Crudecorp AS Quarterly financial statement Q4 2014

Crudecorp AS Condensed Consolidated Income Statement Unaudited figures in USD

Note

Revenues

Q4 14

Q4 13

2014

2013

2 476 194

4 441 409

10 025 327

14 569 048

-

-

-

-

-2 308 641

-3 329 203

-9 648 753

-11 606 097

Other operating income Production costs Salaries Depreciation and impairment

2, 3

Other operating expenses Other income and expenses

5

Operating profit

Net financial items

7

Profit before tax Taxes

8

Net profit/(loss)*

-34 314

-441 648

-513 456

-1 884 172

-1 437 358

-1 949 828

-20 277 897

-5 062 640

-817 130

-315 331

-2 430 251

-1 468 945

17 981 181

-5 050 583

20 179 328

-5 855 152

15 859 931

-6 645 184

-2 665 703

-11 307 958

-315 329

-828 084

-5 706 283

-2 291 683

15 544 602

-7 473 269

-8 371 985

-13 599 641

-344 674

-550 163

-503 022

10 166

15 199 928

-8 023 432

-8 875 007

-13 589 475

Q4 14

Q4 13

2014

2013

15 199 928

-8 023 432

-8 875 007

-13 589 475

8 408 966

282 617

12 930 776

-4 294 511

Consolidated Statement of Comprehensive Income

Unaudited figures in USD Net profit

Note

Comprehensive income items Translation differences Other comprehensive income, net after tax

Total comprehensive income

8 408 966

282 617

12 930 776

-4 294 511

23 608 894

-7 740 815

4 055 769

-17 883 986

Net profit allocated The shareholders of the parent Total comprehensive income allocated The shareholders of the parent

15 199 928

-8 023 432

-8 875 007

8 408 966

282 617

12 930 776

-13 589 475 -4 294 511

23 608 894

-7 740 815

4 055 769

-17 883 986

Earnings per. share is calculated by dividing net profit attributable to equity shareholders of the weighted average number of ordinary shares outstanding during the period

Q4 14

Q4 13

2014

2013

15 199 928

-8 023 432

-8 875 007

-13 589 475

125 265

110 917

125 265

103 022

Earnings per share

0,12

-0,07

-0,07

-0,13

Diluted earnings per share

0,12

-0,07

-0,07

-0,13

-2 781 253

-2 972 849

-29 054 335

-7 734 323

Profit attributable to equity shareholders Weighted average number of ordinary shares outstanding (in thousands)

*Net profil/(loss) exluding MTM is

Crudecorp AS Consolidated Balance Sheet Unaudited figures in USD

Note

31.12.2014

31.12.2013

ASSETS Non-current assets Deferred tax assets

8

2 267 512

2 770 534

Fixed Assets

2

40 060 472

54 944 652

Working Interest Chico Martinez

3

3 911 289

7 000 311

Other non-current assets

6

5 302 320

5 240 279

Derivatives

5

Other long-term recivables

5

3 475 421 4 257 410

0 0

59 274 423

69 955 776

156 381

276 945

Total non-current assets Current Assets Inventories Derivatives

5

3 783 208

0

Trade Receivables and other receivables

5

5 962 364

1 746 440

7 651 511

21 869 071

Total current assets

17 553 463

23 892 456

Total assets

76 827 888

93 848 232

31.12.2014

31.12.2013

Cash and cash equivalents

Unaudited figures in USD

Note

EQUITY Equity attributable to parent company shareholders Share capital

4

361 013

411 802

Share premium

4

65 307 886

71 791 430

-24 447 645

-28 503 414

41 221 254

43 699 818

28 074 196

Retained Earnings Total shareholders' equity Liabilities Long Term Liabilities Loan

5

21 024 239

Derivatives

5

874 807

4 861 606

Decommissioning and Abandonment

5

1 344 204

1 280 859

23 243 250

34 216 661

Total long term liabilities

, Short Term Debt Loan

5

5 600 000

6 400 000

Derivatives

5

874 807

2 336 320

Trade and other payables

5

5 888 577

7 195 432

Total short term debt

12 363 383

15 931 752

Total liabilites

35 606 634

50 148 413

Total equity and liabilities

76 827 888

93 848 232

Note 1 to 9 forms an integral part of the group accounts.

