TIDMGED
RNS Number : 8703J
Global Energy Development PLC
15 September 2016
lmmediate Release 15 September 2016
GLOBAL ENERGY DEVELOPMENT PLC
(the "Company" or "Global")
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2016
Global Energy Development PLC (AIM: GED), a petroleum
exploitation, development and production company with operations in
Colombia, South America, announces its interim results for the
six-month period ended 30 June 2016 (the "Period").
Key points:
-- Strong cash balance of $21 million at 30 June 2016
-- Note receivable balance of $10 million with a 12 per cent coupon at 30 June 2016
-- Debt free
-- Continued discussions with various companies regarding
possible strategic alternatives associated with its Colombian
contracts
Mikel Faulkner, Chairman, commented: "The Group has been
actively vetting acquisition prospects in both the petroleum
development sector as well as the oilfield services sector during
the first half of 2016. Global has not limited itself to looking at
traditional petroleum exploration and production plays and has
expanded its geographical research to cover potential opportunities
outside of our current South America focus. During the first half
of 2016, the Group has reorganised personnel and work functions to
both streamline our efforts as well as strategically position the
Company for advancement."
For further information please contact
Global Energy Development PLC
Anna Williams, Director of Strategy +1 817 424 2424, ext
and Business Development 110
awilliams@globalenergyplc.com
www.globalenergyplc.com
finnCap Ltd Christopher Raggett/Scott Mathieson/Kate
Bannatyne (Corporate Finance) 0207 220 0500
Joanna Scott (Corporate Broking)
Abchurch
George Robinson/ Rebecca Clube 0207 398 7700
globalenergy@abchurch-group.com
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
Notes to Editors:
The Company's shares have been traded on AIM, a market operated
by the London Stock Exchange, since March 2002 (AIM: GED). The
Company's portfolio includes exploration and developmental drilling
opportunities in Colombia, South America. The Company currently
holds two operated contracts in Colombia.
Chairman's Statement & Review of Operations
The Group has been actively vetting acquisition prospects in
both the petroleum development sector as well as the oilfield
services sector during the first half of 2016. Sustained low oil
pricing has created enhanced buying opportunities stemming from
highly-leveraged companies that are challenged within this current
downturn. Global continues to have financial strength with a strong
cash position and a debt-free balance sheet and believes that
multiple sectors within the energy industry provide excellent "buy
low", "hold" and "sell high" scenarios. The Group is seeking to use
this downturn to capitalise on these opportunities.
Timing is key in successfully executing any strategy. Although
the exact timing of an oil price stabilisation and following
recovery is unknown, the Group believes that a future price
recovery is, at some level, inevitable. We believe that over the
next eighteen months there will be an opportune period to
consolidate and acquire within the energy industry at low prices in
order to expand and create a more diversified portfolio of assets
and or companies that can take advantage of a future oil price
stabilisation and longer term recovery. Global has not limited
itself to looking at traditional petroleum exploration and
production plays and has expanded its geographical research to
cover potential opportunities outside of our current South America
focus.
During the first half of 2016, the Group has reorganised
personnel and work functions to both streamline our efforts as well
as strategically position the Company for advancement.
The Group also made the decision to perform a portion of its
remediation obligations related to the Bocachico and Bolivar
Contract Areas in Colombia during the upcoming year rather than
upon expiration of the contracts. This decision was made in order
to take advantage of lower oilfield service pricing during
depressed industry conditions in Colombia and to also reduce future
environmental obligations. This decision resulted in the increase
in short-term provisions from $184 thousand to $912 thousand during
the first half of 2016, as the projects and their related costs
were reclassified from non-current and increased to their present
values.
Financials
Statement of Financial Position
In February 2016, the Group and HKN, Inc. ("HKN") amended its
secured, short-term financing note receivable ("Note Receivable")
with Everest Hill Group, Inc. ("Everest"). Under the amendment, the
Group loaned an additional $2.0 million principal amount to Everest
and extended the maturity date by six months to 15 September 2016.
In addition, the Group was granted right of first refusal to
purchase certain offshore oil service vessels owned by Everest and
its affiliates. The Note Receivable continues to be subject to an
interest charge of 12 per cent per annum, payable monthly in
arrears. Everest paid to Global a 2 per cent transaction fee of
$40,000 upon the closing of the amendment. As of 30 June 2016, the
total outstanding principal balance of the Note Receivable was $12
million, with Global's participating interest at $10 million and
HKN's participating interest at $2 million.
Subsequently in September 2016, the Group and HKN agreed to
amend the Note Receivable and extend the maturity date by thirty
days from 15 September 2016 to 15 October 2016. All other terms
within the Note Receivable shall continue in full force and
effect.
