Wentworth Resources - lnterim Results
26/09/2023 07:00
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RNS Number : 5941N Wentworth Resources PLC 26 September 2023
26 September 2023
WENTWORTH RESOURCES PLC
("Wentworth" or the "Company")
lnterim Results for the six months ended 30 June 2023
Wentworth Resources (ΑΙΜ: WEN), the independent, Tanzania-focused natural
gas production company, announces its interim financial results for the six
months ended 30 June 2023. AII dollar values are expressed in US dollars
unless stated otherwise.
Katherine Roe, CEO, commented:
"The first half of 2023 saw continued strong production, further highlighting
the quality of the Mnazi Bay asset, alongside an ongoing exemplary safety
record which remains a key priority for Wentworth. Furthermore, our
strengthened financial position underscores the robust nature of the
business.
"We continue to work collaboratively with all stakeholders towards successful
completion of the acquisition by Maurel & Prom in Q4 2023, which we see as
representing considerable value realisation for shareholders."
HIGHLIGHTS
Financial
· Revenues grew 29% to $19.9 million (H1 2022: $15.5 million)
· Adjusted earnings before interest, taxes, depreciation, amortization,
and exploration (EBITDAX) increased by 53% to $14.7 million (H1 2022: $9.6
million)
· Strong financial position with $40.7 million cash (H1 2022: $27.4
million) and zero debt
Operational
· Health and safety of employees, partners and local communities
continues to be a top priority for Wentworth. On 2 August 2023, the Company
celebrated seven years without a Lost Time lncident (LTI)
· Average daily production of 98.2 MMscf/d (gross) during the first six
months of 2023 (2022: 92.3 MMscf/d)
· Wentworth's share of Gross 2P Reserves estimated to be 137 Bcf as at
31 December 2022
Outlook
· 2023 production guidance maintained at 90 - 100 MMscf/d for Mnazi Bay
as issued in June 2023, up from previous guidance of 85 - 95 MMscf/d issued in
March 2023
· The Company anticipates, given the absence of recent investment in
the Mnazi Bay field and continued cost recovery in H1 2023, that H2 2023
production will include significant periods where costs have been fully
recovered, leading to substantially lower revenues
· The Government's re-examination of the historic cost pool audit for
the years 2013 - 2015 is ongoing; any reduction in the current expected cost
pool balance as a result is likely to further impact revenue going forward
Update on offer by Etablissements Maurel & Prom S.A. ("M&P")
· On 5 December 2022, the boards of Wentworth and M&P announced
that they had reached agreement on the terms of a recommended all cash offer
by M&P for the entire issued, and to be issued, share capital of Wentworth
(the "Acquisition"). The Acquisition is to be implemented by means of a scheme
of arrangement pursuant to Article 125 of the Jersey Companies Law. The
circular in relation to the Scheme was published or made available to
Wentworth Shareholders on 25 January 2023 (the "Scheme Document")
· The Acquisition was approved by Wentworth Shareholders at the Court
Meeting and the General Meeting which were held on 23 February 2023, but
remains subject to the satisfaction or (where capable of being waived) waiver
of the other Conditions to the Acquisition as set out in Part III (Conditions
to and certain further terms of the Acquisition and the Scheme) of the Scheme
Document
· These Conditions include, inter alia, (i) consent from the Minister
responsible for petroleum affairs in Tanzania under the Petroleum Act 2015
(the "Act") and any other applicable laws; (ii) the waiver of any right of
first refusal or pre-emption right to which the Tanzania Petroleum
Development Corporation is entitled in respect of the Mnazi Bay asset; and
(iii) approval from the Tanzanian Fair Competition Commission ("FCC"), in
each case on terms satisfactory to M&P, acting reasonably
· On 11 July 2023, Wentworth was notified that the FCC has issued a
decision notice that application for FCC approval shall not be determined at
this time and that this application will be marked closed by the FCC
· Following this, there have been a number of discussions between the
parties to the offer including recent meetings in country between the CEO of
Wentworth and relevant Tanzanian government stakeholders, as well as the CEO
of M&P and relevant Tanzanian stakeholders, to seek to bring the
Acquisition to a successful conclusion before the agreed 31 December
2023 Long Stop Date, including at the highest levels of government in
Tanzania
· There has been positive progress in these discussions, although there
can be no certainty that the Conditions will be satisfied or (where capable of
being waived), waived by M&P. The Company and M&P are working
towards the satisfaction or (where capable of being waived) waiving of the
Conditions in Q4 2023
Ends
Enquiries:
