Source - RNS
RNS Number : 0036L
Petroneft Resources PLC
28 September 2016
 

28 September 2016

 

2016 Interim Results

PetroNeft (AIM: PTR) an oil & gas exploration and production company operating in the Tomsk Oblast, Russian Federation, and 50% owner and operator of Licences 61 and 67 is pleased to report its results for the 6 months ended 30 June 2016.

Highlights

•      Current gross production from Licence 61 is about 3,200 bopd.

•      Represents a 39% increase in production in 2016.

•      New wells drilled at South Arbuzovskoye during period drove production growth.

David Golder, Chairman of PetroNeft Resources plc, commented:

"We have had a busy year so far, with good success in growing production by almost 40% and in enhancing our understanding of Licence 61.

Given that market conditions remain challenging with little sign of improvement in oil prices in the near term, our focus continues to be on growing production, managing costs and positioning the Company for any improvement in market conditions, while we are also investigating opportunities to benefit from current conditions by growing the company through acquisitions or business combinations focussed on producing assets in Russia. We look forward to updating shareholders of our results over the coming year."

For further information, contact:

Dennis Francis, CEO, PetroNeft Resources plc

+1 713 988 2500

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

Martin Jackson/Shabnam Bashir, Citigate Dewe Rogerson

+44 207 638 9571

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 2016 and provide an update on recent progress. 2016 has been a busy year with a significant work programme undertaken at Licence 61, together with our 50% partner Oil India.  The 2016 campaign delivered considerable production growth from new wells at South Arbuzovskoye but some disappointment with the result of a delineation well at the Sibkrayevskoye oil field.

 

Production and Sales

Gross production at Licence 61 in the six months to 30 June 2016 averaged 2,366 bopd, a 36% increase compared to the same period in 2015 (1,744 bopd). We sold 421,714 (gross) barrels of oil in the six months to 30 June 2016 (H1 2015: 329,733 bbls) and achieved an average Russian Domestic oil price of $20.56 (H1 2015: $29.87). The fall in price is reflective of the continuing challenges being faced across the oil and gas industry.

 

Licence 61 Gross Production

H1 2016

Q2-2016

Q1-2016

H1 2015

Total gross production

430,693

223,877

206,816

315,664

Gross bopd

2,366

2,460

2,272

1,744

PetroNeft 50% share bopd

1,183

1,230

1,136

872

 

Gross production at Licence 61 has grown by 39% in the year to date and is currently approximately 3,200 bopd. This growth came from the new wells at South Arbuzovskoye which came online in June and July 2016. Production is shown quarterly above and we intend to publish quarterly production statements from October 2016 onwards. The actual production for Q3-2016 will be announced in October 2016.

 

South Arbuzovskoye

The main drilling programme in 2016 was focussed on the southern lobe of Arbuzovskoye. In 2015 we had drilled the A-103 well from Pad 1 in the northern end and acquired some additional 2D seismic on the southern end. Both the well and the seismic gave us confidence in the potential of the southern lobe. The lessons learned from the horizontal drilling at Tungolskoye in 2015 also proved valuable in setting out the drilling programme in South Arbuzovskoye.

 

We drilled two vertical and two horizontal wells. Our pre-drill estimates were to achieve initial production of 125 bopd from the vertical wells and 600 bopd from the horizontal wells. The results far exceeded these estimates with the vertical wells (A213 & A-216) coming in at over 350 bopd and 175 bopd respectively and the horizontal wells (A-214 & A-215) coming in at over 800 bopd and 650 bopd respectively. With the exception of the A-216 well, the new wells at South Arbuzovskoye continue to perform ahead of expectations. The water cut at A-216 has risen higher than expected and we are examining ways to solve this issue.

 

Sibkrayevskoye

In 2015 we drilled the S-373 delineation well and carried out a major 2D seismic programme across the northern portion of Licence 61 including Sibkrayevskoye.  Between late January and April 2016 the S-373 well was put on production and averaged 200 bopd during the period. This well, along with the previous wells, S-372 and S-370, forms the basis for the initial development of Sibkrayevskoye at Pad 1which is planned for 2017.  We are currently arranging the necessary studies, permits and approvals to sanction Pad 1 development of Sibkrayevskoye later this year.

