TOWER RESOURCES PLC — Interim / Quarterly Report 2016

May 12, 2016

Wentworth Resources Limited Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2016 Unaudited

Unaudited Condensed Consolidated Interim Statement of Financial Position

United States \$000s, unless otherwise stated

	Note	March 31, 2016	December 31, 2015
ASSETS
Current assets
Cash and cash equivalents		4,054	2,746
Trade and other receivables		4,962	3,253
Prepayments, deposits and advances to partners		1,213	841
Current portion of long-term receivables	4	16,368	18,190
		26,597	25,030
Non-current assets
Long-term receivables	4	19,126	18,897
Exploration and evaluation assets	5	43,323	43,141
Property, plant and equipment	6	94,536	95,168
Deferred tax asset		33,922	34,341
		190,907	191,547
Total assets		217,504	216,577
LIABILITIES
Current liabilities
Trade and other payables		7,819	6,269
Current portion of long-term loans	7	8,596	5,270
Current portion of other liability		1,158	1,508
		17,573	13,047
Non-current liabilities
Long-term loans	7	17,205	20,512
Other liability		1,972	1,634
Decommissioning provision		1,020	973
		20,197	23,119
EQUITY
Share capital		411,493	411,493
Equity reserve		25,911	25,683
Accumulated deficit		(257,670)	(256,765)
		179,734	180,411
Total liabilities and equity		217,504	216,577

The accompanying notes are an integral part of these unaudited condensed consolidated interim 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 Unaudited Condensed Consolidated Interim Statement of Loss and Comprehensive Loss

United States \$000s, unless otherwise stated

		Three months ended March 31,
	Note	2016	2015
Total revenue		3,206	272
Operating expenses
Production and operating		(897)	(504)
General and administrative		(1,512)	(1,497)
Depreciation and depletion	6	(1,114)	(106)
Share based compensation	9	(228)	(306)
Loss from operating activities		(545)	(2,141)
Finance income	8	1,285	1,307
Finance costs	8	(1,226)	(1,882)
Loss before tax		(486)	(2,716)
Deferred tax expense		(419)	-
Net loss and comprehensive loss		(905)	(2,716)
Net loss per ordinary share
Basic and diluted (US\$/share)	10	(0.01)	(0.02)

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

Unaudited Condensed Consolidated Interim Statement of Changes in Equity

United States \$000s, unless otherwise stated

	Note	Number of shares	Share capital \$	Equity reserve \$	Accumulated deficit \$	Total equity \$
Balance at December 31, 2014	9	154,122,700	404,225	24,916	(283,799)	145,342
Net loss and comprehensive loss		-	-	-	(2,716)	(2,716)
Share based compensation		-	-	306	-	306
Balance at March 31, 2015		154,122,700	404,225	25,222	(286,515)	142,932
Balance at December 31, 2015	9	169,534,969	411,493	25,683	(256,765)	180,411
Net loss and comprehensive loss		-	-	-	(905)	(905)
Share based compensation		-	-	228	-	228
Balance at March 31, 2016		169,534,969	411,493	25,911	(257,670)	179,734

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

Unaudited Condensed Consolidated Interim Statement of Cash Flows

United States \$000s, unless otherwise stated

		Three months ended March 31,
	Note	2016	2015
Operating activities
Net loss for the period		(905)	(2,716)
Adjustments for:
Depreciation and depletion	6	1,114	106
Finance (income)/loss, net	8	(59)	575
Deferred tax expense		419	-
Share based compensation	9	228	306
Change in non-cash working capital		(939)	(70)
Net cash utilized in operating activities		(142)	(1,799)
Investing activities
Acquisitions of evaluation and exploration assets	11	-	(6,733)
Acquisitions of property, plant and equipment	11	-	(2,478)
Reductions of/(additions to) long-term receivable	11	2,596	(523)
Net cash from/(used in) investing activities		2,596	(9,734)
Financing activities
Proceeds from long-term loan		-	10,480
Interest paid	7	(773)	-
Payment of other liability		(373)	-
Net cash (used in)/from financing activities		(1,146)	10,480
Net change in cash and cash equivalents		1,308	(1,053)
Cash and cash equivalents, beginning of the period		2,746	5,487
Cash and cash equivalents, end of the period		4,054	4,434

Supplemental information: Cash interest paid (note 7)

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

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

United States \$000s unless otherwise stated

1. Nature of business

Wentworth Resources Limited ("Wentworth" or the "Company") is an East Africa-focused upstream oil and natural gas company. These unaudited condensed consolidated interim 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 and Dar es Salaam, Tanzania.

2. Summary of accounting policies

Basis of presentation and statement of compliance

These unaudited condensed consolidated interim financial statements have been prepared by management in accordance with International Accounting Standard 34, "Interim Financial Reporting".

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing these unaudited condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended December 31, 2015. These unaudited condensed consolidated interim financial statements have been prepared following the same accounting policies as the annual audited consolidated financial statements for the year ended December 31, 2015 and should be read in conjunction with the annual audited consolidated financial statements and the notes thereto.