Wentworth Resources Katherine Roe katherine.roe@wentplc.com (mailto:katherine.roe@wentplc.com)
Chief Executive Officer
+44 (0) 7841 087 230
Stifel Nicolaus Europe Limited AIM Nominated Adviser and Joint Broker +44 (0) 20 7710 7600
Callum Stewart
Simon Mensley
Peel Hunt LLP Joint Broker +44 (0) 20 7418 8900
Richard Crichton
Georgia Langoulant
FTI Consulting Communications Advisor +44 (0) 20 3727 1000
Sara Powell
Ben Brewerton
Ollie Mills
About Wentworth Resources
Wentworth Resources plc (AIM: WEN) is a leading, domestic natural gas producer
in Tanzania with a core producing asset at Mnazi Bay in the onshore Rovuma
Basin in Southern Tanzania.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
Six months ended 30 June
2023 2022
(unaudited) (unaudited)
Note $000 $000
Total revenue 4 19,920 15,447
Production and operating costs (2,229) (1,922)
Depletion 9 (3,022) (3,945)
Total cost of sales (5,251) (5,867)
Gross profit 14,669 9,580
Recurring administrative costs 5 (4,257) (3,028)
Acquisition costs (1,894) -
New venture and pre-licence costs - (232)
Share-based payment charges 14 (667) (472)
Depreciation 9 (56) (49)
Total costs (6,874) (3,781)
Profit from operations 7,795 5,799
Finance income 6 464 45
Finance costs 6 (148) (290)
Profit before tax 8,111 5,554
Current tax expense (1,042) (223)
Deferred tax expense/(income) (1,777) 841
(2,819) 618
Net and comprehensive profit after tax 5,292 6,172
Net profit per ordinary share
Basic and diluted (US$/share) 16 0.03 0.03
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
30 June 31 December
2023 2022
(unaudited) (audited)
Note $000 $000
ASSETS
Current assets
Cash and cash equivalents 40,689 30,916
Trade and other receivables 7 8,569 11,101
49,258 42,017
Non-current assets
Property, plant and equipment 9 38,842 41,814
Deferred tax asset 12,320 14,097
51,162 55,911
Total assets 100,420 97,928
LIABILITIES
Current liabilities
Trade and other payables 11 2,571 5,623
2,571 5,623
Non-current liabilities
Decommissioning provision 12 1,893 1,818
1,893 1,818
Equity
Share capital 15 414,676 414,676
Equity reserve 27,902 27,803
Accumulated deficit (346,622) (351,992)
95,956 90,487
Total liabilities and equity 100,420 97,928
The condensed consolidated financial statements of Wentworth Resources plc,
registered number 127571 were approved by the Board of Directors and
authorised for issue on 26 September 2023.
Signed on behalf of the Board of Directors.
Katherine Roe
Chief Executive Officer
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
Number of shares Share capital Equity reserve Accumulated Total
Note deficit equity
$000 $000 $000 $000
Balance at 31 December 2021 (audited) 181,049,139 414,919 26,695 (334,879) 106,735
Dividends 17 - - - (4,133) (4,133)
Net loss and comprehensive loss - - - (12,980) (12,980)
Share based compensation 15 - - 1,108 - 1,108
Cancellation of own shares (866,572) (243) - - (243)
Balance at 31 December 2022 (audited) 180,182,567 414,676 27,803 (351,992) 90,487
Dividends 17 - - - 78 78
Net profit and comprehensive profit - - - 5,292 5,292
Share based compensation 15 - - 99 - 99
Balance at 30 June 2023 (unaudited) 180,182,567 414,676 27,902 (346,622) 95,956
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
Six months ended 30 June
2023 2022
(unaudited) (unaudited)
Note $000 $000
Operating activities
Net profit for the year 5,292 6,172
Adjustments for:
Depreciation and depletion 9 3,078 3,994
Net finance (income)/costs 18 (348) 220
Income tax expense/(income) 2,819 (618)
Share based compensation 14 667 472
11,508 10,240
Change in non-cash working capital:
Trade and other receivables 2,533 (3,794)
Trade and other payables (2,743) (1,019)
Cash generated from operating activities 11,298 5,427
Current tax paid (1,042) (223)
Net cash generated from operating activities 10,256 5,204
Investing activities
Additions to property, plant and equipment 9 (111) (402)
Interest income 180 36
Proceeds from disposal - 9
Net cash used in investing activities 69 (357)
Financing activities
Repurchase of own shares - (242)
Lease payment 13 (28) (28)
Dividend 17 78 -
Exercise of share options 15 (568) -
Bank charges 6 (34) (15)
Net cash used in financing activities (552) (285)
Net change in cash and cash equivalents 9,773 4,562
Cash and cash equivalents, beginning of the period 30,916 22,820
Cash and cash equivalents, end of the period 40,689 27,382
( )
1. Incorporation and basis of preparation
Wentworth Resources plc ("Wentworth" or the "Company") is an East
Africa-focused upstream natural gas company. These unaudited condensed
consolidated interim financial statements include the accounts of the Company
and its subsidiaries (collectively referred to as the "Wentworth Group" or the
"Group"). Wentworth is a gas exploration, development and production
operations company incorporated in Jersey and listed on the AIM Market of the
London Stock Exchange (ticker: WEN).
