 — — — 350000 150  04022009 04022018
l ord st john 250000 — — — 250000 0875  24102006 23042015
of bletso 250000 — — — 250000 150  04022009 07072018
during the year a new longterm incentive plan ltip scheme was introduced as part of this arrangement the terms of the 
previous share option scheme were modified resulting in the affected share options being surrendered and replaced by new 
options issued under the ltip scheme
options granted under the new ltip scheme are subject to specific performance criteria the criteria ranges include continuing 
employment with the company and specific operational targets being met for more information on the new ltip scheme see  
note 22
remaining options granted under the 2004 share option scheme have already vested 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
56
 6 staff numbers and costs
the average number of employees on a fulltime equivalent basis during the year including executive directors was as follows
  number of 
  employees
         2009 2008
group
managementoperational       116 93
administrative support       43 36
        159 129
the aggregate staff costs of these employees was as follows
        2009 2008
         000 000
wages and salaries       5706 6809
social security costs       964 897
pension costs       893 752
share option charge see note 22       7618 9120
         15181 17578
in addition to the defined contribution pension scheme in the united kingdom the group contributes to a local government pension 
scheme within ukraine the group has no further payment obligations towards the local government pension scheme once the 
contributions have been paid
 7 finance costs
        2009 2008
        000 000
interest on bank loans       — 87
interest on obligations under finance leases      47 33
finance and arrangement fees       — 405
unwinding of discount on decommissioning provision     97 —
         144 525
our financials
notes continued
forming part of the financial statements our performance 
chairman’s statement 
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57
our financials 
notes
 8 taxation
analysis of charge in period       2009 2008
         000 000
current tax
overseas — current year       190 214
deferred tax
uk — current year       3505 1860
uk — prior year       706 —
tax on profit on ordinary activities      2989 2074
 
the tax charge for the period is higher than the standard rate of corporation tax in the uk of 28 2008 285 blended the 
charge for the period can be reconciled to the loss as per the income statement as follows
        2009  2008 
         000 000
current tax reconciliation
loss on ordinary activities before tax      6830 48739
current tax credit at 28 2008 285      1912 13891
effects of
tax effect of the application of overseas tax rates     107 753
tax effect of expensesincome not deductibleassessable in determining taxable profitloss  3598 4497
tax effect of losses not recognised      1902 10715
tax effect of prior year adjustments      706 —
tax charge for the year       2989 2074
 factors affecting future tax charge 
the directors do not consider it appropriate to recognise any deferred tax asset to reflect the potential benefit arising from  
temporary differences at 31 december 2009 as there is insufficient evidence of future taxable profits 
at 31 december 2009 and in gross terms the group are not recognising deferred tax assets in relation to carried forward tax 
relief of approximately 154 million 2008 150 million the majority of this amount approximately 135 million relates to uk 
tax losses which can be carried forward indefinitely 
 9 l oss for the financial year
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 loss for the period includes a parent company loss 
after tax of 13194000 for the year ended 31 december 2009 2008 39881000 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
58
 10 l oss per share
basic loss per share of 37 cents 2008 256 cents is based upon losses of 9819000 2008 50813000 and 264073061 
2008 198378455 ordinary shares being the weighted average number of shares as the exercise of options would be anti
dilutive they have been excluded from the computation of diluted loss per share in both periods
 11 intangible fixed assets
 2009 2008
   exploration assets computer  exploration assets computer
   romania egypt software total romania egypt software total
   000 000 000 000 000 000 000 000
group
cost
at beginning of year 21187 4794 447 26428 22245 3654 263 26162
additions 1028 696 37 1761 4360 2027 184 6571
exploration costs written off — 95 — 95 2580 887 — 3467
effect of movement in  
foreign exchange 709 — — 709 2838 — — 2838
at end of year 21506 5395 484 27385 21187 4794 447 26428
amortisation
at beginning of year — —  228 228 — — 170 170
charge for year — — 90 90 — — 58 58
at end of year — — 318 318 — —  228 228
net book value
at 31 december 21506 5395 166 27067 21187 4794 219 26200
        2009  2008
        computer  computer
        software software
        000 000
company
cost
at beginning of year       385 222
additions       22 163
at end of year       407 385
amortisation
at beginning of year       184 136
charge for year       72 48
at end of year       256 184
net book value
at 31 december        151 201
our financials
notes continued
forming part of the financial statements our performance 
chairman’s statement 
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our financials 
notes
 12 property plant and equipment
 2009  2008
     exploration    exploration
    and    and
   development    development
    costs other fixed  costs other fixed
    ukraine assets total ukraine assets total
     000 000 000 000 000 000
group
cost 
at beginning of year   66495 1713 68208 36872 1441 38313
additions   92966 123 93089 29661 378 30039
disposals   — 351 351 — — —
effect of movement in foreign exchange  3 11 14 38 106 144
at end of year   159458 1474 160932 66495 1713 68208
depreciation
at beginning of year   5609 1011 6620 3871 881 4752
charge for year   2787 211 2998 1738 226 1964
on disposals   — 168 168 — — —
effect of movement in foreign exchange  — 10 10 — 96 96
at end of year   8396 1044 9440 5609 1011 6620
net book value
at 31 december   151062 430 151492  60886  702  61588
  other fixed assets include fixtures fittings and equipment motor vehicles and plant and machinery
        2009   2008 
          other fixed  other fixed
