TIDMFEP
RNS Number : 9376B
Forum Energy Plc
10 March 2014
10 March 2014
FORUM ENERGY PLC
("Forum Energy" or the "Company")
Audited results for the year ended 31 December 2013
Forum Energy, the UK incorporated oil and gas exploration and
production company with a focus on the Philippines, today announces
its audited results for the year ended 31 December 2013.
OPERATIONAL Highlights
-- SC72 drilling programme commencement pending due to the
on-going discussions between the Philippine and Chinese
governments. An extension has been granted to August 2015 to
complete the second sub-phase obligations of drilling wells on SC72
and the Philippine government remains supportive of Forum's
entitlement to drill the area;
-- Galoc Phase II completed in November 2013, with the drilling
of two additional wells, which resulted in increased production, at
the Galoc Oil field from an average 4,720 barrels of oil per day
(bopd) to an average daily rate of 9,800 bopd since Phase II
commenced; and
-- Continued technical review of the SC40 onshore area to
determine any potential drilling prospects.
Financial and Corporate Highlights
-- Revenues of US$4.4 million in 2013 (2012: US$4.5 million)
-- Gross profit of US$1.5 million in 2013 (2012: US$0.9 million)
-- Administrative expense reduced to US$2.5 million in 2013;
including payments of US$0.5 million restructuring costs in 2013
(2012 - total administrative expense of US$2.8 million)
-- Impairment charge of US$1.3 million in 2013 (2012: US$25.4
million), mainly relating to the Libertad field
-- Net loss attributable to owners of the parent of US$2.9
million (2012: US$26.3 million after impairment)
-- Working capital of US$0.3 million at year end (2012 US$6.1
million - excluding the Philex loan facility)
-- Available funds of US$2.8m under the Philex loan facility as
at 31 December 2013 (2012: Nil)
-- Capital spend on Galoc Phase II of US$4.2 million (2012:
US$0.7 million) which will improve our future production and
revenue stream
-- Increased loan facility from Philex Group to US$18 million
and extended repayment date to 24 November 2016
Robin Nicholson, Chairman, commented: "Whilst it is
disappointing that we have been unable, as a result of matters
beyond our control, to carry out drilling under the second
sub-phase of the Service Contract 72 contract, we remain committed
to pursuing the project and continue to have the support of the
Philippine Government as demonstrated by the extension awarded in
respect of the second sub-phase. We remain financially committed to
ensure the Company ultimately achieves its objectives at such time
as government approval to proceed with work at SC72 is granted. Our
producing Galoc field is performing well and our future revenue
stream remains encouraging. We are also pleased to have recorded
US$1.5m gross profit for the year and intend to explore other
possible transactions for the Company. We thank our shareholders
for their ongoing support and will update the market as
developments occur."
The Company expects to announce, in due course, when it has
posted its Annual Report and Accounts and AGM Notice.
For further information please contact:
Forum Energy Plc
Andrew Mullins, Executive Director Tel: +44 (0) 1932 445 344
Execution Noble & Company Limited
Harry Stockdale Tel: +44 (0) 20 7456 9191
John Llewellyn-Lloyd
Or visit the Company's website:
www.forumenergyplc.com <http://www.forumenergyplc.com>
OVERVIEW
The Company's primary focus is on developing its current
production and exploration licences.
The principal asset of the Company is a 70% interest in Service
Contract 72 (SC72), an 8,800-square kilometre (Km(2) ) offshore
petroleum licence situated west of Palawan Island in the West
Philippine Sea. In 2006, results from a 250 Km(2) 3D seismic survey
over the licence area indicated a mean volume of 3.4 trillion cubic
feet (TCF) gas-in-place (GIP) with significant upside potential. It
is a primary objective of the Company to establish the
commerciality of the hydrocarbons within SC72.
In March 2011, a total of 565 Km(2) of 3D seismic data was
acquired over the Sampaguita Gas Field and 2,202 Line-Km of 2D
seismic data was acquired to further define additional leads
identified within the SC72 acreage and to possibly upgrade existing
leads to prospects. This work, which satisfied Forum's obligations
with the Philippine Department of Energy under the first sub-phase
of the SC72 contract, was primarily designed to provide a more
comprehensive evaluation of the SC72 property and to identify
potential sites for appraisal wells.
SC72 seismic interpretation and resources update was completed
in April 2012, which showed
an improvement in the resources previously known and supported
the case to proceed with the drilling programme.
During 2012, the increased territorial disputes between the
Philippine and Chinese governments resulted in the Company being
unable to obtain permission to deploy vessels to perform the
planned drilling programme. Recognising that these matters were
beyond the control of the Company, in January 2013
the Philippine Department of Energy granted an extension to
August 2015 for the Company to complete
its second sub-phase work obligations which are expected to cost
in excess of US$50 million.
Our largest producing asset is the Galoc oil field which
accounts for 76% of our total income (2012 - 81%). We plan to
continue participating in the continued development of the field to
maximise our revenue stream.
ASSET SUMMARY
SC72 (70% interest)
The SC72 licence was awarded on 15 February 2010. It covers an
area of 8,800 Km(2) and contains the Sampaguita Gas Discovery which
has the potential to contain In-Place Contingent Resources of 2.6
TCF of gas plus another In-Place Prospective Resources totalling
5.5 TCF based on a resource assessment performed in 2012 by
Weatherford Petroleum Consultants, an independent qualified
competent person. The results of the study were used to define the
location of two wells, to be named Sampaguita-4 and Sampaguita-5.
