TIDMPTR
RNS Number : 0187C
Petroneft Resources PLC
23 June 2016
23 June 2016
PetroNeft Resources plc
("PetroNeft" or the "Group" or the "Company")
2015 Final Results
PetroNeft (AIM: PTR) owner and operator of Licences 61 and 67,
Tomsk Oblast, Russian Federation, is pleased to report its final
results for the year ended 31 December 2015. In addition, PetroNeft
announces that the Company's Annual Report and Accounts for 2015
and Notice of the 2016 AGM will be mailed to shareholders and will
be available online at the Company's website www.petroneft.com on
or before Thursday 30 June 2016.
Highlights
-- Gross production 737,655 barrels of oil from Licence 61 in 2015
o Average gross production of 2,021 bopd
o Current gross production about 3,000 bopd
-- 11 Wells drilled in 2015
-- 1,000 km of 2D seismic acquired at Licence 61 in 2015
-- 65.5 mmbbls total 2P reserves net to PetroNeft
Outlook
-- Further production increases likely from South Arbuzovskoye
-- Drilling at Sibkrayevskoye No. 374 due to commence in July
2016 - potential for material increase in reserves
-- Active, fully funded work programme planned at Licence 61 in 2016 and 2017
Dennis Francis, Chief Executive Officer of PetroNeft Resources
plc, commented:
"2015 was a busy year for PetroNeft, during which the company
carried out an extensive drilling programme, in partnership with
Oil India, across Licence 61. We have gained significant experience
in horizontal drilling, deepened our understanding of the Licence
and have identified additional upside at Sibkrayevskoye and South
Arbuzovskoye.
After 3 weeks of production the A-214 horizontal well at South
Arbuzovskoye is still producing over 850 bopd and the pressure
decline is very slow. In the near term we look forward to the A-215
horizontal well results at South Arbuzovskoye and the commencement
of drilling on the S-374 delineation well at Sibkrayevskoye."
For further information, contact:
Dennis Francis, CEO, PetroNeft Resources +1 713 988
plc 2500
Paul Dowling, CFO, PetroNeft Resources +353 1 647
plc 0280
John Frain/Brian Garrahy, Davy (NOMAD +353 1 679
and Joint Broker) 6363
Henry Fitzgerald-O'Connor, Canaccord +44 207
Genuity Limited (Joint Broker) 523 8000
Martin Jackson/Shabnam Bashir, Citigate +44 207
Dewe Rogerson 638 9571
Joe Heron / Douglas Keatinge, Murray +353 1 498
Consultants 0300
The information contained in this announcement has been reviewed
and verified by Mr. Dennis Francis, Director and Chief Executive
Officer of PetroNeft, for the purposes of the Note for Mining, Oil
and Gas Companies issued by the London Stock Exchange in June 2009.
Mr. Francis holds a B.S. Degree in Geophysical Engineering and a
M.S. Degree in Geology from the Colorado School of Mines. He has
also graduated from the Harvard University Program for Management
Development. He is a member of the American Association of
Petroleum Geologists and the Society of Exploration Geophysicists.
He has over 40 years' experience in oil and gas exploration and
development.
PetroNeft Resources plc
Final Results
for the year ended 31 December 2015
Forward Looking Statements
This report contains forward-looking statements. These
statements relate to the Group's future prospects, developments and
business strategies. Forward-looking statements are identified by
their use of terms and phrases such as 'believe', 'could',
'envisage', 'potential', 'estimate', 'expect', 'may', 'will' or the
negative of those, variations or comparable expressions, including
references to assumptions.
The forward-looking statements in this report are based on
current expectations and are subject to risks and uncertainties
that could cause actual results to differ materially from those
expressed or implied by those statements. These forward-looking
statements speak only as at the date of these financial
statements.
Chairman's Statement
2015 was a busy year for our Company particularly with our
partner, Oil India, at Licence 61 where we drilled wells at
Tungolskoye, Arbuzovskoye, Sibkrayevskoye and Lineynoye and
completed a major 2D seismic acquisition programme. The work
programme saw a mix of successes, challenges and disappointments.
2015 also saw further challenges for the industry as a whole with
further significant weakness in the oil price internationally.
Operations
The existing production wells at Lineynoye and Arbuzovskoye
performed well during 2015 but continued to decline naturally as
expected. The main development programme in the year was bringing
the Tungolskoye oil field into production. Unfortunately, the J1-2
horizon was unexpectedly absent from some wells and the oil-water
contact on the eastern side of the field is shallower than expected
based on previous drilling and seismic data. As a result, the
number of wells in the programme was reduced which meant we could
not achieve the anticipated production, however, we did gain
considerable additional experience in drilling horizontal wells
particularly being able to keep the well within a narrow zone over
the 1,000 metre horizontal segment.
In late May 2015 we announced the results of a delineation well
at Sibkrayevskoye. The S-373 well found net pay of 11.5 metres and
achieved a stabilised natural flow of 100 bopd from a cased hole
test. This along with the newly acquired 2D seismic has provided
further evidence of the quality and size of the Sibkrayevskoye oil
field and we are now actively planning for development
activities.
2016-17 work programme
Following up on the drilling results at Arbuzovskoye and
Sibkrayevskoye in 2014 and 2015 as well as the new seismic data, we
will be developing the southern part of the Arbuzovskoye oil field
in 2016. We will also drill another delineation well at
Sibkrayevskoye in 2016 with a view to commencing development of
Sibkrayevskoye in 2017. Oil India have agreed to provide all the
funding for these two projects by way of a shareholder loan to the
joint venture company. We have already seen some excellent results
from the first two wells at South Arbuzovskoye and gross production
at Licence 61 is currently about 3,000 bopd (1,500 bopd net to
PetroNeft).
Reserves
Ryder Scott have prepared a report as at 1 January 2016 on the
reserves of Licence 61. While the reserves have fallen, primarily
at Tungolskoye, the report demonstrates the large potential of the
Sibkrayevskoye oil field which we expect to start developing in
2017. While the increase in 2P reserves at Sibkrayevskoye as a
result of the S-373 well was modest, this was due to its proximity
to previous wells. However, the seismic data has shown that the
field is likely to be significantly larger and we hope that a
successful result from the S-374 well will lead to a more
significant increase in 2P reserves.
Ryder Scott Estimated Reserves in Oil Fields (net
to PetroNeft)
Oil Field Name Proved Proved Proved,
& Probable Probable
& Possible
------------------------ -------- ------------ ------------
Licence 61 1P mmbo 2P mmbo 3P mmbo
Lineynoye 7.1 13.0 16.0
Tungolskoye 0.4 2.9 3.7
Kondrashevskoye 0.7 1.3 1.6
Arbuzovskoye 2.0 4.5 5.7
Sibkrayevskoye 5.8 29.4 52.8
North Varyakhskoye 0.2 0.4 0.5
-------- ------------ ------------
16.2 51.5 80.3
Licence 67
Ledovoye 1.5 14.0 17.4
Total net to PetroNeft 17.7 65.5 97.7
======== ============ ============
-- Licence 61 as at 31 December 2015 (Ryder Scott report as at 1 January 2016).