The Company's principal place of business is located at 4th Floor, St Paul's
Gate, 22-24 New Street, St Hellier, Jersey JE1 4TR.
The Company maintains offices in Dar es Salaam in the United Republic of
Tanzania and Jersey.
2. Summary of significant accounting policies
Use of judgements and estimates
In preparing these interim financial statements, management has made
judgements and estimates that affect the application of accounting policies
and the reported amounts of assets and liabilities, income and expenses.
Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those described in the 2022 annual report and financial statements.
Going concern
During the first half of 2023, Wentworth continued its strong operating and
financial performance, posting its best ever six-month results. Given the
essential nature of services provided and the forecasted impact of recent
world events on both international capital markets and production operations
in the United Republic of Tanzania, the Group assesses that an interruption to
production remains remote.
On 5 December 2022, Wentworth received, and the Board of Directors
subsequently recommended the acceptance of a cash offer for 100% of the issued
and to be issued share capital of the Company for 32.5 pence per share by
Etablissements Maurel et Prom, S.A. (''M&P''). M&P is the ultimate
parent company of the Operator of the Mnazi Bay licence. On 23 February 2023,
shareholders voted in favour of a scheme of arrangement at a court meeting
held the same day. On 9 June 2023 TPDC informed the Group of its decision to
exercise its right of first refusal ("ROFR") for Wentworth's interest in the
Mnazi Bay asset pursuant to section 86(7) of the Tanzanian Petroleum Act, Cap
392. On 11 July 2023, Wentworth was notified that the Fair Competition
Commission ("FCC") had issued a decision notice that application for FCC
approval shall not be determined at this time and that this application would
be marked closed. Discussions with relevant Tanzanian government stakeholders
in order to bring the Acquisition to a successful conclusion before the
agreed 31 December 2023 Long Stop are ongoing as of the date of this report.
It is acknowledged that the above developments introduce uncertainty as to the
timing and manner in which an acquisition (if any) of the Group will be
finalised. The Directors expect that the Group would continue to operate in
its existing state if none of the proposed arrangements set out above proceed
during the going concern period. Should an acquisition proceed, it is
uncertain how the acquirer intends to integrate Wentworth's interest in the
Mnazi Bay asset with its own operations and whether the legal entities in
which the Group operates will remain in their current form or cease to
operate, in which case the Group will no longer be a going concern.
Apart from the uncertainty noted above, the Directors view the continued
timely settlement of gas-sales invoices by the Government of Tanzania to be
the most significant financial risk currently faced by the Group with respect
to its ongoing operations.
The Directors have prepared base and sensitised cash flow information for a
period of at least 12 months from the date of their approval of these
financial statements (the going concern assessment period) on the assumption
that the Group continues in its current form. Based on the application of
severe but plausible down-side scenarios, which include non-settlement of
future gas sales, potential changes in demand, capital spend and operating
costs, the Directors believe that if the Group were to continue in its present
structure it is well placed to manage the Group's financial exposures and has
sufficient cash resources for working capital needs, committed capital and
operational expenditure programs for the going concern assessment period.
Based on the above factors and with respect to the going concern assessment
period, the Directors believe that it remains appropriate to prepare the
financial statements on a going concern basis. However, the uncertainty
regarding the proposed acquisition and the subsequent integration of the
Group's operations into that of the acquirer's should the acquisition proceed,
indicates the existence of a material uncertainty related to events or
conditions that may cast significant doubt on the Group's ability to continue
as a going concern and, therefore, that the Group may be unable to realise its
assets and discharge their liabilities in the normal course of business in a
plausible situation that the Group is reorganised by the acquiring entity. The
Group, in its current form, does have the resources to be able to satisfy its
expected obligations as they fall due. The financial statements do not include
any adjustments that would result from the basis of preparation being
inappropriate.
Basis of presentation and statement of compliance
These unaudited condensed consolidated interim financial statements have been
prepared by management in accordance with International Accounting Standard
34, "Interim Financial Reporting". The preparation of interim financial
statements requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported amounts of
assets and liabilities, income and expenses. Actual results may differ from
these estimates.
These financial statements have been prepared following the same accounting
policies as the annual audited consolidated financial statements for the year
ended 31 December 2022 and should be read in conjunction with the annual
audited consolidated financial statements and the notes thereto. These
unaudited condensed consolidated interim financial statements were approved by
the Board of Directors on 26 September 2023. The disclosures provided below
are incremental to those included in the 2021 annual consolidated financial
statements.
The information for the year ended 31 December 2022 included in the report was
derived from the statutory accounts for that year which were prepared in
accordance with Jersey Company Law. Under that law the Directors have elected
to prepare the Group financial statement in accordance with UK-adopted
international accounting standards, in conformity with the requirements of the
Companies (Jersey) Law 1991. The auditor's opinion in relation to those
accounts was unqualified, did not draw attention to any matters by way of
emphasis or any other matters as may be required under The Companies (Jersey)
Law 1991.
