REG - Petroneft Resources - 2015 Final Results <Origin Href="QuoteRef">PTR.I</Origin> - Part 2
23/06/2016 07:06
- Part 2: For the preceding part double click ID:nRSW0187Ca
(10,435,521) (5,450,642)
Gross (loss)/profit (135,427) 395,004
Administrative expenses (1,519,005) (1,027,260)
Impairment of oil and gas properties (4,550,000) -
Operating loss (6,204,432) (632,256)
Finance revenue 11,694 4,713
Finance costs (2,572,317) (876,896)
Loss for the year for continuing operations before taxation (8,765,055) (1,504,439)
Income tax expense - 1,200,000
Loss for the year (8,765,055) (304,439)
Loss for the year
Other comprehensive income to be reclassified to profit or loss in subsequent years: (8,765,055) (304,439)
Currency translation adjustments (11,587,393) (23,807,671)
Total comprehensive loss for the year (20,352,448) (24,112,110)
The currency translation adjustment results from the devaluation of the
Russian Rouble during the year. All Russian Rouble carrying values in
Stimul-T, the 100% subsidiary of WorldAce are converted to US Dollars at each
period end. The resulting gain or loss is recognised through other
comprehensive income and transferred to the currency translation reserve. The
Russian Rouble depreciated significantly against the US Dollar during the year
from RUB56.5:US$1 at 31 December 2014 to RUB73.3:US$1 at 31 December 2015.
6. Equity-accounted Investment in Joint Venture - WorldAce
Investments Limited (continued)
2015 2014
US$ US$
Non-current Assets
Oil and gas properties 27,646,307 26,378,463
Property, plant and equipment 197,826 285,775
Exploration and evaluation assets 6,044,036 7,856,589
Assets under construction 2,345,358 3,226,280
36,233,527 37,747,107
Current Assets
Inventories 257,857 691,950
Trade and other receivables 259,142 1,633,624
Cash and cash equivalents 153,198 514,206
670,197 2,839,780
Total Assets 36,903,724 40,586,887
Non-current Liabilities
Provisions (273,278) (393,153)
Interest-bearing loans and borrowings (48,366,752) (32,593,955)
(48,640,030) (32,987,108)
Current Liabilities
Trade and other payables (2,649,103) (1,638,815)
(2,649,103) (1,638,815)
Total Liabilities (51,289,133) (34,625,923)
Net (Liabilities)/Assets (14,385,409) 5,960,964
Capital commitments
2015 2014
US$ US$
Details of capital commitments at the balance sheet date are as follows:
Contracted for but not provided in
the financial statements 1,236,788 12,839,994
Including contracted with related parties - 3,697,366
6. Equity-accounted Investment in Joint Venture - WorldAce
Investments Limited (continued)
Future minimum rentals payable under non-cancellable operating leases at the balance sheet date are as follows:
2015 2014
US$ US$
Within one year 39,459 44,624
After one year but not more than five years 150,274 160,711
More than five years 326,079 403,104
515,812 608,439
The above capital commitments in the joint venture are incurred jointly with
Oil India International B.V. The Group has a 50% share of these commitments.
7. Equity-accounted Investment in Joint Venture - Russian BD Holdings
B.V.
PetroNeft Resources plc has a 50% interest in Russian BD Holdings B.V., a
jointly controlled entity which holds 100% of LLC Lineynoye, an entity
involved in oil and gas exploration and the registered holder of Licence 67.
The interest in this joint venture is accounted for using the equity
accounting method. Russian BD Holdings B.V. is incorporated in the Netherlands
and carries out its activities in Russia.
Share of net assets
US$
At 1 January 2014 3,331,844
Retained loss (294,103)
Translation adjustment (2,672,563)
At 1 January 2015 365,178
Retained loss (314,859)
Translation adjustment (887,109)
Credited against loans receivable from Russian BD Holdings B.V. (Note 8) 836,790
At 31 December 2015 -
The balance sheet position of Russian BD Holdings B.V. shows net liabilities
of US$1,673,580 following a loss in the year of US$629,718 together with a
currency translation adjustment (loss) of US$1,774,218. PetroNeft's 50% share
is included above and results in a negative carrying value of US$836,790.
Therefore, the share of net assets is reduced to Nil and, in accordance with
IAS 28 Investments in Associates and Joint Ventures, the amount of US$836,790
is deducted from other assets associated with the joint venture on the Balance
Sheet which are the loans receivable from Russian BD Holdings B.V. (Note 8).
