TIDMMATD
RNS Number : 5431J
Petro Matad Limited
29 June 2017
29 June 2017
Petro Matad Limited
("Petro Matad" or the "Company")
Final results for year ended 31 December 2016
Petro Matad Limited ("Petro Matad" or "the Company"), the AIM
quoted Mongolian oil explorer, announces its audited final results
for the year ended 31 December 2016.
Operational and Financial Highlights
-- The net profit after tax for the Group for the 12 months
ended 31 December 2016 was $10.90 million (31 December 2015: Loss
$0.19 million).
-- During the year the Group focused on exploration activities
on its Production Sharing Contracts (PSCs) with the Mineral
Resources and Petroleum Authority of Mongolia (MRPAM) on Blocks IV,
V and XX in Mongolia.
-- After year-end:
o In February 2017, reassignment of Blocks IV and V following
Shell's affiliate exit; 100% now held by the Group;
o In May 2017, financing agreement with Bergen to provide up to
$43.2 million through staged private placements over 15 months,
together with a $2 million convertible loan note;
o In May 2017, letter of intent with Sinopec for drilling rig
for 2017 drilling campaign; and
o In June 2017, 2-year PSC extensions received from MRPAM for
Blocks IV and V.
-- As at 31 December 2016 the Group's cash position was $6.48
million (31 December 2015: $5.34 million. Following receipt of the
final exit payment from Shell in February 2017 and first financing
tranches from Bergen, the Group current cash position is $11.18
million.
No dividends have been paid or are proposed in respect of the
year 2016 (2015: Nil).
About Petro Matad
Petro Matad is the parent company of a group focussed on oil
exploration, as well as future development and production in
Mongolia. At the current time, Petro Matad holds the sole
operatorship of three Production Sharing Contracts with the
Government of Mongolia. Block XX has an area of 10,340 km(2) in the
far eastern part of the country, and Blocks IV and V have an area
of 28,900 km(2) and 21,100 km(2) , respectively, in the west
central part of the country.
Petro Matad Limited is incorporated in the Isle of Man under
company number 1483V. Its registered office is at Victory House,
Prospect Hill, Douglas, Isle of Man, IM1 1EQ.
Further Information:
Petro Matad Limited
Ridvan Karpuz, CEO +976 70141099 / +976 75751099
Nominated Adviser and Broker
Stockdale Securities Limited +44 (0)20 7601 6100
Richard Johnson / David Coaten
Business Advisory Firm
FTI Consulting
Edward Westropp +44 (0)20 3727 1521 / +44(0) 7920 453 705
Annual Report and Accounts
The Company's statutory annual report and accounts will be
dispatched electronically to shareholders today and will be posted
shortly to shareholders who have elected to receive hard copies of
the Annual Report. Additional copies of the Annual Report may be
requested directly from the Company and an electronic copy is
available on the Company's website www.petromatadgroup.com .
Annual General Meeting ("AGM")
A notice of the Company's AGM will be distributed in due course
and be made available on the Company's website
www.petromatadgroup.com.
Directors' Statement
Petro Matad has an extensive onshore licence position (60,500
km(2) ) in three petroleum blocks. Blocks IV and V are in a
regionally proven play, with virgin undrilled frontier acreage in
West Central Mongolia. The 2016 financial year was a busy and
exciting one for the Company, as it brought Petro Matad to a stage
of being ready to drill wildcat exploration wells in Blocks IV and
V in 2017.
Our 2016 work programme focused on high grading basins and
maturing prospects to drillable targets, and building a diversified
drilling prospect portfolio in Blocks IV and V. Our objective is to
generate significant shareholder value through our upcoming
drilling programme. Our exploration strategy is focused on
"play-based" exploration by systematically de-risking and
high-grading prospective basins with geological and geophysical
studies by introducing state of the art exploration techniques. In
addition to our wildcat exploration drilling campaign, the Company
intends to acquire 300 km2 of 3D seismic in the Tugrug Basin in
Block V, where the TSC-1 core hole has already proved a working
petroleum system by recovering live oil, to de-risk prospects and
to generate drillable targets. This will be the first time 3D
seismic will have been acquired in this region and the results are
expected to generate additional prospects with higher chances of
success for our upcoming drilling campaign in 2018.
As this area of Mongolia has never seen exploration drilling for
hydrocarbons, the wells will not only be play and basin openers for
our blocks, but also for an entire geographic area of the
country.
The exit of Shell's Affiliate from Blocks IV and V (which
followed Shell's acquisition of BG Group) did not alter Petro
Matad's work programme plans as the exit payments made by Shell
funded all planned activities during the year.
Farmout process
In November 2016, the Company embarked on a farmout campaign.
The Company is of the view that sharing the risk of frontier
exploration is a prudent approach for conserving existing funds and
accessing additional funds, which will also allow for a more
comprehensive exploration effort to fully explore the Company's
vast frontier acreage. Significant interest has been shown by
potential partners in the farmout campaign. The farmout process
continues and, at the time writing, a number of companies remain
engaged in discussions that could result in an agreement. Almost
universally, parties that have visited Petro Matad's virtual and
physical data rooms have expressed very positive views on the
technical aspects and prospectivity of our blocks. However, new
country entry is always a substantial hurdle for any potential
farmout partner and that is a principal factor resulting in their
internal review processes to take significantly longer than for
opportunities where they already have a presence in the
country.
Financing flexibility
To ensure that Petro Matad is well financed in the event a
farmout is not concluded on a timely basis, the Company
investigated several financing opportunities and, on 8 May 2017,
entered into an agreement with Bergen Asset Management, LLC
(Bergen) which, in the Board's view, offered the most attractive
package. The agreement provides staged private placements of up to
US$43,200,000 worth of new ordinary shares in the Company and a
US$2,000,000 convertible instrument. The staged private placements
will occur approximately monthly, over a period of up to 15 months,
with the value of each tranche ranging between $1.2 million - $3.0
million per month, the precise amounts being subject to mutual
agreement. The funding provided by the agreement with Bergen
provides the Company with the financial flexibility to enable it to
carry out its 2017 and 2018 work programmes. It is important to
note that the Bergen facility may be cancelled at any time by the
Company and, if appropriate under the circumstances, this would be
an option that the Company would consider if or when a farmout is
concluded. The funds from each tranche are received prior to the
issuance of the new shares for each tranche.
On 15 June 2017, the Company announced that the MRPAM had
formally approved an extension of the exploration period for the
Blocks IV and V PSCs, for 2 years each, until 29 July 2019. A
further two-year extension is provided for in the PSCs, which the
Company will be eligible to apply for in early 2019.
With funding secured and the commencement of the drilling
programme in the near term, the Company is poised to enter a new
and exciting chapter in its history, especially given the
exploration potential of our blocks. The following points from the
PETEX conference presentation made by Petro Matad in November 2016,
reinforces this point.
-- With the incorporation of the results of the data acquired
during the 2015-2016 exploration work program (including the
acquisition of 1660 km of 2D seismic and 11,000 km2 of Full Tensor
Gradiometer & High Resolution Aeromagnetic data), the Company
has significantly upgraded its prospective basin portfolio. The
current data coverage in the Company's acreage has revealed 12
prospective basins and this is likely to increase as further work
programme activities, including seismic acquisition, are undertaken
in the future. Therefore, excellent potential for discovering
material hydrocarbon volumes exists within the Company's
acreage.
-- Regional petroleum basin modelling and play evaluation work
has addressed 6 key basins where the data coverage is currently
more complete; these are: Biger, Shal, Baatsagaan, and Baidrag in
Block IV; and Taats and Tugrug in Block V. The other basins (which
only have sparse data coverage) that make up the remainder of the
12 prospective basins are: Delger, Bayantsagaan, Khangai, Orog,
Khovor and Guchin-Us.
-- The Company's in-house estimates of undiscovered petroleum
resources initially in place, as determined by its exploration team
and consultants following the interpretation acquired datasets in
Blocks IV and V, show potentially generated hydrocarbons using the
play and basin analysis method on the 6 high-graded key basins of
circa 90 billion barrels of oil in the Upper Jurassic-Lower
Cretaceous play, which is the proven and producing petroleum system
in Mongolia. The volume of potentially trapped oil ranges from 9 to
23 billion barrels of Stock Oil Initially in Place (STOIIP),
assuming trapping efficiencies of 10% to 25%. Further upside
potential exists in the deeper Permian-Jurassic play, which is
analogous to the prolific systems in the western Chinese basins.
The remaining six other sub-basins and other areas with limited
data coverage will be the focus of future new seismic acquisition
to determine their prospectivity potential.
-- The Company's play and basin focused exploration strategy has
enabled the Company to build a portfolio which contains a wide
range of exploration opportunities. This diversified basin
portfolio approach has provided the framework for a spectrum of
leads and prospects with different risk and reward factors, to be
developed. The result is that the Company has an extensive
drill-ready high impact prospect portfolio for the upcoming 2017
drilling campaign and beyond.
2016 and 2017 Work Programme Summary
The 2D seismic acquisition programme that commenced in 2015 and
was completed in 2016 was designed to: 1) improve basin-scale
definition over the greater Baatsagaan trend of central Block IV,
and 2) elevate data coverage to prospect-scale for drill target
definition over two priority areas - the Taatsiin Basin of Block V
and the high-graded Baidrag Graben of Block IV.
