TIDMEXI
RNS Number : 2804L
Exillon Energy Plc
31 August 2012
The following amendements have been made to the "Half Yearly
Results" announcement released on 31 August at 7.35am under RNS
number 1763L
1. Report on Review of Interim Condensed Consolidated Financial
Statements was replaced with the INDEPENDENT REVIEW REPORT TO
EXILLON ENERGY PLC including the full text document.
2. Cash flow statements page was re-titled to "INTERIM
CONSOLIDATED STATEMENT OF CASH FLOWS"
3. Footnote 23, Capital commitments, "other" category was
corrected to 43 (vs 42).
4. Footnote 6, Operating segments, "Total assets" line, "Exillon
WS" column was corrected to 349,799 (vs 349,979) and "Total" column
was corrected to 711,711 (vs 711,891).
All other details remain unchanged.
The full amended text is shown below.
Exillon Energy plc
Interim results for the first six months of 2012
31 August 2012
31 August 2012 - Exillon Energy plc (EXI.LN), a London Premium
listed independent oil producer with assets in two oil-rich regions
of Russia, Timan-Pechora ("Exillon TP") and West Siberia ("Exillon
WS"), today issues its interim results for the first six months to
30 June 2012.
Highlights
Production Growth
-- Oil production increased 48% from 1.42 million to 2.1 million
barrels. Production guidance of 17,000 bpd by end of 2012
reiterated
Financials
-- EBITDA increased 98% from US$7.8 million to US$15.5 million.
Net profit fell from US$5.9 million to net loss of US$1.7 million.
The fall in net profit arose primarily because of the absence of
non-cash FX gains made in 2011, and a write-off of the up-front
costs of increasing our debt facility
-- US$138.5 million of cash and cash equivalents as at 30 June
2012. Net cash position was US$38.3 million
Operations
-- Excellent drilling results in the first six months of the year:
o Drilling speeds in Exillon WS reduced to around 20 days per
well
o New strategy of drilling wells at 60 degree angle doubles
exposed net pay
o Lack of oil water contact in wells drilled to North East of
the EWS I field suggests substantial reserves increase likely in
this area of the field
o Improved completion and cementing procedures across
portfolio
Infrastructure
-- Significant infrastructure progress:
o Completion of oil treatment and power generation facilities in
both Exillon TP and Exillon WS
o Completion of Exillon's own entry point into Transneft
pipeline network expected to improve EBITDA per barrel going
forward
Mark Martin, Chief Executive Officer, commented:
"I am very pleased with the progress that Exillon has made in
the first six months of the year. We have increased oil production
by 48% and EBITDA by 98% compared to the same period in 2011.
The completion of our oil treatment and power generation
facilities combined with our new entry point into Transneft
pipeline network is expected to further improve EBITDA per barrel
going forward and our new strategy of drilling wells at a 60 degree
angle has materially increased each well's exposure to net pay
resulting in higher average production levels from these wells.
Our strong cash position leaves us ideally placed to progress
our development plans and I look forward to meeting investors in
September to detail our plans to continue to expand our production,
drive up our EBITDA per barrel and increase our audited
reserves."
Contact Details:
Tom Blackwell
Email: Blackwell@mcomgroup.com
Tel: +44 207 920 2330
A conference call with the Exillon Energy management to discuss
this announcement will be held on Monday 3(rd) September 2012, at
12:00 BST. In order to register for participation in this call and
to receive dial-in details, please contact Chris McMahon at M:
Communications on +44 20 7920 2358 or mcmahon@mcomgroup.com.
Production[1]
We publish monthly production data, and therefore have already
announced details of our production for the period. For reference
we summarise below the monthly data published during the six month
period, and also for July. Our production data for August will be
published by 5(th) September.
Jan Feb March April May June July
PLC peak 11,836 12,106 12,177 12,810 12,247 12,528 13,381
PLC average 10,972 11,584 11,785 11,463 11,320 12,131 12,330
ETP average 3,094 3,103 3,261 2,884 3,434 3,069 3,148
EWS average 7,877 8,481 8,525 8,579 7,886 9,062 9,182
Drilling
We announce wells when completed and tested. During the
reporting period we announced the following wells: North EWS I -
61, East EWS I-51, East EWS I - 52, East EWS I - 54 and East EWS I
- 53.
In addition we have drilled but not yet completed or announced
three wells in ETP (Well 7601 on ETP III, Wells 5 and 2003 on ETP
IV). We will announce the results of these well once they have been
completed.
"Completion" of a well involves various procedures such as
casing, cementation, perforation and testing.
Dear Shareholders,
Exillon has enjoyed a very successful first six months to 2012,
increasing oil production by 48% to 2.1 million barrels. Based on
our drilling results, we reiterate our previous guidance that we
expect to reach a daily production rate of 17,000 barrels per day
by the end of 2012.
During the reporting period, our revenue increased 58% from
US$88.4 million to US$140.0 million. Mainly as a result of rising
production and improved efficiency, our netback (which we define as
revenue less Mineral Extraction Tax, Export Duty and Transneft
charges) rose 55% from US$28.7 million to US$44.5 million.
EBITDA increased 98% from US$7.8 million to US$15.5 million,
whilst net profit fell from US$5.9 million to net loss of US$1.7
million. The growth in EBITDA was a result of continuing investment
in our surface infrastructure and the success of our drilling and
workover programme. EBITDA was equivalent to US$7.4 per barrel,
compared to our budgeted figure of US$7.8. The fall in net profit
was due to the lack of foreign exchange gains made in 2011,
increased depreciation charges and the amortisation of shares
awards made in 2011. No share awards have been made in 2012.
Our balance sheet is stronger than expected with US$138.5
million of cash and cash equivalents as at 30 June 2012, which is
ahead of our originally budgeted cash balance. On 3rd February we
increased our loan with Credit Suisse to US$100 million, at a
reduced interest margin and with an extended maturity of 5 years.
This 5 year facility is our only debt. As at 30 June 2012, debt was
US$100.2 million, so our net cash position was US$38.3 million.
Operationally we have seen excellent results from our drilling
programme this year. Drilling speeds in Exillon WS have been
reduced to around 20 days per well. Our new strategy of drilling
wells at a 60 degree angle has been successful, exposing double the
net pay compared to vertical wells, and we have also begun to drill
Exillon's first horizontal sidetrack wells. Our completion and
cementing procedures have improved, and we have substantially
increased our water injection rates to sustain the productivity of
our fields.