7. Equity-accounted Investment in Joint Venture - Russian BD Holdings
B.V. (continued)
Additional financial information in respect of PetroNeft's 50% interest in the
equity-accounted joint venture entity is disclosed below:
2015 2014
US$ US$
Revenue - -
Cost of sales - -
Gross profit - -
Administrative expenses (106,224) (143,643)
Operating loss (106,224) (143,643)
Finance revenue 434 1,743
Finance costs (209,069) (152,203)
Loss for the year for continuing operations before taxation (314,859) (294,103)
Taxation - -
Loss for the year (314,859) (294,103)
Loss for the year (314,859) (294,103)
Other comprehensive income to be reclassified to profit or loss in subsequent years:
Currency translation adjustments (887,109) (2,672,563)
Total comprehensive loss for the year (1,201,968) (2,966,666)
2015 2014
US$ US$
Non-current assets 3,327,327 4,155,338
Current assets 71,104 165,716
Total assets 3,398,431 4,321,054
Non-current liabilities (4,034,780) (22,810)
Current liabilities (200,441) (3,933,066)
Total liabilities (4,235,221) (3,955,876)
Net (Liabilities)/Assets (836,790) 365,178
7. Equity-accounted Investment in Joint Venture - Russian BD
Holdings B.V. (continued)
Future minimum rentals payable under non-cancellable operating leases at the balance sheet date are as follows:
2015 2014
US$ US$
Within one year 2,091 2,605
After one year but not more than five years 6,706 8,980
More than five years 22,010 29,377
30,807 40,962
There were no capital commitments as at 31 December 2014 or 31 December 2015.
8. Financial assets - loans and receivables
2015 2014
US$ US$
Loans to WorldAce Investments Limited 49,224,805 46,398,502
Less: share of WorldAce Investments Limited loss (Note 6) (9,516,618) -
39,708,187 46,398,502
Loans to Russian BD Holdings B.V. 4,012,464 -
Less: share of Russian BD Holdings B.V. loss (Note 7) (836,790) -
3,175,674 -
42,883,861 46,398,502
The Company has granted a loan facility to its joint venture undertaking
WorldAce Investments Limited of up to US$45 million. This loan facility is US$
denominated and unsecured. Interest currently accrues on the loan at USD LIBOR
plus 6.0% but the Company has agreed not to seek payment of interest until
2017 at the earliest. The loan is set to mature on 31 December 2022. As at 31
December 2015 the loan was fully drawn down. The loan from the Company to
Russian BD Holdings is repayable on demand. Interest currently accrues on the
loan at 6.0% per annum.
9. Inventories
2015 2014
US$ US$
Materials 54,302 15,179
54,302 15,179
10. Trade and other receivables
2015 2014
US$ US$
Other receivables 147,641 112,492
Receivable from jointly controlled entity (Note 14) 1,628,667 4,879,292
Receivable from related parties (Note 14) - 11,858
Advances to contractors 3,708 1,922
Prepayments 62,112 64,380
1,842,128 5,069,944
Other receivables are non-interest-bearing and are normally settled on 60-day
terms.
11. Cash and Cash Equivalents
2015 2014
US$ US$
Cash at bank and in hand 1,284,212 3,392,769
1,284,212 3,392,769
Bank deposits earn interest at floating rates based on daily deposit rates.
Short-term deposits are made for varying periods of between one day and one
month depending on the immediate cash requirements of the Group, and earn
interest at the respective short-term deposit rates.
12. Trade and other payables
2015 2014
US$ US$
Trade payables 238,570 306,857
Trade payables to jointly controlled entity (Note 14) 239,228 53,450
Corporation tax 59,087 60,797
Oil taxes, VAT and employee taxes 78,293 74,497
Other payables 212,141 137,475
Accruals 317,827 818,547
1,145,146 1,451,623
The Directors consider that the carrying amount of trade and other payables
approximates their fair value.
Trade and other payables are non-interest-bearing and are normally settled on
60-day terms.
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs.
13. Share capital 2015 2014
E E
Authorised
1,000,000,000 (2014: 1,000,000,000) Ordinary Shares of E0.01 each 10,000,000 10,000,000
10,000,000 10,000,000
Allotted, called up and fully paid equity Number of Ordinary Shares Called up share capital US$
At 1 January 2014 644,920,275 8,561,499
Issued in 2014 62,325,631 867,683
At 1 January 2015 707,245,906 9,429,182
At 31 December 2015 707,245,906 9,429,182
The Company issued 62,325,631 new shares for consideration of US$5.2 million
in March 2014. The net proceeds of this share issue of US$5.0 million, after
transaction costs of US$0.2 million, were used to finance expenditure on oil
and gas properties, exploration and evaluation costs, debt repayment and
corporate overhead.
