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Wentworth Resources (WEN)

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Tuesday 03 September, 2019

Wentworth Resources

Interim Results to the 6 months ended 30 June 2019

RNS Number : 9765K
Wentworth Resources PLC
03 September 2019
 

 

 

 

PRESS RELEASE                                                                                                                                  3 September 2019

 

WENTWORTH RESOURCES PLC
("Wentworth" or the "Company")

Interim Results for the six months ended 30 June 2019

Wentworth (AIM: WEN), the AIM listed independent, East Africa-focused oil & gas company, announces its interim results for the six months ended 30 June 2019. An updated Corporate Presentation is available on the Company's website at www.wentplc.com.

HIGHLIGHTS

Corporate

Ø Completed corporate simplification with Oslo Børs delisting effective 14 February 2019

Ø Mozambique office closed March 2019

Ø Active and refreshed East African focused M&A led growth mandate

Ø Strong and supportive institutional shareholder register

Financial

Ø Maiden interim dividend declared of GBP 0.45 per share, being a total interim distribution of US$1.0 million. This is expected to deliver an annual yield of approximately 6.7% based on the closing share price at 30 August 2019 and assuming a final dividend is declared in line with the proposed 1/3 : 2/3 interim / final split

Ø Sustained Mnazi Bay gas sales revenues of $8.02 million (H1 2018: $10.79 million); heavier Q2 2019 rainy season and an additional c.20 MMscf/d of gas produced into the National Natural Gas Pipeline ("NNGP") from the Songo Songo field

Ø Adjusted EBITDAX of $3.3 million (H1 2018: $7.1 million) excluding non-recurring expenses of $nil (H1 2018: $11.8 million); Ziwani cost gas fully surrendered in January 2019 relating to Ziwani-1 exploration well and seismic costs in 2012

Ø Net loss of $0.2 million (H1 2018: $6.5 million)

Ø Cash and cash equivalents on hand at 30 June 2019 of $9.9 million (H1 2018: $4.04 million) with $8.4 million of cash receipts received post period end to 31 August 2019

Ø Reduced outstanding term loans to $5.2 million compared to $8.6 million at 31 December 2018, with the July 2019 repayment of $1.7 million made post period end; two payments remain before redemption in January 2020

Ø Final contingent payment of $441k net to Wentworth to PTT Exploration and Production Public Company Limited ("PTTEP") made in May 2019

Operational

Ø Average gross daily gas production for the period of 66.17 MMscf/d, down from 78.6 MMscf/d H1 2018 due to heavier rainy season and additional Song Songo supply

Ø Production volumes of 90 MMscf/d in August 2019 with revised 2019 guidance of 60 to 75 MMscf/d maintained

Ø Achieved reduction of NNGP inlet pressure from 95 bar to 85 bar in April 2019

Ø Operating costs of $0.64 / Mscf (2018: $0.44/ Mscf), driven by reduced production volumes in H1 2019

Ø 2P Reserves of 100 Bscf (16.6 MMboe), valued at $106 million (after tax NPV15) as at 31 December 2018

Ø Tembo block in Northern Mozambique successfully relinquished in June 2019 with no liability exposure

Eskil Jersing, CEO, commented:

"Wentworth has been through a period of significant change corporately and financially; the first half of 2019 has seen us successfully complete our simplification mandate and prepare for a sustainable capital returns policy. We have continued to produce gas and receive associated revenues to reduce our debt and build a cash balance of c.$14.2 million at the end of August.

"Our confidence in the Tanzanian demand driven landscape has enabled us to introduce a maiden dividend with an expected annual yield of c.6.7%; this clearly distinguishes us from our peer group, whilst we focus on securing material East African growth and returns for all our shareholders."