Jersey Company Law. Under that law the Directors have elected to prepare the
Group financial statement in accordance with UK-adopted international
accounting standards, in conformity with the requirements of the Companies
(Jersey) Law 1991.
Functional and presentation currency
These consolidated financial statements are presented in US dollars which is
the functional currency of the Group.
Basis of consolidation
These unaudited condensed consolidated interim financial statements include
the accounts of the Company and its subsidiaries. Subsidiaries are entities
that the Company controls. An investor controls an investee when it is
exposed, or has rights, to variable returns from its involvement with the
investee and can affect those returns through its authority over the
investee. The existence and effect of potential voting rights are considered
when assessing whether a company controls another entity. Subsidiaries are
fully consolidated from the date on which control is transferred to the
Company. They are deconsolidated from the date that control ceases.
The legal entities within the Wentworth Group are noted in note 10 of this
report.
Changes in accounting policies.
The following accounting standards, amendments and interpretations, which had
no significant impact on these financial statements, became effective in the
current reporting period on adoption in the United Kingdom of Great Britain
through the UK Endorsement Board ("UKEB"):
IFRS 17 'Insurance Contracts': The IASB effective date is 1 January 2023 and
the UKEB adopted the amendment on 17 May 2022. IFRS 17 establishes principles
for the recognition, measurement, presentation and disclosure of insurance
contracts within the scope of the Standard. The objective of the standard is
to ensure that an entity provides relevant information that faithfully
represents those contracts. The standard provides three measurement approaches
for the accounting of insurance contracts. These include the General
Measurement Model-or Building Block Approach (BBA), the Premium Allocation
Approach (PAA or simplified approach) and the Variable Fee Approach (VFA).
This amendment is not expected to have impact on the Group's consolidated
financial statements.
IAS 12 (amendments) 'Deferred tax related to assets and liabilities arising
from a single transaction': The IASB effective date is 1 January 2023 and
the UKEB adopted the amendment on 2 December 2022. The amendments clarify how
companies account for deferred taxes on certain transactions, such as leases
and decommissioning obligations, with a focus on reducing diversity in
practice. The amendments narrow the scope of the initial recognition exemption
so companies will need to recognise a deferred tax asset and a deferred tax
liability arising from transactions that give rise to equal and offsetting
temporary differences. This amendment is not expected to have impact on the
Group's consolidated financial statements.
IAS 8 (amendments) 'Definition of accounting estimates': The IASB effective
date is 1 January 2023 and the UKEB adopted the amendment on 2 December 2022.
The amendments clarify how companies distinguish changes in accounting
policies from changes in accounting estimates, with a primary focus on the
definition and guidance on accounting estimates. The distinction between the
two is important because changes in accounting policies are applied
retrospectively, whereas changes in accounting estimates are applied
prospectively. The amendments clarify that accounting estimates are monetary
amounts in the financial statements subject to measurement uncertainty. The
amendments also clarify the relationship between accounting policies and
accounting estimates by specifying that a company develops an accounting
estimate to achieve the objective set out by an accounting policy. This
amendment is not expected to have impact on the Group's consolidated financial
statements.
IAS 1 (amendments) 'Disclosure of accounting policies': The IASB effective
date is 1 January 2023 and the UKEB adopted the amendment on 2 December 2022.
The amendments continue the IASB's clarifications on applying the concept of
materiality. These amendments help companies provide useful accounting policy
disclosures by:
· requiring companies to disclose their material accounting
policies instead of their significant accounting policies;
· clarifying that accounting policies related to immaterial
transactions, other events or conditions are themselves immaterial and do not
need to be disclosed; and
· clarifying that not all accounting policies that relate to
material transactions, other events or conditions are themselves material.
The IASB also amended IFRS Practice Statement 2 to include guidance and
examples on applying materiality to accounting policy disclosures. This
amendment is not expected to have impact on the Group's consolidated financial
statements.
