TIDMNTOG
RNS Number : 2777L
Nostra Terra Oil & Gas Company PLC
30 September 2016
30 September 2016
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Interim Results
Nostra Terra (AIM:NTOG), the oil and gas exploration and
production company with a portfolio of assets in the USA and Egypt,
is pleased to announce its unaudited results for the six month
period ended 30 June 2016.
Highlights:
-- Revenue for the period of GBP133,000 (30 June 2015: GBP393,000)
-- Gross profit from operations (before non-cash items of
depreciation and amortization) for the period of GBP60,000 (30 June
2015: GBP268,000)
-- Average production during first half at 60 boepd (US only)
-- Cost cutting initiative - 42% reduction in overheads,
including a 25% reduction in management and board remuneration
-- Raised GBP350,000 via an equity placing in March 2016
-- Reorganisation of share capital completed in May 2016
Post-period events:
-- Equity placing to raise GBP250,000 in July 2016 -- Divestment
of majority of Company's wells in the Chisholm Trail Prospect for
US$2.1 million completed -- Independent Resources (Egypt) Ltd, the
Company's JV with Independent Resources plc, settles US$2.5 million
loan note for US$200,000
Chairman's report
In the recently released annual report for 2015, I reported to
shareholders that there was "still a lot of work to be done" in
repositioning Nostra Terra to withstand the worst bear market in
the oil and gas industry for over 30 years. With this in mind, our
main priority in the first half of 2016 was to restructure Nostra
Terra so that we could start to rebuild the business on firmer
foundations. Conditions remain extremely tough in the market for
all exploration and production companies, including junior oil and
gas companies. As such, during H12016 we made a number of difficult
decisions for the long term good of the Company, including the
share capital reorganization which we completed in May.
I am pleased to report that in the second half of 2016 we are
clearly seeing the benefits of the actions we took earlier in the
year and our expectation now is to be able to start introducing new
assets into Nostra Terra before the end of the period. We remain
confident that our strategy of acquiring assets which generate
positive cash flow in a low oil price environment, should deliver
substantial value to shareholders over the medium term.
The cost cutting initiative in the first half yielded
significant savings within the business, achieving a 40 per cent
reduction in total operating costs. This included a 25 per cent
reduction in board and management salaries. Together with the
GBP350,000 the Company raised at the start of March, Nostra Terra
entered the second half of the year on a much firmer financial
footing. We further strengthened Nostra Terra's balance sheet
post-period, through the GBP250,000 we raised in July and the
completion of the sale of the Company's interest in the Chisholm
Trail prospect for $2.1million.
During the period we were able to negotiate a contract to
acquire a larger asset in the Permian Basin, which Nostra Terra
would operate. We intended that the asset be financed via a bond
offering, however unfortunately a number of market factors, outside
of Nostra Terra's control, worked against our efforts to secure
this funding. It is naturally extremely disappointing to have
missed out on what should have been a transformational deal for
Nostra Terra. However, with the prudent steps we have taken in
restructuring the business, our job is to move on from this and
focus our energies on securing the next deal for Nostra Terra.
From the decisions taken earlier in 2016 Nostra Terra is in a
much better position to grow the business, building a portfolio of
producing assets from a robust deal pipeline. where Nostra Terra
will operate and therefore have more control over its own destiny.
At the same time we will reach for more substantial transactions
when we perceive the assets have the ability to add to shareholder
value. Meanwhile in Egypt, as reported in our annual report, there
is uncertainty with operations. However, we continue to make steady
progress with our partner Independent Resources plc. Currently the
market appears to have written off our stake in the East Ghazalat
concession. We believe this is unduly pessimistic and ignores
progress made on the ground. During H1-2016 our 50% owned Joint
Venture, Independent Resources (Egypt) Ltd, completed permitting
with the Egyptian Government and received the necessary security
clearance in anticipation of receiving payments. We are realistic
in our expectations of likely timelines moving forward, but the
cash-generative potential at East Ghazalat remains unchanged.
I look forward to reporting progress as we fulfill our strategic
objectives and introduce new acquisitions to Nostra Terra in the
coming months.
Ewen Ainsworth
Chairman
30 September 2016
Chief Executive Officer's report
During the first half of 2016 oil prices ranged from below $30
per barrel to the low $50's. Pressure on the oil price may well
remain for the foreseeable future and therefore we will remain
diligent to keep overheads low.
Our goal remains to reinvest funds to build our asset base
during the low price environment. The immediate focus is on
building production and revenues where we surpass free cash flow on
a corporate level. We're primarily seeking assets where Nostra
Terra has more control over the pace of exploration and
development.
