Less Ads, More Data, More Tools Register for FREE

Pin to quick picksMyn.l Regulatory News (MYN)

  • There is currently no data for MYN

Watchlists are a member only feature

Login to your account

RNS Alerts are a premium feature

Login to your account

myTerminal is a premium feature

Login to your account

Don't have an account? Click here to register.

Attis Oil and GasLtd - Final Results

Tue, 11th Jun 2019 07:00

RNS Number : 7468B
Attis Oil and Gas Ltd
11 June 2019
 

 

Mayan Energy Ltd / Index: AIM / Epic: MYN/ ISIN: VGG6622A1057 / Sector: Oil and Gas

11 June 2019

Mayan Energy Ltd ('Mayan' or 'the Company')

Final Results for the Year Ended 31 December 2018

 

Mayan Energy Ltd (AIM: MYN), the AIM listed oil and gas company, is pleased to announce its final results for the year ended 31 December 2018. The full audited Report and Accounts for the period under review will be available on the Company's website today at www.mayanenergy.com and are being posted to Shareholders. Extracts are set out below.

 

Highlights

·    Completion of full portfolio review and strategic development plan for core US onshore asset base focused on building a revenue generative, highly profitable oil and gas company

·    Core assets include Austin Field in Texas, Zink Ranch in Oklahoma and post period end the Fort Worth Basin

·    Robust corporate governance and financial/fiscal structure put in place across the business by strengthened Board to ensure returns are maximised and risks minimised:

o Non- Executive Chairman, Paolo Amoruso appointed providing strong US legal oil expertise

o Non-Executive Director, Sarah Cope appointed strengthening the board's governance

·    Rationalisation of US operations and consolidation of US corporate structure successfully executed

·    Settlement of multiple outstanding claims and potential lawsuits with creditors

 

Post Balance Date Highlights

·    Excluding P&A liabilities, 70% of liabilities as at 31 December have been settled

·    Re-negotiated terms of acquisition of Austin Field interests reducing the consideration payable to US$375,000 and increasing the working interest in six well package

·    Acquisition of Attis Oil & Gas Ltd, US onshore operator with 50% of 98 producing gas wells in Fort Worth Basin, Texas

·    Executive COO, Thom Board to join the board to lead US operations

·    Commencement of a six well workover programme and recommencement of production at Austin Field

·    Control of field operations at Zink Ranch field secured and commencement of workover programme

·    During May 2019 a mean average production of 131 Boepd and net mean average production of 93.8 Boepd

 

Charlie Wood, said, "2018 represents a year of progress for Mayan following changes in management and a review of the asset portfolio which resulted in decisions to pursue, monetise or dispose of certain assets.   The addition of two new experienced board members has significantly strengthened the governance and controls required for a listed entity.   Following the post balance date acquisition of Attis Oil & Gas, the Company now has an excellent platform and team in place from which to build a profitable oil business, and I look forward to providing further updates on our progress during the year ahead."

 

For further information visit www.mayanenergy.com or contact the following:

 

Charlie Wood

Mayan Energy Ltd

+44 20 7236 1177

Roland Cornish

Beaumont Cornish Ltd

+44 20 7628 3396

James Biddle

Beaumont Cornish Ltd

+44 20 7628 3396

Frank Buhagiar

St Brides Partners Limited

+44 20 7236 1177

Gaby Jenner

St Brides Partners Limited

+44 20 7236 1177

Colin Rowbury

Novum Securities Limited

+44 20 7399 9400

 

Chairman's Statement

 

This is my first Chairman's Statement since my appointment as Non-Executive Chairman of the Company in October of 2018.  I took on this role because I believed that with an effective corporate governance programme and the implementation of fiscal and financial discipline to our decision making, Mayan's assets had the potential to deliver value to its shareholders.  During the last seven months our CEO, Charlie Wood, and I have been systematically working to implement the necessary processes to deliver that value.

 

We began with a thorough self-assessment of our finances and our assets, engaged strategic partners, cut unnecessary overhead, settled multiple outstanding claims and debts, and began the process of rebuilding the Company.  I promised at the last shareholder's meeting that new additions to the board and management would only be implemented following a rigorous review and selection process. To that end,  Sarah Cope came on board as a Non-Executive Director in December of 2018, bringing a depth of experience on governance matters and  recently we announced as part of our acquisition of Attis Oil and Gas Ltd. ("Attis"), that Thom Board will be joining as Chief Operating Officer and Executive Director as well as Russell Lamming as a Non-Executive Director.  Both Russell and Thom bring a wealth of experience in the energy arena and are highly experienced and respected executives. 

 

On the asset side, our first priority was to capitalise on the opportunities identified across our core asset base following the comprehensive review Attis undertook over Mayan's existing portfolio of assets completed in December of 2018.  The objective of this review was to high-rank our properties and determine the optimal allocation of our limited financial resources in order to maximise the Company's returns.   The findings of this review led the Company to decide that the renamed Austin Field (a combination of the Austin Chalk field and the Stockdale field) and Zink Ranch would constitute our core portfolio.  The Forest Hill field was determined to be non-core and we continue to assess our options with regards to those assets.   Working alongside Attis, our attention was then focused on devising a development strategy with the primary aim of reworking our existing wells and recommencing production across the core US portfolio in the short term while keeping cost down to a minimum. 

 

The portfolio review also confirmed that while the asset base is mainly comprised of late in life wells, the fundamentals of Mayan's core assets remain compelling and we believe that our operations team can unlock additional value.  We also renegotiated the acquisition of the Austin Chalk well package from Smart Bit LLC in early January, reducing our cash constraints and increasing our interest in the field from 65% to 100% working interest in return for a 10% overriding royalty.   We recently completed the initial rework of the Austin Field wells and are in the process of optimizing production while evaluating potential benefits of leasing and unlocking the Eagle Ford Shale formation. In Zink Ranch, following the settlement of our dispute with our operator, Glen Supply, we have begun the process with the Bureau of Indian Affairs ("BIA") in Osage County, Oklahoma, to transfer operatorship back to us. While this process can take up to 6 months or longer, we have an agreement in place with Glen Supply that allows us to begin work on the field.  Zink Ranch consists of 18 active wells, a further 50 historic wells as well as two tank batteries and one gas sales point.  We are currently on site evaluating the assets and implementing an initial workover in order to build production.  Our current development plan is based on the same strategy as the Austin Field: evaluate the assets, conduct an initial workover and restart the wells, and, based on initial production numbers, begin a targeted workover strategy on the wells with the highest return potential.  We believe that this plan will enhance the field's existing production through straightforward and low-cost initiatives. 

 

As mentioned earlier, in conjunction with an operational review of our assets, we also undertook a rigorous assessment of the corporate governance and structure of the Company.  This resulted in a significant cost cutting exercise that successfully reduced our overhead and established policies for good and effective corporate governance.

 

In order for us to grow, develop and become a revenue generative, producing oil and gas company, we recognised the importance of having an experienced, skilled team supporting both the operational and corporate parts of the business.  The new additions to the Board complement well the existing skillsets and have resulted in a highly experienced Board.  Further, the acquisition of Attis has provided the Company with an established, in-country operational team which significantly increases our depth of technical knowledge and experience.

 

The post period end acquisition of Attis Oil & Gas, a UK based, US onshore operator with a portfolio of producing gas wells in Texas neatly encapsulates what we have been looking to achieve.  In terms of growing our assets, Attis's 50% joint venture ownership of the Fort Worth Field brings a portfolio of 98 producing gas wells in the Fort Worth field in Texas and increases our net acreage to 8,481 acres.  In terms of revenues, the acquisition added 41 boepd to our overall production (at the time of acquisition) bringing the total to almost 100 barrels of oil equivalent per day and scaling up our monthly revenues to c. US$190,000. In terms of costs, acquiring Attis, our contract operator across all of our fields, made economic sense as we expect to save approximately US$20,000 per month due to the removal of current third-party operator fees.  In terms of personnel, Attis brings an experienced oilfield operations team based out of Borger, Texas that will be invaluable as we manage the development of our assets, look to assess a number of additional internal development opportunities, and acquire additional properties. The acquisition of Attis is therefore an important step forward for Mayan as we focus on becoming profitable and growing our team and our assets in the US. 