-- Reserves reflect just PetroNeft's 50% share of reserves for each licence.
-- All oil in discovered fields is in the Upper Jurassic section.
-- Reserves were determined in accordance with the Society of
Petroleum Engineers ("SPE") Petroleum Resources Management System
("PRMS") rules.
-- Licence 67 will be co-developed with Arawak Energy and the
reserves above reflect PetroNeft's 50% share as per the most recent
Ryder Scott report as at 1 January 2011.
Engagement with Natlata
Following extensive engagement with our largest shareholder,
Natlata Partners Limited ("Natlata"), during 2015 and in connection
with their requisitioned EGM, in April 2016 we announced that we
reached an agreement on a new Board composition and structure. This
involved the appointment Maxim Korobov as non-executive Director
and Anthony Sacca and David Sturt as independent non-executive
Directors. David Sanders, Gerry Fagan and Paul Dowling left the
Board. Mr. Dowling remains CFO of the Company. The agreement
includes a commitment from Natlata that it will support the newly
constituted Board for a period of two years.
Also, Pavel Tetyakov of Natlata has joined the Company and will
be responsible for new business development in Russia.
I would like to thank David Sanders, who was a founder of the
Company, and Gerry Fagan for their many years of service to the
Company. I would also like to thank Vakha Sobraliev, who resigned
from the Board in September 2015 for his contribution to the
Company over the previous ten years.
Review of PetroNeft loss for the year
The loss after taxation for the year was US$8,474,383 (2014:
US$8,784,385). The loss included a foreign exchange loss on
intra-group loans of US$0.3 million (2014: US$2.4 million) the
share of joint venture's net loss in WorldAce Investments of
US$8,765,055 which was after an impairment loss within WorldAce of
US$4.55 million (US$9.1 million gross). The loss on the disposal of
a subsidiary of US$5.6 million in 2014 relates to the farmout of
Licence 61 and more details can be found at Note 4 to the financial
statements. Finance costs in 2014 of US$1.6 million relate to
interest on the loans from Macquarie and Arawak for the period to 3
July 2014 when the loans were repaid in full.
As mentioned above, the Licence 61 Farmout was completed on 3
July 2014. For accounting purposes the results of the WorldAce
Group are fully consolidated in the PetroNeft Income statement up
to that date. After that date PetroNeft must account for its share
of the results of the WorldAce Group using the equity method of
accounting. Furthermore, interest receivable on loans to the
WorldAce Group, which up to 3 July 2014 would have been eliminated
on consolidation, is included as income in the PetroNeft
consolidated income statement after that date. The 2015 numbers
reflect the new arrangements in full.
PetroNeft Key Financial Metrics 2015 2014
Continuing operations US$'000 US$'000
Revenue 2,398 19,165
Cost of sales (2,371) (15,233)
========
Gross profit 27 3,932
Administrative expenses (1,380) (3,678)
Exchange loss on intra-Group
loans (284) (2,402)
Operating loss (1,637) (2,148)
Loss on disposal of subsidiary
undertaking - (5,569)
Share of joint venture's net
loss - WorldAce Investments
Limited (8,765) (304)
Share of joint venture's net
loss - Russian BD Holdings
B.V. (315) (294)
Finance revenue 3,042 1,551
Finance costs - (1,612)
Loss for the year for continuing
operations before taxation (7,675) (8,376)
Income tax expense (799) (408)
Loss for the year (8,474) (8,784)
======== =========
Revenue
Revenue in 2015 includes income as operator of both licences and
the revenue of PetroNeft's wholly owned subsidiary, Granite
Construction in respect of construction services provided in
relation to both joint ventures. Revenue in 2014 includes revenues
from oil sales for the period to 3 July 2014 of US$17.5m and income
as operator of both licences of US$1.7 million.
Income of PetroNeft Group as Operator of Licence 61 and Licence
67
In the joint venture agreements related to both Licence 61 and
Licence 67, PetroNeft is designated as the operator of each
Licence. This means that PetroNeft employees and management are
responsible for the day to day running of both Licences. Major
strategic and financial decisions relating to the Licences require
unanimous approval by both shareholders in the respective joint
venture agreements.
As PetroNeft management and employees are responsible for day to
day matters in both Licences, PetroNeft is entitled to recover a
portion of its expenses from the joint ventures. In that regard we
established a management group of key Russian employees who are
employed by the PetroNeft subsidiary Dolomite. Both PetroNeft and
Dolomite invoice for their services to the joint ventures based on
rates pre-agreed with our respective joint venture partners. The
costs associated with this revenue are included in cost of
sales.
In 2015 PetroNeft Group charged a total of US$1.6 million (2014:
US$1.2 million) to the joint ventures in respect of management
services. PetroNeft also owns a small construction company, Granite
Construction, which carries out small ad hoc construction projects
such as well pads and on-site accommodation on both Licences. In
2015 Granite Construction charged the WorldAce Group US$0.8 million
(2014: US$0.5 million) in respect of these services.
Finance Revenue
Most of the finance revenue relates to Interest receivable on
loans to joint ventures. During 2015 PetroNeft had interest
receivable of US$2,826,303 (2014: US$1,415,202) on its loans to
WorldAce Group and US$205,189 (2014: US$117,120) on its loans to
Russian BD Holdings B.V.
Key Financial Metrics - WorldAce Group
Because of the above accounting implications it is difficult to
extract meaningful metrics from the PetroNeft consolidated income
statement. Therefore the metrics below are an extraction from the
audited financial statements of the WorldAce Group and give an
indication as to the performance of Licence 61:
PetroNeft's PetroNeft's 100% of WorldAce
50% share 50% share 2015 2014
2015 3 July -
31 December
2014
US$'000 US$'000 US$'000 US$'000
Continuing operations
Revenue 10,300 5,846 20,600 29,289
Cost of sales (10,436) (5,451) (20,871) (26,379)
============
Gross profit (136) 395 (271) 2,910
Gross margin % (1.3%) 6.8% (1.3%) 10.0%
Administrative expenses (1,519) (1,027) (3,038) (5,129)
Impairment of oil
and gas properties (4,550) - (9,100) -
============
Operating loss (6,205) (632) (12,409) (2,219)
Finance revenue 12 5 23 16
Finance costs (2,572) (877) (5,144) (1,818)
============
Loss for the period
for continuing operations
before taxation (8,765) (1,504) (17,530) (4,021)
Income tax credit - 1,200 - 2,400
============
Loss for the period
for continuing operations
before taxation (8,765) (304) (17,530) (1,621)
============ ============= ========= =========
Net Loss - WorldAce Group
The net loss of WorldAce Group for the full year increased to
US$17,530,110 from US$1,621,345 in 2014. The increase in the loss
for the year before taxation can be attributed to higher interest
payable on loans from shareholders in 2015 as a result of
additional loans provided by Oil India Limited to WorldAce as part
of the Licence 61 Farmout. Of the US$5.1 million in interest
payable by WorldAce, US$2.8 million is payable to PetroNeft. Due to
the lower oil price environment and a reduction in reserves at the
Lineynoye oil field an impairment of oil and gas properties in the
amount of US$9.1 million was required.