In terms of infrastructure, we have completed our oil treatment
and power generation facilities in both Exillon TP and Exillon WS,
and in August we completed our own entry point into the Transneft
pipeline network. The latter did not contribute to these 6 month
results but will improve our EBITDA per barrel further in the
second half of 2012, as well as guaranteeing our operational
independence.
Drilling results in Exillon WS continue to exceed our
expectations. The high natural flow rates, achieved without any
well stimulation, demonstrate that the newly developed areas of our
reservoir are thick and of high quality. The lack of any oil water
contact to date in the North East of the EWS I field also indicates
that a substantial increase in reserves in this area of the licence
is likely when we conduct our annual reserves audit at the end of
the year.
Strategically, on 12th January we announced the acquisition of
the ETP VII licence in Timan Pechora, increasing our contiguous
licence area at ETP by 61% to 344km(2) . We have completed our
initial seismic exploration and modelling of these areas and are
currently finalising our exploration plans for ETP VII and also for
the ETP VI licence area that we acquired in 2011. We are also in
the late stages of acquiring another substantial contiguous licence
area for a modest acquisition cost which will increase our
exploration potential further.
We have also made progress in controlling our central overhead
costs. For example we have reduced our financial audit costs by
40%, and made a variety of other administrative savings.
We look forward to meeting investors and analysts on our
forthcoming roadshow in September, during which we will set out our
medium term plans in further detail. This will set out how we
intend to continue to 1) expand our production 2) drive up our
EBITDA per barrel and 3) increase our audited reserves.
Mark Martin
Chief Executive Officer
MATERIAL EVENTS AND TRANSACTIONS
Drilling Update
The following material events and transactions were announced
relating to activity during the period:
Drilling Update - East EWS I - 51
Well East EWS I-51, which was spudded on 7 May 2012, was drilled
in 20 days on the northern part of the East EWS I field. This was
the first development well drilled from pad 5 following the success
of exploration well 50 drilled last year.
The well flowed water-free oil naturally to the surface with a
flow rate of 892 bbl/day on an 8 mm choke and 1,218 bbl/day on a 10
mm choke. The well encountered the Jurassic P reservoir at 1,861
meters, confirming 15.0 meters of effective vertical net pay within
the Jurassic. Due to the trajectory of the well bore this exposed
30.7 meters of effective net oil pay for production.
Oil water contact in this area of the field was previously
assumed at 1,872 meters, and well 51 was designed to test this
assumption. The new well has not encountered an oil water
transition zone and confirmed presence of oil at least 4 meters
below the previously assumed oil water contact.
Drilling Update - North EWS I - 61
Well North EWS I - 61, which was spudded on 30 April 2012, was
drilled in 31 days on the North EWS I field.
The well encountered the Jurassic P reservoir at 1,856m,
confirming 9.5 meters of net oil pay. The well was drilled
directionally with a high level of deviation (1.6km) to the north
of Pad 6.
Drilling Update - East EWS I - 52
Well East EWS I - 52 was spudded on 18 June 2012 and drilled in
19 days on the northern part of the East EWS I field. The well
flowed water-free oil naturally to the surface with a test flow
rate of 692 bbl/day on an 8 mm choke. Only part of the net pay zone
has so far been perforated. The well encountered the Jurassic P
reservoir at 1,865 metres, confirming 21.7 metres of effective
vertical net pay. Due to the angled trajectory of the well bore
this exposed 40.6 metres of effective net oil pay for
production.
The oil water contact in this area of the field had originally
been assumed to be at 1,872 metres. The new well has not
encountered an oil water transition zone and has confirmed the
presence of oil at least 21 metres below the originally assumed oil
water contact.
Drilling Update - East EWS I - 54
Well East EWS I - 54 was spudded on 29 May 2012 and drilled in
18 days on the northern part of the East EWS I field. The well
flowed water-free oil naturally to the surface with a combined test
flow rate of 721 bbl/day on an 8 mm choke.
The well encountered the Jurassic P reservoir at -1,857 metres
sub-sea, confirming 14.9 metres of effective vertical net pay and
30 metres of effective measured net pay for production due to the
angled trajectory of the wellbore. In addition the well encountered
4.5 metres of effective vertical net pay of pre-Jurassic reservoir.
This was tested separately, and resulted in the natural flow rate
to surface of 263 bbl/day on an 8 mm choke.
The oil water contact in this area of the field had originally
been assumed to be at -1,872 metres sub-sea. The new well has not
encountered an oil water transition zone and has flowed oil from a
zone that is 10 meters below previously assumed oil water
contact.
Drilling Update - East EWS I - 53
Well East EWS I - 53 was spudded on 19th July 2012 and drilled
and cemented in 24 days on the northern part of the East EWS I
field. The well encountered the Jurassic P reservoir at 1,875
metres, confirming 20.3 metres of effective vertical net pay. Due
to the angled trajectory of the well bore, this exposed 38.4 metres
of effective net oil pay for production.
The combined well flowed water-free oil naturally to the surface
with a test flow rate of 828 bbl/day on a 8mm choke.
Financial
On 3rd February 2012 our wholly owned subsidiary Exillon Finance
Limited ("Exillon Finance") signed a new term loan with Credit
Suisse. Further details are given in Note 19 of these financial
statements.
Acquisition
On 30 December 2011, Exillon acquired the Sinatiyskoye
exploration and production licence in a state auction for a total
consideration of USD 1.3 million. The licence is valid until 30
December 2036, and has been designated "ETP VII".
ETP VII borders the southern boundary of the Group's existing
ETP II field, with its existing oil production infrastructure. The
licence covers an area of 130.4 km(2). For reference, our existing
six Exillon TP fields cover an area of approximately 214 km(2).
ETP VII is already largely covered by 2D seismic data which has
identified eight significant geological structures. Tectonically
the eastern part of ETP VII is located in the Khoreiverskaya
depression, and the western part is at the intersection of
Khoreiverskaya depression and Kolvinskiy swell. The potential of
the licence relates to sediments in the lower Silurian period.
FINANCIAL REVIEW
The interim condensed consolidated financial information of
Exillon Energy plc for the six month period ended 30 June 2012 has
been prepared in accordance with IAS 34 "Interim Financial
Statements". The condensed consolidated financial information and
notes on pages 8 through to 23 should be read in conjunction with
this review which has been included to assist in the understanding
of the Group's financial position at 30 June 2012.
