TIDMPET
RNS Number : 6649C
Petrel Resources PLC
19 June 2019
19(th) June 2019
Petrel Resources plc
("Petrel" or "the Company")
Preliminary Results for the Year Ended 31(st) December 2018
Petrel announces its results for the year ended 31(st) December
2018.
Highlights
-- The Iolar well, being drilled by CNOOC / ExxonMobil during
mid-2019, is a key test of ultra-deep-rock (6,310 metres below
sea-bed), deep-water plays in the Irish Atlantic Porcupine.
-- Petrel has applied to assume operatorship and extend the 1st
phase of FEL 3/14, and to convert LO 16/24 to a Frontier
Exploration Licence.
-- The reforming Ghanaian NPP Government is expediting Petroleum
development. A systematic review of historic Petroleum Agreements
is underway, which includes Tano 2A Block.
-- Revised coordinates for Tano offshore acreage, submitted by
Clontarf, are under consideration by the Ghanaian authorities. Most
of the original 1,532km2 is immediately available, though part
awaits relinquishment.
-- Riadh Hameed has joined Petrel Resources plc as a
Non-Executive Director, and is helping re-establish Petrel's
Baghdad operations.
A copy of the Company's Annual Report and Accounts for 2018 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, 162 Clontarf Road, Dublin 3,
Ireland.
The Company's Annual General Meeting will be held on 24(th) July
2019 in the Gresham Hotel, 23 O'Connell Street Upper, Dublin 1, D01
C3W7 at 10:30 am.
S
For further information please visit
http://www.petrelresources.com/ or contact:
Enquiries:
Petrel Resources PLC
John Teeling, Chairman
David Horgan, Director +353 1 833 2833
Beaumont Cornish - Nominated Adviser
Felicity Geidt
Roland Cornish +44 (0) 020 7628 3396
Novum Securities Limited - Broker
Colin Rowbury +44 (0) 20 399 9400
Blytheweigh - PR +44 (0) 20 7138 3206
Julia Tilley +44 (0) 207 138 3553
Fergus Cowan +44 (0) 207 138 3208
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). The person
who arranged for the release of this announcement on behalf of the
Company was Jim Finn, Director.
CHAIRMANS STATEMENT
Petrel is a grassroots exploration company. That means we pursue
high risk high potential projects. But high risk means there is a
high risk of total loss. The only true lie detector in exploration
is a drill hole. The most sophisticated and best informed analyses
and evaluation of a prospect comes with high risk. No better
example that the well currently being drilled in the Atlantic
Porcupine offshore Ireland. From surface to target depth is over
8,000 metres - 8 kilometres! 2,162 metres of water and 6,310 metre
of rock. And there is a good probability of finding nothing of
value.
Petrel was first founded in the early 1980's to participate in
offshore Irish exploration. It failed. Revived in the 1990's with
new management and new risk capital we entered Iraq, then offshore
Ireland and offshore Ghana.
When choosing places to explore there are three overriding
considerations - the probability of finding something, the
potential size of the discovery and can we develop and profit from.
There are two main risks, Geological and Political. Our strategy
has been to go where the best chances are of finding something.
Often this is in areas where the political rules change. So we
accept higher political risk for lower geological risk.
How has this worked out? Not well. The big surprise is that
Ireland where we assumed low political risk and higher geological
risk and turning out to have high political risk while the
geological has not improved.
Petrel and the partners it attracted to Ireland saw a stable
environment, clear terms and rights to develop. This is not what
has happened.
- The Corrib debacle lasting 20 years has done serious damage to
our international reputation. It now is taken for granted that
there will be objections to any natural resource developments.
Delays of years are common thus destroying the present value of the
project.
- The state changed the taxation laws applying to petroleum
projects. There is absolutely no logic for doing this. Exploration
has found almost nothing. There are no profits to tax. Ireland has
one of the highest failure rates in oil exploration in the world.
We should be increasing incentives not diminishing them.