Results of Operations
During the period, the Group's sole producing well, the Torcaz
#2 well within the Bocachico field in Colombia, South America,
averaged approximately 22 gross barrels of oil per day ("bopd")
yielding lifted volumes of 3,946 barrels of oil ("bbls"), which was
a decrease from the prior year lifted volumes of 5,862 bbls.
Turnover decreased from $217 thousand during the prior year period
to $84 thousand during the first six months of 2016, and average
realised sales prices decreased to $21.38/bbl compared to
$37.10/bbl for the prior year period.
Cost of sales decreased significantly to $269 thousand from $411
thousand during the prior year period as a result of lower
production volumes at the Bocachico field and decreased maintenance
activities in both fields. These decreases were due to efforts to
minimise costs while oil pricing remains low. The decreases in both
sales prices and production were more than offset by cost
reductions in the fields, resulting in a slight reduction in the
gross loss from $194 thousand to $185 thousand.
During the first six months of 2016, the Group recorded an
impairment charge of $184 thousand on its oil and gas properties in
the Bocachico and Bolivar contract areas in Colombia. This charge
is the result of the decision to perform certain remediation
obligations earlier than originally anticipated as discussed above
and resulted in the recognition of future accretion as additional
cost during the current period. The decision to perform these
activities prior to the end of the contract terms will result in
lower accretion being recognised within finance expense in future
periods.
Administrative expenses decreased slightly to $2.3 million
during the period compared to $2.5 million for the prior year
period. The decrease was primarily attributable to a decrease of
$589 thousand in personnel and office related costs as compared to
the first six months of 2015 which is the result of staff and
salary reductions during the second half of 2015 and cost-cutting
measures implemented across the organisation as well as the
inclusion of one-time redundancies of $173 thousand during the
prior year period. The decreases in the Group's staffing and office
costs were partially offset by an increase of $310 thousand in
professional fees due to consulting and due diligence costs related
to the Group's evaluation of acquisition opportunities within the
energy market as well the search for the Group's new Director of
Operations.
The Group recorded a loss on currency translation during the
current year period of approximately $194 thousand as a result of
the Colombian peso exchange rate strengthening against the Group's
functional currency which is the US dollar.
Finance income increased significantly during the current year
period as a result of $590 thousand in interest and fees related to
the Note Receivable to Everest which earns an annual interest rate
of 12 per cent. The Group extended $8 million to Everest during
September 2015 and subsequently loaned an additional $2 million
during February 2016.
Tax expense for the six months ended 30 June 2016 was $87
thousand as compared to an overall tax benefit of $296 thousand for
the prior year period. Tax expense for the current year is
primarily comprised of the CREE and wealth taxes related to our
Colombian subsidiaries. The prior year period benefit was primarily
due to a net decrease in deferred tax liabilities for the
period.
The Group also recognised a $139 thousand loss from discontinued
operations during the first six months of 2016 related to
disallowed tax credits on a tax refund due from the tax authorities
in Peru. The anticipated tax refund was related to VAT charged on
invoices for oil and gas activities related to the Group's Block 95
contract in Peru which was sold to Gran Tierra Energy during 2012.
Upon the Group's request for a refund, the taxing authority in Peru
commenced an audit of the refund claim which was completed during
the 2016 period, and a partial refund was issued to the company's
wholly-owned Peruvian subsidiary. The income from discontinued
operations of $1.0 million during the prior year period was related
to tax and purchase price adjustments on the Group's sale of its
wholly-owned subsidiary, Colombia Energy Development Company
("CEDCO"), which was finalised during 2015.
Conclusion
During this period of time that uncertainty in the energy market
prevails, the Group's goal continues to be to increase value for
its shareholders by seeking investments or acquisitions within the
energy sector with potential for upside upon sustained oil price
recovery. The Group is well-positioned to pursue strategic
opportunities during a time of consolidation within our
industry.
Mikel Faulkner
Chairman
Independent Review Report to Global Energy Development PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2016 which comprises the Condensed
Consolidated Statement of Comprehensive Income, Condensed
Consolidated Statement of Financial Position, Condensed
Consolidated Cash Flow Statement, Condensed Consolidated Statement
of Changes of Equity and related explanatory notes. We have read
the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our review work has been undertaken so that we might state
to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report, is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing and presenting the half-yearly financial report in
accordance with the AIM Rules of the London Stock Exchange.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards and International Financial Reporting
Interpretations Committee pronouncements as adopted by the European
Union. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
International Accounting Standard 34, "Interim Financial Reporting"
as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2016 is not prepared, in all material respects, in accordance
with International Accounting Standard 34, "Interim Financial
Reporting" as adopted by the European Union, and the AIM Rules of
the London Stock Exchange.
