lnterim Results

Wentworth Resources PLC

26 September 2023

 

                                                               26 September 2023

WENTWORTH RESOURCES PLC

("Wentworth" or the "Company")

lnterim Results for the six months ended 30 June 2023

Wentworth Resources (ΑΙΜ: WEN), the independent, Tanzania-focused natural gas production company, announces its interim financial results for the six months ended 30 June 2023. AII dollar values are expressed in US dollars unless stated otherwise.

Katherine Roe, CEO, commented:

"The first half of 2023 saw continued strong production, further highlighting the quality of the Mnazi Bay asset, alongside an ongoing exemplary safety record which remains a key priority for Wentworth. Furthermore, our strengthened financial position underscores the robust nature of the business. 

"We continue to work collaboratively with all stakeholders towards successful completion of the acquisition by Maurel & Prom in Q4 2023, which we see as representing considerable value realisation for shareholders."

HIGHLIGHTS

Financial

·    Revenues grew 29% to $19.9 million (H1 2022: $15.5 million)

·    Adjusted earnings before interest, taxes, depreciation, amortization, and exploration (EBITDAX) increased by 53% to $14.7 million (H1 2022: $9.6 million)

·    Strong financial position with $40.7 million cash (H1 2022: $27.4 million) and zero debt

Operational

·    Health and safety of employees, partners and local communities continues to be a top priority for Wentworth.  On 2 August 2023, the Company celebrated seven years without a Lost Time lncident (LTI)

·    Average daily production of 98.2 MMscf/d (gross) during the first six months of 2023 (2022: 92.3 MMscf/d)         

·    Wentworth's share of Gross 2P Reserves estimated to be 137 Bcf as at 31 December 2022

Outlook

·    2023 production guidance maintained at 90 - 100 MMscf/d for Mnazi Bay as issued in June 2023, up from previous guidance of 85 - 95 MMscf/d issued in March 2023

·    The Company anticipates, given the absence of recent investment in the Mnazi Bay field and continued cost recovery in H1 2023, that H2 2023 production will include significant periods where costs have been fully recovered, leading to substantially lower revenues

·    The Government's re-examination of the historic cost pool audit for the years 2013 - 2015 is ongoing; any reduction in the current expected cost pool balance as a result is likely to further impact revenue going forward

Update on offer by Etablissements Maurel & Prom S.A.  ("M&P")

·    On 5 December 2022, the boards of Wentworth and M&P announced that they had reached agreement on the terms of a recommended all cash offer by M&P for the entire issued, and to be issued, share capital of Wentworth (the "Acquisition"). The Acquisition is to be implemented by means of a scheme of arrangement pursuant to Article 125 of the Jersey Companies Law. The circular in relation to the Scheme was published or made available to Wentworth Shareholders on 25 January 2023 (the "Scheme Document")

·    The Acquisition was approved by Wentworth Shareholders at the Court Meeting and the General Meeting which were held on 23 February 2023, but remains subject to the satisfaction or (where capable of being waived) waiver of the other Conditions to the Acquisition as set out in Part III (Conditions to and certain further terms of the Acquisition and the Scheme) of the Scheme Document

·    These Conditions include, inter alia, (i) consent from the Minister responsible for petroleum affairs in Tanzania under the Petroleum Act 2015 (the "Act") and any other applicable laws; (ii) the waiver of any right of first refusal or pre-emption right to which the Tanzania Petroleum Development Corporation is entitled in respect of the Mnazi Bay asset; and (iii) approval from the Tanzanian Fair Competition Commission ("FCC"), in each case on terms satisfactory to M&P, acting reasonably

·    On 11 July 2023, Wentworth was notified that the FCC has issued a decision notice that application for FCC approval shall not be determined at this time and that this application will be marked closed by the FCC

·    Following this, there have been a number of discussions between the parties to the offer including recent meetings in country between the CEO of Wentworth and relevant Tanzanian government stakeholders, as well as the CEO of M&P and relevant Tanzanian stakeholders, to seek to bring the Acquisition to a successful conclusion before the agreed 31 December 2023 Long Stop Date, including at the highest levels of government in Tanzania

·    There has been positive progress in these discussions, although there can be no certainty that the Conditions will be satisfied or (where capable of being waived), waived by M&P.  The Company and M&P are working towards the satisfaction or (where capable of being waived) waiving of the Conditions in Q4 2023

Ends

Enquiries:
Wentworth Resources	Katherine Roe Chief Executive Officer	[e-mail] [phone]
Stifel Nicolaus Europe Limited	AIM Nominated Adviser and Joint Broker  Callum Stewart Simon Mensley	[phone]
Peel Hunt LLP	Joint Broker  Richard Crichton Georgia Langoulant	[phone]
FTI Consulting	Communications Advisor  Sara Powell                                Ben Brewerton Ollie Mills	[phone]

