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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Petroneft Resources Plc | LSE:PTR | London | Ordinary Share | IE00B0Q82B24 | ORD EUR0.01 (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.085 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMPTR
RNS Number : 8902Q
Petroneft Resources PLC
23 June 2015
23 June 2015
PetroNeft Resources plc
("PetroNeft" or the "Group" or the "Company")
2014 Final Results
PetroNeft (AIM: PTR) owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, is pleased to report its final results for the year ended 31 December 2014. In addition, PetroNeft announces that the Company's Annual Report and Accounts for the year ended 31 December 2014 and Notice of AGM will be mailed to shareholders and be available online at the Company's website www.petroneft.comon or before Tuesday 30 June 2015.
2014 Highlights
-- Licence 61 Farmout to Oil India Limited completed in July 2014. -- Total investment by Oil India will be up to US$85 million.
-- Licence 61 Farmout has left the Company debt free and is funding a major well drilling campaign.
-- Drilling recommenced in August 2014. -- Production 728,826 barrels of oil from Licence 61 in 2014.
Dennis Francis, Chief Executive Officer of PetroNeft Resources plc, commented:
"2014 was a transformative year for the company during which the greatest achievement was the Licence 61 Farmout to Oil India Limited announced in April 2014 and completed in July 2014. The Farmout gave us a strong industry partner seeking to build a strategic position in Russia as well as the financial resources to develop the significant potential of Licence 61. We are currently producing from less than 15% of our reserve base and the substantial investment in infrastructure made in recent years leaves us well placed to deliver significant and profitable growth now that we have satisfactorily resolved the funding challenges of recent years.
Drilling has recommenced at Licence 61 and significant production growth is expected in 2015."
For further information, contact:
Hot Features
Premium
+1 713 988
Dennis Francis, CEO, PetroNeft Resources plc 2500
+353 1 647
Paul Dowling, CFO, PetroNeft Resources plc 0280
John Frain/Brian Garrahy, Davy (NOMAD and Joint +353 1 679
Broker) 6363
Henry Fitzgerald-O'Connor, Canaccord Genuity Limited +44 207 523
(Joint Broker) 8000
+44 207 638
Martin Jackson/Shabnam Bashir, Citigate Dewe Rogerson 9571
+353 1 498
Douglas Keatinge, Murray Consultants 0300
PetroNeft Resources plc
Final Results
for the year ended 31 December 2014
Forward Looking Statements
This report contains forward-looking statements. These statements relate to the Group's future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as 'believe', 'could', 'envisage', 'potential', 'estimate', 'expect', 'may', 'will' or the negative of those, variations or comparable expressions, including references to assumptions.
The forward-looking statements in this report are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements speak only as at the date of these financial statements.
Chairman's Statement
A Transformative Year
2014 was a transformative year for our Company during which we succeeded in both solving the short-term funding constraints and securing the long-term investment requirements necessary to develop the full potential of Licence 61. On 17 April 2014, we signed a farmout deal with Oil India Limited ("OIL" or "Oil India") that accomplished both our short-term and long-term goals. Following shareholder approval at an EGM in May 2014 and subsequent Russian regulatory approval the deal was completed on 3 July 2014. The total investment by OIL will be up to US$85 million.
The Licence 61 Farmout materially strengthened PetroNeft both financially and strategically. We believe the transformation we will undergo as a result of the Licence 61 Farmout will be for the benefit of the shareholders of the Company as a whole. The Company is now debt-free and the jointly controlled entity is undertaking a fully funded US$45 million work programme. The Licence 61 Farmout has given us a strong industry partner seeking to build a strategic position in Russia as well as the financial resources to develop the significant potential of Licence 61.
Operations
The existing production wells at Lineynoye and Arbuzovskoye performed reasonably well during 2014 and while total production at Licence 61 declined in 2014 this was due to natural decline of existing wells and because no new wells were drilled between February 2013 and late 2014. We have had good success in maintaining production and slowing the production decline by the timely workover of wells to replace pumps and re-perforate wells where possible.
The specific geological and operations expertise we gained from Lineynoye and Arbuzovskoye will serve the Company well in the future developments at Tungolskoye and Sibkrayevskoye. Our new partner, Oil India, will also add to this expertise through targeted secondments of their experts.
2015 work programme
In late 2014 we commenced drilling of the Tungolskoye No. 5 well which was our first horizontal well. The positive result, achieved in early 2015, gave us the confidence to take a decision to develop the Tungolskoye field in 2015. We have already constructed a 25km pipeline and utility line to connect the Tungolskoye oil field to the central processing facility at Lineynoye and have commenced a drilling programme of up to 11 wells. This is an exciting programme with significant production potential and we look forward to the results during the second half of 2015.
In late May 2015 we announced the results of a delineation well at Sibkrayevskoye. The S-373 well found net pay of 11.5 metres and achieved a stabilised natural flow of 100 bopd from a cased hole test. This bodes well for a positive development decision later in 2015 once the 1,000 km of new high quality 2D seismic acquired in the northern end of Licence 61 has been interpreted.
Reserves
While the Licence 61 Farmout resulted in a reduction of the 2P reserves net to PetroNeft, the Company has had good exploration success in the past and I am confident that we can bring the Company's reserves back towards pre-farmout levels in the medium term with further appraisal and exploration wells on key fields and prospects, especially Sibkrayevskoye, Emtorskaya and Traverskaya in the coming years. Numerous unexplored structures have also been seismically defined but not yet drilled on the southern half of Licence 61.
At Licence 67 we acquired 156 km(2) of 3D seismic in 2014 to better define the three oil pools discovered at Cheremshanskoye and the two oil pools at Ledovoye. This data has been processed and interpreted and we are currently discussing future plans with our partner, Arawak.
