TOWER RESOURCES PLC — Audit Report / Information 2016

Mar 23, 2017

Wentworth Resources Limited Consolidated Financial Statements

For the years ended December 31, 2016 and 2015

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 as adopted by the International Accounting Standards Board. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the measurement of transactions in which objective judgments are 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 Professional Accountants, is appointed by the Board of Directors to audit the consolidated financial statements and report directly to them; their report follows. The external auditors have full and free access to both the Audit Committee and management to discuss their audit findings.

Executive Chairman Managing Director Chief Financial Officer

(Signed) "Robert McBean" (Signed) "Geoffrey Bury" (Signed) "Lance Mierendorf"

Calgary, Alberta March 21, 2017

WENTWORTH RESOURCES LIMITED

Consolidated Statements of Financial Position

United States \$000s, unless otherwise stated

	Note	December 31, 2016	December 31, 2015
ASSETS
Current assets
Cash and cash equivalents		979	2,746
Trade and other receivables		6,699	3,253
Prepayments, deposits and advances to partners		187	841
Current portion of long-term receivables	5	12,283	18,190
		20,148	25,030
Non-current assets
Long-term receivables	5	18,034	18,897
Exploration and evaluation assets	6	45,538	43,141
Property, plant and equipment	7	93,366	95,168
Deferred tax asset	15	31,145	34,341
		188,083	191,547
Total assets		208,231	216,577
LIABILITIES Current liabilities
Trade and other payables		8,675	6,269
Current portion of long-term loans	9	5,258	5,270
Current portion of other liability	10	1,260	1,508
		15,193	13,047
Non-current liabilities
Long-term loans	9	15,254	20,512
Other liability	10	1,100	1,634
Decommissioning provision	8	773	973
		17,127	23,119
EQUITY
Share capital		411,493	411,493
Equity reserve		26,275	25,683
Accumulated deficit		(261,857)	(256,765)
		175,911	180,411
Total liabilities and equity		208,231	216,577

Subsequent event 19

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

Approved by the Board of Directors and Management

Robert P. McBean	John W.S. Bentley	Cameron Barton
Chairman of the Board	Deputy Chairman	Non-Executive Director
Neil Kelly	Geoff Bury	Lance Mierendorf

Non-Executive Director Managing Director Chief Financial Officer

WENTWORTH RESOURCES LIMITED

Consolidated Statements of (Loss)/Profit and Comprehensive (Loss)/Profit

United States \$000s, unless otherwise stated

		Year ended December 31,
	Note	2016	2015
Total revenue		11,750	4,637
Operating expenses Production and operating General and administrative		(3,371) (5,397)	(3,214) (6,367)
Depreciation and depletion Share based compensation	7 12	(3,864) (592)	(1,707) (767)
Loss from operations		(1,474)	(7,418)
Finance income	11	4,693	4,818
Finance costs	11	(5,115)	(4,707)
Loss before tax		(1,896)	(7,307)
Deferred tax (expense)/recovery	15	(3,196)	34,341
Net (loss)/profit and comprehensive(loss)/profit		(5,092)	27,034
Net (loss)/profit per ordinary share Basic and diluted (US\$/share)	14	(0.03)	0.17

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

WENTWORTH RESOURCES LIMITED Consolidated Statements 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, 2014		154,122,700	404,225	24,916	(283,799)	145,342
Net profit and comprehensive income Share based compensation	12	- -	- -	- 767	27,034 -	27,034 767
Issue of share capital	13	15,412,269	7,639	-	-	7,639
Share issue costs Balance at December 31, 2015		- 169,534,969	(371) 411,493	- 25,683	- (256,765)	(371) 180,411
Balance at December 31, 2015 Net loss and comprehensive loss		169,534,969 -	411,493 -	25,683 -	(256,765) (5,092)	180,411 (5,092)
Share based compensation	12	-	-	592	-	592
Balance at December 31, 2016		169,534,969	411,493	26,275	(261,857)	175,911

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

WENTWORTH RESOURCES LIMITED

Consolidated Statements of Cash Flows

United States \$000s unless otherwise stated

		Year ended December 31,
	Note	2016	2015
Operating activities
Net (loss)/profit for the year		(5,092)	27,034
Adjustments for:
Depreciation and depletion	7	3,864	1,707
Finance costs/(income), net	11	422	(111)
Deferred tax expense	15	3,196	(34,341)
Share based compensation	12	592	767
Change in non-cash working capital	17	(2,506)	175
Net cash generated from/(utilized in) operating activities		476	(4,769)
Investing activities
Additions to evaluation and exploration assets	17	(2,371)	(10,299)
Additions to property, plant and equipment	17	(2,347)	(12,926)
Reductions of/(additions to) long-term receivable Interest income	17	10,763 -	(1,116) 7
Net cash from/(used in) investing activities		6,045	(24,334)
Financing activities
Proceeds from long-term loan	9	-	20,000
Repayment of long-term loans	9	(5,333)	-
Interest paid	9	(2,073)	(906)
Issue of share capital, net of issue costs	13	-	7,268
Payment of other liability	10	(882)	-
Net cash (used in)/from financing activities		(8,288)	26,362
Net change in cash and cash equivalents		(1,767)	(2,741)
Cash and cash equivalents, beginning of the year		2,746	5,487
Cash and cash equivalents, end of the year		979	2,746

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 upstream oil and natural gas company. These consolidated financial statements include the accounts of the Company and its subsidiaries (collectively referred to as "Wentworth Group of Companies" or the "Group"). The Company is actively involved in oil and gas exploration, development and production operations. Wentworth is incorporated in Canada and shares of the Company are widely held and listed on the Oslo Stock Exchange (ticker: WRL) and the AIM of the London Stock Exchange (ticker: WRL).