Summary
EBITDA for the six months ended 30 June 2012 increased by 98% to
US$15.5 million compared to US$7.8 million for the six months ended
30 June 2011.
Net loss for the period, which includes depreciation costs,
foreign exchange loss and share-based compensation amounted to
US$1.7 million compared to net profit of US$5.9 million for the six
months ended 30 June 2011.
Revenue
Our revenue for the six months ended 30 June 2012 increased by
58% year-on-year, reaching US$140.0 million (2011: US$88.4
million), of which US$83.9 million or 60% came from export sales of
crude oil and US$56.1 million or 40% came from domestic sales of
crude oil. This increase in revenue is attributable to:
-- An increase in production leading to a 43% increase in sale
volumes from 1,374,536 bbl in 2011 to 1,966,861 bbl; and
-- An increase in average commodity prices: we achieved an
average oil price of US$113/bbl (2011: US$107/bbl) for export sales
and US$46/bbl (2011: US$42/bbl) for domestic sales.
Our netbacks for domestic and export sales are similar because
of the effect of Export Duty. The increase is 55% from US$28.7
million to US$44.5 million year-on-year.
Operating Results
Operating costs excluding depreciation, depletion and
amortisation increased to US$58.4 million (2011: US$35.5 million)
following an increase in production of 48% to 2,100,162 bbl (2011:
1,423,276 bbl). The difference between the production volumes and
sales volumes is due to the change in the oil inventory balance
during the year. The increase in production costs is mainly related
to the growth of mineral extraction tax from US$28.1 million in
2011 to US$45.0 million in 2012, as a result of both higher
production volumes and increased average commodity prices in 2012
used in the calculation of the tax.
Depreciation, depletion and amortisation costs primarily relate
to the depreciation of proven and probable reserves and other
production and non-production assets. These costs totalled US$8.2
million (2011: US$5.8 million). The increase in DD&A costs is
driven by higher production volumes and our increasing asset
base.
Selling expenses for the six months ended 30 June 2012 of
US$55.7 million (2011: US$36.5 million) is comprised of export
duties of US$44.1 million (2011: US$27.5 million), transportation
services of US$10.8 million (2011: US$8.1 million) and other
selling expenses of US$0.8 million (2011: US$0.9 million).
Transportation services include services provided by Transneft and
transportation services from oil field to oil filling station.
Export duty rates increased from the beginning of the period by
13%, from US$397.5 per tonne to US$448.6 per tonne reflecting the
increase in crude oil prices. Export duty is reviewed by the
Russian government on a monthly basis and is based on a formula
that takes into account the average Urals price prevailing in the
market between the 15(th) and 15(th) of the two months prior to the
month of delivering the crude.
Administrative expenses (excluding share-based compensation
expenses and share issuance costs) totalled US$10.7 million (2011:
US$8.0 million). This is explained by an increase in headcount
leading to an ensuing increase in salaries.
In 2012, interest income increased to US$1.6 million (2011:
US$0.2 million) resulting from surplus cash being held on
short-term deposits and VTB credit-linked deposits.
It should be noted that - in accordance with IFRS - a foreign
exchange loss of US$0.04 million has been included in our net
expense arising from the revaluation of foreign currency monetary
items (cash and cash equivalents, accounts receivable and payable,
other assets) using the closing rate at the reporting date. A
larger foreign exchange loss of US$10.1 million has been applied
directly to the consolidated statement of financial position as the
part of translation reserve being the result of the translation of
our net investment in our foreign operations.
As a result of the above, the Group reported a net loss after
tax of US$1.7 million compared to a profit of US$5.9 million for
the six months ended 30 June 2011.
Financial position
In February 2012 we received proceeds of US$14.3 million
comprising the nominal value and accrued interest in relation to
Eurobonds issued by EBRD.
In March 2012 we replaced our existing US$50 million loan
facility by US$100 million facility with a LIBOR plus 6% interest
rate and a term of 5 years. The previous loan had an interest rate
of LIBOR plus 7% and a term of 3.5 years.
We ended the period in a strong financial position with US$138.5
million of cash and cash equivalents (2011: US$117.6 million) with
outstanding borrowings of US$100.2 million, equivalent to a net
cash position of US$38.3 million.
The increase in the cost of property, plant and equipment has
been driven by the drilling of wells and further development of
field infrastructure in Exillon WS and the launch of extensive
field development in Exillon TP.
Principal risks and uncertainties
The principal risks and uncertainties affecting the business
activities of the Group are set out on pages 18 to 19 of the
Directors' Report section of the Annual Report for the year ended
31 December 2011, a copy of which is available on the Company's
website at www.exillonenergy.com. The Board continually assesses
and monitors the key risks of the business. The principal risks and
uncertainties that could have a material impact on the Group's
performance over the remainder of the financial year have not
changed from those which are set out in the Group's 2011 Annual
Report.
In accordance with DRT 4.2.7, we summarise below the principal
risks that could have a material impact on our business for the
remaining six months of the year:
Directors
A full list of Directors is maintained on the Group's website:
exillonenergy.com.
Related parties
Related party transactions are given in note 24.
Statement of directors' responsibilities
The Directors of the Company hereby confirm that to the best of
their knowledge:
(a) the condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 and give a true and fair
view of the assets, liabilities, financial position and profit and
loss of the Group as required by DTR 4.2.10(4); and
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7 (being an indication of important
events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and
uncertainties for the remaining six months of the year) and DTR
4.2.8 (being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
entity during that period).
On behalf of the board of directors of Exillon Energy plc.
Mark Martin
Chief Executive Officer
Disclaimer
This statement may contain forward-looking statements concerning
the financial condition and results of operations of the Group.
Forward-looking statements are statements of future expectations
that are based on the management's current expectations and
assumptions and involve known and unknown risks and uncertainties
that could cause actual results, performance or events to differ
materially from those expressed or implied in these statements. No
assurances can be given as to future results, levels of activity
and achievements and actual results, levels of activity and
achievements may differ materially from those expressed or implied
by any forward-looking statements contained in this report. The
Company does not undertake any obligation to update publicly or
revise any forward-looking statement as a result of new
information, future events or other information.
