TIDMCASP
RNS Number : 4429N
Caspian Sunrise plc
25 September 2023
Caspian Sunrise PLC ("Caspian Sunrise," " the Group" or the
"Company")
Interim results for the six months ended 30 June 2023
Highlights
Operational
-- Aggregate production in the period 351,620 bbls (2022: 414,048 bbls)
-- Post period end production 1,953 bopd (2022: 2,264 bopd)**
-- First commercial drilling contract for the Caspian Explorer signed
Financial
-- Total revenue $17.3 million (2022: $25.6 million)
-- Revenue from oil production $12.5 million (2022: $24.4 million)
-- Revenue from sales trading $3.8 million (2022: $ nil)
-- Revenue from drilling activities $1.0 million (2022: $1.2 million)
-- Gross Profit $12.4 million (2022: $18.9 million)
-- Operating profit $8.1 million (2022: $10.3 million)
-- Profit before tax $7.9 million (2022: $10.0 million)
-- Profit after tax $7.5 million (2022: $7.3 million)
-- Net current liabilities $24.6 million (2022: $13.1 million)
-- Cash $0.5 million (2022: $5.0 million)
-- Total assets $130.7 million (2022: $112.5 million)
-- Dividends paid in the period $3.0 million (2022: nil)
** based on production at end August 2023 & and end August 2022
Introduction
I am pleased to present the unaudited interim results for the
six months ended 30 June 2023.
Overview
The Group's principal activities are the exploration, production
and sale of oil from oilfields in the Mangistau Oblast in
Kazakhstan, which borders the north-east shore of the Caspian Sea.
Additionally, the Group provides onshore and offshore drilling
services to third parties.
The board believes the geological conditions present at Kashagan
and Tengiz oil fields, which are both world class discoveries and
valued in the billions of dollars, may extend to the Group's
flagship BNG contract area and further to the Block 8 contract
area, which the Group is in the process of acquiring.
If so, and in particular if the Group can achieve commercial
flow rates from the deep structures at these contract areas, there
should be very significant value in the Company's shares.
Operating in Kazakhstan
The sanctions imposed on Russia in March 2022, following its
invasion of Ukraine in February 2022, have had a material adverse
impact on the Group, even though the EU and UK sanctions
specifically exclude oil produced in Kazakhstan and shipped via the
Russian pipeline network.
As previously announced the ongoing large discount for oil
emerging from the Russian pipeline network and termed "Urals Oil"
taken together with Kazakh taxes on international sales still being
based on the full international price rather than the actual price
achieved means that for the period covered by this interim
statement it was uneconomic to sell on the international market.
Accordingly, all the oil produced in the period under review was
sold on either the domestic market or to local mini refineries at
prices currently approximately $50-$60 per barrel lower than
headline world prices.
Results
The impact of sanctions made operating conditions in the period
under review significantly tougher than in the corresponding
period. Inevitably therefore our financial performance, which is
set out in more detail in the financial review later in this
interim statement, shows a worse position than 12 months ago at
most measures of performance.
Nevertheless, with contributions from our new sales trading
operations and from our drilling services activities, despite a 32%
fall in headline revenues we are able to report a marginal increase
in profit after tax.
BNG Operational update
The BNG contract area is located approximately 40 km from Tengiz
and extends over 1,561 km2. The contract area has four identified
structures, two of which are shallow (MJF & South Yelemes) and
two of which are deep (Airshagyl and Yelemes Deep).
MJF structure
The vast majority of oil produced in recent years has been from
the MJF structure, which has a full production licence extending to
2043. In the period under review 303,322 barrels of the total
351,620 barrels produced, representing approximately 86% of the
total, came from the MJF structure.
This was a fall of approximately 25% from the corresponding
period as for large parts of the period under review previously
successful wells 141, 142 and 145 were not in production as the
result of increasing levels of water in these wells.
MJF workovers:
-- Following remedial work at Well 142 production levels briefly
returned to previous levels before the water in the well forced
another closure. We then started drilling a new 2,450 meter
side-track, which at the date of this report has reached 2,090
meters.
-- Once work at Well 142 is completed the intention is to
undertake a similar workover / side-track at Well 141.
-- The workover at Well 145 did not result in the improved
performance expected. If we cannot adequately control the
increasing water level there we plan to drill a new side-track to
restore the well to production.
