TIDMPPC
RNS Number : 0462O
President Energy PLC
30 September 2019
30 September 2019
PRESIDENT ENERGY PLC
("President", "the Company" or "the Group")
Unaudited Interim Results for H1 2019 and Group outlook
President (AIM:PPC), the oil and gas upstream company with a
diverse portfolio of production and exploration assets focused
primarily in Argentina, announces its unaudited interim results for
the six months ended 30 June 2019.
Commenting on today's announcement, Peter Levine, Chairman
said:
"President continues with its business in a focussed, calm,
determined and confident way.
"Despite an unforeseen confluence of challenges this year, we
have in H1 2019 delivered demonstrable improvements in all our key
performance indicators over the same period last year.
"In this context, this solid set of results and continuing
profitable operations are a reflection of the strength of President
and its assets and a stark contrast to the disconnected share price
performance of late."
Group Summary
Highlights
-- Group turnover increased by 6.4% over the same period last
year to US$23.3 million despite realisation prices on average
approximately 11% lower
-- Adjusted EBITDA* up 29% from H1 2018 to nearly US$8 million
-- Free cash flow from core operations increased by 11.4% year on year to US$9.7 million
-- Net Group average production up 19.3% from same period 2018
at 2,461 boepd, notwithstanding operational challenges during the
period. The approximate split across our assets was: Rio Negro 76%,
Salta 17% and Louisiana 7% with gas representing less than 5% of
the total
-- Group administration expenses per boe fell by 12.7% to US$6.4 per boe over H1 2018
Outlook
-- President views the outlook for the Company positively and with confidence.
-- Whilst the macro circumstances in Argentina have been
volatile of late, there have been early signs that stability is
returning. Furthermore, we are comforted by the fact that all
Presidential candidates acknowledge that the domestic hydrocarbon
industry needs continued investment with satisfactory returns for
investors and remains key to the future prosperity of
Argentina.
-- Current net Group production is 2,422 boepd with a further
250 boepd due to be brought online from Rio Negro in October. The
Rio Negro assets are contributing the lions share at approximately
79%, followed by Salta at 18% and the balance representing reduced
production from Louisiana. Of the total still less than 5%
represents gas though this will now start to increase in October as
gas production starts to come online with the first Estancia Vieja
gas sales.
-- The Company remains operationally profitable, free cash flow
generative at field level with, in Argentina, unaudited operational
profits in the first three months of H2 still projected to be some
US$3.5 million on a reduced level of G&A compared with the
prior three months.
-- The next four or so months will see continued growth for the
Group as President develops a more balanced portfolio including
profitable, low cost gas developments which we expect, all factors
being equal, to deliver from our existing well stock an additional
ca. 1,850 boepd in spring 2020.
-- Net Group average production for the full year 2019 is now
projected to be ca. 2,600 boepd, up 13.5% year on year (2018: 2,279
boepd), with the benefits of the substantially increased gas
production only being felt from the end of the year once the
building of the enlarged pipeline between Puesto Prado and Las
Bases is completed.
-- Internal projections for 2020 therefore show a materially
increased average in the range 4-5,000 boepd with a significantly
increased proportion of gas all from our Rio Negro assets rising
from less than 5% currently to some 30% of the next year.
* Adjusted EBITDA means Operating Profit before depreciation,
depletion and amortisation, adjusted for non-cash share based
expenses and certain non-recurring items. Non-recurring items
include workovers, one off legal expenses in 2018 and a
discretionary staff bonus award in 2019.
The 2019 Interim Report and Financial Statements will be made
available at www.presidentenergyplc.com
Management will be hosting a conference call at 10.30 a.m. on 30
September 2019 on the following dial-in;
United Kingdom: +44 (0)333 300 0804
PIN: 10921780#
This announcement contains inside information for the purposes
of article 7 of Regulation 596/2014.
Notes to Editors
President Energy is an oil and gas company listed on the AIM
market of the London Stock Exchange (PPC.L) primarily focused in
Argentina, with a diverse portfolio of operated onshore producing
and exploration assets. The Company has independently assessed 1P
reserves in excess of 15 MMboe and 2P reserves of more than 27
MMboe.
