KrisEnergy Ltd - Appendices E to S

7/28/2019 KrisEnergy Ltd - Appendices E to S

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APPENDIX EDESCRIPTION OF OUR SHARES

Share Capital

As of the Latest Practicable Date, our authorized share capital is US$1,000,000 divided into 100,000,000 Shares

of par value US$0.01 each. Under the Cayman Islands Companies Law, certain changes in the share capital of

our Company such as an increase, consolidation or subdivision are permitted if authorized by our Articles.

Article 53 and Article 54 provide that an ordinary resolution is required for an increase to, consolidation orsubdivision of, our Company’s share capital. With regard to a reduction of share capital, Article 55, following the

requirement of the Cayman Islands Companies Law, requires a special resolution to be passed. Article 1 defines

an ordinary resolution as one passed by a simple majority of votes cast by shareholders (i.e. members) at general

meetings, and a special resolution as, other than in relation to Article 18, a resolution requiring a 75.0 per cent.

majority vote of shareholders at general meetings of which not less than 21 days’ notice has been given or

approved in writing by all shareholders entitled to vote at a general meeting of the Company.

As of the date of this document, we have 800,000,000 Shares of par value US$0.00125 each in issue which are fully

paid-up. All of our Shares are in registered form. Our Shares, which have identical rights in all respects, rank

equally with one another. Subject to the Cayman Islands Companies Law, no Shares may be issued by our Board

without the prior approval of our Company’s Shareholders in general meeting but subject thereto and to the Articles

and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, the unissued Shares of our Company shall be at the disposal of our Board of Directors which may offer,

allot, grant options over or otherwise dispose of them to such persons, at such times and for such consideration and

upon such terms and conditions as our Board of Directors may in its absolute discretion determine but so that no

Shares shall be issued at a discount, provided always that (a) no Shares shall be issued to transfer a controlling

interest in our Company without the prior approval of our Shareholders at a general meeting; (b) subject to any

direction to the contrary that may be given by our Company’s Shareholders in general meeting, any issue of Shares

for cash to our Shareholders of any class shall be offered to such Shareholders in proportion as nearly as may be to

the number of shares of the class then held by them and the provisions of the second sentence of Article 56 shall

apply with such adaptations as are necessary shall apply; and (c) any other issue of Shares, the aggregate of which

would exceed the limits referred to in Article 57 but always subject to such limits, if any, as may be prescribed by

the SGX-ST, shall be subject to the approval of our Company’s Shareholders in general meeting.

In the event of the issuance of preference shares, the total number of such preference shares may not exceed thetotal number of the issued ordinary shares. Our Articles provide that our Shareholders in general meeting may

give to our Directors a general authority to issue Shares subject to such limits as may be prescribed by the

SGX-ST of our issued share capital at the time of the passing of the resolution.

We may, subject to the Cayman Islands Companies Law and our Articles, purchase our own Shares.

We will replace lost or destroyed certificates for Shares provided that the applicant pays a fee which will not

exceed S$2.00 together with the amount of duty payable, if any, and furnishes such evidence and a letter of

indemnity as our Board of Directors may require.

Purchase by our Company of our own Shares

Under the laws of the Cayman Islands, a company may, if authorized by its articles of association, purchase its own

shares. Our Company has such power to purchase our own Shares under Article 58 of our Articles. Such power of

our Company to purchase our own Shares shall, subject to the Cayman Islands Companies Law and our Articles

(and if applicable, the rules and regulations of the SGX-ST and other regulatory authorities), be exercisable by the

Directors upon such terms and subject to such conditions as they think fit, in accordance with the Articles.

Under the laws of the Cayman Islands, such purchases may be effected out of profits of our Company or share

premium out of proceeds of a fresh issue of Shares made for that purpose or, in the manner authorized by

Cayman Islands Companies Law and our Articles, by a payment out of capital. At no time may our Company

purchase our Shares if, as a result of the purchase, there would no longer be any shareholder, in our Company.

Only fully paid Shares may be purchased by our Company. A payment out of capital by our Company for the

purchase of our Shares is not lawful unless immediately following the date on which the payment out of capital is

proposed to be made, our Company shall be able to pay its debts as they fall due in the ordinary course of business. Shares purchased by the Company will be treated as cancelled and our Company’s issued, but not our

authorized, capital will be diminished accordingly.

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For further details, please see “ Appendix F— Summary of Certain Provisions of the Cayman Islands Companies

Law and the Memorandum and Articles of Association of Our Company”

Shareholders

We maintain a register of members which contains the particulars as required under the Cayman Islands

Companies Law, and only recognize as shareholders of our Company such persons who are holders of Shares and

who are registered on the register of members. Except as required by law, no person shall be recognized by the

Company as holding any share upon any trust and we will not be bound by or required in any way to recognize(even when having notice thereof) any equitable, contingent, future or partial interest in any share or any

fractional part of a share or (except only as otherwise provided by our Articles or by law) any other rights in

respect of any share except an absolute right to the entirety thereof in the registered holder. If any Share stands

jointly in the names of two or more persons, the person first named in the register shall as regards service of

notices and, subject to the provisions of the Articles, all or any other matters connected with our Company,

except with respect to the transfer of Shares, be deemed the sole holder thereof.

Subject to the terms and conditions of any application of Shares, we may allot Shares applied for within ten

Market Days of the closing date of any such application (or such other period as may be approved by the SGX-

ST).

We may close the register of shareholders for any time or times if we provide the SGX-ST with at least ten clearMarket Days’ notice. However, the register may not be closed for more than 40 days in aggregate in any calendar

year. We would typically close the register to determine shareholders’ entitlement to receive dividends and other

distributions.

Transfer of Shares

Subject to our Articles, any shareholder may transfer all or any of his Shares by a duly signed instrument of

transfer in the form acceptable to our Board provided always that our Company shall accept for registration an

instrument of transfer in a form approved by the SGX-ST. Save as provided in the Articles, there shall be no

restriction on the transfer of fully paid up Shares (except where required by law or the rules or regulations of the

SGX-ST). Our Board may decline to register a transfer of any Share which is not fully paid or on which our

Company has a lien. Our Board may also decline to recognize any instrument of transfer unless, among other

things, it is duly stamped and is presented for registration together with the share certificate and such otherevidence as our Board may reasonably require, and a fee of such sum (not exceeding two Singapore dollars

(S$2.00) or such other maximum sum as the SGX-ST may determine to be payable) as our Board may from time

to time require is paid to our Company in respect thereof.

General Meetings of Our Shareholders

Under the Articles, the annual general meeting is required to be convened at least once in every calendar year

whilst our Directors may, whenever they think fit, convene an extraordinary general meeting.

Article 63 provides that an annual general meeting of our Company shall be held in each year (within a period of

not more than 15 months after the holding of the last preceding annual general meeting unless a longer period

would not infringe the rules or regulations of the SGX-ST, if any). In addition, for so long as the Shares of the

Company are listed on the Main Board of the SGX-ST, the interval between the close of the Company’s financial

year and the date of the Company’s annual general meeting shall not exceed four months or such period as may

be prescribed or permitted by the SGX-ST.

Subject to the Cayman Islands Companies Law, Shareholders holding at the date of deposit of the requisition not

less than one-tenth of the paid up capital of our Company carrying the right of voting at general meetings of our

Company shall at all times have the right, by written requisition to our Board of Directors or the Secretary of our

Company, to require an extraordinary general meeting to be called by our Board of Directors for the transaction

of any business specified in such requisition; and such meeting shall be convened within 21 days from the

deposit of such requisition.

If within 45 days of such deposit our Board of Directors fails to proceed to convene such meeting the

requisitionists themselves may do so in the same manner, and all reasonable expenses incurred by therequisitionist(s) as a result of the failure of our Board of Directors shall be reimbursed to the requisitionist(s) by

our Company.

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At least 14 days’ notice of a general meeting shall be given to each shareholder entitled to attend and vote

thereat. A general meeting at which the passing of a special resolution is to be considered shall be called by not

less than 21 days’ notice. For so long as the Shares of the Company are listed on the Main Board of the SGX-ST,

at least 14 days’ notice of any general meeting shall be given by advertisement in an English daily newspaper in

circulation in Singapore and in writing to the SGX-ST.

Under the Cayman Islands Companies Law, only persons who agree to become shareholders of a company and

whose names are entered on the register of shareholders of such company are considered shareholders, with

rights to attend and vote at general meetings. Accordingly, Depositors (as defined in the Singapore Companies

Act) holding Shares through CDP would not be recognized as shareholders of our Company, and would not have

a right to attend and to vote at general meetings of our Company. In the event that Depositors wish to attend and

vote at general meetings of our Company, CDP will have to appoint them as proxies, pursuant to the Articles and

the Cayman Islands Companies Law.

In accordance with Article 99(b), unless CDP specifies otherwise in a written notice to our Company, CDP shall

be deemed to have appointed as CDP’s proxies each of the Depositors who are individuals and whose names are

shown in the records of CDP, as at a time not earlier than 48 hours prior to the time of the relevant general

meeting, supplied by CDP to our Company. Therefore, Depositors who are individuals can attend and vote at the

general meetings of our Company without the lodgment of any proxy form. Depositors who cannot attend a

meeting personally may enable their nominees to attend as CDP’s proxies. Depositors who are not individuals

can only be represented at a general meeting of our Company if their nominees are appointed by CDP as CDP’sproxies. Proxy forms appointing nominees of Depositors as proxies of CDP would need to be executed by CDP

as member and must be deposited at the specified place and within the specified time frame to enable the

nominees to attend and vote at the relevant general meeting of our Company.

Voting Rights

Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in

accordance with the Articles, at any general meeting (i) on a show of hands every shareholder present in person

(or being a corporation, is present by a representative duly authorized under Articles 108 and 109) or by proxy

shall have one vote and the chairman of the meeting shall determine which proxy shall be entitled to vote where a

shareholder (other than CDP) is represented by two proxies; and (ii) on a poll every shareholder present in person

or by proxy or, in the case of a shareholder being a corporation, by its duly authorized representative shall haveone vote for every fully paid share of which he is the holder or which he represents and in respect of which all

calls due to our Company have been paid, but so that no amount paid up or credited as paid up on a share in

advance of calls or installments is treated for the foregoing purposes as paid up on the share. If the shareholder is

CDP, CDP may appoint more than two proxies to attend and vote at the same general meeting and each proxy

shall be entitled to exercise the same powers on behalf of CDP as CDP could exercise, including the right to vote

individually on a show of hands.

Dividends

Subject to the Cayman Islands Companies Law, our Company in a general meeting may from time to time

declare dividends in any currency to be paid to the members but no dividend shall be declared in excess of the

amount recommended by a Board of Directors. Dividends may be declared and paid out of the profits of our

Company, realized or unrealized, or from any reserve set aside from profits which our Directors determine is nolonger needed.

With the sanction of an ordinary resolution, dividends may also be declared and paid out of the share premium

account or any other fund or account which may be authorized for this purpose in accordance with the Cayman

Islands Companies Law, provided that no distribution or dividend may be paid to shareholders out of the share

premium account unless, immediately following the date on which the distribution or dividend is proposed to be

paid, our Company shall be able to pay its debts as they fall due in the ordinary course of business.

Whenever our Board of Directors or our Company in a general meeting has resolved that a dividend be paid or

declared, our Board of Directors may further resolve that such dividend be satisfied wholly or in part by the

distribution of specific assets of any kind and in particular of paid up Shares, debentures or warrants to subscribe

for securities of our Company or any other company, or in any one or more of such ways.

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Bonus and Rights Issues

Our Company may, upon the recommendation of the Board by Ordinary Resolution, resolve in respect of any one

particular dividend of our Company that a dividend may be satisfied wholly in the form of an allotment of Shares

credited as fully paid up without offering any right to Shareholders to elect to receive such dividend in cash in

lieu of such allotment.

Take-overs and Substantial Shareholders

Our Company is subject to the Securities and Futures Act and the Singapore Take-Over Code notwithstanding

that we are a corporation incorporated in the Cayman Islands.

Take-overs

Under the Singapore Take-Over Code, issued by the Authority pursuant to Section 321 of the Securities and

Futures Act, any person acquiring an interest, either on his own or together with parties acting in concert with

him, in 30.0 per cent. or more of the voting Shares must extend a takeover offer for the remaining voting Shares

in accordance with the provisions of the Singapore Take-Over Code. In addition, a mandatory takeover offer is

also required to be made if a person holding, either on his own or together with parties acting in concert with

him, between 30.0 per cent. and 50.0 per cent. of the voting shares acquires additional voting shares representing

more than 1.0 per cent. of the voting shares in any six-month period. Under the Singapore Take-Over Code, the

following individuals and companies will be presumed to be persons acting in concert with each other unless thecontrary is established:

(a) the following companies:

(i) a company;

(ii) the parent company of (i);

(iii) the subsidiaries of (i);

(iv) the fellow subsidiaries of (i);

(v) the associated companies of (i), (ii), (iii) or (iv); and

(vi) companies whose associated companies include any of (i), (ii), (iii), (iv) or (v); and

(vii) any person who has provided financial assistance (other than a bank in the ordinary course of

business) to any of the above for the purchase of voting rights;

(b) a company with any of its directors (together with their close relatives, related trusts as well as companies

controlled by any of the directors, their close relatives and related trusts);

(c) a company with any of its pension funds and employee share schemes;

(d) a person with any investment company, unit trust or other fund whose investment such person manages

on a discretionary basis, but only in respect of the investment account which such person manages;

(e) a financial or other professional adviser, including a stockbroker, with its customer in respect of the

shareholdings of:

(i) the adviser and persons controlling, controlled by or under the same control as the adviser; and

(ii) all the funds which the adviser manages on a discretionary basis, where the shareholdings of the

adviser and any of those funds in the customer total 10.0 per cent. or more of the customer’s

equity share capital;

(f) directors of a company (together with their close relatives, related trusts and companies controlled by any

of such directors, their close relatives and related trusts) which is subject to an offer or where the directors

have reason to believe a bona fide offer for their company may be imminent;

(g) partners; and

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(h) the following persons and entities:

(i) an individual;

(ii) the close relatives of (i);

(iii) the related trusts of (i);

(iv) any person who is accustomed to act in accordance with the instructions of (i);

(v) companies controlled by any of (i), (ii), (iii) or (iv); and

(vi) any person who has provided financial assistance (other than a bank in the ordinary course of

business) to any of the above for the purchase of voting rights.

Under the Singapore Take-Over Code, a mandatory offer made with consideration other than cash must be

accompanied by a cash alternative at not less than the highest price paid by the offeror or any person acting in

concert within the preceding six months.

Substantial Shareholders

The Securities and Futures Act require our substantial shareholders to give notice to us of certain information as

prescribed by the Authority, including particulars of their interest, within two business days of becoming aware

of being our Substantial Shareholders, being aware of any change in the percentage level of their interest and

being aware of ceasing to be a Substantial Shareholder. “Percentage level”, in relation to a substantial

shareholder, is the percentage figure ascertained by expressing the aggregate of the votes attached to all the

voting shares in which the substantial shareholder has an interest (or interests) immediately before or (as the case

may be) immediately after the relevant time as a percentage of the total votes attached to all of the voting shares,

and if it is not a whole number, rounding that figure down to the next whole number.

Under the Securities and Futures Act, a person has a substantial shareholding in us if he has an interest (or

interests) in one or more of our voting shares and the total votes attached to those shares are not less than 5.0 percent. of the aggregate of the total votes attached to all of our voting shares (excluding treasury shares).

Liquidation

Shareholders are entitled to the surplus assets of the Company in the event that it is wound up.

Indemnity

Our Articles provide that our Board of Directors and officers shall be indemnified from and against all liability

which they incur in execution of their duty in their respective offices, except in respect of negligence, fraud or

breach of fiduciary duty. For further details, please see “ Appendix F — Summary of Certain Provisions of the

Cayman Islands Companies Law and the Memorandum and Articles of Association of our Company — Summaryof Certain Provisions of the Cayman Islands Companies Law — Indemnification”.

Limitations on Rights to Hold or Vote Shares

There are no limitations, either under Cayman Islands law or our Articles, on the rights of non-Caymanian

owners of Shares to hold or vote their Shares.

Minority Rights

The Cayman Islands courts would ordinarily be expected to treat as persuasive English case law precedents

which permit a minority Shareholder to commence a representative action against or derivative actions in the

name of the company to challenge (a) an act which is ultra vires the company or illegal; (b) an act whichconstitutes a fraud against the minority and the wrongdoers are themselves in control of the company; and (c) an

irregularity in the passing of a resolution which requires a qualified (or special) majority.

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APPENDIX FSUMMARY OF CERTAIN PROVISIONS OF THE CAYMAN ISLANDS COMPANIES LAW

AND THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF OUR COMPANY

REGISTRATION NUMBER

We were incorporated on October 5, 2009 and our Company’s registration number is 231666.

SUMMARY OF CERTAIN PROVISIONS OF THE CAYMAN ISLANDS COMPANIES LAW

The Company is incorporated in the Cayman Islands subject to the Cayman Islands Companies Law and,

therefore, operates subject to Cayman Islands law. Set out below is a summary of certain provisions of Cayman

Islands company law, although this does not purport to contain all applicable qualifications and exceptions or to

be a complete review of all matters of Cayman Islands company law and taxation, which may differ from

equivalent provisions in jurisdictions with which interested parties may be more familiar.

(a) Operations

As an exempted company, our operations must be conducted mainly outside the Cayman Islands. We are

required to file an annual return each year with the Registrar of Companies of the Cayman Islands and pay a fee

which is based on the amount of its authorized share capital.

(b) Share Capital

The Cayman Islands Companies Law provides that where a company issues shares at a premium, whether for

cash or otherwise, a sum equal to the aggregate amount of the value of the premiums on those shares shall be

transferred to an account, to be called the “share premium account”. At the option of a company, these provisions

may not apply to premiums on shares of that company allotted pursuant to any arrangement in consideration of

the acquisition or cancellation of shares in any other company and issued at a premium. The Cayman Islands

Companies Law provides that the share premium account may be applied by the company subject to the

provisions, if any, of its memorandum and articles of association in (a) paying distributions or dividends to

members; (b) paying up unissued shares of the company to be issued to members as fully paid bonus shares;

(c) in any manner provided in section 37 of the Cayman Islands Companies Law; (d) writing-off the preliminaryexpenses of the company; and (e) writing-off the expenses of, or the commission paid or discount allowed on,

any issue of shares or debentures of the company.

No distribution or dividend may be paid to members out of the share premium account unless immediately

following the date on which the distribution or dividend is proposed to be paid, the company will be able to pay

its debts as they fall due in the ordinary course business.

The Cayman Islands Companies Law provides that, subject to confirmation by the Grand Court of the Cayman

Islands, a company limited by shares or a company limited by guarantee and having a share capital may, if so

authorized by its articles of association, by special resolution reduce its share capital in any way.

(c) Membership

Under the Cayman Islands Companies Law, only those persons who agree to become members of a Cayman

Islands company and whose names are entered on the register of members of such a company are considered

members. A Cayman Islands company is also not bound to see to the execution of any trust, whether express,

implied or constructive, to which any of its shares are subject and whether or not the company had notice of such

trust. Accordingly, persons holding shares through a trustee, nominee or depository will not be recognized as

members of a Cayman Islands company under Cayman Islands law and may only have the benefit of rights

attaching to the shares or remedies conferred by law on members through or with the assistance of the trustee,

nominee or depository.

(d) Financial Assistance to Purchase Shares of a Company or its Holding Company

Subject to all applicable laws, we may give financial assistance to our Directors and employees, subsidiaries,holding company or any subsidiary of such holding company in order that they may buy Shares in us or shares in

any subsidiary or holding company. Further, subject to all applicable laws, we may give financial assistance to a

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trustee for the acquisition of Shares in us or shares in any such subsidiary or holding company to be held for the

benefit of employees of us, our subsidiaries, any holding company of us or any subsidiary of any such holding

company (including salaried Directors).

There is no statutory restriction in the Cayman Islands on the provision of financial assistance by a company to

another person for the purchase of, or subscription for, its own or its holding company’s shares. Accordingly, a

company may provide financial assistance if the Directors of the company consider, in discharging their duties of

care and acting in good faith, for a proper purpose and in the interests of the company, that such assistance can

properly be given. Such assistance should be on an arm’s-length basis.

(e) Purchase of Shares and Warrants by a Company and its Subsidiaries

Subject to the provisions of the Cayman Islands Companies Law, a company limited by shares or a company

limited by guarantee and having a share capital may, if so authorized by its articles of association, issue shares

which are to be redeemed or are liable to be redeemed at the option of the company or a shareholder. In addition,

such a company may, if authorized to do so by its articles of association, purchase its own shares, including any

redeemable shares. However, if the articles of association do not authorize the manner and terms of the purchase,

a company cannot purchase any of its own shares unless the manner and terms of purchase have first been

authorized by an ordinary resolution of the company. At no time may a company redeem or purchase its shares

unless they are fully paid. A company may not redeem or purchase any of its shares if, as a result of the

redemption or purchase, there would no longer be any issued shares of us other than shares held as treasuryshares. A payment out of capital by a company for the redemption or purchase of its own shares is not lawful

unless immediately following the date on which the payment is proposed to be made, the company shall be able

to pay its debts as they fall due in the ordinary course of business.

A company is not prohibited from purchasing and may purchase its own warrants subject to and in accordance

with the terms and conditions of the relevant warrant instrument or certificate. There is no requirement under

Cayman Islands law that a company’s memorandum or articles of association contain a specific provision

enabling such purchases and the Directors of a company may rely upon the general power contained in its

memorandum of association to buy and sell and deal in personal property of all kinds.

Under Cayman Islands law, a subsidiary may hold shares in its holding company and, in certain circumstances,

may acquire such shares.

(f) Dividends and Distributions

With the exception of section 34 of the Cayman Islands Companies Law, there are no statutory provisions

relating to the payment of dividends. Based upon English case law, which is regarded as persuasive in the

Cayman Islands, dividends may be paid only out of profits and retained earnings. In addition, section 34 of the

Cayman Islands Companies Law permits, subject to a solvency test and the provisions, if any, of the company’s

memorandum and articles of association, the payment of dividends and distributions out of the share premium

account.

(g) Protection of Minorities

The Cayman Islands courts ordinarily would be expected to follow English case law precedents which permit a

minority shareholder to commence a representative action against or derivative actions in the name of the

company to challenge (a) an act which is ultra vires the company or illegal, (b) an act which constitutes a fraud

against the minority and the wrongdoers are themselves in control of the company, and (c) an irregularity in the

passing of a resolution which requires a qualified (or special) majority.

In the case of a company (not being a bank) having a share capital divided into shares, the Court may, on the

application of members holding not less than one-fifth of the shares of the company in issue, appoint an inspector

to examine into the affairs of the company and to report thereon in such manner as the Court shall direct.

Any shareholder of a company may petition the Court which may make a winding up order if the Court is of the

opinion that it is just and equitable that the company should be wound up. Or, as an alternative to a winding-up

order, the Court may make the following orders: (a) an order regulating the conduct of the company’s affairs in

the future; (b) an order requiring the company to refrain from doing or continuing an act complained of by thepetitioner or to do an act which the petitioner has complained it has omitted to do; (c) an order authorizing civil

proceedings to be brought in the name of and on behalf of the company by the petitioner on such terms as the

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Court may direct; or (d) an order providing for the purchase of the shares of any members of the company by

other members or by the company itself and, in the case of a purchase by the company itself, a reduction of the

company’s capital accordingly.

Generally claims against a company by its shareholders must be based on the general laws of contract or tort

applicable in the Cayman Islands or their individual rights as shareholders as established by the company’s

memorandum and articles of association.

(h) Management

The Cayman Islands Companies Law contains no specific restrictions on the power of directors to dispose of

assets of a company. However, as a matter of general law, every officer of a company, which includes a director,

managing director and secretary, in exercising his powers and discharging his duties must do so honestly and in

good faith with a view to the best interests of the company and exercise the care, diligence and skill that a

reasonably prudent person would exercise in comparable circumstances.

(i) Accounting and Auditing Requirements

A Cayman Islands exempted company shall cause proper books of account, including, where applicable, material

underlying documentation including contracts and invoices to be kept with respect to (i) all sums of money

received and expended by the company and the matters in respect of which the receipt and expenditure takes

place; (ii) all sales and purchases of goods by the company; and (iii) the assets and liabilities of the company.

Proper books of account shall not be deemed to be kept if there are not kept such books as are necessary to give a

true and fair view of the state of the company’s affairs and to explain its transactions. A Cayman Islands

exempted company shall cause all its books of account to be retained for a minimum period of five years from

the date on which they are prepared.

(j) Exchange Control

There are no exchange control regulations or currency restrictions in the Cayman Islands.

(k) Taxation

Pursuant to section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, we have obtained an

undertaking from the Governor-in-Cabinet:

(i) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits,

income, gains or appreciation shall apply to us or our operations; and

(ii) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable

on or in respect of the shares, debentures or other obligations of ours.

The undertaking for us is for a period of 20 years from October 20, 2009.

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains orappreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes

likely to be material to us levied by the Government of the Cayman Islands save certain stamp duties which may

be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the

Cayman Islands. The Cayman Islands are not party to any double tax treaties.

(l) Stamp Duty on Transfers

No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except

those which hold interests in land in the Cayman Islands.

(m) Loans to Directors

There is no express provision in the Cayman Islands Companies Law prohibiting the making of loans by a

company to any of its directors.

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(n) Inspection of Corporate Records

Members of the company will have no general right under the Cayman Islands Companies Law to inspect or

obtain copies of the register of members or corporate records of the company. They will, however, have such

rights as may be set out in the company’s articles of association.

An exempted company may, subject to the provisions of its articles of association, maintain its principal register

of members and any branch registers at such locations, whether within or without the Cayman Islands, as the

directors may, from time to time, think fit. An exempted company may also maintain a separate register of

members in respect of its listed shares. There is no requirement under the Cayman Islands Companies Law for an

exempted company to make any returns of members to the Registrar of Companies of the Cayman Islands. The

names and addresses of the members are, accordingly, not a matter of public record and are not available for

public inspection.

(o) Winding Up

A company may be wound up by either an order of the Court, voluntarily or subject to the supervision of the

Court. The Court has authority to order winding up in a number of specified circumstances including where it is,

in the opinion of the Court, just and equitable to do so.

A company may be wound up voluntarily (a) when the period (if any) fixed for the duration of the company byits memorandum or articles of association expires; (b) if the event (if any) occurs, on the occurrence of which the

memorandum or articles of association provide that the company is to be wound up; (c) if the company resolves

by special resolution that it be wound up voluntarily; or (d) if the company in general meeting resolves that it be

wound up voluntarily because it is unable to pay its debts as they fall due. In the case of a voluntary winding up,

such company shall from the commencement of its winding up, cease to carry on its business except so far as it

may be beneficial for its winding up.

In circumstances where a company is solvent (the directors of the company will need to provide a statutory

declaration to this effect), the company can be wound up by a special resolution of its shareholders, and the

liquidation will not require the supervision of the Court. Unless one or more persons have been designated as

liquidator or liquidators of the company in the company’s memorandum and articles of association, the company

in general meeting must appoint one or more liquidators for the purpose of winding up the affairs of the companyand distributing its assets.

Alternatively, where the financial position of the company is such that a declaration of solvency cannot be given

by the directors, the winding up will be initiated by an ordinary resolution of the company’s shareholders and

will occur subject to the supervision of the Court. In this case, a licensed insolvency practitioner will need to be

appointed as liquidator (known as “an official liquidator”). The Court may determine whether any and what

security is to be given by an official liquidator on his appointment; if no official liquidator is appointed, or during

any vacancy in such office, all the property of the company shall be in the custody of the Court. The Court may

appoint a foreign practitioner to act jointly with a qualified insolvency practitioner. A person may qualify as an

official liquidator if that person holds the qualifications specified in the Insolvency Practitioners Regulations of

the Cayman Islands. The Court may appoint a foreign practitioner to act jointly with a qualified insolvency

practitioner.

Upon the appointment of a liquidator, the responsibility for the company’s affairs rests entirely in his hands and

no future executive action may be carried out without his approval. A liquidator’s duties are to collect the assets

of the company (including the amount (if any) due from the contributories), settle the list of creditors and, subject

to the rights of preferred and secured creditors and to any subordination agreements or rights of set-off or netting

of claims, discharge the company’s liability to them (pari passu if insufficient assets exist to discharge the

liabilities in full) and to settle the list of contributories (shareholders) and divide the surplus assets (if any)

amongst them in accordance with the rights attaching to the shares.

As soon as the affairs of the company are fully wound up, the liquidator must make up an account of the winding

up, showing how the winding up has been conducted and the property of the company has been disposed of, and

thereupon call a general meeting of the company for the purposes of laying before it the account and giving an

explanation for it. At least 21 days before the meeting the liquidator must send a notice specifying the time, placeand object of the meeting to each contributory in any manner authorized by the company’s articles of association

and published in the Cayman Islands Gazette.

F-4



(p) Reconstructions

There are statutory provisions which facilitate reconstructions and amalgamations approved by a majority in

number representing seventy-five per cent in value of shareholders or class of shareholders or creditors, as the

case may be, as are present at a meeting called for such purpose and thereafter sanctioned by the Court. While a

dissenting shareholder would have the right to express to the Court his view that the transaction for which

approval is sought would not provide the shareholders with a fair value for their shares, the Court is unlikely to

disapprove the transaction on that ground alone in the absence of evidence of fraud or bad faith on behalf of

management.

(q) Mergers and Consolidations

The Cayman Islands Companies Law provides that any two or more Cayman Islands companies limited by

shares (other than segregated portfolio companies) may merge or consolidate in accordance with the Cayman

Islands Companies Law. The Cayman Islands Companies Law also allows one or more Cayman Islands

companies to merge or consolidate with one or more foreign companies ( provided that the laws of the foreign

jurisdiction permit such merger or consolidation).

To effect a merger or consolidation of one or more Cayman Islands companies the directors of each constituent

company must approve a written plan of merger or consolidation in accordance with the Cayman Islands

Companies Law. The Plan must then be authorized by each constituent company by a special resolution of members and such other authorization, if any, as may be specified in such constituent company’s articles of

association.

Where a Cayman Islands parent is merging with one or more of its Cayman Islands subsidiaries, shareholder

consent is not required if a copy of the plan of merger is given to every member of each subsidiary company to

be merged, unless that member agrees otherwise.

To effect a merger or consolidation of one or more Cayman Islands companies with one or more foreign

companies, in addition to the approval requirements applicable to the merger of consolidation of Cayman Islands

companies (in relation to Cayman Islands companies only), the merger or consolidation must also be effected in

compliance with the constitutional documents of, and laws of the foreign jurisdiction applicable to, the foreign

companies.

(r) Compulsory Acquisition

Where an offer is made by a company for the shares of another company and, within four months of the offer, the

holders of not less than ninety per cent of the shares which are the subject of the offer accept, the offeror may at

any time within two months after the expiration of the said four months, by notice in the prescribed manner

require the dissenting shareholders to transfer their shares on the terms of the offer. A dissenting shareholder may

apply to the Court within one month of the notice objecting to the transfer. The burden is on the dissenting

shareholder to show that the Court should exercise its discretion, which it will be unlikely to do unless there is

evidence of fraud or bad faith or collusion as between the offeror and the holders of the shares who have

accepted the offer as a means of unfairly forcing out minority shareholders.

(s) Indemnification

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for

indemnification of officers and directors, except to the extent any such provision may be held by the court to be

contrary to public policy (e.g. for purporting to provide indemnification against the consequences of committing

a crime).

F-5



SUMMARY OF CERTAIN PROVISIONS OF THE MEMORANDUM AND ARTICLES OFASSOCIATION OF OUR COMPANY

This summary provides information about certain provisions of our Articles and certain aspects of Cayman

Islands company law. The description below is only a summary and is qualified in its entirety by reference to our

Articles and the Cayman Islands Companies Law.

Registration number and Memorandum of Association

The registration number with which our Company was incorporated is 231666. Our Memorandum of Association

states, among other things, that the liability of shareholders is limited to the amount, if any, for the time being

unpaid on the Shares held by them and that our Company is an exempted company as defined in the Cayman

Islands Companies Law. Paragraph 3 of our Memorandum of Association states that the objects for which our

Company is formed are unrestricted, and the Company shall have fully power and authority to carry out any

object not prohibited by prohibited by any law as provided by Section 7(4) of the Cayman Islands Companies

Law.

Directors

Ability of Interested Directors to Vote (Articles 145 and 146)

Every Director who holds any office or possesses any property whereby, whether directly or indirectly, duties orinterests might be created in conflict with his duties or interests as a Director, shall declare at a meeting of the

Directors, the fact and nature, character and extent of the conflict.

A Director shall not participate in any discussions and shall not be entitled to vote in respect of any contract,

transaction or arrangement, or proposed contract, transaction or arrangement or any other proposal whatsoever

(and/or receive any information relating thereto): (i) in which he has any material interest (personal or

otherwise), whether directly or indirectly; or (ii) which might, whether directly or indirectly, create a conflict

with his duties or interests as a Director; or (iii) in the case of a Director who represents the interests of, or who

was nominated for appointment by a Substantial Shareholder, in which such Substantial Shareholder and/or its

related corporation may have an interest or potential interest.

Remuneration (Articles 115 and 116)

The ordinary fees of the Directors shall from time to time be determined by Ordinary Resolution and shall not be

increased except pursuant to an Ordinary Resolution passed at a general meeting where notice of the proposed

increase shall have been given in the notice convening the general meeting and shall (unless such resolution

otherwise provides) be divisible among the Directors as they may agree, or failing agreement, equally, except

that any Director who shall hold office for part only of the period in respect of which such fees is payable shall

be entitled only to rank in such division for a proportion of fees related to the period during which he has held

office. Each Director shall be entitled to reimbursement for his out of pocket expenses incurred in connection

with attending Board meetings.

Fees payable to non-executive Directors shall be by a fixed sum and not by a commission on or percentage of the

profits or turnover. Salaries payable to executive Directors may not include a commission on or a percentage of

turnover.

Borrowing Powers (Article 137)

Subject to the Articles, the Directors may exercise all the powers of the Company to borrow money and to

mortgage or charge its undertaking, property and uncalled capital or any part thereof, to issue debentures,

debenture stock and other securities whenever money is borrowed or as security for any debt, liability or

obligation of the Company or of any third party.

Retirement Age Limit

There are no provisions relating to retirement of Directors upon reaching any age limit.

Shareholding Qualification (Article 117)

There shall be no shareholding qualification for Directors unless determined otherwise by Ordinary Resolution.

F-6



Share Rights and Restrictions

Our Company currently has only one class of shares, which will be designated as ordinary shares.

Dividends and Distribution (Articles 169 to 179)

Subject to the Cayman Islands Companies Law, our Company in a general meeting may from time to time

declare dividends in any currency to be paid to the shareholders but no dividend shall be declared in excess of the

amount recommended by the Board. Dividends may be declared and paid out of the profits of the Company,realized or unrealized, or from any reserve set aside from profits which the Directors determine is no longer

needed. With the sanction of an ordinary resolution, dividends may also be declared and paid out of the share

premium account or any other fund or account which may be authorized for this purpose in accordance with the

Cayman Islands Companies Law, provided that no distribution or dividend may be paid to shareholders out of

the share premium account unless, immediately following the date on which the distribution or dividend is

proposed to be paid, our Company shall be able to pay its debts as they fall due in the ordinary course of

business.

Unless and to the extent that the rights attached to any Shares or the terms of issue thereof otherwise provide:

(i) all dividends shall be declared and paid according to the amounts paid up on the Shares in respect of which the

dividend is paid, but no amount paid up on a Share in advance of calls shall be treated as paid up on the Share;

and (ii) all dividends shall be apportioned and paid pro rata according to the amounts paid up on the Sharesduring any portion or portions of the period in respect of which the dividend is paid. Our Board may deduct from

any dividend or other moneys payable to a member by our Company on or in respect of any Shares all sums of

money (if any) presently payable by him to our Company on account of calls or otherwise.

All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise made

use of by our Board for the benefit of our Company until claimed. Any dividend or bonuses unclaimed after a

period of six years from the date of declaration shall be forfeited and shall revert to our Company.

Voting Rights (Articles 84 and 89)

Each member who is a holder of Shares in the capital of the Company shall be entitled to be present at any

general meeting. Subject to any special rights or restrictions as to voting for the time being attached to any Shares

by or in accordance with the Articles, at any general meeting (i) on a show of hands every shareholder present inperson (or being a corporation, is present by a representative duly authorized under Articles 108 and 109) or by

proxy shall have one vote and the chairman of the meeting shall determine which proxy shall be entitled to vote

where a shareholder (other than CDP) is represented by two proxies, and (ii) on a poll every shareholder present

in person or by proxy or, in the case of a shareholder being a corporation, by its duly authorized representative

shall have one vote for every fully paid share of which he is the holder or which he represents and in respect of

which all calls due to our Company have been paid, but so that no amount paid up or credited as paid up on a

share in advance of calls or installments is treated for the foregoing purposes as paid up on the share. If the

shareholder is CDP, CDP may appoint more than two proxies to attend and vote at the same general meeting and

each proxy shall be entitled to exercise the same powers on behalf of CDP as CDP could exercise, including the

right to vote individually on a show of hands.

Share in Profits

Holders of Shares shall be entitled to share in our Company’s profits by way of dividends declared or distribution

approved by our Company in general meeting in accordance with the Cayman Islands Companies Law.

Share in Surplus upon Liquidation (Articles 206 and 207)

If the Company shall be wound up (whether the liquidation is voluntary, under supervision, or by the court), the

liquidator may, with the sanction of a Special Resolution divide amongst the Shareholders in specie or kind the

whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not)

and may, for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may

determine how such division shall be carried out as between the Shareholders or different Classes.

The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trustsfor the benefit of the Shareholders as the liquidator, with the like sanction shall think fit, but so that no

Shareholder shall be compelled to accept any assets whereon there is any liability.

F-7



Redemption Provisions (Articles 58 to 62)

Subject to the Cayman Islands Companies Law and the bye-laws or listing rules of the Designated Stock

Exchange, the Company may: (a) issue Shares on terms that they are to be redeemed or are liable to be redeemed

at the option of the Company or the Shareholder on such terms and in such manner as the Directors may

determine; (b) purchase its own Shares (including any redeemable Shares) on such terms and in such manner as

the Directors may determine and agree with the Shareholder; and (c) make a payment in respect of the

redemption or purchase of its own Shares in any manner authorized by the Law, the bye-laws, listing rules of the

Designated Stock Exchange or the Singapore Securities and Futures Act (Cap. 289).

Sinking Fund

The Articles do not contain sinking fund provisions.

Calls on Shares (Articles 27, 28, 29, 30, 30, 31 and 32)

Subject to the Articles and to the terms of allotment, the Directors may from time to time make calls upon the

Shareholders in respect of any moneys unpaid on their Shares, and each Shareholder shall (subject to receiving at

least 14 clear days’ written notice specifying the time or times of payment) pay to the Company at the time or

times so specified the amount called on such Shares.

The joint holders of a share shall be jointly and severally liable to pay calls in respect thereof.

If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person

from whom the sum is due shall pay interest upon the sum at the rate of eight percent per annum from the day

appointed for the payment thereof to the time of the actual payment, but the Directors shall be at liberty to waive

payment of that interest wholly or in part.

The provisions of the Articles as to the liability of joint holders and as to payment of interest shall apply in the

case of non-payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time,

whether on account of the amount of the Share, or by way of premium, as if the same had become payable by

virtue of a call duly made and notified.

The Directors may make arrangements on the issue of partly paid shares for a difference between the

shareholders, or the particular Shares, in the amount of calls to be paid and in the times of payment.

The Directors may, if they think fit, receive from any shareholder willing to advance the same all or any part of

the moneys uncalled and unpaid upon any partly paid shares held by him, and upon all or any of the moneys so

advanced may (until the same would, but for such advance, become presently payable) pay interest at such rate

(not exceeding without the sanction of an ordinary resolution, eight per cent. per annum) as may be agreed upon

between the Shareholder paying the sum in advance and the Directors. Capital paid on shares in advance of calls

shall not, whilst carrying interest, confer a right to participate in profits.

The Memorandum of Association states that the liability of shareholders of our Company is limited to the

amount, if any, for the time being unpaid on the Shares held by them.

Discriminatory Provisions against Substantial Shareholder (Article 215)

The Articles do not contain any provision discriminating against any existing or prospective holder of Shares as a

result of such shareholder owning a substantial number of shares save that for so long as the shares of the

Company are listed on the SGX-ST, substantial shareholders (having the meaning ascribed to it in the Singapore

Companies Act) have to disclose particulars of their interest in our Company and of any change in the percentage

level of such interest. Such requirement to disclose does not apply to CDP.

Variation of Rights of Existing Shares or Classes of Shares (Article 16)

Whenever the capital of the Company is divided into different classes the rights attached to any such class may,

subject to and any other rights or restrictions for the time being attached to any class, only be materiallyadversely varied or abrogated with the consent in writing of the holders of not less than three-fourths of the

issued shares of the relevant class, or with the sanction of a resolution passed at a separate meeting of the holders

F-8



of the shares of such class by a majority of three-fourths of the votes cast at such a meeting, provided that,

where the necessary majority for such a resolution is not obtained at the meeting, consent in writing if obtained

from holders who represent at least three-quarters of the total voting rights of the shares concerned within two

months of the meeting, shall be as valid and effectual as a resolution carried at the meeting. To every such

separate meeting all the provisions of the Articles relating to general meetings of the Company or to the

proceedings thereat shall, mutatis mutandis, apply, except that the necessary quorum shall be one or more

persons at least holding or representing by proxy one-third in nominal or par value amount of the issued shares of

the relevant class (but so that if at any adjourned meeting of such holders a quorum as above defined is not

present, those shareholders who are present shall form a quorum) and that, subject to any rights or restrictions for

the time being attached to the shares of that class, every shareholder of the class shall on a poll have one vote for

each share of the class held by him. The Directors may treat all the classes or any two or more classes as forming

one class if they consider that all such classes would be affected in the same way by the proposals under

consideration, but in any other case shall treat them as separate classes.

General Meetings (Articles 63, 103 and 108)

Under the Articles, the annual general meeting is required to be convened at least once in every calendar year

whilst the Directors may, whenever they think fit, convene an extraordinary general meeting.

Article 1 defines an ordinary resolution as one passed by a simple majority of votes cast by shareholders (i.e.

members) at general meetings, and a special resolution as, other than in relation to Article 18 a resolutionrequiring a 75.0 per cent. majority vote of shareholders at general meetings of which not less than 21 days’ notice

has been given or approved in writing by all shareholders entitled to vote at a general meeting of the Company.

Subject to certain requirements in the Articles, all registered shareholders of the Company are entitled to attend

general meetings of our Company. The Cayman Islands Companies Law does not contain provisions as to any

documentary evidence to be produced by proxies and corporate representatives. However, such provisions may

be contained in the Articles. Where, for example, it is stated that an instrument of proxy must be deposited a

specified number of hours before the meeting (see Article 103), proxies deposited after that time cannot be

admitted.

Corporate representatives are different from proxies and unless specifically required by the Articles, a letter of

appointment does not need to be lodged before the meeting.

No Limitation on Non-Cayman Shareholders

Subject to the Articles there are no limitations, either under Cayman Islands law on the rights of non Caymanian

owners of the Company’s shares to hold or vote their Shares.

Changes in Control

Issue of Shares (Article 8(c))

No Shares shall be issued to transfer a controlling interest in the Company without the prior approval of the

shareholders in a general meeting.

Shareholding Disclosure Requirement (Article 215)

The Cayman Islands Companies Law does not require disclosure of shareholder ownership beyond a certain

threshold. However, Article 215 contains provisions to the effect that for so long as the shares of the Company

are listed on the SGX-ST, Directors and substantial shareholders (having the meaning ascribed to it in the

Singapore Companies Act) of our Company will have to disclose particulars of their interest in our Company and

any change in the percentage level of such interest. Article 215 does not apply to CDP.

Changes in Capital (Articles 53, 54 and 55)

Under the Cayman Islands Companies Law, certain changes in the capital of our Company such as an increase,

consolidation or subdivision are permitted if authorized by its shareholders. Article 53 and 54 provides that an

ordinary resolution is required for an increase to, consolidation or subdivision of, our Company’s share capital.With regard to a reduction of share capital, Article 55, following the requirement of the Cayman Islands

Companies Law, requires a special resolution to be passed.

F-9



Forced transfers or sales of Shares (Article 50)

Where the Company or the Directors determine, in their absolute discretion, or are of the opinion (but without

imposing an obligation on them to so determine or opine) that Shares of our Company are being held, directly or

indirectly, by any shareholder (each of the persons listed in (a) to (d) below, a “ Non-Qualifying Person”):

(a) whose ownership of Shares may cause our Company’s tax status or residence to be prejudiced or may

cause our Company to suffer any pecuniary disadvantage (including any excise tax, penalties or liabilities

under the United States Employee Retirement Income Securities Act of 1974, as amended (“ ERISA”));

or

(b) whose ownership of Shares may cause our Company to be required to comply with any registration or

filing requirements in any jurisdiction, with which it would not otherwise be required to comply; or

(c) whose ownership of Shares may cause our Company to be required to register as an “investment

company” under the United States Investment Company Act of 1940, as amended, and the rules

thereunder (the “US Investment Company Act”); or

(d) who is a US Person (as defined in Regulation S under the United States Securities Act of 1933, as

amended) but is not a “qualified purchaser” within the meaning of Section 2(a)(51)(A) of the US

Investment Company Act;

then, in each such case, our Company may at its option direct the Non-Qualifying Person to transfer the whole or

a specified percentage of such Non-Qualifying Person’s Shares to a person who is not a Non-Qualifying Person

and would not by reason of a transfer become a Non-Qualifying Person. If the required transfer is not effected

within 30 days after service of notice by our Company and such Non-Qualifying Person directed to transfer his

Shares has not established to the reasonable satisfaction of the Board or the designated person within the

Company (whose judgment shall be final and binding) that he is not a Non-Qualifying Person, the Shares

concerned may be sold by our Company in any manner it thinks fit on behalf of the said shareholder. The consent

of such shareholder for the transfer of his Shares by our Company is not required and, notwithstanding any

provisions to the contrary in our Articles of Association, until such transfer is effected, the holder of such Shares

will not be entitled to receive or exercise any rights, benefits or privileges (including without limitation voting

rights, dividends or other distributions) attaching to such Shares, and the Company may deal with any suchrights, benefits or privileges of such shareholder at its absolute discretion.

F-10



APPENDIX GLIST OF PRESENT AND PAST PRINCIPAL DIRECTORSHIPS

The list of present and past principal directorships held by our Directors and Executive Officers in the last five

years preceding the Latest Practicable Date is as follows:

Name Present Past

Directors

Will Honeybourne . . . . . . . . . . Barra Holdings GP Limited

Exterran Holdings, Inc.

First Reserve Asia Limited

First Reserve Energy Infrastructure GP Limited

First Reserve GP XII Limited

First Reserve GP XIII Limited

FR Acteon Holdings, Ltd.

FR Horizon GP Limited

FR X Offshore GP Limited

FR XI Offshore GP Limited

FR XII Alternative GP Ltd.

KrisEnergy Holdings Ltd.

KrisEnergy Ltd.

Petroleum Equipment Suppliers Association

Acteon Group Limited

CNOOC (China National Offshore Oil Corporation)

First Reserve International Limited

FR IX Offshore GP Limited

KrisEnergy Pte Ltd.

Red Technology Alliance, LLC

Turbo Cayman Limited

Keith Cameron . . . . . . . . . . . . B Block Ltd

BEM Resources Ltd

CKR Resources (B.V.I.) Ltd

CKR Resources Pte Ltd

EM Block Ltd

KrisEnergy (Asia) Ltd

KrisEnergy (Cambodia) Holding Ltd

KrisEnergy (Cambodia) Ltd

KrisEnergy (East Muriah) Ltd

KrisEnergy (Gulf of Thailand) Ltd

KrisEnergy (Phu Khanh 120) Ltd

KrisEnergy (Song Hong 115) Ltd

KrisEnergy (Satria) Ltd


KrisEnergy Holding Company LtdKrisEnergy International (Thailand) Holdings Ltd

KrisEnergy Ltd.

KrisEnergy Management Ltd

KrisEnergy Management Services Ltd

KrisEnergy Oil & Gas (Thailand) Ltd

KrisEnergy Pte Ltd

KrisEnergy Resources (Thailand) Ltd

Puri Aircraft Ltd

Wassana MOPU Pte. Ltd.(1)

Jasmine Venture Limited


Mont D’Or Petroleum Limited

Chris Gibson-Robinson . . . . . . B Block Ltd

BEM Resources Ltd



EM Block LtdKrisEnergy (Asia) Ltd









KrisEnergy (Udan Emas) B.V.

KrisEnergy Holding Company Ltd

KrisEnergy International (Thailand) Holdings Ltd

KrisEnergy Ltd.




KrisEnergy Pte Ltd

Mubadala Petroleum (SE Asia)

Holdings Limited ( formerly PearlOil Holdings Ltd )

Mubadala Petroleum (SE Asia)

Limited ( formerly Pearl Energy Limited )

Mubadala Petroleum (Thailand)Holdings Limited ( formerly PearlOil (Siam) Limited )

Pearl Oil (Amata) Limited

Pearl Oil (Aoa Thai) Limited

Pearl Oil (Jambi) Limited

Pearl Oil (Petroleum) Limited

Pearl Oil (Resources) Limited

Pearl Oil (Thailand) Limited

Pearl Oil Bangkok Limited

Pearl Oil Offshore Limited

Pearl Oil Onshore Limited

PearlGas (Siam) Limited

PearlOil (Basin) Limited (disposed on December 29,

2010)

PearlOil (Island) Limited (disposed on December 29,

2010)

PearlOil (K) Limited

PearlOil (Nam Con Son) Limited

G-1



Name Present Past

. . . . . . . . . . . . . . . . . . . . . . . . . KrisEnergy Resources (Thailand) Ltd


PearlOil (Obsidian) Limited

PearlOil (Ophiolite) Limited

PearlOil (Ragay) Limited

PearlOil (Salawati) Limited (disposed on January 19,

2011)

PearlOil (Sandstone) Limited

PearlOil (Satria) LimitedPearlOil (Sebuku) Limited

PearlOil (Tachylyte) Limited

PearlOil (Tephrite) Limited

PearlOil (Theralite) Limited

PearlOil (UK) Limited

Richard Lorentz . . . . . . . . . . . . B Block Ltd

BEM Resources Ltd



EM Block Ltd












KrisEnergy Ltd.




KrisEnergy Pte Ltd



Franklin Offshore Holding Pte Ltd.

Global Tender Barge Pte Ltd

Mubadala Petroleum (SE Asia) Holdings Limited

Mubadala Petroleum (SE Asia) Limited



Pearl Oil (Jambi) Limited



Pearl Oil (Thailand) Limited

Pearl Oil Bangkok Limited

Pearl Oil Offshore Limited


PearlGas (Siam) Limited

PearlOil (Basin) Limited

PearlOil (Island) Limited

PearlOil (K) Limited

PearlOil (Nam Con Son) Limited

PearlOil (Obsidian) Limited

PearlOil (Ophiolite) Limited

PearlOil (Ragay) Limited

PearlOil (Salawati) Limited

PearlOil (Sandstone) Limited

PearlOil (Satria) Limited

PearlOil (Sebuku) Limited

PearlOil (Tachylyte) Limited




Brooks Shughart . . . . . . . . . . . KIPP, Inc.


KrisEnergy Ltd

Sabine Oil & Gas Holdings LLC

-

Choo Chiau Beng . . . . . . . . . . Asian Lift Pte Ltd

K1 Ventures Ltd

Keppel Capital Holdings Pte LtdKeppel Capital One Pte Ltd

Keppel Capital Pte Ltd

Keppel Care Foundation Limited

Keppel Energy Pte Ltd

Keppel FELS Limited

Keppel Infrastructure Holdings Pte. Ltd.

Keppel Land China Limited

Keppel Land Limited

KrisEnergy Ltd.