Revenue, Cost of Sales and Gross Margin - WorldAce Group
Revenue from oil sales was US$20,600,188 for the year (2014:
US$29,288,078). Cost of sales includes depreciation of US$2,856,469
(2014: US$3,547,979), which was lower mainly because of the weaker
Rouble. The gross margin fell during the year primarily due to an
increase in Mineral Extraction Tax in 2015 but also due to lower
oil prices. Operating costs per barrel produced (Cost of Sales
excluding depreciation and Mineral Extraction Tax) was steady at
US$11.68 (2014: US$11.67 per barrel). We would expect the gross
margin to improve in future periods as our facilities and field
operations are fully staffed and can handle additional production
from the South Arbuzovskoye oil field under the current cost
structure and do not expect to add significant additional costs
once Sibkrayevskoye comes online. We produced 737,655 barrels of
oil (2014: 728,826 barrels) in the year and sold 761,123 barrels of
oil (2014: 704,189 barrels) achieving an average oil price of
US$27.00 per barrel (2014: US$41.59 per barrel). All oil was sold
on the domestic market in Russia.
Finance Costs - WorldAce Group
Finance costs of US$5,144,634 (2014: US$1,818,438) relate to
interest on loans from PetroNeft and Oil India.
Taxation - WorldAce Group
The tax credit in 2014 arose on the reversal of a deferred tax
charge of US$2,400,000 in relation to temporary differences in
Russia. There is no tax payable in 2015.
Future Funding of PetroNeft Group
PetroNeft is currently debt free. As part of Licence 61 Farmout,
Oil India provided exploration and development funding of US$45
million through the jointly controlled entity WorldAce. Oil India
has also agreed to provide funding for the development of South
Arbuzovskoye and Sibkrayevskoye by way of an unsecured shareholder
loan to WorldAce Group, thereby removing the funding requirement
from PetroNeft for this work. The first tranche of this funding was
agreed by way of an unsecured US$10 million shareholder loan from
Oil India to WorldAce in March 2016. Principal repayments on the
loan will not commence until October 2019. However, should there be
a significant change in the management of PetroNeft while the loan
is outstanding then Oil India may seek early repayment in full. In
such circumstances Petroneft would need to provide its 50% share of
the amount outstanding. It is expected that PetroNeft will commence
collection of interest receivable on its loans to WorldAce in the
second half of 2017.
Summary
We learned a lot in 2015 particularly in the experience gained
in horizontal drilling and the additional upside identified at
Sibkrayevskoye and South Arbuzovskoye. After 3 weeks of production
the A-214 horizontal well at South Arbuzovskoye is still producing
over 850 bopd and the pressure decline is very slow. We also now
have enough production data at A-213 to register the reserves in
the new J1-2 oil pool and will add production from the primary J1-1
interval in this well shortly. Both of these are excellent results.
In the near term we look forward to the A-215 horizontal well
results at South Arbuzovskoye and the commencement of drilling on
the S-374 delineation well at Sibkrayevskoye. The Company is
fortunate in that we have quality assets that are economic in a low
oil price environment. With an excellent partner in Oil India we
are well placed to exploit these opportunities despite the
challenging times for our industry.
Annual Report and AGM
The annual report will be mailed to shareholders and published
on the Company's website (www.petroneft.com) by 30 June 2016. The
AGM will be held in Dublin on 16 September 2016.
Finally, I know that I speak for all the Directors, management
and staff of the Group in giving sincere thanks to our
shareholders, both old and new, for your continued support
throughout the past year.
David Golder
Non-Executive Chairman
Consolidated Income Statement
For the year ended 31 December 2015
2015 2014
Note US$ US$
Continuing operations
Revenue 2,398,314 19,165,456
Cost of sales (2,370,949) (15,233,532)
============
Gross profit 27,365 3,931,924
Administrative expenses (1,379,506) (3,677,947)
Exchange loss on intra-Group
loans (284,449) (2,401,138)
============
Operating loss (1,636,590) (2,147,161)
Loss on disposal of subsidiary
undertaking 4 - (5,569,164)
Share of joint venture's net
loss - WorldAce Investments
Limited (8,765,055) (304,439)
Share of joint venture's net
loss - Russian BD Holdings
B.V. (314,859) (294,103)
Finance revenue 3,041,587 1,550,754
Finance costs - (1,612,312)
============
Loss for the year for continuing
operations before taxation (7,674,917) (8,376,425)
Income tax expense (799,466) (407,960)
Loss for the year attributable
to equity holders of the Parent (8,474,383) (8,784,385)
============ =============
Loss per share attributable to
ordinary equity holders of the
Parent
Basic and diluted - US dollar
cent 3 (1.20) (1.27)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015
2015 2014
US$ US$
Loss for the year attributable
to equity holders of the Parent (8,474,383) (8,784,385)
Other comprehensive income
to be reclassified to profit
or loss in subsequent years:
Currency translation adjustments
- subsidiaries 265,640 (764,277)
Share of joint ventures' other
comprehensive income - foreign
exchange translation differences (12,474,502) (26,480,234)
Recycling of currency translation
reserve on disposal of subsidiary 4 - 9,337,907
Total comprehensive loss for
the year attributable to equity
holders of the Parent (20,683,245) (26,690,989)
============= =============
Consolidated Balance Sheet
As at 31 December 2015
2015 2014
Note US$ US$
Assets
Non-current Assets
Property, plant and equipment 5 181,703 321,802
Equity-accounted investment in
joint ventures - WorldAce Investments
Limited 6 - 10,865,156
Equity-accounted investment in
joint ventures - Russian BD Holdings
B.V. 7 - 365,178
Financial assets - loans and receivables 8 42,883,861 46,398,502
43,065,564 57,950,638
============= =============
Current Assets
Inventories 9 54,302 15,179
Trade and other receivables 10 1,842,128 5,069,944
Cash and cash equivalents 11 1,284,212 3,392,769
3,180,642 8,477,892
============= =============
Total Assets 46,246,206 66,428,530
============= =============
Equity and Liabilities
Capital and Reserves
Called up share capital presented
as equity 13 9,429,182 9,429,182
Share premium account 140,912,898 140,912,898
Share-based payments reserve 6,796,540 6,763,745
Retained loss (74,774,790) (66,300,407)
Currency translation reserve (38,885,148) (26,676,286)
Other reserves 336,000 336,000
Equity attributable to equity
holders of the Parent 43,814,682 64,465,132
============= =============
Non-current Liabilities
Deferred tax liability 1,286,378 511,775
1,286,378 511,775
============= =============
Current Liabilities
Trade and other payables 12 1,145,146 1,451,623
1,145,146 1,451,623
============= =============