Crudecorp AS Consolidated cash flow Unaudited figures in USD Note

31.12.2014

31.12.2013

Cash flow from operating activities Cash flow from operations

-5 212 176

679 407

Interest paid

-5 252 520

-5 368 499

0

-17 679

-10 464 697

-4 706 771

-3 583 158

-10 382 616

Taxes paid Net cash from operating activites Cash flow from investing activities Purchase of tangible fixed assets Disposal of tangible fixed assets Loans to third parties

182 000 0

-940 822

Translation differences on investments

6 065 251

-2 994 835

Net cash flow from investing activities

2 664 093

-14 318 273

917

30 310 166

Cash flow from financing activities Issue of ordinary shares Bond Issue

0

4 699 455

Credit Suisse facility

-6 400 000

-4 700 000

Net cash from financing activities

-6 399 083

30 309 621

-14 199 687

11 284 577

21 869 071

10 875 771

-17 873

-291 276

7 651 511

21 869 071

Net change in cash, cash equivalents and bank overdrafts Cash, cash equivalents and bank overdrafts as of 1 January Exchange rate gain-/loss on cash, cash equivalents, bank overdrafts and recievables Cash, cash equivalents and bank overdrafts at end of period

Crudecorp AS Changes in Group Equity

Unaudited figures in USD Note

Equity 31 December 2012* Repair issue February Share issue April

Share Capital

Share Premium

Retained Earnings

Sum Equity

335 379

44 424 786

-13 486 527

31 273 638

1 228

413 151

414 379

34 756

11 087 168

11 121 924

-112 307

-112 307

Share issue cost Capital increase options Share issue December

132

13 018

13 150

70 681

19 366 504

19 437 185

Share issue cost December

-568 760

Net profit (loss) 2013 Comprehensive income 2013 Translation differences equity

-30 373

-2 832 130

Equity 31 December 2013

411 802

71 791 430

Repair issue february 2014

3

913

Net profit (loss) YTD 2014 Comprehensive income Translation differences equity

-50 793

-6 484 457

Equity 31 December 2014

361 013

65 307 886

-568 760 -13 589 475

-13 589 475

-1 427 411

-1 427 411

-28 503 414

43 699 818

-8 875 007

-8 875 007

12 930 776

12 930 776

-24 447 645

41 221 254

-2 862 503

917

-6 535 250

Note 1 General accounting principles

Crudecorp AS (the “Company”) and its subsidiaries (together with the Company the “Group”) is an international oil company. The Group owns 90 % of the working interest in the oilfield Chico Martinez in California. The Group prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) and these financial statements have been prepared in accordance with the International Accounting Standard for Interim Financial Reporting (IAS 34). As the interim financial statements do not include the full information and disclosures as required in the annual financial statements, it should be read in connection with the Annual Financial Statements for 2013.

2 Fixed Assets 31.12.2014

Carrying value as of beginning of period

54 944 652

48 526 364

-

-

3 583 158

10 382 616

-240 000

-

Conversion differences (Translation) Additions Disposals

31.12.2013

Capitalization of interest

-

-

Decommissioning and Abandonment Impairment*

-

526 425

-14 325 000

-

Depreciation

-3 902 338

-4 490 753

Carrying value as of end of period

40 060 472

54 944 652

64 221 771

60 878 613

As of end of period Acquisition Cost Capitalization of interest Accumulated depreciation and impairment Carrying value as of end of period

1 335 227

1 335 227

-25 496 526

-7 269 188

40 060 472

54 944 652

*An impairment charge of tUSD 14 325 and 1 625 was made during the third quarter, resulting in the carrying amount of the assets being written down to its estimated recoverable amount. If the budgeted cost saving used in the value-in-use calculation for the assets had been lower than management’s estimates at 30 September 2014 (for example, 0 USD/bbl instead of 5 USD/bbl), the group would have recognised a further impairment of the assets by tUSD 11 000 and would need to reduce the carrying value of the assets accordingly. If the estimated cost of capital used in determining the pre-tax discount rate for the assets had been 1% higher than management’s estimates (for example, 11% instead of 10%), the group would have recognised a further impairment against the assets of tUSD 1 000 and would need to reduce the carrying value of the assets accordingly. Management would like to emphasize that based on the value-in-use calculation the estimate is highly sensitive to changes in main assumptions.

