TIDMDES
RNS Number : 0196O
Desire Petroleum PLC
16 September 2013
For immediate release 16 September 2013
Desire Petroleum plc
("Desire" or "the Company")
Interim Results
Desire Petroleum plc (AIM:DES), the exploration company focusing
on the North Falkland Basin, today announces its interim results
for the six months ended 30 June 2013.
Highlights:
-- Data room opened in February 2013
-- Farm-out process on-going with number of companies still engaged in the process
-- Subject to rig availability, new exploration programme could start as early as Q4 2014
-- Premier Oil and Rockhopper Exploration expect one exploration
well to be drilled on licence PL004b (Desire: 40%)
-- Unitisation of Sea Lion Oil Field not expected in Phase 1 development
-- Loss for the period of $1.6 million (2012 H1: $1.9 million)
-- Cash of $9.1 million at 30 June 2013
Stephen Phipps, Chairman of Desire Petroleum, commented:
"We are now entering an exciting period in the North Falkland
Basin (NFB). The Board is pleased to note the statements from both
Premier and Rockhopper that a new exploration programme for the NFB
could, subject to rig availability, start as early as the final
quarter of 2014.
Our current focus has been to attract investment into our NFB
licences by conducting a farmout process. A data room was opened in
February of this year and a number of companies have analysed the
information with a smaller number still engaged in this
process.
The possible recommencement of drilling activity will hopefully
enable us to participate in a drilling campaign that should unlock
more of the potential of our exciting prospect inventory."
020 7436
Desire Petroleum plc 0423
Stephen Phipps, Chairman
Dr Ian Duncan, Chief Executive
Officer
020 7418
Peel Hunt LLP 8900
Richard Crichton
Andy Crossley
020 7466
Buchanan 5000
Ben Romney
Tim Thompson
Chairman's Statement
Dear Shareholder,
We are now entering an exciting period in the North Falkland
Basin (NFB). Having experienced a period of relative inactivity,
the Board is pleased to note the statements from both Premier Oil
PLC ("Premier") and Rockhopper Exploration PLC ("Rockhopper") that
a new exploration programme for the NFB could, subject to rig
availability, start as early as the final quarter of 2014, with
exact timings to be clarified. This would consist of at least three
wells, one of which is expected to be drilled on a licence 40% held
by Desire, namely at the Zebedee location on licence PL004b.
As previously announced, our current focus has been to attract
investment into our NFB licences by conducting a farmout process. A
data room was opened in February of this year and a number of
companies have analysed the information with a smaller number still
engaged in this process. Whilst there has been strong interest in
our prospects, a combination of uncertainty over the timing and
scope of the development of the Sea Lion Oil Field, plus the lack
of a firm date for the mobilisation of a rig to the NFB, has
delayed a conclusion to the farmout process.
The well at the Zebedee location should test our Ninky North
prospect stack with gross best case unrisked prospective oil
resources in multiple targets of 260 MMstb (Senergy Competent
Persons Report 2012). In addition, this location should provide a
southerly appraisal of the Casper South oil reservoir. With the
likelihood of a rig becoming active again in the NFB we believe
that this should also be the opportunity to drill the two most
exciting of our other prospects as part of this drilling programme,
namely the Isobel and Jayne prospect stacks which contain gross
best case unrisked prospective oil resources of 281 MMstb and 405
MMstb respectively (Desire holds a 92.5% and 75% interest in these
prospects respectively).
Our end June 2013 cash balance was $9.1 million, and, as
previously stated, this is more than sufficient for ongoing
administration and licence rental costs for the foreseeable future
but not enough to fund drilling on our own account. It is still our
intention to fund our share of the next drilling campaign by
farming down our prospects and we believe that the increased
likelihood of this campaign commencing in the fourth quarter of
2014 may be the necessary catalyst.
