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STRATEGICREVIEWsoco international plcannual report and accounts 2012Chairman and Chief Executive’s Statement continuedSOCO’s Vietnam operations in the Cuu LongBasin and in particular the TGT field, remain thecornerstone of the Group’s portfolio and aregenerating significant cash flow. Six successfulprojects have been recycled into cash; these includeour interests offshore in the Gulf of Thailand and theTunisian Gulf of Gabès and onshore in the EastShabwa Development Area of Yemen, the TamtsagBasin in Mongolia, European Russia and the WealdBasin in the UK. These divestments have enabledreinvestment in new projects and funding of furtherphases of growth. The other two of our nineinvestment areas, the Congo Basin and theAlbertine Rift, are still in the exploration phase,the latter being in very preliminary stages in ahigh potential region, albeit with significantsecurity challenges.The essence of our strategy is to identify underexploited opportunities in hydrocarbon prone regions.That means that we will not typically enter newregions or open up new, unproven geological areas.Equally, it means a cautious approach to popularisedbut untested regions with significant commercial risk.Moreover, we avoid the commercial risk of projectsthat lock in capital for overly long periods of time.Whilst oil is SOCO’s main focus, the Company wouldnot avoid an opportunity where gas could becommercialised locally.5,437 BOEPD in 2011. Additionally, the Company wasable to benefit from high oil prices with the Grouprealising nearly 118 per barrel of crude oil soldcompared with approximately 113 per barrel in 2011.Finally, we seek opportunities that offer materiality tothe Company. The benchmark for entry into a newcountry is a project that has multiple play types, butthe primary target should have the potential of adding50 million barrels net to the Company’s interest.Cash flows from operating activities were up from 90.2 million in 2011 to 334.8 million in 2012,reflecting the increases in both oil production andrealised oil prices. Capital expenditures reduced to 109.9 million in 2012 from 152.2 million in 2011.Development activities continued apace with theinstallation of the H4-WHP and the drilling of four wellsin the TGT field; however, no exploration wells weredrilled during 2012 whereas two wells were drilledoffshore Congo (Brazzaville) in 2011.Financial and Operating ResultsWe set new records in 2012 with Group revenuejumping to 621.6 million compared to the previousrecord revenues of 234.1 million set in 2011. Thisfollows the Company’s first full year of production fromthe TGT field H1-WHP and approximately six months ofproduction from the H4-WHP. After tax profits mirroredthat dramatic revenue increase at 207.0 million upfrom 88.6 million in 2011. In 2012 Group netentitlement volumes were approximately 15,500barrels of oil equivalent per day (BOEPD) comparedwith an average of approximately 6,730 BOEPD in2011. Working interest production net to SOCOaveraged 14,757 BOEPD during 2012 compared withIn July 2012, the Company used its significant cashbalances to acquire the remaining 20% interest inSOCO Vietnam, which holds the Group’s interest inCNV and the majority of its interest in TGT, for 95.0million. Further, the Company purchased 7.5 millionof its own shares into treasury, representing 2.20%of the Company’s entire issued share capital, at acost of 32.9 million and repurchased convertiblebonds at a cost of 0.9 million. The Group endedTHE STRATEGY THATFUELS growthDisposalReinvestment from cashinflows generated byoperations and disposalscreates more opportunitiesfor explorationKey Recognising opportunity Capturing potential Realising valueCash ectevaluationOtherSourcesCashReturns6

2012 Operations Review4p47CorporateGovernance ReportAfricaRepublic of Congo (Brazzaville)From an analysis of the results of previously acquireddata on the Block, incorporating the results of theLideka Marine 1 well drilled by the previous Blockconcession holder, the Marine XI partners have agreedto drill the Lideka Marine East 1 well. An initial rigsharing agreement was delayed during the fourthquarter of 2012, but the well is expected to spud in thesecond half of 2013. This well will be a test of stackedplays and will test both the structural closure updip fromBoard diversityBoard independenceBoard compositionIn accordance with the UK Corporate GovernanceCode (Code), all Directors are subject to annualindependence reviews and election by veyears1Board nationalitiesUnited KingdomOther EuropeN. wAdditional InformationThe Board recognises the need for anappropriate balance of critical attributes,including skills, experience, diversity,independence and knowledge of theCompany. Accordingly, it continuallyseeks, within an appropriate Board size,to manage a balance between eachimportant element in its composition,including Executive representation,independence,diversity, tenureand refreshment.Vietnam – Block 9-2Production on Block 9-2 from the CNV field has beenDedicated test separation and metering facilities havebeen installed on the Bach Ho central processingplatform complex and the Company has performed itsindependent calibrations. Vietsovpetro, the operator ofthe Bach Ho facilities through which CNV production isprocessed, has undertaken to perform its ownindependent calibrations. We expect to be able toarrive at some agreed measurement techniques