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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Mayan Energy Limited | LSE:MYN | London | Ordinary Share | VGG5S26K1152 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.14 | 0.13 | 0.15 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Dec 2019 to Dec 2024
TIDMAOGL
RNS Number : 7468B
Attis Oil and Gas Ltd
11 June 2019
Mayan Energy Ltd / Index: AIM / Epic: MYN/ ISIN: VGG6622A1057 / Sector: Oil and Gas
11 June 2019
Mayan Energy Ltd ('Mayan' or 'the Company')
Final Results for the Year Ended 31 December 2018
Mayan Energy Ltd (AIM: MYN), the AIM listed oil and gas company, is pleased to announce its final results for the year ended 31 December 2018. The full audited Report and Accounts for the period under review will be available on the Company's website today at www.mayanenergy.com and are being posted to Shareholders. Extracts are set out below.
Highlights
-- Completion of full portfolio review and strategic development plan for core US onshore asset base focused on building a revenue generative, highly profitable oil and gas company
-- Core assets include Austin Field in Texas, Zink Ranch in Oklahoma and post period end the Fort Worth Basin
-- Robust corporate governance and financial/fiscal structure put in place across the business by strengthened Board to ensure returns are maximised and risks minimised:
o Non- Executive Chairman, Paolo Amoruso appointed providing strong US legal oil expertise
o Non-Executive Director, Sarah Cope appointed strengthening the board's governance
-- Rationalisation of US operations and consolidation of US corporate structure successfully executed
-- Settlement of multiple outstanding claims and potential lawsuits with creditors
Post Balance Date Highlights
-- Excluding P&A liabilities, 70% of liabilities as at 31 December have been settled
-- Re-negotiated terms of acquisition of Austin Field interests reducing the consideration payable to US$375,000 and increasing the working interest in six well package
-- Acquisition of Attis Oil & Gas Ltd, US onshore operator with 50% of 98 producing gas wells in Fort Worth Basin, Texas
-- Executive COO, Thom Board to join the board to lead US operations
-- Commencement of a six well workover programme and recommencement of production at Austin Field
-- Control of field operations at Zink Ranch field secured and commencement of workover programme
-- During May 2019 a mean average production of 131 Boepd and net mean average production of 93.8 Boepd
Charlie Wood, said, "2018 represents a year of progress for Mayan following changes in management and a review of the asset portfolio which resulted in decisions to pursue, monetise or dispose of certain assets. The addition of two new experienced board members has significantly strengthened the governance and controls required for a listed entity. Following the post balance date acquisition of Attis Oil & Gas, the Company now has an excellent platform and team in place from which to build a profitable oil business, and I look forward to providing further updates on our progress during the year ahead."
For further information visit www.mayanenergy.com or contact the following:
Hot Features
Premium
Charlie Wood Mayan Energy Ltd +44 20 7236 1177
Roland Cornish Beaumont Cornish Ltd +44 20 7628 3396
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James Biddle Beaumont Cornish Ltd +44 20 7628 3396
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Frank Buhagiar St Brides Partners Limited +44 20 7236 1177
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Gaby Jenner St Brides Partners Limited +44 20 7236 1177
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Colin Rowbury Novum Securities Limited +44 20 7399 9400
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Chairman's Statement
This is my first Chairman's Statement since my appointment as Non-Executive Chairman of the Company in October of 2018. I took on this role because I believed that with an effective corporate governance programme and the implementation of fiscal and financial discipline to our decision making, Mayan's assets had the potential to deliver value to its shareholders. During the last seven months our CEO, Charlie Wood, and I have been systematically working to implement the necessary processes to deliver that value.
We began with a thorough self-assessment of our finances and our assets, engaged strategic partners, cut unnecessary overhead, settled multiple outstanding claims and debts, and began the process of rebuilding the Company. I promised at the last shareholder's meeting that new additions to the board and management would only be implemented following a rigorous review and selection process. To that end, Sarah Cope came on board as a Non-Executive Director in December of 2018, bringing a depth of experience on governance matters and recently we announced as part of our acquisition of Attis Oil and Gas Ltd. ("Attis"), that Thom Board will be joining as Chief Operating Officer and Executive Director as well as Russell Lamming as a Non-Executive Director. Both Russell and Thom bring a wealth of experience in the energy arena and are highly experienced and respected executives.
On the asset side, our first priority was to capitalise on the opportunities identified across our core asset base following the comprehensive review Attis undertook over Mayan's existing portfolio of assets completed in December of 2018. The objective of this review was to high-rank our properties and determine the optimal allocation of our limited financial resources in order to maximise the Company's returns. The findings of this review led the Company to decide that the renamed Austin Field (a combination of the Austin Chalk field and the Stockdale field) and Zink Ranch would constitute our core portfolio. The Forest Hill field was determined to be non-core and we continue to assess our options with regards to those assets. Working alongside Attis, our attention was then focused on devising a development strategy with the primary aim of reworking our existing wells and recommencing production across the core US portfolio in the short term while keeping cost down to a minimum.
The portfolio review also confirmed that while the asset base is mainly comprised of late in life wells, the fundamentals of Mayan's core assets remain compelling and we believe that our operations team can unlock additional value. We also renegotiated the acquisition of the Austin Chalk well package from Smart Bit LLC in early January, reducing our cash constraints and increasing our interest in the field from 65% to 100% working interest in return for a 10% overriding royalty. We recently completed the initial rework of the Austin Field wells and are in the process of optimizing production while evaluating potential benefits of leasing and unlocking the Eagle Ford Shale formation. In Zink Ranch, following the settlement of our dispute with our operator, Glen Supply, we have begun the process with the Bureau of Indian Affairs ("BIA") in Osage County, Oklahoma, to transfer operatorship back to us. While this process can take up to 6 months or longer, we have an agreement in place with Glen Supply that allows us to begin work on the field. Zink Ranch consists of 18 active wells, a further 50 historic wells as well as two tank batteries and one gas sales point. We are currently on site evaluating the assets and implementing an initial workover in order to build production. Our current development plan is based on the same strategy as the Austin Field: evaluate the assets, conduct an initial workover and restart the wells, and, based on initial production numbers, begin a targeted workover strategy on the wells with the highest return potential. We believe that this plan will enhance the field's existing production through straightforward and low-cost initiatives.
As mentioned earlier, in conjunction with an operational review of our assets, we also undertook a rigorous assessment of the corporate governance and structure of the Company. This resulted in a significant cost cutting exercise that successfully reduced our overhead and established policies for good and effective corporate governance.
In order for us to grow, develop and become a revenue generative, producing oil and gas company, we recognised the importance of having an experienced, skilled team supporting both the operational and corporate parts of the business. The new additions to the Board complement well the existing skillsets and have resulted in a highly experienced Board. Further, the acquisition of Attis has provided the Company with an established, in-country operational team which significantly increases our depth of technical knowledge and experience.
The post period end acquisition of Attis Oil & Gas, a UK based, US onshore operator with a portfolio of producing gas wells in Texas neatly encapsulates what we have been looking to achieve. In terms of growing our assets, Attis's 50% joint venture ownership of the Fort Worth Field brings a portfolio of 98 producing gas wells in the Fort Worth field in Texas and increases our net acreage to 8,481 acres. In terms of revenues, the acquisition added 41 boepd to our overall production (at the time of acquisition) bringing the total to almost 100 barrels of oil equivalent per day and scaling up our monthly revenues to c. US$190,000. In terms of costs, acquiring Attis, our contract operator across all of our fields, made economic sense as we expect to save approximately US$20,000 per month due to the removal of current third-party operator fees. In terms of personnel, Attis brings an experienced oilfield operations team based out of Borger, Texas that will be invaluable as we manage the development of our assets, look to assess a number of additional internal development opportunities, and acquire additional properties. The acquisition of Attis is therefore an important step forward for Mayan as we focus on becoming profitable and growing our team and our assets in the US.
I am very pleased and proud of the progress we've made on all fronts in a very short period of time. The Board and management have been committed to turning Mayan around and believe now, with the addition of Thom and the operations team, we're poised to grow into a profitable business. The remainder of 2019 will be used to integrate our operations and begin to leverage the advantages provided to the Company through the acquisition of Attis in order to materially grow production and enhance our portfolio further.
