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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 : 9953B
Petroneft Resources PLC
26 September 2018
26 September 2018
2018 Interim Results
PetroNeft (AIM: PTR) an oil & gas exploration and production company operating in the Tomsk Oblast, Russian Federation, and 50% owner and operator of Licences 61 and 67 is pleased to report its results for the 6 months ended 30 June 2018.
Highlights
-- Gross production from Licence 61 in H1 2018 was 2,135 bopd (1,068 bopd net to PetroNeft). -- Testing of C-4 well continuing
o Testing will continue for several weeks
David Golder, Chairman of PetroNeft Resources plc, commented:
"2018 to date has yielded very positive results from the C-4 well at Cheremshanskoye and good improvement in oil price. We look forward to updating shareholders with the final results of the C-4 well and with the progress on other value optimisation initiatives over the coming months."
For further information, contact:
Hot Features
Premium
Dennis Francis, CEO, PetroNeft Resources plc +1 713 988 2500
Paul Dowling, CFO, PetroNeft Resources plc +353 1 647 0280
-----------------
John Frain/Brian Garrahy, Davy (NOMAD and Joint Broker) +353 1 679 6363
-----------------
Henry Fitzgerald-O'Connor, Canaccord Genuity Limited (Joint Broker) +44 207 523 8000
-----------------
Joe Heron / Douglas Keatinge, Murray Consultants +353 1 498 0300
-----------------
The information contained in this announcement has been reviewed and verified by Mr. Dennis Francis, Director and Chief Executive Officer of PetroNeft, for the purposes of the Guidance Note for Mining and Oil & Gas Companies issued by the London Stock Exchange in June 2009. Mr. Francis holds a B.S. Degree in Geophysical Engineering and a M.S. Degree in Geology from the Colorado School of Mines. He has also graduated from the Harvard University Program for Management Development. He is a member of the American Association of Petroleum Geologists and the Society of Exploration Geophysicists. He has over 40 years' experience in oil and gas exploration and development.
Chairman's Statement
Dear Shareholder,
I am pleased to report on the activities of the Group for the six months to 30 June 2018 and provide an update on recent progress. 2018 has seen the drilling of the C-4 delineation well at the Cheremshanskoye oil field, with results to date exceeding pre-drill expectations.
As mentioned in the June we had anticipated being in a position to announce a material transaction in the third quarter of 2018. Negotiations have slowed but remain ongoing, however the successful C-4 well has also broadened the options available to the Company.
Production and Sales for the period
Gross production at Licence 61 in the six months to 30 June 2018 averaged 2,135 bopd, a small decrease compared to the same period in 2017 (2,347 bopd) with the production decline continuing to be slower than expected. We sold 382,656 (gross) barrels of oil in the six months to 30 June 2018 (H1 2017: 430,421 bbls) and achieved an average Russian Domestic oil price of $44.39 (H1 2017: $32.07), a 38% increase. This welcome price rise was partly offset by higher taxes but did lead to enhanced operating cashflows for the Licence 61 joint venture.
Licence 61 Gross
Production H1-2018 Q2-2018 Q1-2018 H1-2017 FY-2017
Total gross production 386,482 183,368 203,114 424,812 816,476
-------- -------- -------- -------- --------
Gross bopd 2,135 2,015 2,257 2,347 2,237
-------- -------- -------- -------- --------
PetroNeft 50%
share bopd 1,068 1,008 1,128 1,174 1,118
-------- -------- -------- -------- --------
Licence 67 - Cheremshanskoye
The C-4 well, which spudded on 2 August is located on the northern half of the Cheremshanskoye field in Licence 67. The aim of the well was to prove up the northern extent of the field based on the 3D seismic data acquired in 2014. The well is being drilled under the joint venture agreement with our partner for Licence 67, Arawak Energy on a 50:50 basis and operations have progressed smoothly.
Based on core and log data the base of the Bazhenov Formation was penetrated at -2,545.5 m TVDSS which is about 9.5 m high to pre-drill estimates.
The tertiary objective Upper Jurassic J1-1 sandstone interval encountered 1.6 m of net oil pay from -2,546 to -2,547.6 m TVDSS and coring recovered oil saturated sandstone with very good visual reservoir properties. A short duration open-hole test was run over the interval and the prorated flow was 228 bfpd consisting of 84% good quality light oil ( 35deg API) and 16% mud/filtrate. This is a very good initial flow test, without any reservoir stimulation, which exceeds our expectations for the J1-1 interval.
The primary J1-3 interval was also cored, tested and logged. Calculations from the log data show net oil pay of 8.8 m from -2,559.4 to -2,569.2 m TVDSS. A short duration open-hole test was run over the interval and the prorated flow was 171 bfpd consisting of 70% oil and 30% mud/filtrate. This is a good flow test which exceeds our expectations for the J1-3 interval, even though the short flow test indicates some formation damage that restricted the flow rate.