Reserves and production (not audited) Estimated total P90 reserves as of 31.12.14 is 2.18 million boe (net Crudecorp). Total production in Q4 2014 was 54,175 boe.

3 Oil field production rights

Carrying Value as of beginning of period

31.12.2014

31.12.2013

7 000 311

8 186 562

Impairment*

-1 625 000

-

Depreciation

-425 559

-571 887

Conversion differences (Translation)

-1 038 464

-614 364

Carrying value as of end of period

3 911 289

7 000 311

As of end of period Acquisition Cost

6 590 720

7 629 184

Accumulated depreciation, amortization and impairment

-2 679 431

-628 872

Carrying value as of end of period

3 911 289

7 000 311

* see note 2

4 Share capital and share premium

Total as of 31 December 2012 Share issue January 2013 Share issue April 2013

Number of shares (1,000s)

Share capital (NOK)

Share capital (USD)

Share premium (USD)

Total (USD)

93 374

1 867 478

335 379

44 424 786

44 760 165

350

7 000

1 228

413 151

414 379

10 000

200 000

34 756

11 087 168

11 121 924

-112 307

-112 307

40

800

131

13 018

13 149

21 500

430 000

70 681

19 366 504

19 437 185

-568 760

-568 760

-30 373

-2 832 130

-2 862 503

411 802

71 791 430

72 203 232

Share issue cost Capital increase options Share issue December Share issue cost Conversion differences (Translation) Total as of 31 December 2013 Share issue february 2014

125 264

2 505 278

1

20

Conversion differences (Translation) Total as of 31 December 2014

125 265

2 505 298

3

913

917

-50 793

-6 484 457

-6 535 250

361 013

65 307 886

65 668 899

5 Loans and Derivatives 31.12.2014

31.12.2013

Loan from Paladin

1 668 831

1 697 517

Bond Issue

6 585 208

8 006 479

12 770 200

18 370 200

Long-term debt

Credit Suisse Derivatives

874 807

4 861 606

1 344 204

1 280 859

23 243 250

34 216 661

Credit Suisse

5 600 000

6 400 000

Trade and other payables

5 888 577

7 195 432

874 807

2 336 320

12 363 383

15 931 752

Nominal value 31.12.2014

31.12.2013

Loan from Paladin

1 668 831

1 812 831

Bond Issue

6 726 578

8 218 683

Credit Suisse

18 900 000

25 300 000

Total

27 295 409

35 331 514

Decommissioning and Abandonment Total long-term debt

Short-term debt

Derivatives Total short-term debt

Other income and expenses Q4 14

Q4 13

2014

2013

Loan Profit/loss on MTM value on oil and gas contract Credit Suisse

17 981 181

-5 050 583

20 179 328

-5 855 152

Total

17 981 181

-5 050 583

20 179 328

-5 855 152

The carrying value of the Bond Issue is in NOK. Remaining Group's loan is in USD. The loan from Paladin has a nominal interest rate 0% and a repayment schedule that is in step with production with installments of $2 per barrel produced in the Chico Martinez field

The Company has in July 2012 successfully completed a bond issue of NOK 21 million. This bond issue was in September 2013 increased to NOK 50 million. The bond issue has a nominal interest rate of 3 month NIBOR + 12,5 %. Maturity date of the bond issue is 17 July 2017. The bond issue is unsecured and subordinated to the Credit Suisse facility. The Bond Issue agreement includes a call option and Crudecorp may redeem parts of the Bond Issue or the entire Bond Issue as stated in the agreement between Crudecorp ASA and Norsk Tillitsmann (on behalf of the Bondholders). Book value of Bond Issue is USD 8,1 million and consists of principal reduced by costs and transaction fee and added with the period's amortization of costs/transaction fee. Accrued interest related to Bond Issue is USD 0,30 million as per 31 March. Interest is to be paid every third month.

