TIDMPTR
RNS Number : 0036L
Petroneft Resources PLC
28 September 2016
28 September 2016
2016 Interim Results
PetroNeft (AIM: PTR) an oil & gas exploration and production
company operating in the Tomsk Oblast, Russian Federation, and 50%
owner and operator of Licences 61 and 67 is pleased to report its
results for the 6 months ended 30 June 2016.
Highlights
-- Current gross production from Licence 61 is about 3,200 bopd.
-- Represents a 39% increase in production in 2016.
-- New wells drilled at South Arbuzovskoye during period drove production growth.
David Golder, Chairman of PetroNeft Resources plc,
commented:
"We have had a busy year so far, with good success in growing
production by almost 40% and in enhancing our understanding of
Licence 61.
Given that market conditions remain challenging with little sign
of improvement in oil prices in the near term, our focus continues
to be on growing production, managing costs and positioning the
Company for any improvement in market conditions, while we are also
investigating opportunities to benefit from current conditions by
growing the company through acquisitions or business combinations
focussed on producing assets in Russia. We look forward to updating
shareholders of our results over the coming year."
For further information, contact:
Dennis Francis, CEO, PetroNeft Resources plc +1 713 988 2500
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Paul Dowling, CFO, PetroNeft Resources plc +353 1 647 0280
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John Frain/Brian Garrahy, Davy (NOMAD and Joint Broker) +353 1 679 6363
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Henry Fitzgerald-O'Connor, Canaccord Genuity Limited (Joint Broker) +44 207 523 8000
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Martin Jackson/Shabnam Bashir, Citigate Dewe Rogerson +44 207 638 9571
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Joe Heron / Douglas Keatinge, Murray Consultants +353 1 498 0300
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The information contained in this announcement has been reviewed
and verified by Mr. Dennis Francis, Director and Chief Executive
Officer of PetroNeft, for the purposes of the Guidance Note for
Mining and Oil & Gas Companies issued by the London Stock
Exchange in June 2009. Mr. Francis holds a B.S. Degree in
Geophysical Engineering and a M.S. Degree in Geology from the
Colorado School of Mines. He has also graduated from the Harvard
University Program for Management Development. He is a member of
the American Association of Petroleum Geologists and the Society of
Exploration Geophysicists. He has over 40 years' experience in oil
and gas exploration and development.
Chairman's Statement
Dear Shareholder,
I am pleased to report on the activities of the Group for the
six months to 30 June 2016 and provide an update on recent
progress. 2016 has been a busy year with a significant work
programme undertaken at Licence 61, together with our 50% partner
Oil India. The 2016 campaign delivered considerable production
growth from new wells at South Arbuzovskoye but some disappointment
with the result of a delineation well at the Sibkrayevskoye oil
field.
Production and Sales
Gross production at Licence 61 in the six months to 30 June 2016
averaged 2,366 bopd, a 36% increase compared to the same period in
2015 (1,744 bopd). We sold 421,714 (gross) barrels of oil in the
six months to 30 June 2016 (H1 2015: 329,733 bbls) and achieved an
average Russian Domestic oil price of $20.56 (H1 2015: $29.87). The
fall in price is reflective of the continuing challenges being
faced across the oil and gas industry.
Licence 61 Gross H1 2016 Q2-2016 Q1-2016 H1 2015
Production
------------------ -------- -------- -------- --------
Total gross
production 430,693 223,877 206,816 315,664
------------------ -------- -------- -------- --------
Gross bopd 2,366 2,460 2,272 1,744
------------------ -------- -------- -------- --------
PetroNeft 50%
share bopd 1,183 1,230 1,136 872
------------------ -------- -------- -------- --------
Gross production at Licence 61 has grown by 39% in the year to
date and is currently approximately 3,200 bopd. This growth came
from the new wells at South Arbuzovskoye which came online in June
and July 2016. Production is shown quarterly above and we intend to
publish quarterly production statements from October 2016 onwards.
The actual production for Q3-2016 will be announced in October
2016.