Keppel Offshore & Marine Ltd

Keppel Offshore & Marine Technology Centre Pte

Ltd

Keppel Shipyard Limited

KrisEnergy Ltd

Singapore University of Technology and DesignTianjin Eco-city Keppel New Energy Development

Co., Ltd

Keppel Norway AS

Maritime and Port Authority of Singapore

Singapore Maritime Foundation LimitedSingapore Petroleum Company

Singapore Refining Company

SMRT Corporation Ltd

SMRT Buses Ltd

SMRT Light Rail Pte Ltd

SMRT Road Holdings Ltd

SMRT Trains Ltd

G-2



Name Present Past

Loh Chin Hua . . . . . . . . . . . . . AAMTF II (Ex-Korea) Private Limited

AIB Alpha Japan Fund Pte. Ltd.

Alpha Asia Macro Trends Fund II Private Limited

Alpha Asia Macro Trends Fund Private Limited

Alpha Core Plus Real Estate Fund Private Limited

Alpha Investment Partners (B.V.I.) Limited

Alpha Investment Partners China Limited

Alpha Investment Partners Japan Limited

Alpha Investment Partners Korea Private LimitedAlpha Investment Partners Limited

Alpha Reits Manager Limited

AREFM (BVI) Limited

Asia No. 1 Property Fund Limited

Asia Real Estate Fund Management Limited

D. L. Properties Ltd

Fels SES International Pte Ltd

Harbourfront One Pte Ltd

Harbourfront Three Pte Ltd

Harbourfront Two Pte Ltd

Katong AMC Pte. Ltd.

Kephinance Investment Pte Ltd

Keppel Capital Holdings Pte Ltd

Keppel Capital One Pte Ltd

Keppel Capital Pte LtdKeppel Energy Pte. Ltd.

Keppel FELS Limited

Keppel Funds Investment Pte Ltd ( formerly known

as Kepindia Investment Pte Ltd )

Keppel Infrastructure Holdings Pte Ltd

Keppel Investment Limited

Keppel Land China Limited ( formerly known as

Keppel Land China Holdings Pte Ltd )

Keppel Land Limited

Keppel Offshore & Marine Ltd

Keppel Offshore & Marine Technology Centre Pte

Ltd

Keppel Oil & Gas Pte. Ltd.

Keppel Real Estate Investment Pte. Ltd.

Keppel REIT Management Limited (as the

Manager of Keppel REIT )

Keppel Shipyard Limited

KrisEnergy Ltd.

Primero Investments Pte Ltd

Red Daisy Enterprises BVI

Senette Investment Ltd

The Vietnam Investment Fund (Singapore) Ltd

Zattarra Ltd

AAJ Investment Pte. Ltd.

AIBJ Hero Pte. Ltd.

AIBJ Roppongi Pte. Ltd.

AIPJ Investment Pte. Ltd.

All Fortune International Limited

Allenstand Limited

Anderhill Limited

ANOF Korea 1 Private Limited

Antrohorne LtdApplause Investments Limited

Ash Springs Limited

Assibere Limited

Best Inspire International Limited

Brenspere Ltd

Bugis City Holdings Pte Ltd

Canyonwater Limited

Caray Gardens Holdings Ltd

Casa Vista Investments Limited

Chiba Investment Private Limited

Christus Limited

Comprohorne Limited

Core Plus Investment Private Limited

Daikanyama (CP) Investment Private Limited

Dapenso (CP) Investment Private LimitedDivine (AMT) Pte. Ltd.

Equity (CP) Private Limited

Ever Gain Logistics Private Limited

Fertile Crescent Ltd

Fusiongold Private Limited

Garrard Ventures Private Limited

Grathfield Ltd

Great Insight Investments Limited

Greateast Investments Limited

Highland Flow Pte. Ltd.

Hubville Co., Ltd.

Japan Core Investment Private Limited

Kinetic (AMT) Limited

Kynson (AMT) Pte. Ltd.

Lavenson Investment Private LimitedMacro (AMT) Pte. Ltd.

Majesty Power International Limited

Manesar (AMT) Pte. Ltd.

Matrix (CP) Investment Private Limited

Max Platinum Limited

Midcentral Holdings Limited

Myrick Investment Private Limited

Nordic (CP) Private Limited

Northern Tech Private Limited

Noxh Developments (Cecil) Pte. Ltd.

Numberspring Ltd

Omnibury Ltd

Oscar Honour International Limited

Pessiborge Limited

Practical Asia Limited

Preciousbud Limited

Prestimorne Ltd

Prime Industrial Holdings Private Limited

Primiscorne Ltd

Pteris Global Ltd

Regal (1886) Pte. Ltd.

Rightbridge Ltd

Ristoria (AMT) Pte. Ltd.

Rochor Investment Ltd

Sacremorne Ltd

Samnorwood Limited

Sanholpark Ltd

Sheung Wan (AMT) Pte. Ltd.

Shibuya (AMT) Pte. Ltd.

Shine City Investment Limited

G-3



Name Present Past

Shiodo (CP) Investment Private Limited

Solitaire (AMT) Private Limited

Sound Investments Limited

Spellworth Ltd

Sperishorne Ltd

Tannehill Limited

Trends (AMT) Pte. Ltd.

Trillington (AMT) Pte. Ltd.

Tsukiji (CP) Investment Private LimitedUL (CP) Investment Private Limited

Wallwrick Ltd

Zelkova (AMT) Pte. Ltd.

John Koh . . . . . . . . . . . . . . . . . Artfx Fine Art Services Limited

Artpac Management Limited

Bernard Quaritch Limited

BMH Management Pte Ltd

Brandmine Properties Limited

China Lumena New Materials Corp.

Genphar, Inc.

KrisEnergy Ltd.

Mapletree Industrial Fund Ltd

Mapletree Industrial Trust Management Ltd

Mapp Editions LtdMission Impossible Pte. Ltd.

NSL Limited

Singapore Arts School

Singapore National Library

Worldwide Books Corporation

Afa Management LLC

Arbutus International Limited

Easy Capital Limited

Mandra Forestry Finance Limited

Mandra Forestry Holdings Limited

Mission Impossible International Limited

Straits Capital Investments Limited

Duane Radtke . . . . . . . . . . . . . Devon Energy Corporation

KrisEnergy Ltd.

NFR Energy LLC (now Sabine Oil & Gas LLC)

Smith International (merged w/Schlumberger in

2010)

Jeff MacDonald . . . . . . . . . . . . Empire Oil & Gas

KrisEnergy Ltd.

Delta Energy Limited

Remora Energy

Stone Mountain Resources

Tan Ek Kia . . . . . . . . . . . . . . . CityGas Pte LtdCitySpring Infrastructure Management Pte Ltd

Dialog Systems (Asia) Pte Ltd

Keppel Corporation Ltd

Keppel Offshore and Marine Ltd

KrisEnergy Ltd.

PT Chandra Asri Petrochemical Tbk

Singapore LNG Corporation Pte Ltd.

SMRT Corporation Ltd

Star Energy Geothermal; Pte Ltd

Star Energy Group Holdings Pte Ltd

Star Energy Oil and Gas Pte Ltd

Transocean Ltd

InterGlobal Offshore Pte LtdOrchard Energy Pte Ltd

PowerSeraya Ltd

Executive Officers

Kiran Raj . . . . . . . . . . . . . . . . . - CLSA Merchant Bankers Limited

Brighton Capital Advisors Pte Ltd

Stephen Clifford . . . . . . . . . . . B Block Ltd

BEM Resources Ltd

EM Block Ltd

Komodo (B.V.I.) Ltd

KrisEnergy (Ageng) B.V.

KrisEnergy (Andaman Timur) B.V.






KrisEnergy (Nemo) B.V.








PearlOil (Siam) Limited

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Name Present Past

KrisEnergy (Sakti) B.V.KrisEnergy (Satria) Ltd


KrisEnergy (Tanjung Aru) B.V.

KrisEnergy (Udan Emas) B.V.KrisEnergy Asia Coöperatief U.A.

KrisEnergy Asia Holdings B.V.

KrisEnergy East Seruway B.V.

KrisEnergy Glagah-Kambuna B.V.KrisEnergy Holding Company Ltd

KrisEnergy (Andaman II) B.V.


KrisEnergy Kutai B.V.KrisEnergy Kutei B.V.



KrisEnergy (Bangora) B.V.

KrisEnergy Oil & Gas (Thailand) LtdKrisEnergy Pte Ltd



Kelvin Tang . . . . . . . . . . . . . . . B Block Ltd

BEM Resources Ltd

EM Block LtdKomodo (B.V.I.) Ltd


KrisEnergy (Cambodia) Holding LtdKrisEnergy (Cambodia) Ltd




KrisEnergy (Song Hong 115) LtdKrisEnergy (Satria) Ltd



KrisEnergy International (Thailand) Holdings LtdKrisEnergy Management Ltd


KrisEnergy Oil & Gas (Thailand) LtdKrisEnergy Pte LtdKrisEnergy Resources (Thailand) Ltd


KrisEnergy (Ageng) B.V.

KrisEnergy (Andaman Timur) B.V.

KrisEnergy Asia Coöperatief U.A.KrisEnergy Asia Holdings B.V.

KrisEnergy (Nemo) B.V.

KrisEnergy (Sakti) B.V.KrisEnergy (Tanjung Aru) B.V.

KrisEnergy (Udan Emas) B.V.

KrisEnergy East Seruway B.V.

KrisEnergy Glagah-Kambuna B.V.

KrisEnergy (Andaman II) B.V.KrisEnergy Kutai B.V.

KrisEnergy Kutei B.V.


Pearl Energy LtdPearlOil Holdings Limited

PearlOil (Sebuku) Limited

PearlOil (Ragay) LimitedPearlOil (Tachylyte) LimitedPearlOil (Nam Con Son) Limited




Pearl Oil (Petroleum) LimitedPearl Oil (Resources) Limited



PearlOil (Siam) LimitedPearl Oil Onshore Limited

Pearl Oil (Tungkal) Limited

Pa 80 GmbH

Pa 73 GmbHSoturo GmbH

Sopela GmbHGutiba GmbH

Semare GmbH

James Parkin . . . . . . . . . . . . . . Komodo (B.V.I.) Ltd -

Tim Kelly . . . . . . . . . . . . . . . . Komodo (B.V.I.) Ltd

Michael Whibley . . . . . . . . . . . Komodo (B.V.I.) Ltd -

Chris Wilson . . . . . . . . . . . . . . Komodo (B.V.I.) Ltd

Panoteck Pte. Ltd.

Chicane Pte. Ltd. (voluntarily wound up)

John Bujnoch, Jr. . . . . . . . . . . . - -

Brian Helyer . . . . . . . . . . . . . . - -

Tanya Pang . . . . . . . . . . . . . . . - -

Note:

(1) The name of Wassana MOPU Pte. Ltd. is currently being changed to KrisEnergy (Development) Pte. Ltd.

G-5



APPENDIX HRULES OF THE KRISENERGY EMPLOYEE SHARE OPTION SCHEME

1. NAME OF THE SCHEME

The Scheme shall be called the “KrisEnergy Employee Share Option Scheme” (the “Scheme”).

2. DEFINITIONS

In this Scheme, except where the context otherwise requires, the following words and expressions shall

have the following meanings.

“Acceptance Period” The period within which an Option maybe accepted, as described in Rule

7.2.

“Act” The Singapore Companies Act, Chapter 50 of Singapore as amended or

modified from time to time.

“Adoption Date” The date on which this Scheme is adopted by our Company in general

meeting.

“Articles of Association” The Articles of Association of the Company, as amended, supplementedor modified from time to time.

“Associate” or “associate” The term shall have the meaning assigned to it in the Listing Manual.

“Auditors” The auditors of our Company for the time being.

“Board” The Board of Directors of our Company for the time being.

“CDP” The Central Depository (Pte) Limited.

“Code” Singapore Code of Corporate Governance.

“Company” KrisEnergy Ltd.

“Control” The capacity to dominate decision-making, directly or indirectly, in

relation to the financial and operating policies of our Company.

“Controlling Shareholder” A Shareholder who has control over our Company and unless rebutted, a

person who controls directly or indirectly a shareholding of 15.0 per

cent. or more of our Company’s issued share capital shall be presumed

to be a Controlling Shareholder of our Company.

“Depositor” A person being a Depository Agent or holder of a securities account

maintained with CDP but not including a holder of a sub-account

maintained with a Depository Agent.

“Director” A person holding office as a director for the time being of our Group.

“Employee” Any confirmed employee of our Group to participate in this Scheme in

accordance with Rule 4.

“Executive Director” A Director of our Group who performs an executive function.

“Exercise Date” The date on which an Option is exercised pursuant to Rule 9.1.

“Exercise Price” The price at which a Participant shall subscribe for each Share upon the

exercise of an Option as determined in accordance with Rule 8.

“Financial Year” Financial year ended or, as the case may be, ending December 31.

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“Grantee” The person to whom an offer of an Option is made.

“Group” Our Company and our Subsidiaries.

“Independent Director” An “independent” director for the purposes of the Code is one who has

no relationship with the Company, its related companies or its officers

that could interfere, or be reasonably perceived to interfere, with the

exercise of the Director’s independent business judgment with a view to

the best interests of the Company.

“Listing Manual” The Listing Manual of the SGX-ST, as amended, supplemented or


“Market Day” A day on which the SGX-ST is open for trading of securities.

“Market Price” A price equal to the average of the last dealt prices for the Shares on the

SGX-ST over the five consecutive Trading Days immediately preceding the

Offering Date, as determined by the Remuneration Committee by reference

to the daily official list or any other publication published by the SGX-ST,

rounded to the nearest whole cent on the event of fractional prices.

“Non-Executive Director” A Director of our Group who is not an Executive Director (including an

Independent Director).

“Offering Date” The date on which an Option is granted pursuant to Rule 6.1.

“Option” The right to subscribe for Shares granted or to be granted pursuant to this

Scheme and for the time being subsisting, and in respect of which the

Exercise Price is determined in accordance with Rule 8.

“Option Period” The period for the exercise of an Option as set out in Rule 9.1.

“Participant” A holder of an Option.

“per cent.” Per centum.

“Remuneration Committee” A committee comprising Directors of our Company, duly authorized and

appointed by the Board pursuant to Rule 13 to administer this Scheme.

“Rules” The rules of this Scheme, as the same may be amended from time to

time.

“S$” Singapore dollars.

“Scheme” The KrisEnergy Employee Share Option Scheme, as modified oramended from time to time.

“SGX-ST” The Singapore Exchange Securities Trading Limited.

“Shareholders” The registered holders for the time being of the Shares (other than CDP)

or in the case of Depositors, Depositors who have Shares entered against

their names in the Depository Register.

“Shares” Fully paid ordinary shares in the capital of our Company.

“Subsidiary” A company which is for the time being a subsidiary of our Company as

defined by Section 5 of the Act.

“Trading Day” A day on which the Shares are traded on the SGX-ST.

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The terms “Depository Register” and “Depository Agent” shall have the meanings ascribed to them

respectively by Section 130A of the Act.

The term “associate” shall have the meaning ascribed to it by the Listing Manual.

Words denoting the singular shall, where applicable, include the plural and vice versa and words denoting

the masculine gender shall, where applicable, include the feminine and neuter gender. References to

persons shall include corporations. References to Rules and Appendices shall be construed as references

to Rules of and the Appendices to this Scheme.

Any reference to this Scheme to any enactment is a reference to that enactment as for the time being

amended or re-enacted. Any word defined under the Act or any statutory modification thereof and used in

this Scheme shall, where applicable, have the same meaning assigned to it under the Act.

Any reference in this Scheme to a time of day shall be a reference to Singapore time unless otherwise

stated.

3. OBJECTIVES OF THIS SCHEME

This Scheme is a share option incentive scheme. The purpose of this Scheme is to provide an opportunity

for our Directors and Employees who satisfy the eligibility criteria as set out in Rule 4 of the Scheme, to

participate in the equity of our Company so as to motivate them to greater dedication, loyalty and higher

standards of performance, and to give recognition to those who have contributed significantly to our

growth and performance.

This Scheme is proposed on the basis that it is important to recognize the fact that the services of such

Employees and Directors are important to our success and continued well-being. Implementation of this

Scheme will enable our Company to give recognition to the contributions made by such Employees and

Directors, which is essential to our well-being and prosperity. At the same time, it will give such

Employees and Directors an opportunity to have a direct interest in our Company and will also help to

achieve the following positive objectives:

(i) the motivation of Participants to optimize performance standards and efficiency and to maintain a

high level of contribution;

(ii) the retention of key employees whose contributions are important to our long term growth and

prosperity;

(iii) the attainment of harmonious employer/employee relations as well as the strengthening of

working relationships with our close business associates;

(iv) to align the interest of employees and other Participants with the interests of the Shareholders; and

(v) the development of a participatory style of management which promotes greater commitment and

dedication amongst the employees and instills loyalty and a stronger sense of identification with

our long term prosperity

4. ELIGIBILITY

4.1 The following persons shall be eligible to participate in this Scheme at the absolute discretion of the

Remuneration Committee:

(i) Our Employees who are not on probation and have attained the age of 21 years on or before the

Offering Date; and

(ii) Executive Directors, Non-Executive Directors and Independent Directors who have attained the

age of 21 years on or before the Offering Date.

4.2 Controlling Shareholders and their Associates who are Employees, Non-Executive Directors and

Independent Directors who satisfy the requirements in Rule 4.1(i) and (ii) shall also be eligible toparticipate in our Scheme. The Participant must not be an undischarged bankrupt and must not have

entered into a composition with his creditors.

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4.3 Persons who are Controlling Shareholders and their respective Associates shall, if each such person meets

the eligibility criteria in Rules 4.1 and 4.2, be eligible to participate in the Scheme provided that:

(i) their participation in the Scheme is specifically approved by independent Shareholders in a

separate resolution for each such person;

(ii) the aggregate number of Shares which may be offered by way of grant of Options to all

Controlling Shareholders and their respective Associates under the Scheme shall not exceed25.0 per cent. of the total number of Shares available under the Scheme; and

(iii) the number of Shares which may be offered by way of grant of Options to each Controlling

Shareholder and his respective Associate under the Scheme shall not exceed 10.0 per cent. of the

total number of Shares available under the Scheme.

No Option shall be granted to such Controlling Shareholders or their respective Associates unless the

actual number and terms of Options to be granted shall be approved by independent Shareholders in a

separate resolution for each such person. A circular, letter or notice to Shareholders proposing such a

resolution shall include a clear rationale for the proposed participation by such Controlling Shareholders

or their respective Associates. Such circular, letter or notice to Shareholders shall also include a clear

rationale for the number and terms (including Exercise Price) of the Options to be granted.

Although our Non-Executive Directors are not involved in running our day-to-day operations, they play

an invaluable role in furthering our business interests by contributing their experience and expertise. The

participation by Non-Executive Directors in the Scheme will provide our Company with a further avenue

to acknowledge and recognize their services and contributions to us as it may not always be possible to

compensate them fully or appropriately by increasing the directors’ fees or other forms of cash payment.

For instance, the Non-Executive Directors may bring strategic or other value to our Company which may

be difficult to quantify in monetary terms. The grant of Options to Non-Executive Directors will allow

our Company to attract and retain experienced and qualified persons from different professional

backgrounds to join our Company as Non-Executive Directors, and to motivate existing Non-Executive

Directors to take extra efforts to promote our interests.

Although our Controlling Shareholders and their respective Associates have or may already have

shareholding interest in our Company, the extension of the Scheme to allow Controlling Shareholders and

their respective Associates the opportunity to participate in the Scheme will ensure that they are equally

entitled, with our other employees, to participate in and benefit from this system of remuneration. The

Scheme is intended to be part of our Company’s system of employee remuneration and our Company is

of the view that employees who are Controlling Shareholders or their respective Associates should not be

unduly discriminated against by virtue only of their shareholding in our Company.

4.4 Employees and directors of associate companies will not be eligible to participate in the Scheme.

4.5 There shall be no restriction on the eligibility of any Grantee or Participant to participate in any other

share option or share incentive scheme, whether or not implemented by any other companies within ourGroup.

4.6 Subject to the Act and any requirement of the SGX-ST or any other stock exchange on which the Shares

may be listed or quoted, the terms of eligibility for participation in this Scheme may be amended from

time to time at the absolute discretion of the Remuneration Committee.

5. LIMITATIONS OF THIS SCHEME

5.1 The aggregate number amount of Shares over which the Remuneration Committee may grant Options on

any date, when added to the number Shares issued and issuable in respect of (i) all Options granted under

the Scheme and (ii) all awards granted under any other share option, share incentive, performance share

or restricted share plan implemented by the Company and for the time being in force shall not exceed15.0 per cent. of the issued shares of the Company (excluding treasury shares) on the day immediately

preceding the grant of an Option.

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5.2 Subject to Rule 4 and Rule 12, the aggregate number of Shares in respect of which Options may be

offered to any Grantee in accordance with this Scheme shall be determined at the absolute discretion of

the Remuneration Committee, who shall take into account, in respect of a Grantee, criteria such as rank,

past performance, years of service and potential for future development of that employee.

6. OFFERING DATE

6.1 The Remuneration Committee may, save as provided in Rule 4 and Rule 5, offer to grant Options to suchGrantees as it may select in its absolute discretion at any time during the period when this Scheme is in

force, provided that in the event that an announcement on any matter of an exceptional nature involving

unpublished price sensitive information is imminent, Options may only be granted on or after the second

Market Day from the date on which the aforesaid announcement is released.

6.2 An offer to grant the Option to a Grantee shall be made by way of a letter (the “ Letter of Offer”) in the

form or substantially in the form set out in Schedule A, subject to such modification including, but not

limited to imposing restrictions on the number of Options that may be exercised within particular sections

of the relevant Option Period, as the Remuneration Committee may from time to time determine.

7. ACCEPTANCE OF OFFER

7.1 An Option shall be personal to the Participant to whom it is granted and shall not be transferred (other

than to a Participant’s personal representative on the death of that Participant), charged, assigned, pledged

or otherwise disposed of, in whole or in part, unless with the prior approval in writing of the

Remuneration Committee.

7.2 The closing date for the acceptance for the grant of any Option under this Rule 7 shall not be less than 15

days and not more than 30 days from the Offering Date of that Option. The grant of an Option must be

accepted by completing, signing and returning of the Acceptance Form in or substantially in the form set

out in Schedule B, subject to such modification as the Remuneration Committee may from time to time

determine, accompanied by payment of S$1.00 as consideration or such other amount and such other

documentation as the Remuneration Committee may require. The Option is deemed not accepted until

actual receipt by our Company of the Acceptance Form.

7.3 Our Company shall be entitled at its absolute discretion to reject any purported acceptance of a grant of

an Option made pursuant to this Rule 7 or Exercise Notice given pursuant to Rule 11 which does not

strictly comply with the terms of this Scheme.

7.4 In the event that an Option results in a contravention of any applicable law or regulation, such grant shall

be null and void and of no effect and the relevant Participant shall have no claim whatsoever against our

Company.

8. EXERCISE PRICE

8.1 Subject to any adjustment pursuant to Rule 12, the Exercise Price for each Share in respect of which anOption is exercisable shall be determined by the Remuneration Committee at its absolute discretion, and

fixed by the Remuneration Committee on the date of the grant of Option:

(i) a price equal to the Market Price; or

(ii) a price which is set at a discount to the Market Price, provided that:

(a) the maximum discount shall not exceed 20.0 per cent. of the Market Price (or such other

percentage or amount as may be prescribed or permitted for the time being by the SGX-

ST); and

(b) the Shareholders in general meeting shall have authorized, in a separate resolution, themaking of offers and grants of Options under the Scheme at a discount not exceeding the

maximum discount as aforesaid.

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8.2 In making any determination under Rule 8.1(ii), the Remuneration Committee shall take into

consideration such criteria as the Remuneration Committee may, in its absolute discretion, deem

appropriate including but not limited to:

(i) our performance;

(ii) the performance of the individual Participant;

(iii) the contribution of the Participant to our success and development; and

(iv) the prevailing market conditions.

9. EXERCISE OF OPTION

9.1 Subject as provided in this Rule 9 and Rule 10 and any other conditions as may be introduced by the

Remuneration Committee from time to time:

(i) each Option granted with the Exercise Price set at Market Price shall only be exercisable, in whole

or in part (provided that an Option may be exercised in part only in respect of 1,000 Shares or

any multiples thereof) at any time, by a Participant during the period commencing after the first

anniversary of the Offering Date and expiring on the tenth anniversary of such Offering Date or

such earlier date as may be determined by the Remuneration Committee; and

(ii) each Option granted with the Exercise Price set at a discount to Market Price shall only be

exercisable, in whole or in part (provided that an Option may be exercised in part only in respect

of 1,000 Shares or any multiples thereof) at any time, by a Participant during the period

commencing after the second anniversary of the Offering Date and expiring on the tenth

anniversary of such Offering Date or such earlier date as may be determined by the Remuneration

Committee.

9.2 In the event of an Option being exercised in part only ( provided that an option may be exercised in part

only in respect of 1,000 Shares or any multiples thereof), the balance of the option not thereby exercised

shall continue to be exercisable in accordance with this Scheme until such time as it shall lapse in

accordance with the Rules of this Scheme.

9.3 Subject to Rule 9.4, an Option shall, to the extent unexercised, immediately lapse and become null and

void and a Participant shall have no claim against us:

(i) a grant of an Option is not accepted strictly in the manner as provided in Rule 7.2, such offer

within the Acceptance Period; or

(ii) upon the bankruptcy of the Participant or the happening of any other event which results in his

being deprived of the legal or beneficial ownership of such Option; or

(iii) in the event of misconduct on the part of the Participant, as determined by the Remuneration

Committee in its absolute discretion; or

(iv) subject to Rules 9.4 and 9.5, upon the Participant ceasing to be in our employment, for any reason

whatsoever; or

(v) in the event that the Remuneration Committee shall, at its sole and absolute discretion, deem it

appropriate that such Option granted to a Participant shall so lapse on the grounds that any of the

objectives of this Scheme (as set out in Rule 3) have not been met.

For the purpose of Rule 9.3(iv), the Participant shall be deemed to have ceased to be so employed as of the earlier of the date of the Participant’s notice of resignation of employment or the cessation of his

employment/appointment with us.

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9.4 Where a Participant who is an Executive Director or Non-Executive Director ceases to be our employee

due to a change in control of the Board of Directors, he shall, notwithstanding Rule 9.3, be entitled to

exercise in full all unexercised Options from the last date of employment with us until the end of the

relevant Option Period.

9.5 If a Participant dies and at the date of his death holds any unexercised Option, such Option may, at the

absolute discretion of the Remuneration Committee, be fully exercisable by the duly appointed legal

personal representatives of the Participant from the date of his death to the end of the relevant Option

Period and upon the expiry of such period, the Option shall immediately lapse and become null and void.

10. TAKE-OVER AND WINDING-UP OF OUR COMPANY

10.1 Notwithstanding Rule 9 but subject to Rule 10.5, in the event of a take-over being made for the Shares, a

Participant (including Participants holding Options which are then not exercisable pursuant to the

provisions of Rule 9.1) shall be entitled to exercise in full or in part any Option held by him and as yet

unexercised, in the period commencing on the date on which such offer is made or, if such offer is

conditional, the date on which such offer becomes or is declared unconditional, as the case may be, and

ending on the earlier of:

(i) the expiry of six months thereafter, unless prior to the expiry of such six month period, at the

recommendation of the offeror and with the approvals of the Remuneration Committee and theSGX-ST, such expiry date is extended to a later date (being a date falling not later than the date of

expiry of the Option Period relating thereto); or

(ii) the date of the expiry of the Option Period relating thereto,

whereupon any Option then remaining unexercised shall immediately lapse and become null and void.

Provided always that if during such period the offeror becomes entitled or bound to exercise the rights

of compulsory acquisition of the Shares under the provisions of the Act and, being entitled to do so, gives

notice to the Participants that it intends to exercise such rights on a specified date, the Option shall remain

exercisable by the Participants until such specified date or the expiry of the Option Period relating

thereto, whichever is earlier. Any Option not so exercised by the said specified date shall lapse andbecome null and void provided that the rights of acquisition or obligation to acquire shall have been

exercised or performed, as the case may be. If such rights of acquisition or obligations have not been

exercised or performed, all Options shall subject to Rule 9 remain exercisable until the expiry of the

Option Period relating thereto.

10.2 If under the Act, the court sanctions a compromise or arrangement proposed for the purposes of, or in

connection with, a scheme for the reconstruction of our Company or its amalgamation with another

company or companies, each Participant (including Participants holding Options which are then not

exercisable pursuant to the provisions of Rule 9.1) be entitled, notwithstanding Rule 9 but subject to Rule

10.5, to exercise any Option then held by him during the period commencing on the date upon which the

compromise or arrangement is sanctioned by the court and ending either on the expiry of 60 days

thereafter or the date upon which the compromise or arrangement becomes effective, whichever is later

(but not after the expiry of the Option period relating thereto), whereupon the Option shall lapse andbecome null and void.

10.3 If an order is made for the winding-up of our Company on the basis of its insolvency, all Options to the

extent unexercised, shall lapse and become null and void.

10.4 In the event of a members’ voluntary winding-up (other than amalgamation or reconstruction), the

Participants (including Participants holding Options which are not exercisable pursuant to the provisions

of Rule 9.1) shall be entitled within 30 days of the passing of the resolution of such winding-up (but not

after the expiry of the Option Period relating thereto), to exercise any unexercised Option, after which

period such unexercised Option shall lapse and become null and void.

10.5 If in connection with the making of a general offer referred to in Rule 10.1 or this Scheme referred to in Rule10.2 or the winding-up referred to in Rule 10.4, arrangements are made (which are confirmed in writing by the

Auditors, acting only as experts and not as arbitrators, to be fair and reasonable) for the compensation of

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Participants, whether by the continuation of their Options or the payment of cash or the grant of other options

or otherwise, a Participant holding an Option, as yet not exercised, may not, at the discretion of the

Remuneration Committee, be permitted to exercise that Option as provided for in this Rule 10.

10.6 To the extent that an Option is not exercised within the periods referred to in this Rule 10, it shall lapse

and become null and void.

11. MANNER OF EXERCISE

11.1 An Option may be exercised during the Option Period, in whole or in part (provided that an Option may

be exercised in part only in respect of 1,000 Shares or any multiples thereof), by a Participant giving

notice in writing to our Company in or substantially in the form set out in Schedule C (the “ ExerciseNotice”), subject to each case to such modifications as the Remuneration Committee may from time to

time determine. Every Exercise Notice must be accompanied by a remittance for the full amount of the

aggregate Exercise Price in respect of the Shares which have been exercised under the Option, the

relevant CDP charges (if any) and any other documentation the Remuneration Committee may require.

An Option shall be deemed to be exercised upon the receipt by our Company of Exercise Notice duly

completed, the relevant documentation required by the Remuneration Committee and the aggregate

Exercise Price.

11.2 All payment shall be made by cheque, cashier’s order, bank draft or postal order made out in favor of our

Company or such other mode of payment as may be acceptable to our Company.

11.3 Subject to:

(i) such consents or other required actions of any competent authority under any regulations or

enactments for the time being in force as may be necessary (including any approvals required

from the SGX-ST); and

(ii) compliance with the Rules of this Scheme and the Memorandum and Articles of Association of

our Company

our Company shall, as soon as practicable after the exercise of an Option by a Participant but in any event

within ten Market Days after the date of the exercise of the Option in accordance with Rule 11.1, allot the

relevant Shares and within five Market Days from the date of such allotment, dispatch the relevant sharecertificates to CDP for the credit of the securities account of that Participant by ordinary post or such

other mode of delivery as the Remuneration Committee may deem fit.

11.4 Our Company shall as soon as practicable after the exercise of an Option, apply to the SGX-ST and any

other stock exchange on which the Shares are quoted or listed for permission to deal in and for quotation

of the Shares which may be issued upon exercise of the Option and the Shares (if any) which may be

issued to the Participant pursuant to any adjustments made in accordance with Rule 12.

11.5 Shares which are all allotted on the exercise of an Option by a Participant shall be issued, as the

Participant may elect, in the name of CDP to the credit of the securities account of the Participant

maintained with CDP, the Participant’s securities sub-account with a CDP Depository Agent.

11.6 Shares allotted and issued upon the exercise of an Option shall be subject to all provisions of theMemorandum and Articles of Association of our Company and shall rank pari passu in all respects with

the then existing issued Shares in the capital of our Company except for any dividends, rights, allotments

or other distributions, the record date of which is prior to the date such Option is exercised.

11.7 Our Company shall keep available sufficient unissued Shares to satisfy the full exercise of all Options for

the time being remaining capable of being exercised.

12. ALTERATION OF CAPITAL

12.1 If a variation in the issued share capital of our Company (whether by way of a capitalization of profits or

reserves or rights issue or reduction, subdivision, consolidation or distribution, or issues for cash or for

shares or otherwise than for cash or otherwise howsoever) should take place, then:

(i) the Exercise Price in respect of the Shares comprised in the Option to the extent unexercised; and/

or

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(ii) the class and/or number of Shares comprised in the Option to the extent unexercised and the rights

attached thereto; and/or

(iii) the class and/or number of Shares in respect of which additional Options may be granted to

Participants,

shall, at the option of the Remuneration Committee, be adjusted in such manner as the Remuneration

Committee may determine to be appropriate including retrospective adjustments where such variation

occurs after the date of exercise of an Option but the Record Date relating to such variation precedes such

date of exercise and, except in relation to a capitalization issue, upon the written confirmation of the

Auditors (acting only as experts and not as arbitrators), that in their opinion, such adjustment is fair and

reasonable. For this purpose, “Record Date” means the date as of the close of business on which

shareholders must be registered in order to participate in any dividends, rights, allotments or other

distributions (as the case may be).

12.2 Unless the Remuneration Committee considers an adjustment to be appropriate, the following shall not be

regarded as a circumstance requiring adjustment under the provisions of this Rule 12:

(i) the issue of securities as consideration for an acquisition of any assets or private placement of

securities by our Company; and

(ii) the cancellation of issued Shares purchased or acquired by our Company by way of a market

purchase of such Shares undertaken by our Company on the SGX-ST during the period when a

share purchase mandate granted by shareholders of our Company (including any renewal of such

mandate) is in force.

12.3 Notwithstanding the provisions of Rule 12.1 above:

(i) no such adjustment shall be made if as a result the Participant receives a benefit that a shareholder

does not receive; and

(ii) any determination by the Remuneration Committee as to whether to make any adjustment and if

so, the manner in which such adjustment should be made, must (except in relation to acapitalization issue) be confirmed in writing by the Auditors (acting only as experts and not as

arbitrators) to be in their opinion, fair and reasonable.

12.4 Upon any adjustment required to be made, our Company shall notify each Participant (or his duly

appointed personal representative(s)) in writing and deliver to him (or, where applicable, his duly

appointed personal representative(s)) a statement setting forth the new Exercise Price thereafter in effect

and the class and/or number of Shares thereafter comprised in the Option so far as unexercised and the

maximum interest in any one Financial Year. Any adjustment shall take effect upon such written

notification being given.

12.5 The restriction on the number of Shares to be offered to any Grantee under Rule 5 above, shall not apply

to the number of additional Shares or Options over additional Shares issued by virtue of any adjustment to

the number of Shares and/or Options pursuant to this Rule 12.

13. ADMINISTRATION

13.1 This Scheme shall be administered by the Remuneration Committee in its absolute discretion with such

powers and duties as are conferred on it by the Board, provided that no member of the Remuneration

Committee shall participate in any deliberation or decision in respect of Options granted or to be granted

to him.

13.2 The Remuneration Committee shall have the power, from time to time, to make or vary such regulations

(not being inconsistent with this Scheme) for the implementation and administration of this Scheme as it

thinks fit including, but not limited to, imposing restrictions on the number of Options that may be

exercised within particular sections of the relevant Option Period.

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13.3 Any decision of the Remuneration Committee made pursuant to any provision of this Scheme (other than

a matter to be certified by the Auditors) shall be final, binding and conclusive (including any decisions

pertaining to quantum of discount applicable to an Option pursuant to Rule 8.2 or to disputes as to the

interpretation of this Scheme or any rule, regulation or procedure thereunder or as to any rights under this

Scheme).

14. NOTICES AND ANNUAL REPORT

14.1 Any notice given by a Participant to our Company shall be sent by post or delivered to the registeredoffice of our Company or such other address as may be notified by our Company to the Participant in

writing.

14.2 Any notice, documents or correspondence given by our Company to a Participant shall be sent to the

Participant by the Remuneration Committee (or such person(s) as it may from time to time direct) on

behalf of our Company and shall be delivered to him by hand or sent to him at his home address stated in

the records of the Company or the last known address of the Participant, and if sent by post shall be

deemed to have been given on the day immediately following the date of posting.

14.3 Our Company shall in relation to this Scheme, as required by law, the SGX-ST or other relevant

authority, make the following disclosures in its annual report to Shareholders:

(i) the names of the members of the Remuneration Committee;

(ii) the following details in respect of each Participant who is a Director or Controlling Shareholder or

its Associate or a person who received Options pursuant to the grant of the Options under the

Scheme which, in aggregate, represent five per cent. or more of the total number of Options

available under the Scheme:

(a) name;

(b) the number of Options granted during the Financial Year in review (including the terms of

the Options granted);

(c) the aggregate number of Options granted since the commencement of this Scheme up tothe end of the Financial Year in review;

(d) the aggregate number of Options exercised since the commencement of this Scheme up to

the Financial Year in review; and

(e) the aggregate number of Options outstanding as of the end of the Financial Year in review;

(iii) the number and proportion of Options granted at a discount during the Financial Year in review in

respect of every 10 per cent. range, up to the maximum quantum of discount granted; and

(iv) an appropriate negative statement will be included in the annual report to the Shareholders in the

event the disclosure of any of the abovementioned information is not applicable.

15. MODIFICATIONS TO THE SCHEME

15.1 Any or all of the provisions of this Scheme may be modified and/or altered at any time and from time to

time by resolution of the Remuneration Committee except that:

(i) any modification or alteration which shall alter adversely the rights attaching to any Option

granted prior to such modification or alteration and which in the opinion of the Remuneration

Committee, materially alters the rights attaching to any Option granted prior to such modification

or alteration may only be made with the consent in writing of such number of Participants who, if

they exercised their Options in full, would thereby become entitled to not less than three-quarters

of all the Shares which would be issued and allotted upon exercise in full of all outstanding

Options;

(ii) any modification or alteration which would be to the advantage of Participants shall be subject to

the prior approval of Shareholders at a general meeting; and

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(iii) no modification or alteration shall be made without the prior approval of the SGX-ST or (if

required) any other stock exchange on which the Shares are quoted or listed, and such other

regulatory authorities as may be necessary.

For the purposes of Rule 15.1 (i), the opinion of the Remuneration Committee as to whether any

modification or alteration would alter adversely the rights attaching to any Option shall be final and

conclusive.

15.2 Notwithstanding anything to the contrary contained in Rule 15.1, the Remuneration Committee may at

any time by resolution (and without any other formality save for the prior approval of the SGX-ST or (if

required) any other stock exchange on which the Shares are quoted or listed) amend or alter this Scheme

in any way to the extent necessary to cause this Scheme to comply with any statutory provision or the

provisions or the regulations of any regulatory or other relevant authority or body.

15.3 Shareholders who are eligible to participate in this Scheme must abstain from voting on any resolution

relating to the Scheme (other than a resolution relating to the participation of, or grant of Options to the

Employees).

In particular, all Shareholders who are eligible to participate in the Scheme shall abstain from voting on

resolutions of the Shareholders relating to the implementation of the Scheme. Notwithstanding the

foregoing, Participants of the Scheme may act as proxies, but such Participants who are appointed as

proxies will not vote on the aforementioned resolutions unless specific instructions have been given in the

proxy instrument on how the Shareholders wish their votes to be cast for the said resolutions.

15.4 Employees who are also Shareholders and are eligible to participate in this Scheme must abstain from

voting on any resolution relating to the participation of, or grant of Options to the Employees.

15.5 Written notice of any modification or alteration made in accordance with this Rule shall be given to all

Participants.

16. VESTING

16.1 The Options may, at the discretion of the Remuneration Committee, be vested partially over a number of years. The periods over which the Options will vest may exceed any minimum vesting periods prescribed

by any laws, regulations or rules to which this Scheme may be subject, including the regulations of any

stock exchange on which the Shares may be listed and quoted. Further, the Shares to be issued and

allotted to a Participant pursuant to the exercise of any Option under this Scheme may or may not at the

discretion of the Remuneration Committee, be subject to any retention period.

17. TERMS OF EMPLOYMENT UNAFFECTED

17.1 This Scheme shall not form part of any contract of employment within our Group and any Participant and

the rights and obligations of a Participant under the terms of the office or employment with such company

within our Group shall not be affected by his participation in this Scheme or any right which he may have

to participate in it or any Option which he may hold and this Scheme shall afford such an individual noadditional rights to compensation or damages in consequence of the termination of such office or

employment for any reason whatsoever.

17.2 This Scheme shall not confer on any person any legal or equitable rights (other than those constituting the

Options themselves) against us directly or indirectly or give rise to any cause of action at law or in equity

against us.

18. DURATION OF THIS SCHEME

18.1 This Scheme shall continue to be in force at the discretion of the Remuneration Committee, for a

maximum period of 10 years commencing on the Adoption Date. Subject to compliance with any

applicable laws and regulations in Singapore, this Scheme may be continued beyond the above stipulatedperiod with the approval of the Shareholders by ordinary resolution at a general meeting and of any

relevant authorities which may then be required.

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18.2 This Scheme may be terminated at any time by the Remuneration Committee or by resolution of the

Shareholders at a general meeting subject to all other relevant approvals which may be required and if

this Scheme is so terminated, no further Options shall be offered by our Company hereunder.

18.3 The termination, discontinuance or expiry of this Scheme shall be without prejudice to the rights accrued

to Options which have been granted and accepted as provided in Rule 7.2, whether such Options have

been exercised (whether fully or partially) or not.

19. TAXES

All taxes (including income tax) arising from the exercise of any Option granted to any Participant under

this Scheme shall be borne by that Participant.

20. COSTS AND EXPENSES OF THIS SCHEME

20.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the issue and

allotment of any Shares pursuant to the exercise of any Option in CDP’s name, the deposit of share

certificate(s) with CDP, the Participant’s securities account with CDP or the Participant’s securities sub-

account with a CDP Depository Agent.

20.2 Save for the taxes referred to in Rule 19 and such costs and expenses expressly provided in this Schemeto be payable by the Participants, all fees, costs, and expenses incurred by our Company in relation to this

Scheme including but not limited to the fees, costs and expenses relating to the issue and allotment of the

Shares pursuant to the exercise of any Option shall be borne by the Company.

21. DISCLAIMER OF LIABILITY

Notwithstanding any provisions herein contained and subject to the Act, the Board, the Remuneration

Committee and our Company shall not under any circumstances be held liable for any costs, losses,

expenses and damages whatsoever and howsoever arising in respect of any matter under or in connection

with this Scheme including but not limited to our Company’s delay or failure in issuing and allotting the

Shares or in applying for or procuring the listing of and quotation for the Shares on the SGX-ST in

accordance with Rule 11.4.

22. DISPUTES

Any disputes or differences of any nature in connection with this Scheme shall be referred to the

Remuneration Committee and its decision shall be final and binding in all respects.

23. CONDITION OF OPTION

Every Option shall be subject to the condition that no Shares shall be issued pursuant to the exercise of an

Option if such issue would be contrary to any law or enactment, or any rules or regulations of any

legislative or non-legislative governing body for the time being in force in Singapore.

23. GOVERNING LAW

This Scheme shall be governed by and construed in accordance with the laws of the Republic of

Singapore. The Participants, by accepting the offer of the grant of Options in accordance with this

Scheme, and our Company submit to the exclusive jurisdiction of the courts of the Republic of Singapore.

24. EXCLUSION OF THE CONTRACTS (RIGHTS OF THIRD PARTIES) ACT

No person other than the Company or a Participant shall have any right to enforce any provision of the

Scheme.

H-12



SCHEDULE AKRISENERGY EMPLOYEE SHARE OPTION SCHEME LETTER OF OFFER

Serial No:

Date:

To: Name PRIVATE AND CONFIDENTIALDesignation

Address

Dear Sir/Madam

We are pleased to inform you that you have been nominated by the Remuneration Committee of the Board of

Directors of KrisEnergy Ltd. (the “Company”) to participate in the KrisEnergy Employee Share Option Scheme

(the “Scheme”). Terms as defined in the Scheme shall have the same meaning when used in this letter.

Accordingly an offer is hereby made to grant you an Option, in consideration of the payment of a sum of S$1.00,

to subscribe for and be allotted Shares at the price of S$ per

Share. The Option shall be subject to the terms of the Scheme (as the same may be amended from time to time

pursuant to the terms and conditions of the Scheme). A copy of the Scheme is available for inspection at thebusiness address of the Company.

The Option is personal to you and may not be sold, mortgaged, transferred, charged, assigned, pledged or

otherwise disposed of or encumbered in whole or in part, except with the prior approval of the Remuneration

Committee.

If you wish to accept the offer, please sign and return the enclosed Acceptance Form with a sum of S$1.00 not

later than 5.00 p.m. on failing which this offer will forthwith lapse.

Yours faithfullyfor and on behalf of

KrisEnergy Ltd.

.....................................................................................Name:Designation:

H-13



SCHEDULE BKRISENERGY EMPLOYEE SHARE OPTION SCHEME ACCEPTANCE FORM

Serial No:

To: The Remuneration Committee

KrisEnergy Employee Share Option Scheme

c/o The Company Secretary

83 Clemenceau Avenue #10-05

UE Square

Singapore 239920

Closing Date and Time for Acceptance of Option :

No. of Shares in respect of which Option is offered :

Exercise Price per Share : S$

Total Amount Payable on acceptance of Option

(exclusive of the relevant CDP charges)

: S$

I have read your Letter of Offer dated (the “Offering Date”) and agree to be bound by the terms

hereof and of the KrisEnergy Employee Share Option Scheme stated therein. I confirm that my acceptance of the

Option will not result in the contravention of any applicable law or regulation in relation to the ownership of

shares in the Company or options to subscribe for such shares.

I hereby accept the Option to subscribe for Shares of S$ each in the capital of

KrisEnergy Ltd. (the “Shares”) at S$ per Share and enclose a *cheque/banker’s draft/cashier’s

order/postal order no. for S$1.00 being payment for the purchase of the Option.

I understand that I am not obliged to exercise the Option.

I also understand that I shall be responsible for all the fees of The Central Depository (Pte) Limited (“CDP”)

relating to or in connection with the issue and allotment of any Shares in CDP’s name, the deposit of share

certificate(s) with CDP, my securities account with CDP or my securities sub-account with a CDP Depository

Agent (the “CDP Charges”).

I confirm as of the date hereof:

(a) I am not less than 21 years old and nor an undischarged bankrupt nor have I entered into a composition

with any of my creditors;

(b) I satisfy the eligibility requirements to participate in the Scheme as defined in Rule 4 of the Scheme; and

(c) I satisfy the other requirements to participate in the Scheme as set out in the Rules of the Scheme.

I hereby acknowledge that you have not made any representation or warranty or given me any expectation of

employment or continued employment to induce me to accept the offer and that the terms of the Letter of Offer

and this Acceptance Form constitute the entire agreement between us relating to the offer. I agree to keep all

information pertaining to the grant of the Option to me confidential.

H-14



PLEASE PRINT IN BLOCK LETTERS

Name in Full :

Designation :

Address :

Nationality :

*NRIC/Passport No. :

Signature :

Date :

•Delete where inapplicable

Notes:

1. Option must be accepted in full or in multiples of 1,000 Shares.

2. The Acceptance Form must be forwarded to the Company Secretary in an envelope marked“Private and Confidential”.

3. The Participant shall be informed by the Company of the relevant CDP charges payable at the timeof the exercise of an Option.

H-15



SCHEDULE CKRISENERGY EMPLOYEE SHARE OPTION SCHEME EXERCISE NOTICE

To: The Remuneration Committee

KrisEnergy Employee Share Option Scheme

c/o The Company Secretary

83 Clemenceau Avenue

#10-05 UE Square

Singapore 239920

Total Number of Shares of S$[Š] each (the “Shares”)at S$ per Share under an Option grantedon (the “Offering Date”) :

Number of Shares previously allotted and issuedthereunder :

Outstanding balance of Shares which may be allottedand issued thereunder :

Number of Shares now to be subscribed(in multiples of 1,000) :

1. Pursuant to your Letter of Offer dated (the “Offering Date”) and my acceptance thereof, I hereby

exercise the Option to subscribe for Shares in KrisEnergy Ltd. (the “Company”) at S$ per Share.

2. I hereby request the Company to allot and issue to me the number of Shares specified in paragraph 1 in

the name of The Central Depository (Pte) Limited (“CDP”) to the credit of my Securities Account with a

CDP/*Securities Sub-Account with a CDP Depository Agent and to deliver the share certificates relating

thereto to CDP at my own risk. I further agree to bear such fees or other charges as may be imposed by

CDP/CPF (the “CDP charges”) and any stamp duties in respect thereof:

(a) Name in Full :

(b) Designation :

(c) Address :

(d) Nationality :

(e) *NRIC/Passport No. :

*(f) Direct Securities Account Number :

*(g) Securities Sub-Account Number :

Name of CDP Depository Agent :

3. I enclose a *cheque/cashier’s order/bank draft/postal order no. for S$ in

payment for the subscription of S$ for the total number of the said Shares and the applicable CDP

charges.

4. I agree to subscribe for the Shares subject to the terms of the Letter of Offer, the KrisEnergy Employee

Share Option Scheme (as the same may be amended pursuant to the terms thereof from time to time) and

the Memorandum and Articles of Association of the Company.

5. I declare that I am subscribing for the Shares for myself and not as a nominee for any other person.

* Delete where inapplicable

H-16



APPENDIX IRULES OF THE KRISENERGY PERFORMANCE SHARE PLAN

1. NAME OF THE PLAN

The Scheme shall be called the “KrisEnergy Performance Share Plan” (the “Plan”).

2. DEFINITIONS

In this Plan, except where the context otherwise requires, the following words and expressions shall have

the following meanings.

“Act” The Singapore Companies Act, Chapter 50 of Singapore, as amended or


“Adoption Date” The date on which this Plan is adopted by our Company in general

meeting.

“Articles of Association” The Articles of Association of the Company, as amended, supplemented or


“Associate” or “associate” The term shall have the meaning assigned to it in the Listing Manual.

“Auditors” The auditors of the Company for the time being.

“Award” A contingent award of Shares granted under Rule 6.

“Award Date” The date on which an Award is granted.

“Award Letter” A letter in such form as the Remuneration Committee shall approve

confirming an Award granted to a Participant by the Remuneration

Committee.

“Board” The Board of Directors of the Company for the time being.

“CDP” The Central Depository (Pte) Limited.

“Code” Singapore Code of Corporate Governance.

“Company” KrisEnergy Ltd.

“Control” The capacity to dominate decision-making, directly or indirectly, in

relation to the financial and operating policies of our Company.

“Controlling Shareholder” A Shareholder who has control over our Company and unless rebutted, a

person who controls directly or indirectly a shareholding of 15.0 per cent.

or more of our Company’s issued share capital shall be presumed to be a

Controlling Shareholder of our Company.

“Depositor” A person being a Depository Agent or holder of a securities account

maintained with CDP but not including a holder of a sub-account

maintained with a Depository Agent.

“Director” A person holding office as a director for the time being of our Group.

“Employee” Any confirmed employee of the Group to participate in this Plan in

accordance Rule 4.


“Financial Year” Financial year ended or, as the case may be, ending December 31.

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“Group” Our Company and our Subsidiaries.

“Group Executive” Any employee of the Group (including any Executive Director of our

Group or Non-Executive Director of our Group who meets the relevant

age and rank criteria and who shall be regarded as a Group Executive for

the purposes of the Plan) selected by the Remuneration Committee to

participate in the Plan in accordance with Rule 4.

