TIDMCAD
RNS Number : 1567L
Cadogan Petroleum PLC
31 August 2012
CADOGAN PETROLEUM PLC
Half Yearly Report for the Six Months ended 30 June 2012
(Unaudited and Unreviewed)
_______________________________________________________________________________________
Highlights
Cadogan Petroleum plc ("Cadogan" or the "Company"), an
independent oil and gas exploration, development and production
company with onshore gas, condensate and oil assets in Ukraine,
announces its unaudited results for the six months ended 30 June
2012.
-- Continued production from the Zagoryanska, Debeslavetska and
Cheremkivska licences at a combined rate of about 51 mcm/day of gas
and 5.1 tons/day of condensate
-- Joint venture established to develop unconventional shale gas
in Lviv western Ukraine announced
-- New well at Zagoryanska 11 drilled
-- Total capital expenditure of $16.2 million during the first
half of 2012 (30 June 2011: $3.0 million)
-- Decreased operating costs to $4.9 million (H1 2011: $5.4
million) despite significant increase in activity
-- Net cash and cash equivalents at 30 June 2012 of $51.3
million (31 December 2011: $65.0 million)
Commenting on the results, Bertrand des Pallieres Chief
Executive Officer said:
"As predicted in 2011 the Company has made significant progress
in its strategic alliances with both state companies and major oil
companies and is developing exciting opportunities for the
business. Although the results of the shale gas initiative will
take time to be realised, Cadogan is able to participate in this
type of venture without the usual significant levels of capital. A
further initiative is being considered in the shallow Black Sea
area. These activities continue to demonstrate our aim to become a
key player in accelerating the transformation of the energy sector
in Ukraine."
Enquiries:
Cadogan Petroleum +44 (0) 207
Plc 487 8301
Bertrand des Chief Executive
Pallieres Officer
Stefan Bort Company Secretary
------------------- -------------------- ------------
+44 (0) 207
Bankside 397 8888
----------------------------------------- ------------
Simon Rothschild
----------------------------------------- ------------
Board Statement
Introduction
During the first half of 2012 the Group continued to focus on
developing its assets in Ukraine, with continuing production from
one major asset in eastern Ukraine and from three minor assets in
western Ukraine. Although significant increases in production from
new assets have yet to be achieved, management has in 2012 run a
significantly larger capital investment programme than in previous
years, with no corresponding increase in operating costs due to a
significant management focus on productivity initiatives.
In June 2012 Cadogan with its joint venture partner, Ukrainian
state-owned National Joint Stock Company Nak Nadra Ukrayny
("Nadra"), entered into a Share Purchase Agreement with Eni S.p.A
("Eni"), the Italian integrated energy company, whereby Eni will
acquire a stake in the joint venture established by Nadra and
Cadogan, Ukrainian company LLC Westgasinvest. LLC Westgasinvest
currently holds subsoil rights to nine unconventional (shale) gas
license areas in the Lviv Basin of Ukraine, totalling approximately
3,800 square kilometres of acreage. The Lviv Basin is considered to
be one of the most attractive basins in Europe for the exploration
of unconventional gas, being a continuation of the Lublin Basin in
Poland which has already attracted substantial interest from the
hydrocarbon industry.
Under the transaction, Eni will acquire 50.01% of LLC
Westgasinvest from the joint venture parties and will fund an
initial exploration program. Cadogan had transferred ownership of
its two west Ukraine licences, Debeslavetska and Cheremkhivska to
the joint venture. Following the conclusion of the transaction
Cadogan will retain ownership of 15% of LLC Westgasinvest. The
transaction remains conditional on achieving certain conditions
precedent including Ukraine anti monopoly clearance and this is on
target to occur by the end of September. Cadogan remains the
operator for its existing conventional activities at Debeslavetska
and Cheremkhivska and will keep the economic benefit from the
conventional activities on these two licenses.
Operations
During the period to 30 June 2012 the Group continued to operate
safely and efficiently.
Since the end of the half year the Group has concluded the
drilling activity on its Zagoryanska 11 well and the data
acquisition programme is underway. The results will be announced
once the full programme and validation has been concluded. Results
of the various Zagoryanska workovers of the wells acquired in 2010
that were initially drilled in the Soviet era have not been in
accordance with expectations, but the information gathered is being
compiled into a further analysis of the Zagoryanska fields and the
adjacent Pirkroskvoe field to identify reservoir structures. The
rig used on the Zagoryanska 11 drilling project has been moved to
another major oil company project in eastern Ukraine, but will
remain available to Cadogan for further projects in 2013.