Estimated Reserves in Oil Fields (net to PetroNeft)
Oil Field Name Proved Proved Proved,
& Probable Probable
& Possible
-------- ------------ ------------
Licence 61 1P mmbo 2P mmbo 3P mmbo
Lineynoye 4.0 14.9 19.3
Tungolskoye 1.4 9.9 12.3
Kondrashevskoye 0.9 2.5 3.1
Arbuzovskoye 0.9 3.0 3.9
Sibkrayevskoye 1.8 26.5 33.7
North Varyakhskoye 0.4 1.0 1.2
-------- ------------ ------------
9.4 57.8 73.5
Licence 67
Ledovoye 1.5 14.0 17.4
Total net to PetroNeft 10.9 71.8 90.9
======== ============ ============
-- Licence 61 as at 31 December 2014 (Ryder Scott report as at 1 April 2013 adjusted for production to 31 December 2014).
-- Licence 61 reserves reflect just PetroNeft's 50% share of reserves. -- All oil in discovered fields is in the Upper Jurassic section.
-- Reserves were determined in accordance with the Society of Petroleum Engineers ("SPE") Petroleum Resources Management System ("PRMS") rules.
-- Licence 67 will be co-developed with Arawak Energy and the reserves above reflect PetroNeft's 50% share as per the most recent Ryder Scott report as at 1 January 2011.
Accounting implications of the Licence 61 Farmout
The effect of the Licence 61 Farmout was that PetroNeft became a 50% owner of WorldAce Investments Limited which is the 100% owner of Stimul-T the Russian entity that owns Licence 61 and all of the associated infrastructure. Prior to the farmout the WorldAce Group was consolidated 100% in the financials of PetroNeft Group. Once the farmout was completed the consolidation method changed to the equity method which means that just the 50% share of the profit or loss of the WorldAce Group is included in the Income Statement of PetroNeft and 50% of the share of net assets of WorldAce Group is included in the Balance Sheet of PetroNeft rather than showing the proportional share of revenue, expenditure and individual classes of assets and liabilities.
As the Licence 61 Farmout completed during the financial year the Income Statement for 2014 is effectively in transition as it reflects the revenues and expenditures of 100% of the WorldAce Group for the period up to 3 July 2014 and thereafter only shows the share of the net loss of WorldAce Group for the period between 3 July 2014 and 31 December 2014.
Structure of the transaction
The Licence 61 Farmout was effected by bringing Oil India in as a 50% shareholder in WorldAce Investments Limited. This happened through the payment of US$35 million to WorldAce for the issue of new shares in WorldAce. Separately, PetroNeft had previously funded the WorldAce Group through a combination of granting shareholder loans to the WorldAce Group and the investment of equity in the WorldAce Group. Following restructuring of the shareholder loans in 2013, PetroNeft was owed approximately US$80 million by the WorldAce Group. Following the payment of US$35 million by Oil India these funds were passed on to PetroNeft by way of loan repayments meaning that PetroNeft is still owed US$45 million by the WorldAce Group. The other element of the Licence 61 farmout is that Oil India will invest US$45 million into WorldAce for investment in the Licence 61 work programme. Once this amount is fully invested both parties will have mirror image investments through their 50% shareholding and US$45 million shareholder loan to WorldAce. Following that each shareholder will fund future investments in proportion to their equity.
Review of PetroNeft loss for the year
The loss for the year was US$8,376,425 (2013: US$11,495,885). The loss included a foreign exchange loss on intra-Group loans of US$2.4 million and a loss on the disposal of a subsidiary of US$5.6 million. Finance costs of US$1.6 million relate to interest on the loans from Macquarie and Arawak for the period to 3 July 2014 when the loans were repaid in full and include a US$0.4 million fee charged by Macquarie for extending the maturity date of their loan from 28 May 2014 to 7 July 2014.
As mentioned above, the Licence 61 Farmout was completed on 3 July 2014. For accounting purposes the results of the WorldAce Group are fully consolidated in the PetroNeft income statement up to that date. After that date PetroNeft must account for its share of the results of WorldAce Group using the equity method of accounting. Also, interest on loans to the WorldAce Group, which up to 3 July 2014 would have been eliminated on consolidation, is included as income in the PetroNeft consolidated income statement after that date.
PetroNeft Summary Financial Information 2014 2013
US$'000 US$'000
Continuing operations
Revenue 19,165 38,687
Cost of sales (15,233) (33,552)
Gross profit 3,932 5,135
Administrative expenses (3,678) (6,840)
Exchange loss on intra-Group loans (2,402) (6,190)
Operating loss (2,148) (7,895)
Loss on disposal of subsidiary undertaking (5,569) -
Share of joint venture's net loss - (304) -
WorldAce Investments Limited
Share of joint venture's net loss -
Russian BD Holdings B.V. (294) (235)
Finance revenue 1,551 71
Finance costs (1,612) (3,437)
Loss for the year for continuing operations
before taxation (8,376) (11,496)
Income tax (expense)/credit (408) 2,337
=========
Loss for the year (8,784) (9,159)
========= =========
Revenue
Revenue includes revenues from oil sales for the period to 3 July 2014 of US$17.5 million and income as operator of both licences of US$1.7 million.
Income of PetroNeft Group as Operator of Licence 61 and Licence 67
In the joint venture agreements related to both Licence 61 and Licence 67, PetroNeft is designated as the operator of each Licence. This means that PetroNeft employees and management are responsible for the day to day running of both Licences. Major strategic and financial decisions relating to the Licences require unanimous approval by both shareholders in the respective joint venture agreements.
As PetroNeft management and employees are responsible for day to day matters in both Licences, PetroNeft is entitled to recover a portion of its expenses from the joint ventures. In that regard we established a management group of key Russian employees who are now employed by the PetroNeft subsidiary LLC Dolomite. Both PetroNeft and Dolomite invoice for their services to the joint ventures based on rates pre-agreed with our respective joint venture partners.
Income of PetroNeft Group as Operator of Licence 61 and Licence 67 (continued)
In 2014 PetroNeft Group charged a total of US$1.2 million to the joint ventures in respect of management services. PetroNeft also owns a small construction company, Granite Construction, which carries out small ad hoc construction projects such as well pads and on-site accommodation on both Licences. In 2014 Granite Construction charged the WorldAce Group US$0.5 million in respect of these services.