        assets  assets
         000 000
company
cost 
at beginning of year       936 870
additions       56 66
disposals       351 —
at end of year       641 936
depreciation
at beginning of year       657 515
charge for year       71 142
on disposals       168 —
at end of year       560 657
net book value
at 31 december        81 279 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
60
 13 fixed asset investments
       shares in  l oans to
       subsidiary  subsidiary
       undertakings undertakings total
        000  000  000
company
cost 
at 1 january 2008      17279 31644 48923
additions      — 61191 61191
at 31 december 2008      17279 92835 110114
cost 
at 1 january 2009      17279 92835 110114
additions      — 82492 82492
at 31 december 2009      17279 175327 192606
 principal subsidiary undertakings 
at 31 december 2009 the company’s principal subsidiary undertakings all of which are included in the consolidated financial 
statements were
   country of country of   of shares
   incorporation operation principal activity  held
regal petroleum jersey limited jersey ukraine holding company 100
regal petroleum corporation limited jersey ukraine oil  natural gas extraction 100
regal petroleum ukraine limited ukraine ukraine oil  natural gas extraction 100
regal petroleum corporation 
ukraine limited  ukraine ukraine service company 100
regal romania srl  romania romania oil  natural gas exploration 100
regal egypt limited  united kingdom egypt oil  natural gas exploration 100
regal group services limited  united kingdom united kingdom service company 100
the parent company holds indirect interests of 100 of the share capital of regal petroleum corporation limited regal  
petroleum ukraine limited and regal petroleum corporation ukraine limited with all other companies owned directly by the  
parent company regal petroleum corporation limited and regal petroleum ukraine limited are controlled through their 100 
ownership by regal petroleum jersey limited regal petroleum corporation ukraine limited is controlled by its 100  
ownership by regal petroleum jersey limited and regal group services limited
 14 inventories
  group
         2009 2008
         000 000
materials       20024 18832
condensate stock       42 189
        20066 19021
in the opinion of the directors there is no material difference between the cost of inventories included in the accounts and its 
replacement cost
our financials
notes continued
forming part of the financial statements our performance 
chairman’s statement 
chief executives review
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61
our financials 
notes
 15 trade and other receivables
 group company
       2009 2008 2009 2008
       000 000 000 000
trade receivables     18 1 — —
amounts owed by group undertakings    — — 38 332
prepayments and accrued income    1867 1730 417 580
purchase tax receivable     14505 5428 152 252
other receivables     362 348 279 101
       16752 7507 886 1265
none of the group’s trade receivables are past due or impaired all trade receivables are considered to be of high credit quality 
purchase tax receivable in respect of the group includes 13176000 2008 4272000 relating to capital expenditure in  
ukraine which is expected to be recovered via an offset against purchase tax payable on future sales in that country there is an 
additional 3593000 2008 nil which is included within noncurrent trade and other receivables as based on the group’s  
future sales projections it is not expected to be recoverable within one year the directors are satisfied that all such amounts are 
fully recoverable
 16 cash and cash equivalents
 group company
       2009 2008 2009 2008
       000 000 000 000
cash at bank and on hand     1862 1861 102 97
shortterm deposits on hand     98643 73799 98626 73696
restricted cash     18087 30418 18087 29221
       118592 106078 116815 103014
cash at bank earns interest at floating rates based on daily bank deposit rates shortterm deposits are made for varying periods  
of between one day and three months depending on the immediate cash requirements of the group and earn interest at the 
respective shortterm deposit rates the fair value of cash and cash equivalents is 118592000 2008 106078000 the 
group only deposits cash surpluses with major banks of high quality credit standing 
restricted cash is held on fixed term deposits in support of letters of credit which are required under contractual agreements 
relating to the group’s investment strategy in ukraine
 17 trade and other payables
 group company
       2009 2008 2009 2008
       000 000 000 000
trade payables     7543 2669 183 862
taxation and social security     294 603 — —
accruals and deferred income     15652 5766 852 388
       23489 9038 1035 1250
the directors consider that the carrying amount of trade payables approximates to their fair value 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
62
 18 borrowings
on 13 september 2007 the group entered into an agreement with bank of scotland for a us dollar revolving credit facility of up  
to 15 million for a term of one year amounts drawn incurred interest at libor plus an applicable margin and the facility was 
secured via a charge over the group’s shares during 2008 the total amount outstanding on this facility of 105 million was  
repaid from 2008 share placement proceeds and the facility cancelled in full in april 2008 interest paid on this facility was not 
capitalised as the facility was used to fund operational cash flows
19 obligations under finance l eases
  group 
         2009 2008
         000 000
amounts payable under finance leases
within one year       89 97
in the second to fifth years inclusive      63 244
         152 341
less future finance service and insurance charges     56 195
present value of lease obligations      96 146
amount due for settlement within 12 months shown under current liabilities   55 45
amount due for settlement after 12 months      41 101
the finance leases relate to motor vehicles in ukraine the average lease term is three years for the year ended 31 december 
2009 the average effective borrowing rate was 1467 2008 1467 interest rates are fixed at the contract date all leases  
are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments all lease obligations  
