MAHA-ENERGY.COM
I
2023
ANNUAL
REPORT
MAHA-ENERGY.COM
2023 ANNUAL REPORT
II
About Maha
Maha Energy is a leading Swedish listed player in the oil and
gas industry. Maha is focused on developing and operating
productive fields to maximize value, while seizing special
situation opportunities to drive profitability and generate
value to its shareholders. The Company began its journey
in 2013 and celebrated 10 years in 2023. With a team of
industry experts and main offices in Sweden and Brazil,
Maha is publicly traded on Nasdaq Stockholm’s Main
Market under the ticker symbol MAHA-A.
Throughout its first decade, Maha has transformed into
an innovative independent energy platform, strategically
growing by acquiring and developing profitable oil and gas
assets. The Company focuses on developing underper-
forming hydrocarbon assets on a global basis, with the goal
of building a diversified and balanced portfolio between
mature onshore and offshore oil and gas assets.
2023 Highlights
The Sustainability Report is published as a sepa-
rate document, available on maha-energy.com.
Acquisition of 5%
of 3R Petroleum
Strategic entry
into Venezuela
Divestment of previous
assets for up to USD
200 million
200
MILLION USD
New assets acquired
offshore Brazil
Maha Energy’s shares are traded on the
Nasdaq Main Market in Stockholm under
the ticker symbol ‘MAHA-A (publ)’.
MAHA-ENERGY.COM
1
Letter to Shareholders
2023 Operational Highlights
Strategy for Value Creation
Board & Management
The Share
Corporate Governance Report
Administration Report
Financial Statements
Key Financial Data and Ratios
Board Assurance
Auditor’s Report
Definitions
Information
Regarding AGM
The Annual General Meeting of shareholders of Maha
Energy AB (publ) will be held on Wednesday, May 29,
2024, 2:00 p.m. CEST at Setterwalls on Sturegatan 10
in Stockholm, Sweden. The notice and the complete
proposals will be available at www.maha-energy.com.
Content
Corporate Calendar
The Company plans to publish its
2024 Quarterly Reports as follows:
QUARTER 01
Three Month Report 2024
May 28, 2024
QUARTER 02
Six Month Report 2024
August 12, 2024
QUARTER 03
Nine Month Report 2024
November 18, 2024
02
18
06
04
96
101
97
20
12
30
92
47
01
02
03
2023 ANNUAL REPORT
2
Letter to
Shareholders
02
Dear Friends and
Fellow Shareholders:
During 2023, Maha delivered on our strategy
and undertook numerous initiatives which
have set the stage for an exciting 2024 and
beyond. With this ‘new Maha’, we intend to
focus capital and resources on projects in
Latin America, where we have the people,
experience and local relationships to succeed.
Maha has emerged in 2024 as an innovative
and progressive energy platform with a strong
financial position, fully equipped to pursue
growth and profitability in Latin America.
Maha’s transforma-
tional changes were
completed in just over
12 months, and include:
⁄ restructuring our asset portfolio while
maintaining stable production levels;
⁄ securing a substantial cash position
through asset divestitures;
⁄ acquiring new assets that afford future
development opportunities;
⁄ revitalization of our board of directors
and management team;
⁄ relocation of our operational office to
Rio in Brazil and substantially closing
the Canadian office; and
⁄ introducing a new four-step strategy to
optimize value creation.
MAHA-ENERGY.COM
3
Setting the Stage
The business combination with DBO Energy that Maha
completed in early 2023 gave the Company a 15% equity
stake in 3R Offshore, a division of one of the most prom-
inent independent oil and gas companies in Brazil, 3R
Petroleum Óleo e Gás S.A. (“3R Petroleum”), a company I
was intimately involved in the founding and early growth of
alongside certain of our board members. The 3R Offshore
interest gives Maha exposure to the Papa Terra and Peroá
clusters in offshore Brazil and laid the groundwork for our
acquisition of a 5% equity interest in 3R Petroleum early in
2024.
We took steps during 2023 to strategically streamline the
asset base by divesting our Brazilian onshore fields at
Tartaruga and Tie; our LAK asset in the U.S., and finally
Block 70, Oman. The divestments yielded a total consider-
ation of over USD 200 million, including earnouts of USD 48
million. In the fall, we secured an exclusivity agreement and
in March 2024 signed the definitive agreements to acquire
between 24% and 40% of the Venezuelan oil company
named PetroUrdaneta from Novonor Latinvest, expanding
Maha’s Latin American footprint, and affording access to
the world’s largest oil reserve which have been under-cap-
italized for years.
Maha’s Four Steps to Achieve Value Creation
Based on our intimate knowledge of our assets, we are
very optimistic about its substantial potential, and we
are committed to boosting the visibility of its fair market
value. As a result, we developed a four-step value creation
strategy that includes: 1) maximizing current assets; 2)
driving consolidation in Brazilian onshore; 3) optimizing
value in Brazilian offshore; and 4) continuing to advance
our position in Venezuela.
New Company, New Strategy
and New Way Forward
Maha is a completely different company today, in a strong
financial position and ready to embark on a promising
growth journey. We have a platform for substantial expan-
sion in both onshore and offshore Brazil, as well as exciting
opportunities with limited downside financial exposure in
Venezuela.
Maha continues to advance the groundwork, due diligence
and preparations to commence operations in Venezuela
while closely monitoring the political landscape in the
country, including pursuing general or specific U.S. sanc-
tions licensing that may be required to continue activities
going forward. In addition to Venezuela, Maha will continue
to be engaged in opportunities throughout Latin America
that could leverage our financial and operational capabili-
ties, ultimately generating value to our shareholders.
Maha has an experienced management and board in
place, who are strongly aligned with shareholders and are
advancing clear plans to pursue growth and profitability
in Latin America. As we advance projects, Maha remains
committed to boosting the visibility of our current assets’
fair market value to benefit all stakeholders. With our
strong cash on hand, we are fully financed for our present
growth plans, including attractive M&A opportunities. We
are also hoping to soon be in the position when Maha will
be a dividend paying company.
Kjetil Braaten Solbraekke
Chief Executive Officer
Maha Energy
Thank you for your continued
support and confidence.
2023 ANNUAL REPORT
4
2023 Operating Highlights
Transformational Events Over the Past Year and into 2024
Maha Asset Portfolio as at December 31, 2023
Daily oil production from continuing
operations averaged 197 BOEPD, including
non-consolidated production from investment
in associate 3R Offshore of 1,745 BOEPD, total
production amounted to 1,942 BOEPD
Country Concession name
Maha Working
Interest (%) Status
2P reserves
(mmoboe) BOEPD 2023 Partner & Associate
USA Il Basin (various) 98.41% Producing 2.8* 165 -
Brazil Peroá cluster 15% Producing 1.8* 516 3R Offshore (Associate)
Brazil Papa Terra cluster 9.38% Producing 21.2* 1,535 3R Offshore (Associate)
and Nova Técnica Energia
* Per December 31, 2023
Closing of Maha
Brazil’s sale to
PetreReconcavo
for up to USD
187 million
Closing of DBO
transaction
Signing of
exclusivity
to aquire up
to 40% of
PetroUrdaneta
Signing SPA to
exit from block
70 in Oman
Signing
of definitive
documents
to acquire
up to 40% of
PetroUrdaneta
Aquires 5% of
3R Petroleum
shares and
proposes
consolidation
plan
In a short period, the new management put together a series of actions that set the background for a new growth strategy
1,942
BOEPD
Total Production
Feb
2023
May
2023
Oct
2023
Jan
2024
Mar
2024
Jan
2024
5.2
MILLION
Revenue from continuing
operations of 5.2 million
2.2
MILLION
Operating netback from continuing
operations of 2.2 million
131.1
MILLION
Total cash balance on 31 December
2023 of 131.1 million, including
restricted cash of 42.8 million (31
December 2022: 15.2 million, excluding
cash from assets held for sale)
MAHA-ENERGY.COM
5
Maha’s Actions Strategic Impact
Divested onshore
Brazilian asset subsidiary to
PetroReconcavo (Feb/23)
•
Bolstered cash position
•
Support future acquisitions and growth initiatives
Finalized business combina-
tion with DBO (May/23)
•
Gains 15% equity interest in 3R Offshore and producing Brazilian fields
through the Peroá cluster and Papa Terra cluster
•
Reinforces the construction of a diversified portfolio balanced between
onshore and offshore mature oil and gas assets.
•
Brazil remains interesting jurisdiction for Maha given royalty and tax
advantages.
Strengthened Maha’s
leadership through various
appointments
(Feb-Dec/23)
•
Kjetil Solbraekke to CEO and Paulo Thiago Mendonça to Board Chair (Sept/23)
•
Guilherme Guidolin de Campos to CFO (Mar/23)
•
Javier Gremes Cordero to COO (Dec/23)
•
Barbara Bittencourt to Chief Legal Officer. (Feb/23)
Divested of US LAK assets
(Q3/23)
•
Avoids future expenses and operating costs for an asset without cash flow
generation and growth perspective
•
Supports reinvestment into projects that align with Maha’s strategic goals of
optimizing capital structure and streamlining asset base, featuring greater
value creation potential and decreased risk
Divested Block 70 in Oman
to Mafraq Energy LLC
(Jan/24)
•
35% farmed-out for historical costs (Jan/23), final sales agreement
of remaining 65% (Jan/24)
•
Risk reduction + cash proceeds
•
Further streamlining of asset base to concentrate on Latin American
portfolio, while keeping a share of Block 70 project’s potential upside
through our earnouts
Definitive agreement to
acquire 24% - 40% of
PetroUrdaneta signed
(Mar/24)
•
Exclusivity agreement signed (Oct/23) and Definitive Documents executed
(Mar/ 2024)
•
Establishes footprint in Venezuela, which has the world’s largest oil reserves,
and an estimated resources base of more than 8 billion barrels of oil in place
at PetroUrdaneta field
•
Transaction’s closing subject to the fulfillment of certain condition precedent
Acquired 5% of Brazil oil and
gas company 3R Petroleum
(Jan/24)
•
Maha’s investment strategy in 3R Petroleum outlines the initiation of a consol-
idation plan within the Brazilian oil and gas industry
•
Consolidation offering synergies, cost reduction, and improved negotiating
power
•
Significant shareholder value to be unlocked
Actions & Strategic Impacts
2023 ANNUAL REPORT
6
Strategy for
Value Creation
06
MAHA-ENERGY.COM
7
Current Portfolio
Snapshot:
⁄ Production Q4 2023
(consolidated and
non-consolidated) 2,217 boe
per day
⁄ 2P Reserves 25.8 million boe
⁄ Maha Portfolio NAV of USD
237.5 million
⁄ 3R Petroleum`s Shares -
12,019,184 shares (5% of capital
stock, valued at appr USD
73 million mid-March 2024)
⁄ Maha Energy Total NAV of
USD 347.0 million
Current Asset Portfolio
First opportunity to enhance value creation is by simply optimizing and expanding capabilities of
our existing assets, which offer opportunity for significant value increase for Maha.
Note: PetroUrdaneta is not currently part of Maha´s portfolio
2024
1
2023
-
4,000
8,000
12,000
16,000
2025 2027 20292026 2028 2030
1) 2024 production based on January 2024 production. The rest of the years based on public information from 3R Petroleum’s Reserve Report and McDaniel’s Reserve Report for
IB; Also including potential production from Malombe.
Papa Terra Peroá MalombeIB 5% of 3R 24% of PetroUrdaneta
Potential Production From Current Assets Based On Reserve Reports¹ (Boepd)
Illinois
United States
5% of 3R
Petroleum
Brazil
Peroá
Brazil
Papa Terra
Brazil
Onshore Offshore
PetroUrdaneta
Venezuela
2023 ANNUAL REPORT
8
Papa Terra
Papa Terra is a heavy oilfield located in deep waters in the Campos
Basin, in which Maha has an indirect working interest of 9.375%
due to our equity participation of 15% in 3R Offshore, who is also
the operator. Papa Terra is a state-of-the-art asset having only six
years of operations, and benefits from historical infrastructure
investments totaling approximately USD $3 billion (gross). The
field is developed with an FPSO (3R-3) and a Tension Leg Wellhead
Platform (3R-2), with a combined processing capacity of 140,000
barrels of oil per day.
Papa Terra Potential Production (100%)
3Q23 4Q23 Mid-2024
kbbls/d
12.9
16.4
25.0
Almost 2 billion bbls of oil
in place in Papa Terra – only
2.8% recovered and 11.9% 2P
recovery factor = Room for
reserves increase
Rio de
Janeiro
Campos
Basin
Papa Terra
MAHA-ENERGY.COM
9
22% 52% 60%67% 80%
Papa Terra Prospects
Low recovered oil combined with almost 2 billion bbls of oil in place set a clear path for growth.
2.6%
8.0%
11.9%
15.0%
20.0%
2P Production Profile (MBBLS/D) Recovery Factors and Reserves from Reserve Report
49 mmbls
Produced
1P: 103 mmbls
1P: 179 mmbls
Analogue 1: 237 mmbls
Analogue 2: 333 mmbls
2P Recovery Factor
from Campos
Basin
Oil Recovered from
Campos Basin
Recovery Factor
1,909 mmbbls
Oil In Place
17.7
21.0
26.0
31.2
30.7
28.7
27.6
28.9
PDP
PDNP
PUD
P2
26.6
23.8
21.5
19.6
17.7
16.3
15.1
14.0
13.0
12.2
11.4
10.7
10.1
9.5
7.9
7.4
6.9 7.0
33.2
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
2047
2049
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
Setting the Stage for Growth: During 2023, the asset has gone
through an extensive maintenance program, including improve-
ment of the boiler system, several critical pumps and the power
generation unit. This maintenance has gradually improved the
efficiency of the unit over the year. Towards the end of the year,
a workover campaign was launched carried out by the dynamic
positioning drill ship Alpha Star. Interventions are estimated to
take place at wet completion wells, currently out of operation,
connected to the 3R-3 (FPSO), besides interventions in operating
wells. First well intervention was concluded in the PPT-22 well,
which was successfully connection in the first week of December
2023. The second well intervention in the Papa Terra Field (well
PPT-12) was completed ahead of schedule in the beginning of
January 2024. The PPT-12 well was brought into production in the
second part of February 2024. This work will also enhance the effi-
ciency of processing fluids produced by all other wells. One addi-
tional well workover and one sidetrack well (PPT-52) is planned for
the first six months 2024. Later in 2024, a Flotel (floating hotel)
campaign with over 100 workers on board is to be launched in
order to complete the asset integrity recovery. This campaign is
planned for 90 days of activities, with up to 20 days of production
stoppage in the third quarter 2024.
PPT-37
PPT-50
PPT-51
PPT-16
PPT-22
(work-over)
PPT-17
(work-over)
PPT-12
(work-over)
New well
(PPT-52)
Existing
(3Q23)
4Q23 1Q24 1Q24 2S24
Well Portfolio Capacity in Papa Terra¹ (kbbls/d)
14.5
1.7
2.2
5.5
2.7
Operational Efficiency in Papa Terra
80%
90%
Note: 100% basis
last 12 months
of the former
operator
1H23 - 3R
operation
3Q23 - 3R
operation
3R 4Q23
target
60%-80%
3R 2024
target
80%-90%
2023 ANNUAL REPORT
10
Peroá and Malombe
Through our equity participation in 3R Offshore, Maha has an indi-
rect stake of 15% in the Peroá cluster asset, located in the Espírito
Santo basin, offshore Brazil in shallow waters. This asset includes
the Peroá and Cangoá producing fields, they are producing natural
gas via the Peroá platform (3R-1). A 55km long gas pipeline is
connection the platform to the Cacimbas gas processing plant.
Both fields offer potential for increased recovery factors with addi-
tional resources being analyzed.
A new gas sales agreement was signed in July 2023 (“GSA”) with
the Companhia de Gás do Espírito Santo (“ES Gás”). The GSA
has a 30-months term, being effective up to December 2025, and
provides for 3R Offshore’s commitment to supply 400,000 m³/
day of natural gas to ES Gás. As of today, the Peroá Cluster has
a production capacity around 650,000 m³/day of natural gas and,
therefore, any volume of natural gas produced in excess of the
aforementioned commitment can be either negotiated between
the parties or sold into the Brazilian spot market.
The proven Malombe gas discovery outside of Peroá features an
additional 2.1 MMboe of 2C resources of dry gas (Maha’s 15%
working interest), which can be efficiently developed, and would
represent significant future production additions to Maha. Other
prospects could position the Peroá area as a primary producer of
gas in Espirito Santos for decades, especially given the existing
low-cost infrastructure. Maha sees the Peroá pipeline and plat-
form as a natural hub for further development of gas in the basin.
This area also offers Maha significant future growth potential.
25m
50m
100m
500m
N
UTCG Pólo
Cacimbas
Cangoá
Peroá
PPER-1
ESS-206
15km
IA
TN
MO
KY
WI
IN
MI
Illinois
Basin
IL
50m
100m
Cangoá
Peroá
74
ESS-67
ESS-105
PER-3
PER-1
ESS-77
82
85
89A
80
1100m
1200m
1000m
900m
800m
Malombe
1-ESS-206
During 2024, Maha is
targeting an additional
3-6 drilling locations.
Major Mississippi Valley-type lead-zinc deposits
Major oil and gas-producing areas
Location of potentially earthquake-prone areas
Illinois Basin
Maha owns a 98.41% working interest in the light oil (35 deg. API)
Illinois Basin (IB), which had a production from 60 wells of 197
BOPD in 2023, with 1.32 million barrels of proven (1P) oil reserves
and 2.77 million barrels of proven + probable (2P). This area
features low costs, low risks and low recoveries to date, posi-
tioning it as a strategic and attractive asset with long-term devel-
opment potential. We concluded the drilling program for three new
production wells during 2023 that resulted in a production ramp-
up, with volumes increasing over 100% by the end of January 2024
compared to the average production in the fourth quarter of 2023.
This area offers Maha
significant future growth
potential
MAHA-ENERGY.COM
11
BENEFITS OF VENEZUELA:
Venezuela has the largest proven oil reserves in the world,
comprised of more than 300 billion barrels, equaling 17.5 percent
of the world’s entire reserves. Given the size and nature of Vene-
zuela’s reserves and resources, Maha sees limited geological
risk related to future production and development. However, with
sensitivities related to our acquisition and operations in Venezuela,
Maha is committed to develop its projects based on transparency,
while acting responsibly and ethically, in compliance not only with
its policies, but also to the applicable rules and regulations.
With the publication of General License 44, some of the previous
sanctions on Venezuelan oil operations were eased by the US
government in 2022, and in 2023, the US authorizing certain trans-
actions in the oil and gas sector with specific sanctioned parties in
Venezuela, including PdVSA (the state-owned oil company). Maha
continues to closely monitor the political landscape in the country,
including pursuing general or specific U.S. sanctions licensing
that may be required to continue activities following April 2024
(in case General License 44 is not extended). In the interests of
making positive contributions to surrounding communities, Maha
intends to support local projects, create new jobs, and to utilize
local companies for our operations whenever possible.
In addition to steps for value creation, Maha’s strategy continues
to outline acquisition of new producing assets at attractive low
valuation entry multiples – particularly when there is a clear path
to expanding volumes in a capital-efficient manner. And to do so
with a clear vision of ensuring ethical and responsible operations
that prioritize stakeholder safety and well-being, environmental
protection, and risk mitigation.
Maha’s fourth identified step-stone for value creation is the first
mover advantage gained through the entry into Venezuela via the
acquisition of an initial 24% of PetroUrdaneta, a company oper-
ating three oil fields near Maracaibo in northwestern Venezuela,
featuring large oil in place of good quality.