The Company has operated interests in the Puesto Flores and
Estancia Vieja, Puesto Prado and Las Bases Concessions, Rio Negro
Province, in the Neuquén Basin of Argentina and in the Puesto
Guardian Concession, in the Noreste Basin in NW Argentina. The
Company is focused on growing production in the near term in
Argentina. Alongside this, President Energy has cash generative
production assets in Louisiana, USA and further significant
exploration and development opportunities through its acreage in
Paraguay and Argentina.
One of President Energy's largest shareholders is the IFC, part
of the World Bank Group. The Company is actively pursuing
development of high quality production and assets capable of
delivering positive cash flows and shareholder returns. With a
strong institutional base of support and an in-country management
teams, President Energy has world class standards of corporate
governance, environmental and social responsibility.
Contact:
President Energy PLC
Peter Levine, Chairman
Rob Shepherd, Finance Director +44 (0) 207 016 7950
finnCap (Nominated Advisor
Christopher Raggett, Scott Mathieson +44 (0) 207 220 0500
Whitman Howard (Broker) +44 (0) 207 659 1234
Hugh Rich, Grant Barker
Tavistock (Financial PR) +44 (0) 207 920 3150
Nick Elwes, Simon Hudson
Chairman's Statement
Summary
The first half of 2019 saw a noticeable improvement compared to
what was itself a significantly improved H1 2018 in all the Group's
key performance indicators including turnover, adjusted EBITDA and
production costs.
Such solid year on year results were delivered notwithstanding
an unforeseen combination of challenging headwinds producing a
deluge of adverse events beyond President's control, affecting both
Argentina and Louisiana. These included:
-- In Argentina, a series of down-hole issues affecting some of
the high impact production wells and electrical outages impacting
average field performances in our core Puesto Flores field on top
of natural declines; and
-- in Louisiana, unprecedented levels of flooding resulting in
the shutting-in of the entire production from all wells there for
some three months which straddled the period under review as well
as the first part of H2.
In total 10 workovers at the main Puesto Flores field were
completed in the period with the objective of stemming both the
expected and unexpected losses in production and to make production
less reliant on the relatively few high impact wells in the core
Rio Negro province. Whilst these met with mixed success, the
learnings were very valuable and the work was beginning to show
positive signs towards the end of the first half which has now
continued into H2 2019. The frac conducted in well PF0-16 has
proved successful with production still double the pre-frac level.
Further fracs will be effected in the field in due course and
studies continue in this regard.
In other work, the Puesto Prado field and associated facilities
were recommissioned and placed into operation and the Las Bases gas
facilities were successfully tested and further detailed
sub-surface studies were conducted in relation to the Paraguay
exploration areas.
Post period, a further eight workovers have been completed at
the Company's fields in the Rio Negro Province with work currently
continuing at the Puesto Flores field. The Estancia Vieja field and
necessary facilities have now also been brought back into
production after some eight years lying idle. Gas sales from that
field will commence shortly. Elsewhere in Argentina, the Puesto
Guardian field production remains stable.
Work has now also started on the building, completion and
commissioning of a brand new 16 km section of 6" steel pipeline to
be laid between Puesto Prado and Las Bases, replacing the limited
capacity 3" flexible pipeline between those points. This will
enable the significant increase in gas sales in the new year with a
projected additional 1,850 boepd in spring 2020.
The Presidential elections are due to take place in Argentina on
27 October 2019. On 11 August 2019 the primary elections took
place, the result of which saw the Peronist Frente de Todos party
securing 47.65% of the electoral vote; a 15.57% margin over the
Macri administration. This result was not anticipated by the
investing community and global markets with a significant fall
occurring in both the Merval index and US Dollar:Peso exchange rate
following the announcement. This was likewise reflected in the
sharp and, in our view, overdone drop in the Company's share price.
Such a fall, at least in the currency, has to a certain extent
corrected and the peso has strengthened from a low of over 63 to
the Dollar to approximately 57 currently.