are denominated in ukrainian hryvnia and translated to us dollars the group’s obligations under finance leases are secured  
by the lessor’s charge over the leased assets at 31 december 2009 the carrying value of these assets was 148000 2008 
214000
the directors consider that the fair value of the group’s lease obligations approximates their carrying amount
our financials
notes continued
forming part of the financial statements our performance 
chairman’s statement 
chief executives review
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63
our financials 
notes
 20 provisions for l iabilities and charges
       provision for
     decommissioning other total
        000 000  000
group
at beginning of year       2274 84 2358
amounts provided      1361 62 1423
unwinding of discount      97 — 97
at end of year      3732 146 3878
the provision for decommissioning is based on the net present value of the group’s estimated liability for the removal of the 
ukraine production facilities and site restoration at the end of the production life these costs are expected to be incurred between 
2011 and 2024
 21 deferred tax
  group
         2009 2008
         000 000
at beginning of year       3093 1233
charged to income statement — current year      3505 1860
credited to income statement — prior year      706 —
at end of year       5892 3093
this deferred tax liability arises as a result of temporary differences between the carrying values and tax bases of oil and gas assets 
in ukraine 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
64
 22 called up share capital
  2009  2008
      number 000 number 000
authorised
ordinary shares of 5p each approximately 7 cents each   600000000 41394 300000000 17905
allotted called up and fully paid
opening balance at 1 january     211645664 19094 143028824 12378
issued during the year
— exercise of share options     — — 3800000 377
— share issue     104000000 8616 64816840 6339
closing balance at 31 december    315645664 27710 211645664 19094
there are no restrictions over ordinary shares issued
during the year the company increased its authorised share capital to £30000000 via the creation of an additional 300000000 
ordinary shares of 5 pence each ranking pari passu in all respects with the existing ordinary shares of the company
 share option schemes
 long term incentive plan ltip
during the year the company introduced an ltip scheme for certain directors and senior employees of the group as part of  
these arrangements the terms of the previous share option scheme were modified this resulted in a total of 9490000 share 
options the “options” of which 3365000 had already vested being surrendered in exchange for options over 3436000  
ordinary shares of 5 pence each under the ltip the basis of the exchange having been determined inter alia using an indicative 
binomial option pricing analysis of the value of the holder’s existing options the ltip awards are time and performance based  
vest in three tranches on 31 december 2009 31 march 2011 and 31 march 2012 and are in the form of a right to acquire  
ordinary shares at their nominal value being a price of 5 pence per ordinary share the performance conditions are nonmarket 
based being linked to certain predefined operational milestones
 share option scheme
the 2004 share option scheme is still in operation but only applies to certain nonexecutive directors and one external party 
granted the right to subscribe for shares in the company for the nonexecutive directors the remaining options granted under  
the 2004 share option scheme have vested
for both schemes options are normally forfeited if the employee leaves the group before the options vest
the following table illustrates the number and weighted average exercise price waep of and movements in all share options 
during the year
       2009  2008
      2009 wae p 2008 waep
      number £ number £
outstanding at beginning of year    11736600 1796  4175000 1000
surrendered during the year     9940000 1866 — —
replacement options granted     3328500 0050 — —
new options granted during the year    2963129 0050  11386600 1801
exercised during the year     — — 3800000 0937
expired at end of year     138000 1101 25000 1480
outstanding at end of year     7950229 0340 11736600 1796
exercisable at end of year     4417812 0571 2211600 1976
our financials
notes continued
forming part of the financial statements our performance 
chairman’s statement 
chief executives review
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65
our financials 
notes
 22 called up share capital continued
the principal inputs to the options valuation model were
2009
exercise price range  5p to 150p
remaining contractual life  1 to 3 years
weighted average share price  686p
risk free interest rate  059–225 pa
expected volatility  83–117 pa
dividend yield  0 pa
employee turnover  from 0 to 10 pa depending on seniority
early exercise  at rates dependent upon seniority and potential gain from exercise
 
2008
exercise price range  875p to 360p
remaining contractual life  1 to 10 years
weighted average share price  937p
risk free interest rate  45–55 pa
expected volatility  60–150 pa
dividend yield  0 pa
employee turnover  from 0 to 10 pa depending on seniority
early exercise  at rates dependent upon seniority and potential gain from exercise
 
expected volatility has been determined by reference to the historic annualised volatility of the company’s share return
the fair values and expected lives of the options valued in accordance with ifrs 2 were
          weighted
          average
        weighted expected
        average life from 
        fair value grant date
        £ years
2007       0456 109
2008       1069 183
2009       0795 158
the company recognised a total charge of 7618000 2008 9753000 in respect of cash and equity settled sharebased 
awards this includes an additional charge of nil 2008 633000 which was recognised within the share premium account to 
reflect the fair value of warrants granted in relation to a share placing that took place during the year ended 31 december 2008  
an amount of 602000 2008 3023000 was transferred between the equity share option reserve and the profit and loss 
account upon the exercise or lapse or certain awards see note 23 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
66
 23 share premium and reserves
    equity
   share share   foreign 
  share premium option merger capital exchange retained
