TULIP OIL NETHERLANDS OFFSHORE B.V.

Transcription

1 H HALF YEARLY REPORT FOR TULIP OIL NETHERLANDS OFFSHORE B.V. The Hague, 28 February 2018 All Statements contained in this document are subject to legal disclaimer and risk factors detailed in Appendix A. Forward-looking statements in this report reflect current views about future events and are, by their nature, subject to significant risks as detailed and uncertainties because they relate to events and depend on circumstances that will occur in the future.

2 Important information and disclaimer THIS REPORT (THE REPORT ) CONTAINS FINANCIAL INFORMATION (THE FINANCIAL INFORMATION ), OPERATIONAL, LEGAL AND OTHER INFORMATION CONCERNING TULIP OIL NETHERLANDS B.V. (THE COMPANY ) AND ITS BUSINESS. THE REPORT HAS BEEN PREPARED BY OR AT THE DIRECTION OF THE COMPANY FOR INFORMATION PURPOSES ONLY. THE INFORMATION CONTAINED IN THIS REPORT MAY INCLUDE RESULTS OF ANALYSES FROM A QUANTITATIVE MODEL THAT MAY REPRESENT POTENTIAL FUTURE EVENTS THAT MAY OR MAY NOT BE REALIZED, AND IS NOT A COMPLETE ANALYSIS OF EVERY MATERIAL FACT RELATING TO THE COMPANY OR ITS BUSINESS. THIS REPORT CONTAINS PROJECTIONS AND FORWARD LOOKING STATEMENTS. THE WORDS BELIEVE, EXPECT, COULD, MAY, ANTICIPATE, INTEND AND PLAN AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THE REPORT, INCLUDING, WITHOUT LIMITATION, THOSE REGARDING THE FINANCIAL INFORMATION, THE COMPANY S FINANCIAL POSITION, POTENTIAL BUSINESS STRATEGY, POTENTIAL PLANS AND POTENTIAL OBJECTIVES, ARE FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE COMPANY S ACTUAL RESULTS, PERFORMANCE, ACHIEVEMENTS AND VALUE TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE, ACHIEVEMENTS OR VALUES EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE IN THE FUTURE. NO WARRANTY OR REPRESENTATION IS GIVEN BY THE COMPANY OR ANY OF ITS REPRESENTATIVES AS TO THE REASONABLENESS OF THESE ASSUMPTIONS. FURTHER, CERTAIN FORWARD-LOOKING STATEMENTS ARE BASED UPON ASSUMPTIONS OF FUTURE EVENTS THAT MAY NOT PROVE TO BE ACCURATE. THE FORWARD-LOOKING STATEMENTS IN THE FINANCIAL INFORMATION SPEAK ONLY AS AT THE DATE OF THE FINANCIAL INFORMATION AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE OR PROVIDE ANY ADDITIONAL INFORMATION IN RELATION TO SUCH FORWARD-LOOKING STATEMENTS. NOTHING IN THIS REPORT IS, OR SHOULD BE CONSTRUED AS, A PROFIT FORECAST. BY ATTENDING OR RECEIVING THIS REPORT, YOU ACKNOWLEDGE THAT YOU WILL BE SOLELY RESPONSIBLE FOR FORMING YOUR OWN VIEW OF THE POTENTIAL FUTURE PERFORMANCE OF THE COMPANY. 2

3 HIGHLIGHTS IN 2017 CONTENTS + 79mln Cash and cash equivalents Key events in H Summary of financial results 5 Summary of the second half year 6 Financial review 7 49mln Available fiscal losses ( 37mln in CIT and 12mln in SPS) Financial statements with notes 10 Income statement 11 Statement of financial position 12,13 Statement of changes in equity 14 Statement of cash flow 15 Notes to the financial statements 16 Appendix 1 Risk Factors 23 FID on Q10 gas field Read more in the press release 87 million Bond issue Read more in the press release All figures are presented in unless otherwise stated, and figures in brackets apply to the corresponding period in the previous period (H1 2017). 3