 

In 2016 we sought to ascertain the full potential of Sibkrayevskoye through the drilling of a 10 km step out well, S-374. The well was drilled in July and August 2016 but unfortunately did not encounter commercial oil and was plugged and abandoned. The result, while disappointing, should not affect the current 2P reserve significantly or impact our decision regarding the development of Pad 1 at Sibkrayevskoye which is 10 km to the north.


 

Review of PetroNeft loss for the period

The loss for the period was US$2.3m (2014: US$1.4m). The loss includes PetroNeft's share of the losses on the joint ventures relating to Licences 61 and 67 of US$2.4m and US$0.2m respectively (H1 2015: US$1.8m and US$0.2m). The loss relating to the Licence 61 joint venture is discussed in more detail below. Finance revenue of US$1.6m (H1 2015: US$1.5m) relates primarily to interest receivable on loans to the joint ventures.

 

 PetroNeft Key Financial Metrics



Audited



6 months ended 30 June 2016


6 months ended 30 June 2015


Year ended 31  December 2015



US$


US$


US$

Continuing operations



Revenue


1,362


1,220


19,165

Cost of sales


(1,235)


(1,206)


(15,233)

Gross profit


127


14


3,932

Administrative expenses


(1,073)


(572)


(3,678)

Exchange gain/(loss) on intra-Group loans


()


17


(2,402)

Operating loss


(923)


(541)


(2,148)

Share of joint venture's net loss - WorldAce Investments Limited


(2,408)


(1,829)


(304)

Share of joint venture's net loss - Russian BD Holdings B.V.


(173)


(157)


(294)

Finance revenue


1,596


1,504


1,551

Loss for the period for continuing operations before taxation


(1,908)


(1,023)


(8,376)

Income tax expense


(410)


(393)


(408)

Loss for the period for continuing operations before taxation


(2,318)


(1,416)


(8,784)

 

 



 

 

Licence 61 joint venture - WorldAce Group

The metrics below are an extraction from the financial statements of the WorldAce Group which demonstrate the performance of Licence 61:

 



PetroNeft's


PetroNeft's

PetroNeft's



50% share 6 months ended 30 June 2016


50% share 6 months ended 30 June 2015


50% share year ended 31 December 2015



US$'000


US$'000


US$'000

Continuing operations







Revenue


4,339


4,925


10,300

Cost of sales


(4,259)


(4,767)


(10,436)

Gross profit


80


158


(136)

Administrative expenses


(917)


(831)


(1,519)

Impairment of oil and gas properties


-


-


(4,550)

Operating loss


(837)


(673)


(6,205)

Finance revenue


4


6


12

Finance costs


(1,575)


(1,162)


(2,572)

Loss for the period for continuing operations before taxation


(2,408)


(1,829)


(8,765)

Income tax credit


-


-


-

Loss for the period for continuing operations before taxation


(2,408)


(1,829)


(8,765)

 

WorldAce Analysis




6 months ended 30 June 2016


6 months ended 30 June 2015


12 months ended 31 December 2015



US$'000


US$'000










Revenue







Oil sales


4,335


4,908


10,276

Other sales


4


16


24

Total revenue


4,339


4,924


10,300








Cost of Sales







Mineral Extraction Tax


2,047


2,495


4,922

Pipeline tariff


820


635


1,493

Staff costs


402


458


840

Depreciation and amortisation


600


517


1,472

Other cost of sales


390


662


1,708

Total cost of sales


4,259


4,767


10,435

 

The detailed Income Statement and Balance Sheet of WorldAce Investments Limited is disclosed at note 7 to these condensed financial statements. Very low oil prices in late 2015 and the first quarter of 2016 have significantly reduced the margin. With the higher production and improved pricing being achieved in the second half of 2016 we should be able to improve the margin as many of our production costs are fixed.

 

In March 2016 Oil India agreed to provide 100% of the funding required to carry out the agreed work programmes at Licence 61 in 2016 and 2017. This work programme is expected to require gross funding of at least US$35 million, US$10m in 2016 and US$25m in 2017. The funding is to be provided by way of unsecured loans to the joint venture company WorldAce Investments Limited. The loan agreement for the 2016 requirement of US$10m was executed in March 2016 and the funding fully drawn by July 2016. It is expected that the loan agreement for the 2017 requirement will be executed on substantially similar terms in late 2016.

 

Licence 67

During 2015, we agreed an exploration programme for Licence 67 for the five years to 2020 with the Russian authorities; based on this, the first significant expenditure required will be in 2017 but we expect to be able to defer this expenditure to at least 2018. We view Licence 67 as having considerable long term potential and we are discussing forward plans with our joint venture partner Belgrave Naftogas (Arawak Energy).

