ruspetro plc
annual report and accounts 2012
delineating
the prize ruspetro has three contiguous oil 
and gas development licenses totaling 
1205 km
2
 on the krasnoleninsky arch 
hydrocarbon bearing formation in 
western siberia a major oil producing 
region in russia
as at 31 december 2012 we had proved 
reserves of 234 million barrels of oil 
equivalent ‘boe’ and proved plus 
probable reserves of 1838 billion boe
we produce and sell crude oil and gas 
condensate and produce petroleum gas 
as an associated product the company 
has its own metering station at the 
transneft pipeline through which it 
can sell its crude oil to endcustomers 
throughout europe
the area in which we are situated 
has a welldeveloped infrastructure 
and an established service industry for 
hydrocarbon production this includes 
federal highways and the national rail 
network the eld has access to the local 
electricity grid and the in eld terrain 
and infrastructure allow for the 
yearround production of oil
the core ‘knowhow’ for an oil and gas company is the 
ability to predictively model the performance of wells 
the de ning physics inherent in these models are based on 
darcy’s aw this is the equation governing the ow of uid 
through a porous medium ruspetro uses darcy’s law as 
the foundation of our performanceoriented quantitative 
approach to oil eld development for performance 
management we use darcy’s law as follows
represents the geological and petrophysical 
properties inherent in the rock – permeability 
oil viscosity and the thickness of the oil 
bearing zone the goal of our geological team 
and our geological model is to pick 
bottomhole locations maximizing 
  

represents the pressure differential 
between the reservoir and the well bore at 
the perforations the greater this pressure 
differential the greater the rate of oil ow 
our operations team seeks to maximize 
this differential by using electric submersible 
pumps to minimize hydrostatic pressure in 
the well bore keeping the wells ‘pumpedoff’ 
while using water injection to maximize 
pressure in the reservoir ruspetro’s 
hydrodynamic model is the guide for this 
endeavor acting as a tool to identify injectors 
and maximize ood ef ciency sweep
is a variable which represents completion 
– mathematically the radius of the well 
bore in relation to the oil bearing formation 
whether as a simple perforated well or with 
an increased radius due to fracturing or 
horizontal drilling every fracture or other 
form of stimulation results in a  we manage 
performance in fracture engineering and 
execution using  as our yardstick
ruspetrocom
delineating the prize annual report and accounts 2012 ruspetro plc
01
 — 97 increase in revenues year on year 
at us7623 million net of export duty
 — full year ebitda of negative us62 million 
ebitda for q42012 positive at us24 million
 — proved reserves up 35 to 234 million boe 
31 december 2012 including 32 million boe 
increase in oil and condensate reserves and 
29 million boe of commercial gas reserves
 — proved and probable gas reserves of 
153 million boe
 — average 2012 production up 81 over 2011 
at 4639 boepd
 — net debt of us3358 million at year end 
with us344 million of cash
contents
01 highlights 
02 our assets
04 business model and strategy
06 chairman’s statement
09 associated gas production
10 ceo’s strategic review and update
16 drilling advances
18 operating and nancial review
26  crude oil and condensate taxes 
and duties in russia
28  health safety and the 
environment ‘hse’
32 board of directors
34 governance
38 principal risks and uncertainties
42 directors’ report
45 2012 directors’ remuneration report
57 independent auditor’s report
58 financial statements
87  parent company nancial statements 
independent auditor’s report
95 shareholder information
96 contact information
highlights
us7623m
 revenue 2011 us3872m
2012 2011 change
revenue usm 7623 3872 97
well head revenue per barrel usboe 2450 1983 24
oil and condensate production total boe 1697950 935003 82
average production boe 4639 2560 81
proved reserves mmboe 234 173 35
probable reserves mmboe 1604 1372 17
commercial gas reserves 
mboe
150000
120000
90000
60000
30000
0 proved probable possible
29028
124345
13764
2000000
1500000
1000000
500000
0 proved probable possible
233616
1603964
411538
total reserves including gas 
mboe ruspetro plc annual report and accounts 2012
02
our assets
ruspetro has three exploration and 
production licenses making up one 
contiguous eld of 1205 km
2

the three licenses are the pottymsko
inginsky ‘pi’ license in the west of 
the eld the ostochnoinginsky ‘ i’ 
license in the center of the eld and the 
palyanovsky license on the north east 
of the eld the license blocks are 
situated in an area with welldeveloped 
infrastructure including national 
pipelines highways roads rail freight 
terminals and power supply lines
each of the company’s three licenses 
is a combined exploration and 
production license 
our license for the palyanovsky block is 
due to expire in december 2015 having 
been extended in december 2012 
the i license expires in une 2014 
and the pi license block expires 
in une 2017
we expect that the licenses will be 
renewed for the economic lives of the 
 elds although they could be granted 
for a period less than requested
the subsoil law as currently in effect 
allows for the extension of a subsoil 
license at the request of the license 
holder if such extension is necessary to 
 nish exploration or production in the 
 elds covered by the license provided 
that the license holder has not violated 
the terms of the license and ful lled 
its conditions
as a result to the extent that we meet 
our obligations under the applicable 
minimum work program required by 
the licenses and are not in breach of 
any license obligations or conditions 
each of our licenses issued prior to 
this legislation can be extended 
upon expiration for the economic 
life of the eld 
ruspetro plc 
uk
palyanovsky 
block
 ostochno 
inginsky block
pottymsko
inginsky block
ruspetro holding limited 
cyprus
ruspetro llc 
russia
o sc transoil  
russia
o sc inga russia
100
100 100
54
946 annual report and accounts 2012 ruspetro plc
03
15 km 1 5km
w
substation 
500kv
1 10kv
1 10kv
35kv
6kv
6kv
500kv
0 2000 4000 6000 8000 2000 w
pad3
pad27
oil processing
facility
pad for early 
processing facility
pad23
pad31
pad20
oil pipeline ‘gazpromneft’
oil pipeline ‘gazpromneft’
oil pipeline ‘nazim expedition’
oil pipeline ‘lukoil’
pad19
tnkpump 
station 32
ells
power lines
ells
ells
pipelines
y endyr
ingapekh
shyshyegan
malaya rechka
bolotniy
lake verhovoye
pottym
maliy pottym
lake vagator
lake dolgoye
yem’yegan
yendyr
lake mal’nskoye
lake y amnoye
lake mokhovoye
lake bolshoye 
y emyekhovskoye
malaya rechka
yendyr siga
talinka
palyanovo
sales point
‘transneft’ oil pipeline
krasnoleninskaya – ubinka
pad38
pad4
pad24
pad25
pad22
pad2
aste pad
yem’yegan
ork camp
356kv
pad21
p454p
ruspetro sales pipeline
map key
planned bridges
roads
license block boundary
pipelines
power lines
pad
winter wells
future roads
tnk road
winter road
water pipeline
planned pad
russian federation
vostochno
inginsky block
palyanovsky
block
pottymsko
inginsky block ruspetro plc annual report and accounts 2012
04
business model and strategy
our mission 
to maximize production 
and become the lowest 
cost producer in the region 
delivering marketleading 
shareholder returns to 
vigilantly implement the 
company’s safety and ethics 
policies and its commitment 
to being a good steward of 
the environment
our vision 
ruspetro strives to be 
recognized as a marketleading 
production company that is 
successful and responsible 
we are focused on achieving 
superior shareholder returns 
and delivering the lowest 
production and development 
costs in our market segment 
we will continue improving 
the quality of the company’s 
reserve base through the 
growth of proved reserves 
management and employees 
are committed to the highest 
standards of safety ethics and 
environmental performance
growth
objective
to increase production and 
grow our proved reserves base
ef ciency
opportunity
execution
to reduce the cost per barrel 
of oil produced by increasing 
productivity and ef ciency
adaptability to develop the 
company’s assets and the 
business to maximize 
pro tability
to deliver on our production 
objectives and maximize value 
creation for shareholders
scale
with over 18 billion boe of 
proved and probable reserves 
our aim is to become a midsized 
oil and gas producer within 
three years annual report and accounts 2012 ruspetro plc
05
2012 achievements
 — average production up at 4639 
boepd in 2012 from 2560 boepd 
in 2011
 — condensate production initiated 
signi cantly increasing average well 
head revenue per barrel of production
 — proved reserves increased by 35 
since december 2011
 — well completions accelerated
 — contiguous license blocks 
centrally managed
 — seismic reprocessing to improve 
high probability bottom hole 
location selection
 — nyagan of ce closed eld of ce 
centralised in talinka
 — electric submersible pump run life 
increased by 195
 — focusing production towards 
most cash generative barrels 
including condensate 
 — gas monetization plan initiated
 — alternative drilling and completion 
techniques examined
 — advantageous scal opportunities 
evaluated
 — condensate processing facility 
constructed rapidly to process 
5000 boepd per day
 — 27km sales pipeline installed from 
central processing facility to 
transneft ahead of schedule and 
signi cantly below budget
 — managed multiple contractors 
to accelerate drilling program
 — new drilling bits reduce drilling 
time by 26
 — procurement process automated
 — in eld pipeline and electricity 
networks extended to cover all 
operating pads
 — electricity generation utilizing 
associated gas initiated
 — new sales route via road and rail 
opened up for condensate production 
 — geosciences drilling engineering 
operations and administration  
teams expanded
 — surface infrastructure expenditure 
18 under budget
 — water ood commenced in the 
west of the eld enhancing 
well productivity
 — proved reserves up 35 to 
234 million boe
 — proved and probable reserves 
increased by 19 from 31 december 
2011 to 184 billion boe
 — 29 mmboe of proved gas reserves added
 — processing capacity increased by 
220 to 24000 boepd 
key performance indicators
20000
 
2012 activation cost per additional 
barrel of daily production us
1
1 de ned as capextotal additional daily production 
including new production replacing decline
1 independently assessed by degolyer and macnaughton
us’000
ebitda 2012
q1 q2 q3 q4
3000
1000
2000
0
2000
3000
1000
4000
5000
6000
59 5854 2854
2426
net present value growth of the 
company at 10 discount rate
1
usm
12000
10000
8000
6000
4000
2000
0 dec
2011
june
2012
dec
2012
7434 7556
10436
average boepd of production
2010 2011 2012
142
1055 2560 4639
81
28
0
1000
2000
3000
4000
5000
6000
5930
feb
2013
proved reserves 
mmboe
250
200
150
100
50
0 may
2009
may
2010
dec
2011
dec
2012
120 57
111
44
35
173 234 ruspetro plc annual report and accounts 2012
06
chairman’s statement
“ we take considerable encouragement 
from the reserves upgrade the second 
since our otation 2012 was a profoundly challenging 
year for ruspetro the outturn in 
terms of production and consequently 
returns for our shareholders was 
disappointing but to assess the 
company’s performance fully one 
must also look deeper into all levels 
of the company’s operations here i 
have been encouraged by a number of 
positive developments and above all by 
the tenacity of my executive colleagues 
in getting to grips with the challenges 
in the business
while in private ownership ruspetro 
had existed on the lightest footprint 
possible to conserve resources before 
the commencement of substantial cash 
 ows as a result post ipo the senior 
executive team has had not only to carry 
forward the eld development program 
but also to build the company i am 
particularly impressed by the speed 
and thoroughness with which don 
tom alexander and their colleagues 
have completed this exercise we have 
recruited a strong international team 
with experience from a variety of 
operating environments around the 
world at a time of human resource 
shortage in our industry i am 
encouraged by the caliber of recruits 
and take this as an endorsement of the 
quality and potential of our business 
we now have all the necessary human 
technical and engineering resource 
in our three centers the london plc 
of ce the moscow operational center 
and the siberian eld of ces to handle 
the anticipated growth in the business 
our history
1970s
first drilling into the krasnoleninsky 
arch in western siberia
february 1999
open joint stock company ‘inga’ 
issued with the pottymskoinginsky 
and vostochnoinginsky licenses
march 2002
palyanovsky license issued to open 
joint stock company transoil 
‘transoil’ annual report and accounts 2012 ruspetro plc
07
“ in what has been a challenging 
year for the business i should 
like to thank all our employees 
who have worked with great 
dedication to carry us through 
this period”
securing further nancing is essential 
for the continued development of the 
 eld in this regard we are discussing 
our nancial requirements with our 
major lender and we aim to secure this 
 nancing in the near future
in what has been a challenging year 
for the business i should like to thank 
all our employees who have worked 
with great dedication to carry us 
through this period my thanks 
should also go to my fellow board 
members who have been engaged in 
the business giving vital sometimes 
critical but always supportive 
advice our commitment to the best 
governance remains absolute and 
we continue with our comprehensive 
monitoring and vigorous pursuit 
of any possible improvements to 
the company’s health safety and 
environmental performance
christopher clark
chairman
turning to our assets despite the 
challenges of production we take 
considerable encouragement from the 
further increases to our proved and 
probable hydrocarbon reserves the 
second since otation announced post 
year end at these levels the scale and 
quality of our reserves provide a basis 
of full con dence for our medium and 
longterm production plans however 
in the short term we have to recognize 
that technical issues of recovery have 
frustrated our ambition in 2012 
varying permeability and lower than 
expected ow rates in the rst half and 
much higher associated gas production 
in the second both presented technical 
challenges for the management team 
here too i have been impressed by the 
adaptability and energy that the senior 
executive team have shown for 
example the emergence of a gas and 
condensate play in the north east of 
our eld while creating a technical 
challenge has markedly bene ted 
cash ows 
the construction of pipelines the 
structuring and signing of contractual 
supply relationships for fracturing 
the completion of processing facilities 
and nally the development of the 
condensate processing plant in the 
depths of the siberian winter are all 
real proof of the team’s resourcefulness 
and drive it is on this basis that i am 
con dent we are equal to the tasks 
ahead and that stakeholders can expect 
the operational picture to improve 
2004 and 2005
inga and transoil bought by 
summa capital and sold on to itera oil 
 gas company
january 2007
miller  lents reserves’ audit indicates 
56 million barrels of proved reserves 
102 million barrels of probable reserves 
and 389 million barrels of possible 
reserves are contained by the three 
license blocks
november 2007
ruspetro holding limited ‘rph’ 
was incorporated in cyprus
february 2008
ruspetro llc acquired from 
crossmead holding limited by rph
june 2008
ruspetro llc acquires inga and 
transoil from itera oil  gas 
company for us305 million 
transaction nanced by us225 
million loan from sberbank us25 
million loan from limolines transport 
limited and a us55 million loan from 
itera oil  gas company
october 2010
us42 million of new equity capital 
raised by ruspetro llc 
october 2011
ruspetro plc incorporated in england 
and wales as a public company and 
acquires 100 of the shares of rph
january 2012
ruspetro plc lists on the london 
stock exchange having successfully 
completed its ipo annual report and accounts 2012
08
ruspetro plc 09
annual report and accounts 2012 ruspetro plc
associated gas production
a potential new revenue stream
gas monetization
with signi cant gas reserves and 
production and accessible sales points 
available associated gas production at 
ruspetro may contribute signi cantly 
to our revenues in coming years 
associated gas production is 
currently 16 million cubic meters 
per day 9400 boepd due in large 
part to signi cant gas production 
in the palyanovo condensate eld 
this production is now being ared 
and as such is lost revenue for 
the company 
as stated in the 31 december 2012 
degolyer and macnaughton 
reserves’ audit the company has 
proved and probable gas reserves 
of 153 million boe 
the company has recently signed 
an ‘agreement of intent’ to supply 
ojsc fortum a subsidiary of a 
leading finland based electricity 
generator with dry gas for eight 
years this is projected to generate 
revenues for the company of up to 
us700 million during this period
the company has already made 
substantial progress designing the 
gas processing plant and pipeline 
required to commercialize the gas 
and is seeking to arrange the 
required nancing for this project 
these elements may be completed by 
the middle of 2014 putting ruspetro 
in a position to market and sell dry 
gas locally or via the gazprom 
pipeline network
the processing plant will not only 
enable the company to sell dry gas 
to the generating plant in nyagan 
but will also increase the ef ciency 
of our condensate production 
thereby increasing yields 
substantially additional products 
resulting from the processing of 
gas will include large quantities 
of propane and butane which can 
be sold commercially from the 
plant as liquids
gas arin the penalties for gas aring paid 
in 2012 totaled us850000 under 
the law in force during the period 
the regulations for gas aring and 
emission limits however have been 
revised and as a consequence we will 
not suffer penalties for associated 
gas aring as described below 
according to the russian federation 
government legislation effective 
1 january 2013 companies involved 
in the production of associated gas 
are required to reduce the amount of 
 aring of associated gas to 5 or less 
of the overall amount of associated 
gas produced with the exception of 
early stage production companies 
ruspetro as an early stage 
production company as de ned 
under the law can are up to 100 
of its associated petroleum gas for 
three years or until our proved and 
probable reserves are depleted by 
5 depletion as at 31 december 
2012 is less than 1 of the proved 
and probable reserves of the eld
the gas utilization and 
commercialization plan as described 
above for the gas produced in this 
area will reduce aring therefore 
eliminating future penalties and 
optimize the economic potential to 
the company of the produced gas ruspetro plc annual report and accounts 2012
10
ceo’s strategic review  
and update
“ the immediate challenge was to increase 
the pace of development of the company the ruspetro team made some 
signi cant accomplishments during 
2012 unfortunately we did not meet 
our principal objective which was to 
reach a 10400 boepd production target 
i am sincerely disappointed with that 
result nonetheless we did achieve a 
great deal we created a business that 
ef ciently develops produces and sells 
hydrocarbons
following our initial public offering 
‘ipo’ on 19 january 2012 we needed 
to move quickly and accomplish six 
key objectives which were to
1 build a team
2  develop sales treatment and access 
infrastructure urgently
3 grow production
4  improve reserve quality by 
increasing the proved category 1p
5  develop a strategy to develop and 
monetize our gas resources
6  improve the company’s nancial 
performance towards becoming cash 
 ow positive annual report and accounts 2012 ruspetro plc
11
key partnerships
one of the main risks to our business 
is execution part of the challenge is 
to manage the contractors working 
with us to develop our eld and 
ensure they share our vision and 
values and respect how we operate 
this vision includes timely and 
accurate execution of projects along 
with strict adherence to best practice 
hse standards without contractors 
sharing our vision and working with 
us to maintain the highest standards 
it is dif cult to maintain consistent 
best practice standards across 
the eld
our business relies on close 
cooperation with a number of 
contractors to whom we outsource 
many of our operational functions 
during 2012 having been let down 
by two fracturing service providers 
we built a strong relationship with 
weatherford in the last quarter of 
the year they were able to ful ll the 
well completion schedule that had 
fallen behind due to the lack of 
capacity of our previous fracturing 
service providers building this 
type of longterm reliable mutually 
bene cial relationship is key to 
the successful execution of our 
longterm objectives
 nance legal human resources and 
hse departments both in the head 
of ce in moscow and in our uk plc 
of ce in london 
this team executed our eld 
development program successfully 
by mobilizing four additional rigs in 
the eld over the course of the year 
and drilling 33 wells whilst improving 
the surface infrastructure to provide 
access electricity and pipelines to 
all working pads this also included 
building and commissioning the 27km 
sales pipeline ahead of schedule and 
signi cantly under budget the 
company now has 15000 bopd of 
processing capacity for our crude oil 
production in our west eld area and 
9000 bopd of processing capacity for 
condensate and 3 million cubic meters 
of gas processing capacity per day in the 
north of the eld the team continues to 
exceed the regional benchmarks in the 
construction of pipelines power lines 
roads and facilities
while the company made great strides 
in putting in signi cant infrastructure 
quickly and at a lower cost than budgeted 
growing production at the tempo we had 
initially planned proved to be dif cult 
our plan at ipo was to continue 
development of the structural high in the 
west of the eld our mapping showed the 
geology progressing ontrend to the east 
and west from pad 21 as we had some 
existing infrastructure to the east of pad 
21 and knowledge of the formations from 
3d seismic we directed our development 
efforts in this direction by building pad 19 
the immediate challenge was to 
increase the pace of development of 
the company to do this we needed to 
get more rigs into operation start and 
complete on schedule the construction 
of a sales pipeline to link the company’s 
processing facility with the transneft 
pipeline network build a pump station 
and increase oil treatment capacity 
at the time of the ipo we had only 
one rig in operation on pad 21 with 
no more room for expansion to drill 
further wells for other rigs to be 
activated we needed to extend existing 
pads and build the roads power lines 
and pipelines to connect them within 
days of the ipo we began procurement 
of the pipe for the 27km sales pipeline 
and in parallel began trenching 
operations concurrently we started 
extending pad 21 in preparation for 
more drilling this level of activity 
while impressive did require a more 
capable team to manage the multiple 
parallel processes for this pace of 
 eld development 
during the year we increased the 
size of our team considerably in order 
to be able to gain the expertise and 
management capability necessary to 
triple our drilling program buildout 
the required infrastructure increase 
our production and improve our 
understanding of the eld the new 
team needed to be able to deliver on 
our fast paced rollout we were able to 
bring key people into the company with 
both international and local business 
backgrounds they have roles and 
responsibilities throughout the 
business in operations in our 
subsurface department and in the 
 ro essin apa ity
boepd
crude oil 15000
condensate 9000
“ during the year we increased 
the size of our team considerably 
in order to be able to gain the 
expertise and management 
capability necessary to triple 
our drilling program” ruspetro plc annual report and accounts 2012
12
ceo’s strategic review and update
continued
staff
since our ipo we have considerably 
increased the size of our team in order 
to be able to gain the expertise and 
management capability necessary to 
increase our production and improve 
our understanding of the eld key 
new hires include robert stewart who 
heads our production and operations 
and is based in the eld robert has 
28 years of industry experience 
with conoco nick de’ ath formerly 
of tnkbp with over 30 years 
of industry experience heads our 
subsurface team john krupa has 
joined us from exillon as senior 
geophysicist he also has over 30 years 
of industry experience we have also 
made senior appointments to head 
drilling workovers and fracturing
in addition to our operations and 
subsurface team we have made key 
appointments in the nance legal 
human resources and 
hse departments
we are focused on promoting a 
performance based culture to do 
this we are developing an incentive 
program structured to deliver optimal 
performance from our team
2012 key milestones
first quarter
 — ipo raised us214 million
 — completed 27km sales pipeline 
 — developed in eld pipeline 
network 
 — constructed in eld power lines annual report and accounts 2012 ruspetro plc
13
condensate production during the year 
several upgrades to the production system 
were conducted including upgrading the 
in eld pipelines separation water 
disposal and testing equipment
at the end of 2012 it was necessary to 
further upgrade the epf to manage the 
large volumes of gas production and to 
dissipate the heat carried to the surface 
by the gas and condensate production 
a heat exchange system new separators 
and larger diameter ow lines were 
all added to the facility to bring the 
temperature and pressure of the 
well production to a point whereby the 
condensate could be stabilized however 
when the heat exchange system was 
commissioned reservoir pressure decline 
and the resultant drop in condensate 
yield meant that condensate production 
did not rise as initially expected
the increased gas supply and reserves 
identi ed by the development work 
in the north of the eld has been 
instrumental in pushing forward 
our gas utilization and monetization 
strategy this strategy is discussed 
in more detail on page 09
from the company’s inception it has 
been our stated aim to increase the 
quality of our reserves 2012 saw a 35 
increase in our proved reserves which 
now stand at 234 mmboe this is a 
61 mmboe increase of which 29 mmboe 
are the proved gas reserves added 
due to the development of the gas and 
condensate play in the north of the eld
the respectable current gas production 
in the north of the eld associated with 
the condensate we are selling presents 
the potential for a signi cant gas 
business for ruspetro that will enhance 
our pro tability when brought online 
this was not something that we 
envisaged to be feasible a year ago 
we are currently producing about 
16 million cubic meters per day 
9400 boepd
we have been developing a gas 
monetization plan to allow us to sell 
our associated petroleum gas to several 
potential clients the initial primary 
customer is a commercial electricity 
generating plant being constructed in 
the region other potential customers 
are available via the gazprom pipeline 
network which is beginning to open up 
in response to the russian government’s 
drive towards greater utilization of 
associated gas by oil producers
the planning process for a gas processing 
plant and pipeline is under way and we 
intend to start building during the winter 
of 2013 with revenues from the project 
beginning to be realized in the second 
half of 2014 the gas business will have 
relatively low operating costs and thus 
will become another high margin 
revenue stream for ruspetro
erecting a rig and beginning to drill after 
drilling several wells in different areas 
from pad 19 we were met by consistently 
lower permeability than we had found 
previously the reservoir rock had similar 
thickness and in some cases superior 
porosity to the reservoir accessible from 
pad 21 but due to the lower permeability 
the wells were only yielding 
approximately 150 bopd of initial rate 
after fracture treatment at the same time 
that we were experiencing poor reservoir 
quality from pad 19 we were getting 
better results from the gascondensate 
reservoir in the north of the eld 
the gascondensate eld provided 
two positives firstly the well rates 
and reservoir quality while variable 
were on average better than our 
 ndings from pad 19 secondly the 
mineral extraction tax ‘met’ for 
condensate is approximately us20 less 
per barrel than for crude oil this lower 
 scal burden nearly doubled the well 
head revenue ‘whr’ of production 
on a per barrel basis
the combination of the higher ow 
rates and the much lower rate of met 
currently makes condensate far more 
cash generative to produce and sell than 
crude oil in the second half of the year 
we capitalized on this and refocused 
our drilling strategy towards this 
condensate rich area to do this it was 
necessary to mobilize rigs and build 
an early processing facility ‘epf’ to 
stabilize the condensate before it could 
be taken to its destination re nery by 
truck and rail with the increase in gas and 
second quarter
 — 14 wells drilled 
 ve completed
 — proved reserves increase to 
183 million boe
 — accelerated pace of drilling
 — initiated water ood injection 
on pad 21
 — initiated condensate sales
 — building geosciences drilling 
engineering operations and 
administration teams
 — installed initial treatment 
facility in the north east
 — 4 mw generating capacity 
installed utilising associated gas
 — activated three additional 
drilling rigs
 — production begins in the north 
east of the eld ruspetro plc annual report and accounts 2012
14
fourth quarter
 — ebitda positive at 
us24 million for the quarter
 — seismic reprocessing begins
 — second rig in condensate 
play spuds
 — water ood enhancements 
evidenced
ceo’s strategic review and update
continued
conclusion
over the course of 2012 we increased our 
proved reserves base as well as the pace 
of well completions we have completed 
the surface infrastructure necessary to 
build production and have engaged 
the necessary contractors to ensure 
an optimal well completion tempo 
we identi ed signi cant contributions 
from highervalue condensate which 
has in turn driven a change in direction 
for our shortterm initiatives 
we have gained valuable insights into 
the characteristics of our eld in 2012 
marking it out as a year of delineation 
for ruspetro although there have been 
some disappointments we have the 
measures in place to capitalize on the 
vast potential of our eld the years 
ahead will draw on these insights to 
allow us to effectively exploit the 
intrinsic value of ruspetro’s assets
don wolcott
chie e ecuti e o cer
outlook
our main priority for 2013 is to deliver 
on our growing cash generation we will 
continue to develop the gascondensate 
play in the north of the eld this will 
help to build our revenues and cash 
 ows which will give us the exibility 
to grow our business signi cantly 
in the coming years 
building production and making sure 
that we execute our drilling program 
are the main tasks ahead of us now 
we will look to expand our gas business 
to sell substantially all of the associated 
gas produced to third parties from the 
second half of 2014
in our crude oil area we will continue 
to expand water ood operations as 
we are now seeing stabilization and 
in some cases increases in reservoir 
pressures this is beginning to generate 
production enhancement opportunities 
and will continue to do so in 2013 
we will also look to resume drilling 
and increase the range of completion 
technologies used to optimize 
production from the varying geology 
of the eld in 2013
with these aims in mind we are 
currently working with our lender 
to arrange the required nancing
“ our main priority for 2013 
is to deliver on our growing 
cash generation”
2012 key milestones
third quarter
 — condensate reaches a third of 
total production
 — residential man camps 
established in north east and 
west of eld
 — 300 amp stepup transformer 
installed
 — water injection pump station 
commissioned
 — condensate early processing 
facility commissioned
 — central processing upgrade 
initiated
 — in eld pipeline and electricity 
grid expanded annual report and accounts 2012 ruspetro plc
15
corporate social 
responsibility
as a business we are focused on 
incorporating world class standards 
for health safety and the environment 
‘hse’ into all areas of our operations 
we have adopted an hse policy that 
has been approved by the board with 
the following initial aims
 — to strengthen the hse team so 
that standards and policies can 
be implemented effectively 
across the company
 — to develop hse reporting and 
investigation processes
 — to report our environmental 
performance to an international 
standard in our 2013 annual 
report
 — early processing facility 
development initiated for 
increased production volumes annual report and accounts 2012
16
ruspetro plc
drilling advances 
 ringing ef ciency to the eld
during the year we looked at ways to 
reduce our drilling times one of the 
critical issues causing longer than 
necessary drilling times was the low 
rate of penetration by the drill bits 
being used and the need to change 
bits during the drilling of a well
the rig contractors started the 
year using chinese pdc bits in 
the cretaceous and jurassic zones 
generating a rate of penetration of 
283mhr and tricone bits in the 
paleozoic zone averaging 39mhr 
apart from the slow rate of 
penetration changing the bit during 
drilling also delayed the process
working with the drilling contractors 
and a western drill bit manufacturer we 
developed a pdc bit speci cally 
designed to drill the entire section 
in one bit run the rate of penetration 
increased signi cantly to 573mhr 
in the cretaceous and jurassic and 
194mhr in the paleozoic without 
needing to be changed through the 
entire section
 
 
01 2 3 4 5 6 7 8
depth meters vs drilling  tripping time days
earlier bit run averages
chinese pdc bits averaged 283mhr in 
cretaceousjurrasic and tricone bits  
averaged 39mhr in paleozoic
recent wells drilled with western 
pdc bits in 2207 mm hole
special design pdc bit used to drill 
entire section in one bit run rop  
573mhr in cretaceousjurrasic and 
194mhr in paleozoic
800
1000
1200
1400
1600
1800
2000
2200
2400
2600
2800
3000
3200
            previous average            well 248 17
annual report and accounts 2012 ruspetro plc ruspetro plc annual report and accounts 2012
18
250
200
150
100
50
0 may
2009
may
2010
aug
2011
dec
2012
june
2012
dec
2011
57
120
157
173
183
234
audited proved reserves
mmboe
operating and nancial review
our reserves are audited twice 
yearly by degolyer and macnaughton 
the 31 december 2012 audit includes 
for the rst time the characterisation 
of the gas and condensate producing 
formation in the palyanovo license 
block in the north east of the eld 
for the rst time we now have signi cant 
proved and probable gas reserves in our 
 eld we are currently treating and 
selling some of our condensate and 
are developing treatment and delivery 
systems to monetize the remainder 
of the gas and gas liquids
we will continue to migrate probable 
reserves to proved and proved reserves 
to proveddeveloped as we expand our 
drilling program deliver water ood 
results and re ne our geological and 
hydrodynamic models increases will 
come from increased recovery factors 
driven primarily by water ood 
operations and changes in our ooip 
and geological model as we re ne and 
reprocess our seismic and well test data
we are continually developing 
our understanding of the eld by 
reprocessing the 3d seismic and 
historical log data that we acquired 
with the eld and by increasing our 
data set with each additional well 
drilled we believe that there remains 
substantial additional opportunity 
resource potential
proved reserves have increased 
by 35 since our 31 december 2011 
audit to 234 million barrels of oil 
equivalent ‘mmboe’ of which 
205 mmboe are liquids
the company currently has 
proveddeveloped reserves of 
approximately 161 million barrels of 
oil and condensate this compares to 
116 million barrels as at 31 december 
2011 a gain of 40 we will endeavor 
to grow these reserves over the coming 
years as our drilling program expands 
proved and probable ‘2p’ reserves have 
increased by 19 to 184 billion boe since 
our 31 december 2011 audit as a result of 
increased original oil in place identi ed 
during ongoing geological work and the 
discovery and characterization of our gas 
and gas condensate eld in palyanovo 
the total increase in proved reserves 
was 61 mmboe
in our eld in both conventional and 
unconventional reserves and we will 
continue to develop and re ne our 
models through processing new 
well data and the acquisition and 
interpretation of new seismic data 
in the future
our next reserves audit will be dated 
30 june 2013
 o elin our reser oirs
in 2012 the company assembled 
a highly experienced subsurface 
department their aim is to de ne 
the architecture of our reservoir rocks 
de ning how much oil is present within 
the pore spaces of the rock and how best 
to maximize the production of the oil
the department is comprised of 
geologists who describe the intricacies 
of the depositional environment and 
build a ‘geocellular’ or ‘static’ computer 
model of the reservoir geophysicists 
who use seismic surveys to help de ne 
the subsurface architecture petro 
physicists who de ne the character 
of the rock and the uids they contain 
and reservoir engineers who predict 
and model how the uids will move 
in the subsurface
our reservoirs are described by our 
geoscientists as thin tight jurassic 
 uvial sandstones this means they were 
