Enwell Energy plc
Registered number 4462555
Annual Report and Financial Statements
for the year ended 31 December 2023
Contents
Strategic Report
- Highlights
- Chairman’s Statement
- Chief Executive’s Statement
-
Business Model
- Our Strategic Priorities
- Overview of Assets
- Overview of Reserves
-
-
-
-
-
Finance Review
Key Performance Indicators
Sustainability
Principal Risks and Uncertainties
Statement Under S172(1) of the Companies Act 2006
Corporate Governance
Board of Directors
Corporate Governance Statement
Directors’ Report
Independent Auditors’ Report
Financials
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Company Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Company Balance Sheet
Company Statement of Changes in Equity
Company Cash Flow Statement
Notes forming part of the financial statements
Corporate Information
Glossary
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Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
Strategic Report
Highlights
Operational
• Aggregate average daily production of 2,644 boepd (calculated on the days when the Group’s fields
were actually in production) (2022: 2,956 boepd (calculated on the days when the Group’s fields were
actually in production))
• Aggregate production volumes for the year of 885,610 boe (not adjusted for days when the Group’s
fields were off production) (2022: 965,730 boe (not adjusted for days when the Group’s fields were off
production)
• GOL-107 development well completed in Q4 2023 and is undergoing long-term test production
Financial
• Revenue of $62.2 million (2022: $133.4 million), down 53%, primarily as a result of lower production
rates and gas prices
• Gross profit of $39.0 million (2022: $85.9 million), down 55%
• Operating profit of $35.5 million (2022: $75.8 million), down 53%, predominantly as a result of lower
production rates and gas prices
• Net profit of $26.5 million (2022: $60.2 million), down 56%
• Cash and cash equivalents of $76.5 million as at 31 December 2023 (2022: $88.7 million), and of
$91.0 million as at 27 May 2024
• Average realised gas, condensate and LPG prices in Ukraine were
lower at $394/Mm3
(UAH14,426/Mm3), $71/bbl and $98/boe respectively (2022: $960/Mm3 (UAH30,341/Mm3) gas,
$73/bbl condensate and $143/boe LPG)
•
Interim dividend of 15 pence per ordinary share, £48.1 million in aggregate, paid in June 2023 (2022:
nil)
Outlook
• The Russian invasion of Ukraine in February 2022 has had a significant impact on all aspects of life
in Ukraine, including the Group’s business and operations. The scale and duration of disruption to the
Group’s business continues to be difficult to predict, and there remains significant uncertainty about
the outcome of the war in Ukraine
•
In April and May 2023, the Ukrainian authorities took a number of regulatory actions against the Group,
which included the suspension of the VAS production licence and SC exploration licence, and
consequently all work at these licences was suspended
• Subject to the resolution of the regulatory issues and the Group’s ability to operate safely, development
work planned for the remainder of 2024 and 2025 at the MEX-GOL and SV fields includes deepening
the MEX-109 well to explore a deeper horizon, investigating the hydraulic fracturing of the SV-29 well,
planning a workover of the MEX-102 well to access a shallower horizon, evaluating the potential for
sidetracking of the MEX-119 well to access additional reserves, installing additional compression
equipment and upgrading the flow-line network and other field infrastructure
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
2
• Further work on the VAS field and SC licence area will remain suspended until there is a resolution of
the regulatory issues, including the lifting of the suspension orders
• Currently, the Group retains a substantial proportion of its cash outside Ukraine, which enhances the
Group’s ability to navigate the current risk environment for the foreseeable future, and provides a
material buffer to any further disruptions to the Group’s operations
• The Group’s development programme for the remainder of 2024 and 2025 is expected to be funded
from existing cash resources and operational cash flow
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
3
Chairman’s Statement
I am pleased to present the 2023 Annual Report and Financial Statements but wish that circumstances were
different. The invasion of Ukraine by Russia in February 2022 and the ongoing conflict has created a very
challenging and worrying outlook for both the current and future situation in Ukraine, and I am greatly saddened
by the terrible events occurring there.
The ongoing war has had a significant impact on all aspects of life in Ukraine, including the Group’s business
and operations. The overall scale and duration of disruption to the Group’s business continues to be difficult
to predict, and there remains significant uncertainty about the outcome of the war.
Notwithstanding the disruption caused by the war, during 2023, the Group continued with some development
activities at the MEX-GOL and SV fields, as well as some operations at the VAS field and SC exploration
licence area until regulatory action by the Ukrainian authorities in May 2023 required the suspension of all
activities at both the VAS field and SC licence. At the MEX-GOL field, the GOL-107 development well was
completed in late October 2023, and initial testing demonstrated gas flows from the well, albeit at lower than
anticipated rates. The well has been hooked up to the gas processing facilities for longer-term testing to
establish optimal operating parameters and to assess whether stimulation may improve production rates.
Additionally, at the MEX-GOL field, planning continued for the deepening of the MEX-109 well to explore a
deeper horizon, a workover of the MEX-102 well to access a shallower horizon and evaluating the potential for
sidetracking of the MEX-119 well to access additional reserves. At the SV field, hydraulic fracturing of the SV-
29 development well is being considered.
Aggregate average daily production (calculated for the days when the fields were actually on production) from
the MEX-GOL, SV and VAS fields during the year was 2,644 boepd, which is lower than the aggregate daily
production rate of 2,956 boepd achieved during 2022 due to the disruption caused by the war, natural field
decline and the suspension of the VAS field operations in May 2023. The aggregate production volumes for
the year were 885,610 boe (not adjusted for days when the fields were off production), which is lower than the
aggregate production volumes of 965,730 boe in 2022 for the same reasons.
There was also a significant decline in gas prices during the year causing revenues to decline to $62.2 million
(2022: $133.4 million). The Group’s net profit was lower at $26.5 million (2022: $60.2 million) and operating
profit was lower at $35.5 million (2022: $75.8 million). Cash generated from operations increased to $62.9
million (2022: $47.5 million), predominantly due to the recovery of receivables which had built up over previous
periods.
Whilst the Group’s operational activities continued broadly in line with 2022, development activity was
significantly impacted by the increase in risks faced by the Group in Ukraine.
There is significant disruption to the fiscal and economic environment in Ukraine due to the ongoing conflict,
but during 2023, growth returned to the economy and the inflation rate declined, although the Ukrainian Hryvnia
weakened further against other currencies. It is likely that fiscal and economic uncertainties will continue in the
future until hostilities cease.
The Ukrainian Government has implemented a number of reforms in the oil and gas sector in recent years,
which include the deregulation of the gas supply market in late 2015, and subsequently, simplification of the
regulatory procedures applicable to oil and gas exploration and production activities in Ukraine.
The deregulation of the gas supply market, supported by electronic gas trading platforms and improved pricing
transparency, has meant that Ukrainian market prices for gas are broadly correlated with the price of imported
gas. During 2023, Ukrainian gas prices weakened, reflecting a similar trend in European gas prices, as
disruption to worldwide oil and gas supplies eased. Condensate and LPG prices were also lower by
comparison to the previous year for the same reason.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
4
Restructuring of Smart Holding Group
In January 2023, the Company was notified that there had been a restructuring of the ownership of the PJSC
Smart-Holding Group, a member of which held a major shareholding in the Company, and which was ultimately
controlled by Mr Vadym Novynskyi (“Mr Novynskyi”). Under this restructuring, which occurred with effect from
1 December 2022, Mr Novynskyi disposed of his major indirect shareholding interest in the Company to two
trusts registered in Cyprus named the SMART Trust and the STEP Trust. Further information is contained in
the Company’s announcement dated 17 January 2023, and the TR-1 Forms published on 26 January 2023,
31 July 2023 and 20 March 2024.
Regulatory Actions by Ukrainian Authorities and Suspension of VAS and SC Licences
In early December 2022, the Ukrainian Government imposed sanctions on Mr Novynskyi, as set out in the
Company’s announcement dated 9 December 2022.
As announced on 4 January 2023, new legislation, Law No. 2805-IX, relating to the natural resources sector
was enacted in Ukraine, which came into force on 28 March 2023. This legislation is a substantial package of
new procedures and reforms designed to improve the regulatory process relating to the exploration and
development of natural resources in Ukraine. However, the legislation includes provisions that if the ultimate
beneficial owner of a mineral or hydrocarbon licence becomes the subject of sanctions in Ukraine, then the
State Geologic and Subsoil Survey of Ukraine (the “SGSS”) may suspend or revoke that licence.
Following Law No. 2805-IX coming into force on 28 March 2023, the Ukrainian authorities have taken a number
of regulatory actions against certain of the Group’s subsidiary companies in Ukraine.
As announced on 12 April 2023, such regulatory actions included conducting a search at the Group’s Yakhnyky
office, from where the MEX-GOL and SV fields are operated, and placing certain physical assets of the
Ukrainian branch (representative) office of Regal Petroleum Corporation Limited (“RPC”) and LLC Arkona Gas-
Energy (“Arkona”) (which respectively hold the MEX-GOL and SV fields and the SC exploration licence) under
seizure, thereby restricting any actions that would change registration of the property rights relating to such
assets, although the use of such assets was not restricted and therefore the Company has been able to
continue to operate and produce gas and condensate from the MEX-GOL and SV fields. In addition, the
Ministry of Justice of Ukraine (the “MoJ”) made an Order cancelling the registration entry made on behalf of a
subsidiary of the Company named LLC Regal Petroleum Corporation (Ukraine) Limited in the Unified State
Register of Legal Entities, Individuals–entrepreneurs and Civil Institutions of Ukraine (the “State Register”)
relating to the ultimate beneficial owners of such company, which were stated as being the trustees of the
SMART Trust and STEP Trust as previously notified to the Company, thereby restoring the previous entry in
the State Register, Mr Novynskyi. Furthermore, the SGSS issued an Order to RPC requiring that additional
information be provided and/or violations be eliminated in the disclosures relating to the ultimate beneficial
owners of the MEX-GOL and SV licences respectively.
On 2 May 2023, the MoJ made further Orders cancelling the registration entry made on behalf of three further
Ukrainian subsidiaries of the Company named LLC Prom-Enerho Produkt (“PEP”), Arkona and LLC Well
Investum (“Well Investum”) respectively in the State Register relating to the ultimate beneficial owners of such
companies, which again were stated as being the trustees of the SMART Trust and STEP Trust, thereby
restoring the previous entry, Mr Novynskyi. PEP holds the VAS production licence, Arkona holds the SC
exploration licence and Well Investum is a dormant company.
Following the issuance of the abovementioned Orders by the MoJ, Mr Novynskyi is registered in the State
Register as the ultimate beneficial owner of each of PEP and Arkona, and is consequently recognised by the
SGSS as the ultimate beneficial owner of each of the VAS production licence and SC exploration licence. As
a result, on 4 May 2023, the SGSS issued orders suspending the VAS production licence and SC exploration
licence for a period of 5 years effective from that date. Accordingly, the Company ceased all field and
production operations on the VAS and SC licence areas.
In July 2023, new legislation was introduced in Ukraine, which will come into force in September 2024, and
which requires that branches (or representative offices) of foreign companies operating in Ukraine register
their ultimate beneficial owners in Ukrainian Registries. Regal Petroleum Corporation Ltd ("RPC"), which holds
5
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
the MEX-GOL and SV licences, operates such a branch and will therefore be required to register its ultimate
beneficial owners from the implementation of this law, which raises a potential risk that such registration will
not be accepted by the Ukrainian authorities, and possibly result in regulatory action against RPC and/or its
licences and assets, including suspension of the MEX-GOL and SV licences.
Interim Dividend
On 15 June 2023, the Company paid an interim dividend of 15 pence per ordinary share, aggregating to
approximately £48.1 million, which was the Company’s maiden dividend payment to its shareholders. The
Company has not declared any further dividends since then.
Board and Management Changes
In March 2024, Chris Hopkinson stepped down as Non-Executive Chairman of the Board, and Sergii Glazunov
stepped down as Chief Executive Officer and a Director, and I joined the Board as Non-Executive Chairman
and Igor Basai joined the Board as a Non-Executive Director.
In addition, Oleksiy Zayets was appointed as Interim Chief Executive Officer.
On behalf of the Board, I would like to thank Chris and Sergii for their valued contributions during their
respective tenures with the Company, and to welcome Igor to the Board.
Outlook
The ongoing war in Ukraine creates a devastating humanitarian situation in Ukraine, as well as extreme
challenges to the fiscal, economic and business environment. This has been exacerbated in respect of the
Group by the regulatory actions of the Ukrainian authorities, culminating in the suspension of the VAS and SC
licences.
Under these circumstances, it is extremely difficult to plan future investment and operational activities at the
Group’s fields. However, subject to resolution of the current regulatory issues with the Ukrainian authorities,
and it being safe to do so, the Group is planning to undertake further limited development activities during the
remainder of 2024 and beyond in order to continue the development of its fields. In doing so, the Group is
taking and will take all measures available to protect and safeguard its personnel and business, with the safety
and wellbeing of its personnel and contractors being paramount. The Group retains a significant proportion of
its cash reserves outside Ukraine, and this provides a material buffer to any further disruptions to the Group’s
operations. This has enabled the Board to reach the opinion that the Group has sufficient resources to navigate
the current risk environment for the foreseeable future.
In conclusion, on behalf of the Board, I would like to thank all of our staff for their continued dedication and
support during 2023, especially their remarkable fortitude during the ongoing conflict in Ukraine.
Chuck Valceschini
Chairman
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
6
Chief Executive’s Statement
Introduction
The war in Ukraine has materially disrupted the Group’s development activity at its Ukrainian fields during
2023. During the year, production operations and some development activities continued at the MEX-GOL and
SV fields, and this enabled the completion of the GOL-107 development well in late October 2023. After initial
testing of this well demonstrated gas flows, albeit at lower than expected rates, the well was hooked up to the
gas processing facilities to undergo longer-term testing to establish its optimal operating parameters and
assess whether stimulation of the well may improve flow rates.
At the VAS field, production operations continued until May 2023, when the VAS production licence was
suspended by the Ukrainian authorities. The SC exploration licence was also suspended in May 2023.
Consequently, all work at both licence areas has remained suspended since then.
Overall production in 2023 was lower than in 2022 due to the disruption to production operations caused by
the war in Ukraine, natural field decline and the suspension of the VAS production licence.
Quality, Health, Safety and Environment (“QHSE”)
The Group is committed to maintaining the highest QHSE standards and the effective management of these
areas is an intrinsic element of its overall business ethos. The Group’s QHSE policies and performance are
overseen by the Health, Safety and Environment Committee. Through strict enforcement of the Group’s QHSE
policies, together with regular management meetings, training and the appointment of dedicated safety
professionals, the Group strives to ensure that the impact of its business activities on its staff, contractors and
the environment is as low as is reasonably practicable. The Group reports safety and environmental
performance in accordance with industry practice and guidelines.
I am pleased to report that during 2023, a total of 397,997 man-hours of staff and contractor time were recorded
without a Lost Time Incident occurring. The total number of safe man-hours now stands at over 5 million man-
hours without a Lost Time Incident. No environmental incidents were recorded during the year.
Production
The average daily production of gas, condensate and LPG for the 2023 year from the MEX-GOL and SV fields
(351 days in 2022) and for the 124 days in 2023 (147 days in 2022) that the VAS field was producing, is shown
below:
Field
Gas
(MMscf/d)
Condensate
(bbl/d)
LPG
(bbl/d)
Aggregate
boepd
2023
2022
2023
2022
2023
2022
2023
2022
MEX-
GOL &
SV
9.5
11.0
368
445
379
318
2,314
2,604
VAS
1.7
1.8
18
18
-
-
330
352
Total
11.2
12.8
386
463
379
318
2,644
2,956
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
7
As a result of the continued operational disruptions caused by the war and deferment of development work,
the Group’s average daily production rate for the 2023 year has been materially adversely affected. In addition,
as announced on 4 May 2023, as a result of regulatory actions by the Ukrainian authorities, the VAS production
licence and the SC exploration licence have been suspended for a period of five years.
Aggregate production volumes for the year were 885,610 boe (not adjusted for days when the fields were off
production), which is lower than the aggregate production volumes of 965,730 boe in 2022 for the reasons set
out above.
Nevertheless, production is currently continuing at the MEX-GOL and SV fields at a rate of approximately
2,000 boepd.
Operations
The war in Ukraine has significantly affected fiscal and economic stability in Ukraine, and the oil and gas sector
in Ukraine has been particularly affected by interruptions to power supplies, the unavailability of oil field
equipment and services and disruptions to the markets for the sale of gas, condensate and LPG. In addition,
the decrease in gas prices in Europe fed through to the Group’s realised prices in Ukraine, impacting the
Group’s revenues and profitability during the year.
During 2023, the Group continued to refine its geological subsurface models of the MEX-GOL, SV and VAS
fields, as well as the SC licence area, in order to enhance its strategy for the further development of such fields
and licence area, including the timing and level of future capital investment required to exploit the hydrocarbon
resources.
At the MEX-GOL and SV fields, the GOL-107 development well, targeting production from the V-20 and V-23
Visean formations, was completed in late October 2023. The well was spudded in December 2022 and drilled
to a final depth of 5,190 metres. One interval, at a drilled depth of 5,140 - 5,143 metres, within the V-23
formation, was perforated and demonstrated gas flows, but at lower than anticipated rates. The well was
hooked up to the gas processing facilities to undergo longer-term testing to establish its optimal operating
parameters and assess whether stimulation of the well may improve flow rates.
The Group continued to operate each of the SV-2 and SV-12 wells under joint venture agreements with NJSC
Ukrnafta, the majority State-owned oil and gas producer. Under the agreements, the gas and condensate
produced from the respective wells is sold under an equal net profit sharing arrangement between the Group
and NJSC Ukrnafta, with the Group accounting for the hydrocarbons produced and sold from the wells as
revenue, and the net profit share due to NJSC Ukrnafta being treated as a lease expense in cost of sales.
However, following the SV-2 well experiencing water ingress, a workover of this well was undertaken to replace
the production string and remove obstructions in the well, but this work was unsuccessful and the well is now
shut in, and further remedial work is not being considered at the present time.
At the VAS field, production operations continued until May 2023, when the Ukrainian authorities took
regulatory action to suspend the VAS licence for a period of five years.
Similarly, the SC exploration licence was suspended by the Ukrainian authorities in May 2023 for a period of
five years.
Outlook
The ongoing war in Ukraine has caused significant disruption to the country as a whole and to the Group’s
business activities, and until there is a resolution to the conflict, the disruption and uncertainty are likely to
continue. However, subject to resolution of the current regulatory issues with the Ukrainian authorities and it
being safe to do so, during the remainder of 2024 and 2025, the Group plans to continue the development of
its fields to the extent it is possible to do so.
At the MEX-GOL and SV fields, the development programme includes deepening the MEX-109 well to explore
a deeper horizon in the Visean formation, investigating the hydraulic fracturing of the SV-29 well, planning a
workover of the MEX-102 well to access a shallower horizon, evaluating the potential for sidetracking of the
8
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
MEX-119 well to access additional reserves, installing additional compression equipment and upgrading and
maintaining the flow-line network and pipelines and other field infrastructure, as well as planning for the further
development of the fields.
Further work on the VAS and SC licence areas will remain suspended until there is a resolution of the
regulatory issues, including the lifting of the suspension orders made in respect of those licences.
Finally, I would like to add my thanks to all of our staff for the continued hard work and dedication they have
shown over the course of 2023, and to especially recognise their continuing efforts and professionalism in the
face of the extremely challenging current situation in Ukraine.
Oleksiy Zayets
Interim Chief Executive Officer
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
9
Business Model
Activities
Exploration
We aim to identify new opportunities within our fields by accurate geological and geophysical analysis and
modelling to achieve a high probability of success
Appraisal
We pursue methodical analysis and review of drilling results to refine our subsurface models and ensure that
discoveries are adequately appraised prior to development
Development
We carefully plan our development activities using tailored drilling techniques and extraction processes so as
to fully exploit our reserve base, safely and economically
Production
We continually monitor production results to manage reservoir performance and maximise extraction rates, as
well as reviewing processing facilities to optimise recoveries
Resources
Large and growing reserves
Our proved and probable (2P) reserves are approximately 58 MMboe and will be commercialised through
careful and incremental development
Cutting edge technology
We use modern, innovative technology and processes in our development activities, and encourage the
investigation and adoption of new methods by our staff
Detailed budgeting process
A detailed budgeting process is essential to cost forecasting and performance discipline and to enable fiscal
control of our business
Highly experienced team
We have well qualified and experienced technical management to plan and supervise operational activities.
Additionally, we engage with suitably qualified local and international geological, geophysical and engineering
experts and contractors to supplement and broaden the pool of expertise available to us
100% operatorship of assets
Through our 100% operatorship of our fields, we have the ability to maintain rigidly monitored planning and
operational discipline, and can promptly modify plans and schedules should adverse economic, operational or
other issues arise
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
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Stakeholders
Employees
We aim to be a model employer, with high reputational and behavioural standards, safe operational working
conditions and clearly structured career opportunities and progression for employees
Government
We adopt and maintain best industry standards to fully exploit hydrocarbons resources for consumption within
Ukraine, and support the development of the oil and gas industry in Ukraine
Investors
We maintain disciplined operational and financial management to deliver strong growth, successful
development of reserves and profitable results
Local community
We embed corporate and social responsibility throughout our business activities, and contribute to and
participate in local community and countrywide social and welfare programmes, including material
humanitarian aid to provide support during the ongoing war in Ukraine
Suppliers
We maintain a clear and consistent approach to dealing with suppliers, ensuring adherence to contractual
obligations and maintaining safe working practices
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
11
Our Strategic Priorities
Our three strategic priorities
1
Deliver profitable production and reserves growth in Ukraine, with continued capital efficient
operational excellence
Key targets:
Organic Growth
•
•
•
Expedite development of our assets, accelerate production growth, and exploit our resource base
Careful field and reserves development planning
Geological modelling to achieve high probability of success
Growth of reserves and resources
•
Additional exploration, life cycle mix, new business opportunities and screening process
Improving performance
•
•
•
Adopt oil and gas industry best practices
Reduce costs of operations
Application of drilling model
Key risks:
•
•
•
Reservoir and operational performance
Regional stability and conflict
Commodity price shifts
2
Be a responsible steward of the resources we manage, produce and deliver to market
Key targets:
Operating safely and responsibly
•
Continual assessment and monitoring of a safe operating environment during the ongoing war in
Ukraine
Adopt and exceed industry standards
Embed corporate and social responsibility processes throughout the business organisation
•
•
Strong and stable governance
•
Adhere to the QCA Code and institutional shareholder body guidance
Rigid operational financial and risk planning
•
•
Ensure that future operations and sales reflect the market and forecasts
Be cognisant of the necessity for good reservoir and corporate resource management
Key risks:
•
•
•
Implementation and adherence to QHSE policies
Maintenance of independence of the Board of Directors
Maintenance of controls and processes for financial and risk management
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
12
3
Recruit and retain a management team capable of delivering consistent top quartile
performance across recognised industry and market metrics
Key targets:
Stakeholder buy-in
•
Team clear on behaviours, roles and responsibilities
Retention
•
Keeping great people on the team
Correct skills for the objective/role
•
Clarity of skills required for each position
Attracting new talent
•
•
Strong reputation as a model employer
Transparent and clearly structured career opportunities, progression and talent nurturing
Key risks:
•
•
•
Failure to challenge and motivate existing employees
Compensation
Competitiveness
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
13
Overview of Assets
We operate four fields in the Dnieper-Donets basin in north-eastern Ukraine. Our fields have high potential for
growth and longevity for future production - a strong foundation for success.
MEX-GOL and SV fields
The MEX-GOL and SV fields are held under two adjacent production licences, but are operated as one
integrated asset, and have significant gas and condensate reserves and potential resources of unconventional
gas.
Production Licences
We hold a 100% working interest in, and are the operator of, the MEX-GOL and SV fields. The production
licences for the fields were granted to the Group in July 2004 with an initial duration of 20 years, and the
duration of these licences have recently been extended to 2044 in order to fully develop the remaining
reserves. The economic life of these fields extend to 2038 and 2042 respectively pursuant to the most recent
reserves and resources assessment by DeGolyer and MacNaughton (“D&M”) as at 31 December 2017.
The two licences, located in Ukraine’s Poltava region, are adjacent and extend over a combined area of 253
km², approximately 200 km east of Kyiv.
Geology
Geologically, the fields are located towards the middle of the Dnieper-Donets sedimentary basin which extends
across the major part of north-eastern Ukraine. The vast majority of Ukrainian gas and condensate production
comes from this basin. The reservoirs comprise a series of gently dipping Carboniferous sandstones of Visean
age inter-bedded with shales at around 4,700 metres below the surface, with a gross thickness of between
800 and 1,000 metres.
Analysis suggests that the origin of these deposits ranges from fluvial to deltaic, and much of the trapping at
these fields is stratigraphic. Below these reservoirs is a thick sequence of shale above deeper, similar,
sandstones at a depth of around 5,800 metres. These sands are of Tournasian age and offer additional gas
potential. Deeper sandstones of Devonian age have also been penetrated in the fields.
Reserves
The development of the fields began in 1995 by the Ukrainian State company Chernihivnaftogasgeologiya
(“CNGG”), and shortly after this time, the Group entered a joint venture with CNGG in respect of the exploration
and development of these fields.
The fields have been mapped with 3D seismic, and a geological subsurface model has been developed and
refined using data derived from high-level reprocessing of such 3D seismic and new wells drilled on the fields.
The assessment undertaken by D&M as at 31 December 2017 estimated proved plus probable (2P) reserves
attributable to the fields of 50.0 MMboe, with 3C contingent resources of 25.3 MMboe.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
14
VAS field
The VAS field is a smaller field with interesting potential. The field has assessed proved plus probable reserves
in excess of 3 MMboe and substantial contingent and prospective resources, as well as potential resources of
unconventional gas.
Production Licence
We hold a 100% working interest in, and are the operator of, the VAS field. The production licence for the field
was granted in August 2012 with a duration of 20 years. The economic life of the field extends to 2032 pursuant
to the most recent reserves and resources assessment by D&M as at 31 December 2018.
The licence extends over an area of 33.2 km² and is located 17 km south-east of Kharkiv, in the Kharkiv region
of Ukraine. The field was discovered in 1981, and the first well on the licence area was drilled in 2004.
Geology
Geologically, the field is located towards the middle of the Dnieper-Donets sedimentary basin in north-east
Ukraine. The field is trapped in an anticlinal structure broken into several faulted blocks, which are gently
dipping to the north, stretching from the north-east to south-west along a main bounding fault. The gas is
located in Carboniferous sandstones of Bashkirian, Serpukhovian and Visean age.
The productive reservoirs are at depths between 3,370 and 3,700 metres.
Reserves
The field has been mapped with 3D seismic, and a geological subsurface model has been developed and
refined using data derived from such 3D seismic and new wells drilled on the field.
The assessment undertaken by D&M as at 31 December 2018 estimated proved plus probable (2P) reserves
of 3.1 MMboe, with 3C contingent resources of 0.6 MMboe, and prospective resources of 7.7 MMboe in the
VED area of the field. The next well planned on the field is designed to explore the VED area of the field.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
15
SC Licence
The SC licence area is located near to and has similar characteristics to the SV field, and is prospective for
gas and condensate.
Exploration Licence
We hold a 100% working interest in, and are the operator of, the SC licence. The licence was granted in May
2017 with a duration of 20 years.
The licence extends over an area of 97 km2, and is located in the Poltava region in north-eastern Ukraine,
approximately 15 km east of the SV field.
Geology
Geologically, the field is located towards the middle of the Dnieper-Donets sedimentary basin which extends
across the major part of north-eastern Ukraine. The vast majority of Ukrainian gas and condensate production
comes from this basin. The reservoirs comprise a series of gently dipping Carboniferous sandstones of Visean
age inter-bedded with shales at depth between 4,600 and 6,000 metres.
Resources
The licence is prospective for gas and condensate, and has been the subject of exploration since the 1980s,
with five wells having been drilled on the licence since then, although none of these wells are currently on
production.
The assessment undertaken by D&M as at 1 January 2021 estimated proved plus probable (2P) reserves of
12.1 MMboe, with 3C contingent resources of 15.0 MMboe.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
16
Overview of Reserves
1.