This strategic move into Venezuela offers significant upside
potential and low financial exposure and aligns with Maha’s focus
on generating value for shareholders, without compromising on
our commitment to global standards and best practices. Maha
sees opportunity to make new investments in the country, partic-
ularly given we have set up a very qualified team on the ground in
Caracas headed by our COO and our CFO. Identified optimization
activities include well recompletions and workovers, with addi-
tional potential upside from the production and commercialization
of existing associated natural gas reserves in the area.
Current Exposure: EUR 4.6 m - 1
st
exclusivity premium
Maximum Exposure: EUR 9.2 m - 1
st
plus 2
nd
exclusivity premium
Current production²: over 1,000 barrels of oil per day
Oil in place¹
,
²: 8 billion barrels (according to independent energy
research - estimates in Venezuela are connected to significant
uncertainty)
Low financial exposure -
between USD 5 to 10
million, with significant
upside potential
Venezuela Entry via PetroUrdaneta
4.5%
2000
MMbbls/d Market Share
3.5
4.3%
2001
3.3
3.8%
2002
2.9
3.2%
2003
2.6
3.4%
2004
2.9
3.4%
2005
2.9
3.2%
2006
2.7
3.2%
2009
2.7
3.1%
2007
2.7
3.1%
2008
2.7
3.0%
2010
2.6
3.0%
2011
2.7
3.0%
2012
2.7
2.9%
2013
2.7
2.9%
2014
2.7
2.7%
2015
2.6
2.4%
2016
2.3
2.1%
2017
2.1
1.5%
2018
1.5
0.9%
2019
0.9
0.6%
2020
0.6
0.6%
2021
0.6
0.7%
2022
0.7
Start of
mixed
companies
Oil Prices
Plunged
US Sanctions
& Covid
Venezuelan Oil Production Shortfall and Share of Global Output (MMBBLS/D)
2023 ANNUAL REPORT
12
Born
1988
Nationality
Portuguese
Education
Degree in Mechanical Engineering (cum laude) from the Federal
University of Rio de Janeiro (UFRJ).
Other assignments:
Managing Director of the Starboard Group
Prior assignments (last five years):
Chairman of 3R Petroleum.
Experience
Paulo Thiago Mendonça is currently a Managing Director at Star-
board, responsible for private equity investments and advisory
in special situations transactions. Paulo has previously been the
Head of Investment Banking at Brasil Plural’s Investment Banking
division, responsible for M&A, equity and capital market transac-
tions and worked at the Asset Management in Brasil Plural. Paulo
has extensive experience in the oil and gas industry and has led
important transactions in the sector.
Independent of the Company and the senior management:
No
Independent of major shareholders:
No
Shareholding in Maha Energy AB:
None
Warrants in Maha Energy AB:
952,035 (LTIP 9)
Paulo Thiago
Mendonça
Chairman of the Board of Directors since Sept-
ember 2023 and board member since 2022.
Chairman of the Remuneration Committee
and member of the Reserves & HSE Committee
and the Investment Committee.
BOARD OF DIRECTORS
At the
Helm
Board & Management
12
MAHA-ENERGY.COM
13
Born
1980
Nationality
Swedish
Education
Master of Law from the University of Gothenburg, Sweden with a
specialization in Petroleum Law and Petroleum Contracts from
the University of Oslo, Norway.
Other assignments:
Chairman of Jumpgate AB, Transition Energy International AB,
Klash AB, Minotaurus Energi AS and Urtiven AS. Director of Opsy
AB. Managing Director of Tiveden AS and Infundo AB.
Prior assignments (last five years):
–
Experience
Viktor Modigh has worked as a lawyer advising primarily oil
and gas companies on regulatory and contractual matters,
transactions and general corporate law. He has more than 20
years´ experience of investments across different sectors and
has held management positions with Tethys Oil in Oman and the
United Arab Emirates. Viktor is a member of the Association of
International Energy Negotiators.
Independent of the Company and the senior management:
Yes
Independent of major shareholders:
Yes
Shareholding in Maha Energy AB:
None
Warrants in Maha Energy AB:
476,018 (LTIP 9)
Born
1975
Nationality
Norwegian
Education
M.Sc. in Economics and Business Administration from Norwegian
School of Economics (NHH).
Other assignments:
Co-founder and Director at DBO Invest and Janeiro Energy.
Board member at Prosafe SE and 3R Offshore. Chairman of
DreamLearnWork.
Prior assignments (last five years):
Co-founder and CFO at DBO Energy and DBO 2.0 S.A. (re-named
Maha Energy Offshore (Brasil) Ltda.). Audit committee member at
3R Petroleum.
Experience
Halvard Idland has more than 20 years of industrial and financial
investment experience in the oil and gas industry in Norway and
Brazil. Previous experience includes DNB, Pareto and Aker Yards
prior to co-founding DBO Energy.
Independent of the Company and the senior management:
Yes
Independent of major shareholders:
No
Shareholding in Maha Energy AB:
16,337 shares held directly and 7,312,199.33 shares held indirectly
through ownership of one third of the shares of DBO Invest S.A.
Warrants in Maha Energy AB:
–
Viktor
Modigh
Board member since 2022. Member of the
Reserves & HSE Committee, the Remuner-
ation Committee, the Audit Committee and
the Investment Committee.
Halvard
Idland
Board member since March 2023.
Member of the Audit Committee and the
Investment Committee.
2023 ANNUAL REPORT
14
Born
1960
Nationality
Norwegian
Education
Cand. Oecon from the University of Oslo, Economist.
Other assignments:
Chairman of Norwegian Air Shuttle Group since 2021 and DOF
Group since 2023. Board member of TGS-NOPEC. Also board
member of Akerhus University Hospital, Labrida, Janeiro Energy
and Energy Investors. Industry advisor and investor.
Prior assignments (last five years):
Global Knowledge Leader Oil & Gas at McKinsey 2010-2014 and
as leader of Oil & Gas in Latin America, based in Brazil, 2013-
2016. Senior Partner Corporate Finance in Sparebank1 Markets
2018-2021. Board member Seadrill, Nettbil and AGR Petroleum.
Experience
Svein Harald Øygard has served as economist in the Ministry of
Finance of Norway, as a secretary of the Committee of Fiscal
affairs in the Norwegian Parliament, as economic advisor for the
Labor Party and then as Deputy Minister of Finance of Norway,
1990-1994. Thereafter McKinsey Company for 21 years, largely
in oil & gas, finance and industry, among others advising oil & gas
companies in the North Sea, North America, the Mid-East, South-
East Asia and West Africa. He also served as Country Manager
Norway, as interim Central Bank Governor of Iceland after the
2008 Global Financial Crisis, and as Chair of the Execution
Committee for the Icelandic bank restructuring. Co-founder of
DBO Energy 2017 and in 2020 he co-founded Janeiro Energy, a
venture fund investing into businesses in the renewables sector.
Independent of the Company and the senior management:
Yes
Independent of major shareholders:
No
Shareholding in Maha Energy AB:
Svein Harald holds 3,024,406 shares in Maha directly. He also
indirectly holds 374,434 shares in Maha through his investment
company, Energy Investors AS (out of which 40,000 shares are
currently lent out), and 7,312,199.33 shares in Maha indirectly
through ownership of 1/3 of the shares in DBO Invest S.A.
Warrants in Maha Energy AB:
None
Svein Harald
Øygard
Board member since September 2023.
Member of the Remuneration Committee
and the Investment Committee.
Born
1966
Nationality
British
Education
PhD in Petroleum Engineering and an MSc in Petroleum Geology
from Imperial College in London and a BSc in Geology.
Other assignments:
Managing Director of Pandreco Energy Advisors Inc
Prior assignments (last five years):
–
Experience
Richard Norris has over 30 years energy related experience in
both industry and finance, including roles with large and small oil
companies, as well as roles in debt and equity financing. Richard
has worked in engineering, management and board roles covering
Africa, Europe, Former Soviet Union and South America with BP, Elf
Aquitaine/Total, Geopetrol, Candax Energy and Eland Oil and Gas.
In finance Richard was instrumental in building the European oil
and gas structured finance group at BNP Paribas. As a Partner at
Helios Investment Partners, Richard co-managed Helios’s Private
Equity energy investments throughout Africa. Richard is a Fellow of
the Canadian Global Affairs Institute
Independent of the Company and the senior management:
Yes
Independent of major shareholders:
Yes
Shareholding in Maha Energy AB:
None
Warrants in Maha Energy AB:
476,018 (LTIP 9)
Richard
Norris
Board member since 2022. Chairman
of the Reserves & HSE Committee and
member of the Audit Committee.
BOARD OF DIRECTORS
MAHA-ENERGY.COM
15
Born
1974
Nationality
Spanish
Education
Master in Infrastructure Management and Public Services and
Master in Civil Engineering from Universidad Politécnica de Madrid.
MBA from The Wharton School of the University of Pennsylvania,
and Master in Sustainability and Social Corporate Responsibility
from Universidad UNED-UJI.
Other assignments:
Director of the Starboard Group. Executive Director of the IE
Negotiation and Mediation Centre and Professor of Strategy in IE
University in Madrid, Spain.
Prior assignments (last five years):
Senior International Manager in Renfe, Board member of the
Mecca-Medinah High-Speed Train Saudi-Spanish Consortium.
Experience
Enrique Peña has over 25 years’ experience in business develop-
ment and strategic management in large corporations such as
Shell, Boston Consulting Group, Orange and Renfe.
Independent of the Company and the senior management:
Yes
Independent of major shareholders:
No
Shareholding in Maha Energy AB:
None
Warrants in Maha Energy AB:
476,018 (LTIP 9)
Born
1976
Nationality
Swiss
Education
MBA from The Wharton School of the University of Pennsylvania.
BA from the University of São Paulo (FEA-USP).
Other assignments:
Managing Director of the Starboard Group.
Prior assignments (last five years):
Chairman of 3R Petroleum and board member of Gemini Energy.
Experience
Fabio Vassel has over 25 years of experience working on Private
Equity buy-side and Restructuring Advisory in Latin America, North
America and Europe. Fabio previously worked at Brasil Plural (Sao
Paulo), Jefferies (Zurich and London), Nomura (London) and UBS
Investment Bank (New York and London).
Independent of the Company and the senior management:
Yes
Independent of major shareholders:
No
Shareholding in Maha Energy AB:
None
Warrants in Maha Energy AB:
476,018 (LTIP 9)
Enrique
Peña
Board member since 2022.
Chairman of the Audit Committee
Fabio
Vassel
Board member since 2022
2023 ANNUAL REPORT
16
Born
1962
Education
MSc degree from Université de Management, Switzerland and an
MBA degree from Universidad Francisco de Vitoria, Spain.
Other assignments:
-
Prior assignments (last five years):
EGC Consultants – Independent Consultant – Energy Expert, CEO
Pecom Servicios Energía, CEO TGS (Argentina)
Experience
Mr. Gremes experience covers over 35 years within the oil and
gas industry. Before joining Maha as an independent consultant
and later COO, Mr. Gremes was CEO of Pecom Servicios Energía
and CEO of TGS (Argentina). Prior to that, he held the position as
Ecuador General Manager for Petrobras and was also part of the
internationalization process of Perez Companc with responsibili-
ties over Venezuela.
Independent of major shareholders:
Yes
Shareholding in Maha Energy AB:
0
Warrants in Maha Energy AB:
-
Javier Gremes
Cordero
Chief Operating Officer (“COO”) since 2023.
Member of the Remuneration Committee.
Born
1962
Education
Cand. Oecon from the University of Oslo, Economist.
Other assignments:
-
Prior assignments (last five years):
CEO in Sintef do Brasil. Co-founder and CEO at DBO Energy and
DBO 2.0. Board Member of 3R Petroleum.
Experience
Kjetil Solbraekke has over 30 years of experience from the Norwe-
gian Oil and gas sector in various positions as Assistant director
general in the Ministry of Petroleum in Norway, SVP and CFO in
Norsk Hydro, CEO in Panoro Energy and Sintef do Brazil, Founder
and CEO in DBO Energy. He has lived in Brazil since 2006.
Independent of major shareholders:
No
Shareholding in Maha Energy AB:
Holdings: 216,337 shares held directly and 7,312,199.33 shares
held indirectly through ownership of one third of the shares of DBO
Invest S.A.
Warrants in Maha Energy AB:
952,035 (LTIP 8)
Kjetil
Solbraekke
CEO since September 2023
MANAGEMENT
MAHA-ENERGY.COM
17
Born
1981
Education
BSc Industrial Engineering from, University of São Paulo with top
honors (2004).
Other assignments:
Executive Director of Starboard
Prior assignments (last five years):
Finance Director and co-leader of Maha Energy (Oman) Ltd., CFO at
Viracopos International Airport and Interim Project Head for BHP
Billington Brazil.
Experience
Guilherme has broad experience in Investment Banking, Restruc-
turing, Executive Leadership and Strategy Consulting, including 12
years working at Bain & Company. During his 23 years of tenure,
he has worked with top management of large multinational groups
in a diverse array of industries such as oil&gas, mining, metals,
chemicals, fertilizers, agribusiness, airlines & airports, retail, and
financial services.
Independent of major shareholders:
No
Shareholding in Maha Energy AB:
0
Warrants in Maha Energy AB:
761,628 (LTIP 8)
Born
1985
Education
Specialization in Maritime Regulation and Ocean Management,
Harvard University, Boston, USA (2018); LL.M in Oil and Gas from
the University of Aberdeen, Aberdeen, Scotland (2012); Bachelor of
Laws from Universidade Milton Campos Law School, Brazil (2007).
Other assignments:
None
Prior assignments (last five years):
Partner of Demarest Advogados (Brazilian top tier law firm); Senior
Associate at Campos Mello Advogados in Cooperation with DLA
Piper.
Experience
Ms. Bittencourt has over 15 years of experience within energy and
natural resources, focusing her career on transactions and regula-
tory issues in the oil and gas industry. Before joining Maha, Barbara
was a partner of the Brazilian law firm Demarest Advogados at
their Energy and Natural Resources practice. Previously, Barbara
was a Senior Associate of DLA Piper/Campos Mello Advogados.
Independent of major shareholders:
Yes
Shareholding in Maha Energy AB:
0
Warrants in Maha Energy AB:
761,628 (LTIP 8)
Guilherme
Guidolin de
Campos
Chief Financial Officer since 2023
Barbara
Bittencourt
Chief Legal Officer since 2023
2023 ANNUAL REPORT
18
Maha Energy AB (Maha) was listed on NASDAQ
First North Growth Market in Stockholm, Sweden
on July 29, 2016. Maha Energy AB (Maha) was
listed on NASDAQ Main Market in Stockholm,
Sweden on December 17, 2020. The share symbol
is ‘MAHA A’ with ISIN Code SE0008374383.
Share statistics 2023
The final transaction price in 2023 was SEK 9.66 corresponding
to a total market capitalization of MSEK 1,724. During the year the
price of Maha’s share increased by 13 percent. Based on data from
NASDAQ Stockholm, the highest transaction price in 2023 was SEK
10.59 on 7 March and the lowest was SEK 7.21 on 17 July. Maha’s
share capital development is found on Maha’s corporate web,
maha-enery.com.
Dividends
The Board of Directors will propose not to pay dividends for 2024 based on 2023 results, as it anticipates that all available funds will
be invested to finance the growth of Maha’s business. The Board of Directors will propose if dividends should be declared and paid in
the future, based on the Company’s financial position at the relevant time.
Share Data
178,444,753
Class A shares outstanding
As of December 31, 2023, the Company had
178,444,753 shares outstanding of which all
were Class A shares (December 31, 2022:
143,615,696). On 23 May 2023, Maha completed
the business combination with DBO 2.0 S.A.
(“DBO”) (later re-named Maha Energy Offshore
(Brasil) Ltda.). The consideration for all shares
in DBO amounted to 34,829,057 new shares
in Maha.
The Share
18
MAHA-ENERGY.COM
19
130
120
110
100
70
80
90
Mar
Feb
Apr
Jun
Jul
Maha
S&P Energy
Aug
Oct
Nov
Sep
Dec
Jan
2023 Maha Share Price Performance vs S&P Energy Index (100pt Basis)
Owner MAHA A Capital & Votes
FIP Turmalina 33 101 674 18,6%
DBO Invest S.A. 21 936 598 12,3%
Banco BTG Pactual S.A. 7 643 142 4,3%
Brasil Capital 6 286 343 3,5%
Sundt AS 5 161 671 2,9%
Avanza Pension 5 066 454 2,8%
Jonas & Maria Lindvall 4 358 147 2,4%
Svein Harald Øygard 3 148 840 1,8%
Akastor Asa 2 999 641 1,7%
Myrholt Tore 2 694 305 1,5%
Total, 10 largest shareholders 87 815 471 51,8%
Others, appr 8,600 shareholders 86 047 938 48,2%
Total number of shares 178 444 753 100,0%
Source: Monitor by Modular Finance as per 31 December 2023. Compiled and processed data from various sources, including Euroclear, Morningstar and the Swedish Financial
Supervisory. The verification date may vary for certain shareholders.
List of Major Shareholders as of December 31, 2023
2023 ANNUAL REPORT
20
Corporate
Governance Report
Corporate Governance is an integral part of Maha’s foundation which guides
our corporate culture, business objectives, and enables the accommodation of
stakeholder interests. Maha is committed to delivering value to all our stake-
holders (including shareholders, employees, contractors, and the communities
in which we operate) by prioritizing transparency and accountability. For Maha,
strong corporate governance ensures anticipation and mitigation of risks, as
well as oversight of our operational protocols and practices to ensure activities
are undertaken in an ethical, safe, reliable, and responsible manner.
20
MAHA-ENERGY.COM
21
This Corporate Governance Report has been prepared in accordance with the Swedish Companies
Act (SFS 2005:551), the Annual Accounts Act (SFS 1995:1554) and the Swedish Corporate Gover-
nance Code (the “Code”) and has been subject to a review by the Company’s statutory auditor.
The Swedish Corporate Governance Code is based on the tradition
of self-regulation and the principle of “comply or explain”. It acts
as a complement to the corporate governance rules contained in
the Swedish Companies Act, the Annual Accounts Act, EU rules
and other regulations such as the Rulebook for Issuers and good
practice on the securities market. The Code is published on www.
bolagsstyrning.se, where a description of the Swedish Corporate
Governance model can be found.
As a Swedish public company listed on Nasdaq Stockholm
(under symbol MAHA-A) Maha Energy is subject to the Rule-
book for Issuers of Nasdaq Stockholm which can be found on
www.nasdaqomxnordic.com. In addition, the Company abides
by principles of corporate governance found in several internal
and external documents to build trust on how Maha responsibly
conducts its business.
The Company is not aware of any deviations from Nasdaq Stock-
holm’s Rulebook for Issuers, recommendations from the Swedish
Securities Council, decisions from Disciplinary Committee at
Nasdaq Stockholm or statements from the Swedish Securities
Council. The Company does not report any deviations from the
Code. The report has been examined by the Company’s auditors,
please see page 97.
Maha Energy AB (publ), company registration number 559018-
9543, has its corporate head office at Eriksbergsgatan 10, SE-114
30 Stockholm, Sweden and the registered seat of the Board
of Directors is Stockholm, Sweden. The Company’s website is
www.maha-energy.com.
This 2023 Corporate Governance Report is submitted in accor-
dance with the Swedish Annual Accounts Act and the Code. It
explains how Maha has conducted its corporate governance
activities during 2023.
Maha’s business model is built on the corporate governance
foundation, which aims to decrease associated risk of unethical
behavior, unclear responsibilities, and avoid potential conflicts
of interests. Our Corporate Governance Framework further
strengthens and clarifies Maha’s corporate governance foun-
dation and ensures that business is conducted in a responsible
manner. Our governance structure includes our Board of Directors
and its committees, together with our executive team.