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

2. 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").

The consolidated financial statements were approved by the Board of Directors on March 21, 2017.

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.

Basis of consolidation

These consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities that the Company controls. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and 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, 2016	Currency
Wentworth Resources Limited	Canada	Ultimate Parent	US dollar
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

2. Summary of accounting policies (continued)

Basis of consolidation (continued)

The Group holds its 31.94% participation 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 Cyprus Mnazi Bay Limited ("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 the Group proportionately consolidates CMBL as the related contractual agreements establish that the parties to the joint arrangement have rights to the assets and obligations for the liabilities of ownership in proportion to their interest in the arrangement.

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

Measurement uncertainty and use of estimates and judgments

In applying the Company's accounting policies, the preparation of consolidated financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts may differ materially from these estimates due to changes in general economic conditions, changes in laws and regulations, changes in future operating plans and the inherent imprecision associated with estimates. Significant estimates and judgments used in the preparation of these consolidated financial statements include the valuation of E&E and PP&E, decommissioning obligations, collectability of trade and other receivables and of long-term receivables, recognition of a deferred tax asset and determination of classification of joint arrangements.

The Company's significant accounting judgments and estimates are set out 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. 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, therefore, whether the carrying value of exploration and evaluation assets will ultimately be recovered, is inherently uncertain.

WENTWORTH RESOURCES LIMITED Notes to the Consolidated Financial Statements

United States \$000s unless otherwise stated

2. Summary of accounting policies (continued)

Carrying value of exploration and evaluation assets and PP&E (continued)

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 inflows are independent. If impairment indicators 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, which were prepared by an external reserve evaluator as at December 31, 2016, are used in the calculation of depletion, impairment and impairment reversals and recognition of deferred tax asset. Reserve estimates are based on engineering data, estimated future prices and costs, expected future rates of production and the timing of future capital expenditures, all of which are subject to many uncertainties and 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.

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.

Deferred tax assets are recognized if it is probable that future taxable income will be earned sufficient to use the related tax attributes. The estimate of future taxable income is uncertain. Recognition of the Company's deferred tax asset is based on assumptions of future taxable income which are derived from the reserve report. Changes in reserve estimates, commodity prices and tax legislation may significantly impact the amount of the recognized deferred income tax asset.

Collectability of trade and other receivables and the 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 5). Timing of collection of the receivable is impacted by the rate of production, the timing of the increase of production rates and how payment is allocated between partners to the Mnazi Bay Concession. The assessment of collectability of amounts owed from Tanzania Electricity Supply Company Limited ("TANESCO") is subject to significant estimates. Payment cycles from TANESCO vary and are not generally consistent with traditional industry terms of payment of between 30 and 90 days. Management is required to estimate the bad debts provision for this balance based on current and historical payment patterns. Prolonged periods of nonpayment may also affect the amount of revenue recorded with respect to sales to TANESCO.

2. Summary of accounting policies (continued)

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, which is classified as a joint operation.

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.

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 profit or loss. 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 in profit/(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.

2. Summary of accounting policies (continued)

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.

Long-term receivables

Long-term receivables plus applicable accrued interest is initially recognized at their 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 is comprised of its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate of any decommissioning obligations associated with the asset and borrowing costs on qualifying assets. When significant parts of an asset with PP&E, including oil and gas interests, have different useful lives, they are accounted for as separate items (major components).

WENTWORTH RESOURCES LIMITED Notes to the Consolidated Financial Statements

United States \$000s unless otherwise stated

2. Summary of accounting policies (continued)

Property, plant and equipment - crude oil and natural gas properties (continued)

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. 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.

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 straightline 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 of the cost of these assets less residual value is charged 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.

2. Summary of accounting policies (continued)

Impairment (continued)

Non-financial assets (continued)

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 an after-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.

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 generate 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 an after-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 inflows generated by the fields are interdependent. Impairment losses recognized in respect of CGU's are allocated first to reduce the carrying amount of goodwill, if any, 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.

2. Summary of accounting policies (continued)

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, net of tax.

Share based payments

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

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 profit or 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.

2. Summary of accounting policies (continued)

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, if any, or from the initial recognition (other than in a business combination) of other assets in a transaction that affects neither the taxable profit nor the accounting profit.

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

Deferred tax assets are reviewed at 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.

Foreign currency translation

Items included in the financial statements of the Company and its subsidiaries are measured using the currency of the primary economic environment in which the 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 dollars at the average exchange rate for the period.

Translation gains and losses are included in other comprehensive income, however, this subsidiary has limited operations so there is no significant amount of foreign exchange gains and losses to include in other comprehensive income.

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

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, 2016, 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 in further development of its oil and gas exploration and development assets.

2. Summary of accounting policies (continued)

Recent accounting pronouncements

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

New and amended atandards

		Effective for annual periods beginning on or after
IFRS 12 – (Amendments)	Disclosure of interest in other entities	January 1, 2017
IFRS 9	Financial instruments	January 1, 2018
IFRS 15	Revenue from contracts with customers	January 1, 2018
IFRS 2 – (Amendments)	Share-based payments	January 1, 2018
IFRS 16	Leases	January 1, 2019

The Company intends to adopt amendments to IFRS 12 in its financial statements for the annual period beginning on January 1, 2017. The Company does not expect the interpretation to have a material impact on the financial statements. The Company has not completed an assessment of the impact on the other standards.