In an aim to reduce pressure on consumers in the short-term, the
Government passed a Decree on 16 August 2019 which fixed the crude
oil and gasoline prices for 90 days (to mid-November). The original
Decree set a Brent reference price of US$59/bbl and a US
Dollar:Peso exchange rate of 45.19. Following pressure from
Provinces, unions and producers, this fixed exchange rate has now
been increased via a series of decrees to the present level of
49.30 pesos to the Dollar; there is media speculation that further
positive adjustments will follow although nothing concrete can be
said at this stage.
With the US Dollar:Peso exchange rate currently fixed at 49.30,
being lower than the current rate of exchange the original Decree
as amended, has had and is having an impact on the Company due to
the fact that all domestic oil sales contracts are paid in Pesos.
Accordingly realised sales revenues in H2 will be lower than
expected at the start of this year. This decline has however been
partially offset by lower Peso denominated costs.
It remains difficult to forecast where the domestic oil price
for producers will land after the end of the temporary restrictions
in November (if they are at that stage still in place) as well as
the future of the temporary exchange control issues brought in
recently. Nevertheless, there is a cautious but increasing and
welcome air of realism and understanding from both the major
political parties as to the importance to Argentina of its
hydrocarbon industry, specifically the need for it to continue to
be attractive for investors. Whatever happens, President's laser
focus on delivery, margins and cash management means its stress
tested business model remains solid and robust.
In Louisiana, the wells have now been placed back in production
after an extensive workover of the highest producing Triche well
due to lower oil and gas and higher water flow. This and the
historic flooding led to production in the period falling by 42.2%.
After the workover, the Triche well, which is considered to be
still cleaning up, is at present delivering reduced production
compared to pre flood levels. This is down from 260 bopd gross at
the start of the year to some 55 bopd gross currently with a
similar reduction in gas sales. Whilst remaining profitable at
these reduced levels, President is monitoring progress at the
Triche well after its long shut-down and workover period and
considering future action and strategy regarding these non-core and
non-material assets. The Company is scheduled to start drilling in
Q4 2019 at Jefferson Island, where it has a 20% operated
interest.
It remains to extend the Director's appreciation to our
management and staff, our shareholders, our partners, EDHIPSA and
all the Government, Provincial and Regulatory authorities wherever
we conduct business for their continued support.
Financial
-- Group turnover in H1 2019 increased by 6.4% to US$23.3
million against the same period in 2018. This is in spite of lower
realised prices (approximately 11% lower on average year on year
and 12% less than the last half of 2018) as well as production
losses suffered in both Argentina and Louisiana.
-- Adjusted EBITDA for the period increased by 29% over the same
period last year to nearly US$8 million.
-- Free cash from core operations increased by 11.4% year on year to US$9.7 million.
-- Net Group average production in the H1 period increased by
19.3% over same period last year to 2,461 boepd notwithstanding the
issues referred to above. This was approximately split between Rio
Negro assets 76%, Salta 17% and Louisiana 7% with gas representing
less than 5% of the total
-- Group well operating costs per boe (excluding royalties and
production taxes) fell by 15% over the previous year to US$19.9 per
boe.
-- Group administration expenses per boe fell by 12.7% to US$6.4
per boe over the same period in 2018.
-- In the first part of H1 2019 the Company raised US$4.1
million net after expenses by way of a placing of shares at 8p per
share.
-- The Company remains operationally profitable, free cash flow
generative at field level with operational profits for the first
three months of H2 in Argentina still projected, taking into
account reduced realisation prices, to be approximately US$3.5
million on a reduced level of G&A compared with the previous
three months.
-- Accordingly, whilst the results for the whole of H2 2019 are
not currently projected to materially improve upon the levels for
the same period in 2018, the present period is expected to be
operationally profitable on a month by month basis with progress on
a number of fronts including gas production.
Argentina
-- The 10 well workovers completed in the period in the Puesto
Flores field partially mitigated both natural declines, disruptions
to productions and unexpected issues in high impact oil producing
wells. Another three to four workovers will be carried out by the
end of H2 2019.
-- Both the Puesto Prado and Las Bases Concessions together with
the strategic pan-regional pipeline were integrated into the Group
and both fields are contributing to production.
-- As previously advised, whilst the current economic and
political volatility in Argentina prevails, we have deferred this
year's drilling campaign in favour of greater near term emphasis on
progressing and expanding our existing gas project. It is now
anticipated well drilling will commence in H1 2020 with an initial
emphasis on new gas wells.
