RNS Number:9464T
Wham Energy plc
29 March 2007
WHAM Energy plc
Preliminary Results for the year ended 31 December 2006
WHAM ENERGY ANNOUNCES PROGRESS ON
NORTH SEA EXPLORATION STRATEGY
WHAM Energy plc, ("WHAM") the AIM-listed North Sea oil and gas exploration
company, has announced its preliminary results for the year ended 31 December
2006. The annual report will be dispatched to shareholders on the 20 April and
the AGM will be held in London on the 16 May.
Operational highlights:
* Farm-out of "Morpheus" blocks 48/3a and 48/4 to Tullow and Dana
* Independent report by TRACS International identified eight drillable
prospects, of which the three most attractive had unrisked resources net
to WHAM totalling 145 BCF (77 BCF risked).
* Eleven new blocks or part blocks acquired in 24th round of UKCS
licensing, while seven 21st and 22nd round blocks were relinquished
Financial highlights:
* Loss after taxation for 2006 was #375,083 (2005: #216,729)
* Year-end liquid resources amounted to #6.82M.
Tom Windle, Chief Executive of WHAM Energy commented:
" WHAM Energy has made good progress in building a successful and established
exploration company on the UK Continental Shelf. During a year of high rig
costs, but falling near term gas prices and intense competition among our peers,
we have farmed out one licence on attractive terms.
" We also acquired some exciting new acreage in the 24th Round and our portfolio
is generating considerable interest among potential farm-in candidates. WHAM
Energy's 22nd and 23rd Round blocks have been evaluated by independent analysts
TRACS International and Fugro Blackwatch. Together they confirm 88 billion cubic
feet of natural gas resources, fully risked and net to WHAM on this retained
acreage, and we are working hard on our strategy to exploit this potential."
-ends-
Date: 29 March 2007
For further information contact:
WHAM Energy plc cityPROFILE
Tom Windle, Chief Executive Simon Courtenay
Alan Thomas, Finance Director Tel: 020-7448-3244
020-7924-4644
WHAM Energy plc is an AIM listed company. Further details are available on the
Company's website: www.whamenergy.com
Preliminary Results for the year ended 31 December 2006
Chairman's Statement
2006 was a year of steady progress for your Company, both by increasing our
technical resources and in adding value to the Company's assets. Our main
achievements have been the recent farm-out of blocks 48/3a & 48/4 containing
the Morpheus prospect, the acquisition of five new licences in the UK and the
identification of several promising drillable structures which we are confident
will be attractive to investors. However, the commercial environment for
explorers has been challenging because, in spite of strong oil and gas prices
through much of the year, the shortage of rigs and consequent high costs of
exploration has created a difficult environment in which to attract good
farm-in candidates and drill exploration targets.
Our main emphasis for exploration continues to be on Southern North Sea gas
prospects within reach of existing pipeline and platform infrastructure. Growth
in our asset base has been an important objective for chief executive Tom Windle
and his exploration team.
Highlights this year include negotiating a farm-out agreement for blocks 48/3a
and 48/4, and the development of several other farm-out opportunities, two or
more of which we expect to capture in 2007. We were successful in the UK
Government's 24th Round, strengthening our gas prone Southern North Sea
exploration acreage with the award after the year-end of five new licences
comprising eleven blocks or part blocks.
In December an independent evaluation of the Company's 22nd and 23rd Round
assets was completed by TRACS International. This report identified 8 prospects
on retained acreage with unrisked resources net to WHAM of 193 billion cubic
feet (BCF) of natural gas. Of these prospects, the three most attractive had
unrisked resources net to WHAM totalling 145 BCF (77 BCF risked). This thorough
evaluation supplements the report in 2005 by Blackwatch which, after adjusting
for the farm-out terms, identified unrisked net resources of 43 BCF of natural
gas in blocks 48/3a and 48/4 (11 BCF risked). Earlier in 2006 we conducted a 3-D
seismic survey over these blocks. This provided good quality data which has
already helped us identify new leads and will allow us to optimise the well
locations.
We also relinquished one 21st Round block and six 22nd Round blocks. Of these
seven blocks, we believe five were not commercially prospective.