About Wentworth Resources

Wentworth Resources plc (AIM: WEN) is a leading, domestic natural gas producer in Tanzania with a core producing asset at Mnazi Bay in the onshore Rovuma Basin in Southern Tanzania.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

		Six months ended 30 June
	Note	2023 (unaudited) $000	2022 (unaudited) $000
Total revenue	4	19,920	15,447
Production and operating costs		(2,229)	(1,922)
Depletion	9	(3,022)	(3,945)
Total cost of sales		(5,251)	(5,867)
Gross profit		14,669	9,580
Recurring administrative costs	5	(4,257)	(3,028)
Acquisition costs		(1,894)	-
New venture and pre-licence costs		-	(232)
Share-based payment charges	14	(667)	(472)
Depreciation	9	(56)	(49)
Total costs		(6,874)	(3,781)
Profit from operations		7,795	5,799
Finance income	6	464	45
Finance costs	6	(148)	(290)
Profit before tax		8,111	5,554
Current tax expense		(1,042)	(223)
Deferred tax expense/(income)		(1,777)	841
		(2,819)	618
Net and comprehensive profit after tax		5,292	6,172
Net profit per ordinary share
Basic and diluted (US$/share)	16	0.03	0.03

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

	Note	30 June 2023 (unaudited) $000	31 December 2022 (audited) $000
ASSETS
Current assets
Cash and cash equivalents		40,689	30,916
Trade and other receivables	7	8,569	11,101
		49,258	42,017
Non-current assets
Property, plant and equipment	9	38,842	41,814
Deferred tax asset		12,320	14,097
		51,162	55,911
Total assets		100,420	97,928
LIABILITIES
Current liabilities
Trade and other payables	11	2,571	5,623
		2,571	5,623
Non-current liabilities
Decommissioning provision	12	1,893	1,818
		1,893	1,818
Equity
Share capital	15	414,676	414,676
Equity reserve		27,902	27,803
Accumulated deficit		(346,622)	(351,992)
		95,956	90,487
Total liabilities and equity		100,420	97,928

The condensed consolidated financial statements of Wentworth Resources plc, registered number 127571 were approved by the Board of Directors and authorised for issue on 26 September 2023.

Signed on behalf of the Board of Directors.

Katherine Roe

Chief Executive Officer

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

	Note	Number of shares	Share capital	Equity reserve	Accumulated deficit	Total  equity
			$000	$000	$000	$000
Balance at 31 December 2021 (audited)		181,049,139	414,919	26,695	(334,879)	106,735
Dividends	17	-	-	-	(4,133)	(4,133)
Net loss and comprehensive loss		-	-	-	(12,980)	(12,980)
Share based compensation	15	-	-	1,108	-	1,108
Cancellation of own shares		(866,572)	(243)	-	-	(243)
Balance at 31 December 2022 (audited)		180,182,567	414,676	27,803	(351,992)	90,487
Dividends	17	-	-	-	78	78
Net profit and comprehensive profit		-	-	-	5,292	5,292
Share based compensation	15	-	-	99	-	99
Balance at 30 June 2023 (unaudited)		180,182,567	414,676	27,902	(346,622)	95,956

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

		Six months ended 30 June
	Note	2023 (unaudited) $000	2022 (unaudited) $000
Operating activities
Net profit for the year		5,292	6,172
Adjustments for:
Depreciation and depletion	9	3,078	3,994
Net finance (income)/costs	18	(348)	220
Income tax expense/(income)		2,819	(618)
Share based compensation	14	667	472
		11,508	10,240
Change in non-cash working capital:
Trade and other receivables		2,533	(3,794)
Trade and other payables		(2,743)	(1,019)
Cash generated from operating activities		11,298	5,427
Current tax paid		(1,042)	(223)
Net cash generated from operating activities		10,256	5,204
Investing activities
Additions to property, plant and equipment	9	(111)	(402)
Interest income		180	36
Proceeds from disposal		-	9
Net cash used in investing activities		69	(357)
Financing activities
Repurchase of own shares		-	(242)
Lease payment	13	(28)	(28)
Dividend	17	78	-
Exercise of share options	15	(568)	-
Bank charges	6	(34)	(15)
Net cash used in financing activities		(552)	(285)
Net change in cash and cash equivalents		9,773	4,562
Cash and cash equivalents, beginning of the period		30,916	22,820
Cash and cash equivalents, end of the period		40,689	27,382

1.   Incorporation and basis of preparation

Wentworth Resources plc ("Wentworth" or the "Company") is an East Africa-focused upstream natural gas company. These unaudited condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries (collectively referred to as the "Wentworth Group" or the "Group"). Wentworth is a gas exploration, development and production operations company incorporated in Jersey and listed on the AIM Market of the London Stock Exchange (ticker: WEN).