The combined open-hole tests achieved a prorated test rate of 399 bfpd; this rate is expected to increase in a longer test once drilling fluids are cleared out from the well.
The two open-hole tests combined with the log and core data in the Upper Jurassic are very encouraging. There are currently no reserves booked for the Upper Jurassic at Cheremshanskoye and it is estimated that there could be about 40 million bbls of proven and probable reserves, adjacent to nearby infrastructure, at these horizons based on these results (20 mmbbls net to PetroNeft).
Following this, drilling continued in order to target the J-13 and J-14 objectives in the Lower Jurassic. At the J-13 we encountered 7.6m of net oil pay (according to log data), however the reservoir was of low quality.
Now we have run casing in the well and have commenced a cased-hole test at the J1-3 interval which we expect to complete in the coming weeks.
Review of PetroNeft loss for the period
The loss for the period narrowed to US$1.2m (H1 2017: US$1.6m). The loss includes PetroNeft's share of the losses on the joint ventures relating to Licences 61 and 67 of US$1.9m and US$0.2m respectively (H1 2017: US$2.2m and US$0.2m). The loss relating to the Licence 61 joint venture is discussed in more detail below. Finance revenue of US$2.0m (H1 2017: US$1.7m) relates primarily to interest receivable on loans to the joint ventures.
PetroNeft Key Financial Metrics Unaudited Audited
======================== -------------
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2018 June 2017 2017
US$ '000 US$ '000 US$ '000
Continuing operations
Revenue 1,093 1,008 1,713
Cost of sales (881) (938) (1,550)
=========== ===========
Gross profit 212 70 163
Administrative expenses (612) (580) (1,403)
Exchange (loss)/gain on intra-Group
loans (57) 32 52
Operating loss (457) (478) (1,188)
Share of joint venture's net loss
- WorldAce Investments Limited (1,920) (2,219) (4,286)
Share of joint venture's net loss
- Russian BD Holdings B.V. (231) (184) (382)
Finance revenue 1,973 1,710 3,511
Finance costs (48) - -
Loss for the period for continuing
operations before taxation (683) (1,171) (2,345)
Income tax expense (510) (437) (894)
Loss for the period (1,193) (1,608) (3,239)
=========== =========== =============
Licence 61 joint venture - WorldAce Group
The metrics below are an extraction from the financial statements of the WorldAce Group which demonstrate the performance of Licence 61:
Unaudited Audited
======================== -------------
WorldAce WorldAce WorldAce
Group Group Group
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2018 June 2017 2017
US$'000 US$'000 US$'000
Continuing operations
Revenue 17,090 13,807 27,637
Cost of sales (15,078) (12,746) (25,273)
=========== ===========
Gross profit 2,012 1,061 2,364
Administrative expenses (1,432) (1,695) (3,093)
Operating profit/(loss) 580 (634) (729)
Write-off of exploration and evaluation
assets - (26) (26)
Finance revenue 48 22 66
Finance costs (4,467) (3,800) (7,883)
=========== ===========
Loss for the period for continuing
operations before taxation (3,839) (4,438) (8,572)
Income tax - - -
=========== ===========
Loss for the period for continuing
operations after taxation (3,839) (4,438) (8,572)
=========== =========== -------------
PetroNeft's 50% share (1,920) (2,219) (4,286)
=========== =========== -------------
WorldAce Analysis Unaudited Audited
======================== -------------
WorldAce WorldAce WorldAce
Group Group Group
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2018 June 2017 2017
US$'000 US$'000 US$'000
Revenue
Oil sales 16,987 13,795 27,590
Other sales 103 12 47
Total revenue 17,090 13,807 27,637
=========== =========== -------------
PetroNeft's 50% share 8,545 6,903 13,819
=========== =========== -------------
Cost of Sales
Mineral Extraction Tax 9,491 6,666 13,747
Pipeline tariff 1,602 1,744 3,390
Staff costs 1,014 988 1,994
Depreciation and amortisation 1,451 1,544 2,916
Other cost of sales 1,520 1,803 3,226
Total cost of sales 15,078 12,745 25,273
=========== =========== -------------
PetroNeft's 50% share 7,539 6,373 12,637
=========== =========== -------------
The detailed Income Statement and Balance Sheet of WorldAce Investments Limited is disclosed at note 9 to these condensed financial statements. Improved oil prices and cost-cutting in H1 2018 have strengthened the margin in 2018 as compared to the same period last year. This led to an operating profit in the L-61 joint venture of US$580k compared to an operating loss in the same period last year of US$634k.
Achieving value for Shareholders
The geo-political and investment climate for Russia, along with other emerging markets, remains challenging and this, combined with the current shareholding structure, has resulted in a significant difference between the market capitalization of the company and the true long-term value of its assets and reserves. The Company noted on 12 July 2018 that it was examining a number of options in relation to maximising shareholder value.