New wells
-- Well 155, a new shallow well, is planned to spud in Q4 2023.
Production from the MJF structure is currently at the rate of
1,685 bopd.
South Yelemes
South Yelemes, which is the second shallow structure at the BNG
contract area, has a full production licence extending to 2046.
Oil has been produced from this structure since Soviet times and
in the period under review 48,671 bbls were produced, representing
approximately 14% of the total. This compares to only 3% for the
full year ended 31 December 2022 as for much of that year the South
Yelemes wells were shut in awaiting approval for the requested
licence upgrade.
Production from the South Yelemes structure is currently 268
bopd.
Rig mobilization for the planned horizontal well targeting
possible oil in the dolomites is scheduled for H2 2024.
Airshagyl
The Airshagyl structure extends over 58 km2. To date four wells
have been drilled to depths between 4,400 meters and 5,300 meters.
Deep Well A8 has been abandoned but we continue to work on Deep
Wells A5, A6 & A7.
Deep Well plans:
-- At Deep Well A5 we intend in Q4 2023 to drill a new side track
-- At Deep Well A6 our intention, also starting in Q4 2023, is
to repair the well's cementing before reperforating the well.
-- At Deep Well A7 our intention in Q1 2024 is to resume
drilling from the current depth of approximately 2,000 meters to
the original planned depth of 5,300 meters.
Yelemes Deep
The Yelemes Deep structure extends over 36 km2. To date two deep
wells, 801 and 802 have been drilled to depths between 4,000 and
4,868 meters with a third deep well planned to spud before the year
end.
Deep Well update
-- At Deep Well 801 we are working with external geologists to
determine the next course of action.
-- Deep Well 802 has a revised planned total depth of 4,200
meters. A coil tubing exercise was successfully completed, however
we have been struggling with a stuck pipe. Approximately 500 meters
of the stuck pipe has now been successfully removed from the well
leaving a further 3,400 meters still to be removed.
-- In Q4 2023 we intend to spud Deep Well 803, which is a
requirement under the current BNG work programme obligations and
which has a planned total depth of 4,350 meters.
3A Best
During the period under review there has been no material
progress at 3A Best.
Block 8
In September 2022 the Company acquired an option to buy the
Block 8 contract area for a maximum consideration of $60 million,
payable in cash from future production at Block 8 at the rate of $5
per barrel.
As the Block 8 contract area is owned by a member of the
Oraziman family, which holds 48.4% of the shares in Caspian
Sunrise, it constitutes a related party transaction.
Following an extended due diligence process the Independent
Directors, having consulted with WH Ireland, the Company's
nominated adviser, exercised the option to acquire 100% of the
shares of Procyon Investments Limited, the UAE registered holding
company of EPC Munai LLP, which is the Kazakh registered holder of
the licence for the Block 8 contract area.
Completion of the acquisition is now dependent inter alia on the
consents of the regulatory authorities in Kazakhstan and the UAE.
The Independent Directors being Clive Carver and Seokwoo Shin,
having consulted with the Company's nominated adviser, WH Ireland,
consider the terms of the transaction to be fair and reasonable
insofar as the Company's shareholders are concerned.
The Block 8 contract area extends over 2,823 km2 with three
identified structures and production from two existing wells. It
was previously owned by LG International the Korean conglomerate,
which in 2006 began the acquisition of 3D seismic data over
approximately 456 km2. In recent years two deep wells have been
drilled to depths of 4,203 meters and 3,449 meters respectively,
from which oil has flowed at rates of up to 800 bopd.
Current production from Block 8 is approximately 110 bopd, with
oil transported to the same treatment and pumping station used by
BNG.
Drilling at Deep Well AKD-4 has reached its planned total depth
of 3,922 meters and preparations are underway to test the well.
Drilling at Deep Well T-2D, which has a planned total depth of
3,500 meters, has reached 3,408 meters. After the remaining 92
meters are completed the well will be prepared for testing.
The acquisition of Block 8 will bring a second flagship asset
into the Group. Either BNG or Block 8 will then have the ability to
transform the value of the Group in the event of successful deep
drilling.
Caspian Explorer
In March 2023 we announced the first commercial drilling charter
for the Caspian Explorer to drill a well to a planned depth of
2,500 meters in the summer of 2024. The well is to be drilled for
the Isatay Operating Company LLP, in which Italy's ENI is a leading
participant.