Enquiries: 
Wentworth

Eskil Jersing,
Chief Executive Officer

 
Katherine Roe,
Chief Financial Officer

[email protected]
+44 (0)118 2065427

 
[email protected]
+44 (0)118 2065428

 

Stifel Nicolaus
Europe Limited

 

AIM Nominated Adviser and Joint Broker 
Callum Stewart
Ashton Clanfield
Simon Mensley

 

+44 (0) 20 7710 7600

 
Peel Hunt LLP

 
Joint Broker 
Richard Crichton
James Bavister

 
+44 (0) 20 7418 8900

 
Vigo


Investor Relations Adviser 
Patrick d'Ancona
Chris McMahon

 
+44 (0) 20 7390 0230

 

FINANCIAL STATEMENTS

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

 

 

Six months ended 30 June

 

Note

2019

$000

2018

$000

 

 

 

 

 

 

 

 

Total revenue

 

8,018

10,792

 

 

 

 

Production and operating costs

 

(1,772)

(1,470)

Depletion

11

(2,843)

(3,214)

Total cost of sales

 

(4,615)

(4,684)

 

 

 

 

Gross profit

 

3,403

6,108

 

 

 

 

Recurring administrative costs

6

(2,963)

(2,731)

Amounts capitalised to E&E assets

 

-

505

New venture and pre - licence costs

 

(498)

-

Management restructuring costs

 

-

(832)

Redomicile costs

 

-

(335)

Share-based payment charges

19

(243)

(26)

Depreciation

11

(8)

(6)

Tanzanian withholding tax costs

 

-

(1,750)

Total costs

 

(3,712)

(5,175)

 

 

 

 

(Loss)/profit from operations

 

(309)

933

 

 

 

 

Finance income

7

-

2,053

Finance costs

7

(425)

(671)

(Loss)/profit before tax

 

(734)

2,315

 

 

 

 

Current tax expense

 

(11)

(164)

Deferred tax expense

 

587

(8,678)

 

 

 

576

(8,842)

Net loss and comprehensive loss from continuing operations

 

 

(158)

(6,527)

Loss from discontinued operations, net of tax

5

-

(2)

 

 

 

 

 

 

 

 

Net loss per ordinary share

 

 

 

Basic and diluted (US$/share)

21

-

(0.04)

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

 

 

Note

30 June

2019

$000

31 December

2018

$000

 

 

 

 

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

 

9,873

11,903

Trade and other receivables

8

12,445

7,553

TPDC receivables

9

189

5,238

Assets of discontinued operations

5

233

-

 

 

22,740

24,694

Non-current assets

 

 

 

Exploration and evaluation assets

10

8,129

8,129

Property, plant and equipment

11

80,947

83,777

Deferred tax asset

 

4,623

4,036

 

 

93,699

95,942

Total assets

 

116,439

120,636

                                                                                                     

 

 

 

LIABILITIES

 

 

 

Current liabilities

 

 

 

Trade and other payables

13

2,968

3,207

Overdraft credit facility

14

2,500

2,500

Current portion of term loans

15

5,170

6,946

Contingent PTTEP liability

16

-

848

Liabilities of discontinued operations

5

211

-

 

 

10,849

13,501

Non-current liabilities

 

 

 

Term loans

15

-

1,688

Decommissioning provision

17

1,027

969

 

 

1,027

2,657

Equity

 

 

 

Share capital

20

416,426

416,426

Equity reserve

 

26,831

26,588

Accumulated deficit

 

(338,694)

(338,536)

 

 

104,563

104,478

Total liabilities and equity

 

116,439

120,636

 

 

 

 

 

 

 

 

 

 

 

 

The condensed consolidated financial statements of Wentworth Resources plc, registered number 127571 were approved by the Board of Directors and authorised for issue on 3 September 2019.

Signed on behalf of the Board of Directors

Eskil Jersing

Chief Executive Officer

 

 

UNAUDITED 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 2017 as previously reported

 

186,488,465

416,426

26,490

(262,566)

180,350

IFRS 9 transitional adjustment

 

-

-

-

(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

19

-

-

98

-

98

Balance at 31 December 2018

 

 

186,488,465

416,426

26,588

(338,536)

104,478

Net loss and comprehensive loss

 

                        -

               -

-

(158)

(158)

Share based compensation

19

-

-

               243

-

243

Balance at 30 June 2019

 

186,488,465

416,426

26,831

(338,694)

104,563

 

 

 