The Company's principal place of business is located at 4th Floor, St Paul's Gate, 22-24 New Street, St Hellier, Jersey JE1 4TR.

The Company maintains offices in Dar es Salaam in the United Republic of Tanzania and Jersey.

2.   Summary of significant accounting policies

Use of judgements and estimates

In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the 2022 annual report and financial statements.

Going concern

During the first half of 2023, Wentworth continued its strong operating and financial performance, posting its best ever six-month results. Given the essential nature of services provided and the forecasted impact of recent world events on both international capital markets and production operations in the United Republic of Tanzania, the Group assesses that an interruption to production remains remote.

On 5 December 2022, Wentworth received, and the Board of Directors subsequently recommended the acceptance of a cash offer for 100% of the issued and to be issued share capital of the Company for 32.5 pence per share by Etablissements Maurel et Prom, S.A. (''M&P''). M&P is the ultimate parent company of the Operator of the Mnazi Bay licence. On 23 February 2023, shareholders voted in favour of a scheme of arrangement at a court meeting held the same day. On 9 June 2023 TPDC informed the Group of its decision to exercise its right of first refusal ("ROFR") for Wentworth's interest in the Mnazi Bay asset pursuant to section 86(7) of the Tanzanian Petroleum Act, Cap 392. On 11 July 2023, Wentworth was notified that the Fair Competition Commission ("FCC") had issued a decision notice that application for FCC approval shall not be determined at this time and that this application would be marked closed. Discussions with relevant Tanzanian government stakeholders in order to bring the Acquisition to a successful conclusion before the agreed 31 December 2023 Long Stop are ongoing as of the date of this report.

It is acknowledged that the above developments introduce uncertainty as to the timing and manner in which an acquisition (if any) of the Group will be finalised. The Directors expect that the Group would continue to operate in its existing state if none of the proposed arrangements set out above proceed during the going concern period. Should an acquisition proceed, it is uncertain how the acquirer intends to integrate Wentworth's interest in the Mnazi Bay asset with its own operations and whether the legal entities in which the Group operates will remain in their current form or cease to operate, in which case the Group will no longer be a going concern.

Apart from the uncertainty noted above, the Directors view the continued timely settlement of gas-sales invoices by the Government of Tanzania to be the most significant financial risk currently faced by the Group with respect to its ongoing operations.

The Directors have prepared base and sensitised cash flow information for a period of at least 12 months from the date of their approval of these financial statements (the going concern assessment period) on the assumption that the Group continues in its current form. Based on the application of severe but plausible down-side scenarios, which include non-settlement of future gas sales, potential changes in demand, capital spend and operating costs, the Directors believe that if the Group were to continue in its present structure it is well placed to manage the Group's financial exposures and has sufficient cash resources for working capital needs, committed capital and operational expenditure programs for the going concern assessment period.

Based on the above factors and with respect to the going concern assessment period, the Directors believe that it remains appropriate to prepare the financial statements on a going concern basis. However, the uncertainty regarding the proposed acquisition and the subsequent integration of the Group's operations into that of the acquirer's should the acquisition proceed, indicates the existence of a material uncertainty related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern and, therefore, that the Group may be unable to realise its assets and discharge their liabilities in the normal course of business in a plausible situation that the Group is reorganised by the acquiring entity. The Group, in its current form, does have the resources to be able to satisfy its expected obligations as they fall due. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

Basis of presentation and statement of compliance

These unaudited condensed consolidated interim financial statements have been prepared by management in accordance with International Accounting Standard 34, "Interim Financial Reporting".  The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

These financial statements have been prepared following the same accounting policies as the annual audited consolidated financial statements for the year ended 31 December 2022 and should be read in conjunction with the annual audited consolidated financial statements and the notes thereto. These unaudited condensed consolidated interim financial statements were approved by the Board of Directors on 26 September 2023. The disclosures provided below are incremental to those included in the 2021 annual consolidated financial statements.

The information for the year ended 31 December 2022 included in the report was derived from the statutory accounts for that year which were prepared in accordance with Jersey Company Law. Under that law the Directors have elected to prepare the Group financial statement in accordance with UK-adopted international accounting standards, in conformity with the requirements of the Companies (Jersey) Law 1991. The auditor's opinion in relation to those accounts was unqualified, did not draw attention to any matters by way of emphasis or any other matters as may be required under The Companies (Jersey) Law 1991.

