TIDMJPRL
RNS Number : 8592X
Jupiter Energy Ltd
27 February 2017
HALF YEAR FINANCIAL REPORT
31 DECEMBER 2016
CORPORATE DIRECTORY
Directors and Officers
Geoff Gander
Executive Chairman/CEO
Alexey Kruzhkov
Non-Executive Director
Baltabek Kuandykov
Non-Executive Director
Scott Mison
Executive Director/Company Secretary
Principal and Registered Office
Ground Floor PO Box 1282
10 Outram Street West Perth
West Perth Western Australia 6872
Western Australia 6005
Telephone +61 8 9322 8222
Facsimile +61 8 9322 8244
Email info@jupiterenergy.com
Website www.jupiterenergy.com
Auditors
Ernst & Young
11 Mounts Bay Road
Perth, Western Australia 6000
Telephone +61 8 9429 2222
Facsimile +61 8 9429 2436
Bankers
National Australia Bank Limited
Perth Central Business Banking Centre
UB13.03, 100 St Georges Terrace
Perth WA 6000
Share Registry
Computershare Investor Services Pty Ltd
Level 2, 45 St George's Terrace
Perth, Western Australia 6000
Telephone 1300 557 010 (within Australia)
+61 3 9415 4000 (outside Australia)
Facsimile +61 8 9323 2033
Website www.computershare.com
ASX, AIM and KASE Codes
Jupiter Energy Limited shares are listed on the Australian
Securities Exchange under the code JPR, on the AIM Market of the
London Stock Exchange under the code JPRL and on the Kazakh Stock
Exchange under JPRL_AU.
DIRECTORS' REPORT
Your directors submit the financial report of the consolidated
entity for the half-year ended 31 December 2016.
Directors
The names of directors who held office during or since the end
of the half-year:
Name
Mr Geoff Gander
Mr Baltabek Kuandykov
Mr Scott Mison
Mr Alexey Kruzhkov Appointed Director 29 August 2016
The directors have been in office since the beginning of the
period unless otherwise stated.
Operating Results
This review covers the 6 months from 1 July 2016 to 31 December
2016 and the "Subsequent Events" section includes any significant
events that have occurred between 1 January 2017 and the release
date of this report.
The consolidated loss for the period after income tax was
$6,277,355 (2015: $7,729,875).
At the end of December 2016, cash levels were $472,758 (June
2016: $663,446). Assets increased to $50,197,124 (June 2016:
$47,557,046) and equity decreased to $(143,346) (June 2016:
$3,711,243).
Review of Operations
The 6 month period to 31 December 2016 ("the Review Period") saw
little operational progress with restricted funding and uneconomic
domestic oil prices both negatively impacting the further
development of the Block 31 licence area as well as not enabling
the Company to take on additional exploration acreage.
That said, progress was made in terms of positioning the Company
for a return to oil production during the 2017 calendar year.
Oil Production and Revenues:
There was no oil production during the Review Period. No barrels
of oil were produced during the same Review Period in 2015.
Revenues from oil sales in this Review Period amounted to $A nil
(previous Review Period: $ nil).
Production Report/Status of Well Licences:
Production - Akkar North (East Block) Oilfield (J-50 well):
The J-50 well remained shut in during the Review Period as
discussions continued regarding the division of reserves on the
Akkar North field. The J-50 well is located on the Akkar North
(East Block) accumulation and no Trial Production Licence (TPL) has
been in effect on this area since 29 December 2014.
Production - Akkar East Oilfield (J-51, J-52, J-53 and # 19
wells):
During the Review Period, no oil was produced from either the
J-51 or J-52 wells under their respective Trial Production Licences
(TPLs). These two wells are located on the northern section of the
permit and are part of the East Akkar oilfield.
The J-53 well, which is also located on the Akkar East oilfield,
was shut in for the entire Review Period, awaiting further remedial
work before potentially coming back onto production. This work will
be carried out when the appropriate funding and approvals are in
place.
Well 19 which is also located on the Akkar East field and was
drilled in an area of already proven C(1) reserves between the J-51
and J-52 wells and as such was the Company's first 'production'
well.