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

 

Six months ended 30 June

 

Note

2019

$000

2018

$000

 

 

 

 

Operating activities

 

 

 

Net loss for the year

(158)

(6,529)

Adjustments for:

 

 

Depreciation and depletion

2,851

3,220

Net finance (income)/expense

425

(1,382)

    Deferred tax

(587)

8,678

Share based compensation

243

26

 

 

2,774

4,013

Change in non-cash working capital:

 

 

Trade and other receivables

(4,994)

(3,779)

Prepayments and deposits

(44)

(14)

Trade and other payables

 

(125)

807

Net cash (utilized in)/generated from operating activities - continued operation

 

(2,389)

1,027

 

Net cash generated from/(utilized in) operating activities - discontinued operation

 

 

225

 

(39)

Net cash (utilized in)/generated from operating activities

 

(2,164)

988

 

 

 

 

Investing activities

 

 

Additions to exploration and evaluation assets

-

(982)

Additions to property, plant and equipment

(21)

(688)

Reduction of long-term receivable

4,737

6,116

Proceeds from sale of office assets

-

3

 

Change in non-cash working capital

 

4,716

311

4,449

(953)

Net cash from investing activities - continued operation

 

5,027

3,496

 

Disposal of discontinued operation, net of cash disposed of

 

5

 

(186)

 

(28)

Net cash from investing activities

 

4,841

3,468

 

 

 

 

Financing activities

 

 

Principal term loan repayments

(3,330)

(2,666)

Interest on term loan

(387)

(954)

Interest/renewal fee on overdraft facility

(18)

(67)

Payment of contingent PTTEP liability

16

(848)

(543)

Net cash used in financing activities

 

(4,583)

(4,230)

 

 

 

 

 

 

 

Net change in cash and cash equivalents

(1,906)

226

 

 

 

Cash and cash equivalents, beginning of the period

11,779

3,725

 

 

 

Cash and cash equivalents, end of the period

 

9,873

3,951

 

 

 

 

 

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 unaudited condensed consolidated interim 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, having completed its re-domicile from Canada effective 26 October 2018. Shares of the Company as at 30 June 2019 were widely held and listed on the AIM part of the London Stock Exchange (ticker: WEN). The Company de-listed from Oslo Bors effective 13 February 2019.

The Company's principal place of business is located at Thames Tower, 2nd Floor, Station Road, Reading RG1 1LX, United Kingdom after being relocated from 3210, 715 - 5 Avenue, SW Calgary, Canada.

The Company maintains offices in Dar es Salaam, Tanzania and Reading, United Kingdom.

 

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.

 

In preparing these unaudited condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were consistent in all material respects with those applied to the consolidated financial statements as at and for the year ended December 31, 2018. These unaudited condensed consolidated interim financial statements have been prepared following the same accounting policies as the annual audited consolidated financial statements for the year ended December 31, 2018 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 3 September 2019. The disclosures provided below are incremental to those included in the 2018 annual consolidated financial statements.

The information for the year ended 31 December 2018 included in the report was derived from the statutory accounts for that year which were prepared in accordance with International Financial Reporting Standards ('IFRSs') issued by the International Accounting Standards Board and interpretations issued by the International Financial Reporting Interpretations committee ('IFRIC') of the IASB as adopted by the EU up to 31 December 2018, a copy of which has been delivered to the Registrar of Companies.  The auditors opinion in relation to those accounts was unqualified, did not draw attention to any matters by way of emphasis and also did not contain a statement under section 498 (2) or 498 (3) if the Companies Act 2006.