The drilling of two wells is part of the work programme of the
Company for the second sub-phase of SC72, which must be completed
by 14 August 2015, having been granted an extension by the
Philippine Department of Energy.
Galoc (2.27% interest)
Production from the Galoc development reached 1.72 million
barrels gross in 2013 (1.48 million barrels gross in 2012) and is
expected to produce 2.9 million barrels in 2014. The Company has a
2.27% interest in the field and received US$2.1 million (US$2.5
million in 2012) after deduction of share of operating costs from
crude sales from the field during the year. The second phase of
development was completed in November 2013 with the drilling of two
additional production wells, which increased production from 4,720
gross bopd to an average 9,800 bopd from the second phase
commencing. The Company secured US$2.58 million of financing from
BNP Paribas in 2012 to help fund its share of development costs for
this phase of the project.
SC40 (66.67% interest)
SC40 contains the producing Libertad gas field and the Maya
field as well as several other prospects and leads. On 30 January
2009, the company entered into a Gas Sale & Purchase Agreement
(GSPA) with Desco, Inc., for the development of the Libertad gas
field for power generation. On 3 February 2012, commercial
production at the Libertad Field commenced and, as at 31 December
2013, the field has produced 151 million cubic feet of gas gross.
However these revenues are not material to the group's cash flow.
Having received a resource assessment from Petroleum Geo-Services
Asia Pacific Pte Ltd (PGS), an independent competent person, on 19
February 2013 the investment in SC40 was impaired in 2012 by
US$25.4 million to US$3.25 million. An important factor in this
assessment was that third parties had experienced a dry hole while
drilling within the Tañon Straits which significantly reduced the
likelihood of commercially viable hydrocarbon deposit in the
offshore part of SC40. Further technical studies were undertaken in
onshore prospects in Cebu and will continue in 2014 to determine
whether an exploration well will be drilled.
LATEST RESOURCES AT SERVICE CONTRACT 72
In 2012, Weatherford Petroleum Consultants ("Weatherford")
completed a report on SC72, which took into account the 2,202
Line-Km of 2D seismic data over SC72 and 565 Km(2) of 3D seismic
data over the Sampaguita Gas Field in SC72. Weatherford produced
the following summary of unrisked resources initially in place:
SC72 - In-Place Contingent Resources:
Gross Net Attributable
--------- --------- --------- --------- ----------------- ---------
Oil & Liquids Low Best High Low Best High
Contingent
Resources Estimate Estimate Estimate Estimate Estimate Estimate
-------------------- --------- --------- --------- --------- ----------------- ---------
Sampaguita segment
2 34 59 103 24 41 72
Sampaguita segment
4 3 6 12 2 4 8
-------------------- --------- --------- --------- --------- ----------------- ---------
Total for Oil
& Liquids
(OOIP) MMbbls 37 65 115 26 45 80
-------------------- --------- --------- --------- --------- ----------------- ---------
Sampaguita segment
2 1,348 2,354 4,110 944 1,648 2,877
Sampaguita segment
4 127 249 488 89 174 342
-------------------- --------- --------- --------- --------- ----------------- ---------
Total for Gas
(GIIP) BCF 1,475 2,603 4,598 1,033 1,822 3,219
-------------------- --------- --------- --------- --------- ----------------- ---------
SC72 - In-Place Prospective Resources:
Gross Net Attributable
--------- --------- --------- --------- --------------------
Oil & Liquids Low Best High Low Best High
Prospective
Resources Estimate Estimate Estimate Estimate Estimate Estimate
--------------------- --------- --------- --------- --------- --------- ---------
Sampaguita segment
1 40 76 146 28 53 102
Sampaguita segment
3 34 61 110 24 43 77
North Bank prospect 43 83 160 30 58 112
--------------------- --------- --------- --------- --------- --------- ---------
Total Oil &
Liquids (OOIP)
MMbbls 117 220 416 82 154 291
--------------------- --------- --------- --------- --------- --------- ---------
Sampaguita segment
1 1,603 3,055 5,821 1,122 2,139 4,075
Sampaguita segment
3 1,357 2,441 4,393 950 1,709 3,075
North Bank prospect 1,706 3,303 6,398 1,194 2,312 4,479
--------------------- --------- --------- --------- --------- --------- ---------
Total for Gas
(GIIP) BCF 4,666 8,799 16,612 3,266 6,160 11,629
--------------------- --------- --------- --------- --------- --------- ---------
The net attributable amounts in respect of SC72 represent the
company's 70% interest in the estimated resources. These pre-drill
estimates of resources are based on certain assumptions and the
information and interpretations currently available. There can be
no assurances that these assumptions or estimates will prove to be
accurate as future technical evaluations and results, including
drilling results, could lead to variations or differ materially
from those included in Weatherford's report.
The methods and terms used in the preparation of these summaries
are in accordance with Society of Petroleum Engineers guidelines.
For more details please refer to www.spe.org.