I would like to take this opportunity to thank our team of advisors, my fellow Board members, and our shareholders for their patience and commitment to the Company at this pivotal moment in our history. I look forward to providing updates to shareholders throughout the year with regards to our progress.
Financial Review
The Company has reported a gross loss for the year of US$3,211,000 (2017: loss US$3,836,000). This loss, along with a reduction in the Company's gross assets from 2017, can largely be attributed to the impact of impairments against the financial assets. This gives rise to a loss per share of US$ 0.24 cents (2017: US$ 1.86 cents).
We were able to raise GBP4.086 million through a combination of brokered and internally organised fund raises and placings.
Outlook
This year has not been without significant challenges and accordingly, some difficult decisions had to be made regarding Mayan's management, portfolio, and strategy. We relinquished our interest in the Shoats Creek Field in Louisiana and shut down production as we re-assessed our asset base. Based on the third-party study conducted by Attis Oil and Gas, we are exploring options with regard to our Forrest Hill assets. We released all of our employees in the US as we sought to reduce our burn rate, tightly control our finances, and implement effective fiscal policies and corporate governance. We renegotiated contracts, settled numerous outstanding claims and potential lawsuits with creditors, closed more than 15 dormant entities, started preparing and filing US tax returns for the last four years, and began the process of settling outstanding liabilities with the US Internal Revenue Service for employment taxes. Post period end we filed the outstanding tax returns, paid the employee taxes to the IRS, further consolidated our entities and balance sheet, and resumed workovers in the Austin Field and Zinc Ranch.
All of this came at a cost. While we significantly cut expenses, salaries and overhead, we were forced to sell our shares in Block Energy at a loss and had to further dilute our shareholders in order to raise funds to settle claims and resume operations. Through this, Mayan has emerged a completely different company that ultimately led us to the post period end acquisition of Attis Oil and Gas. We feel that we're better equipped to grow with a stronger management, board, and a solid portfolio of development assets in Texas and Oklahoma, as well as additional exploration opportunities. We believe that this platform provides us with the opportunity to grow Mayan into a profitable company in the coming year. We further believe that our investment in Petroteq Energy is poised to yield significant returns for the Company. While its share price has been under pressure lately due to production delays and share dilutions to acquire prospective acreage, we continue to believe in the technology and the progress made to date. Our investment wasn't based on a 6 or 12 month horizon, but rather to provide us with a solid investment in what we believe to be ground-breaking technology. Further, we hold 1,035,233 warrants with a three year expiration date that we hope will also allow Mayan to further expand its position.
Having taken over the role of Chairman of Mayan in October of 2018, I would like to take this opportunity to sincerely thank our shareholders for their continued commitment to Mayan and the trust they placed on us to bring in a solid management and operational team and in turn re-build this company with the goal of becoming profitable during the coming year.
Paolo G. Amoruso Non Executive Chairman 10 June 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEARED 31 DECEMBER 2018
Year to Year to
31 December 31 December
2018 2017
Notes US$ 000's US$ 000's
Continuing operations
Revenue 4 104 30
Cost of sales (403) (237)
Gross loss (299) (207)
Administrative expenses
Impairment of property, plant
and equipment 10 - (2,064)
Impairment of financial assets
at fair value through profit or
loss 12 (1,126) -
Loss on sale of financial assets
at fair value through profit or
loss 12 (129) -
6,
Other administrative expenses 7 (1,659) (1,449)
Total administrative expenses (2,914) (3,513)
Operating loss (3,213) (3,720)
Other Income 19 -
Finance Income 3 - 4
Finance costs 3 (17) (120)
Loss before income tax (3,211) (3,836)
Income tax 9 - -
Loss after tax for the year (3,211) (3,836)
------------ --------------------
Other comprehensive income:
Items that may be subsequently
reclassified to profit or loss
Currency translation differences (12) (528)
------------ --------------------
Total comprehensive income for
the year (3,223) (4,364)
------------ --------------------
Restated for
post consolidation
Earnings per share US cents US cents
-Basic & diluted (US cents per
share) 5 (0.24) (1.86)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
YEARED 31 DECEMBER 2018
31 December 31 December
2018 2017
Note US$ 000's US$ 000's
ASSETS
Non-current assets
Property, plant and equipment 10 1,522 990
------------ ------------
Total non-current assets 1,522 990
Current assets
Trade and other receivables 11 43 320
Financial assets at fair value through
profit or loss 12 419 1,626
Cash and cash equivalents 143 803
Total current assets 605 2,749
TOTAL ASSETS 2,127 3,739
------------ ------------
LIABILITIES
Current liabilities
Trade and other payables 13 (767) (893)
Provisions 16 (284) (588)
Total current liabilities (1,051) (1,481)
Non-current liabilities
Provisions 16 (563) (663)
Total non-current liabilities (563) (663)
TOTAL LIABILITIES (1,614) (2,144)
------------ ------------
NET ASSETS 513 1,595
============ ============
EQUITY ATTRIBUTABLE TO OWNERS OF
THE PARENT
Share capital 15 - -
Share premium 15 40,789 38,946
Foreign exchange reserve 15 (125) (113)
Revenue acquisition reserve 15 (8,202) (8,202)
Retained losses 15 (31,949) (29,036)
TOTAL EQUITY 513 1,595
============ ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEARED 31 DECEMBER 2018
Attributable to the owners of the parent
--------------------------------------------------------------------------
Share Share Foreign Reverse Retained Sub Non Total
capital premium currency acquisition losses total -controlling
translation reserve interests
reserve
US$ US$ US$ US$
000's US$ 000's US$ 000's US$ 000's US$ 000's 000's 000's 000's
--------------- ---------- ---------- ------------- ------------- ---------- -------- ------------- --------
Balance as at
1 January
2017 - 33,126 415 (8,202) (25,832) (493) 307 (186)
--------------- ---------- ---------- ------------- ------------- ---------- -------- ------------- --------
Loss for the
year - - - - (3,836) (3,836) - (3,836)
Other
comprehensive
income
for the
year-currency
translation
differences - - (528) - - (528) - (528)
Total
comprehensive
income - - (528) - (3,836) (4,364) - (4,364)
Share capital
issued - 6,705 - - - 6,705 - 6,705
Cost of share
issue - (560) - - - (560) - (560)
Cost of share
issue -issue
of warrants - (325) - - 325 - - -
Reversal of
NCI on
disposal
of interest - - - - 307 307 (307) -
Total
transactions
with
owners,
recognised
directly
in equity - 5,820 - - 632 6,452 (307) 6,145
Balance as at
31 December
2017 - 38,946 (113) (8,202) (29,036) 1,595 - 1,595
========== ========== ============= ============= ========== ======== ============= ========
Loss for the
year - - - - (3,211) (3,211) - (3,211)
Other
comprehensive
income
for the year
- currency
translation
differences - - (12) - - (12) - (12)
Total
comprehensive
income
for the year - - (12) - (3,211) (3,223) - (3,223)
Share capital
issued - 2,211 - - - 2,211 - 2,211
Cost of share
issue - (70) - - - (70) - (70)
Cost of share
issue -issue
of warrants - (298) - - 298 - - -
Total
transactions
with
owners,
recognised
directly
in equity - 1,843 - - 298 2,141 - 2,141
Balance as at
31 December
2018 - 40,789 (125) (8,202) (31,949) 513 - 513
========== ========== ============= ============= ========== ======== ============= ========
CONSOLIDATED CASH FLOW STATEMENT
YEARED 31 DECEMBER 2018
Year to Year to
31 December 31 December
2018 2017
Notes US$ 000's US$ 000's
Cash flows from operating activities:
Loss for the year before taxation (3,211) (3,836)
Adjustments for:
Impairment 10,12 1,126 2,064
Finance cost 3 17 120
Finance income 3 - (4)
Loss on sale of disposal of financial
assets at fair value through profit
or loss 12 129 -
Share based payments 125 -
Foreign exchange (36) (236)
Change in working capital items:
Decrease in inventories - 31
(Increase)/Decrease in trade and
other receivables 11 (7) 38
Decrease in trade and other payables 13 (60) (642)
Net cash outflow used in operating
activities (1,917) (2,465)
------------ ------------
Cash flows from investing activities
Purchase of Investments - (1,035)
Purchases of property, plant, and
equipment 10 (302) (491)
Proceeds from disposal of financial 260 -
assets at fair value through profit
or loss
Net cash used in investing activities (42) (1,526)
------------ ------------
Cash flows from financing activities
Proceeds from issue of share capital 1,386 5,315
Share issue costs (70) (560)
Net finance costs 3 (17) (116)
Net cash inflow from financing
activities 1,299 4,639
------------ ------------
Net (decrease)/increase in cash
and cash equivalents (660) 648
Cash and cash equivalents at beginning
of year 803 155
Cash and cash equivalents at end
of year 143 803
============ ============
Major Non-Cash Transactions
Directors fees of US$ 150,000 were settled through share based payments.
