REG - Roxi Petroleum Plc - Interim Results <Origin Href="QuoteRef">RXP.L</Origin>

Caspian SunriseAnnouncement

28/09/2016 07:06

RNS Number : 0040L
Roxi Petroleum Plc
28 September 2016
Roxi Petroleum plc
("Roxi" or the "Company")
Interim Results for the period ended 30 June 2016
Roxi Petroleum plc, the Central Asian oil and gas company with a focus on Kazakhstan, announces its unaudited results for the six-month period ended 30 June 2016.
Highlights
Financial
Operating costs significantly reduceddespite increased operational activity
Drilling costs in Kazakhstan remain low
Work continues towards the proposed merger with Baverstock
Operational
Aggregate shallow well production from BNG for the period totalled 62,000 bopd
Remains in line with work programme commitments, targeting renewal of BNG licences to production licences from June 2018
Enquiries:

Roxi Petroleum PLC  +7 727 375 0202 
Clive Carver, Chairman 
WH Ireland Limited  +44 (0) 207 220 1666 
James Joyce / James Bavister 
Abchurch  +44 (0) 207 398 7700
Tim Thompson / George Robinson / Rebecca Clube
Qualified Person
Mr. Nurlybek Ospanov, Roxi's senior geologist who is a member of the Society of Petroleum Engineers ("SPE"), has reviewed and approved the technical disclosures in this announcement. 
Letter from the Executive Chairman 
Introduction
I am pleased to present this interim statement covering the six-month period ended 30 June 2016.
Overview
For some time now we have been on the cusp of reporting real value adding progress from our drilling activities at BNG. I am therefore delighted this report follows the recent independent confirmation of outstanding reserves on just those shallow areas of BNG drilled to date.
The Board's view is that these shallow reserves would on their own constitute a successful outcome at BNG, with fast and cheap drilling, certain oil and close proximity to efficient distribution routes.
The much larger objective is to similarly prove outstanding reserves from our deep drilling. Such an achievement would constitute a very significant value enhancement for the Company. We are just 40 kilometers from the world class Tengiz field, which we believe shares certain important geological features with BNG 
As with many things with a potentially large reward, success is not always easy or quick and we have found this to be the case with our deep drilling campaign at BNG. We have three deep wells vying to be the first to produce consistently to allow an independent assessment of the reserve base. All three have operational challenges caused by the very high pressure and temperatures encountered as detailed below.
There has probably never been a better time to drill in Kazakhstan. Rig rates remain at an all time low, with flexible payment terms on offer. Following periodic devaluations of the Kazakh Tenge against the US$ the majority of our local operating costs are also at an all time low.
With the confirmed existence of our shallow reserves covering much of the current valuation, shareholders may choose to consider our deep drilling as entirely upside.
Approach to developing BNG
Our approach to the development of BNG, the Group's principal asset, has been to seek to maximise reserves with the minimum dilution before the renewal of the current licence in June 2018.
Our task has been aided greatly by the deep and sustained fall in the costs of drilling. Shallow wells to a depth of 2,500 meters, once costing $5 million can now be drilled on a turnkey basis for as little as $1.25 million, whilst deep wells to a depth of 5,000 meters once costing $15 million can be drilled on a turnkey basis for as little as $6 million.
Despite the recovery in world oil prices we do not expect the rates for drilling to change in the foreseeable future.
We are seeking to avoid dilutive equity issues by funding development work from the pre sales of oil from our shallow wells. Under the current licence all oil produced at BNG must be sold at domestic prices, which are currently approximately $10 per barrel. Even at these reduced prices the pay back periods from shallow wells are, if successful, less than 12 months.
Our assets
Roxi has interests in three Kazakh Contract Areas, BNG (58.41%), Munaily (58.41%) and Beibars (50.00%).
BNG
The BNG Contract Area is located in the west of Kazakhstan, 40 kilometers southeast of Tengiz on the edge of the Mangistau Oblast, covering an area of 1,561 square kilometers of which 1,376 square kilometers has 3D seismic coverage acquired in 2009 and 2010. 
In January 2016, Roxi announced that the area of the Contract Area was extended with the addition of 140.6 square kilometres to the north-east of the current block. The extended BNG Contract Area now covers 1,702 square kilometers. 
BNG Shallow Reserves
In January 2011, BNG engaged Gaffney Cline & Associates ("GCA") to undertake a technical audit of the BNG Contract Area and subsequently Petroleum Geology Services ("PGS") to undertake depth migration work, based on the 3D seismic work carried out in 2009 and 2010. 
The work of GCA in 2011 resulted in confirming total un-risked resources of 900 million barrels from 37 prospects and leads mapped from the 3D seismic work undertaken in 2009 and 2010. The report of GCA also confirmed risked resources of 202 million barrels as well as Most- Likely Contingent Resources of 13 million barrels on South Yelemes. 
On 2 September 2016 we published a reserves update from Gaffney Cline & Associates, derived solely from our shallow fields, which based on an 100% economic interest is:
 (P90) Proved reserves of 18.3 million barrels
 (P50) Proved and Probable of 29.3 million barrels
 (P10) Proved, Probable & Possible reserves 45.0 million barrels
These take no account of any reserves from our deep drilling of the Ayrshagyl field.