South Arbuzovskoye
The main drilling programme in 2016 was focussed on the southern
lobe of Arbuzovskoye. In 2015 we had drilled the A-103 well from
Pad 1 in the northern end and acquired some additional 2D seismic
on the southern end. Both the well and the seismic gave us
confidence in the potential of the southern lobe. The lessons
learned from the horizontal drilling at Tungolskoye in 2015 also
proved valuable in setting out the drilling programme in South
Arbuzovskoye.
We drilled two vertical and two horizontal wells. Our pre-drill
estimates were to achieve initial production of 125 bopd from the
vertical wells and 600 bopd from the horizontal wells. The results
far exceeded these estimates with the vertical wells (A213 &
A-216) coming in at over 350 bopd and 175 bopd respectively and the
horizontal wells (A-214 & A-215) coming in at over 800 bopd and
650 bopd respectively. With the exception of the A-216 well, the
new wells at South Arbuzovskoye continue to perform ahead of
expectations. The water cut at A-216 has risen higher than expected
and we are examining ways to solve this issue.
Sibkrayevskoye
In 2015 we drilled the S-373 delineation well and carried out a
major 2D seismic programme across the northern portion of Licence
61 including Sibkrayevskoye. Between late January and April 2016
the S-373 well was put on production and averaged 200 bopd during
the period. This well, along with the previous wells, S-372 and
S-370, forms the basis for the initial development of
Sibkrayevskoye at Pad 1which is planned for 2017. We are currently
arranging the necessary studies, permits and approvals to sanction
Pad 1 development of Sibkrayevskoye later this year.
In 2016 we sought to ascertain the full potential of
Sibkrayevskoye through the drilling of a 10 km step out well,
S-374. The well was drilled in July and August 2016 but
unfortunately did not encounter commercial oil and was plugged and
abandoned. The result, while disappointing, should not affect the
current 2P reserve significantly or impact our decision regarding
the development of Pad 1 at Sibkrayevskoye which is 10 km to the
north.
Review of PetroNeft loss for the period
The loss for the period was US$2.3m (2014: US$1.4m). The loss
includes PetroNeft's share of the losses on the joint ventures
relating to Licences 61 and 67 of US$2.4m and US$0.2m respectively
(H1 2015: US$1.8m and US$0.2m). The loss relating to the Licence 61
joint venture is discussed in more detail below. Finance revenue of
US$1.6m (H1 2015: US$1.5m) relates primarily to interest receivable
on loans to the joint ventures.
PetroNeft Key
Financial Metrics Unaudited Audited
======================== -------------
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
US$ US$ US$
Continuing operations
Revenue 1,362 1,220 19,165
Cost of sales (1,235) (1,206) (15,233)
=========== ===========
Gross profit 127 14 3,932
Administrative
expenses (1,073) (572) (3,678)
Exchange gain/(loss)
on intra-Group
loans (23) 17 (2,402)
Operating loss (923) (541) (2,148)
Share of joint
venture's net loss
- WorldAce Investments
Limited (2,408) (1,829) (304)
Share of joint
venture's net loss
- Russian BD Holdings
B.V. (173) (157) (294)
Finance revenue 1,596 1,504 1,551
Loss for the period
for continuing
operations before
taxation (1,908) (1,023) (8,376)
Income tax expense (410) (393) (408)
===========
Loss for the period
for continuing
operations before
taxation (2,318) (1,416) (8,784)
=========== =========== =============
Licence 61 joint venture - WorldAce Group
The metrics below are an extraction from the financial
statements of the WorldAce Group which demonstrate the performance
of Licence 61:
PetroNeft's PetroNeft's PetroNeft's
50% share 50% share 50% share
6 months 6 months year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
US$'000 US$'000 US$'000
Continuing operations
Revenue 4,339 4,925 10,300
Cost of sales (4,259) (4,767) (10,436)
============ ============
Gross profit 80 158 (136)
Administrative expenses (917) (831) (1,519)
Impairment of oil
and gas properties - - (4,550)
============ ============
Operating loss (837) (673) (6,205)
Finance revenue 4 6 12
Finance costs (1,575) (1,162) (2,572)
============ ============
Loss for the period
for continuing operations
before taxation (2,408) (1,829) (8,765)
Income tax credit - - -
============ ============
Loss for the period
for continuing operations
before taxation (2,408) (1,829) (8,765)
============ ============ =============
WorldAce Analysis 50% of WorldAce
6 months 6 months 12 months
ended 30 ended 30 ended 31
June 2016 June 2015 December
2015
US$'000 US$'000
Revenue
Oil sales 4,335 4,908 10,276
Other sales 4 16 24
=========== ===========
Total revenue 4,339 4,924 10,300
Cost of Sales
Mineral Extraction
Tax 2,047 2,495 4,922
Pipeline tariff 820 635 1,493
Staff costs 402 458 840
Depreciation and
amortisation 600 517 1,472
Other cost of sales 390 662 1,708
=========== ===========
Total cost of sales 4,259 4,767 10,435
=========== =========== ==========
The detailed Income Statement and Balance Sheet of WorldAce
Investments Limited is disclosed at note 7 to these condensed
financial statements. Very low oil prices in late 2015 and the
first quarter of 2016 have significantly reduced the margin. With
the higher production and improved pricing being achieved in the
second half of 2016 we should be able to improve the margin as many
of our production costs are fixed.