Part of the payment for the 5 Austin Chalk wells acquisition was settled through the issuance of shares valued at
$US 230,000.
Payments for operating costs totalling USD$ 125,000 were settled through the issue of equity.
Creditors of USD$ 320,000 were settled through the issue of equity.
Refer to note 17 for further detail.
NOTES TO THE FINANCIAL STATEMENTS
YEARED 31 DECEMBER 2018
1. General Information
The principal activity of Mayan Energy Limited ('The Group') during the year was as an oil & gas exploration and production business focussed in the United States of America. The Group was incorporated in the British Virgin Islands on 13 May 2010 as a private limited company with the name Everest Energy Limited. As at the year end, the Group was domiciled in the British Virgin Islands and listed on the AIM market of the London Stock Exchange.
Summary of significant accounting policies
2.1. Basis of Preparation
The Consolidated Financial Statements have been prepared under the historical cost convention, as modified for financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and in accordance with International Financial Reporting Standards (IFRSs) and International Financial Reporting Interpretations Committee (IFRIC) interpretations, as adopted by the EU. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented unless otherwise stated.
The Consolidated Financial Statements are presented in thousands of US Dollars (US$ 000's). US Dollars is also the functional currency.
2.2 New standards, amendments and interpretations adopted by the Group
At the date of authorisation of these financial statements, the following standards and interpretations, were in issue but not yet effective, and have not been early adopted by the Group:
standard / interpretation impact on initial application effective date
-------------------------- --------------------------------- ----------------
IFRS 16 Leases 1 January 2019
========================== ================================= ================
Annual Improvements Amendments to: IFRS 1 First-time 1 January 2017
to IFRSs: 2014-2016 Adoption of International (IFRS 12)* /
Cycle Financial Reporting Standards, 1 January 2018
IFRS 12 Disclosure of Interests (IFRS 1 and
in Other Entities, IAS 28 IAS 28)
Investments in Associates
========================== ================================= ================
IFRIC Interpretation Uncertainty over Income Tax 1 January 2019
23 treatments
========================== ================================= ================
*Effective dates provided are the IASB effective dates. EU effective dates are yet to be confirmed.
Whilst the Directors do not anticipate the adoption of these standards and interpretation in future reporting periods will have a material impact on the Group's financial statements.
New standards implemented in the period
New and amended standards mandatory for the first time for the year beginning 1 January 2018
The following new IFRS standards and/ or amendments are mandatory for the first time of the Company:
-- IFRS 9 - Financial Instruments (effective 1 January 2018) -- IFRS 15 - Revenue (effective 1 January 2018)
-- IFRS 2 (amendments) - Share based payments - classification and measurement (effective 1 January 2018)
-- Annual Improvements 2014-2016 Cycle
-- IFRIC Interpretation 22 - Foreign currency transactions and advanced consideration (effective 1 January 2018)
IFRS 9 became effective for all periods beginning on or after 1 January 2018 and as such is relevant for the year ended 31 December 2018. IFRS 9 impacts the recognition, classification and measurement and disclosures of financial instruments. The financial instruments held in the Group are financial assets at fair value through profit or loss, trade and other receivables and payables. Financial assets at fair value through profit or loss are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through the profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. Under IFRS 9 trade and other receivables and payables should continue to be measured at amortised cost and as such there is no changes in the numbers presented under the old standards.
IFRS 15 became effective for all periods beginning on or after 1 January 2018 and as such is relevant for the year ended 31 December 2018. The Company has elected to apply the 'modified retrospective' approach to transactions permitted by IFRS 15 under which the comparative financial information is not restated. Given the nature of Mayan's oil marketing and sales arrangements with control passing to the customer upon transfer of physical possession, Mayan principally satisfies its performance obligations at a point in time as opposed to over a period of time. Therefore, the accounting of revenue under IFRS 15 did not have a material effect on the Group's financial statements as at 1 January 2018 and so no transition adjustment has been made. The Standard has not had a material impact on the Group's accounting policy in respect of revenue as previously disclosed in the 2017 financial statements.
Revenue from contracts with customers is presented in Note 4. Amounts presented for comparative periods in 2017 include revenue determined in accordance with the Group's previous accounting policies relating to revenue. The total amounts presented do not, therefore, represent the revenue from contracts with customers that would have been reported for those periods had IFRS 15 been applied using a fully retrospective approach to transaction, as there would have been no impact.
Of the other IFRSs and IFRICs, none are expected to have a material effect on future Company financial statements.
2.3 Basis of Consolidation
The consolidated Financial Statements consolidate the Financial Statements of Mayan Energy Limited and the Financial Statements of its subsidiary undertakings made up to 31 December 2018.
Subsidiaries are entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in the Statement of Comprehensive Income. Any investment retained is recognised at fair value at the date when control is lost.
The group comprises of the following entities:
Name Interest Country of Incorporation Nature of Business
Direct
Mayan Energy Limited 100% Cayman Islands Holding Company
Indirect
Northcote USA Inc. 100% USA Holding Company of USA Interests
Northcote Services LLC* 100% USA Administrative Company
Mayan Energy USA LLC 100% USA Administrative Company and holds Austin Field and
Forrest Hill
Northcote Oklahoma LLC* 100% USA
Oklahoma Energy LLC* 100% USA
Northcote Cleveland LLC* 100% USA Holds Zink Ranch interest
Northcote Osage LLC* 100% USA Dormant
NAP USA Inc. 100% USA Dormant
Name Interest Country of Incorporation Nature of Business
Northcote Energy Mexico S de RL de CV LLC * 100% Mexico Dormant
Mayan Drilling Fluids S.A.P.I. de CV * 100% Mexico Dormant
Springer Energy Development LLC * 33% USA General Partner of Springer
Energy Partners, LP
*An LLC is not a corporation, but is a legal form of company that affords limited liability to Northcote, its owner and general manager.
**An LP is not a corporation, but is a legal form of partnership that affords the partners limited liability and is managed by a general manager.
Registered office for Cayman registered company: Nemours Chambers, Road Town, Tortola, VG1110 BVI
Registered office for USA registered companies: 8584 Katy Fwy, Suite 103, Houston, TX 77024
Registered office for Mexico registered companies: Rio Panuco 43, Col. Cuauhtemoc, Mexicom D.F. 06500
Except for entities connected with the Texas and Oklahoma assets, the majority of the companies are dormant and it is the Group's intention to move to liquidate them or strike them off in the near term.
2.4 Going Concern
The financial statements have been prepared assuming the Group will continue as a Going Concern. This assessment has been made on the Group's economic prospects in its financial forecasts. In assessing whether the going concern assumption is appropriate the Directors have taken into account all available information for the foreseeable future; in particular for the 12 months from the date of approval of the financial statements. This includes:
-- future cash flows based on management prepared forecasts; -- receipt of monies from oil and gas sales; and -- successful settlement of interest and penalties for unpaid payroll taxes.
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and, therefore, can continue to adopt the going concern basis of preparation in these financial statements.
The Financial Statements do not include any adjustments that may be required should the Group be unable to continue as a going concern.