The first phase of the seismic programme in Block IV was
completed in December 2015, with 1085 kms of high quality data
being acquired. The results were encouraging and led to the
discovery of the attractive Baidrag Graben trend, which was the
focus area of the 2016 seismic infill programme in Block IV, which
after a winter break was acquired in May 2016. Operations then
moved to Block V with seismic acquisition commenced in June 2016
where 256 km of seismic were acquired for targeting and developing
leads as well as to pinpoint possible well locations in the
Taatsiin Basin.
Since completing the seismic acquisition programme in August
2016, the Company has been primarily focused on interpreting data
to develop a leads and prospects portfolio, several which are now
drill-ready.
The Company completed its tender processes for a drilling rig
and related services and on 31 May 2017, awarded a Letter of Intent
(LOI) to Sinopec Mongolia LLC (Sinopec). The formal signing of the
drilling contract is expected in the very near future. Sinopec has
initiated preparation processes for commencement of rig
mobilization.
The key work programme activity that is planned over the
remainder of 2017 is to drill two wildcat exploration wells and to
acquire approximately 300 square km. of 3D seismic over the Tugrug
Basin in Block V. Details on the specific drilling targets will be
provided by announcements to the market prior to spudding the
wells. The 3D Seismic programme is designed to acquire data over
the Tugrug Basin, which is in a remote area 600 km southwest of
Ulaanbaatar, in Block V. The main objectives of the 3D survey are
to de-risk/high-grade drillable prospects and understand further
upside and play potential in the basin. The currently identified
leads and prospects in the basin were defined on 2D seismic
acquired in 2010, 2011, and 2013.
It should be noted that the Tugrug basin is structurally complex
and the 2D interpretation leaves a high level of uncertainty
regarding fault linkage and trap definition, which the 3D survey is
expected to resolve and further identify the stratigraphic traps
which are now proven to be most prolific producing trap styles in
similar lacustrine basins. The target formations are in the late
Jurassic-early Cretaceous fluvial-lacustrine Mega-Sequence.
Drilling of the most optimal prospect is planned in 2018.
In relation to Block XX, in April 2016 the Petroleum Authority
of Mongolia provided a one-year moratorium covering the calendar
year 2016, which froze the obligations that would have normally
been incurred, while at the same time extending the current license
period to July 2018. The moratorium has enabled the Company to
focus on the Block IV and V work programmes in 2016, while
providing additional time to seek interested partners in exploring
the highly prospective Block XX acreage.
Governance
During the period, the Company also strengthened the Board with
the addition of Tim Bushell as a Non-Executive Director. Tim is a
highly experienced public company director in the UK as well as a
trained Geo-scientist. Tim's exploration background and capital
markets experience will reinforce the Board's commercial and
technical expertise as the Company enters an important period in
its development.
HSSE
As part of the board's ongoing process of continual improvement
the Company's Health Safety Security and Management System (HSSE
MS) is now fully structured according to International Association
of Oil and Gas Producers (IOGP) guidelines.
All incidents are investigated, recorded and classified
according to IOGP guidelines and learnings are shared through the
management review process.
The Company is deeply focused on environmental protection. This
was evident during the seismic acquisition programmes in 2015 and
2016. To ensure both legal compliance when working near protected
areas and to minimise all adverse environmental impacts, detailed
environmental and cultural sensitivity field studies by specialist
consultants were also commissioned. No environmental complaints
were received during any of the Company's field activities.
Community Relations
The Company takes its responsibilities in community engagement
and relations very seriously. In advance of any work programme
activity being undertaken, the Company obtains approval from MRPAM
and then invites them to join Company representatives on trips to
local communities to present the planned activities. In addition to
meeting local government officials, the socialisation programme
will also normally include town hall meetings where questions by
local residents are answered. Company representatives will also
meet with herders who may be in proximity to planned
operations.
In all the various work programmes the Company has undertaken
over the years, community support has always been provided and no
disruption to work or serious community issues have arisen. This is
a record the Company is proud of and works hard to consistently
achieve.
Outlook - a busy period moving the business towards exploration
drilling.
2017 has already started well with the de-risking of the balance
sheet through the equity financing agreement with Bergen, as well
as the agreement with Sinopec for a drilling rig. Looking ahead we
are anticipating finalising the drilling contract and mobilising
the rig out to location on Block V in Q3 2017 and spudding the well
in September 2017. Following this first well, we then expect to
move directly to drill the second well. Both the wells are fully
funded from existing resources and we will be announcing details of
the drill targets ahead of the commencement of the campaign.
We look forward to updating shareholders regularly as to our
progress with our drilling campaign and other corporate
developments.
Conclusion
The Board would like to express their appreciation to our staff,
both technical and non-technical, who have worked with enthusiasm
and diligence throughout the year. We would also like to express
our gratitude to shareholders for their continued support of the
Company.
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the year ended 31 December 2016
Consolidated
31 Dec 2016 31 Dec 2015
Note $'000 $'000
------------ ------------
Continuing operations
Revenue
Interest income 4(a) 40 22
Other income 4(a) 18,849 11,722
------------ ------------
18,889 11,744
Expenditure
Consultancy fees (55) (476)
Depreciation and amortisation (226) (97)
Employee benefits expense 4(b) (3,280) (2,438)
Exploration and evaluation expenditure 4(c) (2,464) (7,236)
Other expenses 4(d) (1,968) (1,687)
Profit/(Loss) from continuing operations
before income tax 10,896 (190)
Income tax expense 5 - -
------------ ------------
Profit/(Loss) from continuing operations
after income tax 10,896 (190)
Net profit/(loss) for the year 10,896 (190)
------------ ------------
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translating
foreign operations, net of income tax
of $Nil (2015: $Nil) (93) (41)
Other comprehensive loss for the year,
net of income tax (93) (41)
Total comprehensive profit/(loss) for
the year 10,803 (231)
============ ============
Profit/(Loss) attributable to owners
of the parent 10,896 (190)
============ ============
Total comprehensive income attributable
to owners of the parent 10,803 (231)
============ ============
Earnings/(Loss) per share (cents per
share)
Basic earnings/(loss) per share 6 3.8 (0.1)
Diluted earnings/(loss) per share 6 3.8 (0.1)
The above Consolidated Statement of Profit or Loss and Other
Comprehensive Income should be read in conjunction with the
accompanying notes.
Consolidated Statement of Financial Position
As at 31 December 2016
Consolidated
31 Dec 2016 31 Dec 2015
Note $'000 $'000
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents 7 6,479 5,339
Trade and other receivables 8 5,155 822
Prepayments and other assets 9 523 812
------------ ------------
Total Current Assets 12,157 6,973
Non-Current Assets
Trade and other receivables 8 - 536
Exploration and evaluation assets 10 15,275 15,275
Property, plant and equipment 11 783 502
Total Non-Current Assets 16,058 16,313
------------ ------------
TOTAL ASSETS 28,215 23,286
------------ ------------
LIABILITIES
Current Liabilities
Trade and other payables 12 1,352 7,436
Total Current Liabilities 1,352 7,436
TOTAL LIABILITIES 1,352 7,436
------------ ------------
NET ASSETS 26,863 15,850
============ ============
EQUITY
Equity attributable to owners of the
parent
Issued capital 13 106,150 106,150
Reserves 14 4,109 4,010
Accumulated losses (83,396) (94,310)
------------ ------------
TOTAL EQUITY 26,863 15,850
============ ============
The above Consolidated Statement of Financial Position should be
read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
Consolidated
31 Dec
2016 31 Dec 2015
Note $'000 $'000
-------- ------------
Cash flows from operating activities
Payments to suppliers and employees (9,908) (9,359)
Interest received 40 22
Farm-out proceeds 11,659 13,921
Net cash flows provided by/ (used in)
operating activities 7 1,791 4,584
Cash flows from investing activities
Purchase of property, plant and equipment (676) (183)
Proceeds from the sale of property,
plant and equipment 35 3
Net cash flows used in investing activities (641) (180)
Cash flows from financing activities
Proceeds from issue of shares - 81
Net cash flows from financing activities - 81
Net increase in cash and cash equivalents 1,150 4,485
Cash and cash equivalents at beginning
of the year 5,339 895
Net foreign exchange differences (10) (41)
-------- ------------
Cash and cash equivalents at the end
of the year 7 6,479 5,339
======== ============
The above Consolidated Statement of Cash Flows should be read in
conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Consolidated
Attributable to equity holders
of the parent
Issued Accumulated Other
Capital Losses Reserves Total
Note 14
Note $'000 $'000 $'000 $'000
--------- ------------ ---------- -------
As at 1 January 2015 105,278 (94,313) 4,896 15,861
Net loss for the year - (190) - (190)
Other comprehensive income - - (41) (41)
--------- ------------ ---------- -------
Total comprehensive loss
for the year - (190) (41) (231)
Issue of share capital 13 81 - - 81
Cost of capital raising 13 - - - -
13, 14
Share-based payments & 15 791 193 (845) 139
As at 31 December 2015 106,150 (94,310) 4,010 15,850
========= ============ ========== =======
Net loss for the year - 10,896 - 10,896
Other comprehensive income - - (93) (93)
--------- ------------ ---------- -------
Total comprehensive loss
for the year - 10,896 (93) 10,803
Issue of share capital 13 - - - -
Cost of capital raising 13 - - - -
Changes in equity (Dissolved
PMSL) - 18 - 18
13, 14
Share-based payments & 15 - - 192 192
As at 31 December 2016 106,150 (83,396) 4,109 26,863
========= ============ ========== =======
The above Consolidated Statement of Changes in Equity should be
read in conjunction with the accompanying notes.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
1 Corporate information
The financial report of Petro Matad Limited (Company) for the
year ended 31 December 2016 was authorised for issue in accordance
with a resolution of the Directors on 28 June 2017.