In March 2016 Oil India agreed to provide 100% of the funding
required to carry out the agreed work programmes at Licence 61 in
2016 and 2017. This work programme is expected to require gross
funding of at least US$35 million, US$10m in 2016 and US$25m in
2017. The funding is to be provided by way of unsecured loans to
the joint venture company WorldAce Investments Limited. The loan
agreement for the 2016 requirement of US$10m was executed in March
2016 and the funding fully drawn by July 2016. It is expected that
the loan agreement for the 2017 requirement will be executed on
substantially similar terms in late 2016.
Licence 67
During 2015, we agreed an exploration programme for Licence 67
for the five years to 2020 with the Russian authorities; based on
this, the first significant expenditure required will be in 2017
but we expect to be able to defer this expenditure to at least
2018. We view Licence 67 as having considerable long term potential
and we are discussing forward plans with our joint venture partner
Belgrave Naftogas (Arawak Energy).
Board Changes
As discussed in the Annual Report, in April 2016 Maxim Korobov,
Anthony Sacca and David Sturt joined the Board as non-executive
Directors. David Sanders, Gerry Fagan and Paul Dowling left the
Board, however Mr. Dowling remains as CFO of the Company and is
Company Secretary.
Business development
In May 2016 Pavel Tetyakov joined the Company as Vice President
of Business Development to help bring a renewed focus on Business
Development and we are actively pursuing a number of exciting
options in this regard.
Outlook
We have had a busy year so far, with good success in growing
production and our longer term development and exploration plans
for our portfolio, however market conditions remain challenging and
there are few signs of sustained improvement in oil prices in the
near term. We are now focussed on commencing the development of our
largest field, Sibkrayevskoye in 2017 which, with the expected Oil
India loan agreement to be signed, the Company is fully financed
for. Our focus continues to be on growing production, managing
costs and positioning the Company for any improvement in market
conditions, while we are also investigating opportunities to
benefit from current conditions by growing the company through
acquisitions or business combinations focussed on producing assets
in Russia. We look forward to updating shareholders of our results
over the remainder of 2016.