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.

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 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.

3. 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 exposure is equal to the carrying value of its cash and cash equivalents, trade, other and long-term receivables.

Trade and other receivables are comprised predominantly of amounts due from government owned entities 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 TANESCO, the state power company, is connected with the gas sales from the Mnazi Bay Concession to an 18-megawatt gas-fired power plant located in Mtwara, Tanzania. At December 31, 2016, the Mnazi Bay Concession partners were owed thirteen months of invoices for gas sales made to TANESCO, with \$2,159 (2015 - \$438) owing to Wentworth of which \$488, three months of invoices, was received subsequent to year end. The receivable has been discounted by \$96. The Company continues to be engaged in ongoing discussions with TANESCO to accelerate payment of amounts past due.

During 2015, the Company commenced gas sales under a long-term gas sales agreement to TPDC, the operator of the new transnational gas pipeline in Tanzania. Credit risk relating to sales to TPDC is mitigated though a payment guarantee structure which involves a prepayment amount equivalent to approximately three months of sales and once formally established, a replenishable letter of credit mechanism. At December 31, 2016, the November and December 2016 gas sales invoices totalling \$3,217 (2015 – December sales of \$1,660) were outstanding and the November invoices totalling \$1,481 were paid subsequent to year end. Receivables of \$1,279 (2015 - \$1,279) from TPDC for filling and packing the transnational pipeline during Q3 2015 were also outstanding at December 31, 2016. During Q4 2016, TPDC paid \$715 relating to the line pack and line file invoices which was used to settle VAT and Excise tax owing on these gas invoices. Subsequent to year end, TPDC paid \$2,044 (net \$877 million to Wentworth) in respect of these outstanding invoices. The Mnazi Bay joint venture partners expect full payment of the line pack invoice in 2017.

In addition to the receivable for current gas sales to TPDC, at December 31, 2016, an undiscounted long-term receivable of \$27,153 is due from TPDC, a partner in the Mnazi Bay Concession. The Company currently receives, directly from the operator of the Mnazi Bay Concession, a significant portion of TPDC's and the government's share of gas sales from the Mnazi Bay Concession to reduce the receivable from TPDC. 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 may be made.

At December 31, 2016, an undiscounted long-term receivable of \$6,511 related to the Company's disposal of transmission and distribution assets, and the costs associated with the Mtwara Energy Project incurred in prior years by a wholly owned subsidiary of Wentworth. On February 6, 2012, the Company, TANESCO, TPDC and the Ministry of Energy and Minerals ("MEM") reached an 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 the Company's cash and cash equivalents 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.

3. Risk management (continued)

Credit risk (continued)

The maximum exposure to credit risk as at:

			Balance at		Balance at
			December 31, 2016		December 31, 2015
Trade and other receivables			6,699		3,253
Long-term receivables (Note 5)			30,317		37,087
Cash and cash equivalents			979		2,746
			37,995		43,086
Aged trade and other receivables
	Current	31-60	61-90	>90
	1-30 days	days	days	days	Total
Balance at December 31, 2016
Trade receivables	3,594	180	165	2,620	6,559
Other receivables	140	-	-	-	140
	3,734	180	165	2,620	6,699
Balance at December 31, 2015
Trade receivables	2,724	84	91	177	3,076
Other receivables	177	-	-	-	177
	2,901	84	91	177	3,253

Credit risk relating to sales to TPDC is mitigated though a payment guarantee structure which involves a prepayment amount equivalent to approximately three months of sales and once formally established, a replenishable letter of credit mechanism.

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, 2016
Trade and other payables	8,675	-	-	8,675
Other liability	1,260	1,100	-	2,360
Long-term loans, including interest(1)	6,892	8,043	9,123	24,058
	16,827	9,143	9,123	35,093
Balance at December 31, 2015
Trade and other payables	6,269	-	-	6,269
Other liability	1,508	1,634	-	3,142
Long-term loans, including interest(1)	7,344	10,497	13,802	31,643
	15,121	12,131	13,802	41,054

(1) Includes interest expense at the rate in effect at December 31.

3. Risk management (continued)

Liquidity risk (continued)

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

The Company has working capital surplus at December 31, 2016 and generated positive cash flow from operations for 2016. The Company is dependent upon the buyers of natural gas, TPDC and TANESCO, to meet their payment obligations in a timely manner and failure to obtain payment for an extended period of time could negatively impact the Company's ability to meet it ongoing obligations.

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 negligible as the sale prices for gas sold by the Company is fixed under the existing gas sale and purchase agreements.

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 sixmonth 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 of time (less than 1 year) and only in term deposits. An increase of 1% in the six-month LIBOR rate would result in an increase of \$207 (2015 - \$260) in interest expense on an annualized basis.

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. In addition, the Company holds substantially all its cash and cash equivalents in US dollars, and converts to other currencies only when cash requirements demand such conversion.

3. Risk management (continued)

Foreign exchange risk (continued)

The following \$000 US dollar balances are denominated in foreign currency:

	Canadian Dollar	Tanzanian Shilling	Other Currency	Total
Balance at December 31, 2016
Cash and cash equivalents	38	64	10	112
Trade and other receivables	31	100	9	140
Trade and other payables	(169)	(80)	(148)	(397)
	(100)	84	(129)	(145)
	Canadian Dollar	Tanzanian Shilling	Other Currency	Total
Balance at December 31, 2015
Cash and cash equivalents	26	44	-	70
Trade and other receivables	22	155	-	177
Trade and other payables	(12)	(33)	(19)	(64)
	36	166	(19)	183

A 10% increase/decrease of the Canadian dollar against the US dollar would result in a change in profit or loss before tax of \$10 (2015 - \$4). In addition, a 10% increase/decrease of the Tanzanian shilling against the US dollar would result in a change in profit or loss before tax of approximately \$8 (2015 – \$17).

