ECORA RESOURCES PLC

Annual Report • Jun 30, 2023

National Storage Mechanism | Additional information

RNS Number : 4614E

Wentworth Resources PLC

30 June 2023

PRESS RELEASE                                                                                                                                            30 June 2023

WENTWORTH RESOURCES PLC

("Wentworth" or the "Company")

Final Results for the Year Ended 31 December 2022

Wentworth (AIM: WEN), the independent, Tanzania-focused natural gas producer is pleased to announce its audited financial results for the year ended 31 December 2022. All values are expressed in US dollars unless stated otherwise.

Wentworth confirms, following release of its 2022 Financial Results today that both its 2022 Annual Report and Sustainability Report will be available shortly on the Company's website at www.wentplc.com.

On 5 December 2022, the boards of Wentworth and Établissements Maurel & Prom S.A. ("M&P") announced that they had reached agreement on the terms of a recommended all cash offer by M&P for the entire issued, and to be issued, share capital of Wentworth (the "Acquisition"). The outcome of the Acquisition is still pending and as such details of Wentworth's 2023 Annual General Meeting ("AGM") will be announced in due course. It is anticipated that the AGM will be held no later than 15 December 2023.

HIGHLIGHTS

2023 Outlook

·    2023 production guidance increased to 90 - 100 MMscf/d for Mnazi Bay, up from previous guidance 85 - 95 MMscf/d issued in March 2023 (2022 production 90 MMscf/d)

·    The contracted price for gas produced at Mnazi Bay has increased from $3.44/MMbtu to $3.71/MMbtu; effective from 1 January 2023

·    Balance sheet strengthened; remaining debt free with current cash (as at 15 June 2023) of $38 million

·    The Company anticipates, given the absence of recent investment in the Mnazi Bay field and continued cost recovery, that H2 2023 production will include significant periods where costs have been fully recovered, leading to substantially lower revenues

·    The Government's re-examination of the historic cost pool audit for the years 2013 - 2015 is ongoing; any reduction in the current expected cost pool balance as a result is likely to further impact revenue going forward 

·    Continued strong track record of safe operations; no LTIs reported in 2023 to date

Financial

·    Mnazi Bay gas sales revenue of $30.8 million, an increase of 30% (2021: $23.8 million), underpinned by long-term fixed gas price contracts and strong production

·    Adjusted earnings before interest, tax, depreciation and amortisation ("EBITDAX") of $25.7 million, an increase of 89% (2021: $13.6 million) excluding non-recurring expenses of $335k (2021: $502k)

·    E&E and PPE assets impairment of $25.0 million (2021: nil) driven by technical accounting revision in light of the pending Acquisition resulting in net loss of $13 million for 2022 (2021: net profit of $6.1 million)

·    Debt free with total cash at year-end of $30.9 million (2021: $22.8 million)

·    Strong balance sheet, together with the enhanced operational performance of the Mnazi Bay gas field supported the Company's ongoing dividend programme, with an interim dividend declared of $1.45 million, up 10% from H1 2021

·    Whilst a final dividend for FY22 would normally be declared, this is currently suspended pending the outcome of the Acquisition; should the Acquisition not proceed, the Board intend to consider reinstating a final dividend for FY22

Operational

·    No Lost Time Incidents ("LTI") in 2022, with a total of 6 years and 151 days without an LTI

·    2022 average gross daily gas production increased by 10% to 90.0 MMscf/d from 81.6 MMscf/d in 2021, higher than mid-year guidance

·    Gross 2P Reserves of 137 Bscf as at 31 December 2022 (2021: 135.2 Bscf)

Corporate

·    In December 2022, the Company announced it had reached agreement on the terms of a recommended acquisition by M&P (Wentworth's JV partner and operator of the Mnazi Bay Gas Production Facility) of the entire issued and to be issued share capital of Wentworth

·    The Acquisition was approved by Wentworth Shareholders at the Court Meeting and the General Meeting which were held on 23 February 2023, but remains subject to the satisfaction or (where capable of being waived) waiver of the other conditions to the Acquisition as set out in Part III (Conditions to and certain further terms of the Acquisition and the Scheme) of the Scheme Document

·    Representatives of the Company and M&P attended a preliminary hearing before the Fair Competition Commission (the "FCC") (the "Hearing") in Tanzania on 7 June 2023, at which various Tanzanian governmental parties were present.  A number of concerns were raised at the Hearing, which may impact the likelihood of the FCC approving the Acquisition in its current form. A ruling is expected within the coming weeks

·    On 9 June 2023, the Company received a letter from TPDC in which TPDC notified Wentworth Gas Limited, the Company's main operating subsidiary, of its decision purportedly to exercise its right of first refusal in respect of Wentworth's interest in the Mnazi Bay asset pursuant to section 86 (7) of the Tanzanian Petroleum Act, Cap 392 (the "ROFR")

·    M&P and Wentworth intend to consult with relevant Tanzanian government stakeholders about how the above concerns may be satisfactorily addressed and how TPDC intends the ROFR to apply to the Acquisition

·    There can be no certainty that the Acquisition conditions will be satisfied or (where capable of being waived) waived by M&P. In the light of these developments the Company now expects that, if the conditions are satisfied or (where capable of being waived) waived by M&P, the Acquisition will complete in H2 2023 

Sustainability

·    Commenced ESG reporting alignment with Taskforce on Climate-related Financial Disclosures ("TCFD")

·    4.1 million tonnes saved in CO2 emissions from the use of natural gas from Mnazi Bay compared to diesel over the life of the Mnazi Bay gas production project

·    5.6 billion litres of diesel and heavy fuel oils displaced by natural gas from Mnazi Bay Concession over the life of the Mnazi Bay gas production project

·    The Company reduced its Scope 1 emissions by 8% from 2021, to 428t CO2e

·    Wentworth's carbon intensity per boe of 0.29 kg CO2e/boe is one of the lowest reported in the London E&P sector

·    Continued commitment to our local communities through our corporate social responsibility efforts and dedicated foundation programmes

·    Wentworth's domestic natural gas continues to play a critical role in increasing energy access to communities across Tanzania and remains a key partner for the Government of Tanzania to deliver on its ambition to provide universal energy access in Tanzania by 2030 in line with the UN Sustainable Development Goals

Katherine Roe, CEO, commented:

"2022 was a landmark year for Wentworth, representing the culmination of years of hard work. Tanzania's increasing demand for energy, continued good performance from the Mnazi Bay reservoirs and impeccable operational safety record all contributed to 2022's strong performance. H1 2023 continued in the same vein, although we expect 2023's financial outcome to be heavily first half weighted.

"We are incredibly proud of what we achieved throughout the year and we would like to thank our stakeholders for their ongoing support.  We continue to work with M&P and our stakeholders towards a successful completion of the Acquisition. We believe this will represent a considerable value realisation for shareholders."

Enquiries:  Wentworth	Katherine Roe, Chief Executive Officer	katherine.roe@wentplc.com +44 (0) 7841 087 230
Stifel Nicolaus Europe Limited	AIM Nominated Adviser and Joint Broker  Callum Stewart Ashton Clanfield Simon Mensley	+44 (0) 20 7710 7600
Peel Hunt LLP	Joint Broker  Richard Crichton Georgia Langoulant	+44 (0) 20 7418 8900
FTI Consulting	Communications Adviser Sara Powell                                Ben Brewerton	+44 (0) 20 3727 1000

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Year-ended 31 December
	Note	2022 $000	2021 $000
Total revenue	5	37,709	23,818
Production costs		(4,273)	(3,800)
Depletion	13	(7,962)	(6,267)
Total cost of sales		(12,235)	(10,067)
Gross profit		25,474	13,751
Recurring administrative costs	6	(7,721)	(6,424)
Acquisition costs	6	(1,256)	-
New venture and pre - licence costs	6	(335)	(502)
Value Added Tax write-off	6	(607)	-
Share-based payment charges	19	(1,108)	(537)
Depreciation	13	(98)	(50)
Total administrative costs		(11,125)	(7,513)
Impairment of E&E and PPE	12;13	(25,000)	-
(Loss)/profit from operations		(10,651)	6,238
Finance income	9	625	139
Finance expense	9	(237)	(369)
(Loss)/profit before tax		(10,263)	6,008
Current tax expense	23	(8,574)	(1,321)
Deferred tax income	23	5,857	1,380
		(2,717)	59
Net and comprehensive (loss)/profit after tax		(12,980)	6,067
Net (loss)/profit per ordinary share
Basic (US$/share)	21	(0.07)	0.03
Diluted (US$/share)	21	(0.07)	0.03

The accompanying notes form part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Note	31 December 2022 $000	31 December 2021 $000
ASSETS
Current assets
Cash and cash equivalents		30,916	22,820
Trade and other receivables	10	11,101	5,550
		42,017	28,370
Non-current assets
Exploration and evaluation assets	12	-	8,129
Property, plant and equipment	13	41,814	66,465
Deferred tax asset	23	14,097	8,239
		55,911	82,833
Total assets		97,928	111,203
LIABILITIES
Current liabilities
Trade and other payables	15	5,623	2,503
		5,623	2,503
Non-current liabilities
Decommissioning provision	16	1,818	1,929
Lease liability	17	-	36
		1,818	1,965
Equity
Share capital	20	414,676	414,919
Equity reserve		27,803	26,695
Accumulated deficit		(351,992)	(334,879)
		90,487	106,735
Total liabilities and equity		97,928	111,203

The accompanying notes form part of these financial statements

The financial statements of Wentworth Resources plc, registered number 127571 were approved by the Board of Directors and Authorised for issue on 29 June 2023.

Signed on behalf of the Board of Directors.

Katherine Roe

Chief Executive Officer

29 June 2023

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Note	Number of shares	Share capital	Equity reserve	Accumulated deficit	Total  equity
			$000	$000	$000	$000
Balance at 31 December 2020		186,488,465	416,426	26,656	(337,049)	106,033
Dividends	22	-	-	-	(3,920)	(3,920)
Net profit and comprehensive profit		-	-	-	6,067	6,067
Share based compensation	19	-	-	537	-	537
Cancelled Shares		(939,326)	(318)	295	23	-
Repurchase of own shares	18	(4,500,000)	(1,189)	(793)	-	(1,982)
Balance at 31 December 2021		181,049,139	414,919	26,695	(334,879)	106,735
Dividends	22	-	-	-	(4,133)	(4,133)
Net loss and comprehensive loss		-	-	-	(12,980)	(12,980)
Share based compensation	19	-	-	1,108	-	1,108
Cancelled shares		(866,572)	(243)	-	-	(243)
Balance at 31 December 2022		180,182,567	414,676	27,803	(351,992)	90,487

The accompanying notes form part of these financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

		Year-ended 31 December
	Note	2022 $000	2021 $000
Operating activities
Net (loss)/profit for the year		(12,980)	6,067
Adjustments for:
Impairment E&E and PPE	12;13	25,000	-
Depreciation and depletion	13	8,060	6,317
Finance costs, net	26	(448)	172
Income tax expense	23	2,717	(59)
Share based compensation	19	1,108	537
		23,457	13,034
Change in non-cash working capital:
Trade and other receivables		(5,549)	(695)
Trade and other payables		3,553	33
Cash generated from operating activities		21,461	12,372
Current tax paid		(7,181)	(159)
Withholding tax paid		(1,393)	(1,162)
Net cash generated from operating activities		12,887	11,051
Investing activities
Additions to property, plant and equipment	13	(519)	(62)
Interest income		178	36
Proceed from sales of property, plant and equipment		16	-
Net cash used in investing activities		(325)	(26)
Financing activities
Dividends paid	22	(4,133)	(3,920)
Repurchase of own shares	18	(243)	(1,982)
Lease payment	17	(57)	(50)
Renewal fee on overdraft facility		-	(19)
Bank charges	9	(33)	(21)
Net cash used in financing activities		(4,466)	(5,992)
Net change in cash and cash equivalents		8,096	5,033
Cash and cash equivalents, beginning of the period		22,820	17,787
Cash and cash equivalents, end of the period		30,916	22,820

The accompanying notes form part of these financial statements.