 

Board Changes

As discussed in the Annual Report, in April 2016 Maxim Korobov, Anthony Sacca and David Sturt joined the Board as non-executive Directors. David Sanders, Gerry Fagan and Paul Dowling left the Board, however Mr. Dowling remains as CFO of the Company and is Company Secretary. 

 

Business development

In May 2016 Pavel Tetyakov joined the Company as Vice President of Business Development to help bring a renewed focus on Business Development and we are actively pursuing a number of exciting options in this regard.

 

Outlook

 We have had a busy year so far, with good success in growing production and our longer term development and exploration plans for our portfolio, however market conditions remain challenging and there are few signs of sustained improvement in oil prices in the near term. We are now focussed on commencing the development of our largest field, Sibkrayevskoye in 2017 which, with the expected Oil India loan agreement to be signed, the Company is fully financed for. Our focus continues to be on growing production, managing costs and positioning the Company for any improvement in market conditions, while we are also investigating opportunities to benefit from current conditions by growing the company through acquisitions or business combinations focussed on producing assets in Russia. We look forward to updating shareholders of our results over the remainder of 2016.

 

David Golder

Non-Executive Chairman


 

Interim Condensed Consolidated Income Statement

For the 6 months ended 30 June 2016




Audited



6 months ended 30 June 2016


6 months ended 30 June 2015


Year ended 31  December 2015



US$


US$


US$

Continuing operations



Revenue


1,362,158


1,220,323


2,398,314

Cost of sales



(1,234,712)


(1,205,656)


(2,370,949)

Gross profit



127,446


14,667


27,365









Administrative expenses



(1,073,237)


(572,017)


(1,379,506)

Exchange loss on intra-Group loans



22,522


16,401


(284,449)

Operating loss


(923,268)


(540,949)


(1,636,590)









Share of joint venture's net loss - WorldAce Investments Limited


(2,407,781)


(1,828,719)


(8,765,055)

Share of joint venture's net loss - Russian BD Holdings B.V.


(172,677)


(157,470)


(314,859)

Finance revenue


1,595,944


1,504,174


3,041,587

Loss for the period for continuing operations before taxation



(1,907,782)


(1,022,964)


(7,674,917)









Income tax expense


(409,925)


(392,701)


(799,466)









Loss for the period attributable to equity holders of the Parent



(2,317,707)


(1,415,665)


(8,474,383)









Loss per share attributable to ordinary equity holders of the Parent








Basic and diluted - US dollar cent


(0.33)


(0.20)


(1.20)

 

 

Interim Condensed Consolidated Statement of Comprehensive Income

For the 6 months ended 30 June 2016




Audited



6 months ended 30 June 2016


6 months ended 30 June 2015


Year ended 31  December 2015



US$


US$


US$

Loss for the period attributable to equity holders of the Parent


(2,246,207)


(1,415,665)


(8,474,383)

Other comprehensive income to be reclassified to profit or loss in subsequent periods:







Currency translation adjustments - subsidiaries


61,935


19,683


265,640

Share of joint ventures' other comprehensive income - foreign exchange translation differences


5,467,539


909,754


(12,474,502)

Total comprehensive profit/(loss) for the period attributable to equity holders of the Parent


3,211,767


(486,228)


(20,683,245)

 

 

 

Interim Condensed Consolidated Balance Sheet

As at 30 June 2016





Audited



30 June 2016


31 December 2015



US$


US$

Assets



Non-current Assets



Property, plant and equipment


167,922


181,703

Equity-accounted investment in joint ventures - WorldAce Investments Limited


-


-

Equity-accounted investment in joint ventures - Russian BD Holdings B.V.