Based on the terms agreed we expect an operating profit on the
contract of approximately $15 million, although the final amount
will depend principally on the time taken to drill the well.
In June 2023 we announced the conditional sale of 50% of
Prosperity Petroleum FZE, the UAE registered holding company for
the Caspian Explorer, for $22.5 million in cash. However, in July
2023 we updated the market that the agreed purchase consideration
had not been received and that the board was considering
alternative options.
Discussions continue regarding both additional commercial
charters and / or sale.
Financial review
Overview
For the first three months of the corresponding period, before
the impact of sanctions, we were able to sell the majority of oil
produced on the international market. In contrast, during the
period under review, all oil sales were to either the domestic
market or to domestic mini refineries.
As the price for oil sold on these domestic markets was less
than half the current international price the impact on these
results is clear to see. However, the impact of sanctions and lower
production volumes was mitigated by increased revenues from our new
sales trading activities, from revenues from our drilling services
division and by the significantly reduced tax and other deductions
attributable for oil sold on the domestic markets. The net result
being a small increase in profit after tax.
Revenue from oil sales
Revenue for the period under review for the sale of oil produced
at approximately $12.5 million was approximately 49% lower than in
the corresponding period (2022: $24.4 million). This is the result
of an approximate 14% fall in the volume of oil produced and an
approximate 43% fall in the average price excluding VAT at which
that oil was sold.
Production volumes
In the period under review 351,620 barrels of oil were produced
(2022: 414,048) at an average of 1,926 bopd (2022: 2,288 bopd).
Production from the MJF structure at 303,332 barrels was
approximately 25% lower than in 2022, principally because wells
141, 142 and 145 were awaiting remedial action and were either
totally or mostly out of production.
Production from South Yelemes at 48,671 bbls was many times
greater than in 2022, principally because for much of the
corresponding period production from South Yelemes wells was not
permitted while the South Yelemes licence upgrade application was
under consideration.
No oil was produced in either the period under review or the
corresponding period from either the Airshagyl or Yelemes Deep
structures.
Achieved prices
No oil was sold on the international market where prices were
typically $70 per barrel or better throughout the period under
review.
Approximately 48% of oil produced was sold on the domestic
market where prices averaged approximately $33 per barrel excluding
VAT. Approximately 52% of oil produced was sold to local mini
refineries at various prices resulting in the average price
achieved for all production in the period under review being
approximately $35 per barrel excluding VAT.
This compares to an average achieved price of approximately $61
per barrel excluding VAT in the corresponding period.
Sales trading
On 1 January 2023, following changes in the Kazakh regulations
regarding oil trading, it became possible for the first time for
the Group to trade our own oil. We estimate that our to date
limited entry into the local oil trading market added $3.8 million
to total revenue in the period under review.
Revenue from drilling services
During the period under review CTS the Group's wholly owned
drilling company undertook drilling work at the Block 8 contract
area, which as noted above the Group is in the process of
acquiring. As Block 8 is not yet owned by the Group the charges for
the drilling work at Block 8 are accounted for as revenue. In the
corresponding period CTS's work for third parties was approximately
$1.2 million.
There was no revenue from the Caspian Explorer in either the
period under review or the corresponding period.
Cost of sales and gross profit
In the period under review cost of sales fell by approximately
27% to approximately $4.9 million (2022: $6.7 million) with gross
profit for the period being $12.4 million (2022: $18.9 million) as
broken down by activity in the table below.
$'000 6 months ended 30 6 months ended 30 June
June 2023 2022
note Revenue Cost Gross Revenue Cost Gross
of profit of profit
sales sales
----- -------- ------- -------- -------- ------- --------
Oil production 12,464 2,666 9,798 24,385 3,962 20,423
----- -------- ------- -------- -------- ------- --------
Oil trading 2 3,798 671 3,127 nil nil nil
----- -------- ------- -------- -------- ------- --------
Drilling
Services 1 1,024 1,566 (542) 1,206 2,743 (1,537)
----- -------- ------- -------- -------- ------- --------
Total 17,286 4,903 12,383 25,591 6,705 18,886
----- -------- ------- -------- -------- ------- --------
Notes
1. Drilling services, including CTS and Caspian Explorer
2. Sales trading commenced 1 January 2023
Selling expenses
In the period under review, selling expenses fell by
approximately 59% from $6.9 million to approximately $2.8 million
largely as the result of the reduction in export duty charges.