- There is an active political movement to outlaw all offshore
exploration. This in a country which is dependent on Siberian
gas!!! What began as a fanciful proposition from a tiny left wing
party got support from mainstream parties. The recent proposition
before parliament has lapsed but damage has been done and a
precedent established. Foreign investors can spend their money in
over 200 countries, it does not have to be Ireland.
- Finally, companies who obtained exploration licences are being
frustrated in getting drilling permits and are having permits
overturned on technicalities. The state has allowed explorers to
spend tens of millions on early stage prospecting only to frustrate
and delay the granting of drilling licences.
Trying to be positive. Should the current well be a hit and
should the long delayed work commence on the Barryroe prospect then
sentiment may change.
Where is Petrel in all of this? We have applied to assume 100%
operatorship of Frontier Exploration License 3/14 and to extend the
first phase by one year. It has taken almost the full year to get
approval. We have worked up the extensive data on the block and
believe that we have a good package with which to attract a major
but we have no time.
We have applied to transfer our 100% owned Licence Option 16 /
24 to a Frontier Exploration Licence. Here again we believe the
geology holds potential. We will pitch the opportunities to
majors.
Finally we hold a 10% working interest in Frontier Exploration
Licence 11 / 18, Woodside holds the remaining 90%. We have met
commitments until now. When we receive proposed budgets for the
coming year we will evaluate whether to stay in or not.
Overall the Irish offshore is a sorry scene.
Ghana
After ten years in Ghana, Petrel (30%) and partners Clontarf
(60%) local Ghanaian interests (10%) await ratification of the Tano
2A Petroleum Agreement negotiated with the Ghana National Petroleum
Corporation. It needs cabinet and parliamentary approval.
Relationships in Ghana have improved in the last two years,
particularly with the Ghana National Petroleum Corporation, but
there is little evidence that political promises are being
delivered on.
In the ten years we have been waiting for ratification Ghana has
become a significant oil producer, not without difficulty with both
the geology and with government. The change in government has
renewed a focus on oil development. This should assist Petrel and
partners. I hesitate to give any guidance.
Iraq
We had high hopes of commercial success in Iraq. It has the best
oil geology on the planet with drilling success over 90% and a $2
to 4 a barrel production cost. But the political risk offsets all
of this.
Petrel first entered Iraq in 1997 and had initial success in
obtaining a large exploration block in the Western Desert between
Baghdad and Amman Jordan. We were seeking development rights to any
one of the many proven but undeveloped oil fields but we needed to
establish our credentials. We undertook exploration work but were
frustrated by sanctions which stopped us from drilling.
We continued involvement with the Iraqi Oil Ministry and
undertook extensive technical work, with Itochu of Japan on the
Merjan oil field.
Post 2003 we were awarded a development contract on the Subba
and Luhais oil fields. Bureaucratic interference and payment
problems forced Petrel to sell out in 2010.
We maintained our interest and appointed an Iraqi Arman
Kayablian to work in Iraq. We purchased a 20% stake in Amira
Hydrocarbon which had joint operations with Oryx Petroleum, in the
Wasit province. The joint venture failed to obtain a licence. In
2018 the agreement was dissolved and some 20 million Petrel shares
returned to the company.
We have recently appointed Riadh Mahmoud Hameed to the Petrel
board. Riadh worked as project co-ordinator for six years for
Petrel in Iraq.
Activities are normalising in Iraq. There are many oil projects
in Iraq which need to be developed. Petrel will be making a case to
be part of the development.
Future
Oil and gas grassroots exploration has proven to be an expensive
experience for Petrel shareholders. There is little interest in the
sector.
Petrel has had a loyal following for decades but as the downward
cycle in exploration share prices continues and intensifies even
the loyalists lose hope. We continue to press of ratification in
Ghana and continue to seek farm in partners for our offshore
Ireland interests.
Interest is reviving in Iraq. We now have the people to seek out
operations on the ground.
As a board we are awake to other opportunities both in our
sector and in different industries. Because we are a small, tightly
held company with a big shareholder base we are an attractive
vehicle for a new project. Nothing presented to the board has yet
been deemed good enough for shareholders.
