TOWER RESOURCES PLC — Annual Report 2014

Mar 16, 2015

Wentworth Resources Limited Consolidated Financial Statements

For the year ended December 31, 2014 and 2013

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

To the Shareholders of Wentworth Resources Limited:

Management is responsible for the preparation and presentation of the accompanying consolidated financial statements, including responsibility for significant accounting judgments and estimates in accordance with International Financial Reporting Standards. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the measurement of transactions in which objective judgment is required.

In discharging its responsibilities for the integrity and fairness of the consolidated financial statements, management designs and maintains the necessary accounting systems and related internal controls to provide reasonable assurance that transactions are authorized, assets are safeguarded, and financial records are properly maintained to provide reliable information for the preparation of consolidated financial statements.

The Audit Committee is responsible for overseeing management in the performance of its financial reporting responsibilities, and for approving the consolidated financial statements. The Audit Committee fulfils these responsibilities by reviewing the financial information prepared by management and discussing relevant matters with management and external auditors. The Audit Committee is also responsible for recommending the appointment of the Company's external auditors.

KPMG LLP, an independent firm of Chartered Accountants, is appointed by the Board of Directors to audit the consolidated financial statements and report directly to them; heir report follows. The external auditors have full and free access to both the Audit Committee and management to discuss their audit findings.

(Signed) "Robert McBean" (Signed) "Geoffrey Bury" Executive Chairman Managing Director

Calgary, Alberta March 13, 2015

KPMG LLP Telephone (403) 691-8000 205 - 5th Avenue SW Fax (403) 691-8008 Suite 3100, Bow Valley Square 2 www.kpmg.ca Calgary AB T2P 4B9

INDEPENDENT AUDITORS' REPORT

To the Shareholders of and Directors of Wentworth Resources Limited

We have audited the accompanying consolidated financial statements of Wentworth Resources Limited, which comprise the consolidated statements of financial position as at December 31, 2014 and December 31, 2013, the consolidated statements of comprehensive income (loss), changes in equity and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG Canada provides services to KPMG LLP.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Wentworth Resources Limited as at December 31, 2014 and December 31, 2013, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards as adopted by the International Accounting Standards Board.

Emphasis of Matter

Without modifying our opinion, we draw attention to Note 2 in the consolidated financial statements which describes that there is no certainty that the Company will be able to obtain the financing required to meet its ongoing commitments for exploration and development programs. This condition, along with other matters as set forth in Note 2, indicates the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.

Chartered Accountants

March 13, 2015 Calgary, Canada

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG Canada provides services to KPMG LLP.

Consolidated Statement of Financial Position

United States \$000s, unless otherwise stated

	Note	December 31, 2014	December 31, 2013
ASSETS
Current assets
Cash and cash equivalents		5,487	14,501
Short-term investments		-	23,176
Trade and other receivables		2,613	1,845
Prepayments, deposits and advances to partners		1,418	1,674
Current portion of long-term receivables	6	14,530	658
		24,048	41,854
Non-current assets
Long-term receivables	6	19,472	28,661
Exploration and evaluation assets	7	33,762	50,636
Property, plant and equipment	8	85,035	18,498
		138,269	97,795
Total assets		162,317	139,649
LIABILITIES Current liabilities
Trade and other payables		8,204	3,487
		8,204	3,487
Non-current liabilities
Long-term loans	10	5,718	3,816
Contingent long-term liability	11	2,271	2,836
Decommissioning provision	9	782	685
		8,771	7,337
EQUITY
Share capital	15	404,225	403,998
Equity reserve		24,916	23,903
Accumulated deficit		(283,799)	(299,076)
		145,342	128,825
Total liabilities and equity		162,317	139,649

Going concern (Note 2) Commitments (Note 20) Contingencies (Note 21)

The accompanying notes are an integral part of these consolidated financial statements

Approved by the Board of Directors and Management

(Signed) "Robert P. McBean"	(Signed) "John W.S. Bentley"	(Signed) "Cameron Barton"
Chairman of the Board	Deputy Chairman	Non-Executive Director
(Signed) "Neil Kelly"	(Signed) Richard Schmitt	(Signed) "Geoffrey Bury"
Non-Executive Director	Non-Executive Director	Managing Director

Consolidated Statement of Comprehensive Income/(Loss)

United States \$000s, unless otherwise stated

			Year ended December 31,
	Note	2014	2013
Revenue		1,060	955
Operating expenses
Production and operating		(2,592)	(1,656)
General and administrative		(6,826)	(7,931)
Share based compensation	14	(1,090)	(362)
Depreciation and depletion	8	(542)	(451)
Gain from sale of office assets	8	60	-
Reversal of impairment on exploration and evaluation assets	7	13,384	-
Reversal of impairment on property, plant and equipment	8	10,421	-
Income/(loss) from operating activities		13,875	(9,445)
Gain on derivative financial liability	12	-	610
Finance income	13	5,914	5,266
Finance costs	13	(4,512)	(6,420)
Net income/(loss) and comprehensive income/(loss)		15,277	(9,989)
Net income/(loss) per ordinary share
Basic and diluted (US\$/share)	16	0.10	(0.11)

The accompanying notes are an integral part of these consolidated financial statements

WENTWORTH RESOURCES LIMITED Consolidated Statement of Changes in Equity

United States \$000s, unless otherwise stated

	Note	Number of shares	Share capital \$	Equity reserve \$	Accumulated deficit \$	Total equity \$
Balance at December 31, 2012 Net loss and comprehensive loss Reclassification of warrants Share based compensation	12 14	82,503,940 - - -	361,675 - - -	21,996 - 1,678 362	(289,087) (9,989) - -	94,584 (9,989) 1,678 362
Issue of share capital Share issue costs Balance at December 31, 2013	15 15	71,368,760 - 153,872,700	46,200 (3,877) 403,998	(133) - 23,903	- - (299,076)	46,067 (3,877) 128,825
Balance at December 31, 2013 Net income and comprehensive income		153,872,700 -	403,998 -	23,903 -	(299,076) 15,277	128,825 15,277
Share based compensation Issue of share capital	14 15	- 250,000	- 227	1,090 (77)	- -	1,090 150
Balance at December 31, 2014		154,122,700	404,225	24,916	(283,799)	145,342

The accompanying notes are an integral part of these consolidated financial statements

Consolidated Statement of Cash Flows

United States \$000s, unless otherwise stated

	Year ended December 31,
	Note	2014	2013
Operating activities
Net income/(loss) for the year Adjustments for:		15,277	(9,989)
Share based compensation	14	1,090	362
Depreciation and depletion	8	542	451
Finance loss/(income), net		(1,402)	679
Reversal of impairment on exploration and evaluation assets	7	(13,384)	-
Reversal of impairment on property, plant and equipment	8	(10,421)	-
Gain on sale of office assets	8	(60)	-
Gain on derivative financial liability		-	(610)
Change in non-cash working capital	19	(1,092)	1,288
Cash used in operating activities		(9,450)	(7,819)
Investing activities
Additions to evaluation and exploration assets	7	(22,869)	(6,045)
Additions to property, plant and equipment	8	(3,533)	(975)
Short-term investments		23,176	(23,176)
Interest income		100	70
Net (reduction)/increase of long-term receivables		(365)	301
Proceeds from sale of office assets		62	-
Change in non-cash working capital	19	4,454	1,958
Cash provided by/(used in) investing activities		1,025	(27,867)
Financing activities
Issue of share capital, net of share issue costs		150	42,190
Net proceeds from long-term loan	10	5,715	9,887
Repayment of long-term loan	10	(6,000)	(10,036)
Interest paid	10	(341)	(561)
Repayment of other long-term liability		(113)	(645)
Cash (used in)/provided by financing activities		(589)	40,835
Net change in cash and cash equivalents		(9,014)	5,149
Cash and cash equivalents, beginning of the year		14,501	9,352
Cash and cash equivalents, end of the year		5,487	14,501

The accompanying notes are an integral part of these consolidated financial statements

1. Nature of business

Wentworth Resources Limited ("Wentworth" or the "Company") is an East Africa-focused oil and natural gas explorer and producer. These consolidated financial statements include the accounts of the Company and its subsidiaries (collectively referred to as "Wentworth Group of Companies" or the "Group"). Wentworth is actively involved in exploring for oil and gas and in developing commercial opportunities for identified hydrocarbon resources. Wentworth is incorporated in Canada and shares of the Company are widely held and listed on the Oslo Stock Exchange (ticker: WRL) and the AIM Market of the London Stock Exchange (ticker: WRL).

