TIDMPET
RNS Number : 4952Z
Petrel Resources PLC
21 September 2020
21(st) September 2020
Petrel Resources plc
("Petrel" or "the Company")
Interim Statement for the six months ended 30 June 2020
Petrel Resources plc (AIM: PET) today announces financial
results for the six months ended 30(th) June 2020.
Petrel is a hydrocarbon explorer with interests in Iraq, Ghana
and offshore Ireland. The world oil and gas industry has taken a
public relations hammering in recent times yet world demand
continues, and will continue, to grow. Society is very dependent on
oil, gas and petrochemicals.
As an example, the world in 2020 relies on sterile plastic
packaging for syringes, PPE, etc.
Our daily lives are improved by a multitude of hydrocarbon based
products. Renewables are growing and will continue to grow, but for
the coming decades, oil and gas will be the dominant source of
energy. This will require new discoveries, Petrel will play a part
in this.
Petrel has three areas of interest. Iraq, where we have had a
presence since 1999, Ghana, where discussions are ongoing since
2008 and offshore Ireland, where Petrel operated in the 1980s and
re-entered six years ago.
Iraq
Petrel is active once more in Iraq after a hiatus since 2010 due
to political and financial instability. We negotiated a large
exploration block, Block 6, in the Western Desert in 2005. Nothing
has happened there in the recent past. In discussions in early
2020, before the Covid-19 pandemic, with Ministry officials we
renewed our Block 6 interest and re-presented the technical slides
done by the Company on the Merjan-Kefl-West Kifl oil discoveries
which remain undeveloped. We did extensive work under a Technical
Co-operation Agreement on possible ways to develop these
discoveries.
With appropriate terms and pipeline access, the Merjan oil-field
seems poised for early development: it was discovered, as an oil
reservoir, by Mobil in 1982, but work did not proceed, mainly for
political reasons. Petrel's work on Merjan did not suggest that the
area was gas-prone. The discovery well - Me-1- was located using 2D
seismic on a Jurassic reef. No reef or oil was found in the
Jurassic, but the well discovered oil in the Upper Cretaceous
Hartha Formation. Recent analysis of 3D data focusses on the
Jurassic seismic feature, and does not discuss the nature of any
hydrocarbons in the well or the area. The Hartha reservoir in the
well tested oil and water, without a significant flow of gas.
Given the scope to reduce emissions through gas development, we
should also bear Iraq's gas potential in mind: a staggering 16
billion cm (0.6 tcf) of gas are flared yearly (including valuable
liquids), which is about half Iraq's gas output. We proposed gas
and condensate recovery on Subba & Luhais, at various times,
from 2004 through 2010, but the necessary legal framework was not
then in place. With appropriate terms and infrastructure, gas
economics are also attractive.
As lowest cost oil producer Iraq is well poised to benefit from
the development of the oil market. Their output can easily double
in size.
Tano 2A Offshore Block - Ghana
Petrel holds a 30% interest in the Tano 2A block (Clontarf 60%
and local interests 10%) Negotiations began in 2008, were finalised
in 2010 and ratification was expected shortly thereafter. The saga
has dragged on for close to a decade. In the past year high level
contacts were reopened. A series of meetings proposed for March
2020 were cancelled indefinitely due to the pandemic.
Despite low oil prices, offshore Ghana remains attractive with
good geology and acceptable financial terms. In recent weeks the
country is re-opening from lockdown so the cancelled meetings are
expected to occur by year end.
Offshore Ireland
This is sad scene. State policy has effectively stymied offshore
exploration. All new licences are banned and while existing
licences may proceed it is highly probable that any discovery will
not be commercialised, it will likely take years to get an
exploration permit, if ever, and maybe decades to get planning
permission in the face of a small vociferous objecting minority
Petrel holds a 10% working interest in Licence FEL 11/18 in the
Porcupine. Excellent work has been done by the operator Woodside
Petroleum but it is difficult to see how Woodside will commit the
tens of millions to drill.
Tamraz Group
The acquisition of a 29% stake by the Tamraz group in July 2019
was widely welcomed by shareholders followed by approval to go to
51%.
The new investors were unable to complete the purchase of the
additional shares while the ownership of most of the 29% became
uncertain. High Court proceedings stopped any dealings in shares
held by the Tamraz Group. This position persists though there is
ongoing contact.