Shareholder Meeting
Nomination
Committee
Board Of Directors
CEO and Executive Management
Audit
Committee
Investment
Committee
Internal Auditors
Renumeration
Committee
HSE & Reserves
Committee
Independent Reserves Auditor
External
Auditors
2023 ANNUAL REPORT
22
External and Internal governance framework
The Company observes good corporate governance practices in accordance with the laws and regulations of Swedish legislation, the
Company’s own Articles of Association and policies. The Company’s Articles of Association do not contain any provisions for a special
procedure for changing the Articles of Association. The Company issues Annual Consolidated Financial Statements and interim reports
in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU, and Swedish Annual Accounts Act.
Maha adheres to both the internal and external rules for Corporate Governance principles; thus, decreasing potential risks associated
with unclear individual and company responsibilities and avoiding conflicts of interests between its shareholders, managers, and Board
of Directors.
Shareholders
The Company’s shares (MAHA-A) are listed on Nasdaq Stock-
holm. At year-end 2023 the share capital amounted to SEK
1,962,892.283, represented by 178,444,753 shares. All shares
represent one vote each. At 31 December 2023, the number of
shareholders was 8,608 (2022: 10,761). Of the total number of
shares, foreign shareholders accounted for approximately 76
percent. Turmalina Fundo De Investimento Em Participacoes
Multiestrategia and DBO Invest S.A. are the only shareholders
with a holding in excess of 10 percent of shares and votes, with
a holding of 33,101,674 and 21,936,598 shares respectively, repre-
senting approximately 18.55 and 12.29 percent of shares and
votes respectively. For further information on share, share capital
development and shareholders, see page 18 and the Company’s
website.
Annual General Meeting
According to the Swedish Companies Act (2005:551), the general
meeting is the Company’s highest decision-making body. At the
general meeting, the shareholders exercise their voting rights in
key issues, such as changes to the Articles of Association, the
election of the Board of Directors and auditors, adoption of the
income statement and balance sheet, discharge from liability of
the Board of Directors, the CEO and Managing Director, the appro-
priation of profit or loss and the principles for the appointment of
the nomination committee. The Annual General Meeting (“AGM”)
must be held within six (6) months of the close of the fiscal year.
The Company calls the meeting through announcements in the
Swedish Official Gazette, the Svenska Dagbladet and the Compa-
ny’s website.
Right to attend AGMs
All shareholders who are listed in the share registry on the record
date, and who have notified the Company of their participation in
due time, are entitled to participate in the AGM. Shareholders are
entitled to exercise their respective voting rights in accordance
with the description above (item entitled “Shareholders”).
Annual General Meeting 2023
The 2023 AGM was held in Stockholm on 24 May 2023. The
AGM was attended by 26 shareholders, personally or by proxy,
representing 33.97 percent of the Company’s share capital.
The Chairman of the Board of Directors and all Board members,
including the CEO and Managing Director, were present, as well
as the Company’s auditor and a member of the Nomination
Committee for the 2023 AGM.
External Corporate
Governance Rules
⁄ The Annual Accounts Act
⁄ The Exchange Rules for Issuers
⁄ NASDAQ Rules and Regulations
⁄ The Swedish Companies Act
⁄ Swedish Code of Corporate Governance
⁄ Statements of the Swedish Securities
Council
Internal Corporate
Governance Rules
⁄ Anti-Corruption Policy
⁄ Articles of Association
⁄ Code of Conduct
⁄ Corporate Governance Policy
⁄ Health, Safety, and Environment Policy
⁄ Internal Control and Risk Management
⁄ Business Partner Code of Conduct
⁄ Other Company Policies, Guidelines, and
Procedures
MAHA-ENERGY.COM
23
Extra General Meetings 2023
The submissions and resolutions passed by the 2023 AGM included the following major items:
⁄ Fabio Vassel, Paulo Thiago Mendonça, Enrique Peña,
Viktor Modigh, Richard Norris, Halvard Idland and
Kjetil Solbraekke were re-elected as members of the
Board of Directors.
⁄ Fabio Vassel was re-elected as Chairman of the
Board.
⁄ Remuneration of the Board of Directors.
⁄ Approval of the Company’s remuneration report
⁄ Approval on the policy for remuneration and other
employment conditions for senior executives of the
group
⁄ The accounting firm Deloitte AB was re-elected as
the auditor of the Company
⁄ Authorization of the Board of Directors to resolve
upon issuance of new shares, warrants and/or
convertible debentures.
For more information about the Annual General Meeting, including the minutes, see Maha’s website.
The suggested incentive program through issuance of warrants for employees and consultants was withdraw by the Board of Directors.
The suggested incentive program through issuance of warrants for the Board of Directors was likewise withdraw by the Nomination
Committee.
⁄ Resolution on changes to the Articles of Association
with respect to share capital and number of shares
⁄ Resolution regarding an incentive program and
issuance of warrants to employees and consultants
(LTIP 8);
⁄ Resolution regarding an incentive program and
issuance of warrants to the members of the Board
of Directors (LTIP 9). According to the Nomination
Committee’s revised proposal presented at the
general meeting all Board members except Halvard
Idland and Svein Harald Øygard shall be comprised
by the program;
⁄ Election of Paulo Thiago Mendonça as chairman of
the Board of Directors
⁄ Election of new Board member Svein Harald Øygard.
Kjetil Solbraekke was on his own request discharge
from his assignment as ordinary Board member.
Effective as of the general meeting’s resolution, Kjetil
Solbraekke took the position as CEO of Maha.
EXTRAORDINARY GENERAL MEETING IN SEPTEMBER 2023
An Extraordinary General Meeting (“EGM”) was held in Stockholm on 18 September 2023. The EGM was attended by 27 shareholders,
representing 39.75 percent of the votes and share capital in the Company. The Chairman of the Board of Directors and enough Board
members, including the CEO and Managing Director, for a quorum were present, as well as a member of the Nomination Committee. The
resolutions passed by the EGM included the following:
EXTRAORDINARY GENERAL MEETING IN MARCH 2023
An Extraordinary General Meeting (“EGM”) was held in Stockholm on 29 March 2023. The EGM was attended by 20 shareholders,
representing 6.87 percent of the votes and share capital in the Company. The Chairman of the Board of Directors and enough Board
members, including the CEO and Managing Director, for a quorum were present, as well as a member of the Nomination Committee. The
major resolutions passed by the EGM included the following:
⁄ Resolution on changes to the Articles of Association;
⁄ Resolution on issue of new shares against payment
in kind regarding the acquisition of all shares in DBO
2.0 S.A.;
⁄ Election of new Board members Halvard Idland and
Kjetil Solbraekke. Harald Pousette was, upon his own
request, discharged from the Board of Directors.
For more information about the General Meetings, including the
minutes, see Maha’s website.
2023 ANNUAL REPORT
24
Annual General Meeting 2024
The Annual General Meeting (AGM) of Maha Energy AB (publ) is
planned to be held on 29 May 2024 in Stockholm, Sweden.
Nomination Committee and its Function
The duties of the nomination committee include the preparation
and drafting of proposals regarding the election of members of
the Board of Directors, the chairman of the Board of Directors, the
chairman of the general meeting and auditors. The nomination
committee shall also propose fees for Board members and the
auditor. The composition of the nomination committee is publicly
announced at least six months ahead of the AGM.
The principles for the appointment of and instructions regarding a
nomination committee adopted at the Annual General Meeting in
2019, and have since then not been changed. In accordance with
these, the Nomination Committee for the 2024 AGM consists of
members appointed by three (3) of the largest shareholders of the
Company based on shareholdings as at 30 September 2023 and
the Chairman of the Board of Directors. The names of the members
of the Nomination Committee were announced and posted on the
Company’s website on 28 November 2023 (within the time frame
of six (6) months before the AGM, as prescribed by the Code).
The Nomination Committee for the 2024 AGM consists of:
⁄ Rodrigo Pires, appointed by Turmalina Fundo de
Investimento em Participações Multiestratégia;
⁄ Luis Araujo, appointed by DBO Invest S.A.
⁄ Edwyn Neves, appointed by Banco BTG Pactual S.A; and
⁄ Paulo Thiago Mendonça, Chairman of the Company’s
Board.
At the Nomination Committee’s first meeting, Edwyn Neves was
elected as Chairman of the Nomination Committee.
The Nomination Committee Report, including the final proposals
to the 2024 AGM, is published on the Company’s website at the
same time the Notice of the AGM is given.
The Nomination Committee’s purpose is to produce proposals for
certain matters including, amongst others, the following (which
will be presented to the 2024 AGM for consideration):
⁄ Number of members of the Board of Directors;
⁄ Remuneration to the Chairman of the Board of Directors,
the other members of the Board of Directors and auditors
respectively;
⁄ Election of auditors;
⁄ Remuneration, if any, for committee work;
⁄ The composition of the Board of Directors;
⁄ The Chairman of the Board of Directors;
⁄ Resolution regarding the process of the Nomination
Committee 2025;
⁄ Chairman at the AGM.
The work of the Nomination Committee includes evaluation of the
Board’s work, competence and composition, as well as the inde-
pendence of the members. The Nomination Committee will also
consider criteria such as the background and experience of the
Board of Directors, and evaluate the ongoing work.
MAHA-ENERGY.COM
25
The Board of Directors and its work
Board of Directors’ composition
After the general meeting, the Board of Directors is the highest
decision-making body. According to the Swedish Companies Act,
the Board of Directors is responsible for the organization and
management of the company’s affairs, which means that the Board
of Directors is responsible for, among other things, establishing
targets and strategies, securing procedures and systems for
monitoring of set targets, continuously assessing the company’s
financial position and evaluating the operational management.
Furthermore, the Board of Directors is responsible for ensuring
that proper information is given to the company’s shareholders,
that the company complies with laws and regulations and that the
company develops and implements internal policies and ethical
guidelines. Moreover, the Board of Directors is responsible for
ensuring that annual reports and interim reports are prepared in a
timely matter. The Board of Directors also appoints the company’s
CEO and Managing Director and determines its salary and other
compensation.
The members of the Board of Directors, including the Chairman
of the Board, are elected annually at the annual general meeting
for the period until the end of the next annual general meeting.
Pursuant to the Company’s Articles of Association, the Board
shall consist of not less than three (3) and not more than seven
(7) ordinary members, without any deputy members. There are no
specific stipulations in the Company’s Articles of Association on
how the Board members should be assigned or dismissed. The
Company aims to promote diversity at all levels of the Company.
In 2023, two EGMs were convened to resolve upon i.a. proposed
elections of new Board of Directors of the company (for more
information, see Extra General Meetings 2023 above). Up to
March 29, 2023, the Company’s Board consisted of 6 ordinary
members, appointed until the end of the next annual share-
holders’ meeting. This number was increased to seven (7) Board
Members, as per a resolution approved during an Extraordinary
Board Meeting held on 29 March 2023 which removed Mr. Harald
Pousette, upon his own request, from his position, and elected
Halvard Idland and Kjetil Solbraekke as new ordinary Board
members until the end of the next annual general meeting. At an
Extraordinary Board Meeting held on 18 September 2023, Svein
Harald Øygard was elected as new ordinary Board member until
the close of the annual general meeting to be held in 2024. At
the same EGM, it was resolved to elect Paulo Thiago Mendonça
as chairman of the Board of Directors and thereby, upon his own
request, replace Fabio Vassel. It was also resolved, upon his own
request, to discharge Kjetil Solbraekke from his assignment as
ordinary board member. Effective as of the general meeting’s
resolution, Kjetil Solbraekke took the position as CEO of Maha.
Maha’s existing members of the Board of the Directors include
seven Board members and no deputy Board Member: Mr. Paulo
Mendonça (Chairman), Mr. Halvard Idland, Mr. Viktor Modigh, and
Mr. Richard Norris, Mr. Svein Harald Øygard, Mr. Enrique Peña and
Mr. Fabio Vassel (see bios in section “The Board of Directors and
Management”). The majority of the Directors are independent of
the company and its executive management and two (2) of the
members of the Board who are independent of the company and
its executive management are also to be independent in relation to
the company’s major shareholders.
EVALUATION OF THE BOARD’S WORK
The Board of Directors’ work was evaluated in a structured
process conducted by a third party. The evaluation during 2023
was conducted by means of a questionnaire that each Board
member was requested to complete, in the aim of gaining an idea
about the Board members’ views on how the Board work has been
conducted and which measures can be taken to improve the Board
work as well as which matters the directors feel should be given
more attention and in which areas it could possibly be suitable to
have additional expertise on the Board. The results of this evalua-
tion were reported to and discussed by the Board.
BOARD OF DIRECTORS 2023
The Board of Directors in Maha Energy AB consist of Paulo Thiago
Mendonça (Chairman), Fabio Vassel, Enrique Peña, Viktor Modigh,
Richard Norris, Halvard Idland and Svein Harald Øygard. Previous
Board members during 2023 also include Kjetil Solbraekke (took
the position as CEO of Maha in connection with the EGM on
September 18, 2023, when he also resigned from the Board (and
Harald Pousette (resigned from the Board on the EGM held in
March 2023). For more information about Maha’s Board of Direc-
tors, please see page 12.
RULES OF PROCEDURE
The Board of Directors’ work is governed by the approved Rules of
Procedure for BoD. The Board of Directors supervises the work of
the Managing Director by monitoring the Company’s operational
and financial activities. The Board of Directors ensures that the
Company’s organisation, administration, and controls are properly
managed. The Board of Directors adopts strategies and goals and
provides review and approval of larger investments, acquisitions
and disposals of business activities or assets. The Board of
Directors also appoints the Managing Director and determines the
Managing Director’s salary and other compensation. The Chairman
of the Board of Directors supervises the Board’s activities and is
responsible for it functioning well. The Chairman, among other
things, is regularly updated on the Company’s operations, meets
with the Managing Director and is responsible to ensure informa-
tion and documentation is provided by the Company to ensure
high quality discussions and proper consideration of matters.
2023 ANNUAL REPORT
26
Board of Directors’ Yearly Work Cycle:
THE BOARD OF DIRECTORS’ WORK IN 2023
During 2023, the Board of Directors held thirty (30) meetings, in
person, via telephone or digitally and per capsulam meetings.
Attendance for the in-person meetings is shown in the tables
below. The Company’s Chief Legal Officer, Barbara Bittencourt,
acted as corporate secretary. Prior to each meeting, Board
members were provided with an agenda and written information
on the matters to be covered. Each meeting has included the
possibility to discuss without management representatives being
present. The Company’s Auditor also met at least once with the
Board of Directors or respective board committee.
Board
Member
Board
attendence
Audit
Committee
attendance
Remuneration
Committee
attendance
Reserves/ HSE
Committee
attendance
Investment
Committee
attendance
Paulo Mendonça (Chairman) 28/30 0/0 2/2 1/1
Halvard Idland* 21/21 4/4 1/1
Enrique Peña 30/30 5/5
Viktor Modigh 30/30 5/5 2/2 2/2 1/1
Richard Norris 30/30 5/5 2/2
Svein Harald Øygard** 8/8 0/0 1/1
Fabio Vassel 28/30 1/2
Kjetil Solbraekke*** 13/13
Harald Pousette**** 9/9 1/1 2/2
* Elected on March 29, 2023
** Elected on September 18, 2023
*** Elected on March 29, 2023, resigned on September 18, 2023
**** Resigned on March 29, 2023
Q1 / Q2 targeted main activities:
⁄ Approval of the fourth quarter report;
⁄ Approval of the Annual Report and other
annual reports;
⁄ Review of the Auditor’s Report and meeting
with the Auditor (excluding Management) to
discuss the audit process, risk management
and internal controls;
⁄ Review of the Policy on Remuneration for
submission to the AGM;
⁄ Determination of the AGM details and
approval of the AGM materials;
⁄ Approval of the first quarter report;
⁄ Annual investor relations assessment;
⁄ Review of the Rules of Procedure.
Q3 / Q4 main activities:
⁄ Adoption of the budget and work programme;
⁄ Consideration of the Board self-evaluation to
be submitted to the Nomination Committee;
⁄ Approval of the second and third quarter
reports;
⁄ Review of the third quarter Auditor’s Report
and meeting with the Auditor (excluding
Management) to discuss interim review
results;
⁄ Performance assessment of the CEO and
Managing Director;
⁄ Consideration of the performance review
of Group management and Remuneration
Committee remuneration proposals;
⁄ Long-term strategy discussions;
⁄ Evaluation of internal controls;
⁄ Insurance Program renewal.
MAHA-ENERGY.COM
27
Board Committees
In order to increase the efficiency of its work and enable a more
detailed analysis of certain matters, the Board of Directors has
formed four (4) committees, being: Audit Committee; Remuner-
ation Committee; Reserves/HSE Committee; and Investment
Committee. Committee’s members are appointed by the Board
of Directors within the Board members up to the next AGM.
The Committee’s duties and authorities are governed by those
Mandates, Policies and Terms of Reference described below.
The committees perform monitoring and evaluations, resulting
in recommendations to the Board of Directors, where all deci-
sion-making takes place.
AUDIT COMMITTEE
The Board of Directors has established an Audit Committee for the
period up to and including the AGM 2024. The present members
of the Audit Committee are Enrique Peña (Chairman), Halvard
Idland, Richard Norris and Viktor Modigh. Following changes in
the composition of the Board of Directors, the Audit Committee
members have changed during the year. Previously in 2023, Harald
Pousette was a member of the Audit Committee. The Committee
convened five (5) times during 2023.
The Audit Committee is a supervisory body within the Board of
Directors of Maha. The Audit Committee shall ensure compliance
with the Board of Director’s monitoring responsibilities pertaining
to financial reporting, risk management and assessing the effi-
ciency of the Company’s internal controls over financial reporting.
The Audit Committee shall thereby, in particular, contribute to
sound and regular financial reporting to ensure the market’s
trust in Maha. The Audit Committee shall furthermore regularly
liaise with the Company’s external auditors as part of the annual
audit process and review their fees, as well as the auditors’ qual-
ifications, independence and impartiality. The Audit Committee
also assists the Nomination Committee with proposals for
resolutions on the election and remuneration of the auditor. The
Audit Committee shall also ensure that good communication is
maintained between the Board and the external auditor(s). As
per the Audit Committee’s functions and responsibilities, Audit
Committee met with the external auditors more than once during
the year, and also met without the presence of the management.
REMUNERATION COMMITTEE
The Board of Directors has established a Remuneration
Committee for the period up to and including the AGM 2024. The
present members of the Remuneration Committee are Paulo
Mendonça (Chairman), Viktor Modigh and Svein Harald Øygard.
Following changes in the composition of the Board of Directors,
the Remuneration Committee members have changed during
the year. Previously in 2023, Fabio Vassel and Harald Pousette
were members of the Remuneration Committee. The Committee
convened two (2) times during 2023.
The Remuneration Committee is a preparatory body within the
Board of Directors with the main duties to prepare resolutions to be
adopted by the Board of Directors pertaining to matters regarding
remuneration principles, remuneration policies and other terms
of employment for executive management; monitor and eval-
uate current and during the year finalized programs for variable
compensations for the executive management, and monitor and
evaluate the compliance with the guidelines for remuneration for
the executive management which the general meeting by law shall
adopt, and applicable remuneration structures and remuneration
levels in the Company. The work of the Remuneration Committee
is governed by established rules of procedures that have been set
by the Board of Directors.
RESERVES/HSE COMMITTEE
The Board has established a Reserves/HSE Committee for the
period up to and including the 2024 AGM. The present members
of the Remuneration Committee are Richard Norris (Chairman),
Paulo Mendonça and Viktor Modigh. The Committee convened
two (2)times during 2023.
