TIDMWEN
RNS Number : 7119K
Wentworth Resources PLC
24 April 2020
PRESS RELEASE 24 April 2020
WENTWORTH RESOURCES PLC
("Wentworth" or the "Company")
Final Results for the year ended 31 December 2019
Wentworth (AIM: WEN), the independent, East Africa-focused
natural gas company , is pleased to announce its audited financial
results for the year ended 31 December 2019. All dollar values are
expressed in US dollars unless stated otherwise.
Wentworth confirms that the Annual Report and Financial
Statements for the year ended 31 December 2019 have been published,
and are available on the Company's website at wentplc.com . Hard
copies have today been posted to those shareholders who elected to
receive them.
HIGHLIGHTS
2020 Outlook
-- 2020 Mnazi Bay production guidance remains unchanged at 65 - 75 MMscf/d (gross)
-- The Government of the United Republic of Tanzania has taken a
robust and proactive approach to the COVID-19 pandemic
-- 284 COVID-19 cases have been confirmed so far in Tanzania
with the first reported case on the 16 March 2020
-- Zero COVID-19 cases at Mnazi Bay with robust precautionary
measures in place to mitigate the risk of any operational
disruption
-- Mnazi Bay remains fully operational with no current impact on operations due to COVID-19
Financial
-- Revenues of $18.6 million, underpinned by long-term fixed price contracts
-- Adjusted EBITDAX of $8.8 million (2018: $8.3 million)
excluding non-recurring expenses of $1.0 million
-- Declaring a second dividend in respect of FY 2019 of 0.9
pence per share ($2.0 million in aggregate); a total dividend
distribution in respect of 2019 of $3.0 million representing a
yield of 7.2%, based on the closing share price at 20 April
2020
-- Wentworth's share of Gross 2P Reserves as at 31 December 2019
estimated by RPS to be 95.1 Bcf with a post-tax NPV10 of $118.6
million
-- Debt free with cash on hand of $14 million at end March 2020
-- TPDC receivables are now the lowest since first production,
standing at two months at end of 2019 and one month at end of March
2020
Operational
-- Production averaged 70.3 MMscf/day (2018: 83.2 MMscf/day),
lower due to fluctuating demand but in line with guidance of 68-72
MMscf/day
-- Capacity from existing wells and production facilities
increased to in excess of 100 MMscf/day
-- Low operational cost of production of $0.69 / Mscf
Corporate
-- Katherine Roe promoted to CEO in November 2019
-- Operational and financial resilience, accompanied by minimal
2020 work programme, positions the Company to absorb the impact
from the current difficult macroeconomic backdrop
-- Delisting from Oslo Børs and redomicile to the UK providing a
simpler and more cost-effective platform for growth along with a
more transparent corporate governance structure
Sustainable Growth
-- The power access gap in Tanzania is growing despite domestic
energy supply increasing, with a reported access rate of only 32.7%
and 7.7 million households without power
-- Transformational growth needed in domestic energy supply to
deliver the Government's target of universal access by 2030 through
low-cost, low carbon solutions
-- Natural gas will play a critical role in meeting this target
to support cheaper and more reliable electricity as well as
facilitating an enabling environment to supplement carbon-free
renewable energy systems, such as hydro and solar
-- Wentworth is committed to being a long-term partner for
Tanzania to deliver low-carbon, domestic energy supply growth that
will underpin the socio-economic development of the country in the
near and longer-term
Dividend
A dividend is declared of GBP 0.9 pence per share (US$2.0
million), payable by the end of June 2020. This second dividend
follows the Company's maiden interim dividend of US$1.0 million,
which was declared in September 2019, bringing a total distribution
in respect of FY 2019 of US$3.0 million, which delivers an annual
yield of approximately 7.2%, based on the closing share price at 20
April 2020, in line with previous guidance.
In light of uncertainty around timing and logistics of the
Company's 2020 AGM due to the COVID-19 pandemic, Wentworth has
declared this as a second interim dividend rather than a final
dividend for 2019 to avoid any delay in shareholders receiving the
dividend which, if declared as a final dividend, could not be paid
until after the AGM has been held. There will be no final dividend
declared for 2019, however, it is anticipated that in future years
the Company will revert to a declaration of an interim dividend
with the Interim Results and a final dividend declared with the
Final Results to be put to shareholders at the Company's AGM.
Interim Dividend Payment Timetable:
-- Ex-dividend date: 14 May 2020
-- Record Date: 15 May 2020
-- UK Payment Date (for shareholders who hold shares on the UK Register): 12 June 2020
-- VPS Payment Date (for shareholders who hold shares on the VPS Register): 26 June 2020
Results Conference Call
The Company is holding a conference call for analysts at 11:00am
BST today, Friday 24 April 2020 and an updated presentation will be
available on the company's website wentplc.com .
To register for the call, please click on the following
link:
https://secure.emincote.com/client/wentworth/wentworth004/vip_connect
You can view the presentation during the call via the following
link:
https://secure.emincote.com/client/wentworth/wentworth004
Katherine Roe, CEO, commented:
"Debt free and with a healthy balance sheet, Wentworth has never
been in a more financially and operationally robust position,
especially important in these uncertain times we're experiencing
due to the COVID-19 pandemic and stock market volatility. Following
strong performance across the board in 2019 and a resilient 2020
outlook, further underlined by our decision to announce a second
interim dividend, we are excited and confident about the
future.
"We have increased capacity at the Mnazi Bay concession area
which is well positioned to supply the expected demand increase
over the near term as gas-fired power generation in Tanzania is
increased by the Government.
"Responsible growth remains a priority for us. With over 65% of
Tanzania's population having no reliable access to power and a
universal energy access target set by the Government for 2030, we
see a huge opportunity for Wentworth. We aim to continue to play a
critical role in helping to plug the energy gap whilst facilitating
an enabling environment for the longer-term growth of a low-to-no
carbon power sector by using our gas to supplement renewable
technologies when they need it."
Enquiries:
Wentworth Katherine Roe, katherine.roe@wentplc.com
Chief Executive Officer +44 (0) 7841 087 230
AIM Nominated Adviser and Joint Broker
Callum Stewart
Ashton Clanfield
Stifel Nicolaus Europe Limited Simon Mensley +44 (0) 20 7710 7600
Joint Broker
Richard Crichton
Peel Hunt LLP Alexander Allen +44 (0) 20 7418 8900
Investor Relations Adviser
Sara Powell
FTI Ben Brewerton +44 (0) 20 3727 1000
CHAIRMAN'S STATEMENT
2019 was a year in which our Company continued to gain financial
strength. This was highlighted by the Company declaring its first
dividend with a yield of 7.2% on a 18p per share price and a total
distribution of $3.0 million for 2019.
In addition, at the end of January 2020, the Company also became
debt free after making its final loan repayment. Cash reserves
continue to increase and at 31 March 2020 the Group has a cash
balance of $14.0 million.
Mnazi Bay is performing as expected from a world class
reservoir, but production rates have been affected over the past
year by fluctuations in demand primarily driven by increased supply
by hydroelectric generation. The production volumes for 2019 were
within the guidelines provided by Wentworth management and averaged
70.3MMscf/day. Mnazi Bay today has the capacity to deliver in
excess of 100 MMscf/day from existing wells and production
facilities ensuring it is well positioned to supply the expected
demand increase over the near term.
During the past year the Company made a significant change in
its senior management with the promotion of Katherine Roe to CEO
following the departure of Eskil Jersing in November 2019.
Following this, the Board was reduced to four Non-Executive
Directors and one Executive Director, supported by long-standing
and dedicated teams in both the UK and Tanzania.
2019 was a difficult year for the oil and gas business as public
environmental protests affected financial institutions' ability to
further invest in our industry. Although Wentworth's gas focused
business model shields it from most negative sentiment, the Company
still faces the pressures put forward by environmental groups to
remove fossil fuels from the world energy supply mix.
The power access gap in Tanzania is growing, despite domestic
energy supply increasing and transformational growth is needed to
deliver universal access throughout the country through low-cost
low carbon solutions. Natural gas will play a critical role in
meeting this target to support cheaper and more reliable
electricity alongside carbon-free renewable energy systems, such as
hydro and solar. Wentworth is committed to being a long-term
partner for Tanzania in delivering low-carbon, domestic energy
supply growth that will underpin the socio-economic development of
the country in the near and longer-term.
In closing, I would once again like to thank all shareholders
for their continued support and to give special recognition to the
entire Wentworth family, including the Board of Directors, for
their hard work and loyalty in 2019.
Robert McBean
Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year-ended 31 December
Note 2019 2018
$000 $000
------------ ------------
Total revenue 5 18,636 16,224
Production and operating costs (3,935) (2,290)
Depletion 16 (6,236) (7,803)
----------------------------------------------- ----- ------------ ------------
Total cost of sales (10,171) (10,093)
Gross profit 8,465 6,131
Recurring administrative costs 7 (5,883) (6,289)
New venture and pre - licence costs (609) -
Amounts capitalised to E&E assets - 664
Impairment loss on E&E assets 15 - (41,598)
Provision for Tanzania Government receivables 14 - (4,959)
Management restructuring costs 10 (489) (940)
Redomicile costs - (1,393)
Share-based payment charges 24 (63) (98)
Depreciation 16 (2) (12)
Loss on sale of PPE - (3)
Tanzanian withholding tax costs 28 - (993)
----------------------------------------------- ----- ------------ ------------
Total costs (7,046) (55,621)
Profit/(loss) from operations 1,419 (49,490)
Finance income 11 21 2,659
Finance expense 11 (453) (1,616)
----------------------------------------------- ----- ------------ ------------
Profit/(loss) before tax 987 (48,447)
Current tax expense 28 (132) (63)
Deferred tax income / (expense) 28 1,511 (26,714)
----------------------------------------------- ----- ------------ ------------
1,379 (26,777)
Net and comprehensive profit/(loss) after tax 2,366 (75,224)
----------------------------------------------- ----- ------------ ------------
Net profit/(loss) per ordinary share
Basic and diluted (US$/share) 26 0.01 (0.40)
----------------------------------------------- ----- ------------ ------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 31 December
Note 2019 2018
(Restated)(1)
$000 $000
------------------------------------ ------
ASSETS
Current assets
Cash and cash equivalents 13,487 9,403
Trade and other receivables 12 6,075 7,553
TPDC receivables 13 - 5,238
------------------------------------ ------ ------------
19,562 22,194
------------------------------------ ------ ------------
Non-current assets
Exploration and evaluation assets 15 8,129 8,129
Property, plant and equipment 16 77,559 83,777
Deferred tax asset 28 5,548 4,036
------------------------------------ ------ ------------ ---------------
91,236 95,942
------------------------------------ ------ ------------ ---------------
Total assets 110,798 118,136
------------------------------------ ------ ------------ ---------------
LIABILITIES
Current liabilities
Trade and other payables 18 2,125 3,062
Current portion of long-term loans 20 1,714 7,091
Contingent PTTEP liability 21 - 848
------------------------------------ ------
3,839 11,001
------------------------------------ ------ ------------
Non-current liabilities
Long-term loans 20 - 1,688
Decommissioning provision 22 1,085 969
------------------------------------ ------
1,085 2,657
------------------------------------ ------ ------------ ---------------
Equity
Share capital 25 416,426 416,426
Equity reserve 25 26,651 26,588
Accumulated deficit (337,203) (338,536)
------------------------------------ ------ ------------ ---------------
105,874 104,478
------------------------------------ ------ ---------------
Total liabilities and equity 110,798 118,136
------------------------------------ ------ ------------ ---------------
(1) Restated amounts relate to the presentation adjustment
net-off of $2.5 million cash and cash equivalents within current
assets against $2.5 million credit overdraft facility within
current liabilities with respect to the undrawn overdraft credit
facility at 31 December 2018 (note 19).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Number of Share Equity Accumulated Total
Note shares capital reserve deficit equity
$000 $000 $000 $000
------------------------------- ------ -------------------------- ----------- --------- ------------- -----------
Balance at 31 December
2017 as previously reported 186,488,465 416,426 26,490 (262,566) 180,350
IFRS 9 transitional adjustment 2 - - - (746) (746)
------------------------------- ------ -------------------------- ----------- --------- ------------- -----------
Restated balance at 31
December 2017 186,488,465 416,426 26,490 (263,312) 179,604
Net loss and comprehensive
loss - - - (75,224) (75,224)
Share based compensation 24 - - 98 - 98
Balance at 31 December
2018 186,488,465 416,426 26,588 (338,536) 104,478
Dividends 27 - - - (1,033) (1,033)
Net profit and comprehensive
profit - - - 2,366 2,366
Share based compensation 24 - - 63 - 63
------------------------------- ------ --------------------------
Balance at 31 December
2019 186,488,465 416,426 26,651 (337,203) 105,874
------------------------------- ------ -------------------------- ----------- --------- ------------- -----------
CONSOLIDATED STATEMENT OF CASH FLOWS
Year-ended 31 December
Note 2019 2018
(Restated)(1)
$000 $000
------------------------------------------------- ----- --- ---
Operating activities
Net profit/(loss) for the year 2,366 (75,224)
Adjustments for:
Depreciation and depletion 16 6,238 7,815
Impairment loss on E&E assets 15 - 41,598
Provision for Tanzania Government receivables 14 - 4,959
Finance costs/(income), net 31 432 (1,043)
Deferred tax expense 28 (1,511) 26,714
Share based compensation 24 63 98
Loss on sale of PPE - 3
------------------------------------------------- -----
7,588 4,920
Change in non-cash working capital 31 410 1,576
------------------------------------------------- -----
Net cash generated from operating activities 7,998 6,496
------------------------------------------------- ----- --- --- -------- ---------------
Investing activities
Additions to exploration and evaluation
assets 31 - (1,806)
Additions to property, plant and equipment 31 (20) (1,968)
Reduction of TPDC receivable 31 5,238 15,377
Proceeds from sale of office assets 16 - 3
Interest income 21 -
------------------------------------------------- ----- --- ---
Net cash from investing activities 5,239 11,606
------------------------------------------------- ----- --- --- -------- ---------------
Financing activities
Principal term loan repayments 20 (6,661) (6,996)
Overdraft credit facility repayment(1) 19 - (2,500)
Interest on term loan 20 (593) (1,544)
Interest/renewal fee on overdraft facility 19 (18) (68)
Payment of contingent PTTEP liability 21 (848) (1,341)
Dividends paid 27 (1,033) -
------------------------------------------------- ----- --- --- -------- ---------------
Net cash used in financing activities (9,153) (12,449)
------------------------------------------------- ----- --- --- -------- ---------------
Net change in cash and cash equivalents 4,084 5,653
Cash and cash equivalents, beginning
of the period 9,403 3,750
------------------------------------------------- ----- --- ---
Cash and cash equivalents, end of the
period 13,487 9,403
------------------------------------------------- ----- --- --- -------- ---------------
NOTES TO THE FINANCIAL STATEMENTS
1. Incorporation and basis of preparation
Wentworth Resources plc ("Wentworth" or the "Company") is an
East Africa-focused upstream oil and natural gas company. These
audited consolidated financial statements include the accounts of
the Company and its subsidiaries (collectively referred to as
"Wentworth Group of Companies" or the "Group"). The Company is
actively involved in oil and gas exploration, development and
production operations. Wentworth is incorporated in Jersey and
shares of the Company as at 31 December 2019 were widely held and
listed on the AIM part of the London Stock Exchange (ticker:
WEN).