Jersey Company Law. Under that law the Directors have elected to prepare the Group financial statement in accordance with UK-adopted international accounting standards, in conformity with the requirements of the Companies (Jersey) Law 1991.

Functional and presentation currency

These consolidated financial statements are presented in US dollars which is the functional currency of the Group.

Basis of consolidation

These unaudited condensed consolidated interim 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 are noted in note 10 of this report.

Changes in accounting policies.

The following accounting standards, amendments and interpretations, which had no significant impact on these financial statements, became effective in the current reporting period on adoption in the United Kingdom of Great Britain through the UK Endorsement Board ("UKEB"):

IFRS 17 'Insurance Contracts': The IASB effective date is 1 January 2023 and the UKEB adopted the amendment on 17 May 2022. IFRS 17 establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the Standard. The objective of the standard is to ensure that an entity provides relevant information that faithfully represents those contracts. The standard provides three measurement approaches for the accounting of insurance contracts. These include the General Measurement Model-or Building Block Approach (BBA), the Premium Allocation Approach (PAA or simplified approach) and the Variable Fee Approach (VFA). This amendment is not expected to have impact on the Group's consolidated financial statements.

IAS 12 (amendments) 'Deferred tax related to assets and liabilities arising from a single transaction':  The IASB effective date is 1 January 2023 and the UKEB adopted the amendment on 2 December 2022. The amendments clarify how companies account for deferred taxes on certain transactions, such as leases and decommissioning obligations, with a focus on reducing diversity in practice. The amendments narrow the scope of the initial recognition exemption so companies will need to recognise a deferred tax asset and a deferred tax liability arising from transactions that give rise to equal and offsetting temporary differences. This amendment is not expected to have impact on the Group's consolidated financial statements.

IAS 8 (amendments) 'Definition of accounting estimates': The IASB effective date is 1 January 2023 and the UKEB adopted the amendment on 2 December 2022. The amendments clarify how companies distinguish changes in accounting policies from changes in accounting estimates, with a primary focus on the definition and guidance on accounting estimates. The distinction between the two is important because changes in accounting policies are applied retrospectively, whereas changes in accounting estimates are applied prospectively. The amendments clarify that accounting estimates are monetary amounts in the financial statements subject to measurement uncertainty. The amendments also clarify the relationship between accounting policies and accounting estimates by specifying that a company develops an accounting estimate to achieve the objective set out by an accounting policy. This amendment is not expected to have impact on the Group's consolidated financial statements.

IAS 1 (amendments) 'Disclosure of accounting policies': The IASB effective date is 1 January 2023 and the UKEB adopted the amendment on 2 December 2022. The amendments continue the IASB's clarifications on applying the concept of materiality. These amendments help companies provide useful accounting policy disclosures by:

·       requiring companies to disclose their material accounting policies instead of their significant accounting policies;

·       clarifying that accounting policies related to immaterial transactions, other events or conditions are themselves immaterial and do not need to be disclosed; and

·       clarifying that not all accounting policies that relate to material transactions, other events or conditions are themselves material.

The IASB also amended IFRS Practice Statement 2 to include guidance and examples on applying materiality to accounting policy disclosures. This amendment is not expected to have impact on the Group's consolidated financial statements.

Future accounting pronouncements

At the date of these interim financial statements the standards and interpretations listed below were issued but not yet effective. The adoption of these standards may result in future changes to existing accounting policies and disclosures. The Company is currently evaluating the impact that these standards will have on results of operations and financial position:

Standard	Description	IASB Issue Date	IASB Effective Date	Secretary of State Adoption Date
IAS 1 (amendments)	Classification of Liabilities as Current or Non-current.	31 October 2022	1 January 2024	Endorsed
IFRS 16 (amendments)	Lease Liability in a Sale and Leaseback	22 September 2022	1 January 2024	Endorsed
IAS 7 and IFRS 7 (Amendments)	Supplier Finance Arrangements	25 May 2023	1 January 2024	Endorsed

3.   Segment information

Net income/(loss) for the six months ended 30 June 2023

	Tanzania Operations (unaudited) $000	Corporate (unaudited) $000	Consolidated (unaudited) $000
Total revenue	19,920	-	19,920
Production and operating costs	(2,229)	-	(2,229)
Depletion	(3,022)	-	(3,022)
Total cost of sales	(5,251)	-	(5,251)
Gross profit	14,669	-	14,669
Recurring administrative costs	(1,085)	(3,172)	(4,257)
Acquisition costs	-	(1,894)	(1,894)
Share-based payment charges	(115)	(552)	(667)
Depreciation	(56)	-	(56)
Total costs	(1,256)	(5,618)	(6,874)
Profit/(loss) from operations	13,413	(5,618)	7,795
Net finance (costs)/income	(15)	331	316
Profit/(loss) before tax	13,398	(5,287)	8,111
Current tax expense	(1,042)	-	(1,042)
Deferred tax expense	(1,777)	-	(1,777)
Net and comprehensive Profit/(loss) from continued operations	10,579	(5,287)	5,292