MEX-GOL and SV fields
The Group’s estimates of the remaining Reserves and Resources at the MEX-GOL and SV fields are derived
from an assessment undertaken by D&M, as at 31 December 2017 (the “MEX-GOL-SV Report”), which was
announced on 31 July 2018. During the period from 1 January 2018 to 31 December 2023, the Group has
produced 6.99 MMboe from these fields.
The MEX-GOL-SV Report estimated the remaining Reserves as at 31 December 2017 in the MEX-GOL and
SV fields as follows:
Proved
(1P)
Proved + Probable
(2P)
Proved + Probable +
Possible (3P)
Gas
121.9 Bscf / 3.5 Bm3
218.3 Bscf / 6.2 Bm3
256.5 Bscf / 7.3 Bm3
Condensate
4.3 MMbbl / 514 Mtonne
7.9 MMbbl / 943 Mtonne
9.2 MMbbl / 1,098
Mtonne
LPG
2.8 MMbbl / 233 Mtonne
5.0 MMbbl / 418 Mtonne
5.8 MMbbl / 491 Mtonne
Total
27.8 MMboe
50.0 MMboe
58.6 MMboe
The MEX-GOL-SV Report estimated the Contingent Resources as at 31 December 2017 in the MEX-GOL and
SV fields as follows:
Contingent Resources
(1C)
Contingent Resources
(2C)
Contingent Resources
(3C)
Gas
14.7 Bscf / 0.42 Bm3
38.3 Bscf / 1.08 Bm3
105.9 Bscf / 3.00 Bm3
Condensate
1.17 MMbbl / 144 Mtonne
2.8 MMbbl / 343 Mtonne
6.6 MMbbl / 812 Mtonne
Total
3.8 MMboe
9.6 MMboe
25.3 MMboe
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
17
2.
VAS field
The Group’s estimates of the remaining Reserves and Resources at the VAS field and the Prospective
Resources at the VED prospect are derived from an assessment undertaken by D&M as at 31 December 2018
(the “VAS Report”), which was announced on 21 August 2019. During the period from 1 January 2019 to 31
December 2023, 0.80 MMboe were produced from the field.
The VAS Report estimated the remaining Reserves as at 31 December 2018 in the VAS field as follows:
Proved
(1P)
Proved + Probable
(2P)
Proved + Probable +
Possible (3P)
Gas
9,114 MMscf / 258 MMm3
15,098 MMscf / 427
MMm3
18,816 MMscf / 533
MMm3
Condensate
205 Mbbl / 25 Mtonne
346 Mbbl / 42 Mtonne
401 Mbbl / 48 Mtonne
Total
1.895 MMboe
3.145 MMboe
3.890 MMboe
The VAS Report estimated the Contingent Resources as at 31 December 2018 in the VAS field as follows:
Contingent Resources
(1C)
Contingent Resources
(2C)
Contingent Resources
(3C)
Gas
Condensate
-
-
-
-
2,912 MMscf / 83 MMm3
74 Mbbl / 9 Mtonne
The VAS Report estimated the Prospective Resources as at 31 December 2018 in the VED prospect as
follows:
Low (1U)
Best (2U)
High (3U)
Mean
Gas
23,721 MMscf /
672 MMm3
38,079 MMscf /
1,078 MMm3
62,293 MMscf /
1,764 MMm3
41,291 MMscf /
1,169 MMm3
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
18
3.
SC Licence
The Group’s estimates of the remaining Reserves and Contingent Resources at the SC Licence are derived
from an assessment undertaken by D&M as at 1 January 2021 (the “SC Report”), which was announced on 2
June 2021.
The SC Report estimated the remaining Reserves as at 1 January 2021 in the SC licence area as follows:
Proved
(1P)
Proved + Probable
(2P)
Proved + Probable +
Possible (3P)
Gas
17.20 Bscf / 0.49 Bm3
65.16 Bscf / 1.85 Bm3
85.03 Bscf / 2.41 Bm3
Condensate
145 Mbbl / 16 Mtonne
548 Mbbl / 61 Mtonne
716 Mbbl / 80 Mtonne
Total
3.2 MMboe
12.1 MMboe
15.7 MMboe
The SC Report estimated the Contingent Resources as at 1 January 2021 in the SC licence area as follows:
Contingent Resources
(1C)
Contingent Resources
(2C)
Contingent Resources
(3C)
Gas
8.56 Bscf / 0.24 Bm3
14.18 Bscf / 0.40 Bm3
81.16 Bscf / 2.30 Bm3
Condensate
72 Mbbl / 8 Mtonne
119 Mbbl / 13 Mtonne
682 Mbbl / 75 Mtonne
Total
1.6 MMboe
2.6 MMboe
15.0 MMboe
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
19
Finance Review
Despite the continued significant disruption caused by the war in Ukraine, the Group was still able to generate
a net profit for the period of $26.5 million, down 56% on last year (2022: $60.2 million) due to lower production
rates and, more materially, much lower commodity prices.
Revenue for the year, derived from the sale of the Group’s Ukrainian gas, condensate and LPG production,
was down 53% at $62.2 million (2022: $133.4 million) as a result of significantly lower commodity prices,
compounded by lower production rates.
Aggregate average daily production for the year (calculated on the days when the Group’s fields were actually
in production) was down approximately 11% at 2,644 boepd (2022: 2,956 boepd) due to the disruption to
operations as a result of the war in Ukraine, natural field decline and the suspension of the VAS field in May
2023. Aggregate production volumes for the year were 885,610 boe (not adjusted for days when the fields
were off production), which is lower than the aggregate production volumes of 965,730 boe in 2022 for the
same reasons.
During the year, global, and particularly European, commodity prices declined as the disruption to supplies
caused by the Russian invasion of Ukraine abated, and these decreases also occurred in Ukraine, causing a
59% decline in average gas price realisations in the period at $394/Mm3 (UAH14,426/Mm3), with condensate
and LPG average sales prices also down by 3% and 32% at $71/bbl and $98/boe respectively (2022:
$960/Mm3 (UAH30,341/Mm3), $73/bbl and $143/boe respectively).
During the period from 1 January 2024 to 30 April 2024, the average realised gas, condensate and LPG prices
were $306/Mm3 (UAH11,750/Mm3), $109/bbl and $93/boe respectively.
Gross profit for the year more than halved at $39.0 million (2022: $85.9 million).
Cost of sales for the year was also lower at $23.2 million (2022: $47.5 million). The decline in production
resulted in a decline in depreciation, and the decreased commodity prices also reduced the revenue-related
costs of taxes and well rental.
Cash generated from operations increased significantly to $62.9 million (2022: $47.5 million), predominantly
as a consequence of the recovery of overdue receivables that had built up in the period after the invasion of
Ukraine.
The subsoil tax rates applicable to gas production were stable during the year as follows:
(i)
(ii)
(iii)
when gas prices are up to $150/Mm3, the rate for wells drilled prior to 1 January 2018 (“old wells”) is
14.5% for gas produced from deposits at depths shallower than 5,000 metres and 7% for gas produced
from deposits deeper than 5,000 metres, and for wells drilled after 1 January 2018 (“new wells”) is 6%
for gas produced from deposits at depths shallower than 5,000 metres and 3% for gas produced from
deposits deeper than 5,000 metres;
when gas prices are between $150/Mm3 and $400/Mm3, the rate for old wells is 29% for gas produced
from deposits at depths shallower than 5,000 metres and 14% for gas produced from deposits deeper
than 5,000 metres, and for new wells is 12% for gas produced from deposits at depths shallower than
5,000 metres and 6% for gas produced from deposits deeper than 5,000 metres;
when gas prices are more than $400/Mm3, for the first $400/Mm3, the rate for old wells is 29% for gas
produced from deposits at depths shallower than 5,000 metres and 14% for gas produced from
deposits deeper than 5,000 metres, and for new wells is 12% for gas produced from deposits at depths
shallower than 5,000 metres and 6% for gas produced from deposits deeper than 5,000 metres, and
for the difference between $400/Mm3 and the actual price, the rate for old wells is 65% for gas
produced from deposits at depths shallower than 5,000 metres and 31% for gas produced from
deposits deeper than 5,000 metres, and for new wells is 36% for gas produced from deposits at depths
shallower than 5,000 metres and 18% for gas produced from deposits deeper than 5,000 metres.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
20
The subsoil tax rates applicable to condensate production were 31% for condensate produced from deposits
shallower than 5,000 metres and 16% for condensate produced from deposits deeper than 5,000 metres, for
both old and new wells.
As a direct result of the war in Ukraine, including the significant decline in domestic consumption disrupting
the previous supply, demand and pricing dynamics, there was a divergence between domestic and European
gas pricing, and accordingly, the methodology (linked to European prices) used to determine the reference
gas price for the subsoil tax rates had a significantly detrimental effect for domestic gas producers. In order to
address this issue, legislation was implemented in August 2022 which modified such methodology to ensure
that it operates as originally intended (with such reference price being aligned with domestic prices).
Administrative expenses for the year were broadly unchanged at $6.9 million (2022: $6.8 million).
The tax charge for the year was less at $8.7 million (2022: $13.1 million charge), and comprised a current tax
charge of $6.8 million (2022: $14.3 million charge) and a deferred tax charge of $1.9 million (2022: $1.2 million
credit).
A deferred tax asset relating to the Group’s provision for decommissioning as at 31 December 2023 of $0.6
million (2022: $0.5 million) was recognised on the tax effect of the temporary differences of the Group’s
provision for decommissioning at the MEX-GOL and SV fields, and its tax base. A deferred tax liability relating
to the Group’s development and production assets at the MEX-GOL and SV fields as at 31 December 2023 of
$5.5 million (2022: $3.7 million) was recognised on the tax effect of the temporary differences between the
carrying value of the Group’s development and production asset at the MEX-GOL and SV fields, and its tax
base.
A deferred tax asset relating to the Group’s provision for decommissioning as at 31 December 2023 of $0.3
million (2022: $0.3 million) was recognised on the tax effect of the temporary differences on the Group’s
provision on decommissioning at the VAS field, and its tax base. A deferred tax liability relating to the Group’s
development and production assets at the VAS field as at 31 December 2023 of $0.1 million (2022: deferred
tax liability of $0.02 million) was recognised on the tax effect of the temporary differences between the carrying
value of the Group’s development and production asset at the VAS field, and its tax base.
Capital investment of $13.5 million reflects the investment in the Group’s oil and gas development and
production assets during the year (2022: $12.9 million), primarily relating to the drilling of the GOL-107 well.
The materially consistent capital investment is a function of the deferral of certain aspects of the Group’s
development plans necessitated by the ongoing war in Ukraine.
A review of any indicators of impairment of the carrying value of the Group’s assets was undertaken at the
year end and this review did conclude that the war in Ukraine and the suspension of the VAS production licence
had resulted in such an indicator. Impairment reviews were therefore conducted on the carrying value of the
Group’s assets but did not result in the recognition of any further impairment loss (2022: $4.3 million loss).
Cash and cash equivalents held as at 31 December 2023 were lower at $76.5 million (2022: $88.7 million),
the decrease being predominantly the result of the payment of the £48.1 million interim dividend in June 2023
and despite the significant increase in cash from operations. The Group’s cash and cash equivalents balance
as at 27 May 2024 was $91.0 million, held as to $72.5 million equivalent in Ukrainian Hryvnia and the balance
of $18.5 million equivalent predominantly in US Dollars, Euros and Pounds Sterling.
During 2023, the Ukrainian Hryvnia was relatively stable against the US Dollar, weakening from
UAH36.6/$1.00 on 31 December 2022 to UAH38.0/$1.00 on 31 December 2023. The impact of this was $4.8
million of foreign exchange loss (2022: $38.1 million of foreign exchange loss). Increases and decreases in
the value of the Ukrainian Hryvnia against the US Dollar affect the carrying value of the Group’s assets. The
official exchange rate of the Ukrainian Hryvnia to the US Dollar on 27 May 2024 was UAH40.1/$1.00.
Cash from operations has funded the capital investment during the year, and the Group’s current cash position
and positive operating cash flow are the sources from which the Group plans to fund the development
programmes for its assets over the remainder of 2024 and beyond. This is coupled with the fact that the Group
is currently debt-free, and therefore has no debt covenants that may otherwise impede its ability to implement
21
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
contingency plans if domestic and/or global circumstances dictate. This flexibility and ability to monitor and
manage development plans and liquidity is a cornerstone of our planning, and underpins our assessments of
the future. With monetary resources at the end of the year of $76.5 million and annual running costs of less
than $8 million, the Group remains in a very strong position, notwithstanding the impact of the current conflict
in Ukraine, as well as any local or global shocks that may occur to the industry and/or the Group.
On 15 June 2023, the Company paid an interim dividend of 15 pence per ordinary share, approximately £48.1
million in aggregate, which was the Company’s maiden dividend payment to its shareholders. No final dividend
has been declared.
Bruce Burrows
Finance Director
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
22
Key Performance Indicators
The Group uses key performance indicators (KPIs) to measure its performance and achievements in its
business activities. The KPIs are reviewed annually to ensure that the KPIs are relevant. The Group’s targeted
and achieved results of its KPIs for 2023 are set out below. The war in Ukraine had a material and ongoing
impact on all operational and financial targets, and had a significant impact on the actual outcome for the year
and therefore performance against target. The Level One KPI is an overriding KPI for performance related
remuneration, and must be achieved to invoke the Level Two KPIs.
Level One KPI
1.
Fatalities of zero
•
•
Target -
Actual -
zero
zero
Level Two KPIs
1.
Total volumes of gas and condensate produced
•
•
Target -
889,650 boe
Actual -
885,610 boe
2.
Lost Time Incidents
•
•
Target -
zero
Actual -
zero
3.
Operating expenditure per barrel of oil equivalent
•
•
Target -
UAH768 ($17.9)
Actual -
UAH644 ($17.6)
4.
Cashflow from operating activities
•
•
Target -
UAH2,226 million ($51.8 million)
Actual -
UAH2,067 million ($56.5 million)
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
23
Sustainability
We strive to operate and develop our business in a sustainable way and believe in operating to top quartile
ethical, safety and environmental standards. We intend to make a positive impact wherever we work.
Transparency and fairness
We succeed in business by working in an honest and ethical way, and we will not countenance bribery and
corruption. Our Anti-Bribery and Corruption Policy explains our approach to these issues. It is also important
that all our stakeholders are well informed about our work, and that we carry out tenders for operational
services and equipment in a fair and transparent way.
Our people
Our people are our most valuable asset. We work hard to develop the talents and skills of our team, and we
endeavour to recruit outstanding new employees to enrich our capabilities. At the same time, we place
paramount emphasis on safety at work, as well as the broader health and safety of our employees, and have
and continue to implement rigorous new processes and training across the business.
Environmental protection
We regularly update and modernise our infrastructure and ways of working to improve efficiency and reduce
our impact on the natural world. Independent environmental research companies monitor the environment in
the areas in which we operate to ensure that we meet the relevant standards and regulations.
Local communities
We work hard to give back to the communities where we work, not just by creating jobs and paying taxes, but
by maintaining and contributing to local organisations and infrastructure. Among other things, we have
supported local schools (e.g. materials for repair works and funding of school meals) and youth sports, as well
as the repair of roads and local infrastructure, although the war has curtailed many of these initiatives in recent
times.
Humanitarian aid
Since the commencement of the war, we have contributed to humanitarian aid initiatives in Ukraine, including
contributing to the provision of medical equipment and supplies and other humanitarian aid.
Environmental Management
Protecting the natural environment has always been a key focus for us but arguably has never been more
important than now. We carefully monitor the effects of our operations, regularly upgrade equipment to
minimise our impact, and have implemented strict quality, health, safety and environmental policies. Our QHSE
policies and performance are overseen by our Health, Safety and Environment Committee.
We work to mitigate our environmental impact in many ways, including taking a responsible attitude to methods
of production, carefully coordinating our activities, using only high-quality materials certified to international
standards, and frequently updating our technology and processes.
We have been accredited to environmental standard ISO 14001:2015 Environmental Management Systems,
and our QHSE policies are designed to raise standards in these areas.
Regular monitoring of environmental indicators for ongoing projects ensures we can continually assess our
impact on the environment.
Modernised infrastructure
We continue to modernise our production infrastructure in order to improve both operational and environmental
performance.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
24
Over recent years we have progressively upgraded infrastructure, including the metering and separation
station (“MSS”) at the gas processing facility at the MEX-GOL and SV fields. This involved the replacement of
equipment and automation of various processes, allowing us to solve a number of issues and reduce our
environmental impact through, in particular:
•
•
•
•
significant reduction of gas flaring, gas losses and air emissions
expansion of pollution controls in and around the area
development of an enclosed gas measuring system on a well
stricter observance of environmental laws and safety regulations
We also installed a new condensate stabilisation unit (“CSU”) at the MSS, enabling us to use raw materials
more efficiently and greatly improve the MSS’s environmental performance. We also installed facilities to
produce LPG at the MEX-GOL and SV fields. The LPG produced is not only a very marketable product
(liquefied propane-butane) but is also a relatively environmentally friendly hydrocarbon fuel.
We have undertaken work on the gas processing facilities at the MEX-GOL and SV fields to upgrade the LPG
extraction circuit, increase the flow capacity of the facilities, and significantly increase the liquids tank storage
capacity, all of which are designed to improve overall plant efficiencies, improve the quality of liquids produced
and boost recoveries of LPG, while reducing environmental emissions.
Our QHSE policies
Our policies for quality, health, safety and environment protection focus on the following:
•
•
•
•
using our capabilities in the most efficient ways possible
protecting and improving environmental conditions where we work
improving occupational health and safety
developing and expanding employees’ skills
Environmental monitoring
From time to time, we commission independent environmental research companies to monitor the state of soil,
underground and open water, and plant and animal life throughout the entire area of our activities. These
studies have never detected any violation of relevant environmental standards.
Streamlined Energy and Carbon Reporting (“SECR”)
We remain very aware of the current drive globally to monitor, reduce and report levels of energy use in
delivering Group performance, and note that SECR reporting requirements apply to the Group. However, as
our United Kingdom emissions are de-minimis, with only two full-time employees in the United Kingdom and
no operational presence, we fall below the minimum threshold and are currently exempt from reporting such
information. Notwithstanding that exemption, but subject to the restrictions caused by the war in Ukraine, we
are endeavouring to review our Ukrainian operations to determine the processes of self-reporting for our global
operations, and formulating the content of our intended self-reporting.
This initiative is intended to:
•
•
•
•
disclose the environmental-related data currently collected, including: energy consumed, water
consumed, greenhouse gas emissions and waste generated (in natural units and relative to volumes
of extracted gas);
determine any additional applicable indicators to be added, for example: natural gas and solid fuel
consumed for heating, compressors and other equipment; diesel fuel used in diesel generators;
consumption of petrol and diesel in vehicles, etc.;
determine potential benchmarks; and
determine the reporting frequency.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
25
Health and Safety
Safety at work is fundamental and underpins all our success. We continue to improve our safety standards by
introducing new processes and systems. We have introduced new production processes which are intended
to meet or exceed all applicable health and safety standards in Ukraine, as well as aiming to be more efficient
than previously.
We operate a Near Miss reporting system, designed to increase occupational health and safety by detecting
and eliminating dangerous incidents, situations, and practices (“Near Misses”). We centrally record all Near
Misses in our workplaces and seek to establish ways to reduce or eliminate the chances of dangerous incidents
occurring in the future. We undertake practical training sessions and generate a register of reported Near
Misses, ranked by risk level (identification, recognition and mitigation as a key to safe working). We have
developed our Near Miss reporting system to be a fully electronic process, carrying out Near Miss training for
internal auditors and coaches, rolling out new ways to detect and eliminate Near Misses, and introducing Near
Miss KPIs for our team.
In 2020, we launched our TOP 10 safety standards for high risk operations, with leadership and training
programmes for each of these standards.
In 2021, we continued to develop our health and safety regime, with the implementation of a number of
improvement measures, digitisation of health and safety procedures, the adoption of specific measures for the
protection of employees against COVID-19, and an extensive occupational health and safety training
programme for all employees. In addition, our operations were re-certified as complying with international
standards of quality, occupational safety and health management systems, according to ISO 14001:2015 and
ISO 45001:2018.
In early 2022, in anticipation of possible military conflict between Russia and Ukraine, a crisis management
committee was established to prepare for such a conflict, including developing emergency and contingency
plans in case of war and undertaking safety and evacuation drills at operational sites. This proved crucial
immediately following the invasion of Ukraine by Russia, facilitating the prompt and safe evacuation of
personnel, who were then able to work remotely, as well as the evacuation of their families to the west of
Ukraine. Surface and underground bomb shelters were constructed at all operational sites during 2022.
Information and instruction materials have been developed and training has been conducted for all personnel,
including safety actions in case of shelling or chemical or radiation contamination; mental health aid; and
enhanced practical training on first aid and medical assistance.
The safe implementation and undertaking of technical work also remains a priority, and all scheduled training
was conducted as planned during 2023, including safe lifting operations, gas work safety, fire safety and safe
driving. All operational sites maintain incident reporting transparency, and if incidents occurred, or were
identified, appropriate corrective actions were undertaken. Despite the war, the Group operated within
applicable legal, health, safety and environmental frameworks and, despite the imposition of martial law,
successfully obtained all necessary approvals from environmental and labour inspection authorities.
The preservation of human life and health is our highest value, and we will continue to work hard to further
raise occupational health and safety standards.
War in Ukraine
The invasion of Ukraine by Russia which commenced on 24 February 2022 has caused a catastrophic
humanitarian situation in Ukraine, as well as extreme challenges to the fiscal, economic and business
environment. At the present time, the scope and duration of the war is unknown and there is a great deal of
uncertainty about the ultimate impact that such war will have on Ukraine and its population.
These circumstances mean that it is extremely difficult to plan future investment and operational activities at
the Group’s fields. The Group is taking all possible measures to safeguard its staff, especially those who are
located at the Group’s fields. Where possible, staff work remotely and have been supplied with all necessary
devices and software to facilitate remote working, and only necessary field staff attend field operational
facilities and locations, where all possible measures are maintained to minimise risk, such as ensuring that
26
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
hydrocarbon inventories are kept at minimum levels. Currently, production and limited field operations are
being undertaken at the MEX-GOL and SV fields. However, in undertaking such operations, the Group is
taking, and will take, all measures available to protect and safeguard its personnel and business, with the
safety and wellbeing of its staff and contractors being paramount.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
27
Principal Risks and Uncertainties
Risks Overview
Managing risks effectively is fundamental to the success of our business and we apply rigorous criteria across
our operations and functions. We also operate to top quartile quality, health, safety and environmental
(“QHSE”) standards, and we monitor and manage each of these areas.
We evaluate the risks according to a common set of assessment criteria deployed across business units,
corporate functions and capital investment projects, and then rank and prioritise risks by importance and by
comparing their level against predetermined target risk levels and tolerance thresholds.
For all major risks we have developed a strategy for how we respond and mitigation plans, with deadlines and
responsibilities, so if a serious risk ever materialises, we know how we will react and will react quickly.
The key team responsible for managing risks is our Management Risk Committee. This Committee monitors
our business operations, identifies and records important risks, and formally reviews and updates our Risk
Register and Mitigation Plan each quarter.
In addition, oversight and responsibility of all QHSE matters falls to the HSE Committee composed of Board
members and senior management.
The Group’s QHSE policies are robustly enforced via management meetings, training and the work of our
safety experts. The overall aim is always to ensure that the impact of our work on our staff, contractors and
the environment is as low as is practically possible.
We also operate a Near Miss reporting system, collecting and addressing reports on near miss incidents to
monitor and improve occupational health and safety.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
28
Principal Risks and How We Manage Them
The Group has a risk evaluation methodology in place to assist in the review of the risks across all material
aspects of its business. This methodology highlights external, operational and technical, financial and
corporate risks and assesses the level of risk and potential consequences. It is periodically presented to the
Audit Committee and the Board for review, to bring to their attention potential risks and, where possible,
propose mitigating actions. Key risks recognised and mitigation factors are detailed below:-
Risk
External risks
War in Ukraine
On 24 February 2022, Russia invaded Ukraine and
there is currently a serious and ongoing war within
Ukraine. This war is having a huge impact on Ukraine
and its population, with significant destruction of
infrastructure and buildings in the areas of conflict, as
well as damage in other areas of Ukraine. The war is
resulting in significant casualties and has caused a
huge humanitarian catastrophe and refugee influx into
neighbouring countries. The war is also impacting the
fiscal and economic environment in Ukraine, as well
as the financial stability and banking system in
Ukraine, including restrictions on the transfer of funds
outside Ukraine. The war is an escalation of the
previous regional conflict risk faced by the business, a
dispute that has been going on since 2014 in parts of
eastern Ukraine, and since that time Russia has
continued to occupy Crimea. The current war is also
having a significant adverse effect on the Ukrainian
financial markets, hampering the ability of Ukrainian
companies and banks to obtain funding from the
international capital and debt markets. The war has
disrupted the Group’s business and operations,
causing periods of suspension of field operations, and
has also impacted the supply of materials and
equipment and the availability of contractors to
undertake field operations. At present, the war is
ongoing and the scope and duration of the war is
uncertain.
Risk relating to Ukraine
Ukraine is an emerging market and as such the Group
is exposed to greater regulatory, economic and
political risks than it would be in other jurisdictions.
Emerging economies are generally subject to a
volatile political and economic environment, which
makes
to market downturns
elsewhere in the world and could adversely impact the
Group’s ability to operate in the market. Furthermore,
the war in Ukraine is impacting the fiscal and
economic environment, the financial and banking
system, and the economic stability of Ukraine. As a
result, Ukraine will require financial assistance and/or
aid from international financial agencies to provide
economic support and assist with the reconstruction of
infrastructure and buildings damaged in the war.
Banking system in Ukraine
The banking system in Ukraine has been under great
strain in recent years due to the weak level of capital,
them vulnerable
29
Mitigation
The Group has assets in the areas of conflict in the east
of Ukraine, and the war has disrupted its operations in
those areas. The Group has been only undertaking
limited field and production operations at the MEX-GOL
and SV fields, as well as at the VAS and SC licence
areas until their suspension in May 2023. At the MEX-
GOL and SV fields, inventories of hydrocarbons are
being maintained at minimum levels. At the sites where
operations are suspended,
there are no staff
permanently on site, except for necessary security staff.
Where possible, all other staff work remotely and have
been supplied with all necessary devices and software
to facilitate remote working. Additionally, the Group aims
to maintain a significant proportion of its cash resources
outside Ukraine. The Group continues to monitor the
situation and endeavours to protect its assets and
safeguard its staff and contractors.
The Group minimises
risk by continuously
this
monitoring the market in Ukraine and by maintaining as
strong a working relationship as possible with the
Ukrainian regulatory authorities. The Group also
maintains a significant proportion of its cash holdings in
international banks outside Ukraine.
The creditworthiness and potential risks relating to the
banks in Ukraine are regularly reviewed by the Group,
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
In addition, Ukraine continues
low asset quality caused by the economic situation,
currency depreciation, changing regulations and other
economic pressures generally, and so the risks
associated with the banks in Ukraine have been
significant, including in relation to the banks with which
the Group has operated bank accounts. This situation
was improving moderately following remedial action
by the National Bank of Ukraine, but the current war
has significantly affected such improvements, and the
National Bank of Ukraine has imposed a number of
restrictive measures designed to protect the banking
system, including restrictions on the transfer of funds
outside Ukraine (albeit that the Group aims to maintain
a significant proportion of its cash resources outside
Ukraine).
to be
supported by funding from the International Monetary
Fund, and has requested further funding support from
the International Monetary Fund.
Geopolitical environment in Ukraine
Although there were some improvements in recent
years, there has not been a final resolution of the
political, fiscal and economic situation in Ukraine, and
the current war has had a severe detrimental effect on
the economic situation in Ukraine. The ongoing effects
of this are difficult to predict and likely to continue to
affect the Ukrainian economy and potentially the
Group’s business. This situation is currently affecting
the Group’s production and field operations, and the
ongoing
the Group’s
development and operational planning for its assets.
