17 / 19
KUWAIT ENERGY PLC
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
For the six month period ended 30 June 2017
16
10.
ASSETS HELD FOR SALE
Siba farm-out
In May 2017 the Group has completed a farm-out transaction relating to its interest in the Iraq Siba area gas
development and production service contract. Under the terms of the farm-out agreement, which has an effective
date of 1 January 2016, the farmee has been assigned a 20% paying and 15% revenue interest in Siba and the Group
retains a 40% paying and 30% revenue interest. The farmee has settled a part of the consideration in cash, and part of
the consideration will be settled by paying the Group’s share of costs of a major related contract. The balance owed
to the group after settlement of this contract will be received from the farmee’s allocation of revenue once production
commences from this field. The current portion of deferred consideration is included in other receivables and the fair
value of the non-current portion was calculated by discounting expected receipts based on management’s best
estimate of timing and is included in other non-current assets.
Abu Sennan farm-out
In December 2016 the Group signed a farm-out agreement to assign a 25% interest in Abu Sennan in Egypt with an
effective date of 31 December 2016. Under the terms of the farm-out agreement the Group has received an advance
of US$ 12.0 million. Following the completion of pre-emption and government approvals, the Group will have a 25%
revenue interest and a 53% cost interest in Abu Sennan. In September 2017, the Group has completed the Abu Sennan
farm-out transaction (note 14).
The assets and liabilities held for sale are carried at fair value less costs to sell of the sales consideration for each farm-
out. During the period ended 30 June 2017, a loss of US$1.9 million on assets held for sale was recognised in the
consolidated income statement, relating to the period between the effective date and completion.
The major classes of assets and liabilities comprising the assets classified as held for sale:
30 June
31 December
2017
2016
Unaudited
Audited
US$ 000’s
US$ 000’s
Intangible exploration and evaluation assets
5,989
5,989
Property, plant and equipment
15,361
117,995
Inventories
1,623
1,493
Trade and other receivables
322
282
Cash and cash equivalents
70
385
Total assets classified as held for sale
23,365
126,144
Trade and other payables
2,983
22,462
Total liabilities directly associated with assets classified as held for sale
2,983
22,462
Net assets of disposal groups
20,382
103,682