17. provision for decommissioning
As at
-------------------------
31 December
30 June 2011 2010
------------ -----------
$'000 $'000
Balance at the beginning of the
period 3,949 2,704
Additions 459 2,140
Change in estimates (271) (1,105)
Unwinding of the present value
discount 207 168
Translation difference 337 42
------------ -----------
Balance at the end of the period 4,681 3,949
============ ===========
In accordance with the licence agreements the Group is liable
for site restoration, clean up and abandonment of the wells upon
completion of their production cycle. The provision for future site
restoration relates to obligations to restore the oilfields after
use. All of these costs are expected to be incurred at the end of
the life of wells after 2027. They depend on the estimated lives of
the wells, the scale of any possible contamination and the timing
and extent of corrective actions.
The unwinding of the discount related to future site restoration
and abandonment reserve is included within finance costs. The
management believes that this estimate of the future liability is
appropriate to the size of the fields.
18. trade and other payables
As at
-------------------------
31 December
30 June 2011 2010
------------ -----------
$'000 $'000
Trade payables 6,263 3,768
Advances received 2,494 -
Purchase of well - 778
Salary payable 431 1,683
Other payables 1,369 791
------------ -----------
Current trade and other payables 10,557 7,020
============ ===========
19. borrowings
As at
-------------------------
31 December
30 June 2011 2010
------------ -----------
$'000 $'000
Credit Suisse 48,450 47,906
Total borrowings 48,450 47,906
Less: current portion (5,748) (759)
Long-term portion 42,702 47,147
============ ===========
There is no material difference between the carrying amount and
fair value of borrowings.
Credit Suisse - On 10 September 2010, the Group agreed a loan
facility of $50 million with a term of 3.5 years. Interest is
charged at LIBOR plus 7% interest rate. At 30 June 2011, the
outstanding balance of $48,450 thousand was recognised net of the
unamortised amounts of borrowing costs of $2,298 thousand. The
amortisation of borrowing costs for six months ended 30 June 2011
was $554 thousand.
The loan is free of any equity related components and is
repayable in instalments from 18 January 2012: four equal payments
in the amount of $2.5 million will be made on a quarterly basis in
2012; four equal payments in the amount of $5 million will be made
on quarterly bases in 2013; a payment of $5 million will be made on
20 January 2014 and the remaining amount of $15 million will be
paid on 22 April 2014.
The interest is payable quarterly with the first payment made in
January 2011.
The loan is secured by a pledge of the 100% shares of certain
Group's subsidiaries (Note 25): Exillon TP, Exillon WS, Regional
Resources LLC, Ucatex Oil LLC, Kayumneft LLC, Nem Oil LLC,
Actionbrook Limited, Claybrook Limited, Diamondbridge Limited,
Lanarch Limited, Halescope Limited, Vitalaction Limited, Corewell
Limited, Touchskope Limited and Silo Holdings LLC and Exillon
Finance Limited.
The loan is also secured by the rights to receive cash from
trade receivables balances under export contracts with Vitol S.A.
and Altex Handel und Betatung GmbH and cash balances from bank
account opened in CJSC Bank Credit Suisse (Moscow).
20. Share capital
The amount of share capital available for issue at the date of
these consolidated financial statements and the issued share
capital of the Company are as follows:
Number
(allotted and
called up) Share capital Share Premium
$'000 $'000
As at 31 December
2009 125,520,829 1 95,783
Issuance of shares 12,552,082 - 30,251
As at 31 December
2010 138,072,911 1 126,034
Issuance of shares 23,438,000 - 146,082
As at 30 June 2011 161,510,911 1 272,116
The total number of allotted ordinary shares is 161,510,911 with
a par value of $0.0000125 each.
Issuance of new shares - on 21 April 2011, the Company issued
23,438,000 of new shares with a par value of $0.0000125 each at
GBP4 for total proceeds of GBP93,752 thousand or $153,406 thousand.
Costs related to the issuance of new shares taken against share
premium amounted to $7,324 thousand.
21. Share-based payment
In 2009, 1,255,205 ordinary shares awards with a par value of
$0.0000125 each were awarded to Directors and senior management as
part of the IPO plan (Initial Public Offering). The share awards
are conditional on the employee completing three year's service
(the vesting period) from the date of the IPO, during which any
dealings are prohibited. These share awards are not subjected to
any performance conditions. The Group has no legal or constructive
obligation to repurchase the shares related to the granted share
awards.
During the six months ended 30 June 2011 714,737 share awards
were granted to the new senior managers out of the Employee Share
Plan, of which 484,407 share awards subject to non-market
performance conditions and a three year vesting period and 230,330
share awards are not performance-related but are subject to the
completion of three year's service with any dealings prohibited
during that period.
Movements in the number of share awards outstanding are as
follows:
As at
-------------------------
31 December
30 June 2011 2010
------------ -----------
At the beginning of the period 810,736 1,255,205
Granted 714,737 302,880
Forfeited - (747,349)
At the end of the period 1,525,473 810,736
============ ===========
As of 30 June 2011 and 31 December 2010 there were no
exercisable share awards.
Share awards outstanding at the end of the year have the
following expiry dates:
As at
-------------------------
31 December
30 June 2011 2010
------------ -----------
December 2012 507,856 507,856
June 2013 302,880 302,880
June 2014 714,737 -
1,525,473 810,736
============ ===========
The weighted average fair value of share awards granted during
the period determined using the Black-Scholes valuation model was
$7.5 per award (2010: $2.47). The significant inputs into the model
were weighted average share price of GBP4.52 per share (2010:
GBP1.7) at the grant date, exercise price of zero (2010: zero),
dividend yield of 0% (2010: 0%) and an expected share awards life
of three years (2010: three years).
The total expense arising from share-based payment transactions
recognised for the six months ended 30 June 2011 amounted to $438
thousand (2010: $578 thousand).
22. Risk management
The Group's activities expose it to a variety of financial
risks: market risk (including foreign currency risk, interest rate
risk and commodity price risk), credit risk and liquidity risk.
The interim condensed consolidated financial statements do not
include all financial risk management information and disclosures
required in the annual financial statements, and should be read in
conjunction with the Group's annual financial statements as at 31
December 2010.
In 2011 the Group enhanced the risk management policies in
respect of efficient usage of temporarily free cash surpluses,
particularly by investments in highly liquid short-term marketable
securities. The Group has adopted the policy of only dealing with
low-risk securities with high credit ratings provided by
independent rating agencies. The financial ability of existing
investments and overall market circumstances are continuously
monitored by the management.
Major categories of financial instruments - On 6 May 2011, the
Group purchased Eurobonds issued by EBRD for the total
consideration of $15,399 thousand. According to Standard &
Poor's independent rating agency the bonds have AAA credit rating.
The financial instruments are denominated in RUR with the fixed
interest rate of 6% and the maturity date of 14 February 2012.
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