The limited completion and testing of well 19 in early 2015
included perforating the well underbalanced with tubing conveyed
perforating guns, monitoring fluid levels and running pressure
gauges. Testing of the well indicated severe skin damage which will
require an acid treatment to stimulate the well and assist oil flow
into the well bore. This is consistent with other wells in the
area.
Further work on well 19, including an acid stimulation, will not
take place until the requisite approvals and funding for the work
are in place and the Company is ready to return to domestic oil
production.
No oil was produced from well 19 during the Review Period.
Production - West Zhetybai Oilfield (J-55, J-58 and J-59
wells):
During the Review Period, no oil was produced from either the
J-58 or J-59 wells under their respective TPLs. These two wells are
located on the southern section of the permit and are part of the
West Zhetybai oilfield.
The J-55 well, which is also located on the West Zhetybai
oilfield, was shut in for the entire Review Period, awaiting
further remedial work before potentially coming back onto
production. This work will be carried out when the appropriate
funding and approvals are in place.
It should be noted that in order to get the J-58 and J-59 wells
ready for Trial Production, the appropriate surface production
infrastructure must be put in place for both the wells. This
equipment will need to be either relocated from the Akkar East
field and/or purchased and funding is not available at this time to
complete the acquisition of the equipment required.
When the TPLs for West Zhetybai have been approved, the funding
is in place and domestic oil prices have recovered, the forward
plan is for the J-58 well to be put on production from the T(2) B
horizon, and J-59 will be used to test the potential of the shallow
Jurassic horizon discovered during the drilling of the well, before
being completed for production from the T(2) B horizon.
Extension of the Exploration Period
On 19 September 2016, the Company announced that it had signed
Addendum 7 to Contract 2275 which confirmed that the Kazakh
Ministry of Energy had approved a three (3) year extension to the
Exploration Period on Block 31, through to 29 December 2019. The 3
year extension is based on the Company maintaining its current
acreage and the Ministry of Energy has indicated that if the
Company does proceed with the North East and South East land
extensions currently under consideration then a further one (1)
year extension (to 29 December 2020) could also be considered.
Extension of Trial Production Licences - Akkar East and West
Zhetybai oilfields
The Company submitted applications for the extension of the TPLs
on the Akkar East oilfield (J-51, J-52, J-53 and well 19) and the
West Zhetybai oilfield (J-58 and J-59) during the Review Period. If
and when these extensions have been approved, the TPLs for the
Akkar East and West Zhetybai fields will run until 29 December 2019
to coincide with the term of the newly extended Exploration Licence
period.
Status of Operations:
The Company announced on 19 February 2015, as a result of the
material reduction in world oil prices, the sales price being
achieved for domestic oil in Kazakhstan had fallen to levels that
made oil production from Block 31 cashflow negative.
The Company therefore decided to cease production from its
producing Akkar East wells (J-51 and J-52) until the domestic oil
price improved. The Company continued to monitor local pricing
during the Review Period and believes that production may
recommence during 2017 but is unable to give any guarantee that
this will occur.
The Company has opened dialogue with various local oil marketing
groups and if the oil prices offered are at a level that can
sustain a positive cashflow from field operations, Jupiter will
consider recommencing oil production during 2017.
Reserves Dispute:
Akkar North (East Block) Reserves Dispute (J-50 well)
The Company advised shareholders on 28 November 2014 that the
application to extend the TPL for well J-50 was being held by the
Kazakh Committee of Geology pending resolution of the allocation of
reserves associated with the well.
The J-50 well has been shut in since 29 December 2014 (the date
at which the last Trial Production licence expired).
The underlying issue delaying the Trial Production Licence
renewal is the demand by the Committee of Geology that Jupiter
Energy reach agreement with its neighbour MangistauMunaiGas (MMG)
over the division of reserves associated with both companies' share
of the Akkar North accumulation. Jupiter Energy has been in
dialogue with MMG on this issue for some time but has been unable
to reach formal agreement with MMG with respect to the division of
Akkar North reserves or another form of settlement of the
matter.
During the Review Period the Company continued to actively work
with MMG and the relevant Kazakh authorities to resolve this matter
and the Company will advise shareholders when a definitive
resolution has been reached on this matter.
Drilling Report:
No drilling activity took place during the Review Period.