-


-

Financial assets - loans and receivables


47,214,376


42,883,861



47,382,298


43,065,564

Current Assets





Inventories


29,676


54,302

Trade and other receivables


2,314,336


1,842,128

Cash and cash equivalents


382,546


1,284,212



2,726,558


3,180,642

Total Assets


50,108,856


46,246,206






Equity and Liabilities





Capital and Reserves





Called up share capital


9,429,182


9,429,182

Share premium account


140,912,898


140,912,898

Share-based payments reserve


6,796,540


6,796,540

Retained loss


(77,092,497)


(74,774,790)

Currency translation reserve


(33,355,674)


(38,885,148)

Other reserves


336,000


336,000

Equity attributable to equity holders of the Parent


47,026,449


43,814,682






Non-current Liabilities





Deferred tax liability


1,693,335


1,286,378



1,693,335


1,286,378

Current Liabilities





Trade and other payables


1,389,072


1,145,146



1,389,072


1,145,146

Total Liabilities


3,082,407


2,431,524

Total Equity and Liabilities


50,108,856


46,246,206

 


Interim Condensed Consolidated Statement of Changes in Equity

For the 6 months ended 30 June 2016


Called up share capital


Share premium account


Share-based payment and other reserves


Currency translation reserve


Retained loss

Total


US$


US$


US$


US$


US$

US$













At 1 January 2015

9,429,182


140,912,898


7,099,745


(26,676,286)


(66,300,407)


64,465,132

Loss for the year

-


-


-


-


(8,474,383)


(8,474,383)

Currency translation adjustments - subsidiaries

-


-


-


265,640


-


265,640

Share of joint ventures' other comprehensive income - foreign exchange translation differences

-


-


-


(12,474,502)


-


(12,474,502)

Total comprehensive loss for the year

-


-


-


(12,208,862)


(8,474,383)


(20,683,245)

Share-based payment expense

-


-


32,795


-


-


32,795

At 31 December 2015

9,429,182


140,912,898


7,132,540


(38,885,148)


(74,774,790)


43,814,682













At 1 January 2016

9,429,182


140,912,898


7,132,540


(38,885,148)


(74,774,790)


43,814,682

Loss for the period

-


-


-


-


(2,317,707)


(2,317,707)

Currency translation adjustments - subsidiaries

-


-


-


(61,935)


-


(61,935)

Share of joint ventures' other comprehensive income - foreign exchange translation differences

-


-


-


5,467,539


-


5,467,539

Total comprehensive profit for the period

-


-


-


5,529,474


(2,317,707)


3,211,767

At 30 June 2016

9,429,182


140,912,898


7,132,540


(33,355,674)


(77,092,497)


47,026,449


Interim Condensed Consolidated Cash Flow Statement

For the 6 months ended 30 June 2016




Audited



6 months ended 30 June 2016


6 months ended 30 June 2015


Year ended 31  December 2015



US$


US$


US$

Operating activities




Loss before taxation


(1,907,782)


(1,022,964)


(7,674,917)

Adjustment to reconcile loss before tax to net cash flows




Non-cash




Depreciation


36,970

54,575


97,673

Share of loss in joint ventures


2,580,458

1,986,189


9,079,914

Share-based payment expense

-

16,246


32,795

Finance revenue

(1,595,944)

(1,504,174)


(3,041,587)

Working capital adjustments




(Increase)/decrease in trade and other receivables

(322,891)

156,081


(548,351)

Decrease/(increase) in inventories


24,626

(36,465)


(39,122)

Increase/(decrease) in trade and other payables

292,234

(458,992)


31,428

Income tax paid


(12,771)

(9,861)


(25,832)

 Net cash flows used in operating activities


(905,100)


(819,365)


(2,087,999)

Investing activities







Purchase of property, plant and equipment

-

(13,312)


(19,059)

Interest received


1,480

5,984


10,095

 Net cash received from/(used in) investing activities


1,480


(7,328)


(8,964)

 Net decrease in cash and cash equivalents


(903,620)


(826,693)


(2,096,963)

 Translation adjustment


1,954

(8,481)


(11,594)

 Cash and cash equivalents at the beginning of the period


1,284,212


3,392,769


3,392,769

 Cash and cash equivalents at the end of the period

382,546


2,557,595


1,284,212

 



 


Notes to the Interim Condensed Consolidated Financial Statements

For the 6 months ended 30 June 2016

The interim condensed consolidated financial statements of the Group for the six months ended 30 June 2016 were authorised for issue in accordance with a resolution of the Directors on 27 September 2016.

 

PetroNeft Resources plc ('the Company', or together with its subsidiaries, 'the Group') is a Company incorporated in Ireland. The Company is listed on the Alternative Investment Market ('AIM') of the London Stock Exchange and the Enterprise Securities Market ('ESM') of the Irish Stock Exchange. The address of the registered office and the business address in Ireland is 20 Holles Street, Dublin 2. The Company is domiciled in the Republic of Ireland.