The Company, in conjunction with its 50/50 joint venture partner, Oil India has engaged financial advisers to evaluate the disposal of Licence 61. While we are only in the early stages of this process and there is no certainty that any transaction will be completed, we have seen an encouraging level of interest from a range of well-financed industry players. Furthermore, once the testing of the C-4 well at Licence 67 is complete we will consider a similar process for Licence 67, working with Arawak.
We had previously indicated a potential announcement of a material transaction during the third quarter, however commercial discussions are ongoing. While there can be no certainty that a deal will ultimately be concluded, the C-4 well result has broadened the options available to the Company. Further announcements will be made in due course.
Finance
As detailed in the 2017 Annual Report the Company's finances continue to require close attention. The US$2m Petrogrand loan agreed in January 2018 matures on 31 December 2018. This loan has allowed us to drill the C-4 well at Cheremshanskoye the results of which have broadened the funding options open to the Company. The Company has to date drawn down US$1m and is in negotiations to re-finance this loan in advance of its current maturity date.
Outlook
2018 to date has yielded very positive results from the C-4 well at Cheremshanskoye and good improvement in oil price. We look forward to updating shareholders with the final results of the C-4 well and with the progress on other value optimisation initiatives over the coming months.
David Golder
Non-Executive Chairman
Interim Condensed Consolidated Income Statement
For the 6 months ended 30 June 2018
Unaudited Audited
========================== -------------
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2018 June 2017 2017
Note US$ US$ US$
Continuing operations
Revenue 1,092,673 1,007,929 1,712,574
Cost of sales (880,771) (937,686) 1,550,119
============ ============ -------------
Gross profit 211,902 70,243 162,455
Administrative expenses (612,369) (579,892) (1,402,867)
Exchange (loss)/gain on intra-Group
loans (56,726) 31,901 52,093
-------------
Operating loss (457,193) (477,748) (1,188,319)
Share of joint venture's net
loss - WorldAce Investments
Limited 9 (1,919,878) (2,218,754) (4,285,833)
Share of joint venture's net
loss - Russian BD Holdings B.V. 10 (230,178) (184,674) (381,654)
Finance revenue 5 1,972,866 1,710,060 3,510,435
Finance costs 6 (48,256) - -
-------------
Loss for the period for continuing
operations before taxation (682,639) (1,171,116) (2,345,371)
Income tax expense (510,381) (436,788) (893,670)
Loss for the period attributable
to equity holders of the Parent (1,193,020) (1,607,904) (3,239,041)
============ ============ =============
Loss per share attributable
to ordinary equity holders of
the Parent
Basic and diluted - US dollar
cent (0.17) (0.23) (0.46)
Interim Condensed Consolidated Statement of Comprehensive Income
For the 6 months ended 30 June 2018
Unaudited Audited
========================== -------------
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2018 June 2017 2017
US$ US$ US$
Loss for the period attributable
to equity holders of the Parent (1,193,020) (1,607,904) (3,239,041)
Other comprehensive income to be
reclassified to profit or loss
in subsequent periods:
Currency translation adjustments
- subsidiaries 46,256 (19,620) (37,190)
Share of joint ventures' other
comprehensive income - foreign
exchange translation differences (4,030,342) 1,405,547 2,551,042
Total comprehensive loss for the
period attributable to equity holders
of the Parent (5,177,106) (221,977) (725,189)
============ ============ =============
Interim Condensed Consolidated Balance Sheet
As at 30 June 2018
Unaudited Audited
============= -------------
30 June 31 December
2018 2017
Note US$ US$
Assets
Non-current Assets
Property, plant and equipment 8 56,845 88,202
Equity-accounted investment in joint
ventures - WorldAce Investments Limited 9 - -
Equity-accounted investment in joint
ventures - Russian BD Holdings B.V. 10 - -
Financial assets - loans and receivables 11 45,623,285 49,439,502
45,680,130 49,527,704
=============
Current Assets
Inventories 12 100,112 21,908
Trade and other receivables 13 479,911 587,601
Cash and cash equivalents 14 40,378 9,389
620,401 618,898
=============
Total Assets 46,300,531 50,146,602
============= =============
Equity and Liabilities
Capital and Reserves
Called up share capital 9,429,182 9,429,182
Share premium account 140,912,898 140,912,898
Share-based payments reserve 6,796,540 6,796,540
Retained loss (84,634,511) (83,441,491)
Currency translation reserve (32,588,644) (28,604,558)
Other reserves 336,000 336,000
Equity attributable to equity holders of
the Parent 40,251,465 45,428,571
============= -------------
Non-current Liabilities
Deferred tax liability 3,484,128 3,001,617
3,484,128 3,001,617
=============
Current Liabilities
Interest-bearing loans and borrowings 15 1,048,256 -