Premier has indicated that the Sea Lion Oil Field development is
likely to be a phased project, with final project sanction targeted
for the end of 2014. The first phase would be in the northern part
of the Field with a likely second phase in the south to include the
extension into PL004b. Although unitisation of the Sea Lion Oil
Field has not yet been undertaken, we believe our share of
development costs is unlikely to be due until the second phase. We
are seeking clarification of this from both the operator and the
Falkland Islands Government.
The possible recommencement of drilling activity in the NFB
towards the latter part of 2014 will hopefully enable us to
participate in a drilling campaign that should unlock more of the
potential of our exciting prospect inventory.
Yours sincerely,
Stephen L Phipps
Chairman
Financial Report
Income statement
The loss for the period decreased from $1,985,000 in the
previous period to $1,643,000 in the current period. The reduced
loss is mainly due to the previous period's taxation charge in
respect of prior years.
The 2013 exploration and evaluation expense of $585,000 is
slightly reduced from the corresponding period, and largely
comprises farm out activity costs and man time.
Gross administrative expenses as disclosed in Note 2, have
decreased from $1,424,000 to $1,156,000. However, a reduced
allocation to exploration and evaluation costs leaves net
administrative expenses a little higher at $918,000.
The exchange movement for the period showed a loss of $154,000
compared with a previous gain of $66,000, and arises primarily on
the Company's Sterling cash balances. The period end exchange rate
of $1.517/GBP was lower than the 31 December 2012 rate of
$1.626/GBP.
Balance Sheet
The Company incurred $0.6 million of exploration and evaluation
expenditure ("E&E") in the period. The only E&E assets
carried forward at the balance sheet date are those in respect of
the farm in area PL004b, where the Company holds contingent
hydrocarbon reserves. All other E&E costs have been expensed in
the Income Statement, in accordance with the Company's successful
efforts accounting policy.
Property, plant and equipment held for sale has reduced from
$217,000 at the start of the period to $51,000. Disposals during
the period realised $135,000. The balance of $51,000 carried
forward represents the net scrap value of remaining inventory.
The Company's cash resources at the period end amounted to
$9,114,000, from $10,480,000 at the start of the period. The
reduction is due to costs incurred on administration and
exploration and evaluation.
Financial outlook
Due to the Company's available cash resources at the period end,
the Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future.
Eddie Wisniewski
Finance Director
Income Statement
For the 6 months ended 30 6 months 6 months Year
June 2013 ended ended ended
30.06.13 30.06.12 31.12.12
Unaudited Unaudited
$000 $000 $000
Exploration and evaluation
expense (585) (720) (1,815)
Administrative expenses (Note
2) (918) (856) (1,680)
Foreign exchange (loss)/gain (154) 66 143
Operating loss (1,657) (1,510) (3,352)
Finance costs - (48) (69)
Finance income 14 20 36
Loss before tax (1,643) (1,538) (3,385)
Tax - (447) (483)
Loss for period (attributable
to owners of the Company) (1,643) (1,985) (3,868)
Loss per share (Note 4)
Loss per share (cents): Basic (0.48) (0.58) (1.13)
Loss per share (cents): Diluted n/a n/a n/a
--------------------------------- ---------------- ---------------------- -------------------
Balance Sheet
As at 30 June 2013 As at As at As at
30.06.13 30.06.12 31.12.12
Restated*
Unaudited Unaudited
$000 $000 $000
Non-current assets
Intangible assets 367 174 244
Property, plant & equipment 3 4 4
-------------------------------- ------------ ---------------- ---------------
370 178 248
-------------------------------- ------------ ---------------- ---------------
Current assets
Property, plant and equipment
held for sale 51 882 217
Trade and other receivables 33 871 115
Restricted cash - 1,756 -
Cash and cash equivalents 9,114 12,668 10,480
-------------------------------- ------------ ---------------- ---------------
9,198 16,177 10,812
-------------------------------- ------------ ---------------- ---------------
Total assets 9,568 16,355 11,060
-------------------------------- ------------ ---------------- ---------------
Current liabilities
Trade and other payables (448) (3,759) (322)
Total liabilities (448) (3,759) (322)
-------------------------------- ------------ ---------------- ---------------
Net assets 9,120 12,596 10,738
-------------------------------- ------------ ---------------- ---------------
Equity
Share capital 6,406 6,406 6,406
Share premium account 228,939 228,939 228,939
Retained earnings (226,225) (222,749) (224,607)
-------------------------------- ------------ ---------------- ---------------
Total equity 9,120 12,596 10,738
-------------------------------- ------------ ---------------- ---------------
* The Company's net inventory balance of $882,000 at 30 June
2012 was previously disclosed as Property, plant & equipment
under non-current assets.