LATEST RESOURCE ESTIMATES AT SERVICE CONTRACT 40
On 19 February 2013, the company was presented with a new
competent persons report, prepared by PGS on the SC40 contract
area. SC40 contains a developed gas field, two tested oil prospects
and nine untested oil and gas exploration leads and prospects. This
report included probabilistic resource estimates for the gas field
and all of the leads and prospects, as follows:
SC40 - In-Place Reserves:
Gross Net Attributable
--------- --------- --------- --------- ----------------- ---------
(1P) (2P) (3P) (1P) (2P) (3P)
Low Best High Low Best High
Gas Reserves Estimate Estimate Estimate Estimate Estimate Estimate
---------------- --------- --------- --------- --------- ----------------- ---------
Libertad Field 0.9 1.2 4.1 0.6 0.8 2.7
---------------- --------- --------- --------- --------- ----------------- ---------
Total for Gas
(GIIP) BCF 0.9 1.2 4.1 0.6 0.8 2.7
---------------- --------- --------- --------- --------- ----------------- ---------
SC40 - In-Place Contingent Resources:
Gross Net Attributable Risk Factor
--------- --------- --------- --------- ----------------- --------- ------------
(1C) (2C) (3C) (1C) (2C) (3C)
Oil & Liquids Low Best High Low Best High
Contingent Estimate Estimate Estimate Estimate Estimate Estimate (RF)
Resources
---------------- --------- --------- --------- --------- ----------------- --------- ------------
Toledo 1.1 1.6 2.4 0.7 1.1 1.6 8%
Maya 7.2 12.5 20.2 4.8 8.3 13.5 <5%
---------------- --------- --------- --------- --------- ----------------- --------- ------------
Total for
Oil & Liquids
(OIIP) MMbbls 8.3 14.1 22.6 5.5 9.4 15.1
---------------- --------- --------- --------- --------- ----------------- --------- ------------
SC40 - In-Place Prospective Resources:
Gross Net Attributable Risk
Factor
------------------------------- ------------------------------- --------
Oil & Liquids Low Best High Low Best High
Prospective Resources Estimate Estimate Estimate Estimate Estimate Estimate (RF)
------------------------- --------- --------- --------- --------- --------- --------- --------
Prospects
Tambongon Clastics 115.0 237.0 410.0 76.7 158.0 273.3 9%
Tambongon Limestone 90.0 219.0 427.0 60.0 146.0 284.7 9%
Sabil Point 23.0 50.0 90.0 15.3 33.3 60.0 7%
Batbatan South 22.0 44.0 76.0 14.7 29.3 50.7 9%
Jibitnil Island 20.0 38.0 61.0 13.3 25.3 40.7 8%
Leads
Batbatan SE 19.0 37.0 63.0 12.7 24.7 42.0 <5%
Central Tañon 4.0 7.8 13.7 2.7 5.2 9.1 <5%
North Maya 6.5 9.8 14.3 4.3 6.5 9.5 <5%
Agojo 0.8 1.6 2.7 0.5 1.1 1.8 <5%
Total for Oil & Liquids
(OIIP) MMbbls 300.3 644.2 1,157.7 200.2 429.5 771.8
------------------------- --------- --------- --------- --------- --------- --------- --------
The net attributable amounts in respect of SC40 represent the
Company's 66.67% interest in the estimated resources. These
pre-drill estimates of resources are based on certain assumptions
and the information and interpretations currently available. There
can be no assurances that these assumptions or estimates will prove
to be accurate as future technical evaluations and results,
including drilling results, could lead to variations or differ
materially from those included in PGS' report.
The methods and terms used in the preparation of these summaries
are in accordance with Society of Petroleum Engineers guidelines.
For more details please refer to www.spe.org.
In accordance with AIM Guidelines, Mr A.J. Williams, BSc (Hons)
in Geology, a distinguished member of the Petroleum Exploration
Society of Australia (PESA) and a member of the American
Association of Petroleum Geologists (AAPG) is the qualified person
that reviewed the technical information in relation to SC40. Mr
Williams has 32 years of varied petroleum geology, geophysics and
resource management experience and is a manager of Reservoir Group
at PGS, an independent consultancy specialising in petroleum
reservoir evaluation and economic analysis.
EXECUTIVE CHAIRMAN STATEMENT
Dear Shareholder,
Service Contract 72
The encouraging results of the resource assessment study
conducted in early 2012 by Weatherford Petroleum Consultants
supported the case to proceed with the drilling of the Sampaguita-4
and Sampaguita-5 wells in 2013. However, we were unable to commence
our drilling programme due to the on-going territorial disputes
between the Philippine and Chinese governments. In the meantime, we
carried out a seismic reprocessing program involving close to 3,000
line-km of 2D data with Compagnie Generale De Geophysique Veritas
as contractor, which was completed in November 2013. This aims to
further assess the prospectivity of SC72 outside the Sampaguita
field. The required environmental and local government permits,
including the strategic environmental plan clearance from the
Palawan Council for Sustainable Development were secured during the
year. These will enable us to conduct our exploration activities
should the Philippines Department of Energy (DOE) grant
approval.
Galoc
The company has a 2.27% interest in the Galoc oil field. Gross
production during the year averaged 4,720 bopd (2012: 4,060 bopd);
this has increased to an average 9,800 bopd since Phase II
production commenced. Production reached 1.72 million barrels gross
in 2013 (2012: 1.48 million barrels gross). Receipts totalled
US$2.1 million (2012: US$2.5 million) after deduction of share of
operating costs. A second phase of development commenced in June
2013 with the drilling of two additional production wells, Galoc 5
and Galoc 6. From the four wells, daily output increased to 14,500
bopd before stabilizing to 9,800 bopd. Total oil production from
the four wells is expected to be around 2.9 million barrels in
2014. The company secured a US$2.58 million loan in 2012 from BNP
Paribas to fund 60% of the development costs for this phase of the
project. Galoc development may yet go into Phase III in the near
future, with an exploration well being planned to test another
prospect adjacent to the Galoc field. However, it remains a
contingent programme up to this time.