INDEPENDENT REVIEW REPORT TO EXILLON ENERGY PLC
Introduction
We have been engaged by Exillon Energy plc (the "Company") to
review the interim condensed consolidated set of financial
statements in the half-yearly financial report for the six months
ended 30 June 2012 which comprises the interim consolidated
statement of comprehensive income, interim consolidated statement
of financial position, interim consolidated statement of changes in
equity, interim consolidated statement of cash flows and the
related notes 1 to 25. We have read the other information contained
in the half yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the interim condensed consolidated set of
financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 2, the annual consolidated financial
statements of the Company are prepared in accordance with IFRS. The
interim condensed consolidated set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting".
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the interim condensed consolidated set of financial statements in
the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the interim condensed consolidated set of
financial statements in the half-yearly financial report for the
six months ended 30 June 2012 is not prepared, in all material
respects, in accordance with International Accounting Standard
34.
Ernst & Young LLC
Chartered Accountants
Douglas
Isle of Man
31 August 2012
exillon energy plc
INTERIM consolidated statement of comprehensive income
Six months ended 30 June
--------------------------
Note 2012 2011
------------ ------------
Unaudited,
Unaudited as restated
------------ ------------
US$'000 US$'000
Revenue 7 139,960 88,438
Cost of sales 8 (66,446) (41,141)
GROSS PROFIT 73,514 47,297
------------ ------------
Selling expenses 9 (55,695) (36,455)
Administrative expenses 10 (16,384) (8,655)
Other income, net 11 72 4,067
OPERATING PROFIT 1,507 6,254
------------ ------------
Finance income 1,551 201
Finance cost 19 (3,932) (748)
(LOSS)/profit BEFORE INCOME TAX (874) 5,707
Income tax (expense)/credit (863) 166
------------ ------------
(LOSS)/PROFIT FOR THE PERIOD (1,737) 5,873
------------ ------------
OTHER COMPREHENSIVE (EXPENSE)/INCOME:
Currency translation differences (10,092) 30,279
------------ ------------
TOTAL COMPREHENSIVE (LOSS)/INCOME
FOR THE PERIOD (11,829) 36,152
============ ============
(Loss)/earnings per share for
profit attributable to owners
of the Parent (EPS)
* Basic ($) 12 (0.01) 0.04
* Diluted ($) 12 (0.01) 0.04
The notes on pages 12 to 24 are an integral part of this interim
consolidated financial information.
exillon energy plc
INTERIM consolidated statement of FINAncial Position
As at
----------------------------
Note 30 June 2012 31 December
2011
------------ --------------
Unaudited
US$'000 US$'000
ASSETS:
Non-current assets:
Property, plant and equipment 13 551,334 523,423
Intangible assets 112 127
551,446 523,550
------------ --------------
Current assets:
Inventories 14 4,823 2,823
Trade and other receivables 15 15,620 13,686
Other assets 16 1,315 16,648
Cash and cash equivalents 138,507 117,567
160,265 150,724
------------ --------------
TOTAL ASSETS 711,711 674,274
============ ==============
LIABILITIES and equity:
Equity:
Share capital 20 1 1
Share premium 20 272,116 272,116
Other invested capital 68,536 68,536
Retained earnings 174,741 170,780
Translation reserve (71) 10,021
515,323 521,454
------------ --------------
Non-current liabilities:
Provision for decommissioning 17 6,542 5,153
Deferred income tax liabilities 63,256 65,592
Long-term borrowings 19 100,000 45,767
169,798 116,512
------------ --------------
Current liabilities:
Trade and other payables 18 17,853 22,796
Taxes payable 8,503 10,241
Short-term borrowings 19 234 3,271
26,590 36,308
------------ --------------
TOTAL LIABILITIES AND EQUITY 711,711 674,274
============ ==============
The notes on pages 12 to 24 are an integral part of this interim
consolidated financial information.
exillon energy plc
INTERIM consolidated statement of changes in equity
Note Share Share Other Retained Translation Total equity
capital premium invested earnings reserve
capital
--------- --------- --------- --------- ----------- ------------
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1
January 2011 1 126,034 68,536 177,051 36,394 408,016
========= ========= ========= ========= =========== ============
Comprehensive
income
Profit for the
period as restated - - - 5,873 - 5,873
Other comprehensive
income
Translation difference
as restated - - - - 30,279 30,279
--------- --------- --------- --------- ----------- ------------
Total comprehensive
income - - - 5,873 30,279 36,152
--------- --------- --------- --------- ----------- ------------
Ordinary shares
issued for cash 20 - 153,406 - - - 153,406
Share based payment
charge 21 - - - 438 - 438
Share issue costs - (7,324) - - - (7,324)
Transactions
with owners 20 - 146,082 - 438 - 146,520
Balance at 30
June 2011 (unaudited,
as restated) 1 272,116 68,536 183,362 66673 590,688
========= ========= ========= ========= =========== ============
Balance at 1
January 2012 1 272,116 68,536 170,780 10,021 521,454
Comprehensive
income
Net loss for
the period - - - (1,737) - (1,737)
Other comprehensive
income
Translation difference - - - - (10,092) (10,092)
--------- --------- --------- --------- ----------- ------------
Total comprehensive
income - - - (1,737) (10,092) (11,829)
--------- --------- --------- --------- ----------- ------------
Share based
payment charge 21 - - - 5,698 - 5,698
--------- --------- --------- --------- ----------- ------------
Transactions
with owners - - - 5,698 - 5,698
Balance at 30
June 2012 (unaudited) 1 272,116 68,536 174,741 (71) 515,323
========= ========= ========= ========= =========== ============
The notes on pages 12 to 24 form an integral part of this
interim consolidated financial information.
exillon energy plc
INTERIM consolidated statement of cash flow
Six months ended 30 June
---------------------------------
Note 2012 2011
------------ -------------------
Unaudited,
Unaudited as restated
------------ -------------------
US$'000 US$'000
CASH FLOWS FROM OPERATING ACTIVITIES:
(Loss)/profit before income tax (874) 5,707
Adjustments for:
Depreciation, depletion and amortisation 13 8,242 5,798
Loss on disposal of property, plant
and equipment 156 -
Finance income (1,551) (201)
Finance cost 3,932 748
Share based payment charge 5,698 438
Foreign exchange loss 42 (4,654)
Operating cash flow before working
capital changes 15,645 7,836
Changes in working capital:
Increase in inventories (2,207) (1,503)
Increase in trade and other receivables (496) (2,323)
(Decrease)/increase in trade and
other payables (4,932) 6,574
Increase in taxes payable 1,166 3,990
------------ -------------------
Cash generated from operations 9,176 14,574
------------ -------------------
Interest received 817 73
Income tax paid (2,821) (1,547)
Net cash generated from operating
activities 7,172 13,100
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and
equipment (44,842) (46,085)
Interest paid (capitalised portion) (2,637) (957)
Proceeds from Eurobonds 16 14,313 -
Purchase of Eurobonds 16 - (15,399)
Net cash used in investing activities (33,166) (62,441)
------------ -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 19 49,761 -
Repayment of loan 19 (2,500) -
Proceeds from share issuance, net - 146,081
Interest paid - (888)
Net cash generated from financing
activities 47,261 145,193
------------ -------------------
NET INCREASE IN CASH 21,267 95,852
Translation difference (327) 575
Cash at beginning of the period 117,567 56,297
Cash at end of the period 138,507 152,724
============ ===================
The notes on pages 12 to 24 form an integral part of this
interim consolidated financial information.