Climate change
Any near and medium-term continued warming of the
planet can have potentially increasing negative social,
economic
consequences,
environmental
generally, globally and regionally, and specifically in
relation to the Group. The potential impacts include:
loss of market; and increased costs of operations
through increasing regulatory oversight and controls,
including potential effective or actual loss of licences
to operate. As a diligent operator aware of and
responsive to its good stewardship responsibilities,
the Group not only needs to monitor and modify its
business plans and operations to react to changes, but
also to ensure its environmental footprint is as minimal
as it can practicably be in managing the hydrocarbon
resources the Group produces.
Operational and technical risks
Quality, Health, Safety and Environment (“QHSE”)
The oil and gas industry, by its nature, conducts
activities which
safety,
environmental and security
incidents. Serious
incidents can not only have a financial impact but can
also damage
the
opportunity to undertake further projects. The war in
Ukraine poses significant risks to field operations, by
way of potential threat to the lives of employees and
contractors, and damage
to equipment and
infrastructure.
reputation and
is disrupting
the Group’s
instability
health,
cause
and
can
but the geopolitical and economic events in Ukraine
over recent years have significantly weakened the
Ukrainian banking sector. This has been exacerbated by
the current war in Ukraine. In light of this, the Group has
taken and continues to take steps to diversify its banking
arrangements between a number of banks in Ukraine.
These measures are designed to spread the risks
associated with each bank’s creditworthiness, and the
Group endeavours to use banks that have the best
available creditworthiness. Nevertheless, and despite
the recent improvements, the Ukrainian banking sector
remains weakly capitalised and so the risks associated
with the banks in Ukraine remain significant, including in
relation to the banks with which the Group operates
bank accounts. As a consequence, the Group also
maintains a significant proportion of its cash holdings in
international banks outside Ukraine.
The Group continually monitors
the market and
business environment in Ukraine and endeavours to
recognise approaching risks and factors that may affect
its business. However, the war in Ukraine creates
material challenges in planning future investment and
operations. The Group
its operational
is
activities to minimise risk to its staff and contractors, and
to limit its financial exposure.
limiting
from
its emissions
The Group’s plans include: assessing, reducing and/or
mitigating
its operations; and
identifying climate change-related risks and assessing
the degree to which they can affect its business,
including financial implications. The HSE Committee is
specifically
tasked with overseeing, measuring,
benchmarking and mitigating the Group’s environmental
and climate impact, which will be reported on in future
periods. At this stage, the Group does not consider
climate change to have any material implications on the
Group’s
including accounting
estimates.
financial statements,
The Group maintains QHSE policies and requires that
management, staff and contractors adhere to these
policies. The policies ensure that the Group meets
Ukrainian legislative standards in full and achieves
international standards to the maximum extent possible.
As a result of the COVID-19 pandemic the Group has
implemented processes and controls intended to ensure
protection of all our stakeholders and minimise any
disruption to our business. As a consequence of the
current war in Ukraine, operations at the MEX-GOL, SV
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
30
and VAS fields and SC licence area have been
suspended for periods, and currently only limited field
and production operations are continuing at the MEX-
GOL and SV fields. Only essential staff are located at
site, and all other staff are working remotely, either from
areas away from the conflict areas or outside Ukraine.
The Group has invested in technology that allows many
staff to work just as effectively from remote locations.
The Group has well qualified and experienced technical
management staff to plan and supervise operational
activities. In addition, the Group engages with suitably
qualified local and international geological, geophysical
and engineering experts and contractors to supplement
and broaden the pool of expertise available to the
Group. Detailed planning of development activities is
undertaken with the aim of managing the inherent risks
associated with oil and gas exploration and production,
as well as ensuring that appropriate equipment and
personnel are available for the operations, and that local
contractors are appropriately supervised.
In recent years, the Group has engaged external
technical consultants to undertake a comprehensive
review and re-evaluation study of the MEX-GOL and SV
fields in order to gain an improved understanding of the
geological aspects of
reservoir
the
engineering, drilling and completion techniques, and the
results of this study and further planned technical work
are being used by the Group in the future development
of these fields. The Group has established an ongoing
relationship with such external technical consultants to
ensure that technical management and planning is of a
high quality in respect of all development activities on
the Group’s fields.
fields and
staff,
technical management
The Group’s
in
consultation with its external technical consultants,
carefully plan and supervise development and
operational activities with the aim of managing the risks
associated with the further development of the Group’s
fields in Ukraine. This includes detailed review and
consideration of available subsurface data, utilisation of
modern geological software, and utilisation of
engineering and completion techniques developed for
Industry risks
The Group is exposed to risks which are generally
associated with the oil and gas industry. For example,
the Group’s ability to pursue and develop its projects
and undertake development programmes depends on
a number of uncertainties, including the availability of
capital, seasonal conditions, regulatory approvals,
gas, oil, condensate and LPG prices, development
costs and drilling success. As a result of these
uncertainties, it is unknown whether potential drilling
locations identified on proposed projects will ever be
drilled or whether these or any other potential drilling
locations will be able
to produce gas, oil or
condensate. In addition, drilling activities are subject
to many risks, including the risk that commercially
productive reservoirs will not be discovered. Drilling for
hydrocarbons can be unprofitable, not only due to dry
holes, but also as a result of productive wells that do
not produce sufficiently to be economic. In addition,
drilling and production operations are highly technical
and complex activities and may be curtailed, delayed
or cancelled as a result of a variety of factors.
Production of hydrocarbons
Producing gas and condensate
reservoirs are
generally characterised by declining production rates
which vary depending upon reservoir characteristics
and other factors. Future production of the Group’s
gas and condensate reserves, and therefore the
Group’s cash flow and income, are highly dependent
on
in operating existing
producing wells, drilling new production wells and
efficiently developing and exploiting any reserves, and
finding or acquiring additional reserves. The Group
may not be able to develop, find or acquire reserves
at acceptable costs. The experience gained from
drilling undertaken to date highlights such risks as the
Group targets the appraisal and production of these
hydrocarbons.
Risks relating
further development and
operation of the Group’s gas and condensate fields in
Ukraine
The planned development and operation of the
Group’s gas and condensate fields in Ukraine is
susceptible to appraisal, development and operational
risk. This could include, but is not restricted to, delays
in the delivery of equipment in Ukraine, failure of key
equipment, lower than expected production from wells
that are currently producing, or new wells that are
brought on-stream, problematic wells and complex
geology which is difficult to drill or interpret. The
the Group’s success
the
to
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
31
generation of significant operational cash
is
dependent on the successful delivery and completion
of the development and operation of the fields. The
impacting planning and
war
implementation of development and operations at the
Group’s fields.
in Ukraine
is
Drilling and workover operations
Due to the depth and nature of the reservoirs in the
Group’s fields, the technical difficulty of drilling or re-
entering wells in the Group’s fields is high, and this
and the equipment limitations within Ukraine, can
result
than expected
outcomes for wells.
Maintenance of facilities
There is a risk that production or transportation
facilities can fail due to non-adequate maintenance,
control or poor performance of the Group’s suppliers.
in unsuccessful or
lower
the fields. With regards to operational activities, the
Group ensures
that appropriate equipment and
personnel are available for the operations, and that
operational contractors are appropriately supervised. In
addition, the Group performs a review of indicators of
impairment of its oil and gas assets on an annual basis,
and considers whether an assessment of its oil and gas
assets by a suitably qualified independent assessor is
appropriate or required.
The utilisation of detailed sub-surface analysis, careful
well planning and engineering design in designing work
programmes, along with appropriate procurement
procedures and competent on-site management, aims
to minimise these risks.
the Ukrainian minimum
The Group’s facilities are operated and maintained at
standards above
legal
requirements. Operations staff are experienced and
receive supplemental training to ensure that facilities are
properly operated and maintained. Service providers
are rigorously reviewed at the tender stage and are
monitored during the contract period.
the
the Group’s development obligations
Financial risks
Exposure to cash flow and liquidity risk
There is a risk that insufficient funds are available to
meet
to
commercialise the Group’s oil and gas assets. Since
future capital
a significant proportion of
requirements of the Group is expected to be derived
from operational cash generated from production,
including from wells yet to be drilled, there is a risk that
in the longer term insufficient operational cash is
generated, or that additional funding, should the need
arise, cannot be secured. The war in Ukraine has
disrupted production operations at the Group’s fields,
and consequently reduced anticipated cash flows from
those fields, and this has increased the risk regarding
sufficiency of capital for development. In addition, the
conflict may disrupt the sales market for hydrocarbons
that are produced. Currently, however, hydrocarbon
prices are reasonably strong, which is ameliorating the
potential reduction in cash flows, and the Group’s
sales counterparties are meeting
financial
obligations. In addition to the risk of operational cash
shortfalls, there is a risk that even with strong cash
flows and cash balances, the Group, from time to time,
can suffer from non-Ukrainian operational banking
appetite for businesses such as the Group’s business,
which can ultimately manifest itself in having a
restricted access to banking services.
Ensuring appropriate business practices
The Group operates in Ukraine, an emerging market,
where certain inappropriate business practices may,
from time to time occur, such as corrupt business
practices, bribery, appropriation of property and fraud,
all of which can lead to financial loss.
their
The Group maintains adequate cash reserves and
closely monitors forecasted and actual cash flow, as
well as short and longer-term funding requirements. The
Group aims to maintain a significant proportion of its
cash resources outside Ukraine. The Group does not
currently have any loans outstanding, internal financial
projections are regularly made based on the latest
estimates available, and various scenarios are run to
assess the robustness of the Group’s liquidity. However,
as the risk to future capital funding is inherent in the oil
and gas exploration and development industry and
reliant in part on future development success, it is
difficult for the Group to take any other measures to
further mitigate
its
this risk, other
development activities to its available capital funding
from time to time. The Group aims to maintain as
diverse a range of banking relationships as possible to
reduce the risks associated with limited accessibility to
banking services which may exist from time to time.
tailoring
than
The Group maintains anti-bribery and corruption
policies in relation to all aspects of its business, and
ensures that clear authority levels and robust approval
processes are in place, with stringent controls over cash
management and the tendering and procurement
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
32
Hydrocarbon price risk
The Group derives its revenue principally from the sale
of its Ukrainian gas, condensate and LPG production.
These revenues are subject to commodity price
volatility and political influence. A prolonged period of
low gas, condensate and LPG prices may impact the
Group’s ability to maintain its long-term investment
programme with a consequent effect on its growth
rate, which in turn may impact the Company’s share
price or any shareholder
returns. Lower gas,
condensate and LPG prices may not only decrease
the Group’s revenues per unit, but may also reduce
the amount of gas, condensate and LPG which the
Group can produce economically, as would increases
in costs associated with hydrocarbon production, such
as subsoil taxes and royalties. The overall economics
of the Group’s key assets (being the net present value
of the future cash flows from its Ukrainian projects) are
far more sensitive to long term gas, condensate and
LPG prices than short-term price volatility. However,
short-term volatility does affect liquidity risk, as, in the
early stage of the projects, income from production
revenues is offset by capital investment. In addition,
the war in Ukraine may disrupt the sales market for
hydrocarbons, although, currently, hydrocarbon prices
are strong, and the Group’s sales counterparties are
meeting their financial obligations.
Currency risk
Since the beginning of 2014, the Ukrainian Hryvnia
significantly devalued against major world currencies,
including the US Dollar, where it has fallen from
UAH8.3/$1.00 on 1 January 2014 to UAH38.0/$1.00
on 31 December 2023, and UAH40.1/$1.00 on 27 May
2024. This devaluation has been a significant
contributor to the imposition of banking restrictions by
the National Bank of Ukraine over recent years. In
addition, the geopolitical events in Ukraine over recent
years and the current war in Ukraine are likely to
continue to impact the valuation of the Ukrainian
Hryvnia against major world currencies. Further
devaluation of the Ukrainian Hryvnia against the US
Dollar will affect the carrying value of the Group’s
assets.
Counterparty and credit risk
The challenging political and economic environment in
Ukraine and current war means that businesses can
be subject to significant financial strain, which can
mean that the Group is exposed to increased
counterparty risk if counterparties fail or default in their
contractual obligations to the Group, including in
relation to the sale of its hydrocarbon production,
resulting in financial loss to the Group.
Financial markets and economic outlook
The performance of the Group is influenced by global
economic conditions and, in particular, the conditions
prevailing in the United Kingdom and Ukraine. The
33
processes. In addition, office and site protection is
maintained to protect the Group’s assets.
The Group sells a proportion of Its hydrocarbon
production through offtake arrangements, which include
pricing formulae so as to ensure that it achieves market
prices for its products, as well as utilising the electronic
market platforms in Ukraine to achieve market prices for
its remaining products. However, hydrocarbon prices in
Ukraine are implicitly linked to world hydrocarbon prices
and so the Group is subject to external price trends.
The Group’s sales proceeds are received in Ukrainian
Hryvnia, and the majority of the capital expenditure
costs for the current investment programme will be
incurred in Ukrainian Hryvnia, thus the currency of
revenue and costs are largely matched. In light of the
previous devaluation and volatility of the Ukrainian
Hryvnia against major world currencies, and since the
Ukrainian Hryvnia does not benefit from the range of
currency hedging instruments which are available in
more developed economies, the Group has adopted a
policy that, where possible, funds not required for use in
Ukraine be retained on deposit in the United Kingdom
and Europe, principally in US Dollars.
The Group monitors the financial position and credit
quality of its contractual counterparties and seeks to
manage the risk associated with counterparties by
contracting with
and
creditworthy
customers. Hydrocarbon production is sold on terms
that limit supply credit and/or title transfer until payment
is received.
contractors
The Group’s sales proceeds are received in Ukrainian
Hryvnia and a significant proportion of investment
expenditure is made in Ukrainian Hryvnia, which
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
minimises risks related to foreign exchange volatility.
However, hydrocarbon prices in Ukraine are implicitly
linked to world hydrocarbon prices and so the Group is
subject to external price movements. The Group holds
a significant proportion of its cash reserves in the United
Kingdom and Europe, mostly in US Dollars, with
reputable financial institutions. The financial status of
counterparties
to manage
is carefully monitored
counterparty risks. Nevertheless, the overall exposure
that the Group faces as a result of these risks cannot be
predicted and many of these are outside of the Group’s
control.
The Group ensures compliance with commitments and
regulations relating to its production and exploration
licences through Group procedures and controls or,
where this is not immediately feasible for practical or
logistical considerations, seeks to enter into dialogue
with the relevant Government bodies with a view to
agreeing a reasonable
for achieving
compliance or an alternative, mutually agreeable course
of action. Work programmes are designed to ensure that
all licence obligations are met and continual interaction
with Government bodies is maintained in relation to
licence obligations and commitments.
frame
time
economies in these regions have been subject to
volatile pressures in recent periods, with the global
economy having experienced a
long period of
difficulty, the COVID pandemic, and more particularly
the current war in Ukraine. This has led to extreme
the Ukrainian
foreign exchange movements
Hryvnia, high
interest rates, and
increased credit risk relating to the Group’s key
counterparties.
inflation and
in
Corporate risks
Ukrainian production licences
The Group operates in a region where the right to
production can be challenged by State and non-State
parties. During 2010, this manifested itself in the form
of a Ministry Order instructing the Group to suspend
all operations and production from its MEX-GOL and
SV production licences, which was not resolved until
mid-2011. In 2013, new rules relating to the updating
of production licences led to further challenges being
raised by the Ukrainian authorities to the production
licences held by independent oil and gas producers in
Ukraine, including the Group. In March 2019, a
Ministry Order was issued instructing the Group to
suspend all operations and production from its VAS
production licence, which was not resolved until March
2023. In 2020, LLC Arkona Gas-Energy (“Arkona”)
faced a challenge from PJSC Ukrnafta concerning the
validity of its SC exploration licence, which was
ultimately resolved in Arkona’s favour until February
2021. During 2023, the Ukrainian authorities have
taken a number of regulatory actions against the
Group, which have culminated in Ministry Orders
being made in May 2023 to suspend all operations and
production at the VAS production licence and SC
exploration licence. Excepting the current suspension
Orders made in respect of the VAS production licence
and SC exploration licence, all such challenges
affecting the Group have been successfully defended
through the Ukrainian legal system. In July 2023, new
legislation was introduced in Ukraine, which will come
into force in September 2024, and which requires that
branches
foreign
companies operating in Ukraine register their ultimate
beneficial owners in Ukrainian Registries. Regal
Petroleum Corporation Ltd ("RPC"), which holds the
MEX-GOL and SV licences, operates such a branch
and will therefore be required to register its ultimate
beneficial owners from the implementation of this law,
which raises a potential risk that such registration will
not be accepted by the Ukrainian authorities, and
possibly result in regulatory action against RPC and/or
its licences and assets, including suspension of the
licences. The business
MEX-GOL and SV
environment is such that these types of challenges
may arise at any time in relation to the Group’s
representative offices) of
(or
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
34
operations, licence history, compliance with licence
commitments and/or local regulations. In addition,
production licences in Ukraine are issued with and/or
carry ongoing compliance obligations, which if not
met, may lead to the loss of a licence.
Risks relating to key personnel
The Group’s success depends upon skilled
management as well as technical expertise and
administrative staff. The loss of service of critical
members from the Group’s team could have an
adverse effect on the business. The current war in
Ukraine has meant that, as far as possible, the
Group’s staff have needed to move away from areas
of conflict and work remotely.
The Group periodically reviews the compensation and
contractual terms of its staff. In addition, the Group has
developed relationships with a number of technical and
other professional experts and advisers, who are used
to provide specialist services as required. As a result of
the war, only essential staff are located at site, and all
other staff are working remotely, either from areas away
from the conflict areas or outside Ukraine. The Group
has invested in technology that allows many staff to
work just as effectively from remote locations.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
35
Statement by the Directors in performance of their statutory duties in accordance with
Section 172(1) of the Companies Act 2006
Introduction
The Directors of the Company must act in accordance with a set of general duties, which are detailed in Section
172(1) of the Companies Act 2006, as follows:
“A director of a company must act in the way he considers, in good faith, would be most likely to promote the
success of the company for the benefit of its members as a whole and, in doing so have regard (amongst other
matters) to:
•
•
•
•
•
•
the likely consequences of any decision in the long term;
the interests of the company’s employees;
the need to foster the company’s business relationships with suppliers, customers and others;
the impact of the company’s operations on the community and environment;
the desirability of the company maintaining a reputation for high standards of business conduct; and
the need to act fairly as between members of the company.”
The Directors are mindful of their duty to promote the success of the Company as described above. Details of
how the Directors have had regard to these matters can be found throughout this Annual Report and Financial
Statements, where we provide examples of how we: take into account the likely consequences of long-term
decisions; understand the importance of engaging with our employees; build relationships with stakeholders;
understand the impact of our operations on the communities in our region and the environment we depend
upon; attribute importance to behaving as a responsible business; and ensure that we act fairly between
shareholders.
Statement
The Directors of the Company consider, both individually and collectively, that they have acted in the way they
consider, in good faith, would be most likely to promote the success of the Company for the benefit of its
shareholders as a whole (having regard to the stakeholders and matters set out in Section 172(1)(a-f) of the
Companies Act 2006) in the decisions taken during the year ended 31 December 2023. Examples of this
include:
•
Long-term decision-making
We have a strategy for the development of our business and our oil and gas assets in Ukraine, and
retain, monitor and adjust a corporate financial model for the economic life of our assets. Our plan is
designed to have a long-term beneficial impact on the Company and to contribute to its success in safely
producing gas, condensate and LPG from our fields in Ukraine. We will continue to operate our business
with robust and documented financial and operational controls and in line with safety and environmental
regulations and requirements.
•
Employees’ interests
Our employees are fundamental to the delivery of our business plan. We aim to be a responsible
employer in our approach to the remuneration and benefits that our employees receive. The health,
safety and well-being of our employees is one of our primary considerations in the way we do business,
and the training and development of our employees to develop their skills and expertise is fundamental
in the highly technical and specialised oil and gas industry.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
36
•
Relationships with stakeholders
We aim to operate our gas and condensate fields in Ukraine safely and efficiently for the benefit of all
of our stakeholders, including employees, Government, investors, local community and suppliers. In the
operational extraction and production of gas, condensate and LPG, there are many risks, including to
health, safety and the environment. In our operational activities, we rigorously apply our quality, health,
safety and environmental (“QHSE”) policies to protect the safety of our employees and contractors, and
to protect the environment from pollution. In the delivery of our hydrocarbon products, we aim to ensure
that our products meet all applicable regulatory requirements and to be a reliable and consistent supplier
to our customers. We also aim to act responsibly and fairly in how we engage with our contractors,
suppliers and customers, and to co-operate with our industry regulators, all of which are integral to the
successful delivery of our business plan and the stewardship of the resources we manage.
•
Impact on community and environment
Our business plan takes into account the impact of the Company’s operations on the community and
environment in which we operate, and our wider societal responsibilities, particularly in Ukraine at our
operational sites. Prior to the outbreak of the war, we had a broad range of corporate social responsibility
(“CSR”) initiatives in Ukraine, supporting a number of community projects, including support of local
schools (e.g. materials for repair works and funding of school meals) and youth sports, as well as the
repair of roads and local infrastructure. Since the outbreak of the war, our initiatives have focussed on
humanitarian aid, in particular the procurement of medical equipment and supplies. We also strictly
adhere to our QHSE policies in our approach to the environment and ensure compliance with applicable
health, safety and environmental regulatory requirements.
Streamlined Energy and Carbon Reporting (“SECR”)
We remain very aware of the current drive globally to monitor, reduce and report levels of energy use in
delivering Group performance, and note that SECR reporting requirements apply to the Group.
However, as our United Kingdom emissions are de-minimis, with only two full-time employees in the
United Kingdom and no operational presence, we fall below the minimum threshold and are currently
exempt from reporting such information. Notwithstanding that exemption, but subject to the restrictions
caused by the war in Ukraine, we are endeavouring to review our Ukrainian operations to determine the
processes of self-reporting for our global operations and formulating the content of our intended self-
reporting.
This initiative is intended to:
•
•
•
•
disclose the environment-related data currently collected, including: energy consumed, water
consumed, greenhouse gas emissions and waste generated (in natural units and relative to
volumes of extracted gas);
determine any additional applicable indicators to be added, for example: natural gas and solid
fuel consumed for heating, compressors and other equipment; diesel fuel used in diesel
generators; consumption of petrol and diesel in vehicles, etc.;
determine potential benchmarks; and
determine the reporting frequency.
We will keep shareholders updated on this initiative of recognised significance.
•
Business conduct
We aim to ensure that the Company behaves responsibly in the wider community, and that our business
is operated in a responsible manner, operating within the high standards of business conduct and good
governance expected for a business such as ours. We have in place, and monitor adherence to, our
Anti-Bribery and Corruption Policy and a range of QHSE related policies. This approach contributes to
the delivery of our business plan by ensuring we work in an honest and ethical way, and we require the
same from our employees, contractors and others connected with the business.
37
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
•
Fair engagement with shareholders
Our intention is always to behave responsibly toward our shareholders and treat them fairly and equally,
so they, too, may benefit from the successful delivery of our business plan. In light of our significant
majority shareholder, we have in place a Relationship Agreement to ensure that the management and
governance of the Company is and remains independent. We have adopted and, subject to limited
exceptions, adhere to the Quoted Companies Alliance Corporate Governance Code 2018 (“QCA Code”)
to ensure clearly defined governance procedures within our business.
Strategic Report Approval
The Strategic Report, which incorporates Highlights, Chairman’s Statement, Chief Executive’s Statement,
Business Model, Our Strategic Priorities, Overview of Assets, Overview of Reserves, Finance Review, Key
Performance Indicators, Sustainability, Principal Risks and Uncertainties and Statement under s172(1) of the
Companies Act 2006, was approved by the Board on 20 June 2024 and signed on its behalf by:
Chuck Valceschini
Chairman
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
38
Corporate Governance
Board of Directors
Chuck Valceschini
Non-Executive Chairman
Chuck Valceschini was appointed as Non-Executive Chairman in March 2024. Mr Valceschini is an
experienced senior executive and director, with extensive knowledge of the global oil and gas industry. He
commenced his career in technical and operational roles with Marathon Oil Corporation in the United States.
He then moved to similar roles in international postings with IPR Energy Group and Nobel Oil. He subsequently
joined Anglo Albanian Petroleum, American Energy Group, Hycarbex Inc and Severtek LLC, and then TNK-
BP and BP plc in senior technical and management roles. He subsequently founded Valceschini & Associates
LLC to provide technical and commercial services to the oil and gas industry. He has also been a Director of
Block Energy and Chairman of JKX Oil & Gas. Mr Valceschini has a BSc in Petroleum Engineering from the
University of Wyoming, and an MSc in Engineering Management from Portland State University. He is a
member of the Society of Petroleum Engineers.
Audit Committee Chairman
Remuneration Committee Member
Nomination Committee Chairman
HSE Committee Member
Bruce Burrows
Finance Director
Bruce Burrows was appointed as Finance Director in June 2019, having previously been a Non-Executive
Director since August 2017. Mr Burrows has extensive experience in the oil and gas industry, and, in particular,
Ukraine and Eastern Europe, having been Finance Director of JKX Oil & Gas for 14 years until 2011. Since
then, he has been Chief Financial Officer of Seven Energy International, Lekoil, and AITEO Group, and has
served as a non-executive Director of Azonto Petroleum and European Goldfields. Mr Burrows is a member
of the Institute of Chartered Accountants of Australia & New Zealand, and holds a BSc Honours from
Canterbury University (New Zealand) and a Diploma in Accounting from Victoria University (New Zealand).
Nomination Committee Member
Dr Gehrig Schultz
Non-Executive Director
Gehrig Schultz became a Non-Executive Director in August 2022. He is a geophysicist with extensive
experience in the global oil and gas industry. He commenced his career in South America, with management
roles with Western Geophysical and Grant Geophysical, before joining PGS Onshore to assist with the
development of its geophysical business worldwide. He was then Chairman and Chief Executive Officer of
Prospectiuni S.A. and Chairman of Tender Oil & Gas, before founding Surus Geophysical B.V. to provide
geophysical consulting services. He joined EPI Limited in 2018 as Chief Operating Officer of Geoscience, and
currently leads the geoscience division. Mr Schultz has a BSc in Geophysical Engineering from the Colorado
School of Mines, and a PhD in Geophysics from the University of Bucharest.
Audit Committee Member
Remuneration Committee Chairman
HSE Committee Chairman
Alexey Pertin
Non-Executive Director
Alexey Pertin was appointed as a Non-Executive Director in April 2011 and is a nominee of the Company's
indirect majority shareholder, Smart Holding (Cyprus) Limited. He is currently Chairman of the Supervisory
Board of PJSC Smart-Holding, having previously been Chief Executive Officer of PJSC Smart-Holding. He is
also Deputy Chairman of the Supervisory Board of Metinvest B.V., and Chairman of the Strategic & Investment
Committee of the Supervisory Board of Metinvest B.V. He also holds Director positions with Adeona Holdings
39
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
Limited, Smart Holding (Cyprus) Limited and Smart Holding N.V. Mr Pertin previously held the position of
Strategy and Corporate Development Director of PJSC Smart-Holding. Prior to joining the Smart Holding
Group, he held various management positions at JSC Severstal-Group, including the positions of Deputy Chief
Executive Officer for Business Development at JSC Severstal-Group and Chief Executive Officer of CJSC
Izhora Pipe Plant. Mr Pertin graduated from Cherepovets State University and Saint Petersburg State
Technical University with qualifications in financial management, and he also holds an MBA from Newcastle
Business School, England.
HSE Committee Member
Yuliia Kirianova
Non-Executive Director
Yuliia Kirianova was appointed as a Non-Executive Director in May 2016 and is a nominee of the Company's
indirect majority shareholder, Smart Holding (Cyprus) Limited. Ms Kirianova is currently the Chief Executive
Officer of PJSC Smart-Holding, having previously been Chief Financial Officer and First Deputy Chief
Executive Officer of PJSC Smart-Holding. Prior to joining the Smart Holding Group, Ms Kirianova held positions
at ING Bank Ukraine, JSC System Capital Management and LLC DCH Investment Management. Ms Kirianova
holds a degree in Finance from the National Academy of Management, Kyiv and an MBA from the Open
University.