The Company has offices located in Calgary, Canada and Dar es Salaam, Tanzania.

2. Going concern

These financial statements have been prepared on a going concern basis. The going concern basis of presentation assumes that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

The ability of the Company to continue as a going concern is dependent on the Company's ability to obtain financing to fund the ongoing exploration and development capital programs until such time as cash flow from operations is sufficient to fund its future exploration and development program. There is no certainty that the Company will be able to obtain the financing required to meet its ongoing commitments for the exploration and development programs.

At December 31, 2014, the Company has cash and cash equivalents of \$5,487 to fund its planned exploration and corporate activities prior to the commissioning of the Mtwara to Dar es Salaam gas pipeline in Tanzania which is expected during Q2 2015. During Q4 2014, the Company secured two credit facilities totaling \$26,000 with a Tanzanian bank. An amount of \$6,000 was used to repay an existing \$6,000 loan facility with the remaining facility amount to be used to fund development capital within its Mnazi Bay Concession in Tanzania. Should additional exploration and development activity take place prior to generating sufficient cash flow from its gas assets in Tanzania or should the generation of cash flow from the sales of natural gas to the new government pipeline be delayed beyond Q2 2015, additional funding obtained from debt or equity may be necessary.

The potential need to obtain financing, may create significant doubt about the Company's ability to continue as a going concern. The financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. If the going concern basis were not appropriate for these financial statements, then adjustments would be necessary in the carrying value of assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.

3. Summary of accounting policies

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 International Financial Reporting Standard ("IFRS") as issued by the International Accounting Standards Board ("IASB"). These consolidated financial statements are presented in United States (US) dollars.

The consolidated financial statements were approved by the Board of Directors on March 13, 2015.

Functional and presentation currency

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

United States \$000s unless otherwise stated

3. Summary of accounting policies (continued)

Basis of consolidation

These consolidated financial statements include the accounts of the Company and its subsidiaries (collectively referred to as "Wentworth Group of Companies" or the "Group"). 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 has the ability to affect those returns through its power 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 following legal entities are within the Wentworth Group of Companies:

Legal Entity	Registered	Holdings at	Functional
		December 31, 2014	Currency
Wentworth Resources Limited	Canada	Ultimate Parent	US dollar
		Company
Wentworth Resources (UK) Limited	United Kingdom	100%	GBP
Wentworth Holdings (Jersey) Limited	Jersey	100%	US dollar
Wentworth Tanzania (Jersey) Limited	Jersey	100%	US dollar
Wentworth Gas (Jersey) Limited	Jersey	100%	US dollar
Wentworth Gas Limited	Tanzania	100%	US dollar
Cyprus Mnazi Bay Limited	Cyprus	39.925%	US dollar
Wentworth Mozambique (Mauritius) Limited	Mauritius	100%	US dollar
Wentworth Mocambique Petroleos, Limitada	Mozambique	100%	US dollar

Wentworth Mtwara (Jersey) Limited, Wentworth Power (Jersey) Limited and Umoja Light Company (Jersey) Limited were dissolved during 2014. These legal entities were wholly owned holding companies with no assets or liabilities.

The Group recognized its share of Cyprus Mnazi Bay Limited ("CMBL") which results in the consolidated financial statements reflecting the Groups 31.94% participation interest in the Mnazi Bay Concession. The Group holds its interest in the Mnazi Bay concession through two subsidiaries. Wentworth Gas Limited, which is a wholly owned subsidiary, owns a 25.40% participation interest and CMBL owns a 16.38% participation interest of which the Group's proportionate share is 6.54% (e.g. based on Wentworth's interest of 39.925% interest in CMBL multiplied by 16.38% participation interest).

CMBL is a jointly controlled entity and under IFRS 11, Joint Arrangements, the Group proportionately consolidates CMBL as the related contractual agreements establish that the parties to the joint arrangement share the rights and obligations of ownership in proportion to their interest in the arrangement.

All inter-company transactions, balances and unrealized gains on transactions between the parent and subsidiary companies are eliminated.

New standards adopted in 2014

The following new standards, interpretations, amendments and improvements to existing standards issued by the International Accounting Standards Board ("IASB") or International Financial Reporting Standards Interpretations Committee ("IFRIC") were adopted as of January 1, 2014 without any material impact to the Company's Financial Statements: IAS 32 Financial Instruments and IFRIC 21 Levies.

Notes to the Consolidated Financial Statements

United States \$000s unless otherwise stated

3. Summary of accounting policies (continued)

Measurement uncertainty and use of estimates and judgements

In applying the Company's accounting policies, which are described in Note 3, the preparation of consolidated financial statements requires management to make estimates, judgements 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 valuation of E&E and PP&E, value of contingent payments, decommissioning obligations, collectability of long-term receivables, determination of joint arrangements, and going concern.

The Company's significant accounting judgments and estimates are set out in Note 2 and below

Cash generating units ("CGU's")

Cash generating units ("CGUs") are defined as the lowest grouping of integrated assets that generate identifiable cash inflows that are largely independent of the cash inflows of other assets or group of assets. The classification of assets into cash generating units requires significant judgment and interpretations with respect to the integration between assets, the existence of active markets, external users, shared infrastructures and the way in which management monitors the Company's operations.

Carrying value of exploration and evaluation assets and PP&E

Exploration and evaluation assets are inherently judgmental to value and further details on the accounting policy are included in this accounting note. The amounts for exploration and evaluation assets represent active exploration projects. These amounts will be written off to the income statement as exploration costs unless commercial reserves are established or the determination process is not completed and there are no indications of impairment at the reporting date. The outcome of ongoing exploration and evaluation activities, and therefore whether the carrying value of exploration and evaluation assets will ultimately be recovered, is inherently uncertain.

Management performs impairment tests on the Company's property, plant and equipment if 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 capitalization and industry trends. In addition, the impairment assessment is impacted by how management determines the composition of CGUs. Management has grouped assets into CGUs based on several factors with a primary focus on assets whose cash flows are interdependent. If impairment indictors are present an impairment test is required to be performed and the CGU is written down to its recoverable amount. In determining the recoverable amount of assets, in the absence of quoted market prices, impairment tests are based on estimate of reserves, production rates, future oil and natural gas prices, future costs, discount rates, market value of land and other relevant assumptions.

Reserve estimates

Oil and natural gas reserves are used in the calculation of depletion, impairment and impairment reversals. 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 interpretations. The Company expects that, over time, its reserve estimates will be revised upward or downward based on updated information such as the results of future drilling, testing and production levels and may be affected by changes in commodity prices.

Decommissioning provisions

The costs of decommissioning are reviewed annually and are estimated by reference to information provided by operators and where applicable third party consulting engineers. Provisions for future clean-up and remediation costs is based on current legal and constructive requirements, technology and price levels.

United States \$000s unless otherwise stated

3. Summary of accounting policies (continued)

Contingent payments

The estimate of the contingent payments (Note 11) is based on assumptions of the quantities and timing of future gas production volume quantities from the Mnazi Bay Concession and estimating a discount rate.