RSM UK Audit LLP
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
14 September 2016
Unaudited Condensed Consolidated Statement of Comprehensive
Income
For the period ended 30 June 2016
Six months Six months Year
ended ended
Note 30 June 30 June ended
2016 2015
$'000 $'000 31 December
(Unaudited) (Unaudited) 2015
$'000
(Audited)
--------------- ---------------- -------------------
Continuing operations
Revenue 5 84 217 365
Cost of sales (269) (411) (978)
--------------- ---------------- -------------------
Gross loss (185) (194) (613)
Other income - 6 8
Administrative expense (2,273) (2,529) (4,478)
Share-based expense (5) (6) (14)
Exchange (expense)/gain (194) 10 (59)
Impairment loss (184) - (21,813)
--------------- ---------------- -------------------
Operating loss from continuing
operations (2,841) (2,713) (26,969)
Finance income 606 1 440
Finance and other expense (94) (98) (196)
--------------- ---------------- -------------------
Loss before taxation from continuing
operations (2,329) (2,810) (26,725)
Tax (expense)/benefit 10 (87) 296 2,114
--------------- ---------------- -------------------
Loss from continuing operations,
net of tax (2,416) (2,514) (24,611)
--------------- ---------------- -------------------
(Loss)/Income from discontinued
operations, net of tax 3 (139) 1,047 1,047
--------------- ---------------- -------------------
Total comprehensive loss attributable
to the equity holders of the
parent (2,555) (1,467) (23,564)
--------------- ---------------- -------------------
Loss per share for continuing
operations
- Basic 6 $(0.07) $(0.07) $(0.68)
- Diluted 6 $(0.07) $(0.07) $(0.68)
--------------- ---------------- -------------------
Earnings/(loss) per share for
discontinued operations
- Basic 6 $(0.00) $0.03 $0.03
- Diluted 6 $(0.00) $0.03 $0.03
--------------- ---------------- -------------------
Total loss per share
- Basic 6 $(0.07) $(0.04) $(0.65)
- Diluted 6 $(0.07) $(0.04) $(0.65)
--------------- ---------------- -------------------
Figures in thousands except for per share information.
Unaudited Condensed Consolidated Statement of Financial
Position
As at 30 June 2016
30 June
30 June 31 December
2016 2015 2015
$'000 $'000 $'000
(Unaudited (Unaudited (Audited
Note ) and Restated) and Restated)
-------------------- ----------------- --------------------
Assets
Non--current assets
Intangible assets 93 29 93
Other non-current assets 877 840 862
Property, plant and equipment 8 79 22,336 145
-------------------- ----------------- --------------------
Total non--current assets 1,049 23,205 1,100
Current assets
Inventories 251 276 246
Note receivable 9 10,050 - 8,040
Trade and other receivables 49 501 339
Prepayments and other assets 295 302 169
Cash and cash equivalents 21,012 34,963 25,608
-------------------- ----------------- --------------------
Total current assets 31,657 36,042 34,402
Total assets 32,706 59,247 35,502
-------------------- ----------------- --------------------
Liabilities
Non--current liabilities
Deferred tax liabilities
(net) - (1,886) (6)
Long--term provisions (1,692) (2,224) (2,005)
-------------------- ----------------- --------------------
Total non--current liabilities (1,692) (4,110) (2,011)
Current liabilities
Trade and other payables (325) (680) (932)
Short-term provisions (912) - (184)
Corporate and equity tax
liability (74) (115) (122)
Total current liabilities (1,311) (765) (1,238)
-------------------- ----------------- --------------------
Total liabilities (3,003) (4,905) (3,249)
-------------------- ----------------- --------------------
Net assets 29,703 54,342 32,253
Capital and reserves attributable
to equity holders of the parent
Share capital 11 608 608 608
Share premium account 27,139 27,139 27,139
Capital reserve 51,855 51,855 51,855
Retained deficit (49,899) (25,260) (47,349)
Total equity 29,703 54,342 32,253
-------------------- ----------------- --------------------
Unaudited Condensed Consolidated Cash Flow Statement
For the period ended 30 June 2016
Six months Six Year
ended months
ended
30 June 30 ended
2016 June
2015
$'000 $'000 31 December
(Unaudited) (Unaudited) 2015
$'000
Note (Audited)
---------------- ---------------- ----------------------
Cash flows from operating
activities
Cash used by operations 4 (3,041) (3,406) (5,108)
Taxes paid (continuing and
discontinued
operations) (155) (536) (586)
------------------------------------- ------- ---------------- ---- ---------------- ---- ----------------------
Net cash used by operating
activities (3,196) (3,942) (5,694)
------------------------------------- ------- ---------------- ---- ---------------- ---- ----------------------
Cash flows from investing
activities
Placement of note receivable (2,000) - (8,000)
Interest and commission fee from
note receivable 590 - 400
Proceeds from sale of assets 38 - -
Purchase price adjustments for
sale of subsidiary 3 - (1,161) (1,161)
Costs paid for sale of subsidiary - (1,000) (1,000)
Interest received - 1 8
Purchase of property plant and
equipment (28) (88) (98)
Net cash used in investing
activities (1,400) (2,248) (9,851)
------------------------------------- ------- ---------------- ---- ---------------- ---- ----------------------
Decrease in cash and cash
equivalents (4,596) (6,190) (15,545)
Cash and cash equivalents at
beginning
period 25,608 41,153 41,153
------------------------------------- ------- ---------------- ---- ---------------- ---- ----------------------
Cash and cash equivalents at the
end of period 21,012 34,963 25,608
------------------------------------- ------- ---------------- ---- ---------------- ---- ----------------------