 

The principal activities of the Group are oil and gas exploration, development and production. 

 

 

The interim condensed consolidated financial statements for the six months ended 30 June 2016 have been prepared in accordance with IAS 34 Interim Financial Reporting.

 

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2015 which are available on the Group's website - www.petroneft.com.

 

The interim condensed consolidated financial statements are presented in US dollars ("US$").

 

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2015.

 

 

 

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:






Audited






30 June 2016


31 December 2015


Non-current assets




US$


US$


Russia




                    47,379,517

                43,062,084


Ireland




2,781


3,480






        47,382,298


              43,065,564

               

 

4.

Finance revenue


Audited




6 months ended 30 June 2016


6 months ended 30 June 2015


Year ended 31 December 2015




US$


US$


US$


Bank interest receivable


1,480


5,984


10,095


Interest receivable on loans to Joint Ventures


1,594,464


1,498,190


3,031,492




1,595,944


1,504,174


3,041,587

 

 

 

 

  

 

 

5.

Income tax










Audited




6 months ended 30 June 2016


6 months ended 30 June 2015


Year ended 31 December 2015




US$


US$


US$


Current income tax








Current income tax charge


2,968


9,047


24,863


Total current income tax


2,968


9,047


24,863










Deferred tax








Relating to origination and reversal of temporary differences

406,957


383,654


774,603


Total deferred tax


406,957


383,654


774,603


Income tax expense reported in the Interim Consolidated Income Statement



799,466

Property, Plant and Equipment








Plant and



machinery



US$


Cost





At 1 January 2015



996,588


Additions



19,059


Translation adjustment

(215,247)


At 1 January 2016



800,400


Translation adjustment

104,224


At 30 June 2016



904,624







Depreciation





At 1 January 2015



674,786


Charge for the year



97,673


Translation adjustment



(153,762)


At 1 January 2016



618,697


Charge for the period

36,970


Translation adjustment

81,035


At 30 June 2016



736,702




Net book values


At 30 June 2016



167,922


At 31 December 2015



181,703

 

 

 

 

 

 

PetroNeft Resources plc has a 50% interest in WorldAce Investments Limited, a jointly controlled entity which holds 100% of LLC Stimul-T, an entity involved in oil and gas exploration and the registered holder of Licence 61. The interest in this joint venture is accounted for using the equity accounting method. WorldAce Investments Limited is incorporated in Cyprus and carries out its activities, through LLC Stimul-T, in Russia.





Share of net assets





US$







At 1 January 2015



10,865,156


Elimination of unrealised profit on intra-Group transactions



(29,326)


Retained loss



(8,765,055)


Translation adjustment



(11,587,393)


Credited against loans receivable from WorldAce Investments Limited (Note 9)



9,516,618


At 1 January 2016



-


Elimination of unrealised loss on intra-Group transactions



(151,029)


Retained loss



(2,407,781)


Translation adjustment



5,042,837


Reversal of credit to loans receivable from WorldAce Investments Limited (Note 9)



(2,484,027)


At 30 June 2016



-

 

The balance sheet position of WorldAce Investments Limited shows net liabilities of US$23,500,706 following a loss in the period of US$4,815,562 together with a positive currency translation adjustment of US$10,085,675. PetroNeft's 50% share is included above and results in a negative carrying value of US$7,032,591. Therefore, the share of net assets is reduced to Nil and, in accordance with IAS 28 Investments in Associates and Joint Ventures, the amount of US$7,032,591 is deducted from other assets associated with the joint venture on the Balance Sheet which are the loans receivable from WorldAce Investments (see Note 9).



 

 

 

 



Audited



6 months ended 30 June 2016


6 months ended 30 June 2015


Year ended 31  December 2015



US$


US$


US$









Continuing operations







Revenue

4,339,111


4,924,336


10,300,094


Cost of sales

(4,259,206)


(4,766,524)


(10,435,521)


Gross profit

79,905


157,812


(135,427)


Administrative expenses

(916,886)


(830,570)


(1,519,005)


Impairment of oil and gas properties

-


-


(4,550,000)


Operating loss

(836,981)


(672,758)


(6,204,432)


Finance revenue

3,475


5,834


11,694


Finance costs

(1,574,275)


(1,161,795)


(2,572,317)


Loss for the period for continuing operations before taxation

(2,407,781)


(1,828,719)


(8,765,055)


Income tax expense

-


-


-


Loss for the period

(2,407,781)