deposited during the 150–200 million 
years’ timeperiod in a river system 
that in lled a rift that formed as the 
siberian tectonic plate started to break 
apart the tensional forces pulling the 
earth’s crust apart analogous to the 
present day red sea gradually waned 
however and the rift failed 
31 december 2012 commercial 
gas reserves
mmboe
proved 29
probable 124 annual report and accounts 2012 ruspetro plc
19
2012 revenue from crude and 
condensate sales and other usm
1 export crude 169
2 domestic crude 467
3 domestic condensate 112
4 other metering services 14
1
2
3
4
4000
5000
3000
2000
1000
0 2009 2010 2011 2012
673
1055
2560
4639
average production 
boepd
50
40
30
20
10
0 crude
2012 average us245
condensate
215
403
2012 well head revenue per barrel
usboe
erosion of the surrounding uplands 
caused rivers to deposit ‘synrift’ 
sediments into the rift that is to say 
the uplands surrounding our area were 
quite low so only thin river sands were 
deposited at different times throughout 
the jurassic period referred to as the 
uk2 – uk10 sequence 
the rift system was occasionally 
inundated by the jurassic sea which lay 
to the north of our eld when the sea 
encroached it deposited marine shales 
mudstones and silts the principal 
incursions are represented by the 
radom togur and bazhenov shales 
the latter being the nal inundation 
which covered most of west siberia 
our palyanovsky license block in the 
north east was originally a broad valley 
in this area it is the uvial sands of 
uk8 – uk10 that are productive 
in the pottymskoinginsky license 
block in the west of the eld a small 
basement high was still emergent 
during the later jurassic period the 
rivers during this period deposited 
their uk2 – uk3 uvial sediments in 
a radial fashion around the small high 
it is these horizons that are productive 
for ruspetro in this area and we have 
been producing them from pad 21
because these sands were deposited 
in a rift system rivers follow the lowest 
areas on the downthrown side of faults 
consequently the connectivity of our 
thin reservoir sands is disrupted by both 
stratigraphic variation the changing 
direction of rivers and structural 
complexity by faulting this causes 
major challenges in de ning the actual 
area a production well will drain oil from 
as well as understanding which wells 
will be affected by the pressure support 
from water injection wells 
we use seismic data especially 3d 
data to help de ne the subsurface 
architecture of the reservoir but 
although we have three 3d cubes 
covering the northern part of our 
licenses the quality needed to be 
enhanced in order to increase the 
probability of selecting bottom hole 
locations with the best productivity
in the latter part of 2012 the 
subsurface department has been 
reprocessing the seismic that we 
have with the latest technology 
in order to give greater clarity and 
enable future wells to be located with 
greater accuracy as a second step 
the department will then be further 
processing the seismic to provide even 
greater clarity on how our reservoirs 
are distributed at the same time we 
are acquiring more sophisticated well 
logs in some of our wells to de ne 
the rock physics this data and 
information will be used to develop 
a much more accurate understanding 
of the reservoir rocks and uids and 
thus improve well predictability
in the north east of the eld in 
the palyanovsky license block the 
hydrocarbons appear to be in a gas
condensate phase in the reservoir  ruspetro plc annual report and accounts 2012
20
bbl
2009 2010 2011 2012
245645
387570
935003
1697950
0
500000
1000000
1500000
2000000
crude oil and condensate production 
rather than black oil just as 
water changes its phase to ice when 
it is cold or steam when it is hot so 
hydrocarbons change their phase 
depending on temperature and 
pressure this not only occurs in 
the subsurface but also when the 
hydrocarbons are brought to 
the surface 
in 2013 the department may 
investigate the production potential of 
the ‘unconventional’ reservoirs which 
are the hydrocarbon source rocks 
most notably the bazhenov shale 
technological advancements applied 
to ‘unconventionals’ over the past 
decade particularly in the us have 
revolutionized the oil and gas industry 
across the world initial activity in our 
area will require detailed investigation 
of the shale potential which would then 
be followed by pilot horizontal wells 
drilled into the shale and multistage 
fractures performed along the 
horizontal length of the well this 
technology may also be applicable 
to our conventional reservoirs
in 2013 as our well control increases 
and our seismic data improves our static 
and dynamic models will constantly be 
updated to re ect more accurately the 
character and performance of our 
operating and nancial review
continued
reservoirs this will be the foundation 
for our increasing production and the 
continuing growth in our audited oil 
and gas reserves 
 ales an marketin in 2012 the company produced a 
total of 1697950bbls of oil of which 
1650294 was sold an increase 
in production of 82 from 2011 
production of 935003bbls 
21 was crude oil sold for export 
via the transneft pipeline system 
350791bbls for export sales we work 
with glencore plc an international oil 
trading company who sells our crude 
to a re nery in hungary currently we 
have a quota to export up to 35 of 
our production
we have recently delivered our rst 
crude oil cargo by tanker to rotterdam 
in the netherlands demonstrating 
our exible approach to oil sales and 
commitment to maximizing our 
product prices we remain opportunistic 
in our approach to sales and price 
maximization of our high quality crude 
and condensate to achieve our netback 
goals we have increased our evacuation 
routes and delivery options considerably 
since ipo in addition to pipeline sales 
to local re neries we are now able to sell 
crude oil and condensate in russia and 
internationally by truck rail barge 
and tanker flexibility in our delivery 
destinations and a broader customer 
base is the key to maximizing pricing 
and we will continue to opportunistically 
explore and develop new ways to realize 
our hydrocarbons in 2013 
in 2012 we completed our 27km sales 
pipeline connecting our treatment 
facility to the transneft system and 
built an entirely new facility to treat 
gas and gascondensate in our new 
gas eld we also began preliminary 
route design for gas and condensate 
pipelines and the initial engineering 
for a gas processing plant in our 
palyanovo eld we will continue 
to improve on the existing treatment 
systems and continue developing 
our gas processing and pipeline 
infrastructure during 2013
condensate made up 15 of our sales 
volume in 2012 and 27 of our well 
head revenue this product was sold 
directly to a domestic offtaker from 
the early processing facility ‘epf’ 
the offtaker arranges road and rail 
transport from the epf and gives 
ruspetro a price net of these costs
in 2012 ruspetro also earned us14 
million by providing access to the 
transneft pipeline via our metering 
station to third party oil producers 
in the region
2012 sales by market and type bbl
1 domestic crude oil 1032045
2 domestic condensate 267458
3 export crude 350791
 
1
2
3 annual report and accounts 2012 ruspetro plc
21
2012 percentage breakdown of capital 
costs of production wells
1 drilling 67
2 loggingperforation 3
3 fracturing 19
4 coiltubing 4
5 completion 3
6 wellhead and tubing 4
1
2
3
4
5
6
capital e pen iture 2012 actual s o u et
facility us’000 actual
ipo
budget variance
variance

new wells 66014 44400 21614 49
sales pipeline 4078 8900 4822 54
in eld pipelines 11476 4450 7026 158
power facilities 2992 8000 5008 63
electricity lines 817 1500 683 46
pad construction 4881 5000 119 8
oil processing facilities 6674 15650 8976 57
other eld infrastructure 1689 5780 4091 71
other capex 7962 – 7962 na
surface infrastructure subtotal 40569 49280 8711 18
total 106583 93680 12904 14
water injection
the company started its water injection program in june 2012 with the 
conversion of two wells to water injectors water ood increases recoveries 
through reservoir pressure maintenance and by mobilizing oil towards 
producing well bores ‘sweep’ and is an integral part of our eld 
development plan
we are beginning to see physical response to this activity as modeled which will 
enable us to slow or temporarily halt production declines attributed to pressure 
drop and possibly create enhancement candidates in some of our well stock 
we will also be submitting this empirical data to our reserves auditors and 
moving some parts of our eld further towards water ood recovery factors
as part of this program we have installed a water pumping station at the 
central processing facility that enables the company to recirculate separated 
water back to the pads for reinjection into the formations ruspetro plc annual report and accounts 2012
22
operating and nancial review
continued
drillin the company drilled 33 wells in 2012 
at a cost of us66 million including 
fracturing and connections to our 
gathering system during the year we 
mobilized four rigs two in the west of 
the eld drilling into the uk2 – uk3 
formation to produce crude oil and 
two in the north east of the eld 
drilling into the uk8 – uk10 
formations where we had identi ed 
a gas and condensate play
our drilling program in the west of 
the eld revealed two issues that we 
are currently addressing first that the 
reservoir pressure in the pad 21 area has 
been lowered by historic production in 
this area and hydraulic communication 
between bottomhole locations second 
while drilling to the east of pad 21 
revealed similar formation structure 
thicker oilbearing intervals and 
equivalent or better porosity but upon 
completion the permeability of the sands 
and thus the owrate was shown to be 
signi cantly lower than that previously 
known on pad 21
to address the lower reservoir pressure 
we have initiated a water injection 
program in this area beginning 
to convert producer wells to water 
injection wells in the middle of 2012 
we have begun to see pressure 
response in neighboring wells 
as a result of the water ooding
in order for the company to predictively 
select higher quality bottomhole 
locations across the eld we will need 
to improve the resolution of our seismic 
maps and the geophysical clarity of our 
geological model to achieve higher 
resolutions we have completed some 
reprocessing and inversion analysis 
of the existing 2d and 3d seismic 
that covers 100 and 42 of the eld 
respectively more detail about our 
reprocessing program can be found 
in the section modeling our reservoirs 
on page 18  annual report and accounts 2012 ruspetro plc
23
the company had an average 39 day 
spud to completion time of which 
21 days were required to drill and case 
a well we added drilling contractors 
to the eld in 2012 most signi cantly 
with a weatherford and a ssk rig 
both rigs are capable of bestinclass 
vertical well drilling times and quality 
both rigs are also capable of drilling 
horizontal sections
 racturin ruspetro designs and implements 
fracture treatments as a standard 
completion practice on all new wells 
fractures are designed individually for 
the zone of interest in a given well and 
we employ worldclass fracturing service 
contractors to implement our designs 
mathematically a fracture is simply a 
much larger well bore and provides a 
large increase in effective permeability 
and thus the ability of a given well to 
produce at the beginning of the year 
our international oil service contractors 
provided fracturing services in the eld 
with consistency however increasing 
demand in the neighboring elds during 
the year resulted in inconsistent fracture 
scheduling and delays in the completion 
of several wells 
we therefore initiated and established a 
successful relationship with weatherford 
international ltd who in the second 
half of the year became our primary 
fracturing service contractor in the 
 eld the relationship was advantageous 
to weatherford as it allowed them to 
establish themselves in the region with 
a depot in our eld and a signi cant 
number of ruspetro wells to be 
fractured for the company it enabled 
us to bring our completion backlog up to 
date allow new wells to be completed on 
schedule and gave us a consistent high 
quality partner in the eld to meet our 
requirements going forward
infrastructure investment 
and delivery
2012 was a year in which we completed 
several key infrastructure projects at a 
speed and cost we believe to be highly 
competitive in our environment 
transportation treatment and gathering 
infrastructure that we built in 2012 
will provide processing and evacuation 
capacity to support production growth 
for the next several years
immediately after our ipo we began work 
on and completed the 27km sales pipeline 
that transports crude from our central 
processing facility to our wholly owned 
metering station on the transneft 
pipeline from where we can sell our crude 
to russian and european customers we 
completed this project on time and under 
budget and eliminated us228bbl of 
trucking costs from our eld to our 
existing transneft connection point
the company completed several 
projects during the year to secure and 
strengthen its power supply within the 
 eld we installed a 300 amp stepup 
transformer at the talinka substation 
which provides the main power source 
for the western part of the eld the 
company constructed the necessary 
in eld power lines to increase drilling 
and production we also purchased 
4 mw of electricity generators to 
enable us to utilise some of our 
associated petroleum gas in electricity 
production a petroleum gas generator 
can reduce the daily cost of power 
of running a rig to us800 from 
us1500 when compared to using 
power from the grid this brings the 
cost of power to drill a new well down 
to us16800 from us31500
the necessary in eld pipeline network 
has been completed to bring production 
 uid from the wells to the processing 
facilities and transport processed water 
back to the pads via the newly installed 
water pumping station at the central 
processing facility
the in eld electricity grid the in eld 
pipeline system for production uids 
processed water for reinjection and the 
system partially powered by associated 
gas brings us closer to our goal of 
having a closed loop production system 
producing treating and transporting 
crude directly from our elds to 
endcustomers worldwide
condensate production
we started selling gas condensate 
to domestic customers in april 2012 
with the completion of well 1004 in the 
palyanovo license block condensate 
refers to 51 degree api light oil being 
produced in the north of the eld
condensate production has two main 
advantages for our business first 
condensate is a premium product in 
high demand throughout russia and 
commands a price premium to crude 
oil second condensate has been subject 
to a mineral extraction tax ‘met’ of 
rur556 per ton in 2012 rur591 per 
ton in 2013 and rur647 per ton in 
2014 rur591 per ton is currently the 
equivalent of approximately us230 per 
barrel as compared to our average met 
for crude oil in 2012 of us22 per barrel 
consequently the well head revenue of 
condensate production is approximately 
us20 per barrel greater than the well 
head revenue for crude oil production 
this overwhelming net revenue 
advantage has incentivized the 
company to reorient our drilling 
program towards the condensate 
producing area of the eld in the 
near term
condensate now comprises 
approximately 20 of our production ruspetro plc annual report and accounts 2012
24
outlook for 2013
in 2013 drilling will be focused on the 
condensate producing area in the north 
of the eld we nished drilling on the 
pad 1 area in the condensate play in early 
2013 and as at the date of this report are 
mobilizing a rig to pad 4 in the ‘fairway’ 
of our condensate play we expect to 
spud the rst well from this pad in 
late march of 2013
development in 2013 is aimed at 
maximizing cash generation from 
operations condensate production will 
be the initial target with crude coming 
back into focus later in the year as russia 
develops its new tax regime for tight 
conventional and unconventional oil 
during 2013 our subsurface department 
will be engineering new well and 
completion designs to unlock our less 
permeable crude oil plays horizontal 
multiple fractured wells will be the focus 
of this engineering work and initial 
modeling is encouraging as to ow rates 
and investment ef ciencies as russia’s 
tax regime develops to stimulate 
unconventional development we will 
also be reviewing our unconventional 
shale plays in the bazhenov and the 
abalak formations our goal is to 
identify reservoir characteristics 
reserves and the appropriate completion 
and development approach 
financial summary 
for 2012 as set out on pages 58 to 86 
of this report we ended the year with 
revenues of us76230 thousand this 
was an increase of 97 from 2011 and 
was achieved by increasing average 
production for the year to 4639 boepd 
from 2474 boepd full year production 
was 1370960 boepd of crude oil and 
326990 boepd of condensate and we 
achieved an exit rate of 6540 boepd 
at the end of the year revenues are 
reported net of export duty 
we also generated positive ebitda 
of us2426 thousand in the fourth 
quarter of 2012 thanks in large part 
to our focus on condensate production 
ebitda over the year was negative 
us6223 thousand with our absolute 
production and sales volumes being 
lower than anticipated at the time 
of our ipo 
cost of sales
2012 cost of sales including 
depreciation was us74816 thousand 
and represented 98 of revenues in 
2012 as compared to 135 of revenues 
in 2011 the increase in the cost of sales 
was primarily as a result of increasing 
sales volumes and increasing the scale 
of the business in anticipation of further 
sales volume increases
the higher sales related costs includes 
met of us31816 thousand which 
was 68 higher than the prior year 
commensurate with an increase in 
production volumes of 82 year on year 
other sales costs increased by 29 
re ecting both increased production 
volumes and expenditures in anticipation 
of the future development of ruspetro’s 
business operating expenses excluding 
depreciation and met was approximately 
25093 thousand compared to 9719 
thousand in 2011
compared with 2011 depletion 
depreciation and amortization decreased 
by us5820 thousand or 25 to 
us17907 thousand as a result of an 
increase in the proved developed reserve 
base partly offset by an increase in 
production other costs of sales include 
sundry costs and costs of materials used 
in production 
 ellin and administrative 
expenses ‘sa’
sa expenses excluding sharebased 
payments increased to us28446 
thousand or 90 from 2011 sa 
expenses include oil transportation 
costs payroll expenses rent 
professional services property and 
land taxes bank charges and other 
expenses including costs associated 
with ruspetro’s status as a public 
company a full breakdown of the sa 
can be found on page 73 the increase 
in sa re ects the management 
resources and expertise required 
for an increased scale of operational 
activity and production
comprehensive loss for the year
the company recorded a loss for the 
year of us27284 thousand this 
was approximately 68 lower than 
the 2011 loss of us85063 thousand 
after translating the results to the 
presentation currency which resulted 
in a gain of us6061 thousand the 
total comprehensive loss for the year 
was us21223 thousand
cash o our ipo raised net cash proceeds of 
us213699 thousand with the issue 
of 126128848 new ordinary shares 
bringing the total number of ordinary 
shares in issue to 333381480 of ten 
pence each
operating and nancial review
continued
development in 2013 is 
primarily aimed at maximizing 
immediate cash generation from 
operations the early processing 
facility for our condensate 
production can now stabilise 
up to 9000 boepd annual report and accounts 2012 ruspetro plc
25
we started the year with 1294 
thousand in cash after receiving 
us213699 thousand net cash from 
our ipo we repaid debt of us18575 
thousand and paid interest during the 
year of us50645 thousand we spent 
us66014 thousand on drilling 49 
higher than our development plan at 
ipo and us40569 million on 
infrastructure development 18 lower 
than budgeted in our development 
plan at ipo during the year after an 
operating cash out ow before working 
capital adjustments of us7511 
thousand working capital adjustments 
of negative 1291 thousand and a 
currency translation difference of 
positive us3941 thousand we ended 
the year with a closing cash balance 
of us34416 thousand
purchase of property plant and 
equipment ‘ppe’
the company invested us106583 
thousand in property plant and 
equipment in 2012 representing an 
increase in investment over 2011 of 
230 ppe assets were us226736 
thousand at the end of the period 
an increase of 104 whilst mineral 
rights and other intangibles increased 
by 6 to us425551 thousand
financin of ruspetro’s 
current operations and future 
development
on the basis of its current nancial 
resources and its existing external and 
shareholder debt nance ruspetro’s 
development in 2013 and beyond will 
require additional funding 
while the existing us2891 million 
facility with sberbank is due in april 
2015 securing nancing is essential 
for the continued development of the 
 eld therefore ruspetro is currently 
evaluating a number of nancing options 
including additional nancing and term 
extension of its existing debt with our 
major lender such discussions are 
currently underway and it is hoped 
that this re nancing is agreed in the 
near future
outstandin de t at year end 2012
lender
amount 
usm outstanding interest rate maturity
akb ‘sberbank’ 2891 109 pa april 2015
limolines transport limited 618 libor 10 pa may 2015
makayla investments limited 190 libor 10 pa august 2013
crossmead holding limited 03 9 pa past due
total 3702
if additional nancing is not obtained 
the group may be unable to realize its 
assets and discharge its liabilities in the 
normal course of business management 
considers that these circumstances 
represent a material uncertainty that 
may cast doubt on the group’s and 
company’s ability to continue as 
a going concern
1 year end cash balance adjusted by us87 thousand due to reorganization
250
200
150
100
50
0
opening cash 
1 january 2012
ipo financing
operating cash flow
change in 
working capital
capex
loans and 
interest paid
exchange rate and 
other effects
closing cash balance 
31 december 2012
1294
213699
7511
1291
106583
69220
4028
34416
1
2012 cash ow pro le 
usm annual report and accounts 2012
26
ruspetro plc
crude oil and condensate taxes and 
duties in russia
mineral extraction tax ‘met’
met is applied to all hydrocarbon 
production in the russian federation 
it is a production volume based tax and 
is paid monthly
crude oil
for crude oil met is calculated by 
multiplying the extracted quantity 
of dewatered desalted and stabilized 
oil by the base rate per ton of crude oil 
produced and by the adjustment ratio 
that re ects changes in the rubus 
exchange rate and the depletion rate 
of the subject eld according to the 
following formula rub 470 x p—15 
x k261 x cd x cr where
 — rub 470 is the base rate that has 
been increased from rub 446 per 
ton of crude oil as of 1 january 2013
 — p is the average price for urals 
crude on international oil markets 
mediterranean and rotterdam oil 
markets in us per barrel during 
the prior month
 — k is the average ruble per us 
exchange rate established by the 
central bank of russia during the 
prior month
 — cd is the depletion coef cient based 
upon the depletion of each eld 
cd is calculated according to the 
following formula 38–35 x nv 
where n is the cumulative 
production of an oil eld including 
production losses and v is the sum 
of the reserves of the russian 
categories a b c1 and c2 and
 — cr is a new coef cient applicable 
as of 1 january 2012 to re ect the 
amount of resources for a particular 
subsoil area
the formula for calculation of the 
crude oil extraction tax rate provides 
for a cutoff price of urals blend crude 
oil at or below which the tax rate 
amounts to zero since 1 january 
2009 the cutoff price has been 
us1500 per barrel
export duty
the rate of export duty is linked to the average urals price in us per barrel 
as follows
urals price
1 
export duty
12
below us10950 per ton
us1500 per barrel
export duty is not levied
us10950 to us14600 per ton
us1500 to us2000 per barrel
350 of the difference between 
urals price and us10950 per ton 
us1500 per barrel
us14600 to us18200 per ton 
us2000 to us2500 per barrel
us1278 per ton us175 per barrel 
plus 450 of the difference between 
urals price and us14600 per ton 
us2000 per barrel
above us18250 per ton
us2500 per barrel
us2920 per ton us400 per barrel 
plus 600 of the difference between 
urals price and us18250 per ton 
us2500 per barrel
1 assumes a conversion factor of 73 barrels per ton
2 the average urals price per barrel used is the average price during the prior month
the depletion coef cient is applicable 
to mature elds with more than 80 
depletion a coef cient of 10 applies 
to a eld with up to 80 depletion and 
this is reduced on a sliding scale from 
80 to 100 depletion in increments 
of 0035 for each 1 of depletion the 
minimum coef cient is 03 for oil elds 
with a depletion rate above 100 the 
depletion rate is based on crude oil 
production and reserves information 
reported to the russian government
assuming the average monthly us
rub exchange rate is constant and the 
depletion factor equals 10 each increase 
in the average world market price of 
urals blend oil by us100 per barrel 
above the cutoff price of us1500 per 
barrel will result in an increase in the tax 
rate of approximately us161 per ton of 
oil extracted or us022 per barrel of 
oil extracted using a conversion factor 
of 733 barrels per ton
for example
conv ratio bblton 733
urals usbbl 112
met base rurt 470
exchange rate rubus 30
met usbbl 2270
condensate
the met rate for condensate was also 
amended on 1 january 2012 instead 
of the ad valorem rate of 175 the 
following xed rates in rubles per ton 
have been set
 — 556 rubles per ton for 2012
 — 591 rubles per ton for 2013 and
 — 647 rubles per ton from 
1 january 2014
as compared with the ad valorem rate 
applied earlier the new met rates for 
condensate reduce the tax burden 
signi cantly for this type of product  27
annual report and accounts 2012 ruspetro plc
with a r s exchan e rate 
of 30 and a barrels per ton rate 
of 3 this ives a 2013 met 
rate for condensate of 
us237 per barrel
export duty
for example
urals price usbbl 112
export duty usbbl 5620
since december 2008 the russian 
government has been revising the 
crude oil export duty monthly on the 
basis of the immediately preceding 
month’s average crude oil price by 
introducing this measure the russian 
government intended to limit the 
exposure of oil exporting companies 
to severe declines in crude oil prices 
previously the rates of export duty 
were revised every two months
the rate of export duty for condensate 
is not applicable to our operations as 
we sell our condensate to domestic 
customers only ruspetro plc annual report and accounts 2012
28
health safety and the environment 
‘hse’
ruspetro is committed to hse and is working 
to improve its performance across these areas by 
improving the safety and security of its operations 
increasingly protecting and remediating the 
environment and building relationships with 
the local communities in which we work
lost time injury frequency ‘ltif’ 
– the number of lost time injuries 
fatalities and lost work day cases 
per 200000 work hours the ltif 
for ruspetro in 2012 was zero
total recordable incident frequency 
‘trif’ – a broad measure aiming 
to capture all incidents de ned as the 
total number of recordable incidents 
these include fatalities injuries 
resulting in greater than one day or 
shift away from work the restricted 
ability of an employee to work due to 
injury an incident treated with rst 
aid and any unplanned hydrocarbon 
release per 200000 work hours since 
standard reporting started in august 
2012 ruspetro’s trif was 147
motor vehicle incident frequency 
‘mvif’ – the total number of motor 
vehicle crashes per 1000000km 
since standard reporting started in 
august 2012 at the company the 
mvif was 24
hse
introduction
ruspetro has set its goals for hse as
 — to take care of the company’s 
employees 
 — to create a high quality working 
environment
 — to enhance the living standards 
of the communities within which 
we operate and
 — to produce responsibly from the 
company’s assets
ruspetro is committed to these 
goals and is working to improve its 
performance across these areas by 
improving the safety and security of 
its operations increasingly protecting 
and remediating the environment and 
building relationships with the local 
communities in which we work
the company’s main assets are 
the three license blocks it holds 
on the krasnoleninsky arch near 
khantymansiysk in western siberia 
ruspetro is committed to developing 
the resources within its asset base 
in a responsible manner respecting 
all key stakeholders 
there are two communities based 
within our license blocks talinka 
with a population of about 4200 and 
palyanovo with a population of about 
200 the company has its operational 
base in talinka where it manages 
daytoday eld operations by basing 
our operations here we are bringing 
increased investment activity and 
employment to the community whilst 
improving the management of our 
production activities
safety performance
production of oil and gas has inherent 
risks that ruspetro is working to 
effectively manage during 2012 there 
have been no of cial lost time accidents 
reported to the russian authorities 
by ruspetro a lost time accident is an 
incident which results in an employee 
being absent from work for at least 
 ve days or shifts as de ned by the 
russian government 
the company however reports 
incidents internally in order to build 
its reporting systems to international 
standards these reported incidents 
are as follows
lost time injury ‘lti’ – a fatality or 
lost time accident the number of ltis 
is the sum of fatalities and lost time 
accidents a lti will be one which 
results in an employee or contractor 
being absent from work for three days 
or work shifts during 2012 ruspetro 
had no lti annual report and accounts 2012 ruspetro plc
29
in addition to these internationally 
recognized measures the company 
has developed internal safety 
standards to improve our approach 
to safety issues these standards are 
based upon recognized international 
standards within the industry 
developed to address the main risks 
faced by the industry supervisors and 
employees have been trained so that 
they can ensure the workforce is in 
compliance with these standards 
the standards are
to continually improve safety 
standards the company believes that 
it is crucial to report all incidents and 
determine their causes the company 
is adopting recognized procedures 
and processes to provide consistency 
of reporting and to ensure supervisors 
are involved in identifying and 
implementing corrective actions 
the company is also working with 
its main contractors to ensure they 
report transparently to the company
when reported incidents are able 
to give a large enough statistical 
reference point as to where the main 
issues are arising the company will 
be able to prioritize efforts to improve 
safety performance and measure 
the effects of those efforts
security
the company aims to improve the 
security of its assets and information by 
establishing transparent processes and 
procedures for its operations nances 
and procurement work has started 
on ensuring transparent processes are 
implemented for dealing with counter 
parties and the procurement of goods 
and services this work will continue 
in 2013
the protection of physical assets 
has been upgraded through the 
installation of security cameras 
at all the company’s operational 
locations and with gps tracking 
devices installed in both the 
company’s own and contractor 
vehicles to ensure their 
ef cient utilization 
there are currently six cameras in 
operation with another 18 planned for 
installation to cover production areas 
and primary road access points we 
also plan to install of ce access control 
systems and video equipment in all 
of ces by the end of the rst half 
of 2013
standard purpose
leadership to create an expectation of supervisors and employees 
to work safely and a duty to raise concerns
incident investigation 
and reporting
to require that all incidents are reported and 
investigated and that any recommendations to prevent 
a reoccurrence are implemented
personal protective 
equipment ‘ppe’
to ensure ppe is worn and maintained to protect 
employees and contractors
safe systems of work to ensure employees and contractors are provided 
with a safe place to work and that the risks associated 
with their work are described to them
isolate energy sources the processing of oil and gas exposes employees and 
contractors to sources of energy such as pressure and 
electricity to ensure work is performed safely these 
sources of energy needs to be separated from the 
working area and secured with controlled systems
ground disturbances 
 con ned space entry
to ensure the safety from potentially dangerous 
atmospheres or other hidden hazards for staff working 
in places with restricted access
lifting operations the transfer of large and heavy equipment on our sites 
needs to be managed to ensure the safety of staff
working safety at height to protect staff working at height and those below 
the work site
transportation safety to ensure the safe use of cars and vehicles
smoking alcohol  
drug abuse
to prohibit the use of any substances legal or 
otherwise which reduces an employee’s or contractor’s 
ability to perform their work safely ruspetro plc annual report and accounts 2012
30
hse
continued
environmental performance
the company’s duty of care to the 
environment is of key importance 
during 2012 the company has 
adopted an environmental protection 
program via its main production 
subsidiaries ojsc inga and ojsc 
transoil the production of oil causes 
four possible routes of contamination
 — atmospheric emissions – principally 
through the aring or venting of 
associated gas
 — water emissions – mainly from 
produced water 
 — solid wastes – mainly drilling  
cuttings and
 — oil spillages and leaks
the program aims to
 — reduce waste at source through 
design and operation
 — recover or recycle the emissions 
of production eg the reinjection 
of produced water
 — protect the natural water bodies and 
soil from contamination or damage 
from operations
 — optimize the use of existing land 
for pipeline and transportation 
routes and operational sites whilst 
also minimizing land use in 
sensitive natural community 
or historical areas
 — monitor the impact of operations 
on the environment and
 — clean up any waste materials or oil 
spills using recognized reclamation 
procedures to allow the environment 
to recover
in order to address its atmospheric 
emissions during 2012 the company 
installed approximately 4 mw 
of electricity generation powered by 
associated gas this is intended to 
supply in eld power demands 
over the course of the year 
the company paid approximately 
us850000 in penalties for the 
 aring of associated gas in compliance 
with the russian state legislation 
in november 2012 the federal 
government adopted a decree 
signi cantly increasing penalties for 
associated petroleum gas aring when 
overall cumulative production to date 
exceeds 5 of the reserves of the 
reservoir this decree came into effect 
from 1 january 2013 with the aim of 
improving the utilization of associated 
gas by the oil industry the company’s 
low level of current reservoir depletion  annual report and accounts 2012 ruspetro plc
31
at approximately 1 currently means 
that within the framework of the new 
decree the company has no aring 
penalties to pay until the end of 2015 
the company is however currently 
putting in place a strategy to utilize 
100 of its associated gas production 
from 2015
due to the decree increased 
monitoring will be required 
and plans are already in place 
to install additional gas meters 
in early 2013 to provide the 
required data
during 2012 the company carried 
out remediation works to 
contaminated land including
 — the reclamation of 03 hectares 
of land from oil contamination
 — the processing of 9800 cubic 
meters of drilling cuttings
 — the reclamation of 2760 square 
meters of sludge pits and
 — the reclamation of 6300 cubic meters 
of sludge pits from legacy drilling 
works inherited by the company
further remediation work is planned 
in 2013 when the weather improves 
after winter this work includes 
further work on legacy drilling
for the reporting year 2013 the company 
will be required under uk government 
regulations to comply with the guidelines 
for the reporting of greenhouse gas 
emissions in preparation for this we 
are working with trucost a leading 
consultancy collecting and analyzing 
environmentally impactful company 
data with trucost we will be collecting 
and reporting the relevant emission 
data from our operations
community relations
in order to help support the 
communities in which we operate 
the company has agreements with the 
local authorities in talinka and the local 
regional authority of the octyabrskiy 
region these agreements have been 
renewed for 2013 during 2012 the 
company invested approximately 
us250000 into the local community 
to provide support for the local school in 
talinka and create a road infrastructure 
for the village of palyanovo these works 
will be continued in 2013 
additionally ruspetro will continue 
to support the local community 
encouraging quali ed staff to move 
to the area by investing in a number 
of projects these include supporting 
the school in talinka by
 — funding a school trip to the ivth 
international festival of musicians 
and artists ‘visiting the fairytale’
 — equipping a cartoon animation lab and
 — purchasing sports equipment and 
costumes for the center of recreation 