exillon energy plc
notes to INTERIM condensed consolidated financial statements
(UNAUDITED)
1. Background
The principal activity of Exillon Energy plc (the "Company" or
the "Parent") and its subsidiaries (together "the Group") is
exploration, development and production of oil. The Group's
production facilities are based in the Republic of Komi and the
Khanty-Mansiysk Region of the Russian Federation. The Group's
structure is provided in Note 24.
Exillon Energy plc is a public limited company which is listed
on the London Stock Exchange and is incorporated and domiciled in
the Isle of Man. The Company was formed on 27 March 2008. Its
registered address is Fort Anne, South Quay, Douglas, Isle of Man,
IM1 5PD.
As at 30 June 2012, the largest shareholder has 30.2% (2011:
30.2%) in the Company's outstanding issued share capital.
The Group's operations are conducted primarily through its
subsidiaries, Exillon TP and Exillon WS.
2. basis of preparation
This condensed consolidated interim financial information for
the six months ended 30 June 2012 has been prepared in accordance
with International Accounting Standard ("IAS") 34, "Interim
financial reporting". The condensed consolidated interim financial
information should be read in conjunction with the annual financial
statements for the year ended 31 December 2011, which have been
prepared in accordance with International Financial Reporting
Standards ("IFRSs"). The operations carried out by the Group are
not subjected to the seasonality or cyclicality factors.
3. going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
including financial risk factors are set out on pages 5 and 6. In
carrying out their assessment, the Directors have considered the
Company and the Group budgets, the cash flow forecasts, trading
estimates, contractual arrangements, committed financing and
exposure to contingent liabilities. The Directors believe that the
Group's forecasts and projections, taking account of reasonably
possible changes in trading performance, show that the Group is
adequately financed and the Group therefore continues to adopt the
going concern basis in preparing its consolidated interim financial
statements.
4. Retrospective restatement of errors
Foreign exchange gain of US$5,318 thousand for the six months
ended 30 June 2011 attributable to the loans issued to the foreign
subsidiaries of the Company the settlement of which is neither
planned nor likely to occur in the foreseeable future, was
reclassified from profit or loss to other comprehensive income
through the retrospective restatement in accordance with IAS 8,
"Accounting Policies, Changes in Accounting Estimates and
Errors."
5. ACCOUNTING POLICIES
Accounting policies - the accounting policies applied are
consistent with those of the annual consolidated financial
statements for the year ended 31 December 2011.
The following amendments to the standards did not have any
impact on the accounting policies, financial
position or performance of the Group:
-- IFRS 7, "Financial instruments: Disclosures" (amendment,
effective on or after 1 July 2011);
-- IFRS 1, "Severe Hyperinflation and Removal of Fixed Dates for
First-time Adopters" (amendment, effective on or after 1 July
2011).
During the six months ended 30 June 2012 the Group has not early
adopted any other standard, interpretation or amendment that has
been issued but is not yet effective.
Critical accounting judgements and key sources of estimation
uncertainty:
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 expense. Actual
results may differ from these estimates.
In preparing these 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 the same as those that applied to the
consolidated financial statements for the year ended 31 December
2011.
6. OPERATING SEGMENTS
Management has determined the operating segments based on the
reports reviewed by Directors that are used to make strategic
decisions, who are deemed to be the chief operating decision maker
("CODM").
The Company manages its business as three operating segments,
Exillon TP, Exillon WS and
Regional Resources.
-- Exillon TP is an oil company based in the Timan-Pechora basin
in the Komi Republic in the Russian Federation. The revenue is
derived from extraction and sale of crude oil.
-- Exillon WS is an oil company based in Western Siberia in the
Russian Federation. The revenue is derived from extraction and sale
of crude oil.
-- Regional Resources is an oil trading company based in Moscow in the Russian Federation.
Segmental information for the Group for the six months ended 30
June 2012 is presented below:
Exillon Exillon Regional Unallocated Intersegment Total
TP WS Resources eliminations
-------- -------- ---------- ----------- ------------- --------
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Gross segment revenue 23,606 116,354 1,269 - - 141,229
-------- -------- ---------- ----------- ------------- --------
Inter-segment revenues - - (1,269) - - (1,269)
Revenue 23,606 116,354 - - - 139,960
Minerals extraction
tax (12,040) (32,915) - - - (44,955)
Export duties - (44,078) - - - (44,078)
Transportation services
- Transneft - (6,407) - - - (6,407)
Net back 11,566 32,954 - - - 44,520
-------- -------- ---------- ----------- ------------- --------
EBITDA 2,857 17,254 167 (4,789) - 15,489
-------- -------- ---------- ----------- ------------- --------
Depreciation and
depletion 3,100 5,004 60 78 - 8,242
Finance income (8) (29) (207) (1,307) - (1,551)
Finance cost 48 210 - 3,674 - 3,932
Operating profit/(loss) (243) 12,492 103 (10,845) - 1,507
-------- -------- ---------- ----------- ------------- --------
Capital expenditures 19,059 25,708 75 - - 44,842
-------- -------- ---------- ----------- ------------- --------
Total assets 230,483 349,799 3,210 128,219 - 711, 711
-------- -------- ---------- ----------- ------------- --------
Segmental information for the Group for the six months ended 30
June 2011 is presented below (as restated):
Exillon Exillon Regional Unallocated Intersegment Total
TP WS Resources eliminations
-------- -------- ---------- ----------- ------------- --------
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Gross segment revenue 34,007 54,431 479 - - 88,917
-------- -------- ---------- ----------- ------------- --------
Inter-segment revenues - - (479) - - (479)
Revenue 34,007 54,431 - - - 88,438
Minerals extraction
tax (11,304) (16,820) - - - (28,124)
Export duties (10,139) (17,339) - - - (27,478)
Transportation services
- Transneft (1,361) (2,804) - - - (4,165)
-------- -------- ---------- ----------- ------------- --------
Net back 11,203 17,468 - - - 28,671
-------- -------- ---------- ----------- ------------- --------
EBITDA 4,146 7,871 (163) (4,018) - 7,836
-------- -------- ---------- ----------- ------------- --------
Depreciation and
depletion 2,914 2,774 46 64 - 5,798
Finance income (28) (37) - (136) - (201)
Finance cost 48 159 - 541 - 748
Operating profit/(loss) 1,182 5,095 (184) 161 - 6,254
-------- -------- ---------- ----------- ------------- --------
Capital expenditures 3,341 42,062 233 449 - 46,085
-------- -------- ---------- ----------- ------------- --------
Total assets 232,677 352,075 3,945 149,068 - 737,765
-------- -------- ---------- ----------- ------------- --------
Unallocated category represents costs of corporate companies
that are managed at the Group level.