-- Initial gas sales from Estancia Vieja will commence shortly;
the sales will then ramp up significantly once the new section of
pipeline is completed towards the end of this year.
Paraguay
-- The farm-out process in Paraguay also continues without at
this stage any material developments.
-- Extensive sub-surface work was carried out in the period
under review to identify drilling locations for the first well and
volumetrics. A brief summary presentation of part of such work
issued in June 2019 can be found on the Company's website
www.presidentenergypc.com. The work re-validates the prospectivity
of the Pirity block and in particular the mean oil in place
estimations for the initial Delray complex targets which are over
220 million barrels of oil.
-- It remains the intention that exploration drilling will
commence in 2020. Further details in relation to timing will be
given before the end of this year.
Louisiana
-- Louisiana continues to contribute production, profits and
cash to President, albeit substantially less than last year due to
the above referred to factors.
-- Net production to President is currently approximately 75
boepd, solely due to the reduced performance of the Triche well.
This gives a projected monthly cash contribution back to the UK of
approximately US$50,000 cash at present oil prices.
-- USA average realised oil prices decreased in period by 10% to
US$58.5 per barrel and are currently realising around US$60 per
barrel.
Outlook
-- President views the outlook for the Company positively and with confidence.
-- Whilst the macro circumstances in Argentina have been
volatile of late, there have been early signs that stability is
returning. Furthermore, we are comforted by the fact that all
Presidential candidates acknowledge that the domestic hydrocarbon
industry needs continued investment with satisfactory returns for
investors and remains key to the future prosperity of
Argentina.
-- Current net Group production is 2,422 boepd with a further
250 boepd due to be brought online from Rio Negro in October. The
Rio Negro assets are contributing the lions share at approximately
79%, followed by Salta at 18% and the balance representing reduced
production from Louisiana. Of the total still less than 5%
represents gas though this will now start to increase in October as
gas production starts to come online with the first Estancia Vieja
gas sales.
-- The Company remains operationally profitable, free cash flow
generative at field level with, in Argentina, unaudited operational
profits in the first three months of H2 still projected to be some
US$3.5 million on a reduced level of G&A compared with the
prior three months.
-- The next four or so months will see continued growth for the
Group as President develops a more balanced portfolio including
profitable, low cost gas developments which we expect, all factors
being equal, to deliver from our existing well stock an additional
ca. 1,850 boepd in spring 2020.
-- Net Group average production for the full year 2019 is now
projected to be ca. 2,600 boepd, up 13.5% year on year (2018: 2,279
boepd), with the benefits of the substantially increased gas
production only being felt from the end of the year once the
building of the enlarged pipeline between Puesto Prado and Las
Bases is completed.
-- Internal projections for 2020 therefore show a materially
increased average in the range 4-5,000 boepd with a significantly
increased proportion of gas all from our Rio Negro assets rising
from less than 5% currently to some 30% of the next year.