The Company's principal place of business is located at Thames
Tower, 2(nd) Floor, Station Road, Reading RG1 1LX, United
Kingdom.
The Company maintains offices in Dar es Salaam, Tanzania and
Reading, United Kingdom.
Basis of presentation and statement of compliance
These consolidated financial statements have been prepared on a
historical cost basis and have been prepared using the accrual
basis of accounting. The consolidated financial statements are
prepared in accordance with International Financial Reporting
Standard ("IFRS") as issued by the International Accounting
Standards Board ("IASB").
The consolidated financial statements were approved by the Board
of Directors on 24 April 2020.
At the time of writing this report, relatively little is known
about the behaviour and ultimate impact of the Covid-19 virus, both
operational and financial. The virus was entirely unanticipated,
and the speed of infection and reinfection has taken worldwide
authorities by surprise. Freedom of movement and security protocols
have been put in place in the United Kingdom that are unprecedented
in the past 75-years. That being said, Wentworth has never been in
a stronger position to be able to absorb and deal with the
potential downside scenarios that we have been working very hard to
model and mitigate internally. Ultimately, however, it will be the
macro-economic environment that influences the impact upon the
wider Group and there can be no certainty as to what this final
outcome will be. We continue to apply the judgement that the
business will continue, anticipating minimal disruption and do not
at this stage foresee these to be either longstanding or material
to our business. We do, however, continue to monitor the situation
as it progresses and are mindful of the speed in which
circumstances may change, both for the better or for the worse.
Functional and presentation currency
These consolidated financial statements are presented in US
dollars which is the functional currency the majority of its
subsidiaries.
Basis of consolidation
These consolidated financial statements include the accounts of
the Company and its subsidiaries. Subsidiaries are entities that
the Company controls. An investor controls an investee when it is
exposed, or has rights, to variable returns from its involvement
with the investee and can affect those returns through its
authority over the investee. The existence and effect of potential
voting rights are considered when assessing whether a company
controls another entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Company. They are
deconsolidated from the date that control ceases. The legal
entities within the Wentworth Group of Companies are disclosed
within note 17. All inter- company transactions, balances and
unrealised gains on transactions between the parent and subsidiary
companies are eliminated on consolidation.
The Group holds a 31.94% participation interest in the Mnazi Bay
Concession through two subsidiaries. Wentworth Gas Limited ("WGL"),
which is a wholly owned subsidiary, owns a 25.40% participation
interest and CMBL owns a 16.38% participation interest of which the
Group's proportionate share is 6.54% (i.e. Wentworth's interest of
39.925% interest in CMBL multiplied by 16.38% participation
interest). CMBL is considered a jointly controlled entity and
accounted for as a joint operation rather than a joint venture. The
Group proportionately consolidates CMBL as related contractual
agreements establish that the parties to the joint arrangement have
rights to the assets and obligations for the liabilities of
ownership in proportion to their interest in the arrangement.
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Strategic Report. The financial position of the
Group, its cash flows and liquidity position are described in the
Financial Review contained within this report.
With the world currently struggling to come to terms with the
unprecedented events of the Covid-19 pandemic and the risk
presented to the continued health and well-being of our workforce
alongside the disruption that preventative measures have had on the
global supply chain in placing restrictions on the transportation
of goods, services and personnel set to continue for some time to
come, considerable time and resource have been allocated by
Directors and senior management in ensuring that Wentworth is best
placed to be able to continue to safely produce gas from Mnazi Bay
alongside the Operator, Maurel et Prom. Given the essential nature
of services provided and the forecasted impact of the virus in the
country, the Group notes that an interruption of production and
unavailability of key workforce is remote. The Directors however
are mindful of the speed with which circumstances may change, both
for the better or for the worse, and all modelling is based on
information that we currently have available to us.
The Group has a long established and collaborative relationship
with the Government of the United Republic of Tanzania, having
operated in-country for many years, however the Directors do
recognise that the Group is dependent upon the continued collection
of gas sales invoices and ongoing operational support of the
Government as its sole gas sales customer through its operating
agencies TPDC and TANESCO.
The Directors have, therefore, judged that on a risk-weighted
basis which takes into consideration both the probability of
occurrence and an estimate of the financial impact, the continued
timely settlement of gas-sales invoices by the Government of the
United Republic of Tanzania continues to be the most significant
risk currently faced by the Group. To this end, should no
settlement of future gas sales invoices be received from the date
of approval of these financial statements, we have assessed that
the Group would be able to continue to operate for a period of up
to 14-months without the need for a further injection of working
capital.
Further to this based on the application of reasonable and
foreseeable sensitivities, which include potential changes in
demand, capital spend, operating costs, the Directors believe that
the Group is well placed to manage its financial exposures The
Directors have judged that owing to a combination of the stability
of this relationship which has seen payment terms continue to
improve during 2019 and its much improved financial position having
fully repaid all of its fixed-term debt in January 2020, the Group
has sufficient cash resources for its working capital needs,
committed capital and operational expenditure programmes for at
least the next 14-months based on the Directors worst case scenario
of no settlement of future gas sales as noted above.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future and therefore continue to adopt the going
concern basis of accounting in preparing the annual financial
statements.
Future accounting pronouncements
The following amended standards and interpretation are effective
for financial years commencing on or after 1 January 2020. The
Group does not intend to adopt the standards below, before their
mandatory application date.
New and amended standards
Standard Description Effective EU Endorsement Status
date
IFRS 3 (amendments Definition of a Business 1 January Endorsed
2020
------------------------------- ---------- ----------------------
IAS 1 and IAS 8 (amendments) Definition of Material 1 January Endorsed
2020
------------------------------- ---------- ----------------------
IFRS 9, IAS 39 and IFRS 7 (Amendments) Interest Rate Benchmark Reform 1 January Endorsed
2020
------------------------------- ---------- ----------------------
IFRS 17 Insurance Contracts 1 January Endorsed
2021
------------------------------- ---------- ----------------------
The Company intends to adopt the above listed standards and
interpretations in its financial statements for the annual period
beginning 1 January 2020. The Company does not expect the
interpretation to have a material impact on the financial
statements.
2. Summary of accounting policies
The principal accounting policies applied in the preparation of
these Company and Group consolidated financial statements are set
out below. These policies have been consistently applied to all the
years presented, unless otherwise stated.
Joint arrangements
The analysis of joint arrangements requires management to
analyse numerous agreements and the requirements of IFRS 10 and
IFRS 11. Several judgements and estimates are made by management
including whether joint control exists and the extent of exposure
to the underlying assets and liabilities of the joint arrangement.
By virtue of the provisions contained within the underlying
shareholder agreements, to which Cyprus Mnazi Bay Limited (see
below for accounting considerations of this entity) and Wentworth
Holdings Gas Limited, a wholly owned subsidiary of Wentworth
Resources plc, are parties to, management have assessed that the
Company has a joint arrangement through its 31.94% ownership in the
license and accounts for this interest as a joint operation as no
single individual shareholder may exercise absolute control over
the entity. The agreement is bilateral, with Maurel & Prom
Mnazi Bay Holdings SAS (M&P) and whilst the Operator may make
day-to-day decisions, the overall strategic direction of the
partnership requires unanimous consent between M&P and
Wentworth. M&P hold 48.06% share in the license and 20% is
owned by TPDC. As such the Group is entitled to its share of
production from the license and therefore revenue generated from
the sale of this output. Wentworth also recognise its share of all
expenses incurred the joint arrangement, its right to the assets,
as well as its share of the liabilities
and obligations. Financial instruments
The Group recognises financial assets and liabilities on its
balance sheet when it becomes a party to the contractual provisions
of the instrument.
Accounting treatment of CMBL
The Group holds a 31.94% participation interest in the Mnazi Bay
Concession through two subsidiaries. Wentworth Gas Limited ("WGL"),
which is a wholly owned subsidiary, which owns a 25.40%
participation interest and Wentworth Holdings (Jersey) Limited, a
wholly owned subsidiary whom hold 39.925% in Cyprus Mnazi Bay
Limited ("CMBL"), which owns a 16.38% participation interest of
which the Group's proportionate share is therefore 6.54% (i.e.
Wentworth's interest of 39.925% interest in CMBL multiplied by
16.38% participation interest). CMBL is considered a jointly
controlled entity and accounted for as a joint operation rather
than a joint venture. The Group therefore recognises its share of
production from the license and therefore revenue generated from
the sale of this output. It also recognises its share of all
expenses incurred the joint arrangement, its right to the assets,
as well as its share of the liabilities and obligations."
(i) Financial assets
Classification and initial measurement
Financial assets within the scope of IFRS 9 are classified as
financial assets at amortised cost, fair value through profit or
loss or fair value through other comprehensive income. The Group
determines this classification at initial recognition depending on
the business model for managing the financial asset and the
contractual terms of the cash flows.
The Group's financial assets include cash and cash equivalents,
trade and other receivables.
When financial assets are initially recognised, they are
measured at fair value being the consideration given or received
plus directly attributable transaction costs. Any gain or loss at
initial recognition is recognised in the income statement.
The Group's financial assets measured at amortised cost are held
for the collection of contractual cash flows where those cash flows
have specified dates and represent solely payments of principal and
interest, such as cash and cash equivalents or trade
receivables.
The Group's financial assets measured at fair value through
profit or loss are those financial assets where the contractual
cash flows do not represent solely payments of principal and
interest, such as trade receivables.
Subsequent measurement
Financial assets held for the collection of contractual cash
flows that are solely payments of principal and interest (and
classified as amortised cost) are subsequently measured at
amortised cost using the effective interest rate method ("EIR").
Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part
of the EIR. The EIR amortisation is included in finance income in
the income statement. Allowance for impairment is estimated on a
case-by-case basis.
Derecognition
A financial asset is derecognised when the Group loses control
over the contractual rights that comprise that asset. This occurs
when the rights are realised, expire or are surrendered.
Impairment of financial assets
The Group assesses on a forward-looking basis the expected
credit losses that might arise on financial assets measured at
amortised cost. This assessment considers the probability of a
default event occurring that could result in the expected cash
flows due from a counterparty falling short of those contractually
agreed.
Expected credit losses are estimated for default events possible
over the lifetime of a financial asset measured at amortised cost.
However, where the financial asset is not a trade receivable
measured at amortised cost and there have been no significant
increases in that financial asset's credit risk since initial
recognition, expected credit losses are estimated for default
events possible within 12 months of the reporting date.