Audit Committee Member
Igor Basai
Non-Executive Director
Igor Basai was appointed as a Non-Executive Director in March 2024 and is a nominee of the Company’s
indirect majority shareholder, Smart Holding (Cyprus) Limited. Mr Basai is an experienced human resources
professional, having started his career in recruitment with HR Consulting and Brain Source International,
before joining the HR department of Metinvest Holding. He then held senior HR roles with RU-COM Group,
British American Tobacco, Prodo Group, Kellogg, PepsiCo and Interpipe, before joining the Smart-Holding
Group as HR and Organisational Development Director. Mr Basai has a Specialist Degree in English Philology
and Practical Psychology from the Kyiv National Linguistic University, and a Postgraduate Diploma in HR
Management from Nottingham Trent University.
Remuneration Committee Member
Nomination Committee Member
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
40
Corporate Governance Statement
The Company has adopted the Quoted Companies Alliance Corporate Governance Code 2018 (“QCA Code”).
This statement sets out how the Company complies with, or departs from, the 10 principles of the QCA Code.
1. Strategy and business model
The Group is engaged in the exploration and development of oil and gas projects, with assets in Ukraine.
The Directors of the Company set the Company’s strategy and monitor its implementation through
management and financial performance reviews. The Board also works to ensure that adequate resources are
available to implement the Company’s strategy in a timely manner. The Company has set out a strategy and
business model (including the key challenges to its implementation) to promote long-term value creation for
shareholders and will update all shareholders on this in its Annual Report each year.
The Board meets on a regular basis to discuss the strategic direction of the Company and any significant
deviation or change will be highlighted promptly should this occur.
2. Understanding and meeting shareholders’ needs and expectations
The Company is committed to listening to, and communicating openly with, its shareholders to ensure that its
strategy, business model and performance are clearly understood. The Annual General Meeting is a forum for
shareholders to engage in dialogue with the Board. The results of the Annual General Meeting are published
via a regulatory information service and can be found in the News section of the Company’s website at
www.enwell-energy.com.
Chuck Valceschini, Chairman, Oleksiy Zayets, Interim Chief Executive Officer, and Bruce Burrows, Finance
Director, are the principal contacts between the Company and its shareholders, with whom they each maintain
a regular dialogue. The views of shareholders are communicated to the whole Board.
The Company’s progress on achieving its key targets is regularly communicated to investors through its
announcements to the market. The Company also utilises other professional advisers such as the Company’s
Nominated Adviser, Broker and the Company Secretary, who provide advice and recommendations on
shareholder communication.
3. Taking into account wider stakeholder and social responsibilities and their implications for long-
term success
The Board members recognise their responsibilities to stakeholders including staff, suppliers, customers,
regulators and within the communities in which the Company operates. The Company has senior managers
of its operating divisions who provide regular feedback to the Chief Executive Officer, who then ensures that
the Board as a whole is informed of any major developments. In turn, the Board communicates with
management and staff on key issues which may affect them in connection with the Group’s business.
The Company is involved in the local communities close to its operations through sponsorship and community
projects and activities. Careful attention is given to ensure that all operational activities are performed in an
environmentally responsible manner and in accordance with applicable laws and regulations. Both the
involvement in local communities and the performance of operational activities in an environmentally
responsible manner are monitored by the Board to ensure that ethical values and behaviours are recognised.
4. Embedding effective risk management
The Board regularly reviews the risks facing the business and the internal controls which are in place to
address these risks. The Company has a Management Risk Committee that monitors the Group’s business
operations and identifies key risks that are faced. The Management Risk Committee maintains a Risk Register
and Mitigation Plan that is formally reviewed and updated quarterly. The Management Risk Committee
regularly reports to the Board on risk management and mitigation.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
41
The Company is committed to maintaining the highest quality, health, safety and environment (“QHSE”)
standards and the effective management of these areas is an intrinsic element of the overall business ethos.
The Company has a Health, Safety and Environment Committee that oversees and monitors the Group’s
activities and adherence to its QHSE policies, as well as supervising the updating and implementation of such
policies. The Health, Safety and Environment Committee meets regularly and reports to the Board on all QHSE
matters. Through strict enforcement of the Group’s QHSE policies, together with regular management
meetings, training and the appointment of dedicated safety professionals, the Company strives to ensure that
the impact of its business activities on its staff, contractors and the environment is as low as is reasonably
practicable. The Company reports safety and environmental performance in accordance with oil industry
practice and guidelines.
The Board is responsible for the Group’s system of internal control and reviewing its effectiveness. Any such
system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can
only provide reasonable and not absolute assurance against material misstatement or loss. However, the
Company believes that its internal control systems are appropriate to the Company’s business. Internal
controls are assessed for effectiveness and risks are monitored and reviewed through regular Board and
management meetings.
5. Maintaining a balanced and well-functioning Board
In the spirit of the QCA Code, it is the Board’s function to ensure that the Company is managed for the long-
term benefit of all shareholders and other stakeholders with effective and efficient decision-making. Corporate
governance is an important part of that function, reducing risk and adding value to the Company. The Chairman
oversees Corporate Governance compliance for the Company and the Board monitors the governance
framework of the Company on an ongoing basis.
As an AIM-quoted company, the Company is required to apply a recognised corporate governance code,
demonstrating how it complies with such corporate governance code and where it departs from it.
The Board has formally adopted the QCA Code as the basis for its corporate governance framework. The
Board recognises the principles of the QCA Code, which focus on the creation of medium to long-term value
for shareholders. The Company will provide annual updates on its compliance with the QCA Code in its Annual
Reports.
The composition of the Board is as follows:
Board Member
Chuck Valceschini (Chairman) *
Bruce Burrows
Alexey Pertin
Yuliia Kirianova
Gehrig Schultz
Igor Basai *
Chris Hopkinson **
Sergii Glazunov **
*appointed 7 March 2024 / ** resigned 7 March 2024
2023 Meetings Attended
(out of a total possible)
0/0
20/20
1/20
10/20
16/20
0/0
20/20
20/20
The Board comprises six Directors, being the Non-Executive Chairman, the Finance Director and four Non-
Executive Directors, reflecting a blend of different experience and backgrounds. The Non-Executive Chairman
is Chuck Valceschini. Three of the Non-Executive Directors are nominees of Smart Holding (Cyprus) Limited,
the indirect majority shareholder of the Company. The Company has entered into a Relationship Agreement
with Smart Holding (Cyprus) Limited, which regulates the relationship between them to ensure that the
business and affairs of the Company are managed by the Board, independently of Smart Holding (Cyprus)
Limited and its associated entities. The Board also has procedures in place to monitor and deal with Directors’
conflicts of interest. The Directors are expected to devote such time as is necessary for the proper performance
of their respective duties. The Executive Director is an employee of the Group, and the Non-Executive Directors
are expected to spend a minimum number of days on the Group’s business each year. The Board considers
42
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
Chuck Valceschini and Gehrig Schultz to be independent Non-Executives in terms of the QCA guidelines,
although given the size of the Company, the Board has not appointed a senior independent Director.
The Board is responsible for setting the direction of the Company through the establishment of strategic
objectives and key policies. The Board has a schedule of matters reserved for its review and approval, and
such items include Group strategy, approval of major capital expenditure projects, approval of the annual and
interim results, annual budgets, dividend policy, Board composition and structure, and appointment and
assessment of senior management. The Board monitors the exposure to key business risks and reviews the
strategic direction of all operating subsidiaries, their annual budgets, their performance in relation to those
budgets and their capital expenditure. The Board maintains its independence from the day-to-day responsibility
for managing the business which it delegates to the Chief Executive Officer and the senior management team.
The Chief Executive Officer, being the senior executive, has a particular role and areas of responsibility and
engages with the Company’s shareholders and stakeholders as required.
Regular Board meetings are held (a minimum of four per year) and ad hoc meetings are scheduled as required.
The attendance at Board and Committee meetings during the year will be reported in the Annual Report. All
Directors have access to management, including the Company Secretary, and to such information as is
needed to carry out their duties and responsibilities fully and effectively. Furthermore, all Directors are entitled
to seek independent professional advice concerning the affairs of the Company, at its expense.
All Directors are subject to election by shareholders at the first opportunity following their appointment by the
Board. In addition, Directors will retire by rotation and stand for re-election by shareholders at least once every
three years in accordance with the Company’s Articles of Association.
Further details of the Board of Directors, and their roles and background, are set out in the preceding pages
of this Report.
6. Having appropriate experience, skills and capabilities on the Board
The Board has a mix of experience, skills, gender, linguistic and personal qualities that help deliver the strategy
of the Company, including managerial, technical and financial expertise in the oil and gas industry. The
composition of the Board ensures that no one individual or group dominates the decision-making process. The
Company will ensure that between them the Directors have the necessary up-to-date experience, skills and
capabilities to deliver the Company’s strategy and targets. The Directors keep their respective skills up-to-date
through a combination of attendance at relevant industry events and conferences, continued professional
development and experience gained from other board and management roles.
7. Evaluating Board performance
Given the Company’s current size, the Board has not considered it necessary to undertake an external
assessment of the Board performance and effectiveness during the period, but monitors for any such need.
8. Ethical values and behaviours
The Company operates a corporate culture that is based on ethical values and behaviours. It maintains a
quality system appropriate to the standards required for a Company of its size. The Board communicates
regularly with management through meetings and messages, and information is cascaded to staff at operating
subsidiaries via management meetings with operational personnel.
The Company maintains appropriate policies which reflect these values, including an Anti-Bribery and
Corruption Policy in relation to its compliance with the Bribery Act 2010, and Policies on Disclosure of Inside
Information and Share Dealing. These policies set out the high ethical standards required of the Group’s staff
in the course of carrying out its business activities regarding dealing with gifts, hospitality, corruption, fraud,
the use of inside information and whistle-blowing.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
43
9. Maintaining governance structures and processes
The Board
In addition to the Chairman’s Statement and explanation provided under principle 5 above, the Chairman is
responsible for the leadership of the Board and is pivotal to fostering a culture that adopts good corporate
governance.
The Chairman, together with the rest of the Board, sets the direction for the Company through a formal
schedule of matters reserved for its decision. The Chief Executive Officer, as the senior executive, has a
particular role and areas of responsibility and engages with the Company’s shareholders and stakeholders as
required. The Board has a schedule of matters reserved for its review and approval, and such items include
Group strategy, approval of major capital expenditure projects, approval of the annual and interim results,
annual budgets, dividend policy, Board composition and structure, and the appointment and assessment of
senior management. The Board monitors the exposure to key business risks and reviews the strategic direction
of all operating subsidiaries, their annual budgets, their performance in relation to those budgets and their
capital expenditure. The Board delegates day-to-day responsibility for managing the business to the Chief
Executive Officer and the senior management team.
Committees
The Board has established four committees, being the Audit Committee, Remuneration Committee,
Nomination Committee and Health, Safety and Environment Committee. The Audit Committee is composed of
two independent Non-Executive Directors (Chuck Valceschini and Gehrig Schultz) and a Non-Executive
Director (Yuliia Kirianova) who is a nominee of Smart Holding (Cyprus) Limited, the indirect majority
shareholder of the Company. The Remuneration Committee is composed of two independent Non-Executive
Directors (Chuck Valceschini and Gehrig Schultz) and a Non-Executive Director (Igor Basai) who is a nominee
of Smart Holding (Cyprus) Limited. The Nomination Committee is composed of an independent Non-Executive
Director (Chuck Valceschini), an Executive Director (Bruce Burrows) and a Non-Executive Director (Igor Basai)
who is a nominee of Smart Holding (Cyprus) Limited. The Health, Safety and Environment Committee is
composed of two independent Non-Executive Directors (Chuck Valceschini and Gehrig Schultz) and a Non-
Executive Director (Alexey Pertin) who is a nominee of Smart Holding (Cyprus) Limited. The QCA Code
recommends that the membership of these committees is made up of only independent non-executive
directors, but given the size of the Company and the fact that three of the Directors are nominees of Smart
Holding (Cyprus) Limited, the Board considers that the composition of these Committees is appropriate in the
circumstances.
Audit Committee
The Audit Committee meets not less than twice a year to review the published financial information, and the
effectiveness of external audit and internal financial controls. It deals with the appointment, terms of
engagement and fees of the external Auditors, the scope of the audit, review of the financial statements and
reports, including any changes to accounting policies or practices, and the review of the Group’s system of
risk management and internal controls and compliance with applicable laws and regulations. Meetings are
normally attended, by invitation, by a representative of the Auditors.
The composition of the Audit Committee is as follows:
Committee Member
Chuck Valceschini (Chairman) *
Gehrig Schultz
Yuliia Kirianova *
Bruce Burrows **
Chris Hopkinson **
*appointed 7 March 2024 / **resigned 7 March 2024
2023 Meetings Attended
(out of a total possible)
0/0
4/4
0/0
4/4
4/4
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
44
Remuneration Committee
The Remuneration Committee is responsible for establishing and developing the Company’s general policy on
executive and senior management remuneration, having regard to the need to attract and retain individuals of
the highest calibre and with the appropriate experience to make a significant contribution to the Group, and
determining specific remuneration packages for Executive Directors and senior management.
The composition of the Remuneration Committee is as follows:
Committee Member
Gehrig Schultz (Chairman) *
Charles Valceschini
Igor Basai *
Bruce Burrows **
Chris Hopkinson **
*appointed 7 March 2024 / ** resigned 7 March 2024
2023 Meetings Attended
(out of a total possible)
2/2
0/0
0/0
0/2
2/2
Nomination Committee
The Nomination Committee is responsible for overseeing the Company’s recruitment of Directors and senior
executive management, reviewing the composition and evaluating the expertise of the Board and senior
executive management and ensuring that a process is in place for orderly succession to Board and senior
management positions. The Nomination Committee was established in June 2024.
The composition of the Nomination Committee is as follows:
Committee Member
Charles Valceschini (Chairman)
Bruce Burrows
Igor Basai
Health, Safety and Environment Committee
The Health, Safety and Environment Committee meets not less than once a year to oversee and monitor
QHSE matters affecting the Company and its business activities. It is responsible for the supervision of QHSE
matters, including evaluation of the effectiveness of QHSE policies, assessment of Group performance
regarding the impact of decisions relating to QHSE issues, oversight of compliance of QHSE policies with
applicable international and oil industry practice and guidelines, and development and maintenance of the
framework of QHSE policies for the management and reporting of QHSE issues affecting the Group. During
the period, there was frequent communication between the HSE Committee members in relation to their remit,
despite no formal meetings being convened, this being dictated by the disruption and adjustment to work
locations and practices caused by the war in Ukraine.
The composition of the Health, Safety and Environment Committee is as follows:
Committee Member
Gehrig Schultz (Chairman)
Chuck Valceschini *
Alexey Pertin *
Chris Hopkinson **
Sergii Glazunov **
*appointed 7 March 2024 / **resigned 7 March 2024
2023 Meetings Attended
(out of a total possible)
0/0
0/0
0/0
0/0
0/0
10. Communicating with shareholders and other relevant stakeholders
The Board recognises that it is accountable to shareholders for the performance and activities of the Company
and the Group. The Board engages in discussions with shareholders as appropriate from time to time through
formal meetings or correspondence and audio-visual and telephone discussions. The Annual General Meeting
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
45
of the Company provides an opportunity for the Directors to present to shareholders a report on current
operations and developments and enables shareholders to express their views about the Company’s business.
As required by Rule 26 of the AIM Rules for Companies, the Company publishes historical Annual Reports,
Interim Reports, Notices of General Meetings and all announcements since the Company’s admission to the
AIM Market, which are available in the News section of its website at www.enwell-energy.com.
The Board does not publish an Audit Committee or Remuneration Committee report in its Annual Report as
the Board considers this is not appropriate given the size and stage of development of the Company. The
Board will consider annually whether it considers it appropriate for these reports to be included in future Annual
Reports.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
46
Directors’ Report
The Directors present their Annual Report and the audited consolidated financial statements for the year ended
31 December 2023.
Statement under Section 172(1) of the Companies Act 2006
The Statement by the Directors in the performance of their statutory duties in accordance with Section 172(1) of
the Companies Act 2006 is set out in the Strategic Report.
Future Developments
The future developments relating to the Group are described in the Strategic Report, and are therefore not
repeated in the Directors’ Report in accordance with Section 414C(11) of the Companies Act 2006 and related
statutory requirements.
Dividends
An interim dividend of 15 pence per ordinary share, totalling £48.1 million, was paid for the period on 15 June
2023 (2022: nil). No final dividend for the period is proposed (2022: nil).
Capital Structure
Details of the issued share capital, together with details of the movements in the Company's issued share
capital during the year, are shown in Note 26. The Company has one class of ordinary shares which carry no
right to fixed income. Each share carries the right to one vote at general meetings of the Company.
There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed
by the general provisions of the Articles of Association of the Company and prevailing legislation. The Directors
are not aware of any agreements between holders of the Company's shares that may result in restrictions on
the transfer of securities or on voting rights.
No person has any special rights of control over the Company's share capital and all issued shares are fully
paid.
With regard to the appointment and replacement of Directors, the Company is governed by its Articles of
Association, the Companies Act 2006 and related legislation. The Articles of Association themselves may be
amended by special resolution of the shareholders. The powers of the Directors are described in the Corporate
Governance Statement.
Directors and Directors’ Interests
The Directors who held office during the year and up to the date hereof were as follows:
Chris Hopkinson (resigned 7 March 2024)
Sergii Glazunov (resigned 7 March 2024)
Alexey Pertin
Yuliia Kirianova
Bruce Burrows
Gehrig Schultz
Chuck Valceschini (appointed 7 March 2024)
Igor Basai (appointed 7 March 2024)
None of the Directors who held office at the end of the financial year had any disclosable interest in the shares
of the Company or any other Group companies.
According to the register of Directors’ interests, no rights to subscribe for shares in or debentures of Group
companies were granted to any of the Directors or their immediate families, or exercised by them, during the
financial year.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
47
Directors’ Indemnities
The Company has made qualifying third party indemnity provisions for the benefit of its Directors in accordance
with Section 234 of the Companies Act 2006, which were made during the year and remain in force at the date
of this report.
Political Contributions
During the year the Group did not make any political contributions (2022: nil).
Financial Risk Management
The Group’s financial risk management is disclosed in the Strategic Report, and is therefore not repeated in
the Directors’ Report in accordance with Section 414C(11) of the Companies Act 2006 and related statutory
requirements.
Post Balance Sheet Events
Details of significant events since the Balance Sheet date are contained in Note 32.
Substantial Shareholders
As at 20 June 2024, the Company had been notified of the following interests of 3% or more in its issued share
capital:
Substantial Shareholder
Smart Energy (CY) Limited *
Pope Asset Management
Number of
shares
264,996,769
22,273,339
% of issued
ordinary
share capital
82.65%
6.95%
* Smart Energy (CY) Limited is 100% owned by Smart Holding (Cyprus) Limited.
Going Concern Assessment
The Directors have assessed the ability of the Group and the Company to continue as a going concern,
including considering the impact of the ongoing war in Ukraine, and the results of this assessment are set out
in Note 2.
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law,
the Directors have prepared the Group and Company financial statements in accordance with UK-adopted
international accounting standards.
Under company law, the Directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the
Group for that period. In preparing the financial statements, the Directors are required to:
•
•
•
select suitable accounting policies and then apply them consistently;
state whether applicable UK-adopted international accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements;
make judgements and accounting estimates that are reasonable and prudent; and
48
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
•
prepare the financial statements on a going concern basis unless it is inappropriate to presume that the
Group and Company will continue in business.
The Directors are responsible for safeguarding the assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting records that are sufficient to show and
explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the
financial position of the Group and Company and enable them to ensure that the financial statements comply
with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the
United Kingdom governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
Directors’ Confirmations
In the case of each Director in office at the date the Directors’ Report is approved:
•
•
so far as the Director is aware, there is no relevant audit information of which the Group’s and
Company’s Auditors are unaware; and
the Director has taken all the steps that he/she ought to have taken as a Director in order to make
himself/herself aware of any relevant audit information and to establish that the Group’s and Company’s
Auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the
Companies Act 2006.
Independent Auditors
A resolution to reappoint Zenth Audit Ltd as Independent Auditors will be proposed at the next Annual General
Meeting.
On behalf of the Board
Chuck Valceschini
Chairman
20 June 2024
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
49
Independent Auditors’ Report to the members of Enwell Energy plc
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Enwell Energy plc (the “Company”) and together with its
subsidiaries (the ”Group”). These financial statements are included within the Annual Report and Financial
Statements (the "Annual Report"), which comprise: the consolidated and company balance sheets as at 31
December 2023; the consolidated income statement, the consolidated and company statements of
comprehensive income, the consolidated and company cash flow statements, and the consolidated and
company statements of changes in equity for the year then ended; and the notes to the financial statements,
which include a description of the significant accounting policies.
In our opinion, Enwell Energy plc's G roup financial statements and C ompany financial statements (the
"financial statements"):
•
•
•
give a true and fair view of the state of the Group's and of the Company's affairs as at 31 December 2023
and of the Group's profit and the Group's and Company's cash flows for the year then ended;
have been properly prepared in accordance with UK-adopted international accounting standards; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities
for the audit of the financial statements section of our report. We are independent of the Company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applicable to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern assumption on the Company financial statements
In auditing the Company financial statements, we have concluded that the Directors' use of the going concern
basis of accounting in the preparation of the Company financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as
a going concern for a period of at least twelve months from when the financial statements are authorised for
issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report. However, because not all future events or conditions can be predicted, this
statement is not a guarantee as to the Company’s ability as a going concern.
Material uncertainty related to going concern on the Group financial statements
In forming our opinion on the Group financial statements, which is not modified, we have considered the
adequacy of the disclosure made in Note 2 to the financial statements concerning the Group's ability to
continue as a going concern. The Group's operations are entirely based in Ukraine. On 24 February 2022, the
Russian Federation commenced a military invasion of Ukraine which disrupted operations at the Group’s field
locations. As described in Note 2 “Going concern” to the financial statements, following the adoption of new
legislation the Ukrainian authorities suspended in May 2023 the VAS production licence and the SC exploration
licence for a period of 5 years. The future development of this conflict and the future actions of the Ukrainian
state authorities are inherently uncertain and might have potential short and long-term impact on the Group's
operations, staff and assets in Ukraine. These conditions, along with the other matters explained in Note 2 to
the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about
the Group's ability to continue as a going concern and realise its assets in the normal course of business. The
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
50
Group financial statements do not include the adjustments that would result if the Group were unable to
continue as a going concern.
In auditing the Group financial statements, we have concluded that the Directors' use of the going concern
basis of accounting in the preparation of the Group financial statements is appropriate.
Our evaluation of the Directors' assessment of the Group's ability to continue to adopt the going concern basis
of accounting included:
•
•
•
•
•
•
We obtained the Directors' assessment and conclusions with respect to going concern.
We discussed the going concern assessment with management and those charged with governance
and challenged the key assumptions, estimates and judgements made in the assessment.
We tested the cash flow models used in the going concern assessment.
We assessed the likelihood of the different scenarios and sensitivities considered by the Directors, with
specific consideration of the potential impact of the Russian military invasion of Ukraine and the
suspension of other MEX-GOL and SV licences by the state authorities in Ukraine.
We discussed with the Group legal advisers the measures taken by the Group to defend its business
and assets in Ukraine
We considered the appropriateness of the disclosures made in respect of going concern in the Group
financial statements.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Our audit approach
Overview
Audit scope
•
Key audit matters
•
Materiality
•
•
•
•
•
In addition to the statutory audit of the parent company, we conducted full scope audits of two significant
components out of the Group's five components which were selected due to their size and risk
characteristics. An audit of one or more account balances, classes of transactions or disclosures was
performed at a further three components.
This enabled us to obtain coverage of 100% of consolidated revenue, 100% coverage of consolidated
profit before tax and 100% coverage of consolidated total assets of the Group.
Material uncertainty related to going concern (refer to 'Material uncertainty related to going concern
assumption on the Group financial statements' above).
Carrying value of investments in, and loans to, subsidiary undertakings (parent).
Overall Group materiality: US$2,921,000 (2022: US$2,521,000) based on 5% of three-year average
(2022: three-year average) profit before tax adjusted for non-recurring items.
Overall Company materiality: US$925,000 (2022: US$1,690,000) based on 1% of total assets.
Performance materiality: US$2,191,000 (2022: US$1,260,000) (Group) and US$695,000 (2022:
US$845,000) (Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in
the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors' professional judgement, were of most significance in
the audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by the auditors, including those which had the
greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters, and any comments we make on the results of our procedures
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
51
thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
In addition to going concern, described in the 'Material uncertainty related to going concern assumption on the
Group financial statements' section above, we determined the matters described below to be the key audit
matters to be communicated in our report. This is not a complete list of all risks identified by our audit.
Key audit matter
Carrying value of investments in, and loans to,
subsidiary undertakings (parent)
Refer to Note 3 'Significant Accounting Judgements
and Estimates' and Note 19 'Investments and Loans
to Subsidiary Undertakings'. As at 31 December
2023, the Company had a total investment in
subsidiaries of US$69.9 million (2022: US$80.7
million) comprising
in shares of
US$30.7 million (2022: US$30.7 million) and long
term investment loans of US$39.2 million (2022:
US$50.0 million).
investment
At the balance sheet date, management updated its
assessment of the expected credit loss on the
Company's intercompany receivable and determined
that the provision against the receivable should be
In addition,
increased by US$15.0 million.
management updated
the
recoverable amount of the Company's investments in
its subsidiaries and determined that no impairment
loss should be recognised.
its assessment of
the recoverability of
the
The assessment of
involves subjective
investments' carrying value
judgements about future business performance, with
key assumptions including cash flows and discount
rates. The assessment of expected credit loss
requires subjective judgements and estimates of the
timing of future cash flows.
Accordingly, this was an area of focus for our audit
as there is a risk that the carrying value of the
Company's investments in subsidiaries and the
intercompany
receivables could be materially
misstated.
How our audit addressed the key audit matter
in, and
To address the risk that the carrying amount of
investments
to, subsidiary
undertakings as at 31 December 2023, may be
misstated, we
following
performed
procedures:
loans
the
- Discussed with management
assumptions used;
the
key
- Evaluated the overall methodology applied in
management's assessment of the expected credit
losses on loans to subsidiaries and determination
of the recoverable amounts of investments in
and
subsidiaries
appropriateness, and verified the mathematical
accuracy of the related cash flow models;
reasonableness
for
- Validated the assumptions used by management
by agreeing or comparing them to external and
internal sources, where appropriate; recalculated
the weighted average cost of capital using inputs
from external sources;
- Agreed internally generated assumptions to the
approved budgets and management plans;
- Performed sensitivity analysis to understand if
reasonably possible changes in management's
assumptions would result in a material change in
the balances.
We concur with management's conclusions in
respect of the carrying amount of investments in,
and loans to, subsidiary undertakings as at 31
December 2023 and the resulting impact on profit
or loss.
We verified that the Company's assessment was
appropriately accounted for and disclosed in the
company financial statements for the year ended
31 December 2023, including the disclosure of
applicable estimates and judgements.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
52
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on
the financial statements as a whole, taking into account the structure of the Group and the Company, the
accounting processes and controls, and the industry in which they operate.
The Group is structured as two operating segments on a geographical basis: the UK head office and Ukrainian
oil and gas exploration, development and production. The consolidated financial statements are a consolidation
of six legal entities, comprising the Group's operating businesses and centralised functions.
Day-to-day management of the operations of the Group and the Company, including accounting and. financial
reporting, is undertaken in Kyiv, Ukraine. Accordingly, a significant portion of our audit work was undertaken in
Kyiv on our behalf by Ukrainian component auditors, part of a reputable international accounting network. In
establishing the overall approach to the Group audit, we determined the type of work that needed to be performed
by us, as the group audit team, or by the local firm in Ukraine, as a component audit team.
We conducted full scope audits of the parent company and of one component out of the Group's five
components which were selected due to their size and risk characteristics. We audited the parent company
financial statements and the component auditors audited the one local significant component which was a
representative office whereas we performed specific scope procedures for the holding company. An audit of
one or more account balances, classes of transactions or disclosures was performed at a further four
insignificant components. We carried out two of these specific scope procedures and the component team
carried out two specific scope engagements.
Further specific audit procedures relating to the consolidation, compliance with laws and regulations outside of
Ukraine including the audit of UK tax, and procedures relating to the appropriate presentation and disclosure
of the Annual Report and Financial Statements were performed directly by us as the group audit team.
This enabled us to obtain coverage of 100% of consolidated revenue, 100% coverage of consolidated profit
before tax and 100% coverage of consolidated total assets of the Group.