Interest receivable on loans to joint ventures
During 2014 PetroNeft had interest receivable of US$1,415,202 (2013: US$Nil) on its loans to WorldAce Group and US$117,120 (2013: US$32,222) on its loans to Russian BD Holdings B.V.
Loss on disposal of subsidiary
Note 4 to the preliminary financial statements sets out the full details of the loss on disposal of subsidiary of US$5.6 million. The loss was calculated by comparing the value of the assets that remain with PetroNeft after the transaction to the value of the assets and liabilities that were held for sale and then deducting transaction costs of US$1.8 million and transferring the accumulated foreign exchange loss of US$9.3 million included in the currency translation reserve relating to the WorldAce Group to the PetroNeft consolidated income statement.
Key Financial Metrics - WorldAce Group
Because of the above accounting implications it is difficult to extract meaningful metrics from the PetroNeft 2014 consolidated income statement. Therefore the metrics below are an extraction from the audited financial statements of the WorldAce Group and give an indication as to the performance of Licence 61:
PetroNeft's 100% of WorldAce
50% share 12 months 12 months
3 July ended 31 ended 31
- 31 December December December
2014 2014 2013
Continuing operations US$'000 US$'000 US$'000
Revenue 5,846 29,289 38,687
Cost of sales (5,451) (26,379) (33,456)
===============
Gross profit 395 2,910 5,231
Gross margin % 6.8% 10.0% 13.5%
Administrative expenses (1,027) (5,129) (8,341)
===============
Operating loss (632) (2,219) (3,110)
Finance revenue 5 16 23
Finance costs (877) (1,818) (6,945)
==========
Loss for the period for continuing
operations before taxation (1,504) (4,021) (10,032)
Income tax credit/(expense) 1,200 2,400 (2,400)
Loss for the period (304) (1,621) (12,432)
=============== ========== ==========
Net Loss - WorldAce Group
The net loss of WorldAce Group for the full year decreased to US$1,621,345 from US$12,432,403 in 2013. The reduction in the loss for the year before taxation can be attributed to lower interest payable on loans from shareholders in 2014 as a result of the loan restructuring that occurred at the end of 2013 in preparation for the Licence 61 Farmout. Also in 2014, included in administrative expenses, there was a foreign exchange loss of US$1,348,387 (2013: US$4,920,385) on US Dollar-denominated loans owed by Stimul-T, whose functional currency is the Russian Rouble. This loss arose due to the weakening of the Russian Rouble against the US Dollar in the year, however, due a restructuring of the inter-company loans on 3 July 2014 this loss only arose in the first half of 2014 as thereafter any exchange differences were taken to the currency translation reserve of WorldAce Group.
In the consolidated income statement of PetroNeft the share of the WorldAce loss for the period after completion of the farmout is US$304,436. This is after allowing for the interest charge of US$1,415,202 on the loans owed by WorldAce Group to PetroNeft for that period and management service charges from PetroNeft to WorldAce of US$834,318 for the period.
Revenue, Cost of Sales and Gross Margin - WorldAce Group
Revenue from oil sales was US$29,288,078 for the year (2013: US$38,687,123). Cost of sales includes depreciation of US$2,866,247 (2013: US$5,133,256), which was lower mainly because of the weaker Rouble but also because of lower production. The gross margin fell during the year primarily due to lower oil prices in the second half but also because of lower production in the year and therefore a higher costs per barrel because of the level of fixed costs included in cost of sales. For this reason, operating costs per barrel produced (Cost of Sales excluding depreciation and Mineral Extraction Tax) rose from US$10.86 per barrel to US$11.67 per barrel. We would expect the gross margin to improve in future periods as our facilities and field operations are fully staffed and can handle additional production from the Arbuzovskoye and Tungolskoye oil fields under the current cost structure. We produced 728,826 barrels of oil (2013: 870,965 barrels) in the year and sold 704,189 barrels of oil (2013: 879,826 barrels) achieving an average oil price of US$41.59 per barrel (2013: US$43.97 per barrel). All oil was sold on the domestic market in Russia.
Finance Costs - WorldAce Group
Finance costs of US$1,818,438 relate to interest on loans from PetroNeft and Oil India.
Taxation - WorldAce Group
The tax credit arises on the reversal of a deferred tax charge of US$2,400,000 which arose in relation to temporary differences in Russia.
Proceeds of Licence 61 Farmout
PetroNeft received proceeds of US$35 million from the Licence 61 Farmout. US$26.5 million of this was used to settle all outstanding external debt to Macquarie Bank Limited and Arawak. Transaction costs amounted to approximately US$1.8 million. US$3 million was then invested in Licence 67 by way of a loan to Russian BD Holdings B.V. to cover the PetroNeft share of the 3D seismic programme carried out at Licence 67 in 2014.
Board Committees and Policies
On 18 June 2015 Gerard Fagan replaced Tom Hickey as Chairman of the audit committee. In addition, the Board decided to form a permanent Nominations Committee which will be chaired by Tom Hickey. David Golder, Gerard Fagan and Dennis Francis will also be members of the Nominations Committee. Also, in response to shareholder feedback in 2014, the Remuneration Committee decided that PetroNeft would no longer issue share options to Non-Executive Directors. While the Non-Executive Directors already hold some share options and will retain them, all existing share options are out of the money.
Summary
In May 2014, the shareholders overwhelmingly supported the Board's recommendations and proposed strategy for the next phase of the Company's development at the EGM to approve the Licence 61 Farmout and the requisitioned EGM. This gave us a mandate to conclude the Licence 61 Farmout with Oil India and to progress the development of Licence 61, debt-free and with a fully funded US$45 million work programme. Since then we have commenced an ambitious programme to further develop Licence 61. With the Lineynoye, Arbuzovskoye, Tungolskoye and Sibkrayevskoye oil fields we can generate significant cash in the coming years utilising the infrastructure already in place as well as through the addition of yet to be discovered reserves from our portfolio of exploration prospects. Oil India appreciates the potential of the asset and has a long-term view with respect to Licence 61 and business development in Russia. This should enable PetroNeft to expand its reserve base both through exploration and delineation in current licence areas and through business development opportunities in Tomsk and further afield in Russia. We look forward to working with Oil India for many years to come.