Total Liabilities 2,431,524 1,963,398
Total Equity and Liabilities 46,246,206 66,428,530
============= =============
Consolidated Statement of Changes in Equity
For the year ended 31 December 2015
Currency
Called translation
up reserve
share Share-based relating
capital payment to assets
presented Share and Currency held
as premium other translation for Retained
equity account reserves reserve sale loss Total
US$ US$ US$ US$ US$ US$ US$
At 1 January
2014 8,561,499 136,762,387 7,020,820 (177,021) (8,592,661) (57,516,022) 86,059,002
---------- ------------ ------------ ------------- ------------ ------------- -------------
Loss for the
year - - - - - (8,784,385) (8,784,385)
Currency
translation
adjustments
-
subsidiaries - - - (19,031) (745,246) - (764,277)
Share of joint
ventures'
other
comprehensive
income
- foreign
exchange
translation
differences - - - (26,480,234) - - (26,480,234)
Recycling of
currency
translation
reserve on
disposal of
subsidiary - - - - 9,337,907 - 9,337,907
---------- ------------ ------------ ------------- ------------ ------------- -------------
Total
comprehensive
loss
for the year - - - (26,499,265) 8,592,661 (8,784,385) (26,690,989)
New share
capital
subscribed 867,683 4,308,865 - - - - 5,176,548
Transaction
costs on
issue
of share
capital - (158,354) - - - - (158,354)
Share-based
payment
expense - - 78,925 - - - 78,925
-------------
At 31 December
2014 9,429,182 140,912,898 7,099,745 (26,676,286) - (66,300,407) 64,465,132
========== ============ ============ ============= ============ ============= =============
At 1 January
2015 9,429,182 140,912,898 7,099,745 (26,676,286) - (66,300,407) 64,465,132
========== ============ ============ ============= ============ ============= =============
Loss for the
year - - - - - (8,474,383) (8,474,383)
Currency
translation
adjustments
-
subsidiaries - - - 265,640 - - 265,640
Share of joint
ventures'
other
comprehensive
income
- foreign
exchange
translation
differences - - - (12,474,502) - - (12,474,502)
========== ============ ============ ============= ============ ============= =============
Total
comprehensive
loss
for the year - - - (12,208,862) - (8,474,383) (20,683,245)
Share-based
payment
expense - - 32,795 - - - 32,795
At 31 December
2015 9,429,182 140,912,898 7,132,540 (38,885,148) - (74,774,790) 43,814,682
========== ============ ============ ============= ============ ============= =============
Consolidated Cash Flow Statement
For the year ended 31 December 2015
2015 2014
US$ US$
Operating activities
Loss before taxation (7,674,917) (8,376,425)
Adjustment to reconcile loss
before tax to net cash flows
Non-cash
Depreciation 97,673 126,250
Share of loss in joint ventures 9,079,914 598,542
Share-based payment expense 32,795 78,925
Loss on disposal of subsidiary
undertaking 4 - 5,569,164
Finance revenue (3,041,587) (1,550,754)
Finance costs - 1,612,312
Working capital adjustments
Increase in trade and other
receivables (548,351) (506,502)
(Increase)/decrease in inventories (39,122) 44,199
Increase/(decrease) in trade
and other payables 31,428 (1,028,136)
Income tax paid (25,832) (5,354)
Net cash flows used in operating
activities (2,087,999) (3,437,779)
-------------
Investing activities
Purchase of oil and gas properties - (200,669)
Purchase of property, plant
and equipment (19,059) (144,137)
Exploration and evaluation
payments - (1,187,432)
Loan facilities advanced to
joint venture undertakings - (3,500,000)
Repayment of loan facilities
by joint venture undertakings - 36,105,575
Decrease in restricted cash - 2,054,947
Decrease in cash and cash
equivalents held for sale - 176,857
Interest received 10,095 15,310
Net cash (used in)/received
from investing activities (8,964) 33,320,451
-------------
Financing activities
Proceeds from issue of share
capital - 5,176,548
Transaction costs of issue
of shares - (158,354)
Proceeds from loan facilities - 1,500,000
Repayment of loan facilities - (31,500,000)
Interest paid - (1,601,285)
Net cash used in financing
activities - (26,583,091)
============ -------------
Net (decrease)/increase in
cash and cash equivalents (2,096,963) 3,299,581
Translation adjustment (11,594) (23,643)
Cash and cash equivalents
at the beginning of the year 3,392,769 116,831
Cash and cash equivalents
at the end of the year 11 1,284,212 3,392,769
============ =============
Notes to the Preliminary Financial Statements
For the year ended 31 December 2015
1. Basis of Accounting and Presentation of Financial Information
While the financial information included in this announcement
has been prepared in accordance with the Group's accounting
policies under International Financial Reporting Standards (IFRS)
as adopted by the European Union, this announcement does not itself
contain sufficient information to comply with IFRS. The Company is
distributing the full financial statements that comply with IFRS on
or before 30 June 2016.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2015
or 2014, but is derived from those accounts. Statutory accounts for
2014 have been delivered to the Registrar of Companies and those
for 2015 will be delivered following the Company's annual general
meeting. The auditors have reported on those accounts. Both reports
were unmodified.
Adoption of IFRS and International Financial Reporting
Interpretations Committee (IFRIC) interpretations
A number of amendments to existing IFRS (principally related to
clarifications and refinements of definitions) became effective
for, and have been applied in preparing, these Financial
Statements. The application of these amendments did not result in
material changes to the results or financial position of the Group
or the Company.
Going Concern
As detailed in the Chairman's' Statement, a significant work
programme will be carried out at Licence 61 in 2016 and 2017. Oil
India have agreed to provide funding for 100% of this work
programme by way of a shareholder loan to the joint venture
company, WorldAce Investments Limited. This loan is unsecured and
capital repayments do not commence until October 2019. However,
should there be a significant change in PetroNeft management the
loan can be called in and PetroNeft would have to provide its share
of funding to WorldAce in order that the loan could be repaid. The
recent agreement between the Company and its largest shareholder,
Natlata, helps to provide stability in terms of the management team
at PetroNeft and the agreement, which is subject to certain
conditions, is envisaged to last for two years, thereby mitigating
the risk of the loan being called in early.
PetroNeft the holding company recovers some of its costs from
the joint ventures it operates and expects to fund the unrecovered
costs through existing cash resources and also expects to start
receiving interest on its US$45 million loan to WorldAce in
2017.
Management have analysed its cash flow requirements for the
Group and the Company for the period to 31 December 2017 in detail.