Net income/(loss) for the six months ended 30 June 2022

	Tanzania Operations (unaudited) $000	Corporate (unaudited) $000	Consolidated (unaudited) $000
Total revenue	15,447	-	15,447
Production and operating costs	(1,922)	-	(1,922)
Depletion	(3,945)	-	(3,945)
Total cost of sales	(5,867)	-	(5,867)
Gross profit	9,580	-	9,580
Recurring administrative costs	(1,968)	(1,060)	(3,028)
New venture and pre - licence costs	-	(232)	(232)
Share-based payment charges	(77)	(395)	(472)
Depreciation	(49)	-	(49)
Total costs	(2,094)	(1,687)	(3,781)
Profit/(loss) from operations	7,486	(1,687)	5,799
Net finance costs	(104)	(141)	(245)
Profit/(loss) before tax	7,382	(1,828)	5,554
Current tax expense	(223)	-	(223)
Deferred tax expense	841	-	841
Net and comprehensive Profit/(loss) from continued operations	8,000	(1,828)	6,172

Selected balances as at 30 June 2023

	Tanzania Operations (unaudited) $000	Mozambique Operations (Discontinued) (unaudited) $000	Corporate (unaudited) $000	Consolidated (unaudited) $000
Current assets	25,667	9	23,582	49,258
Property, plant and equipment	38,842	-	-	38,842
Deferred tax asset	12,320	-	-	12,320
Total assets	76,829	9	23,582	100,420
Current liabilities	2,220	-	351	2,571
Non-current liabilities	1,893	-	-	1,893
Total Liabilities	4,113	-	351	4,464

Capital additions for the six months ended 30 June 2023

Additions to property, plant   and equipment	111	-	-	111

Selected balances as at 30 June 2022

	Tanzania Operations (unaudited) $000	Mozambique Operations (Discontinued) (unaudited) $000	Corporate (unaudited) $000	Consolidated (unaudited) $000
Current assets	18,831	101	17,795	36,727
Exploration and evaluation assets	8,129	-	-	8,129
Property, plant and equipment	62,884	-	-	62,884
Deferred tax asset	9,080	-	-	9,080
Total assets	98,924	101	17,795	116,820
Current liabilities	1,160	-	3,180	4,340
Non-current liabilities	2,023	-	-	2,023
Total Liabilities	3,183	-	3,180	6,363

Capital additions for the six months ended 30 June 2022

Additions to property, plant   and equipment	413	-	-	413

4.   Revenue

	Six months ended 30 June
	2023 (unaudited) $000	2022 (unaudited) $000
Revenue from gas sales	18,539	15,224
Revenue from condensate sales	22	-
Other revenue	1,359	223
	19,920	15,447

Other revenue represents the recovery of Corporate Income Taxes (CIT) $1.4 million (June 2022: $223k) incurred through adjustments to TPDC gas sales entitlements. The CIT paid and recovered during the six months of 2023 was higher in comparison to the same period in 2022 due to an increase in gas revenue and a small adjustment for an under provision in the previous year.  

Condensate revenue during the first half was $22k, however, in 2022 this was recognised during the second half of the financial year.

5.   General and administrative costs

	Six months ended 30 June
	2023 (unaudited) $000	2022 (unaudited) $000
Employee salaries and benefits	1,357	1,096
Contractors and consultants	532	536
Travel and accommodation	85	157
Professional, legal and advisory	939	325
Office and administration	306	211
Corporate and public company costs	1,038	703
Total general and administrative costs	4,257	3,028

Employee salaries and benefits were higher during the six months ended 30 June 2023 compared to the same period in 2022 due to $152k of charges expensed on the exercise of share-based payments and an inflationary increase in wages and salaries.

Professional, legal and advisory costs were higher during the six months ended 30 June 2023 compared to same period of 2022 due to audit fee overruns of $556k (£439k) following additional procedures conducted by KPMG with respect to the proposed acquisition of the Group by M&P.

Corporate and public company costs were higher during the six months ended 30 June 2023 compared to same period of 2022 due to certain one-off third part services including TCFD (Task Force on Climate-related Financial Disclosures), socioeconomic analysis and other related charges.