Future
Petrel is well funded for ongoing activities. The focus is once
again Iraq.
John Teeling
Chairman
18(th) September 2020
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this announcement.
In addition, market soundings (as defined in MAR) were taken in
respect of the matters contained in this announcement, with the
result that certain persons became aware of inside information (as
defined in MAR), as permitted by MAR. This inside information is
set out in this announcement. Therefore, those persons that
received inside information in a market sounding are no longer in
possession of such inside information relating to the company and
its securities.
S
For further information please visit http://www.petrelresources.com/ or contact:
Petrel Resources
John Teeling, Chairman +353 (0) 1 833 2833
David Horgan, Director
Nominated Adviser and Broker
Beaumont Cornish - Nominated Adviser
Roland Cornish
Felicity Geidt +44 (0) 020 7628 3396
Novum Securities Limited - Broker
Colin Rowbury +44 (0) 20 399 9400
Blytheweigh - PR +44 (0) 207 138 3206
Megan Ray +44 (0) 207 138 3553
Madeleine Gordon-Foxwell +44 (0) 207 138 3208
Teneo
Luke Hogg +353 (0) 1 661 4055
Alan Tyrrell +353 (0) 1 661 4055
Ross Murphy +353 (0) 1 661 4055
Petrel Resources plc
Financial Information (Unaudited)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Six Months Ended Year Ended
30 June 30 June 31 Dec
20 19 19
unaudited unaudited audited
EUR'000 EUR'000 EUR'000
Administrative expenses (243) (115) (345)
Impairment of deferred development costs - - (1,614)
------------------- ------------------- -------------------
OPERATING LOSS (243) (115) (1,959)
LOSS BEFORE TAXATION (243) (115) (1,959)
Income tax expense - - -
------------------- ------------------- -------------------
LOSS FOR THE PERIOD (243) (115) (1,959)
Items that are or may be reclassified
subsequently to profit or loss
Exchange differences (9) 24 (119)
TOTAL COMPREHENSIVE PROFIT FOR THE PERIOD (252) (91) (2,078)
=================== =================== ===================
LOSS PER SHARE - basic and diluted (0.16c) (0.11c) (1.50c)
=================== =================== ===================
30 June 30 June 31 Dec
CONDENSED CONSOLIDATED BALANCE SHEET 20 19 19
unaudited unaudited audited
EUR'000 EUR'000 EUR'000
ASSETS:
NON-CURRENT ASSETS
Intangible assets 985 2,593 984
------------------- ------------------- -------------------
985 2,593 984
------------------- ------------------- -------------------
CURRENT ASSETS
Trade and other receivables 49 59 38
Cash and cash equivalents 409 178 368
------------------- ------------------- -------------------
458 237 406
TOTAL ASSETS 1,443 2,830 1,390
------------------- ------------------- -------------------
CURRENT LIABILITIES
Trade and other payables (654) (643) (630)
------------------- ------------------- -------------------
(654) (643) (630)
------------------- ------------------- -------------------
NET CURRENT LIABILITIES (196) (406) (224)
NET ASSETS 789 2,187 760
=================== =================== ===================
EQUITY
Share capital 1,963 1,307 1,867
Capital conversion reserve fund 8 8 8
Capital redemption reserve 209 209 209
Share premium 21,786 21,601 21,601
Share based payment reserve 27 27 27
Translation reserve 367 519 376
Retained deficit (23,571) (21,484) (23,328)
------------------- ------------------- -------------------
TOTAL EQUITY 789 2,187 760
=================== =================== ===================
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital Capital Share based
Share Share Redemption Conversion Payment Translation Retained Total
Capital Premium Reserves Reserves Reserves Reserves Losses Equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
As at 1 January
2019 1,307 21,601 209 8 27 495 (21,369) 2,278
Total
comprehensive
income - 24 (115) (91)
-------- -------- ----------- ----------- ------------------ ------------ --------- --------
As at 30 June
2019 1,307 21,601 209 8 27 519 (21,484) 2,187
Shares issued 1,360 0 1,360
Shares cancelled (800) 0 (800)
Total
comprehensive
income - (143) (1,844) (1,987)
-------- -------- ----------- ----------- ------------------ ------------ --------- --------
As at 31
December 2019 1,867 21,601 209 8 27 376 (23,328) 760
Shares issued 96 185 281
Total
comprehensive
income - (9) (243) (252)