 

I am very pleased and proud of the progress we've made on all fronts in a very short period of time. The Board and management have been committed to turning Mayan around and believe now, with the addition of Thom and the operations team, we're poised to grow into a profitable business. The remainder of 2019 will be used to integrate our operations and begin to leverage the advantages provided to the Company through the acquisition of Attis in order to materially grow production and enhance our portfolio further. 

 

I would like to take this opportunity to thank our team of advisors, my fellow Board members, and our shareholders for their patience and commitment to the Company at this pivotal moment in our history.  I look forward to providing updates to shareholders throughout the year with regards to our progress.

 

Financial Review

The Company has reported a gross loss for the year of US$3,211,000 (2017: loss US$3,836,000).  This loss, along with a reduction in the Company's gross assets from 2017, can largely be attributed to the impact of impairments against the financial assets. This gives rise to a loss per share of US$ 0.24 cents (2017: US$ 1.86 cents). 

 

We were able to raise £4.086 million through a combination of brokered and internally organised fund raises and placings.   

 

Outlook 

This year has not been without significant challenges and accordingly, some difficult decisions had to be made regarding Mayan's management, portfolio, and strategy.  We relinquished our interest in the Shoats Creek Field in Louisiana and shut down production as we re-assessed our asset base. Based on the third-party study conducted by Attis Oil and Gas, we are exploring options with regard to our Forrest Hill assets.  We released all of our employees in the US as we sought to reduce our burn rate, tightly control our finances, and implement effective fiscal policies and corporate governance.  We renegotiated contracts, settled numerous outstanding claims and potential lawsuits with creditors, closed more than 15 dormant entities, started preparing and filing US tax returns for the last four years, and began the process of settling outstanding liabilities with the US Internal Revenue Service for employment taxes.  Post period end we filed the outstanding tax returns, paid the employee taxes to the IRS, further consolidated our entities and balance sheet, and resumed workovers in the Austin Field and Zinc Ranch.

 

All of this came at a cost.  While we significantly cut expenses, salaries and overhead, we were forced to sell our shares in Block Energy at a loss and had to further dilute our shareholders in order to raise funds to settle claims and resume operations.  Through this, Mayan has emerged a completely different company that ultimately led us to the post period end acquisition of Attis Oil and Gas.  We feel that we're better equipped to grow with a stronger management, board, and a solid portfolio of development assets in Texas and Oklahoma, as well as additional exploration opportunities.  We believe that this platform provides us with the opportunity to grow Mayan into a profitable company in the coming year.  We further believe that our investment in Petroteq Energy is poised to yield significant returns for the Company.  While its share price has been under pressure lately due to production delays and share dilutions to acquire prospective acreage, we continue to believe in the technology and the progress made to date.  Our investment wasn't based on a 6 or 12 month horizon, but rather to provide us with a solid investment in what we believe to be ground-breaking technology.  Further, we hold 1,035,233 warrants with a three year expiration date that we hope will also allow Mayan to further expand its position.  

 

Having taken over the role of Chairman of Mayan in October of 2018, I would like to take this opportunity to sincerely thank our shareholders for their continued commitment to Mayan and the trust they placed on us to bring in a solid management and operational team and in turn re-build this company with the goal of becoming profitable during the coming year.   

 

Paolo G. Amoruso

Non Executive Chairman

10 June 2019

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 DECEMBER 2018

 

Year to

Year to

31 December

2018

31 December

2017

Notes

US$ 000's

US$ 000's

Continuing operations

Revenue

4

104

30

Cost of sales

(403)

(237)

Gross loss

(299)

(207)

Administrative expenses

Impairment of property, plant and equipment

10

-

(2,064)

Impairment of financial assets at fair value through profit or loss

12

(1,126)

-

Loss on sale of financial assets at fair value through profit or loss

12

(129)

-

Other administrative expenses

6, 7

(1,659)

(1,449)

Total administrative expenses

(2,914)

(3,513)

Operating loss

(3,213)

(3,720)

Other Income

19

-

Finance Income

3

-

4

Finance costs

3

(17)

(120)

Loss before income tax

(3,211)

(3,836)

Income tax

9

-

-

Loss after tax for the year

(3,211)

(3,836)

Other comprehensive income:

Items that may be subsequently reclassified to profit or loss

Currency translation differences

(12)

(528)

Total comprehensive income for the year

(3,223)

(4,364)

 

 

Restated for post consolidation

Earnings per share

US cents

US cents

-Basic & diluted (US cents per share)

5

(0.24)

 

(1.86)

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

YEAR ENDED 31 DECEMBER 2018

 

31 December 2018

31 December 2017

Note

US$ 000's

US$ 000's

ASSETS

Non-current assets

Property, plant and equipment

10

1,522

990

Total non-current assets

1,522

990

Current assets

Trade and other receivables

11

43

320

Financial assets at fair value through profit or loss

12

419

1,626

Cash and cash equivalents

143

803

Total current assets

605

2,749

TOTAL ASSETS

2,127

3,739

LIABILITIES

Current liabilities

Trade and other payables

13

(767)

(893)

Provisions

16

(284)

(588)

Total current liabilities

(1,051)

(1,481)

Non-current liabilities

Provisions

16

(563)

(663)

Total non-current liabilities

(563)

(663)

TOTAL LIABILITIES

(1,614)

(2,144)

NET ASSETS

513

1,595

EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT

Share capital

15

-

-

Share premium

15

40,789

38,946

Foreign exchange reserve

15

(125)

(113)

Revenue acquisition reserve

15

(8,202)

(8,202)

Retained losses

15

(31,949)

(29,036)

TOTAL EQUITY

513

1,595

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 DECEMBER 2018

 

Attributable to the owners of the parent

Share capital

Share premium

Foreign currency translation reserve

Reverse acquisition reserve

Retained losses

Sub total

Non -controlling interests

Total

 

US$ 000's

US$ 000's

US$ 000's

US$ 000's

US$ 000's

US$ 000's

US$ 000's

US$ 000's

 

Balance as at 1 January 2017

-

33,126

415

(8,202)

(25,832)

(493)

307

(186)

 

Loss for the year

-

-

-

-

(3,836)

(3,836)

-

(3,836)

 

Other comprehensive income for the year-currency translation differences

-

-

(528)

-

-

(528)

-

(528)

 

Total comprehensive income

-

-

(528)

-

(3,836)

(4,364)

-

(4,364)

 

Share capital issued

-

6,705

-

-

-

6,705

-

6,705

 

Cost of share issue

-

(560)

-

-

-

(560)

-

(560)

 

Cost of share issue -issue of warrants

-

(325)

-

-

325

-

-

-

 

Reversal of NCI on disposal of interest

-

-

-

-

307

307

(307)

-

 

Total transactions with owners, recognised directly in equity

-

5,820

-

-

632

6,452

(307)

6,145

 

 

Balance as at 31 December 2017

-

38,946

(113)

(8,202)

(29,036)

1,595

-

1,595

 

Loss for the year

-

-

-

-

(3,211)

(3,211)

-

(3,211)

 

Other comprehensive income for the year - currency translation differences

-

-

(12)

-

-

(12)

-

(12)

 

Total comprehensive income for the year

-

-

(12)

-

(3,211)

(3,223)

-

(3,223)

 

Share capital issued

-

2,211

-

-

-

2,211

-

2,211

 

Cost of share issue

-

(70)

-

-

-

(70)

-

(70)

 

Cost of share issue -issue of warrants

-

(298)

-

-

298

-

-

-

 

Total transactions with owners, recognised directly in equity

-

1,843

-

-

298

2,141

-

2,141

 

 

Balance as at 31 December 2018

-

40,789

(125)

(8,202)

(31,949)

513

-

513

 

 

 

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

YEAR ENDED 31 DECEMBER 2018

 

Year to

Year to

31 December 2018

31 December 2017

Notes

US$ 000's

US$ 000's

Cash flows from operating activities:

Loss for the year before taxation

(3,211)

(3,836)

Adjustments for:

Impairment

10,12

1,126

2,064

Finance cost

3

17

120

Finance income

Loss on sale of disposal of financial assets at fair value through profit or loss

3

12

-

129

(4)

-

Share based payments

125

-

Foreign exchange

(36)

(236)

Change in working capital items:

Decrease in inventories

-

31

(Increase)/Decrease in trade and other receivables

11

(7)

38

Decrease in trade and other payables

13

(60)

(642)

Net cash outflow used in operating activities

(1,917)

(2,465)

Cash flows from investing activities

Purchase of Investments

-

(1,035)

Purchases of property, plant, and equipment

10

(302)

(491)

Proceeds from disposal of financial assets at fair value through profit or loss

260

-

Net cash used in investing activities

(42)

(1,526)

Cash flows from financing activities

Proceeds from issue of share capital

1,386

5,315

Share issue costs

(70)

(560)

Net finance costs

3

(17)

(116)

Net cash inflow from financing activities

1,299

4,639

Net (decrease)/increase in cash and cash equivalents

(660)

648

Cash and cash equivalents at beginning of year

803

155

Cash and cash equivalents at end of year

143

803

 

 

Major Non-Cash Transactions

Directors fees of US$ 150,000 were settled through share based payments.