6.   Finance income and finance costs

	Six months ended 30 June
	2023 (unaudited) $000	2022 (unaudited) $000
Finance income
Interest income	180	36
Gain on disposal of office equipment	-	9
Foreign exchange gains	284	0
	464	45
Finance costs
Foreign exchange loss	-	(167)
Accretion - decommissioning provision	(76)	(80)
Intercompany loan withholding tax costs	(32)	(25)
Bank Fees & Service Charge	(34)	(15)
Lease interest expenses (note 13)	(1)	(3)
Loss on disposal of office equipment (note 9)	(5)
	(148)	(290)
Net finance income/(costs)	316	(245)

7.   Trade and other receivables

	Balance at 30 June 2023 (unaudited)	Balance at 31 December 2022 (audited)
Receivables from the Operator - M&P	3,245	2,747
Trade receivables from TPDC	3,356	2,479
Trade receivables from TANESCO	748	1,035
Other receivables from TPDC	377	3,563
Other receivables	843	1,277
	8,569	11,101

Receivables from the Operator: As at 30 June 2023, $3.2 million was receivable from the Operator, M&P (December 2022: $2.7 million) representing one month of gas sales of $3.0 million (December 2022: $2.5 million) which was paid by TPDC to M&P in June 2023 but payment to Wentworth was made in July 2023. Also included is $276k (December 2022: $265k) representing two months gas sales paid by TANESCO to M&P in June 2023 but payment to Wentworth was made in July 2023.

Receivables from TPDC: As at June 2023, $3.4 million was receivable from TPDC (December 2022: $2.5 million) representing one month of gas sales invoice (December 2022: one month). The invoice was settled in full in July 2023.

Receivables from TANESCO: As at June 2023, $748k was received from TANESCO (December 2022: $1 million) representing five months of gas sales (December 2022: seven months). Subsequent to 30 June 2023, TANESCO have paid three of these invoices, totalling $441k.

Other receivables from TPDC: represent income tax of $149k (December 2022: $2.9 million) paid by Wentworth Gas Limited, a wholly owned subsidiary of the Company and income tax of $206k (December 2022: $675k) paid by CMBL, a 39.925% 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 from TPDC also include gas condensate sales of $22k (December 2022: nil).

Other receivables: include VAT recoverable of $208k (December 2022: $306k), corporate tax prepayments of $460k (December 2022: $546k), various prepaid expenses $175k (December 2022: $425k). In accordance with IFRS 9, the Company notes no material expected credit losses.

8.   Government of Tanzania receivables

The Group has an agreement with the Government of the United Republic of Tanzania (TANESCO, TPDC and the Ministry of Energy) to be reimbursed for all the project development costs associated with Umoja transmission and distribution expenditures at cost, which was divested on 7 February 2012. 

The Government is conducting an ongoing 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 and continues to feel the provision is appropriate.

9.   Property, plant and equipment

	Natural gas properties	Office and other equipment	Right of use
	$000	$000	$000	Total $000
Cost
Balance at 31 December 2022 (audited)	104,788	617	135	105,540
Additions	110	1	-	111
Disposals	-	(12)	-	(12)
Balance at 30 June 2023 (unaudited)	104,898	606	135	105,639

Accumulated depreciation and depletion
Balance at 31 December 2022 (audited)	(63,197)	(432)	(97)	(63,726)
Depletion and depreciation	(3,022)	(30)	(26)	(3,078)
Disposals	-	7	-	7
Balance at 30 June 2023 (unaudited)	(66,219)	(455)	(123)	(66,797)

Carrying amounts
31 December 2022 (audited)	41,591	185	38	41,814
30 June 2023 (unaudited)	38,679	151	12	38,842

There have been no further indicators of impairment during the period and as such no full impairment review has been undertaken.

During the six months, the Group made cash additions to PPE totaling $111k (2022: $402k).

During the period the Group disposed of communication equipment which was carried at a cost of $12k and depreciation of $7k at the date of disposal. A loss on disposal of $5k was recognised within finance income (note 6).

10.           Subsidiary undertakings

The principal subsidiary undertakings as at 30 June 2023 are:

Name of Company	Country of incorporation	Class of shares held	Types of ownership	Percentage holding	Nature of business
Wentworth Resources (UK) Limited	United Kingdom	Ordinary	Direct	100%	Investment holding company
Wentworth Holdings (Jersey) Limited	Jersey	Ordinary	Direct	100%	Investment holding company
Wentworth Tanzania (Jersey) Limited	Jersey	Ordinary	Indirect	100%	Investment 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 1	Cyprus	Ordinary	Indirect	39.925%	Exploration production company
Wentworth Mozambique (Mauritius) Limited	Mauritius	Ordinary	Indirect	100%	Investment holding company
Wentworth Moçambique Petroleos, Limitada 2	Mozambique	Ordinary	Indirect	100%	Exploration company

¹ CMBL is considered a jointly controlled entity and accounted for as a joint operation rather than a JV.

