90
91
KUWAIT ENERGY plc AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
43
30.
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 diligently pursuing collection of the award but has not yet recognized it in the
financial statements as recovery proceedings are ongoing.
Since CPC’s interest in the RC field has been terminated by the tribunal, the Group has re
-classified all the
related historical assets and liabilities i
nto ‘other receivables (See note 16). The receivables from Ukrnafta
will be set off against the arbitration award upon receipt.
2011
2010
USD
000’s
USD
000’s
b) Other contingent liabilities - letters of guarantee
16,466
21,238
c) Capital commitments (other than covered by
letters of guarantee)
84,952
87,762
31.
SUBSEQUENT EVENTS
The Company has entered into a facility agreement with a financing vehicle of Abraaj Capital Limited (from
the United Arab Emirates) under which Abraaj will make available a convertible loan of up to USD150
Million. If not converted, the outstanding loan will become repayable in three equal tranches over one year
after the expiry of 5.5 years from signature The facility is subject to a number of conditions precedent,
including shareholder approval at the forthcoming Annual General Meeting.
32.
PROPOSED DIVIDENDS
The Board of Directors proposed to distribute cash dividends of Pounds Sterling 0.045 per share for 2011
(2010: 5 fils). This proposal is subject to the approval of the Annual General Meeting. During the year 2010
the dividend declared by the Group amounted to USD 23,086 thousand and was paid during the year 2011.
Kuwait Energy Plc And Subsidiaries
Notes To The Consolidated Financial Statements
For The Year Ended 31 December 2011
Glossary & Definitions
AGM:
Annual General Meeting of Shareholders
AAPG:
American Association of Petroleum Geologists
barrel:
The standard barrel of crude oil or other petroleum product contains 42 US gallons, or 35
Imperial gallons or 159 Liters
bbl:
Barrel
BOE/boe:
Barrels of oil equivalent; A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead
bcf:
Billion cubic feet
Board:
Board of Directors of the Company
bpd:
Barrels per day
bopd:
Barrels of oil per day
BOEPD/boepd:
Barrels oil equivalent per day
B.Sc:
Bachelor of Science
BA:
Bachelor of Art
CEO:
Chief Executive Officer
Company:
Kuwait Energy Company KSCC or Kuwait Energy
Cost Working
Interest:
The percentage interest of the company in the contract for an asset as agreed between the Joint
venture partners and the host government
Development Well: A well drilled within the proved or probable reserves area of an oil or gas reservoir to the depth
of a stratigraphic horizon known to be productive
Dry hole:
An unsuccessful well; a well not capable of producing commercial quantities of oil or gas
EBITDA:
Earnings Before Interest, Taxes, Depreciation and Amortization; An approximate measure of a
Company’s operating cash flow
Exploration
Expenditure:
All costs associated with drilling of exploratory wells and other costs incurred in evaluating
commercial viability of a geological structure
Exploratory well:
A hole drilled: a) to find and produce oil or gas in an area previously considered unproductive
area; b) to find a new reservoir in a known field, i.e., one previously producing oil and gas from
another reservoir, or c) to extend the limit of a known oil or gas reservoir
EIS:
Employee Incentive Scheme
Field:
The geographical area encompassing a group of one or more underground petroleum pools
sharing the same or related infrastructure
GCA:
Gaffney, Cline & Associates
HSESR:
Health, Safety, Environment and Social Responsibility
IFC:
International Finance Corporation
IPIMS:
International Petroleum Industry Multimedia System
kms:
Kilometres 1 km = 0.621 miles
KD:
Kuwaiti Dinar
KOC:
Kuwait Oil Company
KUFPEC:
Kuwait Foreign Petroleum Exploration Company