Part of the payment for the 5 Austin Chalk wells acquisition was settled through the issuance of shares valued at

$US 230,000.

 

Payments for operating costs totalling USD$ 125,000 were settled through the issue of equity.

Creditors of USD$ 320,000 were settled through the issue of equity.

Refer to note 17 for further detail.

 

NOTES TO THE FINANCIAL STATEMENTS

YEAR ENDED 31 DECEMBER 2018

 

1.   General Information

The principal activity of Mayan Energy Limited ('The Group') during the year was as an oil & gas exploration and production business focussed in the United States of America.  The Group was incorporated in the British Virgin Islands on 13 May 2010 as a private limited company with the name Everest Energy Limited.  As at the year end, the Group was domiciled in the British Virgin Islands and listed on the AIM market of the London Stock Exchange. 

 

Summary of significant accounting policies

2.1.                   Basis of Preparation

The Consolidated Financial Statements have been prepared under the historical cost convention, as modified for financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and in accordance with International Financial Reporting Standards (IFRSs) and International Financial Reporting Interpretations Committee (IFRIC) interpretations, as adopted by the EU.  The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.  These policies have been consistently applied to all the years presented unless otherwise stated. 

The Consolidated Financial Statements are presented in thousands of US Dollars (US$ 000's). US Dollars is also the functional currency.

 

2.2                   New standards, amendments and interpretations adopted by the Group

At the date of authorisation of these financial statements, the following standards and interpretations, were in issue but not yet effective, and have not been early adopted by the Group:

 

standard / interpretation

impact on initial application

effective date

IFRS 16

Leases

1 January 2019

Annual Improvements to IFRSs: 2014-2016 Cycle

Amendments to: IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 12 Disclosure of Interests in Other Entities, IAS 28 Investments in Associates

1 January 2017 (IFRS 12)* / 1 January 2018 (IFRS 1 and IAS 28)

IFRIC Interpretation 23

Uncertainty over Income Tax treatments

1 January 2019

*Effective dates provided are the IASB effective dates. EU effective dates are yet to be confirmed.

 

Whilst the Directors do not anticipate the adoption of these standards and interpretation in future reporting periods will have a material impact on the Group's financial statements. 

 

New standards implemented in the period

 

New and amended standards mandatory for the first time for the year beginning 1 January 2018

 

The following new IFRS standards and/ or amendments are mandatory for the first time of the Company:

·    IFRS 9 - Financial Instruments (effective 1 January 2018)

·    IFRS 15 - Revenue (effective 1 January 2018)

·    IFRS 2 (amendments) - Share based payments - classification and measurement (effective 1 January 2018)

·    Annual Improvements 2014-2016 Cycle

·    IFRIC Interpretation 22 - Foreign currency transactions and advanced consideration (effective 1 January 2018)

IFRS 9 became effective for all periods beginning on or after 1 January 2018 and as such is relevant for the year ended 31 December 2018. IFRS 9 impacts the recognition, classification and measurement and disclosures of financial instruments. The financial instruments held in the Group are financial assets at fair value through profit or loss, trade and other receivables and payables. Financial assets at fair value through profit or loss are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through the profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. Under IFRS 9 trade and other receivables and payables should continue to be measured at amortised cost and as such there is no changes in the numbers presented under the old standards.

 

IFRS 15 became effective for all periods beginning on or after 1 January 2018 and as such is relevant for the year ended 31 December 2018. The Company has elected to apply the 'modified retrospective' approach to transactions permitted by IFRS 15 under which the comparative financial information is not restated. Given the nature of Mayan's oil marketing and sales arrangements with control passing to the customer upon transfer of physical possession, Mayan principally satisfies its performance obligations at a point in time as opposed to over a period of time. Therefore, the accounting of revenue under IFRS 15 did not have a material effect on the Group's financial statements as at 1 January 2018 and so no transition adjustment has been made. The Standard has not had a material impact on the Group's accounting policy in respect of revenue as previously disclosed in the 2017 financial statements.

 

Revenue from contracts with customers is presented in Note 4. Amounts presented for comparative periods in 2017 include revenue determined in accordance with the Group's previous accounting policies relating to revenue. The total amounts presented do not, therefore, represent the revenue from contracts with customers that would have been reported for those periods had IFRS 15 been applied using a fully retrospective approach to transaction, as there would have been no impact.

 

Of the other IFRSs and IFRICs, none are expected to have a material effect on future Company financial statements.

 

2.3            Basis of Consolidation

The consolidated Financial Statements consolidate the Financial Statements of Mayan Energy Limited and the Financial Statements of its subsidiary undertakings made up to 31 December 2018. 

 

Subsidiaries are entities over which the Group has control.  The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.  They are de-consolidated from the date that control ceases. 

 

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.  All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. 

 

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.  If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in the Statement of Comprehensive Income.  Any investment retained is recognised at fair value at the date when control is lost. 

 

The group comprises of the following entities:

 

Name

Interest

Country of Incorporation

Nature of Business

Direct

Mayan Energy Limited

100%

Cayman Islands

Holding Company

Indirect

Northcote USA Inc.

100%

USA

Holding Company of USA Interests

Northcote Services LLC*

100%

USA

Administrative Company

Mayan Energy USA LLC

100%

USA

Administrative Company and holds Austin Field and Forrest Hill

Northcote Oklahoma LLC*

100%

USA

Oklahoma Energy LLC*

100%

USA

Northcote Cleveland LLC*

100%

USA

Holds Zink Ranch interest

Northcote Osage LLC*

100%

USA

Dormant

NAP USA Inc.

100%

USA

Dormant

 

 

Name

Interest

Country of Incorporation

Nature of Business

 

Northcote Energy Mexico S de RL de CV LLC *

100%

Mexico

Dormant

Mayan Drilling Fluids S.A.P.I. de CV *

100%

Mexico

Dormant

Springer Energy Development LLC *

33%

USA

General Partner of Springer

Energy Partners, LP

*An LLC is not a corporation, but is a legal form of company that affords limited liability to Northcote, its owner and general manager. 

**An LP is not a corporation, but is a legal form of partnership that affords the partners limited liability and is managed by a general manager.

Registered office for Cayman registered company: Nemours Chambers, Road Town, Tortola, VG1110 BVI

Registered office for USA registered companies: 8584 Katy Fwy, Suite 103, Houston, TX 77024

Registered office for Mexico registered companies: Rio Panuco 43, Col. Cuauhtemoc, Mexicom D.F. 06500

 

Except for entities connected with the Texas and Oklahoma assets, the majority of the companies are dormant and it is the Group's intention to move to liquidate them or strike them off in the near term.  

 

2.4       Going Concern

The financial statements have been prepared assuming the Group will continue as a Going Concern.  This assessment has been made on the Group's economic prospects in its financial forecasts.  In assessing whether the going concern assumption is appropriate the Directors have taken into account all available information for the foreseeable future; in particular for the 12 months from the date of approval of the financial statements.  This includes:

·    future cash flows based on management prepared forecasts;

·    receipt of monies from oil and gas sales; and

·    successful settlement of interest and penalties for unpaid payroll taxes.

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and, therefore, can continue to adopt the going concern basis of preparation in these financial statements. 

 

The Financial Statements do not include any adjustments that may be required should the Group be unable to continue as a going concern.

 

2.5       Operating segments

Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision Maker ("CODM").  The CODM is responsible for allocating resources and assessing performance of the operating segments, whilst it is the Directors of the Group that make the strategic decisions and have been designated as the CODM.

 

2.6       Financial assets

a)  Classification

The Group has classified all of its financial assets as loans and receivables or available for sale financial investments.  The classification depends on the purpose for which the financial assets were acquired.  Management determines the classification of its financial assets at initial recognition. 