Unaudited Condensed Consolidated Statement of Changes in
Equity
For the six months ended 30 June 2016
Attributable to equity holders of the
parent
-------------------------------------------------------------------------------
Share Share Capital Retained
capital premium reserve deficit Total
$'000 $'000 $'000 $'000 $'000
---------------- ------------------ -------------- ------------- ----------
At 1 January 2015
(Audited) 608 27,139 51,855 (23,802) 55,800
Total comprehensive
loss attributable
to equity holders
of the parent - - - (1,467) (1,467)
Share--based payments - - - 9 9
---------------- ------------------ -------------- ------------- ----------
At 30 June 2015 (Unaudited) 608 27,139 51,855 (25,260) 54,342
Total comprehensive
loss attributable
to equity holders
of the parent - - - (22,097) (22,097)
Share--based payments - - - 8 8
---------------- ------------------ -------------- ------------- ----------
At 31 December 2015
(Audited) 608 27,139 51,855 (47,349) 32,253
Total comprehensive
loss attributable
to equity holders
of the parent - - - (2,555) (2,555)
Share--based payments - - - 5 5
---------------- ------------------ -------------- ------------- ----------
At 30 June 2016
(Unaudited) 608 27,139 51,855 (49,899) 29,703
---------------- ------------------ -------------- ------------- ----------
Unaudited Notes Forming Part of the Condensed Consolidated
Interim Financial Report
For the six months ended 30 June 2016
1. Accounting Policies
Basis of Preparation
The interim financial information has been prepared using
policies based on International Financial Reporting Standards (IFRS
and IFRIC interpretations) issued by the International Accounting
Standards Board ("IASB") as adopted for use in the EU. The interim
financial information has been prepared using the accounting
policies which will be applied in the Group's statutory financial
information for the year ending 31 December 2016. Of the new
international accounting standards issued with effective date of 1
January 2016, none have an impact on the Group. The interim
financial information has been prepared in accordance with IAS 34 -
Interim Financial Reporting.
In forming its opinion as to going concern, the Board prepares a
working capital forecast based upon its assumptions. The Board also
prepares a number of alternative scenarios modelling the business
variables and key risks and uncertainties. Based upon these, the
Board remains confident that the Group's current cash on hand and
current cash flow from operations will enable the Group to fully
finance its future working capital discretionary expenditures
beyond the period of 12 months of the date of this report.
Decommissioning
The decommissioning provision represents the present value of
decommissioning costs for existing assets in the Group's oil
operations, which are expected to be incurred between 2016 and
2024. These provisions have been generated based on the Group's
internal estimates, and where available, studies and analyses from
external sources. Assumptions, based on the present economic
environment, have been made which management believes are a
reasonable basis upon which to estimate the future liability. These
estimates are included within short-term and long-term provisions
within the statement of financial position and are reviewed
periodically to take into account any material changes to those
assumptions.
During 2016, the Group made the decision to perform a portion of
its remediation obligations related to the Bocachico and Bolivar
Contract Areas in Colombia during the upcoming year rather than
upon expiration of the contracts. This decision was made in order
to take advantage of lower oilfield service pricing during
depressed industry conditions in Colombia and to also reduce future
environmental obligations. This decision resulted in the increase
in short-term provisions from $184 thousand to $912 thousand during
the first half of 2016, as the projects and their related costs
were reclassified from non-current and increased to their present
values.
2. Financial reporting period
The interim financial information for the period 1 January 2016
to 30 June 2016 is unaudited. In the opinion of the Directors, the
interim financial information for the period presents fairly the
financial position, results from operations and cash flows for the
period in conformity with the generally accepted accounting
principles consistently applied. The interim financial information
incorporates unaudited comparative figures for the interim period 1
January 2015 to 30 June 2015 and the audited financial year to 31
December 2015.
Certain prior year amounts in the statement of financial
position have be reclassified to conform with current year
presentation for purposes comparability. Short-term provisions of
$184 thousand previously included within trade and other payables
at 31 December 2015 have been presented separately in the current
period due to the materiality of the provision at 30 June 2016. In
addition, prepaid taxes of $17 thousand and $5 thousand previously
recorded within trade and other receivables as of 30 June 2015 and
31 December 2015, respectively, have been reclassified to
prepayments and other assets in order to be presented with items of
similar nature. Lastly, prepaid taxes of $840 thousand and $862
thousand previously recorded within prepaid and other assets and
corporate and equity tax liability as of 30 June 2015 and 31
December 2015, respectively, have been reclassified to other
non-current assets for comparability as a result of their
non-current nature as of 30 June 2016.