(ii) Financial liabilities
Classification and initial measurement
Financial liabilities within the scope of IFRS 9 are classified
as financial liabilities at amortised cost or fair value through
profit or loss. The Group determines the classification of its
financial liabilities at initial recognition.
The Group's financial liabilities include trade and other
payables, other liabilities and borrowings which are classified as
amortised cost. Trade payables may be designated and measured at
fair value through profit or loss when doing so eliminates or
significantly reduces a measurement or recognition inconsistency
that would otherwise arise from measuring assets or liabilities on
a different basis.
All financial liabilities are recognised initially at fair value
while financial liabilities at amortised cost additionally include
directly attributable transaction costs.
Subsequent measurement
Trade and other payables, borrowings and other financial
liabilities are subsequently measured at amortised cost using the
EIR method after initial recognition. Gains and losses are
recognised in the income statement through the EIR amortisation
process. Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included in
finance costs in the income statement.
A gain or loss on a financial liability measured at fair value
through profit or loss is recognised in the income statement in the
period in which it arises.
Derecognition
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another on
substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognised in the
income statement.
(iii) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the
net amount reported in the balance sheet when there is an
enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, or to realise the assets
and settle the liabilities simultaneously.
(iv) Fair value of financial instruments
At each reporting date, the fair value of financial instruments
that are traded in active markets is determined by reference to
quoted market prices, without any deduction for transaction costs.
For financial instruments not traded in an active market, the fair
value is determined using appropriate valuation techniques. Such
techniques may include using recent arm's length market
transactions, reference to the current fair value of another
instrument that is substantially the same, discounted cash flow
analysis or other valuation models.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, term deposits
and short-term highly liquid investments with the original term to
maturity of three months or less, which are convertible to known
amounts of cash and which, in the opinion of management, are
subject to an insignificant risk of changes in value.
Long-term receivables
Long-term receivables plus applicable accrued interest are
initially recognised at their fair value based on the discounted
cash flows. The discounted cash flows are reviewed at least every
year to adjust for variations in the estimated future cash flows
with the change in estimate reported in profit or loss. The
discount rate is based on the credit quality and term of the
financial instrument. The financial instrument is subsequently
valued at amortised costs by accreting the instrument over the life
of the asset. The accretion is reported in profit or loss.
Exploration and evaluation ("E&E") exploration assets
E&E costs, including costs of licence acquisition, technical
services and studies, exploratory drilling, whether successful or
unsuccessful, and testing and directly attributable overhead, are
capitalised as E&E assets according to the nature of the assets
acquired. These costs are accumulated in cost centres by well,
field or exploration area pending determination of technical
feasibility and commercial viability.
E&E assets are assessed for impairment if (i) sufficient
data exists to determine technical feasibility and commercial
viability, and (ii) facts and circumstances suggest that the
carrying amount exceeds the recoverable amount.
The technical feasibility and commercial viability of extracting
a resource is generally considered to be determinable when proven
and/or probable reserves are determined to exist. A review of each
exploration licence or field is carried out, at least annually, to
ascertain whether it is technically feasible and commercially
viable. Upon determination of technical feasibility and commercial
viability, intangible E&E assets attributable to those reserves
are first tested for impairment with the unimpaired amounts
reclassified from E&E assets to a separate category within
tangible assets within PP&E referred to as oil and gas
interests.
Costs incurred prior to the legal awarding of petroleum and
natural gas licences, concessions and other exploration rights are
recognised in profit or loss as incurred.
PP&E - oil and natural gas properties
Items of PP&E, which include oil and gas development and
production assets, are measured at cost less accumulated depletion
and depreciation and accumulated impairment losses. PP&E assets
include costs incurred in developing commercial reserves and
bringing them into production, such as drilling of development
wells, tangible costs of facilities and infrastructure
construction, together with the E&E expenditures incurred in
finding the commercial reserves that have been reclassified from
E&E assets as outlined above, the projected cost of retiring
the assets and any directly attributable general and administrative
expenses. Expenditures on developed oil and natural gas properties
are capitalised to PP&E when it is probable that a future
economic benefit will flow to the Company as a result of the
expenditure and the cost can be reliably measured. The initial cost
of an asset is comprised of its purchase price or construction
cost, any costs directly attributable to bringing the asset into
operation, the initial estimate of any decommissioning obligations
associated with the asset and borrowing costs on qualifying assets.
When significant parts of an asset with PP&E, including oil and
gas interests, have different useful lives, they are accounted for
as separate items (major components). Costs incurred subsequent to
the determination of technical feasibility and commercial viability
and the costs of replacing parts of PP&E are recognised as
capitalised oil and gas interests only when they increase the
future economic benefits embodied in the specific asset to which
they relate. Subsequent changes in estimated decommissioning
obligation due to changes in timing, amounts and discount rates are
included in the cost of the asset. Such capitalised oil and gas
interests generally represent costs incurred in developing proved
and/or probable reserves and bringing in or enhancing production
from such reserves and are accumulated on a field or geotechnical
area basis. The carrying amount of any replaced or sold component
is derecognised. The costs of the day-to-day operating of PP&E
are recognised in profit or loss as incurred.
Depletion
The net carrying amount of PP&E is depleted on a field by
field unit of production method by reference to the ratio of
production in the year to the related proven and probable reserves.
If the useful life of the asset is less than the reserve life, the
asset is depreciated over its estimated useful life using the
straight-line method. Future development costs are estimated
considering the level of development required to produce the proven
and probable reserves. These estimates are reviewed by third party
independent reserves engineers. Changes in factors such as
estimates of reserves that affect unit-of-production calculations
are dealt with on a prospective basis. Capital costs for assets
under construction included in development and production assets
are excluded from depletion until the asset is available for use,
that is, when it is in the location and condition necessary for it
to be capable of operating in the manner intended by
management.
Disposals
Oil and natural gas properties are derecognised upon disposal or
when no future economic benefits are expected to arise from the
continued use of the asset. Any gain or loss on derecognition of
the asset, including farm out transactions or asset sales or asset
swaps, is calculated as the difference between the proceeds on
disposal, if any, and the carrying value of the asset, is
recognised in profit or loss in the period of derecognition.
PP&E - office and other equipment
Office and other equipment are carried at cost less accumulated
depreciation and impairment losses. Depreciation of the cost of
these assets less residual value is charged to profit and loss on a
straight-line basis over their estimated useful economic lives of
between three and five years.
Leases
IFRS 16 Leases applies to all leases, including subleases, but
does not apply to leases to explore for or use minerals, oil,
natural gas and similar non-regenerative resources.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right of use asset is initially
measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or
the site on which it is located, less any lease incentives
received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of
the lease term. The estimated useful lives of right-of-use assets
are determined on the same basis as those of property and
equipment. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise the following:
-- Fixed payments, including in-substance fixed payments;
-- Variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement
date;
-- Amounts expected to be payable under a residual guarantee; and
-- The exercise price under a purchase option that the Group is
reasonably certain to exercise, lease payments in an optional
renewal period if the Group is reasonably certain to exercise an
extension option, and penalties for early termination of a lease
unless the group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate,
if there as a change in the Group's estimate of the amount expected
to be payable under a residual value guarantee, or if the Group
changes its assessment of whether it will exercise a purchase,
extension or termination option.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset or is recorded in a profit or loss if the
carrying amount of the right-of-use asset has been reduced to
zero.
The Group presents right-of-use assets that do not meet the
definition of investment property in 'property plant and equipment'
and lease liabilities in 'loans and borrowings' in the statement of
financial position.
The Group has elected not to recognise right-of-use assets and
lease liabilities for short-term leases that have a lease term of
12-months or less and leases of low-value assets. The Group
recognises the lease payments associated with these leases as an
expense on a straight-line basis over the lease term.
Decommissioning obligation
Decommissioning obligations are recognised for legal obligations
related to the decommissioning of long-lived tangible assets that
arise from the acquisition, construction, development or normal
operation of such assets. A liability for decommissioning is
recognised in the period in which it is incurred and when a
reasonable estimate of the liability can be made with the
corresponding decommissioning provision recognised by increasing
the carrying amount of the related long-lived asset. The recognised
decommissioning provision is subsequently allocated in a rational
and systematic method over the underlying asset's useful life. The
initial amount of the liability is accreted by charges to the
profit or loss to its estimated future value.
Impairment
The carrying values of production assets , exploration and
evaluation expenditure s that have been capitalised and property,
plant and equipment are assessed for impairment when indicators of
such impairment exist. In performing impairment reviews, assets are
categorised into the smallest identifiable groups (cash generating
units) that generate cash flows independently. If any indication of
impairment exists, the estimated recoverable amount of the asset or
cash generating unit ( " CGU ") is calculated.
If the carrying amount of the asset or CGU exceeds its
recoverable amount, it is impaired with the loss charged
to the income statement so as to reduce the carrying amount to its recoverable amount.
Impairment losses are recognised in the income statement in
those expense categories consistent with the
function of the impaired asset or CGU.
An assessment is made at each reporting date as to whether there
is any indication that previously recognised impairment losses may
no longer exist or may have decreased. If such indication exists,
the Group makes an estimate of the recoverable amount.
(i) Calculation of recoverable amount
The recoverable amount of an asset or CGU is the greater of its
value in use and fair value less costs to sell. In assessing value
in use, the estimated future cash flows of the asset or CGU in its
present condition are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset. In
determining fair value less costs to sell, consideration will be
given to whether the value of the asset or CGU can be determined
from an active market (e.g. recognised exchange) or a binding sale
agreement which are classified as level 1 in the fair value
hierarchy under IFRS 13 'Fair Value Measurements'. Where this is
not determinable, fair value less costs to sell for a CGU is
usually estimated with reference to a discounted cash flow model,
similar to the method used for value in use, but may include
estimates of future production, revenues, costs and capital
expenditure not currently included in the economic model.
Additionally, cash flow estimates include the impact of tax and are
discounted using a post-tax discount rate. An estimate made on this
basis is classified as level 3 in the fair value hierarchy.
(ii) Reversals of impairment
A previously recognised impairment loss is reversed only if
there has been a change in the estimates used to determine the
asset's recoverable amount since the last impairment loss was
recognised. If this is the case, the carrying amount of the asset
is increased to its recoverable amount. An impairment loss is
reversed only to the extent that the asset's carrying amount does
not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been
recognised for the asset in prior years. Such reversals are
recognised in the income statement. Impairment losses recognised in
relation to goodwill are not reversed for subsequent increases in
the recoverable amount.
Share capital
The proceeds from the exercise of share options and the issuance
of shares from treasury are recorded as share capital in the amount
for which the option, warrant, or treasury share enables the holder
to purchase a share in the Company.
Proceeds for shares in excess of the nominal value are recorded
within share premium.
Share issuance costs
Commissions paid to underwriters, and other related share issue
costs, such as legal, auditing and advisory, on the issue of the
Company's shares are charged directly to share capital, net of tax
within the share premium account.
Share based payments
The fair value of the options at the date of the grant is
determined using the Black-Scholes option pricing model and share
based compensation is accrued and charged to profit or loss, with
an offsetting credit to equity reserve over the vesting periods. A
forfeiture rate is estimated on the grant date and is adjusted to
reflect the actual number of options that vest.
Capitalisation of interest
The Company capitalises interest expense incurred during the
construction phase of the projects, except E&E assets which
were funded by the related financing.
Revenue recognition
Natural gas revenues are recognised upon the transfer of control
over its gas to its customers, TPDC and TANESCO, which is when
delivery is made to them through the offtake network.
Investment income is accrued on a time basis by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that discounts estimated future cash
receipts through the expected life of the financial asset to that
asset's net carrying value.
Income taxes
Tax expense comprises current and deferred tax. Tax is
recognised in the profit or loss except to the extent it relates to
items recognised in other comprehensive income ("OCI") or directly
in equity.
Current income tax
Current tax expense is based on the results for the period as
adjusted for items that are not taxable or not deductible. Current
tax is calculated using tax rates and laws that were enacted or
substantively enacted at the end of the reporting period.
Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is
subject to interpretation. Provisions are established where
appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax
Deferred taxes are the taxes expected to be payable or
recoverable on differences between the carrying amounts of assets
and liabilities in the consolidated statement of financial position
and their corresponding tax basis. Deferred tax liabilities are
generally recognised for all taxable temporary differences.
Deferred tax assets are recognised to the extent that it is
probable that future taxable profits are expected to be available
against which deductible temporary differences to the tax basis can
be utilised. Deferred income tax assets and liabilities are not
recognised if the temporary difference arises from the initial
recognition of goodwill, if any, or from the initial recognition
(other than in a business combination) of other assets in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and joint
arrangements except where the reversal of the temporary difference
can be controlled, and it is probable that the difference will not
reverse in the foreseeable future.
Deferred tax assets are reviewed at each reporting period and
reduced to the extent that it is no longer probable that sufficient
future taxable profits are expected to be available to allow all or
part of the asset to be recovered. Deferred tax assets are
recognised for taxable temporary differences arising on investments
in subsidiaries to the extent that it is probable that the
temporary difference will reverse in the foreseeable future and
future taxable profits are expected to be available against which
the temporary difference can be utilised.