Licences
BNG's current licence runs to June 2018 when we plan to seek a full production licence to run for either 25 or 49 years depending on the reserve position at that time. Under a full production licence we will be able to sell oil produced at world prices. However, under our current licence, we are required to sell oil produced during testing at domestic prices.
The licence at Munaily is a full production licence running until 2025.
Drilling activity 
To date we have drilled two deep wells at BNG and are close to completing a third. Additionally we have drilled 4 shallow wells, plus a further well currently drilling.
We plan to spud one further deep well A7 as the rig working at A6 becomes available and a further two shallow wells, in Q4 2016.
Based on our experience over the past two winters we plan to restrict drilling activities during the main winter months and avoid unnecessary expenditure during periods when work is not possible.
BNG Shallow fields
Roxi has two principal areas of interest to depths of 2,500 meters and above which are located over an area of some 800 square kilometers. The first is the South Yelemes portion of the BNG block where 4 wells have been drilled to date, including the producing wells 54, 805, 806 & 807. The second is the MJF structure located to the north of the South Yelemes wells. In aggregate the shallow fields produced approximately 62,000 barrels of crude oil in the six months to 30 June 2016. The production does not include well 54 due to its extended workover and recompletion.
South Yelemes field
Wells 54 and 805 are producing 100 bopd, while 806 & 807 are shut-in temporarily to replace wellhead parts. These wells have been drilled to depths of 2,500 meters.
MJF structure
Well 143
Well 143, which was drilled in 2013 has been by far the best performing of Roxi's shallow wells. Recently production from this well increased to some 630 bopd following the switch from a 5mm choke to a 7mm choke. Our plan is to flow the well at 500 bopd to ensure optimum production.
Well 141
At Well 141, which is located some 1,200 meters to the southwest of Well 143. The well is to be drilled to a Total Depth of 2,500 meters on a turnkey basis at a total cost of $1.25 million.
Drilling commenced in August 2016 and earlier this week reached the planned 2,500 meter Total Depth. The well was planned initially to target Jurassic Callovian sands at a depth of 2,200 meters with a secondary objective in the Cretaceous Valanginian limestone at a depth of 1,900 meters. 
Based on mudlogging we believe there are intervals with potential. Following the completion of a full open hole log interpretation we will be able to decide which intervals shall be tested.
Well 142
Preparatory work is underway for Well 142, which is also to be drilled on the MJF structure but this time some 1,600 meters to the north-east of Well 143. Drilling Well 142 is expected to commence in October 2016 using the rig currently drilling Well 141.
This well is also to be drilled on a turnkey basis for $1.25 million to a Total Depth of 2,500 meters.
The principal reason for drilling Wells 141 and 142 is to seek to prove the extent of the MJF structure. 
Payback from our shallow wells
Even with oil sales at domestic rather than international prices, should either Shallow Well 141 or 142 perform to the levels of Well 143, according to our expected production profile, we would expect the drilling costs to be recovered well within 12 months by the sale of oil produced.
Deep Wells
Our deep wells, typically with a Total Depth of 5,000 meters, are located in the Ayrshagyl region of the Contract Area, which extends over an area of some 120 square kilometers.
A5
Background
Deep Well A5 was spudded in July 2013 and drilled to a total depth of 4,442 meters with casing set to a depth of 4,077 meters. The well targeted structures in the Middle and Lower Carboniferous. 
Core sampling revealed the existence of a gross oil--bearing interval of at least 105 meters from 4,332 meters to at least 4,437 meters. 
As announced at the time, drilling difficulties resulted in the well being completed on an open-hole basis. Attempts to test the well over an extended period have to date been thwarted by the well becoming blocked after a few hours. However, during brief periods under testing A5 flowed at the rate of some 2,000 bopd.
Our strategy to clear the blockage has been to use a mixture of physical intervention together with opening and closing the well as natural pressure builds. We initially intervened using coil tubing followed by a series of pipe openings for varying periods ending when the pressure at the wellhead fell back to 300 bar.
Current position
Recently, we conducted a series of trials using a pump unit to make sure a proper level of communication exists between the oil pipe, through which the drilling fluids used to control the high pressure are introduced to the well, and the space between the drill pipe and the well casing by which the drilling fluids is recovered.
By monitoring indicator fluid introduced at surface level we were able to demonstrate that the proper communications are in place, with indicator fluid returning to the surface.
Our plans are, at an appropriate time, to close the well for a period sufficient to attempt a side-track from 4,320 meters so that the well is no longer open-hole at Total Depth and therefore maintaining high well pressures to avoid a collapse in the well becomes less important.
Once flowing freely we continue to believe the production rate at A5 will be the best of the three deep wells spudded to date.
A6
Deep Well A6 was spudded in November 2015, targeting the same structure as Deep Well A5 in the Middle and Lower Carboniferous