These unaudited condensed consolidated interim financial statements were approved by the Board of Directors on May 11, 2016. The disclosures provided below are incremental to those included in the 2015 annual consolidated financial statements.

Credit risk

The Company's ongoing exposure to receivables from Tanzania Electricity Supply Company Limited ("TANESCO"), the state power company, is connected with the gas sales from the Mnazi Bay Concession to an 18-megawatt gas-fired power plant located in Mtwara, Tanzania. At March 31, 2016 the Mnazi Bay Concession partners were owed eight months of gas sales for sales made to TANESCO, with \$1,307 owing to Wentworth. The Company is 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 Tanzania Petroleum Development Company ("TPDC"), the operator of a 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 a requirement for a replenishable letter of credit. At March 31, 2016, Wentworth was owed \$2,204 related to March gas sales to TPDC, which was collected in full during April 2016.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

United States \$000s unless otherwise stated

3. Segment information

Net loss for the quarter ended March 31, 2016

	Tanzania	Mozambique
	Operations	Operations	Corporate	Consolidated
Natural gas sales	3,206	-	-	3,206
Production and operating	(897)	-	-	(897)
General and administrative	(799)	(155)	(558)	(1,512)
Depreciation and depletion	(1,093)	-	(21)	(1,114)
Other	42	-	(211)	(169)
Total segment expenses	(2,747)	(155)	(790)	(3,692)
Deferred tax expense	(419)	-	-	(419)
Net loss	40	(155)	(790)	(905)
Selected balances at March 31, 2016
Current assets	23,895	1,091	1,611	26,597
Long-term receivables	19,126	-	-	19,126
Exploration and evaluation assets	8,106	35,217	-	43,323
Property, plant and equipment assets	94,498	-	38	94,536
Deferred tax assets	33,922	-	-	33,922
Current liabilities	16,855	24	694	17,573
Non-current liabilities	20,197	-	-	20,197
Capital additions for the quarter ended March 31, 2016
Additions to exploration and	5	177	-	182
evaluation assets
Additions to property, plant and equipment assets	482	-	-	482

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

United States \$000s unless otherwise stated

3. Segment information (continued)

Net loss for the quarter ended March 31, 2015

	Tanzania	Mozambique
	Operations	Operations	Corporate	Consolidated
Natural gas sales	272	-	-	272
Production and operating	(504)	-	-	(504)
General and administrative	(730)	(114)	(653)	(1,497)
Depreciation and depletion	(65)	-	(41)	(106)
Other	(665)	-	(216)	(881)
Total	(1,964)	(114)	(910)	(2,988)
Deferred tax expense	-	-	-	-
Net loss	(1,692)	(114)	(910)	(2,716)
Selected balances at March 31, 2015
Current assets	16,453	37	2,938	19,428
Long-term receivables	23,200	-	-	23,200
Exploration and evaluation assets	8,084	32,661	-	40,745
Property, plant and equipment assets	87,403	-	96	87,499
Current liabilities	6,243	2,070	138	8,451
Non-current liabilities	19,489	-	-	19,489
Capital additions for the quarter ended March 31, 2015
Additions to exploration and	149	6,834	-	6,983
evaluation assets
Additions to property, plant and equipment assets	2,568	-	2	2,570

4. Long-term receivables

	Balance at	Balance at
	March 31, 2016	December 31, 2015
TPDC receivable (i) Tanzanian government receivable (Transmission & Distribution) (ii)	30,422 5,072	32,128 4,959
	35,494	37,087
Current portion TPDC receivable (i)	16,368	18,190
Long-term portion TPDC receivable (i) Tanzanian government receivable (Transmission & Distribution) (ii)	14,054 5,072	13,938 4,959
	19,126	18,897

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

United States \$000s unless otherwise stated

4. Long-term receivables (continued)

i) TPDC receivable

As at March 31, 2016, the undiscounted receivable from TPDC is \$32,861 (\$35,291 at December 31, 2015).

Balance at December 31, 2015	32,128
Accretion	1,154
Change in accounting estimates	(220)
Retained gas revenue to offset receivable	(3,213)
Share of TPDC Mnazi Bay Concession costs paid by the Company	573
Balance at March 31, 2016	30,422

ii) Tanzanian government receivable

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

Balance at December 31, 2015	4,959
Accretion	113
Balance at March 31, 2016	5,072

The fair value of the TPDC receivable at March 31, 2016 was \$31,936 (December 31, 2015 - \$33,489).

The fair value of the Tanzania government receivable at March 31, 2016 was \$5,235 (December 31, 2015 - \$5,168).

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

Cost
Balance at December 31, 2015	43,141
Additions	182
Balance at March 31, 2016	43,323
Carrying amounts
December 31, 2015	43,141
March 31, 2016	43,323

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

United States \$000s unless otherwise stated

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

	Natural gas properties	Office and other equipment	Total
Cost
Balance at December 31, 2015	99,762	569	100,331
Additions	482	-	482
Balance at March 31, 2016	100,244	569	100,813
Accumulated depreciation and depletion
Balance at December 31, 2015	(4,652)	(511)	(5,163)
Depreciation and depletion	(1,093)	(21)	(1,114)
Balance at March 31, 2016	(5,745)	(532)	(6,277)
Carrying amounts
December 31, 2015	95,110	58	95,168
March 31, 2016	94,499	37	94,536

In determining the depletion charge, it is estimated that future development costs of \$25,800 will be required to bring the total proved reserves into production.