The cash flow includes estimates for a number of key variables
including the timing of cash flows of development expenditure, oil
price, production rates, exchange rates and management of working
capital and is based on the provision of funding by Oil India as
described above. The cash flow analysis demonstrates that the Group
and Company will be in a position to meet its liabilities as they
fall due.
Based on the agreements that are in place with Oil India and
Natlata, and after making enquiries, the directors have a
reasonable expectation that the Group and the Company have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing the financial statements.
2. Segment information
At present the Group has one reportable operating segment, which
is oil exploration and production through its joint venture
undertakings. As a result, there are no further disclosures
required in respect of the Group's reporting segment.
The risk and returns of the Group's operations are primarily
determined by the nature of the activities that the Group engages
in, rather than the geographical location of these operations. This
is reflected by the Group's organisational structure and the
Group's internal financial reporting systems.
Management monitors and evaluates the operating results for the
purpose of making decisions consistently with how it determines
operating profit or loss in the consolidated financial
statements.
Geographical segments
Although the joint venture undertakings WorldAce Investments
Limited and Russian BD Holdings B.V. are domiciled in Cyprus and
the Netherlands, the underlying businesses and assets are in
Russia. Substantially all of the Group's sales and capital
expenditures are in Russia.
Assets are allocated based on where the assets are
located:
2015 2014
Non-current assets US$ US$
Russia 39,886,410 57,945,126
Ireland 3,480 5,512
39,889,890 57,950,638
=============================== =============
3. Loss per Ordinary Share
Basic loss per Ordinary Share amounts are calculated by dividing
net loss for the year attributable to ordinary equity holders of
the Parent by the weighted average number of Ordinary Shares
outstanding during the year. Basic and diluted earnings per
Ordinary Share are the same as the potential Ordinary Shares are
anti-dilutive.
2015 2014
Numerator US$ US$
Loss attributable to equity
shareholders of the Parent
for basic and diluted loss (8,474,383) (8,784,385)
(8,474,383) (8,784,385)
======================== ============
Denominator
Weighted average number of
Ordinary Shares for basic
and diluted earnings per Ordinary
Share 707,245,906 694,097,759
Diluted weighted average number
of shares 707,245,906 694,097,759
======================== ============
Loss per share:
Basic and diluted - US dollar
cent (1.20) (1.27)
The Company has instruments in issue that could potentially
dilute basic earnings per Ordinary Share in the future, but are not
included in the calculation for the reasons outlined below:
-- Employee Share Options -These potential Ordinary Shares are
anti-dilutive for the years ended 31 December 2015 and 2014.
-- Warrants - At 31 December 2014: 9,900,000 Ordinary Shares
were subject to warrants being exercised. These potential Ordinary
Shares were anti-dilutive for the year ended 31 December 2014. All
warrants expired during 2015.
4. Loss on disposal of subsidiary undertaking
In 2014 a legally-binding contract was entered into by the
Company to farmout a 50% non-operated interest in Licence 61. to
Oil India Limited ("OIL").
Under the terms of the agreement, OIL subscribed for shares in
WorldAce, the holding company for Stimul-T, the entity which holds
Licence 61 and all related assets and liabilities; following which,
PetroNeft and Oil India both hold 50% of the voting shares of
WorldAce. In addition, through the shareholder's agreement, both
parties have joint control of WorldAce with PetroNeft continuing as
operator (the "Licence 61 Farmout"). The basic terms of this
agreement provided for a total investment by OIL of up to US$85
million consisting of:
- US$35 million upfront cash payment;
- US$45 million of exploration and development expenditure on Licence 61;
- US$5 million performance bonus, contingent upon average
production from the Sibkrayevskoye Field reaching 7,500 bopd within
the next five years.
WorldAce Investments Limited, which was previously a 100%
subsidiary of PetroNeft, became a jointly controlled entity,
resulting in a loss on disposal of US$5.6 million (after the
recycling of the currency translation reserve of US$9.3 million).
The deal completed on 3 July 2014.
2014
US$
Fair value of remaining equity investment
in joint venture 35,000,000
Loans and other receivables from
joint venture (note 14)* 81,021,362
==============
Value of assets retained by PetroNeft 116,021,362
Assets held for sale (125,155,128)
Liabilities held for sale 14,723,715
==============
Gain before transaction costs and
recycling of currency translation
reserve 5,589,949
Recycling of currency translation reserve
on disposal of subsidiary (9,337,907)
Transaction costs (1,821,206)
Loss on disposal of subsidiary
undertaking (5,569,164)
==============
*US$35 million of the loans receivable from the joint venture
noted above were repaid to PetroNeft out of the proceeds of the new
share issue by WorldAce to Oil India. A further US$600,000 was
repaid from operating cashflows in the second half of 2014.
The recycling of the currency translation reserve of US$9.3
million relates primarily to the realisation of the cumulative
foreign currency losses relating to the retranslation of Russian
Rouble denominated assets and liabilities held by Stimul-T whose
functional currency is Russian Rouble. As part of the consolidation
process in prior periods up to 3 July 2014, those Russian Rouble
carrying amounts were converted to US Dollars, the functional
currency of PetroNeft, at each period end and the unrealised gain
or loss was then recognised through the statement of other
comprehensive income and included in the currency translation
reserve rather than the retained loss reserve. With the completion
of the Licence 61 Farmout in July 2014 this accumulated loss was
realised and therefore transferred to the Income Statement and
included in the calculation of loss on disposal arising from the
Licence 61 Farmout.
Property, Plant and
5. Equipment
Plant
Group and
machinery
US$
Cost
At 1 January 2014 1,472,972
Additions 148,917
Disposals (43,974)
Translation adjustment (581,327)
==========
At 1 January 2015 996,588
Additions 19,059
Translation adjustment (215,247)
At 31 December 2015 800,400
Depreciation
At 1 January 2014 1,005,912
Charge for the year 126,250
Disposals (43,974)
Translation adjustment (413,402)
----------
At 1 January 2015 674,786
Charge for the year 97,673
Translation adjustment (153,762)
At 31 December 2015 618,697
Net book values
At 31 December 2015 181,703
==========
At 31 December 2014 321,802
==========
Plant
Company and
machinery
US$
Cost
At 1 January 2014 27,027
Additions 5,039
----------
At 1 January 2015 32,066
At 31 December 2015 32,066
==========
Depreciation
At 1 January 2014 22,887
Charge for the year (3,667
----------
At 1 January 2015 26,554
Charge for the year (2,032
At 31 December 2015 28,586
==========
Net book values
At 31 December 2015 3,480
==========
At 31 December 2014 5,512
==========
6. Equity-accounted Investment in Joint Venture - WorldAce Investments Limited
PetroNeft Resources plc has a 50% interest in WorldAce
Investments Limited, a jointly controlled entity which holds 100%
of LLC Stimul-T, an entity involved in oil and gas exploration and
the registered holder of Licence 61. The interest in this joint
venture is accounted for using the equity accounting method.