Foreign currency translation
Items included in the financial statements of the Company and
its subsidiaries are measured using the currency of the primary
economic environment in which the legal entity operates (the
"functional currency"). Foreign currency transactions are
translated into the functional currency using the exchange rates
prevailing at the dates of the transaction. Foreign exchange gains
and losses resulting from the settlement of such transactions and
from the translation of monetary assets and liabilities not
denominated in the functional currency of an entity are recognised
in profit or loss.
The functional currency of all Wentworth subsidiaries is US
dollars except for Wentworth Resources (UK) Limited which is Pound
Sterling. The assets and liabilities of this Company are translated
into US dollars at the period-end exchange rate. The income and
expenses of the Company are translated to US dollars at the average
exchange rate for the period.
Translation gains and losses are included in other comprehensive
income; however, this subsidiary has limited operations so there is
no significant amount of foreign exchange gains and losses to
include in other comprehensive income. All other foreign exchange
gains and losses are recognised in profit or loss.
Changes in accounting policies
IFRS 16 'Leases' was adopted on 1 January 2019, replacing IAS 17
'Leases'. The new standard has not been applied retrospectively.
The standard changes the identification of leases and how they will
be recognised, measured and disclosed by lessees, requiring the
recognition of a right-of-use asset and liability for the future
lease payments on the balance sheet. The standard requires the
right-of-use asset to be depreciated over the duration of the lease
term and shown within operating profit in the income statement,
with the interest cost associated with the financing of the asset
included within interest expense. In applying the transition
requirements and provisions of the new standard, the Group reviewed
its lease contracts, which mainly related to leased office
buildings and the right-of-use asset and related liability was
found to be immaterial. The standard does not apply to leases to
explore for or use natural resources, such as production licences
and rights.
The Group has elected not to recognise right-of-use assets and
lease liabilities for leases which have low value, or short-term
leases with a duration of 12 months or less. The payments
associated with such leases are charged directly to the income
statement on a straight-line basis over the lease term.
In assessing the application of IFRS 16, the Group considered
the following practical expedients:
-- the previous determination of whether a contract is, or
contains, a lease pursuant to IAS 17 'Leases' and IFRIC 4
'Determining whether an Arrangement Contains a Lease' has been
maintained for existing contracts;
-- right-of-use assets or lease liabilities for leases where the
lease term ends within 12 months of the date of initial application
have not been recognised;
-- initial direct costs from right-of-use assets have been excluded; and
-- hindsight was used when assessing the lease term.
Earnings or loss per share ("EPS")
Basic earnings or loss per share is calculated by dividing
profit or loss attributable to owners of the Company (the
numerator) by the weighted average number of ordinary shares
outstanding (the denominator) during the period. The denominator is
calculated by adjusting the shares outstanding at the beginning of
the period by the number of shares bought back or issued during the
period, multiplied by a time-weighting factor.
Diluted EPS is calculated by adjusting the earnings and number
of shares for the effects of all dilutive potential ordinary shares
deemed to have been converted at the beginning of the period or if
later, the date of issuance. The effects of anti-dilutive potential
ordinary shares are ignored in calculating diluted EPS.
3. Critical accounting judgements and key sources of estimation uncertainty
In applying the Group's accounting policies, the preparation of
consolidated financial statements requires management to make
estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities as at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual amounts may differ materially from
these estimates due to changes in general economic conditions,
changes in laws and regulations, changes in future operating plans
and the inherent imprecision associated with estimates. Significant
estimates and judgments used in the preparation of these
consolidated financial statements include the assessment of
impairment triggers related to E&E and PP&E assets,
estimation of decommissioning obligations and recognition of a
deferred tax asset.
Recoverable value of Mnazi Bay E&E and PP&E costs
Significant accounting Judgements
The Directors review the carrying value of the Groups assets to
determine whether there are any indicators if impairment such that
the carrying values of the assets may not be recoverable. The
assessment of whether an indicator of impairment or reversal
thereof has arisen requires considerable judgement, taking account
of factors such as future operational and financial plans,
commodity prices and the competitive environment.
E&E are inherently judgemental to value. The amounts for
E&E represent active exploration projects and investments.
These amounts are expensed to profit or loss as exploration costs
unless the determination process over whether reserves are
recoverable or not is not completed and there are no indications of
impairment at the reporting date or commercial reserves are
established. Indictors of impairment include; (a) the right to
explore the specific area has expired and is not expected to be
renewed; (b) significant expenditure for further exploration of
evaluation activities is not being planned; (c) exploration and
evaluation of resources have not led to discovery or confirmation
of commercially viable resource; (d) the sufficient data exists to
indicate that the carrying amount of the asset may not be recovered
in full from development or sale. The outcome of ongoing
exploration and evaluation activities and whether the carrying
value of E&E will ultimately be recovered is inherently
uncertain and requires significant judgement. .
Management performs impairment tests on the Company's PP&E
when indicators of impairment are present. The assessment of
impairment indicators is subjective and considers the various
internal and external factors such as the financial performance of
individual CGUs, market capitalisation and industry trends.
Key sources of estimation uncertainty
The preparation of discounted cash flows used to assess the
recoverable amount of the Groups CGUs includes management's
estimates of future operating costs, economic and regulatory
environments, capital expenditures requirements, long term field
plans and other factors including discount rates and the total
level of reserves deemed to be commercial.
The valuation underpinning the carrying value of PP&E assets
are largely dependent on supply and demand variables.
The gas sales price is fixed and the cost base of production
operations is also largely fixed in nature. Whilst the benefits of
increased production volumes are clear, the opposite is equally
true during operational downtime, prolonged or permanent gas supply
outages which may in turn impact upon the commerciality of the
field. Mnazi Bay currently has 5 producing wells and formally
signed the COD making all terms contained within the Mnazi Bay GSA
legally binding and fully in effect from 10 September 2019. The
Mnazi Bay JO is committed to supplying a minimum quota of natural
gas to TPDC and TANESCO of 80.0 MMscf/d rising to 130.0 MMscf/d for
the entire remaining term of the GSA and is guaranteed of future
revenue streams via a take or pay provision of 85% of these
amounts. This greatly strengthens and formally ratifies the
long-term commerciality of the Mnazi Bay asset, and as such it
would require significant reductions in daily production operations
to trigger an indication of impairment under IFRS 6 and IAS 36 and
a subsequent write down in the book value of the Mnazi Bay asset
which currently totals $77.6 million. During the current fiscal
period there have no indicator of impairment of EE assets and DP
assets'.
Reserves estimates
Significant accounting judgements
Oil and natural gas reserves are estimates of the amount of
product that can be economically and legally extracted from the
Groups oil and gas properties. In order to estimate reserves the
Group employed an external independent reserve evaluator as at
December 31, 2019. These reserve estimates are used in the
calculation of depletion, impairment and impairment reversal
determinations and recognition of deferred tax asset. Reserve
estimates are based on engineering data, estimated future prices
and costs, expected future rates of production and the timing of
future capital expenditures; all of which are subject to many
uncertainties.. The Group expects that, over time, its reserve
estimates will be revised upward or downward based on updated
information such as the results of future drilling, oil and gas
production levels and reservoir performance and may also be
affected by changes in commodity prices.
The Directors do not expect significant changes in the carrying
value of the Groups oil and gas properties, property plant and
equipment, decommissioning liabilities and deferred taxes to arise
from changes in reserves estimates within a reasonably possible
range in the next 12 months.
Foreign currency exposure
Significant accounting judgements
The Group operates across a number of different jurisdictions
with primary exposures to US Dollars, Tanzanian Shillings and Pound
Sterling. The Directors have judged both the functional and
presentation currencies of the Group to be US Dollars.
Key sources of estimation uncertainty
Foreign exchange rate risk is the risk that the Company suffers
financial loss as a result of changes in the value of an asset or
liability or in the value of future cash flows due to movements in
foreign currency exchange rates. All group revenue is generated
from gas sales in Tanzania and upon declaration of COD on 10
September 2019 the Production Sharing Agreement entered the
Commercial Development phase under which both TPDC and TANESCO may
elect to pay the operator in either US Dollars or Tanzanian
Shillings for the gas that is produced and sold. Currently the
Operator continues to be paid in US Dollars. While some costs are
denominated in Tanzanian Shillings, most of the operating
expenditures are denominated in US Dollars which would lead to an
increased currency exposure if payment were to be received in
Tanzanian Shillings. Wentworth Resources plc deposits any cash
reserves that it does not immediately need with counterparties
rated BB- or better (S&P long-term rating or equivalent).
Deposits are made primarily in US Dollars, the functional currency
of the Group, unless a future requirement for other currencies is
identified and reserves of that currency are held but not
immediately required. Where possible, cash reserves are deposited
with more than one counterparty to mitigate the risk of
counterparty default. The Company does not currently undertake any
currency hedges.
Abandonment provision
Significant accounting judgements
The Directors use judgement and experience to determine the
expected timing, closure and decommissioning methods, which can
vary in response to changes in the relevant legal requirements or
decommissioning technologies.
Key sources of estimation uncertainty
The ultimate cost of decommissioning and rehabilitation is
uncertain and cost estimates can vary in response to many factors
including the emergency of new restoration techniques and costs of
labour. Therefore the Group periodically reviews the cost estimate
for its operations. Decommissioning and Abandonment obligations
have been estimated using technology at current prices inflated and
discounted using discount rates that reflect current market
assessments of the time value of money and the risks specific to
each liability. These assessments are subjective by nature and may
be significantly more or less than management's current discounted
cost estimations. Due to the relatively long life of the Groups
assets, changes in estimates within a reasonably possible range in
the next 12 months are not expected to significantly impact the
carrying value of the Groups provisions for decommissioning and
site restoration costs.
Taxes
Significant accounting judgements
The Directors make judgements in relation to the recognition of
various taxes levied on the Group, which are both payable and
recoverable. Judgement applies as the Group operates in countries
where the legal and tax systems are less developed, which increases
the requirement for management to make assumptions as to whether
certain payments will be required related to matters such as income
taxes, value added taxes, and other indirect taxes as well as
outcomes of any tax disputes which would affect the recognition of
tax liabilities and deferred tax assets. A provision is recognized
in the financial statements for such matters if it is considered
probable that a future outflow of cash resources will be required.
The provision, if any, is subject to management estimates and
judgements with respect to the outcome of the event, the costs to
defend, the quantum of the exposure and past practice in the
country.
Key sources of estimation uncertainty
Estimates may be made to determine the amount of taxes
recoverable, principally deferred tax assets. The commencement of
commercial production and gas sales under the Gas Sales Agreement,
allowed for the recognition of a deferred tax asset within the
financial statements. The amount that the company recognizes is
subject to the following estimates:
-- The timing of future profits for the utilization of tax
losses from the current tax pools which are based on management
assessments and forecasts of future performance;
-- The effective tax rate at which the losses will be utilized
at throughout the Group which is currently the prevailing tax rate
of the ultimate parent company;
-- The status of any current tax assessments and disputes and
their impact on the deferred tax pool on a probabilistic basis;
-- Any material changes in legislation that may impact upon the
fiscal regime on which the deferred tax asset is computed.
Changes in these estimates within a reasonably possible range in
the next 12 months are not expected to significantly alter the
carrying amount of the Groups taxes that are recoverable.
4. Segment information
The Company conducts its business through Tanzania ("Mnazi Bay
Concession") segment. Gas operations include the exploration,
development, and production of natural gas and other hydrocarbons.
The Mozambique ("Rovuma Onshore Block") segment was relinquished,
effective 30 April 2019. The Corporate segment activities include
investment income, interest expense, financing related expenses,
share based compensation relating to corporate activities and
general corporate expenditures. Inter-segment transfers of
products, which are accounted for at market value, are eliminated
on consolidation.
