17:00 Fri 24 Jun 2016
Petrel Resources PLC - Preliminary Results for the Year Ended 31 Dec 2015
24th
("Petrel" or the "Company")
Preliminary Results for the Year Ended
Petrel Resources announces its results for the year ended
ENDS
Enquiries:
For further information please visit http://www.petrelresources.com/ or contact:
John Teeling, Chairman +353 (0) 1 833 2833
David Horgan, Director
Dipti Mehta
Nominated Adviser and Broker
Edward Hutton / Gerry Beaney +44 (0)203 861 6625
John Howes (Broking)
Public Relations
Blytheweigh +44 (0)20 7138 3204
Tim Blythe +44 (0) 7816 924 626
Camilla Horsfall +44 (0) 7871 841 793
Megan Ray +44 (0) 7515 857 619
Anna Worboys
Rachael Brooks
PSG Plus
Colm Heatley +353 (0) 1 661 4055
Alan Tyrrell +353 (0) 1 661 4055
Statement Accompanying the Preliminary Results
In a world of significant political and economic uncertainty it is good to have some positive news to report. In the recent Irish Offshore oil bid round Petrel received two awards under two-year Licencing Options comprising three blocks and two part-blocks. On our two Frontier Exploration Licences in the Irish Atlantic, where we have joint ventured with Woodside, an extensive seismic programme has commenced.
Irish offshore exploration is a two generation story starting in the
It is said that technology improvement means that exploration frontiers are re-established every 20 years, and so it is with the Irish offshore. The Irish Atlantic is a live exploration frontier. Despite 43 Atlantic wells over 38 years and the Corrib gas discovery, it is significantly under explored. The challenges are big, but so too the potential prize. What is known about the geology, and knowledge is growing every year, suggests the presence of large geological traps, which if they contain hydrocarbons, could be major discoveries. That's the prize but the challenges are also significant - weather, wind, waves and water depths will test the best technology and best operators in the world. Exploration is hugely expensive, seismic can cost up to
Oil prices, costs and taxes all contribute to the economics of a physical discovery. So too do the estimates of risk and uncertainty that decide the discount rate to be applied to the financial numbers. In a new oil frontier, like the Irish Atlantic, there are significant unknowns. The very best geological, technical, scientific and engineering professionals will be used to reduce the uncertainties but risk cannot be eliminated. The people making the final decision to commit billions to a risky project must weigh the rewards against the risk. This is where the role of the State is so important. The State take and how they take it is often a critical factor in whether or not a project proceeds.
Irish Offshore exploration is a failure so far. More money has been lost than made. Twenty years ago the Irish Government recognised this and revised their tax code and their licencing procedures to entice risk takers. It had limited success though the terms were very good. A few holes were drilled and some ground licenced in the 2011 bid round but, in most years, like 2016, no holes were drilled. Remember the only true lie detector is a drill hole.
High oil prices, improved technology and exploration success in the Atlantic offshore Africa, Canada and Brazil improved the Risk/Reward profile of the Irish Atlantic. Unfortunately, the one well drilled in recent years, at a rumoured cost of
Under pressure from radicals the State began an examination of Irish oil licence terms in 2013 when oil prices were over
Despite all of the above, the 2015 Second Round of Offshore Licence Options was successful with some super major oil companies obtaining blocks in the first awards in early 2016. Petrel, was among the smaller companies obtaining ground in the second phase of awards in
In 2013, Petrel persuaded the successful Australian gas major, Woodside, to joint venture the two Petrel Licencing Options and to convert these into full licences. Currently, Woodside is undertaking an extensive 3D seismic programme on Petrel licence 3/14 offshore Kerry in waters up to 1,000 metres deep. Should the results of the seismic be positive, then the expectation is that at least one well will be drilled. Petrel is covered for all costs up to and including one well, subject to a capped well cost which is unlikely to be reached at present cost levels.