7. Long-term loans

Total credit facilities	26,000
Principal balance drawn on credit facilities at March 31, 2016 and December 31, 2015	26,000
Carrying amount of long-term loans at March 31, 2016	25,801
Current Non-current	8,596 17,205 25,801

The carrying amount of the long-term loan at March 31, 2016 has been derived at after deducting the transaction cost (net of accretion) of \$199.

During the quarter ended March 31, 2016, the Company incurred interest expense, inclusive of the accretion of financing costs of \$560 (2015 - \$240). During the quarter, the Company paid interest of \$773 (2015 - \$nil).

At March 31, 2016, the carrying amount of the credit facilities approximates its fair value as the loan's effective interest rate approximates market rates.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

United States \$000s unless otherwise stated

8. Finance income and finance costs

	Three months ended March 31,
	2016	2015
Finance income
Accretion - TPDC receivable (Note 4)	1,154	1,084
Accretion – Tanzanian government receivable (Note 4)	113	122
Change in estimates – other liability	18	101
	1,285	1,307
Finance costs
Change in estimates – TPDC receivable (Note 4)	(220)	(1,395)
Change in estimates – Tanzanian government receivable (Note 4)	-	(137)
Accretion – other liability	(379)	(61)
Interest expense	(560)	(240)
Accretion – decommissioning provision	(47)	(27)
Foreign exchange loss	(20)	(22)
	(1,226)	(1,882)

9. Share based payments

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

	Number of options	Weighted average exercise price at March 31, 2016
Outstanding at December 31, 2015 Forfeited	11,950,000 (1,000,000)	0.51 -
Outstanding at March 31, 2016	10,950,000	0.52

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

United States \$000s unless otherwise stated

9. 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	0.38	1,000,000	4.5	1,000,000
3.52	0.42	500,000	5.8	500,000
3.60	0.43	2,400,000	4.5	2,400,000
3.85	0.46	2,000,000	9.7	-
4.08	0.49	250,000	7.0	166,667
4.64	0.56	150,000	8.2	50,000
4.70	0.56	200,000	8.2	66,667
4.90	0.59	350,000	6.0	350,000
5.18	0.62	3,500,000	7.6	2,333,333
5.75	0.69	600,000	5.0	600,000
		10,950,000	6.9	7,466,667

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

(i) The US Dollar to Norwegian Kroner exchange rate used for determining the exercise price at March 31, 2016 is 0.11983.

The weighted average exercise price of options that have vested and are exercisable at March 31, 2016 is US\$0.51 (NOK 4.29).

Share based payment charge

During the quarter ended March 31, 2016 a total of 1,000,000 options were forfeited, no options were granted and exercised during the same period (2015 – no options were granted, exercised and forfeited)

During the quarter ended March 31, 2016 a total of \$228 (2015 - \$306) in share based compensation was expensed with an offsetting charge to equity reserve.

United States \$000s unless otherwise stated

10. Loss per share

Basic and diluted loss per share

The calculation of loss per share for the quarter ended March 31, 2016 is based on a loss attributable to shareholders of the Company of \$905 (2015 – loss of \$2,716). Share options and other equity instruments such as warrants outstanding were anti-dilutive for both periods.

	Three months ended March 31,
	2016	2015
Weighted average number of shares outstanding	169,534,969	154,122,700
Dilutive weighted average number of shares outstanding	169,534,969	154,122,700

11. Supplemental cash flow information

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
Quarter ended March 31, 2016
Total additions/(reductions)	182	482	(2,640)
Change in non-cash working capital	(182)	(482)	44
Cash additions/(reductions)	-	-	(2,596)

	Exploration and evaluation	Property, plant and equipment	Long-term receivable
Quarter ended March 31, 2015
Total additions	6,983	2,570	542
Change in non-cash working capital	(250)	(92)	(19)
Cash additions	6,733	2,478	523

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INDEPENDENT AUDITORS' REPORT ON REVIEW OF INTERIM FINANCIAL STATEMENTS

To the shareholders of Wentworth Resources Limited

Introduction

We have reviewed the accompanying unaudited condensed consolidated interim statement of financial position of Wentworth Resources Ltd. as at March 31, 2016, the condensed consolidated interim statements of loss and comprehensive loss, changes in equity and cash flows for the three month periods ended March 31, 2016 and 2015, and notes to the unaudited condensed consolidated interim financial statements ("the condensed consolidated interim financial statements"). Management is responsible for the preparation and presentation of these condensed consolidated interim financial statements in accordance with IAS 34, 'Interim Financial Reporting'. Our responsibility is to express a conclusion on these condensed consolidated interim financial statements based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements as at March 31, 2016, are not prepared, in all material respects, in accordance with IAS 34, 'Interim Financial Reporting'.

Chartered Professional Accountants

May 11, 2016 Calgary, Canada

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