2.5 Operating segments
Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision Maker ("CODM"). The CODM is responsible for allocating resources and assessing performance of the operating segments, whilst it is the Directors of the Group that make the strategic decisions and have been designated as the CODM.
2.6 Financial assets
a) Classification
The Group has classified all of its financial assets as loans and receivables or available for sale financial investments. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading and include investments the Board of Directors expect to trade within the next 12 months. Details of these assets and their fair value is included in note 8.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of Financial Position. Loans and receivables are initially recognised at fair value plus transaction costs and are subsequently carried at amortised cost using the effective interest method, less provision for impairment.
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired, and impairment losses are recognised, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event"), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated.
The criteria that the Group uses to determine whether there is objective evidence of an impairment loss include:
-- significant financial difficulty of the issuer or obligor; and -- a breach of contract, such as a default or delinquency in interest or principal repayments.
The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset's original effective interest rate. The asset's carrying amount is reduced, and the loss is recognised in the Statement of Comprehensive Income.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the Statement of Comprehensive Income.
b) Recognition and measurement
Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the Income Statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Available for sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are presented in the Statement of Comprehensive Income as 'disposal of financial assets at fair value through profit or loss' in the period in which they arise.
2.7 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and current balances with banks and similar institutions, which are readily convertible to known amounts of cash. Cash equivalents are highly liquid amounts that are readily convertible to a known amount of cash.
2.8 Trade and other payables
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.
2.9 Equity
Equity comprises the following:
-- "Share premium" represents the premium paid on Ordinary Shares issued of no par value
-- "Foreign currency translation reserve" includes movements that relate to the retranslation of the subsidiaries whose functional currencies are not the US Dollar.
-- "Reverse acquisition reserve" represents the reserve created in respect of the reverse acquisition difference between the equity structure of the legal parent and the acquired entity.
-- "Retained earnings" represents retained profits or losses. 2.10 Related Parties
Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals (being members of key management personnel, significant shareholders and/or their close family members) or other entities and include entities which are under significant influence of related parties of the Group where those parties are individuals, and any entity that is a related party of the Group.
2.11 Foreign Currency Translation
Functional and presentational currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The Financial Statements are presented in US Dollars (US$). The parent company's functional currency is Pounds Sterling (GBP) and the subsidiary entities functional currency is US Dollars (US$). On consolidation of entities with a non-US Dollar presentational currency, their statements of financial position are translated into US Dollar at the closing rate and income and expenses at the average monthly rate. Share capital is translated into the presentational currency of the Group (US$) using the exchange rate prevailing at the dates of the transactions.
All resulting exchange differences arising in the period are recognised in other comprehensive income, and cumulatively in the Group's translation reserve. Such translation differences are reclassified to profit or loss in the period in which any such foreign operation is disposed of.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the Consolidated Statement of Comprehensive Income.
2.12 Share based payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The equity-settled share-based payments are expensed to the consolidated statement of comprehensive income.
Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is charged with the fair value of goods and services received on a straight line basis over the vesting period based on the Group's estimate of shares that will eventually vest, except where it is in respect to costs associated with the issue of equity, in which case it is charged to the share premium account.
2.13 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured and when it is probable that future economic benefit will flow to the entity. The Group bases its estimate of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Revenue represents the sale value of the Group's share of oil and the income from technical services to third parties. Revenues are recognised when crude oil has been lifted and title passed to the buyer or when services are rendered. Under Mayan's oil marketing and sales arrangements control passes to the customer upon transfer of physical possession, and as such Mayan principally satisfies its performance obligations at a point in time as opposed to over a period of time.
2.14 Taxation
Income tax expense represents the sum of the current tax payable and deferred tax. The current tax payable is based on taxable profit for the year. Taxable profit or loss differs from net profit or loss as reported in the consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Tax is charged or credited in the consolidated statement of comprehensive income, except when it relates to items charged or credited directly to equity or in other comprehensive income, in which case the tax is also dealt with in equity or other comprehensive income respectively. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base used in the computation of taxable profit or loss. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on tax rates and laws substantively enacted by the reporting date. Deferred tax assets and liabilities are offset when there exists a legal and enforceable right to offset and they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
2.15 Business combinations
Except as described below, the acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the criteria for recognition under IFRS 3 (Revised) are recognised at their fair value at the acquisition date. Acquisition costs are expensed.
Mayan Energy Limited (formerly Northcote Energy Limited) was incorporated as an investment vehicle focussed on the completion of a natural resources acquisition.
On 14 January 2014, the Company acquired 100% of the issued share capital of Northcote Energy Limited, Cayman Islands ("Northcote CI"), a US focussed on-shore oil and gas Group, for a consideration of US$ 10.4 million to be satisfied by the issue of 645,084,519 new Shares to the Sellers.
In accordance with IFRS 3 (Revised) the acquisition represented a reverse acquisition. As a reverse acquisition, the acquisition date fair value of the consideration transferred by Northcote Energy Limited was based on the number of equity instruments that Northcote CI would have had to issue to the owners of Northcote Energy Limited to give the owners of Northcote Energy Limited the same percentage of equity interests that result from the reverse acquisition.
The cost of the combination was calculated using the fair value of all the pre-acquisition issued equity instruments of Northcote Energy Limited at the date of acquisition. The fair value of the share consideration was based on the latest share transaction of Northcote Energy CI from October 2012 of GBP0.17 immediately prior to the acquisition. Goodwill of US$ 1,273,000 was expensed immediately on acquisition and all the acquisition related costs were also expensed in accordance with IFRS 3 (Revised).
2.16 Property, plant and equipment - ("D&P Assets")
Capitalisation
D&P Assets are accumulated into single field cost centres and represent the cost of developing the commercial reserves and bringing them into production. From time to time different scenarios occur that call for specific policy guidance.
The following specific policies are applied by the Group:
-- CGUs ("Cash Generating Units") - The Group has defined its CGUs as assets or groups of assets representing the smallest identifiable segments generating cash flows that are largely independent of cash flows from other assets or groups of assets. As defined, each CGU includes the relevant properties, wells, facilities, pipelines and other key components of the included operations.
-- Dry Hole Costs - Dry hole costs are included in the capitalised costs of the field and would therefore be included in any impairment tests conducted, as described below.
-- Water Injection/Disposal Wells - The Group may convert an existing well into a water injection or disposal well. At the time of conversion, all costs associated with the asset are transferred to facility costs. Any capitalisable costs incurred thereafter will be included as facility costs.
-- Allocated Costs - Costs such as G&G, Seismic, Capitalised General and Administrative costs, financing costs, etc. which may cover multiple countries, business segments, CGUs or other assets will be allocated to the appropriate CGUs during the period in which the costs were incurred.
Impairment of D&P Assets
A review is performed for any indication that the value of the Group's D&P assets may be impaired such as:
-- significant changes with an adverse effect in the market or economic conditions; or
-- obsolescence or physical damage of an asset; an asset becoming idle or plans to dispose of the asset before the previously expected date; or
-- evidence is available from internal reporting that indicates that the economic performance of an asset is or will be worse than expected.
For D&P assets when there are such indications, an impairment test is carried out at a CGU level.
When an impairment is identified, the depletion is charged through the statement of comprehensive income if the net book value of capitalised costs relating to the cash generating unit exceeds the associated estimated future discounted cash flows of the related commercial oil reserves.
The Group accounts for D&P assets in accordance with the provisions of IAS 16 following the full cost accounting principles. The Group will continue to monitor the application of its policy with respect to any future guidance on accounting for oil and gas activities which may be issued.
Workovers/overhauls and maintenance
From time to time a workover, overhaul or maintenance of existing D&P assets is required, which normally fall into one of two distinct categories. The type of workover dictates the accounting treatment and recognition of the related costs:
Capitalisable costs
Costs will be capitalised where the performance of an asset is improved, where an asset being overhauled is being changed from its initial use, the assets useful life is being extended, or the asset is being modified to assist the production of new reserves. The asset will then be subject to depreciation.
-- If the workover is being performed on an asset which has been the subject of a previous workover, the net book value of costs previously capitalised will be derecognised and charged to cost of sales at the same time as the subsequent capitalisable workover expenditures are being recognised as part of the asset's revised carrying value.