Operations at Pokrovskoe remain temporarily suspended. The
Pokrovskoe 2a well was drilled to 4,783 metres into the V22 level
of the Upper Visean. The Logs acquired indicated the presence of
hydrocarbons in the lower part of the well and a decision was taken
to deepen the well by approximately 350 metres. Whilst pulling out
of the hole the running string became stuck and subsequent fishing
operations with the limited equipment available in country has not
allowed the running tool to be recovered. Management will evaluate
the most effective option, amongst those available, to re-enter the
well. After analysis of the results for the Pokroskvoe 1 well,
deepened in 2011, and the Pokroskvoe 2a wells, Eni advised Cadogan
that it did not intend to exercise its option to acquire a further
30% of the share capital of Pokroskvoe Petroleum BV. The option
formed part of the transaction entered into with Eni in July
2011.
Production from the Zagoryanska, Debeslavetska and Cheremkivska
licences continued at a combined rate of approximately 51 mcm/day
of gas and 5.1 tons/day of condensate.
Litigation
Under the October 2009 settlement with Global Process Systems
Inc (GPS), the Group is entitled to a payment of $37.5 million. To
date $7.5 million has been received but the remaining $30 million
due to the Group in 2011 has not been received. As a consequence of
this non-payment the Group rescinded GPS's exclusive right to sell
the plants contained within the settlement agreement and started
legal proceedings to recover the amounts due. The Group retains
legal title to both plants and management continues to expect to
recover value of at least $30 million due to the Group through a
sale of the plants and recovery through litigation.
Financial position
At the date of this report, the Group had cash and cash
equivalents of approximately $46.9 million. The Directors believe
that the capital available at the date of this report is sufficient
for the Company and the Group to continue operations for the
foreseeable future.
Changes to the board
On 26 January 2012 Adelmo Schenato was appointed a director of
the Company and became the Group's Chief Operating Officer. On 19
June 2012 Ian Baron resigned as a director of the Company. Mr
Alessandro Benedetti resigned as a director of the Company on 27
June 2012.
Outlook
Cadogan continues to aggressively develop and manage its
portfolio of assets in Ukraine in order to fully exploit
substantial industry changes taking place there. The Board believes
that this strategy will allow the Company to develop into a
significant player in the potential rich Ukraine energy sector.
Operations review
Reserves and resources
As at 30 June 2012 the Group held working interests in nine
(2011: nine) gas, condensate and oil exploration and production
licences in the east and west of Ukraine. All these assets are
operated by the Group and are located in either the Carpathian
basin or the Dnieper-Donets basin, in close proximity to the
Ukrainian gas distribution infrastructure. The Group's primary
focus is on the four licences where the main reserve and resource
potential is located, Zagoryanska, Pokrovskoe, and Pirkovskoe in
the Dnieper-Donets basin of east Ukraine and Bitlyanska, in the
Carpathian Basin of west Ukraine.
Summary of the Group's licences held at 30 June 2012
Working Licence Expiry Licence type((1)
interest
(%)
--------------- ------------------ ---------------- -----------------
Major licences
40.0 Zagoryanska April 2014 E&D
70.0 Pokrovskoe August 2016 E&D
100.0 Pirkovskoe October 2015 E&D
96.5 Bitlyanska(2) December 2014 E&D
Minor licences
98.3 Debeslavetska(3) October 2026 Production
98.3 Debeslavetska(3) September 2016 Exploration
49.8 Cheremkhivska(3) May 2018 Production
100.0 Slobodo-Rungerska April 2016 E&D
95.0 Monastyretska November 2014 E&D
--------------- ------------------ ---------------- -----------------
(1) E&D = Exploration and Development.
(2) The working interest on the Bitlyanska licence declines on a
stepped basis, every five years after the commencement of
production on each well. The Joint Activity Agreement ('JAA') also
distinguishes working interests on new wells and work over wells
with the former offering a higher share to the Group. Effective
working interests are shown above.
(3) The working interest on Debeslavetske and Cheremkhivske
licences did not change for the conventional gas as the result of
the transaction described in the Board Statement above.
The following are updates to the full Operations Review
contained in the Annual Financial Report for 2011:
Zagoryanska licence
In 2009 the Zagoryanska 3 well was perforated and commercial
flow rates were achieved. Production from the well commenced in
August 2010 at a flow rate of 55 mcm/day (2 million scf/day) of gas
and 15 t/day (120 bpd) of condensate and the well was tied into the
Group's Zagoryanska gas treatment plant. Average monthly gross
production rates during the first half of 2012 were 30 mcm/day gas
(H1 2011: 35 mcm/day) and 5.1 t/day condensate (H1 2011: 8
t/day).
As required by the work programme on the licence, a new well has
been drilled to 5,180 metres at Zagoryanska 11. The well has been
completed and a data acquisition programme is being carried out,
and the results will be available by the end of Q3 2012. The rig
used on the Zagoryanska 11 drilling project has been moved to
another major oil company project in eastern Ukraine. As required
by the licence, further geological and economic estimation of
hydrocarbon reserves, seismic interpretation, modelling and
geological studies of the field are on-going.