and culture
and improving local medical facilities 
by purchasing
 — medical supplies for the dental center 
and
 — medical equipment for the clinic 
including a de brillator 
people
the company has employed many highly 
quali ed staff during 2012 attracted to 
work for the company due to its
 — production base and management 
team
 — the dynamic fast paced working 
environment and 
 — the international and progressive 
team environment
during 2012 the company has put in 
place processes to employ and retain 
staff and enable them to grow and 
develop within the organization 
these processes include
 — workforce planning – to ensure 
the future staf ng needs of the 
company are met
 — performance management – to 
identify individual contributions 
to the company’s success
 — career ladders – to encourage 
individual growth and development
 — longterm rewards – to incentivize 
and retain key staff
 — intra company communications – 
to transmit clear and consistent 
information on company 
performance
 — technical and management training 
– to ensure employees and managers 
have the skills required to perform 
their roles effectively and
 — coaching and mentoring – to 
develop staff through experience 
at work and encourage staff to 
give their best effort
ruspetro has recruited over 80 
additional staff in 2012 across our 
locations these hires included staff in 
the london of ce for plc related tasks 
strengthening the operational staff in 
talinka and building out the corporate 
functions in moscow during the year 
58 employees left ruspetro resulting 
in an overall turnover rate of 27 
approximately 5 of staff turnover 
occurred with the relocation of the 
operational base from nyagan to talinka 
and the closure of the nyagan of ce 
nyagan is approximately 2 hours drive 
from the production sites whilst talinka 
is located beside the production 
facilities relocating the functions to 
talinka has improved performance 
within the operational groups
critically highly experienced 
internationally experienced 
professionals have been recruited 
in the areas of reservoir engineering 
geology operations and drilling
during 2012 ruspetro developed a 
quarterly performance review system 
for all staff this will be further re ned 
in 2013 to clearly identify highly 
performing employees and to improve 
the transparent link between company 
performance individual contribution 
and reward 
to attract and retain staff the 
company’s remuneration policy 
has been developed and is presented 
in this report ruspetro has also 
introduced a competitive set of bene ts 
including life and medical insurance 
for all employees and a longterm 
incentive plan a reward policy for 
all staff has been developed  ruspetro plc annual report and accounts 2012
32
board of directors
the board of directors has nine 
members including four independent 
nonexecutive directors
chris clark
chairman
mr clark aged 71 was appointed chief 
executive of johnson matthey in 1998 
he took the company into the ftse 
100 in 2002 and retired two years 
later he was subsequently chairman 
of associated british ports holdings 
plc he was chairman of urenco 
limited from 2006 to 2011 he became 
chairman of oao severstal in 2006
mr clark attended trinity college 
cambridge and brunel university 
london and is a quali ed metallurgist
don wolcott
chief executive of cer
mr wolcott aged 51 worked for yukos 
oil from 1999 to 2005 as senior vice 
president for production and reservoir 
performance at yukos he was 
responsible for all aspects of its 
production and reservoir performance 
business from 1996 to 1998 mr wolcott 
worked at schlumberger oil field 
services and prior to that at arco 
alaska inc from 1989 to 1994 
mr wolcott has a phd in petroleum 
engineering from the colorado school 
of mines
tom reed
chief nancial of cer
mr reed aged 42 was a private equity 
and ma advisor and investor based 
in moscow prior to joining ruspetro 
mr reed has worked in russia on the 
origination trading and research of 
equity and equity derivatives 
distressed debt and debt derivatives 
since 1995 mr reed was an advisor 
to vr capital and raven russia and 
a founding shareholder of rising star 
media he has advised and invested in 
several private companies in russia
mr reed graduated from the 
university of south california with 
a ba in humanities emphasis in 
philosophy minor in nance annual report and accounts 2012 ruspetro plc
33
alexander chistyakov
executive director and president 
mr chistyakov aged 40 prior to 
joining ruspetro was rst deputy 
chairman of the russian federal grid 
company’s ues management from 
2002 having joined in 1999 in 1998 
he was the head of the economic 
analysis department and deputy 
director of the nancial department 
at russia’s federal agency on industry 
rosprom prior to that he was 
deputy director of investment 
management at menatep bank 
and deputy general director of 
aliance menatep 
mr chistyakov has a master’s 
degree in marketing and nance 
and a phd in economics from the 
leningradnavoznesenske finance 
and economics institute
robert jenkins
independent nonexecutive director
mr jenkins aged 59 is a chartered 
accountant kpmg and has 20 years’ 
russiarelated investment experience 
including in private equity with 
framlington group as nance director 
of uk aim mining exploration company 
eurasia mining and as cfo of oil 
exploration and production company 
urals energy mr jenkins is a partner 
in russia focused northstar corporate 
finance and also a nonexecutive 
director of toledo mining corporation 
uk aim listed and engaged in nickel 
exploration and production in the 
philippines
mr jenkins has an ma in modern 
history and modern languages russian 
from oxford university
rolf stomber nonexecutive senior 
independent director
mr stomberg aged 72 is the chairman 
of the supervisory board of lanxess 
ag and he is the senior independent 
director of oao severstal he spent 
30 years with bp plc where he last held 
the position of ceo of bp’s downstream 
business and managing director on 
the main board after this he was a 
nonexecutive director on the boards 
of numerous international companies 
mr stomberg has a doctorate of 
economics from hamburg university
joe mach
independent nonexecutive director
mr mach aged 64 is the principal of 
houston consultants an investment 
company based in texas mr mach 
served as vice president responsible 
for exploration and production at 
yukos ep from 1999 until 2006 
prior to yukos mr mach worked for 
schlumberger from 1976 until 1999 
he has been a society of petroleum 
engineers member since 1970 
mr mach has a bsc degree in 
petroleum engineering from the 
university of tulsa and served as 
chairman of the universities petroleum 
engineering advisory board
james gerson
nonexecutive director
mr gerson aged 40 is general director 
of jsc lonburg and serves as a 
director of jsc sestroetsk tool works 
and jsc new era from 2000 to 2003 
he was head of investor relations at 
jsc lenenergo and from 1997 to 1999 
he worked at rothschild
mr gerson has a ba in russian 
and east european history from 
london university
james mcburney
independent nonexecutive director
mr mcburney aged 54 is ceo of 
white tiger gold limited before 
this he was ceo of hcf international 
advisors and jnr uk limited 
and he headed the european natural 
resources investment banking at bank 
of america in london was a managing 
director with merrill lynch’s energy  
power group in new york and was 
an executive director in ma with 
goldman sachs in new york and 
london prior to his banking career 
he served for ve years as an infantry 
of cer in the us marine corps
mr mcburney received an mba from 
harvard business school and a ba 
cum laude from yale college ruspetro plc annual report and accounts 2012
34
introduction 
ruspetro seeks to maintain a high standard of corporate 
governance and places great emphasis on ensuring these 
standards are maintained throughout the business the 
board provides speci c guidance on corporate governance 
as a central part of its role of providing leadership and 
direction to the company
governance of the company 
the company is committed to the principles of corporate 
governance and since the company was listed on the london 
stock exchange on 19 january 2012 the company has 
embraced and fully supported the principles contained in the 
uk corporate governance code 2010 and 2012 the ‘code’ 
by which the board is accountable to shareholders
the board of directors of ruspetro plc the ‘board’
membership of the board
the board comprises nine directors made up of the chairman 
chief executive of cer chief nancial of cer president and 
executive director senior independent nonexecutive 
directors and four other nonexecutive directors biographical 
details of each of the members of the board are set out in the 
preceding section of the annual report and details of the 
executive directors’ service contracts and the nonexecutive 
directors’ letters of appointment are set out in the directors’ 
remuneration report
the role of the board 
the board’s role is to provide entrepreneurial leadership of the 
company’s business within a framework of prudent and effective 
controls which enables risk to be assessed and managed 
the board sets out its vision for the company’s strategic aims 
ensures that the necessary nancial and human resources are 
in place for the company to meet its objectives and to review 
management performance the board sets out the company’s 
values and standards and ensures that its obligations to its 
shareholders and others are understood and met 
board balance and independence 
the composition of the board comprises an appropriate 
balance of expertise experience independence and depth of 
knowledge of the company to enable the board to discharge 
its respective duties and responsibilities effectively the board 
includes a combination of executive and nonexecutive 
directors including independent nonexecutives to provide 
a balance of perspectives and to ensure that no individual 
director or group of directors can dominate the decisions of the 
board the board has three committees the audit committee 
nomination committee and remuneration committee the 
composition of which is reviewed from time to time to ensure 
that undue reliance is not placed on any one chairman or 
member during the year the chairman met the other 
nonexecutive directors without the attendance of the 
executive directors on a number of occasions
independent and nonexecutive directors
the nonexecutive directors contribute independent and 
objective judgment on issues of strategy and company 
performance including compliance to corporate standards 
throughout the organisation mr stomberg is the company’s 
senior independent nonexecutive director the company 
considers all nonexecutive directors to be independent 
nonexecutive directors within the meaning of ‘independent’ 
as de ned in the code except mr james gerson who 
represents limolines transport limited the company 
con rms that all nonexecutive directors have suf cient 
time available to ful l their obligations to the company 
governance
election and reelection of directors 
directors will stand for reelection at the 2013 annual general 
meeting as required by the companies act 2006 and as 
recommended by the code for election of a nonexecutive 
director the board will set out for shareholders the merits of 
the individual’s appointment and the chairman will con rm 
the effectiveness and commitment of the individual 
new appointments to the board
the appointment of new board members will be conducted 
and appointments made based on individual qualities that 
will ful ll the requirements of the company in meeting 
its objectives and to maintain a healthy balance in the 
composition and balance of the board 
information and support
the chairman through the company secretary ensures 
that the members of the board and its committees receive 
accurate timely and clear information the board receives 
induction and training on corporate governance and the 
code and assistance with professional development as 
appropriate to board members’ needs and roles all directors 
have access to the advice and services of the company 
secretary and have the opportunity to take independent 
professional advice at the company’s expense in support 
of the proper discharge and execution of their duties
chairman and ceo 
a clear division of the roles and responsibilities in the 
leadership of the company is demonstrated by the separate 
appointments of the chairman and chief executive of cer 
the chairman is responsible to the shareholders for the 
overall performance of the board and the company the 
chief executive of cer is responsible to the board for the 
effective delivery of the company’s strategic objectives 
and for its operational performance 
performance evaluation
board performance evaluation is conducted annually 
the executive directors’ performance is evaluated by the 
nonexecutive directors the chairman’s evaluation is led by 
the senior independent director with the other nonexecutive 
directors the nonexecutive directors excluding the 
chairman are evaluated by the chairman and chief executive 
of cer taking into account the views of the executive 
directors the board committees are reviewed by the senior 
independent nonexecutive director and the chief executive 
of cer taking into account the views of the other executive 
directors in addition to self performance assessments by 
those committees the board reviews its own performance as 
a whole by consolidating and discussing the foregoing reviews 
and in 2012 by the conduct of a selfassessment review 
board meetings
the board held seven meetings during the year ended 
31 december 2012 the directors’ attendance at those 
meetings is detailed in the following table 
directors
board 
7 meetings
chris clark 7
don wolcott 7
tom reed 7
alexander chistyakov 5
rolf stomberg 7
robert jenkins 7
james mcburney 7
joe mach 7
james gerson 7 ruspetro plc
35
annual report and accounts 2012
the key items reviewed and actions taken by the board 
during the year include the following
leadership and strategy – the review and approval 
of operational reports budgets a senior secured notes 
offering and the conversion to equity in the company 
of the outstanding shareholder loan and accrued interest 
of limolines transport limited
performance risk and internal control – review 
of nancial statements annual report approval of interim 
management statement review of the effectiveness of the 
company’s risk management and of the internal control 
systems and procedures including nancial operational 
and compliance controls
governance – the board evaluated all elements of the 
company’s business including related party transactions 
with consideration of the uk bribery act and the uk 
corporate governance code
shareholder communications – approving preliminary 
announcement of annual results annual report half yearly 
report quarterly announcements and the release of any 
other company announcements to the london stock 
exchange’s regulatory news service
remuneration and awards
the board sets the level of directors’ remuneration by reference 
to company peer group data and by retaining independent 
remuneration consultants this process establishes levels of 
compensation that are commensurate with their position in 
the company and enables the company to attract and retain 
outstanding candidates the remuneration of each director is 
set out in their respective service agreements and appointment 
letters the payment or award of remuneration which is subject 
to performance criteria in the computation of bonuses and 
awards is assessed and recommended to the board by the 
remuneration committee details of directors’ remuneration 
and interests are set out in the remuneration report 
committees of the board 
audit committee 
the members of the audit committee are mr jenkins chairman 
and two independent nonexecutive directors mr stomberg and 
mr mcburney mr jenkins previously nance director and chief 
 nancial of cer of russian mining and energy companies and 
as an investment banker active in russian energy transactions 
possesses the recent and relevant nancial experience to head 
the audit committee the audit committee meets at least 
quarterly with the company’s chief nancial of cer and the 
company’s auditor pricewaterhousecoopers llp  in attendance 
as required by the business of the meetings 
the terms of reference of the audit committee have been 
approved by the board the audit committee chairman 
reviews the nancial reporting of all of the company’s 
subsidiaries and the committee reviews the company’s 
accounting internal control and risk assurance policies 
in addition it monitors the implementation development 
compliance and effectiveness of such internal policies and 
procedures in order to assess their impact on the integrity 
of the company’s nancial statements it also reviews public 
announcements relating to nancial performance and results 
the audit committee reports to the board and will raise any 
matters to the board which it considers require the board’s 
attention the committee will make recommendations as 
appropriate including those for the board to put to 
shareholders at the annual general meeting 
the audit committee maintains an objective relationship 
with the company’s auditor pricewaterhousecoopers llp 
and meets with them on a periodic basis the company 
may also from time to time ask them to perform nonaudit 
engagements in such circumstances the continued 
objectivity and independence of the auditor is an objective 
of the company this is met by delegating to the audit 
committee the responsibility for the review and 
recommendation to the board of the materiality and 
nature of the nonaudit engagement and its possible 
impact on the audit engagement
the audit committee having reviewed the independence 
and effectiveness of the auditors and being satis ed that the 
auditors remain independent and effective in their role has not 
considered it necessary to carry out a tender process this year 
and has therefore recommended to the board that the existing 
auditors pricewaterhousecoopers llp be reappointed 
pricewaterhousecoopers llp have expressed their 
willingness to continue as auditors
the audit committee also considered the financial reporting 
council’s proposals on auditor rotation and agreed that the 
implications for the company should be reviewed in 2013
the following main items of business were considered by the 
audit committee during the year 
financial and business reporting – the review and 
approval of nancial statements the annual report and 
accounts the half yearly report ims statements and related 
announcements issued to the london stock exchange 
regulatory news service
risk and internal control – the assessment and 
review of risks and the mitigating actionscontingency 
plans for those risks review of internal controls including 
new nancial controls to cover the implementation and 
online availability of the purchase order ‘po’ and the 
authorisation for expenditure ‘afe’ systems and the 
review of procedures for the adoption of new counterparties 
to the approved contractors list ‘acl’ review plans 
for the development of an enterprise resource planning 
system ‘erp’ which enables the integration of nancial 
operational and technical data into one database review 
of internal monthly nancial reporting of actual results 
versus the budget and review of capital and operational 
expenditure budgets review of related party transactions 
policy and procedures as well as the implementation of a 
company whistleblowing policy and the introduction of 
a global independent ‘whistleblower’ hotline accessible 
in many languages review of material litigation as well 
as of health safety and the environment ‘hse’ reports
compliance – the review of the company’s compliance 
with the terms and conditions of its operating licenses 
as well as of the palyanovo license extension application 
consideration of an internal audit function with the decision 
given the size and maturity of the company to develop such 
function at a later stage
audit – the review of the audit ndings report the audit 
plan and the management representation letter
external auditor – the review and approval of the 
engagement letter and the fee proposal of 
pricewaterhousecoopers llp ruspetro plc annual report and accounts 2012
36
governance continued
remuneration committee 
the members of the remuneration committee are 
mr stomberg as chairman mr clark mr mach and 
mr mcburney the members are considered by the board 
to be independent the remuneration committee met twice 
in 2012 to assist the board in determining the remuneration 
and contracts of the directors and senior management of 
the company the terms of reference of the remuneration 
committee are approved by the board 
the remuneration committee has engaged the services of 
specialist remuneration consultants to provide guidance 
no director is involved in setting his own remuneration
the remuneration report which includes details of the 
award of share options in ruspetro plc together with 
information relating to directors’ service contracts 
and appointment letters is set out on pages 45 to 56 
during the year the remuneration committee considered the 
following main items of business
remuneration – the review of a report from 
remuneration consultants on the remuneration of executive 
directors and senior management with a decision not to 
change executive directors’ remuneration in 2013 and 
to consider senior management on an individual basis
bonuses – the approval of 2012 key performance 
indicators for the executive directors’ bonus scheme 
and consideration of whether bonuses are to be paid 
to executive directors 
long term incentive plan – the approval of the 
introduction of a long term incentive plan ‘ltip’ and 
the review and approval of the 2013 ltip rules and metrics 
share options – the approval of share option awards 
to employees not executive directors 
reporting and governance – the approval of the 
remuneration report disclosures the review of proxy voting by 
shareholders the approval of remuneration and reward policies
nomination committee 
the members of the nomination committee are mr clark 
as chairman mr mach and mr mcburney external advisors 
are also invited to attend meetings as and when appropriate 
the nomination committee meets at least annually and 
more frequently as may be required for the proposed 
appointment of new members to the board the activities 
for which the nomination committee is responsible are 
set out in the terms of reference 
during the year the nomination committee considered the 
following main items of business
succession planning – succession planning proposals 
were discussed 
composition of the board – the size composition and 
skill set of the board were reviewed with a decision not to 
recommend any changes to the board at this time the impact 
of the davies report ‘women on boards’ was discussed with 
a decision not to recommend an additional board appointment 
at this time although the nomination committee concurs with 
the conclusions of the report that diversity in its broadest 
sense improves board performance it welcomed the decision 
not to impose quotas regarding gender balance 
board and committee effectiveness – a review of 
board and committee effectiveness by means of an internal 
evaluation was carried out the matters arising from that 
review were addressed
governance – the provisions of the revised uk corporate 
governance code 2012 its impact and compliance requirements 
for the business were reviewed and considered
the nominations committee supports the importance of 
having diversity of thought and representation on the board 
as the committee considers future board composition and 
succession planning it will seek applicants from a wide range 
of backgrounds to ensure that the candidate best equipped to 
bring the right combination of skills and experience to bene t 
the company are identi ed however in terms of gender the 
company operates in an environment with low representation 
of women at all levels of the industry in order to address 
this the company operates equal opportunity policies in 
all areas of its activities the aim over time is that women 
as a percentage of the workforce will increase and create 
a pool of talent from which to recruit its senior positions
the board separately from the nominations committee 
periodically reviews the individual attributes and 
experience of its members and from time to time identify 
the need for additional replacement and successor 
appointments and the refreshing of board committees 
the nomination committee will convene to review and 
recommend appointments proposed by the board 
committee meetings
the various committees met regularly and the members’ 
attendance at those meetings is detailed in the table below
director
audit 
5 meetings
remuneration 
2 meetings
nomination 
1 meeting
chris clark – 2 1
don wolcott – – –
tom reed – – –
alexander chistyakov – – –
rolf stomberg 5 2 –
robert jenkins 5 – –
james mcburney 5 2 1
joe mach – 2 1
james gerson – – –
internal controls and risk management 
board responsibility 
the board is responsible for determining the nature 
and extent of the signi cant risks it is prepared to accept 
in achieving the company’s strategic objectives 
compliance
ruspetro has complied with the code in the 2012 nancial 
year and has continued to develop policies and procedures 
that will ensure compliance with the code and the related 
financial services authority listing rules
control environment 
responsibility levels are communicated throughout the 
business through documented board policy and implemented 
through a matrix of control procedures including the 
segregation of duties
internal control
the board implements and maintains risk management and 
internal control systems to support the company’s activities 
and ensure they comply with the minimum requirements of  ruspetro plc
37
annual report and accounts 2012
the code speci cally the company is establishing a 
continuous process for identifying evaluating and managing 
the signi cant risks of the business and to regularly review 
the effectiveness of the company and its subsidiaries’ risk 
management and internal control systems
business risk
the company has an ongoing process in accordance with best 
practice that identi es evaluates and manages risks faced by 
the company this is based on each operational and corporate 
function producing a risk matrix which identi es the key 
business risks the probability of those risks occurring their 
impact if they do occur and the actions being taken to manage 
those risks to the desired level from these the company has 
compiled a risk register containing the key risks facing the 
company during conduct of its business the register is 
regularly reviewed and discussed by the audit committee 
in the light of the provisions of the uk bribery act 2010 
the noncompliance of which could expose the company to 
unlimited nes and other consequences it is the company’s 
intention in 2013 to introduce additional measures into the 
business to reinforce its zero tolerance approach to bribery 
and corruption including the provision of an online 
antibribery and corruption training programme for 
all new and existing employees 
risk acceptance and reduction objectives are de ned 
with particular attention given to safety and environmental 
factors and applied to ensure that the risks are at a level that 
is as low as reasonably practicable the directors are working 
closely with operational and functional management to 
ensure compliance with the company’s policies procedures 
and risk management processes these are designed to 
manage rather than eliminate the risk of failure in order 
to achieve business objectives
management structure
the board has overall responsibility for the company and its 
subsidiaries there is a formal schedule of matters speci cally 
reserved for decision by the board the executive directors 
led by the chief executive of cer are responsible and 
accountable for all aspects of the group’s business affairs
financial reporting
the company maintains an effective and reliable 
accounting system and has developed a broader management 
information system during the year the board receives a 
monthly report that monitors actual performance against 
budget and forecasts for oil and gas production gross revenue 
and well head revenue capital expenditure and development 
progress it also provides the board with information on 
key issues including treasury cash ow forecasting and 
the nancial implications of sensitivities to changes in 
commodity prices and exchange rates the company 
also maintains an effective and reliable suite of policies 
procedures and controls in preparing consolidated nancial 
statements these controls include rigorous review of the 
process and output data and technical support and review 
to ensure accounting tools and business systems are robust
budgetary process
there is a comprehensive budgeting system with an annual 
budget approved by the board covering capital expenditure 
public offering proceeds cash ow the income statement 
and the balance sheet monthly results are reported against 
budget and revised forecasts are prepared regularly 
separate approval processes and authority limits are in 
place for budgeted and unbudgeted expenditure items
corporate accounting and procedures
responsibility levels are communicated throughout the 
company and its subsidiaries using a table of delegated 
authorities appropriate to each part of the business through 
written corporate accounting procedures and policies 
common to all companies along with company speci c 
procedures and controls which are continually reviewed 
and updated as required the review of the application 
of internal nancial control and operational procedures 
is carried out during visits to the eld operations of ces 
by the directors and senior moscow of ce management
investment appraisal
capital investment is regulated by the budgetary process 
and authorisation levels for expenditure beyond speci ed 
levels detailed written proposals have to be submitted to 
the board capital expenditures are reviewed with major 
overruns in terms of cost and time being investigated 
quality and integrity of personnel
the integrity and competence of personnel is ensured 
through high recruitment standards and subsequent 
training courses high quality personnel are seen as 
an essential part of the control environment the ethical 
standards expected of employees are communicated 
through corporate presentations of policies including 
identi cation and prevention of fraud antimoney 
laundering and bribery including the uk bribery act 
whistleblower ethical practices and a share dealing code
the company is committed to operating in an environment 
that provides personnel with a safe and accessible means 
to report concerns without concern of reprisal and a 
whistleblowing hotline service for all staff and contractors 
has been introduced which will report directly to the 
chairman of the audit committee
internal audit
the audit committee has conducted an annual review into 
whether it is appropriate for the company to establish an 
internal audit function the board places great emphasis 
on the importance of risk management and control at 
all operating levels in the business and is developing 
an appropriate framework 
the board has concluded that the company’s procedures 
policies and systems are appropriate and suitable to enable 
the board to safeguard shareholders’ investment and the 
company’s assets
communication with shareholders 
information about the activities of the company and its 
subsidiaries are provided in the annual report and accounts 
and the halfyearly report which are sent to shareholders 
the company has made quarterly ims and periodic 
operational updates via the london stock exchange’s 
regulatory news service a regular dialogue has been 
developed with institutional shareholders for which 
the board as a whole has responsibility enquiries from 
individuals on matters relating to their shareholding and 
the business of the company are welcomed and are dealt 
with in an informative and timely manner
annual general meeting
shareholders are encouraged to attend and participate in 
general meetings to discuss the progress of the company 
the annual general meeting of ruspetro plc will be held 
at 1100am at white  case 5 old broad street london 
ec2n 1dw on wednesday 17 april 2013 ruspetro plc annual report and accounts 2012
38
governance
principal risks and uncertainties
ruspetro’s current stage of development the geographical area in which we operate and the business 
of oil and gas development and production all mean that the business is exposed to a wide variety 
of risks
our approach is to actively understand and monitor the risks we are exposed to and then manage 
solutions to them so that their potential adverse effects are minimized
the following table describes risks that we face and outlines our approach to mitigating them
internal and operational risks
risk description
reservoir  
performance
ruspetro’s hydrocarbon reservoirs may not perform as expected exposing ruspetro to 
reduced cash ow and challenges in funding planned development this under performance 
may be due to unforeseen geological factors formation damage during drilling or completion or 
overestimation of forecast production accordingly forecast reservoir performance is critical in 
deciding on development options for speci c assets as well as allocation of ruspetro’s nancial 
resources generally 
recruitment and retention 
of key people and critical 
skills
ruspetro’s ability to maintain a competitive position and implement its business strategy 
and meet its oil production targets depends to a large degree on recruiting and retaining 
the services of its senior operational management team and contractors with the requisite 
critical skills 
license status and oil and 
gas eld permitting
renewal of ruspetro’s exploration and production licenses expiring in 2014 2015 and 2017 
is of critical importance as in this context is the satisfactory ful lment of license conditions
procurement and contract 
management capital and 
operating expenditure
lack of effectiveness in negotiating and managing purchases and contracts could increase 
costs for ruspetro andor cause delays to project completions and operations negatively 
impacting production cash ow and value generation
the vetting of counterparties in particular for business ethics and integrity as well as nancial 
and operating capability represents an associated risk area
health safety 
environment and 
community relations 
‘hsec’
failure to put in place and operate a rigorous hsec regime can endanger and negatively effect 
stakeholders adverse publicity from any poor performance in these areas could negatively 
effect ruspetro it could be held responsible for failing to address any contamination or 
damage to license and surrounding areas with signi cant associated costs
protection of 
company property
damage theft or interference to ruspetro’s physical or intellectual assets can stop or limit 
production resulting in reduced cash ow increased costs and negative reputation reducing 
stakeholder con dence in ruspetro ruspetro plc
39
annual report and accounts 2012
inherent 
probability
potential  
impact our approach
medium
high
high ruspetro’s senior management is focused on and has proven expertise in modelling managing and 
maximizing oil reservoir performance and recovery including through the application of proven 
sophisticated fracturing water injection and other oil production enhancement techniques
medium
high
high the group has recruited additional quali ed staff in most functional and technical areas 
to achieve its oil eld development plan objectives the additional experience recruited has 
reduced this risk but some positions remain critical to implementing the business strategy 
innovative reward systems to attract world class contractors are also being introduced
medium high noncompliance with certain license conditions has been remedied applicable license conditions 
are being ful lled and these are largely internally controllable while license renewal is not 
expected to be problematic it will be essential to demonstrate an effective gas utilization program
low high ruspetro operates effective policies procedures and controls in relation to prior approval of 
supplier counterparties and competitive procurement within strict levels of delegated authority 
with the objective of achieving armslength transparent purchasing
ruspetro its board and audit committee monitor carefully and undertake close regular scrutiny 
of the effectiveness of the company’s policies
low high ruspetro treats hsec as a priority and its board has formally adopted appropriate policies 
across the hsec area in order to manage effectively its rapid oil eld development plan 
ruspetro will appoint a russiabased senior hsec manager reporting directly to the ceo 
along with local managers responsible for ensuring the implementation and monitoring 
of ruspetro’s policies across the hsec area
ruspetro has budgeted for appropriate expenditures to comply with applicable laws and regulations 
as well as to contribute to the economic and social bene t and development of the region in which 
it operates
ruspetro has put in place appropriate insurance arrangements to manage and mitigate 
its potential nancial exposure risks in the hsec area
medium medium development and implementation of a security strategy protecting physical and intellectual 
assets which aims to improve training processes and procedures for security personnel and 
improve technological components of physical security and secure assets through robust 
fraudrisk management ruspetro plc annual report and accounts 2012
40
external and financial risks
risk description
political environment the political environment in the russian federation is volatile there have been and there 
is the risk of actions by its executive and judicial authorities that may adversely affect the 
performance of businesses operating in the country
political instability in russia or an increase in the perceived risk of investing in russia could 
