Staatsolie Annual Report 2017

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Confidence in Our Own Abilities 78 Staatsolie Maatschappij Suriname N.V. Staatsolie Maatschappij Suriname N.V. Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 Notes (continued) to the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) Available-for-sale (AFS) financial investments ii. On assessing the useful lives of the refinery assets a different depreciation method between IFRS AFS financial and US investments GAAP was include identified. equity IFRS and requires debt securities. a component Equity depreciation investments approach classified if as components availablefor-sale of are an those asset neither have classified differing as patterns held-for-trading of benefit, nor whereas designated US GAAP at fair value allowed through depreciation profit or on loss. a After initial straight measurement, line basis. The AFS component financial depreciation investments approach are subsequently requires that measured each part at of fair an value asset item with unrealized with gains a cost or losses that is recognized significant in as relation OCI until to the the investment total cost is of derecognized, the item should at which be depreciated time, the cumulative separately. gain or Under loss is US recognized GAAP a weighted in other average operating of the income useful or lives expense, of the or different the investment components is determined was to calculated be impaired, (23.25 at which years). time, In addition, the cumulative the turnaround loss is reclassified and inspections to the consolidated (T&I) is scheduled statement in of profit 2019 or loss which in finance led to costs accelerated and removed depreciation from the for OCI. the assets The Group which evaluates will be replaced. its AFS financial The net impact assets to determine is that whether accumulated the ability and depreciation intention to amounting sell them in to the US$ near 1,176 term as is at still January appropriate. 1, 2016 and US$ 1,534 as at December 31, 2016 were released to the profit and loss/retained earnings. (ii) Financial liabilities iii. The “projects in progress” balance was transferred to the individual property, plant and equipment Recognition and measurement categories as follows: oil, exploration and production properties US$ 156,837, refining properties Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or US$ 27,426 and other properties and equipment for US$ 31,952 as at January 1, 2016. As at loss, loans and borrowings, payables, as appropriate. All financial liabilities are recognized initially at fair December 31, 2016, the transferred balances amounted to US$ 131,058 to oil, exploration and value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. production properties, US$ 959 to refining properties and US$ 840 to other properties and The Group’s financial liabilities include trade and other payables, loans and borrowings including bank equipment. This reclassification is made for the consolidated financial statement disclosure overdrafts. purposes. Loans and borrowings B. This Investments is the category in associate most relevant and joint to venture the Group. After initial recognition, interest bearing loans and borrowings i. Under are US subsequently GAAP, Staatsolie measured previously at amortized accounted cost using for its the 25% EIR interest method. in Gains the Suriname and losses Gold are recognized Project in the CV consolidated (Surgold), statement as a qualifying of profit asset or loss at when net equity the liabilities value, comprising are derecognized of the as purchase well through consideration the EIR amortization and capitalized process. financing Amortized costs. is Under calculated the requirements by taking into of account IFRS, the any investment discount or in premium Surgold on acquisition classified and as fees a financial or costs asset, that are which an integral is not a qualifying part of the asset EIR. per The IAS EIR 23 amortization and therefore is included the in finance costs in are the not consolidated allowed to statement be capitalized. of profit Accordingly, loss. This the category capitalized generally finance applies cost of to interest-bearing US$ 7,529 loans and and US$ borrowings. 12,827 as at January 1, 2016 and December 31, 2016 respectively were written-off through profit and loss in the respective periods. m. Inventories ii. Furthermore, Newmont Mining Corporation, the controlling-interest party in Surgold, performed a Petroleum products are valued at the lower of cost and net realizable value. US GAAP to IFRS conversion assessment on its subsidiary Surgold. This assessment resulted in Raw materials: a slightly different IFRS net income compared to US GAAP. Consequently, Staatsolie adjusted its • Purchase profit share cost is for valued its investment on weighted in Surgold, average resulting method in a loss of US$ 13 as at January 1, 2016 and Finished a goods loss of and US$ work 7 as in at progress: December 31, 2016. • Cost of direct materials and labor and a proportion of manufacturing overheads based on normal C. Inventories operating capacity but excluding borrowing costs The primary basis of accounting for inventory is cost under both US GAAP and IFRS. As such there are no differences in cost valuation. Due to convergence, US GAAP measured Inventories similar to IFRS at Page 62 Page 78