The Reserves & HSE Committee is responsible for the following
functions:
⁄ assisting the Board of Directors in fulfilling its oversight
responsibilities generally with respect to the oil and natural
gas reserves evaluation process of the Company and public
disclosure of reserves data and related information in
connection with the Company’s oil and gas activities;
⁄ evaluating and recommending on appointment of
independent qualified reserve auditor, oversight of the
reserves audit process;
⁄ developing, implementing and monitoring policies, standards
and practices of the Company with respect to matters
concerning health, safety and environment, including public
disclosures.
INVESTMENT COMMITTEE
In October 2023, the Board established an Investment Committee
for the period up to and including the 2024 AGM. The members
of the Investment Committee are Paulo Mendonça, Halvard
Idland, Svein Harald Øygard and Viktor Modigh. In addition, CEO
Kjetil Solbraekke and Maha’s M&A Director Roberto Marchiori
(Chairman) are members of the Investment Committee. The
Committee convened one time during 2023.
The purpose of the Investment Committee is to, on behalf of the
Company, assist the Board in fulfilling their responsibilities with
regards to investments proposed by the management of the
Company. To accomplish this purpose, the Investment Committee
will analyze and decide on investments proposed by the manage-
ment of the Company. The Investment Committee continuously
report to the Board regarding its work and the investments.
2023 ANNUAL REPORT
28
Remuneration of
Board of Directors members
The remuneration of the Chairman and other Board of Directors’
members follows the resolution adopted by the AGM. The Board of
Directors members, except for the CEO and Managing Director up
to the EGM in September 2023, are not employed by the Company,
and therefore do not receive any salary from the Company.
The EGM in September 2023 resolved in accordance with the
proposal of the Nomination Committee on an incentive program
for the members of the Board of Directors through issuance of
warrants entitling to subscription of new shares in the Company.
No warrants were issued in 2023. The Policy on Remuneration
approved by the AGM also comprises remuneration paid to Board
members for work performed outside their directorships.
The 2023 AGM resolved that remuneration of the chairman of the
Board of Directors shall be TSEK 415 per annum and of the other
members TSEK 300 per member per annum. Remuneration is not
paid for service of the Boards or directors of subsidiaries. Paulo
Thiago Mendonça (until he stepped down on September 18 2023),
who was employed by Maha, did not receive any remuneration for
his service on the Board of Directors. The annual fee for Board
committee members is TSEK 40 per committee assignment. The
annual fee for the chairman of the respective committees is TSEK
60. Further, if a member of the Board of Directors, following a reso-
lution by the Board of Directors, performs tasks which are outside
the regular Board of Directors work, separate remuneration will
apply, based on the company’s Remuneration Policy and in accor-
dance with resolution at the AGM 2023.
Management
The executive management in Maha in 2023 has consisted of
(i) the Managing Director and Chief Executive Officer (Paulo
Mendonça) until he stepped down September 18, 2023 and was
succeeded by Kjetil Solbraekke, (ii) the Chief Financial Officer
(Bernardo Guterres), until he stepped down March 10, 2023 and
was succeeded by Guilherme Guidolin de Campos, (iii) the Chief
Operating Officer Alan Johnson until he stepped down November
30, 2023 and was succeeded by, Javier Gremes Cordero (iv) the
Chief Legal Officer Barbara Bittencourt, from February 1, 2023. The
Board of Directors has adopted an instruction for the Managing
Director which clarifies the responsibilities and authority of the
Managing Director. According to the instruction, the Managing
Director shall provide the Board of Directors with decision data
to enable the Board of Directors to make well-founded decisions
and with documents to enable it to continually monitor the activ-
ities for the year. The Managing Director is responsible for the
day-to-day business of the Company and shall take the decisions
needed for developing the business – within the legal framework,
the business plan, the budget and the instruction for the Managing
Director adopted by the Board of Directors, as well as in accor-
dance with other guidelines and instructions communicated by
the Board of Directors. The Board evaluates the work of the Chief
Executive Officer. The Board examines this issue formally at least
once a year, and without any member of the executive manage-
ment present during this evaluation process.
Remuneration for Management
At the AGM 2023 it was resolved to adopt a policy for remuneration
and other employment conditions for the Executive Management,
which is available at the Company’s website.
For additional information on Board of Directors’ member and
Executive Management compensation, please refer to Note 31 of
the Financial Statements, as well as the Company’s Remuneration
Report available at the Company’s website.
External Auditors
At the 2023 AGM and for the period until the conclusion of the
next Annual General Meeting, the accounting firm Deloitte AB was
elected as Maha’s independent auditor. The Auditor in charge is
Andreas Frountzos.
Financial Reporting and Internal Controls
The Board of Directors has the ultimate responsibility of the
internal controls over financial reporting. Maha’s systems of
internal control, with regard to financials reporting, is designed to
minimize risks involved in financial reporting process and ensure
a high level of reliability in the financial reporting. Furthermore,
the system of internal control ensures compliance with applicable
accounting requirements and other disclosure requirements that
Maha is required to meet as a publicly listed company
INTERNAL CONTROLS
While the Board of Directors (with assistance from the Audit
Committee), in accordance with the Swedish Companies Act,
has the ultimate responsibility for the internal controls over the
Company’s financial reporting; front line responsibility for such is
with the CEO and CFO under the approved Instructions for Finan-
cial Reporting and the Instructions to Managing Director. In line
with listed companies of similar size in the oil and gas sector, Maha
maintains a system of internal controls for its financial reporting
that is designed to minimize risks of error and ensure a high level of
reliability and compliance with applicable accounting principles.
The Company’s CFO and CEO continually work on improving the
financial reporting process through evaluating the risk of errors
in the financial reporting and related control activities. Control
activities include close monitoring and approval by the Compa-
ny’s executive team, in line with the authorization guidelines of
invoices, other payables, contracts and legal commitments, and
other financial and treasury activities in relation to the oil and gas
operations of the Company in Brazil, Oman, Venezuela and the
United States. The purpose of these activities is to ensure and
monitor that control activities are in place for the areas of identi-
MAHA-ENERGY.COM
29
fied risks related to financial reporting and potentially fraudulent
activities. The Audit Committee, the CFO, and the CEO follow up
on the compliance and effectiveness of the Company’s internal
controls to ensure the quality of internal processes is appropriate
and develop controls as considered necessary.
INFORMATION AND COMMUNICATION
The Board of Directors has adopted an Information and Commu-
nication Policy for the purpose of ensuring that the external
information is correct and complete. There are also instructions
regarding information security and how to communicate financial
information.
MONITORING
Both the Board of Directors (with assistance from the Audit
Committee) and the Company’s management follow up on the
compliance and effectiveness of the Company’s internal controls
to ensure the quality of internal processes. The Audit Committee
ensures and monitors that adequate controls are in place for the
identified areas of risk related to financial reporting activities. For
this purpose, an independent consultant reporting directly to the
Audit Committee is engaged to monitor and test effectiveness of
internal controls.
The Board of Directors
Readers are referred to page 12 in this Annual Report for details on
the Company’s Board of Directors and Management team.
The Auditor’s Report on the Corporate Governance Statement can
be found in this Annual Report on page 97.
Administration
Report
30
MAHA-ENERGY.COM
31
The Board of Directors and the Managing Director of Maha Energy AB (publ) (“The Company” or “Maha”)
with Company Registration Number 559018-9543, hereby report the Company’s Annual Report covering
the period 1 January 2023 until 31 December 2023, and the associated consolidated Financial Report
for the year 1 January 2023 until 31 December 2023. This report is a review of Maha Energy AB results
and management’s analysis of its financial performance for the same period. The consolidated financial
statements included in this Annual Report have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and
adopted by the European Union (EU). Significant accounting policies used are set out in Note 2 to the
financial statements. All amounts are expressed in United States Dollars (USD), except in the Parent
Company Annual Report where all amounts are expressed in Swedish Krona (SEK), unless otherwise
indicated.
Corporate Structure
Corporate structure as at 31 December 2023¹:
Note 1: The Company structure shows all the subsidiaries of the Group as of 31 December 2023, except for Maha Energy Latam Spain S.L. and Maha Energy
Latam Operaciones C.A. incorporated in 2024 and 3R Petroleum Óleo e Gás S.A. stake acquired in 2024
On December 2023, Maha announced the divestment of Maha Energy (Oman) Ltd. resulting in classification of the Oman assets as
assets held for sale and as discontinued operations (see Note 8). In early 2024, Maha opened a new entity in Spain and a new entity
in Venezuela in relation to the investments underway in the Latin American country. The consolidated financial statements reflect the
activity of Maha for the years ended 31 December 2023 and 2022.
Maha Latam
Operacionies
C.A.
Venezuela
Maha Energy
Services LLC
USA
Maha Energy
(Oman) Ltd.
Cyprus
Maha
Energy Inc.
Canada
Maha Energy
1 (Brazil) AB
Sweden
Maha Energy
2 (Brazil) AB
Sweden
Maha Energy
Finance
(Luxembourg)
SARL
Luxembourg
Maha Energy
(Holding)
Brasil Ltda
Brazil
Maha Energy
(Oman) Ltd.
(Oman Branch)
Oman
Maha Energy
(US) Inc.
United States
2B Ametrino
AB
Sweden
Maha Energy
Latam S.L
Spain
Maha Energy
Finance
(Luxembourg)
SARL
Sverige(Sweden)
Maha Energy
Offshore
(Brasil) Ltda
Brazil
Maha Energy
(Indiana) Inc.
United States
3R Petroleum
Offshore S.A.
Brazil
3R Petroleum
Óleo e Gás
S.A.
Brazil
99% 100% 100% 100% 100% 100% 100% 100%
100% 100% 7.69% 100% 100% 100%
100% 15%
85%
5%
Maha Energy AB (publ)
Sweden
Subsidiaries
Branches
Investments or minority equity interest
Acquired or Incorporated in 2024
2023 ANNUAL REPORT
32
Agreements between Maha
and Novonor
On October 2023, Maha Energy entered into an exclusivity agree-
ment with Novonor Latinvest Energy S.à.r.l (“Novonor”) followed by
the execution of the definitive documents in March 2024, granting
Maha exclusive rights to acquire 60% of Novonor’s wholly-owned
Spanish subsidiary, Odebrecht E&P España SL (“OE&P” or “Partner
B”), which holds a 40% equity interest in PetroUrdaneta, an oil and
gas joint venture operating in Venezuela. This arrangement will
result in Maha indirectly holding a 24% equity interest in Petro-
Urdaneta. The completion of the transaction is subject to various
conditions, including (i) approval from applicable authorities; (ii)
successful negotiation of the relevant operational and collabora-
tion agreements/framework with PDVSA and/ or local authorities
for the redevelopment of PetroUrdaneta’s fields. Such agreements
aim to allow Maha to define a new development program of Petro-
Urdaneta and enhance control over the operations, particularly
in the areas of purchasing, cash management and crude sales/
offtake.
PetroUrdaneta operates in the Maracaibo Basin in northwestern
Venezuela. Maha’s plan involves recompletion and workover of
wells, with potential production and subsequent commercializa-
tion of existing associated natural gas reserves in the area. The
transaction entails Maha paying EUR 4.6 million for the first exclu-
sivity period ending in September 2024, with additional payments
for a possible 12-months extension or at the closing date. Upon
fulfillment of the conditions precedent, Maha will have the
option to acquire 60% of OE&P’s holdings and subsequently the
remaining 40% of Partner B. Maha continues to closely monitor
the political development in Venezuela, including which general
or specific U.S. sanctions licensing that may be required for the
implementation of activities authorized by General License 44
beyond 18 April 2024. In the fourth quarter of 2023, the accounting
impact involved establishing an escrow account, recognized as
cash and cash equivalents on the balance sheet, amounting to
EUR 9.2 million.
Maha Energy Offshore Business
combination between Maha and DBO 2.0
On May 23, 2023, Maha completed its business combination
with DBO 2.0 S.A. (now known as Maha Energy Offshore (Brasil)
Ltda.). The deal involved issuing 34,829,057 new shares in Maha in
exchange for all shares in DBO. Through its equity participation on
3R Petroleum Offshore S.A., Maha currently holds indirect inter-
ests in the Peroá cluster (15%) and the Papa Terra cluster (9.375%)
offshore oil and gas fields.
The Peroá cluster, located in the Espírito Santo basin, consists of
Peroá, Cangoá, and Malombe concessions. Peroá and Cangoá are
producing natural gas via the Peroá platform, while Malombe is
a discovery awaiting development. A gas sales agreement was
signed in July 2023 with ES Gás for a 30-month term, commit-
ting to supply 400,000 m³/day of natural gas. Surplus gas beyond
this commitment can be negotiated or sold in the Brazilian spot
market. The Peroá cluster’s current production capacity is around
650,000 m³ day.
The Papa Terra cluster, an offshore heavy oil field in the Campos
Basin, operates with an FPSO and a Tension Leg Wellhead Plat-
form. Average net production during Q4 2023 was 1,535 BOEPD.
Extensive maintenance in 2023, including improvements to the
boiler system and pump units, increased operational efficiency.
A workover campaign began towards the end of 2023the year,
aiming to enhance production from both wet and operating
wells. Well interventions and adaptations to the FPSO processing
systems are ongoing, with temporary interruptions expected.
Further workovers and a Flotel campaign are planned for 2024 to
continue asset integrity recovery.
Sale of Maha Energy (Oman) Ltd
In Q1 2023, Maha Energy entered a partnership with Mafraq
Energy LLC, selling a 35% stake in Block 70 for USD 11.2 million
while retaining a 65% interest as the Operator. Short-term produc-
tion tests in March showed promising results, with five out of
eight wells averaging 300 barrels of oil per day. In Q3, an extension
to the Initial Phase of the EPSA for Block 70 was granted by the
Ministry of Energy and Minerals of the Sultanate of Oman. During
the fourth quarter, Maha Energy agreed to sell its Cypriot subsid-
iary, Maha Oman, holding a 65% working interest in Block 70, to
Mafraq Energy. Mafraq Energy, already a 35% partner, will cover
all operational costs from December 1, 2023. Maha will receive
USD 2 million up to the closing date and potentially up to USD 12
million in earnouts based on actual production volumes. The sale
was finalized in January 2024, pending approval from the Govern-
ment of the Sultanate of Oman. This transaction resulted in the
reclassification of business activities in Oman as assets held for
sale and discontinued operations, with a loss of USD 25.2 million
recognized.
Divestment in Maha Energy (US) Inc
In the third quarter, the Company successfully divested the LAK
Ranch heavy oil field in the USA. This transaction resulted in
an accounting impairment of $2.5 million, net of the reversal of
decommissioning liabilities.
Financial Results Review
MAHA-ENERGY.COM
33
Sale of Maha Energy Brasil Ltda
On February 28, 2023, Maha completed the sale of Maha Energy
Brasil Ltda. (“Maha Brazil”) to PetroRecôncavo S.A. for a total
purchase price of USD 150.9 million, payable in two installments.
The first installment of USD 95.9 million was paid at closing, with
the second installment of USD 55.0 million paid on August 2023.
Additionally, earn-outs of up to USD 36.1 million may be paid based
on meeting certain conditions, including average annual Brent oil
prices and synergies with PetroRecôncavo’s potential new assets.
Part of the proceeds from the sale were used as collateral for
Maha’s outstanding debt to BTG Pactual. The sale resulted in
Maha Brazil being classified as discontinued operations in the
interim condensed consolidated statement of operations.
Financial Results
In the fiscal year ending December 31, 2023, Maha Energy
witnessed a range of operational and financial metrics, illustrating
the company’s performance and position within the market.
Revenue from continuing operations stood at USD 5.2 million,
reflecting a decrease from the previous year’s USD 12.3 million,
attributed to market dynamics such as lower sales volumes and
a decline in realized oil prices. Similarly, operating netback from
continuing operations decreased to USD 2.2 million, compared to
USD 6.5 million in the previous year.
EBITDA from continuing operations showed a negative value
of USD -2.9 million, contrasting with the positive figure of 0.8
million in the previous year. However, amidst these fluctuations,
Maha Energy managed to improve the net result from continuing
operations to USD -5.3 million, marking an improvement from the
previous year’s USD -11.3 million.
In discontinued operations, the net result was USD -28.6 million,
compared to a positive figure of USD 34.2 million in the previous
year. Despite these fluctuations, earnings per share (basic and
diluted) were recorded at USD -0.17, showing a decrease from USD
0.29 in the previous year.
Maha Energy closed the year with a total cash balance of USD
131.1 million on December 31, 2023, including restricted cash
of USD 42.8 million. This marked a significant increase from the
previous year’s cash balance of USD 15.2 million, excluding cash
from assets held for sale.
Regarding reserves, Maha’s gross reserves before income tax in
the Illinois Basin, USA, amounted to 2.8 million barrels of oil of
proven and probable reserves (2P) as of December 31, 2023.
Production
Production 2023 2022
Total delivered Oil & Gas (BOE)* 212,387 1,172,719
Daily Volume (BOEPD) 2,350 3.213
Continuing Operations
Delivered Oil (Barrels) 71,804 146,482
Daily Volume (BOEPD) 197 401
Discontinued Operations
Delivered Oil (Barrels) 124,029 887,739
Delivered Gas (MSCF) 99,324 830,989
Daily Volume (BOEPD) 340 2,812
*BOE takes into account gas delivered and sold. 1 bbl = 6,000 SCF of ga
Maha’s producing oil and gas assets are located in the Illinois
Basin. Production from Maha’s Brazilian assets, such as Papa-
Terra and Peroá clusters, where Maha holds indirect equity
interest, is not consolidated but included in the Group’s financial
reporting as share in Income from Investment in Associates.
However, average daily production volumes in the Illinois Basin for
Full Year 2023 decreased compared to the comparative period due
to natural well decline and delays in capital projects resulting in a
lack of new production.
Daily oil production from continuing operations averaged 197
barrels of oil equivalent per day (BOEPD), showcasing a decrease
from the previous year’s average of 399 BOEPD. However, including
non-consolidated production from the investment in associate 3R
Offshore, total production amounted to a robust 1,942 BOEPD,
highlighting the diversity in the company’s production portfolio.
Revenue
(TUSD, unless otherwise noted) 2023 2022
Oil and Gas revenue 14,275 89,777
Continuing Operations 5,226 12,327
Discontinued Operations 9,049 77,450
Combined Sales volume (BOE) 279,726 1,109,699
Oil realized price (USD/BBL) 72.31 90.18
Gas realized price (USD/MSCF) 1.15 1.06
Oil Equivalent realized price
(USD/BOE)
51.03 80.90
Reference price – Average Brent
(USD/BBL)*
82.47 100.93
Reference price – Average WTI
(USD/BBL)
77.64 94.90
*Reference price is as per U.S. Energy Information Administration website.
2023 ANNUAL REPORT
34
In 2023, total revenue from continuing operations amounted to
TUSD 5,226, marking a 58% decrease from TUSD 12,327 in the
previous year. This decline correlates with a 20% decrease in real-
ized oil prices and an 18% decrease in sales volumes. Revenue
stems from the transfer of goods, particularly oil production in
the USA - Illinois, with consideration specified in contracts, net of
discounts and sales taxes. Performance obligations are fulfilled
upon the transfer of control of the product to the customer at the
agreed delivery point. The company’s primary customer accounts
for 100% of consolidated gross sales, with no intercompany sales
or purchases of oil and gas during the period. Additionally, no
contract asset or liability balances were present during the period.
Crude oil realized prices in the Illinois Basin are based on West
Texas Intermediate (WTI) price less a discount of approximately
$3/bbl. Further revenue details can be found in Note 4 of the
Consolidated Financial Statements.