Other administrative expenses
These are mostly general and administrative expenses, which fell
by approximately 13% to approximately GBP1.4 million (2022: $1.7
million).
Operating income
The result of the above is that operating income fell by
approximately 21% to approximately $8.1 million from $10.3
million.
Finance costs
Net finance costs were approximately $0.16 million (2022:
approximately $0.32 million).
Profit before tax
Profit before tax was approximately $7.9 million (2022:
approximately $10.0 million).
Tax charge
Tax in the period under review has been estimated at
approximately $0.4 million compared to $2.7 million in the
corresponding period, with the difference being principally the
impact of lower international sales and lower overall
profitability.
Profit after taxation
Profit after taxation was approximately $7.5 million (2022: $7.3
million).
Non-current assets
Non-current assets at approximately $121.1 million were
approximately $13.3 million greater than at the 2022 year end. This
was largely the result of an approximate $7.1 million increase in
proven oil and gas assets, approximately $2.4 million increase in
unproven oil and gas assets and an increase of approximately $3.8
million in long term recoverable VAT.
Net current liabilities
Net current liabilities at approximately $24.6 million were
approximately $8.6 million greater than at the 2022 year end ($13.1
million). The increase being principally additional trade and other
payables and additional short term borrowing.
Cash
Cash at the end of the period under review was approximately
$0.5 million compared to approximately $3.7 million at the 2022
year end. In September 2023, after the period end, the Group signed
a $5.0 million loan with a Kazakh bank, of which at the date of
this report approximately $3.4 million has been drawn.
Cashflows
Of the approximately $13.8 million received from customers
approximately $4.8 million was paid to suppliers and staff;
approximately $2.4 million was spent on additions to unproven oil
and gas assets; approximately $5.5 million was spent on proven oil
& gas assets; approximately $1.5 million was drawn on the Block
8 loan and approximately $3.0 million was paid in dividends.
The Group also received additional loans from the Oraziman
family of approximately $0.3 million under the existing framework
facility agreement.
The above resulted in an approximately $3.4 million decrease in
cash from $3.7 million at the 2022 year end to approximately $0.5
million at 30 June 2023.
Going concern
The financial statements for the year ended 31 December 2022,
which was published on 6 July 2023, set out why the Directors
continue to adopt the going concern approach to the preparation of
those financial statements. The Directors believe the same
considerations and conclusions apply to these interim financial
statements.
Board
Following the Annual General Meeting on 6 July 2023 Edmund
Limerick stepped down from the board after 13 years' service. The
board recognises the need to appoint additional non-executive
directors to comply with best corporate governance practice.
Dividends
There has been no change in the Company's position on dividend
payments, which are suspended until at least the end of the year at
which point the board will review the position based on the then
production and revenue levels.
Outlook
While the international oil price is strong and looks set to
remain so for the foreseeable future, we continue for Russian
sanctions related reasons to sell at domestic / local mini refinery
prices, which have changed little since the end of the period under
review.
We have not yet found a solution to close the huge price
differential between what we should receive and what we would
actually receive for international sales. We are however learning
to live with the sanctions related operational issues .
Short term
Our immediate focus is on increasing production, principally
from the MJF structure. We are also preparing for the Caspian
Explorer's first drilling charter commencing in Q3 2024 and working
to complete the acquisition of Block 8.
Longer term
We do not wish the current largely sanctions related
distractions to divert us from our principal purpose of seeking to
create long term shareholder value. We recognise the Group's longer
term value will depend for the most part on the reserves
attributable to the Group's assets, most notably from the deeper
structures. We therefore have and will continue to work to maximise
our reserves by seeking to bring those deep wells drilled into
production and by drilling additional deep wells at both BNG and
Block 8.
Events which are likely to have a significant positive impact
include:
-- The end of sanctions or a new international delivery route avoiding the price discount
-- Commercial production from one of the BNG deep wells
-- Commercial production from one of the Block 8 deep wells once acquired
-- A further commercial charter or outright sale for the Caspian Explorer
We look forward to updating shareholders with news of our
progress in the coming months.
Clive Carver
Non-executive chairman
25 September 2023
Comment
Clive Carver, Chairman said
"The impact of the ongoing Russian sanctions on the Group's
performance is clearly reflected in these results.