2014 was a turn-around year for PetroNeft and the management team deserve credit for securing an excellent deal with Oil India, particularly given challenging wider market conditions. We are currently producing from less than 15% of our reserve base and the substantial investment in infrastructure made in recent years leaves us well placed to deliver significant and profitable growth now that we have satisfactorily resolved the funding challenges of recent years.
Annual Report and AGM
The annual report will be mailed to shareholders and published on the Company's website (www.petroneft.com) by 30 June 2015. The AGM will be held in Dublin on 18 September 2015.
Finally, I know that I speak for all the Directors, management and staff of the Group in giving sincere thanks to our shareholders, both old and new, for your continued support throughout the past year.
David Golder
Non-Executive Chairman
Consolidated Income Statement
For the year ended 31 December 2014
2014 2013
Note US$ US$
Continuing operations
Revenue 19,165,456 38,687,123
Cost of sales (15,233,532) (33,551,965)
============= -------------
Gross profit 3,931,924 5,135,158
Administrative expenses (3,677,947) (6,839,970)
Exchange loss on intra-Group loans (2,401,138) (6,189,735)
============= -------------
Operating loss (2,147,161) (7,894,547)
Loss on disposal of subsidiary undertaking (5,569,164) -
Share of joint venture's net loss -
WorldAce Investments Limited (304,439) -
Share of joint venture's net loss -
Russian BD Holdings B.V. (294,103) (235,060)
Finance revenue 1,550,754 70,810
Finance costs (1,612,312) (3,437,088)
============= -------------
Loss for the year for continuing operations
before taxation (8,376,425) (11,495,885)
Income tax (expense)/credit (407,960) 2,337,159
Loss for the year attributable to equity
holders of the Parent (8,784,385) (9,158,726)
============= =============
Loss per share attributable to ordinary
equity holders of the Parent
Basic and diluted - US dollar cent 3 (1.27) (1.42)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2014
2014 2013
US$ US$
Loss for the year attributable to equity
holders of the Parent (8,784,385) (9,158,726)
Other comprehensive income to be reclassified
to profit or loss in subsequent periods:
Currency translation adjustments - subsidiaries (764,277) (3,293,001)
Share of joint ventures' other comprehensive
income - foreign exchange translation
differences (26,480,234) (252,238)
Recycling of currency translation reserve
on disposal of subsidiary 4 9,337,907 -
=============
Total comprehensive loss for the year
attributable to equity holders of the
Parent (26,690,989) (12,703,965)
============= =============
Consolidated Balance Sheet
As at 31 December 2014
2014 2013
Note US$ US$
Assets
Non-current Assets
Property, plant and equipment 5 321,802 467,060
Equity-accounted investment in joint venture
- WorldAce Investments Limited 6 10,865,156 -
Equity-accounted investment in joint venture
- Russian BD Holdings B.V. 7 365,178 3,331,844
Financial assets - loans and receivables 8 46,398,502 -
57,950,638 3,798,904
============= ------------------
Current Assets
Inventories 9 15,179 30,523
Trade and other receivables 10 5,069,944 790,864
Cash and cash equivalents 11 3,392,769 116,831
Restricted cash 11 - 2,054,947
------------------
8,477,892 2,993,165
============= ------------------
Assets held for sale 4 - 125,766,570
8,477,892 128,759,735
Total Assets 66,428,530 132,558,639
============= ==================
Equity and Liabilities
Capital and Reserves
Called up share capital 14 9,429,182 8,561,499
Share premium account 140,912,898 136,762,387
Share-based payment reserve 6,763,745 6,684,820
Retained loss (66,300,407) (57,516,022)
Currency translation reserve (26,676,286) (177,021)
Other reserves 336,000 336,000
Amounts recognised in other comprehensive
income and accumulated in equity relating
to assets held for sale 4 - (8,592,661)
Equity attributable to equity holders of the
Parent 64,465,132 86,059,002
============= ------------------
Non-current Liabilities
Deferred tax liability 511,775 106,674
511,775 106,674
============= ------------------
Current Liabilities
Trade and other payables 12 1,451,623 1,806,732
Interest-bearing loans and borrowings 13 - 30,000,000
1,451,623 31,806,732
============= ------------------
Liabilities directly associated with assets
held for sale 4 - 14,586,231
1,451,623 46,392,963
Total Liabilities 1,963,398 46,499,637
Total Equity and Liabilities 66,428,530 132,558,639
============= ==================
Consolidated Statement of Changes in Equity
For the year ended 31 December 2014
Currency
translation
reserve
Share-based relating
Called Share payment Currency to assets
up share premium and other translation held for Retained
capital account reserves reserve sale loss Total
US$ US$ US$ US$ US$ US$ US$
At 1 January
2013 8,561,499 136,762,387 6,602,045 (5,224,443) - (48,357,296) 98,344,192
---------- ------------ ------------ ------------- ------------ ------------- -------------
Loss for the
year - - - - - (9,158,726) (9,158,726)
Currency
translation
adjustments -
subsidiaries - - - (3,293,001) - - (3,293,001)
Share of joint
ventures'
other
comprehensive
income -
foreign
exchange
translation
differences - - - (252,238) - - (252,238)
---------- ------------ ------------ ------------- ------------ ------------- -------------
Total
comprehensive
loss for the
year - - - (3,545,239) - (9,158,726) (12,703,965)
Transfer in
relation to
assets held
for sale - - - 8,592,661 (8,592,661) - -
Share-based
payment
expense - - 418,775 - - - 418,775
-------------
At 31 December
2013 8,561,499 136,762,387 7,020,820 (177,021) (8,592,661) (57,516,022) 86,059,002
========== ============ ============ ============= ============ ============= =============
At 1 January
2014 8,561,499 136,762,387 7,020,820 (177,021) (8,592,661) (57,516,022) 86,059,002
========== ============ ============ ============= ============ ============= =============
Loss for the