 

Financial assets at fair value through profit or loss

 

Financial assets at fair value through profit or loss are financial assets held for trading and include investments the Board of Directors expect to trade within the next 12 months. Details of these assets and their fair value is included in note 8.

 

Loans and receivables

 

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.  They are included in current assets.  The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of Financial Position.  Loans and receivables are initially recognised at fair value plus transaction costs and are subsequently carried at amortised cost using the effective interest method, less provision for impairment. 

 

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset, or a group of financial assets, is impaired.  A financial asset, or a group of financial assets, is impaired, and impairment losses are recognised, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event"), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated. 

The criteria that the Group uses to determine whether there is objective evidence of an impairment loss include:

·    significant financial difficulty of the issuer or obligor; and

·    a breach of contract, such as a default or delinquency in interest or principal repayments. 

The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset's original effective interest rate.  The asset's carrying amount is reduced, and the loss is recognised in the Statement of Comprehensive Income. 

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the Statement of Comprehensive Income. 

 

b)  Recognition and measurement

Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the Income Statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Available for sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

 

Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are presented in the Statement of Comprehensive Income as 'disposal of financial assets at fair value through profit or loss' in the period in which they arise.

 

2.7       Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and current balances with banks and similar institutions, which are readily convertible to known amounts of cash.  Cash equivalents are highly liquid amounts that are readily convertible to a known amount of cash. 

 

2.8       Trade and other payables

Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business.  Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer).  If not, they are presented as non-current liabilities.  Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method. 

 

2.9       Equity

Equity comprises the following:

·    "Share premium" represents the premium paid on Ordinary Shares issued of no par value

·    "Foreign currency translation reserve" includes movements that relate to the retranslation of the subsidiaries whose functional currencies are not the US Dollar. 

·    "Reverse acquisition reserve" represents the reserve created in respect of the reverse acquisition difference between the equity structure of the legal parent and the acquired entity. 

·    "Retained earnings" represents retained profits or losses. 

 

2.10              Related Parties

Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence.  Related parties may be individuals (being members of key management personnel, significant shareholders and/or their close family members) or other entities and include entities which are under significant influence of related parties of the Group where those parties are individuals, and any entity that is a related party of the Group. 

 

2.11                  Foreign Currency Translation

Functional and presentational currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates ("the functional currency").  The Financial Statements are presented in US Dollars (US$).  The parent company's functional currency is Pounds Sterling (£) and the subsidiary entities functional currency is US Dollars (US$).  On consolidation of entities with a non-US Dollar presentational currency, their statements of financial position are translated into US Dollar at the closing rate and income and expenses at the average monthly rate.  Share capital is translated into the presentational currency of the Group (US$) using the exchange rate prevailing at the dates of the transactions. 

 

All resulting exchange differences arising in the period are recognised in other comprehensive income, and cumulatively in the Group's translation reserve.  Such translation differences are reclassified to profit or loss in the period in which any such foreign operation is disposed of. 

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.  Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the Consolidated Statement of Comprehensive Income. 

 

2.12                  Share based payments

The Group issues equity-settled share-based payments to certain employees.  Equity-settled share-based payments are measured at fair value at the date of grant.  The equity-settled share-based payments are expensed to the consolidated statement of comprehensive income. 

 

Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is charged with the fair value of goods and services received on a straight line basis over the vesting period based on the Group's estimate of shares that will eventually vest, except where it is in respect to costs associated with the issue of equity, in which case it is charged to the share premium account.

 

2.13                  Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes.  The Group recognises revenue when the amount of revenue can be reliably measured and when it is probable that future economic benefit will flow to the entity.  The Group bases its estimate of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. 

 

Revenue represents the sale value of the Group's share of oil and the income from technical services to third parties.  Revenues are recognised when crude oil has been lifted and title passed to the buyer or when services are rendered. Under Mayan's oil marketing and sales arrangements control passes to the customer upon transfer of physical possession, and as such Mayan principally satisfies its performance obligations at a point in time as opposed to over a period of time.

 

2.14                  Taxation

Income tax expense represents the sum of the current tax payable and deferred tax.  The current tax payable is based on taxable profit for the year.  Taxable profit or loss differs from net profit or loss as reported in the consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.  The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date. 

 

Tax is charged or credited in the consolidated statement of comprehensive income, except when it relates to items charged or credited directly to equity or in other comprehensive income, in which case the tax is also dealt with in equity or other comprehensive income respectively.  Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base used in the computation of taxable profit or loss.  Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.  Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. 

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on tax rates and laws substantively enacted by the reporting date.  Deferred tax assets and liabilities are offset when there exists a legal and enforceable right to offset and they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. 

 

2.15                  Business combinations

Except as described below, the acquisition of subsidiaries is accounted for using the acquisition method.  The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the Group in exchange for control of the acquiree.  The acquiree's identifiable assets, liabilities and contingent liabilities that meet the criteria for recognition under IFRS 3 (Revised) are recognised at their fair value at the acquisition date.  Acquisition costs are expensed. 

Mayan Energy Limited (formerly Northcote Energy Limited) was incorporated as an investment vehicle focussed on the completion of a natural resources acquisition. 

 

On 14 January 2014, the Company acquired 100% of the issued share capital of Northcote Energy Limited, Cayman Islands ("Northcote CI"), a US focussed on-shore oil and gas Group, for a consideration of US$ 10.4 million to be satisfied by the issue of 645,084,519 new Shares to the Sellers.

 

In accordance with IFRS 3 (Revised) the acquisition represented a reverse acquisition.  As a reverse acquisition, the acquisition date fair value of the consideration transferred by Northcote Energy Limited was based on the number of equity instruments that Northcote CI would have had to issue to the owners of Northcote Energy Limited to give the owners of Northcote Energy Limited the same percentage of equity interests that result from the reverse acquisition. 

 

The cost of the combination was calculated using the fair value of all the pre-acquisition issued equity instruments of Northcote Energy Limited at the date of acquisition.  The fair value of the share consideration was based on the latest share transaction of Northcote Energy CI from October 2012 of £0.17 immediately prior to the acquisition.  Goodwill of US$ 1,273,000 was expensed immediately on acquisition and all the acquisition related costs were also expensed in accordance with IFRS 3 (Revised).

 

2.16                   Property, plant and equipment - ("D&P Assets")

Capitalisation

 

D&P Assets are accumulated into single field cost centres and represent the cost of developing the commercial reserves and bringing them into production. From time to time different scenarios occur that call for specific policy guidance. 

 

The following specific policies are applied by the Group:

 

·    CGUs ("Cash Generating Units") - The Group has defined its CGUs as assets or groups of assets representing the smallest identifiable segments generating cash flows that are largely independent of cash flows from other assets or groups of assets.  As defined, each CGU includes the relevant properties, wells, facilities, pipelines and other key components of the included operations. 

·    Dry Hole Costs - Dry hole costs are included in the capitalised costs of the field and would therefore be included in any impairment tests conducted, as described below. 

·    Water Injection/Disposal Wells - The Group may convert an existing well into a water injection or disposal well.  At the time of conversion, all costs associated with the asset are transferred to facility costs.  Any capitalisable costs incurred thereafter will be included as facility costs. 

·    Allocated Costs - Costs such as G&G, Seismic, Capitalised General and Administrative costs, financing costs, etc. which may cover multiple countries, business segments, CGUs or other assets will be allocated to the appropriate CGUs during the period in which the costs were incurred. 

 

Impairment of D&P Assets

 

A review is performed for any indication that the value of the Group's D&P assets may be impaired such as:

·    significant changes with an adverse effect in the market or economic conditions; or

·    obsolescence or physical damage of an asset; an asset becoming idle or plans to dispose of the asset before the previously expected date; or

·    evidence is available from internal reporting that indicates that the economic performance of an asset is or will be worse than expected. 

For D&P assets when there are such indications, an impairment test is carried out at a CGU level. 

When an impairment is identified, the depletion is charged through the statement of comprehensive income if the net book value of capitalised costs relating to the cash generating unit exceeds the associated estimated future discounted cash flows of the related commercial oil reserves. 

 

The Group accounts for D&P assets in accordance with the provisions of IAS 16 following the full cost accounting principles.  The Group will continue to monitor the application of its policy with respect to any future guidance on accounting for oil and gas activities which may be issued. 