Service Contract 40
On 3 February 2012, commercial production at the Libertad Field
commenced and, as at 31 December 2013, the field had produced
around 151 million (2012: 72.5 million) cubic feet of gas gross
representing net revenues of US$115,000 (2012: US$88,000). The
Libertad Field was impaired by $729,000 in 2013 as reservoir
pressure decline rate forecasts show ultimate recoverable gas
resource will be lower than earlier estimated.
In early 2013, the land gravity survey in northern Cebu was
concluded and the gravity data processing and interpretation were
completed in May 2013. Also, reprocessing of approximately 500
line-km of vintage 2D seismic data was completed by Fairfield
Vietnam in October 2013.
As reported last year, the results of the resource assessment
study undertaken PGS in early 2013 downgraded previously identified
leads and prospects within SC40. This led to the carrying value of
the investment in SC40 to be impaired by US$25.4 million to US$3.25
million in 2012. This carrying value reflects the potential of a
number of smaller onshore locations within SC40. In view of this,
much of the activities that were carried out in 2013 have
concentrated on the onshore portion of SC40, where chances of
finding commercially viable hydrocarbons are expected to be
higher.
Further technical evaluation studies on the SC40 block are
planned for 2014, which will also incorporate results from previous
studies. Depending on the results, we may undertake further
geophysical surveys to identify areas where an exploration well
could be drilled.
Financial Results and Key Financial Indicators
Our revenues decreased by 2% to US$4.4 million due to a
reduction in the oil price compared to 2012.
The gross profit increased 66% to US$1.5m due to the increased
level of reserves at the Galoc Oil Field as Phase II started
production in December 2013, which resulted in a lower depletion
charge.
The administrative expense reduced 9% to US$2.5 million, despite
the company paying US$0.5 million of restructuring costs during the
year. The restructuring costs will reduce the company's employment
costs in future years.
The group recorded a net loss attributable to equity holders of
the parent of US$2.9 million, compared with a net loss of US$26.3
million in 2012 which generated a loss per share of US8.3 cents
(2012: loss per share US73.9 cents).
During the year, the cost of the development of SC72 reduced to
US$0.4 million (2012: US$2.3 million) as permission to start the
second sub-phase has not been obtained, due to the territorial
dispute between the Philippine and Chinese governments.
Our capital spending on the Galoc oil field increased to US$4.2
million (2012: US$0.7 million), as Phase II of its development was
completed in November 2013.
The company's working capital, excluding the loan from Philex
Petroleum Corporation decreased from US$6.1 million to US$0.3
million principally due to the spending on Phase II of the Galoc
oil field development which is anticipated to increase cash flow
from 2014 to 2017.
Cash and cash equivalents at the end of the period stood at
US$0.2 million. The outstanding amount of the loan with Philex
Mining Corporation was US$15.2 million.
During the year, payments totalling US$1 million (2012: US$4.3
million) were made to Basic Energy under the 2006 purchase
agreement of the company's Northwest Palawan assets, which included
Galoc. There are no further liabilities due to Basic Energy.
Outlook for 2014
We remain focused on our goal of establishing the commerciality
of the potential hydrocarbon resources within the SC72, but
recognise that we face significant challenges in the West
Philippine Sea where SC72 is located. We appreciate that this goal
can only be realised with the continuing support of the Philippine
Government.
I would like to take this opportunity once again to thank our
shareholders, our staff and members of the Board of Directors, for
their continuing support and commitment.