  capital account reserve reserve contributions reserve earnings total
group 000 000 000 000 000 000 000 000
at 1 january 2008 12378 265899 3845 3204 7477 4563 245303 45655
retained loss 
for the year — — — — — — 50813 50813 
current year 
ifrs 2 charge — — 9753 — — — — 9753
issued shares 6716 206390 — — — — — 213106
share issue costs — 10040 — — — — — 10040
exchange differences  — — — — — 2028 — 2028
transfer for options 
exercised or expired — — 3023 — — — 3023 —
at 31 december 2008 19094 462249 10575 3204 7477 2535 293093 205633
    equity
   share share   foreign 
  share premium option merger capital exchange retained
  capital account reserve reserve contributions reserve earnings total
  000 000 000 000 000 000 000 000
at 1 january 2009 19094 462249 10575 3204 7477 2535 293093 205633
retained loss 
for the year — — — — — — 9819 9819
current year 
ifrs 2 charge — — 7618 — — — — 7618
issued shares 8616 96494 — — — — — 105110
share issue costs — 3653 — — — — — 3653
exchange differences  — — — — — 627 — 627
transfer for options 
exercised or expired — — 602 — — — 602 —
at 31 december  
2009 27710 555090 17591 3204 7477 1908 302310 304262
 equity share option reserve
the balance held in the equity share option reserve relates to the fair value of the share options that have been expensed  
through the profit and loss account less any amounts that have been transferred to the profit and loss account reserve upon  
exercise or expiry
our financials
notes continued
forming part of the financial statements our performance 
chairman’s statement 
chief executives review
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67
our financials 
notes
 23 share premium and reserves continued
 capital contributions reserve 
the capital contributions reserve is nondistributable and represents the value of equity invested in subsidiary entities prior to the 
company listing
 merger reserve
the merger reserve represents the difference between the nominal value of shares acquired by the company and those issued to 
acquire subsidiary undertakings this balance relates wholly to the acquisition of regal petroleum jersey limited and that 
company’s acquisition of regal petroleum corporation limited during 2002
 foreign exchange reserve
exchange reserve movement for the year attributable to currency fluctuations
       equity
      share share
     share premium option retained
     capital account reserve earnings total
company    000 000 000 000 000
at 1 january 2008    12378 265899 3845 241358 40764
retained loss for the year    — — — 39881 39881 
current year ifrs 2 charge    — — 9753 — 9753
issued shares    6716 206390 — — 213106
share issue costs    — 10040 — — 10040
transfer for options exercised or expired   — — 3023 3023 —
other    — — — 79 79
 at 31 december 2008    19094 462249 10575 278295 213623
       equity
      share share 
     share premium option retained
     capital account reserve earnings total
     000 000 000 000 000
at 1 january 2009    19094 462249 10575 278295 213623
retained loss for the year    — — — 13194 13194
current year ifrs 2 charge    — — 7618 — 7618
issued shares    8616 96494 — — 105110
share issue costs    — 3653 — — 3653
transfer for options exercised or expired   — — 602 602 —
 at 31 december 2009    27710 555090 17591 290887 309504 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
68
 24 operating l ease arrangements
 the group as lessee
 group company
       2009 2008 2009 2008
       000 000 000 000
minimum lease payments under operating leases recognised 
as an expense for the year     611 304 459 304
 
leases on office property are negotiated for an average of five years and rentals are fixed for an average of five years
at the balance sheet date the group had outstanding commitments for future minimum lease payments under noncancellable 
operating leases which fall due as follows
        2009 2008
         l and and land and
         buildings buildings
group and company       000 000
amounts payable due
— within one year       464 327
— in the second to fifth years inclusive      1045 1585
        1509 1912
 25 reconciliation of operating l oss to operating cash flow
        2009 2008
group       000 000
operating loss       9139 24827
depreciation amortisation and impairment charges     3088 2022
movement in provisions       61 1249
share option charge       7618 9120
exploration costs written off       95 3467
increasedecrease in stock       100 73
decreaseincrease in debtors       3802 233
increasedecrease in creditors      1726 1532
cash fromused in operations      7151 13159
        2009 2008
company       000 000
operating loss       18274 21851
depreciation amortisation and impairment charges     327 190
share option charge       7618 9120
write off of borrowing costs       — 375
movement in provisions       29 1171
increase in debtors       38 120
increasedecrease in creditors      488 1138
cash used in operations       9908 14595
our financials
notes continued
forming part of the financial statements our performance 
chairman’s statement 
chief executives review
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69
our financials 
notes
 26 financial instruments
 capital risk management
the group manages its capital to ensure that it is able to continue as a going concern whilst maximising the return to stakeholders 
the company’s overall strategy remains unchanged from 2008
the capital structure of the group consists of equity attributable to the equity holders of the parent comprising issued share capital 
share premium reserves and retained earnings as disclosed in note 23
there are no capital requirements imposed on the group
the group’s financial instruments comprise cash and cash equivalents and various items such as debtors and creditors that arise 
directly from its operations the group has bank accounts denominated in british pounds egyptian pounds us dollars euros 
ukraine hryvnia and romanian lei as at 31 december 2009 the group does not have any longterm borrowings 2008 nil  
the main future risks arising from the group’s financial instruments are currently currency risk interest rate risk and liquidity risk
the group’s financial assets and financial liabilities comprise the following
        2009 2008
financial assets       000 000
cash and cash equivalents       118592 106078
trade and other receivables       178 348