David Golder
Non-Executive Chairman
Interim Condensed Consolidated Income Statement
For the 6 months ended 30 June 2016
Unaudited Audited
========================== -------------
6 months
6 months ended Year ended
ended 30 30 June 31 December
June 2016 2015 2015
Note US$ US$ US$
Continuing operations
Revenue 1,362,158 1,220,323 2,398,314
Cost of sales (1,234,712) (1,205,656) (2,370,949)
============ ============
Gross profit 127,446 14,667 27,365
Administrative expenses (1,073,237) (572,017) (1,379,506)
Exchange loss on intra-Group
loans 22,522 16,401 (284,449)
Operating loss (923,268) (540,949) (1,636,590)
Share of joint venture's
net loss - WorldAce
Investments Limited 7 (2,407,781) (1,828,719) (8,765,055)
Share of joint venture's
net loss - Russian
BD Holdings B.V. 8 (172,677) (157,470) (314,859)
Finance revenue 4 1,595,944 1,504,174 3,041,587
Loss for the period
for continuing operations
before taxation (1,907,782) (1,022,964) (7,674,917)
Income tax expense 5 (409,925) (392,701) (799,466)
Loss for the period
attributable to equity
holders of the Parent (2,317,707) (1,415,665) (8,474,383)
============ ============ =============
Loss per share attributable
to ordinary equity
holders of the Parent
Basic and diluted
- US dollar cent (0.33) (0.20) (1.20)
Interim Condensed Consolidated Statement of Comprehensive
Income
For the 6 months ended 30 June 2016
Unaudited Audited
========================== -------------
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
US$ US$ US$
Loss for the period
attributable to
equity holders of
the Parent (2,246,207) (1,415,665) (8,474,383)
Other comprehensive
income to be reclassified
to profit or loss
in subsequent periods:
Currency translation
adjustments - subsidiaries 61,935 19,683 265,640
Share of joint ventures'
other comprehensive
income - foreign
exchange translation
differences 5,467,539 909,754 (12,474,502)
Total comprehensive
profit/(loss) for
the period attributable
to equity holders
of the Parent 3,211,767 (486,228) (20,683,245)
============ ============ =============
Interim Condensed Consolidated Balance Sheet
As at 30 June 2016
Unaudited Audited
============= -------------
30 June 31 December
2016 2015
Note US$ US$
Assets
Non-current Assets
Property, plant and equipment 6 167,922 181,703
Equity-accounted investment
in joint ventures - WorldAce
Investments Limited 7 - -
Equity-accounted investment
in joint ventures - Russian
BD Holdings B.V. 8 - -
Financial assets - loans
and receivables 9 47,214,376 42,883,861
47,382,298 43,065,564
============= =============
Current Assets
Inventories 10 29,676 54,302
Trade and other receivables 11 2,314,336 1,842,128
Cash and cash equivalents 12 382,546 1,284,212
2,726,558 3,180,642
============= =============
Total Assets 50,108,856 46,246,206
============= =============
Equity and Liabilities
Capital and Reserves
Called up share capital 9,429,182 9,429,182
Share premium account 140,912,898 140,912,898
Share-based payments reserve 6,796,540 6,796,540
Retained loss (77,092,497) (74,774,790)
Currency translation reserve (33,355,674) (38,885,148)
Other reserves 336,000 336,000
Equity attributable to equity
holders of the Parent 47,026,449 43,814,682
============= =============
Non-current Liabilities
Deferred tax liability 1,693,335 1,286,378
1,693,335 1,286,378
============= =============
Current Liabilities
Trade and other payables 13 1,389,072 1,145,146
1,389,072 1,145,146
============= =============
Total Liabilities 3,082,407 2,431,524
Total Equity and Liabilities 50,108,856 46,246,206
============= =============
Interim Condensed Consolidated Statement of Changes in
Equity
For the 6 months ended 30 June 2016
Share-based
payment
Called Share and Currency
up share premium other translation Retained
capital account reserves reserve loss Total
US$ US$ US$ US$ US$ US$
At 1 January 2015 9,429,182 140,912,898 7,099,745 (26,676,286) (66,300,407) 64,465,132
---------- ------------ ------------ ------------- ------------- -------------
Loss for the year - - - - (8,474,383) (8,474,383)
Currency translation
adjustments
- subsidiaries - - - 265,640 - 265,640
Share of joint
ventures' other
comprehensive income
- foreign
exchange translation
differences - - - (12,474,502) - (12,474,502)
---------- ------------ ------------ ------------- ------------- -------------
Total comprehensive
loss for the
year - - - (12,208,862) (8,474,383) (20,683,245)
Share-based payment
expense - - 32,795 - - 32,795
-------------
At 31 December 2015 9,429,182 140,912,898 7,132,540 (38,885,148) (74,774,790) 43,814,682
========== ============ ============ ============= ============= =============