John Teeling
Chairman
18(th) June 2019
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEARED 31 DECEMBER 2018
2018 2017
EUR EUR
CONTINUING OPERATIONS
Administrative expenses (239,042) (297,381)
Impairment of investments - (4,094,804)
OPERATING LOSS (239,042) (4,392,185)
LOSS BEFORE TAXATION (239,042) (4,392,185)
Income tax expense - -
LOSS FOR THE FINANCIAL YEAR: all attributable to equity holders of the parent (239,042) (4,392,185)
Other comprehensive income - -
Items that are or may be reclassified subsequently to profit or loss - -
Exchange differences 95,741 (321,858)
TOTAL COMPREHENSIVE LOSS FOR THE FINANCIAL YEAR (143,301) (4,714,043)
Loss per share - basic and diluted (0.27c) (4.40c)
PETREL RESOURCES PLC
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2018
2018 2017
EUR EUR
Assets
Non-Current Assets
Intangible assets 2,523,279 2,179,283
2,523,279 2,179,283
Current Assets
Trade and other receivables 58,016 27,573
Cash and cash equivalents 329,503 371,380
387,519 398,953
Total Assets 2,910,798 2,578,236
Current Liabilities
Trade and other payables (632,615) (584,693)
Net Current Liabilities (245,096) (185,740)
NET ASSETS 2,278,183 1,993,543
Equity
Called-up share capital 1,306,966 1,246,025
Capital conversion reserve fund 7,694 7,694
Capital redemption reserve 209,342 -
Share premium 21,601,057 21,416,085
Share based payment reserve 26,871 26,871
Translation reserve 495,202 399,461
Retained deficit (21,368,949) (21,102,593)
TOTAL EQUITY 2,278,183 1,993,543
PETREL RESOURCES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARED 31 DECEMBER 2018
Capital Capital Share
Redemption Conversion Based
Share Share Reserve Reserve Payment Translation Retained
Capital Premium fund Reserve Reserve Deficit Total
EUR EUR EUR EUR EUR EUR EUR EUR
At 1 January
2017 1,246,025 21,416,085 - 7,694 26,871 721,319 (16,710,408) 6,707,586
Total
comprehensive
income for
the financial
year - - - - - (321,858) (4,392,185) (4,714,043)
---------- ----------- ----------- ----------- -------- ------------ ------------- ------------
At 31 December
2017 1,246,025 21,416,085 - 7,694 26,871 399,461 (21,102,593) 1,993,543
Shares issued 270,283 184,972 455,255
Share issue
expenses - - - - - (27,314) (27,314)
Shares
cancelled (209,342) - 209,342 - - - - -
Total
comprehensive
income for
the financial
year - - - - - 95,741 (239,042) (143,301)
---------- ----------- ----------- ----------- -------- ------------ ------------- ------------
At 31 December
2018 1,306,966 21,601,057 209,342 7,694 26,871 495,202 (21,368,949) 2,278,183
========== =========== =========== =========== ======== ============ ============= ============
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 redemption reserve
On 25 July 2018 the shareholders approved the buy back and
cancellation of 16,747,368 shares for nominal consideration from
Amira Petroleum N.V., Amira International Holdings Limited and
their advisors. These shares were immediately cancelled upon their
repurchase and the cost of these shares were transferred into the
Capital redemption reserve.
Capital conversion reserve fund
The ordinary shares of the company were renominalised from
EUR0.0126774 each to EUR0.0125 each in 2001 and the amount by which
the issued share capital of the company was reduced was transferred
to the capital conversion reserve fund.
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.