Subject to obtaining the requisite approvals and funding, the
Company plans to continue with its drilling program as soon as it
is possible. At this stage, under the proposed minimum 2017-2019
Work Program that is currently with the Kazakh authorities for
approval, the drilling of two new wells is planned for 2018 and
sidetracks are scheduled for wells J-53 and J-55 in 2019.
Significant Corporate Appointments:
During the Review Period a number of key appointments were made
to the Jupiter Energy organisation.
On 30 August 2016 the Company announced the appointment of
Alexey Kruzhkov as a Non-Executive Director of the Company. Alexey
is the appointed Board representative of Waterford Finance and
Investment Limited, the Company's largest shareholder and replaced
Alastair Beardsall who retired on 31 May 2016. Alexey also joins
the board of each Jupiter subsidiary.
Alexey holds an Engineering Degree and an MBA and has over 10
years' experience working in the investment industry, focusing
primarily on organisations involved in Oil & Gas, Mining and
Real Estate. He has served as a Director on the Boards of companies
listed in Canada and Norway. He is a member of the executive team
of Waterford Investment and Finance Limited.
On 27 October 2016 the Company announced that Baltabek Kuandykov
had been appointed as President: Jupiter (Kazakhstan). Baltabek has
been on the Board of Jupiter Energy Limited since 2010 and this new
position was created to ensure that the Jupiter organisation is
represented at the appropriate level within Kazakhstan,
particularly in relation to interaction with government officials
and at events such as the upcoming EXPO 2017, at which Jupiter is a
sponsor.
On 2 December 2016 the Company announced the appointment of
Alexander Kuzev as an Advisor to the Jupiter Energy Limited
Board.
Alexander Kuzev (51) is an oil industry professional with over
26 years of experience.
Most of Alexander's career has been spent working in the Former
Soviet Union (FSU) with much of that time responsible for the
overall management of field operations with a focus on production
sustainability, technology and field maintenance. He has worked
with a range of oil and gas companies including Schlumberger and
Gazprom Drilling.
Alexander brings an important technical skill set to Jupiter
Energy as well as in country experience, having been involved with
various Kazakhstan based oil and gas operations since the late
1990's.
Alexander is currently Managing Director of an oil production
company with operations in Astrakhan, Southern Russia and he holds
a Bachelor of Engineering.
On 2 December 2016, the Company also announced the appointment
of Sergey Kostin as the new Head of Operations in Kazakhstan.
Sergey is based in Aktau and is responsible for leading the
operations team based both in the Aktau office and in the field as
the Company looks to prepare to recommence production during the 1H
2017. His direct reports include all operations, marketing, geology
and geophysics personnel and he works closely with the heads of
Finance & Administration and Legal.
Sergey (52) has 30 years experience in the oil sector with over
14 years spent in a variety of operational roles with the
international oil services organisation Schlumberger. He has also
worked with a number of Russian oil companies, most recently with
SGC Drilling as their Director of Drilling.
He has vast experience in the drilling of wells and the Company
believes that he will bring Jupiter Energy an important combination
of international drilling expertise and cultural awareness at what
will be a critical period in the development of Block 31.
Once a decision to recommence production has been made it is
expected that a number of further hiring decisions will be made in
Aktau to bolster the current staffing levels there.
2016 Annual General Meeting:
The 2016 Annual General Meeting was held in Perth on Friday 04
November 2016 and all Resolutions were passed.
Funding and Capital Management:
As at 31 December 2016, the Company had 153,377,693 listed
shares trading under the ASX ticker "JPR", the AIM ticker "JPRL"
and the KASE ticker "AU_JPRL".
The Company has no options or Performance Shares, listed or
unlisted, on issue.
As at 31 December 2016, total Company debt outstanding was
$US35,732,987 (A$49,439,089) through a total of five (5) Promissory
Notes, with the following holders:
-- Waterford Petroleum Limited: $US13,053,950
-- Waterford Petroleum Limited: $US9,559,670
-- Mobile Energy Limited: $US10,199,502
-- Midocean Holdings Limited: $US2,199,914
-- Other Private Investors: $US719,951
As at 31 December 2016, the Company has drawn down $US2,291,238
(including accrued interest) under the new Funding Agreement with
Waterford Petroleum Limited, as announced on 29 July 2016, and
therefore has a further $US2,708,762 (including accrued interest)
available to it under this Agreement.