“Independent Director” An “independent” director for the purposes of the Code is one who has no

relationship with the Company, its related companies or its officers that

could interfere, or be reasonably perceived to interfere, with the exercise

of the Director’s independent business judgment with a view to the best

interests of the Company.

“Listing Manual” The Listing Manual of the SGX-ST.

“Market Price” In relation to a Share, on any day, the average of the last dealt price of a

Share, as determined by reference to the daily official list or other

publication published by the SGX-ST for the five consecutive trading days

immediately preceding the Offering Date, rounded up to the nearest wholecent in the event of fractional prices.



“Award Date” The date on which an Award is granted pursuant to Rule 6.

“Participant” A person who has been granted an Award.

“per cent.” Per centum.

“Performance Condition”The performance condition(s) specified on the Award Date in relation tothat Award.

“Performance Period” A period, the duration of which is to be determined by the Remuneration

Committee on the Award Date, during which the Performance Condition is

to be satisfied.

“Plan” The KrisEnergy Performance Share Plan, as modified or amended from

time to time.

“Release” In relation to an Award, the release, at the end of each Vesting Period, of

the Shares to be released on such date and “Released” shall be construed

accordingly.

“Release Schedule” In relation to an Award, a schedule as the Remuneration Committee shall

determine, in accordance with which Shares which are the subject of that

Award shall be Released at the end of each Vesting Period.

“Released Award” An Award which has been released in accordance with Rule 8.

“RemunerationCommittee”

A committee comprising Directors of our Company, duly authorized and

appointed by the Board pursuant to Rule 10 to administer this Plan.

“Rules” The rules of this Plan, as the same may be amended from time to time.

“S$” Singapore dollars.

“SGX-ST” The Singapore Exchange Securities Trading Limited.

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“Shareholders” The registered holders for the time being of Shares, except that where the

registered holder is CDP, the term “Shareholders” shall, where the

context admits, mean the Depositors who have Shares entered against their

names in the Depository Register.

“Shares” Fully paid ordinary shares in the capital of our Company.

“Subsidiary” A company which is for the time being a subsidiary of our Company asdefined by Section 5 of the Act.

“Trading Day” A day on which the Shares are traded on the SGX-ST.

“Vesting Date” In relation to Shares which are the subject of a Released Award, the date

(as determined by the Committee and notified to the relevant Participant)

on which those Shares have vested pursuant to Rule 8.

“Vesting Period” The vesting period for Shares comprised in Awards as determined by the

Remuneration Committee.

The terms “Depository Register” and “Depository Agent” shall have the meanings ascribed to themrespectively by Section 130A of the Act.

Words denoting the singular shall, where applicable, include the plural and vice versa and words denoting

the masculine gender shall, where applicable, include the feminine and neuter gender. References to

persons shall include corporations. References to Rules and Appendices shall be construed as references

to Rules of and the Appendices to this Plan.

Any reference to this Plan to any enactment is a reference to that enactment as for the time being

amended or re-enacted. Any word defined under the Act or any statutory modification thereof and used in

this Plan shall, where applicable, have the same meaning assigned to it under the Act.

Any reference in this Plan to a time of day shall be a reference to Singapore time unless otherwise stated.

3. OBJECTIVES OF THE PLAN

The Plan will provide an opportunity for the selected Group Executives who have contributed

significantly to the growth and performance of the Group and who satisfy the eligibility criteria as set out

in Rule 4 of the Plan, to participate in the equity of the Company.

The Plan is primarily a share incentive scheme. It recognizes the fact that the services of such Group

Executives are important to the success and continued well-being of the Group. Implementation of the

Plan will enable the Company to give recognition to the contributions made by such selected Group

Executives. At the same time, it will give such selected Group Executives an opportunity to have a direct

interest in the Company at no direct cost to its profitability and will also help to achieve the following

positive objectives:

(i) the motivation of Participants to optimize performance standards and efficiency and to maintain a

high level of contribution;

(ii) the retention of key employees whose contributions are important to the long-term growth and

prosperity of our Group;

(iii) the attainment of harmonious employer/employee relations as well as the strengthening of

working relationships with our close business associates;

(iv) to align the interest of employees and other Participants with the interests of the Shareholders; and

(v) the development of a participatory style of management which promotes greater commitment anddedication amongst the employees and instills loyalty and a stronger sense of identification with

our long term prosperity.

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4. ELIGIBILITY

4.1 The following persons shall be eligible to participate in this Plan at the absolute discretion of the

Remuneration Committee:

(i) Our Employees who are not on probation and have attained the age of 21 years on or before the

Offering Date; and

(ii) Executive Directors, Non-Executive Directors and Independent Directors who have attained the

age of 21 years on or before the Offering Date.

4.2 Controlling Shareholders and their Associates who are Employees, Non-Executive Directors and

Independent Directors who satisfy the requirements in Rule 4.1(i) and (ii) shall also be eligible to

participate in our Plan. The Participant must not be an undischarged bankrupt and must not have entered

into a composition with his creditors.

4.3 Persons who are Controlling Shareholders and their respective Associates shall, if each such person meets

the eligibility criteria in Rules 4.1 and 4.2, be eligible to participate in the Plan provided that:-

(i) their participation in the Plan is specifically approved by independent Shareholders in a separate

resolution for each such person;

(ii) the aggregate number of Shares which may be awarded to all Controlling Shareholders and their

respective Associates under the Plan shall not exceed 25.0 per cent. of the total number of Shares

available under the Plan; and

(iii) the number of Shares which may be awarded to each Controlling Shareholder and his respective

Associate under the Plan shall not exceed 10.0 per cent. of the total number of Shares available

under the Plan.

No Award shall be granted to such Controlling Shareholders or their respective Associates unless the

actual number and terms of Awards to be granted shall be approved by independent Shareholders in a

separate resolution for each such person. A circular, letter or notice to Shareholders proposing such aresolution shall include a clear rationale for the proposed participation by such Controlling Shareholders

or their respective Associates. Such circular, letter or notice to Shareholders shall also include a clear

rationale for the number of the Awards to be granted.

Although our Non-Executive Directors are not involved in running our day-to-day operations, they play

an invaluable role in furthering our business interests by contributing their experience and expertise. The

participation by Non-Executive Directors in the Plan will provide our Company with a further avenue to

acknowledge and recognize their services and contributions to us as it may not always be possible to

compensate them fully or appropriately by increasing the directors’ fees or other forms of cash payment.

For instance, the Non-Executive Directors may bring strategic or other value to our Company which may

be difficult to quantify in monetary terms. The grant of Awards to Non-Executive Directors will allow our

Company to attract and retain experienced and qualified persons from different professional backgrounds

to join our Company as Non-Executive Directors, and to motivate existing Non-Executive Directors totake extra efforts to promote our interests.

One of the main objectives of the Plan is to provide an opportunity for participants to participate in the

equity of our Company, thereby promoting organizational commitment, dedication and loyalty. The

objectives of the Plan will apply equally to our employees who are Controlling Shareholders or their

respective Associates. Our view is that all deserving and eligible participants should be motivated,

regardless of whether they are Controlling Shareholders or their respective Associates. It is in our interest

to incentivize outstanding employees who have contributed to our growth to continue to remain with us.

Although our Controlling Shareholders and their respective Associates have or may already have

shareholding interests in our Company, the extension of the Plan to allow Controlling Shareholders and

their respective Associates the opportunity to participate in the Plan will ensure that they are equallyentitled, with our other employees, to participate in and benefit from this system of remuneration. The

Plan is intended to be part of our Company’s system of employee remuneration and our Company is of

I-4



the view that employees who are Controlling Shareholders or their respective Associates should not be

unduly discriminated against by virtue only of their shareholding in our Company.

4.4 Controlling Shareholders and their Associates who have contributed to the success and development of

the Group are, subject to the absolute discretion of the Administration Committee, eligible to participate

in the Plan provided that the participation by each such Controlling Shareholder or Associate and each

grant of Awards to any one of them may be effected only with the specific prior approval of independent

Shareholders at a general meeting in separate resolutions and to approve the actual number and terms of

Awards to be granted. The Company will at such time provide the rationale and justification for any

proposal to grant Awards to Controlling Shareholders or their Associates.

4.5 Employees and directors of associate companies will not be eligible to participate in the Plan

4.6 There shall be no restriction on the eligibility of any Grantee or Participant to participate in any other

share option or share incentive scheme, whether or not implemented by any other companies within our

Group.

4.7 Subject to the Act and any requirement of the SGX-ST or any other stock exchange on which the Shares

may be listed or quoted, the terms of eligibility for participation in this Scheme may be amended from

time to time at the absolute discretion of the Remuneration Committee.

5. LIMITATIONS OF THIS PLAN

5.1 The aggregate number of Shares which may be issued pursuant to Awards granted under the Plan, when

added to the number of Shares issued and/or issuable in respect of all Awards granted under this Plan and

other Shares issued and/or issuable under other share-based incentive schemes of our Company, shall not

exceed 15.0 per cent. of the issued share capital of our Company on the day preceding the relevant date of

Award.

5.2 Shares which are the subject of Awards which have lapsed for any reason whatsoever may be the subject

of further Awards granted by the Remuneration Committee under this Plan.

6. GRANT OF AWARDS

6.1 Subject to Rule 4 and Rule 5, the Remuneration Committee may grant Awards to Employees and/or

Directors, as the Remuneration Committee may select, in its absolute discretion, at any time during the

period when this Plan is in force, provided that no Participant who is a member of the Committee shall

participate in any deliberation or decision in respect of Awards granted or to be granted to him.

6.2 The maximum number of Shares which are the subject of each Award to be granted to a Participant in

accordance with this Plan shall be determined at the absolute discretion of the Remuneration Committee,

which shall take into account criteria such as his rank, job performance, level of responsibility, years of

service and potential for future development, his contribution to the success and development of our

Group and the difficulty with which the Performance Condition may be achieved within the Performance

Period. The Remuneration Committee has the discretion under the terms of the Plan to make payment in

the form of cash instead of issuing fully paid Shares. If the Remuneration Committee exercises itsdiscretion to make cash payments instead of issuing fully paid Shares, the Remuneration Committee will

make a cash payment to the Participant of an amount equal to aggregate fair market value of the Shares

that should otherwise have been issued at such time.

6.3 The Remuneration Committee, in its absolute discretion, shall decide in relation to an Award:

(i) the Participant;

(ii) the Award Date;

(iii) the maximum number of Shares which are the subject of the Award;

(iv) the Performance Period;

(v) the Performance Condition;

I-5



(vi) the Vesting Period(s); and

(vii) the Release Schedule.

6.4 As soon as reasonably practicable after making an Award, the Remuneration Committee shall send to

each Participant an Award Letter confirming the Award and specifying in relation to the Award:

(i) the Award Date;

(ii) the maximum number of Shares which are the subject of the Award;

(iii) the Performance Period;

(iv) the Performance Condition;

(v) the Vesting Period(s); and

(vi) the Release Schedule.

6.5 At any time prior to the vesting of an Award, the Remuneration Committee may, in its absolute

discretion, amend or waive, as the case may be, the maximum number of Shares which are the subject of the Award, the Performance Period, Performance Condition, the Vesting Period(s), and/or the Release

Schedule in respect of that Award. The Remuneration Committee shall notify any such amendment or

waiver to the relevant Participant.

6.6 Participants are not required to pay for the grant of Awards.

6.7 An Award or Released Award shall be personal to the Participant to whom it is granted and, prior to the

allotment and/or transfer of the Shares to which the Released Award relates, shall not be transferred,

charged, assigned, pledged or otherwise disposed of, in whole or in part, unless with the prior approval in

writing of the Remuneration Committee and if a Participant shall do, suffer or permit any such act or

thing as a result of which he would or might be deprived of any rights under an Award or Released

Award, that Award or Released Award shall immediately lapse.

6.8 For the avoidance of doubt and notwithstanding the discretionary powers vested in the Remuneration

Committee to, inter alia, determine the grant of the Awards pursuant to Rule 6 and the Release of Awards

pursuant to Rule 8, the Rules of this Plan shall constitute a valid and binding unilateral offer of reward

and incentive from our Group to the Participants to which the Participants are entitled to rely upon, unless

amended, withdrawn or terminated in accordance with its terms.

7. EVENTS PRIOR TO THE VESTING DATE

7.1 An Award shall, to the extent not yet Released, immediately lapse and become null and void and a

Participant shall have no claim against our Company and/or our Group:

(i) upon the bankruptcy of the Participant or the happening of any other event which results in his

being deprived of the legal or beneficial ownership of an Award; or

(ii) in the event of misconduct on the part of the Participant, as determined by the Remuneration

Committee in its absolute discretion; or

(iii) subject to Rule 7.2, upon the Participant ceasing to be in the employment of our Group for any

reason whatsoever; or

(iv) in the event that the Remuneration Committee shall, at its sole and absolute discretion, deem it

appropriate to revoke or annul such Award on the grounds that any of the objectives of this Plan

(as set out in Rule 3) have not been met.

For the purpose of Rule 7.1 (iii), the Participant shall be deemed to have ceased to be so employed as of the earlier of the date of the Participant’s notice of resignation of employment or the cessation of his

employment/appointment with our Group.

I-6



7.2 In any of the following events, namely:

(i) where the Participant ceases at any time to be in the employment of any company within our

Group by reason of:

(a) ill health, injury or disability (in each case, evidenced to the satisfaction of the

Remuneration Committee);

(b) redundancy;

(c) retirement at or after the legal retirement age;

(d) retirement before the legal retirement age with the consent of the Remuneration

Committee; or

(e) the company by which he is employed ceasing to be a company within our Group;

(ii) the death of a Participant; or

(iii) any other event approved by the Remuneration Committee,

then the Remuneration Committee may, in its absolute discretion but shall not be obliged to, preserve all

or any part of any Award and decide as soon as reasonably practicable following such event either to vest

some or all of the Shares which are the subject of any Award or to preserve all or part of any Award until

the end of each Vesting Period and subject to the provisions of this Plan.

7.3 Without prejudice to the provisions of Rule 6.5, if before the Vesting Date, any of the following occurs:

(i) a take-over offer for the Shares becomes or is declared unconditional;

(ii) the court sanctions a compromise or arrangement proposed for the purposes of, or in connection

with, a scheme for the reconstruction of our Company or its amalgamation with another company

or companies under the Act; or

(iii) the Shareholders of our Company pass a resolution for a members’ solvent voluntary winding-up

(other than for amalgamation or reconstruction),

the Remuneration Committee will consider, at its discretion, whether or not to Release any Award. If the

Remuneration Committee decides to Release any Award, it shall in determining the number of Shares to

be vested in respect of such Award, have regard to the proportion of the Performance Period which has

elapsed and the extent to which the Performance Condition has been satisfied. Where Awards are

Released, the Remuneration Committee will, as soon as practicable after the Awards have been Released,

procure the allotment or transfer to each Participant of the number of Shares so determined, such

allotment or transfer to be made in accordance with Rule 8. If the Remuneration Committee so

determines, the Release of Awards may be satisfied in cash instead of issuing fully paid Shares.

8. RELEASE OF AWARDS

8.1 Review of Performance Condition

8.1.1 In relation to each Award, as soon as reasonably practicable after the end of the relevant

Performance Period, the Remuneration Committee shall review the Performance Condition

specified in respect of that Award and determine in its absolute discretion:

(i) whether the Performance Condition has been satisfied and, if so, the extent to which it has

been satisfied; and

(ii) the number of Shares to be Released.

I-7



8.1.2 If the Remuneration Committee determines in its sole discretion that the Performance Condition

has not been satisfied or if the relevant Participant has not continued to be an Employee or a

Director, as the case may be, from the Award Date up to the end of the relevant Vesting Period,

that Award shall (subject to Rule 7) lapse and be of no value and the provisions of Rules 8.2 to 8.5

shall be of no effect.

8.1.3 In determining whether the Performance Condition has been satisfied (whether fully or partially)

and the number of Shares to be Released in relation to each Award, the Remuneration Committee

shall have the right to make computational adjustments to the audited results of the Company or

the Group, as the case may be, and take into account such factors as it may determine to be

relevant, including but not limited to changes in accounting methods, taxes and extraordinary

events.

8.2 Vesting Period(s)

8.2.1 Subject to the Remuneration Committee having determined that the Performance Condition has

been satisfied and provided, in relation to all Awards, that the relevant Participant has continued to

be an Employee or a Director, as the case may be, from the Award Date up to the end of the

relevant Vesting Period and provided further that, in the opinion of the Remuneration

Committee, the job performance of the relevant Participant has been satisfactory, upon the expiry

of each Vesting Period in relation to an Award, the Company shall Release to the relevantParticipant the Shares to which his Award relates in accordance with the Release Schedule

specified in respect of his Award, and procure the allotment or transfer to each Participant of the

relevant number of Shares.

8.2.2 Where new Shares are allotted upon the vesting of any Award, the Company shall, as soon as

practicable after such allotment, apply to the SGX-ST (and any other stock exchange on which the

Shares are quoted or listed) for permission to deal in and for quotation of such Shares.

8.3 Release of Award

Shares which are to be allotted or transferred on the Release of an Award to a Participant shall be issued

in the name of, or transferred to, CDP to the credit of either:

(i) the securities account of that Participant maintained with CDP; or

(ii) the securities sub-account of that Participant maintained with a Depository Agent,

in each case, as designated by that Participant. Until such issue or transfer of such Shares has been

effected, that Participant shall have no voting rights nor any interests to dividends or other distributions

declared or recommended in respect of any Shares which are the subject of the Award granted to him.

The Remuneration Committee has the discretion for the Release of an Award to a Participant to be

satisfied by cash payment instead of fully paid Shares.

8.4 Ranking of Shares

New Shares allotted and issued, and existing Shares procured by our Company for transfer, on the

Release of an Award shall:

(i) be subject to all the provisions of the Memorandum and Articles of Association of our Company;

and

(ii) rank in full for all interests, including dividends or other distributions declared or recommended in

respect of the then existing Shares, the Record Date for which is on or after the relevant Vesting

Date, and shall in all other respects rank pari passu with other existing Shares then in issue.

“Record Date” means the date as of the close of business on which shareholders must be registered inorder to participate in any dividends, rights, allotments or other distributions (as the case may be).

I-8



9. ALTERATION OF CAPITAL

9.1 If a variation in the issued share capital of our Company (whether by way of a capitalization of profits or

reserves or rights issue or reduction, subdivision, consolidation or distribution, or issues for cash or for

shares or otherwise than for cash or otherwise howsoever) should take place, then:

(i) the class and/or number of Shares which are the subject of an Award to the extent not yet vested;

and/or

(ii) the class and/or number of Shares in respect of which future Awards may be granted under the

Plan,

shall, at the option of the Remuneration Committee, be adjusted in such manner as the Remuneration

Committee may determine to be appropriate.

9.2 Unless the Remuneration Committee considers an adjustment to be appropriate, the following shall not be

regarded as a circumstance requiring adjustment under the provisions of this Rule 9:

(i) the issue of securities as consideration for an acquisition or a private placement of securities by

our Company; and

(ii) the cancellation of issued Shares purchased or acquired by our Company by way of a marketpurchase of such Shares undertaken by our Company on the SGX-ST or any other stock exchange

on which the Shares are quoted or listed during the period when a share purchase mandate granted

by shareholders of our Company (including any renewal of such mandate) is in force.

9.3 Notwithstanding the provisions of Rule 9.1 above:

(i) no such adjustment shall be made if as a result the Participant receives a benefit that a Shareholder

does not receive; and

(ii) any determination by the Remuneration Committee as to whether to make any adjustment and if

so, the manner in which such adjustment should be made, must (except in relation to a

capitalization issue) be confirmed in writing by the Auditors (acting only as experts and not as

arbitrators) to be in their opinion, fair and reasonable.

9.4 Upon any adjustment required to be made, our Company shall notify each Participant (or his duly

appointed personal representative(s)) in writing and deliver to him (or, where applicable, his duly

appointed personal representative(s)) a statement setting forth the class and/or number of Shares

thereafter to be transferred on the vesting of an Award. Any adjustment shall take effect upon such

written notification being given.

10. ADMINISTRATION

10.1 The Plan shall be administered by the Remuneration Committee in its absolute discretion with such

powers and duties as are conferred on it by the Board, provided that no member of the Remuneration

Committee shall participate in any deliberation or decision in respect of Awards to be granted to him or

held by him.

10.2 The Remuneration Committee shall have the power, from time to time, to make and vary such regulations

(not being inconsistent with this Plan) for the implementation and administration of this Plan, to give

effect to the provisions of the Plan and/or to enhance the benefit of the Awards and the Released Awards

to the Participants, as they may, in their absolute discretion, think fit. Any matter pertaining or pursuant to

the Plan and any dispute and uncertainty as to the interpretation of the Plan, any rule, regulation or

procedure thereunder or any rights under the Plan shall be determined by the Remuneration Committee.

10.3 Neither the Plan nor the grant of Awards under the Plan shall impose on our Company or the

Remuneration Committee any liability whatsoever in connection with:

(i) the lapsing of any Awards pursuant to any provision of the Plan;

(ii) the failure or refusal by the Remuneration Committee to exercise, or the exercise by the

Remuneration Committee of, any discretion under the Plan; and/or

I-9



(iii) any decision or determination of the Remuneration Committee made pursuant to any provision of

the Plan.

10.4 Any decision of the Remuneration Committee made pursuant to any provision of this Plan (other than a

matter to be certified by the Auditors) shall be final, binding and conclusive (including any decisions

pertaining to disputes as to the interpretation of this Plan or any rule, regulation or procedure thereunder

or as to any rights under this Plan).

11. NOTICES AND ANNUAL REPORT

11.1 Any notice given by a Participant to our Company shall be sent by post or delivered to the registered

office of our Company or such other address as may be notified by our Company to the Participant in

writing.

11.2 Any notice, documents or correspondence given by our Company to a Participant shall be sent to the

Participant by the Remuneration Committee (or such person(s) as it may from time to time direct) on

behalf of our Company and shall be delivered to him by hand or sent to him at his home address stated in

the records of the Company or the last known address of the Participant, and if sent by post shall be

deemed to have been given on the day immediately following the date of posting.

11.3 Our Company shall in relation to this Plan, as required by law, the SGX-ST or other relevant authority,make the following disclosures in its annual report to Shareholders:

(i) the names of the members of the Remuneration Committee;

(ii) the following details in respect of each Participant who is a Director or Controlling Shareholder or

its Associate or a person who received Shares pursuant to the vesting of the Awards granted under

the Plan which, in aggregate, represent five per cent. or more of the total number of New Shares

available under the Plan:

(a) name;

(b) the number of Shares comprised in Awards during the Financial Year in review (includingthe terms of the Awards granted);

(c) the aggregate number of Shares comprised in Awards since the commencement of this

Plan up to the end of the Financial Year in review;

(d) the aggregate number of Shares comprised in Awards which have vested since the

commencement of this Plan up to the Financial Year in review; and

(e) the aggregate number of Shares comprised in Awards not released as of the end of the

Financial Year in review;

(iii) an appropriate negative statement will be included in the annual report to the Shareholders in the

event the disclosure of any of the abovementioned information is not applicable.

12. MODIFICATIONS TO THE PLAN

12.1 Any or all the provisions of this Plan may be modified and/or altered at any time and from time to time by

resolution of the Remuneration Committee except that:

(i) any modification or alteration which shall alter adversely the rights attaching to any Award

granted prior to such modification or alteration, and which in the opinion of the Remuneration

Committee, materially alters the rights attaching to any Award granted prior to such modification

or alteration, may only be made with the consent in writing of such number of Participants who, if

their Awards were Released to them, would thereby become entitled to not less than three-quarters

of all the Shares which would be issued and allotted pursuant to the Awards;

I-10



(ii) any modification or alteration which would be to the advantage of Participants shall be subject to

the prior approval of the Shareholders at a general meeting; and

(iii) no modification or alteration shall be made without the prior approval of the SGX-ST, or (if

required) any other stock exchange on which the Shares are quoted or listed, and such other

regulatory authorities as may be necessary.

For the purposes of Rule 12.1 (i), the opinion of the Remuneration Committee as to whether any

modification or alteration would alter adversely the rights attaching to any Award shall be final andconclusive.

12.2 Notwithstanding anything to the contrary contained in Rule 12.1, the Remuneration Committee may at

any time by resolution (and without other formality save for the prior approval of the SGX-ST or (if

required) any other stock exchange on which the Shares are quoted or listed) amend or alter this Plan in

any way to the extent necessary to cause this Plan to comply with any statutory provision or the provision

or the regulations of any regulatory or other relevant authority or body (including the SGX-ST or any

other stock exchange on which the Shares are quoted or listed).

12.3 Shareholders who are eligible to participate in this Plan must abstain from voting on any resolution

relating to the Plan (other than a resolution relating to the participation of, or grant of Awards to the

Employees).

In particular, all Shareholders who are eligible to participate in the Plan shall abstain from voting on

resolutions of the Shareholders relating to the implementation of the Plan. Notwithstanding the foregoing,

Participants of the Plan may act as proxies, but such Participants who are appointed as proxies will not

vote on the aforementioned resolutions unless specific instructions have been given in the proxy

instrument on how the Shareholders wish their votes to be cast for the said resolutions.

12.4 Employees who are also Shareholders and are eligible to participate in this Plan must abstain from voting

on any resolution relating to the participation of, or grant of Awards to the Employees.

12.5 Written notice of any modification or alteration made in accordance with this Rule shall be given to all

Participants.

13. TERMS OF EMPLOYMENT UNAFFECTED

The terms of employment of a Participant (being an Employee or Director, as the case may be) shall not

be affected by his participation in the Plan, which shall neither form part of such terms nor entitle him to

take into account such participation in calculating any compensation or damages on the termination of his

employment for any reason.

14. DURATION OF THIS PLAN

14.1 This Plan shall continue to be in force at the discretion of the Remuneration Committee, for a maximum

period of 10 years commencing on the Adoption Date. Subject to compliance with any applicable laws

and regulations in Singapore, this Plan may be continued beyond the above stipulated period with the

approval of the shareholders by ordinary resolution at a general meeting and of any relevant authorities

which may then be required.

14.2 This Plan may be terminated at any time by the Remuneration Committee or by resolution of the

shareholders at a general meeting, subject to all other relevant approvals which may be required and if

this Plan is so terminated, no further Awards shall be granted by the Remuneration Committee hereunder.

14.3 The termination, discontinuance or expiry of this Plan shall be without prejudice to the rights accrued to

Awards which have been granted, whether such Awards have been Released (whether fully or partially)

or not.

15. TAXES

All taxes (including income tax) arising from the grant or Release of any Award granted to any

Participant under this Plan shall be borne by that Participant.

I-11



16. COSTS AND EXPENSES OF THIS PLAN

16.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the issue and

allotment or transfer of any Shares pursuant to the Release of any Award in CDP’s name, the deposit of

share certificate(s) with CDP, the Participant’s securities account with CDP, or the Participant’s securities

sub-account with a CDP Depository Agent.

16.2 Save for the taxes referred to in Rule 15 and such costs and expenses expressly provided in this Plan to be

payable by the Participants, all fees, costs and expenses incurred by our Company in relation to this Plan

including but not limited to the fees, costs and expenses relating to the issue and allotment or transfer of

Shares pursuant to the Release of any Award shall be borne by the Company.

17. DISCLAIMER OF LIABILITY

Notwithstanding any provisions herein contained and subject to the Act, the Board, the Remuneration

Committee and our Company shall not under any circumstances be held liable for any costs, losses,

expenses and damages whatsoever and howsoever arising in respect of any matter under or in connection

with this Plan including but not limited to our Company’s delay or failure in issuing and allotting, or

procuring the transfer of, the Shares or in applying for or procuring the listing of and quotation for the

Shares on the SGX-ST in accordance with Rule 8.2.3 (and any other stock exchange on which the Shares

are quoted or listed).

18. DISPUTES

Any disputes or differences of any nature in connection with this Plan shall be referred to the

Remuneration Committee and its decision shall be final and binding in all respects.

19. CONDITION OF AWARD

Every Award shall be subject to the condition that no Shares shall be issued or transferred pursuant to the

Release of any Award if such issue or transfer would be contrary to any law or enactment, or any rules or

regulations of any legislative or non-legislative governing body for the time being in force in Singapore

or any other relevant country having jurisdiction in relation to the issue of Shares hereto.

20. GOVERNING LAW

This Plan shall be governed by and construed in accordance with the laws of the Republic of Singapore.

The Participants, by accepting grants of Awards in accordance with this Plan, and our Company submit to

the exclusive jurisdiction of the courts of the Republic of Singapore.

21. EXCLUSION OF THE CONTRACTS (RIGHTS OF THIRD PARTIES) ACT

No person other than the Company or a Participant shall have any right to enforce any provision of the

Plan or any Award by virtue of the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore.

I-12



APPENDIX JINDEPENDENT AUDITORS’ REPORT ON THECONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010, 2011 AND 2012

J-1



Report From the Independent Auditor’s Report in relation to the

Audited Consolidated Financial Statements of

KrisEnergy Ltd.

(formerly known as KrisEnergy Holdings II Limited)

For the Financial Years ended December 31, 2010, 2011 and 2012

July 1, 2013

The Board of DirectorsKrisEnergy Ltd.83 Clemenceau Avenue#10-05, UE SquareSingapore 239920

Dear Sirs:

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of KrisEnergy Ltd. (the“Company”; formerly known as KrisEnergy Holdings II Limited) and its subsidiaries (collectively, the“Group”), which comprise the consolidated statement of financial position as at December 31, 2010,2011 and 2012 and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the financial years then ended, and asummary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financialstatements in accordance with International Financial Reporting Standards, and for such internalcontrol as management determines is necessary to enable the preparation of consolidated financialstatements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Thosestandards require that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe consolidated financial statements. The procedures selected depend on the auditor’s judgment,

including the assessment of the risks of material misstatement of the consolidated financial statements,whether due to fraud or error. In making those risk assessments, the auditor consider internal controlrelevant to the entity’s preparation and fair presentation of the consolidated financial statements inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of accountingestimates made by management, as well as evaluating the overall presentation of the consolidatedfinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

J-2



APPENDIX KCONSOLIDATED FINANCIAL STATEMENTS FOR THE

YEARS ENDED DECEMBER 31, 2010, 2011 AND 2012

KrisEnergy Ltd.


Consolidated Statement of Comprehensive IncomeFor the Financial Years ended December 31, 2010, 2011 and 2012

Note 2010 2011 2012US$ US$ US$

Revenue 6 81,781,396 100,221,088 89,592,582Cost of sales 6 (69,885,645) (97,291,257) (52,729,286)

Gross profit 11,895,751 2,929,831 36,863,296Other income 6 10,701,310 13,557,312 1,865,296General and administrative expenses 6 (16,770,159) (21,176,927) (24,294,905)Other operating expenses 6 (71,321,433) (1,168,491) (2,028,837)Finance income 6 78,936 279,101 411,332Finance costs 6 (6,761,429) (10,103,196) (11,970,662)

(Loss)/profit before tax 6 (72,177,024) (15,682,370) 845,520Tax benefit/(expense) 7 492,555 (18,479,641) (18,518,399)

Loss for the year (71,684,469) (34,162,011) (17,672,879)Other comprehensive income:

Exchange differences on translation of foreign operations 1,524,053 (2,695,419) (64,809)

Total comprehensive income attributable

to owners of the Company (70,160,416) (36,857,430) (17,737,688)

Loss per share attributable to owners of

the Company (cents per share) 6 (71,684,469) (34,162,011) (36)

The accompanying notes form an integral part of the consolidated financial statements.

K-1



KrisEnergy Ltd.


Consolidated Statement of Financial Position as at December 31, 2010, 2011 and 2012

Note 2010 2011 2012

US$ US$ US$ASSETS

Non-current assetsExploration and evaluation assets 8 91,588,595 120,097,447 135,653,818Oil and gas properties 9 176,239,684 111,831,590 104,691,623Other property, plant and equipment 10 616,344 566,560 254,769Intangible assets 11 36,096,174 43,890,735 43,890,735Embedded derivatives 12 – 1,420,000 2,864,000Investment securities 13 – – 182,057Other receivables 15 – 769,865 –

304,540,797 278,576,197 287,537,002

Current assetsInventories 14 6,293,812 6,918,469 6,054,728Trade and other receivables 15 26,562,288 29,182,528 34,743,446Prepayments 137,209 327,915 1,108,574Other current assets 16 11,721,543 2,491,314 500,000Cash and bank balances 17 35,345,976 42,659,700 129,900,954

80,060,828 81,579,926 172,307,702

Total assets 384,601,625 360,156,123 459,844,704

EQUITY AND LIABILITIES

Equity

Share capital 18 1 1 1,000,000Share premium 18 – – 402,750,000Foreign currency translation reserve 18 1,540,143 (1,155,276) (1,220,085) Accumulated losses (72,161,338) (106,323,349) (123,996,228)

Total equity (70,621,194) (107,478,624) 278,533,687

Non-current liabilitiesLoans and borrowings 20 – 80,317,463 81,142,055Deferred tax liabilities 7 53,029,906 42,490,585 41,744,525Other payables 19 283,471,933 290,276,833 – Provisions 21 17,188,619 18,048,096 22,024,643

353,690,458 431,132,977 144,911,223

Current liabilitiesTrade and other payables 19 13,034,734 13,671,011 11,961,015 Accrued operating expenses 19 9,999,770 7,061,438 9,902,998Loans and borrowings 20 68,000,000 – – Provisions 21 – – 2,500,000Withholding tax payable 191,290 134,925 30,427Tax payable 10,306,567 15,634,396 12,005,354

101,532,361 36,501,770 36,399,794

Total liabilities 455,222,819 467,634,747 181,311,017

Total equity and liabilities 384,601,625 360,156,123 459,844,704


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KrisEnergy Ltd.


Consolidated Statement of Changes in Equity


Attributable to owners of the Company

NoteShare

capitalShare

premiumAccumulated

losses

Foreigncurrency

translationreserve

Totalequity

US$ US$ US$ US$ US$

Balance at January 1, 2010 1 – (476,869) 16,090 (460,778)

Loss for the year – – (71,684,469) – (71,684,469)

Other comprehensive income – – – 1,524,053 1,524,053

Total comprehensive incomefor the year – – (71,684,469) 1,524,053 (70,160,416)

Balance at December 31,2010 1 – (72,161,338) 1,540,143 (70,621,194)

Balance at January 1, 2011 1 – (72,161,338) 1,540,143 (70,621,194)

Loss for the year – – (34,162,011) – (34,162,011)

Other comprehensive income – – – (2,695,419) (2,695,419)

Total comprehensive incomefor the year – – (34,162,011) (2,695,419) (36,857,430)

Balance at December 31,2011 1 – (106,323,349) (1,155,276) (107,478,624)

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KrisEnergy Ltd.


Consolidated Statement of Changes in Equity


Attributable to the equity holders of the Company

NoteShare

capitalShare

premiumAccumulated

losses

Foreigncurrency

translationreserve

Totalequity

US$ US$ US$ US$ US$

Balance at January 1,2012 1 – (106,323,349) (1,155,276) (107,478,624)

Loss for the year – – (17,672,879) – (17,672,879)

Other comprehensiveincome – – – (64,809) (64,809)

Total comprehensiveincome for the year – – (17,672,879) (64,809) (17,737,688)

Issue of shares 18 999,999 402,750,000 – – 403,749,999

Balance atDecember 31, 2012 1,000,000 402,750,000 (123,996,228) (1,220,085) 278,533,687

The accompanying notes form an integral part of the consolidated financial statements

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KrisEnergy Ltd.


Consolidated Statement of Cash Flows


Note 2010 2011 2012US$ US$ US$

Operating activities(Loss)/profit before tax (72,177,024) (15,682,370) 845,520 Adjustment to reconcile (loss)/profit before

tax to net cash flows:Depreciation, depletion and amortization 50,560,989 68,776,871 23,221,442Dry hole expenses 8 32,217,835 430,691 1,283,288Excess of fair value of identifiable net

assets acquired over considerationpaid 4 (21,646) (12,162,008) –

Impairment of goodwill 11 16,256,809 – – Impairment of oil and gas properties 9 22,846,789 – –

Net fair value loss/(gain) on embeddedderivatives – 106,000 (1,444,000)Finance cost 6,761,429 9,567,082 11,571,101Unwinding of discount on

decommissioning provisions 21 – 536,114 399,561Interest income (78,936) (279,101) (411,332)

Operating cash flows before changes inworking capital 56,366,245 51,293,279 35,465,580

Changes in working capital:

(Increase)/decrease in inventories (626,120) 436,106 863,741Increase in trade and other receivables (873,148) (760,733) (6,341,577)Decrease in other current assets 18,559,435 4,037,074 1,991,314Increase/(decrease) in trade and other

payables 1,292,807 (6,104,224) (1,710,505)

Cash flows from operations 74,719,219 48,901,502 30,268,553Interest received 78,936 279,101 411,332Interest paid (6,761,429) (5,295,426) (1,821,509)Taxes paid (17,188,913) (23,163,678) (20,155,928)

Net cash flows from operating activities 50,847,813 20,721,499 8,702,448

Investing activities Additions to exploration and evaluation

assets 8 (52,308,893) (9,016,926) (16,839,659) Addition to oil and gas properties 9 (19,300,347) (7,999,017) (9,421,089)

Addition to intangible assets 11 – (649,955) – Purchase of other plant and equipment 10 (780,502) (428,845) (253,037)Purchase of investment securities 13 – – (182,057) Advance payment pursuant to farm-in

arrangements 16 (6,193,155) – – Advance payment for acquisition of

interests in joint operations 16 (1,275,000) – – Advance payment for signature bonus 16 – (1,000,000) – Acquisition of subsidiaries, net of cash

acquired 4 (217,400,374) (9,698,189) – Farm-in arrangement, net of cash acquired 5 – (146,463) – Proceeds from disposal of other plant and

equipment 7,140 – –

Net cash flows used in investingactivities (297,251,131) (28,939,395) (26,695,842)

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KrisEnergy Ltd.




Note 2010 2011 2012

US$ US$ US$

Financing activities

Proceeds from issuance of shares 18 – – 115,000,000Proceeds from issuance of bonds 20 – 78,455,000 – Increase/(decrease) in amount due to

holding company 106,873,730 3,849,263 (756,969)Proceeds from bank borrowing 20 68,000,000 – – Repayment of bank borrowing 20 – (68,000,000) – Payment of bond interest – – (8,925,000)(Increase)/decrease in restricted cash 17 (10,004,932) 2,004,932 –

Net cash flows from financing activities 164,868,798 16,309,195 105,318,031

Net (decrease)/increase in cash and

cash equivalents (81,534,520) 8,091,299 87,324,637Net effect of exchange rate changes 1,907,471 1,227,357 (83,383)Cash and cash equivalents at January 1 104,968,093 25,341,044 34,659,700

Cash and cash equivalents at

December 31 17 25,341,044 34,659,700 121,900,954


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KrisEnergy Ltd.


Notes to Consolidated Financial Statements – December 31, 2010, 2011 and 2012

1. Corporate information

KrisEnergy Ltd. (the “Company”) was incorporated on October 5, 2009 as a limited liabilitycompany in Cayman Islands. With effect from July 4, 2012, the name of the Company waschanged from KrisEnergy Holdings II Limited to KrisEnergy Ltd.

The registered office of the Company is located at 190 Elgin Avenue, George Town, GrandCayman KY1-9005, Cayman Islands. Its immediate holding company is KrisEnergy HoldingsLimited, a company incorporated in Cayman Islands. The ultimate controlling party is FirstReserve Corporation.

The principal activity of the Company is that of investment holding and the principal place of

business is Singapore. The principal activities of the subsidiaries and joint arrangements aredisclosed in Note 23 to the financial statements.

2. Summary of significant accounting policies

2.1 Basis of preparation

The consolidated financial statements of the Company and its subsidiaries, (collectively the“Group”) have been prepared in accordance with International Financial Reporting Standards(“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The consolidated financial statements have been prepared on a historical cost basis except asdisclosed in the accounting policies below. The consolidated financial statements arepresented in United States Dollars (“USD” or “US$”).

2.2 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company andits subsidiaries as at December 31, 2010, 2011 and 2012.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Groupobtains control, and continue to be consolidated until the date when such control ceases.

The financial statements of the subsidiaries are prepared for the same reporting period as theparent company, using consistent accounting policies.

All intra-group balances, transactions, unrealized gains and losses resulting from intra-grouptransactions and dividends are eliminated in full.

Where the ownership of a subsidiary is less than 100% and, therefore, a non-controllinginterest (“NCI”) exists, the NCI is allocated its share of the total comprehensive income of theperiod, even if that results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

• Derecognizes the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts as at the date when controls is lost

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KrisEnergy Ltd.



2. Summary of significant accounting policies (cont’d)

2.2 Basis of consolidation (cont’d)

• Derecognizes the carrying amount of any NCI• Derecognizes the cumulative translation differences recognized in equity• Recognizes the fair value of the consideration received• Recognizes the fair value of any investment retained• Recognizes any surplus or deficit in profit or loss• Reclassifies the parent’s share of components previously recognized in other

comprehensive income to profit or loss or retained earnings, as appropriate.

2.3 Changes in accounting policy and disclosures

Changes in accounting policies

The accounting policies adopted are consistent with those of the previous years except thatthe Group has adopted all the new and revised standards that are effective for annual periodbeginning on or before January 1, 2012. The adoption of these standards did not have anyeffect on the financial performance of the Group.

IFRS 3 Business Combinations (revised)

The revised IFRS 3 introduces a number of changes to the accounting for business

combinations that will impact the amount of goodwill recognized, the reported results in theperiod that an acquisition occurs, and future reported results. Changes in significantaccounting policies resulting from the adoption of the revised IFRS 3 include:

- Transaction costs would no longer be capitalized as part of the cost of acquisition butwill be expensed immediately;

- Consideration contingent on future events are recognized at fair value on theacquisition date and any changes in the amount of consideration to be paid will nolonger be adjusted against goodwill but recognized in profit or loss;

- The Group elects for each acquisition of a business, to measure non-controllinginterest at fair value, or at the non-controlling interest’s proportionate share of theacquiree’s identifiable net assets, and this impacts the amount of goodwill recognized;

and- When a business is acquired in stages, the previously held equity interests in theacquiree is remeasured to fair value at the acquisition date with any correspondinggain or loss recognized in profit or loss, and this impacts the amount of goodwillrecognized.

The revised IFRS 3 has been applied prospectively for the business combinations acquired inNote 4.

IAS 24 Related Party Transactions (Amendment)

The IASB issued an amendment to IAS 24 that clarifies the definitions of a related party. Thenew definitions emphasize a symmetrical view of related party relationships and clarify the

circumstances in which persons and key management personnel affect related partyrelationships of an entity. In addition, the amendment introduces an exemption from thegeneral related party disclosure requirements for transactions with government and entities

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KrisEnergy Ltd.




2.3 Changes in accounting policy and disclosures (cont’d)

Changes in accounting policies (cont’d)

IAS 24 Related Party Transactions (Amendment) (cont’d)

that are controlled, jointly controlled or significantly influenced by the same government as thereporting entity. The adoption of the amendment did not have any impact on the financialposition or performance of the Group.

On January 1, 2012, the Group early adopted IFRS 10, IFRS 11, IFRS 12 and theconsequential amendments to Revised IAS 27 and Revised IAS 28 which are effective for annual periods beginning on or after January 1, 2013.

IFRS 10 Consolidated Financial Statements and Revised IAS 27 Separate Financial

Statements

IFRS 10 replaces the portion of IAS 27 Consolidation and Separate Financial Statements thataddresses the accounting for consolidated financial statements. It also addresses the issuescovered in Standing Interpretations Committee (“SIC”) Interpretation 12 Consolidation –

Special Purpose Entities.

IFRS 10 establishes a single control model that applies to all entities including structuredentities (previously referred to as special purpose entities). The changes introduced by IFRS10 will require management to exercise significant judgment to determine which entities arecontrolled and therefore are required to be consolidated by a parent, compared with therequirements in IAS 27. The adoption of IFRS 10 does not have any impact on the Group’sfinancial position or performance.

As a consequence of the new IFRS 10 and IFRS 12, what remains in IAS 27 is limited toaccounting for subsidiaries, jointly arrangements and associates in separate financialstatements. The Group does not present separate financial statements.

IFRS 11 Joint Arrangements and Revised IAS 28 Investments in Associates and Joint

Ventures

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities –

Non-monetary Contributions by Venturers.

IFRS 11 uses the principle of control in IFRS 10 to define joint control and removes the optionto account for joint ventures using proportionate consolidation. Accounting for a jointarrangement is dependent on the nature of the rights and obligations arising from thearrangement. Joint operations that give the parties a right to the underlying assets andobligations is accounted for by recognizing the share of those assets and obligations. Jointventures that give the parties a right to the net assets is accounted for using the equitymethod. The revised IAS 28 was amended to describe the application of equity method toinvestments in joint ventures in addition to associates.

The adoption of IFRS 11 did not result in the Group having to revise its method of accountingfor its joint operations, which continues to be recognized in relation to its interest in a jointoperation.

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KrisEnergy Ltd.




2.3 Changes in accounting policy and disclosures (cont’d)

Changes in accounting policies (cont’d)

IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidatedfinancial statements, as well as all of the disclosures that were previously included in IAS 31and IAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint

arrangements, associates and structured entities. A number of new disclosures are alsorequired but have no impact on the Group’s financial position or performance.

2.4 Standards issued but not yet effective

The Group has not adopted the following standards and interpretations that have been issuedbut not yet effective:

Description

Effective for annual periods beginning

on or after

Amendments to IAS 1 Presentation of Items of Other Comprehensive

Income

July 1, 2012

Revised IAS 19 Employee Benefits January 1, 2013IFRS 13 Fair Value Measurement January 1, 2013 Amendments to IFRS 7 Disclosures – Offsetting Financial Assets and

Financial Liabilities Instruments: Disclosures

January 1, 2013

Improvements to IASs 2012 January 1, 2013- Amendment to IAS 1 Presentation of Financial Statements January 1, 2013- Amendment to IAS 16 Property, Plant and Equipment January 1, 2013- Amendment to IAS 32 Financial Instruments: Presentation January 1, 2013

Amendments to IAS 32 Offsetting Financial Assets and Financial

Liabilities

January 1, 2014

IFRS 9 Financial Instruments: Classification and Measurement January 1, 2015

Except for the Amendments to IAS 1, the directors expect that the adoption of the other standards and interpretations above will have no material impact on the financial statements inthe period of initial application. The nature of the impending changes in accounting policy onadoption of the Amendments to IAS 1 is described below.

IAS 1 Presentation of Items of Other Comprehensive Income – Amendments to IAS 1

The amendments to IAS 1 change the grouping of items presentation in Other ComprehensiveIncome (“OCI”). Items that could be reclassified (or “recycled”) to profit or loss at a future pointin time would be presented separately from items which will never be reclassified. Theamendment affects presentation only and therefore will have no impact on the Group’sfinancial position or performance.

The amendments to IAS are effective for annual periods beginning on or after July 1, 2012and, therefore, will be applied in the Group’s first annual report after becoming effective.

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KrisEnergy Ltd.




2.5 Business combination and goodwill

Business combinations are accounted for using the acquisition method. The cost of anacquisition is measured as the aggregate the consideration transferred, measured atacquisition date fair value and the amount of any NCI in the acquiree. For each businesscombination, the Group elects whether it measures NCI in the acquiree at fair value or at theproportionate share of the acquiree’s identifiable net assets. Acquisition related costs areexpensed as incurred and included in general and administrative expenses. When the Groupacquires a business, it assesses the assets and liabilities assumed for appropriate

classification and designation in accordance with the contractual terms, economiccircumstances and pertinent conditions as at the acquisition date. This includes the separationof embedded derivatives in host contracts by the acquiree. Those petroleum reserves andresources that are able to be reliably measured are recognized in the assessment of fair values on acquisition. Other potential reserves, resources and rights, for which fair valuescannot be reliably measured, are not recognized.

If the business combination is achieved in stages, the previously held equity interest in theacquiree is remeasured as its acquisition date fair value and any resulting gain or loss isrecognized in profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at fair value

at the acquisition date. Contingent consideration classified as an asset or liability that is afinancial instrument and within the scope of IAS 39 Financial Instruments: Recognition and

Measurement , is measured at fair value with changes in fair value recognized either in profit or loss or as a change to other comprehensive income. If the contingent consideration is notwithin the scope of IAS 39, it is measured in accordance with the appropriate IFRS. Contingentconsideration that is classified as equity is not remeasured and subsequent settlement isaccounted for within equity

Goodwill is initially measured at cost, being the excess of the aggregate of the considerationtransferred and the amount recognized for NCI over the fair value of the identifiable net assetsacquired and liabilities assumed. If fair value of the identifiable net assets acquired is in excessof the aggregate consideration transferred, the gain is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses.For the purpose of impairment testing, goodwill acquired in a business combination is, from theacquisition date, allocated to each of the Group’s cash generated units (“CGU”) that areexpected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a CGU and part of the operation in that unit is disposed of, thegoodwill associated with the disposed operation is included in the carrying amount of theoperation when determining the gain or loss on disposal. Goodwill disposed in thesecircumstances is measured based on the relative values of the disposed operation and theportion of the CGU retained.

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KrisEnergy Ltd.




2.6 Joint arrangements

A joint arrangement is a contractual arrangement whereby two or more parties have jointcontrol. Joint control is the contractually agreed sharing of control of an arrangement, whichexists only when decisions about the relevant activities require the unanimous consent of theparties sharing control.

A joint arrangement is classified either as joint operation or joint venture, based on the rightsand obligations of the parties to the arrangement.

To the extent the joint arrangement provides the Group with rights to the assets andobligations for the liabilities relating to the arrangement, the arrangement is a joint operation.To the extent the joint arrangement provides the Group with rights to the net assets of thearrangement, the arrangement is a joint venture.

The Group reassesses whether the type of joint arrangement in which it is involved haschanged when facts and circumstances change.

(a) Joint operations/party to joint arrangements

The Group recognizes in relation to its interest in a joint operation/party to joint

arrangements,

- its assets, including its share of any assets held jointly;- its liabilities, including its share of any liabilities incurred jointly;- its revenue from the sale of its share of the output arising from the joint

operation;- its share of the revenue from the sale of the output by the joint operation; andits expenses, including its share of any expenses incurred jointly.

The Group accounts for the assets, liabilities, revenues and expenses relating to itsinterest in a joint operation in accordance with the accounting policies applicable to theparticular assets, liabilities, revenues and expenses.

When the Group enters into transaction involving a sale or contribution of assets with a joint operation in which it is a joint operator, the Group recognizes gains and lossesresulting from such a transaction only to the extent of the interests held by the other parties to the joint operation.

When the Group enters into a transaction involving purchase of assets with a jointoperation in which it is a joint operator, the Group does not recognize its share of thegains and losses until it resells those assets to a third party. When such transactionsprovide evidence of a reduction in the net realizable value of the assets to bepurchased or of an impairment loss of those assets, the Group recognizes its share of those losses.

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KrisEnergy Ltd.




2.6 Joint arrangements (cont’d)

(b) Joint ventures

The Group recognizes its interest in a joint venture as an investment and accounts for the investment using the equity method from the date on which its becomes a jointventure.

On acquisition of the investment, any excess of the cost of the investment over the

Group’s share of the net fair value of the investee’s identifiable assets and liabilities isaccounted as goodwill and is included in the carrying amount of the investment. Anyexcess of the Group’s share of the net fair value of the investee’s identifiable assetsand liabilities over the cost of the investment is included as income in thedetermination of the entity’s share of the joint venture’s profit or loss in the period inwhich the investment is acquired.

Under the equity method, the investment in joint ventures are carried in the balancesheet at cost plus post-acquisition changes in the Group’s share of net assets of the joint ventures. The profit or loss reflects the share of results of operations of the jointventures. Distributions received from joint ventures reduce the carrying amount of theinvestment. Where there has been a change recognized in other comprehensive

income by the joint ventures, the Group recognizes its share of such changes in other comprehensive income. Unrealized gains and losses resulting from transactionsbetween the Group and the joint venture are eliminated to the extent of the interest inthe joint ventures.