Management assesses performance of the operating segments based
on EBITDA (Earnings before interest, tax, depreciation and
depletion and exploration expenses) which is calculated as
operating result plus depletion and depreciation, exploration and
evaluation expenses.
Net back is defined as revenue less direct and indirect
government taxation. The indicator calculated as revenue less
Mineral Extraction Tax, Export Duty and Transneft transportation
services.
Reconciliation of operating profit/(loss) to EBITDA for the six
months ended 30 June 2012 is presented below:
Exillon Exillon Regional Unallocated Intersegment Total
TP WS Resources eliminations
------- --------- ------- ---------- ----------- ------------- -------
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Operating profit/(loss) (243) 12,492 103 (10,845) - 1,507
Depreciation
and depletion 3,100 5,004 60 78 - 8,242
Foreign exchange
loss/(gain) - (242) 4 280 - 42
Share based
payment charge - - - - 5,698 - 5,698
EBITDA 2,857 17,254 167 (4,789) - 15,489
------- --------- ------- ---------- ----------- ------------- -------
Reconciliation of operating profit/(loss) to EBITDA for the six
months ended 30 June 2011 (as restated) is presented below:
Exillon Exillon Regional Unallocated Intersegment Total
TP WS Resources eliminations
------- ------- ---------- ----------- ------------- -------
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Operating profit/(loss) 1,232 5,097 (209) (4,082) - 2,038
Depreciation
and depletion 2,914 2,774 46 64 - 5,798
------- ------- ---------- ----------- ------------- -------
EBITDA 4,146 7,871 (163) (4,018) - 7,836
------- ------- ---------- ----------- ------------- -------
7. revenue
Six months ended 30 June
--------------------------
2012 2011
------------ ------------
US$'000 US$'000
Export sales 83,880 52,478
Domestic sales 56,080 35,960
139,960 88,438
============ ============
8. cost of sales
Six months ended 30 June
--------------------------
2012 2011
------------ ------------
US$'000 US$'000
Minerals extraction tax 44,955 28,124
Depreciation and depletion 8,074 5,655
Salary and related taxes 2,963 2,145
Taxes other than income tax 2,769 681
Current repair of property, plant
and equipment 2,239 1,347
Licence maintenance cost 2,115 297
Materials 1,649 1,505
Rent 625 421
Oil treatment and in-field transportation 485 1,932
Unused vacation accrual 127 -
66,001 42,107
Change in crude oil inventory 445 (966)
------------ ------------
66,446 41,141
============ ============
9. selling expenses
Six months ended 30 June
--------------------------
2011 2011
------------ ------------
US$'000 US$'000
Export duties 44,078 27,478
Transportation services - Transneft 6,407 4,165
Transportation services - trucking
to Transneft 4,430 3,939
Other expenses 781 873
55,696 36,455
============ ============
10. administrative expenses
Six months ended 30 June
--------------------------
Note 2012 2011
------------ ------------
US$'000 US$'000
Salary and related taxes 6,433 4,415
Share based payment charge 21 5,698 438
Business travel 1,121 1,094
Consulting services 879 962
Rent 641 337
Communication services 217 185
Depreciation and amortisation 171 143
Accounting fees 102 73
Insurance 95 123
Unused vacation accrual 92 -
Bank services 92 101
Secretarial services 25 5
Share issuance costs - 195
Fines and penalties - 3
Other expenses 818 581
16,384 8,655
============ ============
11. Other income, net
Six months ended 30 June
--------------------------
2012 2011
------------ ------------
US$'000 US$'000
Foreign exchange (loss)/gain (42) 4,654
Other income/(expense) 114 (587)
72 4,067
============ ============
12. earnings per share
Basic earnings per share ("EPS") is calculated by dividing net
profit for the period attributable to owners of the Parent by
weighted average number of ordinary shares outstanding during the
period.
The following reflects the income and adjusted share data used
in the EPS computations:
Six months ended 30 June
--------------------------
2012 2011
------------ ------------
US$'000 US$'000
(Loss)/profit attributable to
owners of the Parent (1,737) 5,873
Number of shares:
Weighted average number of ordinary
shares 157,865,654 142,231,018
Adjustments for:
- IPO share awards 3,645,257 393,340
------------ ------------
Weighted average number of ordinary
shares for diluted earnings per
share 161,510,911 142,624,358
Basic ($) (0.01) 0.04
Diluted ($) (0.01) 0.04
============ ============
13. Property, plant and equipment
Oil and Exploration Buildings Machinery, Construction Total
gas properties and evaluation and construction equipment, in progress
assets transport
and other
--------------- --------------- ----------------- ----------- ------------ --------
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
31 December 2011 437,316 6,361 10,396 41,149 50,518 545,740
--------------- --------------- ----------------- ----------- ------------ --------
Additions 4,990 117 - 340 43,559 49,006
Transferred from
construction
in progress 42,574 - 288 3,005 (45,867) -
Disposals - - - (289) - (289)
Translation difference (10,262) (125) (361) (1,058) (2,230) (14,036)
--------------- --------------- ----------------- ----------- ------------ --------
30 June 2012 (unaudited) 474,618 6,353 10,323 43,147 45,980 580,421
--------------- --------------- ----------------- ----------- ------------ --------
Accumulated depreciation
31 December 2011 (15,928) - (1,409) (4,980) - (22,317)
--------------- --------------- ----------------- ----------- ------------ --------
Charge for the period (5,650) - (363) (2,229) - (8,242)
Disposals - - - 133 - 133
Translation difference 1,060 - 52 227 1,339
30 June 2012 (unaudited) (20,518) - (1,720) (6,849) - (29,087)
--------------- --------------- ----------------- ----------- ------------ --------
Net book value
--------------- --------------- ----------------- ----------- ------------ --------
31 December 2011 421,388 6,361 8,987 36,169 50,518 523,423
--------------- --------------- ----------------- ----------- ------------ --------
30 June 2012 (unaudited) 454,100 6,353 8,603 36,298 45,980 551,334
--------------- --------------- ----------------- ----------- ------------ --------