The new ground awarded to Petrel in
Other Activities
Petrel has interests in Ghana and Iraq. In 2008 a consortium in which Petrel now holds a 30% stake agreed an exploration licence over block Tano 2A in Ghana with the
.
Our Iraqi interests are at a standstill. We hold a 5% free carry through to production on licences held by Oryx, a Canadian company, in the Wasit province. Oryx has been unable to get permits to drill in Wasit.
Our second interest is an exploration licence over 10,000 sq km in the Western Desert between Baghdad and the Jordanian border. The area is controlled by ISIS so it is a no go area to any outsider.
Future
The immediate and near term future success of Petrel is in the Atlantic offshore Ireland. We hold good acreage, we have a good partner doing good work.
We are financed for the future. The ongoing extensive work programme in the Atlantic is fully funded by Woodside. In Iraq, if and when work starts we are fully carried by Oryx. Our new Licence Options in the Atlantic have an agree work programme over the next two years. This is funded.
John Teeling
Chairman
23rd
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED
|
2015 |
2014 |
|
€ |
€ |
|
|
|
CONTINUING OPERATIONS |
|
|
|
|
|
|
|
|
Administrative expenses |
(228,393) |
(430,903) |
Impairment of evaluation and exploration assets |
- |
(2,528,975) |
|
|
|
OPERATING LOSS |
(228,393) |
(2,959,878) |
|
|
|
Investment revenue |
1,159 |
386 |
|
|
|
LOSS BEFORE TAXATION |
(227,234) |
(2,959,492) |
|
|
|
Income tax expense |
- |
- |
|
|
|
LOSS FOR THE FINANCIAL YEAR: |
(227,234) |
(2,959,492) |
|
|
|
Other comprehensive |
- |
- |
|
|
|
Exchange differences |
305,752 |
500,887 |
|
|
|
TOTAL COMPREHENSIVE LOSS FOR THE FINANCIAL YEAR |
78,518 |
(2,458,605) |
|
|
|
|
|
|
Loss per share - basic and diluted |
(0.23c) |
(2.97c) |
|
|
|
CONSOLIDATED BALANCE SHEET AS AT
|
2015 |
2014 |
|
€ |
€ |
ASSETS |
|
|
|
|
|
NON-CURRENT ASSETS |
|
|
|
|
|
Financial Asset |
4,211,123 |
4,211,123 |
Intangible assets |
1,871,288 |
1,539,277 |
|
|
|
|
6,082,411 |
5,750,400 |
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
Trade and other receivables |
19,203 |
44,408 |
Cash and cash equivalents |
1,111,257 |
1,330,766 |
|
|
|
|
1,130,460 |
1,375,174 |
|
|
|
TOTAL ASSETS |
7,212,871 |
7,125,574 |
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
Trade and other payables |
(315,610) |
(306,831) |
|
|
|
NET CURRENT ASSETS |
814,850 |
1,068,343 |
|
|
|
NET ASSETS |
6,897,261 |
6,818,743 |
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
Called-up share capital |
1,246,025 |
1,246,025 |
Capital conversion reserve fund |
7,694 |
7,694 |
Share premium |
21,416,085 |
21,416,085 |
Share based payment reserve |
26,871 |
26,871 |
Translation reserve |
654,489 |
348,737 |
Retained deficit |
(16,453,903) |
(16,226,669) |
|
|
|
TOTAL EQUITY |
6,897,261 |
6,818,743 |
|
|
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED
|
Share Capital € |
Share Premium € |
Capital Conversion Reserve fund € |
Share Based Payment Reserve € |
Translation Reserve € |
Retained Deficit € |
Total € |
|
|
|
|
|
|
|
|
At |
1,246,025 |
21,416,085 |
7,694 |
26,871 |
(152,150) |
(13,267,177) |
9,277,348 |
Total comprehensive income for the financial year |
- |
- |
- |
- |
500,887 |
(2,959,492) |
(2,458,605) |
At |
1,246,025 |
21,416,085 |
7,694 |
26,871 |
348,737 |
(16,226,669) |
6,818,743 |
Total comprehensive income for the financial year |
|
|
|
|
305,752 |
(227,234) |
78,518 |
At |
1,246,025 |
21,416,085 |
7,694 |
26,871 |
654,489 |
(16,453,903) |
6,897,261 |
Share premium
Share premium comprises of the excess of monies received in respect of the issue of share capital over the nominal value of shares issued.