4 KEY EVENTS IN H July October 2017 October 2017 November 2017 December 2017 Production licence awarded for Q07/Q10a Company secures 87 million Senior Secured Callable bond financing on Oslo Børs Re-Capitalisation of loans from TON B.V. to TONO B.V. Tendering for the Q10 Platform, Platform and Drilling Rig P15 Export Route selected and FEED Commenced KEY EVENTS - OUTLOOK 1 January January January /22 January 2018 Tulip Oil Holding B.V. board expanded Final Investment Decision related to the development of the Q10 gas field Heads of Agreement signed with TAQA for the hook-up, transportation and processing of Q10 production Contracts awarded for the Q10 development for pipeline and production platform to Allseas and Heerema Fabrication Group Respectively. Survey and trenching boat for pipeline 4

5 SUMMARY OF FINANCIAL RESULTS 2017 Unaudited FY 2016 Audited FY ( 1000) H H Operating profit/(loss) (1,376.9) (567.9) (1,944.8) (7,098.6) EBITDA (1,376.9) (506.2) (1,883.1) (1,336.9) Net profit/(loss) for the period (2,225.3) (997.8) (3,223.1) (1,912.6) Cash flow from operations (1,905.3) (2,340.0) (4,245.3) (2,338.0) Cash flow from investments (358.2) (97.2) (455.4) (6,461.6) Total assets 113, , , ,459.9 Net interest-bearing debt (book value) 93, , , ,651.6 Cash and cash equivalents 79, ,

6 SUMMARY OF THE SECOND HALF YEAR 2017 On the 11 January 2018, the Board of Tulip Oil Netherlands Offshore BV ( the company or TONO ) approved to take final investment decision ( FID ) on the Q10 project. This marked the successful conclusion to many successful actions throughout 2017 to allow Tulips Partner EBN and the board of Tulip to approve the commencement of the Q10 Project for Development. The company will now proceed with developing the field which is expected to become a major offshore producing asset in the Netherlands. The Q10 gas field development will encompass an unmanned offshore platform (Q10-A) with a pipeline tie back to the TAQA operated P15d platform to the south west of the platform. First gas is expected in Tulip's first exploration well in Q10 Q10 is located close to shore, 20km offshore The Netherlands in water depth of 24m. The company is now looking at a low risk, off-the-shelf 5 well developed envisaged over a 35 year life of field time span. The project main components will be executed under EPCI contracts. The pipeline scope has been awarded to Allseas and the production platform scope to Heerema Fabrication Group. The output is seen as a positive contributor to the Dutch economy and will contribute to offset production reductions from other assets in the Netherlands. TAQA operated P15-D Platform The successful placement of a 87m bond which will soon be traded on the Oslo Børs, has helped create solid foundations for the company to move ahead with this project in a timely manner and deliver first gas. EBITDA for H (H1 2017) amounted to a loss of 1,376.9 (loss of 506.2) thousand and EBIT was a loss of 1,376.9 (loss of 567.9) thousand. Net profit/(loss) for the period was a loss of 2,225.3 (loss of 997.8) thousand. Interest bearing debt amounted to 93,322.2 ( 29,726.6) thousand at 31 December 2017 comprising of both the bond and the intercompany loan from Tulip Oil Netherlands BV. Fiscal corporate tax losses at 31 December 2017 amounted to 12,279.4 thousand and fiscal state profit share losses amounted to 37,471.2 thousand. 3D design view of the proposed Q10 platform 6