be materially detrimental to ruspetro’s business
exchange rate 
and in ation
ruspetro’s oil revenues are linked to international market prices and as a result it is not protected 
against the negative effect of continuing cost in ation in russia eg currently at over 5 per annum 
or demand led industry speci c in ation
exchange rate movement in particular in that of rub usd could impact negatively ruspetro’s 
 nancial position this re ects in particular the current pro le of its costs revenues and 
sources of capital
access to finance implementation of ruspetro’s development plan may require it to raise additional nance 
of either a debt or equity nature and market conditions may preclude this including on terms 
which ruspetro considers satisfactory in addition ruspetro’s existing level of borrowings 
may constrain it from raising additional debt nance this may result in it not being able 
to implement its development plan and realize the inherent value of the oil and gas in its 
existing license areas 
ruspetro has a signi cant level of bank and shareholder debt with the risk that it may not be 
able to meet its debt service obligations either out of cash ow or re nancing
oil and gas market prices although russia’s taxation regime for its oil producers does give some protection against 
declines in market prices signi cantly lower market prices than those assumed in ruspetro’s 
development plan would nevertheless result in materially reduced net revenue contribution
ruspetro is exposed to both russian domestic market and international oil and gas price 
movements it does not currently enter into any forward sales price hedging agreements
bribery and corruption bribery and corruption is known to be an area of vulnerability for businesses operating in russia 
and as such ruspetro may be exposed to such risks in addition the uk bribery act requires 
that companies introduce adequate procedures to combat bribery at all levels and areas of 
their business
governance
principal risks and uncertainties continued ruspetro plc
41
annual report and accounts 2012
inherent 
probability
potential  
impact our approach
medium high this risk cannot be in uenced by the management of the company however the group 
monitors changes in the political environment and reviews changes to the relevant legislation 
policies and practices the continuing need for oil production as a vital source of state revenue 
and the recent proposed changes in legislation for mineral extraction tax indicates that the 
environment for oil producers remains favorable
low medium ruspetro’s policy and practice is to match as far as practicable receipts and payments in the 
same currency in particular in relation to russian rouble transactions
ruspetro’s risk monitoring will include the review of its actual projected nancial position 
in relation to its us dollardenominated debt
in order to mitigate such inherent external risks ruspetro’s business model and strategy target 
a superior net well head revenue contribution including through the production and sale 
of oil condensate and competitively low operating and other costs to achieve a resulting high 
level of pro tability so as to reduce its potential exposure to the impact of either exchange rate 
movements or cost in ation
high high ruspetro considers that its strategic concentration on the development of its existing licenses 
in growing both its production and proved reserves may maximize its ability to attract both debt 
and equity nance
ruspetro’s board will keep under review its debt service obligations in the light of 
 nancial performance
medium medium in order to manage such risks ruspetro has structured its development plan to be nancially 
feasible at signi cantly lower oil prices than those of today
ruspetro’s sales arrangements effectively mitigate any revenue collection risks ruspetro sells 
its oil production in the domestic market to a limited number of local offtakers at transparent 
armslength market prices with payment in full on delivery it exports entirely through 
glencore international plc the world’s largest international commodity trading company 
with sales contracted quarterly at stipulated volumes and armslength current market prices 
60 prepayment and the balance of 40 paid the following month 
medium high ruspetro prohibits bribery and corruption in any form by all employees and by those working 
for andor connected with the business
the company pays special attention to this in its systems in particular for the approval 
of counterparties and expenditure
employees are expected to report bribery or attempted bribery to their line managers even 
if it is only suspected or attempted in line with the company whistleblower policy which 
has been implemented across the business together with the introduction of an independent 
whistleblower hot line to enable any concerns of wronging to be voiced without fear of reprisal
ruspetro has developed a code of conduct and a supporting statement of ethics which is 
compliant with the bribery act 2010 and its guidance and is in the process of implementing 
this the communication of the new code is to be implemented in the forthcoming year by 
a training program for management employees and contractors globally ruspetro plc annual report and accounts 2012
42
the directors have the pleasure in presenting their annual 
report and audited accounts for the period ending 31 december 
2012 these will be presented to shareholders at the annual 
general meeting of the company which is scheduled to be held 
at 1100am on wednesday 17 april 2013 at the of ces of white 
 case 5 old broad street london ec2n 1dw 
principal business activities
the company’s principal activity is the development 
and production of oil and gas on three contiguous license 
blocks of 1205km
2
 situated in the krasnoleninsky arch 
near khantymansiysk western siberia russia ruspetro 
is the 100 license holder of the pottymskoinginsky 
vostochnoinginsky and palyanovsky license blocks which 
make up 100 of the company’s oil and gas producing assets 
ruspetro’s licenses expire in june 2014 vostochnoinginsky 
block and june 2017 pottymskoinginsky block in december 
2012 the license for the palyanovsky block was extended until 
december 2015 with an expectation that it and the other 
licenses will be further extended for the economic life of the 
 elds which run until between 2029 and 2040 this is in 
accordance with recent legislation allowing the license holder 
to extend the licenses for the economic life of the elds as long 
as ruspetro meets its minimum obligations and is not in breach 
of any license conditions
corporate information
this annual report contains the consolidated nancial 
statements of ruspetro plc the ‘company’ and its 
subsidiaries the ‘group’ for the year ended 31 december 
2012 and the nancial statements of ruspetro plc 
the ‘parent’ for the period ended 31 december 2012
business review
a full review of the activities of the company during the 
year and recent events as well as details of the company’s 
approach to its business and its strategy for creating value 
over the longer term is contained in the chairman’s 
statement on pages 6 and 7 the chief executive of cer’s 
statement on pages 10 to 15 and the operating and 
 nancial review on pages 18 to 25
corporate governance
the company is required to comply with the 2010 code 
which is issued by the financial reporting council and 
is referred to in the listing rules this can be found at the 
financial reporting council website at wwwfrcorguk 
a report on corporate governance and compliance with 
the provisions of the code is set out on pages 34 to 37
results and dividends
ruspetro’s results for the year ended 31 december 2012 
are set out in the company’s consolidated income statement 
on page 58 the loss attributable to equity holders of the 
company was us21223 thousand a nal dividend for 
the year ended 31 december 2012 has not been declared
directors
the names and biographies of current directors are set out 
on pages 32 and 33
ruspetro plc was incorporated as a public company in 
england and wales on 20 october 2011 and mr wolcott 
and mr reed were appointed directors at incorporation 
with the remaining directors being appointed to the 
board on 2 december 2011
directors’ appointment and retirement
directors may be appointed by ordinary resolution of 
shareholders or by the board a director holds of ce only 
until the next annual general meeting and if not reappointed 
at such annual general meeting shall vacate of ce at its 
conclusion at every annual general meeting all the directors 
at the date of the notice convening the annual general 
meeting shall retire from of ce if the company does not ll 
the vacancy at the meeting at which a director retires the 
retiring director shall be deemed to have been reappointed 
unless at the meeting it is resolved not to ll the vacancy 
or unless a resolution for the reappointment of the director 
is put to the meeting and lost
this is in accordance with current best practice as outlined 
in the uk corporate governance code 2010 which provides 
for all directors of ftse companies to be subject to 
reelection by their shareholders every year
directors’ indemnities
directors and of cers of the company are indemni ed under 
the articles of association of the company as provided by the 
companies act 2006 in addition the company has entered 
into deeds of indemnity with each director in respect of 
proceedings brought about by third parties subject to the 
conditions set out in the companies act 2006
governance
directors’ report  ruspetro plc
43
annual report and accounts 2012
share capital
the issued share capital of ruspetro plc as at 31 december 
2012 was 333381480 ordinary shares of 10 pence each 
ruspetro plc is listed on the london stock exchange 
and its rst day of trading was 19 january 2012 the rights 
and obligations attached to these shares are governed by 
english law and the company’s articles of association
voting rights
ordinary shareholders are entitled to receive notice 
attend and speak at the general meetings of the company 
every shareholder shall have one vote for every share of which 
he is the holder if he is present in person by proxy or if a 
corporate shareholder by a duly authorized representative
a shareholder entitled to attend and vote at a general 
meeting may appoint one or more proxies to attend and 
vote instead of him if a shareholder appoints more than 
one proxy he must specify the number of shares which 
each proxy is entitled to exercise rights over
no shareholder holds securities carrying special rights 
as to the control of the company there are no agreements 
between holders of securities that are known to the 
company which may result in restrictions on the transfer 
of voting rights
transfer of shares
a member may transfer all or any of his certi cated shares 
by an instrument of transfer in any usual form or in any 
form which the board may approve an instrument of 
transfer shall be signed by or on behalf of the transferor 
and unless the share is fully paid by or on behalf of the 
transferee an instrument of transfer need not be under 
seal the transferor shall remain the holder of the shares 
concerned until the name of the transferee is entered 
in the register in respect of the shares
all transfers which are in uncerti cated form shall be 
effected by means of the relevant system unless the crest 
regulations provide otherwise
the board may in its absolute discretion refuse to register 
the transfer of a certi cated share which is not a fully paid 
share provided that the refusal does not prevent dealings 
in shares in the company from taking place on an open 
and proper basis the board may also refuse to register 
the transfer of a certi cated share unless the instrument 
of transfer is
a lodged stamped if stampable at the of ce or at 
another place appointed by the board accompanied by 
the certi cate for the share to which it relates and such 
other evidence as the board may reasonably require to 
show the right of the transferor to make the transfer
b in respect of one class of share only and
c in favor of not more than four persons
if the board refuses to register a transfer of a share in 
certi cated form it shall send the transferee notice of 
its refusal within two months after the date on which 
the instrument of transfer was lodged with the company
directors’ interests
the number of ordinary shares of ruspetro plc in which the directors or a person connected with a director 
were bene cially interested as at 31 december 2012 was as follows
director
number of existing 
ordinary shares
number of options 
granted as at 
31 december 2012
3
christopher clark 100000 —
don wolcott
1
22860000 6217579
tom reed 3271440 4145053
alexander chistyakov 43208393 —
rolf stomberg 70000 —
james gerson
2
99150000 —
robert jenkins 50000 —
joe mach ——
james mcburney 40000 —
1 don wolcott a director of the company owns 100 of wind river management limited and is the bene cial owner of such shares 
2 limolines owns 99150000 shares james gerson a director of the company is a consultant to limolines and is deemed to be bene cially interested in such shares
3 the grant was in respect of 5 of the issued share capital of the company as at the date immediately prior to admission to trading on the london stock exchange and 
prior to the issue of the ordinary shares in connection with the initial public offering of the company on the 19 january 2012 ruspetro plc annual report and accounts 2012
44
no fee shall be charged for the registration of any instrument 
of transfer or other document relating to or affecting the 
title to a share
subject to the provisions of the crest regulations 
the board may permit the holding of shares in any class 
of shares in uncerti cated form and the transfer of title 
to shares in that class by means of a relevant system and 
may determine that any class of shares shall cease to be 
a participating security
if a notice is given to a member in respect of a share which 
is subsequently transferred a person entitled to that share is 
bound by the notice if it was given to the member before the 
person entitled to that share was entered into the register 
as the holder of that share
amendments to the articles of association
any amendment to the articles of association of the company 
may be made by special resolution of the shareholders being 
a resolution proposed with not less than 21 days’ notice as 
a special resolution and passed by more than 75 majority 
of those voting on the resolution
post balance sheet events
note 27 to the nancial statements details all signi cant 
events after the balance sheet date of 31 december 2012
supplier payment policy
it is ruspetro’s payment policy to settle agreed outstanding 
accounts in respect of all suppliers in accordance with 
the terms and conditions agreed with the suppliers when 
placing the orders suppliers are made aware of these 
payment conditions 
financial instruments
ruspetro’s use of nancial instruments together with 
objectives and policies on nancial risk and exposure to 
foreign currency credit commodity liquidity and interest 
rate risk can be found in note 25 to the nancial statements
going concern
on the basis of the assumptions and cash ow forecasts 
prepared the directors have assumed that the group will 
continue to operate within both available and prospective 
 nancing facilities accordingly the group nancial 
statements are prepared on the going concern basis and 
do not include any adjustments that would be required 
in the event that the loan holders request repayment and 
alternative nance is not available further details on the 
basis of preparation of the nancial statements is available 
in note 2 of the consolidated nancial statements on 
page 62 of this report 
audit information
each of the directors at the date of the approval of this 
report con rms that
so far as the directors are aware there is no relevant audit 
information of which the company’s auditors are unaware 
and the director has taken all the steps that he ought to have 
taken as director to make himself aware of any relevant audit 
information and to establish that the company’s auditors are 
aware of the information 
this con rmation is given and should be interpreted 
in accordance with the provisions of section 418 of the 
companies act 2006
donations
no donations of a political nature were made
further details are available in community relations section 
on page 31 of this report
auditors
pricewaterhousecoopers llp the company’s auditors 
have indicated their willingness to continue in of ce and 
resolutions seeking to reappoint them as the company’s 
auditors and to authorize the directors to determine their 
remuneration will be proposed at the forthcoming annual 
general meeting
the company’s annual general meeting will be held at 
11 am on wednesday 17 april 2013 at the of ces of white 
 case 5 old broad street london ec2n 1dw details of 
the meeting and the resolutions to be proposed are set out 
in a separate notice of meeting which accompanies 
this annual report
by order of the board
tom reed and don wolcott
directors of ruspetro plc
18 march 2013
governance
directors’ report continued ruspetro plc
45
annual report and accounts 2012
letter from the chairman of the 
remuneration committee 
dear shareholder 
on behalf of the remuneration committee i am pleased to 
introduce the directors’ remuneration report for the year 
ended 31 december 2012 our rst full year as a premium 
listed company on the london stock exchange 
in line with our commitment to high standards of corporate 
governance we have adopted some of the proposals from 
the department for business innovation and skills ‘bis’ 
regarding revised remuneration reporting regulations 
in advance of being required to do so there are therefore 
three main sections to this report
 — 2013 policy report this sets out the elements of our 
remuneration policy going forward and discusses the key 
factors that were taken into account in setting this policy 
 — 2012 implementation report this sets out how the 
remuneration policy has been implemented during the 
year including the payments being made to directors 
and the link between performance and executive pay 
 — audited information this section contains details of 
the directors’ emoluments during the year to 31 december 
2012 and has been audited in accordance with the current 
regulations for executive remuneration reporting 
business context
during 2012 the company has made signi cant progress 
the company drilled 33 wells against a plan for 24 new 
wells installed a sales pipeline from the production location 
as well as other infrastructure projects these projects were 
completed on schedule and within budget the company has 
also made signi cant progress in establishing internal 
policies and procedures with improvements to management 
reporting processes reporting of safety incidents
however the production results have been disappointing 
with production below the end of year target even accounting 
for the production of higher value condensate over crude oil 
similarly the nancial results have disappointed these issues 
are re ected in the performance of ruspetro’s share price on 
the london stock exchange during 2012 
remuneration policy
during 2012 the remuneration committee worked on 
developing a remuneration policy that will support our 
vision of being recognized as a leading independent oil 
and gas producer focused on providing superior 
shareholder returns 
accordingly a signi cant proportion of total remuneration 
for executive directors is performancerelated so that 
any payout is aligned with the value created for 
our shareholders 
prior to the company’s ipo the committee decided to make 
an award of market priced share options at the suggestion 
of the founding shareholders to don wolcott ceo and 
tom reed cfo this was in order to further increase their 
alignment with shareholders as the inherent share price hurdle 
will ensure that rewards for both executive directors will only 
be available if value has been created for our shareholders and 
recognize their contribution in preparing the company for ipo 
going forward any longterm incentive awards to executive 
directors will be in the form of performance shares under 
the performance share plan ‘psp’ under which awards 
will only be earned subject to the satisfaction of stretching 
performance conditions relating to relative total shareholder 
return and the capital expenditure per incremental barrel 
of production 
in line with best practice awards under the psp will 
be subject to ‘malus’ provisions which will enable the 
committee to cancel or reduce awards prior to vesting 
in certain circumstances 
the annual bonus plan sets stretching targets for the 
executives on three key areas production nancial 
performance and progress on corporate governance 
and operation activities 
annual general meeting
this report will be subject to an advisory vote at the annual 
general meeting on 17 april 2013 i will be happy to answer 
questions at the annual general meeting on our remuneration 
policy and the remuneration committee’s activities and look 
forward to receiving your support 
rolf stomberg
chairman of the remuneration committee 
18 march 2013
governance
2012 directors’ remuneration report ruspetro plc annual report and accounts 2012
46
this report has been prepared on behalf of the board by the 
remuneration committee and will be subject to an advisory 
vote at the annual general meeting on 17 april 2013 
the report has been prepared in accordance with the large 
and mediumsized companies and groups accounts and 
reports regulations 2008 the ‘regulations’ and meets 
the relevant requirements of the uk listing rules and 
the principles and provisions of the uk corporate 
governance code 
in accordance with the regulations 
pricewaterhousecoopers llp the company’s auditors 
have audited the information as speci ed by the companies 
act 2006 for their audit which is included in the tables 
on the directors’ emoluments share awards granted to 
executive directors and the directors’ interests in shares 
together with the associated footnotes on page 55 
of this report 
2013 policy report
remuneration policy
ruspetro’s executive remuneration policy has been set 
with the objective of attracting motivating and retaining the 
highest calibre executives in a manner that is consistent with 
best practice and aligned with the interests of shareholders
within these guiding principles the remuneration policy 
for executive directors and other senior managers is set 
to ensure the following key goals are achieved
 — to provide a structure and level of pay which attracts 
and retains executives and senior managers capable 
of delivering the company’s strategic objectives and 
providing leadership within the relevant competitive 
markets including relevant ftse listed companies 
russian companies with a london listing and other 
oil  gas peers
 — to provide clear and transparent performance incentives 
to reward the attainment of key strategic goals and to 
align the remuneration of executives and senior managers 
with the interests of shareholders
 — ensures that rewards provided through the remuneration 
policy are fairly earned and justi ed by performance 
to that effect a signi cant proportion of remuneration 
should be performance related and linked to both 
individual and corporate performance within the 
performancerelated element there should be an 
appropriate balance between shortterm and 
longterm objectives 
 — to ensure that inappropriate operational and nancial 
risktaking is neither encouraged nor rewarded through 
the company’s remuneration policies the committee 
ensures that account is taken of environmental social 
and governance risks when setting remuneration and 
is comfortable that remuneration packages do not raise 
such risks by motivating irresponsible behavior
 — the pay of executive directors and senior managers 
takes into account i pay and conditions throughout 
the company and ii corporate governance best practice
the following table sets out a discussion of each element 
of the remuneration package for executive directors
future policy table from 1 january 2013 – executive directors
element purpose and link to strategy opportunity level operation performance metrics
salary — to provide xed pay that 
is suf cient to attract and 
retain an experienced 
management team with 
signi cant expertise in 
successfully developing 
assets that are similar 
to ruspetro
 — salaries for executive 
directors were set prior 
to the ipo by reference to 
ftse 250 companies and 
other russian companies 
in the natural resources 
sector listed in london 
 — salaries for executive 
directors were not 
increased in respect 
of 2013 the executive 
directors’ salaries will 
therefore remain at the 
following levels
 ceo us1360000
 cfo us827000
 president  ed 
us500000
 — typically reviewed annually 
 — benchmarked against uk 
companies of a similar 
size and complexity 
relevant oil  gas peers 
and other uklisted 
companies from russia 
and the cis region 
operating in similar 
sectors as these are the 
companies against which 
ruspetro competes for 
executive talent
 — the performance of the 
individual in the role is 
one of the considerations 
that will be taken into 
account by the committee 
in setting the level of 
salary and any future 
increases
bene ts  — to provide competitive 
bene ts in line with 
similarly sized companies 
and typical russian 
practice 
 — na — bene ts include medical 
insurance car allowance 
life insurance and 
permanent health 
insurance 
 — the company does 
not currently operate 
a pension scheme
 — none
governance
2012 directors’ remuneration report continued ruspetro plc
47
annual report and accounts 2012
element purpose and link to strategy opportunity level operation performance metrics
annual bonus  — to incentivize and reward 
the achievement of both 
corporate and individual 
performance 
 — kpis are consistent with 
the company’s shortterm 
and mediumterm 
objectives 
 — target performance 100 
of salary for the ceo and 
75 of salary for the other 
executive directors
 — maximum opportunity 
150 of salary for the 
ceo and 100 of salary 
for the other executive 
directors
 — the annual bonus period 
runs from 1 january to 
31 december 
 — targets are set annually 
by the committee and are 
assessed following the 
year end
 — all bonuses will be paid 
in cash although the 
committee may require 
part of the payment to 
be made in shares 
 — company objectives 
may include production 
 nancial and the 
achievement of strategic 
and operational 
milestones
 — no bonus will be payable 
unless the minimum level 
of performance has been 
met for both the company 
and the individual element 
 — the metrics for the annual 
bonus includes production 
measures end of year 
production rate nancial 
measures capital and 
operational budget 
control and strategic and 
operational milestones 
greater weighting towards 
production and nancial 
metrics will be used
performance 
share plan 
‘psp’
 — to link a substantial 
proportion of reward 
to the achievement of 
strategic targets which 
will drive the creation 
of longterm shareholder 
value as ruspetro moves 
into the next stage of 
its development
 — maximum award level 
under the plan of 150 
of salary for the ceo and 
125 of salary for other 
executive directors
 — annual awards of 
performance shares which 
are only earned subject to 
the achievement of 
performance conditions 
over a three year period 
 — malus share awards may 
be reduced or cancelled at 
any time prior to vesting 
at the discretion of the 
remuneration committee 
following events such as 
a material misstatement 
of results failure of risk 
management breach 
of health and safety 
regulations or serious 
reputational damage to 
the company
 — the measures used for 
the psp share plan do not 
repeat the measures used 
for the annual bonus plan 
a nancial measure of 
total shareholder return 
against a group of peer 
companies will be used 
a second operational 
measure will be used to 
evaluate the ef ciency 
of capital expenditure 
required to increase 
production
annual bonus plan
each year the remuneration committee will assess the company’s performance against the metrics set at the beginning 
of the nancial year these will include production nancial and the achievement of strategic and operational milestones 
metrics will be de ned according to these categories with greater weighting given to the production and nancial metrics 
as appropriate for a company at ruspetro’s stage of development the overall performance assessment may be adjusted to 
account for exceptional items such as major health safety and environmental incidents major changes in oil price or actions 
by third party companies
the overall company performance assessment may be adjusted to re ect an individual executive’s contribution to determine 
a nal performance and bonus award therefore no bonus will be payable unless the minimum level of performance has 
been met for both the company and the individual element the overall maximum opportunity under the annual bonus 
is 150 of salary for the ceo and 100 of salary for the other executive directors  ruspetro plc annual report and accounts 2012
48
performance share plan
the remuneration committee will decide during the second quarter of 2013 if an award of performance shares will be 
made to the executive directors under the performance share plan and the details of the measures against which company 
performance will be assessed however the performance measures will be 50 relative total shareholder return against 
the peer group of companies listed below and 50 against capital dollar spent per incremental barrel of production 
achieved over the vesting period
list of peer companies for relative total shareholder return
company
main areas  
of production
ruspetro russia
ophir energy west  east africa
premier oil uk norway africa middle east and asia
cairn energy greenland spain nepal and albania
genel energy iraq turkey
essar energy india indonesia madagascar nigeria and vietnam
afren nigeria and cote d’ivoire
soco international vietnam and africa
enquest north sea
salamander energy indonesia thailand vietnam laos
heritage oil iraq malta pakistan tanzania mali dr congo russia and libya
alliance oil company russia  cis
petropavlovsk russia  cis
jkx oil and gas russia  cis
exilion russia
the overall maximum opportunity under the performance share plan is 150 of salary for the ceo and 125 of salary for 
the other executive directors 
chairman’s and nonexecutive directors’ fees 
nonexecutive director remuneration is set by the chairman of the board and the executive directors no director is involved 
in setting his own fee 
governance
2012 directors’ remuneration report continued ruspetro plc
49
annual report and accounts 2012
the table below shows the remuneration policy in place for nonexecutive directors 
future policy table from 1 january 2013 – nonexecutive directors
element purpose and link to strategy operation fee level
nonexecutive 
director fees
 — set at a level to enable the company 
to attract and retain high calibre 
nonexecutive directors with 
substantial experience of leading 
and advising large international 
companies within ruspetro’s sector 
and with experience in russia and 
the uk 
 — fees are set to take account of 
the typical time commitment and 
the level of involvement expected 
as well as the challenging sector and 
geography within which the company 
operates insofar as this impacts the 
demands placed on the role 
 — nonexecutive chairman 
us516200 £325000 paid 
in sterling
 — senior independent director 
us240000
 — nonexecutive director basic fee 
us200000
 — additional fee for committee 
chairmanship
 audit committee us45000
1
 remuneration committee 
us20000
 nomination committee 
us20000
 — additional fee for committee 
membership us20000
 — in addition should the fee payable 
to any director be diminished by 
the imposition of taxation other than 
that of the directors’ tax residence 
as a result of the company’s activities 
and domicile in the uk the company 
will increase the amount of fees 
payable to ensure that no director 
is disadvantaged as a result
1 the fee for the chairman of the audit committee re ects the high importance of managing risk and compliance in the company’s operations and the time commitment 
required from the committee chairman 
consideration of conditions elsewhere in the group
when setting the policy and levels of directors’ pay the remuneration committee is mindful of its responsibility to consider 
the pay and employment conditions of employees elsewhere within the group 
in particular the committee takes into account the salary increases provided to the general employee population 
the committee has also reviewed the companywide reward policy including the bene t offerings at different levels 
throughout the organization and is satis ed that this policy is appropriate for the group supports the business’s 
objectives and is consistent with the policy for executive directors 
the following table provides a summary of the increase in salary for the executive directors for 2013 as compared with the 
8 increase for employees rated as above average performance throughout the group general in ation in russia has been 
approximately 6 during 2012
salary increase 
effective 1 january 
2013
executive directors 0
employees rated as performance ‘above average’ 8
other employees 0–6 ruspetro plc annual report and accounts 2012
50
shareholder considerations
the remuneration committee is committed to ongoing dialogue with our shareholders and welcomes feedback on our 
remuneration policy and its application 
during february 2013 the remuneration committee chairman or the company secretary entered into dialogue with a number 
of our institutional shareholders as well as representatives from the association of british insurers ‘abi’ and institutional 
shareholder services ‘iss’ the purpose of these discussions was to discuss the company’s overall approach to remuneration 
and consult with shareholders on the proposed performance conditions under the psp to executive directors 
shareholders views were taken into consideration when formulating our policy shareholders expressed their disappointment 
with the performance of the company’s share price and stated that this re ected the missed production and nancial targets 
remuneration scenarios based on 2013 policy for executive directors
the chart below shows hypothetical values of the ongoing remuneration package for executive directors under three assumed 
performance scenarios 
 — below threshold assumes no bonus is paid and no shares vest under the psp 
 — target performance assumes payment of the target bonus of 100 of salary for the ceo and 75 of salary for other 
executive directors and threshold vesting under the psp of 25 of the award 
 — maximum performance assumes maximum bonus is earned 150 of salary for the ceo and 100 of salary for the 
other executive directors and maximum vesting under the psp 
salary and bene ts remain at the same level under all three performance scenarios the chart re ects ongoing remuneration 
policy and therefore excludes the value of the preipo options granted to the ceo and the cfo 
remuneration scenarios
6000000
5000000
4000000
3000000
2000000
1000000
0 below
threshold
target
donald wolcott thomas reed alexander chistyakov
maximum below
threshold
 psp
 bonus
 salary
target maximum below
threshold
target maximum
note the bene ts provided to the executive directors are limited and represent a small percentage less than 10 of their base salary therefore this element has not been 
included in the scenarios
service contracts
the following section sets out the main provisions relating to remuneration contained in the directors’ service contracts 
executive directors
each executive director’s terms of appointment are set out in a service agreement with ruspetro plc which may be 
terminated at any time by either party providing 12 months’ notice 
governance
2012 directors’ remuneration report continued ruspetro plc
51
annual report and accounts 2012
the executive directors are also subject to certain restrictive covenants during the term of their agreement they are not 
permitted to take up any of ce or employment with or have any direct or indirect interest in any rm or company which 
is in direct or indirect competition with the group or any company in which any member of the group has an interest 
without the consent of the board 
their service agreements also contain a general noncompetition covenant in relation to the group for six months from the 
date of termination
details of executive directors’ contracts with ruspetro plc are shown below 
name
commencement 
of appointment
date of  
service contract notice period
don wolcott 1 december 2011 16 december 2011 12 months
tom reed 1 december 2011 16 december 2011 12 months
alexander chistyakov 1 december 2011 16 december 2011 12 months
any termination payments to executive directors would be subject to the policy set out below 
exit payment policy for executive directors 
the company operates the following policy in respect of exit payments
 — notice periods do not exceed 12 months on either side
 — termination payments in lieu of notice are restricted to a maximum of 12 months’ salary plus the cost to the company 
of providing contractual bene ts
 — the executive directors do not have any contractual entitlement to a termination payment in lieu of notice in relation to 
bonus amounts and vesting of shares under the psp the committee has the discretion to determine an appropriate bonus 
amount which would be subject to performance up to the date of termination and prorated for time vesting under any 
share incentive arrangements would be determined in accordance with the rules of such plan typically under the rules 
of the psp outstanding awards for good leavers will be prorated for time served and any performance conditions will 
continue to apply for bad leavers any unvested awards will lapse 
 — in any exit payment scenario the remuneration committee will give due consideration to the circumstances under which 
a director left 
nonexecutive directors
