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KUWAIT ENERGY PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2016
35
14.
INVESTMENT IN JOINT VENTURE
The Group owns a 20% equity interest in Medco L.L.C. (“Medco”), a jointly controlled entity incorporated in Oman.
Medco is the operator of the Karim Small fields (KSF) in Oman and has a 75% working interest in production. In
accordance with IFRS 11 Joint Arrangements, the Group has determined its interest in Medco to be a Joint Venture and
accordingly accounts for it using the equity method.
On 28 April 2015, Medco signed a new 25 year service contract for KSF, commencing from 1 June 2015. The Group has
provided a bank guarantee of US$ 4.0 million (30 June 2015 and 31 December 2015: US$ 7.5 million) to perform work
obligations under the new service contract (see note 18).
Movement in investment in Joint Venture
30 June 31 December
2016
2015
Audited
Audited
US$ 000’s
US$ 000’s
At 1 January
5,528
8,138
Additional investment during the period
-
945
Share of profit of Medco
(628)
445
Dividend received from Medco
(2,000)
(4,000)
At end of the period
2,900
5,528
15.
OTHER NON-CURRENT ASSETS
30 June
31 December
2016
2015
Audited
Audited
US$ 000’s
US$ 000’s
Decommissioning fund
4,918
4,841
Advance to contractors
-
17,913
4,918
22,754
Decommissioning fund is amount held in an escrow account to settle environmental restoration obligation at Block 5
in Yemen.
During 2015 an advance of US$17.9 million was made to a contractor. In 2016, the related work has been completed
and this has been capitalised to oil & gas assets.
16.
INVENTORIES
30 June 31 December
2016
2015
Audited
Audited
US$ 000’s
US$ 000’s
Crude oil
1,588
1,640
Spare parts, materials and supplies
24,180
22,771
25,768
24,411
Crude oil is measured at net realisable value. Spare parts, materials and supplies are used in operations and are not
held for re-sale.