Taxes

The Group operates in countries where the legal and tax systems are less developed which increase the requirement for management to make estimates and assumptions as to whether certain payments will be required related to matters such as income taxes, value added taxes, other in-direct taxes and legal contingencies. A provision is recognized in the financial statements for such matters if it is considered probable that a future outflow of resources will be required. The provision, if any, is subject to management estimates and judgments with respect to the outcome of the event, the costs to defend, the quantum of the exposure and past practice in the country.

Collectability of long-term receivables

Collectability of the receivable from Tanzania Petroleum Development Corporation ("TPDC") and the Tanzanian government receivable (Umoja/power) involves estimating the quantities and timing of future gas production volume quantities from the Mnazi Bay Concession and estimating a discount rate in addition to assessing credit risk (Note 6).

Joint Arrangements

The analysis of joint arrangements requires management to analyze numerous agreements and the requirements of IFRS 10 and IFRS 11. Several judgments and estimates are made by management including whether joint control exists and the extent of exposure to the underlying assets and liabilities of the joint arrangement. The Company has a joint arrangement through its 39.925% ownership in Cyprus Mnazi Bay Limited.

Financial instruments

All financial instruments are initially recognized at fair value on the consolidated statement of financial position. The Company has classified each financial instrument into one of the following categories: i) fair value through profit and loss, ii) loans and receivables, and iii) other financial liabilities. Subsequent measurement of financial instruments is based on their classification.

Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Financial assets and liabilities are offset and the net amount is reported on the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intent to settle on a net basis, or realize the asset and settle the liability simultaneously.

United States \$000s unless otherwise stated

3. Summary of accounting policies (continued)

Financial instruments (continued)

At initial recognition, the Company classifies its financial instruments in the following categories depending on the purpose for which the instruments were acquired:

(i) Financial assets and liabilities at fair value through profit and loss

A financial asset or liability classified in this category is recognized at each period at fair value with gains and losses from revaluation being recognized in net income. A financial asset or liability is classified in this category if acquired principally for the purpose of selling or repurchasing in the short-term. Derivatives are also included in this category unless they are designated as hedges.

(ii) Loans and receivables

Loans and receivables are initially measured at fair value plus directly attributable transaction costs and are subsequently recorded at amortized cost using the effective interest method.

Long-term receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Long-term receivables are initially recognized at fair value based on the discounted cash flows. The discount rate is based on the credit quality and term of the financial instrument. The financial instrument is subsequently valued at amortized costs by accreting the instrument over the expected life of the assets. The accretion associated with instruments valued at amortized cost is reported on the statement of comprehensive income/(loss) each reporting period.

The fair value of the Company's trade and other receivables approximates their carrying values due to the shortterm nature of these instruments.

(iii) Other financial liabilities

Other financial liabilities are initially measured at fair value less directly attributable transaction costs and are subsequently recorded at amortized cost using the effective interest method.

Long-term loans and other long term liabilities are non-derivative financial assets with either fixed or determinable payments or no payment terms and which are not quoted in an active market.

Long term loans are initially recognized at fair value based on the amounts received.

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, in the opinion of management, are subject to an insignificant risk of changes in value.

Short-term investments

Short term investments is comprised of term deposits with original maturity of greater than three months and less than a year in a reputable bank in the United Kingdom

United States \$000s unless otherwise stated

3. Summary of accounting policies (continued)

Long-term receivables

Long-term receivables plus applicable accrued interest is initially recognized at its fair value based on the discounted cash flows. The discounted cash flows are reviewed at least every year to adjust for variations in the estimated future cash flows. The discount rate is based on the credit quality and term of the financial instrument. The financial instrument is subsequently valued at amortized costs by accreting the instrument over the life of the asset. The accretion is reported in profit or loss.

Exploration and evaluation assets, property, plant and equipment

Exploration and evaluation assets

Exploration and evaluation ("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 capitalized as E&E assets according to the nature of the assets acquired. The 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 mineral resource is generally considered to be determinable when proven and/or probable reserves are determined to exist. A review of each exploration license 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 and then reclassified from E&E assets to a separate category within tangible assets within property, plant and equipment referred to as oil and gas interests.

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

Property, plant and equipment - crude oil and natural gas properties

Items of property, plant and equipment ("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 crude oil and natural gas properties are capitalized 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 comprises 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 item of PP&E, including oil and gas interests, have different useful lives, they are accounted for as separate items (major components).

Costs incurred subsequent to the determination of technical feasibility and commercial viability and the costs of replacing parts of PP&E are recognized as 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. All other expenditures are recognized in profit or loss as incurred. Such capitalized 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 derecognized. The costs of the day-to-day servicing of PP&E are recognized in profit or loss as incurred.

Notes to the Consolidated Financial Statements

United States \$000s unless otherwise stated

3. Summary of accounting policies (continued)

Exploration and evaluation assets, property, plant and equipment (continued)

Depletion

The net carrying amount of development or production assets 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. 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 taking into account the level of development required to produce the proven and probable reserves. These estimates are reviewed by independent reserve 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

Crude oil and natural gas properties are derecognized 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 recognized in profit or loss in the period of derecognition.

Property, plant and equipment - office and other equipment

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

Decommissioning obligation

Decommissioning obligations are recognized 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 recognized in the period in which it is incurred and when a reasonable estimate of the liability can be made with the corresponding decommissioning provision recognized by increasing the carrying amount of the related long-lived asset. The 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

Non-financial assets

The carrying amounts of the Company's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment.

E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount exceeds the recoverable amount and when they are reclassified to PP&E assets. For the purpose of impairment testing, E&E assets are grouped by concession or field with other E&E and PP&E assets belonging to the same CGU. The impairment loss will be calculated as the excess of the carrying value over recoverable amount of the E&E impairment grouping and any resulting impairment loss is recognized in profit or loss. The recoverable amount of a CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows 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 assessing fair value less costs to sell, the estimated future cash flows 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 risk specific to the asset. Fair value less costs to sell is generally computed by reference to the present value of the future cash flows expected to be derived from production of proved and probable reserves.

United States \$000s unless otherwise stated

3. Summary of accounting policies (continued)

Impairment (continued)

Non-financial assets (continued)

PP&E assets will be tested for impairment whenever events and circumstances arising during the development and production phase indicate that the carrying amount of a PP&E asset may exceed its recoverable amount. For the purpose of impairment testing, PP&E assets will be grouped into the smallest group of assets that generates cash inflows that are largely independent of cash inflows from other assets or groups of assets (the CGU). The aggregate carrying value will be compared against the expected recoverable amount of the CGU. The recoverable amount of a CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimate future cash flows 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 assessing fair value less costs to sell, the estimated future cash flows 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 risk specific to the asset. Fair value less costs to sell is generally computed by reference to the present value of the future cash flows expected to be derived from production of proved and probable reserves. CGU's are generally defined by field except where a number of field interests can be grouped because the cash flows generated by the fields are interdependent. Impairment losses recognized in respect of CGU's are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro-rata basis.

Impairment losses recognized in prior years are assessed at each reporting date for any indication that the loss has decreased or no longer exists. Impairments are reversed when events or circumstances give rise to changes in the estimate of the recoverable amount since the period the impairment was recorded. An impairment loss is reversed only to the extent that the CGU's carrying amount does not exceed the carrying amount that would have been determined, net of depletion, if no impairment loss had been recognized. An impairment loss in respect of goodwill is not reversed.

Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognized in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost the reversal is recognized in profit or loss.

Share capital

The proceeds from the exercise 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 enabled the holder to purchase a share in the Company.

Share capital issued for non-monetary consideration is recorded at an amount based on fair market value of the shares issued.

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.

United States \$000s unless otherwise stated

3. Summary of accounting policies (continued)

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 the statement of comprehensive income/(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.

Capitalization of interest

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

Revenue recognition

Revenue is recognized when services have been performed and collectability of the revenue is probable.

Investment 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.