When the Group’s share of losses in a joint venture equals or exceeds its interest inthe joint venture, the Group does not recognize further losses, unless it has incurredobligations or made payments on behalf of the joint venture.

After application of the equity method, the Group determines whether it is necessary torecognize an additional impairment loss on the Group’s investment in jointventures. The Group determines at the end of each reporting period whether there isany objective evidence that the investment in the joint venture is impaired. If this is the

case, the Group calculates the amount of impairment as the difference between therecoverable amount of the joint venture and its carrying value and recognizes theamount in profit or loss.

The financial statements of the joint ventures are prepared as the same reporting dateas the Company. Where necessary, adjustments are made to bring the accountingpolicies in line with those of the Group.

Upon loss of significant influence or joint control over the joint venture, the Groupmeasures the retained interest at fair value. Any difference between the fair value of the aggregate of the retained interest and proceeds from disposal and the carryingamount of the investment at the date the equity method was discontinued is

recognized in profit or loss.

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KrisEnergy Ltd.





(b) Joint ventures (cont’d)

The Group accounts for all amounts previously recognized in other comprehensiveincome in relation to that joint venture on the same basis as would have been requiredif that joint venture had directly disposed of the related assets or liabilities.

When an investment in joint venture becomes an investment in an associate, the Group

continues to apply the equity method and does not remeasure the retained interest.

The Group does not have any investment in joint ventures for the year endedDecember 31, 2010, 2011 and 2012.

2.7 Foreign currency

The Group’s consolidated financial statements are presented in USD, which is also theCompany’s functional currency. Each entity in the Group determines its own functionalcurrency and items included in the financial statements of each entity are measured using thatfunctional currency.

(i) Transactions and balances

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective currency spot rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated to thefunctional currency spot rate of exchange ruling at the reporting date.

Differences arising on settlement or translation of monetary items are recognized inprofit or loss with the exception of monetary items that are designated as part of thehedge of the Group’s net investment of a foreign operation. These are recognized inother comprehensive income until the net investment is disposed of, at which time, thecumulative amount is reclassified to profit or loss. Tax charges and credits attributableto exchange differences on those monetary items are also recorded in other

comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency aretranslated using the exchange rates as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using theexchange rates at the date when the fair value was determined. The gain or lossarising on translation of non-monetary items measured at fair value is treated in linewith the recognition of gain or loss on change in fair value of the item (i.e., translationdifferences on items whose fair value gain or loss is recognized in other comprehensive income or profit or loss are also recognized in other comprehensiveincome or profit or loss, respectively.)

Any goodwill arising on the acquisition of a foreign operation and any fair value

adjustments to the carrying amounts of assets and liabilities arising on the acquisitionare treated as assets and liabilities of the foreign operation and translated at the spotrate of exchange at the reporting date.

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KrisEnergy Ltd.




2.7 Foreign currency (cont’d)

(ii) Group companies

On consolidation, the assets and liabilities of foreign operations are translated intoUSD at the rate of exchange prevailing at the reporting date and their profit or loss aretranslated at exchange rates prevailing at the date of the transactions. The exchangedifferences arising on the translation for consolidation purposes are recognized inother comprehensive income. On disposal of a foreign operation, the component of

other comprehensive income relating to that particular foreign operation is recognizedin profit or loss.

In the case of a partial disposal without loss of control of a subsidiary that includes aforeign operation, the proportionate share of the cumulative amount of the exchangedifferences are re-attributed to non-controlling interest and are not recognized in profitor loss. For partial disposals of associates or jointly controlled entities that are foreignoperations, the proportionate share of the accumulated exchange differences isreclassified to profit or loss.

2.8 Oil and natural gas exploration, evaluation and development expenditure

Oil and natural gas exploration, evaluation and development expenditure is accounted for using the successful efforts method of accounting.

Pre-license costs

Pre-license costs are expensed in the period in which they are incurred.

License and property acquisition costs

Exploration license and leasehold property acquisition costs are capitalized in intangibleassets.

License costs paid in connection with a right to explore in an existing exploration area arecapitalized and amortized over the term of the permit.

License and property acquisition costs are reviewed at each reporting date to confirm thatthere is no indication that the carrying amount exceeds the recoverable amount. This reviewincludes confirming that exploration drilling is still under way or firmly planned, or that it hasbeen determined, or work is under way to determine that the discovery is economically viablebased on a range of technical and commercial considerations and sufficient progress is beingmade on establishing development plans and timing.

If no future activity is planned or the license has been relinquished or has expired, the carrying

value of the license and property acquisition costs is written off through profit or loss. Uponrecognition of proved reserves and internal approval for development, the relevant expenditureis transferred to oil and gas properties.

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KrisEnergy Ltd.




2.8 Oil and natural gas exploration, evaluation and development expenditure (cont’d)

Exploration and evaluation costs

Exploration and evaluation activity involves the search for hydrocarbon resources, thedetermination of technical feasibility and the assessment of commercial viability of an identifiedresource.

Once the legal right to explore has been acquired, costs directly associated with an exploration

well are capitalized as exploration and evaluation intangible assets until the drilling of the wellis completed and the results have been evaluated. These costs include directly attributableemployee remuneration, materials and fuel used, rig costs and payments made to contractors.

Geological and geophysical costs are recognized in profit or loss as incurred.

If no potentially commercial hydrocarbons are discovered, the exploration asset is written off through profit or loss as a dry hole. If extractable hydrocarbons are found and, subject tofurther appraisal activity (e.g. the drilling of additional wells), are likely to be capable of beingcommercially developed, the costs continue to be carried as an intangible asset whilesufficient/continued progress is made in assessing the commerciality of the hydrocarbons.Costs directly associated with appraisal activity undertaken to determine the size,characteristics and commercial potential of a reservoir following the initial discovery of

hydrocarbons, including the costs of appraisal wells where hydrocarbons were not found, areinitially capitalized as an intangible asset.

All such capitalized costs are subject to technical, commercial and management review, aswell as review for indicators of impairment at least once a year. This is to confirm the continuedintent to develop or otherwise extract value from the discovery. When this is no longer thecase, the costs are written off through profit or loss.

When proved reserves of oil and natural gas are identified and development is sanctioned bymanagement, the relevant capitalized expenditure is first assessed for impairment and (if required) any impairment loss is recognized, then the remaining balance is transferred to oiland gas properties. Other than license costs, no amortization is charged during the exploration

and evaluation phase.

Farm-outs – in the exploration and evaluation phase

The Group does not record any expenditure made by the farmee on its account. It also doesnot recognize any gain or loss on its exploration and evaluation farm-out arrangements, butredesignates any costs previously capitalized in relation to the whole interest as relating to thepartial interest retained. Any cash consideration received directly from the farmee is creditedagainst costs previously capitalized in relation to the whole interest with any excess accountedfor by the farmor as a gain on disposal.

Development costs

Expenditure on the construction, installation or completion of infrastructure facilities such asplatforms, pipelines and the drilling of development wells, including unsuccessful developmenton delineation wells, is capitalized within oil and gas properties.

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KrisEnergy Ltd.




2.9 Oil and gas properties and other property, plant and equipment

Initial recognition

Oil and gas properties and other property, plant and equipment are stated at cost, lessaccumulated depreciation and accumulated impairment losses.

The initial cost of an asset comprises its purchase price or construction cost, any costs directlyattributable to bringing the asset into operation, the initial estimate of the decommissioningobligation, and for qualifying assets (where relevant), borrowing costs. The purchase price or

construction cost is the aggregate amount paid and the fair value of any other considerationgiven to acquire the asset. The capitalized value of a finance lease is also included withinproperty, plant and equipment.

When a development project moves into the production stage, the capitalization of certainconstruction/development costs ceases and costs are either regarded as part of the cost of inventory or expensed, except for costs which qualify for capitalization relating to oil and gasproperty asset additions, improvements or new developments.

Depreciation, depletion and amortization

Oil and gas properties are depreciated, depleted and amortized on a unit-of-production basisover the total proved developed and undeveloped reserves of the field concerned. The unit-

of-production rate calculation for the depreciation, depletion and amortization of fielddevelopment costs takes into account expenditures incurred to date, together with sanctionedfuture development expenditure.

Other property, plant and equipment are generally depreciated on a straight-line basis over their estimated useful lives which are as follows:

Renovation - 3 yearsFurniture and fittings - 3 yearsOffice equipment - 3 yearsComputers - 2 years

An item of property, plant and equipment and any significant part initially recognized isderecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the differencebetween the net disposal proceeds and the carrying amount of the asset) is included in profitor loss when the asset is derecognized.

The asset’s residual values, useful lives and methods of depreciation, depletion andamortization are reviewed at each reporting period, and adjusted prospectively, if appropriate.

Farm-outs – outside the exploration and evaluation phase

In accounting for a farm-out arrangement outside the exploration and evaluation phase, theGroup:

- Derecognizes the proportion of the asset that it has sold to the farmee

- Recognizes the consideration received or receivable from the farmee, whichrepresents the cash received and/or the farmee’s obligation to fund the capitalexpenditure in relation to the interest retained by the farmor

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2.9 Oil and gas properties and other property, plant and equipment (cont’d)

Farm-outs – outside the exploration and evaluation phase (cont’d)

- Recognizes a gain or loss on the transaction for the difference between the netdisposal proceeds and the carrying amount of the asset disposed of. A gain is onlyrecognized when the value of the consideration can be determined reliably. If not, thenthe Group accounts for the consideration received as a reduction in the carryingamount of the underlying assets

- Tests the retained interests for impairment if the terms of the arrangement indicate thatthe retained interest may be impaired.

The consideration receivable on disposal of an item of property, plant and equipment or anintangible asset is recognized initially at its fair value by the Group. However, if payment for theitem is deferred, the consideration received is recognized initially at the cash priceequivalent. The difference between the nominal amount of the consideration and the cashprice equivalent is recognized as interest revenue. Any part of the consideration that isreceivable in the form of cash is treated as a definition of a financial asset and is accounted for at amortized cost.

Major maintenance, inspection and repairs

Expenditure on major maintenance re-fits, inspections 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 isprobable that future economic benefits associated with the item will flow to the Group, theexpenditure is capitalized. When part of the asset replaced was not separately considered as acomponent and therefore not depreciated separately, the replacement value is used toestimate the carrying amount of the replaced asset(s) which is immediately written off.Inspection costs associated with major maintenance programs are capitalized and amortizedover the period to the next inspection. All other day-to-day repairs and maintenance costs areexpensed as incurred.

2.10 Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less anyaccumulated amortization (calculated on a straight line basis over their useful lives) and anyaccumulated impairment losses, if any.

Internally generated intangible assets, excluding capitalized development costs, are notcapitalized. Instead, the related expenditure is recognized in profit or loss in the year in whichthe expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The

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2.11 Impairment of non-financial assets (cont’d)

Assets (excluding goodwill and indefinite life intangibles) (cont’d)

Impairment losses are recognized in profit or loss in those expense categories consistent withthe function of the impaired asset, except for property previously revalued where therevaluation was taken to other comprehensive income. In this case, the impairment is alsorecognized in other comprehensive income up to the amount of any previous revaluation.

For assets/CGUs excluding goodwill, an assessment is made at each reporting date todetermine whether there is an indication that previously recognized impairment losses may nolonger exist or may have decreased. If such indication exists, the Group estimates the asset’sor CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s/CGU’s recoverableamount since the last impairment loss was recognized. The reversal is limited so that thecarrying amount of the asset/CGU does not exceed its recoverable amount, or the carryingamount that would have been determined, net of depreciation, had no impairment loss beenrecognized for the asset/CGU in prior years. Such reversal is recognized in profit or lossunless the asset is carried at a revalued amount, in which case, the reversal is treated as arevaluation increase and is recognized through other comprehensive income.

Goodwill

Goodwill is tested for impairment annually (as at December 31) and when circumstancesindicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. Where the recoverable amount of the CGU isless than their carrying amount including goodwill, an impairment loss is recognized.Impairment losses relating to goodwill cannot be reversed in future periods.

Intangible assets with indefinite useful lives

Intangible assets with indefinite useful lives are tested for impairment annually (as atDecember 31) either individually or at the CGU level, as appropriate, and when circumstances

indicate that the carrying value may be impaired.2.12 Financial instruments – initial recognition and subsequent measurement

2.12.1 Financial assets

Initial recognition and measurement

Financial assets within the scope of IAS 39 Financial Instruments: Recognition and

Measurement are classified as financial assets at fair value through profit or loss, loans andreceivables, held-to-maturity investments, available-for-sale financial assets, or derivativesdesignated as hedging instruments in an effective hedge, as appropriate. The Groupdetermines the classification of its financial assets at initial recognition.

All financial assets are recognized initially at fair value plus transaction costs, except in thecase of financial assets recorded at fair value through profit or loss which do not includetransaction costs.

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2.12 Financial instruments – initial recognition and subsequent measurement (cont’d)

2.12.1 Financial assets (cont’d)

Initial recognition and measurement (cont’d)

Purchases or sales of financial assets that require delivery of assets in a time frameestablished by regulation or convention in the marketplace (regular way trades) are recognizedon the trade date, i.e. the date at which the Group commits to purchase or sell the asset.

The Group’s financial assets include cash and bank balances, trade and other receivables,investment securities and embedded derivatives.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification, as follows:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading andfinancial assets designated upon initial recognition at fair value through profit or loss. Financialassets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are alsoclassified as held for trading unless they are designated as effective hedging instruments asdefined by IAS 39.

Financial assets at fair value through profit or loss are carried in the statement of financialposition at fair value with net changes in fair value presented as finance costs (negativechanges in fair value) or finance revenue (positive net changes in fair value) in profit or loss.

Financial assets designated upon initial recognition at fair value through profit or loss aredesignated at the initial recognition date and only if the criteria set out in IAS 39 are satisfied.The Group has not designated any financial assets upon initial recognition as at fair valuethrough profit or loss.

The Group evaluated its financial assets as held for trading, other than derivatives, todetermine whether the intention to sell them in the near term is still appropriate. When, in rarecircumstances, the Group is unable to trade these financial assets due to inactive markets andmanagement’s intention to sell them in the foreseeable future significantly changes, the Groupmay elect to reclassify them. The reclassification to loans and receivables, available-for-sale or held-to-maturity depends on the nature of the asset. This evaluation does not affect anyfinancial assets designated at fair value through profit or loss using the fair value option atdesignation, as these instruments cannot be reclassified after initial recognition.

Derivatives embedded in host contracts are accounted for as separate derivatives andrecorded at fair value if their economic characteristics and risks are not closely related to thoseof the host contracts and the host contracts are not held for trading or designated at fair valuethrough profit or loss. These embedded derivatives are measured at fair value, with changes in

fair value recognized in profit or loss. Reassessment only occurs if there is a change in theterms of the contract that significantly modifies the cash flows that would otherwise berequired.

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Subsequent measurement (cont’d)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments

that are not quoted in an active market. After initial measurement, such financial assets aresubsequently measured at amortized cost using the effective interest rate (“EIR”) method, lessimpairment. Amortized cost is calculated by taking into account any discount or premium onacquisition and fee or costs that are an integral part of the EIR. The EIR amortization isincluded in finance income in the profit or loss. The losses arising from impairment arerecognized in other operating expenses for receivables.

Available-for-sale financial investments

Available-for-sale financial investments include equity investments and debt securities. Equityinvestments classified as available-for-sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are

those which are intended to be held for an indefinite period of time and that may be sold inresponse to needs for liquidity or in response to changes in the market conditions.

After initial measurement, available-for-sale financial investments are subsequently measuredat fair value with unrealized gains or losses recognized as other comprehensive income inavailable-for-sale reserves until the investment is derecognized, at which time the cumulativegain or loss is recognized in other operating income, or the investment is determined to beimpaired, when the cumulative loss reclassified from available-for-sale reserve to profit or lossin finance costs. Interest earned whilst holding available-for-sale financial investments isreported as interest income using the EIR method.

The Group evaluates whether the ability and intention to sell its available-for-sale financialassets in the near term is still appropriate. When, in rare circumstances, the Group is unable to

trade these financial assets due to inactive markets and management’s intention to do sosignificantly changes in the foreseeable future, the Group may elect to reclassify thesefinancial assets. Reclassification to loans and receivables is permitted when the financialassets meet the definition of loans and receivables and the Group has the intent and ability tohold these assets for the foreseeable future or until maturity. Reclassification to the held tomaturity category is permitted only when the entity has the ability and intention to hold thefinancial asset accordingly.

For a financial asset reclassified from the available-for-sale category, the fair value carryingamount at the date of reclassification becomes its new amortized cost and any previous gainor loss on the asset that has been recognized in equity is amortized to profit or loss over theremaining life of the investment using EIR. Any difference been the new amortized cost and

the maturity amount is also amortized over the remaining life of the asset using EIR. If theasset is subsequently determined to be impaired, then the amount recorded in equity isreclassified to profit or loss.

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Available-for-sale financial investments (cont’d)

Investments in equity instruments whose fair value cannot be reliably measured are measured

at cost less impairment loss.

Derecognition

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized when:

- The rights to receive cash flows from the asset have expired, or

- The Group has transferred its rights to receive cash flows from the asset or hasassumed an obligation to pay the received cash flows in full without material delay to athird party under a pass-through arrangement; and either (a) the Group hastransferred substantially all the risks and rewards of the asset, or (b) the Group has

neither transferred nor retained substantially all the risks and rewards of the asset, buthas transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has enteredinto a pass-through arrangement, it evaluates if and to what extent it has retained the risks andrewards of ownership. When it has neither transferred nor retained substantially all the risksand rewards of the asset, nor transferred control of the asset, the asset is recognized to theextent of the Group’s continuing involvement in the asset. In that case, the Group alsorecognizes an associated liability. The transferred asset and the associated liability aremeasured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset ismeasured at the lower of the original carrying amount of the asset and the maximum amount

of consideration that the Group could be required to repay.

Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that afinancial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, there is objective evidence of impairment as aresult of one or more events that has occurred since the initial recognition of the asset (anincurred loss event) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtor or group of debtors is experiencingsignificant financial difficulty, default or delinquency in interest or principal payments, the

probability that they will enter bankruptcy or other financial reorganization and observable dataindicating that there is a measurable decrease in the estimated future cash flows, such aschanges in arrears or economic conditions that correlate with defaults.

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Impairment of financial assets (cont’d)

Financial assets carried at amortized cost

For financial assets carried at amortized cost, the Group first assesses whether objective

evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines thatno objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit riskcharacteristics and collectively assesses them for impairment. Assets that are individuallyassessed for impairment and for which an impairment loss is, or continues to be, recognizedare not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has incurred, the amount of the loss ismeasured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet beenincurred). The present value of the estimated future cash flows is discounted at the financialasset’s original EIR. If a loan has a variable interest rate, the discount rate for measuring any

impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and theamount of the loss is recognized in profit or loss. Interest income continues to be accrued onthe reduced carrying amount and is accrued using the rate of interest used to discount thefuture cash flows for the purpose of measuring the impairment loss. The interest income isrecorded as part of finance income in profit or loss. Loans together with the associatedallowance are written off when there is no realistic prospect of future recovery and all collateralhas been realized or has been transferred to the Group. If, in a subsequent year, the amountof the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the

recovery is credited to profit or loss.


For available-for-sale financial investments, the Group reassesses at each reporting datewhether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as available-for-sale, objective evidence wouldinclude a significant or prolonged decline in the fair value of the investment below its costs.‘Significant’ is evaluated against the original cost of the investment and ‘prolonged’ against theperiod in which the fair value has been below its original cost. When there is evidence of impairment, the cumulative loss – measured as the difference between its acquisition cost andthe current fair value, less any impairment loss on that investment previously recognized in

profit or loss – is removed from other comprehensive income and recognized in profit or loss.Impairment losses on equity investments are not reversed through profit or loss; increase intheir fair value after impairment are recognized directly in other comprehensive income.

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In the case of debt instruments classified as available-for-sale, impairment is assessed based

on the same criteria as financial assets carried at amortized cost. However, the amountrecorded for impairment is the cumulative loss measured as the difference between theamortized cost and the current fair value, less any impairment loss on that investmentpreviously recognized in profit or loss.

Future interest income continues to be accrued based on the reduced carrying amount of theasset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income. If,in a subsequent year, the fair value of a debt instrument increases and the increases can beobjectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed in profit or loss.

2.12.2 Financial liabilities


Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair valuethrough profit or loss, loans and borrowings, or as derivatives designated as hedginginstruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognized initially at fair value and, in the case of loans borrowings,net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, accrued operating expenses

and loans and borrowings.


The measurement of financial liabilities depends on their classification as described below:

Other financial liabilities

After initial recognition, other financial liabilities are subsequently measured at amortized costusing the EIR method. Gains and losses are recognized in profit or loss when the liabilities arederecognized, as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition andfee or costs that are an integral part of the EIR. The EIR amortization is included as financecosts in profit or loss.

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2.12.2 Financial liabilities (cont’d)

Derecognition

A financial liability is derecognized when the associated obligation is discharged or cancelledor expires.

When an existing financial liability is replaced by another from the same lender on substantiallydifferent terms, or the terms of an existing liability are substantially modified, such an exchangeor modification is treated as a derecognition of the original liability and the recognition of a newliability. The difference in the respective carrying amounts is recognized in profit or loss.

2.12.3 Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in theconsolidated statement of financial position if there is a currently enforceable legal right tooffset the recognized amounts and there is an intention to settle on a net basis, or to realizethe assets and settle the liabilities simultaneously.

2.12.4 Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting dateis determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined usingappropriate valuation techniques. Such techniques may include using recent arm’s lengthmarket transactions; reference to the current fair value of another instrument that issubstantially the same; a discounted cash flow analysis or other valuation models.

An analysis of fair value of financial instruments and further details as to how they aremeasured are provided in Note 24.

2.12.5 Current versus non-current classification

Derivative instruments that are not designated as effective hedging instruments are classifiedas current or non-current or separated in a current and non-current portion based on anassessment of facts and circumstances (i.e., the underlying contracted cash flows):

- Where the Group expects to hold a derivative as an economic hedge (and does notapply hedge accounting) for a period beyond 12 months after the reporting date, thederivative is classified as non-current (or separated into current and non-current

portions) consistent with the classification of the underlying item.- Embedded derivatives that are not closely related to the host contract are classified

consistent with the cash flows of the host contract.

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2.12.5 Current versus non-current classification (cont’d)

- Derivatives instruments that are designed as, and are effective hedging instruments,are classified consistently with the classification of the underlying hedged item. Thederivative instrument is separated into a current portion and a non-current portion onlyif a reliable allocation can be made.

2.12.6 Cash and cash equivalents

Cash and cash equivalents comprise cash at banks and on hand and short-term deposits withan original maturity of three months or less, but exclude any restricted cash which is notavailable for use by the Group and therefore not considered highly liquid.

2.13 Inventories

Inventories are stated at the lower of cost and net realizable value. Cost includes all costsincurred in the normal course of business in bringing each product to its present location andcondition and is accounted for on a first-in first-out basis. Net realizable value is the estimatedselling price in the ordinary course of business, less estimated costs of completion and the

estimated costs necessary to make the sale.

2.14 Leases

The determination of whether an arrangement is, or contains, a lease is based on thesubstance of the arrangement at date of inception. The arrangement is assessed to determinewhether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitlyspecified in an arrangement.

Operating lease payments are recognized as an operating expense in profit or loss on astraight-line basis over the lease term.

2.15 Provisions

General

Provisions are recognized when the Group has a present obligation (legal or constructive) as aresult of a past event, it is probable that an outflow of resources embodying economic benefitswill be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, thereimbursement is recognized as a separate asset but only when the reimbursement is virtuallycertain. The expense relating to any provision is presented in profit or loss net of anyreimbursement. If the effect of the time value of money is material, provisions are discounted

using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.Where discounting is used, the increase in the provision due to the passage of time isrecognized as part of finance costs in profit or loss.

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2.15 Provisions (cont’d)

Decommissioning liability

The Group recognizes a decommissioning liability when it has a present legal or constructiveobligation as a result of past events, and it is probable that an outflow of resources will berequired to settle the obligation, and a reliable estimate of the amount of obligation can bemade.

The obligation generally arises when the asset is installed or the ground/environment isdisturbed at the field location. When the liability is initially recognized, the present value of theestimated costs is capitalized by increasing the carrying amount of the related oil and gasassets to the extent that it was incurred by the development/construction of the field. Anydecommissioning obligations that arise through the production of inventory are expensed asincurred.

Changes in the estimated timing of decommissioning or changes to the decommissioning costestimates are dealt with prospectively by recording an adjustment to the provision, and acorresponding adjustment to oil and gas assets.

Any reduction in the decommissioning liability and, therefore, any deduction from the asset to

which it relates, may not exceed the carrying amount of that asset. If it does, any excess over the carrying value is taken immediately to profit or loss.

If the change in estimate results in an increase in the decommissioning liability and, therefore,an addition to the carrying value of the asset, the Group considers whether this is an indicationof impairment of the asset as a whole, and if so, tests for impairment in accordance withIAS 36. If, for mature fields, the estimate for the revised value of oil and gas assets net of decommissioning provisions exceeds the recoverable value, that portion of the increase ischarged directly to expense.

Over time, the discount liability is increased for the change in present value based on thediscount rate that reflects current market assessments and the risks specific to the liability. Theperiodic unwinding of the discount is recognized in profit or loss as a finance cost.

The Group recognizes neither the deferred tax asset in respect of the temporary difference onthe decommissioning liability nor the corresponding deferred tax liability in respect of thetemporary difference on a decommissioning asset.

Environmental expenditures and liabilities

Environmental expenditures that relate to current or future revenues are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by pastoperations and do not contribute to current or future earnings are expensed.

Liabilities for environmental costs are recognized when a clean-up is probable and the

associated costs can be reliably estimated. Generally, the timing of recognition of theseprovisions coincides with the commitment to a formal plan of action or, if earlier, on divestmentor on closure of inactive sites.

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Environmental expenditures and liabilities (cont’d)

The amount recognized is the best estimate of the expenditure required. Where the liability willnot be settled for a number of years, the amount recognized is the present value of theestimated future expenditure

2.16 Revenue recognition

Revenue is recognized to the extent it is probable that the economic benefits will flow to theGroup and the revenue can be reliably measured. Revenue is measured at the fair value of theconsideration received or receivable, excluding discounts, sale taxes, excise duties and similar levies. The Group assesses its revenue arrangements against specific criteria in order todetermine if it is acting as principal or agent. The Group has concluded that it is acting as aprincipal in all of its revenue arrangements.

Revenue from the sale of oil and gas is recognized when the significant risks and rewards of ownership have been transferred, which is considered to occur when title passes to thecustomer. This generally occurs when the product is physically transferred into a vessel, pipeor other delivery mechanism.

Revenue from the production of oil, in which the Group has an interest with other producers, isrecognized based on the Group’s working interest and the terms of the relevant productionsharing contracts. Differences between oil lifted and sold and the Group’s share of productionare not significant. Where forward sale and purchase contracts for oil or natural gas have beendetermined to be for trading purposes, the associated sales and purchases are reported net.

The following criteria are also applicable to other specific revenue transactions:

Take or pay contracts

Under these contracts, the Group makes a long-term supply commitment in return for acommitment from the buyer to pay for minimum quantities, whether or not the customer takesdelivery. These commitments contain protective (force majeure) and adjustment provisions. If

a buyer has a right to get a ‘make-up’ delivery at a later date, revenue recognition is deferredand only recognized when the product is delivered, or the make-up product can no longer betaken. If no such option exists within the contractual terms, revenue is recognized when thetake-or-pay penalty is triggered.

Interest income

Interest income is recognized using the effective interest method.

2.17 Employee benefits

(a) Defined contribution plans

The Group makes contributions to the defined contribution pension schemes.Contributions to defined contribution pension schemes are recognized as an expensein the period in which the related service is performed.

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2.17 Employee benefits (cont’d)

(b) Employee leave entitlement

Employee entitlements to annual leave are recognized as a liability when they accrueto the employees. The estimated liability for leave is recognized for services renderedby employees up to the end of the reporting date.

2.18 Taxes

Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amountexpected to be recovered from or paid to the taxation authorities. The tax rates and tax lawsused to compute the amount are those that are enacted or substantively enacted, at thereporting date in the countries where the Group operates and generates taxable income.

Current tax relating to items recognized directly in other comprehensive income or equity isrecognized in other comprehensive income or equity and not in profit or loss. Managementperiodically evaluates positions taken in the tax returns with respect to situations in whichapplicable tax regulations are subject to interpretations and establishes provisions where

appropriate.

Deferred tax

Deferred tax is provided using the balance sheet method on temporary differences betweenthe tax bases of assets and liabilities and their carrying amounts for financial reportingpurposes at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

- Where the deferred tax liability arises from the initial recognition of goodwill or of anasset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

- In respect of taxable temporary differences associated with investments insubsidiaries, associates and interests in joint ventures, where the timing of the reversalof the temporary differences can be controlled by the parent, investor or venturer and itis probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, the carry forwardof unused tax credits and unused tax losses, to the extent that it is probable that taxable profitwill be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

- Where the deferred tax asset relating to the deductible temporary difference arises

from the initial recognition of an asset or liability in a transaction that is not a businesscombination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

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2.18 Taxes (cont’d)

Deferred tax (cont’d)

- In respect of deductible temporary differences associated with investments insubsidiaries, associates and interests in joint ventures, deferred tax assets arerecognized only to the extent that it is probable that the temporary differences willreverse in the foreseeable future and taxable profit will be available, against which thetemporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period andreduced to the extent that it is no longer probable that sufficient taxable profit will be availableto allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assetsare reassessed at the end of each reporting period and are recognized to the extent that it hasbecome probable that future taxable profits will be available to allow the deferred tax asset tobe recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply tothe year when the asset is realized or the liability is settled, based on tax rates (and tax laws)that have been enacted or substantively enacted by the end of the reporting date.

Deferred tax relating to items recognized directly in other comprehensive income or equity isrecognized in other comprehensive income or equity and not in profit or loss.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists toset off current tax assets against current tax liabilities and the deferred taxes relate to thesame taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognized subsequently if new information about factsand circumstances arises. The adjustment is either treated as a reduction to goodwill (as longas it does not exceed goodwill) if it occurred during the measurement period or recognized inprofit or loss.

Royalties, resource rent tax and revenue-based taxes

In addition to corporate taxes, the Group’s consolidated financial statements also include andrecognize as taxes on income, other type of taxes on net income which are calculated basedon oil and gas production.

Royalties, resource rent taxes and revenue-based taxes are accounted for under IAS 12 whenthey have the characteristics of an income tax. This is considered to be the case when theyare imposed under government tax authority and the amount payable is based on taxableincome – rather than based on physical quantity produced or as a percentage of revenue – after adjustment for temporary differences. For such arrangements, current and deferred tax is

provided on the same basis as described above for other forms of taxation. Obligations arisingfrom royalty arrangements and other types of taxes that do not satisfy these criteria arerecognized as current provisions and included in cost of sales.

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Production-sharing arrangements

According to the production-sharing agreement (“PSA”), the share of the profit oil to which thegovernment is entitled in any calendar year, is deemed to include a portion representing thecorporate income tax imposed upon and due by the Group. This amount will be paid directly bythe government on behalf of the Group to the appropriate tax authorities. This portion of taxand revenue are presented net in profit or loss.

3. Significant accounting judgments, estimates and assumptions

The preparation of the Group’s consolidated financial statements in conformity with IFRSrequires management to make judgments, estimates and assumptions that affects the reportedamounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, andthe disclosure of contingent liabilities at the date of the consolidated financialstatements. Estimates and assumptions are continuously evaluated and are based onmanagement’s experience and other factors, including expectations of future events that arebelieved to be reasonable under the circumstances. Uncertainty about these assumptions andestimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

In particular, the Group has identified the following areas where significant judgments,estimates and assumptions are required. Changes in these assumptions may materially affectthe financial position or financial results reported in future periods. Further information on eachof these areas and how they impact the various accounting policies are described below andalso in the relevant notes to the financial statements.

Hydrocarbon reserve and resource estimates (Note 7, 8, 9, 10, 11 and 21)

Oil and gas properties are depreciated on a units of production (“UOP”) basis at a ratecalculated by reference to total proved and probable developed and undeveloped reservesdetermined in accordance with Society of Petroleum Engineers’ rules and incorporating theestimated future cost of developing those reserves. The Group estimates its commercial

reserves based on information compiled by appropriately qualified persons relating to thegeological and technical data on the size, depth, shape and grade of the hydrocarbon bodyand suitable production techniques and recovery rates. Commercial reserves are determinedusing estimates of oil in place, recovery factors and future commodity prices, the latter havingan impact on the total amount of recoverable reserves and the proportion of the gross reserveswhich are attributable to the host government under the terms of the Production-Sharing Agreements. Future development costs are estimated using assumptions as to number of wells required to produce the commercial reserves, the cost of such wells and associatedproduction facilities, and other capital costs. The current long-term Brent oil price assumptionused in the estimation of commercial reserves is US$110.08. The carrying amount of oil andgas properties at December 31 is shown in Note 9.

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3. Significant accounting judgments, estimates and assumptions (cont’d)

Hydrocarbon reserve and resource estimates (Note 7, 8, 9, 10, 11 and 21) (cont’d)

As the economic assumptions used may change and as additional geological information isobtained during the operation of a field, estimates of recoverable reserves may change. Suchchanges may impact the Group’s reported financial position and results, which include:

- The carrying value of exploration and evaluation assets, oil and gas properties,property, plant and equipment, and goodwill may be affected due to changes inestimated future cash flows

- Depreciation and amortization charges in profit or loss may change where such chargesare determined using the UOP method, or where the useful life of the related assetschange

- Provisions for decommissioning may change where changes to the reserve estimatesaffect expectations about when such activities will occur and the associated cost of these activities

- The recognition and carrying value of deferred tax assets may change due to changesin judgments regarding the existence of such assets and in estimates of the likelyrecovery of such assets

Exploration and evaluation expenditures (Note 8)

The application of the Group’s accounting policy for exploration and evaluation expenditurerequires judgment to determine whether it is likely that future economic benefits are likely,either from future exploitation or sale, or whether activities have not reached a stage whichpermits a reasonable assessment of the existence of reserves. The determination of reservesand resources is itself an estimation process that requires varying degrees of uncertaintydepending on how the resources are classified. These estimates directly impact when theGroup defers exploration and evaluation expenditure. The deferral policy requiresmanagement to make certain estimates and assumptions as to future events andcircumstances, in particular, whether an economical viable extraction operation can beestablished. Any such estimates and assumptions may change as new information becomesavailable. If, after expenditure is capitalized, information becomes available suggesting that therecovery of the expenditure is unlikely, the relevant capitalized amount is written off in profit or loss in the period when the new information becomes available.

Units of production depreciation of oil and gas assets (Note 9)

Oil and gas properties are depreciated using the UOP method over total proved and probabledeveloped and undeveloped hydrocarbon reserves. This results in a depreciation, depletionand amortization charge proportional to the depletion of the anticipated remaining productionfrom the field.

The life of each item, which is assessed at least annually, has regard to both its physical lifelimitations and present assessments of economically recoverable reserves of the field at whichthe asset is located. These calculations require use of estimates and assumptions, includingthe amount of recoverable reserves and estimates of future capital expenditure. The

calculation of the UOP rate of depreciation could be impacted to the extent that actualproduction in the future is different from current forecast production based on total proved and

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KrisEnergy Ltd.




Units of production depreciation of oil and gas assets (Note 9) (cont’d)

probable reserves, or future capital expenditure estimates changes. Changes to proved andprobable reserves could arise due to changes in the factors or assumptions used in estimatingreserves, including:

- The effect on proved and probable reserves of differences between actual commodityprices and commodity price assumptions; or

- Unforeseen operational issues

Any changes in estimates are accounted for prospectively. A 1% difference in the forecastproduction based on total proved and probable reserves from management’s estimates wouldresult in approximately 26% (2011: 4%, 2010: 1%) variance in the Group’s profit/(loss) beforetax.

Recoverability of oil and gas assets (Note 8, 9, 11)

The Group assesses each asset or CGU (excluding goodwill, which is assessed annuallyregardless of indicators) each reporting period to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of therecoverable amounts is made, which is considered to be the higher of fair value less costs tosell and value in use. These assessments require the use of estimates and assumptions, suchas long-term oil prices (considering current and historical prices, price trends and related

factors), discount rates, operating costs, future capital requirements, decommissioning costs,exploration potential, reserves and operating performance (which includes production andsales volumes). These estimates and assumptions are subject to risk anduncertainty. Therefore, there is a possibility that changes in circumstances will impact theseprojections, which may impact the recoverable amount of assets and/or CGU.

Fair value is determined as the amount that would be obtained from the sale of the asset in anarm’s length transaction between knowledgeable and willing parties. Fair value for oil and gasassets is generally determined as the present value of estimated future cash flows arising fromthe continued use of the assets, which includes estimates such as the cost of future expansionplans and eventual disposal, using assumptions that an independent market participant maytake into account. Cash flows are discounted to their present value using a discount rate thatreflects current market assessments of the time value of money and the risks specific to the

asset/CGU. Management has assessed its CGUs as being an individual field, which is thelowest level for which cash inflows are largely independent of those of other assets.

Decommissioning costs (Note 21)

Decommissioning costs will be incurred by the Group at the end of the operating life of some of the Group’s facilities and properties. The Group assesses its decommissioning provision ateach reporting date. The ultimate decommissioning costs are uncertain and cost estimates canvary in response to many factors, including changes to relevant legal requirements, theemergence of new restoration techniques or experience at other production sites. Theexpected timing, extent and amount of expenditure can also change, for example, in responseto changes in reserves or changes in laws and regulations or their interpretation. Therefore,significant estimates and assumptions are made in determining the provision for

decommissioning As a result, there could be significant adjustments to the provisionsestablished which would affect future financial results. The provision at reporting daterepresent management’s best estimate of the present value of the future decommissioning

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4. Business combinations

Acquisitions in 2010

KrisEnergy Glagah-Kambuna B.V. and KrisEnergy Nam Con Son B.V.

On January 21, 2010, the Group acquired 100% equity interest in KrisEnergy Glagah-Kambuna B.V. (“KEGKBV”), which holds 25% working interest in Glagah Kambuna Technical Assistance Contract (“TAC”) in offshore Indonesia, and KrisEnergy Nam Con Son B.V.(“KENCSBV”), which holds 33.333% working interest in Block 06/94 PSC in offshore Vietnam,from Serica Asia Holdings B.V. for a consideration of US$106,065,492. The Group has

acquired KEGKBV and KENCSBV to build up its portfolio for producing assets in Indonesiaand increase its presence for exploration assets in Vietnam.

The fair value of the identifiable assets and liabilities of KEGKBV and KENCSBV as at date of acquisition was:

Fair valuerecognized on

acquisitionUS$

Assets:

Oil and gas properties 112,000,000Inventories 1,114,986

Trade and other receivables 6,978,484Cash at banks and on hand 26,075

120,119,545

Liabilities:

Trade and other payables (82,290,064)Deferred tax liabilities (25,546,538)

(107,836,602)

Total identifiable net assets acquired 12,282,943Intra-group debt assignments 77,525,740Goodwill arising on acquisition (Note 11) 16,256,809

Consideration settled in cash 106,065,492Less: Cash and bank balances of subsidiaries acquired (26,075)

Net cash outflow on acquisition 106,039,417

As part of the purchase price allocation, management engaged a technical specialist, RPSGroup Plc (“RPS”), to perform an assessment of the Kambuna field’s reserves and their value

as at December 31, 2009. The assumptions and estimates provided by RPS, together withadjustments made by management formed the basis of the valuation.

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4. Business combinations (cont’d)

Acquisitions in 2010 (cont’d)

KrisEnergy Glagah-Kambuna B.V. and KrisEnergy Nam Con Son B.V. (cont’d)

As the result of the fair value adjustment, management has provided for deferred tax liabilitiesof US$25,546,538 computed at the effective tax rate of 44%.

The carrying value of the trade and other receivables amounting to US$6,978,484 was anapproximate of its fair value. None of the trade and other receivables has been impaired and it

was expected that the full contractual amounts can be collected.

Included in trade and other payables are KEGKBV and KENCSBV intra-group debts owing toSerica Asia Holdings B.V. amounting to US$77,525,740, for payment on behalf of consideration for acquisition of working interests in Glagah Kambuna TAC and Block 06/94PSC. At date of acquisition, the Group undertakes to settle the intra-group debt on behalf of KEGKBV and KENCSBV as part of the cash consideration paid to Serica Asia Holdings B.V.

The goodwill of US$16,259,809 comprises the value of acquiring a producing asset in theIndonesia region and gaining access to additional reserves for the Group. None of the goodwillrecognized is expected to be deductible for tax purposes.

From the date of acquisition to December 31, 2010, KEGKBV and KENCSBV have contributedUS$32,433,499 of revenue to the Group revenue and US$52,472,472 of net loss to the Grouploss. If the business combination had taken place at the beginning of the year, the Grouprevenue would have been US$81,781,396 and the loss for the year would have beenUS$91,967,452.

KrisEnergy Kutai B.V.

On June 8, 2010, the Group acquired 100% equity interest in KrisEnergy Kutai B.V.(“KEKBV”), which holds a 24.6% working interest in Kutai PSC, for a consideration of US$653,623. The Group acquired KEKBV to expand its portfolio of exploration assets held.

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KrisEnergy Ltd.





KrisEnergy (Gulf of Thailand) Ltd (cont’d)

The fair value of the identifiable assets and liabilities of KEGOT as at date of acquisition was:


acquisitionUS$

Assets:Oil and gas properties 115,442,320Exploration and evaluation assets 46,321,905Deferred tax assets 545,346Inventories 4,275,296Trade and other receivables 9,123,086Cash at banks and on hand 35,370,789

211,078,742

Liabilities:

Trade and other payables (8,082,169)Tax payables (13,596,248)

Deferred tax liabilities (42,016,445)Decommissioning provisions (14,581,258)

(78,276,120)

Total identifiable net assets at fair value 132,802,622Goodwill arising on acquisition (Note 11) 13,301,576

Total consideration settled in cash 146,104,198Less: Cash at banks and on hand of subsidiaries acquired (35,370,789)


As part of the purchase price allocation, management engaged a technical specialist,Netherland, Sewell & Associates, Inc. (“NSAI”), to perform an assessment of the field’sreserves and their value as at December 31, 2009. The assumptions and estimates providedby NSAI, together with adjustments made by management formed the basis of the valuation.

As the result of the fair value adjustment, management has provided for deferred tax liabilitiesof US$42,016,445 computed at the effective tax rate of 37%.

The carrying value of the trade and other receivables amounting to US$9,123,086 was anapproximate of its fair value. None of the trade and other receivables has been impaired and itwas expected that the full contractual amounts can be collected.

The goodwill of US$13,301,576 arising from the acquisition comprises the value of strengthening the Group’s portfolio for producing assets held in the region. None of thegoodwill recognized is expected to be deductible for tax purposes.

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KrisEnergy Ltd.





KrisEnergy (Gulf of Thailand) Ltd (cont’d)

From the date of acquisition to December 31, 2010, KEGOT has contributed US$49,347,898of revenue to the Group revenue and US$24,409,667 of net profit to the Group loss. If thebusiness combination had taken place at the beginning of the year, the Group revenue wouldhave been US$110,100,030 and the loss for the year would have been US$67,817,099.

Acquisitions in 2011KrisEnergy Indonesia Holdings BV [“SIHBV”], Serica Energy Pte Ltd [“SEPL”], KrisEnergyKutei BV [“SKBV”] and KrisEnergy East Seruway BV [“SESBV”]

On October 11, 2011, the Group entered into a share sale and purchase agreement to acquire100% equity interest in KrisEnergy Indonesia Holdings BV (formerly known as SericaIndonesia Holdings BV) and its wholly owned subsidiaries, Serica Energy Pte Ltd, KrisEnergyKutei BV (formerly known as Serica Kutei BV) and KrisEnergy East Seruway BV (formerlyknown as Serica East Seruway BV) for a consideration of US$3,142,000. SEPL, SKBV andSESBV holds a 43% working interest in Tanjung Aru Joint Study Agreement (“JSA”), a 30%working interest in Kutai Production Sharing Contract (“PSC”), and a 100% working interest inEast Seruway PSC, respectively. SIHBV and its subsidiaries have been acquired to gain

access to additional reserves for the Group.The fair value of the identifiable assets and liabilities of SIHBV and its subsidiaries at the dateof acquisition were:


acquisitionUS$

Assets:Exploration and evaluation assets 13,476,079Inventories 247,940Trade and other receivables 1,818,992Cash and bank balances 775,841

16,318,852Liabilities:Trade and other payables (1,014,844)

Total identifiable net assets at fair value 15,304,008

Excess of fair value of net assets acquired over consideration paid (12,162,008)

Total consideration settled in cash 3,142,000Less: Cash and bank balances of subsidiaries acquired (775,841)


The excess of fair value of net assets acquired over consideration paid of US$12,162,008arises from the probable, possible and contingent reserves arising from the exploration andevaluation assets acquired.

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KrisEnergy Ltd.





KrisEnergy Indonesia Holdings BV [“SIHBV”], Serica Energy Pte Ltd [“SEPL”], KrisEnergyKutei BV [“SKBV”] and KrisEnergy East Seruway BV [“SESBV”] (cont’d)

From the date of acquisition to December 31, 2011, SIHBV and its subsidiaries did notcontribute to the Group revenue and have contributed US$212,337 of net loss to the Grouploss. If the business combination had taken place at the beginning of the year, the Grouprevenue would have been US$100,221,088 and the loss for the year would have been

US$34,195,676.

BEM Resources Ltd [“BEM”], EM Block Ltd [“EMB”], B Block Ltd [“BBL”] and KrisEnergy(Satria) Ltd [“POSL”]

On October 16, 2011, the Group acquired 100% equity interest in BEM Resources Ltd and itswholly owned subsidiaries, EM Block Ltd and B Block Ltd, for a consideration of US$7,500,000. BEM and its subsidiaries have been acquired to strengthen its portfolio inIndonesia where the Group has experience and technical expertise.

B Block Ltd in turn holds 100% equity interest in KrisEnergy (Satria) Ltd (formerly known asPearl Oil (Satria) Limited), which holds a 42.5% working interest in Bulu PSC. EM Block Ltd in

turn holds 100% equity interest in Pearl Oil (East Muriah) Limited, which holds a 50% workinginterest in East Muriah PSC. The latter transaction for acquisition of East Muriah PSC wascompleted on September 25, 2012.

The fair value of the identifiable assets and liabilities of BEM and its subsidiaries as at the dateof acquisition was:


acquisitionUS$

Assets:

Trade and other receivables 170,227

Inventories 812,823Cash at banks and on hand 167,970

1,151,020

Liabilities:

Trade and other payables (795,626)

Total identifiable net assets at fair value 355,394

Goodwill arising on acquisition (Note 11) 7,144,606

Total consideration settled in cash 7,500,000Less: Cash at banks and on hand of subsidiaries acquired (167,970)


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KrisEnergy Ltd.





BEM Resources Ltd [“BEM”], EM Block Ltd [“EMB”], B Block Ltd [“BBL”] and KrisEnergy(Satria) Ltd [“POSL”] (cont’d)

From the date of acquisition to December 31, 2011, BEM and its subsidiaries did not contributeto the Group revenue and have contributed US$22,378 of net loss to the Group loss. If thebusiness combination had taken place at the beginning of the year, the Group revenue wouldhave been US$100,221,088 and the loss for the year would have been US$51,371,544.

Goodwill arises principally because of the following factors:

(a) The going concern value implicit in our ability to sustain and/or grow our business byincreasing revenue and resources through new discoveries

(b) The ability to capture unique synergies that can be realized from managing a portfolio of both acquired and existing fields.

None of the goodwill recognized is expected to be deductible for tax purposes.

The table below summaries the fair value of the identifiable assets and liabilities of the abovebusiness combinations:

Fair value recognized on acquisition

2010 2011US$ US$

Assets:Oil and gas properties 227,442,320 – Exploration and evaluation assets 47,126,629 13,476,079Deferred tax assets 545,346 – Inventories 5,390,282 1,060,763Trade and other receivables 16,232,630 1,989,219Cash at bank and on hand 35,422,939 943,811

332,160,146 17,469,872

Liabilities:Trade and other payables (91,312,446) (1,810,470)Tax payables (13,596,248) – Deferred tax liabilities (67,562,983) – Decommissioning provisions (14,581,258) –

(187,052,935) (1,810,470)

Total identifiable net assets at fair value 145,107,211 15,659,402Intra-group debt assignments 78,179,363 – Goodwill arising on acquisition 29,558,385 7,144,606Excess of fair value of net assets acquired over

consideration paid (21,646) (12,162,008)

Total consideration settled in cash 252,823,313 10,642,000Less: Cash at banks and on hand of subsidiaries acquired (35,422,939) (943,811)

Net cash outflow on acquisition 217,400,374 9,698,189

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KrisEnergy Ltd.




Fair value recognized on acquisition (cont’d)

If the above business combinations had taken place at the beginning of 2011, Group revenueand loss for the year would have been US$100,221,088 (2010: US$110,100,030) andUS$51,405,209 (2010: US$88,104,510), respectively.

There were no business combinations in 2012.

5. Interests in joint arrangements

The Group has interests in the following joint arrangements:

Contract area(Date of expiry) Held by Description

Place of operation % of working interest

2010 2011 2012

G10/48 Concession(1)

(December 7, 2012)KrisEnergyOil andGas(Thailand)

Ltd

Exploration andproduction of petroleum under Concession

Agreement withDepartment of Mineral Fuels

Gulf of Thailand

25.00 25.00 25.00

G11/48 Concession(1)

(February 12, 2013)KrisEnergyResources(Thailand)Ltd

Exploration andproduction of petroleum under Concession Agreement withDepartment of Mineral Fuels

Gulf of Thailand

25.00 25.00 25.00

Block A PSC(No expiry date for

exploration stage)(2)

KrisEnergy(Cambodia)

Ltd

Drilling of exploration wells

under thePetroleum Agreement withCambodianNationalPetroleum Authority

OffshoreCambodia

25.00 25.00 25.00

Glagah Kambuna TAC(December 16, 2016)

KrisEnergyGlagah-KambunaB.V.

Exploration andproduction of petroleum under Technical Assistancecontract with

IndonesiaGovernmental Authority

Indonesia 25.00 25.00 25.00

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KrisEnergy Ltd.



5. Interests in joint arrangements (cont’d)



2010 2011 2012

Kutai PSC(January 15, 2037)

KrisEnergyKutai B.V.(24.6%)andKrisEnergyKutei B.V.(30.0%)

Exploration andproduction of petroleum under ProductionSharing contractwith IndonesiaGovernmental Authority

Indonesia 24.60 54.60 54.60

Block B8/32 Concession(October 18, 2029)

KrisEnergy(Gulf of Thailand)Ltd

Exploration andproduction of petroleum under Concession Agreement withDepartment of Mineral Fuels

Gulf of Thailand

4.63 4.63 4.63

Block B9A Concession(May 18, 2024)

KrisEnergy(Gulf of

Thailand)Ltd

Exploration andproduction of

petroleum under Concession Agreement withDepartment of Mineral Fuels

Gulf of Thailand

4.63 4.63 4.63

Block 105 PSC(February 2, 2040)

KrisEnergy(SongHong 105)Ltd

Exploration anddevelopment of petroleum under ProductionSharing Contractwith VietnamGovernment

Authority

OffshoreVietnam

50.00 50.00 25.00

Block 120 PSC(January 22, 2039)

KrisEnergy(PhuKhanh120) Ltd

Exploration anddevelopment of petroleum under ProductionSharing Contractwith VietnamGovernment Authority

OffshoreVietnam

50.00 50.00 25.00

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KrisEnergy Ltd.