Decommissioning costs of US$3,514 thousand and US$3,747 thousand
were included within oil and gas properties as of 30 June 2012 and
31 December 2011, respectively.
Cumulative capitalized borrowing costs of US$7,331thousand and
US$4,432 thousand were included within oil and gas properties as of
30 June 2012 and 31 December 2011, respectively. Total borrowing
costs incurred during the six months ended 30 June 2012 period
amounted to US$3,079thousand and were capitalized in full.
Exploration and evaluation assets as of 30 June 2012 and 31
December 2011 comprise the ETP VI licence acquired in February 2010
and the ETP VII licence acquired in December 2011. Construction in
progress relates to the construction of in-field infrastructure and
drilling of oil wells commenced in 2011.
14. Inventories
As at
-------------------------
30 June 2012 31 December
2011
------------ -----------
US$'000 US$'000
Crude oil 1,831 1,141
Spare parts 2,179 1,222
Fuel 406 273
Chemicals 407 187
4,823 2,823
============ ===========
15. trade and other receivables
As at
-------------------------
30 June 2012 31 December
2011
------------ -----------
US$'000 US$'000
Trade receivables 650 1,912
Allowance for doubtful debts (138) (141)
------------ -----------
Net trade receivables 512 1,771
Taxes recoverable 12,930 9,779
Other receivables 2,178 2,136
Current trade and other receivables 15,620 13,686
============ ===========
In determining the recoverability of a trade receivable, the
Group considers any change in the credit quality of the trade
receivable from the date credit was initially granted up to the
reporting date. The concentration of credit risk is limited due to
the customer base. Accordingly, the management of the Group
believes that there is no further credit provision required in
excess of the allowance for doubtful debts.
16. other assets
As at
-------------------------
30 June 2012 31 December
2011
------------ -----------
US$'000 US$'000
Eurobonds - 13,561
Prepayments 489 2,200
Prepaid expenses 744 790
Other 82 97
------------ -----------
Current other assets 1,315 16,648
============ ===========
On 6 May 2011, the Group purchased Eurobonds issued by EBRD for
the total consideration of $15,399 thousand. The financial
instruments were denominated in RUR with the fixed interest rate of
6% and matured in February 2012 (Note 21).
17. provision for decommissioning
As at
30 June 2012 31 December
2011
US$'000 US$'000
Balance at the beginning of the
period 5,153 3,949
Additions 112 2,553
Change in estimates 1,159 (1,469)
Unwinding of the present value
discount 258 390
Translation difference (140) (270)
Balance at the end of the period 6,542 5,153
In accordance with the licence agreements the Group is liable
for site restoration, clean up and abandonment of the wells upon
completion of their production cycle. The provision for future site
restoration relates to obligations to restore the oilfields after
use. All of these costs are expected to be incurred at the end of
the life of wells after 2027. They depend on the estimated lives of
the wells, the scale of any possible contamination and the timing
and extent of corrective actions.
The unwinding of the discount related to future site restoration
and abandonment reserve is included within finance costs. The
management believes that this estimate of the future liability is
appropriate to the size of the fields.
18. trade and other payables
As at
-------------------------
30 June 2012 31 December
2011
------------ -----------
US$'000 US$'000
Trade payables 15,342 13,633
Advances received 1,028 7,329
Purchase of well - 719
Salary payable 516 1,115
Other payables 967 -
------------ -----------
Current trade and other payables 17,853 22,796
============ ===========
19. borrowings
As at
-------------------------
30 June 2012 31 December
2011
------------ -----------
US$'000 US$'000
Credit Suisse 100,234 49,038
Less: current portion (234) (3,271)
Long-term portion 100,000 45,767
============ ===========
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 US$50 million with a term of 3.5 years. Interest was
charged at LIBOR plus 7%.
The first repayment of principal was made in January 2012 in
compliance with the repayment schedule.
In March 2012 the existing loan facility was replaced by a
US$100 million loan facility with a term of 5 years. The loan bears
an interest rate at LIBOR plus 6% and is repayable in equal
quarterly instalments beginning from March 2014. The interest is
payable quarterly with the first payment made in June 2012.
Unamortised borrowing costs of US$1,514 thousand incurred in
relation to the previous loan facility of $50 million were written
off to the statement of comprehensive income in March 2012.
Borrowing costs of US$2,160 thousand directly attributable to
the extension of loan facility were immediately recognised in the
statement of comprehensive income.
The loan is secured by a pledge of the 100% shares of certain
Group's subsidiaries (Note 24): Exillon TP, Exillon WS, Regional
Resources LLC, Ucatex Oil LLC, Kayumneft CJSC, Nem Oil CJSC, Komi
Resources CJSC, Actionbrook Limited, Claybrook Limited,
Diamondbridge Limited, Lanarch Limited, Halescope Limited,
Vitalaction Limited, Corewell Limited, Touchskope Limited, Silo
Holdings Limited and Exillon Finance Limited.
The loan is also secured with future revenue under export
contracts and cash balances from a bank account opened in CJSC Bank
Credit Suisse (Moscow).
20. Share capital
The amount of share capital available for issue at the date of
these consolidated financial statements and the issued share
capital of the Company are as follows:
Number Share capital Share Premium
(allotted and called
up)
--------------------- ------------- -------------
US$'000 US$'000
As at 31 December
2010 138,072,911 1 126,034
Issuance of shares 23,438,000 - 146,082
As at 31 December
2011 161,510,911 1 272,116
Issuance of shares - - -
As at 30 June 2012 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 US$0.0000125 each at
GBP4 for total proceeds of GBP93,752 thousand or US$153,406
thousand. Costs related to the issuance of new shares taken against
share premium amounted to US$7,324thousand.