Petroleum and natural gas revenues are recognized when the significant risks and rewards of ownership have been transferred, which is when title passes to the purchaser, and payment is reasonably assured.

Income taxes

Tax expense comprises current and deferred tax. Tax is recognized in the consolidated statement of comprehensive income/(loss) except to the extent it relates to items recognized 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 bases. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Deferred income tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill 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 recognized for taxable temporary differences arising on investments in subsidiaries 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 the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets are recognized 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 taxable profit will be available against which the temporary difference can be utilized.

United States \$000s unless otherwise stated

3. Summary of accounting policies (continued)

Foreign currency translation

Items included in the consolidated financial statements of each of the Company's subsidiaries are measured using the currency of the primary economic environment in which the 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 recognized in profit or loss.

Wentworth Resources (UK) Limited uses the Great British Pound as its functional currency. The asset 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 dollar at the average exchange rate for the period. Translation gains and losses are included in other comprehensive income, however, this subsidiary was not active in 2014 so there is no impact to other comprehensive income.

All other foreign exchange gains and losses are recognized in profit or loss.

Recent accounting pronouncements

The following standards, amendments and interpretations applicable to the Company are in issue but not yet effective and have not been early adopted in these consolidated financial statements.

New and Amended Standards		Effective for annual periods beginning on or after
IFRS 15	Revenue from Contracts with Customers	January 1, 2017
IFRS 11 (Amendments)	Accounting for Acquisitions of Interests in Joint Operations	January 1, 2016
IFRS 9	Financial Instruments	January 1, 2018

The Company intends to adopt the interpretation in its financial statements for the annual period beginning on January 1, 2015. The Company does not expect the interpretation to have a material impact on the financial statements.

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. All options and warrants are considered anti-dilutive when the Company is in a loss position.

United States \$000s unless otherwise stated

3. Summary of accounting policies (continued)

Capital management

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to develop its oil and gas properties and maintain 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 makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, enter into joint venture arrangements or acquire or dispose of assets. Management reviews the capital structure on a regular basis to ensure that the above-noted objectives are met. The Company has no external debt covenants. The Company's overall strategy remains unchanged from the prior year.

Dividends

The Company's ability to declare and pay a dividend is subject to restrictions contained in the Business Corporations Act (Alberta). Under the Business Corporations Act (Alberta), a corporation cannot declare or pay a dividend if there are reasonable grounds for believing that: (a) the corporation is, or would, after the payment be unable to pay its liabilities as they become due or (b) the realizable value of the corporation's assets would thereby be less than the aggregate of its liabilities and stated capital of all classes. There is not a prescriptive calculation under the Business Corporations Act (Alberta) that is required to be met in order for the Company to pay dividends.

The Company is not required under the Business Corporations Act (Alberta) to maintain minimum capital and equity levels nor are there specific restrictions on the level of liquidity that the Company is required to maintain. At December 31, 2014, management believes that the Company could pay a dividend under the Business Corporations Act (Alberta), however, no such dividend is currently planned or contemplated. The Company will use its capital resources to further development of its oil and gas exploration and development assets.

4. Risk management

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 program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.

Credit risk

.

Wentworth's maximum credit risk is equal to the carrying value of its cash, trade and other and long-term receivables. Trade and other receivables are comprised predominantly of amounts due from government departments in Tanzania, tax input credits for Goods and Services Tax (GST) in Canada and Value Added Tax (VAT) in Tanzania and Mozambique. The Company's ongoing exposure to receivables from Tanzania Electricity Supply Company Limited ("TANESCO"), the state power company, is connected with the gas sales from the Mnazi Bay Concession to the 18 megawatt gas-fired power plant located in Mtwara, Tanzania. At December 31, 2014 the Mnazi Bay Concession partners were owed fifteen months of gas sales, with \$2,424 owing to Wentworth. Subsequent to December 31, 2014, TANESCO has settled three months of arrears totaling \$483.

United States \$000s unless otherwise stated

4. Risk management (continued)

Credit risk (continued)

A long-term undiscounted receivable of \$33,518 (Note 6) is due from TPDC which is a partner in the Mnazi Bay Concession. The Company receives a significant portion of TPDC's share of gas production from the Mnazi Bay Concession directly from the operator of the Mnazi Bay Concession before TPDC receives cash from its share of revenue. There is a risk that future production from the Mnazi Bay Concession may not be sufficient to settle the receivable and should such a determination be made, a provision against the receivable will be recorded.

At December 31, 2014 a receivable of \$6,511 (Note 6) related to the Company's disposal of transmission and distribution assets and the costs associated with the Mtwara Energy Project incurred by a wholly owned subsidiary of Wentworth continues to be acknowledged as payable by a department of the Tanzanian government. On February 6, 2012, the Company, TANESCO, TPDC and the Ministry of Energy and Minerals ("MEM") reached agreement that the Company's cost of historical operations in respect of the Mtwara Energy Project should be reimbursed. Wentworth is currently in discussions with TANESCO, TPDC and MEM on agreeing on a method of reimbursement. There is a risk that the cost reimbursement method may not be in cash, but rather in a long-term recovery from other sources.

Substantially all of the Company's cash and cash equivalents and short-term investments are held at one recognized international financial institution in Canada and an investment bank in the United Kingdom. As a result, the Company was exposed to a concentration of credit risk associated with these institutions. The Company manages its risk on investments by limiting them to guaranteed investment certificates purchased at this financial institution and investing for short periods of time.

The maximum exposure to credit risk as at:

	Balance at	Balance at
	December 31, 2014	December 31, 2013
Trade and other receivables	2,613	1,845
Long-term receivables (Note 6)	34,002	29,319
Short-term investments	-	23,176
Cash and cash equivalents	5,487	14,501
	42,102	68,841

Aged trade and other receivables

	Current	31-60	61-90	>90
	1-30 days	days	days	days	Total
Balance at December 31, 2014
Trade receivables	189	181	181	1,873	2,424
Other receivables	21	-	168	-	189
	210	181	349	1,873	2,613
Balance at December 31, 2013
Trade receivables	-	437	429	631	1,497
Other receivables	15	-	333	-	348
	15	437	762	631	1,845

The Company's ongoing exposure to receivables from TANESCO is associated with gas sales from the Mnazi Bay Concession to the 18 MW power plant located in Mtwara, Tanzania. At December 31, 2014 the Mnazi Bay Concession partners were owed fifteen months of gas sales, with \$2.42 million net owing to Wentworth. Subsequent to December 31, 2014, TANESCO has made two payments settling three months of arrears and totaling \$0.48 million. A provision for doubtful accounts has not been made in respect of the receivable from TANESCO. Construction of the Gas Pipeline Project may provide an opportunity for TANESCO to operate more efficiently, generate positive cash flow and grow its business in order to meet the increasing demand for electrical power. As a result, the Company expects to eventually receive full recovery of current and future receivables from gas sales to TANESCO.

United States \$000s unless otherwise stated

4. Risk management (continued)

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient funds to meet its liabilities. Other than routine trade and other payables, incurred in the normal course of business, the Company also has a long-term loan.

The table below summarizes 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	1 to 2 years	2 to 5 years	Total
Balance at December 31, 2014
Trade and other payables	7,253	-	-	7,253
Long-term loans	487	2,439	4,388	7,314
	7,740	2,439	4,388	14,567
Balance at December 31, 2013
Trade and other payables	3,487	-	-	3,487
Long-term loans	360	360	6,720	7,440
	3,847	360	6,720	10,927

The fair value of the Company's trade and other payables approximates their carrying values due to the short term nature of these instruments.

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 maximizing returns.

Commodity price risk

Commodity price risk is the risk that the Company suffers financial loss as a result of fluctuations in crude oil or natural gas prices. The Company's exposure to commodity price risk is not significant due to the execution of the gas sales and purchase agreement with the Government of Tanzania to supply natural gas from the Mnazi Bay Concession at a price of \$3.00/MMBtu, escalating at US CPI annually over a 17 year term, and as it has not yet begun large-scale commercial production.