Robert Nicholson
Executive Chairman
7 March 2014
Consolidated statement of comprehensive income
for the year ended 31 December 2013
Year ended Year ended
31 December 31 December
2013 2012
Note US$'000 US$'000
---------------------------------------------------------- ----- ------------ ------------
Revenue 4,426 4,522
Cost of sales (2,906) (3,604)
---------------------------------------------------------- ----- ------------ ------------
Gross profit 1,520 918
---------------------------------------------------------- ----- ------------ ------------
Other income - 1,804
---------------------------------------------------------- ----- ------------ ------------
Administrative expenses (2,507) (2,750)
Impairment charge 3 (1,298) (25,359)
---------------------------------------------------------- ----- ------------ ------------
Total operating expenses (3,805) (28,109)
---------------------------------------------------------- ----- ------------ ------------
Loss from operations (2,285) (25,387)
Finance income 248 1
Finance expenses (1,271) (1,038)
---------------------------------------------------------- ----- ------------ ------------
Loss before tax (3,308) (26,424)
Taxation (337) -
Loss for the year from continuing operations (3,645) (26,424)
Other comprehensive Income 60 -
Total comprehensive loss for the year (3,585) (26,424)
---------------------------------------------------------- ----- ------------ ------------
Loss and total comprehensive loss attributable
to:
Owners of the parent (2,938) (26,256)
Non-controlling interest (647) (168)
---------------------------------------------------------- ----- ------------ ------------
(3,585) (26,424)
---------------------------------------------------------- ----- ------------ ------------
US Cents US Cents
---------------------------------------------------------- ----- ------------ ------------
Loss earnings per Ordinary Share (US Cents) attributable
to equity holders of the Company
Basic and diluted 4 (8.3) (73.9)
---------------------------------------------------------- ----- ------------ ------------
All of the results of the group during the year relate to
continuing activities.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2013
2013 2012 2011
Note US$'000 US$'000 US$'000
----------------------------------------- ----- --------- ---------- ----------
Restated* Restated*
Assets:
Non-current assets
Exploration, evaluation and development
assets 5 27,534 27,567 50,246
Oil and gas properties 6 8,863 5,771 4,624
Other property, plant and equipment 56 136 67
Deferred tax 287 - -
Other receivables 117 - -
Investments 9 11 24
----------------------------------------- ----- --------- ---------- ----------
Total non-current assets 36,866 33,485 54,961
----------------------------------------- ----- --------- ---------- ----------
Current assets
Inventories 307 70 57
Trade and other receivables 2,398 2,351 1,862
Derivative asset 22 - -
Cash and cash equivalents 242 5,760 2,761
----------------------------------------- ----- --------- ---------- ----------
Total current assets 2,969 8,181 4,680
----------------------------------------- ----- --------- ---------- ----------
Total assets 39,835 41,666 59,641
----------------------------------------- ----- --------- ---------- ----------
Liabilities:
Non-current liabilities
Loans 7 16,438 - 6,000
Deferred tax 23 - -
Other liabilities and provisions 7 3,917 4,181 3,929
----------------------------------------- ----- --------- ---------- ----------
Total non-current liabilities 20,378 4,181 9,929
----------------------------------------- ----- --------- ---------- ----------
Current liabilities
Loans 1,239 15,000 -
Trade payable and other payables 1,198 2,105 3,964
Income tax payable 225 - -
----------------------------------------- ----- --------- ---------- ----------
Total current liabilities 7 2,662 17,105 3,964
----------------------------------------- ----- --------- ---------- ----------
Total liabilities 23,040 21,286 13,893
----------------------------------------- ----- --------- ---------- ----------
Total Net assets 16,795 20,380 45,748
----------------------------------------- ----- --------- ---------- ----------
Capital and reserves attributable
to equity holders of the company
Share capital 6,322 6,322 5,982
Share premium 51,061 51,061 50,345
Share option reserve - - 438
Retained deficit (41,070) (38,132) (12,314)
----------------------------------------- ----- --------- ---------- ----------
16,313 19,251 44,451
Non-controlling interest 482 1,129 1,297
----------------------------------------- ----- --------- ---------- ----------
Total capital and reserves 16,795 20,380 45,748
----------------------------------------- ----- --------- ---------- ----------
* Certain amounts shown here do not correspond to the 2012
financial statements and reflect adjustments made.
The Financial Statements of Forum Energy Plc (registered number
05411224) were approved by the Board of Directors and authorised
for issue on 7 March 2014. They were signed on behalf of the Board
of Directors by:
Paul Wallace
Finance Director
Statement of changes in equity
for the year ended 31 December 2013 (restated*)
Share Non- Total
capital
Share Share option Retained controlling and
capital premium reserve deficit Total interest reserves
Group US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------- -------- -------- -------- ---------- --------- ------------ ---------
Balance as at
1 January 2012 5,982 *50,345 438 *(12,314) *44,451 1,297 *45,748
Loss for the year - - - (26,256) (26,256) (168) (26,424)
Other comprehensive - - - - - - -
income
---------------------- -------- -------- -------- ---------- --------- ------------ ---------
Total comprehensive
income for the
year - - - (26,256) (26,256) (168) (26,424)
Transfer to retained
deficit - - (438) 438 - - -
Issue of shares
(net of costs) 340 716 - - 1,056 - 1,056
---------------------- -------- -------- -------- ---------- --------- ------------ ---------
Balance as at
31 December 2012 6,322 51,061 - (38,132) 19,251 1,129 20,380
Loss for the year - - - (2,998) (2,998) (647) (3,645)
Other comprehensive
income - - - 60 60 - 60
---------------------- -------- -------- -------- ---------- --------- ------------ ---------
Total comprehensive
income for the
year - - - (2,938) (2,938) (647) (3,585)
Balance as at
31 December 2013 6,322 51,061 - (41,070) 16,313 482 16,795
---------------------- -------- -------- -------- ---------- --------- ------------ ---------
*Certain amounts shown here do not correspond to the 2012
financial statements and reflect adjustments made.
Share capital represents the nominal value of shares issued. The
share premium account holds the balance of consideration received
in excess of the par value of the shares.
The share option reserve relates to the cumulative fair value of
options charged to the statement of comprehensive income adjusted
for transfer on exercise, cancellation or expiry. The transfer of
US$438,000 between share option reserve and retained deficit during
2012 is due to the exercise of all options during 2012.
The retained deficit is the cumulative net gains and losses
recognised in the statement of comprehensive income adjusted for
transfer on exercise, cancellation or expiry of options from the
share option reserve.