21. Share-based payment
During the year ended 31 December 2011 3,137,401 share awards
were granted to the new senior managers out of the Employee Share
Plan, of which 115,377 share awards subject to non-market
conditions relating to the satisfactory performance of the duties
and a three year vesting period and 3,022,024 share awards are not
performance-related but subject to the completion of three year's
service with any dealings prohibited during that period.
As part of a redundancy programme in January 2012 early vesting
was granted in respect of 138,826 restricted share granted out of
the IPO plan and 353,340 shares granted out of the Employee Share
Plan; additionally 123,012 shares granted out of the Employee Share
Plan were forfeited.
Movements in the number of share awards outstanding are as
follows:
As at
-------------------------
30 June 2012 31 December
2011
------------ -----------
At the beginning of the period 3,948,137 810,736
Granted - 3,137,401
Vested (492,166) -
Forfeited (123,010) -
At the end of the period 3,332,961 3,948,137
============ ===========
As of 30 June 2012 and 31 December 2011 there were no
exercisable share awards.
Share awards outstanding at the end of the period have the
following expiry dates:
As at
-------------------------
30 June 2012 31 December
2011
------------ -----------
December 2012 369,030 507,856
June 2013 302,880 302,880
June 2014 123,010 369,030
July 2014 2,538,041 2,768,371
3,332,961 3,948,137
============ ===========
The total expense arising from share-based payment transactions
recognised for the six months ended 30 June 2012 amounted to
US$5,698 thousand (2011: US$438 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 2011.
Major categories of financial instruments - On 6 May 2011, the
Group purchased Eurobonds issued by EBRD for the total
consideration of US$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%.
These financial assets were measured at amortised cost using the
effective interest method with interest income recognised by
applying the effective interest rate.
The Group received proceeds of US$14,313 thousand comprising the
nominal value and accrued interest in relation to the maturity of
Eurobonds on 14 February 2012.
The difference between the consideration paid and the receipt
relates to the foreign exchange loss arising on the revaluation of
foreign currency denominated bonds at the maturity date.
Cash is placed in financial institutions which are considered to
have minimal risk of default in compliance with independent rating
agencies and held mainly on short-term deposits and VTB
credit-linked deposits.
As at
-------------------------
Note 30 June 31 December
2012 2011
-------- --------------
US$'000 US$'000
Financial assets
Cash and cash equivalents 138,507 117,567
Eurobonds 16 - 13,561
Trade and other receivables 15 2,690 3,907
Total financial assets 141,197 135,035
======== ==========
Financial liabilities
Trade and other payables 18 16,825 15,467
Borrowings 19 100,234 49,038
-------- ----------
Total financial liabilities 117,059 64,505
======== ==========
23. COMMITMENTS and contingencies
Capital commitments - The Group has capital commitments
outstanding against major contracts:
As at
-------------------------
Nature of contract: 30 June 2012 31 December
2011
------------ -----------
US$'000 US$'000
Road construction 390 320
Well construction 13,488 19,090
Oil reserves development work 1,356 5,341
Pipeline construction 626 18
Other 43 118
Total 15,903 24,887
============ ===========
Leases - the Group leases three wells and associated land plots
from government agencies in the Russian Federation. The initial
terms on all leases has expired as at 31 December 2011. During the
six months ended 30 June 2012 two lease contracts out of three were
extended till 2017 and 2038, respectively. The extension of the
contract for the third well is currently under negotiation. The
lease terms allow for continued lease renewal after expiry of the
initial term. In continuing to use these wells, the Group relies on
Article 621(2) of the Civil Code of the Russian Federation, which
states that such leases are renewed for an indefinite term if the
tenant continues to use the property after the term of the lease
has expired in the absence of objections from the lessor, although
either party is entitled to terminate the lease upon three months'
notice. The Group believes that the Russian authorities are
unlikely to exercise this termination right as the Group has the
exclusive right to extract the oil resources underlying the wells
and continues to make lease payments.
24. TRANSACTIONS WITH RELATED PARTIES
For the purposes of the financial statements, parties are
considered to be related if one party has the ability to control
the other party, is under common control, or can exercise
significant influence over the other party in making financial and
operational decisions. In considering each possible related party
relationship, attention is directed to the substance of the
relationship, not merely the legal form.
The Group had no outstanding balances with related parties as of
30 June 2012 and 31 December 2011.
Transactions with related parties during the period were as
follows:
Six months ended 30 June
---------------------------
2012 2011
------------- ------------
US$'000 US$'000
Key Management personnel:
Interest-free loan repaid - 254
Compensation of key management personnel - Key management
personnel consist of independent non-executive directors, executive
directors, directors and presidents of operational subsidiaries.
Compensation of key management personnel is set by senior
executives of the Group. Compensation of key management includes
salary, other short-term benefits and share-based payments. Total
compensation to key management personnel included in administrative
expenses in the consolidated statement of comprehensive income was
US$8,095 thousand for the six months ended 30 June 2012 (2011:
US$2,140 thousand).
25. controlled entities
Ownership/ proportion
of ordinary shares
as at
------------------------
Country of 30 June 31 December
Name incorporation Principal activity 2012 2011
-------------------- -------------------- ----------------------------- --------- -------------
Exploration, development
and production
Exillon TP Russian Federation of oil and gas 100% 100%
Exploration, development
and production
Exillon WS Russian Federation of oil and gas 100% 100%
Regional Resources
LLC Russian Federation Oil sales and marketing 100% 100%
Ucatex Oil LLC Russian Federation Subsoil user 100% 100%
Kayumneft CJSC Russian Federation Subsoil user 100% 100%
Nem Oil CJSC Russian Federation Subsoil user 100% 100%
Komi Resources
CJSC Russian Federation Administration 100% 100%
Ucatex Ugra LLC Russian Federation Subsoil user 100% 100%
Silo Holdings
LLC BVI Oil trading 100% 100%
Exillon Finance
LLC Isle of Man Treasury 100% 100%
Exillon Middle
East LLC UAE Services and administration - 49%
On 8 May 2012 the Company sold its ownership shares in Exillon
Middle East LLC to a third party with an insignificant gain.
[1] The Company records production in metric tonnes.
Barrelization ratios are used for illustrative purposes only and
are calculated based on the Company's estimate of the typical API
of oil produced from specific fields. The barrelization ratios used
are 7.67 bbl / tonne for Exillon WS and 7.44 bbl / tonne for
Exillon TP.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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