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KUWAIT ENERGY PLC
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
For the nine month period ended 30 September 2017
13
7.
PROPERTY PLANT AND EQUIPMENT
Other fixed assets include a carrying amount of US$ 6.2 million (31 December 2016: US$ 6.8 million) in respect of assets
held under finance leases.
The additions to oil and gas assets mainly relate to Siba and Block 9 in Iraq, and include US$ 12.8 million (31 December
2016: US$ 17.0 million) of finance costs on qualifying assets capitalised during the period and US$ 2.8 million (31
December 2016: US$ 2.4 million) of fair value loss on convertible loans capitalised.
The Group has undertaken a review of the recoverable amount of its assets in accordance with IAS 36
Impairment of
assets,
primarily because the increase in commercial reserve of certain impaired assets represents an indicator of
reversal of impairment recognised in prior periods. Based on this review, the Group has reversed impairment of US$29.9
million recognised in prior periods on the Siba field in Iraq. The recoverable amount of Siba field based on a value in use
basis calculation is US$260.9 million.
During the period ended 30 September 2017, the Group recognised an impairment loss of US$33.8 million on the
Mansuriya field in Iraq. Due to security situation at Mansuriya field which is situated north-west Baghdad, development
activity has been delayed and no activity in the field has been possible since mid-2014. Now, this has resulted in
insufficient time remaining before the expiry of the contract to make the development economically attractive for the
partners of the field under existing terms of the contract, and/or an extension to its duration, before committing to the
development. Therefore, the Group’s reserve at Mansuriya have been re-classified as contingent resources at 30
September 2017. As there are currently no proved plus probable reserve assigned to Mansuriya, the net present value
of the reserve has been assigned a nil valuation, and the net book value of the asset has been impaired in full. The Group
has recognised net impairment loss of US$3.9 million including US$33.8 million impairment loss on Mansuriya field and
US$29.9 million impairment reversal on Siba field in Iraq, in the consolidated income statement.
Oil and
gas assets
Other fixed
assets
Total
Cost
US$ 000’s
US$ 000’s
US$ 000’s
As at 1 January 2016
1,067,280
23,661
1,090,941
Additions
160,957
142
161,099
Disposal
-
(622)
(622)
Transfer from Intangible exploration and evaluation assets
1,485
-
1,485
Transfer to assets held for sale
(194,962)
(103)
(195,065)
As at 31 December 2016
1,034,760
23,078
1,057,838
Additions
78,880
22
78,902
Disposal
-
(47)
(47)
Transfer from Intangible exploration and evaluation assets
1,785
-
1,785
As at 30 September 2017
1,115,425
23,053
1,138,478
Accumulated Depreciation, depletion, amortisation and impairment
As at 1 January 2016
459,657
9,713
469,370
Charge for the year
60,257
2,137
62,394
Impairment
94,337
-
94,337
Disposal
-
(562)
(562)
Transfer to assets held for sale
(77,070)
-
(77,070)
As at 31 December 2016
537,181
11,288
548,469
Charge for the period
41,898
1,329
43,227
Impairment
33,825
-
33,825
Impairment reversal
(29,949)
-
(29,949)
Disposal
-
(47)
(47)
As at 30 September 2017
582,955
12,570
595,525
Carrying amount
As at 30 September 2017
532,470
10,483
542,953
As at 31 December 2016
497,579
11,790
509,369