Trade and other payables 16 1,516,682 1,716,414
2,564,938 1,716,414
=============
Total Liabilities 6,049,066 4,718,031
Total Equity and Liabilities 46,300,531 50,146,602
============= =============
Interim Condensed Consolidated Statement of Changes in Equity
For the 6 months ended 30 June 2018
Share-based
Called Share payment Currency
up share premium and other translation Retained
capital account reserves reserve loss Total
US$ US$ US$ US$ US$ US$
At 1 January 2017 9,429,182 140,912,898 7,132,540 (31,118,410) (80,202,450) 46,153,760
---------- ------------ ------------ ------------- ------------- ------------
Loss for the year - - - - (3,239,041) (3,239,041)
Currency translation
adjustments -
subsidiaries - - - (37,190) - (37,190)
Share of joint
ventures' other
comprehensive
income - foreign
exchange translation
differences - - - 2,551,042 - 2,551,042
---------- ------------ ------------ ------------- ------------- ------------
Total comprehensive
loss for the year - - - 2,513,852 (3,239,041) (725,189)
At 31 December 2017 9,429,182 140,912,898 7,132,540 (28,604,558) (83,441,491) 45,428,571
========== ============ ============ ============= ============= ============
At 1 January 2018 9,429,182 140,912,898 7,132,540 (28,604,558) (83,441,491) 45,428,571
========== ============ ============ ============= ============= ============
Loss for the period - - - - (1,193,020) (1,193,020)
Currency translation
adjustments -
subsidiaries - - - 46,256 - 46,256
Share of joint
ventures' other
comprehensive
income - foreign
exchange translation
differences - - - (4,030,342) - (4,030,342)
========== ============ ============ ============= ============= ============
Total comprehensive
loss for the period - - - (3,984,086) (1,193,020) (5,177,106)
At 30 June 2018 9,429,182 140,912,898 7,132,540 (32,588,644) (84,634,511) 40,251,465
========== ============ ============ ============= ============= ============
Interim Condensed Consolidated Cash Flow Statement
For the 6 months ended 30 June 2018
Unaudited Audited
========================== -------------
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2018 June 2017 2017
US$ US$ US$
Operating activities
Loss before taxation (682,639) (1,171,116) (2,345,371)
Adjustment to reconcile loss
before tax to net cash flows
Non-cash
Depreciation 25,745 31,899 62,748
Share of loss in joint ventures 2,150,056 2,403,428 4,667,487
Finance revenue 5 (1,972,866) (1,710,060) (3,510,435)
Finance costs 6 48,256 - -
Working capital adjustments
Decrease in trade and other
receivables 103,454 352,199 294,434
(Increase)/decrease in inventories (78,204) 9,295 7,066
(Decrease)/increase in trade and
other payables (140,482) (83,173) 555,937
Income tax paid (29,953) (6,980) (9,783)
============
Net cash flows used in operating
activities (576,633) (174,508) (277,917)
============ -------------
Investing activities
Loan facilities advanced to joint venture
undertakings (392,000) - (40,000)
Interest received 685 532 823
============
Net cash (used in)/received
from investing activities (391,315) 532 (39,177)
============ ============ -------------
Financing activities
Proceeds from loan facilities 1,000,000 - -
============
Net cash received from financing
activities 1,000,000 - -
============ ============ -------------
Net increase/(decrease) in
cash and cash equivalents 32,052 (173,976) (317,094)
Translation adjustment (1,063) 6,488 6,865
Cash and cash equivalents at
the beginning of the period 9,389 319,618 319,618
============
Cash and cash equivalents at
the end of the period 14 40,378 152,130 9,389
============ ============ =============
Notes to the Interim Condensed Consolidated Financial Statements
For the 6 months ended 30 June 2018
1. Corporate Information
The interim condensed consolidated financial statements of the Group for the six months ended 30 June 2018 were authorised for issue in accordance with a resolution of the Directors on 25 September 2018.
PetroNeft Resources plc ('PetroNeft, 'the Company', or together with its subsidiaries and joint ventures, 'the Group') is a public limited company incorporated in the Republic of Ireland with a company registration number 408101. The Company is listed on the Alternative Investment Market ('AIM') of the London Stock Exchange and the Enterprise Securities Market ('ESM') of the Irish Stock Exchange. The address of the registered office and the business address in Ireland is 20 Holles Street, Dublin 2. The Company is domiciled in the Republic of Ireland.
The principal activities of the Group are oil and gas exploration, development and production.
2. Going Concern
As described in the 2017 Annual Report PetroNeft agreed a US$2 million loan facility with Swedish Company Petrogrand AB. To date the Company has drawn down US$1 million. The loan is repayable on 31 December 2018 and the Company is currently in negotiations to re-finance this loan in advance of its current maturity date. The successful C-4 well has broadened the options available to the Company in this regard.