This financial report presents the consolidated results and
financial position of Petro Matad Limited and its subsidiaries
(together, the "Group"). The Group's principal activity in the
course of the financial year consisted of oil exploration in
Mongolia.
Petro Matad Limited (Company) a company incorporated in the Isle
of Man on 30 August 2007 has four wholly owned subsidiaries,
including Capcorp Mongolia LLC and Petro Matad LLC (both
incorporated in Mongolia), as well as Central Asian Petroleum
Corporation Limited (Capcorp) and Petromatad Invest Limited (both
incorporated in the Cayman Islands). The Company and its
subsidiaries are collectively referred to as the "Group". Petro
Matad Service Limited, a subsidiary of the Company was dissolved on
1 January 2016, as the company was dormant due to no longer being
operationally required.
Petrovis Matad Inc. is a major shareholder of the Company,
holding approximately 32.06% of the shareholding at the year end of
2016.
2 Summary of significant accounting policies
(a) Basis of preparation
This financial report complies with International Financial
Reporting Standards (IFRS) as adopted by the European Union.
This financial report has been prepared on a historical cost
basis, except where otherwise stated. Historical cost is generally
based on the fair values of the consideration given in exchange for
goods and services. Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date,
regardless of whether that price is directly observable or
estimated using another valuation technique.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
-- Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
-- Level 2 inputs are inputs, other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
-- Level 3 inputs are unobservable inputs for the asset or liability.
For the purpose of preparing the consolidated financial
statements, the Company is a for-profit entity.
(b) Statement of compliance
This general purpose financial report has been prepared in
accordance with the requirements of all applicable IFRS as adopted
by the European Union and related Interpretations and other
authoritative pronouncements.
(c) Going concern note
The financial statements have been prepared on a going concern
basis, which contemplates the continuity of normal business
activity and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
The Group generated a profit of $10.89 million (2015: $0.19
million loss) and experienced net cash inflows from operating
activities of $1.79 million (2015: $4.58 million). In addition, as
outlined in note 16(b) the Group is required to meet minimum
exploration commitments in the next 12 months on its Petroleum
Sharing Contracts ("PSCs") of approximately $8.41m with further
commitments of $21.07m thereafter.
These conditions indicate a material uncertainty that may cast
significant doubt over the Company and the Group's ability to
continue as going concerns.
The ability of the Group to continue as a going concern is
principally dependent upon a combination of 1 or more of the
following:
-- Being able to draw down a minimum of $22.50m from the Bergen
Asset Management Placement and Convertible Note agreement.
-- Raising additional equity
-- Further varying and/or deferring PSC commitment expenditures; and/or
-- Securing farm - out agreements to fund minimum exploration commitments.
On 8 May 2017, the Company announced a Private
Placement/Convertible Note arrangement with Bergen Asset
Management, LLC, which provides staged private placements of up to
$43.20 worth of new ordinary shares in the Parent company and a
convertible instrument with a nominal value of $2.00m. The staged
private placements will occur over a period not exceeding 15-months
and the value of each tranche will range between $1.20m - $3.00 m
per month, the precise amounts above $1.20m if any being subject to
mutual agreement. The funds payable to the Company as a result of
this arrangement will enable it to fund an aggressive work program,
which will result in meeting all PSC expenditure commitments if
$22.5m or more is received over the life of the agreement.
On 14 June 2017, the Company received PSC extension approvals
from the Mineral Resource Authority of Mongolia ("MRPAM") for
Blocks IV and V. These extensions are for two years to 29 July
2019. A further extension of two years is allowed under the PSCs.
The agreed financial commitments for obtaining the extensions are
$5m for Block IV and $2m for Block V over the two year extension
period not including the existing commitments.
The Block XX PSC term was extended to July 2018 as a result of
MRPAM's approval of a one year moratorium in 2016. Although the
financial commitment did not increase as a result of the
moratorium, the Group is still required to spend an additional
$21.30m by the end of the current term in July 2018. The Company is
currently in negotiations with MRPAM to substantially reduce this
commitment in exchange for agreeing to restate the Block XX PSC in
accordance with the new Petroleum Law. The Company is willing to
consider this since all the key commercial terms are grandfathered
and will not change. The outcome of these negotiations are unknown
at this time.
The directors have prepared a cash flow forecast, which
indicates that the Group will have sufficient cash flows to meet
all commitments and working capital requirements for the 12 month
period from the date of signing this financial report.
The Directors are satisfied that they will achieve successful
outcomes in relation to the matters set out above and therefore the
going concern basis of preparation is appropriate. The financial
report has therefore been prepared on the going concern basis,
which assumes continuity of normal business activities and the
realisation of assets and the settlement of liabilities in the
ordinary course of business.
Should the Group be unable to achieve the matters referred to
above, there is a material uncertainty whether the Group will be
able to continue as a going concerns, therefore, whether they will
realise their assets and discharge their liabilities in the normal
course of business and at amounts stated in the financial
report.
The financial report does not include adjustments relating to
the recoverability and classification of recorded asset amounts nor
to the amounts and classification of liabilities that might be
necessary should the Company and the Group not continue as going
concerns.
(d) Application of new and revised Accounting Standards
Standards and Interpretations adopted in the current year
The Group has adopted all of the new and revised Standards and
Interpretations issued by the International Accounting Standards
Board that are relevant to their operations and are effective for
the current financial reporting period beginning 1 January
2016.
The following new and revised Standards and Interpretations have
been adopted in the current period:
-- Annual Improvements to IFRSs 2010- 2012 Cycle and 2011-2013
Cycle
The impact of the adoption of the above standards and
interpretations did not have a material impact for the Group.
Standards and Interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the
following International Financial Reporting Standards and
Interpretations have recently been issued or amended but are not
yet effective and have not been adopted by the Group for the year
ended 31 December 2016:
Standard/Interpretation Effective for Expected to
annual reporting be initially
periods beginning applied in
on or after the financial
year ending
--------------------------------------- ------------------- ---------------
IFRS 9 'Financial Instruments' 1 January 2018 31 December
2018
--------------------------------------- ------------------- ---------------
IFRS 15 'Revenue from Contracts 1 January 2018 31 December
with Customers' 2018
--------------------------------------- ------------------- ---------------
IFRS 16 'Leases' 1 January 2019 31 December
2019
--------------------------------------- ------------------- ---------------
Annual Improvements to IFRSs 2012-2014 1 January 2016 31 December
Cycle 2016
--------------------------------------- ------------------- ---------------
The impact of these recently issued or amended standards and
interpretations are currently being assessed by the Group and
impact is not expected to be material.
(e) Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
and its subsidiaries. Control is achieved when the Company:
-- has power over the investee;
-- is exposed, or has rights, to variable returns from its involvement with the investee; and
-- has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above.
The financial statements of the subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases.
The financial statements of subsidiaries are prepared for the
same reporting period as the parent company, using consistent
accounting policies. Adjustments are made to bring into line any
dissimilar accounting policies that may exist.
A change in the ownership interest of a subsidiary that does not
result in a loss of control is accounted for as an equity
transaction.
All intercompany balances and transactions, including unrealised
profits arising from intra-group transactions, have been eliminated
in full. Unrealised losses are eliminated unless costs cannot be
recovered.
(f) Foreign currency translation
Functional and presentation currency
Both the functional and presentation currency of Petro Matad
Limited is United States Dollars (USD). The Cayman Island
subsidiaries functional currency is USD. The Mongolian
subsidiaries' functional currency is Mongolian Tugrugs (MNT) which
is then translated to the presentation currency, USD.
Transactions and balances
Transactions in foreign currencies are initially recorded in the
functional currency by applying the exchange rates ruling at the
date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of
exchange ruling at the reporting date.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rate as at
the date of the initial transaction. Non-monetary items measured at
fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Exchange differences are recognised in profit or loss in the
period in which they arise except for:
-- Exchange differences on transactions entered into to hedge
certain foreign currency risks; and
-- Exchange differences on monetary items receivable from or
payable to a foreign operation for which settlement is neither
planned nor likely to occur (therefore forming part of the net
investment in the foreign operation), which are recognised
initially in other comprehensive income and reclassified from
equity to profit or loss on disposal or partial disposal on the net
investment.
Translation of subsidiaries' functional currency to presentation
currency
The results of the Mongolian subsidiaries are translated into
USD (presentation currency) as at the date of each transaction.