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 does not have any fair value measurements considered as Level 1 or 3. The Company's longterm receivables, long-term loans, and other liability are considered Level 2 measurements.

4. Segment information

The Company conducts its business through two major operating business segments. Gas operations include the exploration, development, and production 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 loss for the twelve months ended December 31, 2016

	Tanzania	Mozambique
	Operations	Operations	Corporate	Consolidated
Natural gas sales	11,750	-	-	11,750
Production and operating	(3,371)	-	-	(3,371)
General and administrative	(2,708)	(395)	(2,294)	(5,397)
Depreciation and depletion	(3,797)	-	(67)	(3,864)
Other	(392)	-	(622)	(1,014)
Total segment expenses	(10,268)	(395)	(2,983)	(13,646)
Deferred tax expense	(3,196)	-	-	(3,196)
Net loss	(1,714)	(395)	(2,983)	(5,092)
Selected balances at December 31, 2016
Current assets	19,646	191	311	20,148
Long-term receivables	18,034	-	-	18,034
Exploration and evaluation assets	8,129	37,409	-	45,538
Property, plant and equipment assets	93,349	-	17	93,366
Deferred tax asset	31,145	-	-	31,145
Current liabilities	14,625	154	414	15,193
Non-current liabilities	17,127	-	-	17,127
Capital additions for the twelve months ended December 31, 2016
Net additions to exploration and evaluation assets	27	2,370	-	2,397
Net additions to property, plant and equipment assets	2,035	-	27	2,062

WENTWORTH RESOURCES LIMITED Notes to the Consolidated Financial Statements

United States \$000s unless otherwise stated

4. Segment information (continued)

Net income/(loss) for the twelve months ended December 31, 2015

	Tanzania	Mozambique
	Operations	Operations	Corporate	Consolidated
Natural gas sales	4,637	-	-	4,637
Production and operating	(3,214)	-	-	(3,214)
General and administrative Depreciation and depletion	(3,224) (1,550)	(628) -	(2,515) (157)	(6,367) (1,707)
Other	81	(10)	(727)	(656)
Total segment expenses	(7,907)	(638)	(3,399)	(11,944)
Deferred tax recovery	34,341	-	-	34,341
Net income/(loss)	31,071	(638)	(3,399)	27,034
Selected balances at December 31, 2015
Current assets	23,328	732	970	25,030
Long-term receivables	18,897	-	-	18,897
Exploration and evaluation assets	8,101	35,040	-	43,141
Property, plant and equipment assets	95,110	-	58	95,168
Deferred tax assets	34,341	-	-	34,341
Current liabilities	12,219	22	806	13,047
Non-current liabilities	23,119	-	-	23,119
Capital additions for the twelve months December 31, 2015
Net additions to exploration and evaluation assets	164	9,215	-	9,379
Net additions to property, plant and equipment assets	11,760	-	80	11,840

5. Long-term receivables

	Balance at	Balance at
	December 31, 2016	December 31, 2015
TPDC receivable (i)	24,836	32,128
Tanzanian Government receivable (Transmission &	5,481	4,959
Distribution) (ii)
	30,317	37,087
Current portion
TPDC receivable (i)	12,283	18,190
Long-term portion
TPDC receivable (i)	12,553	13,938
Tanzanian Government receivable (Transmission &	5,481	4,959
Distribution) (ii)
	18,034	18,897

5. Long-term receivables (continued)

The first gas delivery to the new government owned Mtwara to Dar es Salaam gas pipeline commenced on August 20, 2015. The current portion of TPDC receivable as at December 31, 2016 represents those amounts that are expected to be collected within the next twelve months.

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 its carrying amount is adjusted for accretion and changes in the estimated timing of cash flows. 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, 2016, the undiscounted receivable from TPDC is \$27,153 (2015 - \$35,291).

	TPDC receivable
Balance at December 31, 2014	28,914
Accretion	4,327
Change in estimated timing of receipt	(2,129)
Retained gas revenue to offset receivable	(2,279)
Share of TPDC Mnazi Bay Concession costs paid by the Company	3,295
Balance at December 31, 2015	32,128
Accretion	4,171
Change in estimated timing of receipt	(2,568)
Retained gas revenue to offset receivable	(10,569)
Share of TPDC Mnazi Bay Concession costs paid by the Company	1,674
Balance at December 31, 2016	24,836

The fair value of the TPDC receivable at December 31, 2016 calculated at 8.25% (2015 - 8%) was \$25,413 (2015 - \$33,489).

ii) Tanzanian government receivable

As at December 31, 2016 the undiscounted Tanzanian Government receivable is \$6,511 (2015 - \$6,511).

	Tanzanian government receivable
Balance at December 31, 2014	5,088
Accretion	484
Change in accounting estimates	(613)
Balance at December 31, 2015	4,959
Accretion	471
Change in accounting estimates	51
Balance at December 31, 2016	5,481

The fair value of the Tanzania Government receivable at December 31, 2016 is calculated at 8.25% (2015 - 8%) was \$5,601 (2015 - \$5,168).