-- If the workover replaces parts, equipment or components of an asset or group of assets, and these replacement items qualify for capitalisation, then the original cost of those parts or equipment, including related installation and set up costs that were capitalised as part of the original asset, will be derecognised and charged to cost of sales in the consolidated statement of comprehensive income. In the event that the original cost of parts, equipment or components being replaced are not reasonably identifiable, the cost of the new items, adjusted for inflation, may be deemed adequate for consideration as the original cost.
Non-capitalisable costs
Expense type workover costs are costs incurred such as maintenance type expenditures, which would be considered day-to-day servicing of the asset. These types of expenditures are recognised within cost of sales in the consolidated statement of comprehensive income as incurred. Expense workovers generally include work that is maintenance in nature and generally will not increase production capability through accessing new reserves, producing from a new zone or significantly extend the life or change the nature of the well from its original production profile.
Decommissioning
Provision is made for the cost of decommissioning assets at the time when the obligation to decommission arises. Such provision represents the estimated liability for costs which are expected to be incurred in removing production facilities and site restoration at the end of the producing life of each field.
2.17 Critical Accounting Estimates and Judgements
Use of Estimates and Judgements
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results.
A) Carrying value of Property, Plant and Equipment (Note 10)
At 31 December 2018, mineral leases and capitalised daily costs and equipment on producing properties have a total carrying value of US$ 1,522,000 (2017: US$ 990,000). Management tests annually whether the assets have future economic value in accordance with the accounting policies. These assets are also subject to an annual impairment review.
The recoverable amount of each property has been determined based on judgement surrounding oil and gas price (circa US$50-60) per barrel and the expectated timing as to when the wells will commence production (circa May 2019). These estimates and judgements are subject to uncertainty and changes in circumstance may impact the recoverable amount.
B) Decommissioning provision (Note 16)
The Group has decommissioning obligations in respect of its interests. The full extent to which a provision is required depends on the legal requirements at the time of decommissioning, the costs and timing of any decommissioning works.
The decommissioning provision is updated each year to reflect management's best estimates based on the current economic environment of the key assumptions used. Actual decommissioning costs will ultimately depend upon future market prices for the necessary decommissioning works required, which will reflect market conditions at the relevant time. Furthermore, the timing of decommissioning is likely to depend on when the fields cease to produce at economically viable rates. This in turn will depend upon future oil and gas prices, which are inherently uncertain.
The key inputs used by Management in calculating the decommissioning provision are the number of wells both currently and previously in production, for which at the end of the life of the well the Group will have the obligation to plug and abandon, and the estimated cost per well of plugging and abandoning the well. Senior technical personnel estimate the per well decommissioning cost based on previous cost history as well as knowledge of the current market cost environment.
C) Share based payments (Note 14)
The Group has made awards of options and warrants over its unissued capital. The valuation of these options and warrants involves making a number of estimates relating to price volatility, future dividend yields, expected life and forfeiture rates. Options and warrants are valued using the Black Scholes method. Volatility is calculated by measuring the historical volatility of the Company's share price over the life of the option or warrant. This volatility measurement method is normal accepted industry practise and Management deems it appropriate to adopt for Mayan.
D) Payroll tax provision (Note 16)
The Group has payroll tax liabilities dating back to 2014 which are included in trade and other payables and provisions.
The Group has estimated the additional amounts which will be payable to the US State in terms of penalties and interest in terms of the penalties due as follows:
-- Failure to file (25% per year) -- Failure to deposit (10% per year) -- Interest on payable (0.5% per month)
E) Financial assets at fair value through profit or loss (Note 12)
Financial assets at fair value through profit or loss have a carrying value of $419,000 at 31 December 2018 following equity share acquisitions in the year. An impairment charge of $1,126,000 (2017: Nil) has been recognised in the year.
The Group follows the guidance of IFRS 9 to determine when a financial asset at fair value through profit or loss is impaired. This determination requires significant judgement. In making this judgement, the Company evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost; and the financial health of the short-term business outlook for the investee, including factors such as industry and sector performance and operational and financing cash flow.
3. Finance income and Finance costs
2018 2017
Finance income US$ 000's US$ 000's
---------- ----------
Income on cash and cash equivalents - 4
- 4
========== ==========
2018 2017
Finance costs US$ 000's US$ 000's
---------- ------------
Bank charges and finance expense on
borrowings 17 120
17 120
========== ============
4. Segmental analysis
As the Group made investments during the year in order to commence the establishment of a strategic portfolio of investments in listed and unlisted entities in the oil and gas sector, the Directors believe the operations of the Group now comprise two operating segments. The other segment comprising the production, development and sale of hydrocarbons and related activities in the USA.
Information per the segments reportable to the Chief Operating Decision Maker are as follows:
2018 USA Investments Total
$ 000's $ 000's $ 000's
Revenues 104 - 104
Interest expense 17 - 17
Impairment of assets - 1,126 1,126
Reportable segment assets 1,708 419 2,127
Reportable segment liabilities 1,614 - 1,614
2017 USA Investments Total
$ 000's $ 000's $ 000's
Revenues 30 - 30
Interest expense 120 - 120
Impairment of assets 2,064 - 2,064
Reportable segment assets 1,829 1,910 3,739
Reportable segment liabilities 2,144 - 2,144
The comparative segmental analysis related to one segment only being the production, development and sale of hydrocarbon and related activities in the USA. As said, this is the same as the information in the prior year primary statements and supporting notes. As such no separate analysis is shown here.
Revenue sales are all made to one key customer (2017: one key customer).
5. Earnings per Share
Basic earnings per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
2018 2017
Earnings per share US$ 000's US$ 000's
-------------------------------------------- -------------- ------------
Loss attributable to owners of the parent (3,211) (3,836)
Weighted average number of ordinary shares
in issue 1,312,110,098 206,124,133
Earnings per share (cents) (0.24) (1.86)
In accordance with International Accounting Standard 33 'Earnings per share', no diluted earnings per share is presented as the Group is loss making.
6. Expenses by nature
The Group's operating loss is stated after charging:
2018 2017
Expenses by nature US$ 000's US$ 000's
------------------------------------------- ---------- ----------
Auditors' remuneration - audit services 56 46
Professional and consulting fees 692 345
Travel and accommodation 106 141
Impairment of financial assets at
fair value through profit or loss 1,126 2,064
Rent and office costs 385 41
Staff costs (including share-based
payments) 451 857
Loss on financial assets at fair value
through profit and loss 129 -
Joint Brokers & Nomad 101 354
Legal fees 148 21
Other expenses and foreign exchange (79) (156)
Net movement in decommissioning provision (201) (200)
Total 2,914 3,513
========== ==========
During the year a number of creditor balances were settled for less than their stated amount with the balance going against the individual expense line to which it originally related.
7. Staff Costs (including Directors)
The Group employed an average number of 6 members of staff, including 4 directors (2017: 5 and 3 respectively).
2018 2017
Staff costs (including Directors) US$ 000's US$ 000's
Directors remuneration 279 428
Staff costs 172 429
451 857
========== ==========
The 2017 Staff costs includes an expense for payroll taxes payable of $163,000 which relates to previous periods.
Key management of the Group are considered to be the Directors and the remuneration of those in office during the year was as follows:
Key management remuneration Short Other Directors Total Total
term employee long term other
benefits benefits benefits
2018 2017
US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's
Paulo G. Amoruso 8 - - 8 -
Charlie Wood 155 - - 155 118
JD Mc Graw 48 - - 48 90
Sarah Cope 3 - - 3 -
Eddie Gonzalez 65 - - 65 220
Total Key Management 279 - - 279 428
=============== =========== ========== ========== ==========
8. Financial Risk Management
The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group's overall risk management programme seeks to minimise potential adverse effects on the Group's financial performance. Risk management is carried out by the Board.