Nevertheless, with contributions from our new oil trading
operations and from our drilling services operations and despite a
32% fall in headline revenue, we are reporting a marginal increase
in profit after taxation."
Contacts:
Caspian Sunrise PLC
Clive Carver, Chairman +7 727 375 0202
WH Ireland, Nominated Adviser & Broker
James Joyce +44 (0) 207 220 1666
James Bavister
Andrew de Andrade
Qualified person
Mr. Assylbek Umbetov, a member Association of Petroleum
Engineers, has reviewed and approved the technical disclosures in
this announcement.
This announcement has been posted to:
www.caspiansunrise.com/investors
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT
Six months Six months
ended ended 30
30 June 2023 June 2022
Unaudited Unaudited
US$000s US$000s
Revenue 17,286 25,591
Cost of sales (4,903) (6,705)
---------------------- ------------- ----------
Gross Profit 12,383 18,886
Selling expense (2,826) (6,906)
Other administrative
expenses (1,449) (1,662)
---------------------- ------------- ----------
Operating Income 8,108 10,318
Finance cost (245) (330)
Finance income 81 10
Income before taxation 7,944 9,998
Taxation (436) (2,690)
------------------------------- ------ -------
Income after taxation 7,508 7,308
------------------------------- ------ -------
Income attributable to
owners of the parent 7,447 7,218
Income (Loss) attributable
to non-controlling interest 61 90
------------------------------- ------ -------
Income for the year 7,508 7,308
Earnings per share
Basic income per ordinary
share (US cents) 0.36 0.33
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Six months Six months
ended ended 30
30 June 2023 June 2022
Unaudited Unaudited
US$000s US$000s
Income (Loss) after taxation 7,447 7,218
------------------------------------- ------- ---------
Other comprehensive loss:
------------------------------------- ------- ---------
Items to be reclassified
to profit or loss in subsequent
periods
Exchange differences on
translating
foreign operations 968 (9,264)
------------------------------------- ------- ---------
Total comprehensive income
/ (loss) for the period 8,415 (1,956)
------------------------------------- ------- ---------
Total comprehensive loss
attributable to: Owners
of the parent 8,354 (2,046)
Non-controlling interest 61 90
------------------------------------- ------- ---------
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
For the six months ended 30 June 2023
Unaudited Share Cumulative Capital Merger Retained Total Non-controlling Total
capital translation contribution Reserve deficit interests equity
reserve reserve
---------------------
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------------- -------- ------------ ------------- --------- -------- ------- --------------- -------
At 1 January
2023 33,060 (66,521) (2,362) 11,511 84,872 60,560 (5,667) 54,893
--------------------- -------- ------------ ------------- --------- -------- ------- --------------- -------
Income after
taxation - - - - 7,447 7,447 61 7,508
Exchange
differences
on translating
foreign operations - 968 - - - 968 - 968
--------------------- -------- ------------ ------------- --------- -------- ------- --------------- -------
Total comprehensive
income for
the period - 968 - - 7,447 8,415 61 8,476
------------- --------- -------- ------- --------------- -------
Dividends
declared (2,442) (2,442) - (2,442)
------------- --------- -------- ------- --------------- -------
At 30 June
2023 33,060 (65,553) (2,362) 11,511 89,877 66,533 (5,606) 60,927
--------------------- -------- ------------ ------------- --------- -------- ------- --------------- -------
For the six months ended 30 June 2022
Unaudited Share Share Deferred Cumulative Capital Merger Retained Total Non-controlling Total
capital premium shares translation contribution Reserve deficit interests equity
reserve reserve
----------------
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------- ------- --------- -------- ----------- ------------ -------- ---------- --------- --------------- ---------
At 1 January
2022 31,118 164,817 64,702 (62,103) (2,362) 11,511 (156,239) 51,444 (5,801) 45,643
---------------- ------- --------- -------- ----------- ------------ -------- ---------- --------- --------------- ---------
Income after
taxation - - - - - - 7,218 7,218 90 7,308
Exchange
differences
on translating
foreign
operations - - - (9,264) - - - (9,264) - (9,264)
---------------- ------- --------- -------- ----------- ------------ -------- ---------- --------- --------------- ---------
Total
comprehensive
income for
the period - - - (9,264) - - 7,218 (2,046) 90 (1,956)
Shares issue
(debt to
equity)* 1,942 4,273 - - - - - 6,215 - 6,215
Share premium
and Deferred
Shares
reserves
cancellation** (169,090) (64,702) 233,792 - - -
---------------- ------- --------- -------- ----------- ------------ -------- ---------- --------- --------------- ---------
At 30 June
2022 33,060 - - (71,367) (2,362) 11,511 84,771 55,613 (5,711) 49,902
---------------- ------- --------- -------- ----------- ------------ -------- ---------- --------- --------------- ---------
Reserve Description and purpose
Share capital The nominal value of shares issued