year - - - - - (8,784,385) (8,784,385)
Currency
translation
adjustments -
subsidiaries - - - (19,031) (745,246) - (764,277)
Share of joint
ventures'
other
comprehensive
income -
foreign
exchange
translation
differences - - - (26,480,234) - - (26,480,234)
Recycling of
currency
translation
reserve
on disposal
of subsidiary - - - - 9,337,907 - 9,337,907
========== ============ ============ ============= ============ ============= =============
Total
comprehensive
loss for the
year - - - (26,499,265) 8,592,661 (8,784,385) (26,690,989)
New share
capital
subscribed 867,683 4,308,865 - - - - 5,176,548
Transaction
costs on
issue of
share
capital - (158,354) - - - - (158,354)
Share-based
payment
expense - - 78,925 - - - 78,925
At 31 December
2014 9,429,182 140,912,898 7,099,745 (26,676,286) - (66,300,407) 64,465,132
========== ============ ============ ============= ============ ============= =============
Consolidated Cash Flow Statement
For the year ended 31 December 2014
2014 2013
US$ US$
Operating activities
Loss before taxation (8,376,425) (11,495,885)
Adjustment to reconcile loss before
tax to net cash flows
Non-cash
Depreciation 126,250 5,632,077
Share of loss in joint ventures 598,542 235,060
Share-based payment expense 78,925 418,775
Loss on disposal of subsidiary 4 5,569,164 -
Finance revenue (1,550,754) (70,810)
Finance costs 1,612,312 3,437,088
Working capital adjustments
(Increase)/decrease in trade and other
receivables (506,502) 189,890
Decrease in inventories 44,199 661,568
(Decrease)/increase in trade and other
payables (1,028,136) 9,703,801
Income tax (paid)/ received (5,354) 167,592
Net cash flows (used in)/received
from operating activities (3,437,779) 8,879,156
-------------
Investing activities
Purchase of oil and gas properties (200,669) (4,866,256)
Purchase of property, plant and equipment (144,137) (83,286)
Proceeds from disposal of property,
plant and equipment - 12,268
Exploration and evaluation payments (1,187,432) (326,918)
Loan facilities advanced to joint venture
undertakings (3,500,000) -
Repayment of loan facilities by joint
venture undertakings 36,105,575 -
Decrease in restricted cash 2,054,947 1,945,053
Decrease in cash and cash equivalents
held for sale 176,857 -
Interest received 15,310 32,819
Net cash received from/(used in) investing
activities 33,320,451 (3,286,320)
-------------
Financing activities
Proceeds from issue of share capital 5,176,548 -
Transaction costs of issue of shares (158,354) -
Proceeds from loan facilities 1,500,000 -
Repayment of loan facilities (31,500,000) (6,500,000)
Interest paid (1,601,285) (2,709,529)
Net cash used in financing activities (26,583,091) (9,209,529)
============= -------------
Net increase/(decrease) in cash and
cash equivalents 3,299,581 (3,616,693)
Translation adjustment (23,643) (14,607)
Cash and cash equivalents held for
sale 4 - (191,291)
Cash and cash equivalents at the beginning
of the year 116,831 3,939,422
Cash and cash equivalents at the end
of the year 11 3,392,769 116,831
============= =============
Notes to the Preliminary Financial Statements
For the year ended 31 December 2014
1. Basis of Accounting and Presentation of Financial Information
While the financial information included in this announcement has been prepared in accordance with the Group's accounting policies under International Financial Reporting Standards (IFRS) as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRS. The Company is distributing the full financial statements that comply with IFRS on or before 30 June 2015.
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2014 or 2013, but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts. Both reports were unmodified, but the 2013 report did draw attention to going concern issues by way of emphasis of matter.
Adoption of new IFRS's
The Group has adopted the following new and amended IFRS and IFRIC interpretations in respect of the 2014 financial year-end:
-- Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32 Financial Instruments: Presentation)
-- Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36 Impairment of Assets)
-- Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39 Financial Instruments: Recognition and Measurement)
-- IFRIC 21 Levies
The application of the above standards and interpretations did not result in material changes to the results or financial position of the Group or the Company.
2. 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.
2. Segment information (continued)
Assets are allocated based on where the assets are located:
2014 2013
Non-current assets US$ US$
Russia 57,945,126 3,794,764
Ireland 5,512 4,140
57,950,638 3,798,904
====================== ================
3. Loss per Ordinary Share
Basic loss per Ordinary Share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the Parent by the weighted average number of Ordinary Shares outstanding during the year.
Basic and diluted earnings per Ordinary Share are the same as the potential Ordinary Shares are anti-dilutive.
2014 2013
Numerator US$ US$
Loss attributable to equity shareholders
of the Parent for basic and diluted
loss (8,784,385) (9,158,726)
(8,784,385) (9,158,726)
============= ============
Denominator
Weighted average number of Ordinary
Shares for basic and diluted earnings
per Ordinary Share 694,097,759 644,920,275
Diluted weighted average number of
shares 694,097,759 644,920,275
============= ============
Loss per share
Basic and diluted - US dollar cent (1.27) (1.42)
The Company has instruments in issue that could potentially dilute basic earnings per Ordinary Share in the future, but are not included in the calculation for the reasons outlined below:
-- Employee Share Options - These potential Ordinary Shares are anti-dilutive for the years ended 31 December 2014 and 2013.
-- Warrants - At 31 December 2014, 9,900,000 (2013: 9,400,000) Ordinary Shares are subject to warrants being exercised. These potential Ordinary Shares are anti-dilutive for the years ended 31 December 2014 and 2013.