Following the purchase of the Zagoryanska 3 well in 2010, (which
it was previously renting), together with four additional wells on
the field a work over plan was prepared for three of the four
additional wells (Zagoryanska 1, 2 and 8). Zagoryanska 1 and 2
wells have been worked over, and work over operations are concluded
and both wells are presently being monitored; the work over of
Zagoryanska 8 identified issues within the old well that could not
be resolved with the fishing equipment available in country and is
temporarily abandoned.
Pokrovskoe licence
At Pokrovskoe 2a the well was drilled to a casing point at 4,783
metres in 2012 where the logs acquired indicated the presence of
hydrocarbons in the lower part of the well and a decision was taken
to deepen the well by approximately 250 metres. Whilst pulling out
of the hole the running string became stuck and the limited fishing
equipment available in country prevented the running tool from
being recovered. The well has therefore been suspended while future
options are considered for the well. After analysis of the results
for the Pokroskvoe 1 well, deepened in 2011, and the Pokroskvoe 2a
wells, Eni advised Cadogan that it did not intend to exercise its
option to acquire a further 30% of the share capital of Pokroskvoe
Petroleum BV. The option formed part of the transaction entered
into with Eni in July 2011.
Pirkovskoe licence
No activity to report up to the date of this report.
Bitlyanska licence area
No activity to report up to the date of this report.
Minor fields
The Group has a number of minor licence areas located in western
Ukraine. These include the following:
-- Debeslavetska Production licence area
The field is currently producing 101.4 boepd (full year 2011 was
84.0 boepd). The planned compressor maintenance is under
schedule.
-- Cheremkhivska Production licence area
This licence is currently producing 23.0 boepd (full year 2011
was 32.8 boepd).
-- Monastyretska licence area
After re-entry of the Blazhiv 1 well in 2011, minor oil
production was re-established at the rate of 16 bopd. A basic
hydraulic formation cleaning on the well was conducted; and present
production is averaging 20 - 25 bopd. Well behaviour is being
monitored and further actions are being considered.
Financial Review
Overview
In the six months ended 30 June 2012 the Group mainly focused on
exploration activity at Pokrovskoe and appraisal activity at
Zagoryanska fields together with its joint venture partner Eni. In
total $16.2 million was spent on capital expenditure, which was a
primary reason for the cash position to decrease to $51.3 million
as at 30 June 2012 from $65.0 million as at 31 December 2011.
Income statement
Loss before tax was $7.1 million (30 June 2011: $6.2 million, 31
December 2011: profit - $152.6 million). Revenues of $2.7 million
(30 June 2011: $4.4 million, 31 December 2011: $7.0 million)
comprised sales of gas from the Debeslavetska, Cheremkhivska fields
and Zagoryanska 3 well. Cost of sales, which represents production
royalties and taxes, depreciation and depletion of producing wells
and direct staff costs amounted to $1.9 million (30 June 2011: $3.5
million, 31 December 2011: $6.3 million) to give a gross profit of
$0.8 million (30 June 2011: $0.8 million, 31 December 2011: $0.7
million). In addition, an increase in the gas price in Ukraine
enabled gross margin to increase to 30% from 19% for the
comparative period in 2011.
-- Other administrative expenses of $4.9 million (30 June 2011:
$5.4 million, 31 December 2011: $11.6 million) comprise staff
costs, professional fees, Directors' remuneration, depreciation
charges on non-producing property, plant and equipment.
-- Net impairment charges of $2.0 million (30 June 2011: $0.3
million reversal of impairment, 31 December 2011: $2.8 million)
relates to Ukrainian VAT impairment.
-- Other operating loss of $1.1 million (30 June 2011: $2.0
million, 31 December 2011: income - $4.6 million) relates to net
foreign exchange losses (30 June 2011: $2.0 million, 31 December
2011: gain - $2.4 million) mainly on the translation of the USD
denominated monetary assets held by the UK companies whose
functional currency is GBP.
Profit on disposal of subsidiaries and other losses for the year
ended 31 December 2011 relate to the Eni transaction completed in
July 2011 (refer to note 39 to the Consolidated Financial
Statements for year ended 31 December 2011).
Cash flow statement
The Condensed Consolidated Cash Flow Statement on page 13 shows
expenditure of $6.1 million (30 June 2011: $2.0 million, 31
December 2011: $16.9 million) on intangible Exploration and
evaluation assets (E&E) and $10.0 million (30 June 2011: $0.9
million, 31 December 2011: $4.4 million) on Property, plant and
equipment (PP&E). In addition, the Group received $4.1 million
(30 June 2011: $nil, 31 December 2011: $58.0 million) as a part of
deferred consideration from disposal of subsidiaries in 2011.
Net cash outflow from operations has decreased to $2.2 million
during six months ended 2012 from $3.5 million in the same period
of 2011 mainly due to changes in the working capital.