14. Related party disclosures
Transactions with joint ventures
PetroNeft Resources plc had the following transactions with its joint ventures
during the years ended 31 December 2015 and 2014:
Russian BD Holdings BV Group WorldAce Investments Limited Group
US$ US$
Receivable by PetroNeft Group at 1 January 2014 644,531 -
Transferred on subsidiary becoming a joint venture (note 4) - 81,021,362
Advanced during the year 3,500,000 -
Transactions during the year 330,967 1,574,116
Interest accrued in the year 117,120 1,415,202
Repaid during the year (475,000) (35,630,575)
Payments for services made during the year (206,290) (968,140)
Translation adjustment (28,750) (70,199)
At 1 January 2015 3,882,578 47,341,766
Transactions during the year 183,333 2,670,250
Interest accrued in the year 205,189 2,826,303
Payment for services made during the year (29,781) (2,483,727)
Share of joint venture's currency translation adjustment (836,790) (9,516,618)
Translation adjustment (14,821) 45,618
Balance 31 December 2015 3,389,708 40,883,592
Balance at 31 December 2014 comprised of:
Loan facility advanced - 46,398,502
Trade and other receivables 3,882,578 996,714
Trade Payables - (53,450)
3,882,578 47,341,766
Balance at 31 December 2015 comprised of:
Loans facility advanced 3,175,674 39,708,187
Trade and other receivables 214,034 1,414,633
Trade and other payables - (239,228)
3,389,708 40,883,592
14. Related party disclosures (continued)
Remuneration of key management
Key management comprise the Directors of the Company, the Vice President of
Business Development and Operations, the General Director and the Executive
Director of the Russian subsidiary LLC Dolomite, along with both the Chief
Geologist and Chief Engineer of LLC Dolomite. Their remuneration during the
year was as follows:
Remuneration of key management
2015 2014
US$ US$
Compensation of key management 1,715,340 2,068,014
Contributions to defined contribution pension plan 89,917 65,923
Share-based payment expense 15,401 39,981
1,820,658 2,173,918
The total amount of unpaid fees and expenses due to Directors as at 31
December 2015 was US$143,536 (2014: US$561,348).
Details of transactions between the Group and other related parties are
disclosed below.
Transactions with TBNG Group
Vakha Sobraliev, a Director of PetroNeft until his resignation on 18 September
2015, is the principal of LLC Tomskburneftegaz ("TBNG"), a company which has
drilled production and exploration wells for the Group. Various contracts for
drilling have been awarded to TBNG in recent years. All drilling contracts
with TBNG are "turnkey" contracts whereby TBNG assumes substantially all
liabilities in relation to the health and safety, environmental and other
risks associated with drilling operation. As part of this arrangement WorldAce
Group companies also occasionally sell sundry goods and services to TBNG.
Other companies related to TBNG also provide some services to the Group such
as transportation, power management and repairs. The following is a summary of
the transactions:
TBNG Group TBNG Group
From 1 January to 18 September 2015 2014
US$ US$
Maximum value of new contracts awarded during the period 1,778,324 4,494,543
Paid during the period for drilling and related services 5,379,260 6,869,038
Paid during the period for other services 2,023 24,523
Amount due to TBNG and related companies at period end - 351,172
Received during the period for sundry goods and services 98,789 37,271
Amount due from TBNG and related companies at period end - 400,970
Other PetroNeft Group companies provided various services to TBNG Group during
the period from 1 January to 18 September 2015 amounting to US$536 (2014:
US$15,917). An amount of US$Nil (2014: US$11,858) was outstanding from TBNG
Group at 18 September 2015.
14. Related party disclosures (continued)
The Group has an indirect 50% interest in Lineynoye which in turn is 100%
owned by the jointly controlled entity Russian BD Holdings B.V. Lineynoye also
entered into some transactions with TBNG and related companies as follows:
TBNG Group TBNG Group
From 1 January to 18 September 2015 2014
US$ US$
Maximum value of new contracts awarded during the period - -
Paid during the period for drilling and related services - 183,874
Paid during the period for other services - -
Amount due to TBNG and related companies at period end - -
Received during the period for sundry goods and services 4,114 -
Amount due from TBNG and related companies at period end - 4,625
15. Important Events after the Balance Sheet Date
On 24 April 2016 David Sanders, Gerard Fagan and Paul Dowling resigned from
the Board of the Company and Maxim Korobov, Anthony Sacca and David Sturt were
appointed to the Board in conjunction with an agreement between the Company
and its largest shareholder, Natlata Partners Limited. Mr. Dowling remains as
CFO of the Company. The agreement with Natlata, which is for a period of two
years, includes a commitment from Natlata only to support shareholder
resolutions that have been recommended by the Board of the Company.