Capital conversion reserve fund
The ordinary shares of the company were renominalised from
Share based payment reserve
The share based payment reserve represents share options granted which are not yet exercised and issued as shares.
Translation Reserve
The translation reserve comprises of foreign exchange movement on translation from US Dollars (functional currency) to Euro (presentation currency).
Retained deficit
Retained deficit comprises accumulated losses in the current and prior financial years.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE FINANCIAL YEAR ENDED
|
2015 |
2014 |
|
€ |
€ |
|
|
|
CASH FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
Loss for the financial year |
(227,234) |
(2,959,492) |
Impairment charge |
- |
2,528,975 |
Investment revenue recognised in loss |
(1,159) |
(386) |
|
|
|
OPERATING CASHFLOW BEFORE |
|
|
MOVEMENTS IN WORKING CAPITAL |
(228,393) |
(430,903) |
|
|
|
Movements in working capital: |
|
|
Decrease in trade and other payables |
(36,221) |
(216,495) |
Decrease/(Increase) in trade and other receivables |
25,205 |
(10,364) |
|
|
|
CASH USED IN OPERATIONS |
(239,409) |
(657,762) |
|
|
|
Investment revenue |
1,159 |
386 |
|
|
|
NET CASH USED IN OPERATING ACTIVITIES |
(238,250) |
(657,376) |
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
Payments for exploration and evaluation assets |
(110,837) |
(575,303) |
Receipts in respect of farm out of exploration assets |
- |
945,214 |
|
|
|
NET CASH USED IN INVESTING ACTIVITIES |
(110,837) |
369,911 |
|
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS |
(349,087) |
(287,465) |
|
|
|
Cash and cash equivalents at beginning of financial year |
1,330,766 |
1,425,025 |
|
|
|
Effect of exchange rate changes on cash held in |
|
|
foreign currencies |
129,578 |
193,206 |
|
|
|
Cash and cash equivalents at end of financial year |
1,111,257 |
1,330,766 |
|
|
|
NOTES:
1. ACCOUNTING POLICIES
There were no changes in accounting policies from those used to prepare the Group's Annual Report for financial year ended
2. LOSS PER SHARE
|
2015 |
2014 |
|
€ |
€ |
|
|
|
Loss per share - basic and diluted |
(0.23c) |
(0.63c) |
|
|
|
Basic loss per share
The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:
|
2015 |
2014 |
|
€ |
€ |
|
|
|
Loss for the year attributable to equity holders |
(227,234) |
(2,959,492) |
|
|
|
|
|
|
|
2015 |
2014 |
|
Number |
Number |
Weighted average number of ordinary shares for the |
|
|
purpose of basic earnings per share |
99,681,992 |
99,681,992 |
|
|
|
Basic and diluted loss per share are the same as the effect of the outstanding share options is anti-dilutive.