Where work was performed by our component team in Ukraine, we determined the level of involvement we
needed to have in their work to ensure sufficient appropriate audit evidence had been obtained as a basis for
our opinion on the financial statements. We conducted our oversight through regular dialogue via video
conferencing, calls and other forms of communication as considered necessary and appropriate in the
circumstances throughout the planning, execution, and completion phases of the audit. In addition, we
performed a review of component auditor working papers to satisfy ourselves that the appropriate audit work
had been performed. We also attended key meetings virtually with management in Ukraine and our component
team.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds
for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit
and the nature, timing and extent of our audit procedures on the individual financial statement line items and
disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
53
Based on our professional judgement, we determined materiality for the financial statements as a whole as
follows:
Overall
materiality
How we
determined it
for
Rationale
benchmark
applied
Financial statements - Group
US$2,921,000 (2022: US$2,521,000).
Financial statements - Company
US$925,000 (2022: US$1,690,000).
1% of total assets
We believe that total assets is the
primary measure used by shareholders
in assessing the performance of the
Company, and is a generally accepted
auditing benchmark.
three-year average (2022:
three-year
5% of
average) profit before tax adjusted for non-
recurring ·items
Profit before tax is the primary measure used by
the shareholders in assessing the performance
of the Group and is a generally accepted
auditing benchmark. The Group's earnings are
heavily influenced by the realised selling price of
gas and, despite the relatively stable level of
production in the last three years, profit for the
current year is showing a decreasing trend.
Therefore, it was considered to be appropriate
to use an average of profit before tax and the
three-year average profit before tax (2022:
three-year average) was considered to be the
most appropriate benchmark.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall
Group materiality. The range of materiality allocated across components was between US$1,168,000 and
US$1,753,000. Certain components were audited to a local statutory audit materiality that was also less than
our overall Group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance
materiality in determining the scope of our audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining sample sizes. Due to this being our second
year audit, our performance materiality was 75% (2022: 50%) of overall materiality, amounting to
US$2,191,000 (2022: US$1,260,000) for the Group financial statements and US$695,000 (2022: US$845,000)
for the Company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements,
risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount in the
middle of our normal range was appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during
our audit above US$146,000 (2022: US$126,000) for the Group audit and above US$46,000 (2022:
US$84,500) for the Company audit, as well as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements
and our auditors' report thereon. The Directors are responsible for the other information. Our opinion on the
financial statements does not cover the other information and, accordingly, we do not express an audit opinion
or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent
material inconsistency or material misstatement, we are required to perform procedures to conclude whether
there is a material misstatement of the financial statements or a material misstatement of the other information.
54
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors' Report, we also considered whether the disclosures
required by the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report
certain opinions and matters as described below.
Strategic Report and Directors' Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic
Report and Directors' Report for the year ended 31 December 2023 is consistent with the financial statements
and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the
course of the audit, we did not identify any material misstatements in the Strategic Report and Directors' Report.
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Directors' Responsibilities Statement, the Directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that
they give a true and fair view. The Directors are also responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group's and the
Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the
Company or to cease operations, or have no realistic alternative but to do so.
Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non compliance
with laws and regulations related to the failure to comply with environmental regulations, health and safety
regulations and the relevant tax compliance regulations in the jurisdictions in which the Group operates, and
we considered the extent to which non-compliance might have a material effect on the financial statements.
We also considered those laws and regulations that have a direct impact on the financial statements such as
the Companies Act 2006. We evaluated management's incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of override of controls), and determined that the
principal risks were related to posting inappropriate journal entries and management bias in accounting
estimates. The Group engagement team shared this risk assessment with the component auditors so that they
could include appropriate audit procedures in response to such risks in their work.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
55
Audit procedures performed by the group engagement team and/or component auditors included:
•
•
•
•
Inquiries of management and those charged with governance, including consideration of known or
suspected instances of non-compliance with laws and regulation and fraud;
Understanding and evaluating controls designed to prevent and detect irregularities and fraud;
Assessing significant judgements and estimates in particular those relating to the carrying value of
investments in, and loans to, subsidiary undertakings, and the disclosure of these items (and as outlined
further in the 'Key audit matters' section of this report).
Identifying and testing journal entries, using specific risk criteria, including journals with unusual account
combinations, journals posted by unexpected users, journals with no description or specific words
included in the description and year end and consolidation journals.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that are not closely related to events and transactions
reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly
using data auditing techniques. However, it typically involves selecting a limited number of items for testing,
rather than testing complete populations. We will often seek to target particular items for testing based on their
size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about
the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC's
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
•
•
•
•
we have not obtained all the information and explanations we require for our audit; or
adequate accounting records have not been kept by the C ompany, or returns adequate for our audit
have not been received from branches not visited by us; or
certain disclosures of Directors' remuneration specified by law are not made; or
the Company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Use of this report
This report, including the opinions, has been prepared for and only for the Company's members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in
giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where expressly agreed by our prior consent in
writing.
Filip Lyapov (Senior Statutory Auditor)
for and on behalf of Zenith Audit Ltd
Statutory Auditor
1st Floor, 18 Devonshire Row, London EC2M 4RH
20 June 2024
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
56
Consolidated Income Statement
for the year ended 31 December 2023
Revenue
Cost of sales
Gross profit
Administrative expenses
Other operating gains/(losses), (net)
Operating profit
Finance income
Finance costs
Net impairment (losses) on financial assets
Other gains/(losses), (net)
Profit before taxation
Income tax expense
Profit for the year
Earnings per share (cents)
Basic and diluted
Note
2023
$000
2022
$000
4
5
6
9
10
11
12
13
62,194
(23,222)
38,972
(6,953)
3,517
35,536
2,144
(2,705)
(475)
683
35,183
(8,697)
26,486
133,380
(47,457)
85,923
(6,830)
(3,320)
75,773
1,126
(1,410)
(444)
(1,738)
73,307
(13,124)
60,183
15
8.3c
18.8c
The Notes set out below on pages 65 to 108 are an integral part of these consolidated financial
statements.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
57
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
Profit for the year
Other comprehensive income/(expense):
Items that may be subsequently reclassified to profit or loss:
Equity – foreign currency translation
Items that will not be subsequently reclassified to profit or loss:
Re-measurements of post-employment benefit obligations
Total other comprehensive income/(expense)
Total comprehensive income for the year
2023
$000
2022
$000
26,486
60,183
(4,844)
(38,094)
47
53
(4,797)
(38,041)
21,689
22,142
Company Statement of Comprehensive Income
for the year ended 31 December 2023
Profit/(loss) for the year
14
7,151
(6,358)
Total comprehensive income/(loss) for the year
7,151
(6,358)
Note
2023
$000
2022
$000
The Notes set out below on pages 65 to 108 are an integral part of these consolidated financial statements.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
58
Consolidated Balance Sheet
as at 31 December 2023
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Deferred tax asset
Prepayments for fixed assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Corporation tax payable
Net current assets
Non-current liabilities
Provision for decommissioning
Lease liabilities
Defined benefit liability
Deferred tax liability
Other non-current liabilities
Total liabilities
Net assets
Equity
Called up share capital
Foreign exchange reserve
Merger reserve
Capital contributions reserve
Retained earnings
Total equity
Note
16
17
18
25
20
21
22
23
18
24
18
25
26
27
27
27
2023
$000
79,277
8,372
192
352
110
88,303
2,951
15,585
76,493
95,029
2022
$000
74,256
8,994
364
287
5,385
89,286
3,358
60,993
88,652
153,003
183,332
242,289
(6,012)
(38)
(2,175)
(8,225)
(28,084)
(229)
(2,447)
(30,760)
86,804
122,243
(7,305)
(245)
(372)
(4,976)
(88)
(12,986)
(6,964)
(258)
(323)
(3,232)
(93)
(10,870)
(21,211)
(41,630)
162,121
200,659
28,115
(146,549)
(3,204)
7,477
276,282
162,121
28,115
(141,705)
(3,204)
7,477
309,976
200,659
The Notes set out below on pages 65 to 108 are an integral part of these consolidated financial statements.
The financial statements of Enwell Energy plc, company number 04462555, on pages 57 to 108 were approved by
the Board of Directors on 20 June 2024 and signed on its behalf by:
Bruce Burrows
Finance Director
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
59
Consolidated Statement of Changes in Equity
for the year ended 31 December 2023
Called
up share
capital
$000
28,115
-
-
-
-
28,115
Called
up share
capital
$000
28,115
-
-
-
-
-
28,115
Share
premium
account
$000
-
-
-
-
-
-
Share
premium
account
$000
-
-
-
-
-
-
-
As at 1 January 2022
Profit for the year
Other comprehensive expense
- exchange differences
- re-measurements of post-
employment benefit obligations
Total comprehensive
income/(expense)
As at 31 December 2022
As at 1 January 2023
Profit for the year
Other comprehensive income
- exchange differences
- re-measurements of post-
employment benefit obligations
Total comprehensive
income/(expense)
Dividends
As at 31 December 2023
Merger
reserve
$000
(3,204)
-
-
-
-
Merger
reserve
$000
(3,204)
-
-
-
-
Capital
contributions
reserve
$000
Foreign
exchange
reserve*
$000
Retained
earnings/(Accumu
lated losses)
$000
(103,611)
-
(38,094)
-
(38,094)
(141,705)
249,740
60,183
-
53
60,236
309,976
Total equity
$000
178,517
60,183
(38,094)
53
22,142
200,659
(3,204)
7,477
Capital
contributions
reserve
$000
Foreign
exchange
reserve*
$000
Retained
earnings/(Accum
ulated losses)
$000
Total equity
$000
(141,705)
(4,844)
(4,844)
-
(146,549)
309,976
26,486
-
47
26,533
(60,227)
276,282
200,659
26,486
(4,844)
47
21,689
(60,227)
162,121
-
(3,204)
-
7,477
7,477
-
-
-
-
7,477
-
-
-
-
* Predominantly as a result of exchange differences on non-monetary assets and liabilities where the subsidiaries’ functional currency is not the US Dollar.
The Notes set out below on pages 65 to 108 are an integral part of these consolidated financial statements.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
60
Consolidated Cash Flow Statement
for the year ended 31 December 2023
Operating activities
Cash generated from operations
Charitable donations
Income tax paid
Interest received
Net cash inflow from operating activities
Investing activities
Purchase of oil and gas development, production and other property,
plant and equipment
Purchase of oil and gas exploration and evaluation assets
Sale of financial instruments
Purchase of oil and gas development, production and other
intangible assets
Proceeds from sale of property, plant and equipment
Net cash outflow from investing activities
Financing activities
Payment of principal portion of lease liabilities
Dividend paid
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
ECL* of cash and cash equivalents
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the year
*ECL – Expected credit losses
Note
28
12
2023
$000
2022
$000
62,947
(17)
(6,990)
4,578
60,518
47,541
(6,534)
(15,863)
1,888
27,032
(10,179)
(19,829)
(335)
-
(320)
(4,092)
4,762
(1,482)
7
(10,827)
4
(20,637)
(406)
(59,623)
(60,029)
(10,338)
88,652
(494)
(1,327)
76,493
(398)
-
(398)
5,997
87,780
(14)
(5,111)
88,652
22
22
The Notes set out below on pages 65 to 108 are an integral part of these consolidated financial statements.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
61
Company Balance Sheet
as at 31 December 2023
Assets
Non-current assets
Intangible assets
Investments
Loans to subsidiary undertakings
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Other non-current liabilities
Current liabilities
Trade and other payables
Net current assets
Total liabilities
Net assets
Note
2023
$000
2022
$000
19
19
21
22
36
30,704
39,206
69,946
1,369
20,695
22,064
41
30,704
49,974
80,719
1,170
81,541
82,711
92,010
163,430
-
-
-
(2,171)
(2,171)
(20,515)
(20,515)
19,893
62,196
(2,171)
(20,515)
89,839
142,915
28,115
114,800
7,151
(60,227)
61,724
89,839
28,115
121,158
(6,358)
-
114,800
142,915
Equity
Called up share capital
Retained earnings/(Accumulated losses) as at 1 January
- Profit/(loss) for the year and total comprehensive income
- Dividend payment
Retained earnings/(Accumulated losses) as at 31 December
Total equity
26
14
The Notes set out below on pages 65 to 108 are an integral part of these consolidated financial statements.
The financial statements of Enwell Energy plc, company number 04462555, on pages 57 to 108 were
approved by the Board of Directors on 20 June 2024 and signed on its behalf by:
Bruce Burrows
Finance Director
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
62
Company Statement of Changes in Equity
for the year ended 31 December 2023
Called up
share
capital
$000
28,115
-
28,115
Called up
share
capital
$000
28,115
-
-
28,115
Share
premium
account
$000
Retained
earnings/
(Accumulated
losses)
$000
-
-
-
121,158
(6,358)
114,800
Total equity
$000
149,273
(6,358)
142,915
Share
premium
account
$000
Retained
earnings/
(Accumulated
losses)
$000
Total equity
$000
-
-
-
-
114,800
142,915
7,151
(60,227)
61,724
7,151
(60,227)
89,839
As at 1 January 2022
Profit for the year and total
comprehensive income
As at 31 December 2022
As at 1 January 2023
Profit for the year and total
comprehensive income
Dividend payment
As at 31 December 2023
The Notes set out below on pages 65 to 108 are an integral part of these consolidated financial statements.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
63
Company Cash Flow Statement
for the year ended 31 December 2023
Operating activities
Cash used in operations
Taxation paid
Interest received
Net cash from/(used in) operating activities
Investing activities
Purchase of subsidiaries
Repayment of principal and interest on loans to Group
companies
Issue of loans to Group companies
Net cash from/(used in) investing activities
Note
28
Financing acitvities
Dividends paid
Net cash (used in)/provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
22
2023
$000
(2,975)
-
1,906
(1,069)
(100)
-
-
(100)
(59,623)
(59,623)
(60,792)
81,541
(54)
20,695
2022
$000
21,691
(10)
677
22,358
(1,211)
1,077
(4,000)
(4,134)
-
-
18,224
63,299
18
81,541
The Notes set out below on pages 65 to 108 are an integral part of these consolidated financial statements.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
64
Notes forming part of the financial statements
1. General Information and Operational Environment
Enwell Energy plc (the “Company”) and its subsidiaries (the “Group”) is a gas, condensate and LPG
production group.
The Company is a public limited company quoted on the AIM Market operated by London Stock Exchange
plc and incorporated in England and Wales under the Companies Act 2006. The Company’s registered
office is at 16 Old Queen Street, London, SW1H 9HP, United Kingdom and its registered number is
4462555. The principal activities of the Group and the nature of the Group’s operations are set out above.
As at 31 December 2023, the Company’s immediate parent company was Smart Energy (CY) Limited,
which was 100% owned by Smart Holding (Cyprus) Limited, which was 100% owned by Proteas Trustees
Ltd as trustee of the STEP Trust, and Proteas Trustee Services Ltd, Afroditi Loukaidou, Elena Iona and
Maria Sokratous as trustees of the SMART Trust. Accordingly, the Company was ultimately controlled by
Proteas Trustees Ltd as trustee of the STEP Trust, and Proteas Trustee Services Ltd, Afroditi Loukaidou,
Elena Iona and Maria Sokratous as trustees of the SMART Trust. As at 31 December 2022, the Company’s
immediate parent company was Smart Energy (CY) Limited, which was 100% owned by Smart Holding
(Cyprus) Limited, which was 100% owned by Proteas Trustees Ltd as trustee of the STEP Trust, and
Proteas Trustee Services Ltd, Afroditi Loukaidou, Elena Iona and Charoula Sofokleous as trustees of the
SMART Trust.
The Group’s gas, condensate and LPG extraction and production facilities are located in Ukraine.
Impact of the ongoing war in Ukraine
On 24 February 2022, Russia commenced a military invasion of Ukraine, and since then there has been
an ongoing war in Ukraine. Shortly after the invasion, the Ukrainian Government imposed martial law, and
the corresponding introduction of related temporary restrictions that impact, amongst other areas, the
economic environment and business operations in Ukraine. The war has caused significant economic
challenges in Ukraine, which has led to a deterioration of Ukrainian State finances, volatility of financial
markets, illiquidity on capital markets, higher inflation and a depreciation of the national currency against
major foreign currencies.
The war is continuing, causing very significant numbers of military and civilian casualties and significant
dislocation of the Ukrainian population. The Russian army has occupied territories in the east and south of
Ukraine, including the majority of the Kherson, Zaporizhzhia, Luhansk and Donetsk regions. Russian
attacks have targeted and destroyed civilian infrastructure over wide areas of Ukraine, including hospitals
and residential complexes.
According to a projection published by the National Bank of Ukraine (“NBU”) in December 2023, Ukrainian
GDP increased by 4.9% in 2023 (2022: 29.1% decrease).
In June 2022, the NBU took a number of measures to protect the Ukrainian economy, including significantly
increasing its key policy interest rate to 25%, introducing temporary restrictions on foreign currency trades
and limiting cross-border payments for non-critical imports and repayment of debt to foreign creditors, apart
from international institutions. In addition, the Ukrainian Hryvnia exchange rate with the US Dollar was
effectively fixed at UAH29.25:$1.00 in February 2022 and then at UAH36.57:$1.00 in July 2022 on the
foreign exchange market to ensure the stable operation of Ukraine’s financial system.
However, in June 2023, the NBU lifted some of the currency restrictions, including those related to making
cross-border payments to service and repay external credit facilities and loans established after 20 June
2023 (subject to a number of requirements) and those that were established earlier through an international
financial organisation or secured by a foreign export credit agency or foreign state. Furthermore, with effect
from 1 December 2023, the NBU relaxed the measures that related, inter alia, to foreign currency sale limits
for banks and non-banking financial institutions and allowed export credit agencies to make international
fund transfers for insurance/reinsurance contracts.
65
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
In addition, during 2023, the NBU gradually decreased its key policy rate, and this has stood at 15% since
15 December 2023. The NBU is now following an interest rate policy consistent with inflation targets. The
inflation rate in Ukraine for 2023 was 5% (2022: 26.6%) according to the statistics published by the State
Statistics Service of Ukraine.
On 3 October 2023, the NBU returned to a floating exchange rate for the Ukrainian Hryvnia, and as of 31
December 2023, the Ukrainian Hryvnia exchange rate with the US Dollar was UAH37.98/$1.00
(UAH36.57/$1.00 as at 31 December 2022).
The Ukrainian Government also took a number of actions designed to limit the negative effects of the war
on the Ukrainian economic environment during the period of martial law, but several of these actions were
relaxed with effect from 1 August 2023, including the moratorium on tax audits.
Since the start of the war, the Ukrainian budget has experienced a significant deficit, which has been
financed by national and international borrowings, grants, and other means. As a result of the inflow of
international aid, Ukrainian currency reserves have reached a record level of $41.7 billion as of 31 July
2023. This was the highest level of such reserves in more than 30 years. However, following a slowdown
of international aid, such reserves decreased to $40.5 billion as of 31 December 2023. International support
is crucially important to Ukraine’s ability to continue fighting against Russia’s aggression and to fund its
budget deficit and ongoing debt repayments.
The nature of the situation in Ukraine and the unpredictability of the outcome means it is impracticable to
assess the full impact of the war on the economic environment.
Overall, the final resolution and the ongoing effects of the war and political and economic situation in
Ukraine are difficult to predict, but they may have further severe effects on the Ukrainian economy and the
Group’s business.
As at 27 May 2024, the official NBU exchange rate of the Ukrainian Hryvnia against the US Dollar was
UAH40.1/$1.00, compared with UAH38.0/$1.00 as at 31 December 2023.
Further details of risks relating to Ukraine can be found within the Principal Risks section of the Strategic
Report.
2. Accounting Policies
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.
Basis of Preparation
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and
became UK-adopted International Accounting Standards, with future changes being subject to
endorsement by the UK Endorsement Board. The Group and Company transitioned to UK-adopted
International Accounting Standards on 1 January 2021. This change constitutes a change in accounting
framework. However, there is no impact on recognition, measurement or disclosure in the period reported
as a result of the change in framework. The consolidated financial statements of the Group and the financial
statements of the Company have been prepared in accordance with UK-adopted International Accounting
Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting
under those standards.
These consolidated financial statements have been prepared in accordance with UK-adopted International
Accounting Standards under the historical cost convention, as modified by the initial recognition of financial
instruments based on fair value, and by the revaluation of financial instruments categorised at fair value
through profit or loss (“FVTPL”) and at fair value through other comprehensive income (“FVOCI”). The
principal accounting policies applied in the preparation of these consolidated financial statements are set
out below. Apart from the accounting policy changes effective from 1 January 2022 these policies have
been consistently applied to all the periods presented, unless otherwise stated.
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Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
The preparation of financial statements in conformity with UK-adopted International Accounting Standards
requires the use of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree
of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated
financial statements are disclosed in Note 3. The consolidated financial statements are presented in
thousands of US Dollars.
Going Concern
The Group’s business activities, together with the factors likely to affect its future operations, performance
and position are set out in the Chairman’s Statement, Chief Executive’s Statement and Finance Review.
The financial position of the Group, its cash flows and liquidity position are set out in these consolidated
financial statements.
On 24 February 2022, Russia commenced a military invasion of Ukraine, and since then there has been
an ongoing war between Russia and Ukraine. Immediately after the commencement of the war, the
Ukrainian Government imposed martial law and introduced a number of related temporary restrictions that
impacted the economic environment and business operations in Ukraine. While a number of restrictions
remain in place, improvements in the economic environment have led the Ukrainian Government to relax
a number of the restrictions and stabilise the economic situation in Ukraine.
The production assets of the Group are located in the central and eastern part of the country (Poltava and
Kharkiv regions) which are controlled by the Ukrainian Government. As of the date of approval of these
financial statements, no assets of the Group have been damaged, and the Group continues to operate and
produce from its MEX-GOL and SV assets in the Poltava region. However, the licences relating to the
Group’s SC asset in the Poltava region and VAS asset in the Kharkiv region are suspended after the State
Geologic and Subsoil Survey of Ukraine issued orders on 4 May 2023 for the suspension of the SC
exploration licence and VAS production licence for a period of five years effective from that date, and
consequently the Group ceased all field and production operations on these licences. No military activities
have occurred at the Group’s field locations. The Gas Transmission System Operator of Ukraine has
maintained complete operational and technological control over the operations of the Ukrainian Gas
Transmission System. However, as of the date of approval of these financial statements, the war has had,
and continues to have, a material impact on the production and sales levels of the business and execution
of the Group’s 2023 budget.
The Group has no debt and funds its operations from its own cash resources. Cash and cash equivalents
were $91.0 million as at 27 May 2024. The Directors maintain a significant level of flexibility to modify the
Group’s development plans as may be required to preserve cash resources for liquidity management.
Absent the potential impact of the war in Ukraine, the Directors are satisfied that the Group and the
Company are a going concern and will continue their operations for the foreseeable future.
In assessing the impact of the war on the ability of the Group and the Company to continue as a going
concern, the Directors have analysed a number of possible scenarios of economic and military
developments and the impact on the expected cash flows of the Group and Company for 2024 and 2025.
This includes considering a possible (but in the view of the Directors, highly unlikely) worst case scenario
in which the Group has zero production as a result of possible future military conflict dictating field
operations being completely shut-in, and all other non-production related costs being maintained at current
levels with no reduction or mitigating actions as would otherwise be possible. Even in this worst-case
scenario, the Directors are satisfied that the Group and the Company have sufficient liquid resources to be
able to meet their liabilities as they fall due and to be able to continue as a going concern for the foreseeable
future.
The corporate strategy for the near term is to:
•
continue production from MEX-GOL and SV licences, generating cash to cover Group costs and add
to existing cash resources, whilst moderating development plans to reduce cash spend exposure
whilst the war and operational/political uncertainty continues;
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
67
•
•
vigorously pursue legal initiatives to protect the Group’s assets, restore all licences and production,
and seek compensation for losses incurred to date and as may be incurred in the future; and
tightly manage costs to ensure cash resources are maintained at levels capable of sustaining the
business through the uncertainty that lies ahead.
In respect of the Group’s operations, staff and assets in Ukraine, the potential short and long-term impact
of the future development of the war is inherently uncertain. Accordingly, this creates a material uncertainty
related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern because of the potential impact on its ability to continue its operations for the foreseeable future
and realise its assets in the normal course of business. The financial statements do not include the
adjustments that would result if the Group were unable to continue as a going concern.
The Company is a UK-based investment holding company. The Company had cash and cash equivalents
of $18.5 million as at 27 May 2024, all of which are held outside of Ukraine, in US Dollars, Pounds Sterling
and Euros. The Directors are satisfied that the Company is a going concern and will be able to continue its
operations for the foreseeable future, and there is no material uncertainty in respect of its ability to do so.
New and amended standards adopted by the Group
The following amended standards became effective from 1 January 2023, but did not have a material impact
on the Group’s consolidated or Company’s financial statements:
•
•
•
•
•
•
•
IFRS 17 "Insurance Contracts". IFRS 17 replaces IFRS 4, which has given companies dispensation
to carry on accounting for insurance contracts using existing practices. As a consequence, it was
difficult for investors to compare and contrast the financial performance of otherwise similar
insurance companies.
Amendments to IFRS 17 and an amendment to IFRS 4 (issued on 25 June 2020 and effective for
annual periods beginning on or after 1 January 2023). The amendments include a number of
clarifications intended to ease implementation of IFRS 17, simplify some requirements of the
standard and transition.
Transition option to insurers applying IFRS 17 – Amendments to IFRS 17 (issued on 9 December
2021 and effective for annual periods beginning on or after 1 January 2023). The amendment to
the transition requirements in IFRS 17 provides insurers with an option aimed at improving the
usefulness of information to investors on initial application of IFRS 17.
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on
12 February 2021 and effective for annual periods beginning on or after 1 January 2023). IAS 1 was
amended to require companies to disclose their material accounting policy information rather than
their significant accounting policies.
Amendments to IAS 8: Definition of Accounting Estimates (issued on 12 February 2021 and effective
for annual periods beginning on or after 1 January 2023). The amendment to IAS 8 clarified how
companies should distinguish changes in accounting policies from changes in accounting estimates.
Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS
12 (issued on 7 May 2021 and effective for annual periods beginning on or after 1 January 2023).
The amendments to IAS 12 specify how to account for deferred tax on transactions such as leases
and decommissioning obligations.
Amendments to IAS 12 Income taxes: International Tax Reform – Pillar Two Model Rules (issued 23
May 2023). In May 2023, the IASB issued narrow-scope amendments to IAS 12, ‘Income Taxes’.
This amendment was introduced in response to the imminent implementation of the Pillar Two model
rules released by the Organisation for Economic Co-operation and Development's (OECD) as a
result of international tax reform.
Impact of standards issued but not yet applied by the Group
Certain new standards and interpretations have been issued that are mandatory for the annual periods
beginning on or after 1 January 2024 or later, and which the Group has not early adopted.
(a)
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
68
(b) Classification of liabilities as current or non-current – Amendments to IAS 1
(c)
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures:
Supplier Finance Arrangements
(d)
Amendments to IAS 21 Lack of Exchangeability
(e)
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture – Amendments
to IFRS 10 and IAS 28
These new standards and interpretations are not expected to affect significantly the Group’s consolidated
financial statements.
Exchange differences on intra-group balances with foreign operation
The Group has certain inter-company monetary balances of which the Company is the beneficial owner.
These monetary balances are payable by a subsidiary that is a foreign operation and are eliminated on
consolidation.
In the consolidated financial statements, exchange differences arising on such payables because the
transaction currency differs from the subsidiary’s functional currency are recognised initially in other
comprehensive income if the settlement of such payables is continuously deferred and is neither planned
nor likely to occur in the foreseeable future.
In such cases, the respective receivables of the Company are regarded as an extension of the Company’s
net investment in that foreign operation, and the cumulative amount of the abovementioned exchange
differences recognised in other comprehensive income is carried forward within the foreign exchange
reserve in equity and is reclassified to profit or loss only upon disposal of the foreign operation.
When the subsidiary that is a foreign operation settles its quasi-equity liability due to the Company, but the
Company continues to possess the same percentage of the subsidiary, i.e. there has been no change in
its proportionate ownership interest, such settlement is not regarded as a disposal or a partial disposal, and
therefore cumulative exchange differences are not reclassified.
