CONTENTS
Pages | |
Condensed Consolidated Interim Statement of Profit or Loss and | |
Other Comprehensive Income | 2 |
Condensed Consolidated Interim Statement of Financial Position | 3 |
Condensed Consolidated Interim Statement of Changes in Equity | 4 |
Condensed Consolidated Interim Statement of Cash Flows | 5 |
Notes to the Unaudited Condensed Consolidated Interim Financial Statements | 6 |
Management Discussion and Analysis | 22 |
Other Information | 28 |
CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
The board of directors (the "Board") of CHK Oil Limited (the "Company") reports the unaudited condensed consolidated interim financial statements of the Company and its subsidiaries (collectively referred to as the "Group") for the six months ended 30 June 2024 (the "Period") as follows:
Six months ended 30 June | |||||
2024 | 2023 | ||||
(Unaudited) | (Unaudited) | ||||
Note | HK$'000 | HK$'000 | |||
Revenue | 4 | 36,705 | 39,952 | ||
Cost of sales | (36,584) | (39,460) | |||
Gross profit | 121 | 492 | |||
Other income | 251 | 137 | |||
Administrative expenses | (12,458) | (8,119) | |||
Selling expenses | (155) | - | |||
Finance costs | (148) | (120) | |||
Loss before tax | 5 | (12,389) | (7,610) | ||
Income tax expense | 6 | - | (10) | ||
Loss for the period | (12,389) | (7,620) | |||
Loss attributable to: | |||||
Owners of the Company
Non-controlling interests
Other comprehensive loss for the period, net of tax
Item that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign operations
Total comprehensive loss for the period
Total comprehensive loss attributable
to:
Owners of the Company
Non-controlling interests
Loss per share
(12,389)(7,620)
--
(12,389)(7,620)
(2,553)(4,723)
(14,942) (12,343)
(14,942) (12,343)
--
(14,942) (12,343)
Basic and diluted | 8 | (HK1.47 cents) | (HK0.91 cents) | ||
2 CHK Oil Limited
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
30 June | 31 December | |||
2024 | 2023 | |||
(Unaudited) | (Unaudited) | |||
(Restated) | ||||
Note | HK$'000 | HK$'000 | ||
Non-current assets | ||||
Property, plant and equipment | 15,819 | 15,813 | ||
Intangible assets | 129,458 | 129,458 | ||
Right-of-use assets | 2,418 | 3,353 | ||
Statutory deposits and other assets | 2,622 | 2,622 | ||
150,317 | 151,246 | |||
Current assets | ||||
Trade receivables | 9 | 7,276 | 7,679 | |
Prepayments, deposits and | ||||
other receivables | 10 | 126,497 | 176,945 | |
Bank balances and cash | 40,285 | 1,252 | ||
174,058 | 185,876 | |||
Current liabilities | ||||
Trade and other payables | 11 | 56,604 | 50,729 | |
Loans from ultimate holding company | 11,560 | 2,980 | ||
Bank loan and other borrowings | 2,793 | 13,854 | ||
Lease liabilities | 1,941 | 1,888 | ||
Tax payable | 11,448 | 11,716 | ||
84,346 | 81,167 | |||
Net current assets | 89,712 | 104,709 | ||
Total assets less current liabilities | 240,029 | 255,955 | ||
Non-current liabilities | ||||
Deferred tax liabilities | 1,043 | 1,043 | ||
Lease liabilities | 590 | 1,574 | ||
1,633 | 2,617 | |||
Net assets | 238,396 | 253,338 | ||
Equity | ||||
Share capital | 12 | 168,376 | 168,376 | |
Reserves | 69,005 | 83,947 | ||
Equity attributable to owners of the | ||||
Company | 237,381 | 252,323 | ||
Non-controlling interests | 1,015 | 1,015 | ||
Total equity | 238,396 | 253,338 | ||
Interim Report 2024 | 3 |
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
At 1 January 2024, as previously reported Correction of prior year
errors
At 1 January 2024, as restated (Unaudited)
Loss for the period Other comprehensive loss
for the period
Total comprehensive loss for the period
At 30 June 2024 (Unaudited)
Equity attributable to owners of the Company | |||||||||||||||||||||||||
Treasury | Non- | ||||||||||||||||||||||||
Share | Share | shares | Capital | Statutory | Translation | Accumulated | controlling | ||||||||||||||||||
capital | premium | reserve | reserve | reserve | reserve | losses | Reserves | Sub-total | interests | Total equity | |||||||||||||||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | |||||||||||||||
168,376 | 2,815,677 | (10,556) | 403,851 | 12,196 | (3,740) | (2,978,545) | 238,883 | 407,259 | 1,015 | 408,274 | |||||||||||||||
- | - | - | - | - | - | (154,936) | (154,936) | (154,936) | - | (154,936) | |||||||||||||||
168,376 | 2,815,677 | (10,556) | 403,851 | 12,196 | (3,740) | (3,133,481) | 83,947 | 252,323 | 1,015 | 253,338 | |||||||||||||||