During the period we entered a contract to sell our largest
producing asset in the US; the Chisholm Trail Prospect. While we
were primarily interested in one particular formation, one of the
aspects we liked when we originally acquired the interest in the
prospect was the stacked pay. This discipline faired well for us,
as the prospect is in an area of high activity and interest
allowing us to sell at a premium to our internal valuation. While
we retained some of the wells and acreage, we sold the bulk of
these and raised in excess of US$2.1 million. Some of those funds
were used to pay down Company debt leaving flexibility to use the
finance facilities for other assets, while we retained enough funds
to reinvest in new projects.
We are currently evaluating a number of producing and drill
ready opportunities in the USA, which would be part funded by our
cash flows. Chisholm Trail was a portfolio of leases and producing
wells. All of the wells were operated by other companies where
Nostra Terra had a working interest up to 20 per cent. The various
assets we review are those where Nostra Terra will have a large
working interest and operate.
As Ewen commented we have continued to make progress with our
initial asset in Egypt during the first half of the year. The
recent early settlement by Independent Resources (Egypt) Ltd
("IRE") of the TransGlobe loan note for $200,000 has made the
fundamentals of the project even more attractive. Rather than
paying $3.47 per barrel of attributable 2P reserves IRE's entry
cost has now decreased to $1.19 per barrel. This valuation
underpins our desire to continue working on local operational
improvements with our partners.
We look forward to updating shareholders on progress during the
remainder of the year.
Matt Lofgran
Chief Executive Officer
30 September 2016
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information, visit www.ntog.co.uk or contact:
Nostra Terra Oil and Gas Company
plc
Matt Lofgran, CEO +1 480 993 8933
Strand Hanson Limited
(Nominated & Financial Adviser +44 (0) 20 7409
and Joint Broker) 3494
Rory Murphy / Ritchie Balmer
Vicarage Capital Limited (Joint +44 (0) 20 3651
Broker) 2910
Rupert Williams / Jeremy Woodgate
Cornhill Capital Ltd (Joint +44 (0) 20 7710
Broker) 9610
Nick Bealer / Colin Rowbury
Nostra Terra Oil and Gas Company plc
Consolidated statement of comprehensive income
for the six months ended 30 June 2016
Six months Year to
Six months to 30 June 31 December
to 30 June 2015 2015
Note 2016 Unaudited Unaudited Audited
GBP'000s GBP'000s GBP'000s
Revenue 133 393 594
Cost of sales 3 (389) (1,065) (1,909)
--------------- ----------- -----------------------------
Gross profit/(loss) (256) (672) (1,315)
Share based payment - - (27)
Administrative expenses (222) (378) (689)
Share of results
of joint venture (314) - (157)
--------------- ----------- -----------------------------
Operating loss (792) (1,050) (2,188)
Other income 4
Finance expense (16) (11) (122)
--------------- ----------- -----------------------------
Loss for the financial
period (804) (1,061) (2,310)
--------------- ----------- -----------------------------
Other comprehensive
income
Exchange gain/(loss)
on translation of foreign
ops. 177 (19) 111
--------------- ----------- -----------------------------
Total comprehensive
income for the period (627) (1,080) (2,199)
=============== =========== =============================
Loss per share
Attributed to:
Equity holders of
the company
Basic and
diluted 4 (0.022p) (0.032p) (0.069)
--------------- ----------- -----------------------------
The Company's operating loss arose from continuing
operations.
There were no recognised gains or losses other than those
recognised in the income statement above.