Interest rate risk

Interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's debt, in the form of the long-term loan, has a floating interest rate of six month LIBOR plus 7.5 percentage points with a minimum 8% and maximum 9.5%interest rate per annum. The Company's objective is to minimize its interest rate risk on its cash balances by investing for short periods (less than 1 year) and only in term deposits.

The risk related to interest rates is not material.

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 Canadian dollar against its functional currency of its operating entities, the US dollar. The Company's objective is to minimize its risk by borrowing funds in US dollars as revenues are paid (or indexed) to the US dollar. The Company has not yet begun large-scale commercial production and the Company's existing borrowed funds are denominated in US dollars. In addition, it holds substantially all of its cash and cash equivalents in US dollars, and converts to other currencies only when cash requirements demand such conversion.

United States \$000s unless otherwise stated

4. Risk management (continued)

Foreign exchange risk (continued)

The following balances are denominated in foreign currency (stated in \$000 US dollars at period end exchange rates):

	Canadian Dollar	Tanzanian Shilling	Other Currency	Total
Balance at December 31, 2014
Cash and cash equivalents	28	48	37	113
Trade and other receivables	21	159	-	180
Trade and other payables	(49)	(32)	(9)	(90)
	-	175	28	203
	Canadian	Tanzanian	Other
	Dollar	Shilling	Currency	Total
Balance at December 31, 2013
Cash and cash equivalents	202	20	618	840
Trade and other receivables	30	209	50	289
Trade and other payables	(763)	(166)	-	(929)
	(531)	63	668	200

A 10% increase/decrease of the Canadian dollar against the US dollar would result in a change in net income before tax of Nil (2013 - \$53). In addition, a 10% increase/decrease of the Tanzanian shilling against the US dollar would result in a change in net income before tax of approximately \$18 (2013 – \$7).

Financial instrument classification and measurement

The Company classifies the fair value of financial instruments according to the following hierarchy based on the amount 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 Company's long-term receivables and long-term loans are considered Level 2 measurements. The Company's contingent long-term liability is considered a Level 3 measurement.

United States \$000s unless otherwise stated

5. Segment information

The Company conducts its business through two major operating business segments. Gas operations include the exploration, development, production and transportation of natural gas and other hydrocarbons, and these activities are carried out in two operating segments - Tanzania ("Mnazi Bay Concession") and Mozambique ("Rovuma Onshore Block"). 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.

Internal management reporting is used to monitor operations on the basis of operational business segments and associated projects. Reporting on operational results and financial reporting of key financial indicators to senior management is on a continuous basis. The Company's highest operative decision maker is the Managing Director, with the support of the executive management team and in some cases the Board of Directors. The Managing Director in conjunction with the Board of Directors assesses the Company's financial position and business activity based on the operational commitments and prospects of the business. This approach has been applied consistently in the current and prior period.

Net income/(loss) for the year ended December 31, 2014

	Tanzania Operations	Mozambique Operations	Corporate	Consolidated
Natural gas sales	1,060	-	-	1,060
Production and operating General and administrative Depreciation and depletion	(2,592) (3,702) (379)	- (558) -	- (2,566) (163)	(2,592) (6,826) (542)
Reversal of impairment losses on non-financial assets Other	23,805 4,001	- (3)	- (3,626)	23,805 372
Total segment expense	21,133	(561)	(6,355)	14,217
Net income/(loss)	22,193	(561)	(6,355)	15,277

Selected balances at December 31, 2014

and equipment assets

	Tanzania	Mozambique
	Operations	Operations	Corporate	Consolidated
Segment current assets	18,880	2,029	3,139	24,048
Long-term receivables	19,472	-	-	19,472
Exploration and evaluation assets	7,935	25,827	-	33,762
Property, plant and equipment assets	84,900	-	135	85,035
Segment current liabilities	6,712	1,309	183	8,204
Segment non-current liabilities	8,771	-	-	8,771
Selected Cash Flows for the year ended December 31, 2014
Net additions to exploration and evaluation assets	7,862	15,007	-	22,869
Net additions to property, plant	3,482	-	51	3,533

19

United States \$000s unless otherwise stated

5. Segment information (continued)

Net (loss) for the year ended December 31, 2013

	Tanzania Operations	Mozambique Operations	Corporate	Consolidated
Natural gas sales	955	-	-	955
Production and operating General and administrative Depreciation and depletion Gain on derivative financial liability Other income	(1,656) (3,062) (312) - (316)	- (695) - - (10)	- (4,174) (139) 610 (1,190)	(1,656) (7,931) (451) 610 (1,516)
Total segment expense	(5,346)	(705)	(4,893)	(10,944)
Net (loss)	(4,391)	(705)	(4,893)	(9,989)

Selected balances at December 31, 2013

	Tanzania	Mozambique
	Operations	Operations	Corporate	Consolidated
Segment current assets	6,218	2,874	32,762	41,854
Long-term receivable	28,661	-	-	28,661
Exploration and evaluation assets	39,817	10,819	-	50,636
Property, plant and equipment assets	18,251	-	247	18,498
Segment current liabilities	2,136	332	1,019	3,487
Segment non-current liabilities	3,521	-	3,816	7,337
Selected Cash Flows for the year ended December 31, 2013
Net additions to exploration and evaluation assets	4,064	1,981	-	6,045
Net additions to property, plant and equipment assets	882	-	93	975

Notes to the Consolidated Financial Statements

United States \$000s unless otherwise stated

6. Long-term receivables

	Balance at	Balance at
	December 31, 2014	December 31, 2013
TPDC receivable (i)	28,914	24,128
Tanzanian government receivable (Umoja/power) (ii)	5,088	5,191
	34,002	29,319
Current portion
TPDC receivable (i)	14,530	658
Long-term portion
TPDC receivable (i)	14,384	23,470
Tanzanian government receivable (Umoja/power) (ii)	5,088	5,191
	19,472	28,661

The new government owned Mtwara to Dar es Salaam gas pipeline is expected to be commissioned in Q2 2015. The current portion of the TPDC receivable as at December 31, 2014 includes recovery of the receivable from nine months of anticipated revenue from the sale of natural gas to the new pipeline.

i) TPDC receivable

On June 30, 2009, the Company and TPDC entered into a Joint Operating Agreement ("JOA") related to the Mnazi Bay Concession in Tanzania. Under the terms of the JOA, TPDC has a 20% participating interest share in the Mnazi Bay Development Area production and will pay the Company for 20% of past costs incurred in respect of the Mnazi Bay Concession from TPDC's share of future production. In addition, the TPDC's share of costs incurred subsequent to June 30, 2009, which are paid by the Company, will be recovered by the Company from TPDC's share of future production. This receivable is subject to an interest charge of one (1) month term LIBOR plus 2% per annum. This receivable from TPDC is considered a financial instrument and initially recorded at fair value based on discounted cash flows and at each reporting date it is revalued and amortized by accreting the instrument over the expected life of the receivable. The accretion over the expected term of the asset is based on future expected cash flows from the Mnazi Bay Concession and the accretion included in finance income.

As at December 31, 2014, the undiscounted receivable from TPDC is \$33,518 (\$35,015 at December 31, 2013).

	TPDC receivable
Balance at December 31, 2012 Accretion Change in accounting estimates Retained gas revenue to offset receivable Share of TPDC Mnazi Bay Concession costs paid by the Company	23,808 4,885 (4,264) (794) 493
Balance at December 31, 2013	24,128
Accretion Change in accounting estimates Retained gas revenue to offset receivable Share of TPDC Mnazi Bay Concession costs paid by the Company	5,321 (900) (882) 1,247
Balance at December 31, 2014	28,914

6. Long-term receivables (continued)

ii) Tanzanian government receivable (Umoja/power)

As at December 31, 2014 the undiscounted Tanzanian government receivable (Umoja/power) is \$6,511 (December 31, 2013 - \$6,511).