Royalties
(TUSD, unless otherwise noted) 2023 2022
Royalties 2,044 10,894
Per unit (USD/BOE) 7.31 9.82
Royalties as a % of revenue 14.3% 12.1%
Continuing Operations 1,268 2,976
Royalties as a % of revenue 24.3% 24.1%
Discontinued Operations 776 7,918
Royalties as a % of revenue 8.6% 10.2%
Royalties, settled in cash and calculated based on realized prices
before discounts, experienced a significant decline in expense.
Specifically, royalty expense decreased by 57% for the full year of
2023 compared to the corresponding periods in 2022. This reduc-
tion aligns with the decrease in revenue observed during the same
periods, indicating a consistent trend across financial metrics.
Production Expenses
(TUSD, unless otherwise noted) 2023 2022
Operating costs 3,058 16,145
Transportation costs 221 2,009
Total Production expenses 3,279 18,154
Per unit (USD/BOE) 11.72 16.36
Continuing Operations
Total Production expenses 1,761 2,828
Discontinued Operations
Operating costs 1,297 13,317
Transportation costs 221 2,009
Total Production expenses 1,518 15,326
Production expenses for continuing operations decreased for the
full year of 2023 compared to the corresponding periods, primarily
attributed to lower sales volumes. However, this reduction was
slightly mitigated by an increase in overall costs due to inflation.
Despite the decrease in overall expenses, production expenses
on a per unit basis rose compared to the comparative periods,
primarily due to the need to absorb high fixed costs with lower
sales volumes.
Operating Netback
(TUSD, unless otherwise noted) 2023 2022
Operating Netback 8,952 60,729
Netback (USD/BOE) 32.00 54.73
Continuing Operations
Operating Netback 2,197 6,523
Netback (USD/BOE) 7.85 5.88
Discontinued Operations
Operating Netback 6,755 54,206
Netback (USD/BOE) 24.15 48.85
Operating netback, a non-GAAP financial metric utilized in the oil
and gas sector for internal performance comparison and industry
benchmarking, is calculated as revenue less royalties and produc-
tion expenses. For the full year of 2023, operating netback experi-
enced a significant decrease of 66% compared to the comparative
period, mainly due to lower sales volumes and diminished oil
realized prices.
MAHA-ENERGY.COM
35
Depletion, depreciation,
and amortization (“DD&A”)
(TUSD, unless otherwise noted) 2023 2022
DD&A 1,898 13,338
DD&A (USD/BOE) 6.79 12.02
Continuing Operations 1,883 2,783
Discontinued Operations 15 10,555
The depletion rate, calculated on proved and probable oil and
natural gas reserves, considers future development costs. Deple-
tion expense is calculated on a unit-of-production basis, fluctu-
ating based on capital spending and reserves additions. For the
full year of 2023, DD&A expense decreased by 32%, totaling TUSD
1,883 (average depletion rate of USD $26.78 per BOE), compared
to TUSD 2,777 (average depletion rate of USD $20.87 per BOE)
in the comparative period. This decrease in 2023 is attributed to
Maha Energy (Indiana) Inc subsidiary with the lower production
volumes compared to the previous year.
Impairment of Exploration
and Evaluation assets (“E&E assets”)
In September 2023, the company sold its heavy oil field, LAK
Ranch, in the USA, which had been acquired in 2013 and shut down
in 2020. Before the sale, the assets were revalued, resulting in a
net impairment loss of TUSD 2,459 (not considering TUSD 25,233
of Oman discontinued operations).
General and Administration expenses (“G&A”)
(TUSD, unless otherwise noted) 2023 2022
G&A 12,154 7,411
G&A (USD/BOE) 172.87 6.68
Continuing Operations 9,392 5,944
Discontinued Operations 2,762 1,467
Throughout 2023, general and administrative (G&A) expenses
rise, primarily driven by several key factors. Firstly, there was
an increase in the volume of concluded and potential future
mergers and acquisitions (M&A) transactions, leading to nonre-
curring legal and advisory fees, as well as diligence-related costs.
Secondly, one-off restructuring costs were incurred due to the
relocation of headquarters from Canada to the newly established
Maha Brazil Holding and subsequent changes in management.
These are one-time expenses, and are expected to contribute to
cost savings in the foreseeable future. Lastly, there was a reduc-
tion in the portion of G&A costs reallocated to capital expenditure
(capex) and operational expenditure (opex) due to the divestment
of assets that previously absorbed these costs.
Over the full year of 2023, G&A expenses totaled TUSD -9,392,
representing 91% increase from the previous year. However, when
considering a more comparable recurring G&A of TUSD 3,995,
there was actually a reduction of 19% for the full year of 2023.
Foreign currency exchange gain or loss
During the entirety of 2023, the net foreign currency exchange
gain totaled TUSD 314, compared to TUSD 1 in 2022. These
fluctuations arise upon settlement of transactions denominated
in foreign currencies. Notably, the foreign exchange gain for the
year is attributed to the Swedish Krona bank accounts held by
the parent company, which operates with US dollars as its func-
tional currency. During the course of the year, the Swedish Krona
strengthened against the US dollar ending at 10.04.
Other income
In 2023, the Company recorded other income totaling TUSD 37,
compared to nil in 2022. This income primarily stems from the
closing of the Calgary office lease asset.
Finance income and costs
Income from finance activities increased notably in 2023
compared to 2022, totaling TUSD 8,710 for the full year, a substan-
tial rise from TUSD 64 in the previous year. These gains primarily
result from investment returns on short-term investments, a
strategy consistently employed by the company, mainly through
low-risk time deposits or investments with minimal volatility.
Simultaneously, finance costs decreased throughout 2023,
amounting to TUSD 7,084 for the full year, down from TUSD 9,394
in 2022. This reduction can be attributed to the company’s debt
amortization activities.
Income Taxes
The Company recorded a current tax recovery of nil for 2023
(2022: TUSD 2,548 expense). The expense in 2022 was entirely
attributed to operations that have since been discontinued. This
shift to zero tax recovery in 2023 primarily results from the sale of
Maha Brazil, which was concluded in February 2023.
Taxation of corporate profits in Maha’s discontinued operations
is a combined 34% rate (25% corporate income tax and 9% social
contribution); however, Maha Energy Brasil Ltda. has secured
certain tax incentives (SUDENE) allowing for the reduction of
75 percent of the corporate income tax from 25 percent to 6.25
percent, bringing the combined net tax rate to 15.25 percent.
The Company recorded deferred tax expense of nil (2022: TUSD
12,711) for 2023. The expense in 2022 was entirely attributed to
operations that have since been discontinued. This shift to zero
deferred tax expense in 2023 primarily results from the sale of
Maha Brazil, which was concluded in February 2023.
2023 ANNUAL REPORT
36
Exchange differences on translation
of foreign operations
The Company operates with US Dollars as its presentation
currency, consequently, the variances in translation from foreign
operations are documented within other comprehensive income.
Exchange differences pertaining to the translation of foreign
operations, as outlined in the Statement of Comprehensive Earn-
ings,for the entirety of 2023, amounted to TUSD -7,772, contrasting
with TUSD 6,743 in 2022. Following the conclusion of the Maha
Brazil Transaction, the Company acknowledged TUSD 26,612 of
foreign exchange translation, which was incorporated into the net
loss from discontinued operations.
Balance sheet
All balance sheet items relating to the discontinued operations
have been reclassified as assets held for sale and liabilities held
for sale as detailed in Note 8. Comparative numbers have not been
reclassified under IFRS and therefore not included in Note 8.
Non-current assets
Property, plant and equipment (“PP&E”) amounted to TUSD 14,988 (2022: TUSD 14,015) and are detailed in Note 9. During the fourth
quarter of 2023, the company announced the divestment of Maha Oman resulting in classification of the Oman assets as assets held
for sale and as discontinued operations (see Note 8). Exploration and evaluation expenditure amounted to nil (2022: TUSD 29,202)
with the both divestments occurred during 2023 and are detailed in Note 10. Total expenditures incurred during the year, including
discontinued operations, were as follows:
2023 (TUSD) Brazil USA Oman Canada Total
Development 0 3,237 0 0 3,237
Exploration and evaluation 0 0 0 0 0
0 3,237 0 0 3,237
2022 (TUSD) Brazil USA Oman Canada Total
Development 45,699 1,847 46 9 47,602
Exploration and evaluation 0 803 14,278 0 15,081
45,699 2,650 14,324 9 62,683
USA
The Company owned and operated a 99% working interest in the
LAK Ranch oil field until the third quarter, when the operations
located on the eastern edge of the multi-billion-barrel Powder
River Basin in Wyoming were divested.
OMAN
In October 2020, Maha Energy entered an EPSA with Oman’s
government for Block 70, becoming its operator with a 100%
working interest. In 2022, the drilling program continued as
planned. The Omani government approved a farmout agreement
with Mafraq Energy LLC in exchange for a 35% working interest,
with Mafraq covering its share of past and future costs. In Q1
2023, Maha farmed out a 35% interest to Mafraq, retaining 65%,
with Mafraq committing to bear 35% of future costs. Short-term
production tests started in March and the drilling campaign
ended in June 2023. An extension to the EPSA for Block 70 was
granted in Q3. In Q4, Maha executed a binding term-sheet for the
sale of its Cypriote subsidiary, Maha Oman, to Mafraq Energy. The
sale, subject to government approval, includes an earnout linked
to Block 70’s production volumes and led to a USD 25.2 million
impairment.
Investment in Associate amounted to TUSD 34,985 versus nil
in the last years. This happened because on 23 May 2023, the
Company entered into a business combination with DBO, now
known as Maha Offshore, for the transfer of 100 percent of all the
outstanding shares in DBO 2.0 -- current Maha Offshore (the “DBO
Transaction”). Through the DBO Transaction, Maha received all
outstanding shares in DBO (current Maha Offshore) against the
transfer of 34,829,057 new shares in the Company to DBO’s share-
holders (issued pursuant to the resolution of the extraordinary
general meeting held on 29 March 2023), being the transaction
costs equivalent to TUSD 592. Maha Offshore owns 15 percent
of shares in 3R Offshore, which holds operated working interests
in producing oil and gas offshore fields in Brazil – i.e. Peroá and
Papa-Terra clusters. The Company applies equity accounting to
the investment in the 3R Offshore as the Company has significant
influence over 3R Offshore, mainly due to the Company’s owner-
ship and representation on 3R Offshore’s Board of Directors. As
a result, investment in DBO 2.0 was recognized as investment in
associates.
MAHA-ENERGY.COM
37
Other long-term assets totaled TUSD 9,134 (2022: TUSD 302). This
primarily consists of a debenture with the associate 3R Offshore
amounting to TUSD 7,833, along with an investment in EIG Bolivia
Pipeline AB in Q3 2023 worth TUSD 1,148.
Regarding the Restricted Cash, please refer to the commentary on
its Current and Non-Current classification in the following section.
Current assets
In the fourth quarter, Maha announced the potential divestment of
Maha Oman, classifying the asset as held for sale (refer to Note 8).
Prepaid expenses and deposits totaled TUSD 561 (2022: TUSD
590), mainly comprising prepaid operational and insurance
expenditures.
Crude oil inventories increased to TUSD 215 (2022: TUSD 172) due
to oil inventory in the USA, notably influenced by the new wells in
the Illinois Basin.
Accounts receivable amounted to TUSD 1,092 (2022: TUSD 568),
as detailed in Note 11.
The Company’s restricted cash balance of USD 42.8 million (with
TUSD 12,000 classified as Non-Current) serves as collateral for
the Company’s debt balance of USD 34.4 million and certain finan-
cial commitments and contingent liabilities related to the Maha
Brazil Transaction. The significant cash increase will be utilized
for strategic acquisitions at favorable multiples to expand the
portfolio of stable producing assets.
Cash and cash equivalents reached TUSD 88,289 (2022: TUSD
19,520), primarily impacted by the sale of assets onshore Brazil.
Non-current liabilities
On 30 March 2021, the Company entered into a loan agreement
(the “Term Loan”) and equity financing subscription with Brazilian
Investment Bank BTG Pactual S.A. for total proceeds of USD 60
million before customary fees and expenses. As of 31 December
2023, balance for the bank debt amounted to TSUD 34,379 and the
current portion of the debt amounted to TUSD 22,500 (with TUSD
11,879 in non-current) which was classified as current liability, see
Note 14 for further details.
The decommissioning provision amounted to TUSD 539 (2022:
TUSD 1,700) and relates to future site restoration obligations as
detailed in Note 16. Besides the additional provision setup for
the new wells drilled in the Illinois Basin, occurred a decrease
impacted by Brazil sale.
The lease commitments amounted to TUSD 494 (2022: TUSD 78)
and is related to Canadian and Brazilian offices.
Current liabilities
Liabilities held for sale are related to divestment of Maha Oman
as described in the report above. Bank Debt amounted to TUSD
22,500 (2022: 19,500) as Current Liabilities. The entire debt
amounthas the same explanation mentioned in non-current liabil-
ities. Accounts payables amounted to TUSD 3,017 (2022: TUSD
3,649). Continuing operations liabilities were mainly in line with
the comparative period and accrued liabilities amounted to TUSD
735 (2022: TUSD 5,975) as detailed in Note 19. Current portion of
the lease commitment amounted to TUSD 104 (2022: TUSD 77).
Share data
Share outstanding Class A
31 December 2022 143,615,696
Share Subscriptions in 2023 34,829,057
31 December 2023 178,444,753
On 23 May 2023, Maha completed the previously announced
business combination with DBO (later re-named Maha Energy
Offshore (Brasil) Ltda.). The consideration for all shares in DBO
amounted to 34,829,057 new shares in Maha. DBO holds indirectly,
through shareholding in 3R Petroleum Offshore S.A., interests in
the offshore oil and gas fields called Peroá cluster (15% indirect
interest) and the Papa Terra cluster (9.375% indirect interest).
Cash flow
Cash flow from operating activities amounted to TUSD -12,675
(2022: TUSD 58,388), a decrease of 122% from prior year mainly
due to sales of Maha Brazil and a reduction in the volume of the
company’s ongoing business activities. Cash flow from investing
activities amounted to TUSD 92,650 (2022: TUSD -62,729) mainly
due to sales of Maha Brazil concluded at the end of February 2023.
Cash flow from financing activities decrease to TUSD -14,407
(2022: TUSD 6,385) mainly for the repayment of Maha’s bank debt
and lease payments during the year.
We have reclassified cash flows from previous period to improve
the accuracy and clarity of our financial reporting. This adjust-
ment ensures that our cash flow presentation better reflects our
financial activities. We anticipate that this modification will offer
stakeholders a clearer understanding of our cash operations,
facilitating more informed decisions about our financial position
and liquidity.
2023 ANNUAL REPORT
38
Liquidity and capital resources
The Company strategically manages its capital structure to
support growth initiatives. Its key objectives include maintaining
financial flexibility, preserving access to capital markets, financing
internal growth, and funding potential acquisitions while meeting
financial obligations. Credit risk is mitigated by limiting counter-
parties to major banks, with consideration of their credit ratings.
Presently, investments primarily consist of low-risk assets and
short-term, highly liquid investments, occasionally diversifying
into attractive equity positions or high-yield fixed-income assets
within internal investment policies.
The capital structure comprises shareholders’ equity of USD 154.8
million (compared to USD 140.9 million as of December 31, 2022)
and current assets of USD 130.8 million. Management adjusts
the capital structure in response to economic conditions and the
risk profile of underlying assets, supported by annual expenditure
budgets reviewed and approved by the Board of Directors. The
budget is updated as needed, reflecting factors like capital deploy-
ment success and market dynamics.
Legal matters
The Maha Brazil Transaction has been concluded at the end of
February 2023. Despite not being a party under the lawsuits,
Maha retains responsibility towards PetroRecôncavo for financial
commitments related to specific lawsuits and contingent liabili-
ties existing as of the effective date of the Maha Brazil Transac-
tion. These obligations are considered standard and align with
typical business practices in Brazil.
Any remaining balance will be transferred to Maha upon the resolu-
tion of the final lawsuit or within six (6) years from the closing date
of the Maha Brazil Transaction, as applicable. Provisions for these
legal matters are estimated in collaboration with the Company’s
Brazilian legal advisors and were included in the non-current liabil-
ities and provisions of the discontinued operations.
Health, Safety and the Environmental (HSE)
Maha considers that oil and gas developments can and must be
undertaken in a manner that is safe for employees, contractors,
stakeholders, neighbors, and the environment. At Maha, HSE is a
key component of its management systems. Maha Energy strives
to provide a safe and healthy work environment for all employees,
contractors and suppliers. This means the safety of life, limb,
environment and property always comes first – in that order. The
Company actively monitors all operational sites and proactively
encourages everyone to be mindful of all the Company’s HSE
Values. This is achieved through education, enforcement and
reporting. Everyone working or visiting our sites have the right to
stop work at any time to prevent potential HSE incidents occurring.
Maha’s HSE Values set the tone for how employees, contractors,
stakeholders and the environment are approached.
Environment, Social, and Governance (ESG)
Maha’s corporate culture is built around the core values of Integ-
rity, Responsibility, Safety, Efficiency, and Transparency.
In 2023, we engaged external consultants to assess Maha’s ESG
initiatives and support us in defining our ESG strategy moving
forward, considering the transformations the Company has been
through.
As part of this project, we have reviewed our materiality assess-
ment to reflect the European Sustainability Reporting Standards’
double materiality standard. This exercise was conducted taking
into account the Global Reporting Initiative (GRI) framework,
including the GRI 11 Sector Standard: Oil and Gas Sector, and
SASB Industry Standard: Oil & Gas Exploration & Production.
As a result of this analysis, new material topics were added to
those identified in the previous year, while other topics had their
scope adjusted.
MAHA-ENERGY.COM
39
Maha’s updated ESG materiality matrix is now organized in 5 pillars, which from now on will stream-
line and potentialize our ESG efforts:
To design Maha’s ESG strategy, a working group was formed, integrating executives and Board
members. The group discussed and defined Maha’s ambition in each ESG pillar based on experts’
recommendations, benchmarking and regulatory trends.
Climate
Efficient Management of GHG Emissions and Climate Risk:
managing risks associated with climate change.
Environment
Environment Management System: adopting industry’s best practices to prevent, minimize
and offset negative environmental impacts.
Governance
Sustainable Governance: enhance Company’s governance structures and practices to fully inte-
grate ESG factors into decision-making, performance monitoring and reporting.
Workforce
Superior Work Environment: continue improving employee and contractors’ physical health and
safety, and develop a positive organizational culture that also protects mental health and promotes
Diversity, Equity and Inclusion (DEI).
Communities
& Governments
Stakeholder Governance: establishing clear roles and responsibilities, policies and processes to
manage the relationships with neighbouring communities and relevant governmental authorities in
the locations where Maha operates,
These ambitions were then translated into specific goals for each material pillar and submitted to the Board of Directors in March 2024.
⁄ GHG Emissions
⁄ Climate Risks
Management
Climate
⁄ Water Management
⁄ Waste
⁄ Biodiversity
⁄ Pollution (air, water,
soil)
⁄ Critical Incident Risk
Management
Environment
⁄ Business Ethics &
Transparency
⁄ Anti-Corruption &
Antitrust Compliance
⁄ Gender Diversity in
Leadership Positions
⁄ ESG Policy for M&A/
JVs
⁄ Reserve Valuation
⁄ Supply Chain ESG
performance
⁄ Facilities closure and
Rehabilitation
Governance
⁄ Employees and
Service Providers
Health and Safety
⁄ Employee Relations
and Talent Retention
⁄ Diversity,
Non-Discrimination
& Equal Opportunity
Workforce
⁄ Human Rights &
Rights of Indigenous
Peoples
⁄ Relationship with
Local Communities
⁄ Government
Relations
Communities
& Governments
2023 ANNUAL REPORT
40
We are currently implementing the organizational changes that
will enable us to pursue these goals.