2010 2011 2012

Block 06/94 PSC(3)

(April 1, 2037)KrisEnergyNam ConSon B.V.(4)

Exploration anddevelopment of petroleum under ProductionSharing Contractwith VietnamGovernment Authority

OffshoreVietnam

33.33 – –

East Seruway PSC(November 12, 2014)

KrisEnergyEastSeruwayB.V


Indonesia – 100.00 100.00

Bulu PSC (October 13,

2013)

KrisEnergy

(Satria)Ltd

Exploration and

production of petroleum under ProductionSharing contractwith IndonesiaGovernmental Authority

Indonesia – 42.50 4 2.50

East Muriah PSC(November 12, 2038)

KrisEnergy(EastMuriah)B.V.

Exploration andproduction of petroleum under ProductionSharing contract

with IndonesiaGovernmental Authority

Indonesia – – 50.00

Tanjung Aru PSC(December 13, 2041)

KrisEnergy(Tanjung Aru) B.V.



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KrisEnergy Ltd.






2010 2011 2012

Udan Emas PSC(July 19, 2041)

KrisEnergy(UdanEmas)B.V.



(1) Application for extension of the contract area has been submitted to the Department of Mineral Fuels of Thailand. As at December 31, 2012, the approval for the extension of the contract area has not beenreceived. On April 11, 2013, the supplementary agreements for extension of the contract area for three yearshave been approved by the Minister.

(2) On November 15, 2011, Cambodian National Petroleum Authority announced its intention to exercise its right totake 5% working interest in the contract area. Upon government’s approval, the Group’s working interests in thecontract area will decrease from 25.00% to 23.75%. As at December 31, 2012, the approval from the governmenthas not been received.

(3) Block relinquished on December 12, 2011(4) With effect from April 9, 2013, the name of the Company was changed from KrisEnergy Nam Con Son B.V. to


Farm-in arrangements

Block 105 PSC and Block 120 PSC

On March 23, 2010, KrisEnergy (Phu Khanh 120) Ltd entered into a Farm-out Agreement withNeon Energy (Song Hong) Pty Ltd (“Neon Energy”), whereby the Group will farm-in andacquire 40% participating interest in Block 120 PSC, offshore Vietnam. KrisEnergy (Phu Khanh120) Ltd is to pay Neon Energy for past cost of US$375,000, seismic costs of Block 2D (to theextent then incurred), and all amounts that it will become liable under the Joint Operating Agreement (JOA) incurred in the period between the Effective Date (January 1, 2010) and theFarm-in Date (May 17, 2011). Total consideration was US$2,927,802, of which US$2,835,438

was paid in 2010 and included in advance payments (see Note 16).

On May 3, 2010, KrisEnergy (Song Hong 105) Ltd entered into a Farm-out Agreement withNeon Energy, whereby it will farm-in and acquire 40% participating interest in Block 105 PSC,Offshore Vietnam. KrisEnergy (Song Hong 105) Ltd is to pay Neon Energy the past costs of US$562,000, seismic costs of up to a maximum of US$2,750,000, and all the amounts that itwill become liable for under the Joint Operating Agreement incurred in the period between theEffective Date, January 1, 2010, and the Farm-in Date (May 17, 2011). Total considerationwas US$3,431,081, of which US$3,357,717 was paid in 2010 and included in advancepayments (see Note 16).

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KrisEnergy Ltd.




Farm-in arrangements (cont’d)

Block 105 PSC and Block 120 PSC (cont’d)

The fair value of the identifiable assets and liabilities of Block 105 PSC and Block 120 PSC asat the Farm-in Date was:

Fair value recognized on farm-inBlock 105 Block 120 Total

US$ US$ US$

Exploration and evaluation assets 3,456,554 2,989,984 6,446,538Trade and other receivables 26,004 34,988 60,992Cash and bank balances 5,345 13,920 19,265Trade and other payables (56,822) (111,090) (167,912)

Total identifiable net assets at fair value,representing total consideration settled in cash 3,431,081 2,927,802 6,358,883

Less: Cash and bank balances of farm-inarrangement (5,345) (13,920) (19,265)

Less: Advance payments (Note 16) (2,835,438) (3,357,717) (6,193,155)

Net cash outflow on farm-in 590,298 (443,835) 146,463

Acquisition of interests in joint arrangements

Tanjung Aru PSC

On December 19, 2011, a production sharing contract has been signed with BPMIGAS (3) for a43% interest in Tanjung Aru PSC. An advance payment of US$1,000,000 was paid onDecember 27, 2011.

The approval for Tanjung Aru PSC was obtained on January 13, 2012.

Udan Emas PSC

On July 20, 2012, a production sharing contract has been signed with BPMIGAS (3) for a 100%interest in Udan Emas PSC. A signature bonus of US$1,000,000 was paid on August 7, 2012.

(3) On November 13, 2012, the Constitutional Court of Indonesia ordered the dissolution of Satuan KerjaKhusus Badan Pelaksana Kegiatan Usaha Hulu Minyak Dan Gas Bumi (“BPMIGAS”). The Government

of Indonesia created an interim task force, referred to as Satuan Kerja MIGAS (“SKMIGAS”), within theMinistry of Energy and Mineral Resources to assume the work of BPMIGAS until a new permanentregulatory body is formed. All existing agreements remain valid until their expiry dates.

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KrisEnergy Ltd.



6. (Loss)/profit before tax

The following items have been included in arriving at (loss)/profit before tax:

2010 2011 2012US$ US$ US$

Revenue:Sale of crude oil 55,164,247 70,254,234 67,404,375Sale of gas 26,617,149 29,966,854 22,188,207

81,781,396 100,221,088 89,592,582

Cost of sales:Depreciation, depletion and

amortization of oil and gasproperties (Note 9) (50,263,555) (68,293,048) (22,638,042)

Operating costs (11,224,095) (18,032,493) (18,741,758)Thai petroleum special

remuneratory benefits androyalties paid (8,397,995) (10,965,716) (11,349,486)

(69,885,645) (97,291,257) (52,729,286)

Other income is mainly made up of the following items:

Excess of fair value of net assetsacquired over consideration paid(Note 4) 21,646 12,162,008 –

Joint operator overhead charges – 26,376 497,667Management service fee income

from holding company 8,943,445 – – Net foreign exchange differences 1,104,641 108,053 97,502Income from shared facilities in joint

operations – 751,291 674,367

General and administrativeexpenses is mainly made up of

the following items:Consultants’ fees (1,031,804) (854,695) (408,348)Data purchase and subscriptions (252,838) (1,275,083) (501,953)Database rental (252,558) (278,676) (203,705)Depreciation of other property, plant

and equipment (Note 10) (297,434) (483,823) (583,400)Doubtful debt expense – – (2,333,106)Employee benefits expense:- Salaries and bonuses (6,878,317) (9,119,172) (10,730,440)- Central Provident Fund

contributions (82,467) (158,654) (161,771)- Other short-term benefits (185,496) (365,410) (529,680)Expenses incurred for acquisition of

joint operations – – (2,000,000)

Operating lease expense (414,671) (518,463) (538,688)Professional fees (4,354,872) (4,838,489) (3,199,930)Travel and entertainment (940,758) (1,264,160) (1,366,734)

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KrisEnergy Ltd.



6. (Loss)/profit before tax (cont’d)

2010 2011 2012US$ US$ US$

Other operating expenses is mainly

made up of the following items:

Dry hole expenses (Note 8) (32,217,835) (430,691) (1,283,288)Gain on settlement of commodity

options – – 121,980Goodwill impairment (Note 11) (16,256,809) – –

Impairment of oil and gas properties(Note 9) (22,846,789) – – Joint study expenses – – (1,771,529)Net fair value (loss)/gain on

embedded derivatives – (106,000) 1,444,000Premium paid on commodity options – (631,800) (540,000)

Finance income:

Interest income from banks 78,936 279,101 411,332

Finance costs:

Accretion of interest on bonds – (336,463) (824,592)Banking facility fees (3,082,853) (3,148,446) (1,528,851)Interest on bank borrowings (2,963,107) (2,128,980) (292,658)Interest expenses paid to vendors

upon acquisition of subsidiaries (715,469) – – Interest on callable bonds – (3,953,193) (8,925,000)Unwinding of discount on

decommissioning provisions(Note 21) – (536,114) (399,561)

(6,761,429) (10,103,196) (11,970,662)

Thai petroleum special remuneratory benefits and royalties paid

Under the terms of the Thai I regime, the concessionaire is required to pay production royaltiesto the Royal Thai Government computed based on 12.5% of income from sale or disposal of petroleum which may be treated as tax credit.

Under the Thai III tax regime, the concessionaire is required to pay production royalties to theRoyal Thai Government computed based on sliding scale rates from 5% to 15% of the value of petroleum sold or disposed during the month, depending on the number of barrels sold or disposed during the month.

Special remuneration benefit (“SRB”) is tax payable only in years concessionaire haspetroleum profit. In calculating such profit (or loss), capital expenditure, operating costs and a

special reduction of 35% operating expenses for the year and petroleum loss carried forwardindefinitely from prior years may be deducted. SRB is calculated by exploration block onincome per meter of well, subject to a ceiling of 75% of petroleum profit for the year.

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KrisEnergy Ltd.



6. (Loss)/profit before tax (cont’d)

Loss per share

The basic and diluted loss per share is calculated by dividing loss for the year attributable toowners of the Company by the weighted average number of ordinary shares during thefinancial year.

The following tables reflect the profit and share data used in the computation of basic anddiluted loss per share for the years ended December 31:

2010 2011 2012US$ US$ US$

Loss for the year attributable to ownersof the Company used in thecomputation of basic and diluted lossper share (71,684,469) (34,162,011) (17,672,879)

2010 2011 2012No. of shares No. of shares No. of shares

Weighted average number of ordinaryshares for computation of basic and

diluted loss per share 100 100 49,041,147

7. Taxation

The major components of tax (benefit)/expense for the years ended December 31, 2010, 2011and 2012 are:

2010 2011 2012US$ US$ US$

Current tax:- Current tax charge 12,321,153 29,012,724 19,403,263- Under/(over) provision in respect of

previous years 1,557,318 6,238 (138,804)

13,878,471 29,018,962 19,264,459Deferred tax:- Reversal of temporary differences (14,371,026) (10,539,321) (746,060)

Tax (benefit)/expense recognized in profit or loss (492,555) 18,479,641 18,518,399

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KrisEnergy Ltd.



7. Taxation (cont’d)

Relationship between tax (benefit)/expense and accounting profit

A reconciliation between tax (benefit)/expense and the accounting profit multiplied by theapplicable tax rate for the years ended December 31, 2010, 2011 and 2012 are as follows:

2010 2011 2012US$ US$ US$

(Loss)/profit before tax (72,177,024) (15,682,370) 845,520

Tax at domestic rates applicable in thecountries where the Group operates (15,206,998) 1,999,781 16,046,954

Adjustments:Non-deductible expenses 1,593,766 567,087 1,136,755Income not subject to tax – – (348,768)Effect of partial tax exemption and

tax relief (19,304) (19,752) (21,204)Deferred tax assets not recognized 11,552,782 15,900,315 1,807,386Under/(over) provision in respect of

previous years 1,557,318 6,238 (138,804)Other 29,881 25,972 36,080

Tax (benefit)/expense recognized inprofit or loss (492,555) 18,479,641 18,518,399

The above reconciliation is prepared by aggregating separate reconciliation for each national jurisdiction.

The nature of expenses that is not deductible for tax purposes are mainly made up of thefollowing items:

2010 2011 2012US$ US$ US$

Expenses attributable to joint operation’soverhead charges – 110,627 85,184

Doubtful debts – – 1,026,741Interest expenses 873,200 319,979 – Settlement of claim 271,463 – –

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KrisEnergy Ltd.



7. Taxation (cont’d)

Deferred tax

Deferred tax at December 31 relates to the following:

Consolidatedstatement of financial position

Consolidatedstatement of comprehensive

income

2010 2011 2012 2010 2011 2012

US$ US$ US$ US$ US$ US$

Deferred tax liabilities

Fair valueadjustment onacquisition 53,521,793 45,465,616 43,971,002 (13,755,026) (8,056,177) (1,494,614)

Deferred tax assets

Provisions (491,887) (2,975,031) (2,226,477) (616,000) (2,483,144) 748,554

Deferred taxbenefit (14,371,026) (10,539,321) (746,060)

Net deferred tax

liabilities 53,029,906 42,490,585 41,744,525

Deferred tax assets not recognized

2010 2011 2012US$ US$ US$

Differences in depreciation, depletion andamortization for tax purposes – 13,905,142 16,403,182

Unutilized tax losses 11,552,782 13,547,955 12,857,301

11,552,782 27,453,097 29,260,483

The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to setoff current tax assets and current tax liabilities and the deferred tax assets and deferred taxliabilities relate to income taxes levied by the same tax authority.

Deferred tax assets have not been recognized in respect of these temporary differences andtax losses as they may not be used to offset taxable profits elsewhere in the Group, they havearisen in subsidiaries that have been loss-making for some time, and there are no other taxplanning opportunities or other evidence of recoverability in the near future. The use of thesetax losses is subject to the agreement of the tax authorities and compliance with certainprovisions of the tax legislation of the respective countries in which the companies operates.

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KrisEnergy Ltd.



8. Exploration and evaluation assets

2010 2011 2012US$ US$ US$

Cost At January 1 24,370,908 91,588,595 120,097,447 Acquisition of subsidiaries (Note 4) 47,126,629 13,476,079 – Farm-in arrangement (Note 5) – 6,446,538 – Additions 52,308,893 9,016,926 16,839,659Dry hole expenses (32,217,835) (430,691) (1,283,288)

At December 31 91,588,595 120,097,447 135,653,818

9. Oil and gas properties

US$Cost At January 1, 2010 – Acquisition of subsidiaries (Note 4) 227,442,320 Additions 21,907,708

At December 31, 2010 and January 1, 2011 249,350,028 Additions 8,322,380Exchange difference (31,637,654)

At December 31, 2011 and January 1, 2012 226,034,754 Additions 15,498,075

As at December 31, 2012 241,532,829

Depletion, amortization and impairment At January 1, 2010 – Charge for the year 50,263,555Impairment loss (Note 11) 22,846,789

At December 31, 2010 and January 1, 2011 73,110,344

Charge for the year 68,293,048Exchange difference (27,200,228)

At December 31, 2011 and January 1, 2012 114,203,164Charge for the year 22,638,042

As at December 31, 2012 136,841,206

Net book value As at December 31, 2010 176,239,684

As at December 31, 2011 111,831,590

As at December 31, 2012 104,691,623

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KrisEnergy Ltd.



10. Other property, plant and equipment

Renovation

Furnitureand

FittingsOffice

equipment Computers TotalUS$ US$ US$ US$ US$

Cost

At January 1, 2010 15,547 27,599 3,347 125,400 171,893 Additions 572,871 8,181 7,488 191,962 780,502Disposals – (10,680) (665) – (11,345)Exchange differences 847 1,504 182 6,925 9,458

At December 31, 2010and January 1, 2011 589,265 26,604 10,352 324,287 950,508

Additions 119,196 23,644 16,129 269,876 428,845Exchange differences (18,731) (113) (424) (12,084) (31,352)

At December 31, 2011and January 1, 2012 689,730 50,135 26,057 582,079 1,348,001

Additions 106,188 – 793 146,056 253,037Exchange differences 43,137 2,014 812 41,659 87,622

At December 31, 2012 839,055 52,149 27,662 769,794 1,688,660

Accumulated

depreciation

At January 1, 2010 15,547 2,577 473 12,759 31,356Charge for the year 169,384 11,255 4,603 112,192 297,434Disposals – (3,879) (326) – (4,205)Exchange differences 5,345 335 141 3,758 9,579


Charge for the year 217,931 12,742 6,392 246,758 483,823Exchange differences (25,219) (672) 7 (10,662) (36,546)


Charge for the year 337,105 15,476 6,104 224,715 583,400Exchange differences 34,045 1,652 781 32,572 69,050

At December 31, 2012 754,138 39,486 18,175 622,092 1,433,891

Net carrying amount

At December 31, 2010 398,989 16,316 5,461 195,578 616,344

At December 31, 2011 306,742 27,777 14,767 217,274 566,560

At December 31, 2012 84,917 12,663 9,487 147,702 254,769

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KrisEnergy Ltd.



11. Intangible assets

Goodwill Others TotalUS$ US$ US$

Cost At January 1, 2010 21,774,832 1,019,766 22,794,598 Acquisitions of subsidiaries (Note 4) 29,558,385 – 29,558,385

At December 31, 2010 and January 1, 2011 51,333,217 1,019,766 52,352,983 Acquisitions of subsidiaries (Note 4) 7,144,606 – 7,144,606 Additions – 649,955 649,955

At December 31, 2011, January 1, 2012and December 31, 2012 58,477,823 1,669,721 60,147,544

Accumulated amortization andimpairment loss

At January 1, 2010 – – – Impairment loss 16,256,809 – 16,256,809

At December 31, 2010, January 1, 2011,December 31, 2011, January 1, 2012and December 31, 2012 16,256,809 – 16,256,809

Net carrying amount

At December 31, 2010 35,076,408 1,019,766 36,096,174

At December 31, 2011 and 2012 42,221,014 1,669,721 43,890,735

Goodwill


(a) The going concern value implicit in our ability to sustain and/or grow our business byincreasing reserves and resources through new discoveries.

(b) The ability to capture unique synergies that can be realized from managing a portfolioof both acquired and existing fields.

(c) The requirement to recognize deferred tax assets and liabilities for the differencebetween the assigned values and the tax bases of assets acquired and liabilitiesassumed in a business combination at amounts that do not reflect fair value.

Other intangible assets

2010 2011 2012US$ US$ US$

0.75% overriding royalty interest inConcession Block G10/48 and G11/48 750,000 1,300,000 1,300,000

Leasehold bonus for Concession BlockG10/48 269,721 269,721 269,721

Others 45 100,000 100,000

1,019,766 1,669,721 1,669,721

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KrisEnergy Ltd.



11. Intangible assets (cont’d)

The Group was assigned the overriding royalty interest from the acquisition of KrisEnergy Oiland Gas (Thailand) Ltd (“KEOG”) and KrisEnergy Resources (Thailand) Ltd (“KER”). Theoverriding royalty interest entitles the Group rights to the revenues derived from the productionand disposal of all of the oil, gas, and other minerals, in, on, under, and that may be producedand saved from Concession Block G10/48 and G11/48.

The useful lives of these other intangible assets are estimated to be indefinite as theexploration period of the blocks are extended every three years and cannot be reliablyestimated.

Impairment testing

For impairment testing purposes, goodwill acquired through business combinations has beenallocated as follows:

2010 2011 2012US$ US$ US$

G10/48 and G11/48 Concession 21,774,832 21,774,832 21,774,832Block 9A and Block 8/32 Concession 13,301,576 13,301,576 13,301,576Bulu PSC – 7,144,606 7,144,606

35,076,408 42,221,014 42,221,014

The recoverable amount of each field is determined on a value-in-use calculation.

The calculation of value in use of the oil exploration and production CGU is most sensitive tothe following assumptions:

- Production volumes- Discount rates- Crude oil prices

Estimated production volumes are based on detailed date for the fields and take into accountdevelopment plans for the fields agreed by management as part of the long-term planning

process. It is estimated that, if all production were to be reduced by 2% for the whole term of the contract area, this would not be sufficient to reduce the excess of recoverable amount over the carrying amounts of the individual CGUs to zero. Consequently, management believes noreasonably possible change in the production assumptions would cause the carrying amountof goodwill and/or other non-current assets to exceed their recoverable amount.

The Group generally estimates value in use for the oil exploration and production CGU using adiscount cash flow model. The future cash flows are discounted to their present value using apre-tax discount rate of 8% to 10% that reflects current market assessments of the time valueof money and the risks specific to the asset.

The discount rate is derived from the Group’s weighted average cost of capital (“WACC”), withappropriate adjustments made to reflect the risks specific to the asset/CGU.

Oil prices are based on Brent future prices at the reporting date and adjusted for quality,transportation fees and regional price differences.

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KrisEnergy Ltd.




During the year ended December 31, 2010, the Group engaged RPS to carry out anassessment of the Glagah Kambuna Block and its reserves value. As a result, an impairmentloss of US$23,627,101 was recognized, of which US$780,312 and US$22,846,789 wasallocated to goodwill and oil and gas properties, respectively.

In 2010, an impairment loss of US$15,476,497 relating to goodwill arising from the acquisitionof KrisEnergy Nam Con Son B.V. was also recognized. This was triggered by unsuccessfulexploration results.

12. Embedded derivatives

In 2011, the Group issued callable bonds (Note 20), which have embedded derivatives thatrequire bifurcation and separately recognized and accounted for at fair value with any changesto fair value credited or charge to profit or loss. The carrying value of the embedded derivativesas at December 31, 2011 and 2012 amounted to US$1,420,000 and US$2,864,000respectively. The effect on profit or loss is reflected in other operating expenses (Note 6).

13. Investment securities

2010 2011 2012US$ US$ US$

Available for sale investments

Unquoted equity shares, at cost – – 182,057

14. Inventories

2010 2011 2012US$ US$ US$

Statement of financial position:

Drilling supplies and materials 5,570,791 5,954,438 5,309,628Crude oil 723,021 964,031 745,100

6,293,812 6,918,469 6,054,728

Profit or loss:

Inventories recognized as an expense incost of sales 170,973 241,922 1,518,421

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KrisEnergy Ltd.



15. Trade and other receivables

2010 2011 2012US$ US$ US$

Trade and other receivables (current):

Trade receivables 17,357,761 13,336,750 11,180,087Refundable deposits 1,387,185 482,751 282,210Other receivables 4,154,463 8,105,586 14,352,815Joint operation receivables 3,662,879 7,257,441 8,928,334

26,562,288 29,182,528 34,743,446Other receivables (non-current):

Amount due from holding company – 769,865 –

Total trade and other receivables (currentand non-current) 26,562,288 29,952,393 34,743,446

Add: Cash and bank balances (Note 17) 35,345,976 42,659,700 129,900,954

Total loans and receivables 61,908,264 72,612,093 164,644,400

Trade receivables are non-interest bearing and are generally on 30 days’ terms. They arerecognized at their original invoice amounts which represent their fair values on initialrecognition.

Joint operation receivables relate to amounts due from the joint operators for cash calls inexcess of the Group’s obligation. These amounts are unsecured, non-interest bearing, and willbe offset against future cash calls.

Amount due from holding company was unsecured and non-interest bearing. The amount wasfully settled in 2012.

Other receivables (current) comprise:

2010 2011 2012

US$ US$ US$Payment on behalf of joint operation’spartners – – 7,646,320

Proportionate share of joint operation’s other receivables 4,125,410 7,978,075 5,905,932

Value added tax receivables 29,053 36,017 701,530Others – 91,494 99,033

4,154,463 8,105,586 14,352,815

Value added tax receivables include value added tax claim made to the IndonesianGovernment in respect of Glagah Kambuna TAC of US$3,013,204. For the year ended

December 31, 2012, an allowance for doubtful debt of US$2,333,106 was made against thevalue added tax receivables as the value added tax claim may not be recoverable due to theanticipated relinquishment of the contract area in 2013.

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KrisEnergy Ltd.



15. Trade and other receivables (cont’d)

Trade and other receivables denominated in foreign currencies at December 31 are as follows:

2010 2011 2012US$ US$ US$

Thai Baht 5,398 73,312 20,679

At the reporting date, except for the allowance made on the value added tax receivables, theGroup does not have any receivables that are past due or impaired, or would otherwise be

past due but not impaired.

16. Other current assets

2010 2011 2012US$ US$ US$

Advance payment pursuant to farm-inarrangements 6,193,155 – –

Advance payment for acquisition of interestsin joint operations 1,275,000 1,275,000 –

Advance payment for signature bonus – 1,000,000 – Cash calls paid in respect of 10%

participating interest in Block 105 andBlock 120 that have yet to be legallytransferred to the Group – 142,577 –

Cash calls paid in advance 1,066,086 – – Cash calls paid in advance on behalf of

carried party 3,187,302 – – Expenses directly attributable to proposed

share issue – – 500,000Past costs of Tanjung Aru JSA – 73,737 –

11,721,543 2,491,314 500,000

Advance payment pursuant to farm-in arrangements

On March 23, 2010, KrisEnergy (Phu Khanh 120) Ltd entered into Farm-out Agreement withNeon Energy (Song Hong) Pty Ltd (“Neon Energy”), whereby KrisEnergy (Phu Khanh 120) Ltdacquired 40% participating interest in Block 120 PSC, offshore Vietnam. Pursuant to the Farm-out Agreement, KrisEnergy (Phu Khanh 120) Ltd is to pay Neon Energy the past costs of US$375,000 seismic costs of Block 2D (to the extent then incurred), and all amounts that it willbecome liable for under the Joint Operating Agreement (“JOA”) incurred in the period betweenthe Effective Date, January 1, 2010, and the Farm-in Date.

On May 3, 2010, KrisEnergy (Song Hong 105) Ltd entered into Farm-out Agreement with NeonEnergy, whereby it acquired 40% participating interest in Block 105 – 110/04, offshoreVietnam. Pursuant to the Farm-out Agreement, KrisEnergy (Song Hong 105) Ltd is to payNeon Energy the past costs of US$562,000, seismic costs of up to a maximum of

US$2,750,000, and all the amounts that it will become liable for under the Joint Operating Agreement incurred in the period between the Effective Date, January 1, 2010, and the Farm-in Date.

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KrisEnergy Ltd.



16. Other current assets (cont’d)

Cash calls paid in advance on behalf of carried party

In addition, KrisEnergy Ltd. also paid US$9,872,727 for the Chervon’s 30% participatinginterest of all the costs and expenses associated with the Farming Obligations (the “Carry Amount”) pursuant to the Farmout Agreement dated November 1, 2009. Any additional farm-inobligation costs associated with Chevron’s 30% participating interest shall be borne solely byChevron.

In 2010, the operator made cash calls for US$6,685,423, leaving a balance of US$3,187,302as at December 31, 2010, which was extinguished in 2011 when the operator made further

cash calls.

17. Cash and bank balances

2010 2011 2012US$ US$ US$

Cash at banks and on hand 27,345,976 34,659,700 121,900,954Short-term structured deposits 8,000,000 8,000,000 8,000,000

Cash and bank balances 35,345,976 42,659,700 129,900,954

Cash at banks earn interest at floating rates based on daily bank deposit rates. Included incash at banks and on hand is a short-term structured deposit of US$8,000,000 placed with andpledged to a bank for issuance of guarantees on behalf of KrisEnergy (Song Hong 105) Ltdand KrisEnergy (Phu Khanh 120) Ltd. These deposits had a minimum yield of 0.5% per annum.

As at December 31, 2010, an amount of US$2,004,932 in debt servicing reserve account hasbeen pledged to secure banking facilities (Note 20).

For the purpose of consolidated statement of cash flows, cash and cash equivalents comprisethe following at December 31:

2010 2011 2012US$ US$ US$

Cash and bank balances 35,345,976 42,659,700 129,900,954Less: Restricted cash (10,004,932) (8,000,000) (8,000,000)

Cash and cash equivalents 25,341,044 34,659,700 121,900,954

Cash at banks and on hand denominated in foreign currencies at December 31 are as follows:

2010 2011 2012US$ US$ US$

Thai Baht 5,699 76,748 37,185Euro Dollar – 5,724 193,322Indonesia Rupiah 36,690 86,490 49,901

Singapore Dollar – 491 460United States Dollar 1,645,210 68,339 140,938

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KrisEnergy Ltd.



18. Share capital and reserve

Share capital

2010 and 2011 2012No of

Shares US$No of

shares US$

Issued and fully paid

ordinary shares

At January 1 100 1 100 1Issued on July 4, 2012

by way of capitalization of amount due to holdingcompany – – 79,999,900 799,999

Issued on July 9, 2012for cash – – 20,000,000 200,000

At December 31 100 1 100,000,000 1,000,000

The holders of ordinary shares are entitled to receive dividends as and when declared by theCompany. All ordinary shares carry one vote per share. The ordinary shares have a par value

of US$0.01 each.

Share premium

2010 2011 2012US$ US$ US$

At January 1 – – – Increase on July 4, 2012 by way of

capitalization of amount due to holdingcompany into new shares – – 287,950,000

Increase on July 9, 2012 for cash arisingfrom an issuance of share capital – – 114,800,000

At December 31 – – 402,750,000

Foreign currency translation reserve

The foreign currency translation reserve represents exchange differences arising from thetranslation of the financial statements of foreign subsidiaries whose functional currencies aredifferent from that of the Group’s presentation currency.

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KrisEnergy Ltd.



19. Trade and other payables

2010 2011 2012US$ US$ US$

Trade and other payables (current):

Trade payables 2,136,549 2,409,652 2,726,314Joint operation payables 6,141,360 1,505,856 878,884Staff payroll and bonus payables 2,081,687 2,737,985 2,394,288Other payables 2,675,138 7,017,518 5,961,529

13,034,734 13,671,011 11,961,015

Other payables (non-current): Amount due to holding company 283,471,993 290,276,833 –

Total trade and other payables (currentand non-current) 296,506,727 303,947,844 11,961,015

Accrued operating expenses 9,999,770 7,061,438 9,902,998Loans and borrowings (Note 20) 68,000,000 80,317,463 81,142,055Less: Staff payroll and bonus payables (2,081,687) (2,737,985) (2,394,288)

Total financial liabilities at amortized costs 372,424,810 388,588,760 100,611,780

Trade payables are non-interest bearing and are normally settled on 60-day terms.

Joint operation payables are cash calls due to the operator of joint operations. These amountsare unsecured, non-interest bearing, and are to be settled in cash.

Other payables (current) comprise:

2010 2011 2012US$ US$ US$

Cash calls received in relation to Tanjung Aru PSC – 1,235,344 –

Settlement of claim 1,600,000 – – Proportionate share of joint operation’s

other payables 1,009,229 1,693,742 1,723,607 Accrued interest payable for callable

bonds – 3,953,193 3,953,193Others 65,909 135,239 284,729

2,675,138 7,017,518 5,961,529

Settlement of claim relates to a US$1,600,000 payable to an external partner as an agreedsettlement for their claim relating to Block A Cambodia farm-in arrangement in 2009.

The Tanjung Aru PSC was signed on December 19, 2011. Cash calls received on behalf weretransferred to Tanjung Aru PSC’s bank account in 2012.

Amount due to holding company was unsecured and non-interest bearing. The amounts werefully settled in 2012, of which US$288,749,999 was converted into share capital of theCompany (Note 18).

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KrisEnergy Ltd.



19. Trade and other payables (cont’d)

Included in accrued operating expenses is the Group’s proportionate share of joint operation’saccrued expenses for 2010, 2011 and 2012 amounting to US$5,764,193, US$2,988,163 andUS$4,047,565, respectively.

Trade and other payables denominated in foreign currencies at December 31 are as follows:

2010 2011 2012US$ US$ US$

Thai Baht 48,257 244,314 254,971Indonesia Rupiah – 41,876 167,186

20. Loans and borrowings

Maturity 2010 2011 2012US$ US$ US$

Current:

USD loan at LIBOR + 4.5% p.a. 2011 45,000,000 – – USD loan at LIBOR + 6.5% p.a. 2011 23,000,000 – –

68,000,000 – –

Non-current:

Callable bonds 2016 – 80,317,463 81,142,055

68,000,000 80,317,463 81,142,055

Bank loans

The London Interbank Offered Rate (“LIBOR”) rate ranges from 0.25% to 0.3425%. The loanswere repayable within 18 months from the drawdown date. The facility has a 6-monthextension option, subject to lenders’ approval and extension for payment. The facility was

secured by:

(1) Fixed and floating charges over the acquired producing oil and gas assets in Indonesiaand Thailand (the “Assets”) of KrisEnergy Asia Holdings B.V. (“KEAH”) and KrisEnergy(Gulf of Thailand) Ltd (“KEGOT”) (Note 9);

(2) Pledge over shares of KEAH and KEGOT and all existing and future rights directly or indirectly related to the Assets;

(3) Assignment and subordination of all inter-company/shareholders’ loans;(4) Security over all other material tangible or intangible assets relating to Thailand and

Indonesian assets owned by the Group (Note 9); and(5) Charge over the debt service reserve accounts in KrisEnergy (“KEITH”) and

KrisEnergy Asia Holdings B.V. (“KEAH”) (Note 17).

The bank loans were fully repaid in 2011.

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KrisEnergy Ltd.



20. Loans and borrowings (cont’d)

Callable bonds

KrisEnergy Holding Company Ltd (“Issuer”), a wholly owned subsidiary, issued aUS$85,000,000 10.5% Senior Guaranteed Secured Bonds (“Bonds”) due July 21, 2016 atissue price of 92.3%. Interest on the Bonds will accrue at the rate of 10.5% per annum and willbe payable semi-annually in arrears on January 21, and July 21 in each year, commencing onJanuary 21, 2012.

The Bonds include an option for the Issuer to redeem all or a part of the Bonds at theredemption prices, giving rise to an embedded derivative that require bifurcation and is

separately recognized and accounted for at fair value (Note 12).

The carrying amount of the liability component of the Bonds at reporting date is arrived at asfollows:

2010 2011 2012US$ US$ US$

Face value of bonds – 85,000,000 85,000,000Discount on bonds – (6,545,000) (6,545,000)

Proceeds from issuance of Bonds – 78,455,000 78,455,000Embedded derivatives (Note 12) at initial

recognition – 1,526,000 1,526,000

Liability component at initial recognition – 79,981,000 79,981,000 Add: Accretion of interest on bonds – 336,463 1,161,055

At December 31 – 80,317,463 81,142,055

All obligations with respect to the Bonds are secured as follows:

(a) A first priority pledge over all of the share capital in certain subsidiaries and KrisEnergy(Gulf of Thailand) Ltd’s equity interest in B8/32 Partners Ltd and Orange Energy Ltd;

(b) A first priority floating charge granted by certain subsidiaries over each of their presentand future assets;

(c) A first priority assignment by certain subsidiaries of each of their present and futuremoney claims under the internal loans; and

(d) A pledge by KrisEnergy Asia Holdings B.V. of its present and future receivables under the internal loans and certain insurances in relation to hydrocarbon assets.

Revolving credit

On July 21, 2011 the Issuer also entered into a credit agreement with banks for aUS$30,000,000 revolving credit facility (“Revolving Credit”). The Revolving Credit has an interestrate of LIBOR plus an applicable margin ranging from 4.0% to 5.0% (in increments of 0.25%),

depending on the percentage of commitment utilized at the relevant time. The Revolving Credit isused to finance the Group’s working capital requirements, capital expenditure, acquisitions andpayment of fees and expenses related to obtaining debt funding.

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KrisEnergy Ltd.




Revolving credit (cont’d)

As at December 31, 2011 and 2012, there is no amount drawn under the Revolving Credit.

The Parent Guarantor of the Bonds and Revolving Credit is the Company and the SubsidiaryGuarantors are KrisEnergy Asia Coöperatief U.A., KrisEnergy Ltd, KrisEnergy Glagah-Kambuna B.V., Kutai B.V., KrisEnergy Nam Con Son B.V., KrisEnergy Oil & Gas (Thailand)Ltd, KrisEnergy Resources (Thailand) Ltd, KrisEnergy (Gulf of Thailand) Ltd., KrisEnergy(Cambodia) Ltd, KrisEnergy (Phu Khanh 120) Ltd. and KrisEnergy (Song Hong 105) Ltd.

Please refer to Note 23 for subsidiaries that provide the above collaterals.

21. Provisions

US$Decommissioning provisions

At January 1, 2010 – Acquisition of a subsidiary (Note 4) 14,581,258 Arising during the year 2,875,363Write back of unused provisions (268,002)

At December 31, 2010 and January 1, 2011 17,188,619 Arising during the year 1,100,000Unwinding of discount on decommissioning provisions 536,114Write back of unused provisions (776,637)

At December 31, 2011 and January 1, 2012 18,048,096 Arising during the year 6,076,986Unwinding of discount on decommissioning provisions 399,561

At December 31, 2012 24,524,643

2010 2011 2012US$ US$ US$

Current – – 2,500,000Non-current 17,188,619 18,048,096 22,024,643

At December 31 17,188,619 18,048,096 24,524,643

The Group makes full provision for the future cost of decommissioning oil production facilitiesand pipelines on a discounted basis on the installation of those facilities.

The decommissioning provision represents the present value of decommissioning costsrelating to oil and gas properties, which are expected to be incurred up to 2039. Theseprovisions have been created based on the Group’s internal estimates. Assumptions based onthe current economic environment have been made, which management believe are areasonable basis upon which to estimate the future liability. These estimates are reviewed

regularly to take into account any material changes to the assumptions. However, actualdecommissioning costs will ultimately depend upon future market prices for the necessarydecommissioning works required which will reflect market conditions at the relevant time.

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KrisEnergy Ltd.



21. Provisions (cont’d)

Furthermore, the timing of decommissioning is likely to depend on when the fields cease toproduce at economically viable rates. This in turn will depend upon future oil and gas prices,which are inherently uncertain.

22. Commitments

(a) Operating lease commitments

The Group has entered into non-cancellable commercial property leases for the officeoperations. These operating leases have remaining lease terms of one year or more.

Future minimum lease payments payable under non-cancellable operating leases asat December 31 are as follows:

2010 2011 2012US$ US$ US$

Not later than one year 413,352 466,155 679,980Later than one year but not later

than five years 447,798 120,440 1,331,608

861,150 586,595 2,011,588

(b) Capital commitments

Certain joint operations are required to incur minimum exploration activities of whichthe Group’s share of the estimated minimum budget for 2010, 2011 and 2012 isapproximately US$615,000, US$66,105,500 and US$93,295,534 respectively.

At the reporting date, the Group’s outstanding minimum exploration commitments willfall due as follows:

2010 2011 2012US$ US$ US$

Within one year – 30,854,500 13,627,034Within two to five years 615,000 35,251,000 79,668,500

Total 615,000 66,105,500 93,295,534

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KrisEnergy Ltd.



23. Related party disclosures

The financial statements include the financial statements of KrisEnergy Ltd., the subsidiariesand joint arrangements listed in the following table:

Name of entities Principalactivities

Principalplace of

businessCountry of

incorporation% of

equity interest2010 2011 2012

KrisEnergy HoldingCompany Ltd

(formerly known asKrisEnergy (NENatuna) Ltd)(1)(2)(3)

Investment holding Singapore British VirginIslands

100 100 100

KrisEnergy Pte Ltd(1)(2)(3) Provision of management supportservice

Singapore Singapore 100 100 100

KrisEnergy(ManagementServices) Ltd(1)(2)(3)

Provision of offshoremanagement supportservice

Singapore British VirginIslands

100 100 100

KrisEnergy Ltd(1)(2)(3)(4) Investment holding Singapore British VirginIslands

100 100 100

KrisEnergy International(Thailand) HoldingsLtd(1)(2)(3)

Investment holding Thailand British VirginIslands

100 100 100

KrisEnergy (Gulf of Thailand) Ltd.

Investment holding Thailand CaymanIslands

100 100 100

KrisEnergy Oil and Gas(Thailand) Ltd

Exploration andproduction of oil andgas

Thailand Thailand 100 100 100

KrisEnergy Resources(Thailand) Ltd



KrisEnergy

Management Ltd

Dormant Thailand British Virgin

Islands

100 100 100

KrisEnergy (Cambodia)Holding Ltd(1)(2)(3)

Investment holding Cambodia British VirginIslands

100 100 100

KrisEnergy (Cambodia)Ltd


Cambodia Cambodia 100 100 100

KrisEnergy (Phu Khanh120) Ltd(1)(2)(3)


Vietnam British VirginIslands

100 100 100

KrisEnergy (Song Hong105) Ltd(1)(2)(3)

Exploration andproduction of oil and

gas


100 100 100

KrisEnergy (Production)Ltd(9)

Dormant Singapore British VirginIslands

100 100 100

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KrisEnergy Ltd.



23. Related party disclosures (cont’d)


Principalplace of

businessCountry of

incorporation% of


KrisEnergy AsiaCoöperatief U.A.

Investment holding Singapore TheNetherlands

100 100 100

KrisEnergy AsiaHoldings B.V.(1)

Investment holding Singapore TheNetherlands

100 100 100



Indonesia TheNetherlands

100 100 100

KrisEnergy Nam ConSon B.V.(5)



100 100 100

KrisEnergy Kutai B.V. Exploration andproduction of oil andgas


100 100 100

KrisEnergy IndonesiaHoldings B.V.(formerly known asSerica Indonesia

Holdings B.V.)(6)



– 100 100

Serica Energy Pte Ltd(7) Investment holding Singapore Singapore – 100 100

KrisEnergy Kutei B.V.(formerly known asSerica Kutei B.V.)



– 100 100

KrisEnergy EastSeruway B.V.(formerly known asSerica East SeruwayB.V.)



– 100 100

BEM Resources Limited Investment holding Indonesia British VirginIslands

– 100 100

EM Block Limited Exploration andproduction of oil andgas

Indonesia British VirginIslands

– 100 100

B Block Limited Investment holding Indonesia British VirginIslands

– 100 100

KrisEnergy (Satria) Ltd(formerly known asPearl Oil (Satria)Limited)



– 100 100

KrisEnergy (EastMuriah) Limited



– – 100

KrisEnergy (Ageng) B.V. Exploration andproduction of oil andgas


– – 100

K-70



KrisEnergy Ltd.





Principalplace of

businessCountry of

incorporation% of


KrisEnergy (AndamanTimur) B.V.



– – 100

KrisEnergy (Nemo) B.V. Exploration andproduction of oil andgas


– – 100

KrisEnergy (Rembang)B.V.(8)


IndonesiaThe

Netherlands

– – 100

KrisEnergy (Tanjung Aru)B.V.


IndonesiaThe

Netherlands

– – 100

KrisEnergy (Udan Emas)B.V.


IndonesiaThe

Netherlands

– – 100

Orange Energy Ltd Exploration andproduction of oil andgas


B8/32 Partners Ltd Exploration andproduction of oil andgas

Thailand Thailand 4.63 4.63 4.63

(1) Capital Stock in this entity pledged as collateral for callable bonds(2) First priority floating charge provided by this entity over present and future assets as collateral for callable bonds(3) Assignment of internal loans by this entity as collateral for callable bonds(4) With effect from February 26, 2013, the name of the Company was changed from KrisEnergy Ltd to KrisEnergy (Asia) Ltd.(5) With effect from April 9, 2013, the name of the Company was changed from KrisEnergy Nam Con Son B.V. to KrisEnergy

(Bangora) B.V.(6) With effect from April 9, 2013, the name of the Company was changed from KrisEnergy Indonesia Holdings B.V. to

KrisEnergy (Andaman II) B.V.(7) With effect from February 28, 2013, the name of the Company was changed from Serica Energy Pte Ltd to Wassana

MOPU Pte. Ltd.(8) With effect from April 9, 2013, the name of the Company was changed from KrisEnergy (Rembang) B.V. to KrisEnergy

(Sakti) B.V.(9) With effect from May 2, 2013, the name of the Company was changed from KrisEnergy (Production) Ltd to KrisEnergy

(Song Hong 115) Ltd.

Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, thefollowing significant transactions between the Group and related parties took place at terms agreedbetween the parties during the financial year:

2010 2011 2012US$ US$ US$

Management fee from holding company 8,943,445 – –

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KrisEnergy Ltd.




Compensation of directors and key management personnel

The remuneration of directors and other members of key management during the year was as follows:

2010 2011 2012US$ US$ US$

Salaries and bonus 3,382,484 3,521,763 3,762,717Central Provident Fund contributions 13,449 16,537 16,317

3,395,933 3,538,300 3,779,034

Comprise amounts paid to:Directors of the Company 2,284,302 2,414,108 2,578,112Other key management personnel 1,111,631 1,124,192 1,200,922

3,395,933 3,538,300 3,779,034

24. Fair value of financial instruments

(a) Fair value of financial instruments that are carried at fair value

The following table shows an analysis of financial instruments carried at fair value bylevel of fair value hierarchy:

Level 1 Level 2 Level 3 TotalUS$ US$ US$ US$

2011Financial assets:Embedded derivatives – 1,420,000 – 1,420,000

2012Financial assets:Embedded derivatives – 2,864,000 – 2,864,000

At December 31, 2010, there are no financial instruments carried at fair value.

Fair value hierarchy

The Group classifies fair value measurement using a fair value hierarchy that reflectsthe significance of the inputs used in making the measurements. The fair valuehierarchy has the following levels:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2 – Inputs other than quoted prices included within Level 1 that areobservable for the asset or liability, either directly (i.e., as prices) or indirectly(i.e., derived from prices)

• Level 3 – Inputs for the asset or liability that are not based on observablemarket data (unobservable inputs)

There have been no transfers between fair value measurements level during thefinancial years ended December 31, 2010, 2011 and 2012.

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KrisEnergy Ltd.



24. Fair value of financial instruments (cont’d)

(a) Fair value of financial instruments that are carried at fair value (cont’d)

Determination of fair value

Embedded derivatives – Fair value of embedded derivatives are determined usingvaluation models with both observable and non-observable data inputs. The non-observable inputs to the models include assumptions regarding the bond price, bondyield and sigma (bond price volatility).

(b) Fair value of financial instruments by classes that are not carried at fair valueand whose carrying amounts are reasonable approximation of fair value

Trade and other receivables and payables and accrued operating expenses, and

short-term loans and borrowings

The carrying amounts of these financial assets and liabilities are reasonableapproximation of fair values due to their short-term nature.

(c) Fair value of financial instruments by classes that are not carried at fair value

and whose carrying amounts are not reasonable approximation of fair value

The fair value of financial instruments that are not carried at fair value and whose

carrying amounts are not reasonable approximate of fair value are as follows:

2010 2011 2012

Carryingamount Fair value



US$ US$ US$ US$ US$ US$

Financial assets Amount due from

holding company – – 769,865 * – – Equity securities,

at cost – – – – 182,057 **

Financial

liabilities: Amount due toholding company 283,471,993 * 290,276,833 * – –

Loans andborrowings(non-current)- amortized cost – – 80,317,463 80,307,945 81,142,055 81,041,256

* Amounts due from/to holding company

Fair value information has not been disclosed for amounts due from/to holding companies thatare carried at cost because fair value cannot be measured reliably. The amounts have no fixedterms of repayment and are repayable only when the cash flows of the borrower permits.

Accordingly, the fair values of the amounts due from/to holding companies are notdeterminable as the timing of the future cash arising from the amounts cannot be estimatedreliably.

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KrisEnergy Ltd.






(cont’d)

** Investment in equity securities carried at cost

Fair value information has not been disclosed for the Group’s investment in equity securitiesthat are carried at cost because fair value cannot be measured reliably. These equity securitiesare not quoted on any market and does not have any comparable industry peer that is

listed. The Group does not intend to dispose of this investment in the foreseeable future.


Fixed rate callable loans

The fair value disclosed in the table above is estimated by discounting expected cash flows atmarket incremental lending rate for similar types of borrowing arrangements at the reportingdate.

25. Financial risk management objectives and policies

The Group is exposed to financial risks arising from its operations and the use of financialinstruments. The key financial risks include credit risk, interest rate risk, and liquidity risk. It is,and has been throughout the current financial year, the Group’s policy that no derivatives shallbe undertaken, except for the use as hedging instruments where appropriate and cost-efficient.

The following sections provide details regarding the Group’s exposure to the above-mentionedfinancial risks and the objectives, policies and processes for the management of these risks.

Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should acounterparty default on its obligations. The Group’s exposure to credit risk arises primarily from

trade and other receivables. For other financial assets (including cash and bank balances andderivatives), the Group minimizes credit risk by dealing exclusively with high credit ratingcounterparties.

Exposure to credit risk

At the end of the reporting date, the Group’s maximum exposure to credit risk is representedby:

- the carrying amount of each class of financial assets recognized in the consolidatedstatement of financial position- the carrying amount of loans and borrowings recognized in the consolidated statement of

financial position relating to a corporate guarantee for the Bonds

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KrisEnergy Ltd.



25. Financial risk management objectives and policies (cont’d)

Credit risk (cont’d)

Credit risk concentration profile

At the report date, approximately 46.5% (2011: 67.4%, 2010: 83.5%) of the Group’sreceivables arises from the Group’s working interest in Glagah Kambuna TAC, Block B8/32concession and Block B9A concession.

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are with creditworthydebtors with good payment record with the Group. Cash and cash equivalents, investmentsecurities and derivatives are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed inNote 15 (Trade and other receivables).

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s financialinstrument will fluctuate because of changes in market interest rates. At December 31, 2011and 2012, the Group has insignificant financial instruments that are exposed to interest raterisk.

In 2010, the Group’s exposure to interest rate risk arises primarily from the Group’s short-termdebt obligations with floating interest rates. With all other variables held constant, a hundredbasis points increase (decrease) in interest rate would increase (decrease) the Group’s lossafter tax by approximately US$340,000 arising mainly as a result of higher (lower) interestexpense on net floating borrowing position.

K-75



KrisEnergy Ltd.




Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligationsdue to shortage of funds. The Group’s exposure to liquidity risk arises primarily frommismatches of the maturities of financial assets and liabilities.

The table below summaries the maturity profile of the Group’s financial liabilities at thereporting date based on contractual undiscounted repayments obligations.

One year or less One to fiveyears More thanfive years TotalUS$ US$ US$ US$

2010

Financial liabilities:Trade and other payables 13,034,734 – – 13,034,734 Accrued operating

expenses 9,999,770 – – 9,999,770 Amount due to holding

company – – 283,471,933 283,471,933Loans and borrowings 68,000,000 – – 68,000,000

Total undiscountedfinancial liabilities 91,034,504 – 283,471,933 374,506,437

2011



company – – 290,276,833 290,276,833Loans and borrowings – 125,671,807 – 125,671,807

Total undiscountedfinancial liabilities 20,732,449 125,671,807 290,276,833 436,681,089

2012



companyLoans and borrowings – 116,746,808 – 116,746,808

Total undiscountedfinancial liabilities 21,864,013 116,746,808 – 138,610,821

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KrisEnergy Ltd.




Liquidity risk (cont’d)

The table below shows the contractual expiry by maturity of the Group’s contingent liabilitiesand commitments. The maximum amount of the corporate guarantee for the callable bonds(Note 20) is allocated to the earliest period in which the guarantee could be called.

One year or less

One to fiveyears

More thanfive years Total

US$ US$ US$ US$

2011

Corporate guarantees – 125,671,807 – 125,671,807

2012


26. Capital management

Capital includes debt and equity items as disclosed in the table below.

The primary objective of the Group’s capital management is to ensure that it maintain a healthycapital ratios in order to support its business and maximize shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes ineconomic conditions. To maintain or adjust the capital structure, the Group may adjust thedividend payment to shareholders, return capital to shareholders or issue new shares. Nochanges were made in the objectives, policies or processes during the year endedDecember 31, 2010, 2011 and 2012 respectively.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus

net debt. The Group’s policy is to keep the gearing ratio between 20% and 40%. The Groupincludes within net debts, trade and other payables, accrued operating expenses, and loansand borrowings less cash and cash equivalents. Capital includes equity attributable to theowners of the Company and amount due to holding company.

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KrisEnergy Ltd.



26. Capital management (cont’d)

2010 2011 2012US$ US$ US$

Trade and other payables (Note 19) 13,034,734 13,671,011 11,961,015 Accrued operating expenses (Note 19) 9,999,770 7,061,438 9,902,998Loans and borrowings (Note 20) 68,000,000 80,317,463 81,142,055Less: cash and cash equivalents

(Note 17) (27,345,976) (34,659,700) (121,900,954)

Net debt/(cash position) 63,688,528 66,390,212 (18,894,886)Equity attributable to the owners of

the Company (70,621,194) (107,478,624) 278,533,687 Amount due to holding company 283,471,933 290,276,833 –

Total capital 212,850,739 182,798,209 278,533,687

Capital and net debt 276,539,267 249,188,421 278,533,687

Gearing ratio 23% 27% –

27. Segment reporting

For management purposes, the Group operates in one business segment, that is explorationand production of oil and gas in Southeast Asia.