nonexecutive directors do not have service contracts and their terms are set out in a letter of appointment 
each appointment is for an initial term of three years subject to being reelected as a director at each annual general 
meeting and may be terminated with a notice period of one month three months’ notice in the case of the board chairman 
nonexecutive directors are not entitled to any compensation on leaving the board 
name
commencement 
of appointment
date of letter of 
appointment notice period
christopher clark 2 december 2011 9 december 2011 3 months
rolf stomberg 2 december 2011 9 december 2011 1 month
robert jenkins 2 december 2011 9 december 2011 1 month
james mcburney 2 december 2011 9 december 2011 1 month
joe mach 2 december 2011 9 december 2011 1 month
james gerson 2 december 2011 9 december 2011 1 month ruspetro plc annual report and accounts 2012
52
remuneration committee
membership and terms of reference 
the remuneration committee was established by the board prior to the company’s listing on the london stock exchange 
and its members all of whom were appointed at the time of its establishment are shown in the table below 
name role
rolf stomberg chairman
christopher clark member
joe mach member
james mcburney member
in line with the principles of the uk corporate governance code the committee comprises solely of independent 
nonexecutive directors and the board chairman who was considered independent on appointment 
no other nonexecutive directors were members of the committee during the year 
under its terms of reference the committee’s main responsibility is to determine the company’s overall framework for 
remuneration and to set the remuneration packages for the executive directors the chairman of the board and other 
members of senior management the committee is also responsible for the design and operation of all share incentive plans 
the remuneration of the nonexecutive directors is determined by the chairman of the board and the executive directors 
advice to the committee
during the year to 31 december 2012 the following advisors provided services to the committee 
 — deloitte llp ‘deloitte’ – provision of advice on various remuneration matters under consideration by the committee 
including on the preparation of this remuneration report deloitte is a member of the remuneration consultants group 
and provides advice in line with its code of conduct in relation to executive remuneration consulting in the uk 
 — white  case llp – provision of legal advice in relation to share plans and service contracts 
the committee met twice in 2012 with all members in attendance at both meetings
in addition to the services described above other parts of deloitte provided unrelated taxation services to the group 
the remuneration committee does not consider there to be any con ict of interest in this regard
furthermore the committee invited the chief executive of cer the chief nancial of cer the hr director and the company 
secretary to attend its meetings as necessary no person provided input or was involved when their own remuneration was 
being discussed 
discussion of individual remuneration elements 
salary
salaries for executive directors were set prior to ruspetro’s listing on the london stock exchange by reference to the ftse 
250 index and other russiancis companies in the natural resources sector listed in london these are the companies 
against which ruspetro competes for executive talent 
the committee has made no salary increases for 2013 to any of the executive directors 
both the current salary levels and salaries with effect from 1 january 2013 are shown below executives have two elements 
to their salary a uk element and a russian element 
name
2012 base 
annual salary  
uk
2012 base  
annual salary
 russia
total  
2012  
salary
don wolcott us200000 us1233432 us1433432
tom reed us200000 us682679 us882679
alexander chistyakov us200000 us415282 us615282
governance
2012 directors’ remuneration report continued ruspetro plc
53
annual report and accounts 2012
 
bene ts in kind
during the year executive directors received private medical insurance cover a car and driver if required life insurance 
and permanent health insurance the company does not currently operate any pension plans for executive directors 
or any other employees 
annual bonus plan 
the target bonus for 2012 was 100 of base salary for the ceo and 75 of base salary for the other two executive directors 
with a maximum opportunity of 150 and 100 of base salary respectively 
the actual bonus payable in respect of 2012 has been determined by the committee taking into account the following factors
 — end of year production at approximately 6500 boepd against a target of 10400 boepd however 1500 boepd condensate 
which achieves a higher level of income due to a lower rate of the mineral extraction tax the nal production rate is 
approximately 8000 boepd
 — end of year average daily production of 4600 boepd against target of 7600 boepd see note above regarding additional 
value of condensate
 — ebitda of us58 million against target of us26 million for the year
 — very successful completion of the infrastructure projects to handle increased oil production
 — development of a hse management and reporting system
 — development of monthly management information reporting
despite the progress to date on the installation and commissioning of production infrastructure the development of the 
corporate governance processes and procedures the board of directors believe the missed production and nancial targets 
and resulting poor performance for shareholders of the market value of the company do not justify a bonus to the executive 
directors in respect of 2012
preipo option awards to the ceo and cfo
as previously disclosed prior to the company’s ipo on the london stock exchange the company following the 
recommendation of the remuneration committee granted market priced options to don wolcott and tom reed 
on 17 january 2012 with an exercise price equal to the ipo offer price 
the granting of these options was intended to further enhance the alignment between executive directors and shareholders 
as the inherent share price hurdle will ensure that rewards will only be earned if shareholder value has been created 
in addition these options were intended to reward the contribution of the directors in preparing the company for ipo 
these options vest in equal tranches on the rst second and third anniversary of the grant date the options can be exercised 
between the third and tenth anniversary of the date of grant the vesting of these options is not subject to the satisfaction 
of any performance criteria 
the number of options granted to each executive director is shown on page 43 of the report 
performance share plan the ‘psp’
the remuneration committee will decide during the second quarter of 2013 if an award of performance shares will be 
made to the executive directors under the performance share plan and the details of the measures against which company 
performance will be assessed however the performance measures will be 50 against relative total shareholder return 
and 50 against capital dollar spent per incremental barrel of production achieved during the period 
the nal target value for ef ciency of capital expenditure to increase production us of capex per incremental barrel 
will be determined during the second quarter based on the nancial budget agreed with the board of directors ruspetro plc annual report and accounts 2012
54
the following sets out details in respect of the intended june 2013 psp grants
discussion
performance conditions — 50 against total shareholder return against a group of peer companies
 — 50 against the ef ciency of capital expenditure required to increase production
targets set in respect  
of 2013 to 2015
 — total shareholder return 
 — below median  0 0 of ltip award
 — median  35 175 of ltip award
 — upper quartile  100 50 of ltip award
 — ef ciency of capital expenditure to increase production
 — greater than 10 less than target ef ciency  0 0 of ltip award 10 less than 
above target ef ciency  35 175 of ltip award
 — at target ef ciency  75 375 of ltip award at 10 or below of target ef ciency 
 100 50 of ltip award
directors’ shareholdings
the executive directors already hold signi cant shareholdings in the company as shown in the table below as at 31 december 2012 
don  
wolcott
tom  
reed
alexander 
chistyakov
shares bene cially held 22860000 3271440 43208393
shares currently deferred subject to continuous employment only 
or no forfeiture provisions 6217579 4145053 –
total number of shares 29077579 7416493 43208393
value of shareholding assuming share price of £07900 at 31 december 2012 £22971287 £5859029 £34134630
shareholding as a multiple of salary
1
273 126 1084
1 average exchange for 31 december 2012 used is us16153£10000
mar 13 dec 12 sep 12 jun 12 mar 12 jan 12
200
180
160
140
120
100
80
60
40
20
0
ruspetro plc ftse all share oil and gas producers index
total shareholder return 
source thomson reuters datastream
the chart above shows the company’s total shareholder return since trading for ruspetro shares began on the london stock 
exchange on 19 january 2012 against the ftse all share oil  gas producers index 
the ftse all share oil  gas producers index was chosen as it is a broad based index of which the company is a constituent 
governance
2012 directors’ remuneration report continued ruspetro plc
55
annual report and accounts 2012
audited information
directors’ emoluments for the year ended 31 december 2012
us’000 salaryfees bene ts bonus
total  
2012
total  
2011
executive directors
don wolcott 1433 36 – 1469 462
tom reed 883 27 – 910 354
alexander chistyakov 615 30 – 645 161
nonexecutive directors
christopher clark 576
1
12 – 588 47
rolf stomberg 288
2
–– 288 25
robert jenkins 273
3
–– 273 22
james mcburney 268
3
–– 268 22
joe mach 240 – – 240 20
james gerson 200 – – 200 17
1 mr clark’s fees are paid in gbp converted from usd at exchange rate of the day average exchange for 2012 used is us15832£10000
2 dr stomberg’s fees are paid in euros converted from usd average exchange rate used is 12831 eurosus10000
3 the directors are based in the uk and salary and fees are paid in gbp average exchange for 2012 used is us15832£10000
share option awards to executive directors 
director date of grant
number of 
options granted
options 
exercised  
in year
options  
at end  
of year
exercise  
price p
date  
from which 
exercisable expiry date
don wolcott
1
17 jan 2012 6217579 – 6217579 134 17 jan 2015 17 jan 2022
tom reed
1
17 jan 2012 4145053 – 4145053 134 17 jan 2015 17 jan 2022
1 the exercise of these options is not subject to the satisfaction of any performance criteria 
the highest and lowest closing prices for the company’s shares during the year ended 31 december 2012 was £23000 and 
£07225 respectively the closing price for a ruspetro plc share on 31 december 2012 was £07900  ruspetro plc annual report and accounts 2012
56
directors’ interests in shares
the table below sets out the interests of each director of the company as well as the interests held by his or her connected 
persons in the company’s shares excluding interests under share options the dates stated
director
19 january 
2012
1
31 december  
2012
don wolcott 22860000 22860000
tom reed 3271440 3271440
alexander chistyakov 34768560 43208393
christopher clark – 100000
rolf stomberg – 70000
robert jenkins – 50000
james mcburney – 40000
joe mach ––
james gerson
2
99150000 99150000
1 number of shares held by each director as at admission of the company’s shares on the of cial list of the london stock exchange
2 limolines owns 99150000 shares james gerson is a consultant to limolines and is deemed to be bene cially interested in such shares
there has been no change in the interests of the directors and their connected persons between 31 december 2012 and the 
date of this report 
this report has been approved by the remuneration committee of the board on 18 february 2013 and signed on its behalf by
rolf stomberg
chairman of the remuneration committee 
18 march 2013
governance
2012 directors’ remuneration report continued ruspetro plc
57
annual report and accounts 2012
independent auditors’ report to the members 
of ruspetro plc 
we have audited the group nancial statements of ruspetro plc 
for the year ended 31 december 2012 which comprise the 
consolidated statement of comprehensive income the 
consolidated statement of financial position the consolidated 
statement of changes in equity the consolidated statement of 
cash flows the signi cant accounting policies and the related 
notes the nancial reporting framework that has been applied 
in their preparation is applicable law and international financial 
reporting standards ifrss as adopted by the european union 
respective responsibilities of directors and auditors 
as explained more fully in the directors’ responsibilities 
statement the directors are responsible for the preparation 
of the group nancial statements and for being satis ed that 
they give a true and fair view our responsibility is to audit 
and express an opinion on the group nancial 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 ethical standards 
for auditors 
this report including the opinions has been prepared for 
and only for the company’s members as a body in accordance 
with chapter 3 of part 16 of the companies act 2006 and for 
no other purpose we do not in giving these opinions accept 
or assume responsibility for any other purpose or to any other 
person to whom this report is shown or into whose hands it 
may come save where expressly agreed by our prior consent 
in writing
scope of the audit of the nancial statements 
an audit involves obtaining evidence about the amounts 
and disclosures in the nancial statements suf cient to give 
reasonable assurance that the nancial 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 circumstances and 
have been consistently applied and adequately disclosed 
the reasonableness of signi cant accounting estimates made 
by the directors and the overall presentation of the nancial 
statements in addition we read all the nancial and 
non nancial information in the annual report to identify 
material inconsistencies with the audited nancial statements 
if we become aware of any apparent material misstatements 
or inconsistencies we consider the implications for our report
opinion on nancial statements 
in our opinion the group nancial statements 
 — give a true and fair view of the state of the group’s affairs 
as at 31 december 2012 and of its loss and cash ows for the 
year then ended 
 — have been properly prepared in accordance with ifrss as 
adopted by the european union and 
 — have been prepared in accordance with the requirements of 
the companies act 2006 and article 4 of the las regulation 
opinion on other matter prescribed by the 
companies act 2006 
in our opinion the information given in the directors’ report 
for the nancial year for which the group nancial statements 
are prepared is consistent with the group nancial statements
emphasis of matter
in forming our opinion on the nancial statements 
which is not modi ed we have considered the adequacy 
of the disclosure made in note 2 to the nancial statements 
concerning the group’s ability to continue as a going concern 
this ability is dependent whether the group can obtain 
additional nancing and an extension of the maturities of 
the existing debt facilities from the respective lenders and 
shareholders this condition along with the other matters 
explained in note 2 to the nancial statements indicate the 
existence of a material uncertainty which may cast signi cant 
doubt about the group’s and company’s ability to continue as 
a going concern the nancial statements do not include the 
adjustments that would result if the group and company 
was unable to continue as a going concern
matters on which we are required to report 
by exception 
we have nothing to report in respect of the following 
under the companies act 2006 we are required to report 
to you if in our opinion 
 — certain disclosures of directors’ remuneration speci ed 
by law are not made or 
 — we have not received all the information and explanations 
we require for our audit or
under the listing rules we are required to review 
 — the directors’ statement in relation to going concern 
 — the part of the corporate governance statement relating 
to the company’s compliance with the nine provisions of the 
uk corporate governance code speci ed for our review and
 — certain elements of the report to shareholders by the board 
on directors’ remuneration
other matter 
we have reported separately on the parent company nancial 
statements of ruspetro plc for the period ended 31 december 
2012 and on the information in the directors’ remuneration 
report that is described as having been audited that report 
includes an emphasis of matter
kevin reynard senior statutory auditor
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors
aberdeen
20 march 2013
notes
a the maintenance and integrity of the ruspetro plc website is the responsibility of 
the directors the work carried out by the auditors does not involve consideration 
of these matters and accordingly the auditors accept no responsibility for any 
changes that may have occurred to the nancial statements since they were 
initially presented on the website
b legislation in the united kingdom governing the preparation and dissemination 
of nancial statements may differ from legislation in other jurisdictions
financial statements
independent auditor’s report ruspetro plc annual report and accounts 2012
58
note
year ended 31 december
2012 2011
revenue 7 76230 38718
cost of sales 8 74816 52355
gross pro tloss 1414 13637
selling and administrative expenses 9 40481 14982
other incomeexpenses net 10 20215 1385
operating loss 18852 30004
finance costs 11 29815 33126
change in fair value of call option 17 3240 –
foreign exchange gainloss net 23804 25535
loss before income tax 28103 88665
income tax benet12 819 3602
loss for the period 27284 85063
other comprehensive income
exchange difference on translation to presentation currency 6061 7291
total comprehensive loss for the period 21223 77772
loss attributable to
equity holders of the parent 27284 81095
noncontrolling interests – 3968
loss for the period 27284 85063
total comprehensive loss attributable to
equity holders of the parent 21223 74169
noncontrolling interests – 3603
total comprehensive loss for the period 21223 77772
loss per share
basic and diluted loss per ordinary share us 26 009 041
the accompanying notes on pages 62 to 86 are an integral part of these consolidated nancial statements
       
don wolcott      tom reed
chief executive ofcer    chief nancial of cer
financial statements
consolidated statement of comprehensive income 
for the year ended 31 december 2012 presented in us thousands except otherwise stated ruspetro plc
59
annual report and accounts 2012
note
year ended 31 december
2012 2011
assets
noncurrent assets
property plant and equipment 13 226736 111313
mineral rights and other intangibles 14 425551 401513
652287 512826
current assets
inventories 15 2567 2610
trade and other receivables 16 19721 5810
income tax prepayment 37 36
other current assets 17 24 –
cash and cash equivalents 18 34416 1294
56765 9750
total assets 709052 522576
shareholders’ equity
share capital 19 51226 7
share premium 19 220506 49994
retained loss 87741 60208
exchange difference on translation to presentation currency 24061 30122
other reserves 20517 –
equity retained earningsloss and other reserves attributable to parent 180447 40329
noncontrolling interests 19 – 408
total equity 180447 40737
liabilities
noncurrent liabilities
borrowings 20 348493 360250
provision for dismantlement 21 7697 5961
deferred tax liabilities 12 89900 85726
other noncurrent liabilities 17 15365 –
461455 451937
current liabilities
borrowings 20 21804 46197
trade and other payables 22 39721 13496
taxes payable other than income tax 4544 4226
other current liabilities 1081 47457
67150 111376
total liabilities 528605 563313
total equity and liabilities 709052 522576
the accompanying notes on pages 62 to 86 are an integral part of these consolidated nancial statements
the nancial statements on pages 58 to 86 were approved by the board of directors on 20 march 2013
       
don wolcott      tom reed
chief executive ofcer    chief nancial of cer
financial statements
consolidated statement of nancial position
as at 31 december 2012 presented in us thousands except otherwise stated ruspetro plc annual report and accounts 2012
60
note
attributable to owners of the parent
share  
capital
share 
premium
retained 
earnings
accumulated 
loss
exchange 
difference on 
translation to 
presentation 
currency
other 
reserves total
non
controlling 
interest
total 
equity
balance as at 
1 january 2011 6 39989 20887 37049 – 23833 3195 27028
loss for the period – – 81095 – – 81095 3968 85063
other comprehensive 
income for the period – – – 6927 – 6927 365 7291
total comprehensive 
incomeloss for 
the period – – 81095 6927 – 74168 3603 77772
issue of share capital 1 10005 – – – 10006 – 10006
balance as at 
31 december 2011 7 49994 60208 30122 – 40329 408 40737
balance as at 1 january 
2012 7 49994  60208 30122 – 40329 408 40737
loss for the period – – 27284 – – 27284 – 27284
other comprehensive 
income for the period – – – 6061 – 6061 – 6061
total comprehensive 
incomeloss for 
the period – – 27284 6061 – 21223 – 21223
reorganization of 
the group 19 31818 49994 249 – 18176 249 408 159
issue of share capital 19 19401 220506 – – – 239907 – 239907
share options of 
shareholders 17 – – – –96949694 –9694
sharebased payment 
compensation 19 – – – –1203512035 –12035
balance as at 
31 december 2012 51226 220506 87741 24061 20517 180447 – 180447
the accompanying notes on pages 62 to 86 are an integral part of these consolidated nancial statements
       
don wolcott      tom reed
chief executive ofcer    chief nancial of cer
financial statements
consolidated statement of changes in equity 
for the year ended 31 december 2012 presented in us thousands except otherwise stated ruspetro plc
61
annual report and accounts 2012
note
year ended 31 december
2012 2011
cash ows from operating activities
loss before income tax 28103 88665
adjustments for
depreciation depletion and amortization 13 14 19762 24524
foreign exchange incomeloss 23804 25535
finance costs 11 29815 33126
change in fair value of call option 17 3240 –
gain on settlement of makayla debt 10 21282 –
sharebased payment compensation 19 12035 –
other operating expenses 826 2286
operating cash out ows before working capital adjustments 7511 3194
working capital adjustments
change in trade and other receivables 964 530
change in inventories 43 472
change in trade and other payables 12259 648
change in other taxes receivablepayable 12629 4292
net cash ows used in operating activities 8802 552
cash ows from investing activities
purchase of property plant and equipment 106583 32335
net cash used in investing activities 106583 32335
cash ows from nancing activities
proceeds from issue of share capital net 19 213699 10006
repayments of loans and borrowings 18575 –
interest paid 50645 –
cash in ow on reorganization 87 –
net cash generated from nancing activities 144566 10006
net increasedecrease in cash and cash equivalents 29181 22881
effect of exchange rate changes on cash and cash equivalents 3941 5310
cash and cash equivalents at the beginning of the period 1294 18865
cash and cash equivalents at the end of the period 34416 1294
the accompanying notes on pages 62 to 86 are an integral part of these consolidated nancial statements
       
don wolcott      tom reed
chief executive ofcer    chief nancial of cer
financial statements
consolidated statement of cash ows
for the year ended 31 december 2012 presented in us thousands except otherwise stated ruspetro plc annual report and accounts 2012
62
financial statements
notes to the consolidated nancial statements
for the year ended 31 december 2012 all tabular amounts are in us thousands except otherwise stated
1 corporate information
the consolidated nancial statements of ruspetro plc the ‘parent’ or ‘ruspetro’ and its subsidiaries together referred 
to as ‘the group’ for the year ended 31 december 2012 were approved by its board of directors on 20 march 2013 
the parent was incorporated in the united kingdom on 20 october 2011 as a public company under the provisions of the 
companies act 2006 of england and wales the parent’s registered of ce is 57–59 st james’s street london sw1a 1ld england
on 18 january 2012 the parent became a company of the group through a series of shares exchanges see note 19
although these consolidated nancial statements have been released in the name of the parent they represent 
an insubstance continuation of the existing group headed by ruspetro holding limited the ‘previous parent’ 
and the following accounting treatment has been applied to account for the reorganization
 — the consolidated assets and liabilities of the subsidiaries were recognized and measured at the prereorganization 
carrying amounts without restatement to fair value 
 — the retained earnings and other equity balances recognized in the consolidated statement of nancial position re ect the 
consolidated retained earnings and other equity balances of the previous parent immediately prior to the reorganization 
and the results of the period from 1 january 2012 to the date of the reorganization are those of the previous parent as 
the parent was not active prior to the reorganization subsequent to the reorganization the equity structure re ects 
the applicable movements in equity of the parent including the equity instruments issued to effect the reorganization 
and the initial public offering ‘ipo’ note 19 and 
 — comparative numbers presented in the consolidated nancial statements are those reported in the consolidated nancial 
statements of the previous parent for the year ended 31 december 2011
the principal activities of the group are exploration for and production of crude oil the operating subsidiaries of the group – 
ojsc inga and ojsc transoil hereinafter referred to as inga and transoil respectively hold three licenses for exploration 
for and extraction of crude oil and natural gas in the khantymansiysk region of the russian federation
details of subsidiaries consolidated within the group are as follows
company business activity country of incorporation
year of 
incorporation
effective ownership
31 december
 2012 2011
ruspetro holding limited holding company republic of cyprus 2007 100 100
ruspetro llc ‘ruspetro russia’ crude oil sale russian federation 2005 100 95
inga exploration and production of 
crude oil
russian federation
1998 100 95
transoil exploration and production of 
crude oil
russian federation
2001 100 95
on 19 january 2012 llc sberbank capital transferred its 5 participating interest in ruspetro russia to the company in 
consideration for a pro rata number of shares in the parent as of this date all of the group’s subsidiaries were 100 owned
2 basis of preparation
these consolidated nancial statements of the parent including those of its subsidiaries the ‘group’ have been prepared 
in accordance with international financial reporting standards ifrs as adopted by the european union the consolidated 
 nancial statements are prepared under the historical cost convention modi ed for fair values under ifrs
the consolidated nancial statements are presented in us dollars ‘us’ and all values are rounded to the nearest thousand 
unless otherwise indicated
going concern
these consolidated nancial statements are prepared on a going concern basis which presumes that the group will be able 
to realize its assets and discharge its liabilities in the normal course of business in the foreseeable future
at 31 december 2012 the group had net current liabilities of us10385 thousand which included cash in hand of 
us34416 thousand furthermore the group has a longterm loan from sberbank amounting to us286671 thousand 
which is repayable in may 2015 together with longterm shareholder loans of us61822 thousand which are also repayable 
in may 2015 
management consider that the continued operational existence of the group is dependent upon the ability to make further 
investment in eld development in order to increase hydrocarbon production and sales in response to these circumstances 
management are in discussions with existing lenders with regard to the provision of additional longterm debt nancing and 
the extension of the maturity of the existing longterm loans ruspetro plc
63
annual report and accounts 2012
management consider the additional nancing and the maturity extension of existing debt will provide suf cient nancial 
resources such that the group can further invest in eld development with the intention of raising production management 
further consider that the additional cash ows to be generated from production would allow the group to service debt 
further increase production and fund other group activities in developing their cash ow forecasts management have 
a number of signi cant assumptions these include assumptions as to future hydrocarbon prices taxes production 
volumes and in ation and are further discussed in note 4 
agreements with the existing lenders as to additional nancing and maturity extension have not been entered into as of the date 
of these nancial statements in the event that such additional nancing and maturity extension is not obtained the group may 
be unable to realize its assets and discharge its liabilities in the normal course of business these circumstances represent 
a material uncertainty that may cast signi cant doubt on the group’s and parent’s ability to continue as a going concern
however on the basis of the assumptions and cash ow forecasts prepared management have assumed that the group will 
continue to operate within both available and prospective facilities accordingly the group nancial statements are prepared 
on the going concern basis and do not include any adjustments that would be required in the event that the loan holders 
do request repayment and alternative nance is not available
3 summary of signi cant accounting policies
principles of consolidation
subsidiaries
subsidiaries are those entities in which the group has an interest of more than one half of the voting rights or otherwise 
has power to exercise control over their operations subsidiaries are consolidated from the date on which control is 
transferred to the group and are no longer consolidated from the date that control ceases 
all intercompany transactions balances and unrealized gains on transactions between group companies are eliminated 
unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred 
where necessary accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted 
by the group 
the nancial statements of the subsidiaries are prepared for the same reporting year as the parent using consistent 
accounting policies
business combinations 
the group uses the acquisition method of accounting to account for business combinations the consideration transferred 
for the acquisition of a subsidiary is the fair values of the assets transferred the liabilities incurred and the equity interests 
issued by the group the consideration transferred includes the fair value of any asset or liability resulting from a contingent 
consideration arrangement acquisitionrelated costs are expensed as incurred identi able assets acquired and liabilities 
and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition 
date on an acquisitionbyacquisition basis the group recognizes any noncontrolling interest in the acquiree either at 
fair value or at the noncontrolling interest’s proportionate share of the acquiree’s net assets 
the excess of the consideration transferred the amount of any noncontrolling interest in the acquiree and the acquisitiondate 
fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the identi able net assets 
acquired is recorded as goodwill if this is less than the fair value of the net assets of the subsidiary acquired in the case 
of a bargain purchase the difference is recognized directly in pro t or loss 
oil and natural gas exploration evaluation and development expenditure 
oil and gas exploration activities are accounted for in a manner similar to the successful efforts method costs of successful 
development and exploratory wells are capitalized
development costs
expenditure on the construction installation or completion of infrastructure facilities such as platforms pipelines and the drilling 
of development wells including unsuccessful development or delineation wells is capitalized within oil and gas properties
property plant and equipment mineral rights and other intangibles
oil and gas properties and other property plant and equipment including mineral rights are stated at cost less accumulated 
depletion depreciation and accumulated impairment losses 
the initial cost of an asset comprises its purchase price or construction cost any costs directly attributable to bringing 
the asset into operation the initial estimate of the decommissioning obligation and for qualifying assets borrowing costs 
the purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given 
to acquire the asset 
2 basis of preparation continued  ruspetro plc annual report and accounts 2012
64
financial statements
notes to the consolidated nancial statements continued
for the year ended 31 december 2012 all tabular amounts are in us thousands unless otherwise noted
depreciation and depletion
oil and gas properties are depreciated on a unitofproduction basis over proved developed reserves of the eld concerned 
except in the case of assets whose useful life is shorter than the lifetime of the eld in which case the straightline method 
is applied mineral rights are depleted on the unitofproduction basis over proved and probable reserves of the relevant area 
other property plant and equipment are generally depreciated on a straightline basis over their estimated useful lives 
as follows 
years
buildings and constructions 30–50
other property plant and equipment 1–6
major maintenance and repairs
expenditure on major maintenance re ts or repairs comprises the cost of replacement assets or parts of assets inspection costs 
and overhaul costs where an asset or part of an asset that was separately depreciated and is now written off is replaced and it is 
probable that future economic bene ts associated with the item will ow to the group the expenditure is capitalized where part 
of the asset was not separately considered as a component the replacement value is used to estimate the carrying amount of the 
replaced assets which is immediately written off inspection costs associated with major maintenance programs are capitalized 
and amortized over the period to the next inspection all other maintenance costs are expensed as incurred
intangible assets
intangible assets are stated at the amount initially recognized less accumulated amortization and accumulated impairment 
losses intangible assets include computer software
intangible assets acquired separately are measured on initial recognition at cost the cost of intangible assets acquired in a 
business combination is fair value as at the date of acquisition following initial recognition intangible assets are carried at 
cost less any accumulated amortization and any accumulated impairment losses amortization is calculated on a straightline 
basis over their useful lives except for mineral rights that are depleted on the unitofproduction basis as explained above
impairment of assets
the group monitors internal and external indicators of impairment relating to its tangible and intangible assets
the recoverable amounts of cash generating units ‘cgu’ and individual assets have been determined based on the higher 
of valueinuse viucalculations and fair values less costs to sell fvlcs these calculations require the use of estimates 
and assumptions it is reasonably possible that the oil price assumption may change which may then impact the estimated 
life of the eld and may then require a material adjustment to the carrying value of longterm assets 
given the shared infrastructure and interdependency of cash ows related to the three licenses the group holds the assets 
are considered to represent one cgu which is the lowest level where largely independent cash ows are deemed to exist
share option plan 
the share option plan under which the group has the ability to choose whether to settle it in cash or equity instruments at 
the discretion of the board of directors is accounted for as an equity settled transaction the fair value of the options granted 
by the parent to employees is measured at the grant date and calculated using the trinomial option pricing model and 
recognized in the consolidated nancial statements as a component of equity with a corresponding amount recognized 
in selling general and administrative expenses over the time share reward vest to the employee
modi cations of the terms or conditions of the equity instruments granted in a manner that reduces the total fair value of 
the sharebased payment arrangement or is not otherwise bene cial to the employee are accounted for as services received 
in consideration for the equity instruments granted as if the modi cation had not occurred
financial instruments
a nancial instrument is any contract that gives rise to nancial assets or liabilities
financial assets within the scope of ias 39 are classi ed as either nancial assets at fair value through pro t or loss loans 
and receivables held to maturity investments or available for sale nancial assets as appropriate when nancial assets are 
recognized initially they are measured at fair value plus directly attributable transaction costs for all nancial assets not 
carried at fair value through pro t or loss 
the group determines the classi cation of its nancial assets at initial recognition
3 summary of signi cant accounting policies continued ruspetro plc
65
annual report and accounts 2012
financial instruments carried on the consolidated statement of nancial position include loans and receivables cash and 
cash equivalent balances borrowings accounts payable and put and call options the particular recognition and measurement 
methods adopted are disclosed in the individual policy statements associated with each item