The Reserves and HSE Committee is formally incorporating the
responsibilities to (i) overview the implementation of the ESG
strategy, (ii) monitor our ESG performance, and (iii) recommend
improvement measures in policies, processes, training, organiza-
tional design and other measures deemed necessary to reinforce
our ESG performance.
The Audit Committee is formally incorporating the responsibility
to overview the development, implementation, and effectiveness
of the organization’s compliance program and ethics culture.
At the executive level, the Chief Legal Officer will continue to
be responsible for Human Resources and Ethics & Compliance,
while incorporating formal responsibilities for ESG and Corporate
Affairs.
Once we start operating in Venezuela, we also intend to ensure
local accountability for the execution of our ESG strategy by
appointing local representatives for ESG and HSE matters.
We will report on our progress in each of the 5 pillars as we move
forward.
The Sustainability Report is published as a separate document.
For comprehensive information on Maha’s Environmental, Social,
and Governance (ESG) initiatives, stakeholders are encouraged to
review the company’s Sustainability Report, which is available on
its website (www.maha-energy.com).
Related Party Transactions
There have been no significant changes in related party transac-
tions compared to previous years.
Parent Company
Business activities for Maha Energy AB focuses on: a) manage-
ment and stewardship of all group affiliates, subsidiaries and
foreign operations; b) management of publicly listed Swedish
entity; c) fundraising as required for acquisitions and group busi-
ness growth; and d) business development.
For the Parent Company, the net result for the Full Year 2023
amounted to TSEK -389,255, lower than the previous year’s TSEK
-64,878. This increase in loss was mainly due to impairment of
shares in subsidiaries.
Proposed Distribution of Earnings
The Board of Directors proposes no dividends to be paid for
the year. Furthermore, the board of Directors proposes that the
unrestricted equity of the Parent Company of SEK 283,338,618
including the net result for the year of SEK (389,255,389) be
brought forward as follows:
SEK
Dividend -
Carried forward 283,338,618.40
Total - SEK 283,338,618.40
Risk Management
The Company is engaged in the exploration, development and production of oil and gas and its operations are subject to various risks
and uncertainties which include but are not limited to those listed below. The risks and uncertainties below are not the only ones that the
Group faces. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial
may also impair the business and operations of the Company and cause the price of the Mahas’ shares to decline.
A detailed analysis of Maha’s financial risks and mitigation of those risks through risk management are detailed in Note 23.
Non-financial risks
VOLATILITY IN OIL
AND GAS COMMODITY PRICES
The demand for oil, natural gas and other petroleum products are
dependent on the global economy. In addition, the economic situa-
tion on the global market affects the Company’s business, results
and financial position. Numerous factors do, and will continue to
affect the marketability and price of oil and natural gas acquired or
discovered by the Company.
Prices for oil and natural gas are subject to large fluctuations
depending on a variety of factors. These factors include, but
are not limited to political, social or economic instability and
geopolitical developments, for example, the war in Ukraine and
Middle East, governmental regulation, risks of supply disruption,
natural disasters, terrorist attacks, the availability of alternative
fuel sources, currency fluctuations, changes in interest rates,
downturns in the economy, natural disasters, trade restrictions,
increased protectionism or pandemics, such as the COVID-19
pandemic, and uncertainty about future economic prospects.
Even after the COVID-19 outbreaks have subsided, the Company
MAHA-ENERGY.COM
41
may continue to experience materially adverse impacts to the
business, mainly due to the global economic impact and the effect
on the world demand for, and prices of, oil and gas. Furthermore,
continued and/or heightened tensions related to Russia’s invasion
of Ukraine, and sanctions imposed by third countries, can signifi-
cantly affect the global economy negatively and there is a risk
that the general outlook for oil and gas prices will be volatile and
impacted by the duration and severity of the conflict, the extent to
which Russian exports are reduced by sanctions, and the timing
and ability of producers and governments to replace reduced
supply. In addition, a potential escalation of the recent conflict
between Israel and the Hamas group in the Middle East can pose
a significant impact in oil prices ang global supply chain. Further-
more, in recent years the Organization of Petroleum Exporting
Countries (“OPEC”) and associated countries have, from time to
time, agreed to voluntary production limitations, and Oman has
in the past participated in such agreements. If Oman agrees to
voluntary production limitations this may have an adverse effect
on the Company’s potential earn-out related to future oil and gas
production and sales from Oman.
All the factors listed above could result in a material decrease in
the Company’s expected net production revenue and a decline in
its oil and natural gas acquisition, development and exploration
activities. Any substantial and/or extended decline in the price of
oil and natural gas would have an adverse effect on the Company’s
revenues, profitability and cash flows from operations and could
also affect the Company’s ability to obtain equity or debt financing
on acceptable terms. In addition, volatile oil and natural gas prices
make it difficult to estimate the value of producing properties for
acquisitions and often cause disruption in the market for oil and
natural gas producing properties. For instance, during 2023 , the
Brent oil price was at its lowest USD 71 per barrel and at its highest
USD 98 per barrel. Decrease in the Brent and/or WTI benchmark
oil price may thus have a material adverse effect on the Company.
Price volatility also makes it difficult to budget for and project the
return on acquisitions and development and exploitation projects.
The commodity price risks noted above, as well as other risks
such as market access constraints and transportation restric-
tions, reserves replacement and reserves estimates and cost
management that are more fully described herein, may have a
material impact on our business, financial condition, results of
operations, cash flows and reputation and may be considered indi-
cators of impairment. Another potential indicator of impairment is
the comparison of the carrying value of our assets to our market
capitalization. We conduct an assessment, at each reporting date,
of the carrying value of our assets in accordance with IFRS. If
crude oil, NGLs, refined product, and natural gas prices decline
significantly and remain at low levels for an extended period of
time or if the costs of our development of such resources signifi-
cantly increase, the carrying value of our assets may be subject
to impairment and our net earnings could be adversely affected.
CONCENTRATED PRODUCTION IN A SMALL
NUMBER OF FIELDS IN ONE JURISDICTION
The Company’s current production of oil and gas is currently
concentrated in one oil producing fields in the United States.
As a result of these concentrations, the Company is dispropor-
tionately exposed to the effect of regional supply and demand
factors, delays or interruptions of production from wells in these
areas caused by governmental regulation, availability of equip-
ment, equipment failure, interruptions of facilities, personnel or
services market limitations, weather events, or interruption of
the processing or transportation of oil. Additionally, the Company
may be exposed to risks, such as changes in field-wide rules and
regulations that could cause the Company to permanently or
temporarily close the wells within these fields. These risks may,
if materialized, adversely affect the Company’s ability to conduct
its operations in one or several of these fields, which could have
a material adverse effect on the Company’s results and financial
position.
ALTERNATIVES TO AND CHANGING DEMAND
FOR PETROLEUM PRODUCTS
Alternative fuel requirements, increasing consumer demand for
alternatives to oil and natural gas such as hydropower, wind power,
solar energy, geothermal energy and biofuels, and technological
advances in fuel economy, electric vehicles and energy generation
devices could over time reduce the demand for oil and other liquid
hydrocarbons. The Company faces the evolving worldwide energy
transition risks as demand for energy and global advancement
of alternative sources of energy that are not sourced from fossil
fuels could change assumptions used to determine the recover-
able amount of the Company’s PP&E (Property, Plant, and Equip-
ment) and E&E (exploration and evaluation) assets and could
affect the carrying value of those assets. It may also affect future
development or viability of exploration prospects, may curtail the
expected useful lives of oil and gas assets thereby accelerating
depreciation charges and may accelerate decommissioning obli-
gations increasing the present value of the associated provisions.
Also, increasing regulatory demands and international treaties
governing the commitment to the decrease of carbon dioxide
emissions (such as the Paris Agreement of 2016) could reduce the
demand for oil and/or gas over time. The Company cannot predict
the negative impact of changing demand for oil and natural gas
products, and any major changes may have a material adverse
effect on the Company’s business, results and financial position,
e.g. with regard to the Company’s cash flows.
2023 ANNUAL REPORT
42
EXPLORATION, DEVELOPMENT AND
PRODUCTION RISKS
Exploration for and development of oil and gas involves many risks,
such as risks associated with expenditures made on future explo-
ration by the Company which may not always result in discoveries
of oil in commercial quantities, or commercial quantities of oil may
not at all be discovered by the Company. It is difficult to project the
costs of implementing an exploratory drilling program due to the
uncertainties associated with drilling in unknown formations. The
costs are associated with various drilling conditions, such as over
pressured zones and equipment that might get lost in the hole,
and changes in drilling plans and locations as a result of prior
exploratory wells or new interpretations of seismic data. Future
oil exploration may involve unprofitable efforts, not only from dry
wells, but from wells that are productive but do not produce suffi-
cient net revenues to return a profit after drilling, operating and
other costs. Completion of a well does not necessarily assure a
profit on the investment or Exploration for and development of oil
and gas involves many risks, such as risks associated with expen-
ditures made on future exploration by the Company which may
not always result in discoveries of oil in commercial quantities, or
commercial quantities of oil may not at all be discovered by the
Company. It is difficult to project the costs of implementing an
exploratory drilling program due to the uncertainties associated
with drilling in unknown formations. The costs are associated
with various drilling conditions, such as over pressured zones and
equipment that might get lost in the hole, and changes in drilling
plans and locations as a result of prior exploratory wells or new
interpretations of seismic data. Future oil exploration may involve
unprofitable efforts, not only from dry wells, but from wells that
are productive but do not produce sufficient net revenues to return
a profit after drilling, operating and other costs. Completion of a
well does not necessarily assure a profit on the investment or
recovery of drilling, completion and operating costs.
RISKS RELATED TO GATHERING AND
PROCESSING FACILITIES AND GENERAL
INFRASTRUCTURE
The Company is dependent on available and functioning infra-
structure relating to the properties on which it operates, such as
roads, power and water supplies, and gathering systems for oil
and gas. Depending on the area in which the Company operates,
certain infrastructure and services commonly associated with
petroleum operations may not be readily available. If any infra-
structure or systems failures occur or do not meet the require-
ments of the Company, this could result in delayed, postponed or
cancelled petroleum operations, lower production and sales and/
or higher costs, and result in the Company’s inability to realize
the full economic potential of its production or in a reduction
of the price offered for the Company’s production. This risk is
particularly high in certain countries such as Venezuela where the
Company expects to grow production in the future.
DEPENDENCY ON COUNTERPARTIES
The Company is dependent on a few important counterparties.
A loss of any of the Company’s material counterparties, the
counterparties changing their terms or increase their prices, or
the counterparties encountering difficulties in complying with
their contractual obligations could have a negative impact on
the Company. Also, there is a risk that these counterparties will
encounter difficulties in complying with their contractual obli-
gations due to a shortage of raw materials, strikes, damage,
financial difficulties or other circumstances that may affect the
counterparty.
OPERATIONS IN EMERGING COUNTRIES
The Company participates in oil and gas projects located in
Venezuela and Brazil which are considered emerging markets.
Oil and gas exploration, development and production activities in
emerging markets are subject to political, economical and legal
uncertainties. Depending on the market uncertainties include, but
are not limited to, the risk of war, terrorism, civil unrest, destruc-
tion or theft of Company property and infrastructure, kidnapping,
extortion, expropriation, nationalization, renegotiation or nullifica-
tion of existing or future concessions and contracts, the imposi-
tion of international sanctions, a change in crude oil pricing poli-
cies, a change in taxation policies, and the imposition of currency
controls.
Oil and gas operations in emerging markets like Venezuela, and
to a lower degree Brazil, involves navigating a complex array of
challenges and expose the Company’s personnel and facilities
to heightened safety and security risks. High crime rates, and
the presence of armed rebel groups or drug traffickers pose
additional threats to the Company. Weak regulatory oversight in
some regions also increases risks related to equipment failures,
accidents, and environmental incidents. A company operating in
such environment should implement robust security protocols
and social programs, and may incur significant costs to protect its
employees, contractors, communities, and assets. Any security
incidents, accidents or environmental damage could lead to opera-
tional disruptions, legal liabilities, and reputational harm. Ensuring
safe and compliant operations in higher risk areas is challenging
and could result in higher operating costs for the Company and for
the operators of assets the Company participates in. The above
risks could therefore impede the possibility of the Company to
conduct its operations to the planned extent.
POLITICAL AND ECONOMIC
INSTABILITY IN VENEZUELA
The Company’s recent investments in oil and gas assets in Vene-
zuela expose it to significant political and economic risks in that
country. Venezuela has experienced sustained political unrest,
social upheaval, and economic instability in recent years. Addi-
tionally, the country’s oil industry has suffered from mismanage-
ment and underinvestment, leading to a decline in production and
MAHA-ENERGY.COM
43
exports. The re-election of President Nicolás Maduro in 2018 was
widely disputed, and the United States imposed significant sanc-
tions against Venezuela. These sanctions generally are imposed
pursuant to various Executive Orders issued by US presidents and
by implementing regulations enforced by the US Treasury Depart-
ment’s Office of Foreign Assets Control (“OFAC”). US sanctions
do not prohibit all activities involving Venezuela. US persons,
however, are generally prohibited from engaging in transactions
involving the Government of Venezuela, state-owned enterprises
(such as Petróleos de Venezuela, S.A. (“PDVSA”)), and certain
other specifically sanctioned Venezuelan individuals and entities.
More recently, on October 18, 2023, in response to the signing of
an electoral roadmap agreement between government represen-
tatives and Venezuelan political opposition parties (“Barbados
Agreement”), OFAC published Venezuela General License 44.
This license temporarily authorizes, through midnight of April 17,
2024, all transactions that are related to the oil and gas sector
operations in Venezuela, including authorizing ordinarily incident
and necessary financial transactions with the blocked Venezuelan
financial institutions Banco Central de Venezuela and Banco de
Venezuela SA Banco Universal.
The volatile political climate raises risks of the US reviewing its
Venezuela sanctions policy (depending specially on the fulfillment
of the commitments of the Barbados Agreement). Venezuelan
elections are scheduled to occur in July 2024.
Additionally, expropriation, nationalization, civil unrest, and arbi-
trary changes in laws and policies could severely impact the
Company’s Venezuelan operations. High inflation rates, currency
controls, and deteriorating infrastructure also threaten to disrupt
operations and supply chains.
The Company may face difficulties repatriating profits from
Venezuela due to foreign exchange controls. These political
and economic risks could have a material adverse effect on the
Company’s investments, production levels, profitability, and cash
flows from its Venezuelan assets.
Violations of these sanctions regimes can result in severe civil and
criminal penalties. Maintaining rigorous compliance procedures
in higher risk areas is essential but adds administrative costs.
As sanctions policies continually evolve, the Company must stay
vigilant in monitoring regulatory changes that could impact its
activities or business partners in certain countries. Any sanctions
breaches, even inadvertent ones, pose substantial legal, financial
and reputational risks to the Company.
Despite these challenges, Venezuela’s oil sector remains a crucial
part of its economy and could play a central role in any future
economic recovery, pending a resolution to the ongoing political
crisis and an improvement in the investment climate.
COST OF NEW TECHNOLOGIES
The oil industry is characterized by technological advancements
and introductions of new products and services utilizing new
technologies (such as horizontal drilling, 3D and 4D seismic along
with deep-sea drilling), and the Company is somewhat dependent
on competitive technical solutions in order to maintain its market
position. Other oil companies may have greater financial, tech-
nical and personnel resources that allow them to enjoy techno-
logical advantages and may in the future allow them to implement
new technologies before such technologies become available to
the Company. There is a risk that the Company will not be able
to respond to such competitive pressures and implement such
technologies on a timely basis or at a cost acceptable to the
Company. One or more of the technologies currently utilized by the
Company or implemented in the future may become obsolete and
the Company may be unable to utilize the most advanced, cost
effective and commercially available technology. In such case,
this might result in a diminution or loss of the Company’s compet-
itiveness, which could have a material adverse negative impact on
the Company’s net sales and also its business over time.
RISKS IN ESTIMATING RESERVES
AND RESOURCES
There are a number of uncertainties in estimating the quantities
of reserves/resources including factors which are beyond the
control of the Company. Estimating reserves and resources is a
subjective process and the results of drilling, testing, production
and other new data subsequent to the date of an estimate may
result in revisions to original estimates.
Reservoir parameters may vary within reservoir sections. The
degree of uncertainty in reservoir parameters used to estimate
the volume of hydrocarbons, such as porosity, net pay and water
saturation, may vary. The type of formation within a reservoir
section, including rock type and proportion of matrix and or
fracture porosity, may vary laterally and vertically and the degree
of reliability of these parameters as representative of the whole
reservoir may be proportional to the overall number of data points
(wells) and the quality of the data collected. Reservoir parameters
such as permeability and effectiveness of pressure support may
affect the recover process. Recovery of reserves and resources
may also be affected by the availability and quality of water, fuel
gas, technical services and support, local operating conditions,
security, performance of the operating company and the continued
operation of well and plant equipment.
2023 ANNUAL REPORT
44
Additional risks associated with estimates of reserves and
resources include operational risks during drilling activity, devel-
opment and production, delays or changes in plans for develop-
ment projects or capital expenditures, the uncertainty of esti-
mates and projections related to production, costs and expenses,
health, safety, security and environmental risks, and availability
and efficiency of drilling equipment availability and personnel.
These risks may impact the Company’s ability to meet reserve
and resource reporting deadlines and affect the accuracy of the
reporting.
The Company has historically engaged professional and inde-
pendent auditors staffed with professional geologists, engineers
and other disciplines to evaluate its reservoir and development
plans. For the year 2023, Maha has obtained reserves estimates
from McDaniel & Associates Consultants regarding Block 70
in Oman (discontinued) and the Company’s assets in the USA.
There is a risk that the estimated range of volumes of reserves
do not capture the full range of uncertainty. There is a risk that
these estimates may change over time as new data and informa-
tion becomes available. Actual production and cash flow could
therefore be lower than the estimates, which in turn may affect the
Company’s expected earnings.
SHARED OWNERSHIP AND
DEPENDENCY ON PARTNERS
In 2023 the Company concluded the divestment of a 35 percent
participating interest in Block 70 in Oman, to Mafraq Energy LLC
(“Mafraq”) and the parties have entered into a Joint Operating
Agreement. In January 2024 the Company signed a definitive
agreement to sell the remaining 65 percent to the same partner.
The Omani Government also retains a right to ‘back in’ to the
Block 70 Agreement at Declaration of Commerciality whereby the
Government would reimburse the Company its pro rata share of
past expenditures. The Company is therefore dependent on, and
affected by, the due performance of its partner. If Maha’s partner
fails to perform, the Company may, among other things, risk losing
rights to the earn-out related to the sale of this asset.
In 2023 the Company also acquired a minority interest in 3R
Offshore by the conclusion of a business combination with DBO in
Brazil, 3R Offshore is operated by 3R Petroleum, a listed Brazilian
company. The Company is again dependent on, and affected
by, the due performance of its partner. If Maha’s partner fails to
perform, the Company may, among other things, risk losing rights
to the dividends from 3R Offshore, or may be forced to contribute
more capital to the project.
ENVIRONMENTAL AND
CLIMATE-RELATED RISKS
All phases of the oil and natural gas business present environ-
mental risks and hazards and are subject to environmental regu-
lation pursuant to a variety of laws and regulations in the different
jurisdictions where the Company operates. Environmental legisla-
tion provides for, among other things, restrictions and prohibitions
on spills, releases or emissions of various substances produced
in association with oil and natural gas operations. The legislation
also requires that wells and facility sites be operated, maintained,
abandoned, decommissioned and reclaimed in a certain way to
satisfy applicable regulatory authorities. Environmental regula-
tions are expected to become more stringent in the future, and
costs are expected to increase. Failure to comply with any such
environmental regulations or any undertakings imposed on the
Company might entail civil, administrative and criminal sanctions.