Revenue and non-current assets information based on the geographical location of assetsrespectively are as follows:

Revenue Non-current assets2010 2011 2012 2010 2011 2012US$ US$ US$ US$ US$ US$

Cambodia – – – 12,608,234 19,010,324 21,797,456

Indonesia 32,433,632 27,111,442 15,403,798 62,270,668 23,845,946 25,203,134Thailand 49,347,764 73,109,646 74,188,784 229,045,551 226,108,453 226,656,954Vietnam – – – – 6,855,049 10,578,632

81,781,396 100,221,088 89,592,582 303,924,453 275,819,772 284,236,176

Non-current assets information presented above consist of exploration and evaluation assets,oil and gas properties and intangible assets as presented in the consolidated statement of financial position.

Information about major customers

The Group identifies a major customer as one who contributes to 10 per cent or more of the

total revenue. As at December 31, 2010, 2011 and 2012, revenue from four major customerscontributed to 22%, 26%, 22% and 12%, 33%, 29%, 14% and 11%, and 38%, 30%, 9% and12% of the total revenue respectively.

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KrisEnergy Ltd.



28. Subsequent events

On March 15, 2013, KrisEnergy (Gulf of Thailand) Ltd entered into a Farm-out Agreement withPearl Oil (Amata) Limited, whereby it acquired 30% participating interest and operatorship inG6/48 concession, located at the Gulf of Thailand. As at date of the consolidated financialstatements, the approval from the Thai Government in connection with the assignment of thefarm-in interest and operatorship has not been received.

On April 8, 2013, KrisEnergy Ltd has entered into a sales and purchase agreement with TullowOil International Limited to acquire 100% of the share capital of Tullow Bangladesh Limited(“TBL”) through its wholly owned subsidiary, KrisEnergy Asia Holdings B.V. As at date of the

unaudited interim consolidated financial statements, the transaction is pending approval fromBangladesh Mineral Oil and Gas Corporation (“Petrobangla”) and the Government of thePeople’s Republic of Bangladesh. TBL holds a 30% working interest and operatorship of theproducing Bangora Block 9 onshore gas field.

On May 2, 2013, the US$30,000,000 revolving credit facility (Note 20) between KrisEnergyHolding Company Ltd and Standard Bank plc as administrative agent, Standard Bank plc andSumitomo Mitsui Banking Corporation as mandated lead arrangers, as issuing banks and asinitial lenders and The Bank of New York Mellon, Singapore branch as security trustee, hasbeen amended and restated to increase the total commitments to US$42,500,000.

On May 31, 2013, the Issuer of the Bonds (Note 20) issued an additional US$35,000,000

Bonds under the same terms, including the same interest rate and maturity date, increasingthe total principal amount of the 10.5% Senior Guaranteed Secured Bonds toUS$120,000,000.

29. Authorization of consolidated financial statements for issue

The consolidated financial statements for the financial year ended December 31, 2010, 2011and 2012 were authorized for issue in accordance with a resolution of the directors on July 1,2013.

K-79



APPENDIX LINDEPENDENT AUDITORS’ REPORT ON THE

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTSFOR THE THREE MONTHS ENDED MARCH 31, 2013

L-1



KrisEnergy Ltd

(Formerly known as KrisEnergy Holdings II Limited)

Report on Unaudited Interim Consolidated Financial Statements

For the three months period ended March 31, 2013

July 1, 2013

The Board of DirectorsKrisEnergy Ltd83 Clemenceau Avenue#10-05, UE SquareSingapore 239920

Dear Sirs:

Introduction

We have reviewed the accompanying interim consolidated statement of financial position of KrisEnergyLtd. (the “Company”; formerly known as KrisEnergy Holdings II Limited) and its subsidiaries(collectively, the “Group”) as at March 31, 2013 and the related interim consolidated statement of comprehensive income, changes in equity and cash flows for the three-month period then ended, anda summary of significant accounting policies and other explanatory notes. Management is responsiblefor the preparation and fair presentation of these interim consolidated financial statements inaccordance with International Accounting Standard 34, Interim Financial Reporting (IAS 34). Our responsibility is to express a conclusion on these interim consolidated financial statements based onour review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410,Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financialand accounting matters, and applying analytical and other review procedures. A review is substantiallyless in scope than an audit conducted in accordance with International Standards on Auditing andconsequently does not enable us to obtain assurance that we would become aware of all significantmatters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that theaccompanying interim consolidated financial statements do not present fairly, in all material respects,

the financial position of the Group as at March 31, 2013, and of its financial performance and its cashflows for the three-month period then ended in accordance with IAS 34.

L-2



KrisEnergy Ltd


Report on Unaudited Interim Consolidated Financial Statements


Other matter

This Report has been prepared for inclusion in the offering documents of KrisEnergy Ltd. in connectionwith the initial public offering of the ordinary shares of the Company.

Ernst & Young LLPPublic Accountants and Certified Public AccountantsSingapore

Partner-in-Charge: Toong Weng Sum, Vincent

L-3



APPENDIX MUNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2013

KrisEnergy Ltd


Consolidated Comprehensive Income


Three-month period ended

NoteMarch 31,

2012March 31,

2013US$ US$

(Unaudited) (Unaudited)

Revenue 5 24,539,778 20,067,114Cost of sales 5 (13,042,561) (10,856,270)

Gross profit 11,497,217 9,210,844Other income 5 591,336 871,936General and administrative expenses 5 (3,480,594) (4,739,059)Other operating expenses 5 287,000 251,424Finance income 5 103,381 210,241Finance costs 5 (2,524,706) (2,551,748)

Profit before tax 5 6,473,634 3,253,638Tax expense 6 (5,011,554) (3,792,509)

(Loss)/profit for the period 1,462,080 (538,871)

Other comprehensive income to be reclassified to profit or loss in subsequent periods:

Exchange differences on translation of foreign operations 6,446 (29,321)

Total comprehensive income attributable to owners of the Company 1,468,526 (568,192)

(Loss)/earnings per share attributable to owners of theCompany (cents per share) 5 1,462,080 (1)

The accompanying notes form an integral part of the interim consolidated financial statements.

M-1



KrisEnergy Ltd


Consolidated Statement of Financial Position as at March 31, 2013

NoteDecember 31,

2012March 31,

2013US$ US$

(Audited) (Unaudited)ASSETS

Non-current assetsExploration and evaluation assets 7 135,653,818 139,885,794Oil and gas properties 8 104,691,623 102,938,824Other property, plant and equipment 9 254,769 380,008Intangible assets 10 43,890,735 43,890,735Embedded derivatives 11 2,864,000 3,176,000Investment securities 12 182,057 182,057

287,537,002 290,453,418

Current assetsInventories 13 6,054,728 6,972,066Trade and other receivables 14 34,743,446 33,875,605Prepayments 1,108,574 767,002Other current assets 15 500,000 500,000Cash and bank balances 16 129,900,954 128,262,118

172,307,702 170,376,791

Total assets 459,844,704 460,830,209


EquityShare capital 17 1,000,000 1,000,000Share premium 17 402,750,000 402,750,000Foreign currency translation reserve 17 (1,220,085) (1,249,406) Accumulated losses (123,996,228) (124,535,099)

Total equity 278,533,687 277,965,495

Non-current liabilitiesLoans and borrowings 19 81,142,055 81,353,663

Deferred tax liabilities 6 41,744,525 40,969,036Provisions 20 22,024,643 22,132,592

144,911,223 144,455,291


M-2



KrisEnergy Ltd


Consolidated Statement of Financial Position as at March 31, 2013

NoteDecember 31,

2012March 31,

2013US$ US$

(Audited) (Unaudited)Current liabilitiesTrade and other payables 18 11,961,015 10,884,976 Accrued operating expenses 18 9,902,998 7,859,521Provisions 20 2,500,000 2,500,000Withholding tax payable 30,427 14,695Tax payable 12,005,354 17,150,231

36,399,794 38,409,423

Total liabilities 181,311,017 182,864,714

Total equity and liabilities 459,844,704 460,830,209


M-3



KrisEnergy Ltd


Consolidated Statement of Changes in Equity for the three months period ended March 31,

2013

Attributable to owners of the Company

NoteShare

capitalShare

premiumAccumulated

losses

Foreigncurrency

translationreserve

Totalequity

US$ US$ US$ US$ US$Balance at

January 1,2012 1 – (106,323,349) (1,155,276) (107,478,624)

Profit for theperiod – – 1,462,080 – 1,462,080

Other comprehensiveincome – – – 6,446 6,446

Totalcomprehensiveincome for theyear – – 1,462,080 6,446 1,468,526

Balance atMarch 31, 2012(Unaudited) 1 – (104,861,269) (1,148,830) (106,010,098)

Balance atJanuary 1,2013 1,000,000 402,750,000 (123,996,228) (1,220,085) 278,533,687

Loss for the period – – (538,871) – (538,871)Other

comprehensiveincome – – – (29,321) (29,321)

Totalcomprehensiveincome for theperiod – – (538,871) (29,321) (568,192)

Balance atMarch 31, 2013(Unaudited) 1,000,000 402,750,000 (124,535,099) (1,249,406) 277,965,495

The accompanying accounting policies and explanatory notes form an integral part of the interim

consolidated financial statements.

M-4



KrisEnergy Ltd




Three-month period endedMarch 31,

2012March 31,

2013US$ US$

(Unaudited) (Unaudited)Operating activitiesProfit before tax 6,473,634 3,253,638 Adjustment to reconcile profit before tax to net cash flows:Depreciation, depletion and amortization 4,739,834 4,629,434Net fair value gain on embedded derivatives (287,000) (312,000)Finance cost 2,424,816 2,443,799Unwinding of discount on decommissioning provisions 99,890 107,949Interest income (103,381) (210,241)

Operating cash flows before changes in working capital 13,347,793 9,912,579Changes in working capital:

Increase in inventories (390,526) (917,338)Decrease/(increase) in trade and other receivables (5,513,666) 1,209,413Increase in other current assets (129,604) – Decrease in trade and other payables (1,137,149) (306,350)

Cash flows from operations 6,176,848 9,898,304Interest received 103,381 210,241Interest paid (889) (21,710)

Net cash flows from operating activities 6,279,340 10,086,835

Investing activities Additions to exploration and evaluation assets (780,404) (4,231,976) Addition to oil and gas properties (1,800,472) (2,767,125)Purchase of other plant and equipment (68,886) (233,251)Purchase of investment securities (184,393) –

Net cash flows used in investing activities (2,834,155) (7,232,352)

Financing activitiesProceeds from bank borrowings 5,000,000 – Decrease in amount due to holding company (103,212) – Payment of bond interest (4,462,500) (4,462,500)

Net cash flows (used in)/from financing activities 434,288 (4,462,500)

Net (decrease)/increase in cash and cash equivalents 3,879,473 (1,608,017)Net effect of exchange rate changes (13,184) (30,819)Cash and cash equivalents at January 1 34,659,700 121,900,954

Cash and cash equivalents at March 31 (Note 16) 38,525,989 120,262,118


M-5



KrisEnergy Ltd


Notes to Interim Consolidated Financial Statements – March 31, 2013


KrisEnergy Ltd. (the “Company”) was incorporated on October 5, 2009 as a limited liabilitycompany in Cayman Islands. With effect from July 4, 2012, the name of the Company waschanged from KrisEnergy Holdings II Limited to KrisEnergy Ltd.


The principal activity of the Company is that of investment holding and the principal place of

business is Singapore. The principal activities of the subsidiaries and joint arrangements aredisclosed in Note 22 to the financial statements.

2. Summary of significant accounting policies

2.1 Basis of preparation

The interim consolidated financial statements of the Company and its subsidiaries, (collectivelythe “Group”) have been prepared in accordance with International Financial ReportingStandards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The interim consolidated financial statements have been prepared on a historical cost basisexcept as disclosed in the accounting policies below. The interim consolidated financialstatements are presented in United States Dollars (“USD” or “US$”).

2.2 Basis of consolidation

The interim consolidated financial statements comprise the financial statements of theCompany and its subsidiaries as at March 31, 2013.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Groupobtains control, and continue to be consolidated until the date when such control ceases.

The financial statements of the subsidiaries are prepared for the same reporting period as the

parent company, using consistent accounting policies.

All intra-group balances, transactions, unrealized gains and losses resulting from intra-grouptransactions and dividends are eliminated in full.

Where the ownership of a subsidiary is less than 100% and, therefore, a non-controllinginterest (“NCI”) exists, the NCI is allocated its share of the total comprehensive income of theperiod, even if that results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

• Derecognizes the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts as at the date when controls is lost

• Derecognizes the carrying amount of any NCI

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2.2 Basis of consolidation (cont’d)

• Derecognizes the cumulative translation differences recognized in equity• Recognizes the fair value of the consideration received• Recognizes the fair value of any investment retained• Recognizes any surplus or deficit in profit or loss• Reclassifies the parent’s share of components previously recognized in other

comprehensive income to profit or loss or retained earnings, as appropriate.

2.3 Changes in accounting policy and disclosures

Changes in accounting policies

The accounting policies adopted in the preparation of the interim consolidated financialstatements are consistent with those followed in the preparation of the Group’s annualconsolidated financial statements for the year ended December 31, 2012, except for theadoption of new standards and interpretations effective as at January 1, 2013.

The nature and the impact of the new standard/amendment is described below:

IAS 1 Presentation of Items of Other Comprehensive Income – Amendments to IAS 1

The amendments to IAS 1 change the grouping of items presentation in Other ComprehensiveIncome (“OCI”). Items that could be reclassified (or “recycled”) to profit or loss at a future pointin time would be presented separately from items which will never be reclassified. Theamendment affects presentation only and therefore will have no impact on the Group’sfinancial position or performance.

2.4 Standards issued but not yet effective

The Group has not adopted the following standards and interpretations that have been issuedbut not yet effective:

Description

Effective for annual

periods beginning on or after

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities January 1, 2014

IFRS 9 Financial Instruments: Classification and Measurement January 1, 2015

The directors expect that the adoption of the standards and interpretations above will have nomaterial impact on the financial statements in the period of initial application.

2.5 Business combination and goodwill

Business combinations are accounted for using the acquisition method. The cost of an

acquisition is measured as the aggregate the consideration transferred, measured atacquisition date fair value and the amount of any NCI in the acquiree. For each businesscombination, the Group elects whether it measures NCI in the acquiree at fair value or at the

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2.5 Business combination and goodwill (cont’d)

proportionate share of the acquiree’s identifiable net assets. Acquisition related costs areexpensed as incurred and included in general and administrative expenses. When the Groupacquires a business, it assesses the assets and liabilities assumed for appropriateclassification and designation in accordance with the contractual terms, economiccircumstances and pertinent conditions as at the acquisition date. This includes the separationof embedded derivatives in host contracts by the acquiree. Those petroleum reserves andresources that are able to be reliably measured are recognized in the assessment of fair

values on acquisition. Other potential reserves, resources and rights, for which fair valuescannot be reliably measured, are not recognized.

If the business combination is achieved in stages, the previously held equity interest in theacquiree is remeasured as its acquisition date fair value and any resulting gain or loss isrecognized in profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at fair valueat the acquisition date. Contingent consideration classified as an asset or liability that is afinancial instrument and within the scope of IAS 39 Financial Instruments: Recognition and

Measurement , is measured at fair value with changes in fair value recognized either in profit or loss or as a change to other comprehensive income. If the contingent consideration is notwithin the scope of IAS 39, it is measured in accordance with the appropriate IFRS. Contingent

consideration that is classified as equity is not remeasured and subsequent settlement isaccounted for within equity

Goodwill is initially measured at cost, being the excess of the aggregate of the considerationtransferred and the amount recognized for NCI over the fair value of the identifiable net assetsacquired and liabilities assumed. If fair value of the identifiable net assets acquired is in excessof the aggregate consideration transferred, the gain is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses.For the purpose of impairment testing, goodwill acquired in a business combination is, from theacquisition date, allocated to each of the Group’s cash generated units (“CGU”) that areexpected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a CGU and part of the operation in that unit is disposed of, thegoodwill associated with the disposed operation is included in the carrying amount of theoperation when determining the gain or loss on disposal. Goodwill disposed in thesecircumstances is measured based on the relative values of the disposed operation and theportion of the CGU retained.

2.6 Joint arrangements

A joint arrangement is a contractual arrangement whereby two or more parties have jointcontrol. Joint control is the contractually agreed sharing of control of an arrangement, whichexists only when decisions about the relevant activities require the unanimous consent of theparties sharing control.

A joint arrangement is classified either as joint operation or joint venture, based on the rightsand obligations of the parties to the arrangement.

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To the extent the joint arrangement provides the Group with rights to the assets andobligations for the liabilities relating to the arrangement, the arrangement is a joint operation.To the extent the joint arrangement provides the Group with rights to the net assets of thearrangement, the arrangement is a joint venture.

The Group reassesses whether the type of joint arrangement in which it is involved haschanged when facts and circumstances change.

(a) Joint operations/party to joint arrangements

The Group recognizes in relation to its interest in a joint operation/party to jointarrangements,

- its assets, including its share of any assets held jointly;- its liabilities, including its share of any liabilities incurred jointly;- its revenue from the sale of its share of the output arising from the joint

operation;- its share of the revenue from the sale of the output by the joint operation; andits expenses, including its share of any expenses incurred jointly.

The Group accounts for the assets, liabilities, revenues and expenses relating to itsinterest in a joint operation in accordance with the accounting policies applicable to theparticular assets, liabilities, revenues and expenses.

When the Group enters into transaction involving a sale or contribution of assets with a joint operation in which it is a joint operator, the Group recognizes gains and lossesresulting from such a transaction only to the extent of the interests held by the other parties to the joint operation.

When the Group enters into a transaction involving purchase of assets with a jointoperation in which it is a joint operator, the Group does not recognize its share of thegains and losses until it resells those assets to a third party. When such transactionsprovide evidence of a reduction in the net realizable value of the assets to be

purchased or of an impairment loss of those assets, the Group recognizes its share of those losses.

(b) Joint ventures

The Group recognizes its interest in a joint venture as an investment and accounts for the investment using the equity method from the date on which its becomes a jointventure.

On acquisition of the investment, any excess of the cost of the investment over theGroup’s share of the net fair value of the investee’s identifiable assets and liabilities isaccounted as goodwill and is included in the carrying amount of the investment. Anyexcess of the Group’s share of the net fair value of the investee’s identifiable assets

and liabilities over the cost of the investment is included as income in thedetermination of the entity’s share of the joint venture’s profit or loss in the period inwhich the investment is acquired.

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(b) Joint ventures (cont’d)

Under the equity method, the investment in joint ventures are carried in the balancesheet at cost plus post-acquisition changes in the Group’s share of net assets of the joint ventures. The profit or loss reflects the share of results of operations of the jointventures. Distributions received from joint ventures reduce the carrying amount of theinvestment. Where there has been a change recognized in other comprehensive

income by the joint ventures, the Group recognizes its share of such changes in other comprehensive income. Unrealized gains and losses resulting from transactionsbetween the Group and the joint venture are eliminated to the extent of the interest inthe joint ventures.

When the Group’s share of losses in a joint venture equals or exceeds its interest inthe joint venture, the Group does not recognize further losses, unless it has incurredobligations or made payments on behalf of the joint venture.

After application of the equity method, the Group determines whether it is necessary torecognize an additional impairment loss on the Group’s investment in joint ventures.The Group determines at the end of each reporting period whether there is any

objective evidence that the investment in the joint venture is impaired. If this is thecase, the Group calculates the amount of impairment as the difference between therecoverable amount of the joint venture and its carrying value and recognizes theamount in profit or loss.

The financial statements of the joint ventures are prepared as the same reporting dateas the Company. Where necessary, adjustments are made to bring the accountingpolicies in line with those of the Group.

Upon loss of significant influence or joint control over the joint venture, the Groupmeasures the retained interest at fair value. Any difference between the fair value of the aggregate of the retained interest and proceeds from disposal and the carryingamount of the investment at the date the equity method was discontinued is

recognized in profit or loss.

The Group accounts for all amounts previously recognized in other comprehensiveincome in relation to that joint venture on the same basis as would have been requiredif that joint venture had directly disposed of the related assets or liabilities.

When an investment in joint venture becomes an investment in an associate, theGroup continues to apply the equity method and does not remeasure the retainedinterest.

The Group does not have any investment in joint ventures for the period and year ended March 31, 2013.

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2.7 Foreign currency

The Group’s consolidated financial statements are presented in USD, which is also theCompany’s functional currency. Each entity in the Group determines its own functionalcurrency and items included in the financial statements of each entity are measured using thatfunctional currency.

(i) Transactions and balances

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective currency spot rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated to thefunctional currency spot rate of exchange ruling at the reporting date.

Differences arising on settlement or translation of monetary items are recognized inprofit or loss with the exception of monetary items that are designated as part of thehedge of the Group’s net investment of a foreign operation. These are recognized inother comprehensive income until the net investment is disposed of, at which time, thecumulative amount is reclassified to profit or loss. Tax charges and credits attributableto exchange differences on those monetary items are also recorded in other

comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency aretranslated using the exchange rates as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using theexchange rates at the date when the fair value was determined. The gain or lossarising on translation of non-monetary items measured at fair value is treated in linewith the recognition of gain or loss on change in fair value of the item (i.e., translationdifferences on items whose fair value gain or loss is recognized in other comprehensive income or profit or loss are also recognized in other comprehensiveincome or profit or loss, respectively.)

Any goodwill arising on the acquisition of a foreign operation and any fair value

adjustments to the carrying amounts of assets and liabilities arising on the acquisitionare treated as assets and liabilities of the foreign operation and translated at the spotrate of exchange at the reporting date.

(ii) Group companies

On consolidation, the assets and liabilities of foreign operations are translated intoUSD at the rate of exchange prevailing at the reporting date and their profit or loss aretranslated at exchange rates prevailing at the date of the transactions. The exchangedifferences arising on the translation for consolidation purposes are recognized inother comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognized

in profit or loss.

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2.7 Foreign currency (cont’d)

(ii) Group companies (cont’d)

In the case of a partial disposal without loss of control of a subsidiary that includes aforeign operation, the proportionate share of the cumulative amount of the exchangedifferences are re-attributed to non-controlling interest and are not recognized in profitor loss. For partial disposals of associates or jointly controlled entities that are foreignoperations, the proportionate share of the accumulated exchange differences is

reclassified to profit or loss.

2.8 Oil and natural gas exploration, evaluation and development expenditure

Oil and natural gas exploration, evaluation and development expenditure is accounted for using the successful efforts method of accounting.

Pre-license costs

Pre-license costs are expensed in the period in which they are incurred.

License and property acquisition costs

Exploration license and leasehold property acquisition costs are capitalized in intangibleassets.

License costs paid in connection with a right to explore in an existing exploration area arecapitalized and amortized over the term of the permit.

License and property acquisition costs are reviewed at each reporting date to confirm thatthere is no indication that the carrying amount exceeds the recoverable amount. This reviewincludes confirming that exploration drilling is still under way or firmly planned, or that it hasbeen determined, or work is under way to determine that the discovery is economically viablebased on a range of technical and commercial considerations and sufficient progress is beingmade on establishing development plans and timing.

If no future activity is planned or the license has been relinquished or has expired, the carryingvalue of the license and property acquisition costs is written off through profit or loss. Uponrecognition of proved reserves and internal approval for development, the relevant expenditureis transferred to oil and gas properties.

Exploration and evaluation costs

Exploration and evaluation activity involves the search for hydrocarbon resources, the determination

of technical feasibility and the assessment of commercial viability of an identified resource.

Once the legal right to explore has been acquired, costs directly associated with an explorationwell are capitalized as exploration and evaluation intangible assets until the drilling of the wellis completed and the results have been evaluated. These costs include directly attributable

employee remuneration, materials and fuel used, rig costs and payments made to contractors.

Geological and geophysical costs are recognized in profit or loss as incurred.

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2.8 Oil and natural gas exploration, evaluation and development expenditure (cont’d)

Exploration and evaluation costs (cont’d)

If no potentially commercial hydrocarbons are discovered, the exploration asset is written off through profit or loss as a dry hole. If extractable hydrocarbons are found and, subject tofurther appraisal activity (e.g. the drilling of additional wells), are likely to be capable of beingcommercially developed, the costs continue to be carried as an intangible asset whilesufficient/continued progress is made in assessing the commerciality of the hydrocarbons.

Costs directly associated with appraisal activity undertaken to determine the size,characteristics and commercial potential of a reservoir following the initial discovery of hydrocarbons, including the costs of appraisal wells where hydrocarbons were not found, areinitially capitalized as an intangible asset.

All such capitalized costs are subject to technical, commercial and management review, aswell as review for indicators of impairment at least once a year. This is to confirm the continuedintent to develop or otherwise extract value from the discovery. When this is no longer thecase, the costs are written off through profit or loss.

When proved reserves of oil and natural gas are identified and development is sanctioned bymanagement, the relevant capitalized expenditure is first assessed for impairment and (if

required) any impairment loss is recognized, then the remaining balance is transferred to oiland gas properties. Other than license costs, no amortization is charged during the explorationand evaluation phase.

Farm-outs – in the exploration and evaluation phase

The Group does not record any expenditure made by the farmee on its account. It also doesnot recognize any gain or loss on its exploration and evaluation farm-out arrangements, butredesignates any costs previously capitalized in relation to the whole interest as relating to thepartial interest retained. Any cash consideration received directly from the farmee is creditedagainst costs previously capitalized in relation to the whole interest with any excess accountedfor by the farmor as a gain on disposal.

Development costs

Expenditure on the construction, installation or completion of infrastructure facilities such asplatforms, pipelines and the drilling of development wells, including unsuccessful developmenton delineation wells, is capitalized within oil and gas properties.

2.9 Oil and gas properties and other property, plant and equipment

Initial recognition

Oil and gas properties and other property, plant and equipment are stated at cost, lessaccumulated depreciation and accumulated impairment losses.

The initial cost of an asset comprises its purchase price or construction cost, any costs directlyattributable to bringing the asset into operation, the initial estimate of the decommissioning

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2.9 Oil and gas properties and other property, plant and equipment (cont’d)

Farm-outs – outside the exploration and evaluation phase (cont’d)

- Tests the retained interests for impairment if the terms of the arrangement indicate thatthe retained interest may be impaired.

The consideration receivable on disposal of an item of property, plant and equipment or anintangible asset is recognized initially at its fair value by the Group. However, if payment for the

item is deferred, the consideration received is recognized initially at the cash priceequivalent. The difference between the nominal amount of the consideration and the cashprice equivalent is recognized as interest revenue. Any part of the consideration that isreceivable in the form of cash is treated as a definition of a financial asset and is accounted for at amortized cost.

Major maintenance, inspection and repairs

Expenditure on major maintenance re-fits, inspections 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 isprobable that future economic benefits associated with the item will flow to the Group, theexpenditure is capitalized. When part of the asset replaced was not separately considered as a

component and therefore not depreciated separately, the replacement value is used toestimate the carrying amount of the replaced asset(s) which is immediately written off.Inspection costs associated with major maintenance programs are capitalized and amortizedover the period to the next inspection. All other day-to-day repairs and maintenance costs areexpensed as incurred.

2.10 Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less anyaccumulated amortization (calculated on a straight line basis over their useful lives) and anyaccumulated impairment losses, if any.

Internally generated intangible assets, excluding capitalized development costs, are notcapitalized. Instead, the related expenditure is recognized in profit or loss in the year in whichthe expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Theamortization period and the amortization method for an intangible asset with a finite useful lifeis reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset areconsidered to modify the amortization period or method, as appropriate, and are treated as

changes in accounting estimates. The amortization expense on intangible assets with finitelives is recognized in profit or loss in the expense category consistent with the function of theintangible assets.

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2.10 Intangible assets (cont’d)

Intangible assets with indefinite useful lives are not amortized, but are tested for impairmentannually, either individually or at the CGU level. The assessment of indefinite life is reviewedannually to determine whether the indefinite life continues to be supportable. If not, the changein useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as thedifference between the net disposal proceeds and the carrying amount of the asset and are

recognized in profit or loss when the asset is derecognized.

2.11 Impairment of non-financial assets

Assets (excluding goodwill and indefinite life intangibles)

The Group assesses at each reporting date whether there is an indication that an asset (or CGU) may be impaired. If any indication exists, or when annual impairment testing for an assetis required, the Group estimates the asset’s or CGU’s recoverable amount. The recoverableamount is the higher of an asset’s or CGU’s fair value less costs to sell (“FVLCS”) and value inuse (“VIU”). The recoverable amount is determined for an individual asset, unless the assetdoes not generate cash inflows that are largely independent of those from other assets or

groups of assets, in which case, the asset is tested as part of a larger CGU to itbelongs. Where the carrying amount of an asset or CGU exceeds its recoverable amount, theasset/CGU is considered impaired and is written down to its recoverable amount.

The Group bases its impairment calculation on detailed budgets and forecasts which areprepared separately for each of the Group’s CGUs to which the individual assets are allocated.These budgets and forecasts generally cover the term of the contract area.

VIU does not reflect future cash flows associated with improving or enhancing an asset’sperformance, whereas anticipated enhancements to assets are included in FVLCScalculations.

In calculating VIU, the estimated future cash flows are discounted to their present value using

a pre-tax discount rate that reflects current market assessments of the time value of moneyand the risks specific to the asset/CGU. In determining FVLCS, recent market transactions aretaken into account. If no such transactions can be identified, an appropriate valuation model isused. These calculations are corroborated by valuation multiples or other available fair valueindicators.

Impairment losses are recognized in profit or loss in those expense categories consistent withthe function of the impaired asset, except for property previously revalued where therevaluation was taken to other comprehensive income. In this case, the impairment is alsorecognized in other comprehensive income up to the amount of any previous revaluation.

For assets/CGUs excluding goodwill, an assessment is made at each reporting date to

determine whether there is an indication that previously recognized impairment losses may nolonger exist or may have decreased. If such indication exists, the Group estimates the asset’sor CGU’s recoverable amount. A previously recognized impairment loss is reversed only if

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2.11 Impairment of non-financial assets (cont’d)

Assets (excluding goodwill and indefinite life intangibles) (cont’d)

there has been a change in the assumptions used to determine the asset’s/CGU’s recoverableamount since the last impairment loss was recognized. The reversal is limited so that thecarrying amount of the asset/CGU does not exceed its recoverable amount, or the carryingamount that would have been determined, net of depreciation, had no impairment loss beenrecognized for the asset/CGU in prior years. Such reversal is recognized in profit or loss

unless the asset is carried at a revalued amount, in which case, the reversal is treated as arevaluation increase and is recognized through other comprehensive income.

Goodwill

Goodwill is tested for impairment annually (as at December 31) and when circumstancesindicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. Where the recoverable amount of the CGU isless than their carrying amount including goodwill, an impairment loss is recognized.Impairment losses relating to goodwill cannot be reversed in future periods.

Intangible assets with indefinite useful lives

Intangible assets with indefinite useful lives are tested for impairment annually (as atDecember 31) either individually or at the CGU level, as appropriate, and when circumstancesindicate that the carrying value may be impaired.

2.12 Financial instruments – initial recognition and subsequent measurement

2.12.1 Financial assets


Financial assets within the scope of IAS 39 Financial Instruments: Recognition and

Measurement are classified as financial assets at fair value through profit or loss, loans andreceivables, held-to-maturity investments, available-for-sale financial assets, or derivativesdesignated as hedging instruments in an effective hedge, as appropriate. The Groupdetermines the classification of its financial assets at initial recognition.

All financial assets are recognized initially at fair value plus transaction costs, except in thecase of financial assets recorded at fair value through profit or loss which do not includetransaction costs.

Purchases or sales of financial assets that require delivery of assets in a time frameestablished by regulation or convention in the marketplace (regular way trades) are recognizedon the trade date, i.e. the date at which the Group commits to purchase or sell the asset.

The Group’s financial assets include cash and bank balances, trade and other receivables,investment securities and embedded derivatives.

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The subsequent measurement of financial assets depends on their classification, as follows:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading andfinancial assets designated upon initial recognition at fair value through profit or loss. Financialassets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are alsoclassified as held for trading unless they are designated as effective hedging instruments asdefined by IAS 39.

Financial assets at fair value through profit or loss are carried in the statement of financialposition at fair value with net changes in fair value presented as finance costs (negativechanges in fair value) or finance revenue (positive net changes in fair value) in profit or loss.

Financial assets designated upon initial recognition at fair value through profit or loss aredesignated at the initial recognition date and only if the criteria set out in IAS 39 are satisfied.The Group has not designated any financial assets upon initial recognition as at fair valuethrough profit or loss.

The Group evaluated its financial assets as held for trading, other than derivatives, todetermine whether the intention to sell them in the near term is still appropriate. When, in rarecircumstances, the Group is unable to trade these financial assets due to inactive markets andmanagement’s intention to sell them in the foreseeable future significantly changes, the Groupmay elect to reclassify them. The reclassification to loans and receivables, available-for-sale or held-to-maturity depends on the nature of the asset. This evaluation does not affect anyfinancial assets designated at fair value through profit or loss using the fair value option atdesignation, as these instruments cannot be reclassified after initial recognition.

Derivatives embedded in host contracts are accounted for as separate derivatives and recordedat fair value if their economic characteristics and risks are not closely related to those of the hostcontracts and the host contracts are not held for trading or designated at fair value through profitor loss. These embedded derivatives are measured at fair value, with changes in fair valuerecognized in profit or loss. Reassessment only occurs if there is a change in the terms of thecontract that significantly modifies the cash flows that would otherwise be required.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable paymentsthat are not quoted in an active market. After initial measurement, such financial assets aresubsequently measured at amortized cost using the effective interest rate (“EIR”) method, lessimpairment. Amortized cost is calculated by taking into account any discount or premium on

acquisition and fee or costs that are an integral part of the EIR. The EIR amortization isincluded in finance income in the profit or loss. The losses arising from impairment arerecognized in other operating expenses for receivables.

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Available-for-sale financial investments include equity investments and debt securities. Equity

investments classified as available-for-sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category arethose which are intended to be held for an indefinite period of time and that may be sold inresponse to needs for liquidity or in response to changes in the market conditions.

After initial measurement, available-for-sale financial investments are subsequently measuredat fair value with unrealized gains or losses recognized as other comprehensive income inavailable-for-sale reserves until the investment is derecognized, at which time the cumulativegain or loss is recognized in other operating income, or the investment is determined to beimpaired, when the cumulative loss reclassified from available-for-sale reserve to profit or lossin finance costs. Interest earned whilst holding available-for-sale financial investments isreported as interest income using the EIR method.

The Group evaluates whether the ability and intention to sell its available-for-sale financialassets in the near term is still appropriate. When, in rare circumstances, the Group is unable totrade these financial assets due to inactive markets and management’s intention to do sosignificantly changes in the foreseeable future, the Group may elect to reclassify thesefinancial assets. Reclassification to loans and receivables is permitted when the financialassets meet the definition of loans and receivables and the Group has the intent and ability tohold these assets for the foreseeable future or until maturity. Reclassification to the held tomaturity category is permitted only when the entity has the ability and intention to hold thefinancial asset accordingly.

For a financial asset reclassified from the available-for-sale category, the fair value carryingamount at the date of reclassification becomes its new amortized cost and any previous gain

or loss on the asset that has been recognized in equity is amortized to profit or loss over theremaining life of the investment using EIR. Any difference been the new amortized cost andthe maturity amount is also amortized over the remaining life of the asset using EIR. If theasset is subsequently determined to be impaired, then the amount recorded in equity isreclassified to profit or loss.

Investments in equity instruments whose fair value cannot be reliably measured are measuredat cost less impairment loss.

Derecognition

A financial asset (or, where applicable a part of a financial asset or part of a group of similar

financial assets) is derecognized when:

- The rights to receive cash flows from the asset have expired, or

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Derecognition (cont’d)

- The Group has transferred its rights to receive cash flows from the asset or hasassumed an obligation to pay the received cash flows in full without material delay to athird party under a pass-through arrangement; and either (a) the Group has

transferred substantially all the risks and rewards of the asset, or (b) the Group hasneither transferred nor retained substantially all the risks and rewards of the asset, buthas transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has enteredinto a pass-through arrangement, it evaluates if and to what extent it has retained the risks andrewards of ownership. When it has neither transferred nor retained substantially all the risksand rewards of the asset, nor transferred control of the asset, the asset is recognized to theextent of the Group’s continuing involvement in the asset. In that case, the Group alsorecognizes an associated liability. The transferred asset and the associated liability aremeasured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset ismeasured at the lower of the original carrying amount of the asset and the maximum amountof consideration that the Group could be required to repay.

Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that afinancial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, there is objective evidence of impairment as aresult of one or more events that has occurred since the initial recognition of the asset (anincurred loss event) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtor or group of debtors is experiencing

significant financial difficulty, default or delinquency in interest or principal payments, theprobability that they will enter bankruptcy or other financial reorganization and observable dataindicating that there is a measurable decrease in the estimated future cash flows, such aschanges in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortized cost

For financial assets carried at amortized cost, the Group first assesses whether objectiveevidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines thatno objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk

characteristics and collectively assesses them for impairment. Assets that are individuallyassessed for impairment and for which an impairment loss is, or continues to be, recognizedare not included in a collective assessment of impairment.

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Financial assets carried at amortized cost (cont’d)

If there is objective evidence that an impairment loss has incurred, the amount of the loss is

measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet beenincurred). The present value of the estimated future cash flows is discounted at the financialasset’s original EIR. If a loan has a variable interest rate, the discount rate for measuring anyimpairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and theamount of the loss is recognized in profit or loss. Interest income continues to be accrued onthe reduced carrying amount and is accrued using the rate of interest used to discount thefuture cash flows for the purpose of measuring the impairment loss. The interest income isrecorded as part of finance income in profit or loss. Loans together with the associatedallowance are written off when there is no realistic prospect of future recovery and all collateralhas been realized or has been transferred to the Group. If, in a subsequent year, the amountof the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, therecovery is credited to profit or loss.


For available-for-sale financial investments, the Group reassesses at each reporting datewhether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as available-for-sale, objective evidence wouldinclude a significant or prolonged decline in the fair value of the investment below its costs.

‘Significant’ is evaluated against the original cost of the investment and ‘prolonged’ against theperiod in which the fair value has been below its original cost. When there is evidence of impairment, the cumulative loss – measured as the difference between its acquisition cost andthe current fair value, less any impairment loss on that investment previously recognized inprofit or loss – is removed from other comprehensive income and recognized in profit or loss.Impairment losses on equity investments are not reversed through profit or loss; increase intheir fair value after impairment are recognized directly in other comprehensive income.

In the case of debt instruments classified as available-for-sale, impairment is assessed basedon the same criteria as financial assets carried at amortized cost. However, the amountrecorded for impairment is the cumulative loss measured as the difference between theamortized cost and the current fair value, less any impairment loss on that investmentpreviously recognized in profit or loss.

Future interest income continues to be accrued based on the reduced carrying amount of theasset, using the rate of interest used to discount the future cash flows for the purpose of

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measuring the impairment loss. The interest income is recorded as part of finance income. If,

in a subsequent year, the fair value of a debt instrument increases and the increases can beobjectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed in profit or loss.

2.12.2 Financial liabilities


Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair valuethrough profit or loss, loans and borrowings, or as derivatives designated as hedginginstruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognized initially at fair value and, in the case of loans borrowings,net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, accrued operating expensesand loans and borrowings.


The measurement of financial liabilities depends on their classification as described below:

Other financial liabilities

After initial recognition, other financial liabilities are subsequently measured at amortized cost

using the EIR method. Gains and losses are recognized in profit or loss when the liabilities arederecognized, as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition andfee or costs that are an integral part of the EIR. The EIR amortization is included as financecosts in profit or loss.

Derecognition

A financial liability is derecognized when the associated obligation is discharged or cancelledor expires.

When an existing financial liability is replaced by another from the same lender on substantially

different terms, or the terms of an existing liability are substantially modified, such an exchangeor modification is treated as a derecognition of the original liability and the recognition of a newliability. The difference in the respective carrying amounts is recognized in profit or loss.

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2.12.3 Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the interimconsolidated statement of financial position if there is a currently enforceable legal right tooffset the recognized amounts and there is an intention to settle on a net basis, or to realizethe assets and settle the liabilities simultaneously.

2.12.4 Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting dateis determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined usingappropriate valuation techniques. Such techniques may include using recent arm’s lengthmarket transactions; reference to the current fair value of another instrument that issubstantially the same; a discounted cash flow analysis or other valuation models.

An analysis of fair value of financial instruments and further details as to how they are

measured are provided in Note 23.

2.12.5 Current versus non-current classification

Derivative instruments that are not designated as effective hedging instruments are classifiedas current or non-current or separated in a current and non-current portion based on anassessment of facts and circumstances (i.e., the underlying contracted cash flows):

- Where the Group expects to hold a derivative as an economic hedge (and does notapply hedge accounting) for a period beyond 12 months after the reporting date, thederivative is classified as non-current (or separated into current and non-currentportions) consistent with the classification of the underlying item.

- Embedded derivatives that are not closely related to the host contract are classifiedconsistent with the cash flows of the host contract.

- Derivatives instruments that are designed as, and are effective hedging instruments,are classified consistently with the classification of the underlying hedged item. Thederivative instrument is separated into a current portion and a non-current portion onlyif a reliable allocation can be made.

2.12.6 Cash and cash equivalents

Cash and cash equivalents comprise cash at banks and on hand and short-term deposits withan original maturity of three months or less, but exclude any restricted cash which is not

available for use by the Group and therefore not considered highly liquid.

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2.13 Inventories

Inventories are stated at the lower of cost and net realizable value. Cost includes all costsincurred in the normal course of business in bringing each product to its present location andcondition and is accounted for on a first-in first-out basis. Net realizable value is the estimatedselling price in the ordinary course of business, less estimated costs of completion and theestimated costs necessary to make the sale.

2.14 Leases

The determination of whether an arrangement is, or contains, a lease is based on thesubstance of the arrangement at date of inception. The arrangement is assessed to determinewhether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitlyspecified in an arrangement.

Operating lease payments are recognized as an operating expense in profit or loss on astraight-line basis over the lease term.

2.15 Provisions

General

Provisions are recognized when the Group has a present obligation (legal or constructive) as aresult of a past event, it is probable that an outflow of resources embodying economic benefitswill be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, thereimbursement is recognized as a separate asset but only when the reimbursement is virtuallycertain. The expense relating to any provision is presented in profit or loss net of anyreimbursement. If the effect of the time value of money is material, provisions are discountedusing a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.Where discounting is used, the increase in the provision due to the passage of time isrecognized as part of finance costs in profit or loss.

Decommissioning liability

The Group recognizes a decommissioning liability when it has a present legal or constructiveobligation as a result of past events, and it is probable that an outflow of resources will berequired to settle the obligation, and a reliable estimate of the amount of obligation can bemade.

The obligation generally arises when the asset is installed or the ground/environment isdisturbed at the field location. When the liability is initially recognized, the present value of theestimated costs is capitalized by increasing the carrying amount of the related oil and gasassets to the extent that it was incurred by the development/construction of the field. Anydecommissioning obligations that arise through the production of inventory are expensed asincurred.

Changes in the estimated timing of decommissioning or changes to the decommissioning costestimates are dealt with prospectively by recording an adjustment to the provision, and acorresponding adjustment to oil and gas assets.

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Decommissioning liability (cont’d)

Any reduction in the decommissioning liability and, therefore, any deduction from the asset towhich it relates, may not exceed the carrying amount of that asset. If it does, any excess over the carrying value is taken immediately to profit or loss.

If the change in estimate results in an increase in the decommissioning liability and, therefore,

an addition to the carrying value of the asset, the Group considers whether this is an indicationof impairment of the asset as a whole, and if so, tests for impairment in accordance withIAS 36. If, for mature fields, the estimate for the revised value of oil and gas assets net of decommissioning provisions exceeds the recoverable value, that portion of the increase ischarged directly to expense.

Over time, the discount liability is increased for the change in present value based on thediscount rate that reflects current market assessments and the risks specific to the liability. Theperiodic unwinding of the discount is recognized in profit or loss as a finance cost.

The Group recognizes neither the deferred tax asset in respect of the temporary difference onthe decommissioning liability nor the corresponding deferred tax liability in respect of thetemporary difference on a decommissioning asset.

Environmental expenditures and liabilities

Environmental expenditures that relate to current or future revenues are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by pastoperations and do not contribute to current or future earnings are expensed.

Liabilities for environmental costs are recognized when a clean-up is probable and theassociated costs can be reliably estimated. Generally, the timing of recognition of theseprovisions coincides with the commitment to a formal plan of action or, if earlier, on divestmentor on closure of inactive sites.

The amount recognized is the best estimate of the expenditure required. Where the liability will

not be settled for a number of years, the amount recognized is the present value of theestimated future expenditure.

2.16 Revenue recognition

Revenue is recognized to the extent it is probable that the economic benefits will flow to theGroup and the revenue can be reliably measured. Revenue is measured at the fair value of theconsideration received or receivable, excluding discounts, sale taxes, excise duties and similar levies. The Group assesses its revenue arrangements against specific criteria in order todetermine if it is acting as principal or agent. The Group has concluded that it is acting as aprincipal in all of its revenue arrangements.

Revenue from the sale of oil and gas is recognized when the significant risks and rewards of

ownership have been transferred, which is considered to occur when title passes to thecustomer. This generally occurs when the product is physically transferred into a vessel, pipeor other delivery mechanism.

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2.16 Revenue recognition (cont’d)

Revenue from the production of oil, in which the Group has an interest with other producers, isrecognized based on the Group’s working interest and the terms of the relevant productionsharing contracts. Differences between oil lifted and sold and the Group’s share of productionare not significant. Where forward sale and purchase contracts for oil or natural gas have beendetermined to be for trading purposes, the associated sales and purchases are reported net.

Take or pay contracts

Under these contracts, the Group makes a long-term supply commitment in return for acommitment from the buyer to pay for minimum quantities, whether or not the customer takesdelivery. These commitments contain protective (force majeure) and adjustment provisions. If a buyer has a right to get a ‘make-up’ delivery at a later date, revenue recognition is deferredand only recognized when the product is delivered, or the make-up product can no longer betaken. If no such option exists within the contractual terms, revenue is recognized when thetake-or-pay penalty is triggered.

Interest income

Interest income is recognized using the effective interest method.

2.17 Employee benefits

(a) Defined contribution plans

The Group makes contributions to the defined contribution pension schemes.Contributions to defined contribution pension schemes are recognized as an expensein the period in which the related service is performed.

(b) Employee leave entitlement

Employee entitlements to annual leave are recognized as a liability when they accrueto the employees. The estimated liability for leave is recognized for services rendered

by employees up to the end of the reporting date.

2.18 Taxes

Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amountexpected to be recovered from or paid to the taxation authorities. The tax rates and tax lawsused to compute the amount are those that are enacted or substantively enacted, at thereporting date in the countries where the Group operates and generates taxable income.

Current tax relating to items recognized directly in other comprehensive income or equity isrecognized in other comprehensive income or equity and not in profit or loss. Management

periodically evaluates positions taken in the tax returns with respect to situations in whichapplicable tax regulations are subject to interpretations and establishes provisions whereappropriate.

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Deferred tax

Deferred tax is provided using the balance sheet method on temporary differences betweenthe tax bases of assets and liabilities and their carrying amounts for financial reportingpurposes at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

- Where the deferred tax liability arises from the initial recognition of goodwill or of anasset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

- In respect of taxable temporary differences associated with investments insubsidiaries, associates and interests in joint ventures, where the timing of the reversalof the temporary differences can be controlled by the parent, investor or venturer and itis probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, the carry forwardof unused tax credits and unused tax losses, to the extent that it is probable that taxable profit

will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

- Where the deferred tax asset relating to the deductible temporary difference arisesfrom the initial recognition of an asset or liability in a transaction that is not a businesscombination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

- In respect of deductible temporary differences associated with investments insubsidiaries, associates and interests in joint ventures, deferred tax assets arerecognized only to the extent that it is probable that the temporary differences willreverse in the foreseeable future and taxable profit will be available, against which the

temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period andreduced to the extent that it is no longer probable that sufficient taxable profit will be availableto allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assetsare reassessed at the end of each reporting period and are recognized to the extent that it hasbecome probable that future taxable profits will be available to allow the deferred tax asset tobe recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply tothe year when the asset is realized or the liability is settled, based on tax rates (and tax laws)that have been enacted or substantively enacted by the end of the reporting date.

Deferred tax relating to items recognized directly in other comprehensive income or equity isrecognized in other comprehensive income or equity and not in profit or loss.

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Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists toset off current tax assets against current tax liabilities and the deferred taxes relate to thesame taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for

separate recognition at that date, are recognized subsequently if new information about factsand circumstances arises. The adjustment is either treated as a reduction to goodwill (as longas it does not exceed goodwill) if it occurred during the measurement period or recognized inprofit or loss.

Royalties, resource rent tax and revenue-based taxes

In addition to corporate taxes, the Group’s consolidated financial statements also include andrecognize as taxes on income, other type of taxes on net income which are calculated basedon oil and gas production.

Royalties, resource rent taxes and revenue-based taxes are accounted for under IAS 12 when

they have the characteristics of an income tax. This is considered to be the case when theyare imposed under government tax authority and the amount payable is based on taxableincome – rather than based on physical quantity produced or as a percentage of revenue – after adjustment for temporary differences. For such arrangements, current and deferred tax isprovided on the same basis as described above for other forms of taxation. Obligations arisingfrom royalty arrangements and other types of taxes that do not satisfy these criteria arerecognized as current provisions and included in cost of sales.

Production-sharing arrangements

According to the production-sharing agreement (“PSA”), the share of the profit oil to which thegovernment is entitled in any calendar year, is deemed to include a portion representing thecorporate income tax imposed upon and due by the Group. This amount will be paid directly by

the government on behalf of the Group to the appropriate tax authorities. This portion of taxand revenue are presented net in profit or loss.

3. Significant accounting judgments, estimates and assumptions

The preparation of the Group’s consolidated financial statements in conformity with IFRSrequires management to make judgments, estimates and assumptions that affects the reportedamounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, andthe disclosure of contingent liabilities at the date of the interim consolidated financialstatements. Estimates and assumptions are continuously evaluated and are based onmanagement’s experience and other factors, including expectations of future events that are

believed to be reasonable under the circumstances. Uncertainty about these assumptions andestimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

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In particular, the Group has identified the following areas where significant judgments,estimates and assumptions are required. Changes in these assumptions may materially affectthe financial position or financial results reported in future periods. Further information on eachof these areas and how they impact the various accounting policies are described below andalso in the relevant notes to the financial statements.

Hydrocarbon reserve and resource estimates (Note 6, 7, 8, 9, 10 and 20)

Oil and gas properties are depreciated on a units of production (“UOP”) basis at a rate

calculated by reference to total proved and probable developed and undeveloped reservesdetermined in accordance with Society of Petroleum Engineers’ rules and incorporating theestimated future cost of developing those reserves. The Group estimates its commercialreserves based on information compiled by appropriately qualified persons relating to thegeological and technical data on the size, depth, shape and grade of the hydrocarbon bodyand suitable production techniques and recovery rates. Commercial reserves are determinedusing estimates of oil in place, recovery factors and future commodity prices, the latter havingan impact on the total amount of recoverable reserves and the proportion of the gross reserveswhich are attributable to the host government under the terms of the Production-Sharing Agreements. Future development costs are estimated using assumptions as to number of wells required to produce the commercial reserves, the cost of such wells and associatedproduction facilities, and other capital costs. The current long-term Brent oil price assumption

used in the estimation of commercial reserves is US$110.08. The carrying amount of oil andgas properties at March 31, 2013 is shown in Note 8.