7 FINANCIAL REVIEW INCOME STATEMENT ( 1000) H H Total income - - EBITDA (1,376.9) (506.2) EBIT (1,376.9) (567.9) Net financial items (2,496.2) (1,202.4) Profit/(loss) before (3,873.1) (1,770.3) taxes Taxes 1, Net profit/(loss) for the period (2,225.3) (997.8) STATEMENT OF FINANCIAL POSITION ( 1000) H H Intangible fixed assets 17, ,063.7 PPE 14, ,765.1 Cash and cash 79, equivalents Net working capital (1,794.9) 77.8 Total assets 113, ,020.2 Equity 16,365.8 (1,925.5) Interest bearing debt 93, ,726.6 Other operating expenses amounted to 1,365.4 ( 358.1) thousand. The increase in the second half is as a result of the company preparing for the Q10 development. There is no depreciation or impairment in the period. The previous period included an impairment of 61.7 thousand related to the previous wells write off (Q07-07). The company recorded a higher operating loss of 1,376.9 (loss of 567.9) thousand in the second half period in line with the company preparing for Q10 development. The net loss for the period was 2,225.3 ( 997.8) thousand after net financial items of -2,496.2 ( -1,202.4) thousand and a tax credit of 1,647.8 ( 772.5) thousand. Total intangible assets amounted to 17,514.7 ( 14,063.7) thousand, of which deferred tax assets were 15,711.5 ( 14,063.7) thousand. This increase arises from the recording of a future liability on the Q10 development licence. Total available fiscal corporation tax losses amount to 12,279.4 thousand and fiscal state profit share losses amount to 37,471.2 thousand. Property, plant and equipment increased to 14,037.0 ( 13,765.1) thousand, reflecting investments in the Q10 development on pre FEED studies. The group s cash and cash equivalents were 79,386.3 ( 45.2) thousand as of 31 December Total assets were 113,870.9 ( 28,020.2) thousand at the end of the year. Equity amounted to 16,365.8 ( -1,925.5) thousand at the end of the year, corresponding to an equity ratio of 14.4% (-6.9%) percent. The improvement is resulting from additional share premium injected into the company following a loan equity swap. Interest-bearing debt increased to 93,322.2 ( 29,726.6) thousand, consisting of the TULIP bond of 85,322.2 thousand and intercompany loans of 8,000.0 thousand. 7

8 CASHFLOW STATEMENT ( 1000) H H Cash flow from operations Cash flow from investing Cash flow from financing Net change in cash and cash eq. Cash and cash eq. end of period (1,905.3) (2,340.0) (358.2) (97.2) 81, , ,341.1 (362.2) 79, Net cash flow from operating activities was - 1,905.3 ( -2,340.0) thousand. Net cash flow from investment activities was ( -97.2) thousand. Investments in fixed assets amounted to ( 97.2) thousand for the second half year period, mainly reflecting capital expenditures ( CAPEX ) on pre FEED studies for the Q10 development. Net cash flow from financing activities in the second half year principally consisted of the bond placement raising funds of 85,322.2 thousand less legal and other costs for setup of 2,507.6 thousand. The discount on the bond is being amortised over the term of the bond. Funding At the end of the year, the company had total available liquidity of 79,386.3 ( 45.2) thousand, comprising of cash and cash equivalents of 8,529.2 ( 45.2) thousand and restricted cash and cash equivalents of 70,857.1 ( Nil) thousand. The restricted cash and cash equivalents partly relates to the payment of the first six quarters of interest payable on the bond. The balance is linked to the approval of the Q10 project and is available to be drawn down in tranches based on set criteria and timing. In October 2017, the company priced senior secured notes offering of 87 million aggregate principal amount due in 2022 at par in a bullet manner. The coupon rate on the bond amounts to 3 month EURIBOR + 8.5% p.a. with interest payable quarterly. The offering was closed on 25 October

9 FINANCIAL STATEMENTS WITH NOTES 9

10 INCOME STATEMENT Unaudited Unaudited Unaudited Audited H2 H ( 1000) Note Petroleum revenues Total Income Exploration expenses 2 - (0.7) (0.7) (4.7) Production costs (11.5) (147.4) (158.9) (149.9) Depreciation Impairments 3,5 - (61.7) (61.7) (5,761.6) Other operating expenses (1,365.4) (358.1) (1,723.5) (1,182.4) Total operating expenses (1,376.9) (567.9) (1,944.8) (7,098.6) Operating profit/(loss) (1,376.9) (567.9) (1,944.8) (7,098.6) Interest income Other financial income Interest expenses (2,339.5) (1,197.9) (3,537.4) (1,705.7) Other financial expenses (156.8) (4.5) (161.3) - Net financial items 6 (2,496.2) (1,202.4) (3,698.6) (1,705.7) Profit/(loss) before taxes (3,873.1) (1,770.3) (5,643.4) (8,804.3) Tax (charge)/credit 7 1, , ,891.7 Net profit/(loss) for the period (2,225.3) (997.8) (3,223.1) (1,912.6) Net profit/(loss) for the period is attributable to: Tulip Oil Netherlands Offshore B.V. (2,225.3) (997.8) (3,223.1) (1,912.6) STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Unaudited Audited H2 H ( 1000) Note Net profit/(loss) for the period (2,225.3) (997.8) (3,223.1) (1,912.6) Total comprehensive income in (2,225.3) (997.8) (3,223.1) (1,912.6) period 10