Directors have deferred their Directors' Fees since February
2015 and will continue to do so until such time that the Company
has an improved cashflow position.
The Company is still reviewing its ongoing funding requirements
for 2017 and the directors are exploring a range of options for
financing the further development of the East Akkar and West
Zhetybai fields during 2017 and beyond, to the stage where export
oil sales are being achieved and further development of the field
is self-funding; these options may include the further issue of new
equity, reserve based debt, convertible debt or a combination of
these and other funding instruments.
Once the appropriate funding has been secured, the further
development of both the Akkar East and West Zhetybai fields, and in
particular building of the topside infrastructure on Akkar East
including a processing facility and gas separation plant, will be
accelerated.
Based on current management forecasts, the Company has
sufficient working capital, including its access to the remaining
funding under the Waterford Promissory Notes, until June 2017. The
Company continues to seek a longer term funding package that will
enable the commencement of the proposed 2017 Work Program,
recommencing domestic oil production from the Akkar East field and
for on-going working capital in the 2nd half of 2017 and
beyond.
Subsequent Events:
On 31 January 2017 the Company received a further $US240,000
from Waterford under the existing funding facility and these funds
will be put towards meeting working capital commitments.
The Board believes the remaining funding available from the
Waterford Promissory Notes will be sufficient to provide the
Company with working capital for the 1(st) half of 2017 calendar
year based on the current Care & Maintenance budget. If a
broader amount of work is to be carried out including recommencing
oil production from the Akkar East oilfield, additional funding
will first need to be sourced.
There are no further "Subsequent Events" to report prior to the
release of this report.
Summary:
The Company had a productive 6 month period from 1 July to 31
December 2016.
The extension of the Exploration Licence to 29 December 2019 was
a key milestone and good progress was made in getting the TPLs
approved for the Akkar East and West Zhetybai oilfields.
Whilst global oil prices have remained low and domestic oil
prices have meant that production has been shut in, market
conditions appear to be improving and a return to domestic
production appears possible during 2017 assuming the requisite
regulatory approvals and funding are in place.
Since acquiring an exploration permit in 2008, independent
reserve reports continue to confirm that that Jupiter has now
discovered two sizeable oilfields with significant reserves and
resources. In addition, oil production has moved from zero at the
beginning of 2011 to over 230,000 barrels for calendar year 2014,
with 2014 calendar year revenues reaching $A8.75 million
($US7.568m).
The goal of developing Jupiter Energy into a full cycle E&P
company with a meaningful production profile and sizeable 2P
reserves base remains the key objective for the Board and
Management and the Company remains confident of continuing to make
progress towards achieving this goal during 2017.
Competent Persons Statement:
General
Alexey Glebov, PhD, with over 33 years' oil & gas industry
experience, is the qualified person as defined in the AIM Guidance
Note on Mining and Oil & Gas Companies dated June 2009, who has
reviewed and approved the technical information contained in this
report. Alexey PhD's in technical science (1992) and geology
science (2006), an Honors Degree in Geology and Geophysics (1984)
from Novosibirsk State University and a Gold Medal (1985) from USSR
Academy of Sciences. He is a member since 2001 of the European
Association of Geoscientists & Engineers (EAGE #M2001-097) and
was made an Honorary Oilman in 2011 by the Ministry of Energy of
the Russian Federation. Alexey Glebov is qualified in accordance
with ASX Listing Rule 5.41.
Auditor's Independence Declaration
In accordance with section 307C of the Corporations Act 2001,
the Directors have obtained a declaration of independence from
Ernst & Young, the consolidated entity's auditors. The
independence declaration is included at page 9 of the financial
report.
Dated at Perth on 24 February 2017.
This report is signed in accordance with a resolution of the
Board of Directors.