Balance sheet
As at 30 June 2012, the Group had net cash and cash equivalents
of $51.3 million (30 June 2011: $30.9 million, 31 December 2011:
$65.0 million). Intangible E&E assets of $71.7 million (30 June
2011: $8.4 million, 31 December 2011: $66.0 million) represent the
carrying value of the Group's investment in exploration and
appraisal assets, mainly at Pokrovskoe licence. It also includes
$40.3 million of fair value uplift recognised in 2011 from the
valuation of the 70% jointly-controlled interest in the former
subsidiary which holds the licence. The PP&E balance of $107.9
million (30 June 2011: $53.2 million, 31 December 2011: $99.4
million), comprised of the cost of developing fields with
commercial reserves and bringing them into production. It includes
$40.0 million of fair value uplift recognised in 2011 from the
valuation of the 40% jointly-controlled interest in the former
subsidiary which holds Zagoryanska licence. Trade and other
receivables of $58.5 million (30 June 2011: $35.8 million, 31
December 2011: $66.3 million) include $30.0 million (30 June 2011:
$30.0 million, 31 December 2011: $30.0 million) receivables in
respect of the settlement with GPS, $24.7 million (30 June 2011:
$nil, 31 December 2011: $29.1 million) represent deferred and
contingent consideration for the disposal of two of Group's
subsidiaries to Eni in July 2011 and $1.1 million prepayments (30
June 2011: $3.3 million, 31 December 2011: $4.3 million) mostly
relate to prepayments made to contractors in Ukraine for the
drilling and work over campaign.
Related party transactions
No material transactions have taken place with related parties
during the six months to 30 June 2012.
Commitments
There has not been any change to the commitments and
contingencies reported as at 31 December 2011 (refer to page 64 of
the Annual Report).
Treasury
The Group continually monitors its exposure to currency risk. It
maintains a portfolio of cash and cash equivalent balances mainly
in US dollars ('USD') held primarily in the UK and holds these
mostly in term deposits depending on the Group's operational
requirements. Production revenues from the sale of hydrocarbons are
received in the local currency in Ukrainian hryvnia ('UAH') and to
date funds from such revenues have been held in Ukraine for further
use in operations rather than being remitted to the UK. Funds are
transferred to the Company's subsidiaries in USD to fund operations
at which time the funds are converted to UAH. Some payments are
made on behalf of the subsidiaries from the UK.
Key performance indicators
The Group monitors its performance in implementing its strategy
with reference to clear targets set out for five key financial and
one key non-financial performance indicators ('KPIs'):
-- to increase oil, gas and condensate production measured on
number of barrels of oil equivalent produced per day ('boepd');
-- to increase the Group's oil and gas reserves by de-risking
possible resources and contingent reserves into 2P Reserves. This
is measured in million barrels of oil equivalent ('mmboe');
-- to increase the realised price per 1,000 cubic metres;
-- to decrease the cost per barrel for exploration and acquisition related expenditure;
-- to increase the Group's basic and diluted earnings per share; and
-- to reduce the number of lost time incidents.
The Group's performance during the six months 2012 against these
targets is set out in the table below, together with the prior year
performance data. No changes have been made to the source of data
or calculation used in the period/year.
Unit 30 June 30 June 31 December
2012 2011 2011
----------- -------- --------
Financial KPIs
Average production (working
interest basis) (1) boepd 210 424 297
2P reserves (2) mmboe 2.6 2.6 2.6
Realised price per 1,000 cubic
metres (3) $ 489.9 345.2 395.1
Basic and diluted (loss)/profit
per share (4) cent (3.1) (2.5) 65.6
Non-financial KPIs
Lost time incidents (5) incidents - - 2
--------------------------------- ----------- -------- -------- ------------
(1) Average production is calculated as the average daily
production during the period.
(2) Quantities of 2P reserves as at 30 June 2012 and 31 December
2011 are based on Gaffney, Cline & Associates' independent
reserves report on 2P Reserves as at 31 December 2009, dated 16
March 2010, as adjusted for the actual production until 30 June
2012, 30 June 2011 and 31 December 2011 respectively.
(3) This represents the average price received for gas sold
during the period (including VAT).
(4) Basic and diluted (loss)/profit per Ordinary share is
calculated by dividing the net (loss)/profit for the period
attributable to Ordinary equity holder of the parent by the
weighted average number of Ordinary shares during the period.
(5) Lost time incidents relate to injuries where an
employee/contractor is injured and has time off work.
Risk and Uncertainties
There are a number of potential risks and uncertainties inherent
in the oil and gas sector which could have a material impact on the
long-term performance of the Group and which could cause the actual
results to differ materially from expected and historical results.