The Group has analysed its cash flow requirements through to 31 December 2019 in detail. The cash flow includes estimates for a number of key variables including the timing and availability of any further drawdowns under the Petrogrand Loan, the timing of cash flows of expenditure and management of working capital, including significant deferral and reduction in remuneration of Directors and key management which has been in place since October 2017. The Directors believe that the Group's cash flow forecasts represent the best estimate of the actual cash flows over the forecast period at the date of approval of the financial statements. The cash flow is stress tested to assess the adverse effect arising from reasonable changes in circumstance. The cash flow projections for the period to 31 December 2019 indicate that, provided the Petrogrand loan is re-financed or extended before the maturity date and the deferral and reduction of remuneration of Directors and key management continues the Company will have sufficient cash resources to meet its obligations as they fall due.
The Company's obligation to amend, extend or otherwise re-finance the Petrogrand loan prior to the maturity date on 31 December 2018 represents a material uncertainty that may cast significant doubt upon the Group and the Company's ability to continue as a going concern. Nevertheless, after making enquiries, and considering the uncertainty described above, the Directors are confident that the Group and the Company will have adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing these accounts.
Accordingly, these financial statements do not include any adjustments to the carrying amount or classification of assets and liabilities that would result if the Group or Company was unable to continue as a going concern.
3. Accounting Policies
3.1 Basis of Preparation
The interim condensed consolidated financial statements for the six months ended 30 June 2018 have been prepared in accordance with IAS 34 Interim Financial Reporting.
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 31 December 2017 which are available on the Group's website - www.petroneft.com.
The interim condensed consolidated financial statements are presented in US dollars ("US$").
3.2 Significant Accounting Policies
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2017.
4. Segment information
At present the Group has one reportable operating segment, which is oil exploration and production through its joint venture undertakings. As a result, there are no further disclosures required in respect of the Group's reporting segment.
The risk and returns of the Group's operations are primarily determined by the nature of the activities that the Group engages in, rather than the geographical location of these operations. This is reflected by the Group's organisational structure and the Group's internal financial reporting systems.
Management monitors and evaluates the operating results for the purpose of making decisions consistently with how it determines operating profit or loss in the consolidated financial statements.
Geographical segments
Although the joint venture undertakings WorldAce Investments Limited and Russian BD Holdings B.V. are domiciled in Cyprus and the Netherlands, the underlying businesses and assets are in Russia. Substantially all of the Group's sales and capital expenditures are in Russia.
Assets are allocated based on where the assets are located:
Unaudited Audited
============================ -------------------------
30 June 31 December
2018 2017
Non-current assets US$ US$
Russia 45,679,324 49,526,318
Ireland 806 1,386
-------------------------
45,680,130 49,527,704
============================ =========================
5. Finance revenue Unaudited Audited
============================ -------------
6 months Year ended
6 months ended ended 30 31 December
30 June 2018 June 2017 2017
US$ US$ US$
Bank interest receivable 685 532 823
Interest receivable on loans
to Joint Ventures 1,972,181 1,709,528 3,509,612
1,972,866 1,710,060 3,510,435
=============== =========== =============
6. Finance costs Unaudited Audited
============================== -------------
6 months Year ended
6 months ended ended 30 31 December
30 June 2018 June 2017 2017
US$ US$ US$
Interest on loans 48,256 - -
48,256 - -
=============== =========== =============
7. Income tax
Unaudited Audited
================================ -------------
Year ended
6 months ended 6 months ended 31 December
30 June 2018 30 June 2017 2017
US$ US$ US$
Current income tax
Current income tax charge 15,425 5,398 9,182
===============
Total current income tax 15,425 5,398 9,182
=============== -------------
Deferred tax
Relating to origination and
reversal of temporary differences 494,956 431,390 884,488
===============
Total deferred tax 494,956 431,390 884,488
=============== =============== -------------
Income tax expense reported
in the Consolidated Income Statement 510,381 436,788 893,670
=============== =============== =============
8. Property, Plant and Equipment
Group Plant and machinery
US$
Cost
At 1 January 2017 945,868
Translation adjustment 47,060
--------------------
At 1 January 2018 992,928
Translation adjustment (71,297)
At 30 June 2018 921,631
Depreciation
At 1 January 2017 802,402
Charge for the year 62,748
Translation adjustment 39,576
====================
At 1 January 2018 904,726
Charge for the period 25,745
Translation adjustment (65,685)
At 30 June 2018 864,786
Net book values
At 30 June 2018 56,845
====================
At 31 December 2017 88,202
====================
9. Equity-accounted Investment in Joint Venture - WorldAce Investments Limited
PetroNeft Resources plc has a 50% interest in WorldAce Investments Limited, a jointly controlled entity which holds 100% of LLC Stimul-T, an entity involved in oil and gas exploration and the registered holder of Licence 61. The interest in this joint venture is accounted for using the equity accounting method. WorldAce Investments Limited is incorporated in Cyprus and carries out its activities, through LLC Stimul-T, in Russia.