Statement of Changes in Equity
For the 6 months ended 30 6 months 6 months Year
June 2013 ended ended ended
30.06.13 30.6.12 31.12.12
Unaudited Unaudited
$000 $000 $000
Opening balance 10,738 14,556 14,556
Loss for period and total
comprehensive income (1,643) (1,985) (3,868)
Credit to equity for share-based
payments 25 25 50
---------------------------------- ----------- --------------- --------------
Closing balance 9,120 12,596 10,738
---------------------------------- ----------- --------------- --------------
Cash Flow Statement
For the 6 months ended 30 June 6 months 6 months Year
2013 ended ended ended
30.06.13 30.06.12 31.12.12
Restated*
Unaudited Unaudited
$000 $000 $000
Net cash from operating activities (842) (621) (1,716)
Investing activities
Interest received 14 6 17
Purchase of tangible and intangible
assets (551) (342) (2,458)
Proceeds from disposal of PPE
held for sale 135 - 718
Transfer from restricted cash - 1,250 1,264
Partner contributions to exploration
activities 25 5,842 6,335
Repayment of payment contributions - (4,136) (4,445)
-------------------------------------- ---------------- --------------- --------------
Net cash generated from/(invested
in) investing activities (377) 2,620 1,431
-------------------------------------- ---------------- --------------- --------------
Net increase/(Decrease) in
cash and cash equivalents (1,219) 1,999 (285)
Cash and cash equivalents at
the beginning of the period 10,480 10,616 10,616
Effect of foreign-exchange
rate changes (147) 53 149
Cash and cash equivalents at
the end of the period 9,114 12,668 10,480
-------------------------------------- ---------------- --------------- --------------
* The 2012 presentation has been restated to disclose $19,000 of
pre-licence costs through net cash from operating activities
instead of through purchase of tangible or intangible assets, as
previously disclosed.
Material non-cash transactions
As restricted cash is excluded from cash and cash equivalents,
then payments for oil expenditure costs from restricted cash are
treated as non-cash transactions.
In addition to the purchase of tangible and intangible assets
stated above, there were $Nil (30 June 2012 - $21,810,000) paid
from restricted cash.
Reconciliation of Operating Loss to Net Cash from Operating
Activities
For the 6 months ended 30 June 6 months 6 months Year
2013 ended ended ended
30.06.13 30.06.12 31.12.12
Restated*
Unaudited Unaudited
$000 $000 $000
Operating loss for the period (1,657) (1,510) (3,352)
Exploration and evaluation
expense 585 701 2,163
Foreign exchange 154 (66) (143)
Depreciation and amortisation
of non-current assets 24 25 50
Interest paid - - (69)
Share-based payment expense 25 25 50
------------------------------------ -------------------- ------------------ ----------------
Operating cash flows before
movement in working capital (869) (825) (1,301)
Decrease/(Increase) in receivables 67 (6) 183
(Decrease)/Increase in payables (40) 210 (115)
Income tax paid - - -
------------------------------------ -------------------- ------------------ ----------------
Net cash from operations (842) (621) (1,233)
Income tax paid - - (483)
------------------------------------ -------------------- ------------------ ----------------
Net cash from operating activities (842) (621) (1,716)
------------------------------------ -------------------- ------------------ ----------------
* The presentation at 30 June 2012 has been restated to exclude
$19,000 of pre-licence expenditure from exploration and evaluation
expense, where it was previously disclosed.