Future accounting pronouncements
At the date of these interim financial statements the standards and
interpretations listed below were issued but not yet effective. The adoption
of these standards may result in future changes to existing accounting
policies and disclosures. The Company is currently evaluating the impact that
these standards will have on results of operations and financial position:
Standard Description IASB Issue Date IASB Effective Date Secretary of State Adoption Date
IAS 1 (amendments) Classification of Liabilities as Current or Non-current. 31 October 2022 1 January 2024 Endorsed
IFRS 16 (amendments) Lease Liability in a Sale and Leaseback 22 September 2022 1 January 2024 Endorsed
IAS 7 and IFRS 7 (Amendments) Supplier Finance Arrangements 25 May 2023 1 January 2024 Endorsed
3. Segment information
Net income/(loss) for the six months ended 30 June 2023
Tanzania Operations
(unaudited) Corporate Consolidated
$000 (unaudited) (unaudited)
$000 $000
Total revenue 19,920 - 19,920
Production and operating costs (2,229) - (2,229)
Depletion (3,022) - (3,022)
Total cost of sales (5,251) - (5,251)
Gross profit 14,669 - 14,669
Recurring administrative costs (1,085) (3,172) (4,257)
Acquisition costs - (1,894) (1,894)
Share-based payment charges (115) (552) (667)
Depreciation (56) - (56)
Total costs (1,256) (5,618) (6,874)
Profit/(loss) from operations 13,413 (5,618) 7,795
Net finance (costs)/income (15) 331 316
Profit/(loss) before tax 13,398 (5,287) 8,111
Current tax expense (1,042) - (1,042)
Deferred tax expense (1,777) - (1,777)
Net and comprehensive Profit/(loss) from continued operations 10,579 (5,287) 5,292
Net income/(loss) for the six months ended 30 June 2022
Tanzania Operations
(unaudited) Corporate Consolidated
$000 (unaudited) (unaudited)
$000 $000
Total revenue 15,447 - 15,447
Production and operating costs (1,922) - (1,922)
Depletion (3,945) - (3,945)
Total cost of sales (5,867) - (5,867)
Gross profit 9,580 - 9,580
Recurring administrative costs (1,968) (1,060) (3,028)
New venture and pre - licence costs - (232) (232)
Share-based payment charges (77) (395) (472)
Depreciation (49) - (49)
Total costs (2,094) (1,687) (3,781)
Profit/(loss) from operations 7,486 (1,687) 5,799
Net finance costs (104) (141) (245)
Profit/(loss) before tax 7,382 (1,828) 5,554
Current tax expense (223) - (223)
Deferred tax expense 841 - 841
Net and comprehensive Profit/(loss) from continued operations 8,000 (1,828) 6,172
Selected balances as at 30 June 2023
Mozambique Operations
Tanzania Operations (Discontinued)
(unaudited) (unaudited) Corporate Consolidated
$000 $000 (unaudited) (unaudited)
$000 $000
Current assets 25,667 9 23,582 49,258
Property, plant and equipment 38,842 - - 38,842
Deferred tax asset 12,320 - - 12,320
Total assets 76,829 9 23,582 100,420
Current liabilities 2,220 - 351 2,571
Non-current liabilities 1,893 - - 1,893
Total Liabilities 4,113 - 351 4,464
Capital additions for the six months ended 30 June 2023
Additions to property, plant
and equipment 111 - - 111
Selected balances as at 30 June 2022
Mozambique Operations
Tanzania Operations (Discontinued)
(unaudited) (unaudited) Corporate Consolidated
$000 $000 (unaudited) (unaudited)
$000 $000
Current assets 18,831 101 17,795 36,727
Exploration and evaluation assets 8,129 - - 8,129
Property, plant and equipment 62,884 - - 62,884
Deferred tax asset 9,080 - - 9,080
Total assets 98,924 101 17,795 116,820
Current liabilities 1,160 - 3,180 4,340
Non-current liabilities 2,023 - - 2,023
Total Liabilities 3,183 - 3,180 6,363
Capital additions for the six months ended 30 June 2022
Additions to property, plant
and equipment 413 - - 413
4. Revenue
Six months ended 30 June
2023 2022
(unaudited) (unaudited)
$000 $000
Revenue from gas sales 18,539 15,224
Revenue from condensate sales 22 -
Other revenue 1,359 223
19,920 15,447
Other revenue represents the recovery of Corporate Income Taxes (CIT) $1.4
million (June 2022: $223k) incurred through adjustments to TPDC gas sales
entitlements. The CIT paid and recovered during the six months of 2023 was
higher in comparison to the same period in 2022 due to an increase in gas
revenue and a small adjustment for an under provision in the previous
year.
Condensate revenue during the first half was $22k, however, in 2022 this was
recognised during the second half of the financial year.
5. General and administrative costs
Six months ended 30 June
2023 2022
(unaudited) (unaudited)
$000 $000
Employee salaries and benefits 1,357 1,096
Contractors and consultants 532 536
Travel and accommodation 85 157
Professional, legal and advisory 939 325
Office and administration 306 211
Corporate and public company costs 1,038 703
Total general and administrative costs 4,257 3,028
Employee salaries and benefits were higher during the six months ended 30 June
2023 compared to the same period in 2022 due to $152k of charges expensed on
the exercise of share-based payments and an inflationary increase in wages and
salaries.
Professional, legal and advisory costs were higher during the six months ended
30 June 2023 compared to same period of 2022 due to audit fee overruns of
$556k (£439k) following additional procedures conducted by KPMG with respect
to the proposed acquisition of the Group by M&P.
Corporate and public company costs were higher during the six months ended 30
June 2023 compared to same period of 2022 due to certain one-off third part
services including TCFD (Task Force on Climate-related Financial Disclosures),
socioeconomic analysis and other related charges.