Share of
net assets
US$
At 1 January 2017 -
Elimination of unrealised profit on intra-Group
transactions (27,336)
Retained loss (4,285,833)
Translation adjustment 2,356,702
Credited against loans receivable from WorldAce
Investments Limited (Note 17) 1,956,467
============
At 1 January 2018 -
Retained loss (1,919,878)
Translation adjustment (3,706,547)
Credited against loans receivable from WorldAce
Investments Limited (Note 17) 5,626,425
At 30 June 2018 -
============
9. Equity-accounted Investment in Joint Venture - WorldAce Investments Limited (continued)
The balance sheet position of WorldAce Investments Limited shows net liabilities of US$41,026,114 following a loss in the period of US$3,839,756 together with a negative currency translation adjustment of US$7,413,094. PetroNeft's 50% share is included above and results in a negative carrying value of US$15,829,478. Therefore, the share of net assets is reduced to Nil and, in accordance with IAS 28 Investments in Associates and Joint Ventures, the amount of US$15,829,478 is deducted from other assets associated with the joint venture on the Balance Sheet which are the loans receivable from WorldAce Investments (see Note 11).
Additional financial information in respect of PetroNeft's 50% interest in the equity-accounted joint venture entity is disclosed below:
50% Share of WorldAce Group
Unaudited Audited
================================ -------------
Year ended
6 months ended 6 months ended 31 December
30 June 2018 30 June 2017 2017
US$ US$ US$
Continuing operations
Revenue 8,545,032 6,903,472 13,818,415
Cost of sales (7,539,017) (6,373,066) (12,636,469)
=============== =============== -------------
Gross profit 1,006,015 530,406 1,181,946
Administrative expenses (716,069) (847,477) (1,546,643)
Operating loss 289,946 (317,071) (364,697)
Write-off of exploration
and evaluation assets - (13,051) (13,051)
Finance revenue 23,921 11,142 33,176
Finance costs (2,233,745) (1,899,774) (3,941,261)
=============== =============== -------------
Loss for the period for continuing
operations before taxation (1,919,878) (2,218,754) (4,285,833)
Income tax expense - - -
=============== =============== -------------
Loss for the period (1,919,878) (2,218,754) (4,285,833)
=============== =============== =============
Loss for the period (1,919,878) (2,218,754) (4,285,833)
Other comprehensive income
to be reclassified to profit
or loss in subsequent periods:
Currency translation adjustments (3,706,547) 1,296,301 2,356,702
=============== =============== -------------
Total comprehensive loss
for the period (5,626,425) (922,453) (1,929,131)
=============== =============== =============
Finance costs mainly relate to interest on shareholder loans from Oil India International B.V. and PetroNeft. The details of gross interest accrued on loans to PetroNeft are disclosed in Note 17 Related party disclosures.
The currency translation adjustment results from the revaluation of the Russian Rouble during the period. All Russian Rouble carrying values in Stimul-T, the 100% subsidiary of WorldAce are converted to US Dollars at each period end. The resulting gain or loss is recognised through other comprehensive income and transferred to the currency translation reserve. The Russian Rouble depreciated against the US Dollar during the period from RUB57.7:US$1 at 31 December 2017 to RUB62.754:US$1 at 30 June 2018.
9. Equity-accounted Investment in Joint Venture - WorldAce Investments Limited (continued)
50% Share of WorldAce Group
Unaudited Audited
============== --------------
31 December
30 June 2018 2017
US$ US$
Non-current Assets
Oil and gas properties 35,647,329 39,312,150
Property, plant and equipment 155,165 184,027
Exploration and evaluation assets 8,651,388 9,321,748
Assets under construction 830,555 824,992
45,284,437 49,642,917
============== --------------
Current Assets
Inventories 715,751 605,240
Trade and other receivables 270,285 282,925
Cash and cash equivalents 469,247 68,613
1,455,283 956,778
============== --------------
Total Assets 46,739,720 50,599,695
============== ==============
Non-current Liabilities
Provisions (649,681) (658,513)
Interest-bearing loans and borrowings (63,474,495) (61,435,277)
(64,124,176) (62,093,790)
============== --------------
Current Liabilities
Interest-bearing loans and borrowings (864,962) (715,405)
Trade and other payables (2,263,639) (2,677,132)
(3,128,601) (3,392,537)
============== --------------
Total Liabilities (67,252,777) (65,486,327)
============== ==============
Net Liabilities (20,513,057) (14,886,632)
============== ==============
Interest-bearing loans and borrowings are shareholder loans from Oil India International B.V. and PetroNeft. The details of loans due to PetroNeft are disclosed in Note 17 Related party disclosures.
10. 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, through LLC Lineynoye, in Russia.