Drilling at Deep Well A6 paused for several weeks over the summer to allow casing to be set at a depth of some 4,036 meters. The cementing proved more difficult than we and our drilling contractors anticipated and delayed our original timetable.
Drilling paused again in August to allow the installation of a higher specification blow-out preventer. Drilling has now resumed and the well is currently progressed to a depth 4,370 meters, well below the salt layer.
Based on seismic information we anticipated encountering oil-bearing intervals at depths of 4,100 meters, 4,242 meters and most importantly at 4,386 meters, some 16 meters deeper than we have drilled to date. 
The Total Depth of the well was planned at 5,000. However, drilling may be stopped earlier dependent on an analysis of the mudlogging. Once the well has reached a Total Depth a decision on which intervals to test will be taken.
Pressure in the well remains high as with at Deep Well A5 and accordingly our hopes for A6 are similarly strong.
801
Deep Well 801 was spudded on 15 December 2014 and reached a Total Depth of 5,050 meters on August 2015. The well is located approximately 8 kilometers from Deep Well A5. 
As previously reported extended flow testing at Deep Well 801 has been frustrated by the presence of excess drilling fluids used to control the high pressure encountered while drilling the well.
Our plan with this well is to use chemical washes to clear the well to allow a continuous flow test. To date we have been through a full cycle of chemical washes. Similarly to Deep Well A5, the periods during which the well has flowed in between clean-ups, while short, are increasing in duration exhibiting strong oil flows.
While we do not have a view on the timing that will be required to complete the clean-up, we are comforted that our best producing well, shallow Well 143, also went through a similar extended period of clean-up before becoming a consistent and valuable producer.
Munaily 
The Munaily field is located in the Atyrau Oblast approximately 70 kilometres southeast of the town of Kulsary. The field was discovered in the 1940s and produced from 12 reservoirs in the Cretaceous through to the Triassic. Roxi acquired 58.41 per cent interest of the 0.67 square kilometers rehabilitation block in 2008 and funded two wells and one well re--entry.
The only well is currently producing at that is at the rate of 70 bopd (41 bopd net to Roxi). Sales of oil from Munaily are at export prices as the field has a full production licence, which does not expire until 2025.
As previously announced we entered a joint venture agreement with a Chinese contractor for it to re-enter up to 20 wells drilled in the Soviet era, at the expense of the Chinese contractor, with sales of any oil produced split on a 50:50 basis.
To date, EOR Petroleum Technology Aktobe LLP, the Chinese contractor concerned, has re-entered one well. However, it is too early to judge how successful this or other re-entries will prove.
Beibars
In 2007, Roxi acquired a 50 per cent interest in Beibars Munai LLP, which operates the 167 square kilometer Beibars Contract Area on the Caspian shoreline south of the city of Aktau. 
While acquiring 3D seismic in 2008, the licence was put under Force Majeure when the acreage was allocated as a military exercise area (Polygon), by the Ministry of Defence. Since then no operations have been carried out, and Roxi operates a care and maintenance administrative budget on the project. 
We understand a court hearing to consider an end to the force is in progress. 
Financial performance
Comparisons to the corresponding period in 2015 are difficult as in H1 2015 we reported a $20.8 million contribution to operating profit from the disposal of Galaz. Despite increased operational activity in H1 2016 we are pleased to report reduced operating costs.
Funding
In recent months the newly spudded and soon-to-be spudded wells, plus on-going work on existing wells have been funded by pre-sales of BNG oil to local traders. 
We have no external debt, aside from $10.4 million debt due to Vertom, a company controlled by our CEO, and other amounts due to local oil traders.As income from any further successful wells increases Roxi could continue to fund developing the BNG asset with only limited recourse to shareholders.
Baverstock merger
The Company continues to progress the planned merger with Baverstock GmbH, the entity controlling the 41% of BNG & Munaily not owned by Roxi, which was announced in June 2016. and we expect to announce the detailed terms in the coming weeks. Completion of the proposed merger requires certain regulatory consents in the UK and Kazakhstan, together with the approval of independent Roxi shareholders and the Baverstock Quota-holders.
Outlook
Roxi is in compliance with its work programme commitments and is working towards the renewal of its BNG licence as a full production licence from June 2018.
The Group's focus remains to prove the greatest level of reserves, without unnecessarily diluting shareholders.
The very strong potential of the shallow fields at BNG has been independently confirmed in the recent Gaffney Cline & Associates reserve report and in the Board's opinion the BNG shallow fields assessed have great value on their own.
The much greater potential of our Ayrshagyl deep field and possibly of further shallow fields remain to be independently quantified. The Company continues to work through its drilling plan to achieve this at an early stage and success here could be viewed as entirely upside.
The group has limited external debt and will, should the proposed merger with Baverstock be completed as expected in the next couple of months, own up to 99% of what the board considers to be one of the most exciting prospects in Kazakhstan.
Clive Carver
Chairman
CONSOLIDATED INCOME STATEMENT