----------- ----------- ------------------ ------------
As at 30 June
2020 1,963 21,786 209 8 27 367 (23,571) 789
======== ======== =========== =========== ================== ============ ========= ========
CONDENSED CONSOLIDATED CASH FLOW Six Months Ended Year Ended
30 June 30 June 31 Dec
20 19 19
unaudited unaudited audited
EUR'000 EUR'000 EUR'000
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the period (243) (115) (1,959)
Impairment charge 0 0 1,614
---------- ---------- -----------
(243) (115) (345)
Movements in Working Capital 13 9 (28)
---------- ---------- -----------
CASH USED IN OPERATIONS (230) (106) (373)
NET CASH USED IN OPERATING ACTIVITIES (230) (106) (373)
---------- ---------- -----------
INVESTING ACTIVITIES
Payments for exploration and evaluation
assets (2) (47) (151)
---------- ---------- -----------
NET CASH USED IN INVESTING ACTIVITIES (2) (47) (151)
---------- ---------- -----------
FINANCING ACTIVITIES
Shares issued 281 0 560
---------- ---------- -----------
NET CASH GENERATED FROM FINANCING ACTIVITIES 281 0 560
---------- ---------- -----------
NET INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS 49 (153) 36
Cash and cash equivalents at beginning
of the period 368 330 330
Effect of exchange rate changes on
cash held in foreign currencies (8) 1 2
CASH AND CASH EQUIVALENT AT THE
OF THE PERIOD 409 178 368
========== ========== ===========
Notes:
1. INFORMATION
The financial information for the six months ended 30 June 2020
and the comparative amounts for the six months ended 30 June 2019
are unaudited.
The interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by
the European Union. The interim financial statements have been
prepared applying the accounting policies and methods of
computation used in the preparation of the published consolidated
financial statements for the year ended 31 December 2019.
The interim financial statements do not include all of the
information required for full annual financial statements and
should be read in conjunction with the audited consolidated
financial statements of the Group for the year ended 31 December
2019, which are available on the Company's website
www.petrelresources.com
The interim financial statements have not been audited or
reviewed by the auditors of the Group pursuant to the Auditing
Practices board guidance on Review of Interim Financial
Information.
2. No dividend is proposed in respect of the period.
3. LOSS PER SHARE
30 June 30 June 31 Dec
20 19 19
EUR EUR EUR
Loss per share - Basic and Diluted (0.16c) (0.11c) (1.50c)
Basic and diluted loss per share
The earnings and weighted average number of ordinary shares
used in the calculation of basic loss per share are as follows:
EUR'000 EUR'000 EUR'000
Loss for the period attributable
to equity holders (243) (115) (1,959)
Weighted average number of ordinary
shares for the purpose of basic
earnings per share 150,821,396 104,557,246 130,647,568
Basic and diluted loss per share are the same as the effect of
the outstanding share options is anti-dilutive.
4. INTANGIBLE ASSETS
30 June 30 June 31 Dec
20 19 19
Exploration and evaluation assets: EUR'000 EUR'000 EUR'000
Opening balance 984 2,523 2,523
Additions 2 47 196
Impairment - - (1,614)
Exchange translation adjustment (1) 23 (121)
________ ________ ________
Closing balance 985 2,593 984
Exploration and evaluation assets relate to expenditure incurred
in exploration in Ireland and Ghana. The directors are aware that
by its nature there is an inherent uncertainty in Exploration and
evaluation assets and therefore inherent uncertainty in relation to
the carrying value of capitalized exploration and evaluation
assets.
Due to legislative uncertainty since 2017, exacerbated by the
Taoiseach's public statements in September 2019 against the issue
of new Atlantic oil exploration licences, Petrel has discontinued
farm-out discussions with a gas super-major. Also, the board
reluctantly dropped our 100% owned and operated Frontier
Exploration Licence (FEL) 3/14, despite multiple identified
targets. Similarly, the board decided not to apply to convert our
prospective Licensing Option (LO) 16/24 into a Frontier Exploration
Licence. Accordingly, the directors have impaired in full all
expenditure relating to the above mentioned licences, resulting in
an impairment charge of EUR1,613,591 in the prior year.
