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KUWAIT ENERGY PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2015
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13.
INTANGIBLE EXPLORATION AND EVAL
UATION (‘E&E’) ASSET
S
E&E assets
Cost
USD 000’s
At 1 January 2014
58,178
Additions
56,819
Exploration expenditure written off
(1,513)
Transfer to Property, plant and equipment (note 14)
(66,996)
At 31 December 2014
46,488
Additions
10,742
Exploration expenditure written off
(14,218)
Transfer to Property, plant and equipment (note 14)
(10,349)
At 31 December 2015
32,663
As at 31 December 2015, exploration costs of USD 32.7 million (2014: USD 46.4 million) were capitalised pending
further evaluation of whether or not the related oil and gas properties are commercially viable.
As at 31 December 2015, the Group held exploration costs of USD 20.9 million (2014: USD 19.6 million) related to
Block 49 in Yemen where in 2015 the political and security situation has become unstable. The work of operations on
site has been put on hold and force majeure has been declared on Block 49 during the year. There has been no incursion
at the site and control of assets has been maintained. Management have made a significant judgement to continue
capitalising the costs associated with Block 49. In making this judgement, management have considered the existence of
significant contingent resources certified
by the Group’s third party reservoir
engineer, Gaffney Cline & Associates, and
believes that the situation will be resolved so that the Group can continue its exploration and appraisal programme of the
resource discovered to date.
During 2015, exploration cost associated with proven commercial reserves amounting to USD 10.3 million relating to
Abu Sennan in Egypt (2014: USD 56.7 million relating to Block 9 in Iraq and USD 10.3 million relating to Burg El Arab
(BEA) and Abu Sennan in Egypt) were transferred to property, plant and equipment.
Unsuccessful exploration expenditure written off of USD 14.2 million includes USD 11.6 million relating to Block 82 in
Yemen, where the licence has been relinquished due to unsuccessful exploration activities. Further, the Company has
written off unsuccessful exploration expenditure amounting to USD 2.6 million related to Area A in Egypt. Unsuccessful
exploration expenditure written off during 2014 of USD 1.5 million was related to BEA in Egypt.
The additions to exploration and evaluation assets include USD nil (2014: USD 2.4 million) finance costs on qualifying
assets capitalised during the year (see note 9).
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