TIDMPPP
RNS Number : 6592X
Pennpetro Energy PLC
01 May 2019
For immediate release 1 May 2019
Pennpetro Energy PLC
("Pennpetro" or the "Group")
Annual Report and
Financial Results for the year ended 31 December 2018
London, 1 May 2019 - Pennpetro, an independent oil and gas
company focusing on production in the Gonzales Oil Field in Texas,
USA, today announces its Annual Report and accounts for the year
ended 31 December 2018.
The full annual report will be available to download on the
Company's website at www.pennpetroenergy.co.uk.
2018 Highlights - Financial
Our focus during 2018 was to continue to develop our proven
reserve base at our licences in Gonzalez. The Company used 2018 to
further lay the foundations for future revenue generation:
-- The financial results for the year ended 31 December 2018
show a loss after tax of $788,630 (2017: loss $153,269).
The majority of the cost contributing to the Group's loss for
the year included legal and professional fees, directors'
emoluments and interest charges, which were in line with the
Board's expectations.
-- The Group's borrowings, which were non-current, at 31
December 2018 were $5,863,863 (2017: $6,092,657).
-- The Group had cash balances at 31 December 2018 of $Nil
(2017: $22,073) and short-term investments of $166,367 (2017:
$2,073,299). The year on year decrease in cash and short-term
investments was primarily a result of cash used in operating
activities and development expenditure.
-- In addition, the Group had a receivables balance at 31
December 2018 of $523,482 (2017: $1,537,448). The year on year
decrease principally related to the reclassification of amounts
owed by former participant Sunrise to Intangible Drilling assets,
as a result of Sunrise's exit from the Operating Agreement.
-- Following additions of $56,382, the cumulative Petroleum
mineral lease expenditure which has been capitalised in property
plant and equipment was $1,275,597 at 31 December 2018 (2017:
$1,219,215).
-- Following additions of $750,473, the cumulative
Drilling-related expenditure which has been capitalised in
intangible assets was $3,842,241 at 31 December 2018 (2017:
$1,908,751).The increase in capitalised Drilling-related
expenditure included $1,183,017 of expenditure that was
re-categorised from receivables, as a result of former participant
Sunrise's departure from the Gonzales Project.
-- The Group expects to generate revenue in 2019 from its first
horizontal well and intends to use its cash balances and cashflow
from oil production to fund additional development of its lease
interests in Gonzales.
Operational
2018 was a year of preparation for future production and growth
across the Group's onshore Texas asset base, during which,
Pennpetro:
-- Commenced completion activity of one new horizontal well,
COG#1-H, in which the Group has an interest
-- Permitting of the Company's second horizontal well situated to the north of COG#1-H
-- Began examination of a number of asset opportunities
encompassing producing hydrocarbons with offsetting strategic
leasehold interests capable of both additional infill and
expansionary drilling locations. This work is being carried out by
the company's recently formed corporate entity, Pennpetro USA Corp,
Inc., and its highly regarded Houston based technical teams.
Post period developments
Since the reporting period, the Group has:
-- On 15 February 2019, the Company issued 1,433,702 Ordinary
shares at a price of GBP0.55 per share, raising gross proceeds of
GBP788,536.
-- On 5 March 2019, Pennpetro announced that its subsidiary,
Nobel Petroleum UK Limited, had through its US based entities,
increased its working interest from 50% to 75% in the leasehold
petroleum interests centred on the City of Gonzales, southwest
Texas, comprising the undeveloped central portion of the Gonzales
Oil Field.
Outlook
In line with our strategy, all our operations are in highly
active plays where the economics of drilling and producing remain
attractive at sub-US$30 oil prices. This highlights the success we
have had in taking advantage of the prior industry downturn to
accelerate the positioning of our South Texas leasehold position in
favour of the Austin Chalk and Eagleford Shale. With a strategic
foothold in these prolific, low-cost plays established and a proven
management team in place, we will look to further expand our
position in this US onshore sweet spot, as and when management
considers it most advantageous to do so.