Functional and presentation currency

These consolidated financial statements are presented in US dollars which is the functional currency the majority 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 following legal entities are within the Wentworth Group of Companies:

 

Legal entity

Registered

Holdings at

30 June 2019

Functional currency

Wentworth Resources plc

Jersey

Ultimate Parent

US dollar

Wentworth Resources (UK) Limited

United Kingdom

100%

GBP

Wentworth Holdings (Jersey) Limited

Jersey

100%

US dollar

Wentworth Tanzania (Jersey) Limited

Jersey

100%

US dollar

Wentworth Gas (Jersey) Limited

Jersey

100%

US dollar

Wentworth Gas Limited

Tanzania

100%

US dollar

Cyprus Mnazi Bay Limited

Cyprus

39.925%

US dollar

Wentworth Mozambique (Mauritius) Limited

Mauritius

100%

US dollar

Wentworth Moçambique Petroleos, Limitada(1)

Mozambique

100%

US dollar

 

(1) The Wentworth Moçambique Petroleos, Limitada is in the process of liquidation after relinquishment of the Tembo Block Appraisal Licence. 

 

All inter-company transactions, balances and unrealized gains on transactions between the parent and subsidiary companies are eliminated on consolidation.

 

Changes in accounting policies

On January 1, 2019, the Company adopted new standards with respect to IFRIC 23 - Uncertainty over Income Tax Treatments and Amendment to IAS 28 - Long-term Interests in Associates and Joint Ventures. 

 

IFRIC 23 - Effective January 1, 2019, the Company has adopted IFRIC 23 "Uncertainty over Income Tax Treatments" which clarifies the accounting for income tax treatments that have yet to be accepted by tax authorities, whilst also aiming to enhance transparency. The Company has analysed the relevant information in assessing a tax treatment and is expecting that tax authorities will accept treatments in the tax returns.

 

IAS 28 (amendment) - Effective January 1, 2019, the Company has adopted "Long-term Interests in Associates and Joint Ventures" which relates to whether the measurement, in particular relating to impairment, of long term interests in associates and joint ventures that, in substance, form part of the 'net investment' in the associate or joint venture should be governed by IFRS 9, IAS 28 or a combination of both. The Company does not consider that any retrospective restatement or current period presentation amendments will be required following its adoption.

Future accounting pronouncements

At the date of these 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.

 

IFRS 17 Insurance Contracts was issued on 18 May 2017 and is effective for periods beginning on or after 1 January 2021.

 

IAS 1 and IAS 8 (amendments) was issued on 31 October 2012, the IASB issued 'Definition of Material' to clarify the definition of 'material' and to align the definition used in the Conceptual Framework and the standards themselves. The amendments are effective annual reporting periods beginning on or after 1 January 2020.

 

IFRS 3 (amendments) was issued on 22 October 2018, the IASB issued 'Definition of a Business' aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets. The amendments are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020

 

2.    Going concern

 

The Group has a long established and collaborative relationship with the Government 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 assessed that owing to the stability of this relationship which has seen consistency payments of gas sales invoices during H1 2019, the Group has sufficient cash resources for its working capital needs, committed capital and operational expenditure and debt repayment programmes for at least for the next 12 months based on the application of reasonable and foreseeable sensitivities. Consequently, the Directors believe that both the Group and Company are well placed to manage their financial exposures.

 

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.

 

 

 

3.    Summary of significant accounting policies

 

The condensed consolidated financial statements have been prepared on a historical cost basis.

All accounting policies adopted in the preparation of the condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2018, except as described below.

 

None of the new standards or amendments to standards and interpretations applicable during the period has had a material impact on the financial position or performance of the Group. The Group has not early adopted any standard, interpretation or amendment that was issued but is not yet effective.

 

In preparing these condensed consolidated financial statements, the Group has adopted all the applicable extant accounting standards issued by the IASB and all the applicable extant interpretations issued by the IFRIC and adopted by the EU up to 30 June 2019.

 

The following accounting standards, amendments and interpretations, which had no significant impact on these condensed consolidated financial statements, became effective in the current reporting period as adopted by the EU through the European Financial Reporting Advisory Group ('EFRAG'):

 

IFRS 16 - Leases.  On 1 January 2019, the Group adopted IFRS 16 'Leases'.  The standard changes the identification of leases and how they will be recognised, measured and disclosed by lessees, requiring the recognition of a right-to-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 relate to leased office buildings and payments for land, and the right-of-use asset and related liability was found to be immaterial.

 

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.