Share premium Amount subscribed for share capital in excess of nominal
value
Deferred shares The nominal value of deferred shares issued
Cumulative translation Losses arising on retranslating the net assets of overseas
reserve operations into US Dollars
Merger reserves Gains accrued as the result of acquisitions made in
previous periods
Capital contribution Capital contribution arising when a shareholder has
Reserve made an irrevocable gift to the Company
Retained deficit Cumulative losses recognised in the profit or loss
Non-controlling interest The interest of non-controlling parties in the net assets
of the subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
As at As at As at
30 June 31 December 30 June
---------------------------
2023 2022 2022
Note US$000s US$000s US$000s
--------------------------- ------ --------- ------------------- ----------------
Assets Unaudited Audited Unaudited
Non-current assets
Unproven oil and 5 46,243 43,813 29,090
gas assets
Property, plant
and equipment 6 67,815 60,746 65,471
Other receivables 7 6,359 2,533 5,813
Restricted use cash 707 694 607
--------------------------- ------ --------- ------------------- ----------------
Total non-current
assets 121,124 107,786 100,981
--------------------------- ------ --------- ------------------- ----------------
Current assets
Inventories 2,457 492 677
Other receivables 6,668 5,191 5,832
Cash and cash equivalents 475 3,682 5,044
Total current assets 9,600 9,365 11,553
--------------------------- ------ --------- ------------------- ----------------
Total assets 130,724 117,151 112,534
--------------------------- ------ --------- ------------------- ----------------
Equity and liabilities
Equity
Share capital 8 33,060 33,060 33,060
Other reserves (2,362) (2,362) (2,362)
Merger reserve 11,511 11,511 11,511
Retained earnings 89,877 84,872 84,771
Cumulative translation
reserve (65,553) (66,521) (71,367)
--------------------------- ------ --------- ------------------- ----------------
Shareholders' equity 66,533 60,560 55,613
Non-controlling
interests (5,606) (5,667) (5,711)
--------------------------- ------ --------- ------------------- ----------------
Total equity 60,927 54,893 49,902
Current liabilities
Trade and other
payables 22,498 15,871 15,206
Short-term borrowings 9 2,456 352 988
Provision for BNG
license payment 3,178 3,178 3,178
Other current provisions 6,089 5,977 5,261
--------------------------- ------ --------- ------------------- ----------------
Total current liabilities 34,221 25,378 24,633
--------------------------- ------ --------- ------------------- ----------------
Non-current liabilities
Deferred tax liabilities 6,219 6,335 6,629
Provision for BNG
license payment 14,875 16,297 17,923
Other non-current
provisions 477 469 452
Other payables 14,005 13,779 12,995
--------------------------- ------ --------- ------------------- ----------------
Total non-current
liabilities 35,576 36,880 37,999
--------------------------- ------ --------- ------------------- ----------------
Total liabilities 69,797 62,258 62,632
Total equity and
liabilities 130,724 117,151 112,534
--------------------------- ------ --------- ------------------- ----------------
This financial information was approved and authorised for issue
by the Board of Directors on 22 September 2023 and was signed on
its behalf by:
Clive Carver
Chairman
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Six months
30 June 2023 ended
30 June 2022
------------------------------- ------------------------------- -------------------------
Unaudited Unaudited
US$000s US$000s
Cash flow provided
by operating activities
Cash received from
customers 13,764 24,328
Payments made to
suppliers
and employees (4,751) (14,222)
------------------------------- ------------------------------- -------------------------
Net cash used by
operating activities 9,013 10,106
Cash flow used in
investing activities
Additions to unproven
oil and gas assets (2,430) (5,362)
Purchase of PP&E (5,536) (129)
Cash flow used in
investing
activities (7,966) (5,491)
------------------------------- ------------------------------- -------------------------
Cash flow used by financing
activities (1,545) -
Loans provided
Loans received 316 -
Dividends paid (3,025)
------------------------------- ------------------------------- -----------------------
Net cash used by financing
activities (4,254) -
------------------------------- ------------------------------- -----------------------
Net increase /decrease
in cash and
cash equivalents (3,207) 4,615
------------------------------- ------------------------------- -------------------------
Cash and cash equivalents
at
the start of the period 3,682 429
------------------------------- ------------------------------- -------------------------
Cash and cash equivalents
at the end of the period 475 5,044
------------------------------- ------------------------------- -------------------------
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
INFORMATION
1. STATUTORY ACCOUNTS
The interim nancial results for the period ended 30 June 2023
are unaudited. The nancial information contained within this report
does not constitute statutory accounts as defined by Section 434(3)
of the Companies Act 2006.