The designation of inter-company monetary balances as part of the net investment in a foreign operation
is re-assessed when management’s expectations and intentions on settlement change due to a change in
circumstances.
Where, because of a change in circumstances, a receivable balance, or part thereof, previously designated
as a net investment into a foreign operation is intended to be settled, the receivable is de-designated and
is no longer regarded as part of the net investment.
In such cases, the exchange differences arising on the subsidiary’s payable following de-designation are
recognised within finance costs / income in profit or loss, similar to foreign exchange differences arising
from financing.
Foreign exchange gains and losses not related to intra-group balances are recognised on a net basis as
other gains or losses.
Basis of Consolidation
The consolidated financial statements incorporate the financial information of the Company and entities
controlled by the Company (and its subsidiaries) made up to 31 December each year.
Subsidiaries
Subsidiaries are all entities (including structured 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
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
69
consolidated from the date on which control is transferred to the Group. They are deconsolidated from the
date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred
to the former owners of the acquiree and the equity interests issued by the Group. The consideration
transferred includes the fair value of any asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date. The Group recognises any
non-controlling interest in the acquiree on an acquisition-by-acquisition basis at the non-controlling
interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s
previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains
or losses arising from such re-measurement are recognised in profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset
or liability is recognised in accordance with IFRS 9 in profit or loss.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have
been adjusted to conform with the Group’s accounting policies.
Segment reporting
The Group’s only class of business activity is oil and gas exploration, development and production. The
Group’s primary operations are located in Ukraine, with its head office in the United Kingdom.
The geographical segments are the basis on which the Group reports its segment information to
management. Operating segments are reported in a manner consistent with the internal reporting provided
to the Board of Directors.
Commercial Reserves
Proved and probable oil and gas reserves are estimated quantities of commercially producible
hydrocarbons which the existing geological, geophysical and engineering data show to be recoverable in
future years from known reservoirs. Proved reserves are those quantities of petroleum that, by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to be commercially
recoverable from known reservoirs and under defined technical and commercial conditions. Probable
reserves are those additional reserves which analysis of geoscience and engineering data indicate are less
likely to be recovered than proved reserves but more certain to be recovered than possible reserves.
The proved and probable reserves conform to the definition approved by the Petroleum Resources
Management System.
Oil and Gas Exploration/Evaluation and Development/Production Assets
The Group applies the successful efforts method of accounting for oil and gas assets, having regard to the
requirements of IFRS 6 Exploration for and Evaluation of Mineral Resources.
Exploration costs are incurred to discover hydrocarbon resources. Evaluation costs are incurred to assess
the technical feasibility and commercial viability of the resources found. Exploration, as defined in IFRS 6
Exploration and evaluation of mineral resources, starts when the legal rights to explore have been obtained.
Expenditure incurred before obtaining the legal right to explore is generally expensed; an exception to this
would be separately acquired intangible assets such as payment for an option to obtain legal rights.
Expenditures incurred in the exploration activities are expensed unless they meet the definition of an asset.
The Group recognises an asset when it is probable that economic benefits will flow to the Group as a result
of the expenditure. The economic benefits might be available through commercial exploitation of
70
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
hydrocarbon reserves or sales of exploration findings or further development rights. Exploration and
evaluation (“E&E”) assets are recognised as either property, plant and equipment or intangible assets,
according to their nature, in single field cost centres.
The capitalisation point is the earlier of:
(a)
(b)
the point at which the fair value less costs to sell the property can be reliably determined as being
higher than the total of the expenses incurred and costs already capitalised (such as licence
acquisition costs); and
an assessment of the property demonstrates that commercially viable reserves are present and
hence there are probable future economic benefits from the continued development and production
of the resource.
E&E assets are reclassified from Exploration and Evaluation when evaluation procedures have been
completed. E&E assets that are not commercially viable are written down. E&E assets for which
commercially viable reserves have been identified are reclassified to Development and Production assets.
E&E assets are tested for impairment immediately prior to reclassification out of E&E.
Once an E&E asset has been reclassified from E&E, it is subject to the normal IFRS requirements. This
includes impairment testing at the cash-generating unit (“CGU”) level and depreciation.
Abandonment and Retirement of Individual Items of Property, Plant and Equipment
Normally, no gains or losses shall be recognised if only an individual item of equipment is abandoned or
retired or if only a single lease or other part of a group of proved properties constituting the amortisation
base is abandoned or retired as long as the remainder of the property or group of properties constituting
the amortisation base continues to produce oil or gas. Instead, the asset being abandoned or retired shall
be deemed to be fully amortised, and its costs shall be charged to accumulated depreciation, depletion or
amortisation. When the last well on an individual property (if that is the amortisation base) or group of
properties (if amortisation is determined on the basis of an aggregation of properties with a common
geological structure) ceases to produce and the entire property or group of properties is abandoned, a gain
or loss shall be recognised. Occasionally, the partial abandonment or retirement of a proved property or
group of proved properties or the abandonment or retirement of wells or related equipment or facilities may
result from a catastrophic event or other major abnormality. In those cases, a loss shall be recognised at
the time of abandonment or retirement.
Intangible Assets other than Oil and Gas Assets
Intangible assets other than oil and gas assets are stated at cost less accumulated amortisation and any
provision for impairment. These assets represent exploration licences. Amortisation is charged so as to
write off the cost, less estimated residual value on a straight-line basis of 20-25% per annum.
Depreciation, Depletion and Amortisation
All expenditure carried within each field is amortised from the commencement of commercial production on
a unit of production basis, which is the ratio of gas production in the period to the estimated quantities of
commercial reserves at the end of the period plus the production in the period, generally on a field by field
basis. In certain circumstances, fields within a single development area may be combined for depletion
purposes. Costs used in the unit of production calculation comprise the net book value of capitalised costs
plus the estimated future field development costs necessary to bring the reserves into production.
Impairment
At each balance sheet date, the Group reviews the carrying amount of oil and gas development and
production assets to determine whether there is any indication that those assets have suffered an
impairment loss. This includes exploration and appraisal costs capitalised which are assessed for
impairment in accordance with IFRS 6. If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment loss.
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Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
For oil and gas development and production assets, the recoverable amount is the greater of fair value less
costs to dispose and value in use. In assessing value in use, the estimated future cash flows are discounted
to their present value using an expected weighted average cost of capital. If the recoverable amount of an
asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. Impairment losses are recognised as an expense immediately. The valuation method
used for determination of fair value less cost of disposal is based on unobservable market data, which is
within Level 3 of the fair value hierarchy.
Should an impairment loss subsequently reverse, the carrying amount of the asset is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset
in prior years. A reversal of an impairment loss is recognised as income immediately.
Decommissioning Provision
Where a material liability for the removal of existing production facilities and site restoration at the end of
the productive life of a field exists, a provision for decommissioning is recognised. The amount recognised
is the present value of estimated future expenditure determined in accordance with local conditions and
requirements. The cost of the relevant property, plant and equipment is increased with an amount
equivalent to the provision and depreciated on a unit of production basis. Changes in estimates are
recognised prospectively, with corresponding adjustments to the provision and the associated fixed asset.
The unwinding of the discount on the decommissioning provision is included within finance costs.
Property, Plant and Equipment other than Oil and Gas Assets
Property, plant and equipment other than oil and gas assets (included in Other fixed assets in Note 16 are
stated at cost less accumulated depreciation and any provision for impairment. Depreciation is charged so
as to write off the cost of assets on a straight-line basis over their useful lives as follows:
Buildings and constructions
Machinery and equipment
Vehicles
Office and other equipment
Useful lives in years
10 to 20 years
2 to 5 years
5 years
4 to 12 years
Spare parts and equipment purchased with the intention to be used in future capital investment projects
are recognised as oil and gas development and production assets within property, plant and equipment.
Right-of-use assets
The Group leases various offices, equipment, wells and land. Contracts may contain both lease and non-
lease components. The Group allocates the consideration in the contract to the lease and non-lease
components based on their relative stand-alone prices.
Assets arising from a lease are initially measured on a present value basis.
Right-of-use assets are measured at cost comprising the following:
●
●
●
●
the amount of the initial measurement of lease liability,
any lease payments made at or before the commencement date less any lease incentives received,
any initial direct costs, and
costs to restore the asset to the conditions required by lease agreements.
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72
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term
on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use
asset is depreciated over the underlying assets’ useful lives. Depreciation on the items of the right-of-use
assets is calculated using the straight-line method over their estimated useful lives as follows:
Land
Wells
Properties:
Buildings and constructions
Machinery and equipment
Vehicles
Office and other equipment
Inventories
Useful lives in years
40 to 50 years
10 to 20 years
10 to 20 years
2 to 5 years
5 years
4 to 12 years
Inventories typically consist of materials, spare parts and hydrocarbons, and are stated at the lower of cost
and net realisable value. Cost of finished goods is determined on the weighted average bases. Cost of
other than finished goods inventory is determined on the first in first out basis. Net realisable value
represents the estimated selling price less all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
Revenue Recognition
Revenue is income arising in the course of the Group’s ordinary activities. Revenue is recognised by the
amount of the transaction price. Transaction price is the amount of consideration to which the Group
expects to be entitled in exchange for transferring control over promised goods or services to a customer,
excluding the amounts collected on behalf of third parties.
Revenue is recognised net of indirect taxes and excise duties.
Sales of gas, condensate and LPG are recognised when control of the good has transferred, being when
the goods are delivered to the customer, the customer has full discretion over the goods, and there is no
unfulfilled obligation that could affect the customer’s acceptance of the goods. Delivery occurs when the
goods have been shipped to the specific location, the risks of obsolescence and loss have been transferred
to the customer, and either the customer has accepted the goods in accordance with the contract, the
acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance
have been satisfied.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration
is unconditional because only the passage of time is required before the payment is due.
The Group normally uses standardised contracts for the sale of gas, condensate and LPG, which define
the point of control transfer. The price and quantity of each sale transaction are indicated in the
specifications to the sales contracts.
The control over gas is transferred to a customer when the respective act of acceptance is signed by the
parties to a contract upon delivery of gas to the point of sale specified in the contract, normally being a
certain point in the Ukrainian gas transportation system. Acts of acceptance of gas are signed and the
respective revenues are recognised on a monthly basis.
The control over condensate and LPG is transferred to a customer when the respective waybill is signed
by the parties to a contract upon shipment of goods at the point of sale specified in the contract, which is
normally the Group’s production site.
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73
Foreign Currencies
The Group’s consolidated financial statements and those of the Company are presented in US Dollars. The
functional currency of the subsidiaries which operate in Ukraine is Ukrainian Hryvnia. The remaining entities
have US Dollars as their functional currency.
The functional currency of individual companies is determined by the primary economic environment in
which the entity operates, normally the one in which it primarily generates and expends cash. In preparing
the financial statements of the individual companies, transactions in currencies other than the entity’s
functional currency (“foreign currencies”) are recorded at the rates of exchange prevailing on the dates of
the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing on the balance sheet date. Foreign exchange gains and
losses resulting from the settlement of such transactions and from the translation at year-end exchange
rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income
Statement. Non-monetary assets and liabilities carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when the fair value was determined. Non-
monetary items which are measured in terms of historical cost in a foreign currency are not retranslated.
Gains and losses arising on retranslation are included in net profit or loss for the period, except for exchange
differences arising on balances which are considered long term investments where the changes in fair value
are recognised directly in other comprehensive income.
On consolidation, the assets and liabilities of the Group’s subsidiaries which do not use US Dollars as their
functional currency are translated into US Dollars as follows:
(a)
(b)
assets and liabilities for each Balance Sheet presented are translated at the closing rate at the date
of that Balance Sheet;
income and expenses for each Income Statement are translated at average monthly exchange rates
(unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing
on the transaction dates, in which case income and expenses are translated at the rate on the dates
of the transactions); and
(c)
all resulting exchange differences are recognised in other comprehensive income.
The principal rates of exchange used for translating foreign currency balances as at 31 December 2023
were $1:UAH37.98 (2022: $1: UAH36.57), $1:£0.779 (2022: $1:£ 0.827), $1:€0.886 (2022: $1:€ 0.934),
and the average rates for the year were $1:UAH36.58 (2022: $1:UAH32.37), $1:£0.804 (2022: $1:£ 0.811),
$1:€0.923 (2022: $1:€ 0.951)
None of the Group’s operations are considered to use the currency of a hyperinflationary economy, however
this is kept under review.
Pensions
The Group contributes to a local government pension scheme in Ukraine and defined benefit plans. The
Group has no further payment obligations towards the local government pension scheme once the
contributions have been paid.
Defined benefit plans define an amount of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years of service and compensation.
The Group companies participate in a mandatory Ukrainian State-defined retirement benefit plan, which
provides for early pension benefits for employees working in certain workplaces with hazardous and
unhealthy working conditions. The Group also provides lump sum benefits upon retirement subject to
certain conditions. The early pension benefit (in the form of a monthly annuity) is payable by employers
only until the employee has reached the statutory retirement age. The pension scheme is based on a benefit
formula which depends on each individual member’s average salary, his/her total length of past service
and total length of past service at specific types of workplaces (“list II” category).
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74
The liability recognised in the Balance Sheet in respect of defined benefit pension plans is the present value
of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The
defined benefit obligation is calculated annually by independent actuaries using the projected unit credit
method. The present value of the defined benefit obligation is determined by discounting the estimated
future cash outflows using interest rates of high-quality corporate bonds that are denominated in the
currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of
the related pension obligation. Since Ukraine has no deep market in such bonds, the market rates on
government bonds are used.
The current service cost of the defined benefit plan, recognised in the Income Statement within the Cost of
Sales in employee benefit expense, except where included in the cost of an asset, reflects the increase in
the defined benefit obligation resulting from employee service in the current year, benefit changes
curtailments and settlements. Past-service costs are recognised immediately in the Income Statement.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Income
Statement within the Cost of Sales.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are
charged or credited to equity in other comprehensive income in the period in which they arise.
Taxation
The tax expense represents the sum of the current tax and deferred tax.
Current tax, including UK corporation and overseas tax, is provided at amounts expected to be paid (or
recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts
of assets and liabilities in the financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability method. 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 liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the
reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax is calculated at the tax rates which are expected to apply in the period when the liability is
settled or the asset is realised. Deferred tax is charged or credited in the Income Statement, except when
it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in
equity.
Other taxes which include recoverable value added tax, excise tax and custom duties represent the
amounts receivable or payable to local tax authorities in the countries where the Group operates.
Value added tax
Output value added tax related to sales is payable to tax authorities on the earlier of (a) collection of
receivables from customers or (b) delivery of goods or services to customers. Input VAT is generally
recoverable against output VAT upon receipt of the VAT invoice. The tax authorities permit the settlement
of VAT on a net basis. VAT related to sales and purchases is recognised in the consolidated statement of
financial position on a gross basis for different entities of the Group and disclosed separately as an asset
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75
and a liability. Where provision has been made for expected credit losses (“ECL”) of receivables, the
impairment loss is recorded for the gross amount of the debtor, including VAT.
Financial Instruments
Financial instruments - key measurement terms. Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. The best evidence of fair value is the price in an active market. An active market is one in which
transactions for the asset or liability take place with sufficient frequency and volume to provide pricing
information on an ongoing basis.
Fair value of financial instruments traded in an active market is measured as the product of the quoted price
for the individual asset or liability and the number of instruments held by the entity. This is the case even if
a market’s normal daily trading volume is not sufficient to absorb the quantity held and placing orders to
sell the position in a single transaction might affect the quoted price.
A portfolio of financial derivatives or other financial assets and liabilities that are not traded in an active
market is measured at the fair value of a group of financial assets and financial liabilities on the basis of the
price that would be received to sell a net long position (i.e. an asset) for a particular risk exposure or paid
to transfer a net short position (i.e. a liability) for a particular risk exposure in an orderly transaction between
market participants at the measurement date. This is applicable for assets carried at fair value on a recurring
basis if the Group: (a) manages the group of financial assets and financial liabilities on the basis of the
Group’s net exposure to a particular market risk (or risks) or to the credit risk of a particular counterparty in
accordance with the Group’s documented risk management or investment strategy; (b) it provides
information on that basis about the group of assets and liabilities to the Group’s key management
personnel; and (c) the market risks, including duration of the Group’s exposure to a particular market risk
(or risks) arising from the financial assets and financial liabilities are substantially the same.
Valuation techniques such as discounted cash flow models or models based on recent arm’s length
transactions or consideration of financial data of the investees are used to measure fair value of certain
financial instruments for which external market pricing information is not available. Fair value
measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements
at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements
are valuations techniques with all material inputs observable for the asset or liability, either directly (that is,
as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not
based on solely observable market data (that is, the measurement requires significant unobservable
inputs).
Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of
a financial instrument. An incremental cost is one that would not have been incurred if the transaction had
not taken place. Transaction costs include fees and commissions paid to agents (including employees
acting as selling agents), advisers, brokers and dealers, levies by regulatory agencies and securities
exchanges, and transfer taxes and duties. Transaction costs do not include debt premiums or discounts,
financing costs or internal administrative or holding costs.
Fair value is the amount at which the financial instrument was recognised at initial recognition, while
amortised cost (“AC”) is the amount at which the financial instrument was subsequently measured after the
initial recognition less any principal repayments, plus accrued interest, and for financial assets less any
allowance for ECL. Accrued interest includes amortisation of transaction costs deferred at initial recognition
and of any premium or discount to the maturity amount using the effective interest method. Accrued interest
income and accrued interest expense, including both accrued coupon and amortised discount or premium
(including fees deferred at origination, if any), are not presented separately and are included in the carrying
values of the related items in the consolidated statement of financial position.
The effective interest method is a method of allocating interest income or interest expense over the relevant
period, so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts
(excluding future credit losses) through the expected life of the financial instrument or a shorter period, if
appropriate, to the gross carrying amount of the financial instrument. The effective interest rate discounts
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Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
cash flows of variable interest instruments to the next interest repricing date, except for the premium or
discount which reflects the credit spread over the floating rate specified in the instrument, or other variables
that are not reset to market rates. Such premiums or discounts are amortised over the whole expected life
of the instrument. The present value calculation includes all fees paid or received between parties to the
contract that are an integral part of the effective interest rate. For assets that are purchased or originated
credit impaired (“POCI”) at initial recognition, the effective interest rate is adjusted for credit risk, i.e. it is
calculated based on the expected cash flows on initial recognition instead of contractual payments.
Financial instruments – initial recognition. Financial instruments at fair value through profit or loss (“FVTPL”)
are initially recorded at fair value. All other financial instruments are initially recorded at fair value adjusted
for transaction costs. Fair value at initial recognition is best evidenced by the transaction price. A gain or
loss on initial recognition is only recorded if there is a difference between fair value and transaction price
which can be evidenced by other observable current market transactions in the same instrument or by a
valuation technique whose inputs include only data from observable markets. After the initial recognition,
an ECL allowance is recognised for financial assets measured at AC and investments in debt instruments
measured at fair value through other comprehensive income (“FVOCI”), resulting in an immediate
accounting loss.
All purchases and sales of financial assets that require delivery within the time frame established by
regulation or market convention (“regular way” purchases and sales) are recorded at trade date, which is
the date on which the Group commits to deliver a financial asset. All other purchases are recognised when
the entity becomes a party to the contractual provisions of the instrument.
Financial assets – classification and subsequent measurement – measurement categories. The Group
classifies financial assets in the following measurement categories: FVTPL, FVOCI and AC. The
classification and subsequent measurement of debt financial assets depends on: (i) the Group’s business
model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset. The
Group’s financial assets include cash and cash equivalents, trade and other receivables, loans to subsidiary
undertakings, all of which are classified as AC in accordance with IFRS 9.
Financial assets - classification and subsequent measurement – business model. The business model
reflects how the Group manages the assets in order to generate cash flows – whether the Group’s objective
is: (i) solely to collect the contractual cash flows from the assets (“hold to collect contractual cash flows”),
or (ii) to collect both the contractual cash flows and the cash flows arising from the sale of assets (“hold to
collect contractual cash flows and sell”) or, if neither of (i) and (ii) is applicable, the financial assets are
classified as part of “other” business model and measured at FVTPL.
Business model is determined for a group of assets (on a portfolio level) based on all relevant evidence
about the activities that the Group undertakes to achieve the objective set out for the portfolio available at
the date of the assessment. Factors considered by the Group in determining the business model include
past experience on how the cash flows for the respective assets were collected.
The Group’s business model for financial assets is to collect the contractual cash flows from the assets
(“hold to collect contractual cash flows”).
Financial assets - classification and subsequent measurement - cash flow characteristics. Where the
business model is to hold assets to collect contractual cash flows or to hold contractual cash flows and sell,
the Group assesses whether the cash flows represent solely payments of principal and interest (“SPPI”).
Financial assets with embedded derivatives are considered in their entirety when determining whether their
cash flows are consistent with the SPPI feature. In making this assessment, the Group considers whether
the contractual cash flows are consistent with a basic lending arrangement, i.e. interest includes only
consideration for credit risk, time value of money, other basic lending risks and profit margin.
Where the contractual terms introduce exposure to risk or volatility that is inconsistent with a basic lending
arrangement, the financial asset is classified and measured at FVTPL. The SPPI assessment is performed
on initial recognition of an asset and it is not subsequently reassessed.
Financial assets - reclassification. Financial instruments are reclassified only when the business model for
managing the portfolio as a whole changes. The reclassification has a prospective effect and takes place
from the beginning of the first reporting period that follows after the change in the business model. The
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Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
Group did not change its business model during the current and comparative period and did not make any
reclassifications.
Financial assets impairment - credit loss allowance for ECL. The Group assesses, on a forward-looking
basis, the ECL for debt instruments measured at AC and FVOCI and for the exposures arising for
contractual assets. The Group measures ECL and recognises Net impairment losses on financial and
contractual assets at each reporting date. The measurement of ECL reflects: (i) an unbiased and probability
weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money
and (iii) all reasonable and supportable information that is available without undue cost and effort at the
end of each reporting period about past events, current conditions and forecasts of future conditions.
Debt instruments measured at AC and contractual assets are presented in the consolidated statement of
financial position net of the allowance for ECL. For loan commitments and financial guarantees, a separate
provision for ECL is recognised as a liability in the consolidated statement of financial position.
The Group applies a simplified approach for impairment of cash and cash equivalents, other short-term
investments and trade and other receivables, by recognising lifetime expected credit losses based on past
default experience and credit profiles, adjusted as appropriate for current observable data. For other
financial assets the Group applies a three stage model for impairment, based on changes in credit quality
since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified
in Stage 1. Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of
lifetime ECL that results from default events possible within the next 12 months or until contractual maturity,
if shorter (“12 Months ECL”). If the Group identifies a significant increase in credit risk (“SICR”) since initial
recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis,
that is, up until contractual maturity but considering expected prepayments, if any (“Lifetime ECL”). If the
Group determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL
is measured as a Lifetime ECL. For financial assets that are purchased or originated credit-impaired (“POCI
Assets”), the ECL is always measured as a Lifetime ECL.
Financial assets - write-off. Financial assets are written-off, in whole or in part, when the Group has
exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of
recovery. The write-off represents a derecognition event. The Group may write-off financial assets that are
still subject to enforcement activity when the Group seeks to recover amounts that are contractually due,
however, there is no reasonable expectation of recovery.
Financial assets - derecognition. The Group derecognises financial assets when (a) the assets are
redeemed or the rights to cash flows from the assets otherwise expire or (b) the Group has transferred the
rights to the cash flows from the financial assets or entered into a qualifying pass-through arrangement
whilst (i) also transferring substantially all the risks and rewards of ownership of the assets or (ii) neither
transferring nor retaining substantially all the risks and rewards of ownership but not retaining control.
Financial assets - modification. If the modified terms are substantially different, the rights to cash flows from
the original asset expire and the Company derecognises the original financial asset and recognises a new
asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for
subsequent impairment calculation purposes, including determining whether a SICR has occurred. Any
difference between the carrying amount of the original asset derecognised and fair value of the new
substantially modified asset is recognised in profit or loss, unless the substance of the difference is
attributed to a capital transaction with owners. If the modified asset is not substantially different from the
original asset and the modification does not result in derecognition. The Group recalculates the gross
carrying amount by discounting the modified contractual cash flows by the original effective interest rate (or
credit-adjusted effective interest rate for POCI financial assets), and recognises a modification gain or loss
in profit or loss.
Financial liabilities - measurement categories. Financial liabilities are classified as subsequently measured
at AC, except for (i) financial liabilities at FVTPL: this classification is applied to derivatives, financial
liabilities held for trading (e.g. short positions in securities), contingent consideration recognised by an
acquirer in a business combination and other financial liabilities designated as such at initial recognition
and (ii) financial guarantee contracts and loan commitments. The Group’s financial liabilities include trade
and other payables, lease liabilities, all of which are classified as AC in accordance with IFRS 9.
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78
Financial liabilities - derecognition. Financial liabilities are derecognised when they are extinguished (i.e.
when the obligation specified in the contract is discharged, cancelled or expires).
Trade Receivables
Trade receivables are amounts due from customers for goods sold in the ordinary course of business. If
collection is expected in one year or less, they are classified as current assets. If not, they are presented
as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest method, less expected credit losses.
Prepayments
Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current
when the goods or services relating to the prepayment are expected to be obtained after one year, or when
the prepayment relates to an asset which will itself be classified as non-current upon initial recognition.
Prepayments to acquire assets are transferred to the carrying amount of the asset once the Group has
obtained control of the asset and it is probable that future economic benefits associated with the asset will
flow to the Group. Other prepayments are written off to profit or loss when the services relating to the
prepayments are received. If there is an indication that the assets, goods or services relating to a
prepayment will not be received, the carrying value of the prepayment is written down accordingly and a
corresponding impairment loss is recognised in profit or loss for the year.
Investments in subsidiaries
Investments made by the Company in its subsidiaries are stated at cost in the Company’s financial
statements and reviewed for impairment if there are indications that the carrying value may not be
recoverable.
Loans issued to subsidiaries
Loans issued by the Company to its subsidiaries are initially recognised in the Company’s financial
statements at fair value and are subsequently carried at amortised cost using the effective interest method,
less credit loss allowance. Net change in credit losses and foreign exchange differences on loans issued
are recognised in the Company’s statement of profit or loss in the period when incurred.
Trade and Other Payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course
of business from suppliers. Accounts payable are classified as current liabilities if payment is due within
one year or less. 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.
Lease liabilities
Liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
●
●
●
●
fixed payments (including in-substance fixed payments), less any lease incentives receivable,
variable lease payments that are based on an index or a rate, initially measured using the index or
rate as at the commencement date,
the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the Group exercising that
option.
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79
Extension and termination options are included in a number of property and equipment leases across the
Group. These terms are used to maximise operational flexibility in terms of managing contracts. Extension
options (or period after termination options) are only included in the lease term if the lease is reasonably
certain to be extended (or not terminated). Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases of the Group, the Group’s incremental borrowing rate is
used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of
similar value in a similar economic environment with similar terms and conditions.
To determine the incremental borrowing rate, the Group:
●
●
●
where possible, uses recent third-party financing received by the individual lessee as a starting point,
adjusted to reflect changes in financing conditions since third party financing was received,
uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk, and
makes adjustments specific to the lease, e.g. term, country, currency and collateral.
The Group is exposed to potential future increases in variable lease payments based on an index or rate,
which are not included in the lease liability until they take effect. When adjustments to lease payments
based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use
asset.
Lease payments are allocated between principal and finance costs. The finance costs are charged to profit
or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance
of the liability for each period.
Payments associated with short-term leases and all leases of low-value assets under $5,000 are
recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease
term of 12 months or less.
Equity Instruments
Ordinary shares are classified as equity. Equity instruments issued by the Company and the Group are
recorded at the proceeds received, net of direct issue costs. Any excess of the fair value of consideration
received over the par value of shares issued is recorded as share premium in equity.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and deposits held at call with banks and other short-
term highly liquid investments which are readily convertible to a known amount of cash with insignificant
risk of change in value. Cash and cash equivalents are carried at amortised cost. Interest income that
relates to cash and cash equivalents on current and deposit accounts is disclosed within operating cash
flow.