G A Gander
Executive Chairman/CEO
[AUDIT INDEPENCE DECLARATION]
AUDITORS' REVIEW REPORT
PAGE 1
AUDITORS' REVIEW REPORT
PAGE 2
DIRECTORS' DECLARATION
In accordance with a resolution of the Directors of Jupiter
Energy Limited, I state that:
In the opinion of the Directors:
a. The financial statements and notes of the consolidated entity
are in accordance with the Corporations Act 2001, including:
I. giving a true and fair view of the financial position of the
consolidated entity as at 31 December 2016 and the performance for
the half-year ended on that date, and
II. complying with Accounting Standard AASB 134 "Interim
Financial Reporting" and the Corporations Regulations 2001; and
b. Subject to the matters disclosed at note 2(a), there are
reasonable grounds to believe that the company will be able to pay
its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the
Board of Directors.
G A Gander
Executive Chairman/CEO
Signed at Perth 24 February 2017.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF YEARED 31 DECEMBER 2016
Consolidated Entity
Note 6 months 6 months
to to
31 Dec 31 Dec
2016 2015
$A $A
Revenue - -
Cost of sales - (179,872)
------------ ------------
Gross profit - (179,872)
------------ ------------
Foreign currency gain / (loss) (1,343,720) (1,871,391)
General and administrative
costs (1,702,186) (3,275,414)
Operating loss (3,045,906) (5,326,677)
------------ ------------
Finance income 9,363 12,529
Finance costs (3,240,812) (2,415,727)
------------ ------------
Loss before tax (6,277,355) (7,729,875)
------------ ------------
Income tax expense - -
------------ ------------
Loss after income tax (6,277,355) (7,729,875)
------------ ------------
Other comprehensive income
in subsequent periods (net
of tax)
Foreign currency translation 2,422,766 (26,024,936)
------------ ------------
Total comprehensive loss
for the period (3,854,589) (33,754,811)
------------ ------------
Loss per share attributable
to ordinary equity holders
of the parent (cents per
share)
Basic loss per share (4.09) (5.04)
Diluted loss per share (4.09) (5.04)
The above Statement of Comprehensive Income should be read in
conjunction with the accompanying notes.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
Note 31 Dec 2016 30 June
2016
$A $A
ASSETS
Current Assets
Cash and cash equivalents 4 472,758 663,446
Trade and other receivables 24,727 24,064
Other current assets 79,009 67,459
Inventories 18,219 17,886
------------ --------------
Total Current Assets 594,713 772,855
------------ --------------
Non-Current Assets
Trade and other receivables 2,897,779 2,787,367
Oil and gas properties 6 15,605,794 14,976,550
Plant and equipment 426,970 417,142
Exploration and evaluation
expenditure 5 30,253,333 28,215,402
Other financial assets 418,535 387,732
------------ --------------
Total Non-Current Assets 49,602,411 46,784,193
------------ --------------
Total Assets 50,197,124 47,557,048
------------ --------------
Current Liabilities
Trade and other payables 7 669,054 755,133
Total Current Liabilities 669,054 755,133
------------ --------------
Non-current Liabilities
Provisions 232,327 154,442
Other financial liabilities 8 49,439,089 42,936,226
Total Non-Current Liabilities 49,671,416 43,090,668
------------ --------------
Total Liabilities 50,340,470 43,845,801
------------ --------------
Net (Liability) / Assets (143,346) 3,711,247
============ ==============
Equity
Contributed equity 9 85,633,935 85,633,935
Share based payment reserve 5,764,014 5,764,014
Foreign currency translation
reserve (23,880,886) (26,303,650)
Accumulated losses (67,660,407) (61,383,052)
------------ --------------
Total (Deficiency)/ Equity (143,346) 3,711,247
============ ==============
The above Statement of Financial Position should be read in
conjunction with the accompanying notes.
STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEARED 31 DECEMBER 2016
CONSOLIDATED Issued Share Foreign Accumulated Total
Capital based currency Losses Equity
payment translation
reserve reserve
$A $A $A $A $A
------------ ----------- -------------- --------------- --------------
As at 1 July
2016 85,633,935 5,764,014 (26,303,650) (61,383,052) 3,711,247
Loss for the
period - - - (6,277,355) (6,277,355)
Other comprehensive
income - - 2,422,766 - 2,422,766
------------ ----------- -------------- --------------- --------------
Total comprehensive
income / (loss) - - 2,422,766 (6,277,355) (3,854,589)
As at 31 December
2016 85,633,935 5,764,014 (23,880,886) (67,660,407) (143,346)
------------ ----------- -------------- --------------- --------------
As at 1 July
2015 85,633,935 5,764,014 1,165,133 (50,908,182) 41,654,900
Loss for the
period - - - (7,729,875) (7,729,875)
Other comprehensive
income - - (26,024,936) - (26,024,936)
------------ ----------- -------------- --------------- --------------
Total comprehensive
income / (loss) - - (26,024,936) (7,729,875) (33,754,811)
Share based payments - - - - -
------------ ----------- -------------- --------------- --------------
As at 31 December
2015 85,633,935 5,764,014 (24,859,802) (58,638,059) 7,900,088
------------ ----------- -------------- --------------- --------------
The above Statement of Changes in Equity should be read in
conjunction with the accompanying notes.