11 STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited H2 H1 ( 1000) Note ASSETS Intangible assets Other intangible assets 4 1, Deferred tax assets 7 15, , ,291.2 Tangible fixed assets Property, plant and equipment 5 14, , ,729.6 Financial assets Other non-current financial assets 2, Total non-current assets 33, , ,020.8 Inventories Inventories Receivables Accounts receivable Other short-term receivables Cash and cash equivalents Cash and cash equivalents * 9 79, Total current assets 79, ,439.1 TOTAL ASSETS 113, , ,459.9 *including restricted cash and cash equivalents 11

12 STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited H2 H1 ( 1000) Note EQUITY AND LIABILITIES Equity Share capital Share premium 20, Retained earnings (4,150.8) (1,925.5) (927.7) Total equity 16,365.8 (1,925.5) (927.7) Non-current liabilities Deferred taxes Long-term abandonment provision Long-term bonds 11 85, Interest-bearing loans from affiliates 12 8, , ,651.6 Other non-current liabilities 1, Current liabilities Trade creditors ,347.2 Accrued expenses Liabilities against affiliates Tax payable Other current financial liabilities 13 1, Total liabilities 97, , ,387.6 TOTAL EQUITY AND LIABILITIES 113, , ,

13 STATEMENT OF CHANGES IN EQUITY (Unaudited) ( 1000) Share capital Share premium Retained earnings Total equity Equity as of (927.7) (927.7) Profit/(loss) for the period - - (997.8) (997.8) Equity as of (1,925.5) (1,925.5) Share premium injection 20, ,516.6 Profit/(loss) for the period - - (2,225.3) (2,225.3) Equity as of ,516.6 (4,150.8) 16,

14 STATEMENT OF CASH FLOW Unaudited Unaudited Unaudited Audited H2 H ( 1000) Note CASH FLOW FROM OPERATING ACTIVITIES Profit/(loss) before taxes (3,873.1) (1,770.3) (5,643.4) (8,804.3) Net financial items 2, , , ,705.7 Taxes paid during the period Depreciation Impairment losses ,761.7 Interest paid: Interest expenses (2,496.2) (1,202.4) (3,698.6) (1,705.7) Accretion expenses Change in other current financial liabilities 1, , Amortisation of legal bond costs Decrease/(increase) in trade and other receivables (369.3) (1,032.0) Decrease/(increase) in trade, other payables and (1,521.4) (614.1) 1,736.6 provisions (Increase)/decrease in inventories NET CASH FLOW FROM OPERATING ACTIVITIES (1,905.3) (2,340.0) (4,245.3) (2,338.0) CASH FLOW FROM INVESTMENT ACTIVITIES Payments to acquire tangible fixed assets (358.2) (97.2) (455.4) (6,461.6) NET CASH FLOW FROM INVESTMENT ACTIVITIES (358.2) (97.2) (455.4) (6,461.6) CASH FLOW FROM FINANCING ACTIVITIES Loans received from affiliates , , ,207.0 Loans repaid to affiliate (2,000.0) - (2,000.0) - Bond setup costs paid (2,507.6) - (2,507.6) - Net proceeds from issuance of bond 85, , NET CASH FLOW FROM FINANCING ACTIVITIES 81, , , ,207.0 Net change in cash and cash equivalents 79,341.1 (362.2) 78, Cash and cash equivalents at start of period CASH AND CASH EQUIVALENTS AT END OF PERIOD 79, ,