4. Assets Held for Sale
In 2013 the Company commenced a process with Evercore Partners of London to seek a farmout partner for Licence 61. This process led to the signing of a Memorandum of Understanding with Oil India Limited ("OIL") on 27 December 2013 in respect of the farmout of a 50% non-operated interest in Licence 61. Consequently it was deemed that the held for sale criteria under IFRS 5 were met and that the related assets and liabilities ('the disposal group') be classified as held for sale in the 31 December 2013 balance sheet.
Immediately before the classification as held for sale, the recoverable amount was estimated and no impairment loss was identified. As at 31 December 2013, there was no write-down as the carrying amount of the disposal group did not fall below its fair value less costs to sell.
A legally-binding contract was entered into on 17 April 2014. Under the terms of the agreement, OIL subscribed for shares in WorldAce, the holding company for Stimul-T, the entity which holds Licence 61 and all related assets and liabilities; following which, PetroNeft and Oil India both hold 50% of the voting shares of WorldAce. In addition, through the shareholders agreement, both parties will have joint control of WorldAce with PetroNeft continuing as operator (the "Licence 61 Farmout"). The basic terms of this agreement provide for a total investment by OIL of up to US$85 million consisting of:
- US$35 million upfront cash payment; - US$45 million of exploration and development expenditure on Licence 61;
- US$5 million performance bonus, contingent upon average production from the Sibkrayevskoye Field reaching 7,500 bopd within the next five years.
Following shareholders' approval at an EGM in May 2014 and Russian Regulatory approval, the transaction closed on 3 July 2014, and WorldAce Investments Limited, which was previously a 100% subsidiary of PetroNeft, became a jointly controlled entity, resulting in a loss on disposal of US$5.6 million (after the recycling of the currency translation reserve of US$9.3 million).
The major classes of assets and liabilities held for sale as at 3 July 2014 and 31 December 2013 were as follows:
As at As at
3 July 2014 31 December
2013
US$ US$
Assets held for sale
Oil and gas properties 95,360,748 96,023,796
Property, plant and equipment 903,759 935,000
Exploration and evaluation assets 27,518,559 27,235,454
Inventories 1,156,906 1,215,210
Trade and other receivables 200,722 165,819
Cash and cash equivalents 14,434 191,291
125,155,128 125,766,570
============= =============
Liabilities directly associated with
assets held for sale
Trade and other payables 10,755,435 10,633,142
Deferred tax liability 2,400,000 2,400,000
Provisions 1,568,280 1,553,089
14,723,715 14,586,231
============= =============
Amounts recognised in other comprehensive
income and accumulated in equity relating
to assets held for sale
Currency translation reserve 9,337,907 8,592,661
9,337,907 8,592,661
============= =============
4. Assets Held for Sale (continued)
Loss on disposal of subsidiary undertaking 2014
US$
Fair value of remaining equity investment in joint
venture 35,000,000
Loans and other receivables from joint venture
(note 15)* 81,021,362
==============
Value of assets retained by PetroNeft 116,021,362
Assets held for sale (125,155,128)
Liabilities held for sale 14,723,715
==============
Gain before transaction costs and recycling
of currency translation reserve 5,589,949
Recycling of currency translation reserve on disposal
of subsidiary (9,337,907)
Transaction costs (1,821,206)
Loss on disposal of subsidiary undertaking (5,569,164)
==============
*US$35 million of the loans receivable from the joint venture noted above were repaid to PetroNeft out of the proceeds of the new share issue by WorldAce to Oil India. A further US$600,000 was repaid from operating cashflows in the second half of 2014.
The recycling of the currency translation reserve of US$9.3 million relates primarily to the realisation of the cumulative foreign currency losses relating to the retranslation of Russian Rouble denominated assets and liabilities held by Stimul-T whose functional currency is Russian Rouble. As part of the consolidation process in prior periods up to 3 July 2014 those Russian Rouble carrying amounts were converted to US Dollars, the functional currency of PetroNeft, at each period end and the unrealised gain or loss was then recognised through the statement of other comprehensive income and included in the currency translation reserve rather than the retained loss reserve. With the completion of the Licence 61 Farmout in July 2014 this accumulated loss was realised and therefore transferred to the Income Statement and included in the calculation of loss on disposal arising from the Licence 61 Farmout.
5. Property, plant and equipment
Plant and
machinery
US$
Cost
At 1 January 2013 1,854,724
Additions 14,551
Transferred from oil and
gas properties 108,427
Disposals (39,380)
Translation adjustment (129,353)
-----------
1,808,969
Transferred to assets held
for sale (335,997)
-----------
At 1 January 2014 1,472,972
Additions 148,917
Disposals (43,974)
Translation adjustment (581,327)
===========
At 31 December 2014 996,588
===========
Depreciation
At 1 January 2013 1,082,298
Charge for the year 227,083
Transferred from oil and
gas properties 52,512
Disposals (27,112)
Translation adjustment (81,280)
-----------
1,253,501
Transferred to assets held
for sale (247,589)
-----------
At 1 January 2014 1,005,912
Charge for the period 126,250
Disposals (43,974)
Translation adjustment (413,402)
===========
At 31 December 2014 674,786
===========
Net book values
At 31 December 2014 321,802
===========
At 31 December 2013 467,060
===========
6. 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 became a joint venture with effect from 3 July 2014. Full details of the transaction and the accounting implications are discussed in Note 4. 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 2014 -
Subsidiary becoming a joint venture
(Note 4) 35,000,000
Elimination of unrealised profit on
intra-Group transactions (22,734)
Retained loss (304,439)
Translation adjustment (23,807,671)
At 31 December 2014 10,865,156
=============
Additional financial information in respect of PetroNeft's 50% interest in the equity-accounted joint venture entity is disclosed below:
Period from
3 July to
31 December
2014
US$
Continuing operations
Revenue 5,845,646
Cost of sales (5,450,642)
=============
Gross profit 395,004
Administrative expenses (1,027,260)
=============
Operating loss (632,256)
Finance revenue 4,713
Finance costs (876,896)
=============
Loss for the period for continuing
operations before taxation (1,504,439)
Income tax credit 1,200,000
Loss for the period (304,439)
=============
Loss for the period (304,439)
Other comprehensive income
to be reclassified to profit
or loss in subsequent periods:
Currency translation adjustments (23,807,671)
Total comprehensive loss for
the period (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 period moving from RUB34.2:US$1 at 3 July 2014 to RUB56.5:US$1 at 31 December 2014.