At 1 January 2016 9,429,182 140,912,898 7,132,540 (38,885,148) (74,774,790) 43,814,682
========== ============ ============ ============= ============= =============
Loss for the period - - - - (2,317,707) (2,317,707)
Currency translation
adjustments
- subsidiaries - - - (61,935) - (61,935)
Share of joint
ventures' other
comprehensive income
- foreign
exchange translation
differences - - - 5,467,539 - 5,467,539
========== ============ ============ ============= ============= =============
Total comprehensive
profit for
the period - - - 5,529,474 (2,317,707) 3,211,767
At 30 June 2016 9,429,182 140,912,898 7,132,540 (33,355,674) (77,092,497) 47,026,449
========== ============ ============ ============= ============= =============
Interim Condensed Consolidated Cash Flow Statement
For the 6 months ended 30 June 2016
Unaudited Audited
========================== -------------
6 months
6 months ended Year ended
ended 30 30 June 31 December
June 2016 2015 2015
US$ US$ US$
Operating activities
Loss before taxation (1,907,782) (1,022,964) (7,674,917)
Adjustment to reconcile
loss before tax to net
cash flows
Non-cash
Depreciation 36,970 54,575 97,673
Share of loss in joint
ventures 2,580,458 1,986,189 9,079,914
Share-based payment
expense - 16,246 32,795
Finance revenue 4 (1,595,944) (1,504,174) (3,041,587)
Working capital adjustments
(Increase)/decrease in trade
and other receivables (322,891) 156,081 (548,351)
Decrease/(increase)
in inventories 24,626 (36,465) (39,122)
Increase/(decrease) in trade
and other payables 292,234 (458,992) 31,428
Income tax paid (12,771) (9,861) (25,832)
Net cash flows used
in operating activities (905,100) (819,365) (2,087,999)
============ -------------
Investing activities
Purchase of property, plant
and equipment - (13,312) (19,059)
Interest received 1,480 5,984 10,095
Net cash received from/(used
in) investing activities 1,480 (7,328) (8,964)
============ ============ -------------
Net decrease in cash
and cash equivalents (903,620) (826,693) (2,096,963)
Translation adjustment 1,954 (8,481) (11,594)
Cash and cash equivalents
at the beginning of
the period 1,284,212 3,392,769 3,392,769
Cash and cash equivalents
at the end of the period 12 382,546 2,557,595 1,284,212
============ ============ =============
Notes to the Interim Condensed Consolidated Financial
Statements
For the 6 months ended 30 June 2016
1. Corporate Information
The interim condensed consolidated financial statements of the
Group for the six months ended 30 June 2016 were authorised for
issue in accordance with a resolution of the Directors on 27
September 2016.
PetroNeft Resources plc ('the Company', or together with its
subsidiaries, 'the Group') is a Company incorporated in Ireland.
The Company is listed on the Alternative Investment Market ('AIM')
of the London Stock Exchange and the Enterprise Securities Market
('ESM') of the Irish Stock Exchange. The address of the registered
office and the business address in Ireland is 20 Holles Street,
Dublin 2. The Company is domiciled in the Republic of Ireland.
The principal activities of the Group are oil and gas
exploration, development and production.
2. Accounting Policies
2.1 Basis of Preparation
The interim condensed consolidated financial statements for the
six months ended 30 June 2016 have been prepared in accordance with
IAS 34 Interim Financial Reporting.
The interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual
financial statements, and should be read in conjunction with the
Group's annual financial statements as at 31 December 2015 which
are available on the Group's website - www.petroneft.com.
The interim condensed consolidated financial statements are
presented in US dollars ("US$").
2.2 Significant Accounting Policies
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
financial statements for the year ended 31 December 2015.
3. Segment information
At present the Group has one reportable operating segment, which
is oil exploration and production through its joint venture
undertakings. As a result, there are no further disclosures
required in respect of the Group's reporting segment.
The risk and returns of the Group's operations are primarily
determined by the nature of the activities that the Group engages
in, rather than the geographical location of these operations. This
is reflected by the Group's organisational structure and the
Group's internal financial reporting systems.
Management monitors and evaluates the operating results for the
purpose of making decisions consistently with how it determines
operating profit or loss in the consolidated financial
statements.