- | - | - | - | - | - | (12,389) | (12,389) | (12,389) | - | (12,389) | |||||||||||||||
- | - | - | - | - | (2,553) | - | (2,553) | (2,553) | - | (2,553) | |||||||||||||||
- | - | - | - | - | (2,553) | (12,389) | (14,942) | (14,942) | - | (14,942) | |||||||||||||||
168,376 | 2,815,677 | (10,556) | 403,851 | 12,196 | (6,293) | (3,145,870) | 69,005 | 237,381 | 1,015 | 238,396 | |||||||||||||||
Equity attributable to owners of the Company | ||||||||||||||||||||||||||
Treasury | Non- | |||||||||||||||||||||||||
Share | Share | shares | Capital | Statutory | Translation | Accumulated | controlling | |||||||||||||||||||
capital | premium | reserve | reserve | reserve | reserve | losses | Reserves | Sub-total | interests | Total equity | ||||||||||||||||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||||||||||||||||
At 1 January 2023, as | ||||||||||||||||||||||||||
previously reported | 168,376 | 2,815,677 | (10,556) | 403,851 | 12,196 | (904) | (2,928,993) | 291,271 | 459,647 | 1,015 | 460,662 | |||||||||||||||
Correction of prior year | ||||||||||||||||||||||||||
errors | - | - | - | - | - | - | (173,204) | (173,204) | (173,204) | - | (173,204) | |||||||||||||||
At 1 January 2023, as | ||||||||||||||||||||||||||
restated (Unaudited) | 168,376 | 2,815,677 | (10,556) | 403,851 | 12,196 | (904) | (3,102,197) | 118,067 | 286,443 | 1,015 | 287,458 | |||||||||||||||
Loss for the period | - | - | - | - | - | - | (7,620) | (7,620) | (7,620) | - | (7,620) | |||||||||||||||
Other comprehensive loss | ||||||||||||||||||||||||||
for the period | - | - | - | - | - | (4,723) | - | (4,723) | (4,723) | - | (4,723) | |||||||||||||||
Total comprehensive loss | ||||||||||||||||||||||||||
for the period | - | - | - | - | - | (4,723) | (7,620) | (12,343) | (12,343) | - | (12,343) | |||||||||||||||
At 30 June 2023 (Unaudited) | 168,376 | 2,815,677 | (10,556) | 403,851 | 12,196 | (5,627) | (3,109,817) | 105,724 | 274,100 | 1,015 | 275,115 | |||||||||||||||
4 CHK Oil Limited
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
Six months ended 30 June | ||||
2024 | 2023 | |||
(Unaudited) | (Unaudited) | |||
HK$'000 | HK$'000 | |||
Net cash from (used in) operating activities | 42,418 | (13,658) | ||
Net cash (used in) from investing activities | (54) | 110 | ||
Net cash used in financing activities | (3,243) | (1,092) | ||
Net increase (decrease) in cash and cash | ||||
equivalents | 39,121 | (14,640) | ||
Effect on exchange rate changes | (88) | 5,155 | ||
Cash and cash equivalents at beginning of period | 1,252 | 15,147 | ||
Cash and cash equivalents at end of period, | ||||
represented by bank balances and cash | 40,285 | 5,662 | ||
Interim Report 2024 | 5 |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. GENERAL INFORMATION
CHK Oil Limited (the "Company", together with its subsidiaries are collectively referred to as the "Group") is a limited liability company incorporated in Bermuda. The Company's shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The principal activities of the Group are investment holding, exploring, exploiting and sale of oil and natural gas ("Oil and gas sales") and trading of oil, oil-related and other products.
The unaudited condensed consolidated interim financial statements are presented in Hong Kong dollars ("HK$") which is same as the functional currency of the Company and all values are rounded to the nearest thousand except where otherwise indicated.
2. BASIS OF PREPARATION
The Group's unaudited condensed consolidated interim financial statements for the six months ended 30 June 2024 have been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") and also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange (the "Listing Rules").
These unaudited condensed consolidated interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's audited consolidated financial statements for the year ended 31 December 2023 including the announcements of the Company dated 15 August 2024 and 27 September 2024 (collectively, the "Announcements").
The condensed consolidated interim financial statements are unaudited, but have been reviewed by the audit committee of the Company (the "Audit Committee").
The unaudited condensed consolidated interim financial statements have been prepared on the historical cost basis.