Peter Levine
Executive Chairman
30 September 2019
Glossary of terms
MMboe Million barrels of oil equivalent
Boepd Barrels of oil equivalent per day
Bopd Barrels of oil per day
MMbbls Million barrels of oil
MMBtu Million British Therman Units (gas)
Tcf Trillion cubic feet (gas)
Production means the production that a Concession owner has the
legal and contractual right to retain
Condensed Consolidated Statement of Comprehensive Income
Six months ended 30 June 2019
6 months 6 months Year to
to 30 to 30
June June 31 Dec
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Note US$000 US$000 US$000
Continuing Operations
Revenue 23,315 21,907 47,181
Cost of sales
Depletion, depreciation & amortisation (4,332) (3,511) (7,245)
Other cost of sales (13,891) (13,821) (25,207)
Total cost of sales 3 (18,223) (17,332) (32,452)
------------ ------------ ----------
Gross profit/(loss) 5,092 4,575 14,729
Administrative expenses 4 (2,866) (2,752) (6,059)
Operating profit / (loss) before
impairment charge
------------ ------------ ----------
and non-operating gains / (losses) 2,226 1,823 8,670
Presented as:
Adjusted EBITDA 7,931 6,128 16,660
Non-recurring items (1,201) (634) (2,275)
EBITDA excluding share options 6,730 5,494 14,385
Depreciation, depletion & amortisation (4,347) (3,526) (7,291)
Release of abandonment provision - - 1,817
Share based payment expense (157) (145) (241)
Operating profit / (loss) 2,226 1,823 8,670
----------------------------------------- ----- ------------ ------------
Impairment charge 5 - - 2,610
Non-operating gains /(losses) 6 33 (79) (29)
Profit/(loss) after impairment
and non-operating
------------ ------------ ----------
gains and (losses) 2,259 1,744 11,251
Finance income 7 221 215 394
Finance costs 7 (2,231) (2,386) (5,565)
Profit / (loss) before tax 249 (427) 6,080
Income tax (charge)/credit
Current tax income tax (charge)/credit - - (19)
Deferred tax being a provision
for future taxes (1,607) (4,164) (5,941)
Total income tax (charge)/credit (1,607) (4,164) (5,960)
Profit/(loss) for the period from
continuing operations (1,358) (4,591) 120
Other comprehensive income
- Items that may be reclassified
subsequently
to profit or loss
Exchange differences on translating
foreign operations - - -
Total comprehensive profit/(loss)
for the period
attributable to the equity holders
of the Parent Company (1,358) (4,591) 120
============ ============ ==========
Earnings/ (loss )per share from
continuing operations US cents US cents US cents
Basic earnings/ (loss) per share 8 (0.12) (0.47) 0.01
Diluted earnings / (loss) per share 8 (0.12) (0.47) 0.01
============ ============ ==========
Condensed Consolidated Statement of Financial Position
As at 30 June 2019
30 June 30 June 31 Dec
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$000 US$000 US$000
Note
ASSETS
Non-current assets
Intangible exploration and
evaluation assets 9 104,027 103,470 103,950
Goodwill 705 705 705
Property, plant and equipment 9 93,945 72,197 92,117
------------ ------------ ----------
198,677 176,372 196,772
Deferred tax 1,726 950 1,800
Other non-current assets 351 351 351
200,754 177,673 198,923
------------ ------------ ----------
Current assets
Trade and other receivables 10 13,756 10,643 10,658
Stock - 82 84
Cash and cash equivalents 197 2,054 1,970
13,953 12,779 12,712
------------ ------------ ----------
TOTAL ASSETS 214,707 190,452 211,635
============ ============ ==========
LIABILITIES
Current liabilities
Trade and other payables 22,448 18,294 23,739
Lease liability (IFRS16) 479 - -
Borrowings 11 4,236 2,460 3,792
27,163 20,754 27,531
------------ ------------ ----------
Non-current liabilities
Long-term provisions 4,507 5,239 4,509
Lease liability (IFRS16) 625 - -
Borrowings 11 23,692 18,698 26,306
Deferred tax 8,390 4,230 6,857
37,214 28,167 37,672
------------ ------------ ----------
TOTAL LIABILITIES 64,377 48,921 65,203
============ ============ ==========
EQUITY
Share capital 24,353 23,642 23,654
Share premium 245,304 240,822 240,904
Translation reserve (50,240) (5,624) (50,240)
Profit and loss account (76,427) (124,396) (75,069)
Other reserve 7,340 7,087 7,183
TOTAL EQUITY 150,330 141,531 146,432
============ ============ ==========
TOTAL EQUITY AND LIABILITIES 214,707 190,452 211,635
============ ============ ==========
Condensed Consolidated Statement of Changes in Equity
Share Share Translation Profit Other Total
capital premium reserve and reserve
loss
account
US$000 US$000 US$000 US$000 US$000 US$000
Balance at 1 January
2018 23,642 240,822 (50,240) (75,189) 6,942 145,977
--------- --------- ------------ ---------- --------- --------
Convertible loan
equity - - - - - -
Transfer to P&L