WorldAce Investments Limited became a joint venture with effect
from 3 July 2014. Full details of the transaction and the
accounting implications are discussed in Note 4. WorldAce
Investments Limited is incorporated in Cyprus and carries out its
activities, through LLC Stimul-T, in Russia.
Share of
net assets
US$
At 1 January 2014 -
Investment in joint venture
during the year 35,000,000
Elimination of unrealised
profit on intra-Group transactions (22,734)
Retained loss (304,439)
Translation adjustment (23,807,671)
-------------
At 1 January 2015 10,865,156
Elimination of unrealised
loss on intra-Group transactions (29,326)
Retained loss (8,765,055)
Translation adjustment (11,587,393)
Credited against loans receivable
from WorldAce Investments
Limited (Note 8) 9,516,618
=============
At 31 December 2015 -
=============
The balance sheet position of WorldAce Investments Limited shows
net liabilities of US$28,770,819 following a loss in the year of
US$17,530,110 together with a negative currency translation
adjustment of US$23,174,786. PetroNeft's 50% share is included
above and results in a negative carrying value of US$9,516,618.
Therefore, the share of net assets is reduced to Nil and, in
accordance with IAS 28 Investments in Associates and Joint
Ventures, the amount of US$9,516,618 is deducted from other assets
associated with the joint venture on the Balance Sheet which are
the loans receivable from WorldAce Investments (see Note 8).
6. Equity-accounted Investment in Joint Venture - WorldAce Investments Limited (continued)
Additional financial information in respect of PetroNeft's 50%
interest in the equity-accounted joint venture entity is disclosed
below:
Period
from 3
July to
31 December
2015 2014
US$ US$
Continuing operations
Revenue 10,300,094 5,845,646
Cost of sales (10,435,521) (5,450,642)
============= -------------
Gross (loss)/profit (135,427) 395,004
Administrative expenses (1,519,005) (1,027,260)
Impairment of oil and gas
properties (4,550,000) -
============= -------------
Operating loss (6,204,432) (632,256)
Finance revenue 11,694 4,713
Finance costs (2,572,317) (876,896)
============= -------------
Loss for the year for continuing
operations before taxation (8,765,055) (1,504,439)
Income tax expense - 1,200,000
=============
Loss for the year (8,765,055) (304,439)
============= =============
Loss for the year
Other comprehensive income
to be reclassified to profit
or loss in subsequent years: (8,765,055) (304,439)
Currency translation adjustments (11,587,393) (23,807,671)
=============
Total comprehensive loss for
the year (20,352,448) (24,112,110)
============= =============
The currency translation adjustment results from the devaluation
of the Russian Rouble during the year. All Russian Rouble carrying
values in Stimul-T, the 100% subsidiary of WorldAce are converted
to US Dollars at each period end. The resulting gain or loss is
recognised through other comprehensive income and transferred to
the currency translation reserve. The Russian Rouble depreciated
significantly against the US Dollar during the year from
RUB56.5:US$1 at 31 December 2014 to RUB73.3:US$1 at 31 December
2015.
6. Equity-accounted Investment in Joint Venture - WorldAce Investments Limited (continued)
2015 2014
US$ US$
Non-current Assets
Oil and gas properties 27,646,307 26,378,463
Property, plant and equipment 197,826 285,775
Exploration and evaluation
assets 6,044,036 7,856,589
Assets under construction 2,345,358 3,226,280
36,233,527 37,747,107
============= -------------
Current Assets
Inventories 257,857 691,950
Trade and other receivables 259,142 1,633,624
Cash and cash equivalents 153,198 514,206
670,197 2,839,780
============= -------------
Total Assets 36,903,724 40,586,887
============= =============
Non-current Liabilities
Provisions (273,278) (393,153)
Interest-bearing loans and
borrowings (48,366,752) (32,593,955)
(48,640,030) (32,987,108)
============= -------------
Current Liabilities
Trade and other payables (2,649,103) (1,638,815)
(2,649,103) (1,638,815)
============= -------------
Total Liabilities (51,289,133) (34,625,923)
============= =============
Net (Liabilities)/Assets (14,385,409) 5,960,964
============= =============
Capital commitments
2015 2014
US$ US$
Details of capital commitments at the balance sheet
date are as follows:
Contracted for but not provided
in
the financial statements 1,236,788 12,839,994
Including contracted with
related parties - 3,697,366
========== ===========
6. Equity-accounted Investment in Joint Venture - WorldAce
Investments Limited (continued)
Future minimum rentals payable under non-cancellable
operating leases at the balance sheet date are as
follows:
2015 2014
US$ US$
Within one year 39,459 44,624
After one year but not more
than five years 150,274 160,711
More than five years 326,079 403,104
515,812 608,439
========== =========
The above capital commitments in the joint venture are incurred
jointly with Oil India International B.V. The Group has a 50% share
of these commitments.
7. Equity-accounted Investment in Joint Venture - Russian BD Holdings B.V.
PetroNeft Resources plc has a 50% interest in Russian BD
Holdings B.V., a jointly controlled entity which holds 100% of LLC
Lineynoye, an entity involved in oil and gas exploration and the
registered holder of Licence 67. The interest in this joint venture
is accounted for using the equity accounting method. Russian BD
Holdings B.V. is incorporated in the Netherlands and carries out
its activities in Russia.
Share of
net assets
US$
At 1 January 2014 3,331,844
Retained loss (294,103)
Translation adjustment (2,672,563)
================================
At 1 January 2015 365,178
Retained loss (314,859)
Translation adjustment (887,109)
Credited against loans receivable
from Russian BD Holdings B.V.
(Note 8) 836,790
At 31 December 2015 -
================================
The balance sheet position of Russian BD Holdings B.V. shows net
liabilities of US$1,673,580 following a loss in the year of
US$629,718 together with a currency translation adjustment (loss)
of US$1,774,218. PetroNeft's 50% share is included above and
results in a negative carrying value of US$836,790. Therefore, the
share of net assets is reduced to Nil and, in accordance with IAS
28 Investments in Associates and Joint Ventures, the amount of
US$836,790 is deducted from other assets associated with the joint
venture on the Balance Sheet which are the loans receivable from
Russian BD Holdings B.V. (Note 8).