5. Long-term receivables (continued)

ii) Tanzanian Government receivable (continued)

The Company has an agreement with the Government of Tanzania (TANESCO, TPDC and the MEM) to be reimbursed for all 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. After deducting costs associated with the Tariff Equalization Fund and VAT input credits associated with the MEP totaling \$1,610, the amount agreed to be reimbursed was \$6,511. Management is working with the Government of Tanzania to agree on a reimbursement method for the T&D costs. This receivable is considered a financial instrument and initially recorded at fair value based on discounted cash flows and at each reporting date its value is adjusted for accretion and changes in the estimated timing of cash flows is revalued and amortized by accreting the instrument over the expected life of the receivable.

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

Balance at December 31, 2016	45,538
Additions	2,397
Balance at December 31, 2015	43,141
Additions	9,379
Balance at December 31, 2014	33,762
Cost

On an ongoing basis, the Company considers if there are indicators of impairment of the E&E assets in Mozambique. At December 31, 2016, the Company concluded that an impairment test was not required. Significant factors that led to the conclusion that an impairment test was not required include: in June 2016, the Mozambique Government approval of a two-year appraisal plan for the gas discovery encounter within the Tembo-1 exploration well, the Company assuming operatorship of the Rovuma Onshore Block concession agreement and an increase in the participation interest in the Mozambique concession agreement to 85 percent. The appraisal plan includes the reprocessing of existing seismic data, evaluation of the Tembo-1 well, acquiring additional 2D seismic over the Rovuma Onshore Block and, should a suitable drilling location be identified, drilling of an appraisal well. The Company expects to use internally generated cash flows and possibly a farm-in of one or more industry partners to finance the work program.

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

	Natural gas properties	Office and other equipment	Total
Cost
Balance at December 31, 2014	88,002	489	88,491
Additions	11,760	80	11,840
Balance at December 31, 2015	99,762	569	100,331
Additions	2,035	27	2,062
Balance at December 31, 2016	101,797	596	102,393
Accumulated depreciation and depletion Balance at December 31, 2014	(3,102)	(354)	(3,456)
Depreciation and depletion Balance at December 31, 2015	(1,550) (4,652)	(157) (511)	(1,707) (5,163)
Depreciation and depletion Balance at December 31, 2016	(3,796) (8,448)	(68) (579)	(3,864) (9,027)
Carrying amounts December 31, 2015 December 31, 2016	95,110 93,349	58 17	95,168 93,366

Non-cash reduction during the year of \$388 (2015 - \$nil) relate to the reduction in the estimated future decommissioning obligation for existing natural gas properties.

The Company assessed triggers for impairment on the natural gas properties and determined that an impairment test was not required. The majority of the Company's natural gas is sold under long-term fixed price gas sales and purchase agreements, eliminating the current volatility in the commodity market. In addition, the valuation of the Company's reserves is in excess of the net book value of the Company's PP&E.

8. Decommissioning provision

The Company's decommissioning provisions result from net ownership interests in petroleum and natural gas assets including well sites, pipeline gathering systems, and processing facilities in Tanzania. The Company estimated a total of \$4,229 as undiscounted inflation-adjusted amount of cash flow required to settle its decommissioning obligations. The costs are expected to be incurred around 2030. 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. The discount and inflation rates used in determining the value of the decommission provision at December 31, 2016 was 12.0% and 2.03%, respectively (2015 – 14.2% and 2.0%, respectively).

A reconciliation of the decommissioning obligations is provided below:

	2016	2015
Balance at January 1	973	782
Addition	-	70
Accretion	188	121
Change in accounting estimates	(388)	-
Balance at December 31	773	973

9. Long-term loans

Credit facilities from Tanzania based banks

On December 8, 2014, Wentworth Gas Limited ("WGL"), a subsidiary of the Company, entered into two long-term credit facilities: 1) a \$20,000 loan to finance field infrastructure development within the Mnazi Bay Concession in Tanzania and 2) a \$6,000 loan to repay an existing medium-term loan.

The term of each loan was initially forty-eight months in duration commencing on the first draw-down date and each loan bears interest at six month 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 commenced following a grace period of eighteen months after the first draw down date. 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.

Principal balance drawn on credit facilities at December 31, 2014 Drawn during the year	6,000 20,000
Principal balance as at December 31, 2015	26,000
Loan repayments during the year	(5,333)
Principal balance as at December 31, 2016 (Note 19)	20,667
Net financing costs at December 31, 2014 Accretion during the year	(282) 64
Net financing costs at December 31, 2015	(218)
Accretion during the year	63
Net financing costs at December 31, 2016	(155)
Carrying amount of long-term loans at December 31, 2016	20,512
Current	5,258
Non-current	15,254
	20,512

During the year ended December 31, 2016, the Company incurred interest expense, inclusive of accretion of financing costs of \$2,190 (2015 - \$1,712). A total of \$2,073 was settled in cash for the year ended December 31, 2016 (2015 - \$906).

The carrying amount of the long-term loans include transaction costs of \$155 (net of accretion). At December 31, 2016, the carrying amount of the credit facilities approximates its fair value as the loan's effective interest rate approximates market rates.

WENTWORTH RESOURCES LIMITED Notes to the Consolidated Financial Statements

United States \$000s unless otherwise stated

10. Other liability

	2016	2015
Balance at January 1	3,142	3,132
Accretion	62	239
Change in accounting estimate	38	(229)
Payments to reduce liability	(882)	-
Balance at December 31	2,360	3,142
Current portion	1,260	1,508
Long-term portion	1,100	1,634

As a result of an asset purchase and sale transaction in 2012, the Company is 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 face value of the payable at December 31, 2016 is \$2,511 (2015 - \$3,394). The other liability is recognized at its estimated fair value which is determined by discounting the future cash payments at based on the anticipated timing of the payments.