6 CHK Oil Limited
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
2. BASIS OF PREPARATION (continued)
Restatement adjustments
The Group held exploitation interest in the gas and oil fields in the State of Utah, United States of America (the "USA") (the "Utah Gas and Oil Field"), through four leases with the Bureau of Land Management ("BLM") of the United States Department of Interior and two leases with State of Utah of Department of Natural Resources. In August 2024, the Company discovered that three of the leases with the BLM would have been terminated at earliest as at 26 September 2022, being 60 days after the Group received BLM's 22 June 2022 written order (the "Relevant Leases"). For details, please refer to the Announcements.
Upon the termination of the Relevant Leases, the Group's oil and gas processing rights in Utah, the USA under intangible assets and the oil and gas properties under the property, plant and equipment related to the Relevant Leases as at 31 December 2022 and 2023, and 30 June 2023 were not properly recorded. The consolidated financial statements for the financial years ended 31 December 2022 and 2023 and the condensed consolidated interim financial statements for the six months ended 30 June 2023 would have been restated.
The effect of the restatements on those financial statements relevant to the condensed consolidated interim financial statements for the six months ended 30 June 2024 is summarised as follows.
Interim Report 2024 | 7 |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
2. BASIS OF PREPARATION (continued)
Restatement adjustments (continued)
Previously | Restatement | |||||
reported | adjustments | Restated | ||||
HK$'000 | HK$'000 | HK$'000 | ||||
For the year ended 31 December 2022 | ||||||
Consolidated Statement of | ||||||
Financial Position | ||||||
Reserves | 291,271 | (173,204) | 118,067 | |||
- Accumulated losses | (2,928,993) | (173,204) | (3,102,197) | |||
Equity attributable to owners of | ||||||
the Company | 459,647 | (173,204) | 286,443 | |||
Total equity | 460,662 | (173,204) | 287,458 | |||
For the year ended 31 December 2023 | ||||||
Consolidated Statement of Financial | ||||||
Position | ||||||
Property, plant and equipment | 48,812 | (32,999) | 15,813 | |||
Intangible assets | 292,379 | (162,921) | 129,458 | |||
Non-current assets | 347,166 | (195,920) | 151,246 | |||
Total assets less current liabilities | 451,875 | (195,920) | 255,955 | |||
Deferred tax liabilities | 42,027 | (40,984) | 1,043 | |||
Non-current liabilities | 43,601 | (40,984) | 2,617 | |||
Net assets | 408,274 | (154,936) | 253,338 | |||
Reserves | 238,883 | (154,936) | 83,947 | |||
- Accumulated losses | (2,978,545) | (154,936) | (3,133,481) | |||
Equity attributable to owners of the | ||||||
Company | 407,259 | (154,936) | 252,323 | |||
Total equity | 408,274 | (154,936) | 253,338 | |||
For the six months period ended | ||||||
30 June 2023 | ||||||
Condensed Consolidated Interim Statement | ||||||
of Financial Position | ||||||
Reserves | 278,928 | (173,204) | 105,724 | |||
- Accumulated losses | (2,936,613) | (173,204) | (3,109,817) | |||
Equity attributable to owners of | ||||||
the Company | 447,304 | (173,204) | 274,100 | |||
Total equity | 448,319 | (173,204) | 275,115 | |||
8 CHK Oil Limited
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
2. BASIS OF PREPARATION (continued)
Going concern
These unaudited condensed consolidated interim financial statements have been prepared in conformity with the principles applicable to a going concern basis. The applicability of these principles is dependent upon continued availability of adequate finance or attaining profitable operations in the future in view of the cash requirements to meet its financial obligations as and when they fall due within the next twelve months. The Group incurred a net loss attributable to owners of the Company of HK$12,389,000 for the six months ended 30 June 2024 and, as of that date, the Group's total trade and other payables (excluding contract liabilities), loans from ultimate holding company, bank loan and other borrowings, lease liabilities, tax payable in aggregated to approximately HK$47,059,000, of which HK$46,469,000 are due for repayment within the next twelve months after 30 June 2024, and also the Group had only bank balances and cash of HK$40,285,000. These conditions indicate a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern and, therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.
The directors of the Company are of the opinion that the Group will have sufficient working capital to finance its operations and to meet its financial obligations for at least the next twelve months from the date of approval of the unaudited condensed consolidated interim financial statements which can be prepared on a going concern basis, after taking into consideration of the followings:
- the Group's ultimate holding company and its substantial beneficial shareholder have committed to provide continuous financial support to the Group as is necessary to enable the Group to meet its day-to-day operations and its financial obligations as they fall due;
- with reference to the cash flow projection for the next twelve months, the Group will maintain sufficient cash and cash equivalents through internally generated cash flows to finance its activities and pay its debts as and when they fall due;
- the Group will consider other financing arrangements and fund-raising alternatives with a view to increasing the Group's capitalisation/equity and to support the daily operations of the Group; and
- the Group will continue to improve the operating efficiency by implementing measures to tighten cost controls over various operating expenses in order to enhance its profitability and to improve the cash flows from its operation in future.
Interim Report 2024 | 9 |