STATEMENT OF CASH FLOWS
FOR THE HALF YEARED 31 DECEMBER 2016
Consolidated
Entity
6 months 6 months
to to
31 December 31 December
2016 2015
$A $A
Cash flows from operating activities
Receipts from customers - -
Payments to suppliers and employees (1,775,861) (1,781,022)
Interest received 9,363 12,529
Net cash used in operating activities (1,766,498) (1,768,493)
------------- -------------
Cash flows from investing activities
Payments for exploration and
development expenditure (321,074) (471,062)
Payments for plant and equipment (5,000) -
Net cash used in investing activities (326,074) (471,062)
------------- -------------
Cash flows from financing activities
Proceeds from unsecured loan 1,910,923 912,780
Net cash provided by financing
activities 1,910,923 912,780
------------- -------------
Net decrease in cash held (181,649) (1,326,775)
Cash at the beginning of the
financial period 663,446 1,613,560
Foreign exchange gain/(loss) (9,039) 13,201
------------- -------------
Cash at the end of the financial
period 472,758 299,986
------------- -------------
The above Statement of Cash Flows should be read in conjunction
with the accompanying notes
1. CORPORATE INFORMATION
The half year financial report of Jupiter Energy Limited for the
period 31 December 2016 was authorised for issue in accordance with
a resolution of the Directors on 24 Feb 2017.
Jupiter Energy Limited is a company limited by shares that is
incorporated and domiciled in Australia and whose shares are
publicly listed and traded on Australian Securities Exchange, KASE,
the Kazakh Stock Exchange, and the London's Alternative Investment
Market. Jupiter Energy is a for profit entity.
The registered office is Ground Floor, 10 Outram Street, West
Perth, Western Australia 6005.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
(a) Basis of preparation
This condensed financial report for the half-year ended 31
December 2016 has been prepared in accordance with AASB 134 Interim
Financial Reporting and the Corporations Act 2001.
All monetary values are reported in Australian Dollar unless
otherwise stated.
The half-year financial report does not include all notes of the
type normally included within the annual financial report and
therefore cannot be expected to provide as full an understanding of
the financial performance, financial position and financing and
investing activities of the consolidated entity as the full
financial report.
It is recommended that the half-year financial report be read in
conjunction with the annual report for the year ended 30 June 2016
and considered together with any public announcements made by
Jupiter Energy Limited during the half-year ended 31 December 2016
and in the subsequent period to the date of this report in
accordance with the continuous disclosure obligations of the ASX
listing rules.
Going Concern
The consolidated financial statements have been prepared on a
going concern basis with the Directors of the opinion that the
Group can meet its obligations as and when they fall due.
At 31 December 2016 the Group has a net current liability
position of $74,341 and a net deficiency position of
($143,346).
As at 31 December 2016, the Group has in place a US$5,000,000
promissory note facility. US$2,820,000 of the facility has been
used with US$2,708,762 remaining. Based on current forecasts, the
Group does not have sufficient working capital for the 12 months
from the signing date of this report based on its current 2017
budget. The Group is reviewing its ongoing funding requirements for
2017 and beyond, to enable the Company to carry out its 2017-2019
Work Program and develop Block 31 to the stage where export oil
sales are being achieved and further development of the field is
self-funding. Funding options may include the further issue of new
equity, reserve based debt, convertible debt or a combination of
these and other funding instruments.
The Directors, after consultation with the major shareholders
and debt providers, are confident of being able to raise the
required capital, but note that financing has not been secured at
the date of this report and that the recommencement of production
is dependent on a recovery in the Kazakh domestic oil price which
is in turn linked to an overall recovery in world oil prices.