(1,828,719)


(8,765,055)









Loss for the period

(2,407,781)


(1,828,719)


(8,765,055)


Other comprehensive income to be reclassified to profit or loss in subsequent periods:







Currency translation adjustments

5,042,837


837,749


(11,587,393)


Total comprehensive profit/(loss) for the period

2,635,056


(990,970)


(20,352,448)

 

The currency translation adjustment results from the revaluation of the Russian Rouble during the period. All Russian Rouble carrying values in Stimul-T, the 100% subsidiary of WorldAce are converted to US Dollars at each period end. The resulting gain or loss is recognised through other comprehensive income and transferred to the currency translation reserve. The Russian Rouble appreciated significantly against the US Dollar during the period from RUB73.30:US$1 at 31 December 2015 to RUB64.05:US$1 at 30 June 2016.

 

 

 

 

 






Audited




30 June 2016


31 December 2015




US$


US$


Non-current Assets




Oil and gas properties


35,421,820


27,646,307


Property, plant and equipment


206,001


197,826


Exploration and evaluation assets


7,048,832


6,044,036


Assets under construction


2,665,129


2,345,358





45,341,782


36,233,527









Current Assets






Inventories


479,906


257,857


Trade and other receivables


308,786


259,142


Cash and cash equivalents


38,018


153,198




826,710


670,197








Total Assets



46,168,492


36,903,724
















Non-current Liabilities






Provisions


(353,646)


(273,278)


Interest-bearing loans and borrowings


(52,416,272)


(48,366,752)




(52,769,918)


(48,640,030)


Current Liabilities






Trade and other payables


(5,148,927)


(2,649,103)





(5,148,927)


(2,649,103)


Total Liabilities



(57,918,845)


(51,289,133)









Net Liabilities



(11,750,353)


(14,385,409)

 



 

 

 

PetroNeft Resources plc has a 50% interest in Russian BD Holdings B.V., a jointly controlled entity which holds 100% of LLC Lineynoye, an entity involved in oil and gas exploration and the registered holder of Licence 67. The interest in this joint venture is accounted for using the equity accounting method. Russian BD Holdings B.V. is incorporated in the Netherlands and carries out its activities in Russia.

 





Share of net assets





US$







At 1 January 2015



365,178


Retained loss



(314,859)


Translation adjustment



(887,109)


Credited against loans receivable from Russian BD Holdings BV (Note 9)



836,790


At 1 January 2016



-


Retained loss



(172,677)


Translation adjustment



424,702


Reversal of credit to loans receivable from Russian BD Holdings BV (Note 9)



(252,025)


At 30 June 2016



-


The balance sheet position of Russian BD Holdings B.V. shows net liabilities of US$1,169,530 following a loss in the year of US$345,354 together with a currency translation adjustment (gain) of US$849,404. PetroNeft's 50% share is included above and results in a negative carrying value of US$584,765. Therefore, the share of net assets is reduced to Nil and, in accordance with IAS 28 Investments in Associates and Joint Ventures, the amount of US$584,765 is deducted from other assets associated with the joint venture on the Balance Sheet which are the loans receivable from Russian BD Holdings B.V. (Note 9).

 

 

 



 

 

 



Audited



6 months ended 30 June 2016


6 months ended 30 June 2015


Year ended 31  December 2015



US$


US$


US$









Revenue

-


-


-


Cost of sales

-


-


-


Gross profit

-


-


-


Administrative expenses

(56,435)


(58,858)


(106,224)


Operating loss

(56,435)


(58,858)


(106,224)


Finance revenue

204


274


434


Finance costs

(116,446)


(98,886)


(209,069)


Loss for the period for continuing operations before taxation

(172,677)


(157,470)


(314,859)









Taxation

-


-


-









Loss for the period

(172,677)


(157,470)


(314,859)









Loss for the period

(172,677)


(157,470)


(314,859)


Other comprehensive income to be reclassified to profit or loss in subsequent periods:







Currency translation adjustments

424,702


72,005


(887,109)


Total comprehensive profit/(loss) for the period

252,025


(85,465)


(1,201,968)

 

 





Audited



30 June 2016



31 December 2015



US$



US$


Non-current assets

3,787,327



3,327,327


Current assets

45,227



71,104


Total assets

3,832,554



3,398,431








Non-current liabilities

(4,214,659)



(4,034,780)


Current liabilities

(202,660)



(200,441)


Total liabilities

(4,417,319)



(4,235,221)








Net Liabilities

(584,765)



(836,790)

 

 

 

9.