Net income/(loss) for the year-ended 31 December 2019
Tanzania Corporate Consolidated
Operations
$000 $000 $000
--------------------------------------- ------------ -------------- --------------
Total revenue 18,636 - 18,636
Production and operating
costs (3,935) - (3,935)
Depletion (6,236) - (6,236)
--------------------------------------- ------------ -------------- --------------
Total cost of sales (10,171) - (10,171)
Gross profit 8,465 - 8,465
Recurring administrative
costs (2,939) (2,944) (5,883)
New venture and pre - licence
costs - (609) (609)
Management restructuring
costs - (489) (489)
Share-based payment charges (23) (40) (63)
Depreciation and depletion - (2) (2)
--------------
Total costs (2,962) (4,084) (7,046)
Profit/(loss) from operations 5,503 (4,084) 1,419
Finance income - 21 21
Finance costs (338) (115) (453)
--------------------------------------- ------------ -------------- --------------
Profit/(loss) before tax 5,165 (4,178) 987
Current tax expense (83) (49) (132)
Deferred tax income 1,511 - 1,511
--------------------------------------- ------------ -------------- --------------
1,428 (49) 1,379
--------------------------------------- ------------ -------------- --------------
Net profit/(loss) and comprehensive
profit/(loss) from continued
operation 6,593 (4,227) 2,366
--------------------------------------- ------------ -------------- --------------
Net income/(loss) for the year-ended 31 December 2018
Tanzania Mozambique Corporate Consolidated
Operations (Discontinued)
$000 $000
$000 $000
--------------------------------- ------------ ------------------------------ -------------- -------------
Total revenue 16,224 - - 16,224
Production and operating
costs (2,290) - - (2,290)
Depletion (7,803) - - (7,803)
--------------------------------- ------------ ------------------------------ -------------- -------------
Total cost of sales (10,093) - - (10,093)
Gross profit 6,131 - - 6,131
Recurring administrative
costs (3,151) (19) (3,119) (6,289)
Amounts capitalised as
E&E assets 449 - 215 664
Impairment loss on E&E
assets - (41,598) - (41,598)
Provision for Tanzania
Government receivables (4,959) - - (4,959)
Management restructuring
costs - - (940) (940)
Redomicile costs - - (1,393) (1,393)
Share-based payment charges (5) - (93) (98)
Depreciation and depletion - - (12) (12)
Loss of sale of PPE (3) - - (3)
Tanzanian withholding
tax costs (993) - - (993)
--------------------------------- ------------ ------------------------------ -------------- -------------
Total costs (8,662) (41,617) (5,342) (55,621)
Loss from operations (2,531) (41,617) (5,342) (49,490)
Finance income 2,659 - - 2,659
Finance costs (1,592) - (24) (1,616)
--------------------------------- ------------ ------------------------------ -------------- -------------
Loss before tax (1,464) (41,617) (5,366) (48,447)
Current tax expense (33) - (30) (63)
Deferred tax expense (26,714) - - (26,714)
--------------------------------- ------------ ------------------------------ -------------- -------------
(26,747) - (30) (26,777)
--------------------------------- ------------ ------------------------------ -------------- -------------
Net loss and comprehensive
loss from continued operation (28,211) - (5,396) (33,607)
Net loss and comprehensive
loss from discontinued
operation - (41,617) - (41,617)
Selected balances at 31 December 2019
Tanzania Mozambique Corporate Consolidated
Operations (Discontinued)
$000 $000
$000 $000
---------------------------- -------------- ------------------ ------------ ---------------
Current assets 8,758 118 10,686 19,562
Exploration and evaluation
assets 8,129 - - 8,129
Property, plant and
equipment 77,556 - 3 77,559
Deferred tax asset 5,548 - - 5,548
---------------------------- -------------- ------------------ ------------ ---------------
Total assets 99,991 118 10,689 110,798
---------------------------- -------------- ------------------ ------------ ---------------
Current liabilities 3,356 - 483 3,839
Non-current liabilities 1,085 - - 1,085
---------------------------- -------------- ------------------ ------------ ---------------
Total Liabilities 4,441 - 483 4,924
---------------------------- -------------- ------------------ ------------ ---------------
Capital additions for the year-ended 31 December 2019
Additions to property,
plant
and equipment 18 - 2 20
------------------------ --------------- ---- ---
Selected balances at 31 December 2018
Tanzania Mozambique Corporate Consolidated
Operations (Discontinued)
(Restated)(1) (Restated)(1)
$000 $000
$000 $000
---------------------------- ----------------- ------------------ ------------ -----------------
Current assets(1) 21,391 392 411 22,194
Exploration and evaluation
assets 8,129 - - 8,129
Property, plant and
equipment 83,773 - 4 83,777
Deferred tax asset 4,036 - - 4,036
---------------------------- ----------------- ------------------ ------------ -----------------
Total assets 117,329 392 415 118,136
---------------------------- ----------------- ------------------ ------------ -----------------
Current liabilities(1) 9,870 428 703 11,001
Non-current liabilities 2,657 - - 2,657
---------------------------- ----------------- ------------------ ------------ -----------------
Total Liabilities 12,527 428 703 13,658
---------------------------- ----------------- ------------------ ------------ -----------------
(1) Restated amounts relate to the presentation adjustment
net-off of $2.5 million cash and cash equivalents within current
assets against $2.5 million credit overdraft facility within
current liabilities with respect to the fully undrawn overdraft
credit facility at 31 December 2018 (note 19).
Capital additions for the year-ended 31 December 2018
Additions to exploration
and
evaluation assets - 1,806 - 1,806
Additions to property,
plant
and equipment 1,256 - 6 1,262
-------------------------- ------------------ ------ ---- ------
5. Revenue
2019 2018
$000 $000
------- -------
Revenue from gas sales 18,601 16,169
Revenue from condensate sales 35 55
18,636 16,224
------- -------
6. Leases
Amounts recognised in profit or loss
The following amounts have been recognised in profit or loss for
which the Company is a lessee:
2019: Leases under IFRS 16
$000
------
Expenses relating to short-term leases 250
------
2018: Operating leases under IAS 17
$000
------
Leases expenses 281
------
Amounts recognised in statement of cash flows
2019 2018
$000 $000
------ ------
Cash outflow for leases 250 281
------ ------
7. Expenses and auditor's remuneration
2019 2018
$000 $000
------ ------
Employee salaries and benefits 2,277 2,685
Contractors and consultants 972 775
Travel and accommodation 248 347
Professional, legal and advisory 829 1,257
Office and administration 638 696
Corporate and public company costs 919 529
------ ------
5,883 6,289
------ ------
Auditor's remuneration:
Audit of these financial statements 111 107
Audit of financial statements of subsidiaries of the Company 151 52
Taxation compliance services 62 202
Other tax advisory services 60 15
384 376
------ ------
8. Staff numbers and costs
The average number of persons employed by the Company during the
year, analysed by category, was as follows:
2019 2018
---------- ----------
Number of employees
----------------------
Senior Managers 1 2
Managers and supervisors 5 5
Support staff 9 8
---------- ----------
15 15
---------- ----------
The aggregate payroll costs were as follows:
2019 2018
$000 $000
------ ------
Salaries 775 845
Social security costs 167 79
Bonus 116 93
Severance - 111
Other payroll costs 141 169
1,199 1,297
------ ------
9. Directors' remuneration
2019 2018
$000 $000
------ ------
Director's remuneration 1,062 787
Bonus 152 334
Severance 489 -
Other benefits 112 46
LTIP charges 43 37
Share option charges - 15
1,858 1,219
------ ------
The aggregate of remuneration of the highest paid Director was
$341k (2018: $202k).
10. Management restructuring costs
During year 2019, management restructuring costs of $489 (2018:
$940k) were incurred and comprise employee severance related to the
departure of Eskil Jersing, formerly CEO of the Company, who was
based in Reading, United Kingdom.
11. Finance income and finance costs
2019 2018
$000 $000
-------- ----------
Finance income
Interest income 21 -
Accretion - TPDC receivable (Note 13) - 2,188
Accretion - Tanzanian Government receivable (Note 14) - 471
-------- ----------
21 2,659
-------- ----------
Finance costs
Accretion - decommissioning provision (116) (104)
Change in estimates - Tanzanian Government receivable (Note 14) - (471)
Interest expense and other finance costs (208) (980)
Foreign exchange loss (129) (61)
(453) (1,616)
-------- ----------
12. Trade and other receivables
2019 2018
$000 $000
-------- --------
Trade receivable from TPDC 4,014 5,760
Other receivable from TPDC 513 513
Trade receivable from TANESCO 789 491
Other receivables 759 789
-------- --------
6,075 7,553
-------- --------
Other receivables from TPDC represent income tax of $513k (2018:
$513k) paid by Wentworth Gas Limited, a wholly owned subsidiary of
the Company. The income tax is anticipated to be recovered from
TPDC's share of profit gas within the next 12-months under the
terms of the Mnazi Bay PSA, which provides such a mechanism for the
recovery of all corporate taxes.
Other receivables include VAT recoverable of $279k (2018:
$258k), gas condensate sales of $35k (2018: $74k) and corporate tax
prepayments with respect to changes in the Tanzanian tax law of
$312k (2018: $326) in accordance with IFRS 9. The Company notes no
material expected credit losses.
13. TPDC receivables
On 30 June 2009, the Company and TPDC entered into a Joint
Operating Agreement ("JOA") related to the Mnazi Bay Concession in
Tanzania. Under the terms of the JOA, TPDC has a 20% participating
interest share in the Mnazi Bay Development Area production and
will pay the Company for 20% of past costs incurred in respect of
the Mnazi Bay Concession from TPDC's share of future production.
This receivable from TPDC was considered a financial instrument and
initially recorded at fair value based on discounted cash flows and
its carrying amount has been adjusted for accretion and changes in
the estimated timing of cash flows.
As at 31 December 2019, the receivable from TPDC was fully
recovered (2018: $5.2 million).
$000
Balance at 31 December 2017 15,550
Accretion 2,188
Retained gas revenue to offset receivable (13,585)
Share of TPDC Mnazi Bay Concession costs
paid by the Company 1,085
---------
Balance at 31 December 2018 5,238
Retained gas revenue to offset receivable (5,685)
Share of TPDC Mnazi Bay Concession costs
paid by the Company 447
---------
Balance at 31 December 2019 -
---------
14. Tanzania Government receivables
As at 31 December 2019, the undiscounted Tanzanian Government
receivable is $6.5 million (2018: $6.5 million).
$000
Balance at 31 December 2017 4,959
Accretion 417
Change in estimated timing of receipt (417)
Provision against amortised balance (4,959)
--------
Balance of amortised cost at 31 December -
2018
Accretion 516
Change in estimated timing of receipt (516)
--------
Balance of amortised cost at 31 December -
2019
--------
The Group has an agreement with the Government of the United
Republic of Tanzania (TANESCO, TPDC and the Ministry of Energy and
Minerals) to be reimbursed for all the project development costs
associated with T&D expenditures at cost. An audit of the
Mtwara Energy Project ("MEP") development expenditures was
completed in November 2012 and costs of approximately $8.1 million
were verified to be reimbursable. After deducting costs associated
with the Tariff Equalisation Fund and VAT input credits associated
with the MEP totalling $1.6 million, the amount agreed to be
reimbursed was $6.5 million.
During 2017, the Government initiated its first review of the
costs to verify the balance owing by it. On 8 February 2018 the
Government issued the results which differed from the previously
audited and approved gross receivable of $6.5 million, which the
Group maintains was accurate and correct.
The Government is conducting a second review and due to the age
and uncertainty surrounding the receivable and its recoverability,
the Group made a provision in-full during 2018 against the carrying
amount without prejudice to the ongoing commercial discussions with
the Government, the Group has reviewed this at the year-end and
continues to feel the provision is appropriate.
15. Exploration and evaluation assets
Tanzania Mozambique Total
$000 $000 $000
--------- ----------- ---------
Cost
Balance at 31 December 2017 8,129 39,792 47,921
Additions - 1,806 1,806
Impairment loss - (41,598) (41,598)
--------- ----------- ---------
Balance at 31 December 2018
and 2019 8,129 - 8,129
--------- ----------- ---------
During 2018, the Company performed a technical and commercial
review of the Mozambique E&E asset portfolio and determined
that the Tembo licence did not provide the Company with suitable
monetisation solutions in keeping with the Company's material
growth mandate. All Mozambique E&E assets of $41.6 million were
impaired in 2018.
Tanzania E&E assets were $8.1 million (2018: $8.1 million).
The Mnazi Bay Concession agreement will expire in 2031. The Mnazi
Bay joint operation have identified several prospects within the
concession area but outside of the area covering discovered gas
reserves. The costs incurred in evaluating these prospects have
been capitalised and, to the extent that it is possible to do so
given their maturity, have been assessed as being recoverable in
full.
16. Property, plant and equipment
Natural gas properties Office and other equipment Total
$000 $000 $000
----------------------- ------------------------------------ --------
Cost
Balance at 31 December 2017 102,854 600 103,454
Additions 1,256 6 1,262
Disposals of assets (82) - (82)
----------------------- ------------------------------------ --------
Balance at 31 December 2018 104,028 606 104,634
Additions 18 2 20
Balance at 31 December 2019 104,046 608 104,654
----------------------- ------------------------------------ --------
Accumulated depreciation and depletion
Balance at 31 December 2017 (12,527) (591) (13,118)
Depreciation and depletion (7,803) (12) (7,815)
Disposal of assets 76 - 76
--------- ------ ---------
Balance at 31 December 2018 (20,254) (603) (20,857)
Depreciation and depletion (6,236) (2) (6,238)
Balance at 31 December 2019 (26,490) (605) (27,095)
--------- ------ ---------
Carrying amounts
31 December 2018 83,774 3 83,777
31 December 2019 77,556 3 77,559
The Company assessed triggers for impairment on the natural gas
properties and determined that none of the criteria had been met.
An impairment test was therefore not required. Materially all of
the Company's natural gas is sold under long-term, fixed price gas
sales and purchase agreements, eliminating the current volatility
in the commodity market. In addition, the independent valuation of
the Company's Proved plus Probable reserves of $118.6 million is in
excess of the net book value of the Company's PP&E.