Notes to the Interim Financial Statements for the six months
ended 30 June 2013
1 Basis of preparation and accounting policies
The results for the six months to 30 June 2013 have been
prepared in accordance with the AIM Rules for Companies. As
permitted, the Company has chosen not to adopt IAS 34 "Interim
Financial Statements" in preparing this interim financial
information. The condensed interim financial statements should be
read in conjunction with the annual financial statements for the
year ended 31 December 2012, which have been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted
by the European Union. The accounting policies adopted are
consistent with those of the annual financial statements for the
year ended 31 December 2012.
The financial statements have been prepared under the historical
cost convention.
The interim financial statements have been prepared on a going
concern basis in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRS) as
adopted by the European Union.
These condensed interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year ended 31
December 2012 were approved by the board of directors on 25 March
2013 and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006. These condensed
interim financial statements have been reviewed, not audited.
2. Administrative expenses
6 months 6 months Year
ended ended ended
30.06.13 30.06.12 31.12.12
Restated
Unaudited Unaudited
$000 $000 $000
Auditors' remuneration 26 33 59
Employment costs 561 687 1,272
Legal and professional fees 237 214 482
Management fees 105 237 363
Other expenses 198 211 339
Depreciation and amortisation 24 25 50
Operating Leases - land and
buildings 5 17 20
--------------------------------- ---------------- --------------------- ----------------------
Gross administrative expenses 1,156 1,424 2,585
Reallocation to exploration
and evaluation activities (238) (568) (905)
Total administrative expenses 918 856 1,680
--------------------------------- ---------------- --------------------- ----------------------
3 Segmental information
The Company considers itself to have a single purpose, the
exploration and exploitation of its licences in the North Falkland
Basin, and therefore concludes that it has only one business
segment and only one geographic segment.
4 Loss per share
The calculation of basic loss per share is based upon the loss
for the period and the weighted-average number of shares of
342,282,198 (2012 - 342,285,172) in issue during the period.
There are 10,100,050 (2012 - 12,215,701) of share options and
Share Appreciation Rights in issue that could potentially dilute
the basic earnings per share in the future.
When the Company reports a loss for the period then, in
accordance with International Accounting Standard 33, the share
options are not considered dilutive.
5 Tax
Current tax comprises a provision for tax on the interest
receivable less any allowable expenses, and any adjustment for over
or under provision in prior periods.
There was no tax charge in the 6 months to 30 June 2013 (2012:
$447,000).
6 Copies of report
Copies of this interim statement can be viewed on the Company's
website and will be available to the public at the Registered
Office, Mathon Court, Mathon, Malvern, Worcestershire WR13 5NZ.
Independent review report to Desire Petroleum Plc
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the interim financial report for the six
months ended 30 June 2013, which comprises the income statement,
balance sheet, statement of changes in equity, cash flow statement,
reconciliation of operating loss to net cash from operating
activities and related notes. We have read the other information
contained in the interim financial report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
Directors' responsibilities
The interim financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the interim financial report in accordance with the AIM
Rules for Companies which require that the financial information
must be presented and prepared in a form consistent with that which
will be adopted in the company's annual financial statements.
As disclosed in note 1, the annual financial statements of the
company are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this interim financial report has been prepared in accordance
with the basis of preparation set out in note 1.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the interim financial
report based on our review. This report, including the conclusion,
has been prepared for and only for the company for the purpose of
the AIM Rules for Companies and for no other purpose. We do not, in
producing this report, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown
or into whose hands it may come save where expressly agreed by our
prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the interim financial report for the six months ended 30 June
2013 is not prepared, in all material respects, in accordance with
the basis of preparation set out in note 1 and the AIM Rules for
Companies.
PricewaterhouseCoopers LLP
Chartered Accountants
Uxbridge
16 September 2013
Note (a)
The maintenance and integrity of the Desire Petroleum Plc
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
they were initially presented on the website.
Note (b)
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
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