Disappointingly, however, two blocks held prospects which we believe could have
been economically attractive had the 20% Supplementary Charge on UKCS activities
been removed.
Staff
In April 2006 we welcomed the appointment of Dr Andrew Mortimer as Exploration
Manager. Andrew's extensive experience in the UK and overseas has enhanced the
Company's ability to identify new prospects within our existing acreage, and
prospective new ventures that fit with our strategy in the UK and elsewhere. In
September our Commercial Director, Mick Jarvis, resigned to take up a position
in Houston with ConocoPhillips. We are grateful to Mick for helping WHAM through
the formative period of WHAM's flotation on AIM and for his contribution to our
legal and commercial affairs. In his place, we welcomed Tony Mulcare as Legal
and Commercial adviser. Tony is highly respected within the industry: as a
director and non-executive Chairman of the UK Gas Interconnector he brings to
WHAM a wealth of knowledge and experience which is highly relevant to our
company's increasing focus on gas.
Finance
At year-end 2006 the Company's liquid resources amounted to #6.82m (2005#9.25m).
During the year no new funds were raised. The Company's cash resources were
employed in acquisition and evaluation of seismic data, and the development of
farm-out opportunities.
Prospect evaluation
The Company's primary objective in 2006 has been to identify and evaluate
prospects within our portfolio, and to attract industry partners to drill those
that we believe are commercial. We have reported previously on the endorsement
of one of these prospects, Morpheus, by Fugro Blackwatch, and in 2006 three more
prospects with commercially attractive potential have been confirmed by TRACS
International. Our goal for 2007 is to find partners to drill these prospects as
soon as possible.
Also in 2006, we evaluated a number of acquisition opportunities both in the UK
and overseas but the price of oil and gas reached new highs in 2006 causing
asset prices to rise above the level we felt appropriate to pay.
Commercial environment
* Rig costs reached a peak during the year, but recent indications are that
rates are now starting to return to more sustainable levels.
* Production of oil and gas in the UK is declining, yet energy demand
remains strong. Future supplies will have to come from further afield and
the transport costs associated with the greater distances will underpin
unitprices for new domestic production. Recent sharp declines in spot gas
prices have not been reflected in the forward market and your Directors see
plenty of evidence to support a positive longer term price scenario.
* We believe that there remain many undrilled prospects that offer
attractive exploration potential. Estimates within the industry range up to
8 billion barrels of oil equivalent left to find in the UKCS.
Conclusion
Your Board is concerned that the hard work and achievements of its exploration
team have not yet been reflected in the performance of the Company's shares.
However, the Morpheus farm-out, the independent confirmation of three more
attractive drillable prospects and the 24th licensing round awards demonstrate
your Company's ability to make progress in a highly competitive environment.
Michael J Pavia
Chairman
23 March 2007
Preliminary Results for the year ended 31 December 2006
PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2006
2006 2005
------- -------
# #
Turnover - 23,598
Cost of sales - -
------- -------
Gross profit - 23,598
Administrative expenses 754,588) (395,086)
------- -------
Operating loss (754,588) (371,488)
------- -------
Loss on ordinary activities before interest (754,588) (371,488)
Interest receivable 379,505 113,313
------- -------
Loss on ordinary activities before taxation (375,083) (258,175)
Tax on loss on ordinary activities - 41,446
------- -------
Loss for the period after taxation (375,083) (216,729)
Retained (loss)/profit brought forward (115,400) 101,329
------- -------
Loss carried forward (490,483) (115,400)
------- -------
Basic and diluted loss per share (see note 4) (1.18)p (1.05)p
BALANCE SHEET
As at 31 December 2006
2006 2005
--- ---
# #
Fixed assets
Intangible assets 1,976,236 518,901
Tangible fixed assets 44,976 20,344
------- -------
2,021,212 539,245
------- -------
Current assets
Debtors 498,004 178,766
Investments (see note) 6,801,405 9,130,277
Cash at bank and in hand 16,017 122,736
------- -------
7,315,426 9,431,779
------- -------
Creditors