         118770 106426
 
        2009 2008
financial l iabilities       000 000
trade and other payables       7326 2352
accruals       15130 5424
         22456 7776
 
 currency risk
the functional currency of the majority of entities in the group is us dollars the following analysis of net monetary assets and 
liabilities shows the group’s currency exposures exposures comprise the monetary assets and liabilities of the group that are not 
denominated in the functional currency of the relevant entity
        2009 2008
currency       000 000
british pounds       28121 31191
euros       29989 64131
ukraine hryvnia       8230 4104
romanian lei       1452 109
         67792 99535
further disclosure regarding foreign currency risk management including how potential exposures are managed is discussed under 
the section titled operating environment principal risks and uncertainties 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
70
 26 financial instruments continued
 foreign currency sensitivity analysis
the group is mainly exposed to the currency of the european union euro the currency of the united kingdom sterling and the 
currency of ukraine hryvnia
the following table details the group’s sensitivity to a 10 per cent increase and decrease in the us dollar against the stated 
currencies 10 per cent is the sensitivity rate used when reporting foreign currency risk internally to key management personnel  
and represents management’s assessment of the reasonably possible change in foreign exchange rates the sensitivity analysis 
comprises money market deposits held at the balance sheet date a positive number below indicates an increase in profit and  
other equity where the us dollar weakens 10 per cent against the relevant currency for a 10 per cent strengthening of the us 
dollar against the relevant currency there would be an equal and opposite impact on the profit and other equity and the balances 
below would be negative
 euro currency  sterling currency hryvnia currency
 change change change
     2009 2008 2009 2008 2009 2008
currency    000 000 000 000 000 000
profitloss
— 10 per cent strengthening of usd  3040  4984 2976  3227 42 47
— 10 per cent weakening of usd   3040 4984 2976 3227 42 47
other equity
— 10 per cent strengthening of usd  3040 4984 2976  3227 42 47
— 10 per cent weakening of usd   3040 4984 2976 3227 42 47
 
 interest rate risk management
the group is not exposed to interest rate risk on financial liabilities as none of the entities in the group have any external  
borrowings the group does not use interest rate forward contracts and interest rate swap contracts as part of its strategy
the group is exposed to interest rate risk on financial assets as entities in the group hold money market deposits at floating  
interest rates the risk is managed by fixing interest rates for a period of time when indications exist that interest rates may move 
adversely
the group’s exposure to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management  
section below
 interest rate sensitivity analysis
the sensitivity analysis below has been determined based on exposure to interest rates for nonderivative instruments at the  
balance sheet date a 05 per cent increase or decrease is used when reporting interest rate risk internally to key management 
personnel and represents management’s assessment of a reasonably possible change in interest rates
if interest rates earned on money market deposits had been 05 per cent higherlower and all other variables were held constant  
the group’s
■ loss for the year ended 31 december 2009 would decrease by 525000 in the event of 05 higher interest rates and increase 
by 516000 in the event of 05 lower interest rates 2008 decrease and increase by 591000 this is mainly attributable to 
the group’s exposure to interest rates on its money market deposits and
■ other equity reserves would not be affected 2008 not affected
interest payable on the group’s liabilities would have an immaterial effect on the loss for the year
our financials
notes continued
forming part of the financial statements our performance 
chairman’s statement 
chief executives review
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71
our financials 
notes
 26 financial instruments continued
 l iquidity risk
the group’s objective throughout the year has been to ensure continuity of funding operations to date have primarily been 
financed through capital contributions facility drawdowns the issue of share capital prior to january 2006 february and june 
2008 and july 2009 revenue from ukraine operations and proceeds received as a result of the joint venture in egypt from which 
75 of back costs were reimbursed
details of the group’s cash management are explained in note 16
liquidity credit and cash flow risk for the group are further detailed under the section titled operating environment principal risks 
and uncertainties and in respect of liquidity risk the going concern section of the directors’ report
 interest rate risk profile of financial assets
the group had the following cash and cash equivalent balances which are included in financial assets as at 31 december 2009 
with an exposure to interest rate risk
 2009 2008
     floating  fixed  floating fixed
     rate  rate  rate rate
     financial  financial  financial financial
    total assets assets total assets assets
currency   000 000 000 000 000 000
british pounds   29765 29765 — 32342 32342 —
us dollars   57996 57996 — 7847 7847 —
euros   30399 30399 — 64857 64857 —
ukraine hryvnia   416 416 — 923 923 —
romanian lei   16 16 — 109 109 —
total   118592 118592 — 106078  106078 —
cash deposits included in the above balances comprise deposits placed in money market funds
 interest rate risk profile of financial l iabilities
the group had no interestbearing financial liabilities at year end 2008 nil 
all the group’s creditors falling due within one year are excluded because they are not interest bearing 
 maturity of financial l iabilities
the maturity profile of the group’s financial liabilities on an undiscounted basis is as follows
        2009 2008
         000 000
in one year or less       22456 7776
within two to five years       — —
in more than five years       — —
total       22456 7776 17759	 070510	 proof	5
regal petroleum plc annual report and accounts 2009
72