The financial information contained in this interim report does
not constitute statutory accounts as defined by section 435 of the
Companies Act 2006. The comparatives for the full year ended 31
December 2015 are not the Company's full statutory accounts for
that year. A copy of the statutory accounts for that year has been
delivered to the Registrar of Companies. The auditors' report on
those accounts was unqualified, did not include references to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report and did not contain a statement
under section 498(2)-(3) of the Companies Act 2006.
3. Discontinued Operations
Peru Discontinued Operations:
During 2012 the Group closed on the sale of its remaining 40 per
cent working interest in the Peruvian Block 95 License Contract
("Block 95") through its wholly-owned subsidiary to Gran Tierra
Energy, Inc. ("GTE"). Block 95 was the Company's only Peruvian
asset, located in the Maranon Basin in the north-east area of the
country. Block 95 did not generate any revenues or expenses during
the year ended 31 December 2015. Following the sale of Block 95,
the Group's wholly-owned subsidiary retained a receivable for tax
credits related to drilling costs incurred by that entity along
with GTE. Under the terms of the sale agreement, the Group agreed
to continue with the refund collection process with the Peruvian
tax authority and to pass along to GTE any refunded tax credits
attributable to drilling costs paid by them. Upon the filing for
this refund in 2012, the Peruvian tax authority initiated an audit
of this balance which was not fully concluded until 2016. Upon the
conclusion of this audit and receipt of certain allowable refunds
from the Peruvian tax authority, the Group satisfied its obligation
to GTE and recorded expenses related to legal costs and disallowed
tax credits. During the six months ended 30 June 2016, the Group's
results from discontinued operations consist of $130 thousand of
disallowed tax credits along with approximately $14 thousand in
legal and professional fees associated with the tax audit along
with the associated foreign currency gain of $5 thousand upon
extinguishment of the tax asset and liability to GTE.
The table below provides further details of the amounts shown in
the statement of operations for the discontinued operations of
Peru:
Six months Six months Year
ended ended
30 June 2016 30 June ended
2015
$'000 $'000 31 December
2015 $'000
(Audited)
Peru (Unaudited) (Unaudited)
--------------------------------- ---------------- --------------- ----------------
Revenue - - -
Gross profit - - -
--------------------------------- ---------------- --------------- ----------------
Administrative expenses (144) - -
Exchange gain 5 - -
Loss before taxation (139) - -
Tax (expense) benefit - - -
--------------------------------- ---------------- --------------- ----------------
Loss from discontinued operations (139) - -
CEDCO Discontinued Operations:
On 6 December 2014, the Group closed on the sale of its
wholly-owned subsidiary, Colombia Energy Development Company
("CEDCO"), with an effective date of 1 August 2014. CEDCO held the
Company's contract areas (Rio Verde, Alcaravan and Los Hatos
contracts) within the Llanos Basin of Colombia, South America.
These contracts previously comprised the majority of the Company's
oil producing properties. As a result of this disposal, the
operations of CEDCO have been treated as discontinued operations.
There were no discontinued operations pertaining to CEDCO during
the six months ended 30 June 2016.
The table below provides further details of the amounts shown in
the statement of operations for the discontinued operations of
CEDCO:
Six Six months Year
ended
months 30 June ended
ended 2015 31 December
2015
30 June $'000 $'000(Audited)
2016
$'000 (Unaudited)
Colombia (Unaudited)
------------------------------------------- ---------------- ----- --------------- -------------------
Revenue - - -
Gross profit - - -
------------------------------------------- ---------------- ----- --------------- -------------------
Administrative expenses - - -
Profit before taxation - - -
Tax benefit(1) - 661 661
------------------------------------------- ----------------------- --------------- -------------------
(Loss) / income after taxation 661 661
Gain on disposal of business (including
fees and purchase price adjustments)(2) - 386 386
------------------------------------------- ----------------------- --------------- -------------------
Income from discontinued operations - 1,047 1,047
------------------------------------------- ----------------------- --------------- -------------------
(1) Based upon new Colombian regulation introduced in 2015, the
2014 pre-effective date CREE tax liabilities for discontinued
operations previously accrued as at 31 December 2014 and owed by
the Group were able to be eliminated upon the filing of the 2014
Colombian tax returns in May 2015. The elimination of the accrued
CREE tax liability of approximately $661 thousand is recorded to
profit from discontinued operations in the statement of operations
as of 30 June 2015.