Geographical segments
Although the joint venture undertakings WorldAce Investments
Limited and Russian BD Holdings B.V. are domiciled in Cyprus and
the Netherlands, the underlying businesses and assets are in
Russia. Substantially all of the Group's sales and capital
expenditures are in Russia.
Assets are allocated based on where the assets are located:
Unaudited Audited
==============================
30 June 31 December
2016 2015
Non-current assets US$ US$
Russia 47,379,517 43,062,084
Ireland 2,781 3,480
47,382,298 43,065,564
============================== ==========================
4. Finance revenue Unaudited Audited
========================
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
US$ US$ US$
Bank interest receivable 1,480 5,984 10,095
Interest receivable
on loans to Joint Ventures 1,594,464 1,498,190 3,031,492
1,595,944 1,504,174 3,041,587
=========== =========== =============
5. Income tax
Unaudited Audited
========================
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
US$ US$ US$
Current income tax
Current income tax
charge 2,968 9,047 24,863
Total current income
tax 2,968 9,047 24,863
-------------
Deferred tax
Relating to origination
and reversal of temporary
differences 406,957 383,654 774,603
Total deferred tax 406,957 383,654 774,603
=========== =========== -------------
Income tax expense reported
in the Interim Consolidated
Income Statement 409,925 392,701 799,466
=========== =========== =============
Property, Plant
6. and Equipment
Plant and
machinery
US$
Cost
At 1 January 2015 996,588
Additions 19,059
Translation adjustment (215,247)
----------
At 1 January 2016 800,400
Translation adjustment 104,224
At 30 June 2016 904,624
Depreciation
At 1 January 2015 674,786
Charge for the year 97,673
Translation adjustment (153,762)
==========
At 1 January 2016 618,697
Charge for the period 36,970
Translation adjustment 81,035
At 30 June 2016 736,702
Net book values
At 30 June 2016 167,922
==========
At 31 December 2015 181,703
==========
7. Equity-accounted Investment in Joint Venture - WorldAce Investments Limited
PetroNeft Resources plc has a 50% interest in WorldAce
Investments Limited, a jointly controlled entity which holds 100%
of LLC Stimul-T, an entity involved in oil and gas exploration and
the registered holder of Licence 61. The interest in this joint
venture is accounted for using the equity accounting method.
WorldAce Investments Limited is incorporated in Cyprus and carries
out its activities, through LLC Stimul-T, in Russia.
Share
of net
assets
US$
At 1 January 2015 10,865,156
Elimination of unrealised profit
on intra-Group transactions (29,326)
Retained loss (8,765,055)
Translation adjustment (11,587,393)
Credited against loans receivable
from WorldAce Investments Limited
(Note 9) 9,516,618
=============
At 1 January 2016 -
Elimination of unrealised loss on
intra-Group transactions (151,029)
Retained loss (2,407,781)
Translation adjustment 5,042,837
Reversal of credit to loans receivable
from WorldAce Investments Limited (Note
9) (2,484,027)
At 30 June 2016 -
=============
The balance sheet position of WorldAce Investments Limited shows
net liabilities of US$23,500,706 following a loss in the period of
US$4,815,562 together with a positive currency translation
adjustment of US$10,085,675. PetroNeft's 50% share is included
above and results in a negative carrying value of US$7,032,591.
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$7,032,591 is deducted from other assets
associated with the joint venture on the Balance Sheet which are
the loans receivable from WorldAce Investments (see Note 9).