an obligation to acquire own shares is classi ed as a liability the liability to repurchase own shares is initially recognized 
at the fair value of consideration payable being the net present value of estimated redemption amount and it is recorded 
as deduction of equity subsequent changes revision of estimate unwinding of discount are recognized in pro t or loss 
if options are not exercised the amount recognised as a liability is transferred to equity
rights to acquire own shares are classi ed as assets the right to repurchase own shares is initially recognized at the fair 
value of consideration payable estimated using the blackscholes option pricing model and it is recorded as increase 
of equity subsequent changes revision of estimate are recognized in pro t and loss 
loans and receivables
loans and receivables are nonderivative nancial assets with xed or determinable payments that are not quoted in an 
active market after initial measurement loans and receivables are subsequently carried at amortized cost using the effective 
interest method less any provision for impairment
a provision for impairment is recognized when there is an objective evidence that the group will not be able to collect all 
amounts due according to the original terms of the loans and receivables the amount of provision is the difference between the 
assets’ carrying value and the present value of the estimated future cash ows discounted at the original effective interest rate 
the change in the amount of the loan or receivable is recognized in pro t or loss interest income is recognized in pro t or loss 
by applying the effective interest rate
cash and cash equivalents
cash and cash equivalents in the consolidated statement of nancial position comprise cash at banks and on hand and 
shortterm deposits with an original maturity of three months or less 
for the purpose of the consolidated cash ow statement cash and cash equivalents consist of cash and cash equivalents 
as de ned above net of outstanding bank overdrafts if any
borrowings and accounts payable
the group’s nancial liabilities are represented by accounts payable and borrowings 
borrowings are initially recognized at fair value of the consideration received less directly attributable transaction costs 
after initial recognition borrowings are measured at amortized cost using the effective interest method any difference 
between the initial fair value of the consideration received net of transaction costs and the redemption amount is 
recognized as an adjustment to interest expense over the period of the borrowings
a nancial liability is derecognized when the obligation under the liability is discharged or canceled or expires where an 
existing nancial liability is replaced by another from the same lender on substantially different terms or the terms of an 
existing liability are substantially modi ed such an exchange or modi cation is treated as a derecognition of the original 
liability and the recognition of a new liability and the difference in the respective carrying amounts is recognized in the 
pro t or loss
impairment of nancial assets 
the group assesses at the end of each reporting period whether there is any objective evidence that a nancial asset or a 
group of nancial assets is impaired a nancial asset or a group of nancial assets is deemed to be impaired if and only if 
there is an objective evidence of impairment as a result of one or more events that has occurred after the initial recognition 
of the asset an incurred ‘loss event’ and that loss event has an impact on the estimated future cash ows of the nancial 
asset or the group of nancial assets that can be reliably estimated evidence of impairment may include indications that 
the debtors or a group of debtors is experiencing signi cant nancial dif culty default or delinquency in interest or principal 
payments the probability that they will enter bankruptcy or other nancial reorganization and where observable data 
indicate that there is a measurable decrease in the estimated future cash ows such as changes in arrears or economic 
conditions that correlate with defaults
inventories
inventories are stated at the lower of cost and net realizable value cost of inventory is determined on the weighted average 
basis the cost of nished goods and work in progress comprises raw material direct labor other direct costs and related 
production overheads based on normal operating capacity but excludes borrowing costs net realizable value is the 
estimated selling price in the ordinary course of business less the estimated cost of completion and selling expenses
3 summary of signi cant accounting policies continued ruspetro plc annual report and accounts 2012
66
provisions 
general
provisions are recognized when the group has a present obligation legal or constructive as a result of a past event it is 
probable that an out ow of resources embodying economic bene ts will be required to settle the obligation and a reliable 
estimate can be made of the amount of the obligation the expense relating to any provision is presented in pro t or loss net 
of any reimbursement if the effect of the time value of money is material provisions are discounted using rates that re ect 
where appropriate the risks speci c to the liability where discounting is used the increase in the provision due to the 
passage of time is recognized as nance costs
provision for dismantlement
provision for dismantlement is related primarily to the conservation and abandonment of wells removal of pipelines and other 
oil and gas facilities together with site restoration activities related to the group’s license areas when a constructive obligation 
to incur such costs is identi ed and their amount can be measured reliably the net present value of future decommissioning 
and site restoration costs is capitalized within property plant and equipment with a corresponding liability provisions are 
estimated based on engineering estimates license and other statutory requirements and practices adopted in the industry 
and are discounted to net present value using discount rates re ecting adjustments for risks speci c to the obligation
adequacy of such provisions is periodically reviewed changes in provisions resulting from the passage of time are re ected in 
pro t or loss each year under nance costs other changes in provisions relating to a change in the expected pattern of settlement 
of the obligation changes in the discount rate or in the estimated amount of the obligation are treated as a change in accounting 
estimate in the period of the change and are re ected as an adjustment to the provision and a corresponding adjustment to 
property plant and equipment if a decrease in the liability exceeds the carrying amount of the asset the excess is recognized 
immediately in pro t or loss
taxes
income tax
the income tax expense comprises current and deferred taxes calculated based on the tax rates that have been enacted or 
substantively enacted at the end of the reporting period current and deferred taxes are charged or credited to pro t or loss 
except where they are attributable to items which are charged or credited directly to equity in which case the corresponding 
tax is also taken to equity
current tax is the amount expected to be paid to or recovered from the taxation authorities in respect of taxable pro ts 
or losses for the current and prior periods 
deferred tax assets and liabilities are calculated in respect of temporary differences using the liability method deferred 
taxes provide for all temporary differences arising between the tax bases of assets and liabilities and their carrying values 
for nancial reporting purposes except where the deferred tax arises from the initial recognition of an asset or liability in 
a transaction that is not a business combination and at the time of the transaction affects neither the accounting pro t 
nor taxable pro t or loss
a deferred tax asset is recognized for all deductible temporary differences and carry forward of unused tax credits and 
unused tax losses only to the extent that it is probable that taxable pro t will be available against which the deductible 
temporary differences or carry forward losses can be utilized 
unrecognized deferred tax assets are reassessed at the end of each reporting period and are recognized to the extent that 
it has become probable that future taxable pro t will allow the deferred tax asset to be recovered
deferred tax assets and liabilities are offset when the group has a legally enforceable right to set off current tax assets and 
liabilities when deferred tax balances are referred to the same governmental body ie federal regional or local and the 
same subject of taxation and when the group intends to perform an offset of its current tax assets and liabilities 
value added tax
russian value added tax ‘vat’ at a standard rate of 18 is payable on the difference between output vat on sales of goods 
and services and recoverable input vat charged by suppliers output vat is charged on the earliest of the dates either the 
date of the shipment of goods works services or the date of advance payment by the buyer input vat could be recovered 
when purchased goods works services are accounted for and other necessary requirements provided by the tax legislation 
are met 
vat related to sales and purchases is recognised in the consolidated balance sheet on a gross basis and disclosed separately 
as a current asset and liability
financial statements
notes to the consolidated nancial statements continued
for the year ended 31 december 2012 all tabular amounts are in us thousands unless otherwise noted
3 summary of signi cant accounting policies continued ruspetro plc
67
annual report and accounts 2012
mineral extraction tax 
mineral extraction tax on hydrocarbons including natural gas and crude oil is due on the basis of quantities of natural resources 
extracted mineral extraction tax for crude oil is determined based on the volume produced per xed tax rate rur419 per ton 
adjusted depending on the monthly average market prices of the urals blend and the rurus exchange rate for the preceding 
month the ultimate amount of the mineral extraction tax on crude oil depends also on the depletion and geographic location of 
the oil eld mineral extraction tax on gas condensate is determined based on a xed percentage from the value of the extracted 
mineral resources mineral extraction tax is accrued as a tax on production and recorded within cost of sales
equity
share capital
ordinary shares are classi ed as equity incremental costs directly attributable to the issue of new shares and options 
are shown in equity as a deduction net of tax from the proceeds any excess of the fair value of shares issued or liabilities 
extinguishment over the par value of shares issued is recorded as share premium
other reserves
other reserves include reserve on reorganisation of the group note 19 the amount of initial recognition of share options 
of shareholders note 17 and amount related to fair value of directors’ options note 17
noncontrolling interests
noncontrolling interests ‘nci’ is the equity in subsidiaries not attributable directly or indirectly to the parent nci at 
the end of the reporting period represents the noncontrolling shareholders’ portion of the carrying value of the identi able 
assets and liabilities of the subsidiary nci are presented within equity separately from the equity attributable to the 
parent’s shareholders
the group treats transactions with nci as transactions with equity owners of the group for purchases from nci 
the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the 
subsidiary is recorded in equity gains or losses on disposals to noncontrolling interests are also recognized in equity
revenue recognition
revenue is measured at the fair value of the consideration received or receivable for goods provided or services rendered 
less any trade discounts value added tax and similar salesbased taxes after eliminating sales within the group 
revenue from sale of crude oil and gas condensate is recognized when the signi cant risks and rewards of ownership have 
been transferred to the customer the amount of revenue can be measured reliably it is probable that the economic bene ts 
associated with the transaction will ow to the group and costs incurred or to be incurred in respect of this transaction can 
be measured reliably if the group agrees to transport the goods to a speci ed location revenue is recognized when goods 
are passed to the customer at the designated location 
other revenue is recognized in accordance with contract terms 
interest income is accrued on a regular basis by reference to the outstanding principal amount and the applicable effective 
interest rate which is the rate that exactly discounts estimated future cash receipts through the expected life of the nancial 
asset to that asset’s net carrying amount dividend income is recognized where the shareholders’ right to receive a dividend 
payment is established
leases
leases in which a signi cant portion of the risks and rewards of ownership are retained by the lessor are classi ed 
as operating leases payments made under operating leases net of any incentives received from the lessor are charged 
to the income statement on a straightline basis over the period of the lease
borrowing costs
borrowing costs directly relating to the acquisition construction or production of a qualifying capital project under 
construction are capitalized and added to the project cost during construction until such time that the assets are substantially 
ready for their intended use ie when they are capable of production where funds are borrowed speci cally to nance a project 
the amount capitalized represents the actual borrowing costs incurred where surplus funds are available for a short term out 
of money borrowed speci cally to nance a project the income generated from such shortterm investments is also capitalized 
and deducted from the total capitalised borrowing cost where the funds used to nance a project form part of general 
borrowings the amount capitalized is calculated using a weighted average of rates applicable to relevant general borrowings 
of the group during the period all other borrowing costs are recognized in the pro t or loss as nance costs in the period 
in which they are incurred
3 summary of signi cant accounting policies continued ruspetro plc annual report and accounts 2012
68
employee bene ts 
wages salaries contributions to the russian federation state pension and social insurance funds paid annual leave and sick 
leave bonuses are expensed as incurred
foreign currency translation
foreign currency transactions are initially recognized in the functional currency at the exchange rate ruling at the date of 
transaction monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rate 
of exchange in effect at the end of the reporting period 
the us dollar ‘us’ is the presentation currency of the group and the functional currency of the parent the functional 
currency of subsidiaries operating in the russian federation is the russian rouble ‘rur’ the assets and liabilities of the 
subsidiaries are translated into the presentation currency of the group at the rate of exchange ruling at the end of each of 
the reporting periods income and expenses for each income statement are translated at average exchange rates unless this 
average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates in which 
case income and expenses are translated at the rate on the dates of the transactions all the resulting exchange differences 
are recorded in other comprehensive income 
the us to rur exchange rates were 3037 and 3220 as at 31 december 2012 and 31 december 2011 respectively and the 
average rates for the year ended 31 december 2012 and 2011 were 3107 and 2874 respectively the us to gbp exchange 
rates were 062 and 065 as at 31 december 2012 and 31 december 2011 respectively and the average rates for the year ended 
31 december 2012 and 2011 were 063 and 062 respectively the decrease in the us to rur exchange rate for the year 
ended 31 december 2012 has resulted in a gain of us23804 thousand in the consolidated statement of comprehensive 
income and an adjustment of us6061 thousand in other comprehensive income refer to notes 13 and 14
  signi cant accounting judgments estimates and assumptions
in the application of the group’s accounting policies management is required to make judgments estimates and assumptions 
about the carrying amounts of assets and liabilities that are not readily apparent from other sources 
the estimates and associated assumptions are based on historical experience and other factors that are considered to be 
relevant actual results may differ from these estimates the estimates and underlying assumptions are reviewed on an ongoing 
basis revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only 
that period or in the period of the revision and future periods if the revision affects both current and future periods
the most signi cant areas of accounting requiring the use of the group’s management estimates and assumptions relate 
to oil and gas reserves useful economic lives and residual values of property plant and equipment impairment of tangible 
assets provisions for dismantlement taxation and allowances
subsoil licenses
the group conducts operations under exploration and production licenses which require minimum levels of capital 
expenditure and mineral production timely payment of taxes provision of geological data to authorities and other 
such requirements the current periods of the group’s licenses expire between june 2014 and june 2017
regulatory authorities exercise considerable discretion in issuing and renewing licenses and in monitoring licensees’ 
compliance with license terms the loss of license would be considered a material adverse event for the group
it is management’s judgment that each of the three licenses held by the group will be renewed for the economic lives of 
the elds which are projected to be up to 2040 two licenses held by inga and 2029 the license held by transoil the 
appraised economic lives of the elds are used as the basis for reserves estimation depletion calculation and impairment 
analysis in making this assessment management consider that the license held by transoil which was extended for three 
years to december 2015 will be further extended this further extension will be depended on management demonstrating 
to licensing authorities that associated petroleum gas produced in the course of oil production is being utilised
useful economic lives of property plant and equipment and mineral rights
oil and gas properties and mineral rights
the group’s oil and gas properties are depleted over the respective life of the oil and gas elds using the unitofproduction 
method based on proved developed oil and gas reserves note 13 mineral rights are depleted over the respective life of the 
oil and gas elds using the unitofproduction method based on proved and probable oil and gas reserves note 14 
reserves are determined using estimates of oil in place recovery factors and future oil prices
financial statements
notes to the consolidated nancial statements continued
for the year ended 31 december 2012 all tabular amounts are in us thousands unless otherwise noted
3 summary of signi cant accounting policies continued ruspetro plc
69
annual report and accounts 2012
when determining the life of the oil and gas eld assumptions that were valid at the time of estimation may change when 
new information becomes available the factors that could affect the estimation of the life of an oil and gas eld include 
the following
 — changes of proved and probable oil and gas reserves
 — differences between actual commodity prices and commodity price assumptions used in the estimation of oil and 
gas reserves
 — unforeseen operational issues and
 — changes in capital operating processing and reclamation costs discount rates and foreign exchange rates possibly 
adversely affecting the economic viability of oil and gas reserves
any of these changes could affect prospective depletion of mineral rights and oil and gas assets and their carrying value
other nonproduction assets
property plant and equipment other than oil and gas properties are depreciated on a straightline basis over their useful 
economic lives note 13 management at the end of each reporting period reviews the appropriateness of the assets useful 
economic lives and residual values the review is based on the current condition of the assets the estimated period during 
which they will continue to bring economic bene t to the group and their estimated residual value
estimation of oil and gas reserves
unitofproduction depreciation depletion and amortization charges are principally measured based on group’s estimates 
of proved developed and proved and probable oil and gas reserves estimates of proved and probable reserves are also 
used in determination of impairment charges and reversals proved and probable reserves are estimated by independent 
international reservoir engineers by reference to available geological and engineering data and only include volumes 
for which access to market is assured with reasonable certainty 
information about the carrying amounts of oil and gas properties and the depreciation depletion and amortization charged 
is provided in notes 13 and 14
estimates of oil and gas reserves are inherently imprecise require the application of judgments and are subject to regular 
revision either upward or downward based on new information such as from the drilling of additional wells observation 
of longterm reservoir performance under producing conditions and changes in economic factors including product prices 
contract terms or development plans changes to the group’s estimates of proved and probable reserves affect prospectively 
the amounts of depreciation depletion and amortization charged and consequently the carrying amounts of mineral rights 
and oil and gas properties
were the estimated proved reserves to differ by 10 from management’s estimates the impact on depletion would 
be as follows
increasedecrease in reserves estimation
effect on loss before tax for 
the year ended 31 december
2012 2011
10 1628 2132
10 1989 2606
provision for dismantlement
the group has a constructive obligation to recognize a provision for dismantlement for its oil and gas assets note 21 
the fair values of these obligations are recorded as liabilities on a discounted basis which is typically at the time when assets 
are installed the group performs analysis and makes estimates in order to determine the probability timing and amount 
involved with probable required out ow of resources estimating the amounts and timing of such dismantlement costs 
requires signi cant judgment the judgment is based on cost and engineering studies using currently available technology 
and is based on current environmental regulations provision for dismantlement is subject to change because of change 
in laws and regulations and their interpretation
estimated dismantlement costs for which the out ow of resources is determined to be probable are recognized as a provision 
in the group’s nancial statements 
impairment of noncurrent assets 
the group accounts for the impairment of noncurrent assets in accordance with ias 36 impairment of assets under ias 
36 the group is required to assess the conditions that could cause assets to become impaired and to perform a recoverability 
test for potentially impaired assets held by the group these conditions include whether a signi cant decrease in the market 
value of the assets has occurred whether changes in the group’s business plan for the assets have been made or whether 
a signi cant adverse change in the business environment has arisen
  signi cant accounting judgments estimates and assumptions continued ruspetro plc annual report and accounts 2012
70
subsequent to the year end the group’s shares have been trading at a level which indicate that the market capitalization 
of the group is below the carrying value of net assets this has resulted in a review of the group’s noncurrent assets 
oil and gas properties and mineral rights to determine whether they are impaired as at the reporting date
if there are indications of loss in value the recoverable amount is estimated the recoverable amount is the higher of 
the assets fvlcs or its viu management consider that an appropriate approach to determining fvlcs is by discounting 
the posttax cash ows expected to be generated by the oil and gas assets net of associated selling costs taking into account 
those assumptions that market participants would use in estimating fair value the viu is a discounted cash ow calculation 
based on continued use of the assets in its present condition excluding potential exploitation of improvement or 
expansion potential
the determination of the recoverable amount for both the fvlcs and the viu involves assumptions as to future 
hydrocarbon prices taxes production volumes and in ation the models also use estimates of proved developed for 
viu and proved and probable reserves for fvlcs as developed by the independent reservoir engineers degolyer and 
macnaughton estimated cash ows are discounted with a risk adjusted discount rate derived as the weighted average 
cost of capital ‘wacc’ for the group’s businesses the pretax nominal discount rate is estimated at 12 
based on our estimation of fair value less cost of sale we do not consider that the group’s noncurrent assets are impaired 
as of 31 december 2012 
assumptions used in developing cash ow forecasts of the group
assumptions value
average crude oil price usd 101 per barrel
average effective rate of mineral extraction tax of crude oil rub 4700 per ton
average effective rate of mineral extraction tax of gas condensate rub 590 per ton
production volume of crude oil over economic life of the elds 438574 thousand barrels
production volume of gas condensate over economic life of the elds 13584 thousand barrels
in ation 5
as the fvlcs is sensitive to changes in production volume and to changes in average crude oil price the impairment of oil 
and gas properties may occur if crude oil initial ow rate per well would be equal to 220 barrels per day or average crude oil 
price per barrel would be equal to us60
taxation
the group is subject to income and other taxes signi cant judgment is required in determining the provision for income 
tax and other taxes due to complexity of the tax legislation of the russian federation deferred tax assets are recognized to 
the extent that it is probable that it will generate enough taxable pro ts to utilize deferred income tax recognized signi cant 
management judgment is required to determine the amount of deferred tax assets recognized based upon the likely timing 
and the level of future taxable pro ts management prepares cash ow forecasts to support recoverability of deferred tax assets 
cash ow models are based on a number of assumptions relating to oil prices operating expenses production volumes etc 
these assumptions are consistent with those used by independent reservoir engineers management also takes into account 
uncertainties related to future activities of the group and going concern considerations when signi cant uncertainties exist 
deferred tax assets arising from losses are not recognized even if recoverability of these is supported by cash ow forecasts
segment reporting
management views the group as one operating segment and uses reports for the entire group to make strategic decisions 
98 and 97 of total revenues from external customers in 2012 and 2011 respectively were derived from sales of crude oil 
and gas condensate these sales are made to domestic and international oil traders although there are a limited number 
of these traders the group is not dependent on any one of them as crude oil is widely traded and there are a number of 
other potential buyers of this commodity the group’s operations are entirely located in russia
gain on settlement of makayla investment limited liability
management views the difference between the carrying value of the liability to makayla investments limited ‘makayla’ 
and the fair value of shares issued for the settlement of the liability is a gain because in effect the transaction was settled 
with a third party note 10
the parent’s board of directors evaluates performance of the entity on the basis of different measures including total 
expenses capital expenditures operating expenses per barrel and others 
financial statements
notes to the consolidated nancial statements continued
for the year ended 31 december 2012 all tabular amounts are in us thousands unless otherwise noted
  signi cant accounting judgments estimates and assumptions continued ruspetro plc
71
annual report and accounts 2012
5 adoption of the new and revised standards
at the date of approval of these consolidated nancial statements the following accounting standards amendments 
and interpretations were issued by the international accounting standards board and ifrs interpretations committee 
in the year ended 31 december 2012 but are not yet effective and therefore have not been applied
i not endorsed by the european union
new standards and interpretations 
 — ifrs 9 – financial instruments effective for annual periods beginning on or after 1 january 2015
amendments
 — improvements to ifrss 2009–2011 effective for annual periods beginning on or after 1 january 2013
 — amendments to ifrs 10 ifrs 11 and ifrs 12 effective for annual periods beginning on or after 1 january 2013 – 
transition guidance
 — amendments to ifrs 10 ifrs 12 and ias 27 effective for annual periods beginning on or after 1 january 2014 – 
investment entities
ii endorsed by the european union
new standards and interpretations 
 — ifrs 10 consolidated financial statements
 — ifrs 11 joint arrangements 
 — ifrs 12 disclosure of interests in other entities 
 — ifrs 13 fair value measurement
 — ias 27 separate financial statements 
 — ias 28 investments in associates and joint ventures
amendments
 — amendments to ifrs 7 financial instruments disclosures – offsetting financial assets and financial liabilities 
 — ifrs 1 – firsttime adoption of international financial reporting standards effective for annual periods beginning 
on or after 1 january 2013 – government loans
 — amendments to ias 32 financial instruments presentation – offsetting financial assets and financial liabilities 
 — amendments to ifrs 1 firsttime adoption of international financial reporting standards – severe hyperin ation 
and removal of fixed dates for firsttime adopters 
 — amendments to ias 12 income taxes – deferred tax recovery of underlying assets 
 — amendments to ias 1 presentation of items of other comprehensive income 
 — amendments to ias 19 employee bene ts 
management expects that the adoption of these accounting standards in future periods will not have a material effect 
on the nancial statements of the group
6 segment reporting 
the management views the operations of the group as one operating segment should the group diversify its operations 
the nancial reporting will be adjusted to re ect the change 
the chief operating decision maker evaluates performance of the group on the basis of different measures including 
production volumes related revenues capital expenditures operating expenses per barrel and others
7 revenue
year ended 31 december
2012 2011
revenue from crude oil sales 63614 37595
revenue from gas condensate sales 11230 –
other revenue 1386 1123
total revenue 76230 38718
other revenue includes proceeds from third parties for crude oil transportation 
for the years ended 31 december 2012 and 2011 revenue from export sales of crude oil amounted to us16877 thousand 
and us11120 thousand respectively
revenues from some individual customers in the crude oil and gas condensate segment approximately equaled or exceeded 
10 of total group’s segment revenue ruspetro plc annual report and accounts 2012
72
customer
year ended 31 december
2012 2011
customer 1 20047 23794
customer 2 16877 11120
customer 3 16831 –
customer 4 8779 –
customer 5 7774 –
70308 34914
8 cost of sales
year ended 31 december
2012 2011
mineral extraction tax 31816 18909
depletion depreciation and amortization 17907 23727
production services 6727 2534
repairs and maintenance 5476 1716
transportation services 4541 2854
employee bene t expense 5264 1855
reserves evaluation 815 503
change of inventories 812 180
other 1458 437
total cost of sales 74816 52355
depletion depreciation and amortization expense for the year ended 31 december 2012 has decreased compared to 2011 due 
to the increase in estimates of proved developed reserves note 28 oil and gas property plant and equipment are primarily 
depleted on the unit of production basis over proved developed reserves of the elds concerned the effect on the unit of 
production depletion resulting from the increase in estimates of proved developed reserves is somewhat offset by the 
increase in property plant and equipment and the increase in hydrocarbons production compared to the 
corresponding period
production services include mainly pump rent geophysics and electricity production services for the year ended 
31 december 2012 have increased compared to 2011 primarily due to increased levels of production activity
9 selling and administrative expenses
year ended 31 december
2012 2011
selling expenses
oil transportation costs 2564 1949
administrative expenses
employee bene t expense 10345 6684
sharebased payment compensation note 19 12035 –
professional services 4259 2787
taxes other than income tax 3288 1172
depreciation and amortization 1855 797
rent expenses 1698 217
it telecom and other information services 1039 22
travel expenses 981 422
bank charges 414 101
other 2003 831
total selling and administrative expenses 40481 14982
oil transportation costs represent the cost of transferring oil to export customers through the ‘transneft’ pipeline system 
professional services include insurance recruiting expenses public relations expenses
other selling and administrative expenses include primarily inventories penalties services and security services
financial statements
notes to the consolidated nancial statements continued
for the year ended 31 december 2012 all tabular amounts are in us thousands unless otherwise noted
7 revenue continued ruspetro plc
73
annual report and accounts 2012
auditor’s remuneration
during the year the group obtained the following services from the parent’s auditor and its associates
year ended 31 december
2012 2011
fees payable to the parent’s auditor and its associates for the audit of company and consolidated 
 nancial statements 486 355
fees payable to the parent’s auditor and its associates for other services
– the audit of the parent’s subsidiaries – –
– auditrelated assurance services – –
– tax advisory services 16 –
– tax compliance service – –
employee bene t expense
the employee numbers and costs incurred in the reporting years were as follows
year ended 31 december
2012 2011
wages and salaries 13505 7569
social security costs 2104 970
total employee costs 15609 8539
sharebased payment compensation 12035 –
average number of employees including directors 183 129
details of the remuneration of key management personnel are given in note 24
directors’ remuneration 
year ended 31 december
2012 2011
don wolcott 1433 462
tom reed 883 –
alexander chistyakov 615 –
christopher clark 576 –
rolf stomberg 288 –
robert jenkins 273 –
james mcburney 268 –
joe mach 240 –
james gerson 200 –
total directors’ remuneration 4776 462
directors’ interests
number of ordinary shares in the parent
year ended 31 december
2012 2011
alexander chistyakov 43208393 –
don wolcott 29077579 762
tom reed 7416493 –
christopher clark 100000 –
rolf stomberg 70000 –
robert jenkins 50000 –
james mcburney 40000 –
total number of ordinary shares in the parent held by directors 79962465 762
9 selling and administrative expenses continued ruspetro plc annual report and accounts 2012
74
10 other income
on 13 december 2011 itera group limited agreed to sell a receivable from ruspetro relating to deferred consideration 
arising from the acquisition of inga and transoil the ‘itera debt’ to makayla investments limited ‘makayla’ a related 
party and shareholder of the parent as at 31 december 2011 ruspetro had a related liability including accrued interest 
of us47453 thousand recorded in its consolidated nancial statements
makayla negotiated the terms of settlement with itera and agreed to buy the receivable at an amount lower than the carrying 
value makayla passed on this bene t to ruspetro by entering into an agreement dated 13 december 2011 with ruspetro 
granting it the option to acquire the debt owing to makayla by no later than 25 january 2012 for us26171 thousand 
on 18 january 2012 the parent company issued 12707584 ordinary shares at £134 each to makayla to acquire this debt for a 
total fair value of us26171 thousand management is of the view that the difference between the carrying value of the liability 
and the fair value of shares issued is a gain because in effect the transaction was settled with a third party accordingly an 
amount of us21282 thousand representing the difference between the nominal value of the debt and the fair value of the 
issued ordinary shares was recognized as other income
11 finance costs
year ended 31 december
2012 2011
interest expense on borrowings 27912 30304
unwinding discount of put option liabilities note 17 1058 –
unwinding discount of provision for dismantlement note 21 682 494
interest on payables and other current liabilities 163 2328
total nance costs 29815 33126
for the years ended 31 december 2012 and 2011 borrowing costs amounting to us5220 thousand and us3753 thousand 
respectively were capitalized in property plant and equipment and are not included above the capitalization rate used to 
determine the amount of borrowing costs eligible for capitalization for both of the years ended 31 december 2012 and 2011 
was 10 per annum
12 income tax
the major components of income tax expense for the years ended 31 december 2012 and 2011 are
year ended 31 december
2012 2011
current income tax expense – –
deferred tax bene t 819 3602
total income tax bene t 819 3602
income tax for the reporting period is calculated in accordance with the policy disclosed in note 3