 26 financial instruments continued
 borrowing facilities
the group did not have any borrowing facilities available to it at year end the group’s borrowing facility was closed when all drawn 
amounts were repaid in april 2008
 fair value of financial assets and l iabilities
the fair value of all financial instruments is not materially different from the book value
 commodity price risk
risks relating to the fluctuation in the natural gas price are discussed under the section titled operating environment principal  
risks and uncertainties
 27 capital commitments 
amounts contracted in relation to the ukraine field development but not provided for in the financial statements at 31 december 
2009 were 699000 2008 2090000 in addition the company has entered into five year contracts with saipem spa for the 
provision of two drilling rigs the contracts for these rigs have a break clause after two years which if exercised results in a total 
minimum commitment through to early 2011 of 59220000 2008 103554000 however the company has the legal right  
to subcontract these rigs which may partially or wholly mitigate any exposure
 28 related party disclosures
key management personnel of the group are considered to comprise only the directors details of directors’ remuneration are 
disclosed in note 5 
 29 post balance sheet events
there were no events after the balance sheet date which require adjustment to or disclosure in these financial statements 
our financials
notes continued
forming part of the financial statements 17759	 070510	 proof	5 17759	 070510	 proof	5
 
regal petroleum plc
glossary
 company secretary and registered office
	c 	 phillips
lansdowne house
57 berkeley square
london w1j 6er
united kingdom
 auditors
	deloitte 	 llp
2 new street square
london ec4a 3bz
united kingdom
 bankers
	bank 	 of	 scotland	 corporate
london chief office
155 bishopsgate
london ec2m 3yb
united kingdom
 solicitors
	pinsent 	 masons	 llp
city point
1 ropemaker street
london ec2y 9ah
united kingdom
 nominated advisor
	strand 	 hanson	 limited
26 mount row
london w1k 3sq
united kingdom
 
 joint broker
	merrill 	 lynch	 international
merrill lynch financial centre
2 king edward street
london ec1a 1hq
united kingdom
 joint broker
	rbs 	 hoare	 govett
250 bishopsgate
london ec2m 4aa
united kingdom
 joint broker
	mirabaud 	 securities	 llp
21 st james’s square
london sw1y 4jp
united kingdom
 share registry
	computershare 	 investors	 services	 plc
the pavilions
bridgwater road
bristol bs99 6zy
united kingdom
 pr advisors
	citigate 	 dewe	 rogerson
3 london wall buildings
london ec2m 5sy
united kingdom
 km
kilometres
 km
2
square kilometres
 m
3
d
cubic metres per day
 mm
3
thousand cubic metres
 mm
3
d
thousand cubic metres per day
 mmcfd
million cubic feet per day
 bbl
barrel
 boepd
barrels of oil equivalent per day
 mmboe
million barrels of oil equivalent
 
united states dollar
 hp
horsepower
advisors 17759	 070510	 proof	5 17759	 070510	 proof	5
         annual report and accounts 2009 lansdowne house
57 berkeley square
london  w1j 6er
united kingdom
t 44 020 7408 9500
f 44 020 7408 9501
wwwregalpetroleumcouk
regal petroleum plc annual report and accounts 2009


Summary:
 06
regal petroleum plc annual report and accounts 2009
17759	 070510	 proof	5
our business
chief executive officer’s statement
david greer obe
continue to drive the company forward during 2009 four new 
generation wells were spud in ukraine and by january 2010 
production had risen to 2072 boepd following the hookup  
of sv58
health safety environment and security
regal is committed to maintaining the highest standards of 
health safety environment and security hses and the 
effective management of these areas is an intrinsic element of the 
overall business ethos through strict enforcement of the 
company’s hses management system together with regular 
management meetings training and the appointment of dedicated 
safety professionals the company strives to ensure that the 
impact of its business activities on its staff contractors and the 
environment is as low as is reasonably practicable regal reports 
safety and environmental performance in accordance with the 
association of oil and gas producers ogp guidelines
the number of safe manhours worked by staff and contractors 
in 2009 totalled 900549 manhours with no lost time 
incidents reported during the year this brought the cumulative 
total without a lost time incident to over 16 million hours by  
31 december 2009 and since this date the total has exceeded 
20 million hours over two years without a lost time incident  
no environmental incidents were recorded during the year
introduction
2009 was a year of sustained progress in ukraine most notably 
with the spudding of the first wells with the new topdrive drilling 
rigs work on the 3d subsurface model was further refined 
following the completion of seismic acquisition in 2008 and  
with data from the new wells governance procedures were 
strengthened further and historic regulatory matters were finally 
brought to a close the worldwide financial crisis and the resultant 
contraction in availability of investment capital threatened to derail 
regal’s development programme but the support shown by 
shareholders in the 105 million gross capital raising through a 
secondary placing on 1 july 2009 coupled with the funds raised 
in the preceding year has enabled the company to maintain 
momentum and to continue to build upon the achievements of  
last year 
the application of new technology and the appointment of 
experienced professionals with a wealth of industry experience 
driving the 
company  
forward 07
our performance 
chairman’s statement 
chief executives review
stockcode rpt wwwregalpetroleumcouk
17759	 070510	 proof	5
our business 
chief executive officer’s statement 08
regal petroleum plc annual report and accounts 2009
17759	 070510	 proof	5
our business
chief executive officer’s statement continued
technological
achievements
reservoir technol ogy
■ acquired processed and interpreted 3d seismic
imagery over entire licensed area
■ acquired advanced petrophysical analysis and
geological modelling software for detailed reservoir 
characterisation  
■ constructed static reservoir model based on 24 wellbores 
integrated with the seismic imagery as a basis for 
volumetric estimation 
■ consequent increase in internal view of initial hydrocarbons 
