NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
 
NOTE 33 – FINANCIAL RISK MANAGEMENT continued 
 
 
 
Year ended 31 December 
2014 
US$’000 
2013 
US$’000 
   
Effect on profit before tax 
Increase / (Decrease) 
                   Oil 
  
- improvement in US$ oil price of $10 per barrel   (2,400)      (2,351) 
- decline in US$ oil price of $10 per barrel 3,041 1,477 
Gas 
  
- improvement in US$ gas price of $0.50 per mcf    (120)        (124) 
- decline in US$ gas price of $0.50 per mcf 
 
120 180 
 
Interest Rate Risk 
Interest rate risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate 
because of changes in market interest rates.  The Group’s exposure to the risk of changes in market interest rates 
relates primarily to the Group’s long-term debt obligations with floating interest rates. 
 
Interest Rate Sensitivity Analysis 
Based on the net debt position as at 31 December 2014 and 2013, taking into account interest rate swaps, with 
all other variables remaining constant, the following table represents the effect on income as a result of changes 
in the interest rate.  The impact on equity is the same as the impact on profit before tax. 
  
 
Year ended 31 December 
2014 
US$’000 
2013 
US$’000 
   
Effect on profit before tax 
Increase / (Decrease) 
 
  
- increase in interest rates + 2%   (906)   (177) 
- decrease in interest rates - 2% 184 - 
 
This assumes that the change in interest rates is effective from the beginning of the financial year and the net 
debt position and fixed/floating mix is constant over the year.  However, interest rates and the debt profile of 
the Group are unlikely to remain constant and therefore the above sensitivity analysis will be subject to change.  
 
  
- 101 -