Share of
net assets
US$
At 1 January 2017 -
Retained loss (381,654)
Translation adjustment 194,339
Credited against loans receivable from Russian
BD Holdings BV (Note 17) 187,315
============
At 1 January 2018 -
Retained loss (230,178)
Translation adjustment (323,795)
Credited against loans receivable from Russian
BD Holdings BV (Note 17) 553,973
At 30 June 2018 -
============
The balance sheet position of Russian BD Holdings B.V. shows net liabilities of US$2,547,952 following a loss in the period of US$460,356 together with a negative currency translation adjustment of US$647,590. PetroNeft's 50% share is included above and results in a negative carrying value of US$1,273,976. Therefore, the share of net assets is reduced to Nil and, in accordance with IAS 28 Investments in Associates and Joint Ventures, the amount of US$1,273,976 is deducted from other assets associated with the joint venture on the Balance Sheet which are the loans receivable from Russian BD Holdings B.V. (Note 11).
10. Equity-accounted Investment in Joint Venture - Russian BD Holdings B.V. (continued)
Additional financial information in respect of PetroNeft's 50% interest in the equity-accounted joint venture entity is disclosed below:
50% Share of Russian BD Holdings B.V.
Unaudited Audited
================================ -------------
Year ended
6 months ended 6 months ended 31 December
30 June 2018 30 June 2017 2017
US$ US$ US$
Revenue - - -
Cost of sales - - -
Gross profit - - -
Administrative expenses (42,993) (45,987) (94,626)
Operating loss (42,993) (45,987) (94,626)
Finance revenue 360 228 259
Finance costs (187,545) (138,915) (287,287)
Loss for the period for continuing
operations before taxation (230,178) (184,674) (381,654)
Taxation - - -
Loss for the period (230,178) (184,674) (381,654)
=============== =============== =============
Loss for the period (230,178) (184,674) (381,654)
Other comprehensive income to
be reclassified to profit or
loss in subsequent periods:
Currency translation adjustments (323,795) 109,246 194,339
Total comprehensive loss for
the period (553,973) (75,428) (187,315)
=============== =============== =============
Finance costs comprise of interest on shareholder loans from Belgrave Naftogas B.V. and PetroNeft. The details of gross interest accrued on loans to PetroNeft are disclosed in Note 17 Related party disclosures.
50% Share of Russian BD
Holdings B.V.
===========================
Unaudited Audited
============= ------------
31 December
30 June 2018 2017
US$ US$
Non-current assets 4,499,340 4,370,482
Current assets 100,837 12,048
Total assets 4,600,177 4,382,530
============= ------------
Non-current liabilities (5,539,618) (4,981,608)
Current liabilities (334,535) (120,925)
Total liabilities (5,874,153) (5,102,533)
============= ------------
Net Liabilities (1,273,976) (720,003)
============= ============
Financial assets - loans
11. and receivables
Unaudited Audited
============= -------------
31 December
Group 30 June 2018 2017
US$ US$
Loans to WorldAce Investments
Limited (Note 17) 57,262,240 55,474,668
Less: share of WorldAce Investments
Limited loss (Note 9) (15,829,478) (10,203,053)
41,432,762 45,271,615
============= -------------
Loans to Russian BD Holdings
B.V. (Note 17) 5,464,499 4,887,890
Less: share of Russian BD Holdings
B.V. loss (Note 10) (1,273,976) (720,003)
4,190,523 4,167,887
============= -------------
45,623,285 49,439,502
============= =============
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 2019 at the earliest. The loan is set to mature on 31 December 2025. As at 30 June 2018 the loan was fully drawn down. The loan from the Company to Russian BD Holdings is repayable on demand. Interest currently accrues on the loan at LIBOR plus 5.0% per annum.
12. Inventories Unaudited Audited
=============================== -----------------------------
31 December
30 June 2018 2017
US$ US$
Materials 100,112 21,908
100,112 21,908
=============================== =============================
13. Trade and other receivables Unaudited Audited
================================ ------------------------------
31 December
30 June 2018 2017
US$ US$
Other receivables 50,664 21,039
Receivable from jointly controlled
entity (Note 17) 387,302 503,527
Advances to contractors 2,218 1,676
Prepayments 39,727 61,359
479,911 587,601
================================ ==============================
Other receivables are non-interest-bearing and are normally settled on 60-day terms.
14. Cash and Cash Equivalents
Unaudited Audited
================================ ------------------------------
31 December
Group 30 June 2018 2017
US$ US$
Cash at bank and in hand 40,378 9,389
40,378 9,389
================================ ==============================
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.