 

Workovers/overhauls and maintenance

 

From time to time a workover, overhaul or maintenance of existing D&P assets is required, which normally fall into one of two distinct categories.  The type of workover dictates the accounting treatment and recognition of the related costs:

 

Capitalisable costs

 

Costs will be capitalised where the performance of an asset is improved, where an asset being overhauled is being changed from its initial use, the assets useful life is being extended, or the asset is being modified to assist the production of new reserves.  The asset will then be subject to depreciation. 

·    If the workover is being performed on an asset which has been the subject of a previous workover, the net book value of costs previously capitalised will be derecognised and charged to cost of sales at the same time as the subsequent capitalisable workover expenditures are being recognised as part of the asset's revised carrying value. 

·    If the workover replaces parts, equipment or components of an asset or group of assets, and these replacement items qualify for capitalisation, then the original cost of those parts or equipment, including related installation and set up costs that were capitalised as part of the original asset, will be derecognised and charged to cost of sales in the consolidated statement of comprehensive income.  In the event that the original cost of parts, equipment or components being replaced are not reasonably identifiable, the cost of the new items, adjusted for inflation, may be deemed adequate for consideration as the original cost. 

 

Non-capitalisable costs

 

Expense type workover costs are costs incurred such as maintenance type expenditures, which would be considered day-to-day servicing of the asset.  These types of expenditures are recognised within cost of sales in the consolidated statement of comprehensive income as incurred.  Expense workovers generally include work that is maintenance in nature and generally will not increase production capability through accessing new reserves, producing from a new zone or significantly extend the life or change the nature of the well from its original production profile.

 

Decommissioning

 

Provision is made for the cost of decommissioning assets at the time when the obligation to decommission arises.  Such provision represents the estimated liability for costs which are expected to be incurred in removing production facilities and site restoration at the end of the producing life of each field. 

 

 

2.17                  Critical Accounting Estimates and Judgements

Use of Estimates and Judgements

The Group makes estimates and assumptions concerning the future.  The resulting accounting estimates will, by definition, seldom equal the related actual results.

 

A)  Carrying value of Property, Plant and Equipment (Note 10)

At 31 December 2018, mineral leases and capitalised daily costs and equipment on producing properties have a total carrying value of US$ 1,522,000 (2017: US$ 990,000). Management tests annually whether the assets have future economic value in accordance with the accounting policies. These assets are also subject to an annual impairment review.

 

The recoverable amount of each property has been determined based on judgement surrounding oil and gas price (circa US$50-60) per barrel and the expectated timing as to when the wells will commence production (circa May 2019). These estimates and judgements are subject to uncertainty and changes in circumstance may impact the recoverable amount.

 

B)  Decommissioning provision (Note 16)

The Group has decommissioning obligations in respect of its interests. The full extent to which a provision is required depends on the legal requirements at the time of decommissioning, the costs and timing of any decommissioning works.

The decommissioning provision is updated each year to reflect management's best estimates based on the current economic environment of the key assumptions used. Actual decommissioning costs will ultimately depend upon future market prices for the necessary decommissioning works required, which will reflect market conditions at the relevant time. Furthermore, the timing of decommissioning is likely to depend on when the fields cease to produce at economically viable rates.  This in turn will depend upon future oil and gas prices, which are inherently uncertain. 

 

The key inputs used by Management in calculating the decommissioning provision are the number of wells both currently and previously in production, for which at the end of the life of the well the Group will have the obligation to plug and abandon, and the estimated cost per well of plugging and abandoning the well. Senior technical personnel estimate the per well decommissioning cost based on previous cost history as well as knowledge of the current market cost environment.

 

C)  Share based payments (Note 14)

The Group has made awards of options and warrants over its unissued capital. The valuation of these options and warrants involves making a number of estimates relating to price volatility, future dividend yields, expected life and forfeiture rates.  Options and warrants are valued using the Black Scholes method. Volatility is calculated by measuring the historical volatility of the Company's share price over the life of the option or warrant. This volatility measurement method is normal accepted industry practise and Management deems it appropriate to adopt for Mayan.

 

D)  Payroll tax provision (Note 16)

The Group has payroll tax liabilities dating back to 2014 which are included in trade and other payables and provisions.

The Group has estimated the additional amounts which will be payable to the US State in terms of penalties and interest in terms of the penalties due as follows:

·    Failure to file (25% per year)

·    Failure to deposit (10% per year)

·    Interest on payable (0.5% per month)

 

E)  Financial assets at fair value through profit or loss (Note 12)

Financial assets at fair value through profit or loss have a carrying value of $419,000 at 31 December 2018 following equity share acquisitions in the year. An impairment charge of $1,126,000 (2017: Nil) has been recognised in the year.

 

The Group follows the guidance of IFRS 9 to determine when a financial asset at fair value through profit or loss is impaired. This determination requires significant judgement. In making this judgement, the Company evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost; and the financial health of the short-term business outlook for the investee, including factors such as industry and sector performance and operational and financing cash flow.

 

3.   Finance income and Finance costs

2018

2017

 

Finance income

US$ 000's

US$ 000's

 

Income on cash and cash equivalents

-

4

 

  -

  4

 

2018

2017

Finance costs

US$ 000's

US$ 000's

Bank charges and finance expense on borrowings

17

120

 17

120    

 

 

4.   Segmental analysis

As the Group made investments during the year in order to commence the establishment of a strategic portfolio of investments in listed and unlisted entities in the oil and gas sector, the Directors believe the operations of the Group now comprise two operating segments.  The other segment comprising the production, development and sale of hydrocarbons and related activities in the USA. 

 

Information per the segments reportable to the Chief Operating Decision Maker are as follows:

 

2018

USA

$ 000's

Investments

$ 000's

Total

$ 000's

Revenues

104

-

104

Interest expense

17

-

17

Impairment of assets

-

1,126

1,126

Reportable segment assets

1,708

419

2,127

Reportable segment liabilities

1,614

-

1,614

 

 

2017

USA

$ 000's

Investments

$ 000's

Total

$ 000's

Revenues

30

-

30

Interest expense

120

-

120

Impairment of assets

2,064

-

2,064

Reportable segment assets

1,829

1,910

3,739

Reportable segment liabilities

2,144

-

2,144

 

The comparative segmental analysis related to one segment only being the production, development and sale of hydrocarbon and related activities in the USA. As said, this is the same as the information in the prior year primary statements and supporting notes. As such no separate analysis is shown here.

 

Revenue sales are all made to one key customer (2017: one key customer).

 

5.   Earnings per Share

Basic earnings per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. 

2018

2017

Earnings per share

US$ 000's

US$ 000's

Loss attributable to owners of the parent

(3,211)

(3,836)

Weighted average number of ordinary shares in issue

1,312,110,098

206,124,133

Earnings per share (cents)

(0.24)

(1.86)

 

In accordance with International Accounting Standard 33 'Earnings per share', no diluted earnings per share is presented as the Group is loss making.  

 

 

 

 

6.   Expenses by nature

The Group's operating loss is stated after charging:

2018

2017

Expenses by nature

US$ 000's

US$ 000's

Auditors' remuneration - audit services

56

46

Professional and consulting fees

692

345

Travel and accommodation

106

141

Impairment of financial assets at fair value through profit or loss

1,126

2,064

Rent and office costs

385

41

Staff costs (including share-based payments)

451

857

Loss on financial assets at fair value through profit and loss

129

-

Joint Brokers & Nomad

101

354

Legal fees

148

21

Other expenses and foreign exchange

(79)

(156)

Net movement in decommissioning provision

(201)

(200)

Total

2,914

3,513

 

During the year a number of creditor balances were settled for less than their stated amount with the balance going against the individual expense line to which it originally related.

 

7.   Staff Costs (including Directors)

The Group employed an average number of 6 members of staff, including 4 directors (2017: 5 and 3 respectively). 

2018

2017

Staff costs (including Directors)

US$ 000's

US$ 000's

Directors remuneration

279

428

Staff costs

172

429

451

857

 

 

The 2017 Staff costs includes an expense for payroll taxes payable of $163,000 which relates to previous periods.