The Company has taken reasonable steps to mitigate these where
possible. Full details are disclosed on pages 12 to 13 of the 2011
Annual Financial Report. There have been no changes to the risk
profile during the first half of the year. These are summarised
below:
Operational risks
-- Health, safety, and environment
-- Drilling operations
-- Production and maintenance
-- Work over and abandonment
-- Subsurface risks
Financial risks
-- Recoverability of the Group's assets
-- Liquidity risk, management and going concern assumption
-- Regulatory and tax compliance risk
-- Fraud risk
-- Foreign exchange risk
-- Inflation risk
-- Credit risk
-- Commodity price risk
Corporate risks
-- Regulatory and licence issues
-- Emerging market risk
-- Insurance risk
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
(a) the Condensed set of Financial Statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting';
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year);
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein); and
(d) the condensed set of financial statements, which has been
prepared in accordance with the applicable set of accounting
standards, gives a true and fair view of the assets, liabilities,
financial position and profit or loss of the issuer, or the
undertakings included in the consolidation as a whole as required
by DTR 4.2.4R.
This Half Yearly Report has been approved by the Board and
signed on its behalf by:
Stefan Bort
Company Secretary
30 August 2012
_______________________________________________________________________________________
Cautionary Statement
The business review and certain other sections of this Half
Yearly Report contain forward looking statements that have been
made by the directors in good faith based on the information
available to them up to the time of their approval of this report.
However they should be treated with caution due to inherent
uncertainties, including both economic and business risk factors,
underlying any such forward-looking information and no statement
should be construed as a profit forecast.
Condensed Consolidated Income Statement
Six months ended 30 June 2012
Six months ended Year ended
30 June 31 December
2012 2011 2011
$'000 $'000 $'000
Notes (Unaudited) (Unaudited) (Audited)
------------------------------------- ------ ------------ ------------ -------------
CONTINUING OPERATIONS
Revenue 2,740 4,373 6,981
Cost of sales (1,917) (3,542) (6,264)
------------------------------------- ------ ------------ ------------ -------------
Gross profit 823 831 717
Administrative expenses:
Other administrative expenses (4,895) (5,427) (11,634)
(Impairment)/reversal of impairment
of other assets (2,009) 341 (2,818)
(6,904) (5,086) (14,452)
Gain on disposal of subsidiaries - - 164,945
Other losses - - (3,299)
Other operating (loss)/income 4 (1,082) (2,000) 4,552
------------------------------------- ------ ------------ ------------ -------------
Operating (loss)/profit (7,163) (6,255) 152,463
Investment revenue 91 45 155
Finance costs (7) (6) (11)
(Loss)/profit before tax (7,079) (6,216) 152,607
Tax (62) 441 473
------------------------------------- ------ ------------ ------------ -------------
(Loss)/profit for the period/year 5 (7,141) (5,775) 153,080
------------------------------------- ------ ------------ ------------ -------------
Attributable to:
Owners of the Company (7,141) (5,775) 151,549
Non-controlling interest - - 1,531
------------------------------------- ------ ------------ ------------ -------------
(7,141) (5,775) 153,080
(Loss)/profit per Ordinary share cent cent cent
Basic and diluted 6 (3.1) (2.5) 65.6
------------------------------------- ------ ------------ ------------ -------------
Condensed Consolidated Statement of Comprehensive Income
Six months ended 30 June 2012
Six months ended Year ended
30 June 31 December
2012 2011 2011
$'000 $'000 $'000
(Unaudited) (Unaudited) (Audited)
----------------------------------- --- ------------ ------------ -------------
(Loss)/profit for the period/year (7,141) (5,775) 153,080
Unrealised currency translation
differences 152 2,270 (2,067)
Total comprehensive (loss)/profit
for the period/year (6,989) (3,505) 151,013
---------------------------------------- ------------ ------------ -------------
Attributable to:
Owners of the Company (6,989) (3,505) 149,482
Non-controlling interest - - 1,531
---------------------------------------- ------------ ------------ -------------
(6,989) (3,505) 151,013
--------------------------------------- ------------ ------------ -------------
Condensed Consolidated Balance Sheet
Six months ended 30 June 2012
Six months ended Year ended
30 June 31 December
2012 2011 2011
$'000 $'000 $'000
Notes (Unaudited) (Unaudited) (Audited)
-------------------------------------- ------ ------------ ------------ -------------
ASSETS
Non-current assets
Intangible exploration and evaluation
assets 7 71,706 8,370 65,972
Property, plant and equipment 7 107,865 53,210 99,373
Other financial assets 37 719 -
-------------------------------------- ------ ------------ ------------ -------------
179,608 62,299 165,345
Current assets
Inventories 6,465 4,695 6,556
Trade and other receivables 8 58,457 35,758 66,251
Other financial assets - 372 -
Cash and cash equivalents 51,317 30,853 65,039
-------------------------------------- ------ ------------ ------------ -------------
116,239 71,678 137,846
-------------------------------------- ------ ------------ ------------ -------------
