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KUWAIT ENERGY PLC
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
Six months ended 30 June 2015
20
13.
CONVERTIBLE LOANS
30 June
31 December
2015
Unaudited
2014
Audited
USD 000’s
USD 000’s
Non-current portion
121,229
111,740
Current portion
1,740
6,089
122,969
117,829
Movement in convertible loan
As at 1 January
117,829
112,551
Change in fair value
9,794
13,747
Payment of coupon interest
(4,654)
(8,469)
As at end of the period
122,969
117,829
The change in fair value since the prior period arises as a result of changes in the forecasted cash flows, likelihood and
timing of an equity offering. Of this amount during the period ended 30 June 2015 USD 1,064 thousand (31 December
2014: USD 3,816 thousand) has been capitalised to qualifying assets in the period, resulting in a net charge to the
income statement of USD 8,730 thousand (31 December 2014: USD 9,931 thousand).
The convertible loans are classified as Level 3 in the fair value hierarchy in all the periods presented. Level 3 fair
value measurements are those derived from inputs that are not based on observable market data (unobservable inputs).
The group uses a discounted cash flow technique to determine the fair value of the loans. The significant inputs
considered in the valuation are likelihood and timing of an equity offering and the discount rate. The discount rate
used was in the range of 15-16%. Changing the likelihood and timing assumptions in the fair value measurement could
have a maximum impact of increasing the liability by USD 12,045 thousand or reducing the liability by USD 18,605
thousand.
14.
TRADE AND OTHER PAYABLES
30 June
31 December
2015
Unaudited
2014
Audited
USD 000’s
USD 000’s
Trade Payables
96,497
86,911
Advance against farm-out of working interest
43,190
-
Accruals and joint venture partners payables
10,981
31,150
Accrued interest payable
9,793
10,388
Salaries and bonus payables
1,070
5,204
161,531
133,653
During the period ended 30 June 2015, USD 43,190 thousand was received from Egyptian General Petroleum
Corporation (“EGPC”) as per a farm-out agreement to assign to EGPC a 10% working interest share in the Block 9
exploration, development and production service contract in Iraq, which has been accounted for as an advance against
farm-out of working interest (note 19).
15.
CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
As at 30 June 2015, the Group’s contingent liabilities relating to a letter of guarantee were USD 7,500 Thousand (31
December 2014: USD 500 thousand) and capital commitments, other than covered by letters of guarantee, were
USD 57,271 thousand (31 December 2014: USD 58,531 thousand). Capital commitments include committed
exploration drilling and seismic expenditures as specified in the licences.