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KUWAIT ENERGY plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2014
43
17.
PROPERTY PLANT AND EQUIPMENT (CONTINUED)
6 months ended 30 June 2014
The additions to oil and gas assets include USD 3,268 thousand of finance costs on qualifying assets capitalised during
the period using a weighted average interest rate of 6.62% and USD 1,882 thousand of fair value loss on convertible
loans capitalised (six months ended 30 June 2013: USD 1,792 thousand and USD 1,840 thousand respectively).
The property, plant and equipment of certain subsidiary undertakings with a net book value of USD 282,375 thousand
(30 June 2013: USD 199,107 thousand) are under registered mortgage to secure certain bank loans (see note 24).
In Yemen, the Group’s Block 5 license will expire on 8 June 2015, but as a result of lost production days due to the
security situation in Yemen, the Group is seeking to extend the Block 5 commitment period for 545 days (until 5
December 2016), utilising the force majeure mechanisms in the licence. Although discussions are ongoing with the
Yemeni government, the Group is still awaiting a final determination. If the Group is unable to obtain an extension of
the commitment period of the full 545 days from the Yemeni government, the Group will lose up to a year or more of
anticipated production from Block 5, and may also be required to surrender its license in respect of Block 5. This
would trigger an impairment charge on the value of its Jannah Hunt Oil Company Limited acquisition which, based on
prevailing oil prices at 30 June 2014, would have been up to approximately USD 60 million or, if based on prevailing
oil prices at 31 October 2014, would have been up to approximately USD 70 million. No such impairment charge has
been recorded as the Group believes its application for the additional 545 days is in accordance with the licence terms.
As at 30 June 2014 the Group had property, plant and equipment with a carrying value of USD 24.5 million in relation
to the Mansuriya field located in North East Iraq where, during the period ended 30 June 2014, the political and
security situation become unstable. The work of operations on site has been put on hold. However, management
believes that in the long term the situation will be resolved and that no impairment is required in the current period.
12 months ended 31 December 2013
The additions to oil and gas assets include USD 4,642 thousand of finance costs on qualifying assets capitalised during
the year using a weighted average interest rate of 6.62% and USD 3,612 thousand of fair value loss on convertible loans
capitalised.
During the year the company recognised an impairment loss on the block 5 and block 43 fields in Yemen amounting to
USD 1,541 thousand and 260 thousand respectively to match the carrying value of the assets to the recoverable value
measured on a value in use basis (see note 9).
The property, plant and equipment of certain subsidiary undertakings with a net book value of USD 280,069 thousand
are under registered mortgage to secure certain bank loans (see note 24).
12 months ended 31 December 2012
The additions to oil and gas assets include USD 2,320 thousand of finance costs on qualifying assets capitalised during
the year using a weighted average interest rate of 6.62% and USD 2,586 thousand of fair value loss on convertible loans
capitalised.
During the year, the Group incurred impairment losses on certain oil and gas properties of USD 30,862 thousand which
relate to operations classified as discontinued operations (see note 13).
The property, plant and equipment of the subsidiaries Kuwait Energy Egypt Ltd and Kuwait Energy Ukraine Limited,
with a net book of USD 337,808 thousand were under registered mortgage to secure certain bank loans (see note 24).
12 months ended 31 December 2011
The additions to oil and gas assets include USD 5,140 thousand of finance costs on qualifying assets capitalised during
the year using a weighted average interest rate of 6.62%.
The property, plant and equipment of the subsidiaries Kuwait Energy Egypt Ltd and Kuwait Energy Ukraine Limited,
with a net book value of USD 432,250 thousand were under registered mortgage to secure certain bank loans (see note
24).