Should the Group not achieve the matters set out above, there is
uncertainty whether the Group would continue as a going concern and
therefore whether it would realise its assets and extinguish its
liabilities in the normal course of business and at the amounts
stated in the financial report. The financial report does not
include adjustments relating to the recoverability or
classification of the recorded assets amounts nor to the amounts or
classification of liabilities that might be necessary should the
Group not be able to continue as a going concern.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)
(b) Accounting policies
The accounting policies adopted in the preparation of the half
year financial report are consistent with those followed in the
preparation of the Group's financial statements for the year ended
30 June 2016. All new and amended accounting standards and
interpretations effective 1 July 2016 have been adopted by the
Group. The adoption of new standards and amendments from 1 July
2016 has not had a significant impact on the accounting policies of
the Group.
The Group has not elected to early adopt any new standards or
amendments that are issued but not yet effective.
3. SEGMENT REPORTING
The Consolidated Entity is exploring for oil and gas in
Kazakhstan. Each activity has been aggregated as they have similar
economic characteristics and are being conducted in one area of
interest. The operations of the Consolidated Entity therefore
present one operating segment under AASB 8 Operating Segments.
The accounting policies applied for internal reporting purposes
are consistent with those applied in the preparation of the half
year financial report.
4. CASH AND CASH EQUIVALENTS
Consolidated
Entity
31 Dec 31 Dec
2016 2015
$A $A
For the purpose of the half year
cash flow statement, cash and
cash equivalents are comprised
of the following:
Cash at bank 472,758 299,985
472,758 299,985
--------- ---------
5. EXPLORATION AND EVALUATION EXPITURE
Consolidated
Entity
31 Dec 30 June
2016 2016
$A $A
Exploration expenditure carried
forward in respect of areas of
interest in:
Exploration and evaluation expenditure
at cost 30,253,333 28,215,402
=========== =============
Movements during the period
Balance at beginning of period 28,215,402 44,166,103
Expenditure incurred during the
period 321,074 279,759
Impairment - -
Foreign exchange translation 1,716,858 (16,230,460)
----------- -------------
Balance at end of period 30,253,333 28,215,402
=========== =============
Exploration and evaluation assets are capitalised on the basis
that the Company continues to hold a current contract ("the
Contract") for all areas of interests to which the capitalised
costs relate.
Consolidated
Entity
31 Dec 30 June
2016 2016
$A $A
Movements during the period
Balance at beginning of period
- 1 July 16,805,439 26,227,918
Net exchange differences 629,244 (9,422,479)
------------ ------------
Balance at end of period 17,434,683 16,805,439
------------ ------------
Depletion and impairment at beginning
of period (1,828,889) (1,828,889)
Charge for the period / year - -
------------ ------------
Depletion and impairment at end
of period (1,828,889) (1,828,889)
------------ ------------
Net book value at end of period 15,605,794 14,976,550
------------ ------------
6. OIL AND GAS PROPERTIES
7. TRADE AND OTHER PAYABLES
Consolidated
Entity
31 Dec 30 June
2016 2016
$A $A
Trade creditors 562,952 652,938
Accrued expenses 106,102 102,195
669,054 755,133
-------- --------
8. OTHER FINANCIAL LIABILITIES
Consolidated
Entity
31 Dec 30 June
2016 2016
$A $A
Non-Current
Promissory notes (unsecured) 49,439,089 42,936,226
49,439,089 42,936,226
----------- -----------
Promissory Notes
On 31 May 2016, the major shareholder Waterford Petroleum
Limited ("Waterford") agreed to re-finance its current Promissory
Note (as originally announced on 7 October 2014 and subsequently
amended on 30 April 2015) that, as at 31 May 2016, amounted to
US$8,633,333 (A$11,636,956) in principal with accrued interest of
US$1,250,894 (A$1,686,092) (total US$9,914,227 / A$13,323,048) into
a new Promissory Note with the following key terms:
-- Unsecured
-- Effective 31 May 2016
-- Repayable on 1 July 2018
-- Interest rate of 15% pa
-- Interest will accrue and be repayable with principal
-- Lender can elect to be repaid if there is a change of control
in Jupiter Energy Limited or Jupiter Energy Pte Ltd or there is a
change in control in contract 2275 covering the Block 31
Licence
The previous Promissory Note and all accrued interest were due
for repayment on 1 July 2016.