No interim of final dividend has been paid or proposed during
the year.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2013
Year ended Year ended
31 December 31 December
2013 2012
US$'000 US$'000
Restated*
-------------------------------------------------- ------------ ------------
Cash flows from operating activities
Loss before tax from operations (3,308) (26,424)
Adjustments for:
Depletion and depreciation 938 2,039
Impairment charge 1,298 25,359
Loss on investments 2 13
Finance income (1) (1)
Interest charge on loan facility 1,120 569
Hedging losses and charge 149 -
Working capital adjustment
Increase in trade and other receivables (186) (489)
Increase in inventories (60) (13)
(Decrease)/increase in trade and other
payables (1,119) 633
Increase in provisions and employee benefits 26 57
Cash flows from operating activities (1,141) 1,743
Tax paid (393) -
-------------------------------------------------- ------------ ------------
Net cash used in operating activities (1,534) 1,743
Investing activities:
Purchase of property, plant and equipment (27) (4,329)
Disposal of property, plant and equipment 45 -
Purchase of intangible assets (4,766) (3,903)
Loss on sale of exploration equipment (569) -
Interest received 1 1
Net cash used in investing activities (5,316) (8,231)
Financing activities:
Issue of ordinary share capital (net of
issue costs) - 1,056
Loan facility drawn down 2,677 9,000
Hedging losses and charges (149) -
Interest paid (1,196) (569)
-------------------------------------------------- ------------ ------------
Net cash from financing activities 1,332 9,487
-------------------------------------------------- ------------ ------------
Net (decrease)/increase in cash and cash
equivalents (5,518) 2,999
Cash and cash equivalents at beginning of
the year 5,760 2,761
Cash and cash equivalents at end of the
year 242 5,760
-------------------------------------------------- ------------ ------------
* Certain amounts shown here do not correspond to the 2012
financial statements and reflect adjustments made.
Notes to the financial statements
for the year ended 31 December 2013
1 ACCOUNTING POLICIES
1.1 Basis of preparation
The accounting policies have been consistently applied to all
the years presented, unless otherwise stated. The Group financial
statements have been prepared and approved by the Directors in
accordance with International Financial Reporting Standards IFRSs
and IFRIC interpretations, issued by the International Accounting
Standards Board ('IASB') as endorsed for use in the EU ('IFRSs')
and those parts of the Companies Act 2006 that are applicable to
companies that prepare their financial statements under IFRS.
The financial information for the years ended 31 December 2013
and 31 December 2012 does not constitute statutory accounts as
defined by section 435 of the Companies Act 2006 but is extracted
from the audited accounts for those years. The 31 December 2012
accounts have been delivered to the Registrar of Companies. The 31
December 2013 accounts will be delivered to Companies House within
the statutory filing deadline. The auditor's report on those
financial statements was unqualified and did not contain a
statement under s498 (2) - (3) of Companies Act 2006.
1.2 Going concern
The Group is currently conducting exploration and development
activities using existing funds including those generated by the
Group's interests in producing assets, including Galoc and SC14. In
the absence of a defined timetable for further activity related to
the appraisal and development of SC 72, the Group's cash flow
forecasts are mostly dependent on the performance of the Galoc
field and prices achieved from the sale of the associated
production.
The Directors are currently reviewing various funding options to
fund the continued development of SC72 once the territorial dispute
between the Philippine and Chinese governments has been resolved.
To-date the Directors have successfully renegotiated the terms of
the loan facility with Philex Mining Corporation by extending the
date of repayment until 24 November 2016 and increasing the size of
the loan facility from $15 million to $18 million; at the date of
approval of these financial statements $2.7 million remains
undrawn.
The Directors are of the opinion that the Group currently has
sufficient funds to meet their obligations and commitments as they
fall due in the foreseeable future and has therefore adopted the
going concern basis in preparing the financial statements.
2 SEGMENT ANALYSIS
The Group's costs and sales are based on geographic areas and
they are not larger than a segment. The Group currently has one
pool, the Philippines.
Geographical information
Revenues from external
customers Non-current assets
2013 2012 2013 2012
US$'000 US$'000 US$'000 US$'000
---------------- ------------ ----------- ---------- ---------
United Kingdom - - 170 68
Philippines 4,426 4,522 36,696 33,417
---------------- ------------ ----------- ---------- ---------
4,426 4,522 36,866 33,485
---------------- ------------ ----------- ---------- ---------
Non-current assets for this purpose consist of property, plant
and equipment, exploration and evaluation assets and oil and gas
properties.
All of the 2013 revenues (2012: 100%) were generated from
Philippine based assets including the Galoc, Libertad, Nido and
Matinloc fields.
Annual revenue from major customers is detailed below: Year ended Year ended
31 December 31 December
2013 2012
US$'000 US$'000
Shell Petroleum corporation 912 769
MT Bei Hai Ming Wand 872 -
MT Bang Gong Hu 839 -
MT Pacific Bridge 762 -
MT Xuan Wu Hu 697 -
GS Caltex Singapore Pte Ltd - 1,752
Hyundai Oil Singapore Pte Ltd - 1,272
SK Energy Company Ltd - 632
Revenue of US$344,000 (2012: US$97,000) is attributable to
external customers with individual revenue amounts less than 10% of
the Group's revenue.
3 impairment Charge
Year ended Year ended
31 December 31 December
2013 2012
US$'000 US$'000
------------------------------------------------- ------------ ------------
Impairment of exploration and evaluation assets - 25,359
Impairment of oil and gas property 729 -
Loss on sale of exploration equipment 569 -
------------------------------------------------- ------------ ------------
1,298 25,359
------------------------------------------------- ------------ ------------
The Libertad gas field has been written down by US$729,000 due
to a reduction in the fields estimated ultimate recoverable gas
reserves.