 

 

4.    Segment information

 

Net income/(loss) for the six months ended 30 June 2019

 

 

Tanzania Operations

$000

     Corporate

 

$000

  Consolidated

 

$000

 

 

 

 

Total revenue

8,018

-

8,018

 

 

 

 

Production and operating costs

(1,772)

-

(1,772)

Depletion

(2,843)

-

(2,843)

Total cost of sales

(4,615)

-

(4,615)

 

 

 

 

Gross profit

3,403

-

3,403

 

 

 

 

Recurring administrative costs

(980)

(1,983)

(2,963)

New venture and pre - licence costs

-

(498)

(498)

Share-based payment charges

(4)

(239)

(243)

Depreciation

(7)

(1)

(8)

Total costs

(991)

(2,721)

(3,712)

 

 

 

 

Profit/(loss) from operations

2,412

(2,721)

(309)

 

 

 

 

Finance costs

(271)

(154)

(425)

Profit/(loss) before tax

2,141

(2,875)

(734)

 

 

 

 

Current tax expense

-

(11)

(11)

Deferred tax expense

587

-

587

 

-

(11)

576

 

Net Profit/(loss) and comprehensive profit/(loss) from continued operation

 

2,728

 

(2,886)

 

(158)

 

 

 

Net income/(loss) for the six months ended 30 June 2018

 

 

Tanzania Operations

$000

Mozambique (Discontinued)

$000

     Corporate

 

$000

  Consolidated

 

$000

 

 

 

 

 

Total revenue

10,792

-

-

10,792

 

 

 

 

 

Production and operating costs

(1,470)

-

-

(1,470)

Depletion

(3,214)

-

-

(3,214)

Total cost of sales

(4,684)

-

-

(4,684)

 

 

 

 

 

Gross profit

6,108

-

-

6,108

 

 

 

 

 

Recurring administrative costs

(1,369)

(2)

(1,364)

(2,733)

Amounts capitalized as E&E assets

247

-

258

505

Management restructuring costs

-

-

(832)

(832)

Redomicile costs

-

-

(335)

(335)

Share-based payment charges

(2)

-

(24)

(26)

Depreciation

-

-

(6)

(6)

Tanzanian withholding tax costs

(1,750)

-

-

(1,750)

Total costs

(2,874)

(2)

(2,303)

(5,177)

 

 

 

 

 

Profit/(loss)/from operations

3,234

(2)

(2,303)

931

 

 

 

 

 

Finance income

2,053

-

-

2,053

Finance costs

(661)

-

(10)

(671)

Profit/(loss) before tax

4,626

-

(2,313)

2,313

 

 

 

 

 

Current liabilities

(164)

-

-

(164)

Deferred tax expense

(8,678)

-

-

(8,678)

 

(8,842)

-

-

(8,842)

 

Net loss and comprehensive loss from contined operation

 

(4,216)

 

-

 

 

(2,313)

 

(6,529)

 

 

 

 

 

Loss from discontinued operations, net of tax

-

(2)

-

(2)

 

 

 

 

 

 

 

 

Selected balances at 30 June 2019

 

 

 

 

 

 

Tanzania Operations

 

$000

Mozambique Operations

(Discontinued)

$000    

Corporate

 

 

$000 

Consolidated

 

 

$000

Current assets

18,315

233

4,192

22,740

Exploration and evaluation assets

8,129

-

-

8,129

Property, plant and equipment

80,943

-

4

80,947

Deferred tax asset

4,623

-

-

4,623

 

Total assets

 

112,010

 

233

 

4,196

 

116,439

 

 

 

 

 

Current liabilities

10,173

211

465

10,849

Non-current liabilities

1,027

-

-

1,027

 

Total Liabilities

 

11,200

 

211

 

465

 

11,876

Capital additions for the six months ended 30 June 2019

 

 

 

 

 

Additions to property, plant

  and equipment

            19

-

2

21

Selected balances at 30 June 2018

 

Tanzania Operations

 

$000

Mozambique Operations

(Discontinued)

$000    

Corporate

 

 

$000 

Consolidated

 

 

