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The 2019 interim results contained the following re KUfPEC claim:
Remeasurements and exceptional items
Remeasurements and exceptional items resulting in a net loss of $120.0 million before tax have been disclosed separately for the six months ended 30 June 2019 (2018: gain of $34.5 million).
Revenue included unrealised losses of $42.9 million in respect of the mark to market movement on the Group’s commodity contracts (2018: unrealised gains of $2.5 million). Other items include a charge to the statement of comprehensive income as a result of an increase in fair value relating to the contingent consideration on the 75% acquisition of Magnus and associated infrastructure of $26.9 million, which reflects the Group’s expectations of continued strong performance at Magnus, $28.1 million unwinding of discount on the end 2018 contingent consideration balance and the provision for settlement of the historical KUFPEC claim of $15.6 million (2018: fair value adjustment of the discounted purchase option valuation for Magnus and associated infrastructure assets of $41.8 million).
No probs. Btw Enquest acquired the FPSO Producer from Bluewater a few year’s back. It’s not leased.
From the prospectus (MOWOS = Marathon Oil West of Shetland Ltd):
MOWOS’s principal activity is the development and production of oil and gas from the Foinaven area in the United Kingdom (UK) Atlantic Margin. MOWOS has a 28% interest in the BP operated Foinaven area complex in UK blocks 204/19 and 204/24a, located directly west of the Shetland Islands, some 190km north west of Orkney. MOWOS has a 28% interest in the main Foinaven field, a 47% interest in East Foinaven and a 20% interest in the T25 and T35 accumulations. The Foinaven development utilises an FPSO vessel, linked by flexible production risers to a subsea system and remote wells on the seabed.
Licence data by block can be found on the OGA website here https://itportal.ogauthority.co.uk/information/licence_reports/offshorebyblock.html
Would appear to just be RRE and BP.
Definition:
A lease in which all risks and rewards related to asset ownership remain with the lessor for the leased asset is called an operating lease. In this type of lease, the asset is returned by the lessee after using it for the agreed-upon lease term. In a financial lease (also known as a capital lease), the risks and rewards related to ownership of the asset being leased are transferred to the lessee.
Ownership:
With an operating lease, the ownership of the asset remains with the lessor for the entire lease period. In finance leases, the ownership transfer option at the end of the lease period is available to the lessee. The title may or may not be transferred eventually.
Accounting Effect:
An operating lease is generally treated like renting. That means the lease payments are treated as operating expenses and the asset does not show on the balance sheet. A financial lease is generally treated like loan. Here, asset ownership is considered by the lessee, so the asset appears on the balance sheet.
IFRS16 essentially does away with operating leases and all material leases have to be accounted for as finance leases going forward. It ends the guesswork involved when calculating a company’s often-substantial lease obligation. The new standard provides transparency on companies’ lease assets and liabilities, meaning that off balance sheet lease financing is no longer lurking in the shadows. It also helps improve comparability between companies that lease and those that borrow to buy.
From the Interim Results presentation:
Foinaven Area
~3,000 boepd net production 2019 rising to ~5,000 boepd in 2020
10.3 MMboe net 2P reserves (including satellites)
Partnership reviewing options for production post-2025
From this week’s Interim Results RNS:
Foinaven area (Operator - BP)
Production from the Foinaven area for the first six months of 2019 was adversely impacted by a compressor outage, pipework, and topside integrity issues. Average net production was 4,221 boepd. An extended maintenance shutdown from July to September is expected to improve operating efficiency.
Beat me to it, HMHn.
The accounts are correct.
A finance lease is not debt like a bank loan. However, the future obligation to pay contracted lease payments now appear on the balance sheet, split between current and long-term liabilities (they would not if the lease had been accounted for as an operating lease).
Having a balance sheet which made no reference to the long-term commitment to pay Bumi could be mis-leading, hence the introduction of the new accounting standard.
RRE interims out tomorrow and they were 4% up today as well.
Coincidence....?
The accounts are presented in US$ but surely the underlying revenue for gas sales is in GBP? The 2018 accounts show that $49.3 million of receivables were denominated in pounds sterling....