Pennpetro's priority for the remainder of 2019 is project
delivery, during which it expects to achieve the following
objectives:
-- Build upon the initiative that commenced with the completion of our initial well, COG#1-H
-- Acquire additional land leases
-- Progress the permitting and horizontal development of our second objective well
Keith Edelman Chairman of Pennpetro, said:
"Our focus during 2018 was to continue to develop our proven
reserve base at our licences in Gonzalez.
According to the Group's Competent Person's Report ("CPR"),
prepared in December 2017, Pennpetro had a working interest in
2,000 Mbbl of oil and 1,000 MMcf of gas across its Gonzalez leases.
Most recently, Nobel has increased its working interest in the
portfolio of petroleum interests from 50% to 75%, thereby its
working interest is now over 3,000 MBBL of oil and 1,500 MMcf of
gas resulting in a substantive uplift in our valuation metric.
The low oil price environment since mid-2014 presented the
opportunity to acquire leases in our core areas of focus, most
notably the prolific Austin Chalk and Eagleford Shale in South
Texas. To this, we have been able to add additional reserves from
the Buda Formation from the drilling of an initial horizontal well,
which we have now completed with the operator having advised the
Texas Railroad Commission, the local authority, that the well is
designated as a discovery and commercial unit. Commercial
quantities of test hydrocarbons have been sold from this well. The
well is currently undergoing improvements to its submersible jet
pumping unit, whereupon it will recommence hydrocarbon
deliverability.
These highly active plays are well suited to thrive in today's
stronger oil price environment. The wells we are drilling and plan
to drill are economic at oil prices sub US$30/bbl; record
production rates have been reported as the horizontal laterals are
extended and the amount of pay in each well has increased; drilling
and completion costs have been significantly reduced; and initial
decline rates during the first 12-18 months of production are lower
than those in other US plays. Over the last two years, we have
taken advantage of depressed market conditions to increase our
exposure to these areas.
West Texas Intermediate ("WTI") averaged US$64.94/bbl during
2018, more than 27% higher than US$50.88/bbl averaged during 2017.
The value of WTI as at 24 April 2019 was US$66.04 (source:
Bloomberg Markets).
For 2019, our main objectives are to build upon the initiative
that commenced with the completion of our initial well, COG#1-H,
and to further acquire additional land leases and to progress the
permitting and horizontal development of our second objective
well.
I look forward to providing updates on our progress in the year
ahead."
Enquiries
Pennpetro Energy Plc
88 Whitfield Street
First Floor
London
W1T 4EZ
tme@pennpetroenergy.co.uk
Instinctif
+44 (0)20 7457
David Simonson david.simonson@instinctif.com 2020
+44 (0)20 7457
Sarah Hourahane sarah.hourahane@instinctif.com 2020
+44 (0)20 7457
Dinara Shikhametova dinara.shikhametova@instinctif.com 2020
NOTES TO EDITORS
Pennpetro Energy is an independent oil and gas company focusing
on production in the Gonzales Oil Field in Texas, USA. Shares in
the company were admitted to the Official List of the London Stock
Exchange by way of a Standard Listing on 21 December 2017.
Further information on the Company can be found at
www.pennpetroenergy.co.uk
IMPORTANT NOTICE - FORWARD-LOOKING STATEMENTS
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements may be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These
forward-looking statements include all matters that are not
historical facts and involve predictions. Forward-looking
statements may and often do differ materially from actual results.
In addition, even if results or developments are consistent with
the forward-looking statements contained in this announcement,
those results or developments may not be indicative of results or
developments in subsequent periods. Any forward-looking statements
reflect the Group's current view with respect to future events and
are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to the Group's business,
results of operations, financial position, liquidity, prospects,
growth or strategies and the industry in which it operates.
Forward-looking statements speak only as of the date they are made
and cannot be relied upon as a guide to future performance.
This information is provided by RNS, the news service of the
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END
FR LFFSFSEIIVIA
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