² The Wentworth Moçambique Petroleos, Limitada is in the process of liquidation following the relinquishment of the Tembo Block Appraisal Licence in April 2019.

11.           Trade and other payables

	Balance at 30 June 2023 (unaudited) $000	Balance at 31 December 2022 (audited) $000
Payable to Mnazi Bay Operator - M&P	1,212	1,634
Trade payables	184	1,070
Lease liability - current portion (note 13)	14	41
Other payables and accrued expenses	1,161	2,878
	2,571	5,623

The Payable to Mnazi Bay Operator - M&P represents the accrued cash call for field costs for the second quarter of 2023 totaling $1.1 million (December 2023: $1.2 million). The cash call was settled in July 2023. Also included are $121k a cash call for CMBL administration costs for the first half of 2023.

Other payables and accrued expenses include income tax liability $206k (December 2022: $994k), audit and tax advice fees accrual $728k (December 2022: $350k), other third-party services of $166k (December 2021: $852K) and payroll taxes $61k (December 2022: $53k).

12.           Decommissioning and Abandonment provision

A reconciliation of the decommissioning obligations is provided below:

	Balance at 30 June 2023 (unaudited) $000	Balance at 31 December 2022 (audited) $000
Balance at 1 January	1,818	1,929
Change in accounting estimates	-	(250)
Accretion	75	139
Balance at 30 June and 31 December	1,893	1,818

 

13.           Lease liability

The Group recognised a lease liability of $14k (December 2022: $41k), the whole amount is current (December 2022: $41k) and is presented in trade and other payables:

	Balance at 30 June 2023 (unaudited)  $000	Balance at 31 December 2022 (audited) $000
Balance at 1 January	41	82
Additions	-	11
Lease interest expenses	1	5
Lease payment	(28)	(57)
Balance at 31 December	14	41
Current portion (note 11)	14	41

14.           Share-based payments

	Six months ended 30 June
	2023 (unaudited) $000	2022 (unaudited) $000
Share-based compensation recognised in the Statement of Comprehensive Income	667	472

During the six months ended 30 June 2023, share-based compensation was $667k (2022: $472k) which included an accounting charge of $115k under accrued on the exercise of options (2022: $nil).

Movement in the total number of share options outstanding and their related weighted average exercise prices are summarised as follows:

	Number of options	Weighted average exercise price (US$))
Outstanding at 1 January 2023	13,785,049	0.07
Exercised Lapsed	(2,485,621) (250,000)	- 0.38
Outstanding at 30 June 2023	11,049,428	0.07

During the six months ended 30 June 2023, an award under the Company's LTIP over 2,485,621 conditional rights reached the end of its performance period resulting in the award vesting over 2,437,376 ordinary shares in the Company and 250,000 options lapsed. In addition, the Remuneration Committee exercised its discretion to award dividend equivalents in the sum of $129k (£105k) pursuant to the rules of the LTIP.  Dividend equivalents were only awarded in respect of dividends paid since 15 June 2021, the date the performance conditions were amended. The Remuneration Committee elected to settle the LTIP by way of the transfer of 1,291,809 shares held by the Company in treasury and the payment of $439k (£355k) in cash (which was used to settle the tax liability).

The following table summarises share options outstanding and exercisable at 30 June 2023:

		Outstanding		Exercisable
Exercise price (NOK)	Exercise price (US$)1	Number of options	Weighted average remaining life (years)	Number of options
-	-	1,016,430	9.0	-
-	-	3,014,590	8.8	-
-	-	957,447	8.4	-
-	-	3,368,368	8.0	-
-	-	942,593	7.1	-
3.85	0.36	750,000	2.5	750,000
5.18	0.48	1,000,000	0.8	1,000,000
		11,049,428		1,750,000

¹ The US Dollar to Norwegian Kroner exchange rate used for determining the exercise price at 30 June 2023 is 0.09269.

        

15.        Share capital and reserves

	Balance at 30 June 2023 (unaudited)		Balance at 31 December 2022 (audited)
	Ordinary shares	$000	Ordinary shares	$000
Balance at 1 January	180,182,567	414,676	181,049,139	414,919
Repurchase of own shares: Cancelled and removed from the share register during the first half of 2022	-	-	(866,572)	(243)
Balance at 30 June 2023 and 31 December 2022	180,182,567	414,676	180,182,567	414,676

The holders of 178,952,098 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. 1,230,469 ordinary shares held in treasury are not entitled to receive dividends or entitled to vote.