(2) Per the share purchase agreement, the purchaser of CEDCO
could send proposed adjustments to the purchase price following 90
days after the closing date. In February 2015, the Group received
the purchaser's adjustment statement with proposed additional
purchase price adjustments totalling $1.5 million. The Group
accrued the $1.5 million of proposed adjustments in its financial
statements as of 31 December 2014. On 31 March 2015, the Group and
the purchaser agreed upon the finalised purchase price adjustment
of $1.1 million following review of the proposed adjustments in
accordance with the share purchase agreement. The $1.1 million was
paid to the purchaser in March 2015. The resulting difference of
approximately $386 thousand is recorded to profit from discontinued
operations in the statement of operations as of 30 June 2015.
4. Reconciliation of profit / (loss) before taxation to net cash
flow from operations
Six months
ended
Six months 30 June Year
ended
30 June 2015 ended
2016 $'000 31 December
2015
$'000(Unaudited) (Unaudited) $'000
(Audited)
-------------------------- -------------------------- -------------------------------------- ----------------------
Continuing operations
Loss before tax (2,329) (2,810) (26,725)
Adjustments for:
Depreciation of
property, plant
& equipment 49 37 78
Amortisation of
intangible assets - 3 4
Impairment charge 184 - 21,813
Provision for
uncollectible accounts 4 - -
Share based expense 5 6 14
Other income - - (8)
Finance income (590) (1) (440)
Finance costs 94 98 196
Operating cash flow
before movements
in working capital (2,583) (2,667) (5,068)
-------------------------- -------------------------- -------------------------------------- ----------------------
(Increase) / Decrease in
inventories (4) 14 44
Increase in trade and
other receivables (17) (839) (569)
Decrease in trade and
other payables (425) (558) (159)
Cash used in continuing
operations (3,029) (4,050) (5,752)
-------------------------- -------------------------- -------------------------------------- ----------------------
Discontinued operations
Loss before tax (139) - -
Adjustments for:
Provision for
uncollectible accounts 130 - -
Gain on sale of
subsidiary - 1,047 1,047
Operating cash flow
before movements
in working capital (9) 1,047 1,047
-------------------------- -------------------------- -------------------------------------- ----------------------
Increase in trade and
other receivables (5) - -
(Decrease) / increase in
trade
and other payables 2 (403) (403)
Cash (used in) generated
from
discontinued operations (12) 644 644
-------------------------- -------------------------- -------------------------------------- ----------------------
Cash used by operations (3,041) (3,406) (5,108)
-------------------------- -------------------------- -------------------------------------- ----------------------
The Statement of Cash Flows contains the following elements
related to discontinued operations:
Six months Six months Year
ended
ended 30 June ended
30 June 2015 31 December
2015
2016 $'000 $'000
$'000 (Unaudited) (Audited)
(Unaudited)
---------------------------------------- ----------------- ------------------ -----------------------
Net cash generated from operating
activities - 108 108
Net cash used in investing activities - (87) (87)
Net cash used in financing activities - - -
---------------------------------------- ----------------- ------------------ -----------------------
Total - 21 21
---------------------------------------- ----------------- ------------------ -----------------------
5. Revenue
Revenue is attributable to one continuing activity which is oil
liftings from the Group's Bocachico field located in Colombia,
South America.
6. Earnings/(loss) per share
Basic earnings/(loss) per share amounts are calculated by
dividing profit/(loss) for the period attributable to ordinary
equity holders of the parent by the weighted average number of
ordinary shares outstanding for the period.
Diluted earnings/(loss) per share amounts are calculated by
dividing the profit/(loss) for the period attributable to ordinary
equity holders of the parent by the weighted average number of
ordinary shares outstanding during the period plus the weighted
average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into
ordinary shares. The calculation of the dilutive potential ordinary
shares related to employee and Director share option plans includes
only those options with exercise prices below the average share
trading price for each period.
The following table reflects the profit/(loss) and share data
used in the basic and diluted earnings per share calculations:
Figures in thousands except for share and per share
information.
Six months Six months Year
ended ended
30 June 30 June ended
2016
$'000 2015 31 December
(Unaudited) 2015
$'000 $'000
(Unaudited)
(Audited)
----------------- ------------------ ----------------------
Loss from continuing operations after
taxation (2,416) (2,514) (24,611)
(Loss) / Profit from discontinued
operations
after taxation (139) 1,047 1,047
Net loss attributable to equity holders
of the parent used in dilutive
calculation (2,555) (1,467) (23,564)
----------------- ------------------ ----------------------
Loss per share for continuing operations
- Basic and diluted $(0.07) $(0.07) $ (0.68)
Earnings / (loss) per share for
discontinued
operations
- Basic and diluted $(0.00) $0.03 $0.03
Total loss per share
- Basic and diluted $(0.07) $(0.04) $(0.65)
Basic weighted average number of shares 36,112,187 36,112,187 36,112,187
Dilutive potential ordinary shares - - -
Employee and Director share option - - -
plans
Diluted weighted average number of
shares 36,112,187 36,112,187 36,112,187
----------------- ------------------ ----------------------
The calculation of the diluted earnings per share assumes all
criteria giving rise to the dilution of the earnings per share are
achieved and all outstanding share options with exercise prices
lower than the average period share price are exercised.