	Tanzanian government receivable
Balance at December 31, 2012 Discount	5,807 (616)
Balance at December 31, 2013	5,191
Accretion Change in accounting estimates	493 (596)
Balance at December 31, 2014	5,088

The Company has an agreement with the Government of Tanzania (TANESCO, TPDC and the MEM) to be reimbursed for all of the project development costs associated with transmission and distribution ("T&D") expenditures at cost. An audit of the Mtwara Energy Project ("MEP") development expenditures was completed in November 2012 and costs of approximately \$8,121 were verified to be reimbursable. Management is working with the Government of Tanzania to agree on a reimbursement method for the T&D costs. Settlement of the \$6,511 will be made which is inclusive of \$8,121 verified costs and Tariff Equalization Fund and VAT input credits associated with the MEP which total \$1,610 at December 31, 2014. On December 31, 2013, the verified T&D costs, inclusive of the credits, were reclassified from current to long-term and discounted to reflect the anticipated delay in timing of collections. This receivable is considered a financial instrument and initially recorded at fair value based on discounted cash flows and at each reporting date it is revalued and amortized by accreting the instrument over the expected life of the receivable.

7. Exploration and evaluation assets ("E&E")

	Exploration and evaluation assets
Cost
Balance at December 31, 2012	108,706
Additions	6,045
Disposal of assets(1)	(1,403)
Balance at December 31, 2013	113,348
Additions	22,869
Transferred to PP&E (2)	(53,127)
Elimination of impaired assets(3)	(49,328)
Balance at December 31, 2014	33,762
Accumulated impairment
Balance at December 31, 2012	(64,115)
Disposal of assets(1)	1,403
Balance at December 31, 2013	(62,712)
Reversal of impairment loss(3)	13,384
Elimination of impaired assets(3)	49,328
Balance at December 31, 2014	-

7. Exploration and evaluation assets ("E&E") (continued)

	Exploration and
	evaluation assets
Carrying amounts
December 31, 2013	50,636
December 31, 2014	33,762

• (1) During 2013 the Company disposed of fully impaired assets, which were no longer in use, relating to operations in Mozambique and Tanzania for \$nil proceeds.
• (2) During 2014 the Company transferred E&E assets of \$53,127 to PP&E which included the cost associated with three existing wells and field infrastructure within the Mnazi Bay Concession in Tanzania which will be utilized in the production of discovered natural gas.
• (3) During the years 2008 and 2009, management determined that the carrying amounts of the Tanzanian and Mozambique gas E&E assets exceeded their fair value which resulted in the Company recording a noncash impairment loss of \$62,712.

At December 31, 2014, there were indicators of impairment reversals for the Company's Tanzanian CGU, where previous contingent resources were classified as reserves by the Company's independent reserve evaluators. In 2014, a market for the Company's discovered natural gas has evolved to an advanced stage of certainty in Tanzania. The Company signed a long-term gas sales agreement in September 2014 to deliver natural gas to a government owned transnational pipeline at a fixed price of \$3.00/MMBtu escalating annually at US CPI. Accordingly, at December 31, 2014, the Company tested this Tanzanian CGU for reversal of impairment of both its E&E and PP&E assets. The recoverable amount of the Tanzanian CGU is estimated to be in excess of the net book value of PP&E for the CGU after the impairment reversal and reclassification of E&E to PP&E. The recoverable amount was estimated using a fair value less cost to sell calculation based on expected future cash flows generated from proved and probable reserves using an after-tax discount rate of 15%, based on the independent external reserves report dated December 31, 2014. The assessment resulted in previously recognized write-downs of these E&E assets of \$13,384 being reversed and included as a separate item in net earnings.

The Company also eliminated the cost and associated accumulated impairment of \$49,328 relating to assets that have no future value.

Notes to the Consolidated Financial Statements

United States \$000s unless otherwise stated

8. Property, plant and equipment ("PP&E")

	Natural gas properties	Office and other equipment	Total
Cost
Balance at December 31, 2012	93,812	6,754	100,566
Additions	882	93	975
Disposal of assets(1)	(1,438)	(5,961)	(7,399)
Balance at December 31, 2013	93,256	886	94,142
Additions	3,482	51	3,533
Transferred from E&E (2)	53,127	-	53,127
Elimination of impaired assets(3)	(61,740)	-	(61,740)
Disposal of assets(4)	(123)	(448)	(571)
Balance at December 31, 2014	88,002	489	88,491
Accumulated depreciation, depletion and impairment
Balance at December 31, 2012	(76,131)	(6,461)	(82,592)
Depreciation and depletion	(312)	(139)	(451)
Disposal of assets(1)	1,438	5,961	7,399
Balance at December 31, 2013	(75,005)	(639)	(75,644)
Depreciation and depletion	(379)	(163)	(542)
Reversal of impairment loss(3)	10,421	-	10,421
Elimination of impaired assets(3)	61,740	-	61,740
Disposal of assets(4)	121	448	569
Balance at December 31, 2014	(3,102)	(354)	(3,456)
Carrying amounts
December 31, 2013	18,251	247	18,498
December 31, 2014	84,900	135	85,035

• (1) During 2013 the Company disposed of fully impaired assets, which were no longer in use, relating to operations in Mozambique and Tanzania for \$nil proceeds.
• (2) During 2014 the Company transferred to PP&E natural gas properties E&E assets of \$53,127 which included the cost associated with three existing wells and field infrastructure within the Mnazi Bay Concession in Tanzania which will be utilized in the production of discovered natural gas.

United States \$000s unless otherwise stated

8. Property, plant and equipment ("PP&E") (continued)

• (3) During the years 2008 and 2009, management determined that the carrying amounts of the Tanzanian and Mozambique gas PP&E assets exceeded their fair value which resulted in the Company recording a non-cash impairment loss of \$72,161.
• (4) At December 31, 2014, there were indicators of impairment reversals for the Company's Tanzanian CGU, where previous contingent resources were classified as reserves by the Company's independent reserve evaluators. In 2014, a market of the Company's discovered natural gas has evolved to an advanced stage of certainty in Tanzania. The Company signed a long-term gas sales agreement in September 2014 to deliver natural gas to a government owned transnational pipeline at a fixed price of \$3.00/mmbtu escalating annually at US CPI. Accordingly, at December 31, 2014, the Company tested this Tanzanian CGU for reversal of impairment of both its E&E and PP&E assets. The recoverable amount of the Tanzanian CGU is estimated to be in excess of the net book value of PP&E for the CGU after the impairment reversal. The recoverable amount was estimated using a fair value less cost to sell calculation based on expected future cash flows generated from proved and probable reserves using an after-tax discount rate of 15%, based on the independent external reserves report dated December 31, 2014. The assessment resulted in previously recognized write-downs of these PP&E assets of \$10,421 being reversed, net of depletion, and included as a separate item in net earnings.

The Company also eliminated the cost and associated accumulated impairment of \$61,740 relating to assets that have no future value.

(5) During 2014 the Company disposed of office assets having a net book value of \$2 for net proceeds of \$62.

9. Decommissioning provision

The Company's decommissioning obligations result from net ownership interests in petroleum and natural gas assets including well sites, pipeline gathering systems, and processing facilities in Tanzania. At December 31, 2012, the Company estimates the total undiscounted inflation-adjusted amount of cash flow required to settle its decommissioning obligations to be approximately \$7,451. The costs are expected to be incurred in the period between 2030 and 2031. The decommissioning obligations have been estimated using existing technology at current prices and discounted using discount rates that reflect current market assessments of the time value of money and the risks specific to each liability. A credit adjusted risk free rate of 14.2% (2013 – 14.2%) was used to calculate the fair value of the decommissioning obligations.