1.            Incorporation and basis of preparation

Wentworth Resources plc ("Wentworth" or the "Company") is an East Africa-focused upstream natural gas production company. These audited consolidated financial statements include the accounts of the Company and its subsidiaries (collectively referred to as "Wentworth Group of Companies" or the "Group"). The Company is actively involved in oil and gas exploration, development and production operations. Wentworth is incorporated in Jersey and shares of the Company as at 31 December 2022 were held and listed on the AIM Market of the London Stock Exchange (ticker: WEN).

The Company's registered office is located at 4th Floor, St Paul's Gate, 22 - 24 New Street, St Helier, Jersey, JE1 4TR. The Group maintains offices in Jersey and Tanzania.

Basis of presentation and statement of compliance

These consolidated financial statements have been prepared on a historical cost basis and have been prepared using the accrual basis of accounting. The consolidated financial statements are prepared in accordance with UK-adopted International Financial Reporting Standard ("IFRS"), as issued by the International Accounting Standards Board (IASB) in conformity with the requirements of the Companies (Jersey) Law 1991.

The consolidated financial statements were approved by the Board of Directors on 29 June 2023.

The Group continue to apply the judgement that the business will continue as a going concern for the foreseeable future, further discussion on which is noted below.

Functional and presentation currency

These consolidated financial statements are presented in US dollars which is the functional currency of the majority of its subsidiaries.

Basis of consolidation

These consolidated financial statements include the accounts of the Company and its subsidiaries.  Subsidiaries are entities that the Company controls. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and can affect those returns through its authority over the investee.  The existence and effect of potential voting rights are considered when assessing whether a company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are deconsolidated from the date that control ceases. The legal entities within the Wentworth Group of Companies are disclosed within note 14. All intercompany transactions, balances and unrealised gains on transactions between the parent and subsidiary companies are eliminated on consolidation.

The Group holds a 31.94% participation interest in the Mnazi Bay Concession through two subsidiaries.  Wentworth Gas Limited ("WGL"), which is a wholly owned subsidiary, owns a 25.40% participation interest and Cyprus Mnazi Bay Limited ("CMBL") owns a 16.38% participation interest of which the Group's proportionate share is 6.54% (i.e. Wentworth's interest of 39.925% in CMBL multiplied by 16.38% participation interest). CMBL is considered a jointly controlled entity and accounted for as a joint operation rather than a joint venture. The Group accounts for its share of CMBL assets and liabilities as CMBL has contractual agreements which establish that the parties to the joint arrangement have rights to the assets and obligations for the liabilities of ownership in proportion to their interest in the arrangement.

Going Concern

Wentworth's business activities, together with the factors likely to affect any future development, performance and position are set out in the Strategic Report. The financial position of the Group, its cash flows and liquidity position are described in the Financial Review contained within that report.

2022 saw Wentworth achieve its best operating and financial results in our history, despite unprecedented upward inflationary pressures on our expenditures. Given the essential nature of services provided and the forecasted impact of recent world events on both international capital markets and production operations in  the United Republic of Tanzania, the Group notes that an interruption to production remains remote.

On 5 December 2022, Wentworth received, and the Board of Directors subsequently recommended the acceptance of a cash offer for 100% of the issued and to be issued share capital of the Company for 32.5 pence per share by M&P. M&P is the ultimate parent company of the Operator of the Mnazi Bay licence. On 23 February 2023, shareholders voted in favour of a scheme of arrangement at a court meeting held the same day. Following this meeting, shareholders voted to pass the resolution in connection with the amendment of Wentworth's Articles in order to implement the scheme of arrangement once the Jersey Court sanctions this.

Following the ratification of the proposed acquisition by shareholders there were certain legal and administration consents to be obtained, including the consent of the Tanzanian government to the proposed transaction, the waiver of any right of first refusal or pre-emption right to which TPDC may be entitled in respect of the Mnazi Bay Asset and approval from the Tanzanian Fair Competition Commission (FCC).

At a preliminary hearing held by the FCC on 7 June 2023 a number of concerns were raised which may impact the likelihood of the FCC approving the proposed acquisition in its current form. On 9 June 2023 TPDC informed the Group of its decision to exercise its right of first refusal (ROFR) for Wentworth's interest in the Mnazi Bay asset pursuant to section 86(7) of the Tanzanian Petroleum Act, Cap 392. Discussions with TPDC and the FCC on the way forward and resolution of these issues are ongoing as at the date of this report.

It is acknowledged that the above developments introduce uncertainty as to the timing and manner in which an acquisition (if any) of the Group will be finalised. The Directors expect that the Group would continue to operate in its existing state if none of the proposed arrangements set out above proceed during the going concern period. Should an acquisition proceed, it is uncertain how the acquirer intends to integrate Wentworth's interest in the Mnazi Bay asset with its own operations and whether the legal entities in which the Group operates will remain in their current form or cease to operate, in which case the Group will no longer be a going concern.

Apart from the uncertainty noted above, the Directors view the continued timely settlement of gas-sales invoices by the Government of Tanzania to be the most significant financial risk currently faced by the Group with respect to its ongoing operations.

The Directors have prepared base and sensitised cash flow information for a period of at least 12 months from the date of their approval of these financial statements (the going concern assessment period) on the assumption that the group continues in its current form. Based on the application of severe but plausible down-side scenarios, which include non- settlement of future gas sales, potential changes in demand, capital spend and operating costs, the Directors believe that if the Group were to continue in its present structure it is well placed to manage the Group's financial exposures and has sufficient cash resources for working capital needs, committed capital and operational expenditure programs for the going concern assessment period.

Based on the above factors and with respect to the going concern assessment period, the Directors believe that it remains appropriate to prepare the financial statements on a going concern basis. However, the uncertainty regarding the proposed acquisition and the subsequent integration of the Group's operations into that of the acquirer`s should the acquisition proceed, indicates the existence of a material uncertainty related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern and, therefore, that the group may be unable to realise its assets and discharge their liabilities in the normal course of business in a plausible situation that the Group is reorganised by the acquiring entity. The Group, in its current form, does have the resources to be able to satisfy its expected obligations as they fall due. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

Changes in accounting policies

A number of new standards are effective from 1 January 2022, but they do not have material effect on the Group's financial statements.

New and amended standards

The following amended standards and interpretation are effective for financial years commencing on or after 1 January 2023. The Group does not intend to adopt the standards below, before their mandatory application date.

Standard	Description	IASB Issue Date	IASB Effective Date	Secretary of State Adoption Date
IAS 1 (amendments)	Classification of Liabilities as Current or Non-current.	23 January 2020	1 January 2023	Endorsed
IFRS 17	Insurance contracts.	25 June 2020	1 January 2023	Endorsed
IAS 12 (Amendments)	Deferred tax related to assets and liabilities arising from a single transaction.	7 May 2021	1 January 2023	Endorsed
IAS 8 (amendments)	Definition of accounting estimates.	12 February 2021	1 January 2023	Endorsed
IAS 1 and IFRS Practice Statement 2 (amendments)	Disclosure of accounting policies.	12 February 2021	1 January 2023	Endorsed
IFRS 16 (amendments)	Lease Liability in a Sale and Leaseback		1 January 2024

Future accounting pronouncements

The Company intends to adopt the above listed standards and interpretations in our financial statements for the annual period beginning 1 January 2023. The Company does not expect the interpretation to have a material impact on the financial statements.

2.            Summary of accounting policies

The principal accounting policies applied in the preparation of these Company and Group consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Joint arrangements

The analysis of joint arrangements requires management to analyse numerous agreements and the requirements of IFRS 10 and IFRS 11. Judgements made by management include whether joint control exists and the extent of exposure to the underlying assets and liabilities of the joint arrangement. By virtue of the provisions contained within the underlying shareholder agreements, to which Cyprus Mnazi Bay Limited (see below for accounting considerations of this entity) and Wentworth Holdings Gas Limited, a wholly owned subsidiary of Wentworth Resources plc, are parties to,  management have assessed that the Company has a joint arrangement through its 31.94% ownership in the licence and accounts for this interest as a joint operation as no single individual shareholder may exercise absolute control over the entity. The agreement is bilateral, with Maurel & Prom Mnazi Bay Holdings SAS (M&P) and whilst the Operator may make day-to-day decisions, the overall strategic direction of the partnership requires unanimous consent between M&P and Wentworth. M&P hold 48.06% share in the licence and 20% is owned by TPDC.  As such the Group is entitled to its share of production from the licence and therefore revenue generated from the sale of this output.  Wentworth also recognise its share of all expenses incurred by the joint arrangement, its right to the assets, as well as its share of the liabilities and obligations.  

Accounting treatment of CMBL

The Group holds a 31.94% participation interest in the Mnazi Bay Concession through two subsidiaries. WGL is a wholly owned subsidiary, which owns a 25.40% participation interest and Wentworth Holdings (Jersey) Limited is a wholly owned subsidiary that holds 39.925% in CMBL, which owns a 16.38% participation interest, of which the Group's proportionate share is therefore 6.54% (i.e. Wentworth's interest of 39.925% interest in CMBL, multiplied by 16.38% participation interest). CMBL is considered a jointly controlled entity and accounted for as a joint operation rather than a JV. The Group recognises its share of the following:

• Assets, including its share of any assets held jointly;

• Liabilities, including its share of any liabilities incurred jointly;

• Revenues arising from the joint operation;

• Other revenues from the joint operation; and

• Expenses, including its share of any expenses incurred jointly.

Financial instruments

The Group recognises financial assets and liabilities on its balance sheet when it becomes a party to the contractual provisions of the instrument.

(i)            Financial assets

Classification and initial measurement

Financial assets within the scope of IFRS 9 are classified as financial assets at amortised cost, fair value through profit or loss or fair value through (OCI). The Group determines this classification at initial recognition depending on the business model for managing the financial asset and the contractual terms of the cash flows.

The Group's financial assets include cash and cash equivalents, Trade and other receivables.

When financial assets are initially recognised, they are measured at fair value being the consideration given or received plus directly attributable transaction costs. Any gain or loss at initial recognition is recognised in the income statement.

The Group's financial assets measured at amortised cost are held for the collection of contractual cash flows where those cash flows have specified dates and represent solely payments of principal and interest, such as cash and cash equivalents or trade receivables.

The Group's financial assets are initially measured at fair value where the contractual cash flows do not solely represent payments of principal and interest, such as trade and other receivables.