Six months ended 
30 June 2016
Unaudited

Six months ended 
30 June 2015
Unaudited


US$000s

US$000s





Revenue

896

970
Cost of sales

(907)

 (994)
Gross Profit/(Loss)

(11)

(24)
Profit on disposal of equity accounted joint venture

-

18,658
Profit from revaluation of financial liability

-

2,182
Share-based payments

(277)

(278)
Administrative expenses

(1,099)

(1,545)
Operating Profit/ (Loss)

(1,387)

18,993





Finance cost

(405)

(398)
Finance income

110

100





Profit/(Loss) before taxation

(1,682)

18,695





Taxation

(818)

(4,592)





Profit/(Loss) after taxation from continuing operations

(2,500)

14,103





Loss for the year from discontinued operations

-

(914)





Profit/(Loss) after taxation 

(2,500)

13,189





Profit attributable to owners of the parent

(1,241)

9,450
Profit attributable to non-controlling interest

(1,259)

3,739





Profit/(Loss) for the year 

(2,500)

13,189





Earnings per share
3



Basic earnings/(loss) per ordinary share (US cents)



From continuing operations

(0.13)

1.13
From discontinued operations

-

(0.06)
Total

(0.13)

1.07
Diluted earnings/(loss) per ordinary share (US cents)



From continuing operations

(0.13)

1.11
From discontinued operations

-

(0.06)
Total

(0.13)

1.05




















CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


Six months ended 
30 June 2016
Unaudited
Six months ended 
30 June 2015
Unaudited


US$000s
US$000s




Profit after taxation

(2,500)
13,189
Other comprehensive loss:




Exchange differences on translating foreign operations from continuing operations

1,791
(2,320)

Exchange differences on translating foreign operations from discontinued operations

-
289
Total comprehensive income/(loss) for the period

(709)
11,158




Total comprehensive income/(loss) attributable to:



Owners of the parent

(184)
8,573
Non-controlling interest

(525)
2,585
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2016

Share capital
Share premium
Deferred shares
Cumulative translation reserve
Other reserve
Retained deficit
Total
Non-controlling interests
Total equity
Unaudited
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
At 1 January 2016
15,979
146,664
64,702
(56,534)
(583)
(124,315)
45,913
3,624
49,537
Loss after taxation
-
-
-
-
-
(1,241)
(1,241)
(1,259)
(2,500)
Exchange differences on translating foreign operations 
-
-
-
1,057
-
-
1,057
734
1,791
Total comprehensive income for the period
-
-
-
1,057
-
(1,241)
(184)
(525)
(709)
Arising on share issue
-
-
-
-
-
-
-
-
-
Transactions with owners 
-
-
-
-
-
-
-
-
-
Arising on employee share options
-
-
-
-
-
277
277
-
277
Employee share options exercised
21
64
-
-
-
-
85
-
85
At 30 June 2016
16,000
146,728
64,702
(55,477)
(583)
(125,279)
46,091
3,099
49,190
For the six months ended 30 June 2015