General objectives, policies and processes
The Directors have overall responsibility for the determination of the Company's risk management objectives and policies. Further details regarding these policies are set out below:
Financial instruments by category
The accounting policies for financial instruments have been applied to the line items below:
31 December 2018 Total
US$ 000's
------------------------------------ ----------
Assets
Cash and cash equivalents 143
Trade and other receivables 43
------------------------------------ ----------
Total assets measured at amortised
cost 186
------------------------------------ ----------
Financial assets at fair value
through profit or loss 419
------------------------------------ ----------
Total assets at fair value through
profit or loss 419
------------------------------------ ----------
Liabilities
------------------------------------ ----------
Trade and other payables 767
------------------------------------ ----------
Total liabilities measured at
amortised cost 767
------------------------------------ ----------
31 December 2017 Total
US$ 000's
------------------------------------ ----------
Assets
Cash and cash equivalents 803
Trade and other receivables 320
------------------------------------ ----------
Total assets measured at amortised
cost 1,123
------------------------------------ ----------
Financial assets at fair value
through profit or loss 1,626
Total assets at fair value through
profit or loss 1,626
Liabilities
Trade and other payables 893
------------------------------------ ----------
Total liabilities measured at
amortised cost 893
------------------------------------ ----------
(a) Market Risk
Foreign exchange risk
The Group operates principally in the US but is exposed to foreign exchange risk arising from currency exposures, primarily with respect to the British Pound. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.
As at 31 December 2018 the exposure to this risk is not considered material to the Group's operations and thus the Directors consider that, for the time being, no hedging or other arrangements are necessary to mitigate this risk and as a result of this not being considered material no disclosure has been made in this respect.
Oil price risk
While the return on the Group's operations and investments is US$ denominated, changes in Oil and Gas prices impact on the viability of its operations and also the ease with which the Group can raise capital.
(b) Credit Risk
The Group has policies in place to ensure that sales of products are made to customers with appropriate credit worthiness. The Group limits credit risk by assessing creditworthiness of potential counterparties before entering into transactions with them and continuing to evaluate their credit-worthiness after transactions have been initiated.
Where appropriate, the use of prepayment for product sales limits the exposure to credit risk. There is no difference between the carrying amount of trade and other receivables and the maximum credit risk exposure.
Credit risk also arises from cash and cash equivalents. The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk. The Group will only keep its holdings of cash and cash equivalents with institutions which have a minimum credit rating of 'B'.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at December 31, 2018 and 2017 were as follows:
2018 2017
US$ 000's US$ 000's
----------------------------- ---------- ----------
Assets
Cash and cash equivalents 143 803
Trade and other receivables 43 320
----------------------------- ---------- ----------
Total 186 1,123
----------------------------- ---------- ----------
(c) Liquidity Risk
Management of liquidity risk is achieved by monitoring budgets and forecasts against actual cash flows. Where the group entered into borrowings during the year, management monitored the repayment and servicing of these arrangements against the contractual terms and reviewed cash flows to ensure that sufficient cash reserves were maintained.
(d) Capital Risk Management
The Directors determine the appropriate capital structure of the Group, specifically, how much is raised from shareholders (equity) and how much is borrowed from financial institutions (debt), in order to finance the Group's business strategy.
The Group's policy as to the level of equity capital and reserves is to ensure that it maintains a strong financial position and gearing ratio which provides financial flexibility to continue as a going concern and to maximise shareholder value. The capital structure of the Group consists of shareholders' equity together with net debt (where relevant). The Group's funding requirements are met through a combination of debt, equity and operational cash flow.
(e) Fair Value Estimation
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
-- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).
-- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
The fair values for the Group's assets and liabilities are not materially different from their carrying values in the financial statements.
The following table presents the Company's financial assets that are measured at fair value:
31 December 2018: Level 1 Level 2 Level 3 Total
US$ 000's US$ 000's US$ 000's US$ 000's
Financial assets
at fair value through
profit or loss
Trading Securities 419 - - 419
31 December 2017: Level 1 Level 2 Level 3 Total
US$ 000's US$ 000's US$ 000's US$ 000's
Financial assets
at fair value through
profit or loss
Trading Securities - - 1,626 1,626
The Company does not have any liabilities measured at fair value. There have been no transfers in to or transfers out of fair value hierarchy levels in the period.
(i) Financial instruments in level 1
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in Level 1.
(ii) Financial instruments in level 2
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
(iii) Financial instruments in level 3
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. As permitted under IFRS 13 the cost model has been used to fair value the investments if cost is considered to represent fair value. This is because there is a lack of sufficient appropriate information on which to base an alternative valuation technique for the investments. The income and market valuation models are not thought to be appropriate due to the type of investments. Management may allow for an impairment of any of the investments where the realisable value is believed to be less than the carrying value. Management made an impairment charge of $1,126,000 against the value of level 3 assets in 2018 (2017: $nil).
The following table presents the changes in level 3 instruments for the year.
2018 2017
US$ 000's US$ 000's
---------------------------------- ---------- ----------
Opening balance 1,626 -
Additions into level 3 - 1,626
Impairment of level 3 (Note 12) (1,126) -
Disposals from level 3 (Note 12) (405) -
Foreign exchange 324 -
Transfers into level 1 (419)
---------- ----------
Closing balance - 1,626
========== ==========
9. Taxation
Taxation 2018 2017
--------------------------------
US$ 000's US$ 000's
-------------------------------- ---------- ----------
Current income tax charge - -
Deferred tax charge/ (credit) - -
Total taxation charge/ (credit) - -
========== ==========
Taxation reconciliation
The charge/(credit) for the year can be reconciled to the loss per the consolidated statement of comprehensive income:
2018 2017
Tax Reconciliation US$ 000's US$ 000's
------------------------------------------------------------------------------- ---------- ----------
Loss before income tax (3,211) (3,836)
Tax on loss at the weighted average Corporate tax rate of 26.5% (2017: 26.5%) (851) (1,017)
Effects of:
Tax losses carried forward 851 1,017
Total income tax expense - -
========== ==========
2018 2017
Unprovided deferred tax asset: US$ US$
000's 000's
----------------------------------------------------------- ------- -------
Group tax losses carried forward amount to US$
22.1M (2017: US$ 21.2 M) as determined by cumulative
losses multiplied by the US standard rate of corporation
tax 21% (2017: 21%). 4,643 4,452
======= =======
The deferred tax asset has not been provided for because of uncertainty over the timing of future taxable profits against which the losses may be offset.
10. Property, plant & equipment
Property, plant Other Tangible Assets under Development Total
and equipment Assets construction and production
assets
US$ 000's US$ 000's US$ 000's US$ 000's
Cost
At 1 Jan 2017 11 955 13,437 14,403
Additions - - 491 491
Disposal - - - -
At 31 December
2017 11 955 13,928 14,894
--------------- -------------- ---------------- ----------
Additions - - 532 532
Disposal - - - -
At 31 December
2018 11 955 14,460 15,426
=============== ============== ================ ==========
Depreciation
and impairment
charge
At 1 Jan 2017 (2) (955) (10,883) (11,840)
--------------- -------------- ---------------- ----------
Impairment (9) - (2,055) (2,064)
Charge for the
year - - - -
-------------- ---------------- ----------
At 31 December
2017 (11) (955) (12,938) (13,904)
--------------- -------------- ---------------- ----------
Impairment - - - -
Charge for the
year - - - -
At 31 December
2018 (11) (955) (12,938) (13,904)
=============== ============== ================ ==========
Net book value
At 31 December
2018 - - 1,522 1,522
=============== ============== ================ ==========
At 31 December
2017 - - 990 990
=============== ============== ================ ==========
Property, plant and Other Tangible Assets Development Total Total
equipment: Assets under construction and production 2018 2017
Analysis of NBV assets
by project
US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's
Zink Ranch - - 500 500 500
Stockdale - - 342 342 260
Forrest Hill - - 280 280 230
Austin Chalk - - 400 400 -
At 31 December 2018 - - 1,522 1,522 990
================ ===================== ================ ========== ==========
Impairment
At year end, Management review each exploration project for any indication of impairment. Indications would include sustained changes in the oil and gas price outlook, written off wells, changes in management's development plan and the relinquishment of development acreage. The principle influences on management's decision to impair the properties are described below:
Oil price
According to the US Energy Information Administration ('EIA'), crude oil prices for West Texas Intermediate ('WTI') are expected to remain in the $60 - $63 range for 2019 and 2020. The EIA also expects Henry Hub natural gas spot prices will average $2.79/million British thermal units (MMBtu) in 2019 and $2.78/MMBtu in 2020. (See, www.EIA.gov/outlook/steo/marketreview/crude.php)
Development plan
The value of any proven Oil & Gas asset is a function of both its current production but also in the extraction of proven but as yet unproduced reserves.