Subsequent measurement

Financial assets held for the collection of contractual cash flows that are solely payments of principal and interest (and classified as amortised cost) are subsequently measured at amortised cost using the effective interest rate method ("EIR"). Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. Allowance for impairment is estimated on a case-by-case basis.

A gain or loss on a financial asset measured at fair value through profit or loss is recognised in the income statement in the period in which it arises.

Derecognition

A financial asset is derecognised when the Group loses control over the contractual rights that comprise that asset. This occurs when the rights are realised, expire or are surrendered.

Impairment of financial assets

The Group assesses on a forward-looking basis the expected credit losses that might arise on financial assets measured at amortised cost. This assessment considers the probability of a default event occurring that could result in the expected cash flows due from a counterparty falling short of those contractually agreed.

Expected credit losses are estimated for default events possible over the lifetime of a financial asset measured at amortised cost. However, where the financial asset is not a trade receivable measured at amortised cost and there have been no significant increases in that financial asset's credit risk since initial recognition, expected credit losses are estimated for default events possible within 12 months of the reporting date.

(ii)           Financial liabilities

Classification and initial measurement

Financial liabilities within the scope of IFRS 9 are classified as financial liabilities at amortised cost or fair value through profit or loss. The Group determines the classification of its financial liabilities at initial recognition.

The Group's financial liabilities include trade and other payables, other liabilities and borrowings which are classified as amortised cost. Trade payables may be designated and measured at fair value through profit or loss when doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities on a different basis.

All financial liabilities are recognised initially at fair value while financial liabilities at amortised cost additionally include directly attributable transaction costs.

Subsequent measurement

Trade and other payables, borrowings and other financial liabilities are subsequently measured at amortised cost using the EIR method after initial recognition. Gains and losses are recognised in the income statement through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the income statement.

A gain or loss on a financial liability measured at fair value through profit or loss is recognised in the income statement in the period in which it arises.

Derecognition

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

(iii)          Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when there is an enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

(iv)          Fair value of financial instruments

At each reporting date, the fair value of financial instruments that are traded in active markets is determined by reference to quoted market prices, without any deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm's length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis or other valuation models.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, term deposits and short-term highly liquid investments with the original term to maturity of three months or less, which are convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Exploration Assets ("E&E")

E&E costs, including costs of licence acquisition, technical services and studies, exploratory drilling, whether successful or unsuccessful, and testing and directly attributable overhead, are capitalised as E&E assets according to the nature of the assets acquired. These costs are accumulated in cost centres by well, field or exploration area pending determination of technical feasibility and commercial viability.

E&E assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount.

The technical feasibility and commercial viability of extracting a resource is generally considered to be determinable when proven and/or probable reserves are determined to exist. A review of each exploration licence or field is carried out, at least annually, to ascertain whether it is technically feasible and commercially viable. Upon determination of technical feasibility and commercial viability, intangible E&E assets attributable to those reserves are first tested for impairment with the unimpaired amounts reclassified from E&E assets to a separate category within tangible assets within Property, Plant and Equipment referred to as oil and gas interests.

Once the commercial viability of a resource has been proven and/or probable and reserves have been determined to exist, the intangible E&E asset attributable to those reserves are then transferred to oil and natural gas properties within PP&E and then depleted over its useful life on a unit of production basis.

Costs incurred prior to the legal awarding of petroleum and natural gas licences, concessions and other exploration rights are recognised in profit or loss as incurred.

Property Plant and Equipment ("PP&E") - oil and natural gas properties

Items of PP&E, which include oil and gas development and production assets, are measured at cost less accumulated depletion and depreciation and accumulated impairment losses. PP&E assets include costs incurred in developing commercial reserves and bringing them into production, such as drilling of development wells, tangible costs of facilities and infrastructure construction, together with the E&E expenditures incurred in finding the commercial reserves that have been reclassified from E&E assets as outlined above, the projected cost of retiring the assets and any directly attributable general and administrative expenses. Expenditures on developed oil and natural gas properties are capitalised to PP&E when it is probable that a future economic benefit will flow to the Company as a result of the expenditure and the cost can be reliably measured. The initial cost of an asset is comprised of its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate of any decommissioning obligations associated with the asset and borrowing costs on qualifying assets.  When significant parts of an asset with PP&E, including oil and gas interests, have different useful lives, they are accounted for as separate items (major components).

Costs incurred after the determination of technical feasibility and commercial viability and the costs of replacing parts of PP&E are recognised as capitalised oil and gas interests only when they increase the future economic benefits embodied in the specific asset to which they relate.  Subsequent changes in estimated decommissioning obligation due to changes in timing, amounts and discount rates are included in the cost of the asset.  Such capitalised oil and gas interests generally represent costs incurred in developing proved and/or probable reserves and bringing in or enhancing production from such reserves and are accumulated on a field or geotechnical area basis. The carrying amount of any replaced or sold component is derecognised. The costs of the day-to-day operating of PP&E are recognised in profit or loss as incurred.

Depletion 

The net carrying amount of PP&E is depleted on a field-by-field unit of production method by reference to the ratio of production in the year to the related proven and probable reserves. These reserves represent full field recoverable reserves and not just those recoverable to the end of the current licence period.  If the useful life of the asset is less than the reserve life, the asset is depreciated over its estimated useful life using the straight-line method.  Future development costs are estimated considering the level of development required to produce the proven and probable reserves. These estimates are reviewed by third party independent reserves engineers. Changes in factors such as estimates of reserves that affect unit-of-production calculations are dealt with on a prospective basis. Capital costs for assets under construction included in development and production assets are excluded from depletion until the asset is available for use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

Disposals

Oil and natural gas properties are derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss on derecognition of the asset, including farm out transactions or asset sales or asset swaps, is calculated as the difference between the proceeds on disposal, if any, and the carrying value of the asset, is recognised in profit or loss in the period of derecognition.

PP&E - office and other equipment

Office and other equipment are carried at cost less accumulated depreciation and impairment losses.  Depreciation of the cost of these assets less residual value is charged to profit and loss on a straight-line basis over their estimated useful economic lives of between three and five years.

Leases

IFRS 16 Leases applies to all leases, including subleases, except for leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources.

The Company has not elected to recognise right-of-use assets and lease liabilities for lease of low-value assets and short-term leases. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Decommissioning obligation

Decommissioning obligations are recognised for legal obligations related to the decommissioning of long-lived tangible assets that arise from the acquisition, construction, development or normal operation of such assets.  A liability for decommissioning is recognised in the period in which it is incurred and when a reasonable estimate of the liability can be made with the corresponding decommissioning provision recognised by increasing the carrying amount of the related long-lived asset.  The recognised decommissioning provision is subsequently allocated in a rational and systematic method over the underlying asset's useful life.  The initial amount of the liability is accreted by charges to the profit or loss to its estimated future value.

Impairment

The carrying values of production assets, E&E expenditures that have been capitalised and property, plant and equipment (PPE) are assessed for impairment when indicators of such impairment exist. In performing impairment reviews, assets are categorised into the smallest identifiable groups, cash generating units (CGU), that generate cash flows independently. If any indication of impairment exists, the estimated recoverable amount of the asset or CGU is calculated. If the carrying amount of the asset or CGU exceeds its recoverable amount, it is impaired with the loss charged to the income statement to reduce the carrying amount to its recoverable amount. Impairment losses are recognised in the income statement in those expense categories consistent with the function of the impaired asset or CGU. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of the recoverable amount.

(i)            Calculation of recoverable amount

The recoverable amount of an asset or CGU is the greater of its value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows of the asset or CGU in its present condition are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, consideration will be given to whether the value of the asset or CGU can be determined from an active market (e.g. recognised exchange) or a binding sale agreement which are classified as level 1 in the fair value hierarchy under IFRS 13 'Fair Value Measurements'. Where this is not determinable, fair value less costs to sell for a CGU is usually estimated with reference to a discounted cash flow model, similar to the method used for value in use, but may include estimates of future production, revenues, costs and capital expenditure not currently included in the economic model. Additionally, cash flow estimates include the impact of tax and are discounted using a post-tax discount rate. An estimate made on this basis is classified as level 3 in the fair value hierarchy.

(ii)           Reversals of impairment

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If this is the case, the carrying amount of the asset is increased to its recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised for the asset in prior years. Such reversals are recognised in the income statement. Impairment losses recognised in relation to goodwill are not reversed for subsequent increases in the recoverable amount.

Share capital

The proceeds from the exercise or vesting of share options and the issuance of shares from treasury are recorded as share capital in the amount for which the option, warrant, or treasury share enables the holder to purchase a share in the Company.

Proceeds for shares in excess of the nominal value are recorded within share premium.

Share issuance costs

Commissions paid to underwriters, and other related share issue costs, such as legal, auditing and advisory, on the issue of the Company's shares, are charged directly to share capital, net of tax within the share premium account.

Share based payments

The fair value of the options at the date of the grant is determined using the Black-Scholes option pricing model and share based compensation is accrued and charged to profit or loss, with an offsetting credit to equity reserve over the vesting periods. A forfeiture rate is estimated on the grant date and is adjusted to reflect the actual number of options that vest.

Capitalisation of interest

The Company capitalises interest expense incurred during the construction phase of the projects, except E&E assets which were funded by the related financing.

Revenue recognition

Natural gas revenues are recognised upon the transfer of control over its gas to its customers, TPDC and TANESCO, which is when delivery is made to them through the offtake network.

Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying value.

Other revenue relating to the recovery of corporate income tax, in line with the Production Sharing Agreement, are recognised in the period the in which the recovery is made. These recoveries are affected through adjustments to TPDC's gas sales entitlements.

Income taxes

Tax expense comprises current and deferred tax. Tax is recognised in the profit or loss except to the extent it relates to items recognised in other comprehensive income ("OCI") or directly in equity.

Current income tax

Current tax expense is based on the results for the period as adjusted for items that are not taxable or not deductible. Current tax is calculated using tax rates and laws that were enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Provisions are established where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax

Deferred taxes are the taxes expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the consolidated statement of financial position and their corresponding tax basis. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that future taxable profits are expected to be available against which deductible temporary differences to the tax basis can be utilised. Deferred income tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill, if any, or from the initial recognition (other than in a business combination) of other assets in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and joint arrangements except where the reversal of the temporary difference can be controlled, and it is probable that the difference will not reverse in the foreseeable future.

Deferred tax assets are reviewed at each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits are expected to be available to allow all or part of the asset to be recovered. Deferred tax assets are recognised for taxable temporary differences arising on investments in subsidiaries to the extent that it is probable that the temporary difference will reverse in the foreseeable future and future taxable profits are expected to be available against which the temporary difference can be utilised.

Foreign currency translation

Items included in the financial statements of the Company and its subsidiaries are measured using the currency of the primary economic environment in which the legal entity operates (the "functional currency"). Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transaction.  Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities not denominated in the functional currency of an entity are recognised in profit or loss.

The functional currency of all Wentworth subsidiaries is US dollars except for Wentworth Resources (UK) Limited which is Pound Sterling.  The assets and liabilities of this Company are translated into US dollars at the period-end exchange rate.  The income and expenses of the Company are translated to US dollars at the average exchange rate for the period.

Translation gains and losses are included in OCI; however, Wentworth Resources (UK) Limited has limited operations so there is no significant amount of foreign exchange gains and losses to include in OCI.  All other foreign exchange gains and losses are recognised in profit or loss.