Assets and liabilities are translated at exchange rates prevailing
at the reporting date.
Exchange differences resulting from the translation are
recognised in other comprehensive income and accumulated in the
foreign currency translation reserve in equity.
On consolidation, exchange differences arising from the
translation of the net investment in Mongolian subsidiaries are
recognised in other comprehensive income and accumulated in the
foreign currency translation reserve. If a Mongolian subsidiary was
sold, the proportionate share of exchange difference would be
transferred out of equity and recognised in profit and loss.
(g) Cash and cash equivalents
Cash and short-term deposits in the statement of financial
position comprise cash at bank and in hand and short-term deposits
with an original maturity of six months or less.
For the purposes of the statement of cash flows, cash and cash
equivalents consist of cash and cash equivalents as defined above,
net of outstanding bank overdrafts.
(h) Trade and other receivables
Trade receivables, which generally have 30-60 day terms, are
recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less an
allowance for impairment.
Collectability of trade receivables is reviewed on an ongoing
basis. An impairment provision is recognised when there is
objective evidence that the Group will not be able to collect the
receivable. Objective evidence of impairment includes financial
difficulties of the debtor, default payments or debts more than 60
days overdue. The amount of the impairment loss is the amount by
which the receivable carrying value exceeds the present value of
the estimated future cash flows, discounted at the original
effective interest rate.
(i) Plant and equipment
Plant and equipment is stated at historical cost less
accumulated depreciation and any impairment in value.
Depreciation is calculated on a straight-line basis over the
estimated useful life of the asset and is currently estimated to be
an average of 6.0 years.
The assets' residual values, useful lives and amortisation
methods are reviewed, and adjusted if appropriate, at each
financial year end.
Derecognition
An item of property, plant and equipment is derecognised upon
disposal or when no further future economic benefits are expected
from its use or disposal.
(j) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred by the Group is
expensed separately for each area of interest. The Group's policy
is to expense all exploration and evaluation costs funded out of
its own resources.
(k) Exploration and evaluation assets
Exploration and evaluation assets arising out of business
combinations are capitalised as part of deferred exploration and
evaluation assets. Subsequent to acquisition exploration
expenditure is expensed in accordance with the Company's accounting
policy.
(l) Impairment of tangible and intangible assets other than goodwill
At each reporting date, the Group assesses whether there is any
indication that tangible and intangible asset may be impaired.
Where an indicator of impairment exists, the Group makes a formal
estimate of recoverable amount for each asset or cash generating
unit to determine the extent of the impairment loss (if any). Where
the carrying amount of an asset (or cash-generating unit) exceeds
its recoverable amount the asset is considered impaired and is
written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to
sell and value in use. It is determined for an individual asset,
unless the asset's value in use cannot be estimated to be close to
its fair value less costs to sell and it does not generate cash
inflows that are largely independent of those from other assets or
groups of assets, in which case, the recoverable amount is
determined for the cash-generating unit to which the asset
belongs.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the assets (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which
case the reversal of impairment loss is treated as a revaluation
increase.
Impairment review for deferred exploration and evaluation assets
are carried out on a project-by-project basis, which each project
representing a single cash generating unit. An impairment review is
undertaken when indicators of impairment arise, typically when one
of the following circumstances apply:
-- Unexpected geological occurrences that render the resource uneconomic;
-- Title to asset is compromised;
-- Variations in prices that render the project uneconomic; or
-- Variations in the currency of operation.
(m) Trade and other payables
Trade and other payables are initially recognised at fair value.
After initial recognition, trade and other payables are carried at
amortised cost and due to their short term nature are not
discounted. They represent liabilities for goods and services
provided to the Group prior to the end of the financial year that
are unpaid and arise when the Group becomes obliged to make future
payments in respect of the purchase of these goods and services.
The amounts are unsecured and are usually paid within 30 days of
recognition.
(n) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at cost, being
the fair value of the consideration received net of issue costs
associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the effective
interest method. Amortised cost is calculated by taking into
account any issue costs, and any discount or premium on
settlement.
Gains and losses are recognised in the profit and loss when the
liabilities are derecognised.
The component parts of compound financial instruments are
classified as financial liabilities and equity in accordance with
the substance of the contractual arrangement. The fair value of the
liability portion of a convertible note is determined using a
market interest rate for an equivalent non-convertible note. The
remainder of the proceeds is allocated to the conversion option. If
the conversion option meets the definition of an equity instrument,
this amount is recognised and included in shareholders' equity and
is not subsequently remeasured.
(o) Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. If the effect of the
time-value of money is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and,
where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to
the passage of time is recognised as a finance cost.
(p) Leases
Finance leases, which transfer to the Group substantially all
the risks and benefits incidental to ownership of the leased item,
are capitalised at the inception of the lease at the fair value of
the leased property or, if lower, at the present value of the
minimum lease payments.
Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate
of interest on the remaining balance of the liability. Finance
charges are charged directly to profit and loss.
Capitalised leased assets are depreciated over the shorter of
the estimated useful life of the asset or the lease term.
Leases where the lessor retains substantially all the risks and
benefits of ownership of the asset are classified as operating
leases. Initial direct costs incurred in negotiating an operating
lease are added to the carrying amount of the leased asset and
recognised over the lease term on the same bases as the lease
income.
Operating lease payments are recognised as an expense in profit
or loss on a straight-line basis over the lease term.
(q) Contributed equity
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or Options are
shown in equity as a deduction, net of tax, from the proceeds.
(r) Revenue
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. The following specific criteria must also be met
before revenue is recognised:
Interest revenue
Revenue is recognised on an accrual basis using the effective
interest method.
(s) Share-based payment transactions
The Group provides to certain key management personnel
share-based payments, whereby they render services in exchange for
rights over shares ("equity-settled transactions").
The cost of these equity-settled transactions is measured by
reference to the fair value at the date at which they are granted.
The fair value is determined by use of the Black Scholes model.
In determining the fair value of the equity-settled
transactions, vesting conditions that are not market conditions are
not taken into account.
The cost of equity-settled transactions is recognised as an
expense on a straight-line basis, together with a corresponding
increase in equity, over the period in which they vest.
The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting date
reflects:
-- the extent to which the vesting period has expired; and
-- the number of awards that, in the opinion of the Directors of
the Group, will ultimately vest.
This opinion is formed based on the best available information
at the reporting date. The impact of the revision of original
estimates, if any, is recognised in profit or loss such that the
cumulative expense reflects the revised estimate, with a
corresponding adjustment to equity reserves.
Where the terms of an equity-settled award are modified, as a
minimum, an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any increase in
the value of the transaction as a result of the modification, as
measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a
new award is substituted for the cancelled award, and designated as
a replacement award on the date that it is granted, the cancelled
and new award are treated as if they were a modification of the
original award, as described in the previous paragraph.
(t) Income tax
Current tax
Current tax is calculated by reference to the amount of income
taxes payable or recoverable in respect of the taxable profit or
tax loss for the year. It is calculated using tax rates and tax
laws that have been enacted or substantively enacted by the
reporting date. Current tax for current and prior years is
recognised as a liability (or asset) to the extent that it is
unpaid (or refundable).
Deferred tax
Deferred tax is accounted for using the comprehensive balance
sheet liability method in respect of temporary differences arising
from differences between the carrying amount of assets and
liabilities and the corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all
taxable temporary differences. Deferred tax assets are recognised
to the extent that it is probable that sufficient taxable amounts
will be available against which deductible temporary differences or
unused tax losses and tax offsets can be utilised. However,
deferred tax assets and liabilities are not recognised if the
temporary differences giving rise to them arise from the initial
recognition of assets and liabilities (other than as a result of a
business combination) that affects neither taxable income nor
accounting profit. Furthermore, a deferred tax liability is not
recognised in relation to taxable temporary differences arising
from goodwill.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year(s) when the asset and
liability giving rise to them are realised or settled, based on tax
rates (and tax laws) that have been enacted or substantively
enacted by reporting date. The measurement of deferred tax
liabilities and assets reflects the tax consequences that would
follow from the manner in which the consolidated Group expects, at
the reporting date, to recover or settle the carrying amount of its
assets and liabilities.
Deferred tax assets and liabilities are offset when they relate
to income taxes levied by the same taxation authority and the
Company intends to settle its current tax assets and liabilities on
a net basis.
Current and deferred tax for the year
Current and deferred tax is recognised as an expense or income
in the profit or loss, except when it relates to items credited or
debited directly to equity/other comprehensive income, in which
case the deferred tax is also recognised directly in equity/other
comprehensive income, or where it arises from the initial
accounting for a business combination, in which case it is taken
into account in the determination of goodwill.
(u) Earnings per share
Basic earnings per share is calculated as net profit
attributable to owners of the parent, adjusted to exclude any costs
of servicing equity (other than dividends), divided by the weighted
average number of ordinary shares, adjusted for any bonus
element.
Diluted earnings per share is calculated as net profit
attributable to owners of the parent, adjusted for:
-- Costs of servicing equity (other than dividends);
-- The after tax effect of dividends and interest associated
with dilutive potential ordinary shares that have been recognised
as expenses; and
-- Other non-discretionary changes in revenues or expenses
during the year that would result from the conversion of dilutive
potential ordinary shares, divided by the weighted average number
of ordinary shares and dilutive potential ordinary shares, adjusted
for any bonus element.