6. Equity-accounted Investment in Joint Venture - WorldAce Investments Limited (continued)
2014
US$
Non-current Assets
Oil and gas properties 27,860,901
Property, plant and equipment 285,775
Exploration and evaluation
assets 9,600,431
37,747,107
=============
Current Assets
Inventories 691,950
Trade and other receivables 1,633,624
Cash and cash equivalents 514,206
2,839,780
=============
Total Assets 40,586,887
=============
Non-current Liabilities
Provisions (393,153)
Interest-bearing loans and
borrowings (32,593,955)
(32,987,108)
=============
Current Liabilities
Trade and other payables (1,638,815)
(1,638,815)
=============
Total Liabilities (34,625,923)
=============
Net Assets 5,960,964
=============
Capital commitments
2014
US$
Details of capital commitments at the balance sheet date are as
follows:
Contracted for but not provided in the financial
statements 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:
2014
US$
Within one year 44,624
After one year but not more than five years 160,711
More than five years 403,104
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 2013 3,819,142
Retained loss (235,060)
Translation adjustment (252,238)
--------------
At 1 January 2014 3,331,844
Retained loss (294,103)
Translation adjustment (2,672,563)
At 31 December 2014 365,178
==============
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:
2014 2013
US$ US$
Revenue - -
Cost of sales - -
Gross profit - -
Administrative expenses (143,643) (114,563)
Exchange loss on intra-Group loans - (65,784)
Operating loss (143,643) (180,347)
Finance revenue 1,743 184
Finance costs (152,203) (45,134)
Loss for the year for continuing operations
before taxation (294,103) (225,297)
Taxation - (9,763)
Loss for the year (294,103) (235,060)
============ ==========
Loss for the year
Other comprehensive income to be reclassified
to profit or loss in subsequent periods: (294,103) (235,060)
Currency translation adjustments (2,672,563) (252,238)
Total comprehensive loss for the year (2,966,666) (487,298)
============ ==========
2014 2013
US$ US$
Non-current assets 4,155,338 4,774,180
Current assets 165,716 164,066
Total assets 4,321,054 4,938,246
============ ------------
Non-current liabilities (22,810) (34,704)
Current liabilities (3,933,066) (1,571,698)
Total liabilities (3,955,876) (1,606,402)
============ ------------
Net Assets 365,178 3,331,844
============ ============
7. Equity-accounted Investment in Joint Venture - Russian BD Holdings B.V. (continued)
Capital commitments 2014 2013
US$ US$
Details of capital commitments at the balance sheet date are as follows:
Contracted for but not provided in
the financial statements - 4,935,229
Including contracted with related parties - 204,980
======= ====================
Future minimum rentals payable under non-cancellable operating leases
at the balance sheet date are as follows:
2014 2013
US$ US$
Within one year 2,605 4,261
After one year but not more than five
years 8,980 15,801
More than five years 29,377 51,251
40,962 71,313
======= ====================
The above capital commitments in the joint venture are incurred jointly with Arawak Energy. The Group has a 50% share of these commitments.
8. Financial assets - loans and receivables
2014 2013
US$ US$
Loans to WorldAce Investments Limited
(Note 15) 46,398,502 -
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 2016 at the earliest. The loan is set to mature on 31 December 2017. As at 31 December 2014 the loan is fully drawn down.
9. Inventories
2014 2013
US$ US$
Materials 15,179 30,523
15,179 30,523
================= ================
10. Trade and other receivables
2014 2013
US$ US$
Other receivables 112,492 14,544
Receivable from jointly controlled
entities (Note 15) 4,879,292 717,190
Receivable from related parties (Note
15) 11,858 -
Advances to contractors 1,922 -
Prepayments 64,380 59,130
5,069,944 790,864
================== ======================
Cash and Cash Equivalents and Restricted
11. Cash
2014 2013
US$ US$
Cash at bank and in hand 3,392,769 116,831
Restricted cash - 2,054,947
3,392,769 2,171,778
======================= ==========
At 31 December 2013 restricted cash amounting to US$2,054,947 was being held in a Macquarie Debt Service Reserve Account ("DSRA"). This account was part of the security package held by Macquarie and was offsetable against the loan in the event of a default on the loan or by agreement between the parties. The related Macquarie loan was repaid in full following the Licence 61 Farmout in July 2014, and the DSRA was subsequently released. Bank deposits earn interest at floating rates based on daily deposit rates. Short-term deposits are made for varying periods of between one day and one month depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates.
12. Trade and other payables
2014 2013
US$ US$
Trade payables 306,857 740,817
Trade payables to jointly controlled
entity (Note 15) 53,450 72,659
Corporation tax 60,797 63,292
Oil taxes, VAT and employee taxes 74,497 87,004
Other payables 137,475 22,745
Accruals 818,547 820,215
1,451,623 1,806,732
================ ==========
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.
Interest-bearing loans and
13. borrowings
Effective Contractual
interest maturity
rate date 2014 2013
% US$ US$
Interest bearing
Current liabilities
7 July
Macquarie Bank Limited 9.81% 2014 - 15,000,000
30 May
Belgrave Naftogaz B.V. 7.38% 2015 - 15,000,000
---------------------- ------------
Total current liabilities - 30,000,000
Total loans and borrowings - 30,000,000
====================== ============
Contractual undiscounted
liability - 30,000,000
Macquarie loan facility
The Macquarie loan was repaid in full in July 2014 following the completion of the Licence 61 Farmout.
Arawak Energy loan facility
In March 2014 Belgrave Naftogas B.V. (an Arawak Group company) extended its loan facility to the Company by US$1,500,000 to US$16,500,000. The loan was subsequently repaid in full following the completion of the Licence 61 Farmout in July 2014.