7. Segmental analysis
For management purposes, the Group organised its business units
based upon the field locations of its production, development and
sale of hydrocarbons and related activities in Colombia, South
America as follows:
-- Bolivar area (comprised of the Bolivar Contract in the Magdalena valley)
-- Bocachico area (comprised of the Bocachico Contract in the Magdalena valley)
Segment performance is evaluated and measured consistently with
operating profit/(loss) in the consolidated condensed financial
statements. However, the Group income taxes are managed on a group
basis and are not allocated to operating segments.
BolÃvar Bocachico Other 30 BolÃvar Bocachico Other 30 June BolÃvar Bocachico Other 31 Dec
June
segment segment segment 2016 segment segment segment 2015 segment segment segment 2015
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
-------------- -------------- ----------- --------- --------- -------------- ----------- --------- --------- -------------- ----------- --------- ----------
Total
revenues(1) - 84 - 84 - 217 - 217 3 362 - 365
Loss before
tax(1) (380) (302) (1,647) (2,329) (137) (203) (2,470) (2,810) (22,583) (37) (4,105) (26,725)
-------------- -------------- ----------- --------- --------- -------------- ----------- --------- ----------
Total
non-current
assets 908 4 137 1,049 22,979 1 225 23,205 901 4 195 1,100
-------------- -------------- ----------- --------- --------- -------------- ----------- --------- --------- -------------- ----------- --------- ----------
Total
non-current
liabilities (953) (739) - (1,692) (5,179) 778 291 (4,110) (1,278) (727) (6) (2,011)
-------------- -------------- ----------- --------- --------- -------------- ----------- --------- --------- -------------- ----------- --------- ----------
(1) From continuing operations
All oil revenues from the Group's business units are generated
entirely in Colombia and result from sales to Colombia-based
customers. All revenue from continuing operations arose from sales
of crude to one customer which amounted to $84 thousand and $217
thousand for the six months ended 30 June 2016 and 2015,
respectively.
The loss before tax for the Bolivar segment and the Bocachico
segment for the six months ended 30 June 2016 includes $130
thousand and $54 thousand in impairment losses, respectively, due
to the decision to perform certain remediation obligations earlier
than originally anticipated, resulting in an increase to their
present values in the current period. The loss before tax for the
Bolivar segment for the year ended 31 December 2015 contains the
$22.2 impairment of the carrying value of the Bolivar oil assets
due to the decline of oil prices and the resulting uneconomic
nature of the proved and probable oil reserves. The loss before tax
for the Bocachico segment for the year ended 31 December 2015
contains a $426 thousand impairment recovery recognised during the
year primarily for the reduction of the decommissioning and
environmental liabilities.
8. Property, plant and equipment
Oil assets are tested periodically for impairment to determine
whether the net book value of capitalised costs relating to the
cash generating unit exceed the associated estimated future
discounted cash flows of the related commercial oil reserves. If an
impairment is identified, the depletion is charged through the
statement of comprehensive income in the period incurred.
As at 31 December 2015, the Group's Bolivar and Bocachico area
oil assets were fully impaired and remained fully impaired as at 30
June 2016 due to the oil reserves within the Bocachico and Bolivar
areas being uneconomic at current pricing. As a result, any capital
costs following the impairment at 31 December 2015, including
plugging and abandonment activities and related changes of
estimates in the associated provisions, are recorded to impairment
expense as incurred.
9. Note Receivable
During 2015, the Group and HKN, Inc. ("HKN") (collectively as
"Co-Lenders") entered into a secured, short-term financing note
agreement (the "Note") with Everest Hill Energy Group Ltd.
("Everest") for the principal amount of $10 million. Under the
Note, the Group participated as a Co-Lender by loaning $8.0 million
and HKN participated by loaning $2.0 million of the principal
amount to Everest.
On February 29, 2016, the Co-Lenders amended the Note. Under the
Amendment, the Group loaned an additional $2.0 million principal
amount to Everest and extended the maturity date by six months to
15 September 2016. In addition, the Group was granted right of
first refusal to purchase certain offshore oil service vessels
owned by Everest and its affiliates. The Note is subject to an
interest charge of 12 per cent per annum, payable monthly in
arrears. Everest paid to GED a 2 per cent transaction fee of $40
thousand upon the closing of this Amendment.
10. Tax expense
The Global Energy Development PLC Group is subject to UK and
Colombian taxation.
UK taxation
The Group does not expect to be liable for UK corporation tax in
the foreseeable future. As at 30 June 2016, the Group had trading
losses carried forward of $26.2 million.