2. BASIS OF PREPARATION
Caspian Sunrise plc is registered and domiciled in England and
Wales.
This interim nancial information of the Company and its
subsidiaries ("the Group") for the six months ended 30 June 2023
has been prepared on a basis consistent with the accounting
policies set out in the Group's consolidated annual nancial
statements for the year ended 31 December 2022. It has not been
audited or reviewed, does not include all of the information
required for full annual nancial statements, and should be read in
conjunction with the Group's consolidated annual nancial statements
for the year ended 31 December 2022. The 2022 annual report and
accounts, which received a quali ed opinion from the auditors,
included a material uncertainty in respect of going concern but did
not contain a statement under section 498 (2) or 498 (3) of the
Companies Act 2006, have been led with the Registrar of Companies.
As permitted, the Group has chosen not to adopt IAS 34 'Interim
Financial Reporting'.
The financial information is presented in US Dollars and has
been prepared under the historical cost convention.
The accounting policies adopted in the preparation of the
interim condensed consolidated nancial statements are consistent
with those followed in the preparation of the Group's annual
nancial statements for the year ended 31 December 2022 except for
the e ect of new standards e ective from 1 January 2023 as
explained below. These are expected to be consistent with the
nancial statements of the Group as at 31 December 2022 that
are/will be prepared in accordance with IFRS and their
interpretations issued by the International Accounting Standards
Board ("IASB") as adopted by the European Union ("EU").
Several other amendments and interpretations apply for the rst
time in 2023, but do not have an impact on the interim consolidated
nancial statements of the Group.
Going Concern
The Group's Financial Statements for the year ended 31 December
2022, which were published on 4 July 2023, contained reference to
the existence of a material financial uncertainty, which only
approximately 10 weeks on continues to exist. This may cast
significant doubt about the Group's ability to continue as a going
concern and therefore it may be unable to realise its assets and
discharge its liabilities in the normal course of business.
The financial information in these interim results has been
prepared on a going concern basis using current income levels but a
reduced work programme. On this basis the Directors believe that
the Group will have sufficient resources for its operational needs
over the relevant period, being until September 2024. Accordingly,
the Directors continue to adopt the going concern basis.
However, the Group's liquidity is dependent on a number of key
factors:
-- The Group continues to forward sell it domestic production
and receive advances from oil traders with $US5.9 million advanced
at 30 June 2023, and the continued availability of such
arrangements is important to working capital. Whilst the Board
anticipates such facilities remaining available given its trader
relationships, should they be withdrawn or reduced more quickly
than expected then additional funding would be required. In January
2023 the group started selling the oil products processed from the
crude oil extracted which increased the margins achieved on local
oil sales.
-- Similarly, the Group sells to local mini refineries. Should
these arrangements be terminated or reduced then additional funding
would be required.
-- For the time being the Group is not selling to the
international markets as a consequence of the impact of sanctions
on Russia, including access to pipelines and the price at which oil
emerging from Russian pipelines is sold. These forecasts remain
sensitive to oil prices, which have shown significant volatility in
recent times. In the event of a significant decline in world and
domestic oil prices additional funding would be required.
3. INCOME PER SHARE
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year including
shares to be issued.
There is no di erence between the basic and diluted loss per
share as the Group made a loss for the current and prior year.
Dilutive potential ordinary shares include share options granted to
employees and directors where the exercise price (adjusted
according to IAS33) is less than the average market price of the
Company's ordinary shares during the period.