As the economic assumptions used may change and as additional geological information isobtained during the operation of a field, estimates of recoverable reserves may change. Suchchanges may impact the Group’s reported financial position and results, which include:

- The carrying value of exploration and evaluation assets, oil and gas properties,property, plant and equipment, and goodwill may be affected due to changes inestimated future cash flows

- Depreciation and amortization charges in profit or loss may change where suchcharges are determined using the UOP method, or where the useful life of the relatedassets change

- Provisions for decommissioning may change where changes to the reserve estimatesaffect expectations about when such activities will occur and the associated cost of these activities

- The recognition and carrying value of deferred tax assets may change due to changesin judgments regarding the existence of such assets and in estimates of the likelyrecovery of such assets

Exploration and evaluation expenditures (Note 7)

The application of the Group’s accounting policy for exploration and evaluation expenditurerequires judgment to determine whether it is likely that future economic benefits are likely,either from future exploitation or sale, or whether activities have not reached a stage which

permits a reasonable assessment of the existence of reserves. The determination of reservesand resources is itself an estimation process that requires varying degrees of uncertaintydepending on how the resources are classified. These estimates directly impact when the

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Exploration and evaluation expenditures (Note 7) (cont’d)

Group defers exploration and evaluation expenditure. The deferral policy requiresmanagement to make certain estimates and assumptions as to future events andcircumstances, in particular, whether an economical viable extraction operation can beestablished. Any such estimates and assumptions may change as new information becomesavailable. If, after expenditure is capitalized, information becomes available suggesting that therecovery of the expenditure is unlikely, the relevant capitalized amount is written off in profit or loss in the period when the new information becomes available.

Units of production depreciation of oil and gas assets (Note 8)

Oil and gas properties are depreciated using the UOP method over total proved and probabledeveloped and undeveloped hydrocarbon reserves. This results in a depreciation, depletionand amortization charge proportional to the depletion of the anticipated remaining productionfrom the field.

The life of each item, which is assessed at least annually, has regard to both its physical lifelimitations and present assessments of economically recoverable reserves of the field at whichthe asset is located. These calculations require use of estimates and assumptions, includingthe amount of recoverable reserves and estimates of future capital expenditure. Thecalculation of the UOP rate of depreciation could be impacted to the extent that actual

production in the future is different from current forecast production based on total proved andprobable reserves, or future capital expenditure estimates changes. Changes to proved andprobable reserves could arise due to changes in the factors or assumptions used in estimatingreserves, including:

- The effect on proved and probable reserves of differences between actual commodityprices and commodity price assumptions; or

- Unforeseen operational issues

Any changes in estimates are accounted for prospectively.

Recoverability of oil and gas assets (Note 7, 8, 10)

The Group assesses each asset or CGU (excluding goodwill, which is assessed annuallyregardless of indicators) each reporting period to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of therecoverable amounts is made, which is considered to be the higher of fair value less costs tosell and value in use. These assessments require the use of estimates and assumptions, suchas long-term oil prices (considering current and historical prices, price trends and relatedfactors), discount rates, operating costs, future capital requirements, decommissioning costs,exploration potential, reserves and operating performance (which includes production andsales volumes). These estimates and assumptions are subject to risk anduncertainty. Therefore, there is a possibility that changes in circumstances will impact theseprojections, which may impact the recoverable amount of assets and/or CGU.

Fair value is determined as the amount that would be obtained from the sale of the asset in anarm’s length transaction between knowledgeable and willing parties. Fair value for oil and gasassets is generally determined as the present value of estimated future cash flows arising from

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Recoverability of oil and gas assets (Note 7, 8, 10) (cont’d)

the continued use of the assets, which includes estimates such as the cost of future expansionplans and eventual disposal, using assumptions that an independent market participant maytake into account. Cash flows are discounted to their present value using a discount rate thatreflects current market assessments of the time value of money and the risks specific to theasset/CGU. Management has assessed its CGUs as being an individual field, which is thelowest level for which cash inflows are largely independent of those of other assets.

Decommissioning costs (Note 20)

Decommissioning costs will be incurred by the Group at the end of the operating life of some of the Group’s facilities and properties. The Group assesses its decommissioning provision ateach reporting date. The ultimate decommissioning costs are uncertain and cost estimates canvary in response to many factors, including changes to relevant legal requirements, theemergence of new restoration techniques or experience at other production sites. Theexpected timing, extent and amount of expenditure can also change, for example, in responseto changes in reserves or changes in laws and regulations or their interpretation. Therefore,significant estimates and assumptions are made in determining the provision for decommissioning As a result, there could be significant adjustments to the provisionsestablished which would affect future financial results. The provision at reporting date

represent management’s best estimate of the present value of the future decommissioningcosts required.

Fair value hierarchy (Note 23)

If the fair value of financial assets and financial liabilities recorded in the statement of financialposition cannot be derived from active markets, then fair value is determined using valuationtechniques such as discounted cash flow models. The inputs to these models are taken fromobservable markets where possible, but if this is not feasible, a degree of judgment is requiredin establishing fair values. The judgments include considerations of inputs such as liquidity risk,credit risk and volatility. Changes in assumptions about these factors could affect the reportedfair value of financial instruments.

Taxes (Note 6)

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in taxlaws, and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existingcontractual agreements, differences arising between the actual results and the assumptionsmade, or future changes to such assumptions, could necessitate future adjustments to taxincome and expense already recorded. The Group establishes provisions, based onreasonable estimates, for possible consequences of audits by the tax authorities of therespective counties in which it operates. The amount of such provisions is based on variousfactors, such as experience of previous tax audits and differing interpretations of tax

regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing inthe respective domicile of the Group companies.

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Taxes (Note 6) (cont’d)

Deferred tax assets are recognized for unused tax losses to the extent that it is probable thattaxable profit will be available against which the losses can be utilized. Significantmanagement judgment is required to determine the amount of deferred tax assets that can berecognized, based upon the likely timing and the level of future taxable profits together withfuture tax planning strategies.

The Group has US$12,524,694 (2012: US$12,857,301) of tax losses carried forward. These

losses relate to subsidiaries that have a history of losses, do not expire and may not be usedto offset taxable income elsewhere in the Group. The subsidiaries have no taxable temporarydifferences nor any tax planning opportunities available that could partly support therecognition of these losses as deferred tax assets. On this basis, the Group has determinedthat it cannot recognize deferred tax assets on the tax losses carried forward. Further detailson taxes are disclosed in Note 6.

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4. Interests in joint arrangements

The Group has interests in the following joint arrangements:



December 31,2012

March 31,2013

(Audited) (Unaudited)

G10/48 Concession(December 7, 2012)(1)

KrisEnergyOil and Gas

(Thailand)Ltd

Exploration andproduction of

petroleumunder Concession AgreementwithDepartment of Mineral Fuels

Gulf of Thailand

25.00 25.00

G11/48 Concession(February 12, 2013)(1)

KrisEnergyResources(Thailand)Ltd

Exploration andproduction of petroleumunder Concession Agreementwith

Department of Mineral Fuels

Gulf of Thailand

25.00 25.00

Block A PSC(No expiry date for exploration stage)(2)

KrisEnergy(Cambodia)Ltd

Drilling of explorationwells under thePetroleum AgreementwithCambodianNationalPetroleum Authority

OffshoreCambodia

25.00 25.00

Glagah Kambuna TAC(December 16, 2016) KrisEnergyGlagah-KambunaB.V.

Exploration andproduction of petroleumunder Technical Assistancecontract withIndonesiaGovernmental Authority

Indonesia 25.00 25.00

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December 31,2012

March 31,2013


Kutai PSC(January 15, 2037)

KrisEnergyKutai B.V.(24.6%) andKrisEnergy

Kutei B.V.(30.0%)

Exploration andproduction of petroleumunder

ProductionSharingcontract withIndonesiaGovernmental Authority


Block B8/32Concession(October 18, 2029)


Exploration andproduction of petroleumunder Concession AgreementwithDepartment of

Mineral Fuels

Gulf of Thailand

4.63 4.63

Block B9A Concession(May 18, 2024)


Exploration andproduction of petroleumunder Concession AgreementwithDepartment of Mineral Fuels

Gulf of Thailand

4.63 4.63

Block 105 PSC(February 2, 2040)

KrisEnergy(SongHong 105)

Ltd

Explorationanddevelopment of

petroleumunder ProductionSharingContract withVietnamGovernment Authority

OffshoreVietnam

50.00 25.00

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December 31,2012

March 31,2013


Block 120 PSC(January 22, 2039)

KrisEnergy(PhuKhanh120) Ltd

Exploration anddevelopment of petroleumunder

ProductionSharingContract withVietnamGovernment Authority

OffshoreVietnam

50.00 25.00

East Seruway PSC(November 12, 2014)

KrisEnergyEastSeruwayB.V.

Exploration andproduction of petroleumunder ProductionSharingcontract withIndonesia

Governmental Authority

Indonesia 100.00 100.00

Bulu PSC(October 13, 2013)

KrisEnergy(Satria)Ltd

Exploration andproduction of petroleumunder ProductionSharingcontract withIndonesiaGovernmental Authority


East Muriah PSC

(November 12, 2038)

KrisEnergy

(EastMuriah)B.V.

Exploration and

production of petroleumunder ProductionSharingcontract withIndonesiaGovernmental Authority


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5. Profit before tax

The following items have been included in arriving at profit before tax:


2012March 31,

2013US$ US$


Revenue:Sale of crude oil 18,622,317 15,920,582

Sale of gas 5,917,461 4,146,532

24,539,778 20,067,114

Cost of sales:Depletion and amortization of oil and gas properties (4,610,238) (4,519,924)Operating costs (5,597,605) (3,850,950)Thai petroleum special remuneratory benefits and

royalties paid (2,834,718) (2,485,396)

(13,042,561) (10,856,270)

Other income is mainly made up of the following items:Joint operator overhead charges 23,069 40,844Net foreign exchange differences 193,349 514,407Income from shared facilities in joint operations 208,926 55,261

General and administrative expenses is mainly made upof the following items:

Consultants’ fees (108,981) (172,395)Data purchase and subscriptions (35,658) (157,217)Database rental (44,882) (67,248)Depreciation of other property, plant and equipment (129,596) (109,510)Employee benefits expense:- Salaries and bonuses (1,761,252) (2,486,100)

- Central Provident Fund contributions (20,904) (32,102)- Other short-term benefits (108,509) (134,524)Expenses incurred for acquisition of joint operations – – Operating lease expense (121,315) (193,617)Professional fees (489,370) (697,959)Travel and entertainment (285,095) (221,276)

Other operating expenses is mainly made up of thefollowing items:

Joint study expenses – (60,576)Net fair value gain on embedded derivatives 287,000 312,000

Finance income:

Interest income from banks 103,381 210,241

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5. Profit before tax (cont’d)


2012March 31,

2013US$ US$


Finance costs: Accretion of interest on bonds (198,273) (211,608)Banking facility fees (306) (21,710)Interest on bank borrowings (584) –

Interest on callable bonds (2,225,653) (2,210,481)Unwinding of discount on decommissioning provisions (99,890) (107,949)

(2,524,706) (2,551,748)

Thai petroleum special remuneratory benefits and royalties paid

Under the terms of the Thai I regime, the concessionaire is required to pay production royaltiesto the Royal Thai Government computed based on 12.5% of income from sale or disposal of petroleum which may be treated as tax credit.

Under the Thai III tax regime, the concessionaire is required to pay production royalties to the

Royal Thai Government computed based on sliding scale rates from 5% to 15% of the value of petroleum sold or disposed during the month, depending on the number of barrels sold or disposed during the month.

Special remuneration benefit (“SRB”) is tax payable only in years concessionaire haspetroleum profit. In calculating such profit (or loss), capital expenditure, operating costs and aspecial reduction of 35% operating expenses for the year and petroleum loss carried forwardindefinitely from prior years may be deducted. SRB is calculated by exploration block onincome per meter of well, subject to a ceiling of 75% of petroleum profit for the year.

(Loss)/earnings per share

The basic and diluted (loss)/earnings per share is calculated by dividing (loss)/profit for the

year attributable to owners of the Company by the weighted average number of ordinaryshares during the financial period.

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5. Profit before tax (cont’d)

(Loss)/earnings per share (cont’d)

The following tables reflect the profit and share data used in the computation of basic anddiluted (loss)/earnings per share for the three-month periods ended:


2012March 31,

2013US$ US$


(Loss)/profit for the period attributable to owners of theCompany used in the computation of basic and diluted(loss)/earnings per share 1,462,080 (538,871)

Weighted average number of ordinary shares for computation of basic and diluted (loss)/earnings per share 100 100,000,000

6. Tax expense

The major components of tax expense for the periods ended March 31, 2013 and 2012 are:


2012March 31,

2013US$ US$

(Unaudited) (Unaudited)Current tax:

- Current tax charge 6,194,164 4,933,497- Overprovision in respect of previous years (225,955) (365,499)

5,968,209 4,567,998Deferred tax:

- Reversal of temporary differences (956,655) (775,489)

Tax expense recognized in profit or loss 5,011,554 3,792,509

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KrisEnergy Ltd



6. Tax expense (cont’d)

Relationship between tax expense and accounting profit

The reconciliation between tax expense and the accounting profit multiplied by the applicabletax rate were as follows:


2012March 31,

2013US$

(Unaudited)US$

(Unaudited)

Profit before tax 6,473,634 3,253,638

Tax at domestic rates applicable in the countries where theGroup operates 5,223,864 4,072,880

Adjustments:Non-deductible expenses 35,035 112,466Income not subject to tax (191,678) – Effect of partial tax exemption and tax relief (20,646) (20,646)Deferred tax assets not recognized 198,005 24,148Overprovision in respect of previous years (225,955) (365,499)Others (7,071) (30,840)

Tax expense recognized in profit or loss 5,011,554 3,792,509

The above reconciliation is prepared by aggregating separate reconciliation for each national jurisdiction.

Deferred tax

Deferred tax at March 31, relates to the following:

Consolidated statement of financial position

Consolidated statement of comprehensive income

Three-month period ended

December 31,2012

March 31,2013

March 31,2012

March 31,2013

US$(Audited)

US$(Unaudited)

US$(Unaudited)

US$(Unaudited)

Deferred tax liabilitiesFair value adjustment on

acquisition 43,971,002 43,606,011 (375,191) (364,991)Deferred tax assets

Provisions (2,226,477) (2,636,975) (581,464) (410,498)

Deferred tax benefit (956,655) (775,489)

Net deferred tax

liabilities 41,744,525 40,969,036

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KrisEnergy Ltd



6. Tax expense (cont’d)


Deferred tax assets not recognized

December 31,2012

March 31,2013

US$(Audited)

US$(Unaudited)

Differences in depreciation, depletion and amortization for tax purposes 16,403,182 16,759,937

Unutilized tax losses 12,857,301 12,524,694

29,260,483 29,284,631

The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to setoff current tax assets and current tax liabilities and the deferred tax assets and deferred taxliabilities relate to income taxes levied by the same tax authority.

Deferred tax assets have not been recognized in respect of these temporary differences andtax losses as they may not be used to offset taxable profits elsewhere in the Group, they havearisen in subsidiaries that have been loss-making for some time, and there are no other tax

planning opportunities or other evidence of recoverability in the near future. The use of thesetax losses is subject to the agreement of the tax authorities and compliance with certainprovisions of the tax legislation of the respective countries in which the companies operates.

7. Exploration and evaluation assets

December 31,2012

March 31,2013

US$ US$(Audited) (Unaudited)

Cost At January 1, 120,097,447 135,653,818 Additions 16,839,659 4,231,976

Dry hole expenses (1,283,288) –

At December 31, 2012 (Audited) and March 31, 2013(Unaudited) 135,653,818 139,885,794

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KrisEnergy Ltd



8. Oil and gas properties

US$Cost At January 1, 2012 226,034,754 Additions 15,498,075

At December 31, 2012 and January 1, 2013 (Audited) 241,532,829 Additions 2,767,125

As at March 31, 2013 (Unaudited) 244,299,954

Depletion, amortization and impairment At January 1, 2012 114,203,164Charge for the year 22,638,042

At December 31, 2012 and January 1, 2013 (Audited) 136,841,206Charge for the period 4,519,924


Net book value As at December 31, 2012 (Audited) 104,691,623


9. Other property, plant and equipment

Renovation

Furnitureand

FittingsOffice


Cost At January 1, 2012 689,730 50,135 26,057 582,079 1,348,001 Additions 106,188 - 793 146,056 253,037Exchange differences 43,137 2,014 812 41,659 87,622

At December 31,2012 andJanuary 1, 2013(Audited) 839,055 52,149 27,662 769,794 1,688,660

Additions 75,299 48,104 9,693 100,155 233,251Exchange differences (9,272) (385) (157) (7,203) (17,017)

At March 31, 2013(Unaudited) 905,082 99,868 37,198 862,746 1,904,894

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KrisEnergy Ltd



9. Other property, plant and equipment (cont’d)

Renovation

Furnitureand

FittingsOffice


Accumulateddepreciation

At January 1, 2012 382,988 22,358 11,290 364,805 781,441Charge for the year 337,105 15,476 6,104 224,715 583,400Exchange differences 34,045 1,652 781 32,572 69,050

At December 31,2012 andJanuary 1, 2013(Audited) 754,138 39,486 18,175 622,092 1,433,891

Charge for the period 45,746 7,516 2,706 53,542 109,510Exchange differences (9,677) (378) (156) (8,304) (18,515)

At March 31, 2013(Unaudited) 790,207 46,624 20,725 667,330 1,524,886

Net carrying amount At December 31,

2012 (Audited) 84,917 12,663 9,487 147,702 254,769

At March 31, 2013(Unaudited) 114,875 53,244 16,473 195,416 380,008

10. Intangible assets

Goodwill Others TotalUS$ US$ US$

Cost At January 1, 2012, December 31,

2012, January 1, 2013 and March 31, 2013 58,477,823 1,669,721 60,147,544

Accumulated amortization and impairmentloss

At January 1, 2012, December 31,2012, January 1, 2013 and March 31, 2013 16,256,809 – 16,256,809

Carrying amounts

At December 31, 2012 (Audited) and March 31,2013 (Unaudited) 42,221,014 1,669,721 43,890,735

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KrisEnergy Ltd




Goodwill


(a) The going concern value implicit in our ability to sustain and/or grow our business byincreasing reserves and resources through new discoveries.

(b) The ability to capture unique synergies that can be realized from managing a portfolioof both acquired and existing fields.

(c) The requirement to recognize deferred tax assets and liabilities for the differencebetween the assigned values and the tax bases of assets acquired and liabilitiesassumed in a business combination at amounts that do not reflect fair value.

Other intangible assets

December 31,2012

March 31,2013


0.75% overriding royalty interest inConcession Block G10/48 and G11/48 1,300,000 1,300,000Leasehold bonus for Concession Block G10/48 269,721 269,721Others 100,000 100,000

1,669,721 1,669,721

The Group was assigned the overriding royalty interest from the acquisition of KrisEnergy Oiland Gas (Thailand) Ltd (“KEOG”) and KrisEnergy Resources (Thailand) Ltd (“KER”). Theoverriding royalty interest entitles the Group rights to the revenues derived from the productionand disposal of all of the oil, gas, and other minerals, in, on, under, and that may be producedand saved from Concession Block G10/48 and G11/48.

The useful lives of these other intangible assets are estimated to be indefinite as theexploration period of the blocks are extended every three years and cannot be reliablyestimated.

Impairment testing

For impairment testing purposes, goodwill acquired through business combinations has beenallocated as follows:

December 31,2012

March 31,2013


G10/48 and G11/48 Concession 21,774,832 21,774,832Block 9A and Block 8/32 Concession 13,301,576 13,301,576Bulu PSC 7,144,606 7,144,606

42,221,014 42,221,014

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KrisEnergy Ltd




Impairment testing (cont’d)

The recoverable amount of each field is determined on a value-in-use calculation.

The calculation of value in use of the oil exploration and production CGU is most sensitive tothe following assumptions:

- Production volumes- Discount rates

- Crude oil prices

Estimated production volumes are based on detailed date for the fields and take into accountdevelopment plans for the fields agreed by management as part of the long-term planningprocess. It is estimated that, if all production were to be reduced by 2% for the whole term of the contract area, this would not be sufficient to reduce the excess of recoverable amount over the carrying amounts of the individual CGUs to zero. Consequently, management believes noreasonably possible change in the production assumptions would cause the carrying amountof goodwill and/or other non-current assets to exceed their recoverable amount.

The Group generally estimates value in use for the oil exploration and production CGU using adiscount cash flow model. The future cash flows are discounted to their present value using a

pre-tax discount rate of 8% to 10% that reflects current market assessments of the time valueof money and the risks specific to the asset.

The discount rate is derived from the Group’s weighted average cost of capital (“WACC”), withappropriate adjustments made to reflect the risks specific to the asset/CGU.

Oil prices are based on Brent future prices at the reporting date and adjusted for quality,transportation fees and regional price differences.

11. Embedded derivatives

In 2011, the Group issued callable bonds (Note 19), which have embedded derivatives thatrequire bifurcation and separately recognized and accounted for at fair value with any changes

to fair value credited or charge to profit or loss. The carrying value of the embedded derivativesas at December 31, 2012 and March 31, 2013 amounted to US$2,864,000 and US$3,176,000,respectively. The effect on profit or loss is reflected in other operating expenses (Note 5).

12. Investment securities

December 31,2012

March 31,2013


Available for sale investmentsUnquoted equity shares, at cost 182,057 182,057

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KrisEnergy Ltd



13. Inventories

December 31,2012

March 31,2013


Statement of financial position:Drilling supplies and materials 5,309,628 6,100,486Crude oil 745,100 871,580

6,054,728 6,972,066

Profit or loss:Inventories recognized as an expense in cost of sales 1,518,421 244,480

14. Trade and other receivables

December 31,2012

March 31,2013


Trade and other receivables (current):Trade receivables 11,180,087 9,024,044

Refundable deposits 282,210 5,113,479Other receivables 14,352,815 9,720,646Joint operation receivables 8,928,334 10,017,436

Total trade and other receivables 34,743,446 33,875,605

Add: Cash and bank balances (Note 16) 129,900,954 128,262,118

Total loans and receivables 164,644,400 162,137,723

Trade receivables are non-interest bearing and are generally on 30 days’ terms. They arerecognized at their original invoice amounts which represent their fair values on initial

recognition.

Joint operation receivables relate to amounts due from the joint operators for cash calls inexcess of the Group’s obligation. These amounts are unsecured, non-interest bearing, and willbe offset against future cash calls.

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KrisEnergy Ltd



14. Trade and other receivables (cont’d)

Other receivables (current) comprise:

December 31,2012

March 31,2013


Payment on behalf of joint operation’s partners 7,646,320 192,028Proportionate share of joint operation’s other receivables 5,905,932 8,773,725Value added tax receivables 701,530 717,584

Others 99,033 37,309

14,352,815 9,720,646

Value added tax receivables include value added tax claim made to the IndonesianGovernment in respect of Glagah Kambuna TAC of US$3,013,204. For the year endedDecember 31, 2012, an allowance for doubtful debt of US$2,333,106 was made against thevalue added tax receivables as the value added tax claim may not be recoverable due to theanticipated relinquishment of the contract area in 2013. There is no movement in allowance for doubtful debt for the period ended March 31, 2013.

Trade and other receivables denominated in foreign currencies at reporting date are as

follows:

December 31,2012

March 31,2013

US$(Audited)

US$(Unaudited)

Thai Baht 20,679 23,469

At the reporting date, except for the allowance made on the value added tax receivables, theGroup does not have any receivables that are past due or impaired, or would otherwise bepast due but not impaired.

15. Other current assets

December 31,2012

March 31,2013

US$(Audited)

US$(Unaudited)

Expenses directly attributable to proposed share issue 500,000 500,000

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KrisEnergy Ltd




December 31,2012

March 31,2013

US$(Audited)

US$(Unaudited)

Cash at banks and on hand 121,900,954 120,262,118Short-term structured deposits 8,000,000 8,000,000

Cash and bank balances 129,900,954 128,262,118


For the purpose of the interim consolidated statement of cash flows, cash and cashequivalents comprise the following at March 31:

March 31,2012

March 31,2013

US$ US$


Cash and bank balances 46,525,989 128,262,118Less: Restricted cash (8,000,000) (8,000,000)

Cash and cash equivalents 38,525,989 120,262,118

Cash at banks and on hand denominated in foreign currencies at reporting date are as follows:

December 31,2012

March 31,2013


Thai Baht 37,185 73,137Euro Dollar 193,322 164,614Indonesia Rupiah 49,901 17,404Singapore Dollar 460 4,497United States Dollar 140,938 31,055

M-48



KrisEnergy Ltd



17. Share capital and reserve

Share capital

December 31,2012

March 31,2013

(Audited) (Unaudited)No of

shares US$No of

Shares US$Issued and fully paid ordinary

shares At January 1, 100 1 100,000,000 1,000,000

Issued on July 4, 2012 byway of capitalization of amount due to holdingcompany 79,999,900 799,999 – –

Issued on July 9, 2012 for cash 20,000,000 200,000 – –

At reporting date 100,000,000 1,000,000 100,000,000 1,000,000

The holders of ordinary shares are entitled to receive dividends as and when declared by theCompany. All ordinary shares carry one vote per share. The ordinary shares have a par valueof US$0.01 each.

Share premium

December 31,2012

March 31,2013


At January 1, – 402,750,000Increase on July 4, 2012 by way of capitalization of

amount due to holding company into new shares 287,950,000 – Increase on July 9, 2012 for cash arising from an

issuance of share capital 114,800,000 –

At reporting date 402,750,000 402,750,000

Foreign currency translation reserve

The foreign currency translation reserve represents exchange differences arising from thetranslation of the financial statements of foreign subsidiaries whose functional currencies aredifferent from that of the Group’s presentation currency.

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KrisEnergy Ltd



18. Trade and other payables

December 31,2012

March 31,2013


Trade and other payables (current):Trade payables 2,726,314 2,090,490Joint operation payables 878,884 1,847,057Staff payroll and bonus payables 2,394,288 2,520,475Other payables 5,961,529 4,426,954

Total trade and other payables 11,961,015 10,884,976

Accrued operating expenses 9,902,998 7,859,521Loans and borrowings (Note 19) 81,142,055 81,353,663Less: Staff payroll and bonus payables (2,394,288) (2,520,475)

Total financial liabilities at amortized costs 100,611,780 97,577,685

Trade payables are non-interest bearing and are normally settled on 60-day terms.

Joint operation payables are cash calls due to the operator of the joint operations. Theseamounts are unsecured, non-interest bearing, and will be settled in cash.

Other payables (current) comprise:

December 31,2012

March 31,2013


Proportionate share of joint operation’s other payables 1,723,607 2,148,347 Accrued interest payable for callable bonds 3,953,193 1,701,174Joint operator overhead charges – 206,004Others 284,729 371,429

5,961,529 4,426,954

Included in accrued operating expenses is the Group’s proportionate share of joint operation’saccrued expenses amounting to US$2,619,591 (2012: US$4,047,565).

Trade and other payables denominated in foreign currencies at reporting date are as follows:

December 31,2012

March 31,2013


Thai Baht 254,971 219,414Indonesia Rupiah 167,186 163,487

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KrisEnergy Ltd



19. Loans and borrowings

MaturityDecember 31,

2012March 31,

2013US$ US$


Callable bonds 2016 81,142,055 81,353,663

Callable bonds

KrisEnergy Holding Company Ltd (“Issuer”), a wholly owned subsidiary, issued aUS$85,000,000 10.5% Senior Guaranteed Secured Bonds (“Bonds”) due July 21, 2016 atissue price of 92.3%. Interest on the Bonds will accrue at the rate of 10.5% per annum and willbe payable semi-annually in arrears on January 21 and July 21 in each year, commencing onJanuary 21, 2012.

The Bonds include an option for the Issuer to redeem all or a part of the Bonds at theredemption prices, giving rise to an embedded derivative that require bifurcation and isseparately recognized and accounted for at fair value (Note 11).

The carrying amount of the liability component of the Bonds at reporting date is arrived at asfollows:

December 31,2012

March 31,2013


Face value of bonds 85,000,000 85,000,000Discount on bonds (6,545,000) (6,545,000)

Proceeds from issuance of Bonds 78,455,000 78,455,000Embedded derivatives (Note 11) at initial recognition 1,526,000 1,526,000

Liability component at initial recognition 79,981,000 79,981,000

Add: Accretion of interest on bonds 1,161,055 1,372,663

81,142,055 81,353,663

All obligations with respect to the Bonds are secured as follows:

(a) A first priority pledge over all of the share capital in certain subsidiaries and KrisEnergy(Gulf of Thailand) Ltd’s equity interest in B8/32 Partners Ltd and Orange Energy Ltd;

(b) A first priority floating charge granted by certain subsidiaries over each of their presentand future assets;

(c) An first priority assignment by certain subsidiaries of each of their present and future

money claims under the internal loans; and(d) A pledge by KrisEnergy Asia Holdings B.V. of its present and future receivables under

the internal loans and certain insurances in relation to hydrocarbon assets.

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KrisEnergy Ltd




Revolving credit

On July 21, 2011 the Issuer also entered into a credit agreement with banks for aUS$30,000,000 revolving credit facility (“Revolving Credit”). The Revolving Credit has aninterest rate of LIBOR plus an applicable margin ranging from 4.0% to 5.0% (in increments of 0.25%), depending on the percentage of commitment utilized at the relevant time. TheRevolving Credit is used to finance the Group’s working capital requirements, capitalexpenditure, acquisitions and payment of fees and expenses related to obtaining debt funding.

As at December 31, 2012 and March 31, 2013, there is no amount drawn under the RevolvingCredit.

The Parent Guarantor of the Bonds and Revolving Credit is the Company and the SubsidiaryGuarantors are KrisEnergy Asia Coöperatief U.A., KrisEnergy Ltd, KrisEnergy GlagahKambuna B.V., Kutai B.V., KrisEnergy Nam Con Son B.V., KrisEnergy Oil & Gas (Thailand)Ltd, KrisEnergy Resources (Thailand) Ltd, KrisEnergy (Gulf of Thailand) Ltd., KrisEnergy(Cambodia) Ltd, KrisEnergy (Phu Khanh 120) Ltd. and KrisEnergy (Song Hong 105) Ltd.

Please refer to Note 22 for subsidiaries that provide the above collaterals.

20. Provisions

US$

Decommissioning provisions

At January 1, 2012 Arising during the year 18,048,096Unwinding of discount on decommissioning provisions 6,076,986Write back of unused provisions 399,561

At December 31, 2012 and March 1, 2013 24,524,643Unwinding of discount on decommissioning provisions 107,949

At March 31, 2013 24,632,592

December 31,2012

March 31,2013

US$(Audited)

US$(Unaudited)

Current 2,500,000 2,500,000Non-current 22,024,643 22,132,592

24,524,643 24,632,592

The Group makes full provision for the future cost of decommissioning oil production facilitiesand pipelines on a discounted basis on the installation of those facilities.

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KrisEnergy Ltd



20. Provisions (cont’d)

The decommissioning provision represents the present value of decommissioning costsrelating to oil and gas properties, which are expected to be incurred up to 2039. Theseprovisions have been created based on the Group’s internal estimates. Assumptions based onthe current economic environment have been made, which management believe are areasonable basis upon which to estimate the future liability. These estimates are reviewedregularly to take into account any material changes to the assumptions. However, actualdecommissioning costs will ultimately depend upon future market prices for the necessarydecommissioning works required which will reflect market conditions at the relevant time.Furthermore, the timing of decommissioning is likely to depend on when the fields cease to

produce at economically viable rates. This in turn will depend upon future oil and gas prices,which are inherently uncertain.

21. Commitments

(a) Operating lease commitments

The Group has entered into non-cancellable commercial property leases for the officeoperations. These operating leases have remaining lease terms of one year or more.

Future minimum lease payments payable under non-cancellable operating leases as

at reporting date are as follows:

December 31,2012

March 31,2013


Not later than one year 679,980 679,870

Later than two year but not later than five years 1,331,608 1,145,367

2,011,588 1,825,237

A leasing arrangement where the lessee has the right to terminate lease by providinga written notice to the lessor without incurring losses significant in comparison to the

value of remaining lease payments is generally not considered a non-cancellable leaseand is not included in such disclosure.

(b) Capital commitments

Certain joint operations are required to incur minimum exploration activities of whichthe Group’s share of the estimated minimum budget is approximately US$96,420,026(2012: US$93,295,534).

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KrisEnergy Ltd



21. Commitments (cont’d)

(b) Capital commitments (cont’d)

At the reporting date, the Group’s outstanding minimum exploration commitments willfall due as follows:

December 31,2012

March 31,2013


Within one year 13,627,034 12,423,901

Within one to five years 79,668,500 83,996,125

Total 93,295,534 96,420,026

22. Related party disclosures

The financial statements include the financial statements of KrisEnergy Ltd., the subsidiariesand joint arrangements listed in the following table:

Name of entitiesPrincipalactivities

Principalplace of

businessCountry of

incorporation % of equity interest

December 31,2012

March 31,2013


KrisEnergy HoldingCompany Ltd(1)(2)(3)

Investmentholding


100 100

KrisEnergy PteLtd(1)(2)(3)

Provision of managementsupportservice

Singapore Singapore 100 100

KrisEnergy(ManagementServices) Ltd(1)(2)(3)

Provision of offshoremanagement

supportservice


100 100

KrisEnergy (Asia) Ltd(formerly known asKrisEnergy Ltd)(1)(2)(3)

Investmentholding


100 100

KrisEnergyInternational(Thailand) HoldingsLtd(1)(2)(3)

Investmentholding

Thailand British VirginIslands

100 100

KrisEnergy (Gulf of Thailand) Ltd.

Investmentholding

Thailand CaymanIslands

100 100

KrisEnergy Oil and

Gas (Thailand) Ltd

Exploration

andproduction of oil and gas

Thailand Thailand 100 100

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KrisEnergy Ltd





Principalplace of

businessCountry of

incorporation % of equity interestDecember 31,

2012March 31,

2013(Audited) (Unaudited)

KrisEnergy Resources(Thailand) Ltd

Explorationandproduction of oil and gas


KrisEnergyManagement Ltd

Dormant Thailand British VirginIslands

100 100

KrisEnergy(Cambodia) HoldingLtd(1)(2)(3)

Investmentholding

Cambodia British VirginIslands

100 100

KrisEnergy(Cambodia) Ltd


Cambodia Cambodia 100 100

KrisEnergy (PhuKhanh 120) Ltd(1)(2)(3)

Explorationandproduction of

oil and gas


100 100

KrisEnergy (SongHong 105) Ltd(1)(2)(3)



100 100

KrisEnergy(Production) Ltd(7)

Dormant Singapore British VirginIslands

100 100

KrisEnergy AsiaCoöperatief U.A.

Investmentholding

Singapore TheNetherlands

100 100

KrisEnergy AsiaHoldings II B.V.

Dormant Singapore TheNetherlands

100 100

KrisEnergy AsiaHoldings B.V.(1)

Investmentholding

Singapore TheNetherlands

100 100




100 100

KrisEnergy Nam ConSon B.V.(4)



100 100

KrisEnergy Kutai B.V. Explorationand

production of oil and gas


100 100

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KrisEnergy Ltd





Principalplace of

businessCountry of


2012March 31,


KrisEnergy IndonesiaHoldings B.V.(5)



100 100

Wassana MOPU Pte.Ltd. (formerly knownas Serica EnergyPte Ltd)

Investmentholding

Singapore Singapore 100 100

KrisEnergy Kutei B.V. Explorationandproduction of oil and gas


100 100

KrisEnergy EastSeruway B.V.



100 100

BEM ResourcesLimited

Investmentholding


100 100

EM Block Limited Explorationandproduction of oil and gas


100 100

B Block Limited Investmentholding


100 100

KrisEnergy (Satria) Ltd Explorationandproduction of oil and gas


100 100

KrisEnergy (EastMuriah) Ltd



100 100

KrisEnergy (Ageng)B.V.



100 100

KrisEnergy (AndamanTimur) B.V.



100 100

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KrisEnergy Ltd





Principalplace of

businessCountry of


2012March 31,


KrisEnergy (Nemo)B.V.



100 100

KrisEnergy (Rembang)B.V.(6)



100 100

KrisEnergy (Tanjung Aru) B.V.



100 100

KrisEnergy (UdanEmas) B.V.



100 100

Orange Energy Ltd Explorationandproduction of oil and gas


B8/32 Partners Ltd Explorationandproduction of oil and gas

Thailand Thailand 4.63 4.63

(1) Capital Stock in this entity pledged as collateral for callable bonds(2) First priority floating charge provided by this entity over present and future assets as collateral for callable bonds(3) Assignment of internal loans by this entity as collateral for callable bonds(4) With effect from April 9, 2013, the name of the Company was changed from KrisEnergy Nam Con Son B.V. to KrisEnergy

(Bangora) B.V.(5) With effect from April 9, 2013, the name of the Company was changed from KrisEnergy Indonesia Holdings B.V. to

KrisEnergy (Andaman II) B.V.(6) With effect from April 9, 2013, the name of the Company was changed from KrisEnergy (Rembang) B.V. to KrisEnergy

(Sakti) B.V.(7) With effect from May 2, 2013, the name of the Company was changed from KrisEnergy (Production) Ltd to KristEnergy

(Song Hong 115) Ltd.

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KrisEnergy Ltd




(a) Fair value of financial instruments that are carried at fair value (cont’d)

Fair value hierarchy (cont’d)

▪ Level 3 – Inputs for the asset or liability that are not based on observablemarket data (unobservable inputs)

There have been no transfers between fair value measurements level during the 3months period ended March 31, 2013 and year ended December 31, 2012.


Embedded derivatives – Fair value of embedded derivatives are determined usingvaluation models with both observable and non-observable data inputs. The non-observable inputs to the models include assumptions regarding the bond price, bondyield and sigma (bond price volatility).

(b) Fair value of financial instruments by classes that are not carried at fair value

and whose carrying amounts are reasonable approximation of fair value

Trade and other receivables and payables and accrued operating expenses

The carrying amounts of these financial assets and liabilities are reasonableapproximation of fair values due to their short-term nature.



The fair value of financial instruments that are not carried at fair value and whosecarrying amounts are not reasonable approximate of fair value are as follows:

December 31, 2012 March 31, 2013(Audited) (Unaudited)



US$ US$ US$ US$

Financial assetsEquity securities, atcost 182,057 * 182,057 *

Financial liabilities:Loans and borrowings

(non-current) – amortized cost 81,142,055 81,041,256 81,353,663 81,441,232

* Investment in equity securities carried at costFair value information has not been disclosed for the Group’s investment in equitysecurities that are carried at cost because fair value cannot be measured reliably.

These equity securities are not quoted on any market and does not have anycomparable industry peer that is listed. The Group does not intend to dispose of thisinvestment in the foreseeable future.

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KrisEnergy Ltd




(c) Fair value of financial instruments by classes that are not carried at fair value and

whose carrying amounts are not reasonable approximation of fair value (cont’d)


Fixed rate callable loans

The fair value disclosed in the table above is estimated by discounting expected cashflows at market incremental lending rate for similar types of borrowing arrangements at

the reporting date.

24. Financial risk management objectives and policies

The Group is exposed to financial risks arising from its operations and the use of financialinstruments. The key financial risks include credit risk, interest rate risk, and liquidity risk. It is,and has been throughout the current financial year, the Group’s policy that no derivatives shallbe undertaken, except for the use as hedging instruments where appropriate and cost-efficient.

The following sections provide details regarding the Group’s exposure to the above-mentionedfinancial risks and the objectives, policies and processes for the management of these risks.

Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should acounterparty default on its obligations. The Group’s exposure to credit risk arises primarily fromtrade and other receivables. For other financial assets (including cash and bank balances andderivatives), the Group minimizes credit risk by dealing exclusively with high credit ratingcounterparties.

Exposure to credit risk

At the end of the reporting date, the Group’s maximum exposure to credit risk is representedby:

- the carrying amount of each class of financial assets recognized in the interim consolidated

statement of financial position- the carrying amount of loans and borrowings recognized in the interim consolidatedstatement of financial position relating to a corporate guarantee for the Bonds

Credit risk concentration profile

At the report date, approximately 42.6% (2012: 46.5%) of the Group’s receivables arises fromthe Group’s working interest in Glagah Kambuna TAC, Block B8/32 concession and Block B9Aconcession.

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are with creditworthy

debtors with good payment record with the Group. Cash and cash equivalents, investmentsecurities and derivatives are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

M-60



KrisEnergy Ltd




Credit risk (cont’d)

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed inNote 14 (Trade and other receivables).

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s financialinstrument will fluctuate because of changes in market interest rates. At March 31, 2013 andDecember 31, 2012, the Group has insignificant financial instruments that are exposed tointerest rate risk.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligationsdue to shortage of funds. The Group’s exposure to liquidity risk arises primarily frommismatches of the maturities of financial assets and liabilities.

The table below summaries the maturity profile of the Group’s financial liabilities at the

reporting date based on contractual undiscounted repayments obligations.

One year or less

One to fiveyears


US$ US$ US$ US$

December 31, 2012(Audited)


expenses 9,902,998 – – 9,902,998Loans and borrowings – 116,746,808 – 116,746,808

Total undiscounted financialliabilities 21,864,013 116,746,808 – 138,610,821

March 31, 2013(Unaudited)


expenses 7,859,521 – – 7,859,521Loans and borrowings – 114,526,467 – 114,526,467

Total undiscounted financialliabilities 18,744,497 114,526,467 – 133,270,964

M-61



KrisEnergy Ltd




Liquidity risk (cont’d)

The table below shows the contractual expiry by maturity of the Group’s contingent liabilitiesand commitments. The maximum amount of the corporate guarantee for the callable bonds(Note 19) is allocated to the earliest period in which the guarantee could be called.

One year or less

One to fiveyears


US$ US$ US$ US$

December 31, 2012(Audited)


March 31, 2013(Unaudited)


25. Capital management

Capital includes debt and equity items as disclosed in the table below.

The primary objective of the Group’s capital management is to ensure that it maintain a healthy

capital ratios in order to support its business and maximize shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes ineconomic conditions. To maintain or adjust the capital structure, the Group may adjust thedividend payment to shareholders, return capital to shareholders or issue new shares. Nochanges were made in the objectives, policies or processes during the year and period endedDecember 31, 2012 and March 31, 2013.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus netdebt. The Group’s policy is to keep the gearing ratio between 20% and 40%. The Group includeswithin net debts, trade and other payables, accrued operating expenses, and loans and borrowingsless cash and cash equivalents. Capital includes equity attributable to the owners of the Company.

December 31,2012

March 31,2013


Trade and other payables (Note 18) 11,961,015 10,884,976 Accrued operating expenses (Note 18) 9,902,998 7,859,521Loans and borrowings (Note 19) 81,142,055 81,353,663Less: cash and cash equivalents (Note 16) (121,900,954) (120,262,118)

Net cash position (18,894,886) (20,163,958)

Equity attributable to the owners of the Company 278,533,687 277,965,495

Capital and net debt 278,533,687 277,965,495

Gearing ratio – –

M-62



KrisEnergy Ltd



26. Segment reporting

For management purposes, the Group operates in one business segment, that is explorationand production of oil and gas in Southeast Asia.

Revenue and non-current assets information based on the geographical location of assetsrespectively are as follows:

Revenue Non-current assetsMarch 31,

2012March 31,

2013December 31,

2012March 31,

2013US$ US$ US$ US$

(Unaudited) (Unaudited) (Audited) (Unaudited)Cambodia – – 21,797,456 22,380,213Indonesia 4,154,553 1,865,120 25,203,134 34,811,416Thailand 20,385,225 18,201,994 226,656,954 219,066,857Vietnam – – 10,578,632 10,456,867

24,539,778 20,067,114 284,236,176 286,715,353

Non-current assets information presented above consist of exploration and evaluation assets,oil and gas properties and intangible assets as presented in the interim consolidated statementof financial position.

Information about major customers

The Group identifies a major customer as one who contributes to 10 per cent or more of thetotal revenue. As at December 31, 2012 and March 31, 2013, revenue from four major customers contributed to 38%, 30%, 9% and 12%, and 35%, 55%, 5% and 1% of the totalrevenue respectively.

Seasonality of operation

Seasonal weather conditions can limit the Group’s exploration, drilling and production activitiesand other oil and gas operations in certain areas. The Group does not experience and havenot experienced any other significant seasonality in the operations.

27. Subsequent events

On April 8, 2013, KrisEnergy Ltd has entered into a sales and purchase agreement with TullowOil International Limited to acquire 100% of the share capital of Tullow Bangladesh Limited(“TBL”) through its wholly owned subsidiary, KrisEnergy Asia Holdings B.V. As at date of theunaudited interim consolidated financial statements, the transaction is pending approval fromBangladesh Mineral Oil and Gas Corporation (“Petrobangla”) and the Government of thePeople’s Republic of Bangladesh. TBL holds a 30% working interest and operatorship of theproducing Bangora Block 9 onshore gas field.

On May 2, 2013, the US$30,000,000 revolving credit facility (Note 19) between KrisEnergyHolding Company Ltd and Standard Bank plc as administrative agent, Standard Bank plc and

Sumitomo Mitsui Banking Corporation as mandated lead arrangers, as issuing banks and asinitial lenders and The Bank of New York Mellon, Singapore branch as security trustee, hasbeen amended and restated to increase the total commitments to US$42,500,000.

M-63



KrisEnergy Ltd



27. Subsequent events (cont’d)

On May 31, 2013, the Issuer of the Bonds (Note 19) issued an additional US$35,000,000Bonds under the same terms, including the same interest rate and maturity date, increasingthe total principal amount of the 10.5% Senior Guaranteed Secured Bonds toUS$120,000,000.

28. Authorization of unaudited interim consolidated financial statements for issue

The unaudited interim consolidated financial statements for the 3 months period ended

March 31, 2013 were authorized for issue in accordance with a resolution of the directors onJuly 1, 2013.

M-64



APPENDIXN

INDEPENDENTAUDITORS’ REPORTONTHEUNAUDITEDPROFORMA

CONSOLIDATED FINANCIALINFORMATIONFORTHEYEAR ENDEDDECEMBER 31, 2012

AND THE THREEMONTHSENDEDMARCH 31, 2013

N-1



Report from the Independent Auditor’s in relation to the

Unaudited Pro Forma Consolidated Financial Information of

KrisEnergy Ltd.


For the financial year ended December 31, 2012 and the three months ended March 31, 2013

July 1, 2013

The Board of DirectorsKrisEnergy Ltd.83 Clemenceau Avenue#10-05, UE SquareSingapore 239920

Dear Sirs:

Report on Unaudited Pro Forma Consolidated Financial Information

We report on the unaudited pro forma consolidated financial information set out in page O-1 to O-17 of the prospectus dated July 1, 2013, which has been prepared, for illustrative purposes only and basedon certain assumptions and after making certain adjustments to show : -

(i) what the financial results and cash flows of KrisEnergy Ltd (the “Company”; formerly known asKrisEnergy Holdings II Ltd.) and its subsidiaries (collectively, the “Group”) for the year endedDecember 31, 2012 and the three months ended March 31, 2013 would have been if thesignificant event as disclosed in Note 2 had occurred on January 1, 2012; and

(ii) what the financial position of the Group as at December 31, 2012 and March 31, 2013 would

have been if the significant event as disclosed in Note 2 had occurred at the end of December 31, 2012 and March 31, 2013.

The unaudited pro forma consolidated financial information, because of its nature, may not give a truepicture of the Group’s actual financial position, results or cash flows of the Group.

The unaudited pro forma consolidated financial information is the responsibility of the directors of theCompany. Our responsibility is to express an opinion on the pro forma consolidated financialinformation based on our work.

We carried out procedures in accordance with Singapore Statement of Auditing Practice 2, Auditors

and Public Offering Documents (“SSAP 2”). Our work, which involved no independent examination of the underlying financial information, consisted primarily of comparing the pro forma consolidated

financial information to the Company and its subsidiaries’ financial statements (or where information isnot available in the Company’s financial statements, to accounting records), considering the evidencesupporting the adjustments and discussing the pro forma consolidated financial information with thedirectors of the Company.

In our opinion,

(a) the unaudited pro forma consolidated financial information has been properly prepared:

(i) on the basis stated in Note 3; and(ii) in a manner consistent with the accounting policies of the Group.

(b) each material adjustment made to the information used in the preparation of the pro formaconsolidated financial information is appropriate for the purpose of preparing such financialinformation.

N-2



Report from the Independent Auditor’s in relation to the

Unaudited Pro Forma Consolidated Financial Information of

KrisEnergy Ltd.



This report has been prepared solely for inclusion in the offering document of KrisEnergy Ltd. inconnection with the initial public offering of the ordinary shares of the Company on the SingaporeExchange Securities Trading Limited. Our work has not been carried out in accordance with auditing,assurance or other standards and practices generally accepted in the United States of America andaccordingly should not be relied upon as if it had been carried out in accordance with those standardsand practices. Therefore, this report is not appropriate in other jurisdictions and should not be used or relied upon for any purpose other than the proposed public offering described above. We accept noduty or responsibility to and deny any liability to any party in respect of any use of, or reliance upon,this report other than the proposed public offering described above.

Ernst & Young LLPPublic Accountants and Certified Public AccountantsSingapore

Partner-in-Charge: Toong Weng Sum, Vincent

N-3



APPENDIX OUNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

FOR THE YEAR ENDED DECEMBER 31, 2012AND THE THREE MONTHS ENDED MARCH 31, 2013

KrisEnergy Ltd.


Unaudited Pro Forma Consolidated Statement of Comprehensive IncomeFor the financial year ended December 31, 2012 and the three months ended March 31, 2013

Note

Year endedDecember 31,

2012

Three-monthended

March 31,2013

US$ US$

Revenue 6 108,211,304 24,042,471

Cost of sales (61,977,931) (13,188,013)

Gross profit 46,233,373 10,854,458Other income 1,865,296 871,936General and administrative expenses (25,286,545) (4,821,673)Other operating expenses (1,784,734) 245,829Finance income 411,332 210,241Finance costs (12,046,201) (2,570,529)

Profit before tax 9,392,521 4,790,262Tax expense (18,518,399) (3,792,509)

(Loss)/profit for the year/period (9,125,878) 997,753

Other comprehensive income to be reclassified toprofit or loss in subsequent periods:

Exchange differences on translation of foreignoperations (64,809) (29,321)

Total comprehensive income attributable toowners of the Company (9,190,687) 968,432

(Loss)/earnings per share attributable to ownersof the Company (cents per share) 5 (19) 1

The accompanying notes form an integral part of the unaudited pro forma consolidated financial

information.

O-1



KrisEnergy Ltd.


Unaudited Pro Forma Consolidated Statement of Financial Position as at December 31, 2012

and March 31, 2013

Note

As atDecember 31,

2012

As atMarch 31,

2013US$ US$

ASSETS

Non-current assetsExploration and evaluation assets 135,653,818 139,885,794Oil and gas properties 134,188,470 131,224,107Other property, plant and equipment 254,769 380,008Intangible assets 50,524,310 50,203,464Embedded derivatives 2,864,000 3,176,000

Investment securities 182,057 182,057

323,667,424 325,051,430

Current assetsInventories 6,054,728 6,972,066Trade and other receivables 45,614,165 45,095,595Prepayments 1,108,574 767,002Other current assets 500,000 500,000

Cash and bank balances 7 87,969,692 86,129,863

141,247,159 139,464,526

Total assets 464,914,583 464,515,956

EQUITY AND LIABILITIESEquityShare capital 1,000,000 1,000,000Share premium 402,750,000 402,750,000Foreign currency translation reserve (1,220,085) (1,249,406)

Accumulated losses (123,599,705) (124,505,582)

Total equity 278,930,210 277,995,012

Non-current liabilitiesLoans and borrowings 81,142,055 81,353,663Deferred tax liabilities 41,744,525 40,969,036

Provisions 23,101,127 23,227,821

145,987,707 145,550,520Current liabilitiesTrade and other payables 12,078,645 10,975,835 Accrued operating expenses 13,252,007 10,248,356Provisions 2,500,000 2,500,000Withholding tax payable 160,660 96,002

Tax payable 12,005,354 17,150,231

39,996,666 40,970,424

Total liabilities 185,984,373 186,520,944

Total equity and liabilities 464,914,583 464,515,956


information.

O-2



KrisEnergy Ltd.