17. Subsidiary undertakings
The subsidiary undertakings at 31 December 2019 are:
Name of Company Country of incorporation Class of Types of Percentage Nature
shares held ownership holding of business
Wentworth Resources (UK) Limited United Kingdom Ordinary Direct 100% Investment
holding
company
Wentworth Holding (Jersey) Limited Jersey Ordinary Direct 100% Investment
holding
company
Wentworth Tanzania (Jersey) Jersey Ordinary Indirect 100% Investment
Limited holding
company
Wentworth Gas (Jersey) Limited Jersey Ordinary Indirect 100% Investment
holding
company
Wentworth Gas Limited Tanzania Ordinary Indirect 100% Exploration
production
company
Cyprus Mnazi Bay Limited Cyprus Ordinary Indirect 39.925% Exploration
production
company
Wentworth Mozambique (Mauritius) Mauritius Ordinary Indirect 100% Investment
Limited holding
company
Wentworth Moçambique Mozambique Ordinary Indirect 100% Exploration
Petroleos, Limitada (1) company
(1) The Wentworth Moçambique Petroleos, Limitada is in the
process of liquidation after relinquishment of the Tembo Block
Appraisal Licence.
18. Trade and other payables
2019 2018
$000 $000
---------------- --------
Payable to Maurel et Prom (Operator) 1,303 1,710
Trade payables 150 413
Other payables and accrued expenses 672 939
2,125 3,062
---------------- --------
Other payables and accrued expenses includes accrued bonus $203k
(2018: nil), payroll taxes $25 (2018: $133k) and accrued third
party services $372k (2018: $806k).
19. Restatement of overdraft credit facility
The Company has a rolling one-year, $2.5 million overdraft
credit facility with a Tanzanian Government owned bank which was is
in the process of being renewed for a further 12 months to 5 April
2021 subject to the mutual agreement of the bank and the Company.
The overdraft facility has an interest rate of the lender's base
lending rate, minus 1% per annum to be paid monthly.
Security provided to the lender includes a debenture over the
fixed and floating assets of the Company's Tanzanian assets and a
deed of assignment of 20% of the revenue and cash flow from sales
of natural gas from the Tanzanian assets.
During the year-ended December 2019, the Company paid interest
expense and renewal fee of $18k (2018: $68k) on the overdraft
credit facility.
The credit facility, which was fully repaid on 9 July 2018, was
not drawn-down at the year-ended 31 December 2018 but was included
within cash and cash equivalents, with a matching current liability
recognised within "overdraft credit facility". It was felt that to
better reflect the true nature of the Group's position, provide
enhanced transparency to the financial reporting process and bring
the presentation in-line with established international accounting
convention, that the cash and cash equivalents asset be netted down
against the undrawn overdraft credit facility liability. This
restatement has had no effect on either the net asset position or
the net and comprehensive profit after tax of the Group at 31
December 2018.
20. Long-term loans
Credit facilities from Tanzania based banks
On 8 December 2014, Wentworth Gas Limited, a wholly owned
subsidiary of the Company, entered into a $20.0 million loan to
finance field infrastructure development within the Mnazi Bay
Concession in Tanzania.
The term of each loan was initially forty-eight months in
duration commencing on the first draw-down date and each loan bears
interest at six-month LIBOR rate plus 750 basis points, subject to
a minimum (floor) of 8% p.a. and a maximum (ceiling) of 9.5% p.a.
Security is in the form of a debenture creating first ranking
charge over all the assets of the WGL (assets of WGL include a
25.4% participation interest in the Mnazi Bay Concession),
assignment over the TPDC long-term receivable and assignment of
revenues generated from the Mnazi Bay Concession.
During the year-ended 31 December 2019, the Company incurred
interest expense on long-term loans, inclusive of accretion of
financing costs, of $0.2 million (2018: $0.9 million). A total of
$0.6 million was settled in cash during 2019 (2018: $1.5
million).
The carrying amount of the long-term loans include transaction
costs of $25k (net of accretion). At 31 December 2019, the carrying
amount of the credit facilities approximates its fair value as the
loan's effective interest rate approximates market rates.
$000
--------
Credit facilities balance
Balance as at 01 January 2018 15,661
Proceeds from loan -
Loan repayments (6,996)
--------
Total changes from financing cash flows (6,996)
--------
Other changes
Interest expense 1,178
Interest paid (1,544)
Finance cost accretion (266)
Transitional adjustment 746
--------
Total other charges 114
--------
Balance as at 31 December 2018 8,779
Proceeds from loan -
Loan repayments (6,661)
--------
Total changes from financing cash flows (6,661)
--------
Interest expense 474
Interest paid (593)
Finance cost accretion (285)
--------
Total other charges (404)
Balance as at 31 December 2019 1,714
The $20 million credit facility
During 2017, the Company executed amendments to the credit
facility agreement, which included the restructuring of principal
loan repayments and added provisions. The new provisions were not
finalised at the time of the execution of the amendment to the
credit facility agreement. On 6 June 2018, the Company formalised
the new provisions, which became effective 6 June 2018.
The new provisions contain a requirement for the Company to
maintain two financial covenants both calculated semi-annually
beginning on 30 June and 31 December. The Debt Service Coverage
Ratio provides that the Company has adequate cover to meet its loan
interest and principal repayment obligations for the next twelve
months, while the Loan Life Coverage Ratio provides that adequate
free discounted cash flow coverage is maintained for all future
loan repayments over the full life of the loan.
The $20.0 million credit facility is subject to interest rate of
six-month LIBOR rate plus 750 basis points subject to a minimum
(floor) of 8.5% p.a. and no maximum (ceiling). As at 31 December
2019, the six-month interest rate was 9.69%.
As at 31 December 2019, only one principal repayment of $1,668k
was outstanding which was paid on 30 January 2020.
21. Contingent PTTEP liability
On 26 July 2012, the Company completed the acquisition of Cove
Energy plc's 16.38 percent interest in Mnazi Bay production
operations which was held by Cove Energy's 100 percent owned
subsidiary Cove Energy Tanzania Mnazi Bay Limited.
Part of the consideration was a contingent payment to Cove
Energy of up to $8.5 million, should certain future natural gas
production thresholds from Mnazi Bay be achieved.
At the same time, the Company completed the sale of 60.075
percent of the share capital of CETMBL to Maurel et Prom for which
their part of the contingent consideration was $5.1 million.
The net contingent liability for the Company after the
completion of the two transactions was, therefore, $3.4 million
($8.5 million less $5.1 million).
The net contingent liability as at 31 December 2019 was $nil (31
December 2018: $850k).
2019 2018
$000 $000
------ --------
Balance at 1 January 848 2,189
Payments to reduce liability (848) (1,341)
------ --------
Balance at 31 December - 848
22. Decommissioning and Abandonment provision
The Company's decommissioning provisions result from net
ownership interests in petroleum and natural gas assets including
well sites, pipeline gathering systems, and processing facilities
in Tanzania. The operator of the Mnazi Bay Concession have
estimated the Company's share of the undiscounted
inflation-adjusted amount of cash flow required to settle
decommissioning obligations for the infrastructure within the Mnazi
Bay Concession to be $4.23 million. The costs are expected to be
incurred around 2030. The obligations have been estimated using
existing technology at current prices inflated and discounted using
discount rates that reflect current market assessments of the time
value of money and the risks specific to each liability. The
discount and inflation rates used in determining the value of the
decommission provision at 31 December 2019 were 12.0% and 2.03%,
respectively (2018: 12.0% and 2.03%, respectively).
A reconciliation of the decommissioning obligations is provided
below:
2019 2018
$000 $000
------ ------
Balance at 1 January 969 865
Accretion 116 104
Balance at 31 December 1,085 969
------ ------
23. Contingent liabilities
Following the completion of the corporate transition to UK and
Oslo Børs delisting, a number of shareholders exercised certain
Dissent Rights under Canadian law which may require the Company to
buy back their equity holdings at fair value. The Company received
Dissent Rights notices over a total of 2,329,326 shares with an
anticipated fair value of $768k. As the process has yet to be
finalised and fair values agreed, the buy back remains contingent
at the balance sheet date.
24. Share-based payments
2019 2018
$000 $000
---------------------------------------------------------------------------- ------
Share based compensation recognised in the statement of Comprehensive loss 63 98
---------------------------------------------------------------------------- ------ ------
Movement in the total number of share options outstanding and
their related weighted average exercise prices are summarised as
follows:
2019 2018
------------------------------- -------------------------------
Number of Weighted average Number of Weighted average
options exercise price options exercise price
(US$) (i) (US$)
------------ ----------------- ------------ -----------------
Outstanding at 1
January 12,560,301 0.49 10,600,000 0.52
Granted 495,422 - 3,560,301 0.49
Forfeited (5,020,226) 0.29 (1,600,000) 0.49
Lapsed (1,650,000) 0.62 - -
Outstanding at 31
December 6,385,497 0.57 12,560,301 0.49
------------ ----------------- ------------ -----------------
The following table summarises share options outstanding and
exercisable at 31 December 2019:
Outstanding Exercisable
Exercise Exercise Number of options Weighted average Number of options
price (NOK) price (US$)(1) remaining life
(years)
------------- ---------------- ------------------ ----------------- ------------------
- - 1,385,497 9.4 -
3.85 0.44 750,000 6.0 750,000
3.60 0.41 1,600,000 0.8 1,600,000
4.08 0.46 250,000 3.3 250,000
5.18 0.59 200,000 4.4 200,000
5.18 0.59 1,700,000 4.2 1,700,000
5.57 0.63 500,000 1.3 500,000
6,385,497 5,000,000
------------------ ----------------- ------------------
(1) The US Dollar to Norwegian Kroner exchange rate used for
determining the exercise price at 31 December 2019 is 0.113891.
The following table summarises share options outstanding and
exercisable at 31 December 2018:
Outstanding Exercisable
Exercise price Exercise Number of Weighted average Number of
(NOK) price (US$) options remaining life options
(i) (years)
--------------- ------------- ----------- ----------------- ------------
3.15 0.36 1,000,000 1.8 1,000,000
3.52 0.40 500,000 3.0 500,000
3.60 0.41 1,800,000 1.8 1,800,000
3.85 0.44 1,850,000 7.0 1,850,000
4.08 0.47 250,000 4.3 250,000
4.70 0.54 200,000 5.4 200,000
4.90 0.56 100,000 3.3 100,000
5.18 0.59 2,800,000 4.8 2,800,000
5.55 0.66 500,000 2.3 500,000
- - 3,560,301 9.9 -
12,560,301 9,000,000
----------- ----------------- ------------
25. Share capital and reserve
2019 2018
$000 $000
--------------------------------- -------- --------
Authorised, called up, allotted
and fully paid
--------------------------------- -------- --------
186,488,465 (2018: 186,488,465)
ordinary shares 416,426 416,426
--------------------------------- -------- --------
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company.
Reserve
2019 2018
$000 $000
--------- ---------
Balance at 1 January 26,588 26,490
Share base compensation charges - 61
LTIP charges 63 37
--------- ---------
Balance at 31 December 26,651 26,588
--------- ---------
26. Earnings per share
Basic and diluted eps
2019 2018
$000 $000
------------ ------------
Net profit/(loss) for the period 2,366 (75,224)
------------ ------------
Weighted average number of ordinary shares outstanding 186,488,465 186,488,465
Dilutive weighted average number of ordinary shares outstanding 186,488,465 186,488,465
------------ ------------
Net profit/(loss) per ordinary share 0.01 (0.40)
------------ ------------
During the year-ended 31 December 2019 11,285,497 (2018:
13,460,075) options were excluded from the dilutive weighted
average number of shares outstanding because they were
anti-dilutive.
27. Dividends
The following dividends were declared and paid by the Company
during the year.
2019 2018
$000 $000
----------------------------------------- ------ ------
0.45 pence (US$ 0.00583; NOK 0.0514) per
ordinary share (2018: nil) 1,033 -
----------------------------------------- ------ ------
On 3 September 2019, the Company announced a maiden interim
dividend of 0.45 pence per share, being a total interim
distribution of US$1.0 million.
The interim dividend payment timetable was:
-- Ex-dividend date: 12 September 2019
-- Record Date: 13 September 2019
-- UK Payment Date (for shareholders who hold shares on the UK Register): 11 October 2019
-- VPS Payment Date (for shareholders who hold shares on the VPS
Register): 22 October 2019
28. Income taxes
Income taxes
The Company's income tax expense for the year-end 31 December is
as follows:
2019 2018
$000 $000
---------- -----------
Profit/(loss) before income taxes 987 (48,447)
---------- -----------
Expected income tax (recovery) expense
at combined Tanzanian rate of 30% (2018:
30%) 296 (14,236)
Rate differentials 541 1,396
Share based compensation 12 29
2014- 2015 Tanzania tax reassessments - 8,096
Tanzania cost gas excluded from taxable
income (3,367) (2,015)
Derecognition of Mozambique and Canada
tax pools - 13,236
Movement in deferred tax assets not previously
recognised and other 1,139 20,271
Income tax expense/(recovery) (1,379) 26,777
---------- -----------
The Company operates in multiple jurisdictions with complex tax
laws and regulations which are evolving over time. The Company has
taken certain tax positions in its tax filings and these filings
are subject to audit and potential reassessment after the lapse of
considerable time. Accordingly, the actual income tax impact may
differ significantly from that estimated and recorded by
management.