6. Finance income and finance costs
Six months ended 30 June
2023 2022
(unaudited) (unaudited)
$000 $000
Finance income
Interest income 180 36
Gain on disposal of office equipment - 9
Foreign exchange gains 284 0
464 45
Finance costs
Foreign exchange loss - (167)
Accretion - decommissioning provision (76) (80)
Intercompany loan withholding tax costs (32) (25)
Bank Fees & Service Charge (34) (15)
Lease interest expenses (note 13) (1) (3)
Loss on disposal of office equipment (note 9) (5)
(148) (290)
Net finance income/(costs) 316 (245)
7. Trade and other receivables
Balance at Balance at
30 June 2023 31 December 2022
(unaudited) (audited)
Receivables from the Operator - M&P 3,245 2,747
Trade receivables from TPDC 3,356 2,479
Trade receivables from TANESCO 748 1,035
Other receivables from TPDC( ) 377 3,563
Other receivables 843 1,277
8,569 11,101
Receivables from the Operator: As at 30 June 2023, $3.2 million was receivable
from the Operator, M&P (December 2022: $2.7 million) representing one
month of gas sales of $3.0 million (December 2022: $2.5 million) which was
paid by TPDC to M&P in June 2023 but payment to Wentworth was made in July
2023. Also included is $276k (December 2022: $265k) representing two months
gas sales paid by TANESCO to M&P in June 2023 but payment to Wentworth was
made in July 2023.
Receivables from TPDC: As at June 2023, $3.4 million was receivable from TPDC
(December 2022: $2.5 million) representing one month of gas sales invoice
(December 2022: one month). The invoice was settled in full in July 2023.
Receivables from TANESCO: As at June 2023, $748k was received from TANESCO
(December 2022: $1 million) representing five months of gas sales (December
2022: seven months). Subsequent to 30 June 2023, TANESCO have paid three of
these invoices, totalling $441k.
Other receivables from TPDC: represent income tax of $149k (December 2022:
$2.9 million) paid by Wentworth Gas Limited, a wholly owned subsidiary of the
Company and income tax of $206k (December 2022: $675k) paid by CMBL, a 39.925%
owned subsidiary of the Company. The income tax is anticipated to be recovered
from TPDC's share of profit gas within the next 12 months under the terms of
the Mnazi Bay PSA, which provides such a mechanism for the recovery of all
corporate taxes.
Other receivables from TPDC also include gas condensate sales of $22k
(December 2022: nil).
Other receivables: include VAT recoverable of $208k (December 2022: $306k),
corporate tax prepayments of $460k (December 2022: $546k), various prepaid
expenses $175k (December 2022: $425k). In accordance with IFRS 9, the Company
notes no material expected credit losses.
8. Government of Tanzania receivables
The Group has an agreement with the Government of the United Republic of
Tanzania (TANESCO, TPDC and the Ministry of Energy) to be reimbursed for all
the project development costs associated with Umoja transmission and
distribution expenditures at cost, which was divested on 7 February 2012.
The Government is conducting an ongoing review and due to the age and
uncertainty surrounding the receivable and its recoverability, the Group made
a provision in full during 2018 against the carrying amount without prejudice
to the ongoing commercial discussions with the Government, the Group has
reviewed this and continues to feel the provision is appropriate.
9. Property, plant and equipment
Natural gas properties Office and other equipment Right of use
Total
$000 $000 $000 $000
Cost
Balance at 31 December 2022 (audited) 104,788 617 105,540
135
Additions 110 1 - 111
Disposals - (12) - (12)
Balance at 30 June 2023 (unaudited) 104,898 606 105,639
135
Accumulated depreciation and depletion
Balance at 31 December 2022 (audited) (63,197) (432) (63,726)
(97)
Depletion and depreciation (3,022) (30) (26) (3,078)
Disposals - 7 - 7
Balance at 30 June 2023 (unaudited) (66,219) (455) (66,797)
(123)
Carrying amounts
31 December 2022 (audited) 41,591 185 38 41,814
30 June 2023 (unaudited) 38,679 151 12 38,842
There have been no further indicators of impairment during the period and as
such no full impairment review has been undertaken.
During the six months, the Group made cash additions to PPE totaling $111k
(2022: $402k).
During the period the Group disposed of communication equipment which was
carried at a cost of $12k and depreciation of $7k at the date of disposal. A
loss on disposal of $5k was recognised within finance income (note 6).
10. Subsidiary undertakings
The principal subsidiary undertakings as at 30 June 2023 are:
Name of Company Country of incorporation Class of shares held Types of ownership Percentage holding Nature of business
Wentworth Resources (UK) Limited United Kingdom Ordinary Direct 100% Investment holding company
Wentworth Holdings (Jersey) Limited Jersey Ordinary Direct 100% Investment holding company
Wentworth Tanzania (Jersey) Limited Jersey Ordinary Indirect 100% Investment holding company
Wentworth Gas (Jersey) Limited Jersey Ordinary Indirect 100% Investment holding company
Wentworth Gas Limited Tanzania Ordinary Indirect 100% Exploration production company
Cyprus Mnazi Bay Limited (1) Cyprus Ordinary Indirect 39.925% Exploration production company
Wentworth Mozambique (Mauritius) Limited Mauritius Ordinary Indirect 100% Investment holding company
Wentworth Moçambique Petroleos, Limitada (2) Mozambique Ordinary Indirect 100% Exploration company
(1) CMBL is considered a jointly controlled entity and accounted for as a
joint operation rather than a JV.
