12
Ukraine. The Group is engaged in active negotiations in respect of the sale of its assets in Russia and expects to complete
the sale during the third quarter of 2014. In Latvia, after initial exploration efforts were unsuccessful, the Group and its
JV partner, PKN Orlen, have decided to relinquish its licence and are currently seeking to either sell their interests in the
licences or enter into discussions with the Latvian Ministry of Economy regarding the terms of exit. The Group’s
divestiture strategy has resulted in the Group exiting from certain jurisdictions in the past, for example from Indonesia in
2009 and from Ukraine in April 2014.
Manage financial risk through a prudent capital structure
The Group has been financially profitable and has generated positive operating cash flow since its inception. The Group
aims to continue to manage its financial risk by applying strict return criteria to new programmes and acquisitions, and
by maintaining a prudent capital structure and focusing a significant part of its operations on developed and producing
assets, and on undeveloped exploration and appraisal assets in reservoirs with a historical track record of cost-effective
hydrocarbon extraction. The Group also regularly monitors its financial liquidity to ensure that its operations are
adequately funded. The Group has therefore established controls and procedures to monitor its commitments, project
updates and budget in support of its exploration, appraisal and development programmes.
Recent Developments
Average daily working interest production for the six months ended 30 June 2014
For the six months
ended 30 June
2014
(boepd)
Location
Egypt
Abu Sennan ...........................................
619
Area A ...................................................
4,342
Burg El Arab .........................................
1,180
ERQ.......................................................
10,241
Egypt Total
.........................................................
16,382
Yemen
Block 5 .....................................................
3,793
Block 43 ...................................................
371
Yemen Total
..........................................................
4,164
Oman
Oman KSF
(1)
...........................................................
2,552
Group average daily working interest
production
.............................................................
23,098
(1)
Reflects the contribution of the Group’s 20% interest in Medco LLC, which holds a 75% working interest in the Karim Small Fields in
Oman. As the Group does not control Medco LLC, under IFRS 11 Medco LLC cannot be consolidated with the Group’s revenue or expense
items on its consolidated income statement. The Group’s interest in Medco LLC is therefore accounted for in the Group’s consolidated
income statement under “Net result from joint venture.”
Since 31 March 2014, the Group’s average daily working interest production has increased by over 1,000 boepd,
primarily due to the Shahd SE 8 development well in East Ras Qattara field in Egypt, which has contributed
approximately 1,850 boepd to the Group’s average daily working interest production since coming on production in May
2014. This increase has been partially offset by Yemen Block 5 shutdowns due to security-related disruptions in the main
export pipeline during May 2014 and in Block 43 in Yemen from 23 June to 4 July 2014 due to a labour strike. The
Group’s exit rate as at 30 June 2013 was 25,069 boepd.