The Company has unrecognised deductible temporary differences
that results in unrecognised deferred income tax assets of:
2019 2018
$000 $000
--------- ---------
Non-capital losses 20,262 19,675
Property and equipment (263) -
Accounts receivables and others 16 1,470
20,015 21,145
--------- ---------
The total non-capital losses of the Company are $163.6 million
(2018: $164.4 million) of which $163.6 million (2018: $163.6
million) are in Tanzania and $6.6 million (2018: $800k) are in the
UK.
A deferred tax asset is recognised to the extent that it is
probable that taxable profit will be available against which
deductible temporary differences and the loss carry forwards can be
utilised. A deferred tax asset of $5.5 million as at 31 December
2019 (2018 - $4.0 million) is attributable to the accumulated tax
loss carry-forward of the Company's Tanzanian subsidiary, which are
expected to be offset against future taxable income. Recognition of
the tax asset is supported by the proven and probable reserves as
determined by a third-party external reserves engineer, RPS
Canada.
2019 2018
$000 $000
--------- -----------
Balance at 1 January 4,036 30,751
Deferred income tax assets recognised
in profit or loss:
Non-capital losses 820 (27,300)
Asset retirement obligations ( 50) 124
Deferred income tax liabilities recognised
in profit or loss:
PP&E 1,200 1,002
Receivables ( 458) (541)
Balance at 31 December 5,548 4,036
--------- -----------
29. Financial instruments
The Company's activities expose it to a variety of financial
risks: credit risk, liquidity risk and market risk (currency
fluctuations, interest rates and commodity prices). The Company's
overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse
effects on the Company's financial performance. A full description
of the risks and key risks affecting the business is noted in the
Business Risks section of the Strategic Report.
Credit risk
Wentworth's credit risk exposure is equal to the carrying value
of its cash and cash equivalents, trade, other and long-term
receivables.
Trade and other receivables are comprised predominantly of
amounts due from government owned entities in Tanzania and Value
Added Tax ("VAT") in Tanzania and Mozambique.
The Group's ongoing exposure to trade receivables from TANESCO,
the state power company, relates to the gas sales from the Mnazi
Bay Concession to a TANESCO owned 18-megawatt gas-fired power plant
located in Mtwara, Tanzania. At 31 December 2019, the Mnazi Bay
Concession partners were owed eight months of invoices for gas
sales made to TANESCO, with $789k owing to Wentworth (2018: $491k).
Subsequent to year-end, TANESCO has paid $293k net to Wentworth.
The receivable from TANESCO was not discounted at year-end (2018:
$nil) as the receivable consisted of less than twelve months of
invoices. The Company continues to be engaged in ongoing
discussions with TANESCO to accelerate payment of amounts past
due.
During 2015, the Group commenced gas sales to TPDC under a
long-term gas sales agreement, the operator of the new
transnational gas pipeline in Tanzania. Credit risk relating to
sales to TPDC is substantially mitigated through a two-part payment
guarantee structure. The first part relates to a prepayment amount
of approximately three to four months of gas deliveries at current
sales volumes which has been received and is held by the Operator
of the Mnazi Bay Concession. The second part is a one-month
replenishable letter of credit which is not yet executed but
expected to be executed during 2020. At 31 December 2019, the Mnazi
Bay Concession partners were owed two months gas sales invoices,
with $4.0 million owing to Wentworth (2018 - $5.7 million).
Subsequent to year-end, TPDC has paid $6.7 million net to
Wentworth.
At 31 December 2019, an undiscounted long-term receivable of
$6.5 million (2018: $6.5 million) related to the Group's disposal
of transmission and distribution assets, and the costs associated
with the MEP incurred in prior years by a wholly owned subsidiary
of Wentworth (see note 14). On February 6, 2012, the Company,
TANESCO, TPDC and MEM reached an agreement that the Group's cost of
historical operations in respect of the Mtwara Energy Project
should be reimbursed.
During 2017, the Government initiated its first review of the
costs to verify the balance owing by it. On 8 February 2018 the
Government issued the results which differed from the previously
audited and approved gross receivable of $6.5 million, which the
Group maintains was accurate and correct.
The Government is conducting a second review and due to the age
and uncertainty surrounding the receivable and its recoverability
the Group made a provision in-full during 2018 against the carrying
amount without prejudice to the ongoing commercial discussions with
the Government; the Group has reviewed this at the year-end and
continues to feel the provision is appropriate.
The Group's cash and cash equivalents are held at recognised
international financial institutions.
The exposure to credit risk as at:
2019 2018
(Restated)(1)
$000 $000
------- ---------------
Trade and other receivables 6,075 7,553
TPDC receivable (Note 13) - 5,238
Cash and cash equivalents 13,487 9,403
------- ---------------
19,562 22,194
------- ---------------
(1) Restated amounts relate to the presentation adjustment
net-off of $2.5 million cash and cash equivalents within current
assets against $2.5 million credit overdraft facility within
current liabilities with respect to the undrawn overdraft credit
facility at 31 December 2018 (note 19).
Aged trade and other receivables
Current 31-60 61-90 >90
1-30 days days days days Total
$000 $000 $000 $000 $000
----------- ------ ------ ------ --------
Balance at 31 December
2019
Trade receivables 1,720 1,736 94 1,254 4,804
Other receivables 448 - - 823 1,271
----------- ------ ------ ------ --------
2,168 1,736 94 2,077 6,075
----------- ------ ------ ------ --------
Balance at 31 December
2018
Trade receivables 3,007 1,507 1,420 243 6,177
Other receivables 1,376 - - - 1,376
----------- ------ ------ ------ --------
4,383 1,507 1,420 243 7,553
----------- ------ ------ ------ --------
Liquidity risk
Liquidity risk is the risk that the Company will not have
sufficient funds to meet its liabilities as they become payable.
Other than routine trade and other payables, incurred in the normal
course of business, the Company also has an undrawn $2.5 million
overdraft credit facility.
The table below summarises the maturity profile of the Company's
financial liabilities based on contractual undiscounted payments
including future interest payments on long-term loans.
Less than 1 to 2 2 to 5 Total
1 year years years $000
$000 $000 $000
-------------------- ------- ------- -------
Balance at December 31,
2019
Trade and other payables 2,125 - - 2,125
Long-term loans, including
interest (1) 1,732 - - 1,732
3,857 - - 3,857
-------------------- ------- ------- -------
Balance at December 31,
2018
Trade and other payables 3,062 - - 3,062
Contingent PTTEP liability 848 - - 848
Long-term loans, including
interest (1) 7,548 1,732 - 9,280
11,458 1,732 - 13,190
-------------------- ------- ------- -------
(1) Includes future interest expense at the rate in effect at
December 31.
The fair value of the Company's trade and other payables
approximates their carrying values due to the short-term nature of
these instruments. The fair value of the long-term loans
approximates their carrying amounts as they bear market rates of
interest. The fair value of the other liability approximates its
carrying amount.
The Company has a working capital surplus at 31 December 2019
and generated positive cash flow from operations in 2019. The
Company plans to pay its financial liabilities in the normal course
of operations and fund future operating and capital requirements
through operating cash flows, bank debt, bank overdraft credit
facility and equity raises, when deemed appropriate. Operating cash
flow of the Company is dependent upon the purchasers of natural
gas, TPDC and TANESCO, continuing to meet their payment obligations
on a timely manner. Any delays in collecting funds from these
purchasers for an extended period of time could negatively impact
the Company's ability to pay its financial liabilities in a timely
manner in the normal course of business (see also Capital
management section).
Market risk
Market risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market prices. Market risk is comprised of foreign currency risk,
interest rate risk and other price risk (e.g. commodity price
risk). The objective of market risk management is to manage and
control market price exposures within acceptable limits, while
maximising returns.
Commodity price risk
Commodity price risk is the risk that the Company suffers
financial loss as a result of fluctuations in oil or natural gas
prices. The Company's exposure to commodity price risk is mitigated
as the sale prices for gas sold by the Company is fixed under the
existing gas sale and purchase agreements. An increase of 1% in the
gas production would result in an increase of $57k (2018: $49k) in
revenue.
Interest rate risk
Interest rate risk is the risk that future cash flows of a
financial instrument will fluctuate because of changes in market
interest rates. The Company had a $20.0 million credit facility
with a floating interest rate of six-month LIBOR plus 7.5
percentage points with a minimum 8.5% and with no maximum interest
rate per annum. The Company's objective is to minimise its interest
rate risk on its cash balances by investing for short periods of
time (less than 1 year) and only in term deposits. An increase of
1% in the six-month LIBOR rate would result in an increase of $17k
(2018: $102k) in interest expense on an annualised basis.
Foreign exchange risk
Foreign exchange rate risk is the risk that the Company suffers
financial loss as a result of changes in the value of an asset or
liability or in the value of future cash flows due to movements in
foreign currency exchange rates. Wentworth operates internationally
and is exposed to foreign exchange risk arising from various
currency exposures, primarily with respect to the Tanzanian
Shilling and Pound Sterling against its functional currency of its
operating entities, the US dollar. The Company's objective is to
minimise its risk by borrowing funds in US dollars as revenues are
paid (or indexed) to the US dollar. In addition, the Company holds
substantially all its cash and cash equivalents in US dollars and
converts to other currencies only when cash requirements demand
such conversion.
Current receivables and liabilities denominated in various
currency:
Pound Sterling Tanzanian Other Currency United States
$000 Shilling $000 Dollar Total
$000 $000 $000
--------------- ---------- --------------- -------------- --------
Balance at 31 December
2019
Cash and cash equivalents 1,442 47 120 11,878 13,487
Trade and other receivables 105 1,000 92 4,878 6,075
Trade and other payables (62) (52) (10) (2,027) (2,151)
1,485 995 202 14,729 17,411
--------------- ---------- --------------- -------------- --------
Pound Sterling Tanzanian Other Currency United States
000 Shilling $000 Dollar Total
$000 $000 $000
Balance at 31 December
2018
Cash and cash equivalents 56 37 29 9,281 9,403
Trade and other receivables 43 106 152 7,252 7,553
Trade and other payables (232) (246) (58) (2,671) (3,207)
--------------- ---------- --------------- -------------- --------
(133) (103) 123 13,862 13,749
--------------- ---------- --------------- -------------- --------
A 10% increase/decrease of the Pound Sterling against US dollar
would result in a change in profit or loss before tax of $28k
(2018: $11k). In addition, a 10% increase/decrease of the Tanzanian
shilling against the US dollar would result in a change in profit
or loss before tax of approximately $5k (2018: $5k).
Financial instrument classification and measurement
The Company classifies the fair value of financial instruments
according to the following hierarchy based on the amount of
observable inputs used to value the instrument:
-- Level 1 - Quoted prices are available in active markets for
identical assets or liabilities as of the reporting date. Active
markets are those in which transactions occur in sufficient
frequency and
volume to provide pricing information on an ongoing basis.
-- Level 2 - Pricing inputs are other than quoted prices in
active markets included in Level 1. Prices in Level 2 are either
directly or indirectly observable as of the reporting date. Level 2
valuations are based on inputs, including expected interest rates,
share prices, and volatility factors, which
can be substantially observed or corroborated in the marketplace.
-- Level 3 - Valuation in this level are those with inputs for
the asset or liabilities that are not
based on observable market data.
The Company does not have any fair value measurements considered
as Level 1. The Company's long-term receivables, long-term loans,
and other liability are considered Level 2 and Level 3
measurements.
Capital management
The Company's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern, in order to
develop its oil and gas properties and maintain a flexible capital
structure for its projects for the benefit of its stakeholders. In
the management of capital, the Company includes the components of
shareholders' equity as well as cash and long-term liabilities.
The Company manages the capital structure and adjusts it in
light of changes in economic conditions and the risk
characteristics of the underlying assets. As part of its capital
management process, the Company prepares budgets and forecasts,
which are used by management and the Board of Directors to direct
and monitor the strategy, ongoing operations and liquidity of the
Company. Budgets and forecasts are subject to judgement and
estimates such as those relating to future gas demand and ultimate
timing of collectability of trade receivables for gas sales. These
factors may not be within the control of the Company, which may
create near term risks that may impact the need to alter the
capital structure. The Company continues to effectively manage its
relationships with its gas purchasers to ensure timely collection
and with external lenders such that lending facilities are
available to the Company as and when needed. The Company may
attempt to issue new shares, enter into joint arrangements or
acquire or dispose of assets in order to maintain or adjust the
capital structure. Management reviews the capital structure on a
regular basis to ensure that the above-noted objectives are met.