Earnings or loss per share (EPS)

Basic earnings or loss per share is calculated by dividing profit or loss attributable to owners of the Company (the numerator) by the weighted average number of ordinary shares outstanding (the denominator) during the period. The denominator is calculated by adjusting the shares outstanding at the beginning of the period by the number of shares bought back or issued during the period, multiplied by a time-weighting factor.

Diluted EPS is calculated by adjusting the earnings and number of shares for the effects of all dilutive potential ordinary shares deemed to have been converted at the beginning of the period or if later, the date of issuance. The effects of anti-dilutive potential ordinary shares are ignored in calculating diluted EPS.

3.            Accounting judgements and key sources of estimation uncertainty

In applying the Group's accounting policies, the preparation of consolidated financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts may differ materially from these estimates due to changes in general economic conditions, changes in laws and regulations, changes in future operating plans and the inherent imprecision associated with estimates. Significant estimates and judgments used in the preparation of these consolidated financial statements include the assessment of impairment triggers related to E&E and PP&E assets and recognition of a deferred tax asset.

3.1 Significant accounting judgements and estimates

Recoverable value of Mnazi Bay E&E and Natural Gas Properties costs

Significant accounting Judgements

Oil and gas assets are inherently judgemental to value. The Directors review the carrying value of the Groups assets to determine whether there are any indicators of impairment such that the carrying values of the assets may not be recoverable. The assessment of whether an indicator of impairment or reversal thereof has arisen requires considerable judgement, taking account of factors such as future operational and financial plans, commodity prices and the competitive environment. Indicators of impairment also include but are not limited to; declines in market value; company net assets in excess of market capitalisation; obsolescence or physical damage; economic performance worse than expected; or substantive expenditure in the specific area is neither budgeted nor planned. The outcome of ongoing production and exploration activities and whether their carrying values will ultimately be recovered is inherently uncertain and requires significant judgement.

Management performs impairment testing on the Group's producing and non-producing assets when indicators of impairment are present. The assessment of impairment indicators is subjective and considers the various internal and external factors such as the financial performance of individual CGUs, market capitalisation and industry trends.

The period over which future cash flows are considered for impairment testing is an area of judgment. Impairment testing was conducted over the licence term, which expires in 2031.

Judgement was applied in determining the fair value less cost of disposal for the natural gas properties. The offer price for the shares of the Group by M&P provides the basis for the fair market value of the business. Judgement is involved in deriving the fair value of the natural gas asset from the fair value of the business based on the offer price for the Group's shares.

Key sources of estimation uncertainty

The preparation of discounted cash flows used to assess the recoverable amount of the Groups CGU includes management's estimates of future operating costs, economic and regulatory environments, capital expenditures requirements, cost recovery estimates, long term field plans and other factors including discount rates and the total level of reserves deemed to be commercial.

The valuation underpinning the carrying value of producing and non-producing assets are largely dependent on supply and demand variables.

The gas sales price is fixed, subject to an annual inflation index linked to the US consumer prices index to 2031 and the cost base of production operations is also largely fixed in nature. Whilst the benefits of increased production volumes are clear, the opposite is equally true during operational downtime, prolonged or permanent gas supply outages which may in turn impact upon the commerciality of the field. Mnazi Bay currently has 5 producing wells and formally signed the Commercialisation of Discovery making all terms contained within the Mnazi Bay GSA legally binding and fully in effect from 10 September 2019. Mnazi Bay is committed to supplying a minimum quota of natural gas to TPDC and TANESCO of 90 MMscf/day rising to 130 MMscf/day for the entire remaining term of the GSA and is guaranteed of future revenue streams via a take or pay provision of 85% of these amounts. This greatly strengthens and formally ratifies the long-term commerciality of the Mnazi Bay asset.

Sensitivities were run on the following variables:

·   Field production per well, noting that the engineering solutions utilised on Mnazi Bay allow for the production of multiple hydrocarbon bearing horizons from certain wells;

·   The operating and development costs of producing gas from Mnazi bay.

·    The impact of increased sales invoice delinquency upon future cash flows;

·    Currency settlement denomination variables, currently in US dollars, noting that in certain circumstances an election for settlement in Tanzanian Shillings may be made by TPDC; and

The above sensitivities impact the value in use of the cash generating unit, which was found to be lower than the fair market value. Given that the fair value less cost to sell was used as the recoverable amount, the Directors have not indicated the quantitative impact of the above sensitivity analysis.

Summary of PPE &EE impairment

At the year-end, a full impairment test was conducted on the Mnazi Bay cash generating unit, which comprises the production asset and the evaluation and exploration asset, as there was an indication of impairment with respect to the discrepancy between the market capitalisation of the Company as at 31 December 2022 of $66.1 million and the net asset of the group of $90.5million.

Given the existence of impairment indicators, the Group determined the of Value- in -use (VIU) and the Fair value less cost to sell (FVLCS) of the cash generating unit and have selected the higher of the two as the recoverable amount.

The full impairment testing ultimately determined that the recoverable amount was lower than the carrying value at the year-end, which resulted in an impairment of $25 million. Due to there being no formal agreement between Mnazi Bay partners to sanction further expenditure on non-producing assets, $8.1m of the impairment loss has been applied against the carrying value of the E&E assets reducing the carrying value down to $nil. At such time as the Group, alongside its JV partners in Mnazi Bay, undertake future exploration activities, this provision will be reviewed and dependent upon the outcome of these activities may be reversed in part or in full. A total of $16.9 million has been provided against the producing asset in Mnazi Bay, reducing the carrying value down to $41.8 million from $58.7 million. Irrespective of the above accounting treatment, the asset continues to outperform expectations and 2022 remains the strongest performing year in its production history. (See notes 12 and 13).

Reserves estimates

Significant accounting judgements

The Directors use judgement and experience to determine the timing and quantum of volumes expected to be recovered from producing fields to be able to calculate a probabilistic base-case value-in-use for its assets. This valuation may vary in response to changes in field performance over time and the Company expects that there will likely be revisions upward or downward based on updated information such as the results of future drilling, oil and gas production levels and reservoir performance.

Key sources of estimation uncertainty

Oil and natural gas reserves, prepared by an external independent reserve evaluator as at 31 December 2022, are used in the calculation of depletion, impairment and impairment reversal determinations and recognition of deferred tax asset. Reserve estimates are based on engineering data, estimated future prices and costs, expected future rates of production and the timing of future capital expenditures; all of which are subject to many uncertainties and certain input assumptions.

3.2 Other accounting judgements and estimates

Taxes

Other accounting judgements

The Directors make judgements in relation to the recognition of various taxes levied on the Group, which are both payable and recoverable. Judgement applies as the Group operates in countries where the legal and tax systems are less developed, which increases the requirement for management to make assumptions as to whether certain payments will be required related to matters such as income taxes, value added taxes, and other indirect taxes as well as outcomes of any tax disputes which would affect the recognition of tax liabilities and deferred tax assets. A provision is recognized in the financial statements for such matters if it is considered probable that a future outflow of cash resources will be required. The provision, if any, is subject to management estimates and judgements with respect to the outcome of the event, the costs to defend, the quantum of the exposure and past practice in the country.

Key sources of estimation uncertainty

Estimates may be made to determine the amount of taxes recoverable, principally deferred tax assets. Commercial production and gas sales under the Gas Sales Agreement, allows for the recognition of a deferred tax asset within the financial statements. The amount that the company recognizes is subject to the following estimates:

·    The timing of future profits for the utilization of tax losses from the current tax pools which are based on management assessments and forecasts of future performance.

·     The effective tax rate at which the losses will be utilised throughout the Group which is currently the tax rate of Tanzania as this is where all of the Group's operations are;

·     The status of any current tax assessments and disputes and their impact on the deferred tax pool on a probabilistic basis;

·      Any material changes in legislation that may impact upon the fiscal regime on which the deferred tax asset is computed.

Changes in these estimates within a reasonably possible range in the next 12 months are not expected to significantly alter the carrying amount of the Groups taxes that are recoverable.

The Group engages early with tax authorities where it has or will enter into a large or complicated transaction that is subject to interpretation and, in Tanzania, completed its most recent Tanzanian Revenue Authority (TRA) audit for the years of 2018 to 2020in January 2021, the result of which was an agreed assessment for taxes totalling $9k. Recently, the TRA issued a determination for disputed 2018 to 2020 CIT assessments totalling $126k and we are awaiting revised assessments to establish the liability which remains.

The tax audit for the fiscal year 2021 was completed in October 2022, with an agreed assessment of $1.1 million for CIT which has been recognised within revenue and also trade and other receivables, the amount will ultimately be recovered from TPDC profit gas. An assessment for VAT of $9k was also made by the TRA. Recently, the TRA issued a determination on disputed assessments for 2021 employment taxes totalling $121k of which assessments for employment taxes totalling $115k have been dropped leaving a tax liability of $6k.

4.           Segment information

The Company conducts its business through the Tanzania ("Mnazi Bay Concession") segment. Gas operations include the exploration, development, and production of natural gas and other hydrocarbons.  The Corporate segment activities include investment income, interest expense, financing related expenses, share based compensation relating to corporate activities and general corporate expenditures.  Inter-segment transfers of products, which are accounted for at market value, are eliminated on consolidation.

Net income/(loss) for the year-ended 31 December 2022

	Tanzania Operations $000	Corporate $000	Consolidated $000
Total revenue	37,709	-	37,709
Production costs	(4,273)	-	(4,273)
Depletion	(7,962)	-	(7,962)
Total cost of sales	(12,235)	-	(12,235)
Gross profit	25,474	-	25,474
Recurring administrative costs	(2,852)	(4,869)	(7,721)
Proposed acquisition costs	-	(1,256)	(1,256)
New venture and pre - licence costs	-	(335)	(335)
Value Added Tax write-off	-	(607)	(607)
Impairment of E&E and PPE	(25,000)	-	(25,000)
Share-based payment charges	(194)	(914)	(1,108)
Depreciation and depletion	(97)	(1)	(98)
Total costs	(28,143)	(7,982)	(36,125)
Loss from operations	(2,669)	(7,982)	(10,651)
Finance income	131	494	625
Finance costs	(125)	(112)	(237)
Loss before tax	(2,663)	(7,600)	(10,263)
Current tax expense	(8,574)	-	(8,574)
Deferred tax	5,857	-	5,857
	(2,717)	-	(2,717)
Net loss and comprehensive loss from continued operation	(5,380)	(7,600)	(12,980)

Net income/(loss) for the year-ended 31 December 2021

	Tanzania Operations $000	Corporate $000	Consolidated $000
Total revenue	23,818	-	23,818
Production costs	(3,800)	-	(3,800)
Depletion	(6,267)	-	(6,267)
Total cost of sales	(10,067)	-	(10,067)
Gross profit	13,751	-	13,751
Recurring administrative costs	(1,988)	(4,436)	(6,424)
New venture and pre - licence costs	-	(502)	(502)
Share-based payment charges	(115)	(422)	(537)
Depreciation and depletion	(50)	-	(50)
Total costs	(2,153)	(5,360)	(7,513)
Profit/(loss) from operations	11,598	(5,360)	6,238
Finance income	137	2	139
Finance costs	998	(1,367)	(369)
Profit/(loss) before tax	12,733	(6,725)	6,008
Current tax expense	(1,321)	-	(1,321)
Deferred tax	1,380	-	1,380
	59	-	59
Net profit/(loss) and comprehensive profit/(loss) from continued operation	12,792	(6,725)	6,067

Selected balances at 31 December 2022

	Tanzania Operations $000	1 Mozambique (Discontinued) $000	Corporate $000	Consolidated $000
Current assets	23,546	205	18,266	42,017
Property, plant and equipment	41,814	-	-	41,814
Deferred tax asset	14,097	-	-	14,097
Total assets	79,457	205	18,266	97,928
Current liabilities	3,955	11	1,657	5,623
Non-current liabilities	1,818	-	-	1,818
Total Liabilities	5,773	11	1,657	7,441

Capital additions for the year-ended 31 December 2022

Additions to property, plant and equipment	530	-	-	530
Disposals	(211)	-	-	(211)
Change in decommissioning liability	(250)	-	-	(250)
Total additions	69	-	-	69

1 Discontinued operations represent Wentworth Moçambique Petroleos, Limitada which is in the process of liquidation after relinquishment of the Tembo Block Appraisal Licence in April 2019.