(v) Interest in Joint Operations
Joint operation is a joint arrangement whereby the parties that
have joint control of the arrangement have rights to the assets,
and obligations for the liabilities, relating to the arrangement.
Those parties are called joint operators. Joint control is the
contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require
the unanimous consent of the parties sharing control.
A joint operator recognises the following in its financial
statements in respect to the joint operation:
-- its assets including its share of any jointly held assets;
-- its liabilities, including its share of any jointly incurred liabilities;
-- its revenue from the sale of its share of the output arising from the joint operation;
-- its share of the revenue from the sale of the output by the joint operation; and
-- its expenses, including its share of any expenses incurred jointly
The group accounts for the assets, liabilities, revenues and
expenses relating to its interest in a Joint operation in
accordance with IFRSs applicable to the particular asset,
liabilities, revenues and expenses.
(w) Significant accounting judgments, estimates and
assumptions
In applying the Group's accounting policies management
continually evaluates judgments, estimates and assumptions based on
experience and other factors, including expectations of future
events that may have an impact on the Group. All judgments,
estimates and assumptions made are believed to be reasonable based
on the most current set of circumstances available to management.
Actual results may differ from the judgments, estimates and
assumptions.
Any revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both the current and future
periods.
The following are the most critical estimates and judgments made
by management in applying the accounting policies and have the most
significant effect on the amounts recognised in the financial
statements.
Share-based payments
The Group measures the cost of equity-settled transactions with
Directors and employees at the fair value of the equity instruments
at the date at which they are granted. The fair value is determined
using a Black Scholes model. One of the inputs into the valuation
model is volatility of the underlying share price which is
estimated on the 4.5 year history of the share price and has been
estimated in a range from 10% to 120% depending on the date of the
grant.
Recovery of the exploration and evaluation assets
The ultimate recoupment of the exploration and evaluation assets
is dependent upon successful development and commercial
exploitation or alternatively the sale of the respective areas of
interest at an amount at least equal to book value. At the point
that it is determined that any capitalised exploration and
evaluation expenditure is not recoverable, it is written off.
Going Concern
The Group assesses the going concern of the Group on a regular
basis, reviewing their cash flow requirements, commitments and
status of PSC requirements and funding arrangements. Refer to Note
2 (c) for further details.
3 Operating segments
Operating segments have been identified on the basis of internal
reports of the Group that are regularly reviewed by the chief
operating decision maker in order to allocate resources to the
segments and to assess their performance.
The chief operating decision maker has been identified as the
Board of Directors. On a regular basis, the Board receives
financial information on a consolidated basis similar to the
financial statements presented in the financial report, to manage
and allocate their resources. Based on the information provided to
the Board of Directors, the Group has one operating segment and
geographical segment, being Mongolia; as such no separate
disclosure has been provided.
31 Dec 31 Dec
2016 2015
Note $'000 $'000
--------- ---------
4 Revenues and expenses
(a) Revenue
Interest income 40 22
Other income:
Consideration for the BG Group
farm-out agreement* 14,008 4,486
Cash calls received from BG
Group* 4,841 7,234
Other income* - 2
18,889 11,744
======= =======
* On 28 April 2016, Shell which acquired BG Group, through its
affiliate company issued an Exit Notice to Petro Matad's 100% owned
subsidiary, Capcorp, exercising the exit option under the Farmout
Agreement (FOA) dated 7 April 2015, to withdraw from Blocks IV and
V Production Sharing Contracts in West/Central Mongolia. In
accordance with provisions of the FOA, Shell's affiliate company
was required to pay an exit payment of $10,005,303, which was
received by the Company on 9 August 2016, which along with Cash
calls paid by Shell's affiliate prior to their exit accounts for
the Other Income amount.
On 1 Feb 2017, following the withdrawal of Shell's Affiliate
from Mongolia, $5 million was received from the Affiliate, which
was in relation to an agreement that such amount would be paid upon
receipt of Mongolian government approval for the reassignment of
Block IV and V interests back to the Company.
(b) Employee benefits expense
Included in employee benefits expense are the following:
Wages and salaries 2,370 1,601
Non-Executive Directors' fees (including
Directors of affiliates) 144 175
Consultancy fees 574 557
Share-based payments 192 105
------ ------
3,280 2,438
====== ======
(c) Exploration and evaluation expenditure
Exploration and evaluation expenditure relates to the following
PSCs:
Block XX - 1
Blocks IV and V 2,464 7,235
2,464 7,236
====== ======
(d) Other expenses
Included in other expenses are the following:
Administration costs 977 903
PSC administration costs 773 533
Audit fees 81 114
Travel expenses 137 137
1,968 1,687
====== ======
31 Dec 31 Dec
2016 2015
Note $'000 $'000
--------- ---------
5 Income tax
Income tax recognised in the statement of profit or loss:
Tax expense/(benefit) comprises:
Current tax expense/(benefit) - -
Deferred tax expense/(benefit)
relating to the
origination and reversal of temporary
differences - -
Total tax expense/(benefit) reported
in the statement of profit or
loss - -
====
The prima facie income tax benefit on pre-tax accounting loss
from continuing operations reconciles to the income tax
expense/(benefit) in the financial statements as follows:
Net profit/(loss) for the year 10,896 (190)
Income tax benefit calculated
at 10% (i) (1,090) 19
Effect of different tax rates
on entities in different jurisdictions (ii) 1,639 650
Change in unrecognised deferred
tax assets (549) (669)
-------- ------
- -
======== ======
(i) The tax rate used in the above reconciliation is the
corporate tax rate of 10% payable by Mongolian corporate entities
on taxable profits up to 3 billion MNT under Mongolian tax law.
(ii) Petromatad Invest Limited and Capcorp are exempt of
Mongolian corporate tax on profits derived from the sale of oil
under their PSCs once production commences and are subject to
Cayman Islands income tax at a rate of 0%. As a consequence, no
provision for Mongolian corporate tax or Cayman Islands current tax
or deferred tax has been made in the Company's accounts in relation
to them.
Petro Matad Limited is subject to Isle of Man income tax at a
rate of 0%. As a consequence, no provision for Isle of Man current
tax or deferred tax has been made in the Company's accounts.
6 Earnings/(Loss) per share
The following reflects the loss and share data used in the total
operations basic and diluted earnings/(loss) per share
computations:
31 Dec 2016 31 Dec 2015
cents per
cents per share share
-------------------- ---------------
Basic earnings/(loss) per share 3.8 (0.1)
==================== ===============
Diluted earnings/(loss) per share 3.8 (0.1)
==================== ===============
$'000's $'000's
-------------------- ---------------
The loss and weighted average number
of ordinary shares used in the calculation
of basic and diluted earnings/(loss)
per share are as follows:
Net profit/(loss) attributable to owners
of the parent 10,896 (190)
-------------------- ---------------
Weighted average number of ordinary shares
for the purposes of diluted earnings/(loss)
per share (in thousands) 287,626 -
Weighted average number of ordinary shares
for the purposes of basic earnings/(loss)
per share (in thousands) 287,495 284,450
-------------------- ---------------
31 Dec 31 Dec
2016 2015
Note $'000 $'000
--------------------- ------------
7 Cash and cash equivalents
Cash at bank and in hand 6,479 5,339
6,479 5,339
====== ======
Cash at bank and in hand earns interest at fixed and floating
rates based on prevailing bank rates, and the fair value of the
above cash and cash equivalents is $6,479,000 (2015: $5,339,000)
due to the short-term nature of the instruments.
Reconciliation from the net gain/(loss) after tax to the net
cash flows from operations:
Net gain/(loss) after tax 10,896 (190)
Adjustments for:
Depreciation and amortisation 226 97
Net (profit)/loss on disposal
of property, plant and equipment 24 9
Share based payments 192 140
Unrealised foreign exchange (gains)/
losses 110 10
Dissolvement of PMSL 18 -
Changes in assets and liabilities
(Increase)/decrease in trade
and other receivables (3,797) (1,117)
(Increase)/decrease in prepayments
and other assets 289 (448)
Increase/(decrease) in trade
and other payables (6,167) 6,083
Net cash flows used in operating
activities 1,791 4,584
======== ========
Non-cash investing and financing activities
There were no non-cash investing or financing activities
undertaken in the financial year or prior year (2015: $0.79
million).
8 Trade and other receivables
Current
Receivable from BG Group 5,000 600
Other debtors 155 222
Non-Current
Receivable from BG Group - 536
5,155 1,358
====== ======
All amounts are recoverable and are not considered past due or
impaired.
9 Prepayments and other assets
Prepayments 222 505
Other assets 301 307
---- ----
523 812
==== ====
Other current assets are mainly comprised of consumables,
including casing, mud and drilling materials purchased for Block
XX.