7. Equity-accounted Investment in Joint Venture - Russian BD Holdings B.V. (continued)
Additional financial information in respect of PetroNeft's 50%
interest in the equity-accounted joint venture entity is disclosed
below:
2015 2014
US$ US$
Revenue - -
Cost of sales - -
Gross profit - -
Administrative expenses (106,224) (143,643)
Operating loss (106,224) (143,643)
Finance revenue 434 1,743
Finance costs (209,069) (152,203)
Loss for the year for continuing
operations before taxation (314,859) (294,103)
Taxation - -
Loss for the year (314,859) (294,103)
============ ============
Loss for the year (314,859) (294,103)
Other comprehensive income
to be reclassified to profit
or loss in subsequent years:
Currency translation adjustments (887,109) (2,672,563)
Total comprehensive loss for
the year (1,201,968) (2,966,666)
============ ============
2015 2014
US$ US$
Non-current assets 3,327,327 4,155,338
Current assets 71,104 165,716
Total assets 3,398,431 4,321,054
============ ------------
Non-current liabilities (4,034,780) (22,810)
Current liabilities (200,441) (3,933,066)
Total liabilities (4,235,221) (3,955,876)
============ ------------
Net (Liabilities)/Assets (836,790) 365,178
============ ============
7. Equity-accounted Investment in Joint Venture - Russian BD Holdings B.V. (continued)
Future minimum rentals payable under non-cancellable
operating leases at the balance sheet date are as
follows:
2015 2014
US$ US$
Within one year 2,091 2,605
After one year but not more
than five years 6,706 8,980
More than five years 22,010 29,377
30,807 40,962
======= ===================
There were no capital commitments as at 31 December 2014 or 31
December 2015.
Financial assets - loans and
8. receivables
2015 2014
US$ US$
Loans to WorldAce Investments
Limited 49,224,805 46,398,502
Less: share of WorldAce Investments
Limited loss (Note 6) (9,516,618) -
============================ ------------
39,708,187 46,398,502
============================ ------------
Loans to Russian BD Holdings
B.V. 4,012,464 -
Less: share of Russian BD
Holdings B.V. loss (Note 7) (836,790) -
============================ ------------
3,175,674 -
============================ ------------
42,883,861 46,398,502
============================ ============
The Company has granted a loan facility to its joint venture
undertaking WorldAce Investments Limited of up to US$45 million.
This loan facility is US$ denominated and unsecured. Interest
currently accrues on the loan at USD LIBOR plus 6.0% but the
Company has agreed not to seek payment of interest until 2017 at
the earliest. The loan is set to mature on 31 December 2022. As at
31 December 2015 the loan was fully drawn down. The loan from the
Company to Russian BD Holdings is repayable on demand. Interest
currently accrues on the loan at 6.0% per annum.
9. Inventories
2015 2014
US$ US$
Materials 54,302 15,179
54,302 15,179
================================= ===============
10. Trade and other receivables
2015 2014
US$ US$
Other receivables 147,641 112,492
Receivable from jointly
controlled entity (Note
14) 1,628,667 4,879,292
Receivable from related
parties (Note 14) - 11,858
Advances to contractors 3,708 1,922
Prepayments 62,112 64,380
1,842,128 5,069,944
====================================== ================
Other receivables are non-interest-bearing and are normally
settled on 60-day terms.
11. Cash and Cash Equivalents
2015 2014
US$ US$
Cash at bank and in hand 1,284,212 3,392,769
1,284,212 3,392,769
============================== ============
Bank deposits earn interest at floating rates based on daily
deposit rates. Short-term deposits are made for varying periods of
between one day and one month depending on the immediate cash
requirements of the Group, and earn interest at the respective
short-term deposit rates.
12. Trade and other payables
2015 2014
US$ US$
Trade payables 238,570 306,857
Trade payables to jointly
controlled entity (Note
14) 239,228 53,450
Corporation tax 59,087 60,797
Oil taxes, VAT and employee
taxes 78,293 74,497
Other payables 212,141 137,475
Accruals 317,827 818,547
1,145,146 1,451,623
================================ ===============
The Directors consider that the carrying amount of trade and
other payables approximates their fair value.
Trade and other payables are non-interest-bearing and are
normally settled on 60-day terms.
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs.
13. Share capital 2015 2014
EUR EUR
Authorised
1,000,000,000 (2014: 1,000,000,000)
Ordinary Shares of EUR0.01 each 10,000,000 10,000,000
===========
10,000,000 10,000,000
=========== ===========
Called
Number of up share
Allotted, called up and Ordinary capital
fully paid equity Shares US$
At 1 January 2014 644,920,275 8,561,499
Issued in 2014 62,325,631 867,683
============ ----------
At 1 January 2015 707,245,906 9,429,182
At 31 December 2015 707,245,906 9,429,182
============ ==========
The Company issued 62,325,631 new shares for consideration of
US$5.2 million in March 2014. The net proceeds of this share issue
of US$5.0 million, after transaction costs of US$0.2 million, were
used to finance expenditure on oil and gas properties, exploration
and evaluation costs, debt repayment and corporate overhead.
14. Related party disclosures
Transactions with joint ventures
PetroNeft Resources plc had the following transactions with its
joint ventures during the years ended 31 December 2015 and
2014:
WorldAce
Russian Investments
BD Holdings Limited
BV Group Group
US$ US$
Receivable by PetroNeft Group
at 1 January 2014 644,531 -
Transferred on subsidiary
becoming a joint venture (note
4) - 81,021,362
Advanced during the year 3,500,000 -
Transactions during the year 330,967 1,574,116
Interest accrued in the year 117,120 1,415,202
Repaid during the year (475,000) (35,630,575)
Payments for services made
during the year (206,290) (968,140)
Translation adjustment (28,750) (70,199)
--------------------------- --------------------
At 1 January 2015 3,882,578 47,341,766
Transactions during the year 183,333 2,670,250
Interest accrued in the year 205,189 2,826,303
Payment for services made
during the year (29,781) (2,483,727)
Share of joint venture's currency
translation adjustment (836,790) (9,516,618)
Translation adjustment (14,821) 45,618
Balance 31 December 2015 3,389,708 40,883,592
=========================== ====================
Balance at 31 December 2014
comprised of:
Loan facility advanced - 46,398,502
Trade and other receivables 3,882,578 996,714
Trade Payables - (53,450)
3,882,578 47,341,766
=========================== ====================
Balance at 31 December 2015
comprised of:
Loans facility advanced 3,175,674 39,708,187
Trade and other receivables 214,034 1,414,633
Trade and other payables - (239,228)
3,389,708 40,883,592
=========================== ====================
14. Related party disclosures (continued)
Remuneration of key management
Key management comprise the Directors of the Company, the Vice
President of Business Development and Operations, the General
Director and the Executive Director of the Russian subsidiary LLC
Dolomite, along with both the Chief Geologist and Chief Engineer of
LLC Dolomite. Their remuneration during the year was as
follows:
Remuneration of key management
2015 2014
US$ US$
Compensation of key management 1,715,340 2,068,014
Contributions to defined contribution
pension plan 89,917 65,923
Share-based payment expense 15,401 39,981
1,820,658 2,173,918
========================= ===================
The total amount of unpaid fees and expenses due to Directors as
at 31 December 2015 was US$143,536 (2014: US$561,348).
Details of transactions between the Group and other related
parties are disclosed below.