In March 2016, Oil India agreed to provide 100% funding for the agreed Licence
61 work programme in 2016 and 2017. A loan of US$10 million was agreed with
the joint venture company, WorldAce Investments Limited, to fund the 2016
programme. The loan is unsecured and capital repayments commence in October
2019. Should there be a significant change in the management of PetroNeft
while the loan is outstanding then Oil India may seek early repayment in full.
In such circumstances Petroneft would need to provide its 50% share of the
amount outstanding.
16. Approval of financial statements
The financial statements were approved, and authorised for issue, by the Board
of Directors on 22 June 2016.
17. Board approval
This announcement was approved by the Board of Directors of PetroNeft
Resources plc on 22 June 2016.
Glossary
1P Proved reserves according
to SPE standards.
2P Proved and probable
reserves according to SPE standards.
3P Proved, probable and
possible reserves according to SPE standards.
AGM Annual General Meeting.
AIM Alternative Investment Market
of the London Stock Exchange.
Arawak Arawak Energy Russia B.V.
bbl Barrel.
Belgrave Naftogas Belgrave Naftogas B.V., a member of the
Arawak group of companies
bfpd Barrels of fluid per day.
boe Barrel of oil equivalent.
bopd Barrels of oil per day.
Company PetroNeft Resources plc.
CPF Central Processing
Facility.
Dolomite LLC Dolomite, a 100% subsidiary
of PetroNeft registered in the Russian Federation
ESM Enterprise Securities Market
of the Irish Stock Exchange.
ESP Electric Submersible Pump
Exploration resources An undrilled prospect in an area of known
hydrocarbons with unequivocal four-way dip closure at the reservoir horizon.
Granite Construction LLC Granite Construction, a 100% subsidiary
of PetroNeft registered in the Russian Federation
Group The Company and its joint
ventures and subsidiary undertakings.
HSE Health, Safety and
Environment.
IAS International Accounting
Standard.
IFRIC IFRS Interpretations
Committee.
IFRS International Financial
Reporting Standard.
km Kilometres.
km2/ sq km Square
kilometres.
KPI Key Performance Indicator.
Licence 61 The Exploration and Production
Licence in the Tomsk Oblast, Russia owned by the joint venture company
WorldAce Investments Limited. It contains seven known oil fields, Lineynoye,
Tungolskoye, West Lineynoye, Arbuzovskoye, Kondrashevskoye, Sibkrayevskoye and
North Varyakhskoye and 27 Prospects and Leads that are currently being
explored.
Licence 61 Farmout An agreement whereby Oil India Limited
subscribed for shares in WorldAce, the holding company for Stimul-T, the
entity which holds Licence 61 and all related assets and liabilities, and
following, PetroNeft and Oil India Limited both hold 50% of the voting shares,
and through the shareholders agreement, both parties have joint control of
WorldAce with PetroNeft as operator
Licence 67 The Exploration and Production
Licence in the Tomsk Oblast, Russia owned by the joint venture company Russian
BD Holdings B.V. It contains two oil fields, Ledovoye and Cheremshanskoye and
several potential prospects.
GLOSSARY (continued)
Lineynoye Limited Liability Company
Lineynoye, a wholly owned subsidiary of Russian BD Holdings B.V., registered
in the Russian Federation.
Macquarie Macquarie Bank Limited.
m Metres.
mmbbls Million barrels.
mmbo Million barrels of oil.
Natlata Natlata Partners Limited, a
significant shareholder of PetroNeft.
Oil pay A formation containing
producible hydrocarbons.
P1 Proved reserves according
to SPE standards.
P2 Probable reserves according
to SPE standards.
P3 Possible reserves according
to SPE standards.
PetroNeft PetroNeft Resources plc.
Russian BD Holdings B.V. Russian BD Holdings B.V., a company owned 50%
by PetroNeft and registered in the Netherlands.
SPE Society of Petroleum
Engineers.
Spud To commence drilling a well.
Stimul-T Limited Liability Company
Stimul-T, a wholly owned subsidiary of WorldAce, based in the Russian
Federation.
TSR Total Shareholder Return.
VAT Value Added Tax.
WAEP Weighted Average Exercise
Price.
WorldAce WorldAce Investments Limited, a
company owned 50% by PetroNeft, registered in Cyprus.
WorldAce Group WorldAce Investments Limited and its 100%
subsidiary LLC Stimul-T
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