pro t before taxation for nancial reporting purposes is reconciled to the tax calculation for the period as follows
year ended 31 december
2012 2011
loss before income tax 28103 88665
income tax bene t at applicable tax rate 5621 17733
tax effect of losses for which no deferred income tax asset was recognized 9026 18523
tax effect for losses utilized 10333 5725
tax effect of sharebase payment compensation 2407 –
tax effect of sberbank capital share options 1129 –
tax effect of nondeductible expenses 2573 1333
income tax expensebene t 819 3602
differences between ifrs and statutory taxation regulations in russia give rise to temporary differences between the 
carrying amount of assets and liabilities for nancial reporting purposes and their tax bases the tax effect of the movements 
in these temporary differences is detailed below and is recorded at the rate of 20 for group companies incorporated in the 
russian federation
financial statements
notes to the consolidated nancial statements continued
for the year ended 31 december 2012 all tabular amounts are in us thousands unless otherwise noted ruspetro plc
75
annual report and accounts 2012
12 income tax continued
the movements in deferred tax assets and liabilities relates to the following
 1 january 
2012 
 recognized 
in the income 
statement 
exchange 
differences 
31 december 
2012
liabilities 
property plant and equipment 6427 289 265 6403
mineral rights and intangible assets 80300 50 4809 85059
accounts payable 682 277 57 1016
accounts receivable 319 203 24 546
deferred income tax liabilities 85726 819 4993 89900
 1 january 
2011 
 recognized 
in the income 
statement 
exchange 
differences 
 31 december 
2011
liabilities 
property plant and equipment 9459 2565 467 6427
mineral rights and intangible assets 85053 101 4652 80300
accounts payable 580 596 494 682
accounts receivable 51 340 30 319
deferred income tax liabilities 93983 3602 4655 85726
the group did not recognise deferred income tax assets of us37180 thousand and us38935 thousand in respect 
of losses that can be carried forward against future taxable income amounting to us185899 thousand and us194675 
thousand as at 31 december 2012 and 31 december 2011 respectively as at 31 december 2012 losses amounting to 
us70031 thousand us43020 thousand us28990 thousand and us43858 thousand expire in 2018 2019 2020 
2021 respectively as at 31 december 2011 losses amounting to us76565 thousand us43020 thousand us28990 
thousand and us46100 thousand expire in 2018 2019 2020 2021 respectively
13 property plant and equipment
oil and gas 
properties
other 
property 
plant and 
equipment
construction 
in progress total 
cost as at 1 january 2012 106324 2632 38432 147388
additions – – 127104 127104
transfers to xed assets 97999 8332 106331 –
change in provision for dismantlement note 21 665 – – 665
disposals 926 79 155 1160
effect of translation to presentation currency 8355 454 2153 10962
cost as at 31 december 2012 212417 11339 61203 284959
accumulated depletion and impairment as at 1 january 2012 34957 1118 – 36075
charge for the period 17452 1839 – 19291
disposals 426 65 – 491 
effect of translation to presentation currency 3194 154 – 3348
accumulated depletion and impairment as at 31 december 2012 55177 3046 – 58223
net book value as at 31 december 2012 157240 8293 61203 226736  ruspetro plc annual report and accounts 2012
76
oil and gas 
properties
other 
property 
plant and 
equipment
construction 
in progress total 
cost as at 1 january 2011 78502 2877 31800 113179
additions – – 40751 40751
transfers to xed assets 33091 191 33282 –
change in provision for dismantlement note 21 1727 – – 1727
disposals – 42 281 323
effect of translation to presentation currency 6996 394 556 7946
cost as at 31 december 2011 106324 2632 38432 147388
accumulated depletion and impairment as at 1 january 2011 14835 727 – 15562
charge for the period 23454 551 – 24005
disposals –24 – 24
effect of translation to presentation currency 3332 136 – 3468
accumulated depletion and impairment as at 31 december 2011 34957 1118 – 36075
net book value as at 31 december 2011 71367 1514 38432 111313
for the year ended 31 december 2012 additions to construction in progress are primarily made up of additions to 
production facilities including wells as well as additions to infrastructure as at 31 december 2012 the construction 
in progress balance mainly represents exploration and production wells and oil production infrastructure not nalized 
eg pads electricity grids etc
none of the group’s property plant and equipment was pledged as at the reporting dates
14 mineral rights and other intangibles
mineral 
rights
other 
intangible 
assets total
cost as at 1 january 2012 402351 53 402404
additions –266 266
effect of translation to presentation currency 24139 1 24140
cost as at 31 december 2012 426490 320 426810
accumulated depletion and impairment as at 1 january 2012 855 36 891
charge for the period 452 19 472
effect of translation to presentation currency 102 1 104
accumulated depletion and impairment as at 31 december 2012 1205 54 1259
net book value as at 1 january 2012 401496 17 401513
net book value as at 31 december 2012 425285 266 425551
mineral 
rights
other 
intangible 
assets total
cost as at 1 january 2011 425032 47 425079
additions –99
effect of translation to presentation currency 22681 3 22684
cost as at 31 december 2011 402351 53 402404
accumulated depletion and impairment as at 1 january 2011 423 22 445
charge for the period 453 19 472
effect of translation to presentation currency 103 1 104
accumulated depletion and impairment as at 31 december 2011 855 36 891
net book value as at 1 january 2011 424609 25 424634
net book value as at 31 december 2011 401469 17 401513
intangible assets of the group are not pledged as security for liabilities and their titles are not restricted
financial statements
notes to the consolidated nancial statements continued
for the year ended 31 december 2012 all tabular amounts are in us thousands unless otherwise noted
13 property plant and equipment continued ruspetro plc
77
annual report and accounts 2012
15 inventories
31 december
2012 2011
spare parts consumables and other inventories 1990 2022
crude oil 577 588
total inventories 2567 2610
the group did not have any obsolete or slowmoving inventory at either of the reporting dates 
16 trade and other receivables
31 december
2012 2011
trade receivables 1998 1702
other receivables and prepayments 1849 1181
vat recoverable 15874 2927
total trade and other receivables 19721 5810
trade receivables are mainly denominated in us and are not pastdue or impaired other receivables and prepayments 
are mostly rur denominated and relate to counterparties with no history of delays in settlements vat recoverable is 
used to offset against amounts due for mineral extraction tax or recovered in cash the vat is recovered within three 
to six months from its initiation following a review by the tax authorities 
as at 31 december 2012 and 31 december 2011 the group did not have any past due or impaired receivables in determining 
the recoverability of trade and other receivables the group considers any change in the credit quality of the receivable from 
the date credit was initially granted up to the reporting date 
17 options on shares of the parent
on 2 december 2011 the parent and llc ‘sberbank capital’ entered into an option agreement which became effective 
on 17 january 2012 pursuant to which llc ‘sberbank capital’ granted the parent a call option to acquire the 10362632 
ordinary shares held by llc ‘sberbank capital’ the call option may be exercised once only at any time prior to the day 
which is 15 months from the date of ipo at an exercise price equal to the ipo price £134 per share less 10 
the fair value of this call option amounted to us24 thousand as at 31 december 2012 the fair value of this option was 
calculated using the blackscholes option pricing model and was recognized in these consolidated nancial statements 
as a current asset 
the following table presents the changes of fair value of call option for the year ended 31 december 2012
2012
as at 1 january –
initial recognition of the option 4059
change in fair value of call option 3240
foreign exchange loss related to call option 795
as at 31 december 24
the following assumptions were used in calculating the fair value of this call option
year ended
31 december
2012
market price £079
exercise price £1206
expected volatility 371
expected life 03 years
riskfree interest rate 10
expected dividend yield zero
expected volatility was determined on the basis of the historic share price volatility of certain peer companies of the group
in addition pursuant to this agreement llc ‘sberbank capital’ may put the ordinary shares issued back to the parent 
the put option may be exercised once only at any time between the second and third anniversary of admission which 
took place on 24 january 2012 at an exercise price equal to the offer price £134 less 20 with respect to the put 
option a noncurrent liability of us15365 thousand has been recorded as at 31 december 2012 ruspetro plc annual report and accounts 2012
78
the following table presents the changes of value of put option for the year ended 31 december 2012
2012
as at 1 january –
initial recognition of the option 13753
unwinding of discount 1058
foreign exchange loss related to put option 554
as at 31 december 15365
18 cash and cash equivalents
31 december
2012 2011
cash in bank denominated in us 13402 264
cash in bank denominated in gbp 10796 –
cash in bank denominated in rur 10218 1030
total cash and cash equivalents 34416 1294
cash balances generally carry no interest the group holds its cash with sberbank moody’s rating baa1dp2 stable 
at 31 december 2012 bank of america moody’s rating baa2p2 negative at 31 december 2012 citibank moody’s rating 
a3dp2 negative at 31 december 2012 and bank of cyprus moody’s rating caa1enp negative at 31 december 2012
19 shareholders’ equity
share capital
31 december
2012 2011
ordinary share capital 51226 7
the issued share capital of the previous parent as at 31 december 2011 comprised 6563 fully paid ordinary shares 
at a nominal value of us1 each
reorganization of the group and initial public offering ‘ipo’
on 18 january 2012 a new holding structure became effective the reorganization was effected through a series of shares 
exchanges as described below
on 18 january 2012 the existing shareholders of the previous parent transferred their shares in the previous parent to the 
parent in consideration for the issue of 196890000 ordinary shares in the parent representing 95 of the issued share 
capital of the parent at the date of transfer with nominal value of £010 each
on 19 january 2012 llc sberbank capital transferred its 5 participating interest in ruspetro russia to the parent in 
consideration for the issue of 10362632 ordinary shares in the parent representing approximately 5 of the issued share 
capital of the parent at the date of transfer with nominal value of £010 each
also on 19 january 2012 the parent completed an ipo on the london stock exchange as a result of the ipo 126128848 
ordinary shares were issued with nominal value of £010 each at a price of £134 per ordinary share including 12707584 
ordinary shares to the value of us262 million in settlement of the debt owing to makayla related to the original itera debt 
note 10 the iporelated transaction costs amounted to us19 million
the net consideration received amounted to us2137 million
number  
of shares  
pcs
share  
capital
share 
premium
exchange 
of shares 
during group 
reorganization
included in 
other reserves 
as at 1 january 2012 6563 7 49994 –
conversion of shares of previous parent to shares of parent 207246069 31818 49994 18176
initial public offering ‘ipo’ 126128848 19401 220506 –
including to acquire makayla debt 12707584 1955 24216 –
as at 31 december 2012 333381480 51226 220506 18176
financial statements
notes to the consolidated nancial statements continued
for the year ended 31 december 2012 all tabular amounts are in us thousands unless otherwise noted
17 options on shares of the parent continued ruspetro plc
79
annual report and accounts 2012
directors’ options
on 17 january 2012 the parent granted two executive directors the options to acquire 10362632 ordinary shares with 
an exercise price of £134 these options are outstanding as at the balance sheet date at grant date the options were not 
subject to service and performance conditions therefore the value of these options was expensed immediately in february 
2013 the terms of the options were amended by introduction of vesting periods which are as follows the options vest in three 
equal installments on 17 january 2013 17 january 2014 and 17 january 2015 after those dates the options are exercisable 
any time up to 16 january 2022 
the fair value of the options amounted to us12035 thousand and was calculated using the trinomial option pricing model 
and recognized in these consolidated nancial statements as a component of equity with a corresponding amount recognized 
in selling general and administrative expenses
the following assumptions were used in calculating the fair value
as at the 
grant date
offer price £134
exercise price £134
volatility 3845
expected life 10 years
riskfree interest rate 465
expected dividend yield zero
expected volatility was determined on the basis of the historic share price volatility of the certain peer companies of the group
20 borrowings
31 december
2012 2011
current
sberbank 2469 45000
shortterm loans from shareholders of the parent 19335 1197
total current borrowings 21804 46197
31 december
2012 2011
noncurrent
sberbank 286671 287116
longterm loans from shareholders of the parent 61822 73134
total longterm borrowings 348493 360250
sberbank credit facility
the group has a nonrevolving us denominated credit facility from sberbank which had the following terms at the date of 
obtaining the credit facility a limit of us250000 thousand expiring in 2013 with an annual interest rate of 14 the parent 
has pledged all its shares in inga and transoil as part of the terms of the credit facility
in 2010 the annual interest rate on the facility was reduced to 9 increasing to 109 from 1 october of that year
on 25 november 2011 the terms of sberbank’s credit facility were amended whereby inter alia repayments of a portion 
of accrued interest and its principal were deferred until april 2015 and future accrued interest is to be payable halfyearly 
in may and november of each year these amendments did not substantially alter the terms of the original credit facility 
and were therefore not treated as extinguishment of an existing liability and recognition of a new liability the present value 
difference arising from the amendments was recognized over the remaining life of the instrument by adjusting the effective 
interest rate 
according to the amended agreement on 3 february 2012 ruspetro paid a portion of the accrued interest which amounted 
to us27055 thousand together with us17945 thousand of principal with further repayments of outstanding interest 
of us10639 thousand and us12618 thousand made on 25 may 2012 and on 26 november 2012 respectively
the group recognized a net foreign exchange gain amounting to us19512 thousand and a net foreign exchange loss 
amounting to us20439 thousand during the years ended 31 december 2012 and 2011 respectively on the sberbank 
credit facility and outstanding accrued interest which is denominated in us
19 shareholders’ equity continued ruspetro plc annual report and accounts 2012
80
loans from shareholders of the parent
the group has a number of us denominated loans obtained from the shareholders of the parent all of these loans are unsecured 
and the interest rate on most of these loans is libor 10 per annum certain loans have matured by 31 december 2012 and are 
presented as current liabilities as at this date
on 17 january 2012 the parent and one of the shareholders agreed that the parent will issue new ordinary shares to that 
shareholder on the date that is 13 months from the date of admission in full settlement of a loan obtained from the shareholder 
on 18 february 2013 a decision was taken not to proceed with the conversion
21 provision for dismantlement
the provision for dismantlement represents the net present value of the estimated future obligations for abandonment 
and site restoration costs which are expected to be incurred at the end of the production lives of the oil and gas elds 
which is estimated to be in 21 years from 31 december 2012
2012 2011
as at 1 january 5961 4155
additions for new obligations and changes in estimates note 13 665 1727
unwinding of discount note 11 682 494
effect of translation to presentation currency 389 415
as at 31 december 7697 5961
this provision has been created based on management’s internal estimates assumptions based on the current economic 
environment have been made which management believe are a reasonable basis upon which to estimate future dismantlement 
liability these estimates are reviewed regularly to take into account any material changes to the assumptions however actual 
dismantlement costs will ultimately depend upon future market prices for the necessary dismantlement works required which 
will re ect market conditions at the relevant time furthermore the timing is likely to depend on when the elds cease to 
produce at economically viable levels this in turn will depend upon future oil and gas prices and future operating costs 
which are inherently uncertain
22 trade and other payables
31 december
2012 2011
trade payables 34242 11649
other non nancial liabilities 5479 1847
total trade and other payables 39721 13496
trade and other payables are denominated primarily in russian roubles
23 capital commitments and other contingencies 
capital commitments
the group did not have any noncancellable capital commitments at 31 december 2012 or 2011
license commitments
the group’s exploration and production licenses require certain operational commitments these include performance 
criteria certain of which have not been fully met during 2012 the directors note that breach of license performance conditions 
has not given rise to any material nes or penalties furthermore management has been undertaking particular actions to 
meet required license performance criteria the directors also note that the group’s production program has been inspected 
by the russian licensing authorities subsequent to 31 december 2012 and that no material nes or penalties have resulted
liquidity of subsidiary undertakings
in accordance with the legal framework in the russian federation creditors and tax authorities may initiate bankruptcy 
procedures against an entity with negative net assets ruspetro russia as at 31 december 2012 reported net liabilities under 
russian gaap  however no such bankruptcy procedures have been initiated either by the creditors or the tax authorities against 
them the directors consider their net liability position to be normal given that the company is still at a development stage
financial statements
notes to the consolidated nancial statements continued
for the year ended 31 december 2012 all tabular amounts are in us thousands unless otherwise noted
20 borrowings continued ruspetro plc
81
annual report and accounts 2012
operating lease commitments – group as lessee
the group has entered into leases for land plots woodlots and motor vehicles the land in the russian federation on which 
the group’s production facilities are located is owned by the state the group leases land through operating lease agreements 
which expire in various years through 2021 these leases have renewal terms at the option of the lessee at lease payments 
based on market prices at the time of renewal there are no restrictions placed upon the lessee by entering into these leases
future minimum lease payments under noncancellable operating leases as at 31 december 2012 and 2011 were as follows
31 december
2012 2011
within one year 774 245
after one year but not more than ve years 907 231
more than ve years 22 35
total capital commitments and other contingencies 1703 511
operating risks and contingencies
pledge of shares
on the opening of its credit facility with sberbank the group provided to sberbank as collateral its shares in inga and transoil 
taxation contingencies
russian tax currency and customs legislation is subject to varying interpretations and changes which can occur frequently 
management’s interpretation of such legislation as applied to the transactions and activity of the group may be challenged 
by the relevant regional and federal authorities in the russian federation 
recent events within the russian federation indicate that the russian tax authorities may be taking a more assertive 
position in their interpretation of the prevailing legislation and assessments and it is possible that transactions and 
activities which have not been challenged in the past may be challenged in the future the supreme arbitration court 
of the russian federation has issued guidance to lower courts on reviewing tax cases providing a systemic roadmap for 
antiavoidance claims and it is possible that this will signi cantly increase the level and frequency of tax authorities’ 
scrutiny as a result signi cant additional taxes penalties and interest may be assessed fiscal periods remain open 
to review by the authorities in respect of taxes for three calendar years preceding the year of review under certain 
circumstances reviews may cover longer periods 
amended russian transfer pricing legislation took effect from 1 january 2012 the new transfer pricing rules are considered 
to be more technical and to a certain extent more aligned with the international transfer pricing principles developed by 
the organization for economic cooperation and development ‘oecd’ the new legislation provides the possibility for tax 
authorities to make transfer pricing adjustments and impose additional tax liabilities in respect of controlled transactions 
transactions with related parties and some types of transactions with unrelated parties provided that the transaction price is 
not arm’s length management has implemented internal controls to be in compliance with the new transfer pricing legislation 
management believes the transfer pricing documentation that the group has prepared as required by the new russian 
tax legislation provides suf cient evidence to support the group’s tax positions and related tax returns given that the 
implementation of the new russian transfer pricing rules has not yet been reviewed by tax authorities and courts the 
impact of any challenge of the group’s transfer prices cannot be reliably estimated however it may be signi cant to 
the nancial conditions andor the overall operations of the group
the group includes companies incorporated outside of russia tax liabilities of the group are determined on the assumptions 
that these companies are not subject to russian pro ts tax because they do not have a permanent establishment in russia 
russian tax laws do not provide detailed rules on taxation of foreign companies it is possible that with the evolution of the 
interpretation of these rules and the changes in the approach of the russian tax authorities the nontaxable status of some 
or all of the foreign companies of the group in russia may be challenged the impact of any such challenge cannot be reliably 
estimated however it may be signi cant to the nancial condition andor the overall operations of the entity 
management believes that its interpretation of the relevant legislation is appropriate and the group’s tax currency 
and customs positions will be sustained where management believes it is probable that a position cannot be sustained 
an appropriate amount is accrued for in these consolidated nancial statements
23 capital commitments and other contingencies continued ruspetro plc annual report and accounts 2012
82
24 related party disclosures 
compensation of key management personnel of the group
key management includes executive directors of the group the compensation paid or payable to key management for 
employee services is shown below
31 december
2012 2011
sharebased payment compensation note 19 12035 –
employee remuneration 2931 772
bene ts in kind 93 –
nonexecutive directors fees 1844 –
ruspetro had rented of ce space from a company in which one of its directors has an interest for an annual rent and service 
charge of rur5255 thousandus169 thousand excluding vat pursuant to a lease dated 1 january 2010 the lease terminated 
on 1 may 2012 
all related party transactions are on an arm’s length basis and no nancial period end balances have arisen as a result 
of these transactions
loans from related parties
the group has a number of loans from shareholders of the parent with the following balances
2012 2011
as at 1 january 74331 67133
interest accrued 7790 7198
principal amount repaid 630 –
interest repaid 334 –
as at 31 december 81157 74331
the effective interest rates and conversion options of loans received are disclosed in note 20 
25 financial risk management objectives and policies
the group’s principal nancial liabilities comprise accounts payable bank borrowings and other loans and obligations 
under the put option the main purpose of these nancial liabilities and instruments is to manage shortterm cash ow and 
raise nance for the group’s capital expenditure program the group has various nancial assets such as accounts receivable 
and cash which arise directly from its operations
it is and has been throughout the years ended 31 december 2012 and 2011 the group’s policy that no speculative trading 
in derivatives shall be undertaken
the main risks that could adversely affect the group’s nancial assets liabilities or future cash ows are commodity price 
risk interest rate risk foreign currency risk liquidity risk and credit risk management reviews and agrees policies for 
managing each of these risks which are summarized below
the following discussion also includes a sensitivity analysis that is intended to illustrate the sensitivity to changes in market 
variables on the group’s nancial instruments and show the impact on pro t or loss and shareholders’ equity where applicable 
financial instruments affected by market risk include bank loans and overdrafts accounts receivable accounts payable and 
accrued liabilities 
the sensitivity has been prepared for the years ended 31 december 2012 and 2011 using the amounts of debt and other 
 nancial assets and liabilities held as at those statement of nancing position dates
capital risk management
the group considers capital to comprise both debt and equity total debt comprises longterm and shortterm loans and 
borrowings as shown in the consolidated statement of nancial position equity of the group comprises share capital share 
premium other reserves retained earnings and noncontrolling interests equity of the group was equal to us180447 
thousand and us40737 thousand as at 31 december 2012 and 2011 respectively
total debt of the group was equal to us370297 thousand and us406447 thousand as at 31 december 2012 and 
31 december 2011 respectively
financial statements
notes to the consolidated nancial statements continued
for the year ended 31 december 2012 all tabular amounts are in us thousands unless otherwise noted ruspetro plc
83
annual report and accounts 2012
the group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to 
provide adequate levels of nancing for its current development and production activities in order to maintain or adjust the 
capital structure the group may adjust the amount of dividends paid to shareholders issue new shares attract new or repay 
existing loans and borrowings 
the group manages its capital structure and makes adjustments to it based on the funds available to the group in order to 
support its construction and production activities the group is at the development stage as such it is dependent on external 
 nancing to fund its activities in order to carry out its planned construction and production activities and pay for administrative 
costs the group will spend its existing capital and raise additional amounts as needed 
there were no changes in the group’s approach to capital management during the period as at 31 december 2012 
and 2011 the group was not subject to any externally imposed capital requirements except for described in note 23 
as at 31 december 2012 the group was not subject to any covenants
commodity price risk
the group sells crude oil and gas condensate under spot contracts on a monthly basis sales are centrally managed and 
during the reporting periods were made principally to domestic customers the basis for determining the export price is 
the average monthly price of brent crude changes in commodity prices can affect the group’s nancial performance either 
positively or negatively and make the group’s revenues subject to volatility in line with uctuations in crude oil reference 
prices currently the group does not use commodity derivative instruments to mitigate the risk of crude oil price volatility 
the table below provides the sensitivity of the group’s revenues to a 10 change in price of crude oil 
commodity price risk
year ended 31 december
2012 2011
favorable 10 7484 3760
unfavorable 10 7484 3760
for the purposes of this analysis the effect of a variation in crude oil prices on group’s pro t is calculated independently 
of any change in another assumption in reality changes in one factor may contribute to changes in another which may 
magnify or counteract the sensitivities 
interest rate risk
the group is exposed to interest rate risk however the possible impact of changes in interest rates are not signi cant since 
the group’s major borrowings are at xed interest rates there is no speci c policy in place to hedge against possible adverse 
changes in interest rates
the following table demonstrates the sensitivity to a reasonably possible change in interest rates with all other variables 
held constant of the group’s loss before tax through the impact on oating rate borrowings
increasedecrease in interest rate
year ended 31 december 
effect on loss before tax
2012 2011
10 809 743
10 809 743
foreign currency risk
the group has transactional currency exposures such exposure arises from borrowing in currencies other than the 
functional currency the group limits foreign currency risk by monitoring changes in exchange rates in the currencies 
in which its cash and borrowings are denominated
the following table demonstrates the sensitivity to a reasonably possible change in the rurus exchange rate with all other 
variables held constant of the group’s loss before tax due to changes in the carrying value of monetary assets and liabilities
increasedecrease in rurus exchange rate
year ended 31 december 
effect on loss before tax
2012 2011
15 37714 43319
15 51025 58609
25 financial risk management objectives and policies continued
capital risk management continued ruspetro plc annual report and accounts 2012
84
liquidity risk
the group monitors liquidity risk by monitoring its debt rating and the maturity dates of existing debt 
the table below summarizes the maturity pro le of the group’s nancial liabilities at 31 december 2012 and 2011 based 
on contractual undiscounted payments
 31 december 2012
on demand
less than 
1 year 1 to 2 years 2 to 5 years 5 years total
borrowings including interest 303 45171 24962 376126 – 446562
trade payables – 34242 – – – 34242
other noncurrent liabilities – – – 17952 – 17952
other current liabilities – 1081 – – – 1081
303 80494 24962 394078 – 499837
 31 december 2011
on demand
less than 
1 year 1 to 2 years 2 to 5 years 5 years total
borrowings including interest 1197 69757 44638 402543 – 518135
trade payables – 11649 – – – 11649
other current liabilities – 47457 – – – 47457
1197 128863 44638 402543 – 577241
credit risk
the group manages its own exposure to credit risk the group trades only with recognized creditworthy third parties 
all external customers undergo a creditworthiness check the group performs an ongoing assessment and monitoring 
of nancial position and the risk of default in addition receivable balances are monitored on an ongoing basis thus 
the group’s exposure to bad debts is not signi cant 
the company had one major customer in 2012 being an international oil trader and accounting for at least 22 of total sales 
in 2012 other sales are made to domestic customers the group is not dependent on any of its major customers or any one 
particular customer as there is a liquid market for crude oil analysis of sales to key customers is included into note 7
with respect to credit risk arising from the other nancial assets of the group which comprise cash and cash equivalents 
the group’s exposure to credit risk arises from default of the counterparty with a maximum exposure equal to the carrying 
amount of these instruments the credit risk on cash is limited because the counterparties are either highly rated banks 
or banks approved by the management of the group approval is made after certain procedures to assess reliability 
and creditability of banks are performed 
fair values
the group has nancial instruments carried at fair value only in the ‘level 3’ category 
the different levels have been de ned as follows
 — quoted prices unadjusted in active markets for identical assets or liabilities level 1
 — inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly 
that is as prices or indirectly that is derived from prices level 2
 — inputs for the asset or liability that are not based on observable market data that is unobservable inputs level 3
the following table presents the group’s assets and liabilities that are carried at fair value at 31 december 2012 
as at 31 december 2011 the group had no assets or liabilities measured at fair value through pro t or loss
31 december 2012
financial assets
other current assets note 17 24
financial statements
notes to the consolidated nancial statements continued
for the year ended 31 december 2012 all tabular amounts are in us thousands unless otherwise noted
25 financial risk management objectives and policies continued ruspetro plc
85
annual report and accounts 2012
set out below is a comparison by category of carrying amounts and fair values of all of the group’s nancial instruments that 
are carried at amortized cost in the nancial statements
carrying amount fair value
31 december  
2012
31 december  
2011
31 december  
2012
31 december  
2011
financial assets 
cash and cash equivalents 34416 1294 34416 1294
trade receivables 1998 1702 1998 1702
financial liabilities 
trade payables 32897 11649 32897 11649
borrowings 370297 406447 370297 406447
26 loss per share
basic
basic earnings per share are calculated by dividing the pro t attributable to equity holders of the parent by the weighted 
average number of ordinary shares in issue during the period
for comparability weighted average number of ordinary shares in issue for the year ended 31 december 2011 presented as 
if the parent was the group company in 2011 for calculation of number of shares outstanding in 2011 the number of shares 
issued on reorganization was used
year ended 31 december
2012 2011
loss attributable to equity holders of the parentprevious parent 27284 81095
weighted average number of ordinary shares in issue 315539053 196890000
basic loss per share us 009 041
diluted
diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares to assume conversion 
of all dilutive potential ordinary shares 
the parent has incurred a loss from continuing operations for the year ended 31 december 2012 and the effect of considering 
the exercise of the options on the parent’s shares would be antidilutive that is it would reduce the loss per share
27 events after the statement of nancial position date 
in february 2013 the terms of the options to two executive directors see note 19 were amended by introduction of vesting 
periods which are as follows the options vest in three equal instalments on 17 january 2013 17 january 2014 and 17 january 
2015 after those dates the options are exercisable anytime up to 16 january 2022 as these modi cations decreased the total 
value of the options and are not bene cial to the employees management continues to account for these options as if the 
modi cation has not occurred 
there have been no other material events after the end of reporting period which require disclosure in these consolidated 
 nancial statements
28  supplementary information unaudited
reserve quantity information
for the purposes of evaluation of reserves as of 31 december 2012 2011 and 2010 the parent used the oil and gas reserve 
information prepared by degolyer and macnaughton independent reservoir engineers prepared in accordance with 
petroleum resources management system ‘prms’ de nition and classi cation system
developed reserves are expected quantities to be recovered from existing wells and facilities
proved reserves are those quantities of petroleum which by analysis of geoscience and engineering data can be estimated 
with reasonable certainty to be commercially recoverable from a given date forward from known reservoirs and under de ned 
economic conditions operating methods and government regulations if deterministic methods are used the term reasonable 
certainty is intended to express a high degree of con dence that the quantities will be recovered if probabilistic methods are 
used there should be at least a 90 probability that the quantities actually recovered will equal or exceed the estimate
25 financial risk management objectives and policies continued ruspetro plc annual report and accounts 2012
86
probable reserves are those additional reserves which analysis of geoscience and engineering data indicate are less likely 
to be recovered than proved reserves but more certain to be recovered than possible reserves it is equally likely that actual 
remaining quantities recovered will be greater than or less than the sum of the estimated proved plus probable reserves 2p 
in this context when probabilistic methods are used there should be at least a 50 probability that the actual quantities 
recovered will equal or exceed the 2p estimate
due to the inherent uncertainties and the necessarily limited nature of reservoir data estimates of reserves are inherently 
imprecise require the application of judgment and are subject to change as additional information becomes available