 

Key management of the Group are considered to be the Directors and the remuneration of those in office during the year was as follows:

Key management remuneration

Short term employee benefits

Other long term benefits

Directors other benefits

Total

Total

2018

2017

US$ 000's

US$ 000's

US$ 000's

US$ 000's

US$ 000's

Paulo G. Amoruso

 8

  -

-

8

-

Charlie Wood

 155

 -

-

155

118

JD Mc Graw

 48

 -

-

48

90

Sarah Cope

3

-

-

3

-

Eddie Gonzalez

 65

  -

-

65

220

Total Key Management

279

  -

-

  279

  428

8.   Financial Risk Management

The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk.  The Group's overall risk management programme seeks to minimise potential adverse effects on the Group's financial performance. Risk management is carried out by the Board. 

 

General objectives, policies and processes

 

The Directors have overall responsibility for the determination of the Company's risk management objectives and policies.  Further details regarding these policies are set out below:

 

Financial instruments by category

 

The accounting policies for financial instruments have been applied to the line items below:

 

31 December 2018

Total

US$ 000's

Assets

Cash and cash equivalents

143

Trade and other receivables

43

Total assets measured at amortised cost

186

Financial assets at fair value through profit or loss

419

Total assets at fair value through profit or loss

419

Liabilities

Trade and other payables

767

Total liabilities measured at amortised cost

767

 

 

31 December 2017

Total

US$ 000's

Assets

Cash and cash equivalents

803

Trade and other receivables

320

Total assets measured at amortised cost

1,123

Financial assets at fair value through profit or loss

1,626

Total assets at fair value through profit or loss

1,626

Liabilities

Trade and other payables

893

Total liabilities measured at amortised cost

893

 

 

(a) Market Risk

Foreign exchange risk

The Group operates principally in the US but is exposed to foreign exchange risk arising from currency exposures, primarily with respect to the British Pound. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities. 

 

As at 31 December 2018 the exposure to this risk is not considered material to the Group's operations and thus the Directors consider that, for the time being, no hedging or other arrangements are necessary to mitigate this risk and as a result of this not being considered material no disclosure has been made in this respect. 

 

Oil price risk

While the return on the Group's operations and investments is US$ denominated, changes in Oil and Gas prices impact on the viability of its operations and also the ease with which the Group can raise capital.

 

(b) Credit Risk

The Group has policies in place to ensure that sales of products are made to customers with appropriate credit worthiness. The Group limits credit risk by assessing creditworthiness of potential counterparties before entering into transactions with them and continuing to evaluate their credit-worthiness after transactions have been initiated. 

 

Where appropriate, the use of prepayment for product sales limits the exposure to credit risk. There is no difference between the carrying amount of trade and other receivables and the maximum credit risk exposure. 

 

Credit risk also arises from cash and cash equivalents. The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk. The Group will only keep its holdings of cash and cash equivalents with institutions which have a minimum credit rating of 'B'.

 

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at December 31, 2018 and 2017 were as follows:

 

2018

2017

US$ 000's

US$ 000's

Assets

Cash and cash equivalents

143

803

Trade and other receivables

43

320

Total

186

1,123

 

(c) Liquidity Risk

Management of liquidity risk is achieved by monitoring budgets and forecasts against actual cash flows. Where the group entered into borrowings during the year, management monitored the repayment and servicing of these arrangements against the contractual terms and reviewed cash flows to ensure that sufficient cash reserves were maintained. 

 

(d) Capital Risk Management

The Directors determine the appropriate capital structure of the Group, specifically, how much is raised from shareholders (equity) and how much is borrowed from financial institutions (debt), in order to finance the Group's business strategy. 

 

The Group's policy as to the level of equity capital and reserves is to ensure that it maintains a strong financial position and gearing ratio which provides financial flexibility to continue as a going concern and to maximise shareholder value. The capital structure of the Group consists of shareholders' equity together with net debt (where relevant). The Group's funding requirements are met through a combination of debt, equity and operational cash flow. 

 

(e) Fair Value Estimation

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

 

·    Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).

·    Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

·    Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

 

The fair values for the Group's assets and liabilities are not materially different from their carrying values in the financial statements.

 

The following table presents the Company's financial assets that are measured at fair value:

 

31 December 2018:

Level 1

Level 2

Level 3

Total

US$ 000's

US$ 000's

US$ 000's

US$ 000's

Financial assets at fair value through profit or loss

Trading Securities

419

-

-

419

 

 

31 December 2017:

Level 1

Level 2

Level 3

Total

US$ 000's

US$ 000's

US$ 000's

US$ 000's

Financial assets at fair value through profit or loss

Trading Securities

-

-

1,626

1,626

 

   

The Company does not have any liabilities measured at fair value. There have been no transfers in to or transfers out of fair value hierarchy levels in the period.

 

(i)         Financial instruments in level 1

 

The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in Level 1.

           

(ii)        Financial instruments in level 2

 

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. 

 

(iii)       Financial instruments in level 3

 

If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. As permitted under IFRS 13 the cost model has been used to fair value the investments if cost is considered to represent fair value. This is because there is a lack of sufficient appropriate information on which to base an alternative valuation technique for the investments. The income and market valuation models are not thought to be appropriate due to the type of investments. Management may allow for an impairment of any of the investments where the realisable value is believed to be less than the carrying value. Management made an impairment charge of $1,126,000 against the value of level 3 assets in 2018 (2017: $nil).

 

The following table presents the changes in level 3 instruments for the year.

2018

2017

US$ 000's

US$ 000's

Opening balance

1,626

-

Additions into level 3

-

1,626

Impairment of level 3 (Note 12)

(1,126)

-

Disposals from level 3 (Note 12)

(405)

-

Foreign exchange

324

-

Transfers into level 1

(419)

Closing balance

-

1,626

 

                       

9.   Taxation

Taxation

2018

2017

US$ 000's

US$ 000's

Current income tax charge

-

-

Deferred tax charge/ (credit)

-

-

Total taxation charge/ (credit)

-

-

 

Taxation reconciliation

 

The charge/(credit) for the year can be reconciled to the loss per the consolidated statement of comprehensive income:

2018

2017

Tax Reconciliation

US$ 000's

US$ 000's

Loss before income tax

(3,211)

(3,836)

Tax on loss at the weighted average Corporate tax rate of 26.5% (2017: 26.5%)

(851)

(1,017)

Effects of:

Tax losses carried forward

851

1,017

Total income tax expense

-

-

 

 

2018

2017

Unprovided deferred tax asset:

US$ 000's

US$ 000's

Group tax losses carried forward amount to US$ 22.1M (2017: US$ 21.2 M) as determined by cumulative losses multiplied by the US standard rate of corporation tax 21% (2017: 21%).

4,643

4,452

 

The deferred tax asset has not been provided for because of uncertainty over the timing of future taxable profits against which the losses may be offset.

 

 

 

10.    Property, plant & equipment

Property, plant and equipment

Other Tangible Assets

Assets under construction

Development and production assets

Total

US$ 000's

US$ 000's

US$ 000's

US$ 000's

Cost

At 1 Jan 2017

11

955

13,437

14,403

Additions

-

-

491

491

Disposal

-

-

-

-

At 31 December 2017

11

955

13,928

14,894

Additions

-

-

532

532

Disposal

-

-

-

-

At 31 December 2018

11

955

14,460

15,426

Depreciation and impairment charge

At 1 Jan 2017

 (2)

(955)

(10,883)

(11,840)

Impairment

(9)

-

(2,055)

(2,064)

Charge for the year

-

-

-

-

At 31 December 2017

 (11)

(955)

(12,938)

(13,904)

Impairment

-

-

-

-

Charge for the year

-

-

-

-

At 31 December 2018

 (11)

(955)

(12,938)

(13,904)

Net book value

At 31 December 2018

-

-

1,522

  1,522

At 31 December 2017

-

-

  990

  990

 

 

Property, plant and equipment: Analysis of NBV by project

Other Tangible Assets

Assets under construction

Development and production assets

Total

2018

Total

2017

US$ 000's

US$ 000's

US$ 000's

US$ 000's

US$ 000's

Zink Ranch

-

-

500

500

500

Stockdale

-

-

342

342

260

Forrest Hill

-

-

280

280

230

Austin Chalk

-

-

400

400

  -

At 31 December 2018

-

-

1,522

1,522

990

Impairment

At year end, Management review each exploration project for any indication of impairment.  Indications would include sustained changes in the oil and gas price outlook, written off wells, changes in management's development plan and the relinquishment of development acreage. The principle influences on management's decision to impair the properties are described below:

 

Oil price

According to the US Energy Information Administration ('EIA'), crude oil prices for West Texas Intermediate ('WTI') are expected to remain in the $60 - $63 range for 2019 and 2020.  The EIA also expects Henry Hub natural gas spot prices will average $2.79/million British thermal units (MMBtu) in 2019 and $2.78/MMBtu in 2020.  (See, www.EIA.gov/outlook/steo/marketreview/crude.php)

 

Development plan

The value of any proven Oil & Gas asset is a function of both its current production but also in the extraction of proven but as yet unproduced reserves. 