11. Finance income and finance costs

	Year ended December 31,
	2016	2015
Finance income
Accretion – TPDC receivable (Note 5)	4,171	4,327
Accretion – Tanzanian Government receivable (Note 5)	471	484
Change in estimates – Tanzanian Government receivable (Note 5)	51	-
Interest income	-	7
	4,693	4,818
Finance costs
Accretion – decommissioning provision (Note 8)	(188)	(121)
Accretion – other liability (Note 10)	(62)	(239)
Change in estimates – TPDC receivable (Note 5)	(2,568)	(2,129)
Change in estimates – Tanzanian Government receivable (Note 5)	-	(613)
Change in estimates – other liability (Note 10)	(38)	229
Interest expense	(2,190)	(1,712)
Foreign exchange loss	(69)	(122)
	(5,115)	(4,707)

12. Share based payments

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

	2016		2015
	Number of options	Weighted average exercise price (US\$) (i)	Number of options	Weighted average exercise price (US\$)
Outstanding at January 1	11,950,000	0.50	9,950,000	0.61
Granted	-	-	2,000,000	0.44
Forfeited	(1,350,000)	-	-	-
Outstanding at December 31	10,600,000	0.50	11,950,000	0.51

12. 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	0.37	1,000,000	3.7	1,000,000
3.52	0.41	500,000	5.0	500,000
3.60	0.42	2,300,000	3.7	2,300,000
3.85	0.45	2,000,000	8.9	666,671
4.08	0.47	250,000	6.3	250,000
4.70	0.54	200,000	7.4	133,333
4.90	0.57	350,000	5.3	350,000
5.18	0.60	3,500,000	6.8	2,366,657
5.75	0.67	500,000	4.3	500,000
		10,600,000	6.1	8,066,661

The following table summarizes share options outstanding and exercisable at December 31, 2016:

(i) The US Dollar to Norwegian Kroner exchange rate used for determining the exercise price at December 31, 2016 is 0.11604.

The weighted average exercise price of options that have vested and are exercisable at December 31, 2016 is US\$0.49 (NOK 4.25).

The following table summarizes share options outstanding and exercisable at December 31, 2015:

			Outstanding	Exercisable
Exercise price (NOK)	Exercise price (US\$) (i)	Number of options	Weighted average remaining life (years)	Number of options
3.15	0.36	1,000,000	4.8	1,000,000
3.52	0.40	500,000	6.0	500,000
3.60	0.41	2,400,000	4.8	2,400,000
3.85	0.44	2,000,000	10.0	-
4.08	0.47	250,000	7.3	166,667
4.64	0.53	150,000	8.4	50,000
4.70	0.54	200,000	8.4	66,667
4.90	0.56	350,000	6.5	266,667
5.18	0.59	3,500,000	8.1	1,199,993
5.75	0.66	1,600,000	5.3	1,600,000
		11,950,000	7.0	7,249,994

(i) The US Dollar to Norwegian Kroner exchange rate used for determining the exercise price at December 31, 2015 is 0.11432.

The weighted average exercise price of options that have vested and are exercisable at December 31, 2015 is US\$0.50 (NOK 4.34)

12. Share based payments (continued)

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 2015. There were no grants during 2016:

	2016	2015
Grant date fair value per option (US\$)	-	0.25
Expected annual interest rate (%)	-	1
Expected volatility (%)	-	60
Expected life (in years)	-	6
Expected forfeiture rate (%)	-	8
Expected dividends (US\$)	-	Nil

During the year ended December 31, 2016 a total of \$592 (2015 - \$767) in share based compensation was expensed with an offsetting charge to equity reserve.

13. 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

2015

On July 1, 2015, the Company closed a private placement issuing 15,412,269 new common shares for cash consideration of \$0.50 (GBP 0.32, NOK 3.88) per share for total gross proceeds of \$7,639 million (GBP 4.9 million, NOK 59.7 million).

Expenses incurred in relation to the private placement and offering were \$371.

14. Per share amounts

Basic and diluted per share amounts

The calculation of loss per share for the year ended December 31, 2016 is based on a loss of \$5,092 attributable to shareholders of the Company (2015 – profit of \$27,034). Share options of 318,976 were dilutive during the year end December 31, 2015.

	Year ended December 31,
	2016	2015
Weighted average number of shares outstanding	169,534,969	161,849,947
Dilutive weighted average number of shares outstanding	169,534,969	162,168,923

WENTWORTH RESOURCES LIMITED Notes to the Consolidated Financial Statements

United States \$000s unless otherwise stated

15. Income taxes

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

	2016	2015
Loss before income taxes	(1,896)	(7,307)
Expected income tax (recovery) expense at combined Canadian
federal and provincial rate of 27.0% (2015 – 26.0%)	(512)	(1,900)
Rate differentials	185	(1,450)
Share based compensation	160	207
Movement in deferred tax assets not previously recognized and other	3,363	(31,198)
Income tax expense/(recovery)	3,196	(34,341)

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

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

	2016	2015
Non-capital losses	22,168	21,600
Property and equipment	486	470
Asset retirement obligations	270	557
	22,924	22,627

The total non-capital losses of the Company are \$271,672 (2015 – \$275,638) of which \$79,777 (2015 - \$76,285) are in Canada, \$189,932 (2015 - \$196,218) are in Tanzania, and \$1,963 (2015 - \$3,135) are in Mozambique.