(2) The Wentworth Moçambique Petroleos, Limitada is in the process of
liquidation following the relinquishment of the Tembo Block Appraisal Licence
in April 2019.
11. Trade and other payables
Balance at Balance at
30 June 2023 31 December 2022
(unaudited) (audited)
$000 $000
Payable to Mnazi Bay Operator - M&P 1,212 1,634
Trade payables 184 1,070
Lease liability - current portion (note 13) 14 41
Other payables and accrued expenses 1,161 2,878
2,571 5,623
The Payable to Mnazi Bay Operator - M&P represents the accrued cash call
for field costs for the second quarter of 2023 totaling $1.1 million (December
2023: $1.2 million). The cash call was settled in July 2023. Also included are
$121k a cash call for CMBL administration costs for the first half of 2023.
Other payables and accrued expenses include income tax liability $206k
(December 2022: $994k), audit and tax advice fees accrual $728k (December
2022: $350k), other third-party services of $166k (December 2021: $852K) and
payroll taxes $61k (December 2022: $53k).
12. Decommissioning and Abandonment provision
A reconciliation of the decommissioning obligations is provided below:
Balance at Balance at
30 June 2023 31 December 2022
(unaudited) (audited)
$000 $000
Balance at 1 January 1,818 1,929
Change in accounting estimates - (250)
Accretion 75 139
Balance at 30 June and 31 December 1,893 1,818
13. Lease liability
The Group recognised a lease liability of $14k (December 2022: $41k), the
whole amount is current (December 2022: $41k) and is presented in trade and
other payables:
Balance at Balance at
30 June 2023 31 December 2022
(unaudited) (audited)
$000 $000
Balance at 1 January 41 82
Additions - 11
Lease interest expenses 1 5
Lease payment (28) (57)
Balance at 31 December 14 41
Current portion (note 11) 14 41
14. Share-based payments
Six months ended 30 June
2023 2022
(unaudited) (unaudited)
$000 $000
Share-based compensation recognised in the Statement of Comprehensive Income 667 472
During the six months ended 30 June 2023, share-based compensation was $667k
(2022: $472k) which included an accounting charge of $115k under accrued on
the exercise of options (2022: $nil).
Movement in the total number of share options outstanding and their related
weighted average exercise prices are summarised as follows:
Number of Weighted average exercise price (US$))
options
Outstanding at 1 January 2023 13,785,049 0.07
Exercised (2,485,621) -
Lapsed (250,000) 0.38
Outstanding at 30 June 2023 11,049,428 0.07
During the six months ended 30 June 2023, an award under the Company's LTIP
over 2,485,621 conditional rights reached the end of its performance period
resulting in the award vesting over 2,437,376 ordinary shares in the Company
and 250,000 options lapsed. In addition, the Remuneration Committee exercised
its discretion to award dividend equivalents in the sum of $129k (£105k)
pursuant to the rules of the LTIP. Dividend equivalents were only awarded in
respect of dividends paid since 15 June 2021, the date the performance
conditions were amended. The Remuneration Committee elected to settle the LTIP
by way of the transfer of 1,291,809 shares held by the Company in treasury and
the payment of $439k (£355k) in cash (which was used to settle the tax
liability).
The following table summarises share options outstanding and exercisable at 30
June 2023:
Outstanding Exercisable
Exercise price (NOK) Exercise price (US$)(1) Number of options Weighted average remaining life (years) Number of options
- - 1,016,430 9.0 -
- - 3,014,590 8.8 -
- - 957,447 8.4 -
- - 3,368,368 8.0 -
- - 942,593 7.1 -
3.85 0.36 750,000 2.5 750,000
5.18 0.48 1,000,000 0.8 1,000,000
11,049,428 1,750,000
( )
(1) The US Dollar to Norwegian Kroner exchange rate used for determining the
exercise price at 30 June 2023 is 0.09269.
15. Share capital and reserves
Balance at Balance at
30 June 2023 (unaudited) 31 December 2022
(audited)
Ordinary shares $000 Ordinary shares $000
Balance at 1 January 180,182,567 414,676 181,049,139 414,919
Repurchase of own shares: Cancelled and removed from the share register during
the first half of 2022
- - (866,572) (243)
Balance at 30 June 2023 and 31 December 2022 180,182,567 414,676 180,182,567 414,676
The holders of 178,952,098 ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per share at
meetings of the Company. 1,230,469 ordinary shares held in treasury are not
entitled to receive dividends or entitled to vote.