Selected balances at 31 December 2021

	Tanzania Operations $000	1 Mozambique (Discontinued) $000	Corporate $000	Consolidated $000
Current assets	19,764	101	8,505	28,370
Exploration and evaluation assets	8,129	-	-	8,129
Property, plant and equipment	66,464	-	1	66,465
Deferred tax asset	8,239	-	-	8,239
Total assets	102,596	101	8,506	111,203
Current liabilities	1,704	-	799	2,503
Non-current liabilities	1,929	-	-	1,929
Lease liability	36	-	-	36
Total Liabilities	3,669	-	799	4,468

Capital additions for the year-ended 31 December 2021

Additions to property, plant   and equipment	186	-	-	186
Disposals	(17)			(17)
Change in decommissioning liability	289	-	-	289
Total additions	458	-	-	458

1 Discontinued operations represent Wentworth Moçambique Petroleos, Limitada which is in the process of liquidation after relinquishment of the Tembo Block Appraisal Licence.

5.            Revenue

	2022 $000	2021 $000
Revenue from gas sales	30,792	23,622
Revenue from condensate sales	9	33
Other revenue	6,908	163
	37,709	23,818

Other revenue includes $3.0 million (2021: 163k) of corporate income tax ("CIT") recovery within WGL. It also includes $1.8 million and $2.1 million of CIT recovery within CMBL for the financial years of 2022 and 2021 respectively (see note: 23). CIT is recovered through adjustments to TPDC gas sales entitlements.

6.            Administrative costs

	2022 $000	2021 $000
Employee salaries and benefits (note 7)	2,213	1,915
Executive director costs (note 8)	742	927
Contractors and consultants	1,199	1,100
Travel and accommodation	423	182
Professional, legal and advisory	967	311
Auditor's remuneration	496	326
Office and administration	521	408
Corporate and public company costs	1,160	1,255
	7,721	6,424
Auditor's remuneration comprises:
Audit of these financial statements	243	159
Audit of financial statements of subsidiaries of the Company	180	124
Other tax advisory services	73	43
	496	326

During the year the Company incurred regulatory, legal and consultancy costs with respect to proposed acquisition transaction expenditures amounting to $1,256k (2021: nil).

	2022 $000	2021 $000
Regulatory costs	794	-
Legal costs	258	-
Consultancy costs	204	-
	1,256	-

During the year the Company incurred legal and consultancy costs with respect to new venture and pre-licence appraisal expenditures amounting to $335k (2021: $502k).

	2022 $000	2021 $000
Legal costs	277	301
Consultancy costs	58	201
	335	502

During the year the Company write-off Value Added Tax recoverable amounting to $607k (2021: nil) which was disallowed for refund by the HM Revenue & Customs.

	2022 $000	2021 $000
Value Added Tax write-off	607	-
	607	-

7.            Staff numbers and costs

The average number of persons employed during the year, analysed by category, was as follows:

	2022	2021
	Number of employees
Senior Managers	2	2
Managers and supervisors	7	7
Support staff	7	7
	16	16

The aggregate payroll costs were as follows:

	2022 $000	2021 $000
Salaries	1,219	856
Social security costs	216	103
Bonuses	338	206
Other staff costs	440	750
Employee salaries and benefits (note 6)	2,213	1,915
LTIP charges	312	134
	2,525	2,049

8.            Directors' costs

	2022 $000	2021 $000
Executive director costs:
Remuneration	404	427
Bonuses	303	357
Contractual termination payments	-	100
Pensions	35	43
Executive director costs	742	927
Non-executive directors' remuneration	271	430
LTIP charges	795	403
	1,808	1,760

The aggregate remuneration of the highest paid Director was $404k (2021: $427k). During 2021, contractual termination payments, relate to amounts paid to Bob McBean who retired as Company Chairman.

For additional segregation by Director, refer to Total Remuneration of Executive Director Table and Total Remuneration of Non-Executive Directors Table contained within the Remuneration Committee Report.

9.            Finance income and finance costs

	2022 $000	2021 $000
Finance income
Foreign exchange gain	431	-
Interest income	178	128
Gain on disposal of PP&E	16
Reversal of expected credit losses on TANESCO receivable (note 10)	-	11
	625	139
Finance costs
Accretion - decommissioning provision (note 16)	(139)	(126)
Intercompany loan withholding tax costs	(60)	(58)
Bank charges	(33)	(21)
Lease interest expenses (note 17)	(5)	(8)
Foreign exchange loss	-	(137)
Renewal fee on overdraft facility	-	(19)
	(237)	(369)

10.          Trade and other receivables

	2022 $000	2021 $000
Trade receivable from TPDC	2,479	1,917
Other receivable from Operator - M&P	2,747	1,087
Trade receivable from TANESCO	1,035	351
Other receivable from TPDC	3,563	378
Other receivables	1,277	1,817
	11,101	5,550

At 31 December 2022, $2.5 million is receivable from TPDC (2021: $1.9 million) representing one month of gas sales (2021: one month).

At 31 December 2022, $2.7 million is receivable from Operator - M&P (2021: $1.1 million) representing one month of gas sales of $2.5 million which was paid by TPDC to M&P in December 2022 but payment to Wentworth was made in January 2023. The receivable from Operator - M&P also include $265k (2021: 62k) representing two months gas sales paid by TANESCO to M&P in November 2022 but payment to Wentworth was made in January 2023.

At 31 December 2022, $1 million is receivable from TANESCO (2021: $351k) representing seven months of gas sales (2021: three months).

Other receivables from TPDC represent income tax of $2.9 million (2021: $378k) paid by WGL, a wholly owned subsidiary of the Company and income tax of $675k (2021: nil) paid by CMBL, a 39.925% owned subsidiary of the Company. The income tax is anticipated to be recovered from TPDC's share of profit gas within the next 12-months under the terms of the Mnazi Bay PSA, which provides such a mechanism for the recovery of all corporate taxes.

Other receivables include VAT recoverable of $306k (2021: 886k), corporate tax prepayments of $546k (2021: $483k), various prepaid expenses $425k (2021: $88k). In accordance with IFRS 9 the Company notes no material expected credit losses.

11.          Tanzania Government receivables

The Group has an agreement with the Government of the United Republic of Tanzania (TANESCO, TPDC and the Ministry of Energy and Minerals) to be reimbursed for all the project development costs associated with Umoja T&D expenditures at cost.  An audit of the Mtwara Energy Project ("MEP") development expenditures was completed in November 2012 and costs of approximately $8.1 million were verified to be reimbursable. After deducting costs associated with the Tariff Equalisation Fund and VAT input credits associated with the MEP totalling $1.6 million, the amount agreed to be reimbursed was $6.5 million.

During 2017, the Government initiated its first review of the costs to verify the balance owing by it. On 8 February 2018 the Government issued the results which differed from the previously audited and approved gross receivable of $6.5 million, which the Group maintains was accurate and correct.

The Government is conducting a second ongoing review and due to the age and uncertainty surrounding the receivable and its recoverability, the Group made a provision in-full during 2018 against the carrying amount without prejudice to the ongoing commercial discussions with the Government, the Group has reviewed this at the year-end and continues to consider the provision is appropriate.

12.          Exploration and evaluation assets

		Tanzania $000
Cost
Balance at 31 December 2021 and 2022		8,129
Accumulated impairment
Balance at 31 December 2021	-
Impairment charge for the year	(8,129)
Balance at 31 December 2022	(8,129)
Carrying amounts
31 December 2021		8,129
31 December 2022		-

At the year-end the carrying value of these assets were assessed for impairment. The impairment test ultimately determined that the recoverable amount was less than the carrying amount and all E&E assets were fully impaired (see note 13).

13.          Property, plant and equipment

	Natural gas properties	Office and other equipment	Right of use	Total
	$000	$000	$000	$000
Cost
Balance at 31 December 2020	104,400	613	-	105,013
Additions	28	34	124	186
Disposals	-	(17)	-	(17)
Change in decommissioning liability	289	-	-	289
Balance at 31 December 2021	104,717	630	124	105,471
Additions	321	198	11	530
Disposals	-	(211)	-	(211)
Change in decommissioning liability	(250)	-	-	(250)
Balance at 31 December 2022	104,788	617	135	105,540

Accumulated depreciation, depletion and impairment
Balance at 31 December 2020	(32,097)	(609)	-	(32,706)
Depreciation and depletion	(6,267)	(5)	(45)	(6,317)
Disposals	-	17	-	17
Balance at 31 December 2021	(38,364)	(597)	(45)	(39,006)
Impairment	(16,871)	-	-	(16,871)
Depreciation and depletion	(7,962)	(46)	(52)	(8,060)
Disposals	-	211	-	211
Balance at 31 December 2022	(63,197)	(432)	(97)	(63,726)

Carrying amounts
31 December 2021	66,353	33	79	66,465
31 December 2022	41,591	185	38	41,814

During the year a full impairment test was conducted on the Mnazi Bay asset as there was an indication of impairment with respect to the difference between the offer made for 100% of the issued and to be issued share capital of the Company and its net assets prior to the recognition of an impairment loss.  This implied fair value of the cash generating unit is derived from the agreed offer price adjusted for cash and other monetary assets and liabilities, provided a higher recoverable amount for the year ended 31 December 2022, compared to the value-in-use of the cash generating unit as at that date. An impairment provision of $25.0 million has therefore been recognised, reducing the carrying value of the cash generating unit to the recoverable amount of $41.8 million from $66.8 million.

The impairment loss has been limited to the measurable fair value less costs to disposal of the individual assets within the CGU. The fair value of the asset is categorised as level 2 and was determine with reference to the offer price, adjusted for additional factors considered in agreeing to the offer price. A $8.1m impairment loss has been applied against the carrying value of the E&E assets reducing the carrying value down to $nil. At such time as the Group, alongside its JV partners in Mnazi Bay, undertake future exploration activities, this provision will be reviewed and dependent upon the outcome of these activities may be reversed in part or in full. A total of $16.9 million has been provided against the producing asset in Mnazi bay, reducing the carrying value down to $41.8 million from $58.7 million. Irrespective of the above accounting treatment, the asset continues to outperform expectations and 2022 remains the strongest performing year in its production history.