Transactions with TBNG Group
Vakha Sobraliev, a Director of PetroNeft until his resignation
on 18 September 2015, is the principal of LLC Tomskburneftegaz
("TBNG"), a company which has drilled production and exploration
wells for the Group. Various contracts for drilling have been
awarded to TBNG in recent years. All drilling contracts with TBNG
are "turnkey" contracts whereby TBNG assumes substantially all
liabilities in relation to the health and safety, environmental and
other risks associated with drilling operation. As part of this
arrangement WorldAce Group companies also occasionally sell sundry
goods and services to TBNG. Other companies related to TBNG also
provide some services to the Group such as transportation, power
management and repairs. The following is a summary of the
transactions:
TBNG Group TBNG Group
From 1 January 2014
to 18 September
2015
US$ US$
Maximum value of new contracts
awarded during the period 1,778,324 4,494,543
Paid during the period for
drilling and related services 5,379,260 6,869,038
Paid during the period for
other services 2,023 24,523
Amount due to TBNG and related
companies at period end - 351,172
Received during the period
for sundry goods and services 98,789 37,271
Amount due from TBNG and
related companies at period
end - 400,970
================= ===========
Other PetroNeft Group companies provided various services to
TBNG Group during the period from 1 January to 18 September 2015
amounting to US$536 (2014: US$15,917). An amount of US$Nil (2014:
US$11,858) was outstanding from TBNG Group at 18 September
2015.
14. Related party disclosures (continued)
The Group has an indirect 50% interest in Lineynoye which in
turn is 100% owned by the jointly controlled entity Russian BD
Holdings B.V. Lineynoye also entered into some transactions with
TBNG and related companies as follows:
TBNG Group TBNG Group
From 1 January 2014
to 18 September
2015
US$ US$
Maximum value of new contracts - -
awarded during the period
Paid during the period for
drilling and related services - 183,874
Paid during the period for - -
other services
Amount due to TBNG and related - -
companies at period end
Received during the period 4,114 -
for sundry goods and services
Amount due from TBNG and related
companies at period end - 4,625
================= ===========
15. Important Events after the Balance Sheet Date
On 24 April 2016 David Sanders, Gerard Fagan and Paul Dowling
resigned from the Board of the Company and Maxim Korobov, Anthony
Sacca and David Sturt were appointed to the Board in conjunction
with an agreement between the Company and its largest shareholder,
Natlata Partners Limited. Mr. Dowling remains as CFO of the
Company. The agreement with Natlata, which is for a period of two
years, includes a commitment from Natlata only to support
shareholder resolutions that have been recommended by the Board of
the Company.
In March 2016, Oil India agreed to provide 100% funding for the
agreed Licence 61 work programme in 2016 and 2017. A loan of US$10
million was agreed with the joint venture company, WorldAce
Investments Limited, to fund the 2016 programme. The loan is
unsecured and capital repayments commence in October 2019. Should
there be a significant change in the management of PetroNeft while
the loan is outstanding then Oil India may seek early repayment in
full. In such circumstances Petroneft would need to provide its 50%
share of the amount outstanding.
16. Approval of financial statements
The financial statements were approved, and authorised for
issue, by the Board of Directors on 22 June 2016.
17. Board approval
This announcement was approved by the Board of Directors of
PetroNeft Resources plc on 22 June 2016.
Glossary
1P Proved reserves according to SPE standards.
2P Proved and probable reserves according to SPE standards.
3P Proved, probable and possible reserves according to SPE
standards.
AGM Annual General Meeting.
AIM Alternative Investment Market of the London Stock
Exchange.
Arawak Arawak Energy Russia B.V.
bbl Barrel.
Belgrave Naftogas Belgrave Naftogas B.V., a member of the Arawak
group of companies
bfpd Barrels of fluid per day.
boe Barrel of oil equivalent.
bopd Barrels of oil per day.
Company PetroNeft Resources plc.
CPF Central Processing Facility.
Dolomite LLC Dolomite, a 100% subsidiary of PetroNeft registered
in the Russian Federation
ESM Enterprise Securities Market of the Irish Stock
Exchange.
ESP Electric Submersible Pump
Exploration resources An undrilled prospect in an area of known
hydrocarbons with unequivocal four-way dip closure at the reservoir
horizon.
Granite Construction LLC Granite Construction, a 100% subsidiary
of PetroNeft registered in the Russian Federation
Group The Company and its joint ventures and subsidiary
undertakings.
HSE Health, Safety and Environment.
IAS International Accounting Standard.
IFRIC IFRS Interpretations Committee.
IFRS International Financial Reporting Standard.
km Kilometres.
km(2) / sq km Square kilometres.
KPI Key Performance Indicator.
Licence 61 The Exploration and Production Licence in the Tomsk
Oblast, Russia owned by the joint venture company WorldAce
Investments Limited. It contains seven known oil fields, Lineynoye,
Tungolskoye, West Lineynoye, Arbuzovskoye, Kondrashevskoye,
Sibkrayevskoye and North Varyakhskoye and 27 Prospects and Leads
that are currently being explored.
Licence 61 Farmout An agreement whereby Oil India Limited
subscribed for shares in WorldAce, the holding company for
Stimul-T, the entity which holds Licence 61 and all related assets
and liabilities, and following, PetroNeft and Oil India Limited
both hold 50% of the voting shares, and through the shareholders
agreement, both parties have joint control of WorldAce with
PetroNeft as operator
Licence 67 The Exploration and Production Licence in the Tomsk
Oblast, Russia owned by the joint venture company Russian BD
Holdings B.V. It contains two oil fields, Ledovoye and
Cheremshanskoye and several potential prospects.
GLOSSARY (continued)
Lineynoye Limited Liability Company Lineynoye, a wholly owned
subsidiary of Russian BD Holdings B.V., registered in the Russian
Federation.
Macquarie Macquarie Bank Limited.
m Metres.
mmbbls Million barrels.
mmbo Million barrels of oil.
Natlata Natlata Partners Limited, a significant shareholder of
PetroNeft.
Oil pay A formation containing producible hydrocarbons.
P1 Proved reserves according to SPE standards.
P2 Probable reserves according to SPE standards.
P3 Possible reserves according to SPE standards.
PetroNeft PetroNeft Resources plc.
Russian BD Holdings B.V. Russian BD Holdings B.V., a company
owned 50% by PetroNeft and registered in the Netherlands.
SPE Society of Petroleum Engineers.
Spud To commence drilling a well.
Stimul-T Limited Liability Company Stimul-T, a wholly owned
subsidiary of WorldAce, based in the Russian Federation.
TSR Total Shareholder Return.
VAT Value Added Tax.
WAEP Weighted Average Exercise Price.
WorldAce WorldAce Investments Limited, a company owned 50% by
PetroNeft, registered in Cyprus.
WorldAce Group WorldAce Investments Limited and its 100%
subsidiary LLC Stimul-T
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
June 23, 2016 02:00 ET (06:00 GMT)