15 NOTES TO THE FINANCIAL STATEMENTS (Unaudited) (All figures in 1000 unless otherwise stated) These interim financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted by the EU ("IFRS") IAS 34 "Interim Financial Reporting". Thus the interim financial statements do not include all information required by IFRS and should be read in conjunction with the company s annual financial statements as at 31 December The interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the dates and interim periods presented. Interim period results are not necessarily indicative of results of operations or cash flows for an annual period. These interim financial statements have not been subject to review or audit by independent auditors. These interim financial statements were authorized for issue by the Company s Board of Directors on 28 February Note 1 Accounting principles The accounting principles used for this interim report are consistent with the principles used in the Company s (Tulip Oil Netherlands Offshore B.V.) annual financial statements as at 31 December There are no new standards effective from 1 January In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Company s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual financial statements as at 31 December Note 2 Exploration expenses Unaudited Unaudited Unaudited Audited H2 H ( 1000) Note Other exploration expenses Total exploration expenses Note 3 Impairments Impairment testing Impairment tests of individual cash-generating units are performed when impairment triggers are identified. No triggers have been identified during the second half of The Q10 development took Final Investment Decision on 11 January

16 Note 4 Intangible assets INTANGIBLE FIXED ASSETS Unaudited ( 1000) Licenses* Book value Acquisition cost Additions - Disposals - Reclassification - Acquisition cost Accumulated depreciation and impairments Depreciation - Impairment - Retirement/transfer depreciations - Accumulated depreciation and impairments Book value Acquisition cost Additions* 1,803.2 Disposals - Reclassification - Acquisition cost ,803.2 Accumulated depreciation and impairments Depreciation - Impairment - Retirement/transfer depreciations - Accumulated depreciation and impairments Book value ,803.2 *see note 14 16

17 Note 5 Tangible fixed assets TANGIBLE FIXED ASSETS Unaudited Unaudited Unaudited Unaudited ( 1000) Assets under construction Production facilities including wells Fixtures and fittings, office equipment Total Book value , ,729.6 Acquisition cost , ,491.2 Additions Disposals Reclassification Acquisition cost , ,588.4 Accumulated depreciation and impairments (5,761.6) - - (5,761.6) Depreciation Impairment (61.7) - - (61.7) Retirement/transfer depreciations Accumulated depreciation and impairments (5,823.3) - - (5,823.3) Book value , ,765.1 Acquisition cost , ,588.4 Additions Disposals (86.2) - - (86.2) Reclassification Acquisition cost , ,860.3 Accumulated depreciation and impairments (5,823.3) - - (5,823.3) Depreciation Impairment Retirement/transfer depreciations Accumulated depreciation and impairments (5,823.3) - - (5,823.3) Book value , ,

18 Unaudited Unaudited Unaudited Audited H2 H Depreciation in the Income statement ( 1000) Depreciation of tangible fixed assets Depreciation of intangible assets Total depreciation in the Income statement Impairment in the Income statement ( 1000) Impairment/(reversal) of tangible fixed assets ,761.6 Total impairment in the Income statement ,761.6 Note 6 Financial items Unaudited Unaudited Unaudited Audited H2 H ( 1000) Interest income (0.1) - (0.1) - Total interest income (0.1) - (0.1) - Interest expenses 1, , Interest on loans from affiliates 1, , , ,705.7 Capitalized interest cost, development projects Total interest expenses 2, , , ,705.7 Bond discount unwinding Accretion expenses Amortized loan costs Total other financial expenses Net financial items 2, , , ,

19 Note 7 Taxes Unaudited Unaudited Unaudited Audited H2 H Taxes for the period ( 1000) Calculated current year tax Change in deferred taxes* 1, , ,891.7 Prior period adjustments Tax (charge)/credit 1, , ,891.7 *H1 has been estimated based on full year effective tax rate Deferred taxes for the period ( 1000) Unaudited Tax losses Provisions Other Total At 1 January , , ,399.5 (Charged)/credited to: Profit and loss account 6, ,891.7 At 31 December , , ,291.2 (Charged)/credited to: Profit and loss account At 30 June , , ,063.7 (Charged)/credited to: Profit and loss account 1, ,647.8 At 31 December , , ,711.5 Note 8 Other short-term receivables Unaudited Unaudited Unaudited ( 1000) Prepayments VAT receivable Total other short-term receivables