PETREL RESOURCES PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE FINANCIAL YEARED 31 DECEMBER 2018
2018 2017
EUR EUR
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the financial year (239,042) (4,392,185)
Write of financial asset - 4,094,804
OPERATING CASHFLOW BEFORE
MOVEMENTS IN WORKING CAPITAL (239,042) (297,381)
Movements in working capital:
Increase in trade and other payables 2,922 129,799
Increase in trade and other receivables (30,443) (4,570)
CASH USED IN OPERATIONS (266,563) (172,152)
NET CASH USED IN OPERATING ACTIVITIES (266,563) (172,152)
INVESTING ACTIVITIES
Payments for exploration and evaluation assets (195,671) (259,161)
Funds on disposal of financial assets - 116,319
NET CASH USED IN INVESTING ACTIVITIES (195,671) (142,842)
FINANCING ACTIVITIES
Shares issued 455,255 -
Share issue expenses (27,314) -
NET CASH GENERATED FROM FINANCING ACTIVITIES 427,941 -
NET DECREASE IN CASH AND CASH EQUIVALENTS (34,293) (314,994)
Cash and cash equivalents at beginning of financial year 371,380 745,195
Effect of exchange rate changes on cash held in
foreign currencies (7,584) (58,821)
Cash and cash equivalents at end of financial year 329,503 371,380
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 31
December 2017. The financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
2. LOSS PER SHARE
2018 2017
EUR EUR
Loss per share - basic and diluted (0.27c) (4.40c)
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:
2018 2017
EUR EUR
Loss for the financial year attributable to
equity holders (239,042) (4,392,185)
2018 2017
Number Number
Weighted average number of ordinary shares
for the
purpose of basic earnings per share 87,733,283 99,681,992
Basic and diluted loss per share are the same as the effect of
the outstanding share options is anti-dilutive.
3. GOING CONCERN
The Group and Company incurred a loss for the financial year of
EUR239,042 (2017: loss of EUR4,392,185) and had a retained earnings
deficit of EUR21,341,635 (2017 deficit of EUR21,102,593), at the
balance sheet date leading to doubt about the Group and Company's
ability to continue as a going concern.
Cashflow projections prepared by the directors indicate that the
funds available are sufficient to meet the obligations of the group
and company for at least 12 months from the date of approval of the
financial statements.
The Group and Company had a cash balance of EUR329,503 (2017:
EUR371,380) at the balance sheet date. Accordingly the directors
are satisfied that it is appropriate to continue to prepare the
financial statements of the Group and Company on the going concern
basis, as the group has sufficient cash resources that can be used
to develop exploration projects along with funding the day to day
running of the Group. The financial statements do not include any
adjustment to the carrying amount, or classification of assets and
liabilities, which would be required if the Group or Company was
unable to continue as a going concern.
4. FINANCIAL ASSET
2018 2017
Investment EUR EUR
At the beginning of the financial year - 4,211,123
Disposal - (116,319)
Impairment - (4,094,804)
At the end of the financial year - -
The Company's investment in financial assets, through its wholly
owned subsidiary Petrel Resources (TCI) Limited, consisted of a 20
per cent shareholding in Amira Hydrocarbons Wasit B.V.("Amira")
which was acquired from Amira Petroleum N.V. on 14 August 2013.
Amira is a special purpose vehicle which holds a 25 per cent
carried to production interest in an early stage oil opportunity in
the large, underexplored and underdeveloped province of Wasit.
The consideration for the acquisition included the issue of
18,947,368 shares in Petrel. The Initial Consideration Shares were
agreed to be locked-in until the date of spudding the first
conventional oil well in respect of Amira's interest in the Wasit
province but that, if the Spudding Date had not occurred by 19
August 2018, Petrel could, amongst other things, elect to
re-acquire the Initial Consideration Shares for a nominal amount.
As part of the agreement with Amira Petroleum, 2.8 million of the
Initial Consideration Shares were, at the direction of Amira
Petroleum, issued to its advisers in satisfaction of fees payable
by Amira Petroleum and were subject to a lock in agreement as
detailed above.
During December 2017, the Directors learnt that 2.2 million of
the Adviser Shares had been sold between March and July 2017,
notwithstanding the lock-in agreement. The parties reached a
settlement and agreed that the vendors of the 2.2 million Adviser
Shares make a payment of GBP100,000 to the Company which has been
received pre year end (representing approximately 4.5p per Adviser
Share sold).