The Group re-gained full ownership of Zink Ranch and entered into agreements to secure material working interests in a portfolio of wells (the Austin Field) in Texas. As part of the programme, the Group intend to invest in technology and techniques to best enhance production and identify new horizons.
Capital constraint
The Group only has a finite amount of capital available and following a comprehensive third party asset review, management prioritised capital allocation to reworking wells in the Austin Field as they offered a better return on balance that than investing in new exploration opportunities.
The impairment provision in the year was charged against the following properties:
Impairment provision by properties: 2018 2017
Project Rationale US$ 000's US$ 000's
Lack of sustainable production
given the considerable expense
to establish production. High
Shoats Creek operating and maintenance costs. - 1,800
High operating costs continue
to impact ability to develop.
Swapped for remaining interests
Horizon in Zinc in 2017. - 169
South Weslaco Was assigned in a prior period. - 95
Total impairment charge for the year - 2,064
=========== ==========
11. Trade and other receivables
2018 2017
US$ 000's US$ 000's
----------------------------------------- ---------- ----------
Trade receivables and accrued income 43 36
Block Energy (convertible loan portion) - 284
---------- ----------
Total 43 320
========== ==========
-- Trade and other receivables are stated at fair values, which as at the year-end equate to their carrying values. As at the year-end trade and other receivables were not past due, were not impaired and were all denominated in US$.
-- In June 2017, the company invested GBP300,000 into Block Energy plc ("Block Energy"), at the time a NEX listed oil and gas company with interests primarily in Georgia. This included a GBP210,000 (US$ 284,000) investment via a Secured Convertible Loan Note with a 10% flat coupon with conversion to equity at a 10% discount to any price at which Block Energy's shares are listed or admitted to trading on any stock exchange other than NEX. The Secured Convertible Loan was converted into ordinary shares on 11 June 2018 and subsequently sold when the Company sold its investment in Block.
12. Financial assets at fair value through profit or loss
Equity securities - held for trading
2018 2017
US$ 000's US$ 000's
----------------------------------- ---------- ----------
Block Energy plc (equity portion) - 121
Deloro Energy LLC 419 1,505
---------- ----------
Total 419 1,626
========== ==========
Financial assets at fair value through profit or loss are presented within 'operating activities' as part of changes in working capital in the Statement of Cash Flows.
Changes in fair values of financial assets at fair value through profit or loss, and gains or losses on disposal are recorded as 'disposal of financial assets at fair value through profit or loss' in the Statement of Comprehensive Income (note 6). The fair value of all equity securities is based on management valuation, being a level 1 hierarchy.
The company has made two investments:
-- In June 2017, invested GBP300,000 into Block Energy plc ("Block Energy"), at the time a NEX listed oil and gas company with interests primarily in Georgia. Investment consisted of a GBP90,000 (US$ 121,000) equity investment via a placing of new shares at GBP0.0085 per Block Energy Share which resulted in Mayan acquiring a 2.47% equity interest in Block Energy. In addition, a GBP210,000 (US$ 284,000) investment via a Secured Convertible Loan Note with a 10% flat coupon with conversion to equity at a 10% discount to any price at which Block Energy's shares are listed or admitted to trading on any stock exchange other than NEX. Block Energy was admitted to Aim in March 2018 and this investment was sold during 2018 with a loss of $129,000 on disposal being recorded through the Consolidated Statement of Comprehensive Income.
-- In November 2017, invested US$1,505,000 into Deloro Energy LLC ("Deloro"). The investment consisted of US$ 1,005,000 paid in cash and US$500,000 settled by way of 64,102,564 Mayan Ordinary shares. Deloro, was a special purpose US company formed to acquire an interest in Petroteq Energy Inc. ("Petroteq") (TSXV:PQE). During 2018, Deloro began a process of liquidation and distributed the shares of Petroteq to its shareholders. Deloro expects to complete its liquidation by the second quarter of 2019. During 2018 an impairment charge of US$1,126,000 was recorded through the Consolidated Statement of Comprehensive Income.
13. Trade and other payables
2018 2017
US$ 000's US$ 000's
----------------------------------- ---------- ----------
Trade payables and accruals 405 531
Payroll Taxes and social security 362 362
---------- ----------
Total 767 893
========== ==========
14. Share based payment
The following is a summary of the share options and warrants outstanding and exercisable as at 31 December 2018 and 31 December 2017 and changes during the period:
2018 2017
------------------------------
Number Weighted Number Weighted
of options Average of options Average
and warrants Exercise and warrants Exercise
price price
Summary of Share Options and (000's) Pence (000's) Pence
Warrants
------------------------------ -------------- ---------- -------------- ----------
Outstanding and exercisable,
beginning of year 87,092 0.05 11,270 0.05
Granted 199,884 0.01 76,742 0.09
Exercised (56,600) 0.03 - -
Expired (554) 0.02 (170) 0.97
Cancelled (4,400) 0.06 (750) 0.00
-------------- --------------
Outstanding and exercisable,
end of year 225,422 0.01 87,092 0.05
============== ==============
The above is expressed in GBGBP pence and not US$ cents due to the terms of the options and warrants.
The following share options or warrants were outstanding in respect of the ordinary shares:
Grant Expiry Ex 01-Jan-17 Expired Granted Cancelled 31-Dec-17 Expired Exercised Granted Cancelled 31-Dec-18
Date Date Price
Pence
12/02/2015 12/02/2018 0.36 157,451 - - - 157,451 (157,451) - - - -
20/04/2015 20/04/2020 0.9 224,096 - - - 224,096 - - - - 224,096
27/11/2015 27/11/2018 0.6 1,041,666 - - - 1,041,666 - - - - 1,041,666
20/04/2016 21/04/2018 0.126 396,825 - - - 396,825 (396,825) - - - -
01/09/2016 02/09/2019 0.06 1,111,110 - - - 1,111,110 - - - - 1,111,110
01/09/2016 01/09/2021 0.06 5,150,000 - - (750,000) 4,400,000 - - - (4,400,000) -
28/10/2016 29/10/2018 0.07 3,019,322 - - - 3,019,322 - - - - 3,019,322
27/06/2017 27/06/2020 0.03 - - 24,583,333 - 24,583,333 - (24,583,333) - - -
08/08/2017 08/08/2020 0.03 - - 28,824,999 - 28,824,999 - (24,491,666) - - 4,333,333
23/11/2017 23/11/2020 0.03 - - 23,333,333 - 23,333,333 - (7,525,000) - - 15,808,333
15/01/2018 15/01/2023 0.01 - - - - - - - 116,633,589 - 116,633,589
06/07/2018 06/07/2020 0.09 - - - - - - - 70,833,334 - 70,833,334
06/07/2018 06/07/2020 0.06 - - - - - - - 9,916,666 - 9,916,666
31/07/2018 31/07/2020 0.09 - - - - - - - 2,500,000 - 2,500,000
11,100,470 - 76,741,665 (750,000) 87,092,135 (554,276) (56,599,999) 199,883,589 (4,400,000) 225,421,449
1) Director options granted 15.01.2018 vests after 01.09.2021 on condition that the Director remain employed. It has subsequently been cancelled.
New options and warrants have been valued using the Black-Scholes valuation method and the assumptions used are detailed below. The expected future volatility has been determined by reference to the historical volatility:
Current year:
Grant Share Exercise Volatility Warrant/ Dividend Risk-free Fair
date price price (%) Option yield investment value
at grant (pence) life (%) rate (%) per option
(pence) (year(s)) (US
cent)
---------- ---------- --------- ----------- ----------- --------- ------------ ------------
27/06/17 0.275 0.3 190 3 0 1 0.3138
08/08/17 0.260 0.3 190 3 0 1 0.3047
22/11/17 0.600 0.6 190 2 0 1 0.6850
The Group recognised US$ 298,404 (2017: $US 324,817) relating to equity-settled share based payment transactions during the year which was charged to share premium.