management has included within proved reserves signi cant quantities which the group expects to produce after the expiry 
dates of certain of its current production licenses the subsoil law of the russian federation states that upon expiration a 
license is subject to renewal at the initiative of the license holder provided that further exploration appraisal production or 
remediation activities are necessary and provided that the license holder has not violated the terms of the license since the 
law applies both to newly issued and old licenses management believes that licenses will be renewed upon their expiration 
for the remainder of the economic life of each respective eld
estimated net proved crude oil reserves for the period ended 31 december 2012 and 31 december 2011 are shown in ’000 
barrels in the table set out below
2012 2011
as at 1 january 172624 157785
revisions of previous estimates 33618 15750
production 1654 911
as at 31 december 204588 172624
estimated net proved developed crude oil reserves as at 31 december 2010 31 december 2011 and 31 december 2012 are 
shown in the table set out below
’000 barrels
31 december 2010 6306
31 december 2011 11556
31 december 2012 16126
estimated net probable crude oil reserves as at 31 december 2010 31 december 2011 and 31 december 2012 are shown in the 
table set out below
’000 barrels
31 december 2010 1279564
31 december 2011 1372028
31 december 2012 1479619
estimated net proved gas reserves as at 31 december 2010 31 december 2011 and 31 december 2012 are shown in the table 
set out below
millions of 
cubic feet
31 december 2010 –
31 december 2011 –
31 december 2012 174166
estimated net probable gas reserves as at 31 december 2010 31 december 2011 and 31 december 2012 are shown in the table 
set out below
millions of 
cubic feet
31 december 2010 –
31 december 2011 –
31 december 2012 746071
financial statements
notes to the consolidated nancial statements continued
for the year ended 31 december 2012 all tabular amounts are in us thousands except otherwise noted
28  supplementary information unaudited continued ruspetro plc
87
annual report and accounts 2012
parent company nancial statements
independent auditor’s report
independent auditors’ report to the members 
of ruspetro plc 
we have audited the parent company nancial statements 
of ruspetro plc for the period ended 31 december 2012 which 
comprise the statement of financial position the statement of 
changes in equity the statement of cash flow the signi cant 
accounting policies and the related notes the nancial 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 
respective responsibilities of directors and auditors 
as explained more fully in the directors’ responsibilities 
statement the directors are responsible for the preparation 
of the parent company nancial statements and for being 
satis ed that they give a true and fair view our responsibility 
is to audit and express an opinion on the parent company 
 nancial 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 ethical standards for auditors 
this report including the opinions has been prepared for 
and only for the company’s members as a body in accordance 
with chapter 3 of part 16 of the companies act 2006 and for 
no other purpose we do not in giving these opinions accept 
or assume responsibility for any other purpose or to any 
other person to whom this report is shown or into whose 
hands it maycome save where expressly agreed by our prior 
consent in writing
scope of the audit of the nancial statements 
an audit involves obtaining evidence about the amounts 
and disclosures in the nancial statements suf cient to give 
reasonable assurance that the nancial 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 parent company’s circumstances 
and have been consistently applied and adequately disclosed 
the reasonableness of signi cant accounting estimates made 
by the directors and the overall presentation of the nancial 
statements in addition we read all the nancial and non
 nancial information in the annual report to identify material 
inconsistencies with the audited nancial statements if we 
become aware of any apparent material misstatements or 
inconsistencies we consider the implications for our report
opinion on nancial statements 
in our opinion the parent company nancial statements 
 — give a true and fair view of the state of the company’s 
affairs as at 31 december 2012 and of its cash ows 
for the period then ended
 — 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 
 — 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 part of the directors’ remuneration report to be 
audited has been properly prepared in accordance with 
the companies act 2006 and 
 — the information given in the directors’ report for the 
 nancial year for which the parent company nancial 
statements are prepared is consistent with the parent 
company nancial statements 
emphasis of matter
in forming our opinion on the nancial statements 
which is not modi ed we have considered the adequacy 
of the disclosure made in note 2 to the nancial statements 
concerning the company’s ability to continue as a going 
concern this ability is dependent whether the group can 
obtain additional nancing and an extension of the maturities 
of the existing debt facilities from the respective lenders and 
shareholders this condition along with the other matters 
explained in note 2 to the nancial statements indicate the 
existence of a material uncertainty which may cast signi cant 
doubt about the group’s and company’s ability to continue as 
a going concern the nancial statements do not include the 
adjustments that would result if the group and company 
was unable to continue as a going concern
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 nancial statements and the part of 
the directors’ remuneration report to be audited are not 
in agreement with the accounting records and returns or 
 — certain disclosures of directors’ remuneration speci ed 
by law are not made or 
 — we have not received all the information and explanations 
we require for our audit 
other matter 
we have reported separately on the group nancial statements 
of ruspetro plc for the year ended 31 december 2012 
that report includes an emphasis of matter
kevin reynard senior statutory auditor
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors
aberdeen
20 march 2013
notes
a the maintenance and integrity of the ruspetro plc website is the responsibility 
of the directors the work carried out by the auditors does not involve 
consideration of these matters and accordingly the auditors accept no 
responsibility for any changes that may have occurred to the nancial 
statements since they were initially presented on the website
b legislation in the united kingdom governing the preparation and 
dissemination of nancial statements may differ from legislation 
in other jurisdictions
  ruspetro plc annual report and accounts 2012
88
parent company nancial statements
statement of nancial position
as at 31 december 2012 presented in us thousands except otherwise stated
note
31 december  
2012
assets
noncurrent assets
property plant and equipment 615
investments in subsidiaries 7 237882
238497
current assets
loans issued to ruspetro llc 6800
trade and other receivables 306
vat recoverable 77
other current assets 8 24
cash and cash equivalents 9 23877
31084
total assets 269581
shareholders’ equity
share capital 10 51226
share premium 10 220506
retained loss 22240
other reserves 2341
total equity 251833
liabilities
noncurrent liabilities
other noncurrent liabilities 8 15365
15365
current liabilities
payables to ruspetro llc 1788
trade and other payables 595
2383
total liabilities 17748
total equity and liabilities 269581
the nancial statements on pages 88 to 94 were approved by the board of directors on 20 march 2013
the accompanying notes on pages 90 to 94 are an integral part of these nancial statements
       
don wolcott      tom reed
chief executive ofcer    chief nancial of cer ruspetro plc
89
annual report and accounts 2012
note
period from 
20 october 2011 to
31 december 2012
cash ows from operating activities
loss before income tax 22240
adjustments for
 depreciation depletion and amortization 96
 foreign exchange gain 2049
 finance costs 1058
 change in fair value of call option 8 3240
 gain on settlement of makayla debt 5 21282
 other operating expenses 621385
 sharebased compensation expense 8 12035
operating cash ow before working capital adjustments 3659
working capital adjustments
 change in trade and other receivables 304
 change in trade and other payables 1671
 change in other taxes receivablepayable 77
net cash ows used in operating activities 2369
cash ows from investing activities
purchase of property plant and equipment 699
investments in ruspetro llc 7 186833
net cash used in investing activities 187532
cash ows from nancing activities
proceeds from issue of share capital on incorporation 10 79
proceeds from issue of share capital on ipo net of expenses 10 213699
net cash generated from nancing activities 213778
net increase in cash and cash equivalents 23877
cash and cash equivalents at the beginning of the period –
cash and cash equivalents at the end of the period 9 23877
parent company nancial statements
statement of cash ows
for the period from 20 october 2011 to 31 december 2012 presented in us thousands except otherwise noted
note
share  
capital
share 
premium retained loss
other 
reserves
total  
equity
balance as at 20 october 2011 –– –––
issue of share capital upon incorporation 10 79 – – – 79
loss for the period – – 22240 – 22240
other comprehensive income for the period – – – – –
total comprehensive expense for the period – – 22240 – 22240
issue of share capital 51147 220506 – – 271653
share options of shareholders 8  – – 9694 9694
sharebased payment compensation 8 – – – 12035 12035
balance as at 31 december 2012 51226 220506 22240 2341 251833
parent company nancial statements
statement of changes in equity
for the period from 20 october 2011 to 31 december 2012 presented in us thousands except otherwise noted ruspetro plc annual report and accounts 2012
90
1 corporate information
the nancial statements of ruspetro plc the ‘company’ or ‘ruspetro’ for the 15 months period ended 31 december 2012 
were approved by its board of directors on 20 march 2013 
the company was incorporated in the united kingdom on 20 october 2011 as a public company under the provisions of the 
companies act 2006 of england and wales the company’s registered of ce is 57–59 st james’s street london sw1a 1ld england
on 18 january 2012 the company became a company of ruspetro group through a series of shares exchanges see note 10
details of subsidiaries of the company are as follows
company business activity country of incorporation
effective ownership
year of  
incorporation
31 december  
2012
ruspetro holding limited holding company republic of cyprus 2007 100
ruspetro llc ‘ruspetro russia’ crude oil sale russian federation 2005 100
inga exploration and production 
of crude oil
russian federation
1998 100
transoil exploration and production 
of crude oil
russian federation
2001 100
on 19 january 2012 llc sberbank capital transferred its 5 participating interest in ruspetro russia to the company in 
consideration for a pro rata number of shares in the company as of this date all of the company’s subsidiaries were 100 owned
2 basis of preparation
the nancial statements of the company have been prepared in accordance with international financial reporting 
standards ‘ifrs’ as adopted by the european union the nancial statements are prepared under the historical cost 
convention modi ed for fair values under ifrs
these nancial statements are presented in us dollars ‘us’ and all values are rounded to the nearest thousand unless 
otherwise indicated
as permitted by section 408 of the companies act 2006 the statement of comprehensive income of the parent company 
is not presented as part of these nancial statements the loss dealt with in the nancial statements of the company 
is us22240 thousand
going concern
these nancial statements are prepared on a going concern basis which presumes that the company will be able to realize 
its assets and discharge its liabilities in the normal course of business in the foreseeable future
at 31 december 2012 the company had net current assets of 28701 thousand which included cash in hand of 
23877 thousand 
management consider that the continued operational existence of the company is dependent upon the ability to make 
further investment in eld development of the subsidiaries in order to increase hydrocarbon production and sales in response 
to these circumstances management are in discussions with existing lenders of the subsidiaries with regard to the provision 
of additional longterm debt nancing and the extension of the maturity of the existing longterm loans 
management consider the additional nancing and the maturity extension of existing debt of the subsidiaries will provide 
suf cient nancial resources such that the subsidiaries can further invest in eld development with the intention of raising 
production management further consider that the additional cash ows to be generated from production would allow the 
subsidiaries to service debt further increase production and fund other activities in developing their cash ow forecasts 
management have a number of signi cant assumptions these include assumptions as to future hydrocarbon prices taxes 
production volumes and in ation and are further discussed in note 4 of the notes to the consolidated nancial statements
agreements with the existing lenders as to additional nancing and maturity extension have not been entered into as of the date 
of these nancial statements in the event that such additional nancing and maturity extension is not obtained the subsidiaries 
may be unable to realize its assets and discharge its liabilities in the normal course of business these circumstances represent 
a material uncertainty that may cast signi cant doubt on the subsidiaries and company’s ability to continue as a going concern 
however on the basis of the assumptions and cash ow forecasts prepared management have assumed that the company 
will continue to operate within both available and prospective facilities accordingly the company’s nancial statements 
are prepared on the going concern basis and do not include any adjustments that would be required in the event that the 
loan holders do request repayment and alternative nance is not available
parent company nancial statements
notes
for the period from 20 october 2011 to 31 december 2012 presented in us thousands except otherwise noted ruspetro plc
91
annual report and accounts 2012
3 summary of signi cant accounting policies 
investments
investments in subsidiary undertakings are included in the balance sheet of the company at cost less any provision 
for impairment
impairment of non nancial assets
the company performs impairment reviews in respect of xed asset investments whenever events or changes in circumstance 
indicate that the carrying amount may not be recoverable an impairment loss is recognized when the recoverable amount 
of an asset which is the higher of the asset’s net realizable value and its value in use is less than its carrying amount
financial instruments
the accounting policy for nancial instruments is consistent with the group accounting policy as presented in the notes 
to the group nancial statements the company’s nancial risk management policy is consistent with the group’s nancial 
risk management policy outlined in the group nancial statements
loans and receivables
loans and receivables are nonderivative nancial assets with xed or determinable payments that are not quoted in an 
active market after initial measurement loans and receivables are subsequently carried at amortized cost using the effective 
interest method less any provision for impairment
a provision for impairment is recognized when there is an objective evidence that the company will not be able to collect all 
amounts due according to the original terms of the loans and receivables the amount of provision is the difference between the 
assets’ carrying value and the present value of the estimated future cash ows discounted at the original effective interest rate 
the change in the amount of the loan or receivable is recognized in pro t or loss interest income is recognized in pro t or loss 
by applying the effective interest rate
cash and cash equivalents
cash and cash equivalents in the statement of nancial position comprise cash at banks and on hand and short term deposits 
with an original maturity of three months or less 
for the purpose of the cash ow statement cash and cash equivalents consist of cash and cash equivalents as de ned above 
net of outstanding bank overdrafts if any
borrowings and accounts payable
the company’s nancial liabilities are represented by trade and other payables 
a nancial liability is derecognized when the obligation under the liability is discharged or cancelled or expires where an 
existing nancial liability is replaced by another from the same lender on substantially different terms or the terms of an 
existing liability are substantially modi ed such an exchange or modi cation is treated as a derecognition of the original 
liability and the recognition of a new liability and the difference in the respective carrying amounts is recognized in the 
pro t or loss
impairment of nancial assets 
the company assesses at the end of each reporting period whether there is any objective evidence that a nancial asset or 
a group of nancial assets is impaired a nancial asset or a group of nancial assets is deemed to be impaired if and only 
if there is an objective evidence of impairment as a result of one or more events that has occurred after the initial recognition 
of the asset an incurred ‘loss event’ and that loss event has an impact on the estimated future cash ows of the nancial asset 
or the group of nancial assets that can be reliably estimated evidence of impairment may include indications that the debtors 
or a group of debtors is experiencing signi cant nancial dif culty default or delinquency in interest or principal payments 
the probability that they will enter bankruptcy or other nancial reorganization and where observable data indicate that there 
is a measurable decrease in the estimated future cash ows such as changes in arrears or economic conditions that correlate 
with defaults
taxes
income tax
the income tax expense comprises current and deferred taxes calculated based on the tax rates that have been enacted or 
substantively enacted at the end of the reporting period current and deferred taxes are charged or credited to pro t or loss 
except where they are attributable to items which are charged or credited directly to equity in which case the corresponding 
tax is also taken to equity
current tax is the amount expected to be paid to or recovered from the taxation authorities in respect of taxable pro ts 
or losses for the current and prior periods  ruspetro plc annual report and accounts 2012
92
3 summary of signi cant accounting policies continued
deferred tax assets and liabilities are calculated in respect of temporary differences using the liability method deferred 
taxes provide for all temporary differences arising between the tax bases of assets and liabilities and their carrying values 
for nancial reporting purposes except where the deferred tax arises from the initial recognition of an asset or liability 
in a transaction that is not a business combination and at the time of the transaction affects neither the accounting pro t 
nor taxable pro t or loss
a deferred tax asset is recognized for all deductible temporary differences and carry forward of unused tax credits and 
unused tax losses only to the extent that it is probable that taxable pro t will be available against which the deductible 
temporary differences or carry forward can be utilized 
unrecognized deferred tax assets are reassessed at the end of each reporting period and are recognized to the extent that 
it has become probable that future taxable pro t will allow the deferred tax asset to be recovered
deferred tax assets and liabilities are offset when the company has a legally enforceable right to set off current tax assets 
and liabilities when deferred tax balances are referred to the same governmental body ie federal regional or local and 
the same subject of taxation and when the company intends to perform an offset of its current tax assets and liabilities 
equity
share capital
ordinary shares are classi ed as equity incremental costs directly attributable to the issue of new shares and options 
are shown in equity as a deduction net of tax from the proceeds any excess of the fair value of consideration received 
over the par value of shares issued is recorded as share premium
foreign currency translation
foreign currency transactions are initially recognized in the functional currency at the exchange rate ruling at the date 
of transaction monetary assets and liabilities denominated in foreign currencies are translated at the functional currency 
rate of exchange in effect at the end of the reporting period 
the us dollar ‘us’ is the presentation currency of the company the functional currency of the company is the pound 
sterling ‘gbp’ the assets and liabilities are translated into the presentation currency at the rate of exchange ruling at the 
end of each of the reporting period income and expenses for each income statement are translated at average exchange rates 
unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction 
dates in which case income and expenses are translated at the rate on the dates of the transactions all the resulting 
exchange differences are recorded in other comprehensive income 
the us to gbp exchange rates were 062 and 065 as at 31 december 2012 and 31 december 2011 respectively and the 
average rates for the year ended 31 december 2012 and 2011 were 063 and 062 respectively 
share option plan 
the share option plan under which the group has the ability to choose whether to settle it in cash or equity instruments 
at the discretion of the board of directors is accounted for as an equity settled transaction the fair value of the options 
granted by the parent to employees is measured at the grant date and calculated using the trinomial option pricing model 
and recognized in the nancial statements as a component of equity with a corresponding amount recognised in selling 
general and administrative expenses over the time share reward vest to the employee
modi cations of the terms or conditions of the equity instruments granted in a manner that reduces the total fair value of 
the share based payment arrangement or is not otherwise bene cial to the employee are accounted for as services received 
in consideration for the equity instruments granted as if the modi cation had not occurred
4 signi cant accounting judgments estimates and assumptions 
the signi cant accounting judgments estimates and assumptions are consistent with the group signi cant accounting 
judgments estimates and assumptions as presented in the notes to the group nancial statements
5 other income
on 13 december 2011 itera group limited agreed to sell a receivable from ruspetro relating to deferred consideration 
arising from the acquisition of inga and transoil the ‘itera debt’ to makayla investments limited ‘makayla’ a related 
party and shareholder of the company 
makayla negotiated the terms of settlement with itera and agreed to buy the receivable at an amount lower than the carrying 
value makayla passed on this bene t to ruspetro by entering into an agreement dated 13 december 2011 with ruspetro 
granting it the option to acquire the debt owing to makayla valued at us47453 thousand at the date of transaction 
by no later than 25 january 2012 for us26171 thousand 
on 18 january 2012 the company issued 12707584 ordinary shares at £134 each to makayla to acquire this debt for a total 
value of us26171 thousand accordingly an amount of us21282 thousand representing the difference between the nominal 
value of the debt and the fair value of the issued ordinary shares was recognized as other income in the accompanying 
 nancial statements
6 other operating expense
other operating expense include the impairment in the carrying amount of the investment in one of the group’s subsidiaries
parent company nancial statements
notes continued
for the period from 20 october 2011 to 31 december 2012 presented in us thousands except otherwise noted ruspetro plc
93
annual report and accounts 2012
7 investments in subsidiaries
as at 
31 december 
2012
ruspetro llc 206138
ruspetro holding limited 31744
total investments in subsidiaries 237882
8 options on shares of the company
on 2 december 2011 the company and llc ‘sberbank capital’ entered into an option agreement which became effective 
on 17 january 2012 pursuant to which llc ‘sberbank capital’ granted the company a call option to acquire the 10362632 
ordinary shares held by llc ‘sberbank capital’ the call option may be exercised once only at any time prior to the day 
which is 15 months from the date of ipo at an exercise price equal to the ipo price £134 per share less 10 
the fair value of this call option amounted to originally valued at us4059 thousand and valued at us24 thousand 
as at 31 december 2012 the fair value of this option was calculated using the blackscholes option pricing model and 
was recognised in these nancial statements as a current asset 
the following table presents the changes of fair value of call option for the year ended 31 december 2012
year ended 
31 december  
2012
as at 1 january
–
initial recognition of the option 4059
change in fair value of call option 3240
foreign exchange loss related to put option 795
as at 31 december 24
the following assumptions were used in calculating the fair value of this call option
year ended 
31 december  
2012
market price gbp079
exercise price gbp1206
expected volatility 371
expected life 03 years
riskfree interest rate 10
expected dividend yield zero
expected volatility was determined on the basis of the historic share price volatility of certain peer companies of the group
in addition pursuant to this agreement llc ‘sberbank capital’ may put the ordinary shares issued back to the company 
the put option may be exercised once only at any time between the second and third anniversary of admission at an exercise 
price equal to the offer price £134 less 20 with respect to the put option a liability of us15365 thousand has been 
recorded as at 31 december 2012
the following table presents the changes of value of put option for the year ended 31 december 2012
year ended 
31 december  
2012
as at 1 january –
initial recognition of the option 13753
unwinding of discount 1058
foreign exchange loss related to put option 554
as at 31 december 15365
9 cash and cash equivalents 
year ended 
31 december  
2012
cash in bank denominated in us 13081
cash in bank denominated in gbp 10796
total cash and cash equivalents 23877
cash balances generally bear no interest the company holds its cash with bank of america moody’s rating baa2p2 
negative at 31 december 2012 ruspetro plc annual report and accounts 2012
94
parent company nancial statements
notes continued
for the period from 20 october 2011 to 31 december 2012 presented in us thousands except otherwise noted
10 shareholders’ equity
share capital
year ended 
31 december  
2012
ordinary share capital 51226
incorporation of the company
the company was incorporated on 20 october 2011 as a public company under the provisions of the companies act 2006 of 
england and wales upon incorporation the company issued 506640 of its ordinary shares with a nominal value of 10 pence 
each for a consideration of us79 thousand 
initial public offering ‘ipo’
on 18 january 2012 a new holding structure became effective the reorganization was effected through a series of shares 
exchanges as described below
on 18 january 2012 the existing shareholders of the previous holding company transferred their shares in the previous 
holding company to the company in consideration for the issue of 196890000 ordinary shares in the company representing 
95 of the issued share capital of the company at the date of transfer with nominal value of £010 each
on 19 january 2012 llc sberbank capital transferred its 5 participating interest in ruspetro russia to the company 
in consideration for the issue of 10362632 ordinary shares in the company representing approximately 5 of the issued 
share capital of the company at the date of transfer with nominal value of £010 each
also on 19 january 2012 the company completed an initial public offering ipo on the london stock exchange as a result 
of the ipo 126128848 ordinary shares were issued with nominal value of £010 each at a price of £134 per ordinary share 
including 12707584 ordinary shares to the value of 262 million in settlement of the debt owing to makayla related to the 
original itera debt note 5 the ipo related transaction costs amounted to us19 million and net proceeds from the ipo 
amounted to us214 million
number  
of shares
pcs
share  
capital
share 
premium
as at 20 october 2011 –––
issue of share capital upon incorporation 506640 79 –
conversion of shares of previous holding company to shares of company 206745992 31746 –
initial public offering ipo 126128848 19401 220506
including to acquire makayla debt 12707584 1955 24216
as at 31 december 2012 333381480 51226 220506 
directors’ options
on 17 january 2012 the company granted two executive directors the options to acquire 10362632 ordinary shares with 
an exercise price of £134 these options are outstanding as at the balance sheet date at grant date the options were not 
subject to service and performance conditions therefore the value of these options was expensed immediately in february 
2013 the terms of the options were amended by introduction of vesting periods which are as follows the options vest in three 
equal instalments on 17 january 2013 17 january 2014 and 17 january 2015 after those dates the options are exercisable 
anytime up to 16 january 2022
the fair value of the options amounted to us12035 thousand and was calculated using the trinomial option pricing 
model and recognized in these nancial statements as a component of equity with a corresponding amount recognized 
in selling general and administrative expenses
the following assumptions were used in calculating the fair value
as at the  
grant date
offer price £134
exercise price £134
volatility 3845
expected life 10 years
riskfree interest rate 465
expected dividend yield zero
expected volatility was determined on the basis of the historic share price volatility of the certain peer companies of the group ruspetro plc
95
annual report and accounts 2012
shareholder information
signi cant shareholders
number of shares in issue 333381480 28 february 2013
shareholder holding  shareholding
limolines transport limited
99150000 2974
nervent limited 46479833 1394
schroder investment management 29206088 876
makayla investments limited 28819017 864
wind river management limited 22860000 686
henderson global investors 21913089 657
crossmead holding limited 12270000 368
llc sberbank capital 10362632 311 ruspetro plc annual report and accounts 2012
96
annual general meeting
the company’s annual general meeting will be 
held at 11am on wednesday 17 april 2013 at the 
of ces of white  case llp 5 old broad street 
london ec2n 1dw
company website
the company’s annual report and results 
announcements are available on our website  
wwwruspetrocom
the website can also be used to access the 
latest information about the company press 
announcements and future events as they 
are released as well as who to contact for 
further information
registrars
for information about the agm shareholdings 
and to report changes in details shareholders 
should contact
capita registrars
ibex house
42–47 minories
london ec3n 1dx
united kingdom
tel 44 0 20 7954 9622
wwwcapitaircouk
investor relations
dominic manley
investor relations director
tel 44 0 20 7318 1265
email dmanley ruspetrocom
registered of ce
ruspetro plc
2nd floor
cassini house
57–59 st james’s street
london sw1a 1ld
united kingdom
tel 44 0 20 7318 1260
moscow of ce
15th oor
belaya ploschad
10 butirsky val
moscow 125047
russian federation
tel 7 495 9357369
fax 7 495 9357368
auditors
pricewaterhousecoopers llp
32 albyn place
aberdeen ab10 1yl
united kingdom
reserves auditor
degolyer and macnaughton
5001 spring valley road
suite 800 east
dallas
texas 75244
usa
legal advisors
white and case llp
5 old broad street
london ec2n 1dw
united kingdom
corporate brokers
bank of america merrill lynch
2 king edward street
london ec1a 1hq
united kingdom
goldman sachs international
peterborough court
133 fleet street
london ec4a 2bb
united kingdom
communications advisors
brunswick group llp
16 lincoln’s inn fields
london wc2a 3ed
united kingdom
contact information  ruspetro plc
2nd floor
cassini house
57–59 st james’s street
london
sw1a 1ld ruspetro plc annual report and accounts 2012


Summary:
 ruspetro plc annual report and accounts 2012
06
chairman’s statement
“ we take considerable encouragement 
from the reserves upgrade the second 
since our otation 2012 was a profoundly challenging 
year for ruspetro the outturn in 
terms of production and consequently 
returns for our shareholders was 
disappointing but to assess the 
company’s performance fully one 
must also look deeper into all levels 
of the company’s operations here i 
have been encouraged by a number of 
positive developments and above all by 
the tenacity of my executive colleagues 
in getting to grips with the challenges 
in the business
while in private ownership ruspetro 
had existed on the lightest footprint 
possible to conserve resources before 
the commencement of substantial cash 
 ows as a result post ipo the senior 
executive team has had not only to carry 
forward the eld development program 
but also to build the company i am 
particularly impressed by the speed 
and thoroughness with which don 
tom alexander and their colleagues 
have completed this exercise we have 
recruited a strong international team 
with experience from a variety of 
operating environments around the 
world at a time of human resource 
shortage in our industry i am 
encouraged by the caliber of recruits 
and take this as an endorsement of the 
quality and potential of our business 
we now have all the necessary human 
technical and engineering resource 
in our three centers the london plc 
of ce the moscow operational center 
and the siberian eld of ces to handle 
the anticipated growth in the business 
our history
1970s
first drilling into the krasnoleninsky 
arch in western siberia
february 1999
open joint stock company ‘inga’ 
issued with the pottymskoinginsky 
and vostochnoinginsky licenses
march 2002
palyanovsky license issued to open 
joint stock company transoil 
‘transoil’ annual report and accounts 2012 ruspetro plc
07
“ in what has been a challenging 
year for the business i should 
like to thank all our employees 
who have worked with great 
dedication to carry us through 
this period”
securing further nancing is essential 
for the continued development of the 
 eld in this regard we are discussing 
our nancial requirements with our 
major lender and we aim to secure this 
 nancing in the near future
in what has been a challenging year 
for the business i should like to thank 
all our employees who have worked 
with great dedication to carry us 
through this period my thanks 
should also go to my fellow board 
members who have been engaged in 
the business giving vital sometimes 
critical but always supportive 
advice our commitment to the best 
governance remains absolute and 
we continue with our comprehensive 
monitoring and vigorous pursuit 
of any possible improvements to 
the company’s health safety and 
environmental performance
christopher clark
chairman
turning to our assets despite the 
challenges of production we take 
considerable encouragement from the 
further increases to our proved and 
probable hydrocarbon reserves the 
second since otation announced post 
year end at these levels the scale and 
quality of our reserves provide a basis 
of full con dence for our medium and 
longterm production plans however 
in the short term we have to recognize 
that technical issues of recovery have 
frustrated our ambition in 2012 
varying permeability and lower than 
expected ow rates in the rst half and 
much higher associated gas production 
in the second both presented technical 
challenges for the management team 
here too i have been impressed by the 
adaptability and energy that the senior 
executive team have shown for 
example the emergence of a gas and 
condensate play in the north east of 
our eld while creating a technical 
challenge has markedly bene ted 
cash ows 
the construction of pipelines the 
structuring and signing of contractual 
supply relationships for fracturing 
the completion of processing facilities 
and nally the development of the 
condensate processing plant in the 
depths of the siberian winter are all 
real proof of the team’s resourcefulness 
and drive it is on this basis that i am 
con dent we are equal to the tasks 
ahead and that stakeholders can expect 
the operational picture to improve 
2004 and 2005
inga and transoil bought by 
summa capital and sold on to itera oil 
 gas company
january 2007
miller  lents reserves’ audit indicates 
56 million barrels of proved reserves 
102 million barrels of probable reserves 
and 389 million barrels of possible 
reserves are contained by the three 
license blocks
november 2007
ruspetro holding limited ‘rph’ 
was incorporated in cyprus
february 2008
ruspetro llc acquired from 
crossmead holding limited by rph
june 2008
ruspetro llc acquires inga and 
transoil from itera oil  gas 
company for us305 million 
transaction nanced by us225 
million loan from sberbank us25 
million loan from limolines transport 
limited and a us55 million loan from 
itera oil  gas company
october 2010
us42 million of new equity capital 
raised by ruspetro llc 
october 2011
ruspetro plc incorporated in england 
and wales as a public company and 
acquires 100 of the shares of rph
january 2012
ruspetro plc lists on the london 
stock exchange having successfully 
completed its ipo annual report and accounts 2012
08
ruspetro plc