Colombian taxation
The Group pays taxes in Colombia through the branch offices of
its wholly owned subsidiaries. The Colombian corporation tax is
calculated as the CREE tax and the higher of net income tax or
presumptive income tax as follows:
-- Presumptive income tax. An alternative minimum tax calculated
on the prior year gross equity less liabilities at a rate of 3 per
cent to determine the presumptive income. A rate of 25 per cent is
applied to the presumptive income to arrive at the tax obligation;
or
-- Net income tax. Calculated at a rate of 25 per cent taking
into account revenues minus costs, standard and special
deductions.
-- CREE tax. Calculated at a rate of 14 per cent for 2015, 15
per cent for 2016, 17 per cent for 2017 and 18 per cent for 2018.
Beginning in 2019, the rate will reduce to 9 per cent thereafter.
Tax loss carryforwards incurred beginning 2015 shall be eligible to
offset the CREE taxable amount with no expiration date. Lastly, the
CREE tax may not be less than three per cent of the taxpayer's net
equity as of 31 December of the preceding taxable year.
Additionally, in 2015, a new Equity Tax was introduced, now
referred to as Wealth Tax, and is calculated each year for three
years using a taxable base of the Net Equity (as at 1 January) at
regressive rates of 1.15 per cent for 2015, 1.00 per cent for 2016
and 0.40 per cent for 2017. The payment of the tax is required with
installments made twice per year (May and September).
The major components of income tax expense for the periods as
disclosed in the consolidated condensed statement of comprehensive
income are:
Six months Six months Year
ended ended
30 June 30 June ended
2016 2015
$'000 $'000 31 December
(Unaudited) (Unaudited) 2015
$'000
(Audited)
---------------- ---------------- ----------------
Current taxes for continuing operations:
CREE income tax 16 17 33
Current income tax charge for continuing
operations 42 50 92
Wealth tax 35 125 125
Other withholdings - 1 5
---------------- ---------------- ----------------
Total current taxes for continuing
operations 93 193 255
---------------- ---------------- ----------------
Deferred tax:
Change in deferred tax related to
temporary differences and other (6) (489) (2,369)
Tax expense (benefit) for continuing
operations 87 (296) (2,114)
---------------- ---------------- ----------------
11. Share capital
Six months ended Six months ended Year ended
30 June 2016 30 June 2015 31 December
2015
(Unaudited) (Unaudited) (Audited)
------------------------ ------------------------------ ---------------------------
Number $'000 Number $'000 Number $'000
of shares of shares of shares
------------- --------- ------------- --------------- ------------- ------------
Allotted,
called
up and fully
paid
Ordinary
shares
of 1p
each 36,112,187 608 36,112,187 608 36,112,187 608
------------- --------- ------------- --------------- ------------- ------------
The ordinary shares confer the right to vote at general meetings
of the Company, to a repayment of capital in the event of
liquidation or winding up and certain other rights as set out in
the Company's articles of association.
The ordinary shares also confer the right to receive dividends
if declared by the Directors and approved by the Company.
12. Related Party Disclosures
HKN and its parties in concert are major shareholders of the
Group. During 2016, the Group and HKN (collectively as
"Co-Lenders") amended the secured Note Receivable with Everest.
Under the Amendment, the Group loaned an additional $2.0 million
principal amount to Everest and extended the maturity date by six
months to 15 September 2016. Please see note 9 for information on
the Note Receivable.
13. Post Reporting Date Event
On 9 September 2016, the Group extended the maturity date of the
amended Note Receivable by thirty days to 15 October 2016.
Forward-looking statements
This release may include statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These
forward-looking statements include all matters that are not
historical facts. They appear in a number of places throughout this
release and include, but are not limited to, statements regarding
the Group's intentions, beliefs or current expectations concerning,
among other things, the Group's results of operations, financial
position, liquidity, prospects, growth, strategies and expectations
of the industry. By their nature, forward-looking statements
involve risk and uncertainty because they relate to future events
and circumstances.
Forward-looking statements are not guarantees of future
performance and the development of the markets and the industry in
which the Group operates may differ materially from those described
in, or suggested by, any forward-looking statements contained in
this release. In addition, even if the development of the markets
and the industry in which the Group operates are consistent with
the forward-looking statements contained in this release, those
developments may not be indicative of developments in subsequent
periods. A number of factors could cause developments to differ
materially from those expressed or implied by the forward-looking
statements including, without limitation, general economic and
business conditions, industry trends, competition, commodity
prices, changes in law or regulation, currency fluctuations
(including the US dollar), the Group's ability to recover its
reserves or develop new reserves, changes in its business strategy,
political and economic uncertainty. Save as required by law, the
Company is under no obligation to update the information contained
in this release.
Past performance cannot be relied on as a guide to future
performance.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFIFILFMSELU
(END) Dow Jones Newswires
September 15, 2016 02:00 ET (06:00 GMT)
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