Equity Reserve
Balance at Balance at
30 June 2023 31 December 2022
(unaudited) (audited)
$000 $000
Balance at 1 January 27,803 26,695
Options charges 552 1,108
Exercise of options (453) -
Balance at 31 December 27,902 27,803
16. Earnings per share
Basic and diluted EPS
2023 2022
(unaudited) (audited)
$000 $000
Net profit/(loss) for the period 5,292 (12,980)
Weighted average number of ordinary shares outstanding 180,182,567 180,530,238
Dilutive effect of share options outstanding 9,299,428 11,785,049
Dilutive weighted average number of ordinary shares outstanding 189,481,995 192,315,287
Basic net profit per ordinary share 0.03 0.07
Diluted net profit per ordinary share 0.03 0.07
17. Dividends
2023 2022
(unaudited) (audited)
$000 $000
Dividend overprovision (78) -
2022: 1.16 pence per ordinary share - 2,680
(78) 2,680
The interim dividend paid on 7 September 2022, included an overprovision of
dividend payment $78k to shares held in treasury. The amount was refunded
during the first six months of 2023.
On 6 April 2022, the Company declared a final dividend of 1.16 pence per
ordinary share which was paid on 29 July 2022, being a total dividend
distribution of $2.7 million. The declared and paid final dividend brings
distributions to shareholders with regard to the financial year ended 31
December 2021 to $4.0 million.
18. Supplemental cash flow information
Six months ended 30 June
2023 2022
(unaudited) (unaudited)
$000 $000
Finance income
Interest income 180 36
Foreign exchange gains 284 -
464 45
Finance costs
Foreign exchange loss - (167)
Accretion - decommissioning provision (76) (80)
Bank Fees & Service Charge (34) (15)
Lease interest expenses (note 13) (1) (3)
Loss on disposal of office equipment (note 9) (5)
(116) (265)
Net finance costs 348 (220)
19. Deferred tax expense
During the six months ended 30 June 2023, deferred tax expenses of $1.8
million (2022: income of $841k) were recorded, principally due to the
increased gas revenues recognised during first half of 2023 and, with respect
to 2022, due to changes made to the income tax computation during that period
following clarification on the interpretation of tax laws in Tanzania recently
enacted by the TRA.
20. Subsequent events
On 11 July 2023, Wentworth was notified that the FCC has issued a decision
notice that the application by M&P for FCC approval shall not be
determined at this time and that the application will be marked closed by the
FCC.
M&P and Wentworth are in consultation with relevant Tanzanian government
stakeholders in order to bring the acquisition to a successful conclusion
before the agreed 31 December 2023 long stop date. Based on discussions with
relevant Tanzanian government stakeholders, Wentworth considers it probable
that a new application will need to be made to the FCC in order for the FCC
condition to be satisfied. There can be no certainty that the conditions will
be satisfied or (where capable of being waived), waived by M&P.
On 31 July 2023, the performance period ended in respect of an award of
conditional rights over 942,593 ordinary shares granted to Katherine Roe,
CEO, pursuant to the terms of the LTIP Plan. The Remuneration Committee
reviewed the extent to which the performance conditions applicable to the
award over the performance period were satisfied, and confirmed that, 95.62%
of the award, representing 901,364 ordinary shares, vested. In addition, in
accordance with the rules of the LTIP ("LTIP Rules"), the Committee determined
to pay dividend equivalents on part of the award.
The Committee determined that the award be satisfied partly by the transfer of
477,722 ordinary shares held in treasury, and partly in cash in the sum of
$176k (£140k), to enable the tax liability to be settled, and a payment of
$40k (£32k) in respect of dividend equivalents.
Non-IFRS Measures
The Group uses certain performance measures that are not specifically defined
under IFRS, or other generally accepted accounting principles. These non-IFRS
measures include adjusted EBITDAX.
Adjusted EBITDAX
Adjusted EBITDAX is a non-IFRS measure that does not have a standardised
meaning prescribed by IFRS. This non-IFRS measure is included because
management uses the information to analyse cash generation and financial
performance of the Group. Adjusted EBITDAX is defined as earnings before
interest, taxation, depreciation, depletion and amortisation, impairment,
share-based payments, provisions, and pre-licence expenditure
Standard
Estimates of reserves and resources have been prepared in accordance with the
June 2018 Petroleum Resources Management System ("PRMS") as the standard for
classification and reporting with an effective date of 31 December 2020.
Qualified Person Review
Cameron Snow, Head of Subsurface and Business Development, is a geologist with
16 years' experience across North America, South America, Africa, and Europe.
He holds a BS in Geology from North Carolina State University, an MS in
Geology from Utah State University, a PhD in Geological and Environmental
Science from Stanford University, and an MBA from Imperial College London. Mr.
Snow has read and approved the technical disclosure in this regulatory
announcement.
Glossary
Bcf/Bscf Billion standard cubic feet
MMscf/d Million standard cubic feet per day
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