 

The Group re-gained full ownership of Zink Ranch and entered into agreements to secure material working interests in a portfolio of wells  (the Austin Field) in Texas. As part of the programme, the Group intend to invest in technology and techniques to best enhance production and identify new horizons.

 

Capital constraint

The Group only has a finite amount of capital available and following a comprehensive third party asset review, management prioritised capital allocation to reworking wells in the Austin Field as they offered a better return on balance that than investing in new exploration opportunities.

 

The impairment provision in the year was charged against the following properties:

 

 

Impairment provision by properties:

2018

2017

Project

Rationale

US$ 000's

US$ 000's

Shoats Creek

Lack of sustainable production given the considerable expense to establish production.  High operating and maintenance costs.

 -

 1,800

Horizon

High operating costs continue to impact ability to develop.  Swapped for remaining interests in Zinc in 2017.

-

169

South Weslaco

Was assigned in a prior period.

-

95

Total impairment charge for the year

-

2,064

 

11.   Trade and other receivables

2018

2017

US$ 000's

US$ 000's

Trade receivables and accrued income

43

36

Block Energy (convertible loan portion)

-

284

Total

43

320

 

•    Trade and other receivables are stated at fair values, which as at the year-end equate to their carrying values.  As at the year-end trade and other receivables were not past due, were not impaired and were all denominated in US$. 

•    In June 2017, the company invested £300,000 into Block Energy plc ("Block Energy"), at the time a NEX listed oil and gas company with interests primarily in Georgia.  This included a £210,000 (US$ 284,000) investment via a Secured Convertible Loan Note with a 10% flat coupon with conversion to equity at a 10% discount to any price at which Block Energy's shares are listed or admitted to trading on any stock exchange other than NEX.  The Secured Convertible Loan was converted into ordinary shares on 11 June 2018 and subsequently sold when the Company sold its investment in Block.

 

12.    Financial assets at fair value through profit or loss

 

Equity securities - held for trading

2018

2017

US$ 000's

US$ 000's

Block Energy plc (equity portion)

-

121

Deloro Energy LLC

419

1,505

Total

419

1,626

 

Financial assets at fair value through profit or loss are presented within 'operating activities' as part of changes in working capital in the Statement of Cash Flows.

 

Changes in fair values of financial assets at fair value through profit or loss, and gains or losses on disposal are recorded as 'disposal of financial assets at fair value through profit or loss' in the Statement of Comprehensive Income (note 6). The fair value of all equity securities is based on management valuation, being a level 1 hierarchy.

 

The company has made two investments:

•    In June 2017, invested £300,000 into Block Energy plc ("Block Energy"), at the time a NEX listed oil and gas company with interests primarily in Georgia.  Investment consisted of a £90,000 (US$ 121,000) equity investment via a placing of new shares at £0.0085 per Block Energy Share which resulted in Mayan acquiring a 2.47% equity interest in Block Energy.  In addition, a £210,000 (US$ 284,000) investment via a Secured Convertible Loan Note with a 10% flat coupon with conversion to equity at a 10% discount to any price at which Block Energy's shares are listed or admitted to trading on any stock exchange other than NEX.  Block Energy was admitted to Aim in March 2018 and this investment was sold during 2018 with a loss of $129,000 on disposal being recorded through the Consolidated Statement of Comprehensive Income.

•    In November 2017, invested US$1,505,000 into Deloro Energy LLC ("Deloro").  The investment consisted of US$ 1,005,000 paid in cash and US$500,000 settled by way of 64,102,564 Mayan Ordinary shares. Deloro, was a special purpose US company formed to acquire an interest in Petroteq Energy Inc. ("Petroteq")  (TSXV:PQE).  During 2018, Deloro began a process of liquidation and distributed the shares of Petroteq to its shareholders. Deloro expects to complete its liquidation by the second quarter of 2019. During 2018 an impairment charge of US$1,126,000 was recorded through the Consolidated Statement of Comprehensive Income.

 

 

13. Trade and other payables

2018

2017

US$ 000's

US$ 000's

Trade payables and accruals

405

531

Payroll Taxes and social security

362

362

Total

767

893

 

14. Share based payment

 

The following is a summary of the share options and warrants outstanding and exercisable as at 31 December 2018 and 31 December 2017 and changes during the period:

 

Summary of Share Options and Warrants

2018

2017

Number of options and warrants

Weighted Average Exercise price

Number of options and warrants

Weighted Average Exercise price

(000's)

Pence

(000's)

Pence

Outstanding and exercisable, beginning of year

87,092

0.05

11,270

0.05

Granted

199,884

0.01

76,742

0.09

Exercised

(56,600)

0.03

-

-

Expired

(554)

0.02

(170)

0.97

Cancelled

(4,400)

0.06

(750)

0.00

Outstanding and exercisable, end of year

225,422

0.01

87,092

0.05

 

The above is expressed in GB£ pence and not US$ cents due to the terms of the options and warrants.

 

The following share options or warrants were outstanding in respect of the ordinary shares:

Grant Date

Expiry Date

Ex Price Pence

01-Jan-17

Expired

Granted

Cancelled

31-Dec-17

Expired

Exercised

Granted

Cancelled

31-Dec-18

12/02/2015

12/02/2018

0.36

157,451

           -  

                 -  

             -  

157,451

 (157,451)  

             -  

                 -  

             -  

                 -

20/04/2015

20/04/2020

0.9

224,096

           -  

                 -  

             -  

224,096

           -  

             -  

                 -  

             -  

   224,096

27/11/2015

27/11/2018

0.6

1,041,666

           -  

                 -  

             -  

1,041,666

           -  

             -  

                 -  

             -  

1,041,666

20/04/2016

21/04/2018

0.126

396,825

           -  

                 -                 

             -  

396,825

 (396,825)  

             -  

                 -                 

             -  

                 -

01/09/2016

02/09/2019

0.06

1,111,110

           -  

                 -

             -  

1,111,110

           -  

             -  

                 -

             -  

 1,111,110

01/09/2016

01/09/2021

0.06

5,150,000

           -  

                 - 

(750,000)

4,400,000

           -  

             -  

                 - 

(4,400,000)

                 -

28/10/2016

29/10/2018

0.07

3,019,322

           -  

                 - 

             -  

3,019,322

           -  

             -  

                 - 

             -  

  3,019,322

27/06/2017

27/06/2020

0.03

             -  

           -  

24,583,333

             -  

24,583,333

           -  

 (24,583,333)  

                 -

             -  

                 -

08/08/2017

08/08/2020

0.03

             -  

           -  

28,824,999

             -  

28,824,999

           -  

(24,491,666)  

                 -

             -  

    4,333,333

23/11/2017

23/11/2020

0.03

             -  

           -  

23,333,333

             -  

23,333,333

           -  

(7,525,000)  

                 -

             -  

  15,808,333

15/01/2018

15/01/2023

0.01

             -  

           -  

                 - 

             -  

                 - 

           -  

             -  

116,633,589

             -  

116,633,589

06/07/2018

06/07/2020

0.09

             -  

           -  

                 - 

             -  

                 - 

           -  

             -  

  70,833,334

             -  

  70,833,334

06/07/2018

06/07/2020

0.06

             -  

           -  

                 - 

             -  

                 - 

           -  

             -  

    9,916,666

             -  

     9,916,666

31/07/2018

31/07/2020

0.09

             -  

           -  

                 - 

             -  

                 - 

           -  

             -  

    2,500,000

             -  

     2,500,000

11,100,470

-

76,741,665

(750,000)

87,092,135

(554,276)

(56,599,999)

199,883,589

  (4,400,000)

225,421,449

 

 

1)   Director options granted 15.01.2018 vests after 01.09.2021 on condition that the Director remain employed. It has subsequently been cancelled.