Unaudited Pro Forma Consolidated Statement of Cash Flows


Year endedDecember 31,

2012

Three-monthended

March 31,2013

US$ US$

Profit before tax 9,392,521 4,790,262 Adjustment to reconcile profit before tax to net cash flows:Depreciation, depletion and amortization 27,616,346 5,554,699Dry hole expense 1,283,288 – Net fair value gain on embedded derivatives (1,444,000) (312,000)Finance cost 11,575,176 2,443,835

Unwinding of discount on decommissioning provisions 471,025 126,694Interest income (411,332) (210,241)

Operating cash flows before changes in working capital 48,483,024 12,393,249Changes in working capital:

Decrease/(increase) in inventories 863,741 (917,338)(Increase)/decrease in trade and other receivables (12,294,407) 9,622,724Decrease in other current assets 1,991,314 – Decrease in trade and other payables (5,517,185) (10,872,243)

33,526,487 10,226,392Cash flows from operationsInterest received 411,332 210,241Interest paid (1,825,584) (21,746)Tax paid (20,155,928) –

Net cash flows from operating activities 11,956,307 10,414,887

Investing activities Additions to exploration and evaluation assets (16,839,659) (4,231,976) Addition to oil and gas properties (12,256,126) (2,877,348) Acquisition of subsidiary (42,350,084) (42,350,084)Purchase of investment securities (182,057) – Purchase of other plant and equipment (253,037) (233,251)

Net cash flows used in investing activities (71,880,963) (49,692,659)

Financing activitiesProceeds from share issuance 115,000,000 – Decrease in amount due to holding company (756,969) – Payment of bond interest (8,925,000) (4,462,500)

Net cash flows from/(used in) financing activities 105,318,031 (4,462,500)

Net increase/(decrease) in cash and cash equivalents 45,393,375 (43,740,272)Net effect of exchange rate changes (83,383) (30,819)Cash and cash equivalents at January 1 34,659,700 121,900,954

Cash and cash equivalents (Note 7) 79,969,692 78,129,863


O-3



KrisEnergy Ltd.


Statement of Adjustments for the Unaudited Pro Forma Consolidated Statement of

Comprehensive Income for the financial year ended December 31, 2012

AuditedConsolidatedStatement of

ComprehensiveIncome

Pro FormaAdjustments

Note 3

UnauditedPro Forma

ConsolidatedStatement of

ComprehensiveIncome

US$ US$ US$

Revenue 89,592,582 18,618,722 108,211,304Cost of sales (52,729,286) (9,248,645) (61,977,931)

Gross profit 36,863,296 9,370,077 46,233,373

Other income 1,865,296 – 1,865,296General and administrative expenses (24,294,905) (991,640) (25,286,545)Other operating expenses (2,028,837) 244,103 (1,784,734)Finance income 411,332 – 411,332Finance costs (11,970,662) (75,539) (12,046,201)

Profit before tax 845,520 8,547,001 9,392,521Tax expense (18,518,399) – (18,518,399)

(Loss)/profit for the year (17,672,879) 8,547,001 (9,125,878)

Other comprehensive income to bereclassified to profit or loss in

subsequent periods:Exchange differences on translation of foreign operations (64,809) – (64,809)

Total comprehensive incomeattributable to owners of theCompany (17,737,688) 8,547,001 (9,190,687)


information.

O-4



KrisEnergy Ltd.


Statement of Adjustments for the Unaudited Pro Forma Consolidated Statement of

Comprehensive Income for the three months ended March 31, 2013

UnauditedConsolidatedStatement of

ComprehensiveIncome


Note 3

UnauditedPro Forma


ComprehensiveIncome

US$ US$ US$

Revenue 20,067,114 3,975,357 24,042,471Cost of sales (10,856,270) (2,331,743) (13,188,013)

Gross profit 9,210,844 1,643,614 10,854,458

Other income 871,936 – 871,936General and administrative expenses (4,739,059) (82,614) (4,821,673)Other operating expenses 251,424 (5,595) 245,829Finance income 210,241 – 210,241Finance costs (2,551,748) (18,781) (2,570,529)

Profit before tax 3,253,638 1,536,624 4,790,262Tax expense (3,792,509) – (3,792,509)

(Loss)/profit for the period (538,871) 1,536,624 997,753

Other comprehensive income to bereclassified to profit or loss in

subsequent periods:Exchange differences on translation of foreign operations (29,321) – (29,321)

Total comprehensive incomeattributable to owners of theCompany (568,192) 1,536,624 968,432


information.

O-5



KrisEnergy Ltd.


Statement of Adjustments for the Unaudited Pro Forma Consolidated Statement of Financial

Position as at December 31, 2012


FinancialPosition


Note 3

Unaudited ProForma


FinancialPosition

US$ US$ US$ASSETS

Non-current assets

Exploration and evaluation assets 135,653,818 – 135,653,818Oil and gas properties 104,691,623 29,496,847 134,188,470

Other property, plant and equipment 254,769 – 254,769Intangible assets 43,890,735 6,633,575 50,524,310Embedded derivatives 2,864,000 – 2,864,000Investment securities 182,057 – 182,057

287,537,002 36,130,422 323,667,424

Current assets

Inventories 6,054,728 – 6,054,728Trade and other receivables 34,743,446 10,870,719 45,614,165Prepayments 1,108,574 – 1,108,574Other current assets 500,000 – 500,000Cash and bank balances 129,900,954 (41,931,262) 87,969,692

172,307,702 (31,060,543) 141,247,159

Total assets 459,844,704 5,069,879 464,914,583


Equity

Share capital 1,000,000 – 1,000,000Share premium 402,750,000 – 402,750,000Foreign currency translation reserve (1,220,085) – (1,220,085) Accumulated losses (123,996,228) 396,523 (123,599,705)

Total equity 278,533,687 396,523 278,930,210

Non-current liabilities

Loans and borrowings 81,142,055 – 81,142,055Deferred tax liabilities 41,744,525 – 41,744,525Provisions 22,024,643 1,076,484 23,101,127

144,911,223 1,076,484 145,987,707

O-6



KrisEnergy Ltd.



Position as at December 31, 2012


FinancialPosition


Note 3

Unaudited ProForma


FinancialPosition

US$ US$ US$

Current liabilities

Trade and other payables 11,961,015 117,630 12,078,645 Accrued operating expenses 9,902,998 3,349,009 13,252,007Provisions 2,500,000 – 2,500,000

Withholding tax payable 30,427 130,233 160,660Tax payable 12,005,354 – 12,005,354

36,399,794 3,596,872 39,996,666




information.

O-7



KrisEnergy Ltd.



Position as at March 31, 2013


FinancialPosition


Note 3

Unaudited ProForma


FinancialPosition

US$ US$ US$ASSETS

Non-current assetsExploration and evaluation assets 139,885,794 – 139,885,794Oil and gas properties 102,938,824 28,285,283 131,224,107Other property, plant and equipment 380,008 – 380,008

Intangible assets 43,890,735 6,312,729 50,203,464Embedded derivatives 3,176,000 – 3,176,000Investment securities 182,057 – 182,057

290,453,418 34,598,012 325,051,430

Current assetsInventories 6,972,066 – 6,972,066Trade and other receivables 33,875,605 11,219,990 45,095,595Prepayments 767,002 – 767,002Other current assets 500,000 – 500,000Cash and bank balances 128,262,118 (42,132,255) 86,129,863

170,376,791 (30,912,265) 139,464,526

Total assets 460,830,209 3,685,747 464,515,956


EquityShare capital 1,000,000 – 1,000,000Share premium 402,750,000 – 402,750,000Foreign currency translation reserve (1,249,406) – (1,249,406) Accumulated losses (124,535,099) 29,517 (124,505,582)

Total equity 277,965,495 29,517 277,995,012

Non-current liabilitiesLoans and borrowings 81,353,663 – 81,353,663Deferred tax liabilities 40,969,036 – 40,969,036Provisions 22,132,592 1,095,229 23,227,821

144,455,291 1,095,229 145,550,520

O-8



KrisEnergy Ltd.



Position as at March 31, 2013


FinancialPosition


Note 3

Unaudited ProForma


FinancialPosition

US$ US$ US$Current liabilitiesTrade and other payables 10,884,976 90,859 10,975,835 Accrued operating expenses 7,859,521 2,388,835 10,248,356Provisions 2,500,000 – 2,500,000Withholding tax payable 14,695 81,307 96,002Tax payable 17,150,231 – 17,150,231

38,409,423 2,561,001 40,970,424




information.

O-9



KrisEnergy Ltd.


Statement of Adjustments for the Unaudited Pro Forma Consolidated Statement of Cash Flows

For the financial year ended December 31, 2012

AuditedConsolidatedStatement of Cash Flows


Note 3

UnauditedPro Forma

ConsolidatedStatement of Cash Flows

US$ US$ US$

Operating activitiesProfit before tax 845,520 8,547,001 9,392,521 Adjustment to reconcile profit before tax to

net cash flows:Depreciation, depletion and amortization 23,221,442 4,394,904 27,616,346Dry hole expenses 1,283,288 – 1,283,288

Net fair value gain on embeddedderivatives (1,444,000) – (1,444,000)

Finance cost 11,571,101 4,075 11,575,176Unwinding of discount on decommissioning

provisions 399,561 71,464 471,025Interest income (411,332) – (411,332)


Changes in working capital:Decrease in inventories 863,741 – 863,741Increase in trade and other receivables (6,341,577) (5,952,830) (12,294,407)Decrease in other current assets 1,991,314 – 1,991,314

Decrease in trade and other payables (1,710,505) (3,806,680) (5,517,185)

Cash flows from operations 30,268,553 3,257,934 33,526,487Interest received 411,332 – 411,332Interest paid (1,821,509) (4,075) (1,825,584)Taxes paid (20,155,928) – (20,155,928)

Net cash flows from operating activities 8,702,448 3,253,859 11,956,307

O-10



KrisEnergy Ltd.




AuditedConsolidatedStatement of Cash Flows


Note 3

UnauditedPro Forma


US$ US$ US$

Investing activities Additions to exploration and evaluation

assets (16,839,659) – (16,839,659) Addition to oil and gas properties (9,421,089) (2,835,037) (12,256,126) Acquisition of subsidiary – (42,350,084) (42,350,084)Purchase of investment securities (182,057) – (182,057)

Purchase of other plant and equipment (253,037) – (253,037)

Net cash flows used in investing activities (26,695,842) (45,185,121) (71,880,963)

Financing activitiesProceeds from issuance of shares 115,000,000 – 115,000,000Decrease in amount due to holding company (756,969) – (756,969)Payment of bond interest (8,925,000) – (8,925,000)

Net cash flows from financing activities 105,318,031 – 105,318,031

Net increase in cash and cash equivalents 87,324,637 (41,931,262) 45,393,375Net effect of exchange rate changes (83,383) – (83,383)Cash and cash equivalents at January 1 34,659,700 – 34,659,700

Cash and cash equivalents atDecember 31 121,900,954 (41,931,262) 79,969,692


information.

O-11



KrisEnergy Ltd.




UnauditedConsolidatedStatement of Cash Flows


Note 3

UnauditedPro Forma


US$ US$ US$

Operating activitiesProfit before tax 3,253,638 1,536,624 4,790,262 Adjustment to reconcile profit before tax to

net cash flows:Depreciation, depletion and amortization 4,629,434 925,265 5,554,699Net fair value gain on embedded

derivatives (312,000) – (312,000)Finance cost 2,443,799 36 2,443,835Unwinding of discount on decommissioning

provisions 107,949 18,745 126,694Interest income (210,241) – (210,241)


Changes in working capital:Increase in inventories (917,338) – (917,338)Decrease in trade and other receivables 1,209,413 8,413,311 9,622,724Decrease in trade and other payables (306,350) (10,565,893) (10,872,243)

Cash flows from operations 9,898,304 328,088 10,226,392Interest received 210,241 – 210,241Interest paid (21,710) (36) (21,746)

Net cash flows from operating activities 10,086,835 328,052 10,414,887

O-12



KrisEnergy Ltd.


Notes to the Unaudited Pro Forma Consolidated Financial Information for the financial year

ended December 31, 2012 and the three months ended March 31, 2013

The unaudited pro forma consolidated financial information should be read in conjunction with theaudited consolidated financial statements of KrisEnergy Ltd. (the “Company”) and its subsidiaries(collectively the “Group”) for the financial year ended December 31, 2012 as set out in Appendix K of the Offering Document respectively.


KrisEnergy Ltd was incorporated on October 5, 2009 as a limited liability company in CaymanIslands. With effect from July 4, 2012, the name of the Company was changed fromKrisEnergy Holdings II Limited to KrisEnergy Ltd.


The principal activity of the Company is that of investment holding.

2. Acquisition of Tullow Bangladesh Limited

On April 8, 2013, the Group entered into a sales and purchase agreement with Tullow OilInternational Limited (“Tullow”) to acquire 100% of the share capital of Tullow BangladeshLimited (“TBL”) through its wholly owned subsidiary, KrisEnergy Asia Holdings B.V. TBL holdsa 30% working interest and operatorship of the producing Bangora Block 9 onshore gas field.

The purchase consideration for this acquisition is US$42,350,084, which shall be deemed toinclude all of the effective date working capital except for the effective date intercompanybalance. This transaction is pending approval from Bangladesh Mineral Oil and GasCorporation (“Petrobangla”) and the Government of the People’s Republic of Bangladesh.

The Group and TBL are herein referred to as the “Pro Forma Group” for the purposes of theseunaudited pro forma consolidated financial information.

3. Basis of preparation of unaudited pro forma consolidated financial information

The unaudited pro forma consolidated financial information set out in this report has beenprepared for illustrative purposes only. It has been prepared to illustrate what:

(i) the financial results and cash flows of the Group for the year ended December 31,2012 and three months ended March 31, 2013 would have been if the acquisition of TBL (as discussed in Note 2) had taken place on January 1, 2012 and

(ii) the financial position of the Group as at December 31, 2012 and March 31, 2013 if theacquisition of TBL (as discussed in Note 2) had taken place as at the end of December 31, 2012 and March 31, 2013.

O-14



KrisEnergy Ltd.




3. Basis of preparation of unaudited pro forma consolidated financial information (cont’d)

The unaudited pro forma consolidated financial information has been prepared based on thefollowing:

(i) audited consolidated financial statements of the Group for the financial year endedDecember 31, 2012 and the interim unaudited consolidated financial statements of theGroup for the three months ended March 31, 2013 which were prepared in accordancewith International Financial Reporting Standards (“IFRS”) as issued by theInternational Accounting Standards Board (“IASB”).

(ii) audited financial statements of TBL for the financial year ended December 31, 2012.

(iii) unaudited management accounts of TBL for the period ended March 31, 2013.

The audited consolidated financial statements of the Group for the financial year endedDecember 31, 2012 and the interim unaudited consolidated financial statements of the Groupfor the three months ended March 31, 2013 were audited and reviewed by Ernst & Young LLPSingapore, Public Accountants and Certified Public Accountants.

The audited financial statements of TBL for the financial year ended December 31, 2012 wasaudited by Robert J. Kidney & Co., another firm of Certified Public Accountants, in accordanceto United Kingdom Accounting Standards and International Standards on Auditing (UK and

Ireland). No material adjustments are required to restate the financial statements of TBL to bein accordance to IFRS.

The auditors’ report on the above financial statements was not subject to any qualification,modification or disclaimer.

The objective of the unaudited pro forma consolidated financial information is to show what thehistorical financial information might have been had the Pro Forma Group existed sinceJanuary 1, 2012, and as at December 31, 2012 and March 31, 2013. However, the unauditedpro forma consolidated financial information of the Pro Forma Group is not necessarilyindicative of results of the operations or related effects on the financial position that would havebeen attained had the Pro Forma Group actually existed earlier.

The following adjustments were made for each of the periods presented:

(1) To account for the acquisition of TBL:

a. The purchase consideration is the aggregate of US$42,350,084 and balancesbetween Tullow and TBL as at December 31, 2012 and March 31, 2013. Theconsideration is funded by internal cash.

b. For the purposes of the unaudited Pro Forma Consolidated Statement of FinancialPosition, the carrying amount of identifiable assets and liabilities approximate their fair values, at December 31, 2012 and March 31, 2013.

c. For the purposes of the unaudited Pro Forma Consolidated Statement of Comprehensive Income and unaudited Pro Forma Consolidated Statement of Cash

Flows, the date of acquisition is assumed to be January 1, 2012 and the carryingamount of identifiable assets and liabilities approximate their fair values, at thosedates.

O-15



KrisEnergy Ltd.




3. Basis of preparation of unaudited pro forma consolidated financial information (cont’d)

(2) Elimination of investment in TBL as at December 31, 2012 and March 31, 2013(3) Recognition of depreciation, depletion and amortization per Group accounting policies(4) Recognition of decommissioning provisions per Group accounting policies(5) Derecognition of employee stock option scheme attributable to TBL employees

The unaudited pro forma consolidated financial information, because of its nature, may notgive a true picture of the Group’s actual financial position, results or cash flows of the Group.

4. Significant accounting policies

The unaudited pro forma consolidated financial information is prepared using the sameaccounting policies as the audited consolidated financial statements of the Group as disclosedin Note 2 to the Audited Consolidated Financial Statements of KrisEnergy Ltd. for the financialyear ended December 31, 2012.

5. (Loss)/earnings per share

The basic and diluted (loss)/earnings per share is calculated by dividing Pro Forma Group’s(loss)/profit for the year and period attributable to owners of the Company by the weighted

average number of ordinary shares during the year and period respectively.

The following tables reflect the (loss)/profit and share data used in the computation of basicand diluted (loss)/earnings per share for the year ended December 31, 2012 and period endedMarch 31, 2013:

2012 2013US$ US$

(Loss)/profit for the period attributable to owners of theCompany used in the computation of basic and diluted(loss)/earnings per share (9,125,878) 997,753

Weighted average number of ordinary shares for computation of basic and diluted (loss)/earnings per share 49,041,147 100,000,000

6. Revenue

2012 2013US$ US$

Sale of crude oil 69,797,244 16,391,960Sale of gas 38,414,060 7,650,511

108,211,304 24,042,471

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KrisEnergy Ltd.





2012 2013US$ US$

Cash at banks and on hand 79,969,692 78,129,863Short-term structured deposits 8,000,000 8,000,000

Cash and bank balances 87,969,692 86,129,863


For the purpose of the consolidated statement of cash flows, cash and cash equivalentscomprise the following for the year ended December 31, 2012 and period ended March 31,2013:

2012 2013US$ US$

Cash and bank balances 87,969,692 86,129,863Less: Restricted cash (8,000,000) (8,000,000)

Cash and cash equivalents 79,969,692 78,129,863

O-17



APPENDIX PUS QUALIFIED PURCHASER’S LETTER

[on the letterhead of the investor; to be executed prior to purchase from the Joint Issue Managers, Global

Coordinators, Bookrunners and Underwriters]

To: KrisEnergy Ltd. (the “Company”)

CLSA Singapore Pte Ltd and Merrill Lynch (Singapore) Pte. Ltd.

(together, the “Joint Issue Managers, Global Coordinators, Bookrunners and Underwriters”)

Ladies and Gentlemen:

We are delivering this letter (“US Qualified Purchaser’s Letter”) in connection with our purchase(s) of

ordinary shares (the “Shares”) of the Company in its initial public offering on the Singapore Exchange. The term

“US person” as used in this US Qualified Purchaser’s Letter is understood to have the meaning given to it in

Regulation S (“Regulation S”) under the United States Securities Act of 1933, as amended (the “US SecuritiesAct”).

We represent and warrant to and agree with you as follows:

1. We are purchasing the Shares for our own account or for one or more beneficial owners for which we areacting as fiduciary or agent, with complete investment discretion and with authority to bind each such

person and not with a view to any public resale or distribution of such Shares. We, and each account for

which we are acting, are each purchasing Shares amounting to at least US$250,000 or its equivalent in

another currency. All references in this US Qualified Purchaser’s Letter to us are understood to include

each such beneficial owner for whom we may be acting.

2. We understand and acknowledge that:

(a) no registration has been or will be undertaken by the Company under the United States Investment

Company Act of 1940, as amended, and the rules and regulations thereunder (the “US InvestmentCompany Act”); and

(b) the Shares have not been and will not be registered under the US Securities Act or with anysecurities regulatory authority of any state or other jurisdiction of the United States.

3. If we are in the United States, we (and each beneficial owner for whom we may be acting):

(a) are a “qualified institutional buyer” as defined in Rule 144A under the US Securities Act (“Rule144A”); and

(b) understand, agree and are aware that the sale to us of Shares is being made in reliance on the

exemption provided by Rule 144A from registration under the provisions of Section 5 of the US

Securities Act.

4. If we are outside the United States, we understand and agree that we are purchasing the shares in an

“offshore transaction” as defined in and in reliance on Regulation S.

5. We agree that neither we, nor any of our affiliates, nor any person acting on our or their behalf, will

make, and represent and warrant that our purchase of Shares is not the result of, and that we have not at

any time initiated any process in relation to any purchase of Shares as a result of nor considered any

purchase of Shares as a result of:

(a) any “directed selling efforts” (as defined in Regulation S) in the United States in connection with

any offer or sale of the Shares;

(b) any “general solicitation” or “general advertising” (as defined in Regulation D under the US

Securities Act) in the United States in connection with any offer or sale of the Shares;

(c) in any manner involving a public offering within the meaning of Section 4(2) of the US Securities

Act;

P-1



(d) any statement or information found on any website of the Company, or any of their affiliates or

the Singapore Exchange Securities Trading Limited (the “SGX- ST”) or the Monetary Authority

of Singapore (the “MAS”); and

(e) any statement or information found in any announcement, press release or press-related materials

released by the Company, any of their affiliates or any person acting on its or their behalf,

including the Joint Issue Managers, Global Coordinators, Bookrunners and Underwriters, their

affiliates or any person acting on its or their behalf and including any such announcement, press

release or materials released by or through the SGX-ST or the MAS.

We further represent and agree that neither we, nor any of our affiliates, nor any person acting on our or

their behalf, has relied nor will rely upon any statement or information described in subparagraphs 5(d)

and 5(e) above and that we waive, and will procure that each of our affiliates and each person acting on

our or their behalf will waive, all claims with respect to any inaccuracy or omission in any such statement

or information.

6. If we are in the United States or a US person at the time this US Qualified Purchaser’s Letter is executed

and at the time of our acquisition of the Shares, we (and each beneficial owner for whom we may be

acting):

(a) understand and acknowledge that the sale to us of Shares is being made in reliance on theexemption from registration provided by Section 3(c)(7) of the US Investment Company Act;

(b) are a “qualified purchaser” (“Qualified Purchaser”) as defined in Section 2(a)(51) of, and related

rules under, the US Investment Company Act;

(c) understand that, subject to certain exceptions, to be a Qualified Purchaser, entities must have

US$25 million in “investments” as defined in Rule 2a51-1 under the US Investment Company

Act;

(d) confirm and represent that: (i) we were not formed for the purpose of investing in the Company;

(ii) if we are a private investment company relying upon Section 3(c)(1) or 3(c)(7) of the US

Investment Company Act or a foreign investment company relying upon Section 7(d) and

Section 3(c)(1) or 3(c)(7) with respect to its US holders and were formed on or before April 30,1996, we have received the necessary consent from our beneficial owners pursuant to the US

Investment Company Act; (iii) we do not and will not invest more than 40% of our total assets in

the Company; and (iv) we are not managed as a device for facilitating individual investment

decisions of our beneficial owners, but rather are managed as a collective investment vehicle;

(e) are not a broker-dealer which owns and invests on a discretionary basis less than $25 million in

securities of unaffiliated issuers;

(f) are not a participant-directed employee plan, such as a plan described in subsections (a)(1)(i)(D),

(E) or (F) of Rule 144A; and

(g) are not a partnership; common trust fund; or corporation, special trust, pension fund or retirement

plan, or other entity, in which the partners, beneficiaries, beneficial owners, participants,

shareholders or other equity owners, as the case may be, may designate the particular investment

to be made, or the allocation thereof.

7. We are not, are not using the assets of and shall not at any time hold the Shares for or on behalf of an

“employee benefit plan” as defined in Section 3(3) of the U.S. Employee Retirement Income Security Act

of 1974, as amended (“ERISA”) which is subject to Title I of ERISA, a “plan” subject to Section 4975 of

the U.S. Internal Revenue Code of 1986, as amended (the “Code”), an entity whose underlying assets

include the assets of such plans by reason of a plan’s investment in such entity, or a governmental, church

or non-U.S. plan subject to federal, state, local or non-U.S. laws substantially similar to Section 406 of

ERISA or Section 4975 of the Code (“Similar Law”) unless, in either case, the purchase of the Shares

would not constitute a non-exempt prohibited transaction or the violation of any Similar Law.

8. We agree that the Shares we purchase, or any interest therein, may be sold, transferred, assigned, pledged or

otherwise disposed of, only in bona fide “offshore transactions” (as defined in and in reliance on,

P-2



Regulation S. We also agree not to effect any sale, transfer, assignment, pledge or other disposition unless

we first execute a US Resale Letter in the form of Appendix Q of the offering document for the Shares and

deliver such letter to the Company prior to the settlement of any sale, transfer, assignment, pledge or other

disposition of the Shares. We understand that these transfer restrictions will remain in effect until the

Company determines, in its sole discretion, to remove them.

9. We understand and acknowledge that if any Shares are issued to us in certificated form, they will bear a

legend to the following effect. In addition, we understand that the legend shall not be removed from the

Shares unless the Company agrees, in its sole discretion, to remove the legend.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS

AMENDED (THE “US SECURITIES ACT”), THE SECURITIES LAWS OF ANY STATE OR

JURISDICTION OF THE UNITED STATES, AND HAS BEEN INITIALLY PLACED PURSUANT TO

EXEMPTIONS FROM THE US SECURITIES ACT AND THE US INVESTMENT COMPANY ACT

OF 1940, AS AMENDED (THE “US INVESTMENT COMPANY ACT”) AND MAY NOT BE RE-

OFFERED, RE-SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF

EXCEPT THAT THIS SECURITY MAY BE RE-OFFERED, RE-SOLD, PLEDGED OR OTHERWISE

TRANSFERRED IN AN “OFFSHORE TRANSACTION” AS DEFINED IN AND PURSUANT TO

REGULATION S UNDER THE US SECURITIES ACT (“REGULATION S”) TO A PERSON

OUTSIDE THE UNITED STATES AND NOT KNOWN BY THE TRANSFEROR TO BE A

US PERSON BY PRE-ARRANGEMENT OR OTHERWISE, AND UPON CERTIFICATION TOTHAT EFFECT BY THE TRANSFEROR IN WRITING IN A FORM ACCEPTABLE TO THE

COMPANY. THE TERM “US PERSON” AS USED HEREIN HAS THE MEANING GIVEN TO IT IN

REGULATION S.

THE COMPANY, ITS AFFILIATES AND ITS AGENTS SHALL NOT BE OBLIGATED TO

RECOGNIZE ANY RESALE OR OTHER TRANSFER OF THIS SECURITY MADE OTHER THAN

IN COMPLIANCE WITH THESE RESTRICTIONS. THE COMPANY, ITS AFFILIATES AND ITS

AGENTS MAY REQUIRE ANY PERSON WITHIN THE UNITED STATES OR ANY US PERSON

WHO IS REQUIRED UNDER THESE RESTRICTIONS TO BE A QUALIFIED PURCHASER (AS

DEFINED UNDER THE US INVESTMENT COMPANY ACT AND THE RULES THEREUNDER (A

“QUALIFIED PURCHASER”)) BUT WHO IS NOT A QUALIFIED PURCHASER AT THE TIME IT

ACQUIRES THIS SECURITY, TO TRANSFER THIS SECURITY IMMEDIATELY TO A NON-USPERSON IN AN OFFSHORE TRANSACTION PURSUANT TO REGULATION S. THE COMPANY

MAY ALSO PURCHASE FOR CANCELLATION (TO THE EXTENT PERMITTED BY THE

SINGAPORE EXCHANGE SECURITIES TRADING LIMITED) ANY SUCH SHARES FROM ANY

SUCH PERSON ON A COMPULSORY BASIS.

FURTHER, EACH PURCHASER OR TRANSFEREE OF THIS SECURITY WILL BE REQUIRED TO

REPRESENT OR WILL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT AND IS NOT

USING THE ASSETS OF AND SHALL NOT AT ANY TIME HOLD SUCH SHARE FOR OR ON

BEHALF OF A “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE U.S.

EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) WHICH

IS SUBJECT TO TITLE I OF ERISA, A “PLAN” SUBJECT TO SECTION 4975 OF THE U.S.

INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), AN ENTITY WHOSE

UNDERLYING ASSETS INCLUDE THE ASSETS OF SUCH PLANS BY REASON OF A PLAN’SINVESTMENT IN SUCH ENTITY OR A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN

SUBJECT TO FEDERAL, STATE, LOCAL OR NON-U.S. LAWS SUBSTANTIALLY SIMILAR TO

SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAW”) OR, IN EITHER

CASE, ITS ACQUISITION, HOLDING AND DISPOSITION OF SUCH SHARE OR OF ANY

INTEREST THEREIN, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED

TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR, IN THE

CASE OF A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN, A VIOLATION OF ANY

APPLICABLE SIMILAR LAWS.

THIS SECURITY IS NOT TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE

RESTRICTIONS DESCRIBED HEREIN. EACH TRANSFEROR OF THIS SECURITY AGREES TO

PROVIDE NOTICE OF THE TRANSFER RESTRICTIONS SET FORTH HEREIN AND IN THECOMPANY’S PROSPECTUS TO THE TRANSFEREE AND TO ANY EXECUTING BROKER.

P-3



10. We understand and agree that our purchase of Shares and any subsequent sale or transfer of Shares (or

beneficial interest therein) to a person may be void and of no effect if such purchase, sale or transfer does

not comply with the representations, warranties and agreements set out in this US Qualified Purchaser’s

Letter.

11. We understand and agree that the Company is authorized to compel us to sell or transfer Shares which we

purchase or to compel a person who, directly or indirectly, holds a beneficial interest in such Shares

through us in certain circumstances set out in “ Appendix F – Summary of Certain Provisions of the

Cayman Islands Companies Law and the Memorandum and Articles of Association of Our Company” of

the offering document for the Shares.

12. We acknowledge that you and your affiliates are relying on the truth and accuracy of, and compliance

with, the foregoing acknowledgements, representations and agreements and agree that if we, or any

transferee, breach any agreement contained herein or have made any misrepresentation herein or if any

US Person or any person within the United States acquires a beneficial interest in the Shares, the

Company may (to the extent permitted by the Singapore Exchange Securities Trading Limited) purchase

our Shares for cancellation or sell our interest in the Shares without our consent to a person designated by

the Company on such terms as the Company shall determine in its sole discretion.

13. Upon a proposed sale, transfer, assignment, pledge or other disposition of the Shares, we will notify any

purchaser of such Shares, the executing broker and any other agent of the transferor involved in sellingthe Shares, as applicable, of the transfer restrictions set forth in this US Qualified Purchaser’s Letter that

are applicable to the Shares being sold and will require the broker and such other agent, as applicable, to

comply with such restrictions.

Where there are joint applicants, each must sign this US Qualified Purchaser’s Letter. Applications from a

corporation must be signed by an authorized officer or be completed otherwise in accordance with such

corporation’s constitutional documents (and evidence of such authority may be required).

(Name of Purchaser)

By:

Title:

Date:

P-4



APPENDIX QUS RESALE LETTER

[on the letterhead of the investor; to be executed after resale of the Shares outside the United States; to be

delivered to the Company prior to the settlement of any sale or other transfer of Shares]

KrisEnergy Ltd. (the “Company”)

83 Clemenceau Avenue

#10-05 , UE Square

Singapore 239920

Ladies and Gentlemen:

This letter (“Resale Letter”) relates to the sale or other transfer by us of ordinary shares (the “ Shares”) of the

Company, which is required to be in an offshore transaction pursuant to Regulation S (“Regulation S”) under the

US Securities Act of 1933, as amended (the “US Securities Act”). Terms used in this Resale Letter are used as

defined in Regulation S, except as otherwise stated herein.

We hereby represent and warrant to you as follows:

(a) We previously purchased the Shares for our own account (or for one or more beneficial owners for whichwe have acted as fiduciary or agent, with complete investment discretion and with authority to bind each

such person), executed a US Qualified Purchaser’s Letter in the form in Appendix P of the offering

document of the Company prepared in relation to the Shares (the “Offering Prospectus”) on our own

behalf and on behalf of each beneficial owner we have acted for and delivered such US Qualified

Purchaser’s Letter to you. We understand that the Shares have not been and will not be registered under

the US Securities Act and that the Company has not registered and will not register as an investment

company under the Investment Company Act of 1940, as amended, and the rules thereunder (the

“Investment Company Act”).

(b) The offer and sale of the Shares by us was not made to a person in the United States or to a US Person (as

defined in Regulation S).

(c) Either:

(i) at the time the buy order for the sale of the Shares by us was originated, the buyer was outside the

United States or we and any person acting on our behalf reasonably believed that the buyer was

outside the United States; or

(ii) the transfer of the Shares by us was executed in, on or through the facilities of a designated

offshore securities market as defined in Regulation S (including, for the avoidance of doubt, a

bona fide sale on the Singapore Exchange Securities Trading Limited), and neither we nor any

person acting on our behalf has reason to believe that the transaction was pre-arranged with a

buyer in the United States.

(d) We have no reason to believe that the person to whom we are transferring the Shares is, or is using the

assets of or shall at any time hold the Shares for or on behalf of, an “employee benefit plan” as defined in

Section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”)

which is subject to Title I of ERISA, a “plan” subject to Section 4975 of the U.S. Internal Revenue Code

of 1986, as amended (the “Code”), an entity whose underlying assets include the assets of such plans by

reason of a plan’s investment in such entity, or a governmental, church or non-U.S. plan subject to

federal, state, local or non-U.S. laws substantially similar to Section 406 of ERISA or Section 4975 of the

Code (“Similar Law”) unless, in either case, the purchase of the Shares would not constitute a non-

exempt prohibited transaction or the violation of any Similar Law.

(e) Neither we, nor any of our affiliates, nor any person acting on our or their behalf, has made any directed

selling efforts (as such term is defined in Regulation S) in the United States with respect to the Shares.

(f) The transfer of the Shares by us was not and is not part of a plan or scheme to evade the registration

requirements of the US Securities Act or the Investment Company Act.

Q-1



(g) None of the Company, any of its agents nor any of their respective affiliates participated in the sale of the

Shares by us.

(h) We agree that the Company, its agents and their respective affiliates may rely upon the truth and accuracy

of the foregoing acknowledgments, representations and agreements.

Where there are joint transferors, each must sign this US Resale Letter. A US Resale Letter of a corporation must

be signed by an authorized officer or be completed otherwise in accordance with such corporation’s constitution

(and evidence of such authority may be required).

Yours sincerely,

(Name of Transferor)

By:Title:

Date:

Q-2



APPENDIX RDEFINITIONS

This glossary contains explanations and definitions of certain terms used in this offering document in connection

with our business. The terms and their assigned meaning may not correspond to standard industry or common

meaning or usage of these terms.

“1C” Low estimate scenario of contingent resources.

“1P” Equivalent to proved reserves; denotes low estimate scenario of reserves.

“2007 PRMS” The Petroleum Resources Management System jointly set out by the Society of

Petroleum Engineers, the World Petroleum Council, the American Association of

Petroleum Geologists and the Society of Petroleum Evaluation Engineers in April

2007.

“2C” Best estimate scenario of contingent resources.

“2D seismic” Geophysical data that depicts the subsurface strata in two dimensions.

“2P” Equivalent to proved plus probable reserves; denotes best estimate scenario of

reserves.

“3C” High estimate scenario of contingent resources.

“3D seismic” Geophysical data that depicts the subsurface strata in three dimensions. 3D

seismic typically provides a more detailed and accurate interpretation of the

subsurface strata than 2D seismic.

“3P” Equivalent to proved plus probable plus possible reserves; denotes high estimate

scenario of reserves.

“Aabar” Aabar Petroleum Investments Company PJSC.

“AWE” AWE Limited.

“B8/32 Partners” B8/32 Partners Ltd.

“Bangladesh Government” the government of the People’s Republic of Bangladesh.

“basin” Areas where sedimentary rocks have accumulated over time, which are regarded

as good prospects for oil and gas exploration.

“bbl” Barrel.

“bcf” Billion cubic feet.

“bcfd” Billion cubic feet per day.

“Block 105” Block 105-110/04.

“boepd” Barrels of oil equivalent per day.

“bopd” Barrels of oil per day.

“BP Migas” Badan Pelaksana Kegiatan Hulu Minyak dan Gas Bumi, the former Indonesian

regulator of upstream oil and gas activities.

“Brent” A blended crude stream produced in the North Sea region which serves as a

reference or marker for pricing a number of other crude streams.

“Cambodian Government” Royal government of the Kingdom of Cambodia.

“Chevron” Chevron Corporation and its subsidiaries.

“CNPA” Cambodian National Petroleum Authority.

R-1



“commercial” When a project is commercial, this implies that the essential social,

environmental and economic conditions are met, including political, legal,

regulatory and contractual conditions. In addition, a project is commercial if the

degree of commitment is such that the accumulation is expected to be developed

and placed on production within a reasonable time frame.

“condensate” A mixture of liquid hydrocarbons (mostly pentanes and heavier) that exist in the

gaseous phase at original reservoir temperature and pressure, but when the gas isproduced and processed through the dew point, are in the liquid phase at surface

temperature and pressure conditions.

“contingent resources” Those quantities of petroleum estimated, as of a given date, to be potentially

recoverable from known accumulations by application of development projects,

but which are not currently considered to be commercially recoverable due to one

or more contingencies.

“contract areas” A specified geographic area that is the subject of an agreement with the host

government pursuant to which an operator and its partners provide financing and

technical expertise to conduct exploration, development and production

operations.

“Controlling Shareholders” First Reserve and Keppel.

“cost recovery limit” Under certain fiscal regimes, such as those in Cambodia, Indonesia and Vietnam,

the contractor is entitled to recover its costs out of net production. The cost

recovery limit is the maximum percentage of hydrocarbons which is permitted to

be allocated to cost recovery.

“Development Pending” The project is seen to have reasonable potential for eventual commercial

development, to the extent that further data acquisition (e.g. drilling, seismic

data) and/or evaluations are currently ongoing with a view to confirming that the

project is commercially viable and providing the basis for selection of an

appropriate development plan. The critical contingencies have been identified

and are reasonably expected to be resolved within a reasonable time frame.

Disappointing appraisal/evaluation results could lead to a re-classification of the

project to “On Hold” or “Not Viable” status.

“Development Unclarified” A discovered accumulation where project activities are on hold and/or where

justification as a commercial development may be subject to significant delay.

The project is seen to have potential for eventual commercial development, but

further appraisal/evaluation activities are on hold pending the removal of

significant contingencies external to the project, or substantial further appraisal

and/or evaluation activities are required to clarify the potential for eventual

commercial development. Development may be subject to a significant time

delay.

“development well” A well drilled to obtain production from a proven oil or gas field.

“discovery” One petroleum accumulation, or several petroleum accumulations collectively,

for which one or several exploratory wells have established through testing,

sampling, and/or logging the existence of a significant quantity of potentially

moveable hydrocarbons. In this context, “significant” implies that there is

evidence of a sufficient quantity of petroleum to justify estimating the in place

volume demonstrated by the well(s) and for evaluating the potential for economic

recovery.

“domestic market

obligation” or “DMO”

An obligation that a contractor to a PSC supply the Indonesian market a

proportion of its entitlement from oil and gas production, up to a maximum of 25.0 per cent., at a specified price (often expressed as a percentage of market

price).

R-2



“Employee” Any confirmed employee of our Group to participate in the Scheme and/or the

Plan.

“Eni” Eni S.p.A. and its subsidiaries.

“Enovation” Enovation Resources Ltd.

“EIA” Environmental Impact Assessment.


“exploration well” A well drilled to find hydrocarbons in an unproved area or to extend significantly

a known oil or gas reservoir.

“farm-in” / “farm-out” Process where the owner of an interest in a contract area invites third parties to

participate in and assume some of the risks of developing the contract area.

“field” An area consisting of a single reservoir or multiple reservoirs all grouped on, or

related to, the same individual geological structural feature and/or stratigraphic

condition.

“final investment decision” The decision by a joint venture to commence development of the relevant fieldpursuant to the relevant approved PAA, PPA, plan of development or

development plans, as the case may be.

“First Reserve” First Reserve Management, L.P., together with its affiliated funds.

“geology” The scientific study of the origin, history and structure of the earth (adj.

geological).

“geophysics” Matters concerning the physics of the earth and its environment, including the

physics of fields such as meteorology, oceanography, and seismology. In oil and

gas exploration, this refers to geophysical methods of imaging the subsurface

such as gravity, magnetic and seismic (adj. geophysical).

“graben” An elongated block of the earth’s crust lying between two faults and displaced

downwards relative to the blocks on either side.

“gross reserves” The total volume of oil and/or gas anticipated to be commercially produced in the

future.

“horst” A raised elongated block of the earth’s crust lying between two faults.

“Indonesian Government” The government of the Republic of Indonesia.

“Industry Consultant” Wood Mackenzie Asia-Pacific Pte Limited.

“JOA” Joint operating agreement.

“Keppel” Keppel Corporation Limited.

“leads” A project associated with a potential accumulation that is currently poorly

defined and requires more data acquisition and/or evaluation in order to be

classified as a prospect.

“Listing Manual” The Listing Manual of the SGX-ST.

“LNG” Liquefied natural gas; gas that has been liquefied by cooling for the purpose of

shipment and storage.

“mcf” Thousand cubic feet.

“MOECO” Mitsui Oil Exploration Co. Ltd.

“mmbo” Million barrels of oil.

R-3



“mmboe” Million barrels of oil equivalent.

“mmbtu” Million British thermal units.

“mmcfd” Million cubic feet per day.

“Mubadala” Mubadala Development Corporation and its subsidiaries, including Pearl Energy

after its acquisition in 2008.

“Neon Energy” Neon Energy Ltd and its subsidiaries.



“Northern Gulf ” Northern Gulf Petroleum Pte Ltd and its subsidiaries.

“OEL” Orange Energy Ltd.

“PAA” Production Area Application.

“Participants” Eligible participants of the Scheme and the Plan.

“Pearl Energy” Pearl Energy Limited, prior to its takeover by Mubadala in 2008.

“Petrobangla” Bangladesh Oil, Gas and Mineral Corporation.

“Petro Vietnam” The Vietnam Oil and Gas Group.

“pigging” The act of forcing a device called a pig through a pipeline for the purposes of

displacing or separating fluids and cleaning or inspecting the line.

“Plan” KrisEnergy Performance Share Plan.

“Plan Shares” Shares released under the Plan.

“Play”A project associated with a prospective trend of potential prospects, but whichrequires more data acquisition and/or evaluation in order to define specific leads

or prospects.

“possible reserves” Those additional reserves which analysis of geoscience and engineering data

indicate are less likely to be recoverable than probable reserves.

“PPA” Production Permit Application.

“probable reserves” 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.

“production area” or “PA” An area defined by the Thai Government authorities where oil and gas may be

produced from oil and gas production material.

“prospect” A project associated with a potential accumulation that is sufficiently well

defined to represent a viable exploration drilling target.

“prospective resources” Those quantities of petroleum which are estimated, as of a given date, to be

potentially recoverable from undiscovered accumulations.

“proved reserves” 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 defined economic

conditions, operating methods, and government regulations.

“PSC” Production sharing contract, which is an agreement with the relevant hostgovernment, which outlines the fiscal terms for exploring, developing and

producing oil and gas within a specified contract area.

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“psig” Pounds per square inch.

“Qualified Person” Netherlands, Sewell & Associates, Inc.

“Qualified Person’sReport”

The summarizing an estimate of our reserves and contingent and prospective

resources prepared by the Qualified Person and set out in Appendix D of this

offering document.

“reserves” Those quantities of petroleum anticipated to be commercially recoverable by

application of development projects to known accumulations from a given date

forward under defined conditions.

“resources” All quantities of petroleum (recoverable and unrecoverable) naturally occurring

on or within the earth’s crust, discovered and undiscovered, plus those quantities

already produced.

“Scheme” KrisEnergy Employee Share Option Scheme.

“Scheme Shares” Shares released under the Scheme.

“Serica” Serica Energy, together with its subsidiaries.

“signature bonus” A payment made to a host government body upon entering into a PSC.

“SKK Migas” Satuan Kerja Khusus Sementara Pelaksana Kegiatan Usaha Hulu Minyak dan

Gas Bumi, the Indonesian Government’s Special Work Unit for Upstream Oil

and Gas Activities, including BP Migas in its former capacity as the Indonesian

regulator of upstream oil and gas activities unless the context otherwise requires.

“standard cubic foot” One cubic foot of gas at standard conditions of 60 degrees Fahrenheit and 14.696

psia.

“stock tank barrel” The volume of stabilized oil, equivalent to one barrel (42 US gallons or

approximately 158.987 liters) at stock tank conditions of 60 degrees Fahrenheit

and 14.696 psia.

“spudded” Began to drill a well.

“SWK” PT Satria Wijayakusuma.

“tertiary basin” A depocenter filled with sediments of Paleogene and Neogene Age, deposited

between 65 million and 1.8 million years ago.

“Thai Government” The government of the Kingdom of Thailand.

“unrecovered cost pools” Under a PSC environment, the contractor’s revenue entitlements include a

component that provides the contractor with the right to recover eligible

operating and capital costs that the contractor has incurred unrecovered costpools are the outstanding balances of recoverable costs that the contractor is

entitled to receive from future revenue streams. These balances occur when

eligible expenditures are greater than revenue streams.

“West Texas Intermediate”

or “WTI”

A crude stream produced in Texas and southern Oklahoma which serves as a

reference or marker for pricing a number of other crude streams and which is

traded in the domestic spot market at Cushing, Oklahoma.

“work program” An annual budget program that defines the seismic, well drilling and facilities

construction plans.

“Working Interest” Percentage ownership in a joint operation associated with revenue and costs.

Working Interests do not take into account the terms of any royalties, governmentshares of production, or similar fiscal terms, and thus do not reflect net

entitlement to any oil or gas produced.

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APPENDIX SSUMMARY OF CERTAIN COVENANTS IN OUR FINANCE AGREEMENTS

The covenants contained in the documentation relating to our 2016 Notes and 2011 Revolving Credit Facility

limit KEHCL’s ability to undertake certain transactions, including, among others, incurring indebtedness, making

restricted payments and entering into transactions with affiliates.

The covenant limiting KEHCL’s ability to incur indebtedness applies if KEHCL’s fixed charge coverage ratio

(the ratio of its consolidated adjusted EBITDAX to its fixed charges for a specified period) is less than 2.25 to 1,

and has carveouts allowing for, among others, (i) the incurrence of permitted refinancing indebtedness,

(ii) ordinary course hedging obligations, (iii) ordinary course cash management obligations and (iv) the

incurrence of up to US$5 million or 1.5 per cent. of total assets in additional debt, whichever is lower.

The covenant limiting the making of restricted payments restricts KEHCL from (i) the declaration or payment of

any dividends or any distribution on account of its or any of its subsidiaries’ equity interests (including, without

limitation, any payment in connection with any merger or consolidation involving it or any of our subsidiaries),

or to the direct or indirect holders of its or any of its subsidiaries’ equity interests in their capacity as such (other

than distributions payable to it or any of its subsidiaries), (ii) the purchase, redemption or other acquisition or

retirement for value (including, without limitation, in connection with any merger or consolidation involving

KEHCL) of any equity interest of it or any of its direct or indirect parents, (iii) the repayment of any shareholder

loans or granting of any loans to its shareholders (other than shareholder loans granted by its subsidiary toanother subsidiary), (iv) the making of any payment on or with respect to, purchase, redemption, defeasance of

other acquisition or retirement for value, of any indebtedness of it or any subsidiary that is contractually

subordinated to the 2016 Notes or to the guarantees (excluding any intercompany Indebtedness between or

among KEHCL and any of its subsidiaries) held by the direct or indirect holders of its equity interests or (v) the

making of any restricted investment.

The limitation on restricted payments does not apply to any permitted dividend payments, which are payments of

dividends up to (i) 50.0 per cent. of KEHCL’s consolidated net income for the period beginning on the first day

of its fiscal quarter in which the 2016 Notes were issued to the end of its most recently ended fiscal quarter for

which financial statements are available at the time of such restricted payment, plus (ii) 100.0 per cent. of the

aggregate net proceeds, including cash and the fair market value of property other than cash, received by it since

the issue date of the 2016 Notes (x) as a contribution to its common equity capital or (y) from the issue or sale of equity interests of it or any direct or indirect parent of it (other than certain disqualified stock or excluded

contributions) or from the issue or sale of convertible or exchangeable disqualified stock or convertible or

exchangeable debt securities that have converted into or exchange from such equity interests (other than equity

interests (or disqualified stock or debt securities) sold to one of its subsidiaries, minus (iii) the amount of such

restricted payment, together with the aggregate amount of all other restricted payments made by it and its

subsidiaries since the date of issue of the 2016 Notes (excluding restricted payments in an aggregate amount

equal to the amount of excluded contributions previously received by it and its subsidiaries), in each case

provided that it would, after giving pro forma effect to the payment in question, have been able to incur at least

US$1.00 of additional indebtedness pursuant to the fixed charge coverage ratio test forth in the incurrence of

indebtedness test.

Under the covenant restricting transactions with affiliates, KEHCL may not, and will not permit any of its

subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assetsto, or purchase any property or assets from, or enter into or make or amend an transaction, contract, agreement,

understanding, loan, advance or guarantee with, or for the benefit of, any of its affiliates (an affiliate of KEHCL

being defined as any other person directly or indirectly controlling or controlled by or under direct or indirect

common control with KEHCL) (each, an “Affiliate Transaction”), unless:

(1) the Affiliate Transaction is in the ordinary course of business and pursuant to the reasonable requirements

of KEHCL’s business;

(2) the Affiliate Transaction is on fair and reasonable terms that are not less favorable to KEHCL or the

relevant subsidiary than those that would have been obtained in a comparable transaction on an arm’s

length basis by KEHCL or such subsidiary with an unrelated person; and

(3) KEHCL delivers to the trustee (x) with respect to any Affiliate Transaction or series of related Affiliate

Transactions involving aggregate consideration in excess of US$5 million, a resolution of its board of

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directors certifying that such Affiliate Transaction complies with this condition and that such Affiliate

Transaction has been approved by a majority of the disinterested members, if any, of KEHCL’s Board of

Directors and (y) with respect to any Affiliate Transaction or series of related Affiliate Transactions

involving aggregate consideration in excess of US$15 million, an opinion as to the fairness to KEHCL or

such subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting,

appraisal or investment banking firm of national standing.

The limitation on entering into Affiliate Transactions contains carveouts for (i) employment agreements,

employee benefit plans, officer or director indemnification agreements or any similar arrangement entered into in

the ordinary course of business or consistent with past practice and payments pursuant thereto, (ii) transactions

(including a merger) between or among KEHCL and/or any of its subsidiaries, (iii) the payment of reasonable

fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of KEHCL or any of

its subsidiaries or any direct or indirect parent company of KEHCL, (iv) restricted payments and investments that

do not otherwise violate the covenant on restricted payments, (v) the issuance of any equity interests (other than

disqualified stock) of KEHCL to its affiliates, directors, officers, employees or consultants or any of its direct or

indirect parent companies, and the granting and performance of registration rights, and (vi) transactions effected

pursuant to agreements in effect on the date of issue of the 2016 Notes and any amendment, modification or

replacement of such agreement (so long as such amendment or replacement is not materially more

disadvantageous to the holders of the 2016 Notes, taken as a whole).

Non-compliance with any of the covenants in the trust deed after any applicable cure period (which ranges from30 days to 180 days, depending on the covenant in question) gives rise to a right for bondholders to declare the

bonds due and payable at their principal amount together with all accrued and unpaid interest. The trustee may

act on the request of at least one-quarter of the principal amount of the notes then outstanding or by extraordinary

resolution. To the extent that 25.0 per cent. of the bondholders and extraordinary resolution are not received, this

in effect acts as a waiver of any breach of the covenants.

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KrisEnergy Ltd - Appendices E to S

Documents

Transcript of KrisEnergy Ltd - Appendices E to S