TIDMWTE
RNS Number : 1306I
Westmount Energy Limited
31 March 2020
31 March 2020
Westmount Energy Limited
("Westmount" or the "Company")
Interim Results
The Company is pleased to announce its Interim Results for the
six months ended 31 December 2019.
Copies of the Company's interim results and are available on the
Company's website, www.westmountenergy.com, and will be posted to
shareholders shortly.
2019 Highlights
-- Continued focus on emerging Guyana-Suriname Basin, where 19
discoveries and in excess of 8 Bn Boe discovered resources have
been reported since 2015
-- GBP5.57m raised in aggregate via Subscription at 13 pence per share
-- Convertible Loan Note interest and partial principal conversion at 14.93 pence per share
-- Two Tertiary heavy oil discoveries (Jethro-1 and Joe-1)
reported from 2019 drilling portfolio
-- Positioned for exposure to imminent ExxonMobil operated
drilling of Upper Cretaceous, light oil, prospects on Canje and
Kaieteur Blocks
-- Material new investment made in Cataleya Energy Corporation
-- Strong cash balances of GBP2.6M at period end.
Chairman's Review
The second half of 2019 reaffirmed the exciting potential of the
emerging Guyana-Suriname basin while establishing important
milestones. Aggressive exploration drilling, by a number of
operators, has yielded new discoveries, new plays and stacked
petroleum systems while extending the geographic and stratigraphic
boundaries of this prolific province. In addition, Guyana became
South America's newest oil producing nation with first oil from the
Liza Phase I development being delivered, in December 2019, less
than 5 years after discovery. Production from this, ExxonMobil
operated, development is currently ramping up and will produce up
to 120,000 barrels of oil per day in the coming months, utilizing
the Liza Destiny floating production storage and offloading vessel
(FPSO). Anticipated sequential follow-on developments, including
Liza Phase II, Payara and Hammerhead, are at various stages of
design, engineering, government approval and project sanction and
have the potential for Guyana to be producing circa 750,000 BOD by
the mid-2020s.
ExxonMobil and Stabroek Block partners added 3 new light oil
discoveries in this period (Tripletail-1, Mako-1 and Uaru-1) and
reported, in January 2020, cumulative discovered resources on the
Stabroek Block of in excess of 8 Bn Boe (not including Uaru-1).
This brings the total number of discoveries, to date, on the
Stabroek Block to 16 from the 18 exploration wells drilled since
2015 (a prodigious success rate of 89%).
Tullow and Orinduik Block partners reported two heavy oil
discoveries (Jethro-1 and Joe-1) in separate Tertiary age
reservoirs during August/September 2019. Repsol and partners
followed up in January 2020 with the reporting of a light oil
discovery (Carapa-1), in Upper Cretaceous reservoirs, on the Kanuku
Block. While the commercial potential of these discoveries remains
to be fully evaluated they have established a south-westwards and
updip extension of the Upper Cretaceous and Tertiary play fairways,
albeit with a more complicated hydrocarbon sourcing and charging
history.
In January 2020 Apache and Total reported a substantial, stacked
pay, hydrocarbon discovery (Maka Central-1) which extended the
Upper Cretaceous play fairways to the southeast into Block 58,
Suriname. This well encountered 50m of net, light oil and
gas-condensate, pay (40(o) -60(o) API) in Campanian reservoirs
overlying 73m of net light oil pay (35(o) -45(o) API) in Santonian
reservoirs. This deeper Santonian pool represents a new play
opening discovery and confirms the potential for deeper light oil
discoveries throughout the deepwater Guyana-Suriname Basin.
These discoveries have confirmed that the petroleum system
extends beyond the Stabroek Block. The drilling results continue to
support the presence of quality reservoirs, multiple source rocks
and multiple phases of hydrocarbon expulsion. Furthermore, a total
of 5 plays have now been proven in the basin though the Upper
Cretaceous Liza play dominates in terms of number of discoveries
and discovered volumes to date.