oncethe outcome of their calibrations is known.Financial StatementsWe arecommitted tothe higheststandardsof corporategovernanceProduction from TGT has averaged 42,126 BOPD grossand 12,618 BOPD net to the Group’s working interestduring 2012 with net entitlement production averaging13,357 BOPD, including recovery of costs carried onbehalf of PetroVietnam. The field continues to performin line with expectations, with field production rangingfrom 52,000 to 55,000 BOPD with daily ratefluctuations reflecting well intervention activities. A24-hour “high rate” flow test of the FPSO was carriedout at 60,789 BOPD with no issues seen in either thereservoir performance or the FPSO operability. Sales ofTGT crude currently realise a premium of 5 to 7 perbarrel to Brent benchmark crude price.steady during the year with production net to theCompany’s working interest averaging 2,139 BOEPDduring 2012.GovernanceSOCO is proud of its operational record andachievements. The on-budget delivery of the secondTGT platform one month ahead of schedule and almostone year ahead of the original development plan is atestament to the Company and its commitment toprudent and effective operations. The Company isparticularly proud of the exemplary track record ofhealth and safety in its Vietnam operations which havehad no reported lost time incidents.South East AsiaVietnam – Block 16-1Production from TGT’s southern platform, theH4-WHP, commenced on 6 July 2012, completing thefield’s conversion from an exploration and developmentplay to a cash generative asset. This was achievedover one month earlier than scheduled and nearly ayear ahead of the original approved development plan.Corporate ResponsibilityThe Directors are not recommending a payment of adividend in respect of 2012 (2011 – nil). However, theBoard expects to recommend a sustainable return ofcapital to shareholders during 2013, the level of whichwill be determined pending Hoang Long and Hoan VuJoint Operating Companies’ (HLHVJOC) approvals ofa 2013 Work Programme and Budget for CNV andTGT and incorporating results of the upcomingcapacity test of the floating production, storageand offloading vessel (FPSO).annual report and accounts 2012Business Reviewthe year with cash, cash equivalents and liquidinvestments of 258.5 million, up from 160.1million at the end of 2011.Strategic Reviewsoco international plc2Board age breakdown 4141-60 605Key Code guidanceAnnual reappointment--- Time elapsed during tenure34Non-Executive Directors’ knowledge, skills and experienceKey strategic l ,governanceBanking,financeand markets7

STRATEGICREVIEWsoco international plcannual report and accounts 2012Chairman and Chief Executive’s Statement continuedan oil leg encountered in the Lideka Marine 1 well thatwas drilled two kilometres to the west and also the largeuntested structural closure in an overlying formation.cost of 2.784 per Share. As at 31 December 2012,the Company held 9,122,268 (31 December 2011– 1,607,852) Treasury Shares.The Group has been awarded a one-year explorationlicence over the Nanga II A Block located adjacent tothe coast, onshore Congo (Brazzaville), near theM’Boundi producing field. The initial plan is to evaluateaeromagnetic data and reprocess several 2D seismiclines previously acquired over the block beforedetermining whether or not to proceed with a limited3D seismic survey on the area. The Group willdetermine whether to enter into a production sharingcontract following an evaluation of the data.Acquisition of the outstanding non-controllinginterest in SOCO Vietnam LtdIn July 2012, SOCO completed an agreementwith Lizeroux Oil & Gas Ltd to acquire the 20%outstanding non-controlling interest in SOCOVietnam for a cash consideration of 95 million(the Acquisition), which was satisfied out of existingcash resources of the Company. The Acquisitionwas conditional upon the approval of SOCOshareholders, which was given at a general meetingof the Company in July 2012. As a result of theAcquisition, SOCO Vietnam became a wholly ownedsubsidiary of the Group and SOCO acquired theright to receive all of the future cash flows that thenon-controlling interest was entitled to receive.Democratic Republic of Congo(Kinshasa) (DRC)The Government of the DRC commissioned an aerialsurvey and baseline studies over Block V in September2011 as part of its wider objective of performing aStrategic Environmental Evaluation. Accordingly,SOCO’s work programme has been agreed in closecollaboration with the Congo Environmental StudiesGroup (also known as Groupe d’EtudesEnvironnementales du Congo or GEEC) and theCongolese Wildlife Authority (also known as InstitutCongolais pour la Conservation de la Nature or ICCN).Preparations are ongoing for the aerial survey, whichwill be carried out from our logistics base in Ugandaand will involve a helicopter flying over Lake Edwardand the surrounding lowland savannah area. Thesecurity status is being assessed on a continual basisand we will only proceed when the assessment is thatit is safe to do so.In July 2012, SOCO increased its interest in the Block Vlicence to 85% by acquiring the 46.75% interest heldby Ophir Energy Plc. The remaining 15% interest is heldby Cohydro, the national oil company of the DRC.In the Nganzi Block depth migrated reprocessing of thedata from the 2D seismic acquisition programme isongoing. Following interpretation, decisions will bemade by the partners on potential drilling locationsprior to