During the year, the Group made additions to PPE totalling $519k (2021: $62k). Right of use asset addition of $11k (2021: $124k) relate to office space leased in Tanzania. Disposals related to office furniture and other equipment disposed during the year. A change to the assumptions used in calculating the decommissioning and abandonment provisions resulted in further additions of ($250k) (2021: $289k) (see note 16). Assets disposals $211k (2021: $17k) includes disposal of vehicles.

14.          Subsidiary and joint undertakings

The subsidiary and joint undertakings at 31 December 2022 are:

Name of Company	Country of incorporation	Class of shares held	Types of ownership	Percentage holding	Nature of business
Wentworth Resources (UK) Limited	United Kingdom	Ordinary	Direct	100%	Investment holding company
Wentworth Holding (Jersey) Limited	Jersey	Ordinary	Direct	100%	Investment holding company
Wentworth Tanzania (Jersey) Limited	Jersey	Ordinary	Indirect	100%	Investment holding company
Wentworth Gas (Jersey) Limited	Jersey	Ordinary	Indirect	100%	Investment holding company
Wentworth Gas Limited	Tanzania	Ordinary	Indirect	100%	Exploration production company
Cyprus Mnazi Bay Limited 1	Cyprus	Ordinary	Indirect	39.925%	Exploration production company
Wentworth Mozambique (Mauritius) Limited	Mauritius	Ordinary	Indirect	100%	Investment holding company
Wentworth Moçambique Petroleos, Limitada 2	Mozambique	Ordinary	Indirect	100%	Investment holding company

1 CMBL is considered a jointly controlled entity and accounted for as a joint operation rather than a joint venture (see note 1 for further details).

2 The Wentworth Moçambique Petroleos, Limitada is in the process of liquidation following the relinquishment of the Tembo Block Appraisal Licence in April 2019.

15.          Trade and other payables

	2022 $000	2021 $000
Payable to Maurel et Prom (Operator)	1,634	1,222
Trade payables	1,070	250
Other payables and accrued expenses	2,919	1,031
	5,623	2,503

Other payables and accrued expenses include income tax liability $994k (2021: nil), bonuses of $682k (2021: $606k), audit and tax advice fees of $350k (2021: $320k), other third-party services of $852k (2021: $59k) and current lease liability $41k (2021: $46k).

16.          Decommissioning and abandonment provision

The Company's decommissioning provision results from net ownership interests in petroleum and natural gas assets including well sites, pipeline gathering systems and processing facilities in Tanzania. The operator of the Mnazi Bay Concession has revised the estimate of the Company's share of the undiscounted, inflation-adjusted amount of cash flows required to settle decommissioning obligations for the infrastructure within the Mnazi Bay Concession to $3.7 million (initial estimated costs was $4.2 million). Estimates of the gross cost of abandonment to the JV has decreased from $9.8 million to $7.7 million as per a revised abandonment cost study prepared by TSB Offshore in 2021. The projected costs have decreased due to the expectation that a local contractor will perform the work. Costs have been discounted back to 2031, the current licence expiry date, however a further 10-year extension beyond this to 2041 would likely be awarded, deferring this expenditure until that date. The obligations have been estimated using existing technology at current prices inflated and discounted using discount rates that reflect current market assessments of the time value of money and the risks specific to each liability.

A reconciliation of the decommissioning obligations is provided below:

	2022 $000	2021 $000
Balance at 1 January	1,929	1,514
Change in accounting estimates	(250)	289
Accretion (Note 9)	139	126
Balance at 31 December	1,818	1,929

The change in the accounting estimate of ($250k) during the year comprises:

·       Change in inflation rate from 3.16% in 2021 to 4.20% in 2022 (2021: from 1.36 to 3.16%).

·       Revised estimated gross abandonment cost which has decreased from $9.8 million to $7.7 million in 2022 (2021: nil).

The same discount rate of 8.3% was used for year 2022 and 2021.

17.          Lease liability

	2022 $000	2021 $000
Balance at 1 January	82	-
Additions	11	124
Lease interest expenses	5	8
Lease payment	(57)	(50)
Balance at 31 December	41	82
Current	41	46
Non-current	-	36

During the year, the Company recognised a lease liability of $41k (2021: $82k), the whole amount is current (2021: $46k) and is presented in trade and other payables. The lease liability was initially recognised in year 2021 with the assumption that the office in Dar Es Salaam would have been leased for the next two years up to September 2023, however in case the lease is extended the lease liability will be revised.

18.          Repurchase of own shares

	2022 $000	2021 $000
Settlement of 866,572 ordinary shares at various prices each	243	-
Settlement of 7,500,000 ordinary shares at 20.0 pence (26 cents) each	-	1,982
	243	1,982

During 2022, the Company repurchased 867k ordinary shares totalling $243k, which were cancelled and removed from the share register during the first half of 2022 (see note 20).

During 2021, the Company repurchased 7.5 million ordinary shares totalling $2.0 million which included $1.2 million for 4.5 million ordinary shares repurchased on 17 December 2021, cancelled and removed from the share register on 30 December 2021. The balance of $793k for 3.0 million ordinary shares repurchased on 17 December 2021 was held in treasury and recognised within equity reserves at 31 December 2021 (see note 20) and used to satisfy upcoming obligations in respect of the employee share plan.

19.          Share-based payments

	2022 $000	2021 $000
Share based compensation recognised in the statement of Comprehensive income	1,108	537

Movement in the total number of share options outstanding and their related weighted average exercise prices are summarised as follows:

	2022		2021
	Number of options	Weighted average exercise price (US$)1		Number of options	Weighted average exercise price (US$)
Outstanding at 1 January	10,749,451	0.17		7,813,711	0.30
Granted	4,031,020	-		4,325,815	-
Forfeited	(500,000)	0.26		-	-
Lapsed	(495,422)	0.26		(1,390,075)	0.38
Outstanding at 31 December	13,785,049	0.07		10,749,451	0.17

The following table summarises share options outstanding and exercisable at 31 December 2022:

		Outstanding		Exercisable
Exercise price (NOK)	Exercise price (US$)1	Number of options	Weighted average remaining life (years)	Number of options
-	-	1,016,430	9.5	-
-	-	3,014,590	9.2	-
-	-	957,447	8.9	-
-	-	3,368,368	8.5	-
-	-	942,593	7.9	-
-	-	2,485,621	7.0	-
3.85	0.39	750,000	3.0	750,000
4.08	0.41	250,000	0.3	250,000
5.18	0.52	1,000,000	1.2	1,000,000
		13,785,049

1 The US Dollar to Norwegian Kroner exchange rate used for determining the exercise price at 31 December 2022 is 0.10135.

The following table summarises share options outstanding and exercisable at 31 December 2021:

		Outstanding		Exercisable
Exercise price (NOK)	Exercise price (US$)1	Number of options	Weighted average remaining life (years)	Number of options
-	-	957,447	9.9	-
-	-	3,368,368	9.5	-
-	-	942,593	8.9	-
-	-	2,485,621	8.0	-
-	-	495,422	7.4	-
3.85	0.44	750,000	4.0	750,000
4.08	0.46	250,000	1.3	250,000
5.18	0.59	1,500,000	2.2	1,500,000
		10,749,451		2,500,000

1 The US Dollar to Norwegian Kroner exchange rate used for determining the exercise price at 31 December 2021 is 0.11349.

Measurement of fair value

The fair value of share options is assessed on the grant date and the fair value is subsequently recognized as compensation expense over the vesting period which is three years. The fair value of options granted is measured at the date of the grant and is determined using the Black-Scholes option pricing model. The following table indicates weighted average grant date fair value and the assumptions used in the determination of the fair value of options granted during the year:

	2022	2021
Grant date fair value per option (US$)	0.53	0.55
Risk free interest rate (%)	4.25	4.25
Expected volatility (%)	64	59
Expected dividends (US$)	Nil	Nil

20.          Share capital

Authorised, called up, allotted and fully paid

	Ordinary shares		Par value
	2022	2021	2022 $000	2021 $000
Balance at 1 January	181,049,139	186,488,465	414,919	416,426
Repurchase of own shares: Cancelled and removed from share register during the first half of year 2022.	(866,572)	-	(243)	-
Repurchase of own shares: Cancelled and removed from share register on 3 February 2021.	-	(939,326)	-	(318)
Repurchase of own shares: Cancelled and removed from share register on 30 December 2021.	-	(4,500,000)	-	(1,189)
180,182,567 (2021: 181,049,139) ordinary shares	180,182,567	181,049,139	414,676	414,919

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

The 867k ordinary shares repurchased on various dates during the first half of 2022 were cancelled and removed from the share register during the same period.

The 939k ordinary shares repurchased in December 2020 were cancelled and removed from the share register on 3 February 2021. These ordinary shares have been removed from share capital.   

The 4.5 million ordinary shares repurchased on 17 December 2021 were cancelled and removed from the share register on 30 December 2021. These ordinary shares have been removed from share capital.

21.          Earnings per share

Basic and diluted eps

	2022 $000	2021 $000
Net (loss)/profit for the period	(12,980)	6,067
Weighted average number of ordinary shares outstanding	181,049,139	185,549,139
Weighted average number of own ordinary shares repurchased	(518,901)	(287,671)
	180,530,238	185,261,468
Dilutive effect of share options outstanding	11,785,049	8,249,451
Dilutive weighted average number of ordinary shares outstanding	192,315,287	193,510,919
Basic net profit per ordinary share	(0.07)	)0.03
Diluted net profit per ordinary share	(0.07)	0.03

During the year-ended 31 December 2022 2.0 million options (2021: 2.5 million options) were excluded from the dilutive weighted average number of shares outstanding because they were anti-dilutive.

During the year, the Company repurchased 867k own ordinary shares from shareholders. The Company cancelled all repurchased ordinary shares on various dates during the first half of 2022.

On 17 December 2021, the Company repurchased 7.5 million own ordinary shares from shareholders. On 30 December 2021, the Company cancelled 4.5 million repurchased ordinary shares (see note 18). The balance of 3.0 million ordinary shares were held in treasury to satisfy upcoming obligations in respect of an employee share plan.

22.          Dividends

The following dividends were declared and paid by the Company during the year.

	2022 $000	2021 $000
1.16 pence ($1.40 cents) per ordinary share (2021: 1.0 pence; ($ 0.14 cents; NOK 0.12205)	2,680	2,600
0.70 pence ($0.78 cents) per ordinary share (2021: 0.52 pence; $ 0.71 cents; NOK 0.06035)	1,453	1,320
Total dividend paid	4,133	3,920

On 23 July 2021 (and for VPS shareholders, 6 August 2021), the Company paid shareholders the final year 2020 dividend of 1.0 pence ($1.4 cents; NOK 0.12205) per ordinary share. The total final dividend distribution was $2.6 million.

On 8 October 2021 (and for VPS shareholders, 22 October 2021), the Company paid shareholders the 2021 interim dividend of 0.52 pence ($ 0.71 cents; NOK 0.06035) per ordinary share. The total interim dividend distribution was $1.3 million.

On 29 July 2022, the Company paid shareholders a final 2021 dividend of 1.16 pence ($1.40 cents) per ordinary share. The total final dividend distribution was $2.7 million.