31 Dec 31 Dec
2016 2015
Note $'000 $'000
--------- ---------
10 Exploration and evaluation assets
Exploration and evaluation assets 15,275 15,275
------- -------
15,275 15,275
======= =======
The exploration and evaluation asset arose following the initial
acquisition in February 2007 of 50% of Petromatad Invest Limited,
together with acquisition on 12 November 2007 of the remaining 50%
not already held by the Group, for a consideration of 23,340,000
ordinary shares credited as fully paid up and with an estimated
fair value of $0.50 per share, taking into account assets and
liabilities acquired on acquisition. This relates to the
exploration and evaluation of PSC Block XX.
The ultimate recoupment of exploration and evaluation
expenditure is dependent upon successful development and commercial
exploitation or alternatively the sale of the respective areas of
interest at an amount at least equal to book value.
Management have reviewed for impairment indicators on Block XX
and no impairment has been noted.
11 Property, plant and equipment
Plant and equipment at cost 1,300 1,050
Accumulated depreciation and impairment (517) (548)
------ ------
783 502
====== ======
Reconciliation of carrying amounts at the beginning and end of
the year:
Plant
and equipment
Total
$'000
---------------
As at 1 January 2015 (net of accumulated
depreciation) 439
Additions 183
Disposals (9)
Foreign exchange (14)
Depreciation charge for the year (97)
As at 31 December 2015 (net of accumulated
depreciation) 502
===============
Additions 676
Disposals (59)
Foreign exchange (110)
Depreciation charge for the year (226)
As at 31 December 2016 (net of accumulated
depreciation) 783
===============
31 Dec 31 Dec
2016 2015
Note $'000 $'000
--------- ---------
12 Trade and other payables (current)
Trade payables 1,352 4,097
Funding received in advance from
BG Group - 3,337
Other payables - 2
------ ------
1,352 7,436
====== ======
Trade payables are non-interest bearing and are normally settled
within 60 day terms.
13 Issued capital
Ordinary Shares
287,494,775 shares issued and fully
paid
(2015: 287,494,775) 106,150 106,150
-------- --------
106,150 106,150
======== ========
Movements in ordinary shares on issue:
Issue
Number of Price
Shares $ $'000
------------ ------- --------
As at 1 January 2015 279,487,279 105,278
Exercise of Conditional Share Awards on 23
April 2015 (note (a)) 5,750,946 0.010 58
Exercise of Conditional Share Awards on 27
July 2015 (note (b)) 2,256,550 0.010 23
--------
81
Share based payment - - 791
--------
As at 31 December 2015 287,494,775 106,150
No transaction during 2016 - -
As at 31 December 2016 287,494,775 106,150
============ ========
(a) On 23 April 2015, pursuant to the Group's Plan, 5,750,946
shares were awarded upon exercise of Conditional Share Awards with
an exercise price per share of $0.01 pursuant to the Cash
Preservation Scheme.
(b) On 27 July 2015, pursuant to the Group's Plan, 2,256,550
shares were awarded upon exercise of Conditional Share Awards with
an exercise price per share of $0.01 pursuant to the Cash
Preservation Scheme.
14 Reserves
A detailed breakdown of the reserves of the Group is as
follows:
Equity Foreign
Merger benefits currency
reserve reserve translation Total
$'000 $'000 $'000 $'000
---------- ---------- ------------- ------
As at 1 January 2015 831 5,076 (1,011) 4,896
Currency translation differences - - (41) (41)
Share based payments - (845) - (845)
---------- ---------- ------------- ------
As at 31 December 2015 831 4,231 (1,052) 4,010
Currency translation differences - - (93) (93)
Share based payments - 192 - 192
As at 31 December 2016 831 4,423 (1,145) 4,109
========== ========== ============= ======
Nature and purpose of reserves
Merger reserve
The merger reserve arose from the Company's acquisition of
Capcorp on 12 November 2007. This transaction is outside the scope
of IFRS 3 'Business Combinations' and as such Directors have
elected to use UK Accounting Standards FRS 6 'Acquisitions and
Mergers'. The difference, if any, between the nominal value of the
shares issued plus the fair value of any other consideration, and
the nominal value of the shares received in exchange are recorded
as a movement on other reserves in the consolidated financial
statements.
Equity benefits reserve
The equity benefits reserve is used to record the value of
Options and Conditional Share Awards provided to employees and
Directors as part of their remuneration, pursuant to the Group's
Long Term Equity Incentive Plan (referred to as "Plan" or "Group's
Plan"). Refer to Note 15 for further details of these plans.
Foreign currency translation reserve
The foreign currency translation reserve is used to record
exchange differences arising from the translation of the financial
statements of foreign subsidiaries.
15 Share based payments
(a) Long Term Equity Incentive Plan ("Plan" or "Group's Plan")
The Group provides long term incentives to employees (including
Executive Directors), Non-Executive Directors and consultants
through the Group's Plan based on the achievement of certain
performance criteria. The Plan provides for share awards in the
form of Options and Conditional Share Awards. The incentives are
awarded at the discretion of the Board, or in the case of Executive
Directors, the Remuneration Committee of the Board, who determine
the level of award and appropriate vesting, service and performance
conditions taking into account market practice and the need to
recruit and retain the best people.
Options may be exercised, subject only to continuing service,
during such period as the Board may determine. Options have a term
of 10 years.
Conditional Share Awards shall vest subject to continuing
service and appropriate and challenging service and performance
conditions determined by the Remuneration Committee relating to the
overall performance of the Group.
Conditional Share Awards based on performance conditions will
vest on achievement of the following performance conditions:
-- 25% vest on the first discovery of oil on a commercial scale,
estimated by management as being by 30 September 2017;
-- 25% vest on the first production of oil on a commercial
scale, estimated by management as being by 30 September 2019;
and
-- 50% vest on the Company achieving the sale of 1 million
barrels of oil, estimated by management as being by 30 September
2020.
Other Conditional Share Awards have service conditions tied to
employment continuity and are available for vesting in three equal
annual instalments on various dates.
(b) Option pricing model
The fair value of Options granted is estimated as at the date of
grant using the Black Scholes model, taking into account the terms
and conditions upon which the Options were granted.
No options have been issued during 2015 and 2016.
(c) Movement in Share Options
Opening Closing
balance balance Exercisable
at 1 Granted Forfeited Exercised as at as at
January during during during 31 December 31 December
2015 the year the year the year 2015 2015
Grant of Options on
3 June
2008 380,000 - - - 380,000 380,000
Grant of Options on
8 April
2009 216,250 - - - 216,250 216,250
Grant of Options on
9 July
2010 745,400 - (125,000) - 620,400 620,400
Grant of Options on
6 April
2011 75,000 - - - 75,000 75,000
Grant of Options on
5 July
2011 150,000 - - - 150,000 150,000
Grant of Options on
22 Nov
2011 120,000 - - - 120,000 120,000
Grant of Options on
5 Dec
2011 43,428 - (3,828) - 39,600 39,600
Grant of Options on
25 Apr
2012 861,940 - (311,940) - 550,000 550,000
Grant of Options on
16 Jul
2012 210,840 - (45,840) - 165,000 165,000
Grant of Options on
5 Oct
2012 75,000 - - - 75,000 75,000
Grant of Options on
4 Dec
2012 6,000 - - - 6,000 6,000
Grant of options on
9 July
2013 100,000 - (50,000) - 50,000 33,000
2,983,858 - (536,608) - 2,447,250 2,430,250
============ ========== ========== ============ ============= =============
Weighted Average
Exercise
Price (cents per
option) 58.96 - 39.40 - 63.25 63.64
============ ========== ========== ============ ============= =============
Opening Closing
balance balance Exercisable
at 1 Granted Forfeited Exercised as at as at
January during during during 31 December 31 December
2016 the year the year the year 2016 2016
Grant of Options on
3 June
2008 380,000 - - - 380,000 380,000
Grant of Options on
8 April
2009 216,250 - - - 216,250 216,250
Grant of Options on
9 July
2010 620,400 - - - 620,400 620,400
Grant of Options on
6 April
2011 75,000 - - - 75,000 75,000
Grant of Options on
5 July
2011 150,000 - - - 150,000 150,000
Grant of Options on
22 Nov
2011 120,000 - - - 120,000 120,000
Grant of Options on
5 Dec
2011 39,600 - - - 39,600 39,600
Grant of Options on
25 Apr
2012 550,000 - - - 550,000 550,000
Grant of Options on
16 Jul
2012 165,000 - - - 165,000 165,000
Grant of Options on
5 Oct
2012 75,000 - - - 75,000 75,000
Grant of Options on
4 Dec
2012 6,000 - - - 6,000 6,000
Grant of options on
9 July
2013 50,000 - - - 50,000 50,000
2,447,250 - - - 2,447,250 2,447,250
============ ========== ========== ============ ============= =============
Weighted Average
Exercise
Price (cents per
option) 63.25 - - - 63.25 63.25
============ ========== ========== ============ ============= =============
(d) Share Options Contractual Life
The weighted average remaining contractual life of outstanding
share Options is 3.8 years (2015: 5.7 years).
(e) Conditional share awards pricing model
The fair value of Conditional Share Awards granted is estimated
as at the date of grant using the Black Scholes model, taking into
account the terms and conditions upon which the Awards were
granted.
The following Table summarizes Conditional Share Awards granted
during 2015, along with relevant details in relation to each
grant.