20 Note 9 Cash and cash equivalents The item 'Cash and cash equivalents' consists of bank accounts and bond related restricted cash balances. The restricted funds relate to four quarters of interest payments on the bond and the remaining amount relates to funds available in specified tranches after final investment decision. Final investment decision of the project was taken on 11 January Unaudited Unaudited Unaudited ( 1000) Cash in hand Bank accounts 8, Restricted funds 70, Cash and cash equivalents 79, Note 10 Provision for abandonment liabilities Unaudited Unaudited Unaudited ( 1000) Provisions as of beginning of the period Accretion expense - present value calculation Change in estimates* (86.3) Total provision for abandonment liabilities Break down of the provision to short-term and longterm liabilities Short-term Long-term Total provision for abandonment liabilities * The change in estimates are mainly related to a review undertaken on abandonment in the context of actual experience on other fields in the Tulip Oil Holding B.V. Group. The estimate is based on executing a concept for abandonment in accordance with the Petroleum Activities Act and international regulations and guidelines. The calculations assume an inflation rate of 2.5% and a discount rate before tax of 8.50%. Note 11 Bonds Unaudited Unaudited Unaudited ( 1000) TULIP Senior secured bond ** 85, Long-term bonds 85, ** The loan is denominated in and runs from October 2017 to September 2022 and carries an interest rate of 3 month EURIBOR + 8.5%. The principal falls due on September 2022 and interest is paid on a quarterly basis. For the issue of this bond, Tulip Oil Netherlands Offshore B.V. has issued a first priority Norwegian law pledge over the bank accounts related to the servicing of the debt and a receivables pledge over its insurances, other bank accounts, sale of hydrocarbons and any loans granted to other companies. 20

21 Note 12 Interest bearing loans from affiliates Unaudited Unaudited Unaudited ( 1000) Balance at the beginning of the period 29, , ,445.0 Movements during the year: Additions , ,206.6 Repayments (2,000.0) - - Conversion from loan to equity (20,516.6) - - Balance at the end of the period 8, , ,651.6 Note 13 Other current financial liabilities Unaudited Unaudited Unaudited ( 1000) Interest due on TULIP bond 1, Total other current financial liabilities 1, Note 14 Contingent liabilities During 2016 Tulip Oil Netherlands Offshore B.V. recorded a contingent liability inherited from Tulip Oil Netherlands B.V. s acquisition of the Q7-Q10 license from PA Resources Ltd for an amount of GBP 1.6 million. In late 2017 this amount has been recorded as an other non-current liability given approval of the project in January Note 15 Guarantees On 25 October 2017 Tulip Oil Netherlands Offshore B.V. has entered into a Senior Secured Callable Bond Issue (hereafter Bond ) agreement for the amount of 87 million. Tulip Oil Netherlands Offshore B.V. is the issuer of the Bond and Tulip Oil Netherlands B.V. is a Guarantor. For the first Escrow Account Release the following securities are given by Tulip Oil Netherlands B.V.: - A Dutch law pledge over the entire share capital of Tulip Oil Netherlands Offshore B.V. (which, i.a., will contain an undertaking to pledge future shares); - A Dutch law receivables pledge over all Subordinated Loans to Tulip Oil Netherlands Offshore B.V. (which, i.a., will contain an undertaking to pledge future Subordinated Loans); - A Norwegian law personal guarantee. 21

22 Appendix 1 Risk Factors The Company's activities expose it to a variety of operational and financial risks, including without limitation, general oil and gas industry risks, specific risks related to the business, credit risk, currency risk, interest risk and liquidity risk. The half year financial do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Company s audited annual financial statements as at 31 December There have been no significant changes in any risk management policies since year end. 22