The impairment of inventories is based on the amount received
for the sale of exploration equipment during 2013.
Having received a resource assessment from Petroleum
Geo-Services Asia Pacific Pte Ltd, an independent competent person,
the investment in SC40 was impaired by US$25.4 million to US$3.25
million in 2012. The remaining balance of US$3.25 million is based
upon the potential recovery from the Maya, Toledo and Jibitnil
projects.
4. LOSS PER SHARE
Basic earnings per share amounts are calculated by dividing the
loss for the year attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares
outstanding during the year.
Loss for the group attributable to the equity holders of the
company for the year US$2.94 million (2012: Loss US$26.26
million).
Year ended Year ended
31 December 31 December
2013 2012
Weighted average number of equity shares
for the period in issue 35,549,533 34,647,930
Fully dilutes number of equity shares
for the period in issue 35,549,533 35,549,533
------------------------------------------ ------------ ------------
The effect of the share options in issue under the Share Option
Plan is anti-dilutive.
5 EXPLORATION, EVALUATION AND DEVELOPMENT ASSETS
Unevaluated Unevaluated
oil and oil and
gas and gas and
development development
costs costs
2013 2012
Group US$'000 US$'000
Cost and net book value
At 1 January 27,567 50,246
Additions 4,841 3,903
Transfer to Oil and gas properties (4,874) (1,223)
Impairment - (25,359)
------------------------------------ ------------- -------------
At 31 December 27,534 27,567
------------------------------------ ------------- -------------
The unevaluated oil, gas and mining costs relate to the
acquisition of the group's assets in the Philippines.
The net book values of assets included within intangible fixed
assets are as follows:
SC40 - US$3.51 million (2012: US$3.25 million)
SC72 - US$23.67 million (2012: US$23.27 million)
SC6 - US$0.35 million (2012 includes SC14: US$1.04 million)
The group has considered the intangible assets for indications
of impairment and in 2012 impaired the SC40 assets to reflect their
recoverable amount.
6 OIL AND GAS PROPERTIES
Oil and
gas
costs
US$'000
--------------------------------------------------------------- --------
Cost
At 1 January 2013 16,790
Additions 25
Impairment (729)
Transfer from exploration, evaluation and development assets 4,874
--------------------------------------------------------------- --------
At 31 December 2013 20,960
--------------------------------------------------------------- --------
Depreciation
At 1 January 2013 11,019
Charge for the year 1,078
--------------------------------------------------------------- --------
At 31 December 2013 12,097
--------------------------------------------------------------- --------
Cost
At 1 January 2012 13,633
Additions 1,934
Transfer from exploration, evaluation and development assets 1,223
--------------------------------------------------------------- --------
At 31 December 2012 16,790
--------------------------------------------------------------- --------
Depreciation
At 1 January 2012 9,019
Charge for the year 2,000
--------------------------------------------------------------- --------
At 31 December 2012 11,019
--------------------------------------------------------------- --------
Net book value
At 31 December 2013 8,863
--------------------------------------------------------------- --------
At 31 December 2012 5,771
--------------------------------------------------------------- --------
7 LIABILITIES
Group Company
2013 2012 2013 2012
Current US$'000 US$'000 US$'000 US$'000
------------------------ -------- -------- -------- --------
Loans 1,239 15,000 - -
Trade payables 5 272 4 14
Other payables 943 1,619 75 55
Employee benefits 122 175 - -
Deferred premium 79 - - -
Derivative liabilities 40 - - -
Tax payable 234 39 3 9
------------------------ -------- -------- -------- --------
2,662 17,105 82 78
------------------------ -------- -------- -------- --------
The US$15m loan in 2012 from Philex Mining Corporation was
originally due for repayment on 24 November 2013, but has been
assigned to Philex Petroleum Corporation and the repayment date
extended to 24 November 2016.
Included in other payables is an amount of Nil for the year
(2012: US$1 million) relating to additional costs on the
acquisition of Basic Petroleum & Mineral Inc. (now Forum Energy
Philippines Corporation) payable out of future Galoc oil field
revenues.
All amounts fall due for payment within one year.
Group Company
2013 2012 2013 2012
Non-current liabilities US$'000 US$'000 US$'000 US$'000
------------------------- -------- -------- -------- --------
Loan facility 16,438 - - -
Provisions 3,866 4,181 - -
Deferred premium 51 - - -
------------------------- -------- -------- -------- --------
20,355 4,181 - -
------------------------- -------- -------- -------- --------
Included in loan facility is a loan from Philex Petroleum
Corporation of US$15.2 million repayable on 24 November 2016,
Philex Petroleum Corporation is one of the Companies major
shareholders.
Included in provisions is the following:
Under the share purchase agreement for Forum Exploration Inc.
dated 11 March 2003, amounts of up to US$3.87 million (2012:
US$4.18 million) are due to the vendor out of the group's share of
future net revenues generated from licence SC40. The liability is
in Philippine Pesos and any movement during the year is due to
changes in exchange rate only. The timing and extent of such
payments is dependent upon future field production performance and
cannot be accurately determined at this stage.