Financial assets - loans and receivables











Audited





30 June 2016


31 December 2015





US$


US$









Loans to WorldAce Investments Limited (Note 14)


50,704,823


                49,224,805


Less: share of WorldAce Investments Limited loss

(7,032,591)


(9,516,618)





43,672,232


39,708,187


Loans to Russian BD Holdings B.V. (Note 14)


4,126,909


                  4,012,464


Less: share of Russian BD Holdings B.V. loss

(584,765)


(836,790)





3,542,144


3,175,674





47,214,376


42,883,861

 

The Company has granted a loan facility to its joint venture undertaking WorldAce Investments Limited of up to US$45 million. This loan facility is US$ denominated and unsecured. Interest currently accrues on the loan at USD LIBOR plus 6.0% but the Company has agreed not to seek payment of interest until H2 2017 at the earliest. The loan is set to mature on 31 December 2022. The loan from the Company to Russian BD Holdings is repayable on demand. Interest currently accrues on the loan at LIBOR plus 6.0% per annum.

 

 

10.

Inventories




Audited





30 June 2016


31 December 2015





US$


US$









Materials



                      29,676


                     54,302





29,676


54,302

 

 

11.

Trade and other receivables




Audited




30 June 2016


31 December 2015




US$


US$









Other receivables



                          224,724


                     147,641


Receivable from jointly controlled entity (Note 14)



                  1,852,613


              1,628,667


Advances to contractors



                         1,992


                      3,708


Prepayments



                    235,007


                    62,112





2,314,336


5,069,944

 

              Other receivables are non-interest-bearing and are normally settled on 60-day terms.

 

 

 

 

 

 

 

12.

Cash and Cash Equivalents











Audited

Group



30 June 2016


31 December 2015



US$


US$






Cash at bank and in hand



                      382,546


               1,284,212





                        382,546


1,284,212

 

              Bank deposits earn interest at floating rates based on daily deposit rates. Short-term deposits are made for varying periods of between one day and one month depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates.

 

13.

Trade and other payables











Audited





30 June 2016


31 December 2015





US$


US$









Trade payables



                          334,135


                     238,570


Trade payables to jointly controlled entity (Note 14)



                       388,254


                   239,228


Corporation tax



                          59,439


                     59,087


Oil taxes, VAT and employee taxes



                          44,874


                     78,293


Other payables



                        348,544


                  212,141


Accruals



                        213,826


                   317,827





                     1,389,072


               1,145,146

 

 

             

              The Directors consider that the carrying amount of trade and other payables approximates their fair value.

 

              Trade and other payables are non-interest-bearing and are normally settled on 60-day terms.

 

              Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.



 

 

 

Transactions with subsidiaries

Transactions between the Group and its subsidiaries, Granite and Dolomite, have been eliminated on consolidation.

 

Transactions with joint ventures

PetroNeft Resources plc had the following transactions with its joint ventures during the six months ended 30 June 2016 and year ended 31 December 2015:


Group


Russian BD Holdings BV Group


WorldAce Investments Limited Group




US$


US$








Receivable by PetroNeft Group at 1 January 2015


3,882,578


47,341,766


Transactions during the year


183,333


2,670,250


Interest accrued in the year


205,189


2,826,303


Payments for services made during the year


(29,781)


(2,483,727)


Share of joint venture's translation adjustment


(836,790)


(9,516,618)


Translation adjustment


(14,821)


45,618


At 1 January 2016


3,389,708


40,883,592


Transactions during the period


78,222


1,686,332


Interest accrued in the period


114,445


1,480,019


Payment for services made during the period


(2,743)


(1,771,387)


Share of joint venture's translation adjustment


252,025


2,484,027


Translation adjustment


7,941


76,554


At 30 June 2016


                  3,839,598


               44,839,137








Balance at 31 December 2015 comprised of:






Loan facility advanced


3,175,674


39,708,187


Trade and other receivables


214,034


1,414,633


Trade Payables


-


(239,228)




3,389,708


40,883,592


Balance at 30 June 2016 comprised of:






Loans receivable


3,542,144

43,672,232


Trade and other receivables


297,454

1,555,159


Trade and other payables


-

(388,254)




3,839,598


44,839,137

 

 

 

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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