in place 
■ identified previously undeveloped limestone
reservoir b24
completion technol ogy
■ custom designed and built equipment for rig and coiled 
tubing to enable deployment of high pressure hydraulic 
abrasive jet perforation to ensure reservoir access 
■ wellbore inflow performance enhancement through 
deployment of “minifrac” stimulation of the rock face
■ completion designs allowing for zonal isolation and 
selective production
■ broadened completion strategy to include slotted liners set 
below 5400 metres depth
production technol ogy
■ launched wellhead compression project to increase 
ultimate recovery
■ launched liquid vapour recovery project to monetise
waste gas
■ identified and implemented production enhancement 
project portfolio on existing wells 09
our performance 
chairman’s statement 
chief executives review
stockcode rpt wwwregalpetroleumcouk
17759	 070510	 proof	5
our business 
chief executive officer’s statement
ke y 
fact s and fig ures
105m of new capital raised
year end cash balance 1186m
revenues up 74 on prior year
capital expenditure of 949m
gas realised price 244 per mm
3 10
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ukrainian
markets
ukraine overview
■ 	 longterm production licence
■ 	 significant existing reserves with clear sizeable
upside potential
■ 	 experience  technology to deliver seasoned industry 
professionals quality ukrainian team
■ 	 strategic location — approximately 80 of russian gas 
exported to the european union crosses ukraine
■ 	 encouraging business environment
■ 	 good fiscal environment encouraging deep
gas exploitation
■ 	 revenues indirectly linked to 
■ 	 structured to repatriate profits
attractive gas pricing 
european market very different to north america
■ 	 higher prices — oil price linked
■ 	 demand rising
■ 	 eastern europe joined eu
■ 	 north sea production decline
■ 	 nearly 80 of ukrainian demand satisfied by imported gas 
from russia domestic production encouraged 11
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however the plan is to modify our forward programme in the 
short term to optimise production 
in romania work continues on both of regal’s licence interests 
on barlad which is 100 regal owned and operated a further 
1047 km of 2d seismic was acquired and is being interpreted 
in advance of a further shallow gas exploration well planned  
for later in 2010 this will discharge the remaining work 
commitment for the licence however additional studies and 
field work are being undertaken to determine whether deeper 
prospects may reside within possible shale deposits of the 
silurian period in the suceava concession which is 50 owned 
by regal and operated by aurelian oil  gas plc 2d seismic 
data acquired during the year has resulted in the identification  
of a gas prospect located 25 km to the east of the vicsani 
discovery in the neighbouring brodina concession which is also 
operated by aurelian oil  gas plc it is intended to drill a well to 
evaluate this gas prospect later in 2010
in the east ras budran licence in egypt in which regal holds a 
25 interest and is operated by apache a workover on well 
erba1x to replace an electrical submersible pump was 
undertaken however technical challenges encountered by 
apache resulted in operations being suspended the 2010 plan 
for egypt includes further technical evaluation of the licence and 
the drilling of an additional well 
ukraine market and regal’s approach to 
unlocking value
ukraine is very well positioned geographically bridging the gas 
supplies of russia and the markets of europe with the 
european union “eu” on ukraine’s western border and russia 
on the east approximately 80 of russian gas exports to the 
eu travel via pipeline across the country and gas infrastructure 
is extensive regal is confident about the domestic demand for 
its gas as the expected production from the mexgol and sv 
licences rises consumption in ukraine over the last 15 years or 
so has been reasonably static with nearly 80 of demand being 
satisfied by imported gas regal’s predicted increase in 
2009 — a year in review
ukraine continues to be by far the main focus of operational 
activity and investment the thrust of regal’s strategy is to apply 
modern technology supported by highly experienced industry 
professionals in a region that has not hitherto seen such 
widespread application the first of a planned series of new
generation wells was spud in the first quarter of 2009 two new 
topdrive 2000 hp drilling rigs were contracted from saipem 
spa eni group and four wells were spud during the year — 
mex106 sv58 sv61 and sv66 drilling performance has 
outstripped all previous drilling activity on the licences up to four 
times faster for equivalent depth and it is expected that as a 
result of the learning acquired new wells should be drilled faster 
resulting in future cost reductions furthermore the new wells 
have been able to penetrate deeper owing to the capacity of the 
new rigs and the company has started to gain data on possible 
upside from the tournasian and devonian age potential reservoirs 
there has inevitably been some degree of initial teething 
problems and challenges but these are considered to be  
learning curve frustrations rather than fundamental problems  
and are to be expected in the first few wells drilled with such  
new technology these are the initial wells in a planned long term 
programme that is expected to continue into and beyond the  
next decade however given the quality and experience of the 
operations team on the ground supported by senior professionals 
in london solutions have been found most notably in the jet 
perforating technique which was first applied to sv58 following 
an intermittent and poor flow from this well when first perforated 
using local conventional guns a liquidised sandbased jet
perforating process successfully trialled on two thin bsands was 
subsequently rolled out over the remaining target reservoirs this 
was further enhanced with stimtube fracturing again a first in the 
ukraine resulting in significant improvements in production rates 
the field is relatively deep and the stratigraphic nature of the 
reservoirs complex but the structure is large and geographically 
extensive the challenge now is to unlock the upside potential 
that is believed to exist in both the b and tsands with each new 