The unrecognized non-capital losses in Canada expire in the years 2026 – 2035 and in Mozambique they expire in the years 2017 – 2021.

A deferred tax asset is recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences and the loss carry forwards can be utilized. A deferred tax asset of \$31,145 as at December 31, 2016 (2015 – \$34,341) is attributable to the accumulated tax loss carry-forward of the Company's Tanzanian subsidiary, which are expected to be offset against future taxable income. Recognition of the tax asset is supported by the proven and probable reserves as determined by the third party external reserve engineer.

	2016	2015
Balance at January 1	34,341	-
Deferred income tax assets recognized in profit or loss: Non-capital losses Asset retirement obligations	(1,885) (25)	58,866 232
Deferred income tax liabilities recognized in profit or loss: PP&E Receivables	(904) (382)	(24,757) -
Balance at December 31	31,145	34,341

WENTWORTH RESOURCES LIMITED Notes to the Consolidated Financial Statements

United States \$000s unless otherwise stated

16. 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,
	2016	2015
Directors fees	333	340
Share based compensation	203	299
	536	639

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

	For the year ended December 31,
	2016	2015
Salaries and benefits	1,631	2,335
Share based compensation	291	261
	1,922	2,596

17. Supplemental cash flow information

Non-cash working capital components

	For the year ended December 31,
	2016	2015
Net change in non-cash working capital related to operating activities:
Trade and other receivables	(3,446)	(640)
Prepayments, deposits and advances to partners	654	577
Trade and other payables	286	238
	(2,506)	175
Net change in non-cash working capital related to investing activities:
Trade and other receivables	-	-
Trade and other payables	1,997	(2,175)
	1,997	(2,175)

17. Supplemental cash flow information (continued)

Cash additions from investing activities in the Statement of Cash Flows consists of the following:

	Exploration and evaluation	Property, plant and equipment	Long-term receivable
Twelve months ended December 31, 2016
Total additions/(reductions)	2,397	2,062	(8,895)
Asset retirement obligation	-	388	-
Change in non-cash working capital	(26)	(103)	(1,868)
Cash additions/(reductions)	2,371	2,347	(10,763)
Twelve months ended December 31, 2015
Total additions	9,379	11,840	1,016
Asset retirement obligation	-	(69)	-
Change in non-cash working capital	920	1,155	100
Cash additions	10,299	12,926	1,116

18. Commitments

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, 2016 are as follows:

Total future minimum lease payments

2017	192
2018	44
	236

19. Subsequent event

On February 3, 2017, the Board of Directors of TIB Development Bank approved amendments to certain provisions of the existing \$20,000 credit facility. The most significant amendments that impact the principal and interest payments are set out below. Principal repayments on the outstanding \$16,667 balance at December 31, 2016 have been amended as follows:

Principal repayment date	Repayment amount
April 30, 2017	\$500
May 31, 2017	\$500
June 30, 2017	\$1,000
July 31, 2017	\$1,333
April 30, 2018	\$1,667
July 30, 2018	\$1,667
October 30, 2018	\$1,666
January 30, 2019	\$1,667
April 30, 2019	\$1,667
July 30, 2019	\$1,666
October 30, 2019	\$1,667
January 30, 2020	\$1,667
	\$16,667

The term of the credit facility has been extended by a year. Interest will be paid on a quarterly basis, in arrears, commencing July 31, 2017. The Company is working with TIB Development Bank to execute all of the amendments to the credit facility agreement.

All provisions of the \$6,000 credit facility, of which \$4,000 principal was outstanding at December 31, 2016, remain unchanged. Interest is paid on a semi-annual basis, in arrears, on the principal repayment date. The principal repayment dates are as follows:

Principal repayment date	Repayment amount
June 8, 2017	\$1,000
December 8, 2017	\$1,000
June 8, 2018	\$1,000
December 8, 2018	\$1,000
	\$4,000

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

INDEPENDENT AUDITORS' REPORT

To the Shareholders of Wentworth Resources Limited

Opinion

We have audited the consolidated financial statements of Wentworth Resources Limited and its subsidiaries (the "Wentworth"), which comprise the consolidated statements of financial position as at December 31, 2016 and 2015, the consolidated statements of profit (loss) and comprehensive profit (loss), changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of Wentworth as at December 31, 2016 and 2015, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion

We conducted our audits in accordance with International Standards on Auditing (ISA). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of Wentworth in accordance with applicable independence standards, and we have fulfilled our other ethical responsibilities in accordance with these standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion of these matters (amounts below are report in United Stated Dollars).

The key audit matter How the matter was addressed in our audit

Recoverability of deferred tax asset – \$31.3 million

Refer to note 15 to the consolidated financial statements.

Wentworth has a \$31.3 million deferred tax asset at December 31, 2016 in respect of accumulated tax losses and other timing differences from its operations in Tanzania. There is inherent uncertainty involved in forecasting future taxable profits generated from Wentworth's Tanzanian operations, which determines the extent to which deferred tax assets are or are not recognized. The key inputs in the future taxable profits forecast include significant estimates with respect to quantities of oil and gas reserves, future production volumes, and operating costs.