$000

Current assets

32,376

255

911

33,542

Tanzania Government receivables

4,959

-

-

4,959

Exploration and evaluation assets

8,129

40,774

-

48,903

Property, plant and equipment

87,795

-

9

87,804

Deferred tax assets

22,073

-

-

22,073

 

Total assets

 

155,332

 

41,029

 

920

 

 197,281

 

 

 

 

 

Current liabilities

17,424

135

534

18,093

Non-current liabilities

6,087

-

-

6,087

 

Total Liabilities

 

23,511

 

135

 

534

 

24,180

 

 

 

 

 

Capital additions for six months ended 30 June 2018

 

 

 

 

 

Additions to exploration and

  evaluation assets

-

982

-

982

Additions to property, plant

  and equipment

            683

-

5

688

 

 

5.    Discontinued operations

In April 2019, the Group relinquished its Tembo licence which comprised its entire Mozambique operating segment. The Group was committed to a plan to relinquish this licence following a decision not to enter into the next exploration phase upon the expiry of the current exploration phase. The related assets and liabilities were classified as discontinued at 30 June 2019. At 30 June 2019, no gain or loss arose on the measurement to fair value less cost to sell.

 

No cash consideration was received with respect to the relinquishment and all amounts were fully impaired at 31 December 2018 leading to $nil pre-tax loss at 30 June 2019. There was $nil attributable tax, leaving a gain after tax of $nil.

 

Results of the discontinued operations

 

Six months ended 30 June

 

2019

$000

2018

$000

Recurring administrative costs

-

2

Loss for the year

-

2

Cash flows from (used in) discontinued operations

 

Six months ended 30 June

 

2019

$000

2018

$000

Net cash (utilized in)/generated from operating activities

(225)

39

Net cash used in investment activities

186

28

 

Net change in cash and cash equivalents

 

(39)

 

67

 

Cash and cash equivalents, beginning of the period

 

124

 

25

 

Cash and cash equivalents, end of the period

 

85

 

92

Effect of the disposals on individual assets and liabilities

 

 

Balance as at

30 June 2019

 

 

Assets of discontinued operations

 

 

 

 

Cash at bank

 

85

 

 

Other receivables

 

148

 

 

 

 

233

 

 

 

Liabilities of discontinued operations

 

 

Trade payables

 

78

 Accrued liabilities

 

133

 

 

211

 

Net identifiable assets and liabilities/net cash (inflow)

 

 

22

 

 

 

 

             
 

 

6.    General and administrative costs

 

Six months ended 30 June

 

2019

$000

2018

$000

Employee salaries and benefits

986

1,162

Contractors and consultants

535

260

Travel and accommodation

123

183

Professional, legal and advisory

530

410

Office and administration

323

338

Corporate and public company costs

466

380

Total general and administrative costs

2,963

2,733

 

7.    Finance income and finance costs

 

Six months ended 30 June

 

2019

$000

2018

$000

Finance income

 

 

Accretion - TPDC receivable

-

2,053

 

 

-

 

2,053

 

 

 

Finance costs

 

 

Accretion - decommissioning provision

(58)

(52)

Interest expense and other finance costs

(209)

(586)

Foreign exchange loss

(158)

(33)

 

 

(425)

 

(671)

 

8.    Trade and other receivables

 

Balance at

30 June 2019

Balance at

31 December 2018

 

 

 

Trade receivable from TPDC

Other receivable from TPDC    

Trade receivable from TANESCO

10,518

513

655

5,760

513

491

Other receivables

759

789

 

 

12,445

 

7,553

 

Other receivables from TPDC represent income tax $513k (2018 - $513kl) paid by Wentworth Gas Limited, a wholly owned subsidiary of the Company. The income tax will be recovered from TPDC profit gas (security revenue) through future gas sales.

Subsequent to 30 June 2019, the Group has received total payments of $8.4 million from TPDC and Tanesco, significantly reducing the receivables balance at 31 August 2019.

 

 

 

  

9.    TPDC receivables

As at 30 June 2019, the undiscounted receivable from TPDC is $189k ($5.2 million at 30 June 2019).