Other short-term investments
Other short-term investments include current accounts and deposits held at banks, which do not meet the
cash and cash equivalents definition. Current accounts and deposits held at banks, which do not meet the
cash and cash equivalents definition are measured initially at fair value and subsequently carried at
amortised cost using the effective interest method. Interest received on other short-term investments is
disclosed within operating cash flow.
Interest income
Interest income is recognised as it accrues, taking into account the effective yield on the asset. Interest
income on current bank accounts and on demand deposits or term deposits with the maturity less than
three months recognised as part of cash and cash equivalents is recognised as other operating income.
Interest income on term deposits other than those classified as cash and cash equivalents is recognised
as finance income.
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Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
Certain reclassifications have been made in the comparative numbers for better clarity and consistency of
presentation.
3. Significant Accounting Judgements and Estimates
The Group makes estimates and judgements concerning the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The estimates and judgements which have a risk
of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year
are discussed below.
Depreciation of Oil and Gas Development and Production Assets
Development and production assets held in property, plant and equipment are depreciated on a unit of
production basis at a rate calculated by reference to proved and probable reserves at the end of the period
plus the production in the period, and incorporating the estimated future cost of developing and extracting
those reserves. Future development costs are estimated using estimates about the number of wells
required to produce those reserves, the cost of the wells, future production facilities and operating costs,
together with assumptions on oil and gas realisations, and are revised annually. The reserves estimates
used are determined using estimates of gas in place, recovery factors, future hydrocarbon prices and also
take into consideration the Group’s latest development plan for the associated development and production
asset. The latest development plan and therefore the inputs used to determine the depreciation charge for
the MEX-GOL, SV and VAS fields continue until the end of the economic life of the fields, which is assessed
to be 2038, 2042 and 2033 respectively, based on the assessment contained in the DeGolyer &
MacNaughton reserves report for these fields. The licences for the MEX-GOL and SV fields have recently
been extended until 2044. Were the estimated reserves at the beginning of the year to differ by 10% from
previous assumptions, the impact on depreciation for the year ended 31 December 2023 would be to
increase it by $1,066,000 or decrease it by $479,000 (2022: increase by $1,394,000 or decrease by
$626,000).
Provision for Decommissioning
The Group has decommissioning obligations in respect of its Ukrainian assets. The full extent to which the
provision is required depends on the legal requirements at the time of decommissioning, the costs and
timing of any decommissioning works and the discount rate applied to such costs.
A detailed assessment of gross decommissioning cost was undertaken on a well-by-well basis using local
data on day rates and equipment costs. The discount rate applied on the decommissioning cost provision
as at 31 December 2023 was 4.67% (31 December 2022: 4.76%). The discount rate is calculated in real
terms based on the yield to maturity of Ukrainian Government bonds denominated in the currency in which
the liability is expected to be settled and with the settlement date that approximates the timing of settlement
of decommissioning obligations. Increase of the discount rate applied is caused by the growth of the
Ukrainian risk-free rate.
The change in estimate applied to calculate the provision as at 31 December 2023 resulted from the revision
of the estimated costs of decommissioning (increase of $556,000 in provision), an increase in the discount
rate applied (increase of $86,000 in provision), revision of the economic life of the VAS field and SC field
(decrease of $362,000 in provision). The costs are expected to be incurred by 2038 on the MEX-GOL field,
by 2042 on the SV field, and by 2033 on the VAS field, which is the end of the estimated economic life of
the respective fields (Note 24).
Net Carrying Amount of Inter-Company Loans Receivable and Investments by the Company into a
Subsidiary
The Company has certain inter-company loans receivable from a subsidiary, which are eliminated on
consolidation. For the purpose of the Company’s financial statements, these receivable balances are
carried at amortised cost using the effective interest method, less credit loss allowance. Measurement of
lifetime expected credit losses on inter-company loans is a significant judgment that involves models and
data inputs including forward-looking information, current conditions and forecasts of future conditions
81
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
impacting the estimated future cash flows that are expected to be recovered, time value of money, etc. In
previous years, significant impairment charges were recorded against the carrying amount of the loans
issued to subsidiaries as the present value of estimated future cash flows discounted at the original effective
interest rate was less than the carrying amount of the loans, and the resulting impairment losses were
recognised in profit or loss in the Company’s financial statements.
For the purpose of assessment of the credit loss allowance as at 31 December 2023, the Company
considered all reasonable and supportable forward-looking information available as at that date without
undue cost and effort, which includes a range of factors, such as estimated future net cash flows to be
generated by the subsidiaries operating in Ukraine and cash flow management. All these factors have a
significant impact on the amounts subject to repayment on the loans and investments. The estimated future
discounted cash flows generated by the subsidiaries operating in Ukraine are considered as a primary
source of repayment on the loans and investments. As at 31 December 2023, the present value of future
net cash flows to be generated by the subsidiaries operating in Ukraine during 2024 – 2028, adjusted for
the subsidiaries’ working capital as at 31 December 2023 and estimated amounts reserved by the Group
for investment projects in the time horizon was calculated.
The key assumptions used in the discounted cash flow model are:
•
•
•
•
•
•
•
•
•
production levels for a period of five years assumed to be: at the level of 6.7 MMboe for the MEX-
GOL and SV fields and zero for the period of suspension of the VAS field and SC licence area;
proved plus probable (2P) reserves at the beginning of 2024 at the MEX-GOL and SV fields of 43.0
MMboe, at the VAS field of 2.3 MMboe and at the SC licence area of 12.1 MMboe;
commodity prices – the model assumes gas prices of $423/Mm3 in 2024, $450/Mm3 in 2025,
decreasing to $414/Mm3 in 2026, and $400/Mm3 in subsequent years;
discount rate applied is 36.17% in 2024, 30.08% in 2025, 23.99% in 2026, 17.89% in 2027 and
11.80% in 2028, determined in real terms;
production taxes applicable to gas production at variable rates under relevant legislation;
capital expenditure allowance for maintenance and development of: MEX-GOL and SV fields at the
level of $750,000 per year, VAS field at the level of $250,000 per year and SC licence area at the
level of $100,000 per year;
future capital expenditures for a period of five years assumed to be: for the MEX-GOL and SV fields
at the level of $195,300,000, VAS field at the level of $80,000 and SC licence area at the level of
$26,100,000;
life of field for the purpose of the assessment of loans – cash flows were taken for a period of five
years as management believes there is no reasonably available information to build reliable
expectations and demonstrate the ability to settle the loans over a longer perspective;
life of field for the purpose of the assessment of investments – cash flows were taken for a period of
the full economic life of the respective CGUs.
The resulting amount, net of the carrying value of the Company’s investments in subsidiaries and loans,
was compared to the discounted cash flows and net financial assets of the subsidiaries as at
31 December 2023. As such, the Company has recorded $14,979,000 of loss, being the net change in the
expected credit losses for loans issued to and investments in subsidiaries in the Company’s statement of
profit or loss for the year ended 31 December 2023.
As with any economic forecast, the projections and likelihoods of occurrence are subject to a high degree
of inherent uncertainty, and therefore the actual outcomes may be significantly different to those projected.
The Company considers these forecasts to represent its best estimate of the possible outcomes.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
82
4. Segmental Information
In line with the Group’s internal reporting framework and management structure, the key strategic and
operating decisions are made by the Board of Directors, who review internal monthly management reports,
budget and forecast information as part of this process. Accordingly, the Board of Directors is deemed to
be the Chief Operating Decision Maker within the Group.
The Group’s only class of business activity is oil and gas exploration, development and production. The
Group’s operations are located in Ukraine, with its head office in the United Kingdom. These geographical
regions are the basis on which the Group reports its segment information. The segment results as
presented represent operating profit before depreciation, amortisation and impairment of non-current
assets.
Revenue
Gas sales
Condensate sales
Liquefied Petroleum Gas sales
Total revenue
Segment result
Depreciation and amortisation of non-current
assets
Operating profit
Ukraine
2023
$000
42,270
10,466
9,458
62,194
United
Kingdom
2023
$000
-
-
-
-
43,649
(1,409)
(6,704)
-
Total
2023
$000
42,270
10,466
9,458
62,194
42,240
(6,704)
35,536
Segment assets
Capital additions*
161,232
22,100
183,332
15,749
-
15,749
*Comprises additions to property, plant and equipment (Note 16)
There are no inter-segment sales within the Group and all products are sold in the geographical region in
which they are produced. The Group is not significantly impacted by seasonality. Revenue is recognised at
a point in time.
During 2022 and until May 2023, the Group was selling all of its gas production to its related party, LLC
Smart Energy (“Smart Energy”). Smart Energy has oil and gas operations in Ukraine and is part of the
PJSC Smart-Holding Group, which was ultimately controlled by Mr Vadym Novynskyi, who until 1
December 2022, through an indirect 82.65% majority shareholding, ultimately controlled the Group. This
arrangement came about in 2017 as a consequence of the Ukrainian Government introducing a number of
new provisions into the Ukrainian Tax Code over the previous two years, including transfer pricing
regulations for companies operating in Ukraine. The introduction of the new regulations has meant that
there is an increased regulatory burden on affected companies in Ukraine who must prepare and submit
reporting information to the Ukrainian Tax Authorities. Due to the corporate structure of the Group, a
substantial proportion of its gas production is produced by a non-Ukrainian subsidiary of the Group, which
operates in Ukraine as a branch, or representative office as it is classified in Ukraine. Under the Ukrainian
tax regulations, this places additional regulatory obligations on each of the Group’s potential customers
who may be less inclined to purchase the Group’s gas and/or may seek discounts on sales prices. As a
result of discussions between the Company and Smart Energy, Smart Energy agreed to purchase all of the
Group’s gas production and to assume responsibility for the regulatory obligations under the Ukrainian tax
regulations. Furthermore, Smart Energy agreed to combine the Group’s gas production with its own gas
production, and to sell such gas as combined volumes, which was intended to result in higher sales prices
due to the larger sales volumes. In order to cover Smart Energy’s sales, administration and regulatory
compliance costs, the Group sold its gas to Smart Energy at a discount of 2.0% to the gas sales prices
83
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
achieved by Smart Energy, who sold the combined volumes in line with market prices. The terms of sale
for the Group’s gas to Smart Energy were (i) for 35% of the monthly volume of gas by the 15th of the month
following the month of delivery, and (ii) payment of the remaining balance by the end of that month. This
arrangement was terminated in May 2023.
Revenue
Gas sales
Condensate sales
Liquefied Petroleum Gas sales
Total revenue
Segment result
Depreciation and amortisation of non-current assets
Operating profit
Ukraine
2022
$000
109,461
12,744
11,175
133,380
84,750
(7,837)
United
Kingdom
2022
$000
-
-
-
-
(1,140)
-
Total
2022
$000
109,461
12,744
11,175
133,380
83,610
(7,837)
75,773
Segment assets
Capital additions*
158,982
82,752
241,734
19,807
-
19,807
*Comprises additions to property, plant and equipment (Note 16)
5. Cost of Sales
Production taxes
Depreciation of property, plant and equipment
Rent expenses (Note 18)
Staff costs (Note 8)
Cost of inventories recognised as an expense
Amortisation of mineral reserves (Note 17)
Transmission tariff for Ukrainian gas system
Other expenses
2023
$000
8,610
5,719
2,573
2,142
1,587
359
322
1,910
23,222
2022
$000
25,271
6,684
8,468
2,149
1,510
411
493
2,471
47,457
A transmission tariff for use of the Ukrainian gas transit system of UAH101.93/Mm3 of gas was applicable
to the Group (2022: UAH101.93/Mm3).
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
84
6. Administrative Expenses
Staff costs (Note 8)
Consultancy fees
Professional services
Depreciation of other fixed assets
Group Auditor’s remuneration*
Rent expenses
Amortisation of other intangible assets
Other expenses
2023
$000
3,585
1,567
339
321
146
137
113
745
6,953
2022
$000
4,105
906
187
297
139
248
169
779
6,830
*The Group Auditor did not provide any non-audit services for the 2023 and 2022 audits.
7. Remuneration of Directors
Directors’ emoluments
The emoluments of the individual Directors were as follows:
Executive Directors:
Sergii Glazunov
Bruce Burrows
Non-executive Directors:
Chris Hopkinson
Alexey Pertin
Yuliia Kirianova
Dmitry Sazonenko
Dr Gehrig Schultz
2023
$000
815
2022
$000
1,325
Total
Emoluments
2023
$000
Total
emoluments
2022
$000
180
343
124
56
56
-
56
815
473
546
124
56
56
50
20
1,325
The emoluments include base salary, bonuses and fees. According to the Register of Directors’ Interests,
no rights to subscribe for shares in or debentures of any Group companies were granted to any of the
Directors or their immediate families during the financial year, and there were no outstanding options to
Directors.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
85
8. Staff Numbers and Costs
The average monthly number of employees during the year (including Executive Directors) and the
aggregate staff costs of such employees were as follows:
Group
Management / operational
Administrative support
Number of employees
2023
2022
169
70
239
166
81
247
The prior year comparative numbers of employees were amended to conform to the current year
presentation. The number of employees includes full-time and part-time employees.
Wages and salaries
Other pension costs
Social security costs
9. Other Operating Gains/(Losses), (net)
Interest income on cash and cash equivalents
Gain on sales of current assets
Contractor penalties applied
Impairment of property, plant and equipment (Note 16)
Other operating (loss)/income, net
10. Finance Income
Financial instrument: unwinding of discount
11. Finance Costs
Unwinding of discount on financial liabilities
Unwinding of discount on provision for decommissioning (Note 24)
Interest expense on lease liabilities
2023
$000
5,268
723
80
6,071
2023
$000
4,578
5
1
-
(1,067)
3,517
2023
$000
2,144
2,144
2023
$000
2,291
331
83
2,705
2022
$000
5,729
816
90
6,635
2022
$000
1,888
20
114
(4,257)
(1,085)
(3,320)
2022
$000
1,126
1,126
2022
$000
996
293
121
1,410
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
86
12. Other Gains/(Losses), (net)
Charitable donations
Foreign exchange gains/(losses)
Other gains/(losses), (net)
2023
$000
(17)
731
(31)
683
2022
$000
(6,534)
4,843
(47)
(1,738)
Charitable donations for the year ended 31 December 2023 and 2022 comprise humanitarian aid for the
population and armed forces of Ukraine.
13. Income Tax Expense
a)
Income tax expense and (benefit):
Current tax
UK - current year
UK - prior year
Overseas - current year
Overseas - prior year
Deferred tax (Note 25)
UK - current year
UK - prior year
Overseas - current year
Income tax expense
2023
$000
131
-
6,621
83
1,941
-
(79)
8,697
2022
$000
54
-
14,263
-
1,852
(3,021)
(24)
13,124
b)
Factors affecting tax charge for the year:
The tax assessed for the year is different from the corporation tax rate in the UK of 19.00% rising to 25.00%
with effect from 1 April 2023. The expense for the year can be reconciled to the profit as per the Income
Statement as follows:
Profit before taxation
Tax charge at UK tax rate of 19.00%/25.00% (2022: 19.00%)
Tax effects of:
Lower foreign corporate tax rates in Ukraine (18.00%) (2022: 18.00%)
Disallowed expenses and non-taxable income
Previously unrecognised tax losses used to reduce income tax expense
Adjustments in respect of prior periods
Total tax expense for the year
2023
$000
35,183
7,010
(504)
3,148
(957)
-
8,697
2022
$000
73,307
13,928
(699)
6,708
(3,792)
(3,021)
13,124
The tax effect of disallowed expenses and non-taxable income are mainly represented by foreign exchange
differences of LLC Regal Petroleum Corporation (Ukraine) Limited and the net change in credit loss
allowance for loans issued to subsidiaries and shares in subsidiary undertakings.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
87
The tax effect of losses not recognised as deferred tax assets are mainly represented by accumulated
losses of LLC Regal Petroleum Corporation (Ukraine) Limited.
14. Profit/(Loss) for the Year
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act
2006 and has not presented its own Income Statement in these financial statements. The Parent Company
profit after tax was $7,151,000 for the year ended 31 December 2023 (2022: loss after tax $6,358,000).
15. Earnings per Share
The calculation of basic earnings per ordinary share has been based on the profit for the year and
320,637,836 (2022: 320,637,836) ordinary shares, being the weighted average number of shares in issue
for the year. There are no dilutive instruments.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
88
16. Property, Plant and Equipment
Group
Cost
At the beginning of the year
Additions
Change in decommissioning provision
Disposals
Exchange differences
At the end of the year
Accumulated depreciation and impairment
At the beginning of the year
Charge for year
Disposals
Impairment charged
Exchange differences
At the end of the year
Net book value at the beginning of
the year
Net book value at the end of the year
Oil and Gas
Development
and
Production
assets
Ukraine
$000
2023
Oil and Gas
Exploration
and
Evaluation
Assets
$000
135,255
13,530
293
(1,389)
(5,787)
141,902
73,108
5,555
(95)
-
(2,949)
75,619
62,147
66,283
13,093
1,403
(13)
(539)
13,944
1,677
-
-
-
(42)
1,635
11,416
12,309
Other
fixed
assets
$000
1,968
816
(519)
(84)
2,181
1,275
304
(95)
-
12
1,496
693
685
Total
$000
150,316
15,749
280
(1,908)
(6,410)
158,027
76,060
5,859
(190)
-
(2,979)
78,750
74,256
79,277
Oil and Gas
Development
and
Production
assets
Ukraine
$000
Oil and Gas
Exploration
and
Evaluation
Assets
$000
2022
Other
fixed
assets
$000
2,631
386
-
(356)
(693)
1,968
1,423
301
(57)
(392)
1,275
Total
$000
175,911
19,807
2,634
(574)
(47,462)
150,316
88,493
7,207
(132)
4,257
(23,765)
76,060
10,110
6,549
38
(18)
(3,586)
13,093
-
-
-
1,896
(219)
1,677
10,110
1,208
87,418
11,416
693
74,256
163,170
12,872
2,596
(200)
(43,183)
135,255
87,070
6,906
(75)
2,361
(23,154)
73,108
76,100
62,147
MEX-GOL, SV, SC and VAS gas and condensate fields
In accordance with the Group’s accounting policies, oil and gas development and producing assets are tested for an impairment loss at each balance sheet date.
As at 31 December 2023, oil and gas development and producing assets were tested for an impairment loss, however no loss was recognised in the period (Note
3).
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
89
17.
Intangible Assets
2023
Group
Cost
At the beginning of the year
Additions
Disposals
Exchange differences
At the end of the year
Accumulated amortisation
At the beginning of the year
Charge for year
Disposals
Exchange differences
At the end of the year
Net book value at the beginning of the
year
Net book value at the end of the year
Exploration
and
evaluation
intangible
assets
$000
Mineral
reserve rights
$000
5,080
-
-
(189)
4,891
2,925
359
(122)
3,162
2,155
1,729
6,433
-
-
(243)
6,190
-
-
-
-
-
6,433
6,190
Other
intangible
assets
$000
860
196
(108)
(34)
914
454
130
(106)
(17)
461
406
Exploration
and
evaluation
intangible
assets
$000
2022
Other
intangible
assets
$000
Total
$000
Mineral
reserve rights
$000
12,373
196
(108)
(466)
11,995
3,379
489
(106)
(139)
3,623
8,994
6,810
-
-
(1,730)
5,080
3,439
411
-
(925)
2,925
3,371
8,651
-
-
(2,218)
6,433
-
-
-
-
-
8,651
453
8,372
2,155
6,433
752
322
(27)
(187)
860
434
182
(27)
(135)
454
318
406
Total
$000
16,213
322
(27)
(4,135)
12,373
3,873
593
(27)
(1,060)
3,379
12,340
8,994
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
90
Intangible assets consist mainly of the hydrocarbon production licence relating to the VAS field which is
held by one of the Group's subsidiaries, LLC Prom-Enerho Produkt, and a hydrocarbon exploration licence
relating to the Svystunivsko-Chervonolutskyi (“SC”) area which is held by LLC Arkona Gas-Energy. The
Group amortises the hydrocarbon production licence relating to the VAS field using the straight-line method
over the term of the economic life of the VAS field until 2028. The hydrocarbon exploration licence relating
to the SC area is not amortised due to it being in an exploration and evaluation stage.
In accordance with the Group’s accounting policies, intangible assets are tested for impairment at each
balance sheet date as part of the impairment testing of the Group’s oil and gas development and production
assets if impairment indicators exist. As at 31 December 2023, intangible assets were tested for an
impairment loss, however no loss was recognised in the period.
18. Right-of-use Assets
This note provides information for right-of-use assets and leases obligations where the Group is a lessee.
Amount recognised in the balance sheet:
Right-of-use assets
Properties
Land
Wells
Lease liabilities
Current
Non-current
2023
$000
-
153
39
192
2023
$000
38
245
283
2022
$000
150
170
44
364
2022
$000
229
258
487
After modification and due to termination of contracts, disposals to the right-of-use assets during the 2023
financial year were $115,000 (2022: disposals to the right-of-use assets after modification and due to
termination of contracts were $271,000).
Amounts recognised in the statement of profit or loss:
Depreciation charge
Properties
Land
Wells
Interest expense (included in finance cost)
Expense relating to short-term leases (included in cost of sales and
administrative expenses)
Expense relating to variable lease payments not included in lease
liabilities (included in cost of sales)
Expense relating to lease payments for land under wells not included in
lease liabilities (included in cost of sales)
2023
$000
(199)
(11)
(5)
(215)
(331)
(132)
2022
$000
(237)
(14)
(5)
(256)
(121)
(228)
(2,522)
(8,430)
(42)
(38)
The total cash outflow for leases in 2023 was $ 3,835,000 (2022: $12,464,000).
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
91
19.
Investments and Loans to Subsidiary Undertakings
Company
As at 1 January 2022
Additions including accrued interest
Repayment of interest and loans
Impairment
Exchange differences
As at 31 December 2022
Additions including accrued interest
Repayment of interest and loans
Impairment
Exchange differences
As at 31 December 2023
Shares in
subsidiary
undertakings
$000
Loans to
subsidiary
undertakings
$000
38,527
3
-
(7,826)
-
30,704
-
-
-
-
30,704
48,899
6,740
(1,077)
(2,116)
(2,472)
49,974
2,795
-
(14,979)
1,416
39,206
Total
$000
87,426
6,743
(1,077)
(9,942)
(2,472)
80,678
2,795
-
(14,979)
1,416
69,910
The Company has recorded a loss of $14,979,000, being the net change in expected credit losses for loans
issued to subsidiaries in the Company’s statement of profit or loss for the year ended 31 December 2023
(Note 3) (2022: $2,116,000).
The Company’s discounted cash flow model used for the assessment of the investments recoverability,
flexed for sensitivities, produced the following results:
Discount rate (increase)/decrease by 1%
Change in gas price increase/(decrease) by 10%
1,355/1,472
2,734/(13,698)
(247)/220
1,664/(1,647)
31 December 2023
$000
31 December 2022
$000
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
92
The table presented below discloses the changes in the gross carrying amount and credit loss allowance
between the beginning and the end of the reporting period for loans to subsidiary undertakings carried at
impairment assessment as at
amortised cost and classified within a
31 December 2023:
three-stage model
for
Stage 1 Stage 2
Credit loss allowance
Stage 3
(lifetime
ECL for
credit
impaired)
(lifetime
ECL for
SICR)
Gross carrying amount
Stage 1 Stage 2
Total
(12-
months
ECL)
(lifetime
ECL for
SICR)
Stage 3
(lifetime
ECL for
credit
impaired)
Total
(12-
months
ECL)
$000
$000
$000
$000
$000
$000
$000
$000
As at 1 January 2023
(1,722)
-
(17,831)
(19,553)
17,234
-
52,293
69,527
Movements with impact
on credit loss allowance
charge for the year:
Modification of loans
Additions including
accrued interest
Payment of interest
Repayment of loans
Exchange difference
Changes to ECL
measurement model
assumptions
Total movements with
impact on credit loss
allowance charge for
the year
As at 31 December
2023
-
-
-
-
-
(3,538)
-
-
-
-
-
-
1,522
-
1,522
-
-
960
-
-
-
(11,441)
-
-
-
(14,979)
-
-
-
-
-
-
-
-
-
-
(1,522)
1,835
(1,522)
2,795
-
-
1,416
-
-
-
1,416
-
(3,538)
-
(9,919)
(13,457)
960
-
1,729
2,689
(5,260)
-
(27,750)
(33,010)
18,194
-
54,022
72,216
ECL - Expected credit losses
SICR - Significant increase in credit risk
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
93
The table presented below discloses the changes in the gross carrying amount and credit loss allowance
between the beginning and the end of the reporting period for loans to subsidiary undertakings carried at
impairment assessment as at
amortised cost and classified within a
31 December 2022:
three-stage model
for
Stage 1 Stage 2
Stage 1 Stage 2
Credit loss allowance
Stage 3
(lifetime
ECL for
credit
impaired)
(lifetime
ECL for
SICR)
(12-
months
ECL)
Total
(12-
months
ECL)
Gross carrying amount
Stage 3
(lifetime
ECL for
credit
impaired)
(lifetime
ECL for
SICR)
Total
$000
$000
$000
$000
$000
$000
$000
$000
As at 1 January 2022
(637)
-
(16,044)
(16,681)
12,276
-
53,304
65,580
Movements with impact
on credit loss allowance
charge for the year:
Modification of loans
Additions including
accrued interest
Payment of interest
Repayment of loans
Exchange difference
Changes to ECL
measurement model
assumptions
Total movements with
impact on credit loss
allowance charge for the
year
As at 31 December
2022
-
-
-
-
-
(1,085)
-
-
-
-
-
-
(876)
-
(876)
-
-
4,958
-
-
120
(1,031)
-
-
120
(2,116)
-
-
-
-
-
-
-
-
-
-
876
1,782
876
6,740
(1,077)
-
(2,592)
-
(1,077)
-
(2,592)
-
(1,085)
-
(1,787)
(2,872)
4,958
-
(1,011)
3,947
(1,722)
-
(17,831)
(19,553)
17,234
-
52,293
69,527
ECL – Expected credit losses
SICR – Significant increase in credit risk
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
94
Subsidiary undertakings
As at 31 December 2023 and 2022, the Company’s subsidiary undertakings, all of which are included in
the consolidated financial statements, were:
Registered address
Country of
incorporation
Country of
operation
Principal
activity
% of shares held
31 December
2023
31 December
2022
Regal Petroleum
Corporation
Limited
3rd Floor, Charter Place,
23-27 Seaton Place, St
Helier, Jersey, JE4 0WH
Regal Petroleum
Corporation
Limited (Branch
Office)
162 Shevchenko Str.,
Yakhnyky Village,
Lokhvytsya District,
Poltava Region, 37212
LLC Arkona
Gas-Energy
LLC Regal
Petroleum
Corporation
(Ukraine)
Limited
162 Shevchenko Str.,
Yakhnyky Village,
Lokhvytsya District,
Poltava Region, 37212
162 Shevchenko Str.,
Yakhnyky Village,
Lokhvytsya District,
Poltava Region, 37212
Jersey
Ukraine
Oil & Natural
Gas Extraction
100%
100%
Ukraine
Oil & Natural
Gas Extraction
Ukraine
Ukraine
Ukraine
Ukraine
Exploration
and Evaluation
for Oil and
Natural Gas
Holding
Company
100%
100%
100%
100%
LLC Prom-
Enerho Produkt
3 Klemanska Str., Kiev,
02081
Ukraine
Ukraine
Oil & Natural
Gas Extraction
100%
100%
Well Investum
LLC
58 Yaroslavska str.,
Kyiv, 04071
Ukraine
Ukraine
Dormant
Company
100%
-
*Regal Group
Services Limited
16 Old Queen Street,
London, SW1H 9HP
United
Kingdom
United
Kingdom
Service
Company
100%
100%
Regal Group Services Limited was dissolved on 21 February 2023.
The Parent Company, Enwell Energy plc, holds direct interests in 100% of the share capital of Regal
Petroleum Corporation Limited, LLC Regal Petroleum Corporation (Ukraine) Limited, LLC Arkona Gas-
Energy and Well Investum LLC, and a 100% indirect interest in LLC Prom-Enerho Produkt through its 100%
shareholding in LLC Regal Petroleum Corporation (Ukraine) Limited, which owns all of the share capital of
LLC Prom-Enerho Produkt. The Parent Company, Enwell Energy plc, held a direct interest in 100% of the
share capital of Regal Group Services Limited until it was dissolved on 21 February 2023.