The Company's overall strategy remains unchanged from the prior
year.
30. Related party transactions
Tr ansactions with key management personnel
Details of Directors' remuneration, which comprise key
management personnel, are provided below:
2019 2018
$000 $000
-------- --------
Short-term employee benefits 1,815 1,167
Share based compensation 43 52
-------- --------
1,858 1,219
-------- --------
31. Supplemental cash flow information
Change in non-cash working capital:
2019 2018
$000 $000
-------- --------
Net change in non-cash working capital related to operating activities:
Trade and other receivables 1,376 3,381
Prepayments and deposits 101 (300)
Trade and other payables (1,067) (1,505)
-------- --------
410 1,576
-------- --------
Cash movements from investing activities in the Statements of
Cash Flows consists of the following:
Exploration Property, TPDC receivable
and evaluation plant and $000
$000 equipment
$000
---------------- ----------- ------------------
Year-ended 31 December 2019
Total additions/(reductions) - 20 (9,161)
Change in non-cash investing
activities - - 3,923
Cash additions/(reductions) - 20 (5,238)
---------------- ----------- ----------------
Year-ended 31 December 2018
Total additions/(reductions) 1,806 1,262 (18,254)
Change in non-cash investing
activities - - 2,877
Change in non-cash working - 706 -
capital
---------------- ----------- ----------------
Cash additions/(reductions) 1,806 1,968 (15,377)
---------------- ----------- ----------------
Closing balance of liabilities arising from financing
liabilities:
Long-term Contingent Total
Loan liability liability
$000 $000 $000
---------- ----------- -----------
Balance as at 01 January 2019 8,779 848 9,627
Changes from financing cash
flows
Principal term loan repayments (6,661) - (6,661)
Contingent liability payment - (848) (848)
---------- ----------- -----------
Total changes from financing
cash flows (6,661) (848) (7,509)
---------- ----------- -----------
Other changes
Interest expense 474 - 474
Interest paid (593) - (593)
Finance cost accretion (285) - (285)
Total liabilities related to
other charges (404) - (404)
---------- ----------- -----------
Balance as at 31 December 2019 1,714 - 1,714
---------- ----------- -----------
Balance as at 01 January 2018 15,661 2,189 17,850
Changes from financing cash
flows
Principal term loan repayments (6,996) - (6,996)
Contingent liability payment - (1,341) (1,341)
---------- ----------- -----------
Total changes from financing
cash flows (6,996) (1,341) (8,337)
---------- ----------- -----------
Other changes
Interest expense 1,178 - 1,178
Interest paid (1,544) - (1,544)
Finance cost accretion (266) - (266)
Transitional adjustment 746 - 746
Total liabilities related to
other charges 114 - 114
Balance as at 31 December 2018 8,779 848 9,627
Finance costs/(income), net
2019 2018
$000 $000
-------- ----------
Finance income
Interest income 21 -
Accretion - TPDC receivable (Note 13) - 2,188
Accretion - Tanzanian Government receivable (Note 141) - 471
-------- ----------
21 2,659
-------- ----------
Finance costs
Accretion - decommissioning provision (116) (104)
Change in estimates - Tanzanian Government receivable (Note 14) - (471)
Interest expense and other finance costs (208) (980)
Foreign exchange loss (129) (61)
(453) (1,616)
-------- ----------
Finance costs/(income), net (432) 1,043
-------- ----------
32. Commitments
Lease payments
The Company has office locations in Reading, UK and Dar es
Salaam, Tanzania. The future minimum lease payments associated with
these office premises as at 31 December 2019 is $61k committed for
year 2019.
33. Subsequent event
On 2 January 2020, the Company announced an LTIP award of
2,485,621 to Katherine Roe subject to a three-year performance
period and certain other provisions.
On 3 February 2020, the Company announced the publication of its
2019 CPR Reserves Report.
On 24 April 2020, the Company announced that the Directors had
declared a second dividend of $2.0 million, bringing a total
distribution of $3.0 million for 2019.
APPICES
GLOSSARY OF TERMS
$ or US Dollar United States Dollar
GBP UK Pound Sterling
----------------------------------------
2D Two Dimensional
----------------------------------------
2P 1P (proven reserves) + probable
reserves, hence "proved AND
probable"
----------------------------------------
3D Three Dimensional
----------------------------------------
AIM AIM, a SME Growth market of
the London Stock Exchange
----------------------------------------
AGM Annual General Meeting
----------------------------------------
Articles The Articles of Association
of the Company
----------------------------------------
Bcf Billion standard cubic feet
----------------------------------------
Boe Barrel of oil equivalent, a
measure of the gas component
converted into its equivalence
in barrels of oil
----------------------------------------
Board The Board of Directors of the
Company
----------------------------------------
Capex Capital expenditure
----------------------------------------
CGU Cash Generating Units
----------------------------------------
CMBL Cyprus Mnazi Bay Limited
----------------------------------------
COD Commercial Operations Date
----------------------------------------
Company Wentworth Resources plc
----------------------------------------
Companies (Jersey) Law The Companies (Jersey) Law 1991
----------------------------------------
CSR Corporate Social Responsibility
----------------------------------------
Directors The Directors of the Company
----------------------------------------
Dissent Rights Alberta Business Corporations
Act Dissent Right in compliance
with Section 191 of that Act
entitling shareholders compensation
for the fair value of the common
shares determined as of the
close of business on the last
business day (in Alberta) before
the day on which the Continuance
is approved by the Shareholders.
----------------------------------------
E&E Exploration and Evaluation assets
----------------------------------------
E&P Exploration and Production
----------------------------------------
EBITDAX (Adjusted) earnings before interest,
taxation, depreciation, depletion
and amortisation, impairment,
share-based payments, provisions,
and pre-licence expenditure
----------------------------------------
EIR Effective Interest Rate
----------------------------------------
EITI Extractive Industries Transparency
Initiative
----------------------------------------
ENH Empresa Nacional de Hidrocarbonetos
----------------------------------------
EPS Earnings Per Share
----------------------------------------
ESG Environmental, social and governance
----------------------------------------
EWURA Energy and Water Utilities Regulatory
Authority
----------------------------------------
FCA Financial Conduct Authority
of the United Kingdom
----------------------------------------
FEED Front End Engineering Design
----------------------------------------
G&A General and Administrative
----------------------------------------
GPF Gas Production Facility
----------------------------------------
GSA Gas Sales Agreement
----------------------------------------
Group The Company and its subsidiary
undertakings
----------------------------------------
HSSE Health, Safety, Security and
Environment
----------------------------------------
IAS International Accounting Standards
----------------------------------------
IASB International Accounting Standards
Board
----------------------------------------
IFRS International Financial Reporting
Standards
----------------------------------------
JOA Joint Operating Agreement
----------------------------------------
JV Joint Venture
----------------------------------------
K Thousands
----------------------------------------
Km Kilometre(s)
----------------------------------------
km2 Square kilometre(s)
----------------------------------------
KPIs Key Performance Indicators
----------------------------------------
London Stock Exchange or LSE London Stock Exchange plc
----------------------------------------
LTI Lost Time Incident
----------------------------------------
LTIP Long-Term Incentive Plan adopted
in 2018
----------------------------------------
M&A Merger and Acquisition
----------------------------------------
MEM Ministry of Energy and Minerals
----------------------------------------
MEP Mtwara Energy Project
----------------------------------------
Mcf Thousand cubic feet
----------------------------------------
Mmboe Million barrels of oil equivalent
----------------------------------------
MMscf/day Million standard cubic feet
per day of gas
----------------------------------------
MW Megawatt
----------------------------------------
NGO Non-Government Organisation
----------------------------------------
NPV Net Present Value (at a specified
discount rate and specified
discount date)
----------------------------------------
NNGI National Natural Gas Infrastructure
(Pipeline)
----------------------------------------
Ordinary Shares Ordinary share capital (no par
value)
----------------------------------------
P90 The value on a probabilistic
distribution which is exceeded
by 90% of the outcomes
----------------------------------------
P50 The value on a probabilistic
distribution which is exceeded
by 50% of the outcomes. The
P50 is also the median value
of the distribution
----------------------------------------
P10 The value on a probabilistic
distribution which is exceeded
by 10% of the outcomes
----------------------------------------
Pmean The average of the values in
the probabilistic distribution
between defined 'boundary conditions'.
Universally regarded as the
best single value to quote or
communicate for any uncertain
distribution of outcomes involved
in repeated trial investigations
----------------------------------------
Petroleum Oil, gas, condensate and natural
gas liquids
----------------------------------------
PPE Property Plant and Equipment
----------------------------------------
PSA Production Sharing Agreement
----------------------------------------
PTTEP PTT Exploration and Production
Public Company Limited is a
national petroleum exploration
and production company based
in Thailand
----------------------------------------
PURA Petroleum Upstream Regulatory
Authority
----------------------------------------
QCA Code Corporate Governance Code for
Small and Mid-Size Quoted Companies
2012
----------------------------------------
Reserves Reserves are those quantities
of petroleum anticipated to
be commercially recoverable
by application of development
projects to known accumulations
from a given date forward under
defined conditions. Reserves
must satisfy four criteria;
they must be discovered, recoverable,
commercial and remaining based
on the development projects
applied. Reserves are further
categorised in accordance with
the level of certainty associated
with the estimates and may be
sub-classified based on project
maturity and/or characterised
by development and production
status
----------------------------------------
Reservoir A porous and permeable rock
capable of containing fluids
----------------------------------------
Seismic Data, obtained using a sound
source and receiver, that is
processed to provide a representation
of a vertical cross-section
through the subsurface layers
----------------------------------------
Shares Ordinary shares
----------------------------------------
Shareholders Ordinary shareholders in the
Company
----------------------------------------
Subsidiary A subsidiary undertaking as
defined in the 2006 Act
----------------------------------------
TANESCO The Tanzania Electric Supply
Company
----------------------------------------
TEITI Tanzania Extractive Industries
Transparency Initiative
----------------------------------------
Tembo The Tembo Block Appraisal Licence,
Mozambique (85% Wentworth, 15%
ENH)
----------------------------------------
TPDC Tanzania Petroleum Development
Corporation
----------------------------------------
TRA Tanzanian Revenue Authority
----------------------------------------
VAT Value Added Tax
----------------------------------------
VETA Vocational Training Institution
(Tanzania)
----------------------------------------
WAF Wentworth Africa Foundation
----------------------------------------
WGL Wentworth Gas Limited
----------------------------------------
Working Interest or WI A company's equity interest
in a project before reduction
for royalties or production
share owed to others under the
applicable fiscal terms Working
interest attributable to Wentworth
----------------------------------------
About Wentworth Resources
Wentworth Resources is a publicly traded (AIM: WEN), independent
oil & gas company with natural gas production; exploration and
appraisal opportunities in the Rovuma Delta Basin of coastal
southern Tanzania.
Inside Information
This announcement does not contain inside information.
Cautionary note regarding forward-looking statements
This press release may contain certain forward-looking
information. The words "expect", "anticipate", believe",
"estimate", "may", "will", "should", "intend", "forecast", "plan",
and similar expressions are used to identify forward looking
information.
The forward-looking statements contained in this press release
are based on management's beliefs, estimates and opinions on the
date the statements are made in light of management's experience,
current conditions and expected future development in the areas in
which Wentworth is currently active and other factors management
believes are appropriate in the circumstances. Wentworth undertakes
no obligation to update publicly or revise any forward-looking
statements or information, whether as a result of new information,
future events or otherwise, unless required by applicable law.
Readers are cautioned not to place undue reliance on
forward-looking information. By their nature, forward-looking
statements are subject to numerous assumptions, risks and
uncertainties that contribute to the possibility that the predicted
outcome will not occur, including some of which are beyond
Wentworth's control. These assumptions and risks include, but are
not limited to: the risks associated with the oil and gas industry
in general such as operational risks in exploration, development
and production, delays or changes in plans with respect to
exploration or development projects or capital expenditures, the
imprecision of resource and reserve estimates, assumptions
regarding the timing and costs relating to production and
development as well as the availability and price of labour and
equipment, volatility of and assumptions regarding commodity prices
and exchange rates, marketing and transportation risks,
environmental risks, competition, the ability to access sufficient
capital from internal and external sources and changes in
applicable law. Additionally, there are economic, political, social
and other risks inherent in carrying on business in Tanzania. There
can be no assurance that forward-looking statements will prove to
be accurate as actual results and future events could vary or
differ materially from those anticipated in such statements.
Use of a Standard
Reserve and resource assessments in this announcement are made
in accordance with the standard defined in the SPE/WPC Petroleum
Resources Management System (2007) and the Canadian Oil and Gas
Evaluation Handbook ("COGEH").
Notice
The AIM Market of the London Stock Exchange has not reviewed
this press release and does not accept responsibility for the
adequacy or accuracy of this press release.
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 PPUAACUPUGAW
(END) Dow Jones Newswires
April 24, 2020 02:00 ET (06:00 GMT)
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