Total assets 295,847 133,977 303,191
-------------------------------------- ------ ------------ ------------ -------------
LIABILITIES
Non-current liabilities
Deferred tax liabilities (11,554) (457) (11,538)
Long-term provisions (597) (439) (548)
-------------------------------------- ------ ------------ ------------ -------------
(12,151) (896) (12,086)
Current liabilities
Short-term borrowings - (372) -
Trade and other payables (7,129) (4,293) (7,552)
Current provisions (527) (751) (524)
-------------------------------------- ------ ------------ ------------ -------------
(7,656) (5,416) (8,076)
-------------------------------------- ------ ------------ ------------ -------------
Total liabilities (19,807) (6,312) (20,162)
-------------------------------------- ------ ------------ ------------ -------------
Net assets 276,040 127,665 283,029
-------------------------------------- ------ ------------ ------------ -------------
EQUITY
Share capital 13,337 13,337 13,337
Retained earnings 383,114 232,188 389,734
Cumulative translation reserves (123,632) (119,447) (123,784)
Other reserves 2,823 2,720 3,344
-------------------------------------- ------ ------------ ------------ -------------
Equity attributable to equity holders
of the parent 275,642 128,798 282,631
Non-controlling interest 398 (1,133) 398
-------------------------------------- ------ ------------ ------------ -------------
Total equity 276,040 127,665 283,029
-------------------------------------- ------ ------------ ------------ -------------
Condensed Consolidated Cash Flow Statement
Six months ended 30 June 2012
Six months ended Year ended
30 June 31 December
2012 2011 2011
$'000 $'000 $'000
Note (Unaudited) (Unaudited) (Audited)
--------------------------------------- ----- ------------ ------------ -------------
Net cash outflow from operating
activities 9 (2,165) (3,450) (7,885)
Investing activities
Proceeds from disposal of subsidiaries 4,142 - 57,954
Purchases of property, plant and
equipment (10,024) (926) (4,402)
Purchases of intangible exploration
and evaluation assets (6,140) (2,048) (16,893)
Proceeds from sale of property,
plant and equipment 459 27 87
Acquisition of financial assets (37) - -
Interest received 91 45 155
--------------------------------------- ----- ------------ ------------ -------------
Net cash (used in)/from investing
activities (11,509) (2,902) 36,901
--------------------------------------- ----- ------------ ------------ -------------
Financing activities
Proceeds from short-term borrowings - - (371)
Net cash used in financing activities - - (371)
--------------------------------------- ----- ------------ ------------ -------------
Net (decrease) /increase in cash
and cash equivalents (13,674) (6,352) 28,645
Effect of foreign exchange rate
changes (48) 786 (25)
Cash and cash equivalents at beginning
of period/year 65,039 36,419 36,419
--------------------------------------- ----- ------------ ------------ -------------
Cash and cash equivalents at end
of period/year 51,317 30,853 65,039
--------------------------------------- ----- ------------ ------------ -------------
Condensed Consolidated of Changes in Equity
Six months ended 30 June 2012
Other reserves
Cumulative Share-based
Share Retained translation payment Non-controlling
capital earnings reserves $'000 Reorganisation interest Total
$'000 $'000 $'000 $'000 $'000 $'000
As at 1 January 2011 13,337 237,963 (121,717) 1,131 1,589 (1,133) 131,170
Share-based
payments - - - - - - -
Net loss for the period - (5,775) - - - - (5,775)
Exchange translation
differences on foreign
operations - - 2,270 - - - 2,270
----------------------- ----------------- ------------------ -------------------- ---------------- ---------------- ---------------- ------------------
As at 30 June 2011 13,337 232,188 (119,447) 1,131 1,589 (1,133) 127,665
Share-based
payments - 222 - 624 - - 846
Net income for the
period - 157,324 - - - 1,531 158,855
Exchange translation
differences on foreign
operations - - (4,337) - - - (4,337)
----------------------- ----------------- ------------------ -------------------- ---------------- ---------------- ---------------- ------------------
As at 1 January 2012 13,337 389,734 (123,784) 1,755 1,589 398 283,029
Share-based payments - 521 - (521) - - -
Net loss for
the period - (7,141) - - - - (7,141)
Exchange translation
differences on foreign
operations - - 152 - - - 152
----------------------- ----------------- ------------------ -------------------- ---------------- ---------------- ---------------- ------------------
As at 30 June 2012 13,337 383,114 (123,632) 1,234 1,589 398 276,040
----------------------- ----------------- ------------------ -------------------- ---------------- ---------------- ---------------- ------------------
Notes to the Condensed Financial Statements
1. General information
Cadogan Petroleum plc (the 'Company', together with its
subsidiaries the 'Group'), is incorporated in England and Wales
under the Companies Act. The address of the registered office is
One Fleet Place, London, EC4M 7WS. The nature of the Group's
operations and its principal activities are set out in the
Operations Review on pages 4 to 5 and the Financial Review on pages
6 and 7.
The financial information for the year ended 31 December 2011
does not constitute statutory accounts as defined in section 434 of
the Companies Act 2006, but is derived from those accounts.