14. Share capital 2014 2013
EUR EUR
Authorised
1,000,000,000 (2013: 800,000,000) Ordinary
Shares of EUR0.01 each 10,000,000 8,000,000
===========
10,000,000 8,000,000
=========== ==========
Called
Number up share
Allotted, called up and fully paid of Ordinary capital
equity Shares US$
At 1 January 2013 644,920,275 8,561,499
------------- ----------
At 1 January 2014 644,920,275 8,561,499
Issued in the year 62,325,631 867,683
At 31 December 2014 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$0.2 million, were used to finance expenditure on oil and gas properties, exploration and evaluation costs, debt repayment and corporate overhead.
15. Related party disclosures
Transactions with subsidiaries
Transactions between the Group and its subsidiaries, WorldAce Investments Limited, Stimul-T, Granite and Dolomite have been eliminated on consolidation. The Company had the following transactions with its subsidiaries during the years ended 31 December 2014 and 2013:
WorldAce
Investments
Stimul-T Granite Construction Limited
US$ US$ US$
Loans
At 1 January 2013 101,924,207 1,581,167 25,133,138
Technical and management services
provided 198,750 - 41,627
Interest accrued in the year 6,767,453 105,375 -
Impairment of loans receivable
and interest in the year (46,287,424) - -
Repaid during the year (5,230,000) (650,000) -
Translation adjustment (1,481,277) - 8,525
At 1 January 2014 55,891,709 1,036,542 25,183,290
Technical and management services
provided - - 16,255
Advanced during the year 600,000 - -
Interest accrued in the year 7,233 66,916 -
Loans repaid during the year (1,075,000) - -
Assigned to WorldAce Investments
Limited (54,815,433) - 54,815,433
Transferred on cessation as a subsidiary (607,233) - (80,011,257)
Translation adjustment (1,276) - (3,721)
=====================
At 31 December 2014 - 1,103,458 -
============= ===================== =============
Capital contributions
Share-based payment 2014 21,169 7,247 -
Share-based payment 2013 221,744 38,959 -
15. Related party disclosures (continued)
Transactions with joint ventures
PetroNeft Resources plc had the following transactions with its joint ventures during the years ended 31 December 2014 and 2013:
WorldAce
Russian Investments
BD Holdings Limited
B.V. Group Group
US$ US$
Receivable by PetroNeft Group at 1
January 2013 639,251 -
Advanced during the year 15,000 -
Transactions during the year (7,774) -
Interest accrued in the year 32,222 -
Repaid during the year (37,936) -
Translation adjustment 3,767 -
---------------- --------------
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
Loans 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 31 December 2014 3,882,578 47,341,766
================ ==============
Balance at 31 December 2013 comprised
of:
Trade and other receivables 717,190 -
Trade and other payables (72,659) -
644,531 -
================ ==============
Balance at 31 December 2014 comprised
of:
Loan facility advanced - 46,398,502
Trade and other receivables 3,882,578 996,714
Trade and other payables - (53,450)
3,882,578 47,341,766
================ ==============
15. 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
2014 2013
US$ US$
Compensation of key management 2,068,014 1,799,937
Contributions to defined contribution
pension plan 65,923 40,784
Share-based payment expense 39,981 258,258
2,173,918 2,098,979
============== ===============
The total amount of unpaid fees and expenses due to Directors as at 31 December 2014 was US$561,348 (2013: US$400,036).
Details of transactions between the Group and other related parties are disclosed below.
Transactions with TBNG Group
Vakha Sobraliev, a Director of PetroNeft, is the principal of LLC Tomskburneftegaz ("TBNG") which has drilled production and exploration wells for the WorldAce Group (100% subsidiary of PetroNeft Group until 3 July 2014, and 50% joint venture afterwards). Various contracts for drilling have been awarded to TBNG in recent years. All drilling contracts with TBNG are "turnkey" contracts whereby TBNG assumes substantially all liabilities in relation to the health and safety, environmental and other risks associated with drilling operation. As part of this relationship PetroNeft Group companies also occasionally sell sundry goods and services to TBNG. Other companies related to TBNG also provide some services to the Group such as transportation, power management and repairs.
The following is a summary of the transactions between the WorldAce Group and the TBNG Group:
TBNG Group TBNG Group
2014 2013
US$ US$
Maximum value of new contracts awarded 4,494,543 -
during the year
Paid during the year for drilling and
related services 6,869,038 1,527,850
Paid during the year for other services 24,523 128,416
Amount due to TBNG and related companies
at year end 351,172 1,962,935
Received during the year for sundry
goods and services 37,271 49,445
Amount due from TBNG and related companies
at year end 400,970 10,122
=========== ===========
Other PetroNeft Group companies provided various services to TBNG Group during 2014 amounting to US$15,917 (2013: US$Nil). An amount of US$11,858 (2013: US$Nil) is outstanding from TBNG Group at 31 December 2014.
15. Related party disclosures (continued)
Transactions with TBNG Group (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
2014 2013
US$ US$
Maximum value of new contracts awarded - -
during the year
Paid during the year for drilling and 183,874 -
related services
Paid during the year for other services - -
Amount due to TBNG and related companies - -
at year end
Received during the year for sundry - -
goods and services
Amount due from TBNG and related companies
at year end 4,625 7,968
=========== ===========
16. Approval of financial statements
The 2014 consolidated financial statements were approved, and authorised for issue, by the Board of Directors on 18 June 2015.
17. Board approval
This announcement was approved by the Board of Directors of PetroNeft Resources plc on 22 June 2015.
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.
AMI Area of Mutual Interest. 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. CSR Corporate and Social Responsibility.
Custody Transfer Point Facility/location at which custody of oil transfers to another operator.
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 subsidiary undertakings. HSE Health, Safety and Environment. IAS International Accounting Standard. IFRIC IFRS Interpretations Committee. IFRS International Financial Reporting Standard. km Kilometres.
km(2) / 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.
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. 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
This information is provided by RNS
The company news service from the London Stock Exchange
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