(1)
7 Jul
15
Conditional Share Awards
granted 1,993,520
Share price at grant date $0.0621
Expected Volatility (%) 28
Risk-free interest rates
(%) 0.50
Expected life (years) 10
Exercise Price $0.01
Estimated fair value of
each Conditional Share
Award at the grant date $0.0527
No awards have been issued during 2016.
(f) Movement in Conditional share awards
Opening Closing
balance balance Exercisable
at 1 Granted Awarded Forfeited as at as at
January during during during 31 December 31 December
Consolidated 2015 the year the year the year 2015 2015
---------- ---------- ------------ ---------- ------------- ---------------
Grant of Conditional Share Awards
on 3 Jun 2008 515,000 - - - 515,000 -
Grant of Conditional Share Awards
on 8 Apr 2009 95,000 - - - 95,000 -
Grant of Conditional Share Awards
on 9 Jul 2010 872,000 - - (125,000) 747,000 -
Grant of Conditional Share Awards
on 6 Apr 2011 144,000 - - - 144,000 -
Grant of Conditional Share Awards
on 5 Jul 2011 180,000 - - - 180,000 -
Grant of Conditional Share Awards
on 22 Nov 2011 50,000 - - - 50,000 -
Grant of Conditional Share Awards
on 5 Dec 2011 39,600 - - - 39,600 -
Grant of Conditional Share Awards
on 25 Apr 2012 1,379,060 - (526,060) (3,000) 850,000 -
Grant of Conditional Share Awards
on 5 Oct 2012 150,000 - - - 150,000 -
Grant of Conditional Share Awards
on 4 Dec 2012 261,661 - (258,661) - 3,000 -
Grant of Conditional Share Awards
on 9 Jul 2013 170,000 - - (50,000) 120,000 -
Grant of Conditional Share Awards
on 23 Apr 2014 5,229,255 - (5,229,255) - - -
Grant of Conditional Share Awards
on 7 Jul 2015 - 1,993,520 (1,993,520) - - -
---------- ---------- ------------ ---------- ------------- -------------
9,085,576 1,993,520 (8,007,496) (178,000) 2,893,600 -
========== ========== ============ ========== ============= =============
Weighted Average Exercise Price
(cents per award) 1.00 1.00 1.00 1.00 1.00 -
========== ========== ============ ========== ============= =============
Opening Closing
balance balance Exercisable
at 1 Granted Awarded Forfeited as at as at
January during during during 31 December 31 December
Consolidated 2016 the year the year the year 2016 2016
---------- ---------- ---------- ---------- ------------- ---------------
Grant of Conditional Share Awards
on 3 Jun 2008 515,000 - - - 515,000 -
Grant of Conditional Share Awards
on 8 Apr 2009 95,000 - - (15,000) 80,000 -
Grant of Conditional Share Awards
on 9 Jul 2010 747,000 - - (100,000) 647,000 -
Grant of Conditional Share Awards
on 6 Apr 2011 144,000 - - - 144,000 -
Grant of Conditional Share Awards
on 5 Jul 2011 180,000 - - - 180,000 -
Grant of Conditional Share Awards
on 22 Nov 2011 50,000 - - - 50,000 -
Grant of Conditional Share Awards
on 5 Dec 2011 39,600 - - - 39,600 -
Grant of Conditional Share Awards
on 25 Apr 2012 850,000 - - - 850,000 -
Grant of Conditional Share Awards
on 5 Oct 2012 150,000 - - - 150,000 -
Grant of Conditional Share Awards
on 4 Dec 2012 3,000 - - - 3,000 -
Grant of Conditional Share Awards
on 9 Jul 2013 120,000 - - - 120,000 -
Grant of Conditional Share Awards - - - - - -
on 23 Apr 2014
Grant of Conditional Share Awards - - - - - -
on 7 Jul 2015
2,893,600 - - (115,000) 2,778,600 -
========== ========== ========== ========== ============= =============
Weighted Average Exercise Price
(cents per award) 1.00 - - 1.00 1.00 -
========== ========== ========== ========== ============= =============
(g) Conditional Share Awards Contractual Life
The weighted average remaining contractual life of outstanding
Conditional awards is 11.5 years (2015: 12.5 years).
16 Commitments and contingencies
(a) Operating lease commitments
Operating leases relate to premises used by the Group in its
operations, generally with terms between 2 and 5 years. Some of the
operating leases contain options to extend for further periods and
an adjustment to bring the lease payments into line with market
rates prevailing at that time. The leases do not contain an option
to purchase the leased property.
Due to prepayment of rent, the Group has no commitment for
office lease in Mongolia as at 31 December 2016.
31 Dec 31 Dec
2016 2015
Note $'000 $'000
--------- -------
Operating Leases:
Within one year - 45
After one year but not more than
five years - 104
Greater than five years - -
--------- -------
- 149
========= =======
(b) Exploration expenditure commitments
Petromatad Invest Limited and Capcorp have minimum spending
obligations, under the terms of their PSCs on Blocks IV, V and XX
with PAM.
The amounts set out below do not include general and
administrative expenses.
31 Dec 31 Dec
2016 2015
Note $'000 $'000
------- -------
Production Sharing Contract Fees:
Within one year 284 898
After one year but not more than
five years 75 40
Greater than five years - -
------- -------
359 938
======= =======
Minimum Exploration Work Obligations:
Within one year 8,124 19,374
Greater than one year but no more
than five years 21,004 15,580
Greater than five years - -
------- -------
29,128 34,954
======= =======
(c) Contingencies
On 5 August 2016, Shell through its Affiliate company announced
it would be withdrawing from Blocks IV and V in West/Central
Mongolia. As part of the negotiations leading to formal Mongolian
Government approval of the reassignment of interest from Shell's
Affiliate to Petro Matad's Affiliate, Shell agreed to a payment of
US$5 million to be remitted to Petro Matad's Affiliate upon such
government approval being received. A condition to the payment by
Shell is that the proceeds would be repaid to Shell by Petro Matad
in the event a farmout is concluded in future prior to the
development of either Block IV or V. There is no certainty that
such farmout will be concluded in future in which case funds would
not be repaid. The US$5 million payment was received on 1 February
2017.
17 Related party disclosures
The immediate parent and ultimate controlling party of the Group
is Petro Matad Limited.
The consolidated financial statements include the financial
statements of Petro Matad Limited and the subsidiaries listed in
the following table:
Equity Interest
Country of 2016 2015
Incorporation % %
---------------- -------- --------
Central Asian Petroleum Corporation
Limited Cayman Islands 100 100
Capcorp Mongolia LLC Mongolia 100 100
Petromatad Invest Limited Cayman Islands 100 100
Petro Matad LLC Mongolia 100 100
Petro Matad Services Limited Isle of Man - 100
Subsidiary Details
Capcorp Mongolia LLC was acquired on the 14 August 2006, on
incorporation of the Company. Capcorp holds 1,000,000 ordinary
shares of MNT150 each.
Petromatad Invest Limited was acquired on 12 November 2007.
Petro Matad Limited and Capcorp each hold 25,000 shares of $1
each.
Central Asian Petroleum Corporation Limited was acquired on 12
November 2007. Petro Matad Limited holds 43,340,000 ordinary shares
of $0.01 each.
Petro Matad LLC is 100% owned by Petromatad Invest Limited.
Petromatad Invest Limited holds 15,000 ordinary
shares of MNT10,000 each.
Petro Matad Services Limited is 100% owned by Petro Matad
Limited. Petro Matad Limited holds 1 ordinary share of $1. Petro
Matad Services Limited was dissolved on 1 January 2016.
Balances and transactions between the Company and its
subsidiaries, which are related parties of the Company, have been
eliminated on consolidation and are not disclosed in this note.
Petrovis Matad Inc. is a major shareholder of the Company,
currently holding approximately 32.06% of the shareholding.
18 Key management personnel
(a) Details of Directors
The names of the Company's Directors, having authority and
responsibility for planning, directing and controlling the
activities of the Group, in office during 2015 and 2016, are as
below:
The Directors were in office until the date of this report and
for this entire year unless otherwise stated.
Directors
Oyungerel Janchiv Non-Executive Director Resigned as Chairperson
1 August 2015
Enkhmaa Davaanyam Non-Executive Chairperson Appointed as
Chairperson 1 August 2015
Philip Arthur Vingoe Non-Executive Director Retired 10 March
2017
Amarzul Tuul Executive Director
John Rene Henriksen Chief Financial Officer
Mehmed Ridvan Karpuz Chief Executive Officer Appointed as CEO 1 October 2015
Timothy Paul Bushell Non-Executive Director Appointed 10 March 2017
(b) Compensation of Directors
Consolidated
31 Dec 31 Dec
2016 2015
Note $'000 $'000
------------- -------
Short-term employee benefits 1,402 864
Post-employment benefits - -
Share based payment expense 177 143
1,579 1,007
============= =======
(c) Other key management personnel transactions
There were no other key management personnel transactions during
the year (2015: Nil).
19 Financial risk management objectives and policies
The Group's principal financial instruments comprise cash and
short-term deposits classified as loans and receivables financial
assets.
The main purpose of these financial instruments is to raise
capital for the Group's operations.