As at 31 December 2016, the above promissory notes with accrued
interest totaled US$10,762,712 (A$14,890,965)
On 24 May 2016, the Group and Waterford agreed to put in place a
new Framework Funding Agreement that makes up to a further
US$5,000,000 (including accrued interest) available to the Group by
way of a new US$5,000,000 Promissory Note. This takes the total
facility available under the existing and the new Framework Funding
Agreement to US$15,000,000 (including accrued interest) of which a
further US$5,088,822 (A$6,859,274) can be drawn down on (including
accrued interest). This is in order to fund the Group's operations
whilst it continues to finalise long term funding arrangements for
the development of its Block 31 licence area in Kazakhstan.
The key terms of the new Framework Agreement with Waterford
are:
-- Effective 24 May 2016
-- Drawdowns will roll into a Promissory Note
-- Promissory Note is repayable on 1 July 2018
-- Interest rate of 15% pa
-- Interest will accrue and be repayable with principal
-- Lender can elect to be repaid if there is a change of control
in Jupiter Energy Limited or Jupiter Energy Pte Ltd or there is a
change in control in contract 2275 covering the Block 31
Licence
As at 31 December 2016, US$2,291,238, (A$3,163,799) (30 June
2016: US$744,989, A$1,004,171) has been drawn from the US$5,000,000
facility.
US$15.5m Convertible Notes (Series B):
On 3 June 2016, the Group announced it had reached agreement
with its Convertible Note holders to refinance the 12,400,000
Convertible Notes with a total value of approx. US$20,800,000
(A$28,761,900) (including accrued interest) into Promissory Notes
with a repayment date of 1 July 2018.
The key terms for the new Promissory Notes are:
-- Unsecured
-- Effective 31 May 2016
-- Repayable on 1 July 2018
-- Interest rate of 15% pa
-- Interest will accrue and be repayable with the principal
-- Lenders can elect to be repaid if there is a change of
control in Jupiter Energy Limited or Jupiter Energy Pte Ltd or
there is a change in control of the ownership of the Block 31
Licence
The Convertible Notes and all accrued interest were due for
repayment on 20 September 2016.
As at 31 December 2016, the above promissory notes with accrued
interest totaled US$22,679,037 (A$31,378,035)
9. CONTRIBUTED EQUITY
31 Dec 30 June
2016 2016
$A $A
Issued Capital
Ordinary shares (a) 85,339,737 85,339,737
Options (b) 294,198 294,198
-------------- ----------
85,633,935 85,633,935
-------------- ----------
(a) Movements in ordinary share
capital No. $A
Balance 30 June 2015 153,377,693 85,339,737
Movement during the period - -
-------------- ----------
Balance 31 December 2015 153,377,693 85,339,737
-------------- ----------
Balance 30 June 2016 153,377,693 85,339,737
Movement during the period - -
Balance 31 December 2016 153,377,693 85,339,737
-------------- ----------
(b) Movements in options No. $A
-------------- ----------
Balance 30 June 2015 - 294,198
Movement during the period - -
-------------- ----------
Balance 31 December 2015 - 294,198
-------------- ----------
Balance 30 June 2016 - 294,198
Movement during the period - -
-------------- ----------
Balance 31 December 2016 - 294,198
-------------- ----------
10. SHARE BASED PAYMENTS
During the current period, there were no share based
payments.
11. CONTINGENT LIABILITIES
There has been no significant change in contingent liabilities
since the last annual reporting date.
12. EVENTS SUBSEQUENT TO REPORTING DATE
On 31 January 2017 the Company received a further $US240,000
from Waterford under the existing funding facility and these funds
will be put towards meeting working capital commitments.
The Board believes the remaining funding available from the
Waterford Promissory Notes will be sufficient to provide the
Company with working capital for the 1(st) half of 2017 calendar
year based on the current Care & Maintenance budget. If a
broader amount of work is to be carried out including recommencing
oil production from the Akkar East oilfield, additional funding
will first need to be sourced.
There are no further "Subsequent Events" to report prior to the
release of this report.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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