Statutory accounts for the year ended 31 December 2011 have been
delivered to the Registrar of Companies. The auditor's report on
those accounts was not qualified but contained an emphasis of
matter in relation to the uncertainty over recoverability of the
amounts included within current other receivables in respect of two
gas plants being sold by Global Process Systems LLC ("GPS") as set
out in note 4(b) to those accounts. The auditor's report did not
contain a statement under section 498(2) (unable to determine
whether adequate accounting records had been kept) or 498(3)
(failure to obtain necessary information and explanations) of the
Companies Act 2006.
This Half Yearly Report has not been audited or reviewed in
accordance with the Auditing Practices Board guidance on 'Review of
Interim Financial Information'.
A copy of this Half Yearly Report has been published and may be
found on the Company's website.
2. Basis of preparation
The annual financial statements of the Group are prepared in
accordance with International Financial Reporting Standards
('IFRS') as issued by the International Accounting Standards Board
('IASB') and as adopted by the European Union ('EU'). These
Condensed Financial Statements have been prepared in accordance
with IAS 34 Interim Financial Reporting, as issued by the IASB.
The same accounting policies and methods of computation are
followed in the condensed financial statements as were followed in
the most recent annual financial statements of the Group, which
were included in the Annual Report issued on 27 April 2012.
(a) Going concern
The Directors have continued to use the going concern basis in
preparing these condensed financial statements. The Group's
business activities, together with the factors likely to affect
future development, performance and position are set out in the
Operations Review on pages 4 and 5. The financial position of the
Group, its cash flow and liquidity position are described in the
Financial Review on pages 6 and 7.
The Group's cash balance as at 30 June 2012 was $51.3 million
(31 December 2011: $65.0 million) with no external debt and the
Directors believe that the funds available at the date of issue of
this financial information is sufficient for the Group to manage
its business risks successfully.
The Group's forecasts and projections, taking into account
reasonably possible changes in operational performance, start dates
and flow rates for commercial production and the price of
hydrocarbons sold to Ukrainian customers, show that there are
reasonable expectations that the Group will be able to operate on
funds currently held and those generated internally, for the
foreseeable future, without taking into account receivables from
litigation and without the requirement to seek external
financing.
After making enquiries and considering the uncertainties
described above, the Directors have a reasonable expectation that
the Company and the Group have adequate resources to continue in
operational existence for the foreseeable future and consider the
going concern basis of accounting to be appropriate. Thus they
continue to adopt the going concern basis of accounting in
preparing the financial information.
(b) Transition to US dollar reporting
The Directors decided to change the Group's presentation
currency from sterling to US dollars with effect from 1 January
2011. The 2011 consolidated financial statements were the first
financial statements and the accompanying notes to be reported in
US dollars.
The change of the Group's presentation currency has been
accounted for in accordance with IAS 21 'The Effects of Changes in
Foreign Exchange Rates'. The following methodology was used to
re--present the financial information into US dollars as at 30 June
2011 and the period then ended, originally reported in pounds
sterling:
a) assets and liabilities were translated into US dollars at the
closing rate prevailing at the balance sheet dates
(1US$/0.6242GBP);
b) income and expenses were translated into US dollars at the
average exchange rate for the relevant period (1US$/0.6186GBP);
and
c) equity items were translated at historical exchange rates,
all resulting exchange rate differences have been recognised in
other comprehensive income, within the foreign currency translation
reserve.
(c) Dividend
The Directors do not recommend the payment of a dividend for the
period (30 June 2011: $nil; 31 December 2011: $nil).
3. Business and geographical segments
The Directors continue to consider there to be only one business
segment, the exploration and development of oil and gas revenues
and only one geographical segment, being Ukraine.
4. Other operating (loss)/income
Six months ended Year ended
30 June 31 December
2012 2011 2011
$'000 $'000 $'000
Out of court settlements - - 2,144
Net foreign exchange (losses)/gains (1,082) (2,000) 2,408
(1,082) (2,000) 4,552
----------------------------------------------- --------- -------- -------------
5. (Loss)/profit for the period/year
The (loss)/profit for the period/year is stated after
(charging)/crediting:
Six months ended Year ended
30 June 31 December
2012 2011 2011
$'000 $'000 $'000
Depreciation of property, plant and equipment (871) (1,330) (2,411)
Gain on disposal of subsidiaries - - 164,945
Other losses - - (3,299)
Gain/(loss) on disposal of property,
plant and equipment 41 (8) (13)
(Impairment)/reversal of impairment (2,009) 341 (2,818)
Staff costs (2,132) (1,704) (4,587)
Net foreign exchange (loss)/gain (1,082) (2,000) 2,408
--------------------------------------------------------- --------- -------- -------------
Profit on disposal of subsidiaries and other losses for the year
ended 31 December 2011 relate to the transaction with Eni completed
in July 2011 (refer to note 39 to the Consolidated Financial
Statements for year ended 31 December 2011).