Petrel continues as a 10% working interest partner with Woodside
in Frontier Exploration Licence (FEL) 11/18, in the Irish
Atlantic's Porcupine Basin.
Relating to the remaining exploration and evaluation assets at
the financial year end, the directors believe there were no facts
or circumstances indicating that the carrying value of the
intangible assets may exceed their recoverable amount and thus no
impairment review was deemed necessary by the directors. The
realisation of these intangible assets is dependent on the
successful discovery and development of economic reserves and is
subject to a number of significant potential risks, as set out
below:
-- Licence obligations;
-- Funding requirements;
-- Political and legal risks, including title to licence, profit
sharing and taxation;
-- Exchange rate risk;
-- Financial risk management;
-- Geological and development risks;
Directors' remuneration of EURNil (2019: EUR30,000) and salaries
of EURNil (2019: EUR15,000) were capitalised as exploration and
evaluation expenditure during the financial year.
Regional Analysis 30 Jun 20 30 Jun 19 31 Dec 19
EUR'000 EUR'000 EUR'000
Ghana 932 918 931
Ireland 53 1,675 53
_______ _______ _______
985 2,593 984
5. SHARE CAPITAL
2019 2019
EUR'000 EUR'000
Authorised:
800,000,000 ordinary shares of EUR0.0125 10,000 10,000
Allotted, called-up and fully paid:
Number Share Capital Premium
EUR'000 EUR'000
At 1 January 2019 104,557,246 1,307 21,601
Issued during the period - -
At 30 June 2019 104,557,246 1,307 21,601
Issued during the period 108,824,869 1,360 -
Cancellation of shares subsequent to year end (64,035,976) (800,450) -
At 31 December 2019 149,346,159 1,867 21,601
Issued during the period 7,692,308 96 185
At 30 June 2020 157,038,467 1,963 21,786
Movements in issued share capital
On 30 July 2019 a total of 44,788,913 shares ("tranche 1
shares") were placed at a price of 1.25 cents per share. Proceeds
were used to provide additional working capital and fund
development costs.
*On 21 November 2019 the company held an Extraordinary General
Meeting and received shareholder approval for the following
transaction:
"64,035,976 Ordinary Shares of 1.25 cent each were to be issued
to the Tamraz group at the placing price of 1.25 cent each."
These shares (known as the "tranche 2 shares") were issued and
allotted to the Tamraz group on 21 November. The share certificates
were retained by the Company until payment was received from the
Tamraz group.
It became known to Petrel that prior to 31 December 2019 the
Tamraz group had offered the tranche 1 shares in Petrel as
collateral to lenders. This was in breach of lock in terms which
were attached to those shares. In addition during December part of
the tranche 1 shares were transferred to a third party, further
breaching the terms of the lock in agreement in relation to those
shares.
The Tamraz group also failed to pay proceeds due in relation to
the tranche 2 shares within the timeline required by Petrel. As a
result of these factors the tranche 2 shares were considered
forfeited and were cancelled by the Group subsequent to year
end.
Although the shares were not legally cancelled until after year
end, they are considered to be forfeited as of year-end given the
circumstances noted above and in particular, the fact that Tamraz
were considered to be in default of funding arrangements and lock
in terms.
Had these circumstances been known to the Group on 21 November
2019 the shares would not have been allotted or issued. The Group
did not suffer any economic loss due to the transaction as they
were able to cancel the tranche 2 shares. As a result the shares
are considered to be economically forfeited at year end and have
been deducted from share capital on the balance sheet.
On 18 May 2020 the Company announced that the tranche 2 shares
have now been cancelled.
On 26 May 2020 a total of 7,692,308 shares were placed at a
price of 3.25 pence per share. Proceeds were used to provide
additional working capital and fund development costs.
6. POST BALANCE SHEET EVENTS
There are no material post balance sheets events affecting the
Group.
7. The Interim Report for the six months to 30(th) June 2020 was
approved by the Directors on 18(th) September 2020.
8. The Interim Report will be available on the Company's website at www.petrelresources.com .
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