Amounts falling due within one year (86,388) (427,991)
------- -------
Net current assets 7,229,038 9,003,788
------- -------
Total assets less current liabilities 9,250,250 9,543,033
------- -------
NET ASSETS 9,250,250 9,543,033
------- -------
Capital and reserves
Called-up share capital 31,696 31,696
Share premium account 9,568,287 9,568,287
Share option reserve 82,300
Other reserves 58,450 58,450
Profit and loss account (490,483) (115,400)
------- -------
EQUITY SHAREHOLDERS' FUNDS 9,250,250 9,543,033
------- -------
Cash Flow Statement
For the year ended 31 December 2006
2006 2005
------ ------
# # # #
Net cash (outflow)/inflow from operating activities (1,348,505) 9,806
(see note)
Returns on investment and servicing of finance
Bank and investment interest receipts 399,006 76,322
Taxation
Taxation paid - (35,000)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (40,221) (18,558)
Payments to acquire intangible fixed assets (1,445,871) (503,709)
------- -------
(1,486,092) (522,267)
------- -------
Net cash flow before use of liquid resources and
financing (2,435,591) (471,139)
Management of liquid resources
Decrease/(increase)in short term deposits 2,328,872 (9,130,277)
Financing
Proceeds from issue of ordinary shares - 10,602,820
Costs associated with share issue - (946,067)
------- --------
- 9,656,753
------- -------
(Decrease)/increase in cash (106,719) 55,337
------- -------
Reconciliation of net cash flow to movement in net
funds
(Decrease)/increase in cash in the year (106,719) 55,337
Cash used to (decrease)/increase liquid resources (2,328,872) 9,130,277
------- -------
Change in net funds (2,435,591) 9,185,614
Net funds at 1 January 2006 9,253,013 67,399
------- -------
Net funds at 31 December 2006 6,817,422 9,253,013
------- -------
Notes:
1. All of the Company's activities are classed as continuing.
2. There are no recognised gains or losses in either year other than the
amounts shown in the profit and loss account.
3. Basis of presentation:
The financial information set out in this announcement does not comprise the
Company's statutory accounts for the years ended 31st December 2006 or
31st December 2005.
The financial information has been extracted from the statutory accounts of the
Company for the years ended 31st December 2006 and 31st December 2005.
The auditors reported on those accounts; their reports were unqualified and
did not contain a statement under either Section 237 (2) or Section 237 (3) of
the Companies Act 1985. The full audited statutory accounts will be included
in the Company's annual report, which will be mailed to shareholders on
20th April 2007. Additional copies will be available at the Company's offices
at 8, Square Rigger Row, Plantation Wharf, London SW11 3TZ after that date.
The statutory accounts for the year ended 31st December 2005 have been
delivered to the Registrar of Companies. Those for 2006 will be delivered to
the Registrar of Companies after the Company's Annual General Meeting,
which is scheduled for 16th May 2007.
The results have been prepared on the same basis as the accounting policies
adopted in the statutory accounts for the year ended 31st December 2005, with
the exception of the implementation of Financial Reporting Standard Number 20 -
share based payments, which had the effect of reducing the profit before and
after taxation by #82,300 (2005: nil).
4. Basic and diluted loss per share:
The basic loss per share has been calculated on the loss on ordinary activities
after taxation of #375,083 (2005: #216,729) divided by the weighted average
number of ordinary shares in issue of 31,695,611 (2005: 20,720,816) during
the year. As the Company reported a loss for the year then, in accordance with
Financial Reporting Standard Number 22, the warrants and options in issue are
not considered dilutive.
5. Investments consisted of money market deposits which earn interest rates set
in advance for periods of 1-2 months by reference to Sterling LIBOR.
6. Reconciliation of operating result to net cash flow from operating
activities
Operating (loss) for the year (754,588) (371,488)
Non cash share based payments 82,300 -
Depreciation 11,263 3,142
(Increase) in debtors (346,275) (35,686)
(Decrease)/increase in creditors (341,205) 413,838
------ ------
Net cash (outflow)/inflow from operating activities (1,348,505) 9.806
------ ------
This information is provided by RNS
The company news service from the London Stock Exchange
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