Nostra Terra Oil and Gas Company plc
Consolidated statement of financial position as at 30 June
2016
As at As at 31
As at 30 30 December
June 2016 June 2015 2015
Unaudited Unaudited Audited
Note GBP'000s GBP'000s GBP'000s
Assets
Non-current assets
Other intangibles 2,012 3,545 3,127
Property, plant,
and equipment 237 483 464
Investment in joint
venture (125) 190
2,124 4,028 3,781
----------- ---------- ---------
Current assets
Assets held for resale 6 1,374 - -
Trade and other receivables 291 216 176
Cash and cash equivalents 11 526 144
1,676 742 320
----------- ---------- ---------
Total assets 3,800 4,770 4,101
=========== ========== =========
Equity and liabilities
Equity
Share capital 9 3,666 3,360 3,360
Share premium account 11,060 11,060 11,060
Translation reserve 113 (194) (64)
Share option reserve 165 139 165
Accumulative deficit (13,256) (11,204) (12,452)
Total equity 1,748 3,161 2,069
=========== ========== =========
Liabilities
Non-current liabilities
Other loans 8 387 1,380 351
Current liabilities
Trade and other payables 383 229 373
Borrowings 1,282 - 1,308
1,665 229 1,681
----------- ---------- ---------
Total liabilities 2,052 1,609 2,032
----------- ---------- ---------
Total equity and
Liabilities 3,800 4,770 4,101
=========== ========== =========
Nostra Terra Oil and Gas Company plc
Consolidated cash flow statement
For the six months ended 30 June 2016
Six months Year to
Six months to 30 31 December
to 30 June June 2015 2015
2016 Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Cash generated/(consumed)
by operations 5 (300) 79 57
Interest paid (11) - (115)
---------------- -------------------- -------------
Net cash outflow
from operating activities (311) 79 (58)
---------------- -------------------- -------------
Cash flows from investing
activities
Sale/(purchases)
of plant and
equipment (1) (18) (25)
Purchase of intangibles
- new oil properties (4) (174) (276)
Purchase of equity
in joint venture
investment - - (347)
Net cash from investing
activities (5) (192) (648)
---------------- -------------------- -------------
Cash flows from financing
activities
Proceeds on issue
of shares 306 - -
Repayment of borrowings (162) (381) (1,162)
New borrowing (net) - 159 1,156
---------------- -------------------- -------------
Net cash from financing
activities 144 (222) (6)
---------------- -------------------- -------------
Effect of exchange
rate changes on cash
and cash equivalents 39 - (5)
---------------- -------------------- -------------
Increase/(decrease)
in cash and cash
equivalents (133) (335) (717)
---------------- -------------------- -------------
Cash and cash equivalents
at the beginning
of the period 144 861 861
---------------- -------------------- -------------
Cash and cash equivalents
at the end of the
period 11 526 144
================ ==================== =============
Nostra Terra Oil and Gas Company plc
Consolidated statement of changes in equity
For the six months ended 30 June 2016
As at As at As at
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
As at beginning of
period 2,069 4,241 4,241
Other comprehensive
income 177 (19) 111
Loss for the period (804) (1,061) (2,310)
Share based payments - - 27
Issue of share capital
net of expenses 306 - -
As at end of period 1,748 3,161 2,069
========= ========= =============
Nostra Terra Oil and Gas Company plc
Notes to the interim report
For the six months ended 30 June 2016
1. General Information
Nostra Terra Oil and Gas Company plc is a public limited company
incorporated in England with a company number 39768 and quoted on
the AIM market of the London Stock Exchange Plc.
2. Basis of Preparation
This interim report, which incorporates the financial
information of the Company, has been prepared using the historical
cost convention, on a going concern basis and in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union, using accounting policies which are consistent
with those set out in the financial statement for the year ended 31
December 2015. This interim financial information for the six
months ended 30 June 2016 was approved by the Board on 29 September
2016.
The unaudited results for the six months ended 30 June 2016 do
not constitute statutory accounts within the meaning of Section 435
of the Companies Act 2006. The comparative figures for the 12
months ended 31 December 2015 are extracted from the statutory
financial statements which have been filed with the Registrar of
Companies and which contain an unqualified audit report, did not
draw attention to any matters by way of an emphasis of matter
paragraph and contained no statement under Section 498 (2) or (3)
of the Companies Act 2006.
Copies of this interim statement are available from the Company
at its registered office at Finsgate, 5-7 Cranwood Street, London
EC1V 9EE. The interim statement will also be available on the
Company's website www.ntog.co.uk in accordance with Rule 26 of the
AIM Rules for Companies.
3. Cost of Sales
Cost of sales includes GBP316,000 non-cash items (not affecting
actual cash flow), in respect of depreciation, depletion and
amortization costs (30 June 2016).
4. Loss per share
Six months Year to
Six months to 30 June 31 December
to 30 June 2015 2015
2016 Unaudited Unaudited Audited
Loss per ordinary shareholders
Basic and diluted (0.022p) (0.032p) (0.069p)
--------------- ----------- ------------
The loss per ordinary share is based on the Company's loss for
the period of GBP804,000 (30 June 2015 - GBP1,061,000; 31 December
2015 - GBP2,310,000) and basic weighted average number of shares in
issue of GBP3,656,114,645 (30 June 2015 - 3,359,578,276; 31
December 2015 - 3,359,578,276).
Given the Company's loss for the period, the diluted loss per
share is the same as the basic loss per share.