Equity Reserve

	Balance at 30 June 2023 (unaudited)  $000	Balance at 31 December 2022 (audited) $000
Balance at 1 January	27,803	26,695
Options charges	552	1,108
Exercise of options	(453)	-
Balance at 31 December	27,902	27,803

16.                         Earnings per share

Basic and diluted EPS

	2023 (unaudited) $000	2022 (audited) $000
Net profit/(loss) for the period	5,292	(12,980)
Weighted average number of ordinary shares outstanding	180,182,567	180,530,238
Dilutive effect of share options outstanding	9,299,428	11,785,049
Dilutive weighted average number of ordinary shares outstanding	189,481,995	192,315,287
Basic net profit per ordinary share	0.03	0.07
Diluted net profit per ordinary share	0.03	0.07

17.        Dividends

	2023 (unaudited) $000	2022 (audited) $000
Dividend overprovision	(78)	-
2022: 1.16 pence per ordinary share	-	2,680
	(78)	2,680

The interim dividend paid on 7 September 2022, included an overprovision of dividend payment $78k to shares held in treasury. The amount was refunded during the first six months of 2023.

On 6 April 2022, the Company declared a final dividend of 1.16 pence per ordinary share which was paid on 29 July 2022, being a total dividend distribution of $2.7 million. The declared and paid final dividend brings distributions to shareholders with regard to the financial year ended 31 December 2021 to $4.0 million.

18.                         Supplemental cash flow information

	Six months ended 30 June
	2023 (unaudited) $000	2022 (unaudited) $000
Finance income
Interest income	180	36
Foreign exchange gains	284	-
	464	45
Finance costs
Foreign exchange loss	-	(167)
Accretion - decommissioning provision	(76)	(80)
Bank Fees & Service Charge	(34)	(15)
Lease interest expenses (note 13)	(1)	(3)
Loss on disposal of office equipment (note 9)	(5)
	(116)	(265)
Net finance costs	348	(220)

19.                         Deferred tax expense

During the six months ended 30 June 2023, deferred tax expenses of $1.8 million (2022: income of $841k) were recorded, principally due to the increased gas revenues recognised during first half of 2023 and, with respect to 2022, due to changes made to the income tax computation during that period following clarification on the interpretation of tax laws in Tanzania recently enacted by the TRA.

20.                         Subsequent events

On 11 July 2023, Wentworth was notified that the FCC has issued a decision notice that the application by M&P for FCC approval shall not be determined at this time and that the application will be marked closed by the FCC.

M&P and Wentworth are in consultation with relevant Tanzanian government stakeholders in order to bring the acquisition to a successful conclusion before the agreed 31 December 2023 long stop date. Based on discussions with relevant Tanzanian government stakeholders, Wentworth considers it probable that a new application will need to be made to the FCC in order for the FCC condition to be satisfied. There can be no certainty that the conditions will be satisfied or (where capable of being waived), waived by M&P.

On 31 July 2023, the performance period ended in respect of an award of conditional rights over 942,593 ordinary shares granted to Katherine Roe, CEO, pursuant to the terms of the LTIP Plan.  The Remuneration Committee reviewed the extent to which the performance conditions applicable to the award over the performance period were satisfied, and confirmed that, 95.62% of the award, representing 901,364 ordinary shares, vested.  In addition, in accordance with the rules of the LTIP ("LTIP Rules"), the Committee determined to pay dividend equivalents on part of the award.  

The Committee determined that the award be satisfied partly by the transfer of 477,722 ordinary shares held in treasury, and partly in cash in the sum of $176k (£140k), to enable the tax liability to be settled, and a payment of $40k (£32k) in respect of dividend equivalents.

 Non-IFRS Measures

The Group uses certain performance measures that are not specifically defined under IFRS, or other generally accepted accounting principles. These non-IFRS measures include adjusted EBITDAX.

Adjusted EBITDAX

Adjusted EBITDAX is a non-IFRS measure that does not have a standardised meaning prescribed by IFRS. This non-IFRS measure is included because management uses the information to analyse cash generation and financial performance of the Group. Adjusted EBITDAX is defined as earnings before interest, taxation, depreciation, depletion and amortisation, impairment, share-based payments, provisions, and pre-licence expenditure

Standard

Estimates of reserves and resources have been prepared in accordance with the June 2018 Petroleum Resources Management System ("PRMS") as the standard for classification and reporting with an effective date of 31 December 2020.

Qualified Person Review

Cameron Snow, Head of Subsurface and Business Development, is a geologist with 16 years' experience across North America, South America, Africa, and Europe. He holds a BS in Geology from North Carolina State University, an MS in Geology from Utah State University, a PhD in Geological and Environmental Science from Stanford University, and an MBA from Imperial College London. Mr. Snow has read and approved the technical disclosure in this regulatory announcement.

Glossary

Bcf/Bscf	Billion standard cubic feet
MMscf/d	Million standard cubic feet per day

 

END