7. Equity-accounted Investment in Joint Venture - WorldAce Investments Limited (continued)
Additional financial information in respect of PetroNeft's 50%
interest in the equity-accounted joint venture entity is disclosed
below:
Unaudited Audited
========================== -------------
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
US$ US$ US$
Continuing operations
Revenue 4,339,111 4,924,336 10,300,094
Cost of sales (4,259,206) (4,766,524) (10,435,521)
============ ============ -------------
Gross profit 79,905 157,812 (135,427)
Administrative expenses (916,886) (830,570) (1,519,005)
Impairment of oil and
gas properties - - (4,550,000)
============ ============ -------------
Operating loss (836,981) (672,758) (6,204,432)
Finance revenue 3,475 5,834 11,694
Finance costs (1,574,275) (1,161,795) (2,572,317)
============ ============ -------------
Loss for the period for
continuing operations
before taxation (2,407,781) (1,828,719) (8,765,055)
Income tax expense - - -
============ ============
Loss for the period (2,407,781) (1,828,719) (8,765,055)
============ ============ =============
Loss for the period (2,407,781) (1,828,719) (8,765,055)
Other comprehensive income
to be reclassified to
profit or loss in subsequent
periods:
Currency translation
adjustments 5,042,837 837,749 (11,587,393)
============ ============
Total comprehensive profit/(loss)
for the period 2,635,056 (990,970) (20,352,448)
============ ============ =============
The currency translation adjustment results from the revaluation
of the Russian Rouble during the period. 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
appreciated significantly against the US Dollar during the period
from RUB73.30:US$1 at 31 December 2015 to RUB64.05:US$1 at 30 June
2016.
7. Equity-accounted Investment in Joint Venture - WorldAce Investments Limited (continued)
Unaudited Audited
============= -------------
30 June 31 December
2016 2015
US$ US$
Non-current Assets
Oil and gas properties 35,421,820 27,646,307
Property, plant and equipment 206,001 197,826
Exploration and evaluation
assets 7,048,832 6,044,036
Assets under construction 2,665,129 2,345,358
45,341,782 36,233,527
============= -------------
Current Assets
Inventories 479,906 257,857
Trade and other receivables 308,786 259,142
Cash and cash equivalents 38,018 153,198
826,710 670,197
============= -------------
Total Assets 46,168,492 36,903,724
============= =============
Non-current Liabilities
Provisions (353,646) (273,278)
Interest-bearing loans and
borrowings (52,416,272) (48,366,752)
(52,769,918) (48,640,030)
============= -------------
Current Liabilities
Trade and other payables (5,148,927) (2,649,103)
(5,148,927) (2,649,103)
============= -------------
Total Liabilities (57,918,845) (51,289,133)
============= =============
Net Liabilities (11,750,353) (14,385,409)
============= =============
8. 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 2015 365,178
Retained loss (314,859)
Translation adjustment (887,109)
Credited against loans receivable
from Russian BD Holdings BV (Note
9) 836,790
==========
At 1 January 2016 -
Retained loss (172,677)
Translation adjustment 424,702
Reversal of credit to loans receivable
from Russian BD Holdings BV (Note
9) (252,025)
At 30 June 2016 -
==========
The balance sheet position of Russian BD Holdings B.V. shows net
liabilities of US$1,169,530 following a loss in the year of
US$345,354 together with a currency translation adjustment (gain)
of US$849,404. PetroNeft's 50% share is included above and results
in a negative carrying value of US$584,765. 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$584,765 is deducted from other assets associated with the joint
venture on the Balance Sheet which are the loans receivable from
Russian BD Holdings B.V. (Note 9).
8. Equity-accounted Investment in Joint Venture - Russian BD Holdings B.V. (continued)
Additional financial information in respect of PetroNeft's 50%
interest in the equity-accounted joint venture entity is disclosed
below:
Unaudited Audited
======================== -------------
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
US$ US$ US$
Revenue - - -
Cost of sales - - -
Gross profit - - -
Administrative expenses (56,435) (58,858) (106,224)
Operating loss (56,435) (58,858) (106,224)
Finance revenue 204 274 434
Finance costs (116,446) (98,886) (209,069)
Loss for the period for
continuing operations
before taxation (172,677) (157,470) (314,859)
Taxation - - -
Loss for the period (172,677) (157,470) (314,859)
=========== =========== =============
Loss for the period (172,677) (157,470) (314,859)
Other comprehensive income
to be reclassified to
profit or loss in subsequent
periods:
Currency translation
adjustments 424,702 72,005 (887,109)
Total comprehensive profit/(loss)
for the period 252,025 (85,465) (1,201,968)
=========== =========== =============
Unaudited Audited
============ ------------
30 June 31 December
2016 2015
US$ US$
Non-current assets 3,787,327 3,327,327
Current assets 45,227 71,104
Total assets 3,832,554 3,398,431
============ ------------
Non-current liabilities (4,214,659) (4,034,780)
Current liabilities (202,660) (200,441)
Total liabilities (4,417,319) (4,235,221)
============ ------------
Net Liabilities (584,765) (836,790)
============ ============
Financial assets - loans
9. and receivables
Unaudited Audited
============ ---------------------------
30 June 31 December
2016 2015
US$ US$
Loans to WorldAce Investments
Limited (Note 14) 50,704,823 49,224,805
Less: share of WorldAce Investments
Limited loss (7,032,591) (9,516,618)
43,672,232 39,708,187
------------ ---------------------------
Loans to Russian BD Holdings
B.V. (Note 14) 4,126,909 4,012,464
Less: share of Russian BD Holdings
B.V. loss (584,765) (836,790)
3,542,144 3,175,674
------------ ---------------------------
47,214,376 42,883,861
============ ===========================
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 H2 2017 at
the earliest. The loan is set to mature on 31 December 2022. The
loan from the Company to Russian BD Holdings is repayable on
demand. Interest currently accrues on the loan at LIBOR plus 6.0%
per annum.