Share capital
Share premium
Deferred shares
Cumulative translation reserve
Other reserve
Retained deficit
Total
Non-controlling interests
Total equity
Unaudited
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
At 1 January 2015
14,761
136,674
64,702
(19,001)
(583)
(132,700)
63,853
31,537
95,390
Income after taxation
-
-
-
-
-
9,450
9,450
3,739
13,189
Exchange differences on translating foreign operations 
-
-
-
(877)
-
-
(877)
(1,154)
(2,031)
Total comprehensive income for the period
-
-
-
(877)
-
9,450
8,573
2,585
11,158
Arising on share issue
405
2,595
-
-
-
-
3,000
-
3,000
Transactions with owners 
405
2,595
-
-
-
-
3,000
-
3,000
Arising on employee share options
-
-
-
-
-
278
278
-
278
Employee share options exercised
38
164
-
-
-
-
202
-
202
Disposal of subsidiary
-
-
-
2,361
-
-
2,361
-
2,361
At 30 June 2015
15,204
139,433
64,702
(17,517)
(583)
(122,972)
78,267
34,122
112,389











Reserve

Description and purpose
Share capital

The nominal value of shares issued
Share premium

Amount subscribed for share capital in excess of nominal value
Shares to be issued

Amount received in respect of shares which are yet to be issued
Deferred shares

The nominal value of deferred shares issued
Cumulative translation reserve

Losses arising on retranslating the net assets of overseas operations into US Dollars
Other reserves

Fair value of warrants issued and capital contribution arising on discounted loans
Retained deficit

Cumulative losses recognised in the profit or loss
Non-controlling interest

The interest of non-controlling parties in the net assets of the subsidiaries




CONSOLIDATED STATEMENT OF FINANCIAL POSITION


As at
30 June 
2016
As at
31 December 
2015

Note
US$000s
US$000s
Assets

Unaudited
Audited
Non-current assets



Unproven oil and gas assets
4
60,472
57,323
Property, plant and equipment

656
195
Inventories

308
12
Other receivables

17,641
14,640
Restricted use cash

431
271
Total non-current assets

79,508
72,441




Current assets



Other receivables

2,115
2,096
Cash and cash equivalents

2,068
10,462
Total current assets

4,183
12,558




Total assets

83,691
84,999
Equity and liabilities



Equity



Share capital
5
16,000
15,979
Share premium

146,728
146,664
Deferred shares
5
64,702
64,702
Other reserves

(583)
(583)
Retained earnings

(125,279)
(124,315)
Cumulative translation reserve

(55,477)
(56,534)
Shareholders' equity

46,091
45,913




Non-controlling interests

3,099
3,624
Total equity

49,190
49,537




Current liabilities



Trade and other payables

4,104
5,732
Short-term borrowings
6
125
308
Current provisions

2,900
2,957
Total current liabilities

7,129
8,997





Non-current liabilities



Borrowings
6
10,316
9,903
Deferred tax liabilities

7,514
7,485
Non-current provisions

782
780
Other payables

8,760
8,297
Total non-current liabilities

27,372
26,465
Total liabilities

34,501
35,462
Total equity and liabilities

83,691
84,999
This financial information was approved and authorised for issue by the Board of Directors on 27 September2016and was signed on its behalf by:
Clive Carver
Chairman
CONSOLIDATED STATEMENT OF CASH FLOWS


Six months ended 
30 June 2016

Six months ended 
30 June 2015



Unaudited

Unaudited




US$000s

US$000s







Cash flow used in operating activities





Cash received from customers

729

-

Payments made to suppliers and employees

(1,310)

(2,469)

Net cash used in operating activities

(581)

(2,469)







Cash flow used in investing activities





Additions to unproven oil and gas assets

(7,555)

(4,260)

Disposal of investments in equity accounted joint venture

-

620

Transfer to restricted use cash

(160)

37

Cash flow used in investing activities

(7,715)

(3,603)







Cash flow provided from financing activities





Issue of share capital

85

3,202

Repayment of borrowings

(183)

4,738

New loans received

-

3,816

Net cash received from financing activities

(98)

11,756







Net increase/(decrease) in cash and cash equivalents

(8,394)