well providing further refinement of our geological understanding  12
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chief executive officer’s statement continued
amendments to the price cap and correspondingly regal’s 
realised price had been made the realised gas price for regal 
in 2009 was higher than the imported price
future strategy
during 2009 regal continued to pursue the strategy that was 
established during the previous year in the development of its 
ukrainian assets despite the worldwide recession and resultant 
stemming of liquidity in global financial markets that has tested 
many companies regal has continued to follow its initial 
objectives to try to unlock the true value of its ukrainian assets 
this foundation should provide a stable platform for significant 
future growth in production and increased revenues with such 
increasing production giving a positive earnings outlook the 
company continues to have no debt and sufficient cash and 
materials to maintain operating activity into the foreseeable future
however the experience gained in the drilling of the first four new 
generation wells and particularly in drilling to the deeper sections 
in the wells on the sv field where drilling conditions have proven 
to be challenging at depth has caused the company to re
evaluate and refine its objectives for the development of the 
ukrainian field in this regard the company has determined that 
its immediate primary focus should be on securing production 
from the bsands reservoirs in both the mexgol and sv fields 
appraisal of the t and dsands in the mexgol field will be 
carried out on the mex106 well where workover operations are 
planned to complete the perforation of the b t and dsands 
using advanced perforation techniques and to replace the well 
completion it is considered that by focussing on increasing 
production from the bsands and the resultant operational 
revenue in the near term the company will be able to establish 
sustainable business growth by conserving and ultimately building 
its cash position and retaining maximum optionality whilst 
continuing to evaluate the most effective method of appraising 
the potential upside of the deeper t and dsands in the future
accordingly the company has determined to complete the sv66 
well as a bsands production well whilst deferring the appraisal 
of the t and dsands in this and subsequent new wells to allow 
further work to be undertaken in the assessment of the most 
effective method of appraising the deeper t and dsands  
i would like to thank our shareholders for their continued 
support particularly during such a turbulent period regal is also 
indebted to the commitment and hard work of all of its staff and 
contractors who have worked tirelessly and professionally to 
understand the subsurface and thereby begin to realise the true 
potential of our operated assets in ukraine and romania
production as each successful well is brought into production 
could in due course be material in terms of domestic supply but 
will still be small in comparison with imported volumes which 
heavily influence domestic prices importantly ukrainian fiscal 
terms actively encourage exploitation of domestic reserves and 
particularly through the royalty regime the recovery of deep gas 
and condensate
production has risen from below 500 boepd in the fourth 
quarter of 2008 to over 2000 boepd by january 2010 this 
represents the first contributions from the significant drilling 
investment which began in earnest in 2009 the overall 
philosophy of the company is to use modern technology much 
of which has not been applied in ukraine previously to drill wells 
both faster and deeper thereby increasing and accelerating 
production and consequently revenues this approach if 
successful should enhance the economic value of anticipated 
future cash flows and is expected to result in earlier enhanced 
revenues than from conventional local drilling practice in terms 
of investment the bulk of the cost lies in the capital expenditure 
for the drilling and completion of these new wells conversely 
the surface infrastructure and variable operating costs are 
relatively low since the gas and condensate require little surface 
treatment and the sales of gas are made from the licence 
boundary free of additional transportation tariffs or costs
the political situation in ukraine has continued to attract market 
attention in the runup to the presidential elections which 
concluded with the former prime minister mr viktor yanukovych 
taking office as president in february 2010 and a new governing 
coalition being formed regal has operated with the support of 
both regional and national government for a number of years 
including the period when mr yanukovych held the position of 
prime minister prior to the “orange revolution” and accordingly 
the company remains confident in the business environment and 
is committed to supporting the development of ukraine and to 
maintaining a strong relationship with the government at all levels
following the formation of the new government there are 
already indications of an improvement in relations between 
ukraine and russia this is reflected in the recent dialogue 
between their respective governments which has resulted in a 
review of the current imported gas price from russia and a fall in 
the imported gas price from russia to ukraine for the remainder 
of 2010 as a consequence the weighted average anticipated 
price for 2010 is likely to be similar or slightly higher than the 
average price for 2009 because the year to date price for 2010 
has been considerably higher than the 2009 average price it 
should be noted that the imported price is distinct from the 
domestic internal prices that are capped by the ukrainian 
authorities as at the time of preparing this report no  13
our performance 
chairman’s statement 
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our business 
chief executive officer’s statement
“the application of new technology and the appointment 
of experienced professionals with a wealth of industry 
experience continue to drive the company forward during 
2009 four new generation wells were spud in ukraine 
and by january 2010 production had risen to 2072 boepd 
following the hookup of sv58”  14
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