10. Inventories Unaudited Audited
============================ ---------------------------
30 June 31 December
2016 2015
US$ US$
Materials 29,676 54,302
29,676 54,302
============================ ===========================
11. Trade and other receivables Unaudited Audited
================================= ----------------------------
30 June 31 December
2016 2015
US$ US$
Other receivables 224,724 147,641
Receivable from jointly controlled
entity (Note 14) 1,852,613 1,628,667
Advances to contractors 1,992 3,708
Prepayments 235,007 62,112
2,314,336 5,069,944
================================= ============================
Other receivables are non-interest-bearing and are normally
settled on 60-day terms.
12. Cash and Cash Equivalents
Unaudited Audited
=============================== ------------------------
30 June 31 December
Group 2016 2015
US$ US$
Cash at bank and in hand 382,546 1,284,212
382,546 1,284,212
=============================== ========================
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.
13. Trade and other payables
Unaudited Audited
================================= ----------------------------
30 June 31 December
2016 2015
US$ US$
Trade payables 334,135 238,570
Trade payables to jointly
controlled entity (Note
14) 388,254 239,228
Corporation tax 59,439 59,087
Oil taxes, VAT and employee
taxes 44,874 78,293
Other payables 348,544 212,141
Accruals 213,826 317,827
1,389,072 1,145,146
================================= ============================
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.
14. Related party disclosures
Transactions with subsidiaries
Transactions between the Group and its subsidiaries, Granite and
Dolomite, have been eliminated on consolidation.
Transactions with joint ventures
PetroNeft Resources plc had the following transactions with its
joint ventures during the six months ended 30 June 2016 and year
ended 31 December 2015:
WorldAce
Russian Investments
BD Holdings Limited
Group BV Group Group
US$ US$
Receivable by PetroNeft Group
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
Payments for services made
during the year (29,781) (2,483,727)
Share of joint venture's translation
adjustment (836,790) (9,516,618)
Translation adjustment (14,821) 45,618
--------------------------- -------------------------
At 1 January 2016 3,389,708 40,883,592
Transactions during the period 78,222 1,686,332
Interest accrued in the period 114,445 1,480,019
Payment for services made
during the period (2,743) (1,771,387)
Share of joint venture's translation
adjustment 252,025 2,484,027
Translation adjustment 7,941 76,554
At 30 June 2016 3,839,598 44,839,137
=========================== =========================
Balance at 31 December 2015
comprised of:
Loan facility advanced 3,175,674 39,708,187
Trade and other receivables 214,034 1,414,633
Trade Payables - (239,228)
3,389,708 40,883,592
=========================== =========================
Balance at 30 June 2016 comprised
of:
Loans receivable 3,542,144 43,672,232
Trade and other receivables 297,454 1,555,159
Trade and other payables - (388,254)
3,839,598 44,839,137
=========================== =========================
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAKNXALNKEFF
(END) Dow Jones Newswires
September 28, 2016 02:00 ET (06:00 GMT)
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