Interest - bearing loans and
borrowings
------------------------------------- -------------------------- ------------ ------------
Effective interest 2013 2012
rate
------------------------------------- -------------------------- ------------ ------------
Current % Maturity US$ million US$ million
US$2.4 million BNP Paribas facility Libor + 6.0 31-Dec-14 1.2 -
------------------------------------- ------------- ----------- ------------ ------------
1.2 -
------------------------------------- ------------- ----------- ------------ ------------
Non-current
US$2.4 million BNP Paribas facility Libor + 6.0 31-Dec-15 1.2 -
US$15.2 million Philex Petroleum
facility Libor + 4.5 24-Nov-16 15.2 15
------------------------------------- ------------- ----------- ------------ ------------
16.4 15
--------------------------------------------------------------- ------------ ------------
US$2.4 million BNP Paribas facility
This loan is secured by a share mortgage consisting over 100% of
the share capital of Forum Energy Philippines Corporation and
security agreement for the rights and interests in Project
Accounts, Hedging Agreements, Agreed Insurances, Offtake Agreement
and intercompany loans.
US$15.2 million Philex Petroleum Corporation
This loan is unsecured and is repayable on 24 November 2016.
Total interest expense for the year on the interest bearing
loans and borrowings was US$801,773 (2012: US$540,361), of which
US$75,324 (2012 - nil) has been capitalised.
8 COMMITMENTS
At 31 December 2013, the group and company had commitments
totalling US$4.2 million in operational and exploration
expenditure, for the second sub-phase programme over Service
Contract 72 (SC72) (31 December 2012: US$2.9 million). This is
subject to permission being granted by the Philippine Department of
Energy.
9 RELATED PARTY TRANSACTIONS
During the year the following related party transactions
occurred within the group and company:
Philex Mining Corporation is the majority shareholder and
ultimate controlling party of the group.
In 2010, Forum Philippines Holdings Ltd, a wholly-owned
subsidiary of the company, entered into a US$10 million Facility
Agreement ("the Facility") with Philex Mining Corporation on 24
November 2010. The facility was increased to US$15 million during
2012. The Facility was available for a three year period from 24
November 2010 and funds were borrowed at an interest rate of US
LIBOR + 4.5%. As at 31 December 2012 the full US$15 million was
drawn down to enable the company to fund its 70% share of the work
programme over Service Contract 72 (SC72).
On 21 November 2013, the following amendments were made to the
Facility:
- Increase the Facility to US$18 million
- Extended repayment date to 24 November 2016, and
- Philex Mining Corporation assigned the facility to Philex
Petroleum Corporation, a major shareholder of the company and
wholly owned subsidiary of Philex Mining Corporation.
All other terms of the Facility agreement remain the same.
Under the amended Facility agreement an additional $200,000 was
drawn down during 2013.
The following transactions in relation to the Facility occurred
during the year:
- Loan amount due to Philex Petroleum Corporation as at 31
December 2013 US$15.2 million (2012 - Philex Mining corporation -
2012 - US$15 million)
- Interest charge for use of facility payable to Philex
Petroleum Corporation year ended 31 December 2013 US$76,971 (2012 -
Nil)
- Interest charge for use of facility payable to Philex Mining
Corporation year ended 31 December 2013 US$649,478 (2012 -
US$569,347)
- Interest due to Philex Petroleum Corporation as at 31 December 2013 US$76,971 (2012 - Nil)
- Interest due to Philex Mining Corporation as at 31 December
2013 US$685,873 (2012 - US$463,512)
10 CONTINGENT LIABILITIES
The company and group have no contingent liabilities.
11 RETROSPECTIVE RESTATEMENT
The prior year consolidated statement of financial position and
company statement of financial position have been adjusted to
reflect the following:
1) The reduced costs of the acquisition of Basic Petroleum and
Minerals Inc. (BPMI) in 2006 which was subsequently renamed as
Forum Energy Philippines Corporation (FEPCO). The acquisition
element paid in Forum Energy Plc, shares should have been based on
market value as date of acquisition and the post-acquisition legal
and other costs should have been included in the consolidated
statement of comprehensive income.
2) The reduced costs of the acquisition of SC72, the
post-acquisition cost should have been included in the consolidated
statement of comprehensive income.
3) The impairment of SC40 was not properly reflected in the
Company's investments' carrying value as stated In the Statement of
Financial Position in 2012
The effect of these adjustments on the Consolidated and Company
statement of financial position and Consolidated and Company
statement of changes in equity are set out below:
Effect on Consolidated Statement US$'000 US$'000
of Financial Position Effect on Effect on
2012 2011
---------------------------------------------- ----------- -----------
Total non-current assets as previously
reported 35,166 56,642
Reduction in FEPCO costs post
acquisition in 2011 (578) (578)
Reduction in SC72 costs post acquisition
in 2011 (484) (484)
Reduction In acquisition costs of BPMI based
on market value of shares at date of issue (619) (619)
Total non-current assets as restated 33,485 54,961
---------------------------------------------- ----------- -----------
Effect on Consolidated Statement of Share Retained Total
Changes in Equity Premium Earnings
US$'000 US$'000
------------------------------------------- --------- ---------- ----------
As at 31 December 2011 previously
reported 50,964 (11,252) 39,712
Reduction in FEPCO costs post acquisition - (578) (578)
Reduction in SC72 costs post acquisition - (484) (484)
Reduction In acquisition costs of
BPMI based on market value of shares
at date of issue (619) - (619)
As at 31 December 2011 as restated 50,345 (12,314) 38,031
----------------------------------------------- --------- ---------- ----------
- END -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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