year end.AngolaInterpretation of the data acquired from the 2D seismicacquisition programme was completed during the year.Preparation has now commenced for the drilling of the20-6 and 20-7 exploration wells in Dinge area. Drillingis expected to start mid-2013. The Company hasannounced that it has entered into a conditionalagreement to sell its interest in the Cabinda NorthBlock (see below for details).CorporatePurchase of own sharesDuring 2012, the Company spent approximately 32.9 million repurchasing 7,514,416 of its ownordinary shares of 0.05 each (Shares) at an average8Transfer of the interest in Block V of theAlbertine Graben, DRCIn July 2012, a wholly owned subsidiary of OphirEnergy Plc transferred its 46.75% interest in theContractor’s right, title and interest in a productionsharing contract relating to Block V to SOCOExploration & Production DRC Sprl (SOCO E&P DRC).The transfer was completed on 20 July 2012 for thecash consideration of 6.5 million plus agreedreimbursement of 2.2 million for the cash calls paidin 2012. As a result of the transfer, SOCO E&P DRChas an 85% interest in Block V.Conditional sale of the majority interestin SOCO Cabinda LimitedIn September 2012, SOCO announced that it hadentered into a conditional agreement (the Disposal)with Quill Trading Corporation (Quill) wherein the Groupwill sell its 80% majority interest in SOCO CabindaLimited (SOCO Cabinda) to Quill, the holder of theremaining 20% interest. SOCO Cabinda has a 17%participating interest in the Cabinda North Block,onshore the Angolan enclave of Cabinda. The Grouphas no reserves attributable to its interests in SOCOCabinda. The Directors believe that the Disposal is inthe best interests of the Company’s shareholders asthe Group continues to re-focus the portfolio on higherimpact projects in which it holds larger participatinginterests. Quill has paid a non-refundable deposit tothe Company for the option to acquire SOCO’s entireshareholding in SOCO Cabinda. The option expiry hasbeen extended and the final terms for closing areunder negotiation.The Board of DirectorsDuring the year, the Board appointed Ms Cynthia Cagleas an Executive Director. Cynthia has been an officerof the Group since its inception in 1997 and is aDirector of the Company’s significant subsidiaries. Inher role as Company Secretary, Cynthia has attendedall of the Company’s Board and Committee meetingssince 1997 and has an in-depth knowledge of theCompany’s Board and committee procedures andpolicies. Cynthia’s appointment increases the financialand corporate governance experience represented onthe Board and reflects the importance the Boardattaches to these areas of expertise.Executive Staff AppointmentIn December 2012, the Company was delighted toannounce the promotion of Antony Maris to ChiefOperating Officer. Antony has played a core role inSOCO’s operations since joining in 2004 and we lookforward to his ongoing positive input to the business.OutlookOperationally in 2013 we will continue appraising theTGT field, with the most significant undrilled fault block,the southern-most H5 fault block, to be drilled as soonas the winter monsoon season ends in Vietnam, likelyat the beginning of the second quarter. With theoutcome of that well and significantly more productiondata from the field, we should be able to furtherprogress our assessment of the potential of the field.Also in Vietnam, we expect to drill an additionalproduction well on CNV, which will allow us to accessthe thus far undrilled south-western corner of thefield. The outcome of this well, with some productionhistory, should enable us to update the reservesposition in the field.Further exploration drilling is planned in the summerof 2013 with the drilling of the East Lideka well.We seek to build shareholder value first and foremostthrough the portfolio. We expect to add multiple newventures to our portfolio in 2013, including at least onemore high profile exploration project in an area wherewe already have a footprint. Nonetheless, the Boardexpects to recommend a sustainable return of capitalto shareholders during 2013, the level of which will bedetermined pending the HLHVJOC’s approval of a2013 Work Programme and Budget for CNV andTGT and incorporating results of the upcomingcapacity test of the FPSO.Rui de SousaChairmanEd StoryPresident and Chief Executive Officer

Strategic Reviewsoco international plcannual report and accounts 2012Our Corporate Responsibility Guiding PrincipleA successful project can transform not only a company, but alsothe economic and social wellbeing of a host country by contributingto its ability to produce and supply its own natural resources.We recognise that built into the heart of this opportunity is thebusiness imperative to act responsibly. SOCO is committed toconducting our business in an honest and ethical manner andensuring that the health and safety of people and the protectionof the environment remain a business priority.Corporate ResponsibilityOur business is guided by an overarching principle:to make a net positive contribution

2012 financial highlights In this Report 02 Strategic Review 02 At a Glance 04 Chairman and Chief Executive's Statement 10 Vietnam Update 12 business Review 14 Review of Operations 22 Financial Review 26 Risk Management Report 30Corporate Responsibility 38 governance 40 About the Board 43 Annual Report of the Directors 47 Corporate Governance Report 57 Directors' Remuneration Report