The calculation of loss
per share is based on:
------------------------------ ---------------------------------------------
Six months Six months
ended 30 ended 30
June 2022 June 2022
Unaudited Unaudited
------------------------------ ---------------------- ---------------------
The basic weighted average
number of ordinary
shares in issue during the
period 2,250,501,559 2,157,729,446
------------------------------ ---------------------- ---------------------
The income (loss) for the
year attributable to owners
of the parent (US$'000) 7,447 7,284
------------------------------ ---------------------- ---------------------
4. FINANCIAL EXPENSE
The Group incurred financial expenses of approximately $245,000
during the 6 months to 30 June 2023 (2022: US$330,000).
5. UNPROVEN OIL AND GAS ASSETS
During the six months period ended June 30 2023 the Company's
oil and gas assets increas ed on US$ 2 million (2022: decrease on
US$ 17 million, due mainly to the transfer of the shallow South
Yelemes structure to proven oil and gas assets on the award of its
production licence (note 6) and the depreciation expense).
6. PROPERTY, PLANT & EQUIPMENT
Proved oil Motor Other Total
and gas Vehicles
Group assets
US$'000 US$'000 US$'000 US$'000
Cost at 1 January 2022 44,929 2,126 15,946 63,001
Additions 323 176 3 501
Disposals (110) - (7,054) (7,164)
Additions 14,025 - - 14,025
Foreign exchange difference (425) (111) (424) (960)
------------------------------ ----------- ---------- -------- --------
Cost at 31 December
2022 58,742 2,191 8,470 69,403
------------------------------ ----------- ---------- -------- --------
Additions 225 12 8,602 8,839
Disposals (245) - - (245)
Foreign exchange difference (618) 125 315 (178)
------------------------------ ----------- ---------- -------- --------
Cost at 30 June 2023 58,104 2,328 17,387 77,819
------------------------------ ----------- ---------- -------- --------
Depreciation at 1
January 2022 2,771 569 2,526 5,866
Charge for the year 2,079 61 358 2,498
Disposals (19) - - (19)
Foreign exchange difference 189 11 112 312
------------------------------ ----------- ---------- -------- --------
Depreciation at 31
December 2022 5,020 641 2,996 8,657
------------------------------ ----------- ---------- -------- --------
Charge for the year 672 55 229 956
Disposals (9) - - (9)
Foreign exchange difference 234 25 141 400
------------------------------ ----------- ---------- -------- --------
Depreciation at 30
June 2023 5,917 721 3,366 10,004
------------------------------ ----------- ---------- -------- --------
Net book value at:
----------------------------- ----------- ---------- -------- --------
01 January 2022 42,158 1,557 13,419 57,135
31 December 2022 53,722 1,550 5,474 60,746
30 June 2023 52,187 1,607 14,021 67,815
------------------------------ ----------- ---------- -------- --------
7. OTHER NON-CURRENT RECEIVABLES
During the six months ended June 30 2023 the Company provided
advances related to its drilling operations in the amount of
US$0.12 million (2022: US$1.52 million). VAT recoverable at the
Group level as at 30. June 2023: was approximately US$4.6 million
(2022: approximately US$4,3 million).
8. CALLED UP SHARE CAPITAL
Number of $'000
ordinary
shares
------------------------ ---------------- ---------
Balance at 31 December
2022 2,250,501,560 33,060
------------------------ ---------------- ---------
Balance at 30 June
2023 2,250,501,560 33,060
------------------------ ---------------- ---------
In June 2022 the Company received approval from the UK High
Court for the cancellation of its Deferred shares and Share premium
accounts
9. BORROWINGS
-----------------------------------------------------------------------------------------------
Six months ended Year ended
30 June 2023 US$'000 31
December 2022
US$'000
Unaudited Audited
------------------------ ---------------------- ---------------
Amounts payable within
one year
Akku Investments 1,982 99
Aibek Oraziman 316 355
Other borrowings 158 534
------------------------ ---------------------- ---------------
2,456 988
------------------------ ---------------------- ---------------
At 30 June 2023 and 31 December 2022 all the loans at the group
were payable to the individuals and entities related to Oraziman
family.
10. SUBSEQUENT EVENTS
In August 2023 BNG Ltd. LLP took out a $5 million loan for up
to 3 years at an interest rate of 7%. At the date of this report
approximately $3.4 million of the loan has been drawn with the
funds used to purchase casing for deep wells and the drilling
rig.
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