A reconciliation of the decommissioning obligations is provided below:

	2014	2013
Balance at January 1	685	600
Accretion	97	85
Balance at December 31	782	685

Notes to the Consolidated Financial Statements

United States \$000s unless otherwise stated

10. Long-term loans

(i) Credit facilities from Tanzania based banks ("Tanzanian Bank Facilities")

On December 8, 2014, Wentworth Gas Limited ("WGL"), a subsidiary of the Company, entered into two longterm credit facilities: a) a \$20,000 loan to finance field infrastructure development within the Mnazi Bay Concession in Tanzania and b) a \$6,000 loan to repay an existing medium-term loan.

The two loan facilities have similar commercial terms. Each loan is forty eight months in duration commencing on the first draw down date and bears interest of 6 months LIBOR rate plus 750 basis points subject to a minimum (floor) of 8% p.a. and a maximum (ceiling) of 9.5% p.a. Principal repayments are made following the grace period of twelve months after the first draw down date and are payable in six semi–annual equal installments in arrears. Security is in the form of a debenture creating first ranking charge over all the assets of the WGL (assets of WGL include a 25.4% participation interest in the Mnazi Bay Concession), assignment over the TPDC long term receivable and assignment of revenues generated from the Mnazi Bay Concession.

At year end, no amount was drawn on the \$20,000 loan facility and the full amount was drawn on the \$6,000 loan facility.

Principal balance at January 1, 2014	-
Drawdown of loan facility	6,000
Principal balance at December 31, 2014	6,000
Financing cost – transaction costs	(285)
Accretion	3
Net financing costs at December 31, 2014	(282)
Carrying amount at December 31, 2014 – long-term	5,718

During the year ended December 31, 2014, the Company incurred interest expense of \$28.

At December 31, 2014, the carrying amount of the loan facilities approximates their fair value as the loan's effective interest rate approximates market rates. The loan facilities have no external financial covenants.

(ii) Loan from Vitol Energy (Bermuda) Limited ("Vitol")

On June 19, 2013, Vitol Energy (Bermuda) Limited, a Vitol Group company ("Vitol"), extended Wentworth Gas (Jersey) Limited ("WGJL"), a subsidiary of the Company, a long-term loan facility of \$10,000 that was scheduled to mature on December 31, 2017. The loan bore interest of 6% per annum with interest only payments prior to maturity. The loan was secured with the entire share capital of WGJL. Assets of WGJL include a 25.4% participation interest in the Mnazi Bay Concession. In connection with executing the loan facility, Vitol was issued 5,000,000 share purchase warrants for the services provided pursuant to the financing arrangement. The fair value of the warrants on the date of the grant was recorded as financing cost.

Notes to the Consolidated Financial Statements

United States \$000s unless otherwise stated

10. Long-term loan (continued)

(iii) Loan from Vitol Energy (Bermuda) Limited ("Vitol") (continued)

Principal balance at January 1, 2013	-
Drawdown of loan facility	10,000
Repayment of loan facility	(4,000)
Principal balance at December 31, 2013	6,000
Repayment of loan facility	(6,000)
Principal balance at December 31, 2014	-
Financing cost – transaction costs	(113)
Financing cost – fair value of warrants (Note 11)	(2,288)
Accretion	217
Net financing costs at December 31, 2013	(2,184)
Accretion	2,184
Net financing costs at December 31, 2014	-

On December 12, 2014 the outstanding principle loan amounting to \$6,000 was repaid in full and the security released. The balance of deferred financing costs of \$2,184 was expensed at the time of repayment.

During the year ended December 31, 2014, the Company incurred interest expense on the loan from Vitol of \$2,525 (2013 - \$436) of which \$2,184 (2013 – \$217) related to the accretion of deferred financing costs. A total of \$341 (2013 - \$219) was settled in cash during the period.

11. Contingent long-term liability

	2014	2013
Balance at January 1	2,836	2,782
Accretion	228	220
Change in accounting estimate	68	(166)
Balance at December 31	3,132	2,836
Current portion – included in trade and other payables	861	-
Long-term portion	2,271	2,836

As a result of an asset purchase and sale transaction in 2012, the Company may be obliged to make payments with a face value of \$3,394 should certain future natural gas production thresholds from Mnazi Bay Concession be reached. The contingent long-term liabilities were initially recognized at the fair values and the carrying values at year end approximate the fair value.

United States \$000s unless otherwise stated

12. Warrants

The Company issued 5,000,000 warrants in relation to the long-term loan from Vitol. The warrants were a derivative financial liability and recorded at fair value at each reporting date from the grant date until such time the warrant exercise price was fixed on October 25, 2013. The fair value of the warrants on October 25, 2013 was recorded in equity. The fair value of the warrants on the grant date of June 19, 2013 was \$2,288 and was included as a financing cost of the long-term loan.

The following table summarizes fair value of the derivative financial liability:

Fair value at grant date of June 19, 2013	2,288
Change in value during 2013 recorded in the statement of operations	(610)
Fair value at October 25, 2013	1,678
Reclassified to equity reserve	(1,678)
Balance at December 31, 2013	-

A summary of the warrant balances are as follows:

	Number of Warrants	Exercise Price US\$/Warrant
Issued on June 19, 2013	5,000,000	0.648
Outstanding at December 31, 2013 and 2014	5,000,000	0.648

The warrants expire on December 31, 2015.

13. Finance income and finance costs

	Year ended December 31,
	2014	2013
Finance income
Accretion – TPDC receivable (Note 6)	5,321	4,885
Accretion – Tanzanian government receivable (Note 6)	493	-
Interest income	100	85
Change in estimates – long-term contingent liability	-	166
Foreign exchange revaluation – long-term loan	-	130
	5,914	5,266

	Year ended December 31,
	2014	2013
Finance costs
Change in estimates – TPDC receivable (Note 6)	(900)	(4,264)
Change in estimates – Tanzanian government receivable (Note 6)	(596)	-
Change in estimates – long-term contingent liability	(68)	-
Accretion – long-term contingent liability	(228)	(220)
Discount of Tanzanian government receivable	-	(616)
Interest expense and deferred financing costs – Vitol loan (Note 10)	(2,525)	(436)
Interest expense – Tanzanian bank facilities	(28)	(342)
Accretion – decommissioning provision	(97)	(85)
Foreign exchange loss	(70)	(457)
	(4,512)	(6,420)

United States \$000s unless otherwise stated

14. Share based payments

Options granted pursuant to the Company's Share Option Plan (the "Plan") must be exercised no later than ten years from date of grant or such lesser period as determined by the Board of Directors. The exercise price of an option is not less than the closing price on the Oslo Bors on the last trading day preceding the grant date. The maximum number of Plan share options that may be reserved for issuance under the Plan is 10% of the number of Common Shares outstanding on a non-dilutive basis. Options vest over the length of services as follows: 1/3 after one year, 1/3 after two years, and 1/3 after three years.

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

	2014		2013
	Number of options	Weighted average exercise price (US\$) (i)	Number of options	Weighted average exercise price (US\$)
Outstanding at January 1	6,450,000	0.68	6,600,000	0.67
Granted	3,750,000	0.69	600,000	0.75
Forfeited	-	-	(331,667)	0.69
Exercised	(250,000)	0.48	(418,333)	0.63
Outstanding at December 31	9,950,000	0.61	6,450,000	0.68

The following table summarizes share options outstanding and exercisable at December 31, 2014:

			Outstanding	Exercisable
Exercise Price (NOK)	Exercise Price (US\$) (i)	Number of options	Weighted average remaining life (years)	Number of options
3.15	0.42	1,000,000	5.8	1,000,000
3.52	0.47	500,000	7.0	333,333
3.60	0.48	2,400,000	5.8	2,400,000
4.08	0.55	250,000	8.3	83,334
4.64	0.62	150,000	9.4	-
4.70	0.63	200,000	9.4	-
4.90	0.66	350,000	7.7	183,333
5.18	0.70	3,500,000	9.2	33,334
5.75	0.77	1,600,000	6.3	1,600,000
		9,950,000	7.4	5,633,334

(i) The US Dollar to Norwegian Kroner exchange rate used for determining the exercise price at December 31, 2014 is 0.13418.