The Spudding Date did not occur. Accordingly, the directors
decided to write off the investment in Amira Hydrocarbons Wasit
B.V. and an impairment charge of EUR4,094,804 was recorded in 2017.
No further shares were issued to Amira and the 16,747,368 shares
already issued were re-acquired for nominal consideration on 25
July 2018 after shareholder approval and the shares were
immediately cancelled.
5. INTANGIBLE ASSETS
Exploration and evaluation assets: 2018 2017
EUR EUR
Cost:
Opening balance 2,179,283 2,138,159
Additions 240,67 304,159
Exchange translation adjustment 103,325 (263,035)
Closing balance 2,523,279 2,179,283
Segmental Analysis 2018 2017
EUR EUR
Ghana 911,631 843,988
Ireland 1,611,648 1,335,295
2,523,279 2,179,283
Exploration and evaluation assets at 31 December 2018 represent
exploration and related expenditure in respect of projects in
Ireland and Ghana. The directors are aware that by its nature there
is an inherent uncertainty in relation to the recoverability of
amounts capitalised on the exploration projects.
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 EUR30,000 (2017: EUR30,000) and
salaries of EUR15,000 (2017: EUR15,000) were capitalised as
exploration and evaluation expenditure during the financial
year.
6. SHARE CAPITAL
2018 2017
EUR EUR
Authorised:
200,000,000 ordinary shares of EUR0.0125 2,500,000 2,500,000
Allotted, called-up and fully
paid:
Number Share Share
Capital Premium
EUR EUR
At 1 January 2017 99,681,992 1,246,025 21,416,085
Issued during the financial - - -
year
At 31 December 2017 99,681,992 1,246,025 21,416,085
At 1 January 2018 99,681,992 1,246,025 21,416,085
Issued during the financial
year 21,622,622 270,283 184,972
Shares cancelled (16,747,368) (209,342) -
At 31 December 2018 104,557,246 1,306,966 21,601,057
Movements in share capital
On 25 July 2018 the company received shareholder approval for
the following transaction:
(i) the contract between Amira Petroleum N.V., Amira
International Holding Limited and the Company for the purchase of
16,147,368 ordinary shares of EUR0.0125 each in the capital of the
Company for nominal consideration; and
(ii) the contract between Hannam & Partners (Advisory) Group
Services Ltd and the Company for the purchase of 600,000 ordinary
shares of 0.0125 each in the capital of the Company for nominal
consideration.
The aggregate 16,747,368 ordinary shares of EUR0.0125 each were
immediately cancelled upon their repurchase by the Company.
The purchase consideration of GBP20 was funded by the issue of
1000 Ordinary shares of EUR0.0125 at 2p per share.
Further details are outlined in note 4 above.
On 11 October 2018 a total of 21,621,622 shares were placed at a
price of 1.85 pence per share. Proceeds were used to provide
additional working capital and fund development costs.
7. POST BALANCE SHEET EVENTS
There were no material post balance sheet events affecting the
company or group.
8. ANNUAL GENERAL MEETING
The Company's Annual General Meeting will be held on 24(th) July
2019 in the Gresham Hotel, 23 O'Connell Street Upper, Dublin 1 ,
D01 C3W7 at 10:30 am.
9. GENERAL INFORMATION
The financial information set out above does not constitute the
Company's financial statements for the year ended 31 December 2018.
The financial information for 2017 is derived from the financial
statements for 2017 which have been delivered to the Companies
Registration Office. The auditors have reported on 2017 statements;
their report was unqualified with an emphasis of matter in respect
of considering the adequacy of the disclosures made in the
financial statements concerning the valuation of intangible assets,
investment in subsidiaries and amounts due by group undertakings.
The financial statements for 2018 will be delivered to the
Companies Registration Office.
A copy of the Company's Annual Report and Accounts for 2018 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, 162 Clontarf Road, Dublin 3,
Ireland.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR GGUQUQUPBGAR
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