3. FINANCIAL ASSET
Investment
|
2015 |
2014 |
|
€ |
€ |
At the beginning of the year |
4,211,123 |
4,211,123 |
Additions |
- |
- |
|
|
|
|
|
|
At the end of the year |
4,211,123 |
4,211,123 |
|
|
|
The Company's investment in financial assets, through its wholly owned subsidiary
Although the company owns 20 per cent of Amira, it does not have significant influence over Amira. Petrel does not have any representation on the
The consideration for the Acquisition comprised an up-front cash payment of
Following completion of the Acquisition, a further 21,052,632 shares in Petrel may be issued in two tranches upon the occurrence of certain events ("Deferred Consideration Shares"). The first tranche of 10,526,316 Deferred Consideration Shares is to be issued upon the Spudding of the first conventional oil well. The second tranche of 10,526,316 Deferred Consideration Shares is to be issued upon notification of a discovery in respect of Amira's interest in the
As part of the Acquisition, Arman Kayablian, COO of
Under the terms of the Acquisition agreement, Petrel is also given a right of first refusal to participate or acquire an operated interest in any future exploration and production licences that
Fair value information for the investment in Amira has not been disclosed as its fair value cannot be reliably measured. As a result the investment is carried at cost. Fair value cannot be reliably measured as the investment is held in a private company. The company's equity instruments do not have a quoted price is an active market.
The recoverability of the group's financial asset is dependent on the discovery and successful development of the economic reserves which is subject to a number of risks as outlined below:
· Licence obligations;
· Funding requirements;
· Political and legal risks, including title to licence, profit sharing and taxation;
· Geological and development risks;
· Exchange rate risk;
· Political risk; and
· Financial risk management.
4. INTANGIBLE ASSETS
|
2015 |
2014 |
|
€ |
€ |
Exploration and evaluation assets: |
|
|
|
|
|
Cost: |
|
|
|
|
|
Opening balance |
1,539,277 |
4,017,982 |
Additions |
155,837 |
687,803 |
Receipt from farm out of exploration assets |
- |
(945,214) |
Impairment charge |
- |
(2,528,975) |
Exchange translation adjustment |
176,174 |
307,681 |
|
|
|
Closing balance |
1,871,288 |
1,539,277 |
|
|
|
4. INTANGIBLE ASSESTS (CONTINUED)
Segmental Analysis |
2015 |
2014 |
|
€ |
€ |
|
|
|
Ghana |
911,425 |
801,834 |
Ireland |
959,863 |
737,443 |
|
|
|
|
1,871,288 |
1,539,277 |
|
|
|
Exploration and evaluation assets at
In the year ended
On
Relating to the remaining exploration and evaluation assets at the financial year end, the directors believe there were no facts or circumstances indicating that the carrying value of the intangible assets may exceed their recoverable amount and thus no impairment review was deemed necessary by the directors. The realisation of these intangible assets is dependent on the successful discovery and development of economic reserves and is subject to a number of significant potential risks, as set out below.
The Group's exploration activities are subject to a number of significant and potential risks including:
· Licence obligations;
· Funding requirements;
· Political and legal risks, including title to licence, profit sharing and taxation;
· Geological and development risks;
· Exchange rate risk;
· Political risk; and
· Financial risk management.
Directors' remuneration of
5. SHARE CAPITAL
|
2015 |
2014 |
|
€ |
€ |
Authorised: |
|
|
200,000,000 ordinary shares of |
2,500,000 |
2,500,000 |
|
|
|
Allotted, called-up and fully paid: |
|
|
|
|
Number |
|
Premium |
|
|
€ |
€ |
|
|
|
|
At |
99,681,992 |
1,246,025 |
21,416,085 |
|
|
|
|
At |
99,681,992 |
1,246,025 |
21,416,085 |
|
|
|
|
|
|
|
|
At |
99,681,992 |
1,246,025 |
21,416,085 |
|
|
|
|
Movements in share capital
There was no movement in share capital in the current year.
6. POST BALANCE SHEET EVENTS
On
Further information is detailed in the Review of Operations.
7. ANNUAL GENERAL MEETING
The Company's Annual General Meeting will be held on 28th
8. GENERAL INFORMATION
The financial information set out above does not constitute the Company's financial statements for the year ended
A copy of the Company's Annual Report and Accounts for 2015 will be mailed shortly only to those shareholders who have elected to receive it. Otherwise shareholders will be notified that the Annual Report will be available on the website at www.petrelresources.com. Copies of the Annual Report will also be available for collection from the Company's registered office,
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