14. Share based payments (continued)

			Outstanding	Exercisable
Exercise Price (NOK)	Exercise Price (US\$) (i)	Number of options	Weighted average remaining life (years)	Number of options
3.15	0.51	1,000,000	6.8	1,000,000
3.52	0.57	500,000	8.0	166,666
3.60	0.58	2,650,000	6.8	2,650,000
4.08	0.66	250,000	9.3	-
4.90	0.79	350,000	8.7	66,667
5.18	0.84	100,000	9.5	-
5.75	0.93	1,600,000	7.3	1,066,667
		6,450,000	7.2	4,950,000

The following table summarizes share options outstanding and exercisable at December 31, 2013:

(ii) The exercise prices and weighted average exercise prices for the share options are denominated in NOK. The US dollar equivalent amounts are converted at the NOK/US dollar exchange rate as at December 31, 2013 of 1 NOK = 0.16209 US dollar.

Share based payment charge

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:

	2014	2013
Grant date fair value per option (US\$)	0.53	0.53
Expected annual interest rate (%)	1	1
Expected volatility (%)	72	75
Expected life (in years)	6	6
Expected forfeiture rate (%)	8	8
Expected dividends (US\$)	Nil	Nil

During the year ended December 31, 2014 a total of \$1,090 (2013 - \$362) in share based compensation was expensed with an offsetting charge to equity reserve.

15. Share capital

A) Authorised share capital

Unlimited number of common voting shares without nominal or par value. Unlimited number of non-voting preferred shares to be issued in series, without nominal or par value.

B) Issued common shares

2014

i) In connection with the stock option plan, on June 16, 2014 the Company issued 250,000 common shares of no par value at an exercise price of NOK 3.60 (US\$0.60) per share.

2013

• i) In connection with the stock option plan, on May 16, 2013 the Company issued 85,000 common shares of no par value at an exercise price of NOK 4.90 (US\$0.84) per share.
• ii) On October 25, 2013, the Company closed a private placement issuing 61,696,024 new common shares for cash consideration of GBP 0.40 (US\$0.648, NOK 3.82) per share for total gross proceeds of GBP 24.68 million (US\$40 million, NOK 235.78 million).
• iii) On November 28, 2013, the Company closed a subsequent offering issuing 9,254,403 new common shares for cash consideration of NOK 3.82 (US\$0.627) per share for total gross proceeds of NOK 35.4 million (\$5.8 million).
• iv) Expenses incurred in relation to the (ii) private placement and (iii) subsequent offering were \$3,877.
• v) In connection with the stock option plan, on December 2, 2013 the Company issued 333,333 common shares of no par value at an exercise price of NOK 3.60 (US\$0.59) per share.

16. Income/(Loss) per share

Basic and diluted income/(loss) per share

The calculation of income/(loss) per share for the year ended December 31, 2014 is based on income attributable to shareholders of the Company of \$15,277 (2013 – (loss) \$9,989).

Share options were dilutive for the year ended December 31, 2014 and were anti-dilutive for the year ended December 31, 2013. The calculation of diluted earnings per share was based on a weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. For the year ended December 31, 2013, 1,025,303 options were excluded from the diluted weighted average number of ordinary shares as their effect would have been anti-dilutive.

	Year ended December 31,
	2014	2013
Weighted average number of shares outstanding	154,011,741	94,238,385
Dilutive weighted average number of shares outstanding	154,861,935	94,238,385

17. Income taxes

The Company has not recognized deferred income tax assets in respect of deductible temporary differences and unused tax losses of:

	2014	2013
Non-capital losses	61,740	66,345
Property and equipment	398	355
Share issue costs	688	936
Asset retirement obligations	235	206
	63,061	67,842

The tax pools associated with non-capital losses are \$262,700 (2013 – \$244,200) of which \$73,100 (2013 - \$70,600) are in Canada, \$176,500 (2013 - \$151,900) are in Tanzania, and \$13,100 (2013 - \$21,700) are in Mozambique.

The unrecognized non-capital losses in Canada expire in the years 2015 – 2034, in Tanzania they have an indefinite life and in Mozambique they expire in the years 2015 – 2019.

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

	2014	2013
Income/(loss) before income taxes	15,277	(9,989)
Expected income tax (recovery) expense at combined Canadian
federal and provincial rate of 25.0% (2013 – 25.0%)	3,819	(2,497)
Rate differentials	1,791	319
Financial derivative liability and share based compensation	272	(62)
Movement in deferred tax assets not recognized for tax and other	(5,882)	2,240
Income taxes expense	-	-

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.

18. Related party transactions

Details of transactions between the Company and other related parties are disclosed below.

The Company incurred the following expenses in respect of Directors:

	For the year ended December 31,
	2014	2013
Directors fees	340	370
Share based compensation	446	159
	786	529

The Company incurred the following expenses in respect of key management personnel:

	For the year ended December 31,
	2014	2013
Salaries and benefits	1,383	1,505
Share based compensation	644	165
	2,027	1,670

19. Supplemental cash flow information

Non-cash working capital components

	For the year ended December 31,
	2014	2013
Net change in non-cash working capital related to operating activities:
Trade and other receivables	(767)	546
Prepayments, deposits and advances to partners	1,098	354
Trade and other payables	(1,423)	388
	(1,092)	1,288
Net change in non-cash working capital related to investing activities:
Trade and other receivables	1,059	4,167
Trade and other payables	3,395	(2,209)
	4,454	1,958

United States \$000s unless otherwise stated

20. Commitments

i) Lease payments

The Company has office locations in Canada and Tanzania. The future minimum lease payments associated with these office premises as at December 31, 2014 are as follows:

Total future minimum lease payments
2015	240
2016	214
2017	56
	510

ii) Oil and gas concession commitments

The Company holds an 11.59% participation interest (13.64% paying interest during exploration phases) in the Exploration and Production Concession Contract ("EPCC") for the Rovuma Onshore Block in Mozambique which was signed on April 18, 2007. As at December 31, 2014 operations are in the third exploration phase of the EPCC which expires on August 31, 2015. During this period the work program commitment includes the drilling of one exploration well with a minimum expenditure of gross \$16,000 (net \$2.128 to Wentworth), a guarantee of which has been provided to the government by the operator of the Rovuma Onshore Block. Drilling of the one exploration well, Kifaru-1, commenced on January 13, 2015.

21. Contingencies

On July 4, 2014 the Tanzanian Revenue Agency (TRA) issued tax assessment certificates totaling Tsh7,016 million comprised of Tsh3,533 million (\$2,077 at the December 31, 2014 exchange rate of 1Tsh=0.000588 US\$) of alleged unpaid payroll taxes and withholding taxes on imported services and certain accounting transactions plus late penalty interest totaling Tsh3,483 million (\$2,048) for the period 2008-2012.

On November 18, 2014, the TRA accepted the Company's objection to a withholding on certain accounting transactions and a tax liability of Tsh1,133 million (\$666), inclusive of late penalty interest, was waived.

In 2014, the Company has recorded a liability Tsh478 million (\$281), inclusive of late penalty interest, which has been included in production and operating expense where the source of the tax basis was initially recorded.

The Company continues to communicate and provide clarification on the remaining assessed amount of Tsh5,405 million (\$3,178) inclusive of interest charges of Tsh3,006 million (\$1,768). The Company believes it has a strong case against the remaining assessed amount and accordingly has not recorded a provision at December 31, 2014. A date has not yet been set by the Tax Revenue Appeals Board to hear the tax appeals.