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KUWAIT ENERGY PLC
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
For the nine month period ended 30 September 2017
14
7.
PROPERTY PLANT AND EQUIPMENT (CONTINUED)
In 2016, due to the reduction in the oil price assumption used in estimating the future cash flows, the Group recorded
an impairment loss of US$ 94.3 million, including US$ 54.5 million on the Siba fields in Iraq, US$ 7.2 million and US$
32.6 million on the BEA and Abu Sennan fields in Egypt respectively, which has been recognised in the consolidated
income statement in 2016.
The key assumptions and judgements used in the impairment test included the pre-tax discount rate of 11% for the
assets in Egypt, 12% for Block 9 and Siba assets in Iraq, 14% for assets in Yemen and Mansuriya field in Iraq in both the
periods presented and a Brent oil price of US$ 53.5/bbl in remaining period of 2017, US$ 57/bbl in 2018, US$ 67/bbl in
2019, US$ 72/bbl in 2020, US$ 75/bbl in 2021, inflated at 2.0% per annum thereafter (31 December 2016: US$ 55/bbl
in 2017, US$ 65/bbl in 2018, US$ 70/bbl in 2019, inflated at 2.0% per annum thereafter). The oil price assumptions are
the Group’s best estimate based on conditions prevailing at the consolidated balance sheet date and take into
consideration external forecasts.
A request for arbitration was filed against the Group (pursuant to the ICC Rules of Arbitration) in 2016 under which the
claimant asserted that it has a right to an increased non-controlling share in one of the Group’s key oil and gas assets
(the “Disputed Interest”). The claimant has requested equitable relief in the form of a conveyance of the Disputed
Interest from the Group to the claimant or, alternatively, a cash amount on account of profits or damages. If the
claimant is successful in its claim, the Group could be required to pay damages in this amount or could be required to
transfer the Disputed Interest to the claimant. No amounts have been accrued regarding this claim as the Group
believes that on the basis of external legal advice its position will be vindicated by the arbitral tribunal following a full
review of the facts and evidence, and is firmly committed to vigorously defending the claim.
8.
TRADE AND OTHER RECEIVABLES
30 September 31 December
2017
2016
Unaudited
Audited
US$ 000’s
US$ 000’s
Trade receivables
108,131
77,836
Other receivables
24,493
5,244
Advance due from joint venture partners
8,291
6,429
Prepayments, deposits and advances
1,801
3,025
Amount due from a related party
3,307
2,449
146,023
94,983
Trade receivables includes US$ 27.3 million (31 December 2016: US$ 19.7 million) arising in Iraq, to be settled by having
physical delivery of crude oil that will be sold under the crude oil prepayment agreement.
The increase in other receivables was due to the current portion of deferred consideration of the Siba farm-out.
The Group’s trade receivables includes US$ 40.4 million (31 December 2016: US$ 24.0 million) arising in Egypt which
is past due at the reporting date and for which the Group has not made any provision as there has not been a significant
change in credit quality and the amounts are still considered recoverable.
Ageing of past due but not impaired
30 September
31 December
2017
2016
Unaudited
Audited
US$ 000’s
US$ 000’s
61 – 90 days
12,689
14,729
91 – 120 days
14,255
2,371
121 – 180 days
10,334
6,903
> 180 days
3,120
-
Total
40,398
24,003