5,684

Cash and cash equivalents at the start of the period

10,462

605

Cash and cash equivalents at the end of the period

2,068

6,289

NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
1. STATUTORY ACCOUNTS
The interim financial results for the period ended 30 June 2016 are unaudited. The financial information contained within this report does not constitute statutory accounts as defined by Section 434(3) of the Companies Act 2006. 
2. BASIS OF PREPARATION
Roxi Petroleum plc is registered and domiciled in England and Wales.
This interim financial information of the Company and its subsidiaries ("the Group") for the six months ended 30 June 2016 has been prepared on a basis consistent with the accounting policies set out in the Group's consolidated annual financial statements for the year ended 31 December 2015. It has not been audited, does not include all of the information required for full annual financial statements, and should be read in conjunction with the Group's consolidated annual financial statements for the year ended 31 December 2015. The 2015 annual report and accounts, which received an unqualified opinion from the auditors, did not draw attention to any matters by way of emphasis, and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006, have been filed with the Registrar of Companies. As permitted, the Group has chosen not to adopt IAS 34 'Interim Financial Reporting'.
The financial information is presented in US Dollars and has been prepared under the historical cost convention.
The same accounting policies, presentation and method of computation are followed in this consolidated financial information as were applied in the Group's latest annual financial statements. 
In addition, the IASB has issued a number of IFRS and IFRIC amendments or interpretations since the last annual report was published. It is not expected that any of these will have a material impact on the Group.
Going Concern
The financial information has been prepared on a going concern basis based upon projected future cash flows and planned work programmes. 
Additional funding would in the opinion of the Directors be available if required from the sale of oil produced during testing, further draw downs under the $40 million equity facility and if required by rescheduling various loans.
The Directors are confident, on the above basis, that the Group will have sufficient resources for its operational needs over the relevant period, being until September 2017. Accordingly, the Directors continue to adopt the going concern basis.
3. EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share is calculated by dividing the income/(loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year including shares to be issued. 
In order to calculate diluted earnings/(loss) per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares according to IAS33. Dilutive potential ordinary shares include share options granted to employees and directors where the exercise price (adjusted according to IAS33) is less than the average market price of the Company's ordinary shares during the period.
The calculation of income/(loss) per share is based on:

Six months 
ended 
30 June 2016 Unaudited
Six months 
ended 
30 June 2015 Unaudited 
The basic weighted average number of ordinary shares in issue during the period
936,944,196
879,552,502

The diluted average number of ordinary shares in issue during the period
945,344,196
896,564,816

The basic weighted average number of ordinary shares in issue as of financials issue date*
936,944,196
881,892,142

The diluted average number of ordinary shares in issue as of financials issue date
945,344,196
898,904,456

The income/(loss) for the year attributable to owners of the parent from continuing operations (US$'000)
(1,241)
9,989

The loss for the year attributable to owners of the parent from discontinued operations (US$'000)
-
(539)

* Including shares to be issued from the day the funds were received for such shares.
4. UNPROVEN OIL AND GAS ASSETS
During six months period ended June 30 2015 Company's oil and gas assets increased by US$3.1 million due to additions (2015: US$1.1 million). 
5. CALLED UP SHARE CAPITAL

Number
of ordinary 
shares
$'000
Number
of deferred 
shares
$'000
Balance at
31 December 2015

935,945,577
15,979
-
64,702
Share options exercised

1,487,500
21
-
-
Balance at
30 June 2016

937,433,077
16,000

64,702
6. BORROWINGS

Sixmonthsended 30 June 2016
Year ended 31 December 2015
US$'000
Unaudited
US$'000
Audited 
Amounts payable within one year


Otherpayables(a)
125
308

125
308

Sixmonthsended
30 June 2016
Year ended 31 December 2015
US$'000
Unaudited
US$'000
Audited
Amounts payable after one year


Loan from Vertom N.V.(b)
10,316
9,903

10,316
9,903
(a) Short-term loans provided by Kazakhstan based borrowers and are repayable on demand. The Company agreed with the borrowers the loans are repayable in future once the Group companies reach free cash flows from oil sales. 
(b) On 29 September 2011 the Company entered into the loan facility with Vertom International NV ("Vertom") whereby Vertom agreed to lend up to US$5 million to the Company with an associated interest of 12% per annum. The Company has offered Vertom security over its investments in its operating assets in respect to this loan facility. On 30 April 2012 the Group extended the term of the loan facility arrangement with Vertom for further two years to 30 April 2014 and at the same time increased the facility amount to US$7 million. On 28 June 2013 the term of the loan facility was extended until 30 April 2016. On 26 June 2015 the term of the loan facility was extended until 30 April 2018. The loan extension represents a substantial modification of the terms of the existing financial liability and has been accounted for as an extinguishment of the original financial liability and recognition of a new financial liability.

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The company news service from the London Stock Exchange
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