On 7 September 2022, the Company paid shareholders an interim dividend of 0.70 pence ($0.78 cents) per ordinary share. The total interim dividend distribution was $1.5 million.

23.          Income taxes

Income taxes

A.     Amounts recognised in profit

	2022 $000	2021 $000
Current tax expense
Current year	4,064	163
Prior year	3,117	(4)
Withholding tax	1,393	1,162
	8,574	1,321
Deferred tax expense
Prior year	2,487	(71)
Current year	(8,466)	(2,645)
Previously unrecognized tax losses now recognised	(1,574)	-
Other temporary differences not recognised	229	80
Tax losses not recognised	1,467	1,256
	(5,857)	(1,380)
Income tax expense:	2,717	(59)

B.      Reconciliation of tax expense

The Company's income tax expense for the year-end 31 December is as follows:

	2022 $000	2021 $000
(Loss)/profit before income taxes	(10,263)	6,008
Expected (loss)/income tax expense at combined Tanzanian rate of 30% (2021: 30%)	(3,079)	1,802
Rate differentials	267	514
Tanzania cost gas excluded from taxable income	(96)	(4,661)
Tanzania dividend withholding tax	1,393	1,162
Tanzania prior year income tax1	3,117	(4)
Prior year deferred tax	2,487	(71)
Previously unrecognized tax losses now recognised	(1,574)	-
Other temporary differences not recognised	229	80
Tax losses not recognised	1,467	1,256
Movement in deferred tax assets not previously recognised and other adjustments2	(1,494)	(137)
Income tax expense:	2,717	(59)
Current tax	8,574	1,321
Deferred tax	(5,857)	(1,380)

1 Prior year income tax includes additional tax charges incurred subsequent to assessments by the Tanzanian Revenue Authority. The amount includes prior year CIT of $1.0 million incurred by WGL and $2.1 million incurred by CMBL

2Includes ($1.5 million) prior year adjustment on T&D receivable (2021: ($137k) Non-deductible expenses and non-taxable profit).

The current tax expense includes $3.0 million of CIT incurred by WGL (2021: $163k), withholding tax $1.4 million incurred by Wentworth Gas Jersey Limited ("WGJL") (2021: $1.2 million) and $1.8 million and $2.1 million of accrued CIT by CMBL for the years 2022 and 2021 respectively.

During the year 2021, Wentworth Resources plc fully recovered amounts it had historically loaned to its operating subsidiaries to explore for, and ultimately develop, gas in Mnazi Bay. The final intercompany loan repayments were made in May 2021. After this date, the repatriation of funds from the United Republic of Tanzania to Wentworth Resources plc was made by way of dividends which carry a 10% withholding tax charge. These charges totalled $1.3 million (2021: $1.2 million). The Group is in continued dialogue with the Government of the United Republic of Tanzania on the applicability of these charges to the PSA at Mnazi Bay, however, will continue to pay these charges in full until such time as talks are concluded and a final settlement is reached.

The Company operates in multiple jurisdictions with complex tax laws and regulations which are evolving over time. The Company has taken certain tax positions in its tax filings and these filings are subject to audit and potential reassessment after the lapse of considerable time. Accordingly, the actual income tax impact may differ significantly from that estimated and recorded by management.

The Company has unrecognised deductible temporary differences that results in unrecognised deferred income tax assets of:

	2022 $000	2021 $000
Non-capital losses	5,313	5,375
Property and equipment	(385)	(307)
	4,928	5,068

The total non-capital losses of the Company are $99.0 million (2021: $118.5 million) of which $81.0 million (2021: $104.0 million) are in Tanzania, $18.0 million (2021: $14.5 million) are in the UK.

A deferred tax asset is recognised to the extent that it is probable that taxable profit will be available against which deductible temporary differences and the loss carry forwards can be utilised. Recognition of the tax asset is supported by the proven and probable reserves as determined by a third-party external reserves engineer, RPS.

	2022 $000	2021 $000
Balance at 1 January	8,239	6,859
Deferred income tax assets recognised in profit or loss:
PP&E	(9,906)	1,688
Receivables	1,488	(3)
Non-capital losses	(5,500)	(518)
Asset retirement obligations	(36)	213
Balance at 31 December	14,097	8,239

The deferred tax balance at year end comprises:

	2022 $000	2021 $000
Property, plant and equipment	(12,107)	(22,014)
Trade and other receivables	1,488	-
Accumulated tax losses	24,172	29,673
Asset retirement obligation	544	580
Balance at 31 December	14,097	8,239

Accumulated tax loss carried forward of $80.6million (2021: $95.6 million) relate to the Company's Tanzanian subsidiary and are expected to be offset against future taxable income.

24.          Financial instruments

The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (currency fluctuations, interest rates and commodity prices). The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance. A full description of the key risks affecting the business is noted in the Business Risks section of the Strategic Report.

Credit risk

Wentworth's credit risk exposure is equal to the carrying value of its cash and cash equivalents, trade, other and long-term receivables. Credit terms are 30 days from the date of invoice. 

Trade and other receivables are comprised predominantly of amounts due from government owned entities in Tanzania and Value Added Tax ("VAT") in Tanzania. 

The Group's ongoing exposure to trade receivables from TANESCO, the state power company, relates to the gas sales from the Mnazi Bay Concession to a TANESCO owned 18-megawatt gas-fired power plant located in Mtwara, Tanzania. At 31 December 2022, the Mnazi Bay Concession partners were owed seven months of invoices for gas sales made to TANESCO, with $1.0 million owing to Wentworth (2021: $350k representing three months). After year-end, TANESCO has paid six invoices, $864k net to Wentworth.

At 31 December 2022, $265k receivable from the Operator representing two months gas sales was paid by TANESCO to M&P in November 2022, but payment to Wentworth was made in January 2023, (2021: $62k representing three months gas sales).

During 2015, the Group commenced gas sales to TPDC under a long-term gas sales agreement, the operator of the new transnational gas pipeline in Tanzania. Credit risk relating to sales to TPDC is substantially mitigated through a two-part payment guarantee structure. The first part relates to a prepayment amount of approximately three to four months of gas deliveries at current sales volumes which has been received and is held by the Operator of the Mnazi Bay Concession. The second part is a one-month replenishable letter of credit which is not yet executed.  At 31 December 2022, the Mnazi Bay Concession partners were owed one-month gas sales, with $2.5 million owing to Wentworth (2021: $1.9 million representing one-month gas sales invoice). Subsequent to the year-end, TPDC paid this invoice, $2.5 million net to Wentworth.

At 31 December 2022, $2.5 million receivable from Operator - M&P representing one month of gas sales which was paid by TPDC to M&P in December 2022 but payment to Wentworth was made in January 2023, (2021: $1.0 million representing three months gas sales for CMBL).

At 31 December 2022, an undiscounted long-term receivable of $6.5 million (2021: $6.5 million) related to the Group's disposal of T&D assets, and the costs associated with the MEP incurred in prior years by a wholly owned subsidiary of Wentworth. On February 6, 2012, the Company, TANESCO, TPDC and MEM reached an agreement that the Group's cost of historical operations in respect of the Mtwara Energy Project should be reimbursed (see note 11).

The Group's cash and cash equivalents of $30.9 million as at 31 December 2022 (2021: $22.8 million). are held with financial institutions which are rated below. Wherever possible ratings are provided by Fitch Ratings, however, where no rating was available from either Fitch Ratings or either of the other major international credit rating agencies such as Standard & Poors or Moodys, the bank's local credit rating was used:

Financial Institutions	Rating	2022 Cash held $000	2021 Cash held $000
Standard Bank	BB-	15,045	12,270
Santander	A+	11,948	7,553
Absa Bank	BB-	2,691	12
FirstRand Bank	BB-	-	2,516
Tanzania Commercial Bank	-	733	245
Citibank Group	A	276	120
Exim Bank	-	123	-
Mauritius Commercial Bank Limited	BB-	92	92
RBC Royal Bank	AA	6	10
Petty cash	N/A	2	2
		30,916	22,820

The exposure to credit risk as at 31 December:

	2022 $000	2021 $000
Trade and other receivables 1	6,534	4,181
Cash and cash equivalents	30,916	22,820
	37,450	27,001

1 Trade and other receivable exclude recoverable VAT and prepaid corporate income tax of $4.6 million (2021: $1.4 million).

Aged trade and other receivables

	Current  1-30 days $000	Overdue, but not impaired			Total $000
31-60  days $000	61-90  days $000	>90  days $000
Balance at 31 December 2022
Trade receivables	2,787	2,644	147	683	6,261
Other receivables	2,705	-	-	2,135	4,840
	5,492	2,644	147	2,818	11,101
Balance at 31 December 2021
Trade receivables	2,410	506	397	42	3,355
Other receivables	288	-	-	1,907	2,195
	2,698	506	397	1,949	5,550
				Current  1-30 days $000		Overdue, but not impaired
31-60  days $000	61-90  days $000	>90  days $000
Balance at 31 December 2022
Trade receivables				2,787		2,644
Other receivables				2,705		-
				5,492		2,644
Balance at 31 December 2021
Trade receivables				2,410		506
Other receivables				288		-
				2,698		506

The movement in the allowances for impairment in respect of trade receivables and contract assets during the year was as follows (see note 10):

	2022 $000	2021 $000
Balance as at 1 January	-	11
Impairment loss recognized	-	(11)
Balance as at 31 December	-	-

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient funds to meet its liabilities as they become payable. Other than routine trade and other payables, incurred in the normal course of business.

The table below summarises the maturity profile of the Company's financial liabilities based on contractual undiscounted payments including future interest payments on long-term loans.

	Less than 1 year $000	1 to 2 years $000	2 to 5 years $000	Total $000
Balance at December 31, 2022
Trade and other payables	3,873	-	-	3,873
	3,873	-	-	3,873
Balance at December 31, 2021
Trade and other payables	2,503	-	-	2,503
Lease liability	-	36	-	36
	2,503	36	-	2,539

Trade and other payables include the current lease liability of $41k (2021: $46k).

The fair value of the Company's trade and other payables approximates their carrying values due to the short-term nature of these instruments.  The fair value of the long-term loans approximates their carrying amounts as they bear market rates of interest. The fair value of the other liability approximates its carrying amount.

The Company has a working capital surplus at 31 December 2022 and generated positive cash flow from operations in 2022. The Company plans to pay its financial liabilities in the normal course of operations and fund future operating and capital requirements through operating cash flows, bank debt, bank overdraft credit facility and equity raises, when deemed appropriate.  Operating cash flow of the Company is dependent upon the purchasers of natural gas, TPDC and TANESCO, continuing to meet their payment obligations. Any delays in collecting funds from these purchasers for an extended period could negatively impact the Company's ability to pay its financial liabilities in a timely manner in the normal course of business (see also capital management section).

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of foreign currency risk, interest rate risk and other price risk (e.g. commodity price risk). The objective of market risk management is to manage and control market price exposures within acceptable limits, while maximising returns.

Commodity price risk

Commodity price risk is the risk that the Company suffers financial loss as a result of fluctuations in oil or natural gas prices.  The Company's exposure to commodity price risk is mitigated as the sale prices for gas sold by the Company is fixed under the existing gas sale and purchase agreements. An increase of 1% in the gas production would result in an increase of $88k (2021: $70k) in revenue.