account - - 44,616 (44,616) - -
Share-based payments - - - - 145 145
Transactions with
owners - - 44,616 (44,616) 145 145
Loss for the period - - - (4,591) - (4,591)
Exchange differences
on
translation - - - - - -
Total comprehensive
income/(loss) - - - (4,591) - (4,591)
Balance at 30 June
2018 23,642 240,822 (5,624) (124,396) 7,087 141,531
Share-based payments - - - - 96 96
Issue of ordinary
shares 12 82 - - - 94
Cost of issue - - - - - -
Transfer to P&L
account - - (44,616) 44,616 - -
Transactions with
owners 12 82 (44,616) 44,616 96 190
Profit for the period - - - 4,711 - 4,711
Exchange differences
on
translation - - - - - -
Total comprehensive
income/(loss) - - - 4,711 - 4,711
Balance at 1 January
2019 23,654 240,904 (50,240) (75,069) 7,183 146,432
Share-based payments - - - - 157 157
Debt conversion 130 907 1,037
Issue of ordinary
shares 569 3,985 - - - 4,554
Cost of issue - (492) - - - (492)
Transactions with
owners 699 4,400 - - 157 5,256
Loss for the period - - - (1,358) - (1,358)
Exchange differences
on
translation - - - - - -
Total comprehensive
income/(loss) - - - (1,358) - (1,358)
Balance at 30 June
2018 24,353 245,304 (50,240) (76,427) 7,340 150,330
========= ========= ============ ========== ========= ========
Condensed Consolidated Statement of Cash Flows
Six months ended 30 June 2019
6 months 6 months Year to
to 30 to 30
June June 31 Dec
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$000 US$000 US$000
Cash flows from operating activities
- (Note 12)
Cash generated/(consumed) by operations 6,749 2,639 14,723
Taxes paid - - (5)
6,749 2,639 14,718
------------ ------------ ----------
Cash flows from investing activities
Expenditure on exploration and evaluation
assets (77) (171) (558)
Expenditure on development and production
assets
(excluding increase in provision
for decommissioning) (8,002) (4,359) (7,865)
Expenditure on decommissioning costs (280) 1 (33)
Proceeds from asset sales 19 1,098 503
Acquisition & licence extension in
Argentina (1,135) - (15,806)
USA acquisition - - (93)
Interest received 102 215 394
(9,373) (3,216) (23,458)
------------ ------------ ----------
Cash flows from financing activities
Proceeds from issue of shares (net
of expenses) 4,062 - -
Loan drawdown 1,948 615 11,670
Repayment of loan capital (3,081) (616) (2,206)
Payment of loan interest and fees (1,875) (1,195) (2,713)
Repayment of obligations under leases (242) - -
812 (1,196) 6,751
------------ ------------ ----------
Net increase/(decrease) in cash and
cash equivalents (1,812) (1,773) (1,989)
Opening cash and cash equivalents
at beginning of year 1,970 4,026 4,026
Exchange (losses)/gains on cash and
cash equivalents 39 (199) (67)
Closing cash and cash equivalents 197 2,054 1,970
============ ============ ==========
Notes to the Half-Yearly Financial Statements
Six months ended 30 June 2019
1 Nature of operations and general information
President Energy PLC and its subsidiaries' (together "the
Group") principal activities are the exploration for and the
evaluation and production of oil and gas.
President Energy PLC is the Group's ultimate parent company. It
is incorporated and domiciled in England. The Group has onshore oil
and gas production and reserves in Argentina and the USA. The Group
also has onshore exploration assets in Paraguay and Argentina. The
address of President Energy PLC's registered office is 1200 Century
Way, Thorpe Park Business Park, Leeds LS15 8ZA. President Energy
PLC's shares are listed on the Alternative Investment Market of the
London Stock Exchange.
These condensed consolidated interim financial statements (the
interim financial statements) have been approved for issue by the
Board of Directors on 30th September 2019. The financial
information for the year ended 31 December 2017 set out in this
interim report does not constitute statutory accounts as defined in
Section 434 of the Companies Act 2006. The financial information
for the six months ended 30 June 2019 and 30 June 2018 was neither
audited nor reviewed by the auditor. The Group's statutory
financial statements for the year ended 31 December 2018 have been
filed with the Registrar of Companies. The auditor's report on
those financial statements was unqualified and did not draw
attention to any matters by way of emphasis and did not contain a
statement under section 498(2) or (3) of the Companies Act 2006
2 Basis of preparation
The interim financial statements do not include all of the
information required for full annual financial statements and
should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 December 2018, which
have been prepared under IFRS as adopted by the European Union.