The Company has in July 2012 signed a USD 30 million crude oil prepaid swap facility with Credit Suisse. The Prepay Facility also involves a cash-settled embedded derivative forward swap over 986,000 barrels of crude oil spread across March 2013 - December 2016 and priced in reference to ICE Brent. Repayment of principal and interests/margin cost on oil swap started in April 2013. Oil sale will be treated as income as before, without any changes. The loan will be accounted for as a fixed interest loan using amortized cost method. The fixed interest will be the margin inherent in the Oil swap agreement. The sale of oil will be recognized at market price, and the change in fair value (MTM) in the Oil swap agreement will be recognized as other gain and losses in the financial statement (operating section, above EBITDA). Crudecorp treats the arrangement as one contract and then bifurcate the embedded derivative for MTM (Market to Market), leaving the host instrument for as fixed interest loan, accounted as amortized cost, where the fixed interest is the margin (incl. funding cost) of USD 15,71 on each bbl. The rest of the oils swap (MTM value) is accounted for as fair value through profit and loss on the line other gains and losses. MTM (Market to Market) value will be calculated each quarter. A positive value of the embedded derivatives will result in a accrual against the interest of the embedded derivative of the accounted fixed interest loan. As of December 31.2014 this accrual amounted to MUSD 8,8

The income/loss related to the oil contract is presented as other income/expenses in the Condensed Consolidated Income Statement and included in derivatives in the balance sheet.

Gas purchase agreement will be treated at fair value, as the purchase is accounted for as own use under IAS 39 definitions. MTM (Market to Market) value is to be calculated each quarter. This gain/loss is presented as other income/expenses in the Condensed Consolidated Income Statement and included in derivatives in the balance sheet.

The table below anlyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1: Quoted prices (unadjusted) in active markrets for identical assets or liabilities Level 2: Inputs other than quotes prices included within Level 1 that are observable for the assets or liability, either directly (that is, as prices) or indirectly (that is, derived prom prices) Level 3: inputs for the assets or liability that are not based on observable market data (that is, unobseervable inputs)

2014

Level 1

Assets Financial derivatives Liabilities Financial derivatives 2013 Assets

Level 2

Level 3

Sum

-

7 258 629

-

7 258 629

-

1 749 613

-

1 749 613

Level 1

Level 2

Level 3

Sum

Financial derivatives Liabilities

-

-

-

-

Financial derivatives

-

7 197 926

-

7 197 926

6 Other non-current assets 31.12.2014

Warranty Bond related to production rights Third parties' share of investment

Other non-current assets

31.12.2013

264 457

264 457

5 037 863

4 975 822

5 302 320

5 240 279

According to the Purchase Agreement related to 90 % of Working interest in the Chico Martinez oil field Sea Industries, Inc. and Petrov Enterprises, Inc, which owns 5 % each (in total the remaining 10% working interest) of the working interest in Chico Martinez, shall not be required to bear any of the first 20 Million USD in costs and expenses incurred in the development of the leases. Third parties' share of investment is reflecting the amount due in the period.

7 Financial income and expenses

Interest expense Credit Suisse and Bond

Q4 14

Q4 13

2014

2013

1 218 400

1 477 244

5 779 991

6 385 004

Foreign exchange losses Interest expense on Plugging and Abandonment

13 575

3 642

15 562

35 925

99 270

35 925

1 233 962

1 513 169

5 892 836

6 424 571

Foreign exchange gain

815 340

658 634

Interest income on short-term bank deposits

103 293

26 452

186 553

64 995

Financial Income

918 633

685 086

186 553

4 132 888

-315 329

-828 084

-5 706 283

-2 291 683

Financial expenses

Net financial expenses

4 067 893

Due to the fact that the parent company has NOK as functional currency, any intercompany receivables with USD entities generate foreign exchange gains and losses. These are in general offset by translation differences presented within Other Comprehensive Income.

8 Income tax expense Q4 14

Q4 13

2014

2013

Tax payable

0

-17 679

0

-17 679

Total tax payable

0

-17 679

0

-17 679

Deferred tax assets

-344 674

-532 484

-503 022

27 845

Total deferred tax

-344 674

-532 484

-503 022

27 845

Taxes

-344 674

-550 163

-503 022

10 166

Tax payble consists of 2013 State and Federal income taxes in US. The management’s evaluation at this stage is that the company are able to utilize the deferred tax asset in the future.

9 Events after balance date There have been no material subsequent events that affect the accounts.