Foreign exchange risk

Foreign exchange rate risk is the risk that the Company suffers financial loss as a result of changes in the value of an asset or liability or in the value of future cash flows due to movements in foreign currency exchange rates.  Wentworth operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Tanzanian Shilling and Pound Sterling against the functional currency of its operating entities, the US dollar. The Company's objective is to minimise its risk by borrowing funds in US dollars as revenues are denominated in US dollars. In addition, the Company holds substantially all its cash and cash equivalents in US dollars and converts to other currencies only when cash requirements demand such conversion. 

Current receivables and liabilities denominated in various currency:

	Pound Sterling $000	Tanzanian Shilling $000	Other Currency $000	United States Dollar $000	Total $000
Balance at 31 December 2022
Cash and cash equivalents	6,702	223	107	23,884	30,916
Trade and other receivables	-	984	92	10,025	11,101
Trade and other payables	(162)	(870)	(9)	(4,582)	(5,623)
	6,540	337	190	29,327	36,394
	Pound Sterling 000	Tanzanian Shilling $000	Other Currency $000	United States Dollar $000	Total $000
Balance at 31 December 2021
Cash and cash equivalents	91	287	111	22,331	22,820
Trade and other receivables	899	645	92	3,914	5,550
Trade and other payables	(49)	(193)	-	(2,261)	(2,503)
	941	739	203	23,984	25,867

A 10% increase of the Pound Sterling against US dollar would result in a change in loss before tax of $106k (2021: $3k) and the opposite will be true for the decrease. In addition, a 10% increase of the Tanzanian shilling against the US dollar would result in a change in loss before tax of approximately $12k (2020: $2k) and the opposite will be true for the decrease.

Financial instrument classification and measurement

The Company classifies the fair value of financial instruments according to the following hierarchy based on the number of observable inputs used to value the instrument:

·    Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

·    Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1. Prices in Level 2 are either directly or indirectly observable as of the reporting date. Level 2 valuations are based on inputs, including expected interest rates, share prices, and volatility factors, which can be substantially observed or corroborated in the marketplace.

·    Level 3 - Valuation in this level are those with inputs for the asset or liabilities that are not based on observable market data.

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

	Carrying amount 2022 $000	Fair value 2022 $000	Level 1 2022 $000	Level 2 2022 $000	Level 3 2022 $000	Carrying amount 2021 $000	Fair value 2021 $000	Level 1 2021 $000	Level 2 2021 $000	Level 3 2021 $000
Loans and receivables
Cash and cash equivalent	30,916	-	-	-	-	22,820	-	-	-	-
Trade and other receivables (note 10)	7,538	-	-	-	-	5,172	-	-	-	-
Total financial assets	38,454	-	-	-	-	27,992	-	-	-	-
Financial liabilities measured at amortised cost
Trade and other payables (note 15)	(3,873)	(41)	-	(41)	-	(2,503)	(46)	-	(46)	-
Lease liability (note 17)	-	-	-	-	-	(36)	(36)	-	(36)	-
Total financial liabilities	(3,873)	(41)	-	(41)	-	(2,539)	(82)	-	(82)	-
Total financial instruments	34,581	(41)	-	(41)	-	25,453	(82)	-	(82)	-

Capital management

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern, to develop its oil and gas properties and maintain a flexible capital structure for its projects for the benefit of its stakeholders. In the management of capital, the Company includes the components of shareholders' equity as well as cash and long-term liabilities.

The Company manages the capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets. As part of its capital management process, the Company prepares budgets and forecasts, which are used by management and the Board of Directors to direct and monitor the strategy, ongoing operations and liquidity of the Company. Budgets and forecasts are subject to judgement and estimates such as those relating to future gas demand and ultimate timing of collectability of trade receivables for gas sales.  These factors may not be within the control of the Company, which may create near term risks that may impact the need to alter the capital structure. The Company continues to effectively manage its relationships with its gas purchasers to ensure timely collection and with external lenders such that lending facilities are available to the Company as and when needed. The Company may attempt to issue new shares, enter into joint arrangements or acquire or dispose of assets to maintain or adjust the capital structure. Management reviews the capital structure on a regular basis to ensure that the above-noted objectives are met. The Company's overall strategy remains unchanged from the prior year. At 31 December 2022 and 2021 there was no net debt.

25.          Related party transactions

Transactions with key management personnel

Details of Directors' remuneration, which comprise key management personnel, are provided below:

	2022 $000	2021 $000
Executive director short-term employee benefits	741	828
Non-executive directors' short-term employee benefits	272	529
LTIP charges	795	403
	1,808	1,760

Further details of the Directors' remuneration can be found in the Remuneration Report on pages 54 to 63 of the Annual Report.

26.          Supplemental cash flow information

Finance income:

	2022 $000	2021 $000
Finance income
Foreign exchange gain	431	-
Interest income	178	128
Gain on disposal	16	-
Reversal of expected credit losses on TANESCO receivable (note 10)	-	11
	625	139
Finance costs
Accretion - decommissioning provision	(139)	(126)
Bank charges	(33)	(21)
Lease interest expenses	(5)	(8)
Foreign exchange loss	-	(137)
Renewal fee on overdraft facility	-	(19)
	(177)	(311)
Finance costs, net	448	(172)

27.          Commitments

Lease commitment

The Group has an office leasehold agreement in Dar es Salaam, Tanzania which was entered into on 1 October 2022 and expires on 30 September 2023 at an annual lease cost of $57k.

Capital commitment

At the date of this report, the Company had an outstanding contractual work programme commitment with respect to the compression project, a gross firm budget for which totalled $13.5 million ($11.1 million net to Wentworth) and a contingent budget of $6.9 million ($2.2 million net to Wentworth). The work programme is expected to be implemented within the coming year.

28.          Subsequent events

On 5th December, the Company and M&P reached agreement on the terms of a recommended acquisition of the entire issued and to be issued share capital of the Company by M&P (the "Acquisition").

Detailed information on the Proposed Transaction is available on Wentworth's website (https://www.wentplc.com/investors/offer-for-wentworth/).

On 23 February 2023, the Company announced that, at the Court Meeting and the General Meeting held earlier that day, the following were the results: -

·      the requisite majority of Scheme Shareholders voted to approve the Scheme at the Court Meeting; and

·      the requisite majority of the Company shareholders voted to pass the resolution in connection with the amendment of the Company Articles and the implementation of the Scheme at the General Meeting.

On 7 June 2023, representatives of the Company and M&P attended a preliminary hearing before the FCC in Tanzania, at which various Tanzanian governmental parties were present.  A number of concerns were raised at the hearing, which may impact the likelihood of the FCC to approve the acquisition in its current form. A ruling is expected in the coming weeks.

On 12 June 2023, the Company received a letter from TPDC dated 9 June 2023 by which TPDC has notified Wentworth Gas Limited, the Company's main operating subsidiary, of its decision purportedly to exercise its right of first refusal in respect of Company's interest in the Mnazi Bay asset pursuant to section 86(7) of the Tanzanian Petroleum Act, Cap 392 (the "ROFR").

The ROFR grants TPDC a right of first refusal to acquire a participating interest that is intended to be assigned to a non-affiliate.  The ROFR does not, however, entitle TPDC to a right of first refusal (or similar right) in connection with any indirect sale of a participating interest arising as a result of the acquisition of shares in Company itself, which in the case of the acquisition will in any event occur only after sanction of the Scheme by the Royal Court of Jersey.

Discussions with TPDC and the FCC on the way forward and resolution of these issues are ongoing as at the date of this report.

LTIP Vesting

On 3 January 2023 the performance period ended in respect of conditional rights over 2,485,621 ordinary shares in the Company granted to Katherine Roe, CEO. Following review by the Remuneration Committee, 98.1% of the Award, representing 2,437,376 ordinary shares vested. The Award was satisfied by the transfer of 1,291,809 ordinary shares held in treasury and the payment of

£459,574 ($601,973) which included the sum of £104,448 ($136,841) in respect of dividend equivalents which the Remuneration Committee determined to pay.

Non-IFRS Measures

The Group uses certain performance measures that are not specifically defined under IFRS, or other generally accepted accounting principles. These non-IFRS measures include adjusted EBITDAX and operational costs of production ($/Mscf). The following note describes why the Group has selected this non-IFRS measure.

Adjusted EBITDAX

Adjusted EBITDAX is a non-IFRS measure which does not have a standardised meaning prescribed by IFRS. This non-IFRS measure is included because management uses the information to analyse cash generation and financial performance of the Group. Adjusted EBITDAX is defined as earnings before interest, taxation, depreciation, depletion and amortisation, impairment, share-based payments, provisions, and pre-licence expenditure The calculations of adjusted EBITDAX are as follows:

2022             2021

($000)          ($000)

Revenue                                                                                  37,709         23,818

Less: production and operating costs                                (4,273)         (3,800)

Less: recurring administrative costs                                  (7,721)         (6,424)

EBITDAX                                                                                  25,715          13,594

Operating costs per Mscf is a non-IFRS measure used to monitor the Group's operating cost efficiency, as it measures operating costs to extract hydrocarbons on a unit basis. Operating costs per Mscf is defined as total production costs excluding depletion. Adjusted aggregate production cost is then divided by total production for the prevailing period, to determine the unit cost per Mscf.

2022             2021              

Production and operating costs ($000)                             (4,273)         (3,800)

Net entitlement to gas production (MMscf)                     8,588            6,904

Production and operating cost ($/Mscf)                           (0.50)           (0.55)            

Standard

Cameron Snow, Head of Subsurface and Business Development, is a geologist with 16 years' experience across North America, South America, Africa, and Europe. He holds a BS in Geology from North Carolina State University, an MS in Geology from Utah State University, a PhD in Geological and Environmental Science from Stanford University, and an MBA from Imperial College London. Mr. Snow has read and approved the technical disclosure in this regulatory announcement.

RESERVE DEFINITIONS

The following definitions have been used by RPS Energy Canada Ltd. (RPS) in evaluating reserves. These definitions are based on the Petroleum Resources Management System, published in 2007, and revised in June 2018, and sponsored by the Society of Petroleum Engineers (SPE), World Petroleum Council (WPC), American Association of Petroleum Geologists (AAPG), Society of Petroleum Evaluation Engineers (SPEE), Society of Exploration Geophysicists (SEG), Society of Petrophysicists and Well Log Analysts (SPWLA), and the European Association of Geoscientists & Engineers (EAGE).

Reserves

Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must satisfy four criteria: discovered, recoverable, commercial, and remaining (as of the evaluation's effective date) based on the development project(s) applied. Reserves are classified according to a range of uncertainty according to the following categories:

Proved Reserves (P1)

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. If deterministic methods are used, the term "reasonable certainty" is intended to express a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate.

Probable Reserves (P2)

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. It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated Proved plus Probable Reserves (2P). In this context, when probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the 2P estimate.

Glossary

Bcf/Bscf	Billion standard cubic feet
BOE	Barrels of oil equivalent
MMbbl	Million barrels
MMboe	Million barrels of oil equivalent
MMscf/d	Million standard cubic feet per day
NPV	Net present value (at a specified discount rate and specified discount date)

Inside Information

The information contained within this announcement is deemed by Wentworth to constitute inside information as stipulated under the Market Abuse Regulation (EU) no. 596/2014 ("MAR"). On the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

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