These financial statements have been prepared under the
historical cost convention, except for any derivative financial
instruments which have been measured at fair value. The accounting
policies adopted in the 2019 interim financial statements are the
same as those adopted in the 2018 Annual report and accounts other
than for the implementation of the new International Financial
Reporting Standard 16 on Leases. The Group implemented IFRS 16 on
Leases effective from 1 January 2019 and further details are
provided in note 13.
The Directors consider the Group as a going concern on the basis
of its financial performance and support it receives from its
principal funder IYA. Furthermore, the Directors consider that
issues surrounding Brexit will have no material effect on the
Group.
6 months 6 months Year to
to 30 to 30
June June 31 Dec
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$000 US$000 US$000
3 Cost of
Sales
Depreciation 4,332 3,511 7,245
Release of abandonment
provision - - (1,817)
Royalties & production
taxes 4,730 4,428 8,265
Well operating costs 9,161 9,393 18,759
18,223 17,332 32,452
============ ============ ==========
4 Administrative expenses
Directors and staff cost 2,399 1,904 3,673
Share-based payments 157 145 241
Depreciation 15 15 46
Other 295 688 2,099
2,866 2,752 6,059
============ ============ ==========
5 Impairment (credit) / charge
DP1002 well in Argentina - - (2,610)
- - (2,610)
============ ============ ==========
6 Non-operating gains / (losses)
Reversal of provision for
doubtful taxes - - 84
Other gains / (losses) 33 (79) (113)
33 (79) (29)
============ ============ ==========
7 Finance income & costs
Interest income 102 215 394
Exchange gains 119 - -
Finance income 221 215 394
============ ============ ==========
Interest & similar charges 2,231 1,419 3,089
Exchange losses - 967 2,476
Finance costs 2,231 2,386 5,565
============ ============ ==========
8 Earnings / (loss) per share
Net profit / (loss) for
the period attributable
to the equity holders
of the
Parent Company (1,358) (4,591) 120
============ ============ ==========
Number Number Number
'000 '000 '000
Weighted average number
of shares in issue 1,126,561 971,173 1,072,106
============ ============ ==========
Earnings /(loss) per share US cents US cents US cents
Basic (0.12) (0.47) 0.01
Diluted (0.12) (0.47) 0.01
============ ============ ==========
9 Non-current assets
Property
Plant
Intangible and Total
Equipment
US$000 US$000 US$000
Cost
At 1 January 2018 145,373 97,264 242,637
Additions 171 4,359 4,530
Disposals (662) (662)
At 30 June 2018 145,544 100,961 246,505
Additions 387 12,058 12,445
Acquisition & licence extension
in Argentina - 11,591 11,591
Acquisition USA 93 - 93
Disposals - 36 36
At 1 January 2019 146,024 124,646 270,670
Additions 77 4,829 4,906
Right of use assets (IFRS16) - 1,346 1,346
At 30 June 2019 146,101 130,821 276,922
=========== ========== ========
Depreciation/Impairment
At 1 January 2018 42,074 25,248 67,322
Disposals - (10) (10)
Charge for the period - 3,526 3,526
----------- ---------- --------
At 30 June 2018 42,074 28,764 70,838
Charge for the period - 3,765 3,765
----------- ---------- --------
At 1 January 2019 42,074 32,529 74,603
Charge for the period - 4,347 4,347
At 30 June 2019 42,074 36,876 78,950
=========== ========== ========
Net Book Value 30 June
2019 104,027 93,945 197,972
=========== ========== ========
Net Book Value 30 June
2018 103,470 72,197 175,667
=========== ========== ========
Net Book Value 31 December
2018 103,950 92,117 196,067
=========== ========== ========
No impairment indicators were noted at 31 December 2018 or
existed at that balance sheet date. Subsequent to year end there
has been increasing volatility and falls in the Merval index and US
Dollar: Peso exchange rate following the announcement. In an aim to
reduce pressure on consumers in the short-term, the government
passed a decree on 16 August 2019 which fixes the crude oil and
gasoline prices for 90 days. The decree sets a Brent reference
price of US$59/bbl and also set an exchange rate that would apply.