Annual Report 2017 79 Staatsolie Maatschappij Suriname N.V. Staatsolie Maatschappij Suriname N.V. Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 Notes (continued) to the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) Inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimated lower of cost and net realizable value (NRV) by issuing AS 2015-11. However, before 2017, Inventories selling price in the ordinary course of business, less estimated costs of completion and the estimated are carried at the lower of cost or market (LCM) per US GAAP, whereas under IFRS, Inventories are costs to sell. carried at the lower of cost or NRV. US GAAP defined market as current replacement cost as long as market The cost is not of crude greater oil than and NRV refined (estimated products selling is the price purchase less reasonable cost, the costs cost of of completion, refining, including disposal and the transportation) appropriate proportion and is not of less depreciation, than NRV depletion reduced by and a normal amortization sales margin. and overheads As at January based 1, on 2016, normal the carrying operating value capacity, at cost determined according on to a IFRS weighted was average slightly higher basis. than the cost under US GAAP, therefore an increase The net realizable of US$ 885 value was of made crude to the oil and inventory refined balance. products is based on the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to D. Provisions make the sale. IAS 37 outlines the accounting for provisions together with contingent assets and contingent liabilities to ensure Materials that and provisions supplies are are valued recognized using the only weighted when (i) average there is cost a present method. obligation resulting from past events, (ii) payment is probable and (iii) the amount can be estimated reliably. Pipeline fill Crude oil, which is necessary to bring a pipeline into working order, is treated as a part of the related Based on the above mentioned criteria, the following provisions resulted in re-measurements under IFRS: pipeline. This is on the basis that it is not held for sale or consumed in a production process, but is necessary i. Staatsolie to the has operation recognized of provisions a facility during for decommissioning more than one its operating production cycle, field and and its related cost cannot facilities, be recouped the refinery through and sale the (or power is significantly plant on the impaired). basis of This discounted applies even expected if the expenditures. part of inventory Differences that is deemed between to be IFRS an item and of US property, GAAP plant arose and because equipment of differences cannot be in separated the treatment physically of changes from the in rest cost of inventory. estimates It is and valued discount at cost rates and is associated depreciated with over the the decommissioning useful life of the liability. related The asset. production field and related facilities provision was reduced by (US$ 3,518) as at January 1, 2016 and (US$ 35,628) in 2016. n. The Impairment refinery provision of non-financial was adjusted assets for (US$ 2,047) as at January 1, 2016 and (US$ 3,822) in The 2016. Group The assesses power at plant each provision reporting was date adjusted whether for there (US$ is 277) an indication as January that an 1, asset 2016 may and (US$ be impaired. 144) in If any 2016. indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating ii. A refinery units construction (CGU) fair claim value was less settled costs by of arbitrage disposal (Arbitral and its value Tribunal) in use. in 2017 It is with determined Ballast Nedam for an individual Infra Suriname asset, unless (BNIS) the for asset an amount does not of US$ generate 12,947. cash Under inflows US that GAAP are requirements, largely independent the claim of which those from originated other assets in fiscal or groups year 2015 of assets. was defined Where as “likely”, the carrying and accordingly amount of no an provision asset or was CGU recognized exceeds as its recoverable at January amount, 1, 2016. the asset Under is IFRS considered the claim impaired was and defined is written as probable down to and its recoverable a provision amount. should be In assessing recognized. value An in use, adjustment the estimated was made future at cash January flows 1, are 2016 discounted and December to their 31, present 2016 for value US$ using 1,600 a with pretax a discount credit to rate provision that reflects and debit current to retained market assessments earnings. As of at the December time value 31, of 2016, money this and amount the risks was specific shown to the as a asset. current In liability determining because fair value this case less was costs settled of disposal, in fiscal recent year 2017. market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. iii. GOw2 accounted for its environmental provision in accordance with US GAAP at the expected value Impairment losses of continuing operations are recognized in the consolidated statement of profit or loss of future cash outflows. The expected value was not discounted to present value, because the time in those expense categories consistent with the function of the impaired asset, except for a property horizon in which the environmental cleanup was planned to be completed was one-to-two years. previously revalued where the revaluation was taken to OCI. In this case, the impairment is also During the IFRS conversion, the time horizon was revised and therefore the provision was properly recognized in OCI up to the amount of any previous revaluation. discounted, using real discount rates, as the expenditures are not expected to be incurred for some Page 63 Page 79
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Contact Information Head Office Dr.
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