Nostra Terra Oil and Gas Company plc
Notes to the interim report
For the six months ended 30 June 2016
5. Reconciliation of operating loss to net cash outflow from operating activities.
Six months Six months Year to
to to 31 December
30 June 2016 30 June 2015
Unaudited 2015 Unaudited Audited
GBP'000s GBP'000s GBP'000s
Operating loss
for the period (792) (1,050) (2,188)
Adjustments
for:
Depreciation
of property,
plant, and equipment 56 51 103
Amortization
of intangibles 260 889 1,026
Well impairment - 571
Share of results
of joint venture 314 157
Share based
payment - - 27
Loss on disposal
of assets - 221 -
(Decrease)/increase
in finance charge
provision - (176) (15)
(Increase)/decrease
in receivables (77) - 310
(Decrease)/increase
in related party (47) 142
(Decrease)/increase
in payables (16) (62) 34
(Increase)/decrease
in deposits
and prepayments 2 48 32
Foreign exchange
Translation-movement
in provision - 16 -
Net cash from
operating activities (300) 79 57
============= =============== ============
6. Assets held for resale
The company announced on 29 June 2016 that it had contracted to
sell its wells within the Chisholm Trail and as a consequence these
have been reclassified as current assets.
7. Segmental analysis
In the opinion of the directors, the Group has one class of
business, being the exploitation of hydrocarbon resources.
The Group's primary reporting format is determined by
geographical segment according to the location of the hydrocarbon
assets.
As the group only operates in a single business and geographical
segment, no segmental information for business segment or
geographical segment is required.
8. Loan notes issued by Nostra Terra (Overseas) Limited
The long-term creditors represent unsecured and interest-free
loan notes issued by Nostra Terra (Overseas) Limited ("NTOL") on 25
May 2007 with no contingency based on the cash flow from NTOL's
Ukrainian assets.
Additionally, in 2015 the group entered into a revolving line of
credit agreement that provides for borrowings of up to $25 million
USD, depending on certain borrowing base requirements. The line of
credit matures in January 2016. Borrowings under the line of credit
bear interest at either 1% plus the U.S. Prime Rate published by
the Wall Street Journal or 4.25%, whichever is greater. The
borrowings under the line of credit are subject to certain
financial covenants and restrictions on indebtedness, business
combinations, and other related items.
9. Share Capital
The issued share capital as at 30 June 2016 was 82,206,954
ordinary shares of 1p each following the share capital
reorganization completed in May 2016. The issued share capital as
at 31 December 2015 and 30 June 2015 was 3,359,578,276 ordinary
shares of 1p each, respectively.
10. Events arising after the balance sheet date
On 27 September 2016, the Company, Independent Resources Group
plc ("IRG") and Independent Resources (Egypt) Limited ("IRE"),
being the Company's joint venture vehicle with IRG which owns the
Company's and IRG's interests in the East Ghazalat concession,
agreed a settlement agreement with TransGlobe Petroleum
International Inc. ("TransGlobe") concerning the early repayment of
the US$2.5 million loan note ("Loan Note") issued to TransGlobe as
deferred consideration for the acquisition of East Ghazalat in
October 2015 and repayable on 30 September 2017.
Under the terms of the agreement, the Company, Independent
Resources (Egypt) Limited and Independent Resources Group plc will
collectively pay US$200,000 to TransGlobe in full and final
settlement of the Loan Note and all interest accruing on the Loan
Note. This removes the outstanding liability net to the Company of
approximately US$1.38 million (including accrued interest), leaving
no further debt on the asset or payments owed to TransGlobe.
The impact of the settlement arrangements will be reflected in
the results of IRE and the Company for the second half of the
financial year ending 31 December 2016 and will result in
-- a reduction in the cost of Independent Resources (Egypt)
Limited's investment in its subsidiary company Sahara Resources GOS
Inc. from $3.5 million to $1.2million, this will result in a
reduction in the cost of the Company's investment in East Ghazalat
to $0.6million;
-- a write back of loan note interest accrued from 13 October
2015 until the settlement date of 27 September 2016 (in respect of
which there was an accrual of GBP133,749 in the balance sheet
creditors of Independent Resources (Egypt) Limited at 30 June 2016:
and a charge to profit of GBP93,625 in Independent Resources
(Egypt) Limited during the six months ended 30 June 2016). This
will result in a reduction in the Company's balance sheet creditors
of GBP62,875 and a write back to the Company's profit and loss
account of GBP46,813; and
-- a write back of foreign exchange translation differences
arising on the retranslation of the loan note balance and the
associated accrued interest (in respect of which there was a charge
of GBP183,920 in Independent Resources (Egypt) Limited during the
six months ended 30 June 2016). This will result in a write back of
GBP91,960 in the Company's profit and loss account.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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