15. Loans and Borrowings
Unaudited Audited
========== ------------
Group and Company Effective Contractual
interest maturity 30 June 31 December
rate date 2018 2017
% US$ US$
Interest-bearing
Current liabilities
Petrogrand AB 11.34% 31-Dec-18 1,048,256 -
========== ------------
Total current liabilities 1,048,256 -
==========
Total loans and borrowings 1,048,256 -
========== ============
Contractual undiscounted 1,048,256 -
liability
Changes in financial liabilities arising from financing activities:
Unaudited
===============
6 months ended
30 June 2018
US$
At 1 January 2018 -
Cash flows - loan drawdowns 1,000,000
Interest accrued but not yet paid 48,256
At 30 June 2018 1,048,256
===============
16. Trade and other payables
Unaudited Audited
=============================== ---------------------------------
31 December
30 June 2018 2017
US$ US$
Trade payables 324,851 570,476
Trade payables to jointly controlled
entity (Note 17) 30,466 212,442
Trade payables to related parties
(Note 17) 88,847 -
Corporation tax 54,993 54,898
Other taxes and social welfare
costs 94,230 83,305
Accruals and other payables 923,295 795,293
1,516,682 1,716,414
=============================== =================================
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.
17. Related party disclosures
Transactions with subsidiaries
Transactions between the Group and its subsidiaries, Granite and Dolomite, have been eliminated on consolidation.
Transactions with joint ventures
PetroNeft Resources plc had the following transactions with its joint ventures during the six months ended 30 June 2018 and year ended 31 December 2017:
Russian BD WorldAce
Holdings BV Investments
Group Group Limited Group
US$ US$
Receivable by PetroNeft Group at 1
January 2017 4,080,882 44,444,591
Advanced during the year 360,251 -
Transactions during the year 142,086 1,798,417
Interest accrued in the year 270,773 3,238,839
Payments for services made during
the year (480,723) (2,019,374)
Share of joint venture's translation
adjustment (187,315) (1,956,467)
Translation adjustment 32,962 5,665
------------- ---------------
At 1 January 2018 4,218,916 45,511,671
Advanced during the period 392,000 -
Transactions during the period 158,368 986,837
Interest accrued in the period 184,609 1,787,572
Payment for services made during the
period (1,229) (1,058,051)
Share of joint venture's translation
adjustment (553,973) (5,626,425)
Translation adjustment (7,661) (12,513)
At 30 June 2018 4,391,030 41,589,091
============= ===============
Balance at 31 December 2017 comprised
of:
Loans receivable 4,167,887 45,271,615
Trade and other receivables 51,029 452,498
Trade Payables - (212,442)
4,218,916 45,511,671
============= ===============
Balance at 30 June 2018 comprised
of:
Loans receivable 4,190,523 41,432,762
Trade and other receivables 200,507 186,795
Trade and other payables - (30,466)
4,391,030 41,589,091
============= ===============
17. Related party disclosures (continued)
Remuneration of key management
Key management comprise the Directors, the Vice Presidents of Business Development and Operations of the Company and the consulting fees paid to HGR Consulting Limited for the services of the CFO. Their remuneration and fees during the year were as follows:
Remuneration of key management Unaudited Audited
=============== -------------
6 months ended Year ended
30 June 2018 31 December
2017
US$ US$
Compensation of key management 484,183 1,103,224
Contributions to defined contribution
pension plan 26,346 52,693
Consulting fees (HGR Consulting
- see below) 163,171 304,556
===============
673,700 1,460,473
=============== =============
The following amounts were owed to key management at 30 June 2018 and 31 December 2017
Unaudited Audited
------------- ------------
30 June 2018 31 December
2017
US$ US$
Remuneration, fees and expenses due
to Directors 533,235 424,564
Remuneration due to other key management 226,996 122,946
Amounts due to HGR Consulting (see
below) 158,437 276,570
============= ------------
918,668 824,080
============= ============
Details of transactions between the Group and other related parties are disclosed below.
Transactions with HGR Consulting Limited
Paul Dowling, Secretary and Chief Financial Officer of PetroNeft, provides his services through HGR Consulting Limited ("HGR").
17. Related party disclosures (continued)
Transactions with Petrogrand AB
Pavel Tetyakov, VP of Business Development of PetroNeft, is CEO of Petrogrand AB, Swedish company. In addition, Maxim Korobov, a significant shareholder and Non-Executive Director of Petroneft is also a major shareholder of Petrogrand AB. PetroNeft received a loan from Petrogrand AB in 2018. PetroNeft Group has also purchased construction materials from Petrogrand AB.
The following is a summary of the transactions:
Petrogrand
AB
US$
Payable by PetroNeft Group
at 1 January 2018 -
Advanced during the period 1,000,000
Transactions during the period
(purchase of materials) 97,458
Interest accrued in the period 48,256
Payments for goods made during
the period -
Translation adjustment (8,611)
Payable by PetroNeft Group
at 30 June 2018 1,137,103
===========
Balance at 30 June 2018 comprised
of:
Loans payable 1,048,256
Trade and other payables 88,847
1,137,103
===========
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
IR PGUMWBUPRURQ
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September 26, 2018 05:00 ET (09:00 GMT)
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