These are short term developments subsequent to the year end that,
at today's date, do not indicate a long term issue to the
investment values held but will continue to be monitored by the
Directors
10 Trade and other receivables
30 June 30 June 31 Dec
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$000 US$000 US$000
Trade and other receivables 13,649 10,594 10,295
Prepayments 107 49 363
13,756 10,643 10,658
============ ============ ==========
11 Borrowings
Current
Bank loan 4,236 2,460 3,792
4,236 2,460 3,792
Non-Current
IYA Loan 19,373 13,735 19,851
Bank loan 4,319 4,963 6,455
23,692 18,698 26,306
------------ ------------ ----------
Total carrying value of
borrowings 27,928 21,158 30,098
============ ============ ==========
12 Reconciliation of operating profit to net cash outflow
from operating activities
6 months 6 months Year to
to 30 to 30
June June 31 Dec
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$000 US$000 US$000
Loss from operations before taxation 249 (427) 6,080
Interest on bank deposits (102) (215) (394)
Interest payable and loan
fees 2,153 1,419 3,089
Depreciation and impairment
of property,
plant and equipment 4,347 3,526 7,291
Impairment charge - - (2,610)
Release of abandonment
provision - - (1,817)
Gain on non-operating transaction (33) 79 29
Share-based payments 157 145 241
Foreign exchange difference (119) 967 2,476
Operating cash flows before movements
in working capital 6,652 5,494 14,385
(Increase)/decrease in
receivables (3,427) (4,070) (4,483)
(Increase)/decrease in
stock 84 (5) (7)
(Decrease)/increase in
payables 3,440 1,220 4,828
Net cash generated by/(used in)
operating activities 6,749 2,639 14,723
============ ============ ==========
13 Adoption of new IFRS16 lease accounting standard
The Group adopted IFRS 16 Leases, which sets out the principles
for the recognition, measurement, presentation and disclosure of
leases, for the period commencing 1 January 2019. On adoption of
IFRS 16, the Group recognised lease liabilities in relation to
leases which were previously classified as operating leases under
the provisions of IAS 17 Leases. The Group has identified leases
predominantly for oil and gas production equipment but also for
property and transportation equipment.
In calculating the present value of lease payments, the Group
uses its incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily
determinable. The discount rates used on transition are the
incremental borrowing rates as appropriate for each lease based on
factors such as the lessee legal entity and lease term. The
incremental borrowing rate applicable for all of the leases for the
Group is between 5.0% and 14.9%. The determination of whether there
is an interest rate implicit in the lease, the calculation of the
Group's incremental borrowing rate, and whether any adjustments to
this rate are required, involves some judgement and is subject to
change over time. At the commencement date of leases management
consider whether the lease term will be the full term of the lease
or whether any option to break or extend the lease is likely to be
exercised. Leases are regularly reviewed and will be revalued if
the term is likely to change.
In accordance with the transition provisions in IFRS 16, the
modified retrospective approach has been adopted with the
cumulative effect of initially applying the new standard recognised
on 1 January 2019. Comparatives for the 2018 financial year have
not been restated. The financial impact of transition to IFRS 16
for the first half of financial year 2019 has been summarised
below. The Group has elected to use the recognition exemptions for
lease contracts that, at the commencement date, have a lease term
of 12 months or less and do not contain a purchase option, and
lease contracts for which the underlying asset is of low value
('low-value assets'). The Group recognises lease expenses for these
contracts on a straight-line basis as permitted by IFRS 16. Lease
liabilities related to operated Joint Ventures are disclosed gross
with the debit representing the partner's share disclosed in
amounts due from Joint Venture Partners.
On adoption
1 Jan 30 Jun
2019 2019
(Unaudited) (Unaudited)
US$000 US$000
Balance
sheet
ASSETS
Non-current assets 639 1,072
LIABILITIES
Current liabilities 339 479
Non-current liabilities 300 876
Income statement
Cost of sales 42
Administrative expense 4
Finance costs (78)
Deferred tax (251)
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
IR SESFAUFUSEFU
(END) Dow Jones Newswires
September 30, 2019 02:02 ET (06:02 GMT)
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