Wentworth Resources PLC Final Results for the year ended 31 December 2019

Fecha : 24/04/2020 @ 01:00
Fuente : UK Regulatory (RNS & others)
Emisora : Wentworth Resources Plc (WEN)
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Wentworth Resources PLC Final Results for the year ended 31 December 2019

Wentworth Resources (LSE:WEN)
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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

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