 

 

$000

Balance at 31 December 2018

5,238

 

 

Retained gas revenue to offset receivable

(5,497)

Share of TPDC Mnazi Bay Concession costs paid by the Company

448

Balance at 30 June 2019

189

 

 

10.  Exploration and evaluation assets

 

$000

Cost

 

Balance at 31 December 2018 and 30 June 2019

8,129

The exploration costs comprise of acquisition and interpretation of 3D Seismic 225 Km² and 2D High Resolution Seismic 281 Km² 

 

11.  Property, plant and equipment

 

Natural gas properties

Office and other equipment

 

 

 

$000

                              

$000

Total

$000

Cost

 

 

 

Balance at 31 December 2018

104,016

618

104,634

 

 

 

 

Additions

19

2

21

Balance at 30 June 2019

104,035

620

104,655

 

Accumulated depreciation and depletion  

 

 

Balance at 31 December 2018

(20,254)

(603)

(20,857)

 

 

 

 

Depreciation and depletion

(2,843)

(8)

(2,851)

Balance at 30 June 2019

(23,097)

(611)

(23,708)

 

Carrying amounts

 

 

 

31 December 2018

83,762

15

83,777

30 June 2019

80,938

9

80,947

 

 

 

 

12.  Subsidiary undertakings

The principal subsidiary undertakings at 30 June 2019 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 Holding (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

Cyprus

Ordinary

Indirect

39.925%

Exploration production company

Wentworth Mozambique (Mauritius) Limited

Mauritius

Ordinary

Indirect

100%

Investment holding company

Wentworth Moçambique Petroleos, Limitada (1)

Mozambique

Ordinary

Indirect

100%

Exploration company

 

(1) The Wentworth Moçambique Petroleos, Limitada is in the process of liquidation after relinquishment of the Tembo Block Appraisal Licence. 

 

 

13.  Trade and other payables

 

Balance at

30 June 2019

Balance at

31 December 2018

Payable to Mnazi Bay Operator

2,237

1,710

Trade payables

212

413

Interest

84

145

Other payables and accrued expenses

435

939

 

 

2,968

 

3,207

The payable to Mnazi Bay Operator represents six months accrued Mnazi bay field cost of which a first quarter cash call of $1.1 million was paid in July 2019. 

 

14.  Overdraft credit facility

The Company has a one-year, $2.5 million overdraft facility with a Tanzanian Government owned bank which is due and repayable on 5 April 2020. The facility can be extended for a further one year at 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.  At 30 June 2019, the lender's base lending rate was 9%.

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 six months 30 June 2019, the Company paid interest expense and renewal fee of $18k (2018 - $67k) on the overdraft credit facility.

 

15.  Term loans

 

$000

Credit facilities balance

 

Principal balance as at 31 December 2018

8,325

 

Loan repayments during the six months

 

(3,330)

 

 

Principal balance as at 30 June 2019

4,995

 

309

 

(135)

 

175

 

 

5,170

 

The carrying amount of the term loan as at 30 June 2019 is all current.

During the six months ended 30 June 2019, the Company incurred interest expense on long-term loans, inclusive of accretion of facility costs, of $0.21 million (2018 - $0.52 million).  A total of $0.39 million was settled in cash (2018 - $0.95 million).

The carrying amount of the long-term loans include transaction costs of $175k (net of accretion).  At 30 June 2019, the carrying amount of the credit facilities approximates its fair value as the loan's effective interest rate approximates market rates.

 

 

The $20 million credit facility

During 2017, the Company executed amendments to the credit facility agreement, which included the restructuring of principal loan payments and added new provisions. The new provisions were not finalized at the time of the execution of the amendment to the credit facility agreement. On 06 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 it's 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, the six-month interest rate was 10.30%. 

Principal repayments on the credit facility are set out in the following table. 

 

Principal repayment date

Repayment amount

$000

30 July 2019

1,666

30 October 2019

1,665

30 January 2020

1,664

 

4,995

 

On 30 July 2019 the $1.67 million was paid, the current loan outstanding balance is $3.3 million payable in two instalments.

 

Medium term $6 million credit facility

The Medium term $6 million credit facility was fully paid on 12 December 2018.

