KUWAIT ENERGY plc GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2013
F-73
31.
CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
a) Ukrnafta dispute
The Joint Activity Agreement # 410/95 as amended (JAA) governed the joint exploration and development of
the Rudivsky-Chervonozavodsky gas condensate field in Ukraine (the RC Field) by Carpatsky Petroleum
Corporation (CPC), a subsidiary undertaking of Kuwait Energy, and Ukrnafta OJSC (Ukrnafta).
In September 2007, CPC commenced arbitration proceedings against Ukrnafta for various breaches of the JAA
including Ukrnafta’s refusal to permit CPC to make additional investments in the JAA in violation of the
provisions of the JAA permitting CPC to make such investments, in order to restore its investment in the RC
Field from approximately 14.91% back to the 50% level envisaged by the JAA.
The arbitration tribunal issued its decision on 24 September 2010 awarding CPC damages in the amount of
USD145.7 million plus post-award interest plus costs of approximately USD1.2 million, and declared the JAA
terminated by reason of Ukrnafta’ s breach. This decision was confirmed by an arbitration tribunal on 16
November 2010. CPC is still diligently pursuing collection of the award but has not yet recognised it in the
financial statements as recovery efforts are ongoing.
Since CPC’s interest in the RC field was terminated by the tribunal the Group had re-classified all the related
historical assets and liabilities of USD 12.5 million into ‘other receivables’. During the year this amount has
been written off within discontinued operations as no amounts have been received to date.
2013
2012
USD 000’s
USD 000’s
b) Other contingent liabilities - letters of guarantee
1,628
2,423
c) Capital commitments (other than covered by
letters of guarantee)
116,400
114,200
d) Agreement to purchase shares
The Chief Operating Officer (COO)of the Group has entered into an agreement with a third party on behalf of
the Group to purchase a specified number of shares of the Group held by that third party. Depending on the
outcome of certain future events, and unless otherwise agreed, the Group may be required to lend the COO the
purchase price of the shares, approximately USD 11 Million, until such time as the COO is able to sell the
shares and repay the loan to the company.
32.
SUBSEQUENT EVENTS
Subsequent to the year end, the Group received an amendment to the loan agreement from Arab Bank, which puts
the Group in compliance with the financial covenants as further explained in Note 22. Accordingly, during 2014
the loan is repayable as per the original repayment schedule mentioned in the loan agreement. Subsequent to the
year end the Group has signed a sale purchase agreement for sale of the Ukraine assets outlined in note 14 and has
to date received USD 4.5 Million against the sale price of USD 5 Million.
33.
PROPOSED DIVIDENDS
The Board of directors proposed to distribute nil dividends per share for 2013 (2012: nil). This proposal is subject
to the approval of the Annual General Assembly. During 2011 the dividend declared by the Group amounted to
USD 23,063 thousand and was paid during the year 2012.