For the share options and warrants outstanding as at 31 December 2018, the weighted average remaining contractual life was 2.69 years (2017: 2.33).
3. Share capital
Number Share price Share Premium
Allotted, called-up and (pence per
fully paid share) US$ 000's
Balance at 1 January 2017 21,144,630,415 33,126
Mar 17 Placing 12,000,000,000 0.05 747
Consolidation (33,061,768,839) 0.2
June 17 Placing 195,833,333 0.03 749
June 17 Broker/Consultant 60,000,000 0.03 230
Aug 17 Placing 203,666,666 0.03 795
Aug 17 Broker/Consultant 85,128,205 0.03 331
Aug17 Placing 83,333,334 0.03 325
Sept 17 Placing 12,820,514 0.03 50
Sept 17 Broker/Consultant 343,333,332 0.03 2,689
Nov 17 Placing 64,102,563 0.06 509
Nov 17 Directors & Consultants 5,064,102 0.06 40
Nov 17 Broker/Consultant 30,192,306 0.06 240
Total Issue costs - - (885)
Balance at 31 December
2017 1,166,335,931 38,946
================= ==============
Mar Exercise of warrants 4,166,666 0.03 18
May Exercise of warrants 8,333,333 0.03 34
Jun Exercise of warrants 36,575,000 0.03 147
Jun Exercise of options 7,525,000 0.06 60
Jun 18 Placing 11,141,176 0.085 125
Jun 18 Placing 141,666,666 0.06 1,127
Share issue costs - - (70)
Jun 18 Creditors 18,782,869 0.07 175
Share issue costs - - (290)
Jul 18 Broker/Consultant 18,437,951 0.06 145
Share issue costs - - (8)
Aug 18 Acquisition of
Austin Chalk wells 25,274,725 0.07 230
Oct 18 Directors & Consultants 24,707,626 0.05 150
Balance at 31 December
2018 1,462,946,943 40,789
================= ==============
4. Provisions
Provisions: Plug & Abandonment Payroll Other provisions Total 2018 Total 2017
Tax interest
and penalties
US$ 000's US$ 000's US$ 000's US$ 000's US$ 000's
Brought forward 873 203 175 1,251 1,073
Provision for
the year 50 - 81 131 966
Released in year (360) - (175) (535) (788)
Carried forward 563 203 81 847 1,251
=================== =============== ================= =========== ===========
Current - 203 81 284 588
Non-Current 563 - - 563 663
Total 563 203 81 847 1,251
=================== =============== ================= =========== ===========
The provision in respect of Plug & Abandonment represents the present value of the decommissioning of up to 33 (2017: 44) existing producing and currently shut-in well bores.
Decommissioning is due to take place from 2019 to 2027 (2017: 2018 to 2027). The provisions are made using the Group's internal estimates that Management believes form a reasonable basis for the expected future costs of decommissioning. Releases against this provision are made when wells are plugged and abandoned during the course of the year under review.
The provision in respect of payroll tax interest and liabilities relates to expected fines and penalties due on unpaid payroll taxes.
Other provisions consists of $81,000 in disputed supplier obligations.
5. Reconciliation of supplementary cash flow information
2017 Non-cash Issue 2018
US$ 000's Cash flow changes of warrants US$ 000's
US$ 000's US$ 000's US$ 000's
------------------------------- ----------- ------------ ----------- ------------- -----------
Property, plant and equipment 990 302 230 - 1,522
Trade payables and provisions 2,144 (60) (470) - 1,614
Share premium 38,946 1,316 825 (298) 40,789
------------------------------- ----------- ------------ ----------- ------------- -----------
42,080 1,558 585 (298) 43,925
------------------------------- ----------- ------------ ----------- ------------- -----------
6. Contingent liabilities
The amount payable in respect of payroll tax interest and liabilities (Note 16) for expected fines and penalties due on unpaid payroll taxes may be higher than the provision and is subject to negotiation with the US Internal Revenue Service.
7. Capital Commitments
There were no capital commitments authorised by the Directors or contracted other than those provided for in these financial statements for at 31 December 2018 (31 December 2017: None).
8. Ultimate Controlling party
As at the Consolidated Statement of Financial Position date, the Directors believe that there is no ultimate controlling party.
9. Related party transactions
The following transactions were undertaken with related parties:
Director's remuneration has been disclosed in Note 7.
Transactions 2018 2017
$'000 $'000
------------------ ------------------------- ---------------- ------ ------
Entity under common
Orana Corporate directorship: C Administration
LLP Wood costs 88 14
McGowen & Fowler Entity in which Legal fees 98 -
P.L.L.C. P Amoruso is a partner
through 30/04/2019
Entity under common
directorship: H
Gonzalez & C Wood
(who held a 48.4%
related shareholding
Deloro LLP pre-investment) Investment - 1,505
10. Events after the reporting date
Smart Bit LLC Assets Acquisition
Mayan agreed to a second amended and restated sale and purchase Agreement (the 'Agreement') with Smart Bit LLC ('Smart Bit') updating the original agreement with Smart Bit as announced on 23rd August 2018. Under the terms of the Agreement Smart Bit agreed to sell Mayan a 100% WI and retain a 10% gross overriding royalty interest in the following wells at Austin Field: Edwards, Neubauer Stanush, Kosub, Ritchie Talley and a 5% gross overriding royalty at the Garrison well.
The consideration for the revised agreement was as follows:
1. US$ 170,000 cash paid by Mayan Energy in August of 2018 2. 48,614,725 shares in Mayan Energy Ltd a. 25,274,725 shares previously issued 0.7p b. 23,340,000 further shares issued at 0.2p
Total consideration under the revised deal on the effective date of the transaction is approximately US$ 375,000.
January 2019 Capital Raise
On 29th January 2019 Mayan raised a total of GBP750,000 gross proceeds at a price of 0.12p per share (the "Placing") and GBP223,069 being 185,890,442 shares issued in settlement of accrued directors fees, consulting fees, settlement of accrued liabilities and an amended agreement with Smart Bit LLC; Directors participated in the Placing to the extent of GBP70,000 cash subscription and a further GBP96,640 in accrued Directors' fees and legal advisor fees settled by the issue of shares at the Placing Price.
Acquisition of Attis Oil & Gas Ltd
On the 30th April 2019 the Company entered into an agreement to acquire 100% of Attis Oil & Gas Limited and its subsidiaries, affiliates and related entities (collectively referred to as "Attis"), a proven US oil & gas operator which holds a 50% interest in the Fort Worth Field, TX and operates 98 wells across 5,100 acres in the Fort Worth Basin ('the Acquisition').
The Acquisition was satisfied through the issue of 952,197,460 new Ordinary Shares at a price of 0.14 pence per Ordinary Share ("Consideration Shares").
On acquisition
GBP'000
Purchase consideration (952,197,460 shares @ .14p) 1,333
Fair value of net assets acquired (150)
---------------
Development and production assets 1,183
---------------
The Attis Oil & Gas Ltd balance sheet is preliminary and may be subject to change.
If new information obtained within one year from the acquisition date about the facts and circumstances that existed at the acquisition date identifies adjustments to the above amounts, or any additional provisions that existed at the acquisition date, then the acquisition accounting will be revised.
Placing
On the 30th April The Acquisition became unconditional following the completion of GBP700,000 placing through the issue of 500,000,000 new ordinary shares of no par value in the capital of the Company. 17,857,142 Ordinary Shares were issued to a third party consultant at the Placing Price for introduction of the transaction ("Settlement Shares"). 10,400,325 Ordinary Shares were issued at Placing Price in relation to the settlement of accrued Director fees to the Company's Chairman.
Following the issue of the Ordinary Shares (being the Consideration Shares for the Acquisition of Attis, the Placing Shares and Settlement Shares), the Company's issued share capital consisted of 3,774,292,308 Ordinary Shares.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR LFFLIRSIILIA
(END) Dow Jones Newswires
June 11, 2019 02:01 ET (06:01 GMT)
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