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