 

16.  Contingent PTTEP liability

A reconciliation of the contingent PTTEP liability is provided below:

 

Balance at

30 June 2019

Balance at

31 December 2018

 

 

 

Balance at 1 January

848

2,189

Payments to reduce liability

(848)

(1,341)

Balance at 30 June (31 December)

-

848

 

 

 

As a result of an asset purchase and sale transaction in 2012, the Company has been obliged to make payments with a face value of $3.4 million should certain natural gas production thresholds from Mnazi Bay Concession be reached.  The liability was fully paid as at 30 June 2019 (31 December 2018 - $848k). 

 

 

 

 

17.  Decommissioning and Abandonment provision

A reconciliation of the decommissioning obligations is provided below:

 

Balance at

30 June 2019

Balance at

31 December 2018

Balance at 1 January

969

865

Accretion

58

104

Balance at 30 June (31 December)

1,027

969

 

18.  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 would 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 $710k. As the process has yet to be finalised and fair values agreed, the buy back remains contingent at the balance sheet date.

 

19.  Share-based payments

 

Six months ended 30 June

 

2019

$000

2018

$000

 

 

 

Share based compensation recognized in the statement of Comprehensive loss

243

26

 

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

 

 

Number of

options

Weighted average exercise price (US$))

 

 

 

Outstanding at January 1

13,460,075

0.50

Granted

495,422

-

Forfeited

-

-

Outstanding at 30 June

13,955,497

0.48

 

Subsequent to the signature of the 2018 annual report, it was confirmed that the former Director Neil Kelly was granted good-leaver status over 900,000 share options by the Remuneration Committee which duly authorised the extension of their expiry date by 12 months to 2 November 2019. The number of options outstanding at 1 January has been adjusted to reflect this.

 

 

The following table summarizes share options outstanding and exercisable at 30 June 2019:

Exercise Price
(US$)

Number of options in issue

Weighted average remaining life (years)

Number of options fully vested and exercisable

-

4,055,497

10.0

-

0.44

1,850,000

6.5

1,850,000

0.54

1,000,000

1.3

1,000,000

0.59

500,000

2.5

500,000

0.61

2,300,000

1.3

2,300,000

0.71

250,000

3.8

250,000

0.78

200,000

4.9

200,000

0.85

100,000

4.0

100,000

0.87

3,100,000

4.7

3,100,000

0.90

100,000

2.0

100,000

1.06

500,000

1.8

500,000

 

13,955,497

 

9,900,000

 

20.  Share capital

 

2019

$000

2018

$000

Authorised, called up, allotted and fully paid

 

 

186,488,465 (2017 - 186,488,465) ordinary shares  

416,426

416,426

 

21.  Earnings per share

 

Basic and diluted EPS

 

2019

$000

2018

$000

 

 

 

Net loss for the period

(158)

(6,529)

 

 

 

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 loss per ordinary share

-

(0.40)

 

22.  Subsequent events

On 10 July 2019, the Company announced the implementation of a dividend policy and confirmed plans to pay an ordinary dividend based on the Company's free cash flow generation. A maiden interim dividend of 0.45 pence per share has been declared as part of these interim results to 30 June 2019, and a dividend will be payable semi-annually going forward, split between the interim and final dividend (1/3:2/3). A final dividend for the year ended 31 December 2019 will be determined by the Board and is expected to be declared with the full year results, subject to shareholder approval.

 

Glossary of Terms

 

Bscf

Billion standard cubic feet

EBITDAX

Earnings before interest, tax, depreciation, amortisation and exploration expense

MMboe

Million barrels of oil equivalent

MMscf/d

Million standard cubic feet per day

MScf

Thousand standard cubic feet

NPV15

Net present value, using a 15% discount rate

W.I.

Working interest

 

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

The information contained within this announcement is deemed by Wentworth to constitute inside information as stipulated under the Market Abuse Regulation (EU) no. 596/2014 ("MAR"). On the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

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 considering 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.                         

-Ends-


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 [email protected] or visit www.rns.com.
 
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