The Group also has various other financial instruments such as
trade debtors and trade creditors, which arise directly from its
operations. It is, and has been throughout the year under review,
the Group's policy that no trading in financial instruments shall
be undertaken.
The main risks arising from the Group's financial instruments
are interest rate risk, foreign currency risk, credit risk and
liquidity risk.
The Board is responsible for identification and control of
financial risks. The Board reviews and agrees policies for managing
each of these risks as summarised below.
Risk Exposures and Responses
Interest rate risk
Interest rate risk is the risk that the value of a financial
instrument or cash flow associated with the instrument will
fluctuate due to changes in market interest rate. Interest rate
risk arises from fluctuations in interest bearing financial assets
and liabilities that the Group uses. Interest bearing assets
comprise cash and cash equivalents which are considered to be
short-term liquid assets. It is the Group's policy to settle trade
payables within the credit terms allowed and the Group does
therefore not incur interest on overdue balances.
The following table sets out the carrying amount of the
financial instruments that are exposed to interest rate risk:
31 Dec 2016 31 Dec 2015
Weighted
Average
Int. rate $'000 $'000
------------ ------------
Financial Assets
Cash and cash equivalents 0.94% 6,479 5,339
Trade and other receivables 0% 5,155 1,358
11,634 6,697
Financial Liabilities
Trade and other payables 0% 1,352 7,436
------------ ------------
1,352 7,436
Net exposure 10,282 (739)
============ ============
Sensitivity Analysis
If the interest rate on cash balances at 31 December 2015 and
2016 weakened/strengthened by 1%, there would be no material impact
on profit or loss. There would be no effect on the equity reserves
other than those directly related to other comprehensive income
movements.
Foreign currency risk
As a result of operations overseas, the Group's Statement of
Financial Position can be affected by movements in various exchange
rates.
The functional currency of Petro Matad Limited and
presentational currency of the Group is deemed to be USD because
the future revenue from the sale of oil will be denominated in USD
and the costs of the Group are likewise predominately in USD. Some
transactions are however dominated in currencies other than USD.
These transactions comprise operating costs and capital expenditure
in the local currencies of the countries where the Group operates.
These currencies have a close relationship to the USD and
management believes that changes in the exchange rates will not
have a significant effect on the Group's financial statements.
The Group does not use forward currency contracts to eliminate
the currency exposures on any individual transactions.
The following significant exchange rates applied during the
year:
Average rate Spot rate at the balance
date
USD 2016 2015 2016 2015
--------- --------- ------------- ------------
Mongolian Tugrug (MNT) 1 2,145.72 1,969.88 2,489.53 1,995.98
Australian Dollar (AUD) 1 1.34553 1.37978 1.38851 1.37003
Great British Pound (GBP) 1 0.74031 0.66662 0.81029 0.67553
Sensitivity Analysis
A 5% strengthening/weakening of the MNT against USD at 31
December 2015 and 2016 would not have a material effect on profit
and loss or on equity.
Price risk
The Group's exposure to price risk is minimal as the Group is
currently not revenue producing other than from interest
income.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group is exposed to credit risk on
its cash and cash equivalents and other receivables as set out in
Notes 7 and 8 which also represent the maximum exposure to credit
risk. The Group only deposits surplus cash with well-established
financial institutions of high quality credit standing.
In addition, receivable balances are monitored on an ongoing
basis with the result that the Group's exposure to bad debts is not
significant.
There are no significant concentrations of credit risk within
the Group.
Maximum exposure to credit risk at reporting date:
31 Dec 31 Dec
2016 2015
Note $'000 $'000
------- -------
Financial Assets
Trade and other receivables 8 5,155 1,358
------- -------
Net exposure 5,155 1,358
======= =======
Impairment Losses:
None of the Group's receivables are past due at 31 December 2016
(2015: Nil)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
The Group's approach to managing liquidity is to ensure, as far
as possible, that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage
to the Group's reputation.
The Group's objective is to ensure that sufficient funds are
available to allow it to continue its exploration activities.
The remaining contractual maturities of the Group's and parent
entity's financial liabilities are:
31 Dec 31 Dec
2016 2015
Note $'000 $'000
------- -------
6 months or less 1,352 6,938
6-12 months - 498
1-5 years - -
over 5 years - -
------- -------
1,352 7,436
======= =======
All of the Group's amounts payable and receivable are
current.
Further, the Group has exploration expenditure commitments on
its PSCs as disclosed in Note 16(b).
Fair Value of Financial Assets and Liabilities
The fair value of cash and cash equivalents and non-interest
bearing financial assets and financial liabilities of the Group
approximate their carrying value due to their short term
duration.
Fair Value Hierarchy as at 31 December
2016
Level Level
1 Level 2 3 Total
---------- ------------ --------- ---------
Financial Assets
Trade and other receivables - 5,155 - 5,155
--------- ------------ --------- ---------
Total - 5,155 - 5,155
========= ============ ========= =========
Financial Liabilities
Trade and other payables - 1,352 - 1,352
Total - 1,352 - 1,352
========= ============ ========= =========
Fair Value Hierarchy as at 31 December
2015
Level Level
1 Level 2 3 Total
---------- ------------ --------- ---------
Financial Assets
Trade and other receivables - 1,358 - 1,358
--------- ------------ --------- ---------
Total - 1,358 - 1,358
========= ============ ========= =========
Financial Liabilities
Trade and other payables - 7,436 - 7,436
Total - 7,436 - 7,436
========= ============ ========= =========
The fair values of the financial assets and financial
liabilities included in the level 2 category above have been
determined in accordance with generally accepted pricing models
based on a discounted cash flow analysis, with the most significant
inputs being the discount rate that reflects the credit risk of
counterparties.
20 Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital. The management of the Group and the Group's
capital is regularly reviewed by the Board. The capital structure
of the Group consists of cash and bank balances (Note 7) and equity
of the Group (comprising issued capital, reserves and retained
earnings as detailed in Notes 13 and 14). This is reviewed by the
Board of Directors as part of their regular Directors meetings.
The Group monitors its capital requirements based on the funding
required for its exploration activities in Mongolia and operations
of the company.
The Group is not subject to externally imposed capital
requirements.
21 Events after the reporting date
On 1 Feb 2017, following the withdrawal of Shell's Affiliate
from Mongolia, $5 million was received from the Affiliate, which
was in relation to an agreement that such amount would be paid upon
receipt of Mongolian government approval for the reassignment of
Block IV and V interests back to the Company which was received on
15 December 2016 with the Protocol of Assignments signed on 18
January 2017.
On 24 March 2017, 197,500 shares were issued to directors and
employees upon exercise of options under the Group's Long Term
Equity Incentive Plan (the "Plan") with an exercise price per share
of GBP0.11.
On 24 March 2017, 75,000 shares were awarded to a director upon
exercise of options under the Group's Plan with an exercise price
per share of GBP0.0788.
On 24 March 2017, 16,000 shares were awarded to a director and
employees upon exercise of options under the Group's Plan with an
exercise price per share of GBP0.1975.
On 24 March 2017, 141,000 shares were awarded to employees upon
exercise of options under the Group's Plan with an exercise price
per share of GBP0.0888.
On 8 May 2017, the Company announced a Private
Placement/Convertible Note arrangement with Bergen Asset
Management, LLC (Bergen), which provides staged private placements
of up to US$43,200,000 worth of new ordinary shares in the Company
and a convertible instrument with a nominal value of US$2,000,000.
The staged private placements will occur over a period not
exceeding 15-months and the value of each tranche will range
between $1.2 million - $3.0 million per month, the precise amounts
being subject to mutual agreement.
On 11 May 2017, the Company issued 5,651,951 commencement and
collateral shares to Bergen as part of the initial closing under
the Private Placement arrangement.
On 16 May 2017, the Company received $1,235,000 from Bergen for
the first tranche payment.
On 13 June 2017, the Company issued 9,507,963 new ordinary
shares to Bergen in relation to the first tranche payment.
On 14 June 2017, the Company received PSC extension approvals
from MRPAM for Blocks IV and V. These extensions are for two years
to 29 July 2019. A further extension of two years is allowed under
the PSCs. The agreed financial commitments for obtaining the
extensions are US$5 million for Block IV and US$2 million for Block
V.
On 21 June 2017, the Company received $1,200,000 from Bergen for
the second tranche payment.
22 Auditors' remuneration
The auditor of Petro Matad Limited is Bentleys (WA) Pty Ltd.
31 Dec 31 Dec
2016 2015
Note $'000 $'000
------- -------
Amounts received or due and receivable
by Bentleys (WA) Pty Ltd for (2015:
Deloitte):
- an audit or review of the financial
report of the entity and any other
entity in the Group 42 75
- other services in relation to
the entity and any other entity
in the Group - -
------- -------
42 75
Amounts received or due and receivable
by Deloitte Onch Audit LLC for:
- an audit or review of the financial
report of subsidiary entities 39 39
- other services in relation to
the subsidiary entities - -
------- -------
39 39
------- -------
81 114
======= =======
23 Other Information
Registered Office:
Victory House
Douglas
Isle of Man
IM1 1EQ
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGUBAQUPMUQB
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