The Company’s operations are located in regions where there are
numerous environmental regulations including restrictions on
where and when oil and gas operations may occur, regulations
on the release of substances into groundwater, atmosphere and
surface land and the location of production facilities
The Company faces the evolving worldwide energy transition
risks as demand for energy and global advancement of alternative
sources of energy that are not sourced from fossil fuels could
change assumptions used to determine the recoverable amount of
the Company’s PP&E and E&E assets and could affect the carrying
value of those assets, may affect future development or viability of
exploration prospects, may curtail the expected useful lives of oil
and gas assets thereby accelerating depreciation charges and may
accelerate decommissioning obligations increasing the present
value of the associated provisions. Changes in environmental
legislation can result in a curtailment of production, and require
significant expenditures, e.g. regarding production, development
and exploration activities. In addition, a breach of applicable envi-
ronmental regulation or legislation may result in liabilities such as
the recovery of the damages, the imposition of fines and penalties,
some of which may be material, and/or restrictions or cessation
of operations. The legislative framework in the jurisdictions where
the Company operates regarding the environment features items
such as strict liability and joint, and several liability with regard to
joint venture operations.
The energy transition could impact the future prices of commod-
ities. Pricing assumptions used in the determination of recover-
able amounts incorporate markets expectations and the evolving
worldwide demand for energy. Changes to assumptions could
result in a material adjustment to the carrying amount of assets
and liabilities within the next financial year.
MAHA-ENERGY.COM
45
DECOMMISSIONING
The Company has assumed certain obligations in respect of the
decommissioning of its fields and related infrastructure in all
operating areas of the Company. In some cases, these liabilities
are derived from legislative and regulatory requirements, and in
other cases, these liabilities can also be contractual obligations.
In Brazil, such requirements depend on ANP, concerning the
decommissioning of wells and production facilities and require
the operator (in Maha’s case, the operator is 3R Offshore) to make
provision for and/or underwrite the liabilities relating to such
decommissioning.
The Company’s accounts make a provision for decommissioning
costs for continuing operations based on the management’s
estimate in accordance with applicable accounting standards
but there is a risk that the actual costs of decommissioning
exceed the amount of the long-term provision set aside to cover
such decommissioning costs. The Company’s decommissioning
provision amounted to TUSD 539 as per 31 December 2023, which
includes all wells and facilities in the USA and Oman. In addi-
tion, the Company may be required to decommission wells that
have not reached the end of their service life as a result of e.g.
regulatory requirements. These risks may, if materialized, have a
material adverse effect on the Company’s business and result. In
addition, local or national governments and lessors of oil and gas
leases may require the Company to provide cash-back guarantees,
blocked cash deposits or similar upfront payments and escrow
relating to future decommissioning costs which would affect the
Company’s liquidity.
Financial risks
MANAGEMENT ESTIMATES
AND ASSUMPTIONS
In preparing consolidated financial statements in conformity with
IFRS, estimates and assumptions are used by management in
determining the reported amounts of assets and liabilities, reve-
nues and expenses recognized during the periods presented and
disclosures of contingent assets and liabilities known to exist
as of the date of the financial statements. These estimates and
assumptions must be made because certain information that is
used in the preparation of such financial statements is depen-
dent on future events, cannot be calculated with a high degree of
precision from data available, or is not capable of being readily
calculated based on generally accepted methodologies. In some
cases, these estimates are particularly difficult to determine and
the Company must exercise significant judgment. Actual results
for all estimates could differ materially from the estimates and
assumptions used by the Company, which could have a material
adverse effect on the Group’s business, financial condition, results
of operations, cash flows and future prospects.
CREDIT RISK
The Company may be exposed to third party credit risk through
its contractual arrangements with its current or future joint
venture partners, customers, and other parties. In Oman, Maha
has entered into a joint operating agreement with Mafraq as its
partner in Block 70, has sold the asset and now have a receivable
due on closing of the transaction and a potential earn-out. In Vene-
zuela, Maha is still in the process of negotiating key contracts with
counterparties that may pose credit risk. In the USA, the Company
markets and sells its oil through Country Mark (Illinois Basin) and
receives payment 30 days in arrears. In the USA, historically, the
Company has always received full payment. The Company’s finan-
cial position may be materially adversely affected in the event such
partners fail to meet their contractual obligations to the Company.
A portion of the Company’s cash is held by banks in foreign juris-
dictions where there could be increased exposure to credit risk. In
the event the Company’s counterparty does not fulfill its obliga-
tions in accordance with agreements, this could adversely affect
the Company’s business, financial position and results.
LIQUIDITY AND REFINANCING RISK
Liquidity risk is the risk that the Company will not be able to meet
its financial obligations as they fall due. The Company has since
inception been equity and debt financed through share and bonds
issues, and also financed by asset divestment. Additional capital
could be needed to finance the Company’s future operations and/
or for acquisition of additional licences. The main risk is that
this need could occur during less favourable market conditions.
Management relies on cash forecasting to assess the Compa-
ny’s cash position based on expected future cash flows. As of
Dec 2023, the Company has outstanding bank debt amounting
to approximately USD 34.4 million of which USD 11.9 million is
current. The terms of the debt contain provisions which limit the
Company’s ability to make certain payments and distributions
(such as paying dividends), incur additional indebtedness, make
certain disposals of or provide security over its assets, or engage
in mergers or demergers. Further, the Company is required to
meet certain maintenance covenants. If the Company would
fail to comply with any of the maintenance covenants, all of the
outstanding debt may be declared immediately due and payable
together with any other amounts payable. As of December, the
Company had current assets of approximately USD 130.8 million.
There is a risk that the Company either has insufficient funds to
settle the current portion of the debt or repay or refinance the debt
when due.
Refinancing risk is the risk that financing cannot be obtained or
renewed on expiry of its term or can only be obtained or renewed
at significantly increased costs. There is a risk that additional
capital cannot be obtained or can only be obtained at unfavorable
terms and conditions.
2023 ANNUAL REPORT
46
FOREIGN CURRENCY EXCHANGE RATE RISK
The Company is exposed to changes in foreign exchange rates
as expenses in foreign subsidiaries, oil and gas expenditures, or
financial instruments may fluctuate due to changes in rates. The
main functional currencies of the Company’s subsidiaries are
Brazilian Reals (”BRL”) for the subsidiaries in Brazil and Luxem-
bourg and Swedish Krona (”SEK”) for the subsidiaries in Sweden,
making the Company sensitive to fluctuations of these currencies
against US Dollar (”USD”). Majority of the Company’s oil sales are
denominated in USD oil price and all operational, administrative
and capital activities related to the Brazil properties are trans-
acted primarily in BRL. In Sweden, the Company’s expenditures
are in SEK. Further, with regards to BRL, there is a risk of inflation
or hyper-inflation.
FUTURE DIVIDENDS
Historically, Maha has not paid any dividends to the shareholders.
As the Company currently focuses on further developing and
expanding its operations, any surpluses in the business are
instead reinvested to finance the Company’s long-term strategy.
The Company has no immediate plan of paying dividends, as it
anticipates that all available funds will be invested to finance
the growth of its business. The size of possible future dividends
depends on a number of factors, including the Company’s future
results, financial position, cash flows, working capital needs,
compliance with loan terms, legal and financial restrictions and
other factors. There is a risk that the Company will not have suffi-
cient distributable funds in the future, and consequently a risk
that no dividends will be paid, and the investor’s potential return
is solely dependent on the future value of the share as long as no
dividends are paid.
MARKET PRICE OF THE SHARE
AND LIQUIDITY
Since an investment in shares may decline in value, there is a risk
that an investor will not recover the capital invested. The devel-
opment of the share price depends on a number of factors, and
may for example be affected by supply and demand, changes in
actual or expected results, changes in profit forecasts, regulatory
changes and other factors, such as divestments of major share-
holdings by shareholders. The price of the Company’s share is
also affected by macro-economic factors, in particular by the oil
market price. The Company’s share is traded on Nasdaq Stock-
holm. During the period 31 March 2023 – 31 March 2024, the
Company’s share price was at its minimum SEK 7.06 and at its
maximum SEK 10.58. Consequently, the price of the Company’s
share may be volatile, and the difference between the selling price
and the purchase price may be significant from time to time, which
makes it more difficult for a shareholder to sell shares at a certain
time at a price deemed satisfactory.
DILUTION
The Company may need to obtain additional financing through
new issues, share-related securities or convertible debt securi-
ties, which may result in a dilution of existing shareholders’ share-
holding in the Company. There is a risk that additional financing
under acceptable terms will not be available to the Company when
required, or at all. If the Company resolves to raise additional
capital, for example through an issuance of new shares, there is a
risk that the Company’s shareholders` may be diluted, which may
also affect the price of the shares. If these risks were to realize,
it could have a material adverse effect on the investors’ invested
capital and/or the price of the shares.
RISK OF HOLDING EQUITY IN OTHER
COMPANIES AS A SUBSTANTIAL PART OF
THE INVESTMENT PORTFOLIO
A substantial part of Maha’s investment portfolio is invested in
3R Petroleum Óleo e Gás S.A. (“3R Petroleum”). 3R Petroleum
(RRRP3:SAO) is a publicly traded Brazilian oil and gas company,
listed on B3 (Brazilian Stock Exchange). There is a risk that
upswings and downturns will occur in the 3R Petroleum’s share
price as regards prices and volumes, that have no relation to, or
that is disproportionate in relation to, 3R Petroleum’s earnings.
General economic and industrial factors could have a material
impact on the price of the 3R Petroleum’s shares, regardless of
its actual earnings. In addition, 3R Petroleum is traded in Brazilian
real, which adds an element of foreign currency risk to the invest-
ment. The aforementioned means there is a risk that Maha, if the
Company would want, will not be able to sell shares at a price
equivalent to or above the price Maha acquired the shares for, and
may make a loss on its investment.
MAHA-ENERGY.COM
47
Financial
Statements
47
2023 ANNUAL REPORT
48
For the Financial Year Ended 31 DecemberConsolidated Statement of Operations
Consolidated Income Statement (TUSD) Note 2023 2022
Revenue
Oil and gas sales 4 5,226 12,327
Royalties (1,268 ) (2,976 )
Net Revenue 3,958 9,351
Cost of sales
Production expenses 3 (1,761 ) (2,828 )
Depletion, depreciation and amortization 9 (1,883 ) (2,768 )
Gross profit 314 3,755
General and administration 5 (9,392 ) (4,922 )
Stock‐based compensation 276 (802 )
Exploration and business development costs 0 0
Foreign currency exchange 314 1
Impairment (LAK) (2,459 ) 0
Share of income from investment in associate 3,977 0
Other Income 37 0
Operating result (6,933 ) (1,968 )
Finance income 8,710 64
Finance costs (7,084 ) (9,394 )
Net Finance items 6 1,626 (9,330 )
Result before tax (5,307 ) (11,298 )
Current and deferred tax 7 0 0
Net result from continuing operations (5,307 ) (11,298 )
Discontinued Operations
Net result from discontinued operations 8 (28,646 ) 34,231
Net result (33,953 ) 22,933
Basic and diluted earnings per share
From continuing operations (0.03 0.09
From discontinued operations (0.17 0.28
(0.20 0.19
Weighted average number of shares:
Before dilution 164,799,396 120,697,888
After dilution 164,799,396 120,987,859
MAHA-ENERGY.COM
49
For the Financial Year Ended 31 DecemberConsolidated Statement of Comprehensive Earnings
Consolidated Comprehensive Result (TUSD) 2023 2022
Net Result for the period (33,953 ) 22,933
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations (7,772 ) 6,743
Transfer of accumalated other comprehensive
Income on disposition
Comprehensive result for the period (15,113 ) 29,676
Attributable to:
Shareholders of the Parent Company (15,113 ) 29,676
2023 ANNUAL REPORT
50
For the Financial Year Ended 31 DecemberConsolidated Statement of Financial Position
Consolidated Balance Sheet (TUSD) Note 2023 2022
ASSETS
Non-current assets
Property, plant and equipment 9 14,988 14,015
Exploration and evaluation assets 10 0 29,202
Investment in associate 30 34,985 0
Other long-term financial assets 9,134 302
Restricted cash 12,000 0
Total non-current assets 71,107 43,519
Current assets
Assets held for sale 8 9,806 153,986
Prepaid expenses and deposits 561 590
Crude oil inventory 215 172
Accounts receivable and other credits 11 1,092 568
Restricted cash 30,830 0
Cash and cash equivalents 12 88,289 19,520
Total current assets 130,793 174,836
TOTAL ASSETS 201,900 218,355
EQUITY AND LIABILITIES
Equity
Share Capital 208 171
Contributed Surplus 135,067 106,063
Other reserves (14,427 ) (33,267 )
Retained earnigs 33,977 67,930
Total Equity 154,825 140,897
Liabilities
Non-current liabilities
Bank debt 15 11,879 26,590
Decommissioning provision 16 539 1,700
Lease liabilities 17 494 78
Total non-current liabilities 12,912 28,368
Current liabilities
Liabilities held for sale 8 7,806 19,889
Bank debt 15 22,500 19,500
Accounts payable 19 3,017 3,649
Accrued liabilities and provisions 735 5,975
Current portion of lease liabilities 17 104 77
Total current liabilities 34,162 49,090
TOTAL LIABILITIES 47,074 77,458
TOTAL EQUITY AND LIABILITIES 201,900 218,355
MAHA-ENERGY.COM
51
For the Financial Year Ended 31 DecemberConsolidated Statement of Cash Flows
Cash Flow (TUSD) Note 2023 2022
Operating Activities
Net results -continuing ops (5,307 ) (11,298 )
Net results -discontinued ops (28,646 ) 34,231
Depletion, depreciation, and amortization 9 1,883 13,338
Impairment 10 27,692 0
Stock based compensation (276 ) 802
Accretion of decommissioning provision 36 146
Amortization of deferred financing fees 15 1,389 1,838
Share of income from investment in associate (3,977 ) 0
Other gains 0 (384 )
Interest expense 15 1,168 7,689
Income tax expense 0 (2,548 )
Deferred tax expense 0 12,712
Unrealized foreign exchange amounts (941 ) (213 )
Accrued liabilities and provisions 1,161 0
Settlement of decommissioning liabilities 0 (103 )
Tax Paid 0 (2,673 )
Interest received 8,710 153
Interest paid (4,428 ) (7,507 )
Changes in working capital 24 (9,543 ) 8,474
Others (1,596 ) 0
Cash from operating activities (12,675 ) 54,657
Investing activities
Capital expenditures ‐ property, plant, and equipment 9 (3,237 ) (47,602 )
Capital expenditures ‐ exploration and evaluation assets 9 (12,994 ) (15,081 )
Farmout Proceeds 10,180 0
Investment in other long term financial assets (9,134 ) 0
Restricted cash (42,830 ) 0
Proceeds from sale of discontinued operations 150,665 0
Cash used in investment activities 92,650 (62,683 )
Financing activities
Lease payments 17 (82 ) (1,358 )
Repayment of bank debt 15 (14,250 ) (11,250 )
Shares subscription (net of issue costs) (75 ) 18,993
Cash from (used in) financing activities (14,407 ) 6,385
Change in cash and cash equivalents 65,568 (1,641 )
Cash and cash equivalents at the beginning of the period 23,228 25,535
Currency exchange differences in cash and cash equivalents (151 ) (666 )
Cash and cash equivalents at the end of the period 88,645 23,228
‐ of which is included in discontinued operations 8 356 3,708
‐ of which is included in the continued operations 88,289 19,520
2023 ANNUAL REPORT
52
For the Financial Year Ended 31 December
For the Financial Year Ended 31 December
Consolidated Statement of Changes in Equity
Parent Company Income Statement
Condensed Consolidated
Statement of Changes in Equity
(TUSD) Share capital
Contributed
surplus Other Reserve
Retained
Earnings
Shareholders’
Equity
Balance at 1 January 2022 146 86,292 (40,010 ) 44,997 91,425
Comprehensive result
Result for the period 0 0 0 22,933 22,933
Currency translation difference 0 0 6,743 0 6,743
Total comprehensive result 0 0 6,743 22,933 29,676
Transactions with owners
Stock based compensation 0 802 0 0 802
Share issuance (net of issue costs) 25 18,969 0 0 18,994
Balance at 31 December 2022 171 106,063 (33,267 ) 67,930 140,897
Comprehensive result 0
Result for the period 0 0 0 (33,953 ) (33,953 )
Currency translation difference 0 0 18,840 0 18,840
Total comprehensive result 0 0 18,840 (33,953 ) (15,113 )
Transactions with owners
Stock based compensation 0 (276 ) 0 0 (276 )
Share issuance (net of issue costs) 37 29,280 0 0 29,317
Balance at 31 December 2023 208 135,067 (14,427 ) 33,977 154,825
Parent Company Statement of Operations
(in thousands of Swedish Krona) Note 2023 2022
Revenue 0 0
Expenses
General and administrative 5 (51,981) (9,081)
Impairment 0 0
Foreign currency exchange gain/loss (12,904) 7,102
Operating result (64,885) (1,979)
Finance costs 6 (471,785) (114,222)
Finance income 6 147,415 51,323
Result before tax (389,255) (64,878)
Income tax 0 0
Net result for the period* (389,255) (64,878)
(*) A separate report over Other Comprehensive Income is not presented for the Parent Company as there are no items included in Other Comprehensive Income for the Parent
Company
MAHA-ENERGY.COM
53
For the Financial Year Ended 31 DecemberParent Company Balance Sheet
Parent Company Balance Sheet (in thousands of Swedish Krona) Note 2023 2022
Assets
Non-current assets
Investments in subsidiaries 30 456,931 16,153
Loans to subsidiaries 31 332,810 691,849
Restricted cash 121,680 0
911,421 708,002
Current assets
Accounts receivable and other 11 20,508 167
Restricted cash 241,355 50
Cash and cash equivalents 876,200 152,391
1,138,063 152,608
Total Assets 2,049,484 860,610
Equity and Liabilities
Restricted equity
Share capital 1,963 1,580
Unrestricted equity
Contributed Surplus 1,201,366 892,763
Retained Earnings (528,773) (463,895)
Net result (389,254) (64,878)
Total unrestricted equity 283,339 363,990
Total equity 285,302 365,570
Non-current liabilities
Bank debt (Non-current) 15 108,344 288,246
Current liabilities
Accounts payable and accrued liabilities 19 6,938 3,604
Loan from subsidiaries 1,403,203 0
Bank debt (Current) 15 245,698 203,190
1,655,839 206,794
Total Liabilities 1,764,182 495,040
Total Equity and Liabilities 2,049,484 860,610
2023 ANNUAL REPORT
54
For the Financial Year Ended 31 DecemberParent Company Cash Flow Statement
Expressed in thousands of Swedish Krona Note 2023 2022
Operating Activities
Net result (389,255) (64,878)
Stock based compensation (3,000) 0
Impairment on investment in subsidiary and loans 397,206 19,939
Amortization of deferred financing fees 14,940 19,064
Interest expense 8,196 76,838
Interest income (95,861) (51,323)
Unrealized foreign exchange (20,652) (6,986)
Interest paid 11,660 (76,838)
Changes in working capital (17,006) 2,031
Cash from operating activities (93,773) (82,152)
Investing activities
Restricted cash (362,985) 0
Investment in subsidiaries (440,778) 0
Loan repayment by subsidiaries 83,500 151,926
Loans to subsidiaries (13,350) (101,566)
Cash used in investment activities (733,614) 50,359
Financing activities
Borrowings 1,403,203 0
Repayment of bank debt (163,995) (119,500)
Exercise of warrants 0 0
Shares subscription (net of issue costs) 311,987 198,433
Cash from (used in) financing activities 1,551,195 78,933
Change in cash and cash equivalents 723,809 47,140
Cash and cash equivalents at the beginning of the period 152,391 88,170
Currency exchange differences in cash and cash equivalents 0 17,081
Cash and cash equivalents at the end of the period 876,200 152,391
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For the Financial Year Ended 31 DecemberParent Company Statement of Changes in Equity
(Thousands of Swedish Krona)
Restricted equity Unrestricted equity
Total Equity Share capital Contributed surplus Retained Earnings
Balance at 1 January 2022 1,317 686,398 (463,895) 223,820
Total comprehensive income 0 0 (64,878) (64,878)
Transaction with owners
Stock based compensation 0 8,195 0 8,195
Share issuance (net of issuance costs) 263 198,170 0 198,433
Total transaction with owners 263 206,365 0 206,628
Balance at 31 December 2022 1,580 892,763 (528,773) 365,570
Total comprehensive income 0 0 (389,255) (389,255)
Transaction with owners
Stock based compensation 0 (3,000) 0 (3,000)
Share issuance (net of issuance costs) 383 311,604 0 311,987
Total transaction with owners 1,963 1,201,367 (918,028) 285,302
Balance at 31 December 2023 1,963 1,201,367 (918,028) 285,302
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Notes to the Financial Statements
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Auditor’s Report
To the general meeting of the shareholders of Maha Energy AB (publ) corporate identity
number 559018-9543
Report on the annual accounts and consolidated accounts
OPINIONS
We have audited the annual accounts and consolidated accounts
of Maha Energy AB (publ) for the financial year 2023-01-01 - 2023-
12-31. The annual accounts and consolidated accounts of the
company are included on pages 30-91 and 96 in this document.