20.
Inventories
Current
Materials and spare parts
Finished goods
Group
2023
$000
2,336
615
2,951
2022
$000
1,914
1,444
3,358
Inventories consist of materials, spare parts and finished goods. Materials and spare parts are represented
by spare parts that were not assigned to any new wells, production raw materials and fuel at the storage
facility. Finished goods consist of produced gas held in underground gas storage facilities and condensate
and LPG held at the processing facility prior to sale.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
95
As at 31 December 2023, allowances for impairment of materials and spare parts amounted to $671,000
(31 December 2022: $705,000).
All inventories are measured at the lower of cost or net realisable value. There was no write down of
inventory as at 31 December 2023 or 2022.
21. Trade and Other Receivables
Trade receivables
Other financial receivables
Financial aids
Less credit loss allowance
Total financial receivables
Prepayments and accrued income
Other receivables
Total trade and other receivables
Group
Company
2023
$000
11,580
533
-
(323)
11,790
350
3,445
15,585
2022
$000
46,188
284
11,316
(433)
57,355
509
3,129
60,993
2023
$000
4
533
-
-
537
-
832
1,369
2022
$000
-
285
-
-
285
249
636
1,170
Due to the short-term nature of the trade and other receivables, their carrying amount is assumed to be the
same as their fair value. All trade and other financial receivables, except those provided for, are considered
to be of high credit quality.
As at 31 December 2023, the Group’s total trade receivables, net of expected credit losses amounted to
$11,752,000 and 100% were denominated in Ukrainian Hryvnia (31 December 2022: $46,033,000 and
100% were denominated in Ukrainian Hryvnia). Further description of financial receivables is disclosed in
Note 29.
Analysis by credit quality of financial trade and other receivables and expected credit loss allowance as at
31 December 2023 is as follows:
Loss rate Gross carrying
amount
$000
Life-
time ECL
$000
Carrying
amount
$000
Basis
28.91%
-
-
100%
95
(95)
-
-
28.91%
11,485
(227)
11,258
28.91%
-
533
-
(1)
-
532
-
financial position of
related party
number of days the
asset is past due
historical credit
losses experienced
individual default
rates
-
12,113
(323)
11,790
Trade receivables from
related parties
Trade receivables -
credit impaired
Trade receivables -
other
Other financial
receivables
Financial aids
Total trade and other
receivables for which
individual approach
for ECL is used
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
96
Analysis by credit quality of financial trade and other receivables and expected credit loss allowance as at
31 December 2022 is as follows:
Loss rate Gross carrying
amount
$000
Life-
time ECL
$000
Carrying
amount
$000
Basis
9.99%
46,003
(126)
45,877
financial position of
related party
100%
9.99%
9.99%
98
87
(98)
(1)
-
number of days the
asset is past due
86
historical credit
losses experienced
284
(25)
259
individual default
rates
-
11,316
(183)
11,133
-
57, 788
(433)
57,355
Trade receivables from
related parties
Trade receivables -
credit impaired
Trade receivables -
other
Other financial
receivables
Financial aids
Total trade and other
receivables for which
individual approach
for ECL is used
ECL - Expected credit losses
The following table explains the changes in the credit loss allowance for trade and other receivables under
the simplified ECL model between the beginning and the end of the year:
Trade and other receivables
Balance as at 1 January
New originated or purchased
Financial assets derecognised during the year
Changes in estimates and assumptions
Foreign exchange movements
Balance as at 31 December
22. Cash and Cash Equivalents
Cash and Cash Equivalents
Cash at bank
Demand deposits and term deposits with
maturity of less than 3 months
2023
$000
433
151
(460)
210
(12)
323
2022
$000
140
441
(172)
61
(37)
433
Group
Company
2023
$000
2022
$000
2023
$000
2022
$000
54,873
33,243
20,695
21,620
55,409
-
76,493
88,652
20,695
26,541
55,000
81,541
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
97
Cash at bank earns interest at fluctuating rates based on daily bank deposit rates. Demand deposits are
made for varying periods depending on the immediate cash requirements of the Group and earn interest at
the respective short-term deposit rates. The terms and conditions upon which the Group’s demand deposits
are made allow immediate access to all cash deposits, with no significant loss of interest.
Cash and Cash Equivalents
Ukrainian Hryvnia
US Dollars
British Pounds
Euros
Group
Company
2023
$000
2022
$000
2023
$000
2022
$000
55,787
20,341
116
249
76,493
6,874
81,282
223
273
88,652
-
20,330
116
249
20,695
-
81,046
223
272
81,541
The credit quality of cash and cash equivalents balances may be summarised based on Moody’s ratings
as follows as at 31 December:
Cash at bank
and on hand
2023
$000
Demand deposits
and term deposits
with maturity less
than 3 months
2023
$000
A- to A+ rated
B- to B+ rated
C- to C+ rated
Unrated
20,708
-
4,017
30,148
54,873
-
-
-
21,620
21,620
Cash at bank
and on hand
2022
$000
26,537
-
3,209
3,497
33,243
Demand deposits
and term deposits
with maturity less
than 3 months
2022
$000
55,000
-
409
-
55,409
A- to A+ rated
B- to B+ rated
C- to C+ rated
Unrated
Total cash and
cash equivalents
and other short-
term investments
2023
$000
20,708
-
4,017
51,768
76,493
Total cash and
cash equivalents
and other short-
term investments
2022
$000
81,537
-
3,618
3,497
88,652
For cash and cash equivalents, the Group assessed ECL based on the Moody’s rating for rated banks and
based on the sovereign rating of Ukraine defined by Standard & Poor's as “CCC” as at 31 December 2023
for non-rated banks. Based on this assessment, the Group concluded that the identified impairment loss
was immaterial.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
98
23. Trade and Other Payables
Taxation and social security
Trade payables
Accruals and other payables
Advances received
Group
Company
2023
$000
1,632
1,293
2,934
153
6,012
2022
$000
3,347
1,079
22,365
1,293
28,084
2023
$000
32
-
2,139
-
2,171
2022
$000
51
-
20,464
-
20,515
The carrying amounts of trade and other payables are assumed to be the same as their fair values, due to
their short-term nature. Financial payables are disclosed in Note 29.
24. Provision for Decommissioning
Group
At the beginning of the year
Amounts provided
Unwinding of discount
Change in estimate
Effect of exchange difference
At the end of the year
2023
$000
6,964
-
331
280
(270)
7,305
2022
$000
5,467
137
293
2,497
(1,430)
6,964
The provision for decommissioning is based on the net present value of the Group’s estimated liability for
the removal of the Ukrainian production facilities and well site restoration at the end of production life.
The non-current provision of $7,305,000 (31 December 2022: $6,964,000) represents a provision for the
decommissioning of the Group’s MEX-GOL, SV, VAS and SC production and exploration facilities, including
site restoration.
The change in estimates applied to calculate the provision as at 31 December 2023 is explained in Note 3.
The principal assumptions used are as follows:
31 December 2023
31 December 2022
Discount rate
Average cost of restoration per well ($000)
4.67%
339
4.76%
326
The sensitivity of the restoration provision to changes in the principal assumptions to the provision balance
and related asset is presented below:
Discount rate (increase)/decrease by 1%
Change in average cost of well restoration increase/
(decrease) by 10%
(1,005)/1,187
653/(653)
(561)/665
451/(451)
31 December 2023
$000
31 December 2022
$000
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
99
25. Deferred Tax
Deferred tax (liability)/asset recognised relating to oil and
gas development and production assets at the MEX-GOL-
SV fields and provision for decommissioning
At the beginning of the year
Charged to Income Statement - UK current year
Charged to Income Statement - UK prior year
Effect of exchange difference
At the end of the year
Deferred tax asset/(liability) recognised relating to
development and production assets at the VAS field and
provision for decommissioning
At the beginning of the year
Credited to Income Statement - overseas current year
Effect of exchange difference
At the end of the year
2023
$000
(3,232)
(1,941)
-
197
(4,976)
2023
$000
287
79
(14)
352
2022
$000
(5,197)
(1,852)
3,021
796
(3,232)
2022
$000
361
24
(98)
287
There was a further $77,523,000 (31 December 2022: $77,072,000) of unrecognised UK tax losses carried
forward for which no deferred tax asset in the amount of $19,380,750 has been recognised. These losses
can be carried forward indefinitely, subject to certain rules regarding capital transactions and changes in
the trade of the Company. However, as at the balance sheet date, there is no evidence that taxable profit
will be available against which the unused tax losses can be realised.
The deferred tax asset relating to the Group’s provision for decommissioning as at 31 December 2023 of
$555,000 (31 December 2022: $449,000) was recognised on the tax effect of the temporary differences of
the Group’s provision for decommissioning at the MEX-GOL and SV fields, and its tax base. The deferred
tax liability relating to the Group’s development and production assets at the MEX-GOL and SV fields as at
31 December 2023 of $5,531,000 (31 December 2022: $3,681,000) was recognised on the tax effect of the
temporary differences between the carrying value of the Group’s development and production asset at the
MEX-GOL and SV fields, and its tax base. The deferred tax liability will be settled more than twelve months
after the reporting period.
The deferred tax asset relating to the Group’s provision for decommissioning as at 31 December 2023 of
$280,000 (31 December 2022: $310,000) was recognised on the tax effect of the temporary differences on
the Group’s provision on decommissioning at the VAS field, and its tax base. The deferred tax asset relating
to the Group’s development and production assets at the VAS field as at 31 December 2023 of $72,000
(31 December 2022: deferred tax liability of $23,000) was recognised on the tax effect of the temporary
differences between the carrying value of the Group’s development and production asset at the VAS field,
and its tax base. The deferred tax assets are expected to be recovered more than twelve months after the
reporting period.
Losses accumulated in a Ukrainian subsidiary service company of UAH1,443,349,000 ($38,000,000) as at
31 December 2023 and UAH877,268,000 ($23,990,000) as at 31 December 2022 mainly originated as
foreign exchange differences on inter-company loans and for which no deferred tax asset was recognised
as this subsidiary is not expected to have taxable profits to utilise these losses in the future.
As at 31 December 2023 and 2022, the Group has not recorded a deferred tax liability in respect of taxable
temporary differences associated with investments in subsidiaries as the Group is able to control the timing
of the reversal of those temporary differences and does not intend to reverse them in the foreseeable future.
100
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
UK Corporation Tax change
The Corporation Tax rate of 19% effective at the beginning of the year, changed with effect from 1 April
2023, when it was replaced by variable rates ranging from 19% to 25%. A small profits rate of 19% applies
to companies whose profits are equal to or less than £50,000, while the main Corporation Tax rate of 25%
applies to companies with profits in excess of £250,000.
Double tax treaty
On 30 October 2019, the Parliament of Ukraine voted for ratification of a Protocol changing the Double Tax
Treaties between Ukraine and the United Kingdom. The Protocol and the new Treaty will enter into force
upon completion of ratification formalities, and for the purposes of withholding tax, commence applying
from 1 January 2020. The Group accrues and pays withholding tax on current amounts of interest at the
moment when such interest accrues and is paid.
26. Called Up Share Capital
Number
2023
$000
Number
2022
$000
Allotted, called up and fully paid
Opening balance as at 1 January
Issued during the year
Closing balance as at 31 December
320,637,836
-
320,637,836
28,115
-
28,115
320,637,836
-
320,637,836
28,115
-
28,115
There are no restrictions over ordinary shares issued. The Company is a public company limited by shares.
27. Other Reserves
The holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote
per share at any general meeting of shareholders.
Other reserves, the movements in which are shown in the statements of changes in equity, comprise the
following:
Capital contributions reserve
The capital contributions reserve is non-distributable and represents the value of equity invested in
subsidiary entities prior to the Company listing.
Merger reserve
The merger reserve represents the difference between the nominal value of shares acquired by the
Company and those issued to acquire subsidiary undertakings. This balance relates wholly to the
acquisition of Regal Petroleum (Jersey) Limited and that company’s acquisition of Regal Petroleum
Corporation Limited during 2002.
Foreign exchange reserve
Exchange reserve movement for the year attributable to currency fluctuations. This balance predominantly
represents the result of exchange differences on non-monetary assets and liabilities where the subsidiaries’
functional currency is not the US Dollar.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
101
28. Reconciliation of Operating Profit to Operating Cash Flow
Group
Operating profit
Depreciation and amortisation
Less interest income recorded within operating profit
Impairment of property, plant and equipment
Fines and penalties received
Gain on sales of current assets, net
Net (gain)/loss on sale of non-current assets
Change in working capital:
Increase in provisions
(Increase)/decrease in inventory
(Increase)/decrease in receivables
Increase/(decrease) in payables
Cash generated from operations
Company
Operating profit
Interest received
Change in working capital:
Movement in provisions (including impairment of subsidiary loans)
Decrease/(increase) in receivables
(Decrease)/increase in payables
Cash used in operations
29. Financial Instruments
Capital Risk Management
2023
$000
35,536
6,704
(4,578)
-
(1)
(5)
(1)
(492)
1,880
44,956
(21,052)
62,947
2023
$000
(16,994)
(1,661)
14,979
(754)
1,455
(2,975)
2022
$000
75,773
7,837
(1,888)
4,256
(114)
(20)
(44)
117
(1,480)
(56,849)
19,953
47,541
2022
$000
(8,112)
(2,740)
9,942
(316)
22,917
21,691
The Group defines its capital as equity. As at 31 December 2023, net assets were $162,121,000
(31 December 2022: $200,659,000). The primary source of the Group’s liquidity has been cash generated
from operations. The Group’s objectives when managing capital are to safeguard the Group’s and the
Company's ability to continue as a going concern in order to provide returns for shareholders and benefits
for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets.
The capital structure of the Group consists of equity attributable to the equity holders of the parent,
comprising issued share capital, share premium, reserves and retained earnings.
There are no capital requirements imposed on the Group.
Financial Risk Management
The Group’s financial instruments comprise cash and cash equivalents and various items such as debtors
and creditors that arise directly from its operations. The Group has bank accounts denominated in British
Pounds, US Dollars, Euros and Ukrainian Hryvnia. The Group does not have any external borrowings. The
main future risks arising from the Group’s financial instruments are currently currency risk, interest rate risk,
liquidity risk and credit risk.
102
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
The Group’s financial assets and financial liabilities comprise the following:
Financial Assets
Group
Cash and cash equivalents
Trade and other financial receivables
Company
Cash and cash equivalents
Loans to subsidiary undertakings
Financial Liabilities
Group
Lease liabilities
Trade and other payables
Other financial liabilities
Company
Trade and other payables
2023
$000
76,493
11,790
88,283
2023
$000
20,695
39,206
59,901
2023
$000
283
1,293
1,248
2,824
2023
$000
2,139
2,139
2022
$000
88,652
46,039
134,691
2022
$000
81,541
49,974
131,515
2022
$000
487
1,079
20,422
21,988
2022
$000
19,923
19,923
Financial assets and financial liabilities are measured at amortised cost, which approximates their fair value
as the instruments are mostly short-term. Assets and liabilities of the Group where fair value is disclosed
are level 2 in the fair value hierarchy and valued using the current cost accounting technique.
Financial instruments that potentially subject the Group to concentrations of credit risk consist primarily of
cash and cash equivalents and accounts receivable, and financial instruments that potentially subject the
Company to concentrations of credit risk consist primarily of cash and cash equivalents and loans to
subsidiary undertakings.
Currency Risk
The functional currencies of the Group’s entities are US Dollars and Ukrainian Hryvnia. The following
analysis of net monetary assets and liabilities shows the Group’s currency exposures. Exposures comprise
the monetary assets and liabilities of the Group that are not denominated in the functional currency of the
relevant entity.
Currency
British Pounds
US Dollars
Euros
Net monetary assets less liabilities
2023
$000
182
-
262
444
2022
$000
223
235
273
731
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
103
The Group’s exposure to currency risk at the end of the reporting period is not significant due to immaterial
balances of monetary assets and liabilities denominated in foreign currencies.
The sensitivity of the exchange rate of US Dollars is presented below:
31 December 2023
$000
31 December 2022
$000
Increase/(decrease) by 10%
-
23/(23)
The prior year comparative figures were amended to conform to the current year presentation.
Interest Rate Risk Management
The Group is not exposed to interest rate risk on financial liabilities as none of the entities in the Group
have any external borrowings. The Group does not use interest rate forward contracts and interest rate
swap contracts as part of its strategy.
The Group is exposed to interest rate risk on financial assets as entities in the Group hold money market
deposits at floating interest rates. The risk is managed by fixing interest rates for a period of time when
indications exist that interest rates may move adversely.
The Group’s exposure to interest rates on financial assets and financial liabilities are detailed in the liquidity
risk section below.
Interest Rate Sensitivity Analysis
The sensitivity analysis below has been determined based on exposure to interest rates for non-derivative
instruments at the balance sheet date. A 0.5% increase or decrease is used when reporting interest rate
risk internally to key management personnel and represents management’s assessment of a reasonably
possible change in interest rates.
If interest rates earned on money market deposits had been 0.5% higher / lower and all other variables
were held constant, the Group’s:
•
•
profit for the year ended 31 December 2023 would increase by $141,000 in the event of 0.5% higher
interest rates and decrease by $141,000 in the event of 0.5% lower interest rates (profit for the year
ended 31 December 2022 would increase by $97,000 in the event of 0.5% higher interest rates and
decrease by $97,000 in the event of 0.5% lower interest rates). This is mainly attributable to the
Group’s exposure to interest rates on its money market deposits; and
other equity reserves would not be affected (2022: not affected)
Interest payable on the Group’s liabilities would have an immaterial effect on the profit or loss for the year.
Liquidity Risk
The Group’s objective throughout the year has been to ensure continuity of funding. Operations have
primarily been financed through revenue from Ukrainian operations.
The table below shows liabilities by their remaining contractual maturity. The amounts disclosed in the
maturity table are the contractual undiscounted cash flows including future interest. Such undiscounted
cash flows differ from the amount included in the statement of financial position because the statement of
financial position amount is based on discounted cash flows and does not include the interest that will be
accrued in future periods.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
104
When the amount payable is not fixed, the amount disclosed is determined by reference to the conditions
existing at the reporting date. Foreign currency payments are translated using the spot exchange rate at
the end of the reporting period. The maturity analysis of financial liabilities as at 31 December 2023 is as
follows:
As at 31 December
2023
Liabilities
Trade and other
payables
Lease liabilities
Other non-current
liabilities
Total future
payments, including
future principal and
interest payments
On demand
and less than
1 month
$000
From 1
to
3 months
$000
From 3 to
12 months
$000
From
12 months
to 5 years
$000
More
than 5
years
$000
Total
$000
2,311
54
-
-
110
-
307
515
-
-
1,064
102
-
2,618
383
2,126
143
245
2,365
110
822
1,166
526
4,989
The maturity analysis of financial liabilities as at 31 December 2022 is as follows:
As at 31 December
2022
Liabilities
Trade and other
payables
Lease liabilities
Other non-current
liabilities
Total future payments,
including future
principal and interest
payments
On demand
and less than
1 month
$000
From 1 to
3 months
From 3 to
12 months
$000
$000
From
12 months
to 5 years
$000
More than
5 years
Total
$000
$000
21,194
29
-
21,223
-
60
-
60
307
284
-
-
492
106
- 21,501
367
1,232
170
276
591
598
537 23,009
Details of the Group’s cash management policy are explained in Note 22.
Liquidity risk for the Group is further detailed under the Principal Risks section above.
Credit Risk
Credit risk principally arises in respect of the Group’s cash balance. For balances held outside Ukraine,
where $20,695,000 of the overall cash and cash equivalents is held (31 December 2022: $81,537,000), the
Group only deposits cash surpluses with major banks of high quality credit standing (Note 22). As at
31 December 2023, the remaining balance of $55,786,000 of cash and cash equivalents was held in
Ukraine (31 December 2022: $7,115,000 of cash and cash equivalents was held in Ukraine). As at 31
December 2023, Standard & Poor’s affirmed Ukraine’s sovereign credit rating of ‘CCC’, Outlook Negative.
There is no international credit rating information available for the specific banks in Ukraine where the
Group currently holds its cash and cash equivalents.
The Group has taken steps to diversify its banking arrangements between a number of banks in Ukraine
and increased the quality of cash placed with UK and European banking institutions. These measures are
designed to spread the risks associated with each bank’s creditworthiness. Management considers the
credit risk to be immaterial.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
105
Interest Rate Risk Profile of Financial Assets
The Group had the following cash and cash equivalent balances which are included in financial assets as
at 31 December with an exposure to interest rate risk:
Currency
Euros
British Pounds
Ukrainian Hryvnia
US Dollars
Floating
rate
financial
assets
2023
$000
Fixed
rate
financial
assets
2023
$000
Total
2023
$000
Total
2022
$000
249
116
55,787
20,341
76,493
249
116
-
20,341
20,706
-
-
55,787
273
223
6,874
81,282
55,787 88,652
-
Floating
rate
financial
assets
2022
$000
Fixed
rate
financial
assets
2022
$000
273
223
-
81,282
81,778
-
-
6,874
-
6,874
Cash deposits included in the above balances comprise term deposits with maturity less than 3 months of
$21,620,000 and term deposits with maturity more than 3 months but less than a year of $nil (2022: term
deposits with maturity less than 3 months of $55,409,000 and term deposits with maturity more than 3
months but less than a year of $nil).
As at 31 December 2023, cash and cash equivalents of the Company of $20,695,000 were held in
US Dollars at a floating rate (2022: $81,046,000).
Interest Rate Risk Profile of Financial Liabilities
As at 31 December 2023 and 2022, the Group had no interest bearing financial liabilities.
Maturity of Financial Liabilities
The maturity profile of financial liabilities, on an undiscounted basis, is as follows:
Group
In one year or less
Company
In one year or less
Borrowing Facilities
2023
$000
2,824
2,824
2023
$000
2022
$000
21,988
21,988
2022
$000
2,139
2,139
19,923
19,923
As at 31 December 2023 and 2022, the Group did not have any borrowing facilities available to it.
Fair Value of Financial Assets and Liabilities
The fair value of all financial instruments is not materially different from their book value.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
106
30. Contingencies and Commitments
Amounts contracted in relation to the Group’s 2023 investment programme in the MEX-GOL, SV, VAS and
SC fields in Ukraine, but not provided for in the financial statements at 31 December 2023, were $118,000
related to Oil and Gas Exploration and Evaluation assets and $597,000 related to Oil and Gas Development
and Production assets (2022: $156,000 related to Oil and Gas Exploration and Evaluation assets and
$8,607,000 related to Oil and Gas Development and Production assets).
Since 2010, the Group has been in dispute with the Ukrainian tax authorities in respect of VAT receivables
on imported leased equipment, with a disputed liability of up to UAH8,487,000 ($302,000) inclusive of
penalties and other associated costs. There is a level of ambiguity in the interpretation of the relevant tax
legislation, and the position adopted by the Group has been challenged by the Ukrainian tax authorities,
which has led to legal proceedings to resolve the issue. The Group had been successful in three court
cases in respect of this dispute in courts of different levels. On 20 September 2016, a hearing was held in
the Supreme Court of Ukraine of an appeal of the Ukrainian tax authorities against the decision of the
Higher Administrative Court of Ukraine, in which the appeal of the Ukrainian tax authorities was upheld. As
a result of this appeal decision, all decisions of the lower courts were cancelled, and the case was remitted
to the first instance court for a new trial. On 1 December 2016 and 7 March 2017 respectively, the Group
received positive decisions in the first and second instance courts, but no appointment of hearings has
been settled yet. No liability has been recognised in these consolidated financial statements for the year
ended 31 December 2023 (31 December 2022: nil), as the Group has been successful in previous court
cases in respect of this dispute in courts of different levels, the date of the next legal proceedings has not
been set and as management believes that adequate defences exist to the claim.
31. Related Party Disclosures
Key management personnel of the Group are considered to comprise only the Directors. Details of
Directors’ remuneration are disclosed in Note 7.
During the year, Group companies entered into the following transactions with related parties who are not
members of the Group:
Total
2023
$000
19,409
689
1
48
LLC
Smart
Energy
2023
$000
19,408
306
-
10
Sale of goods/services
Purchase of goods/services
Amounts owed by related parties
Amounts owed to related parties
Other
Total
2023
$000
2022
$000
LLC
Smart
Energy
2022
$000
1 113,787 113,741
571
56,227
20,576
1,061
56,230
20,603
383
1
38
Other
2022
$000
46
490
3
27
All related party transactions were with subsidiaries of the ultimate Parent Company, and primarily relate
to the sale of gas (see Note 4 for more details), the rental of office facilities and a vehicle and the sale of
equipment. The amounts outstanding were unsecured and will be settled in cash.
As at the date of this report, none of the Company’s controlling parties prepares consolidated financial
statements available for public use.
32. Post Balance Sheet Events
The ongoing war in Ukraine means that the fiscal, economic and humanitarian situation in Ukraine is
unstable and extremely challenging and the final resolution and consequences of the ongoing war are hard
to predict, but they may have a further serious impact on the Ukrainian economy and business of the Group.
Management continues to identify and mitigate, where possible, the impact on the Group, but the majority
of these factors are beyond their control, including the duration and severity of war, as well as the further
actions of various governments and diplomacy.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
107
33. Auditor’s Limitation Liability Agreement
It is proposed that an Auditor’s Limitation of Liability Agreement in respect of the financial year ended 31
December 2023 between the Company and Zenith Audit Ltd will be entered into following shareholders
approval being obtained at the next Annual General Meeting of the Company. The principal terms and
conditions of such Agreement are set out below:
- The Agreement limits the amount of any liability owed to the Company by the Auditor in respect of any
negligence, default, breach of duty or breach of trust, occurring in the course of the audit of the
Company's financial statements for the year ended 31 December 2023, for which the Auditor may
otherwise be liable to the Company.
- The Agreement also stipulates the maximum aggregated amount payable in event of any of the
circumstances stated above.
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
108
Corporate Information
Company Secretary and Registered Office
Chris Phillips
16 Old Queen Street
London SW1H 9HP
United Kingdom
Independent Auditor
Zenith Audit Ltd
1st Floor
18 Devonshire Row
London EC2M 4RH
United Kingdom
Nominated Adviser
Strand Hanson Limited
26 Mount Row
London W1K 3SQ
United Kingdom
Broker
Zeus Capital Limited
125 Old Broad Street
London EC2N 1AR
United Kingdom
PR Adviser
Citigate Dewe Rogerson
8th Floor
Holborn Gate
26 Southampton Buildings
London WC2A 1AN
United Kingdom
Solicitors
Squire Patton Boggs (UK) LLP
60 London Wall
London EC2M 5TQ
United Kingdom
Share Registry
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZY
United Kingdom
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
109
Glossary
AAPG
Arkona
bbl
bbl/d
Bm3
boe
boepd
Bscf
Company
D&M
€
Group
km
km2
LPG
MEX-GOL
m3
m³/d
Mboe
Mm³
MMbbl
MMboe
MMm3
MMscf
MMscf/d
Mtonnes
%
QCA Code
QHSE
SC
scf
SPE
SPEE
SV
Tscf
$
UAH
VAS
VED
WPC
American Association of Petroleum Geologists
LLC Arkona Gas-Energy
barrel
barrels per day
thousands of millions of cubic metres
barrels of oil equivalent
barrels of oil equivalent per day
thousands of millions of scf
Enwell Energy plc
DeGolyer and MacNaughton
Euro
Enwell Energy plc and its subsidiaries
kilometre
square kilometre
liquefied petroleum gas
Mekhediviska-Golotvshinska
cubic metres
cubic metres per day
thousand barrels of oil equivalent
thousand cubic metres
million barrels
million barrels of oil equivalent
million cubic metres
million scf
million scf per day
thousand tonnes
per cent.
Quoted Companies Alliance Corporate Governance Code 2018
quality, health, safety and environment
Svystunivsko-Chervonolutskyi
standard cubic feet measured at 20 degrees Celsius and one
atmosphere
Society of Petroleum Engineers
Society of Petroleum Evaluation Engineers
Svyrydivske
trillion scf
United States Dollar
Ukrainian Hryvnia
Vasyschevskoye
Vvdenska
World Petroleum Council
Enwell Energy plc - Annual Report and Financial Statements for the year ended 31 December 2023
110