 

 

New options and warrants have been valued using the Black-Scholes valuation method and the assumptions used are detailed below. The expected future volatility has been determined by reference to the historical volatility:

 

Current year:

Grant date

Share price at grant (pence)

Exercise price (pence)

Volatility (%)

Warrant/ Option life (year(s))

Dividend yield (%)

Risk-free investment rate (%)

Fair value per option (US cent)

27/06/17

0.275

0.3

190

3

0

1

0.3138

08/08/17

0.260

0.3

190

3

0

1

0.3047

22/11/17

0.600

0.6

190

2

0

1

0.6850

 

 

The Group recognised US$ 298,404 (2017: $US 324,817) relating to equity-settled share based payment transactions during the year which was charged to share premium.

 

For the share options and warrants outstanding as at 31 December 2018, the weighted average remaining contractual life was 2.69 years (2017: 2.33). 

3.   Share capital

Number

Share price

Share Premium

Allotted, called-up and fully paid

(pence per share)

US$ 000's

Balance at 1 January 2017

21,144,630,415

33,126

Mar 17 Placing

12,000,000,000

0.05

747

Consolidation

(33,061,768,839)

0.2

June 17 Placing

195,833,333

0.03

749

June 17 Broker/Consultant

60,000,000

0.03

230

Aug 17 Placing

203,666,666

0.03

795

Aug 17 Broker/Consultant

85,128,205

0.03

331

Aug17 Placing

83,333,334

0.03

325

Sept 17 Placing

12,820,514

0.03

50

Sept 17 Broker/Consultant

343,333,332

0.03

2,689

Nov 17 Placing

64,102,563

0.06

509

Nov 17 Directors & Consultants

5,064,102

0.06

40

Nov 17 Broker/Consultant

30,192,306

0.06

240

Total Issue costs

-

-

(885)

Balance at 31 December 2017

1,166,335,931

38,946

Mar Exercise of warrants

4,166,666

0.03

18

May Exercise of warrants

8,333,333

0.03

34

Jun Exercise of warrants

36,575,000

0.03

147

Jun Exercise of options

7,525,000

0.06

60

Jun 18 Placing

11,141,176

0.085

125

Jun 18 Placing

141,666,666

0.06

1,127

Share issue costs

-

-

(70)

Jun 18 Creditors

18,782,869

0.07

175

Share issue costs

-

-

(290)

Jul 18 Broker/Consultant

18,437,951

0.06

145

Share issue costs

-

-

(8)

Aug 18 Acquisition of Austin Chalk wells

25,274,725

0.07

230

Oct 18 Directors & Consultants

24,707,626

0.05

150

Balance at 31 December 2018

1,462,946,943

40,789

 

 

 

4.   Provisions

 

Provisions:

Plug & Abandonment

Payroll Tax interest and penalties

Other provisions

Total 2018

Total 2017

US$ 000's

US$ 000's

US$ 000's

US$ 000's

US$ 000's

Brought forward

873

203

175

1,251

1,073

Provision for the year

50

-

81

131

966

Released in year

(360)

-

(175)

(535)

(788)

Carried forward

563

203

81

847

1,251

Current

-

203

81

284

588

Non-Current

563

-

-

563

663

Total

563

203

81

847

1,251

 

The provision in respect of Plug & Abandonment represents the present value of the decommissioning of up to 33 (2017: 44) existing producing and currently shut-in well bores.

 

Decommissioning is due to take place from 2019 to 2027 (2017: 2018 to 2027). The provisions are made using the Group's internal estimates that Management believes form a reasonable basis for the expected future costs of decommissioning.  Releases against this provision are made when wells are plugged and abandoned during the course of the year under review.

 

The provision in respect of payroll tax interest and liabilities relates to expected fines and penalties due on unpaid payroll taxes. 

 

Other provisions consists of $81,000 in disputed supplier obligations.

 

5.   Reconciliation of supplementary cash flow information

 

2017

US$ 000's

 

Cash flow

US$ 000's

Non-cash changes

US$ 000's

Issue of warrants

US$ 000's

2018

US$ 000's

Property, plant and equipment

990

302

230

-

1,522

Trade payables and provisions

2,144

(60)

(470)

-

1,614

Share premium

38,946

1,316

825

(298)

40,789

42,080

1,558

585

(298)

43,925

 

6.   Contingent liabilities

The amount payable in respect of payroll tax interest and liabilities (Note 16) for expected fines and penalties due on unpaid payroll taxes may be higher than the provision and is subject to negotiation with the US Internal Revenue Service. 

 

7.   Capital Commitments

There were no capital commitments authorised by the Directors or contracted other than those provided for in these financial statements for at 31 December 2018 (31 December 2017: None). 

 

8.   Ultimate Controlling party

As at the Consolidated Statement of Financial Position date, the Directors believe that there is no ultimate controlling party. 

 

9.   Related party transactions

The following transactions were undertaken with related parties:

 

Director's remuneration has been disclosed in Note 7.

 

Transactions

2018

2017

$'000

$'000

 

Orana Corporate LLP

Entity under common directorship: C Wood

Administration costs

88

14

McGowen & Fowler P.L.L.C.

Entity in which P Amoruso is a partner through 30/04/2019

Legal fees

98

-

Deloro LLP

 

Entity under common directorship: H Gonzalez & C Wood (who held a 48.4% related shareholding pre-investment)

Investment

-

1,505

10. Events after the reporting date

 

Smart Bit LLC Assets Acquisition

Mayan agreed to a second amended and restated sale and purchase Agreement (the 'Agreement') with Smart Bit LLC ('Smart Bit') updating the original agreement with Smart Bit as announced on 23rd August 2018.    Under the terms of the Agreement Smart Bit agreed to sell Mayan a 100% WI and retain a 10% gross overriding royalty interest in the following wells at Austin Field:  Edwards, Neubauer Stanush, Kosub, Ritchie Talley and a 5% gross overriding royalty at the Garrison well. 

 

The consideration for the revised agreement was as follows:

1.    US$ 170,000 cash paid by Mayan Energy in August of 2018

2.    48,614,725 shares in Mayan Energy Ltd

a.    25,274,725 shares previously issued 0.7p

b.    23,340,000 further shares issued at 0.2p

 

Total consideration under the revised deal on the effective date of the transaction is approximately US$ 375,000.  

 

 January 2019 Capital Raise

On 29th January 2019 Mayan raised a total of £750,000 gross proceeds at a price of 0.12p per share (the "Placing") and £223,069  being 185,890,442 shares issued in settlement of accrued directors fees, consulting fees, settlement of accrued liabilities and an amended agreement with Smart Bit LLC;  Directors participated in the Placing to the extent of £70,000 cash subscription and  a further £96,640 in accrued Directors' fees and legal advisor fees settled by the issue of shares at the Placing Price.

 

Acquisition of Attis Oil & Gas Ltd

On the 30th April 2019 the Company entered into an agreement to acquire 100% of Attis Oil & Gas Limited and its subsidiaries, affiliates and related entities (collectively referred to as "Attis"), a proven US oil & gas operator which holds a 50% interest in the Fort Worth Field, TX and operates 98 wells across 5,100 acres in the Fort Worth Basin ('the Acquisition'). 

 

The Acquisition was satisfied through the issue of 952,197,460 new Ordinary Shares at a price of 0.14 pence per Ordinary Share ("Consideration Shares").  

 

On acquisition

£'000

Purchase consideration (952,197,460 shares @ .14p)

1,333

Fair value of net assets acquired

(150)

Development and production assets

1,183

 

The Attis Oil & Gas Ltd balance sheet is preliminary and may be subject to change.

 

If new information obtained within one year from the acquisition date about the facts and circumstances that existed at the acquisition date identifies adjustments to the above amounts, or any additional provisions that existed at the acquisition date, then the acquisition accounting will be revised.

 

 

Placing

On the 30th April The Acquisition became unconditional following the completion of £700,000 placing through the issue of 500,000,000 new ordinary shares of no par value in the capital of the Company. 17,857,142 Ordinary Shares were issued to a third party consultant at the Placing Price for introduction of the transaction ("Settlement Shares"). 10,400,325 Ordinary Shares were issued at Placing Price in relation to the settlement of accrued Director fees to the Company's Chairman.

 

Following the issue of the Ordinary Shares (being the Consideration Shares for the Acquisition of Attis, the Placing Shares and Settlement Shares), the Company's issued share capital consisted of 3,774,292,308 Ordinary Shares.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
FR LFFLIRSIILIA

Login to your account

Don't have an account? Click here to register.