In our opinion, the annual accounts have been prepared in accor-
dance with the Annual Accounts Act and present fairly, in all mate-
rial respects, the financial position of the parent company as of 31
December 2023 and its financial performance and cash flow for
the year then ended in accordance with the Annual Accounts Act.
The consolidated accounts have been prepared in accordance
with the Annual Accounts Act and present fairly, in all material
respects, the financial position of the group as of 31 December
2023 and their financial performance and cash flow for the year
then ended in accordance with International Financial Reporting
Standards (IFRS), as adopted by the EU, and the Annual Accounts
Act.
The statutory administration report is consistent with the other
parts of the annual accounts and consolidated accounts.
We therefore recommend that the general meeting of share-
holders adopts the income statement and balance sheet for the
parent company and the group.
Our opinions in this report on the annual accounts and consoli-
dated accounts are consistent with the content of the additional
report that has been submitted to the parent company’s audit
committee in accordance with the Audit Regulation (537/2014)
Article 11.
BASIS FOR OPINIONS
We conducted our audit in accordance with International Stan-
dards on Auditing (ISA) and generally accepted auditing stan-
dards in Sweden. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities section. We are
independent of the parent company and the group in accordance
with professional ethics for accountants in Sweden and have
otherwise fulfilled our ethical responsibilities in accordance with
these requirements. This includes that, based on the best of our
knowledge and belief, no prohibited services referred to in the
Audit Regulation (537/2014) Article 5.1 have been provided to the
audited company or, where applicable, its parent company or its
controlled companies within the EU.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinions.
KEY AUDIT MATTERS
Key audit matters of the audit are those matters that, in our
professional judgment, were of most significance in our audit of
the annual accounts and consolidated accounts of the current
period. These matters were addressed in the context of our audit
of, and in forming our opinion thereon, the annual accounts and
consolidated accounts as a whole, but we do not provide a sepa-
rate opinion on these matters.
BUSINESS COMBINATIONS
Several transactions has been performed during 2023. Maha
acquired 100 % of shares in DBO 2.0 in may 2023, which later
changed name to Maha Energy (Holding) Brazil Ltda. Through
the Transaction, Maha acquired all outstanding shares in Maha
Energy Offshore. Maha Energy Offshore owns 15 % of the shares
in 3R Offshore, which holds operated working interests in
producing oil and gas offshore fields in Brazil. Maha’s investment
in the common shares of Maha Offshore has been treated as an
investment in an associate and has been accounted for using the
equity method.
⁄ evaluated whether all assets acquired and liabilities assumed
have been recognized in accordance with IFRS
⁄ evaluated whether the consideration transferred by the
acquirer has been recognized in accordance with IFRS
⁄ performed detail testing of acquired assets and liabilities to
determine the nature and extent of opening valuation testing
⁄ evaluated whether the equity interest as of the acquisition
date and subsequent valuation has been recognized in accor-
dance with IAS 28
⁄ evaluation of the disclosures in the annual report and its
compliance with IFRS and the Annual Accounts Act.
Information on accounting principles for business combinations
are disclosed in note 2 in the annual report. Further information on
financial assets is disclosed in note 21 and shares in subsidiaries
in note 30 in the annual report.
VALUATION OF ASSETS AND LIABILITIES
HELD FOR SALE AND DISCONTINUING
OPERATIONS
On December 1, 2023, Maha announced the divestment of their
65% share in block 70 in Oman (Maha Energy Oman Ltda.) to
Mafraq Energy LLC. As a result, Maha Energy Oman Ltda. has
been classified as assets held for sale and amounted to US$
9,8 million as of December 31, 2023. The decision to divest the
Omani segment has further led to Maha Energy Oman Ltda. being
presented as discontinued operations in the consolidated income
statement, separated from continuing operations. Accounting
for discontinued operations requires the identification and sepa-
2023 ANNUAL REPORT
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ration of the financial effects from continuing and discontinued
operations as well as ensuring that the criteria in IFRS are fulfilled
to account for discontinued operations.
Information on accounting principles for assets held for sale and
discontinued operations are disclosed in note 2 in the annual
report. Further information on asset held for sale and discontinued
operations is disclosed in note 8 in the annual report.
Our audit procedures included, but were not limited to:
⁄ assessing the appropriateness of the classification for the
operations as held for sale and discontinued operations in
compliance with IFRS,
⁄ assessing the valuation before initial classification as held for
sale in accordance with IFRS,
⁄ assessment of the financial effects from the discontinued
operations and that they have been appropriately separated
from continuing operations,
⁄ evaluation of the disclosures in the annual report and its
compliance with IFRS and the Annual Accounts Act.
OTHER INFORMATION THAN THE ANNUAL
ACCOUNTS AND CONSOLIDATED ACCOUNTS
This document also contains other information than the annual
accounts and consolidated accounts and is found on pages 1-19,
92-95 and 101-102. The Board of Directors and the Managing
Director are responsible for this other information.
Our opinion on the annual accounts and consolidated accounts
does not cover this other information and we do not express any
form of assurance conclusion regarding this other information.
In connection with our audit of the annual accounts and consoli-
dated accounts, our responsibility is to read the information iden-
tified above and consider whether the information is materially
inconsistent with the annual accounts and consolidated accounts.
In this procedure we also take into account our knowledge other-
wise obtained in the audit and assess whether the information
otherwise appears to be materially misstated.
If we, based on the work performed concerning this information,
conclude that there is a material misstatement of this other infor-
mation, we are required to report that fact. We have nothing to
report in this regard.
RESPONSIBILITIES OF THE BOARD OF DIREC-
TORS AND THE MANAGING DIRECTOR
The Board of Directors and the Managing Director are responsible
for the preparation of the annual accounts and consolidated
accounts and that they give a fair presentation in accordance
with the Annual Accounts Act and, concerning the consolidated
accounts, in accordance with IFRS as adopted by the EU. The
Board of Directors and the Managing Director are also responsible
for such internal control as they determine is necessary to enable
the preparation of annual accounts and consolidated accounts
that are free from material misstatement, whether due to fraud
or error.
In preparing the annual accounts and consolidated accounts, The
Board of Directors and the Managing Director are responsible
for the assessment of the company’s and the group’s ability to
continue as a going concern. They disclose, as applicable, matters
related to going concern and using the going concern basis of
accounting. The going concern basis of accounting is however
not applied if the Board of Directors and the Managing Director
intends to liquidate the company, to cease operations, or has no
realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Board of
Director’s responsibilities and tasks in general, among other
things oversee the company’s financial reporting process.
AUDITOR’S RESPONSIBILITY
Our objectives are to obtain reasonable assurance about whether
the annual accounts and consolidated accounts as a whole are
free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinions. Reason-
able assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs and generally
accepted auditing standards in Sweden will always detect a mate-
rial 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 annual
accounts and consolidated accounts.
As part of an audit in accordance with ISAs, we exercise profes-
sional judgment and maintain professional scepticism throughout
the audit. We also:
⁄ Identify and assess the risks of material misstatement of the
annual accounts and consolidated accounts, whether due to
fraud or error, design and perform audit procedures respon-
sive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinions. 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 the company’s internal control
relevant to our 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 compa-
ny’s internal control.
⁄ Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by the Board of Directors and the Managing
Director.
⁄ Conclude on the appropriateness of the Board of Directors’
and the Managing Director’s use of the going concern basis of
accounting in preparing the annual accounts and consolidated
accounts. We also draw a conclusion, based on the audit
evidence obtained, as to whether any material uncertainty
exists related to events or conditions that may cast significant
doubt on the company’s and the group’s ability to continue as
a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s
report to the related disclosures in the annual accounts and
consolidated accounts or, if such disclosures are inade-
quate, to modify our opinion about the annual accounts and
consolidated accounts. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause a company
MAHA-ENERGY.COM
99
and a group to cease to continue as a going concern.
⁄ Evaluate the overall presentation, structure and content of the
annual accounts and consolidated accounts, including the
disclosures, and whether the annual accounts and consol-
idated accounts represent the underlying transactions and
events in a manner that achieves fair presentation.
⁄ Obtain sufficient and appropriate audit evidence regarding
the financial information of the entities or business activities
within the group to express an opinion on the consolidated
accounts. We are responsible for the direction, supervision
and performance of the group audit. We remain solely respon-
sible for our opinions.
We must inform the Board of Directors of, among other matters,
the planned scope and timing of the audit. We must also inform
of significant audit findings during our audit, including any signifi-
cant deficiencies in internal control that we identified.
We must also provide the Board of Directors 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, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the Board of Directors, we
determine those matters that were of most significance in the
audit of the annual accounts and consolidated accounts, including
the most important assessed risks for material misstatement, and
are therefore the key audit matters. We describe these matters in
the auditor’s report unless law or regulation precludes disclosure
about the matter.
Report on other legal and regulatory
requirements
OPINIONS
In addition to our audit of the annual accounts and consolidated
accounts, we have also audited the administration of the Board
of Directors and the Managing Director of Maha Energy AB (publ)
(publ) for the financial year 2023-01-01 - 2023-12-31 and the
proposed appropriations of the company’s profit or loss.
We recommend to the general meeting of shareholders that the
profit to be appropriated in accordance with the proposal in the
statutory administration report and that the members of the
Board of Directors and the Managing Director be discharged from
liability for the financial year.
BASIS FOR OPINIONS
We conducted the audit in accordance with generally accepted
auditing standards in Sweden. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities
section. We are independent of the parent company and the group
in accordance with professional ethics for accountants in Sweden
and have otherwise fulfilled our ethical responsibilities in accor-
dance with these requirements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinions.
RESPONSIBILITIES OF THE BOARD OF
DIRECTORS AND THE MANAGING DIRECTOR
The Board of Directors is responsible for the proposal for appro-
priations of the company’s profit or loss. At the proposal of a
dividend, this includes an assessment of whether the dividend
is justifiable considering the requirements which the company’s
and the group’s type of operations, size and risks place on the
size of the parent company’s and the group’s equity, consolidation
requirements, liquidity and position in general.
The Board of Directors is responsible for the company’s orga-
nization and the administration of the company’s affairs. This
includes among other things continuous assessment of the
company’s and the group’s financial situation and ensuring that
the company’s organization is designed so that the accounting,
management of assets and the company’s financial affairs
otherwise are controlled in a reassuring manner. The Managing
Director shall manage the ongoing administration according to the
Board of Directors’ guidelines and instructions and among other
matters take measures that are necessary to fulfill the company’s
accounting in accordance with law and handle the management of
assets in a reassuring manner.
AUDITOR’S RESPONSIBILITY
Our objective concerning the audit of the administration, and
thereby our opinion about discharge from liability, is to obtain
audit evidence to assess with a reasonable degree of assurance
whether any member of the Board of Directors or the Managing
Director in any material respect:
⁄ has undertaken any action or been guilty of any omission
which can give rise to liability to the company, or
⁄ in any other way has acted in contravention of the Companies
Act, the Annual Accounts Act or the Articles of Association.
Our objective concerning the audit of the proposed appropriations
of the company’s profit or loss, and thereby our opinion about this,
is to assess with reasonable degree of assurance whether the
proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with generally
accepted auditing standards in Sweden will always detect actions
or omissions that can give rise to liability to the company, or that
the proposed appropriations of the company’s profit or loss are
not in accordance with the Companies Act.
As part of an audit in accordance with generally accepted auditing
standards in Sweden, we exercise professional judgment and
maintain professional scepticism throughout the audit. The exam-
ination of the administration and the proposed appropriations of
the company’s profit or loss is based primarily on the audit of the
accounts. Additional audit procedures performed are based on our
professional judgment with starting point in risk and materiality.
This means that we focus the examination on such actions, areas
and relationships that are material for the operations and where
deviations and violations would have particular importance for the
company’s situation. We examine and test decisions undertaken,
support for decisions, actions taken and other circumstances that
are relevant to our opinion concerning discharge from liability. As
a basis for our opinion on the Board of Directors’ proposed appro-
priations of the company’s profit or loss we examined whether the
proposal is in accordance with the Companies Act.
2023 ANNUAL REPORT
100
The auditor’s examination of the Esef report
OPINION
In addition to our audit of the annual accounts and consolidated
accounts, we have also examined that the Board of Directors and
the Managing Director have prepared the annual accounts and
consolidated accounts in a format that enables uniform electronic
reporting (the Esef report) pursuant to Chapter 16, Section 4 a of
the Swedish Securities Market Act (2007:528) for Maha Energy AB
(publ) for the financial year 2023-01-01 - 2023-12-31.
Our examination and our opinion relate only to the statutory
requirements.
In our opinion, the Esef report has been prepared in a format that,
in all material respects, enables uniform electronic reporting.
BASIS FOR OPINION
We have performed the examination in accordance with FAR’s
recommendation RevR 18 Examination of the Esef report. Our
responsibility under this recommendation is described in more
detail in the Auditors’ responsibility section. We are independent
of Maha Energy AB (publ) in accordance with professional ethics
for accountants in Sweden and have otherwise fulfilled our ethical
responsibilities in accordance with these requirements.
We believe that the evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
RESPONSIBILITIES OF THE BOARD OF DIREC-
TORS AND THE MANAGING DIRECTOR
The Board of Directors and the Managing Director are respon-
sible for the preparation of the Esef report in accordance with
the Chapter 16, Section 4 a of the Swedish Securities Market Act
(2007:528), and for such internal control that the Board of Direc-
tors and the Managing Director determine is necessary to prepare
the Esef report without material misstatements, whether due to
fraud or error.
AUDITOR’S RESPONSIBILITY
Our responsibility is to obtain reasonable assurance whether the
Esef report is in all material respects prepared in a format that
meets the requirements of Chapter 16, Section 4(a) of the Swedish
Securities Market Act (2007:528), based on the procedures
performed.
RevR 18 requires us to plan and execute procedures to achieve
reasonable assurance that the Esef report is prepared in a format
that meets these requirements.
Reasonable assurance is a high level of assurance, but it is not a
guarantee that an engagement carried out according to RevR 18
and generally accepted auditing standards in Sweden will always
detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individu-
ally or in aggregate, they could reasonably be expected to influ-
ence the economic decisions of users taken on the basis of the
Esef report.
The firm applies International Standard on Quality Management
1, which requires the firm to design, implement and operate a
system of quality management including policies or procedures
regarding compliance with ethical requirements, professional
standards and applicable legal and regulatory requirements.
The examination involves obtaining evidence, through various
procedures, that the Esef report has been prepared in a format
that enables uniform electronic reporting of the annual accounts
and consolidated accounts. The procedures selected depend on
the auditor’s judgment, including the assessment of the risks of
material misstatement in the report, whether due to fraud or error.
In carrying out this risk assessment, and in order to design audit
procedures that are appropriate in the circumstances, the auditor
considers those elements of internal control that are relevant to
the preparation of the Esef report by the Board of Directors and
the Managing Director, but not for the purpose of expressing an
opinion on the effectiveness of those internal controls. The exam-
ination also includes an evaluation of the appropriateness and
reasonableness of assumptions made by the Board of Directors
and the Managing Director.
The procedures mainly include a validation that the Esef report
has been prepared in a valid XHMTL format and a reconciliation of
the Esef report with the audited annual accounts and consolidated
accounts.
Furthermore, the procedures also include an assessment of
whether the consolidated statement of financial performance,
financial position, changes in equity, cash flow and disclosures in
the Esef report have been marked with iXBRL in accordance with
what follows from the Esef regulation.
THE AUDITOR’S EXAMINATION OF THE COR-
PORATE GOVERNANCE STATEMENT
The Board of Directors is responsible for that the corporate gover-
nance statement on pages 20-29 has been prepared in accor-
dance with the Annual Accounts Act.
Our examination of the corporate governance statement is
conducted in accordance with FAR´s standard Rev 16 The auditor´s
examination of the corporate governance statement. This means
that our examination of the corporate governance statement is
different and substantially less in scope than an audit conducted
in accordance with International Standards on Auditing and gener-
ally accepted auditing standards in Sweden. We believe that the
examination has provided us with sufficient basis for our opinions.
A corporate governance statement has been prepared.
Disclosures in accordance with chapter 6 section 6 the second
paragraph points 2-6 of the Annual Accounts Act and chapter 7
section 31 the second paragraph the same law are consistent with
the other parts of the annual accounts and consolidated accounts
and are in accordance with the Annual Accounts Act.
Deloitte AB, was appointed auditor of Maha Energy AB (publ) by
the general meeting of the shareholders on the 2023-05-24 and
has been the company’s auditor since 2016-04-22.
Stockholm April 19, 2024
Deloitte AB
Signature on Swedish original
Andreas Frountzos
Authorized Public Accountant
MAHA-ENERGY.COM
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Definitions
Abbreviations
CAD Canadian Dollar
SEK Swedish Krona
BRL Brazilian Real
USD US Dollar
TSEK Thousand SEK
TUSD Thousand USD
MSEK Million SEK
MUSD Million USD
Oil related terms and measurements
BOE or boe Barrels of oil equivalent
BBL or bbl Barrel
BOEPD Barrels of oil equivalent per day
BOPD Barrels of oil per day
SCF or scf Standard cubic foot
Mbbl Thousand of barrels
MMbbl Million of barrels
Mboe Thousands of barrels of oil equivalent
MMboe Million of barrels of oil equivalent
Mboepd Thousands of barrels of oil equivalent per day
Mbopd Thousands of barrels of oil per day
MCF Thousand cubic feet
MSCFD Thousand cubic feet per day
MMSCF Million cubic feet
MMSCFPD Million cubic feet per day
BWPD Barrels of water per day
Gas to oil 6,000 cubic feet = 1 barrel of oil equivalent
conversion
2023 ANNUAL REPORT
102
Maha Energy AB (publ)
Maha Energy AB
Head Office
Eriksbergsgatan 10
SE-114 30
Stockholm, Sweden
+46 8 611 05 11
Technical Office
Ataulfo de Paiva street, 1165
5th Floor - Leblon
Rio de Janeiro, RJ / BRAZIL
22440-032
+46 8 611 05 11
Email: info@maha-energy.com
Website: www.maha-ehergy.com