The procedures that we performed, among others, included:

• Testing the future taxable profit forecast model including verifying the mathematical accuracy of Wentworth's calculations and agreeing the key inputs to Wentworth's reserve report, which is prepared by independent reservoir engineers;
• Performing procedures to establish a basis to use the work of the independent reservoir engineers. These procedures, among others, included: testing the design and implementation of Wentworth's controls over the reserve report, assessing the qualifications of the individuals involved, assessing the accuracy of the input data and mathematical accuracy of the results. As part of this process, we also obtained written responses to reserve questionnaires from the independent reservoir engineers;
• Challenging the key assumptions underpinning Wentworth's near and medium term financial projections against historical performance and our knowledge of the economic conditions in Tanzania; and
• Evaluating the adequacy of Wentworth's disclosures in this area.

Tax provisioning

Refer to note 15 to the consolidated financial statements.

Wentworth operates in multiple jurisdictions with complex tax laws and regulations, which are evolving over time. Accruals for tax contingencies require Wentworth to make judgments and estimates in relation to tax issues and exposures, the complexities of transfer pricing and other international tax legislation and the time it may take for tax matters to be settled with the tax authorities.

The procedures that we performed, among others, included:

• Using our own international and local tax specialists to assess Wentworth's tax positions;
• Reading correspondence with the relevant tax authorities; and
• Analyzing and challenging the assumptions used to determine tax provisions based on our knowledge and experience with the application of the international and local legislation by the relevant authorities and courts.

The key audit matter How the matter was addressed in our audit

Valuation of Exploration and Evaluation ("E&E") Assets in Mozambique – \$37.4 million Refer to note 6 to the consolidated financial statements.

At December 31, 2016, Wentworth has \$37.4 million in E&E assets in Mozambique. Impairment testing is required for an E&E asset when events or changes in circumstances indicate that its carrying amount may exceed its recoverable amount. The assessment of whether such events and circumstances exist at December 31, 2016 includes significant judgment.

The procedures that we performed, among others, included:

• Inspecting Wentworth's assessment of whether events and circumstances existed at December 31, 2016 that would indicate the E&E assets in Mozambique are impaired and evaluated the assumptions used. Our evaluations focused on the status of the extension of the Exploration and Production Concession Contract ("EPCC") to appraise a gas discovery, the status of Wentworth's negotiations with the Government of Mozambique for the approval of the budget for Wentworth's appraisal activities in Mozambique, and evaluation of Wentworth's planned appraisal activities;
• Obtaining and reading correspondence and the relevant agreements between Wentworth and its partners and the Government of Mozambique supporting ongoing development subsequent to the gas discovery, including reading of the committee meeting minutes of the relevant governing bodies for Wentworth's operations in Mozambique; and
• We also considered the adequacy of Wentworth's disclosures in this area.

Recoverability of accounts receivable from Tanzania Electrical Supply Company ("TANESCO") – \$2.2 million

Refer to note 3 to the consolidated financial statements.

At December 31, 2016, Wentworth has \$2.16 million of trade receivables from TANESCO representing thirteen months of gas deliveries. Subsequent to year end, three months of gas deliveries were paid by TANESCO. Wentworth has not recorded an allowance for doubtful accounts/provision for bad debts as at December 31, 2016 with respect to this outstanding balance. Wentworth has discounted the receivable for the time value of money resulting in a charge of \$0.1 million.

Our audit procedures included among others:

• Testing Wentworth's control over the receivables collection processes and Wentworth's assessment of provisions required at period end;
• Testing the receipt of cash after the year-end from TANESCO; and testing the adequacy of Wentworth's provisions against trade receivables by assessing management's assumption, considering TANESCO's historical

The key audit matter	How the matter was addressed in our audit
Given the aging profile, the amount of the receivable and the level of judgment required in determining if a provision for bad debts is necessary, the recoverability of accounts receivable from TANESCO is considered a risk.	cash collections trends and our own knowledge of the local economic environment; and • Evaluating the adequacy of Wentworth's disclosures in this area.
Assessment of liquidity Refer to note 3 to the consolidated financial statements.
Wentworth has an accumulated deficit of \$261.8 million at December 31, 2016 and incurred a net loss of \$5.1 million during 2016. Cash generated from operations was \$0.48 million in 2016. Working capital has decreased at December 31, 2016 compared to the prior year. In addition, TANESCO and the Tanzania Petroleum Development Corporation ("TPDC"), the two purchases of the Company's natural gas had invoices payable to the Company which at December 31, 2016 were past due. Assessing the Company's liquidity and the impact it may have on the going concern assessment requires significant judgment.	The procedures that we performed, among others, included: • Discussing with senior management as to Wentworth's ability to fund its obligations as they come due in 2017; • Assessing the cash flow from operations in 2016 and the working capital surplus as at December 31, 2016; • Reviewing correspondence with respect to revisions to the repayment terms of the bank loans; • Inspecting Wentworth's budget for 2017 and comparing it to the actual results for 2016 with a focus on results in the fourth quarter of 2016; • Challenging the appropriateness of key assumptions in the budget, including the estimated production levels, and comparing those assumptions to amounts estimated in the December 31, 2016 external reserve report; and • Obtaining specific representations from management with respect to their assessment of Wentworth's liquidity.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs, 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 of error.

In preparing the consolidated financial statements, management is responsible for assessing Wentworth's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate Wentworth or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing Wentworth's financial reporting process.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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 Wentworth's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Wentworth's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause Wentworth to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within Wentworth to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit responsible for issuing this independent auditors' report is Shane Doig.

Shane Doig For and on behalf of KPMG LLP, Chartered Professional Accountants Calgary, Canada March 21, 2017