6. (Loss)/profit per ordinary share
(Loss)/profit per ordinary share is calculated by dividing the
net (loss)/profit for the period/year attributable to Ordinary
equity holders of the parent by the weighted average number of
Ordinary shares outstanding during the period/year. The calculation
of the basic and diluted loss per share is based on the following
data:
Six months ended Year ended
30 June 31 December
2012 2011 2011
(Loss)/profit attributable to owners $'000 $'000 $'000
of the Company
(Loss)/profit for the purposes of basic
profit per share being net (loss)/profit
attributable to owners of the Company (7,141) (5,775) 151,549
Number Number Number
Number of shares '000 '000 '000
------------------------------------------- --------- --------- -------------
Weighted average number of Ordinary shares
for the purposes of basic (loss)/profit
per share 231,092 231,092 231,092
Effect of dilutive potential ordinary
shares:
Options and warrants outstanding - - 95
Weighted average number of Ordinary shares
for the purposes of diluted profit per
share 231,092 231,092 231,187
cent cent cent
------------------------------------------- --------- --------- -------------
(Loss)/profit per Ordinary share
Basic (3.1) (2.5) 65.6
Diluted (3.1) (2.5) 65.6
------------------------------------------- --------- --------- -------------
7. Non-current assets
During the period additions $6.1 million (H1 2011: $2 million)
and $10.0 million (H1 2011: $0.9 million) were made to E&E and
PP&E assets respectively, which mainly represent the capital
program on the Pokrovskoe and Zagoryanska licenses.
8. Trade and other receivables
Six months ended Year ended
30 June 31 December
2012 2011 2011
$'000 $'000 $'000
Other receivables 57,317 32,288 61,816
VAT recoverable 72 179 127
Prepayments 1,068 3,291 4,308
------------------ --------- -------- -------------
58,457 35,758 66,251
------------------ --------- -------- -------------
All sales of hydrocarbons are made on a prepayment basis, so
there are no trade debtors.
Out of $57.3 million of other receivables $30.0 million as at 30
June 2012 (30 June 2011: $30.0 million, 31 December 2011: $30.0
million) represent receivables from a settlement agreement with
GPS, $24.7 million (30 June 2011: $nil, 31 December 2011: $29.1
million) represents deferred and contingent consideration for the
disposal of two of Group's subsidiaries to Eni in 2011.
VAT recoverable relates to the UK VAT recoverable. VAT
recoverable in Ukraine is impaired in full as the Board considers
that such VAT is only recoverable on commencement of significant
production, while cash recovery is not considered likely due to
Ukrainian budgetary issues. The amount of the impairment provision
against Ukrainian VAT recoverable as at 30 June 2012 is $20.0
million (30 June 2011: $18.0 million, 31 December 2011: $18.2
million).
$1.1 million prepayments (30 June 2011: $3.3 million, 31
December 2011: $4.3 million) mostly relate to prepayments made to
to contractors in Ukraine for the drilling and work over
campaign.
The Directors consider that the carrying amount of the remaining
other receivables approximates their fair value and none of which
are past due except for the amounts due from GPS (refer to note
4(b) of the 2011 Annual Report). Cadogan has commenced legal action
in the High Court of England and Wales to recover this debt but
continues to assist GPS in its attempts to sell the plant. The
Group retains legal title to both plants and management continues
to expect to recover value of at least $30 million due to the Group
through a sale of the plants and recovery through litigation.
9. Notes to the condensed cash flow statement
Six months ended Year ended
30 June 31 December
2012 2011 2011
$'000 $'000 $'000
(Unaudited) (Unaudited) (Audited)
------------------------------------------------------ ------------ ------------ -------------
Operating (loss)/profit (7,163) (6,255) 152,463
Adjustments for:
Depreciation of property, plant and equipment 871 1,330 2,411
Share-based payment charge - - 846
Gain on disposal of subsidiaries - - (164,945)
Other losses - - 3,299
Reversal of impairment of inventories (45) (166) (344)
Impairment/(reversal of impairment) of
VAT recoverable 2,054 (178) 3,162
(Gain)/loss on disposal of property,
plant and equipment (41) 8 13
Effect of foreign exchange rate changes 684 1,634 (1,691)
------------------------------------------------------ ------------ ------------ -------------
Operating cash flows before movements
in working capital (3,640) (3,627) (4,786)
Decrease/(increase) in inventories 73 (409) (2,563)
Decrease/(increase) in receivables 1,871 3,421 (3,027)
(Decrease)/increase in payables and provisions (422) (2,740) 1,589
Decrease in other financial assets - - 1,035
Cash used in operations (2,118) (3,355) (7,752)
Income taxes paid (47) (95) (133)
------------------------------------------------------ ------------ ------------ -------------
Net cash outflow from operating activities (2,165) (3,450) (7,885)
------------------------------------------------------ ------------ ------------ -------------
10. Related party transactions
No related party transactions have taken place in the six months
ended 30 June 2012 that have materially affected the financial
position or the performance of the Group during the period.
11. Post balance sheet events
No post balance sheet events have taken palce after 30 June
2012.
12. Commitments and contingencies
There has not been any change to the commitments and
contingencies reported on page 64 of the Annual Report.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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