In late 2019 ExxonMobil submitted drilling permit applications
for 3 wells on Canje Block and 3 wells on Kaieteur Block. They also
announced the contracting of a 5(th) drillship (Noble Sam Croft)
for duty offshore Guyana from late Q2 2020. Guidance from Canje and
Kaieteur partners indicates that three wells have been selected as
potential drilling targets in the Canje Block (Bulletwood-1,
Jabillo-1 and Sapote-1), with one well (Tanager-1) as the main
drilling target in the Kaieteur Block. Subject to any operational
delays introduced by the COVID-19 pandemic, it is anticipated that
drilling will commence in Q2 2020 with Westmount shareholders
having exposure to a minimum of 3 ExxonMobil operated Upper
Cretaceous wells within the next 12 months via your Company's
strategic investments in JHI Associates Inc ("JHI"), Cataleya
Energy Corporation ("CEC") and Ratio Petroleum Energy Limited
Partnership ("Ratio Petroleum").
Access to opportunities in offshore Guyana remains one of the
key challenges for both the industry and investors as your company
continues to endeavour to deploy capital in this space. However, no
new offshore deepwater licences have been awarded since January
2016 and Total remains the only major player to gain access (post
Liza-1 Discovery) to direct licence interests via its 2018
multi-block farm-in to the Orinduik, Kanuku and Canje Licences. On
27th August 2019 Total announced that Qatar Petroleum had acquired
a 40% interest in its subsidiary holding company with respect to
the Orinduik and Kanuku Blocks. Current guidance from the various
deepwater operators offshore Guyana indicates that Westmount will
be the only London listed junior player offering exposure to
drilling offshore Guyana in 2020.
Share Subscription, Convertible Loan Note and Investments
On 23rd and 28(th) August 2019 the Board announced the raising
of GBP5.573m in total at 13p per share, by way of a share
subscription. This financing inter alia enabled the completion of
our second CEC investment, announced on the 30th August 2019, with
the acquisition of an additional 313,500 common shares in CEC at a
price of US$10 per share, for a total consideration of US$3,135,000
(equivalent to GBP2,582,372) including transaction costs. As a
result of this share purchase, Westmount holds a total of 567,185
common shares in CEC, representing approximately 5.4% of the fully
diluted share capital of CEC.
This investment increases your company's exposure to the
ExxonMobil operated Kaieteur Block and to the Tanager Prospect one
of the portfolio of drilling targets anticipated for drilling over
the next 12 months. A Ratio Petroleum published CPR by NSAI
describes the Tanager Prospect as a stacked reservoir prospect
(Maastrichtian to Turonian reservoir intervals) and assigns a 'Best
Estimate' Unrisked Gross (100%) Prospective Oil Resource of 256.2
MMBBLs to the prospect (Low to High Estimates 135.6 MMBBLs to 451.6
MMBBLs), with an aggregate Probability of Geologic Success (POSg)
of 72%.
On 1(st) November 2019 the Board announced in conjunction with
making the 1st Interest Payment of GBP67,446.56, in relation to the
residual GBP660,000 principal of 10% p.a. convertible unsecured
loan notes 2021 ("Convertible Loan Notes"), the early repayment of
GBP260,000 principal of the GBP660,000 residual principal of
Convertible Loan Notes through the issue, in aggregate, of
2,193,210 New Ordinary Shares at 14.93p per share. Following this
subscription the residual principal of Convertible Loan Notes has
been reduced to GBP400,000.
Summary/Outlook
Post the end of this reporting period, March 2020 has heralded
the arrival of a series of unprecedented events on the back of the
COVID-19 pandemic. Flight cancellations, industrial shutdowns,
quarantines and travel bans have resulted in a sharp downturn in
economic activity and collapsing capital markets which has had a
devastating impact on the oil and gas industry globally. Dramatic
declines in demand has seen Brent oil prices crash to sub $30/bbl
and this price crash has been accentuated by the ending of the
'Opec-plus' supply cut arrangement from 1(st) April 2020 and the
signalling of substantial oil supply increases to the market by
Saudi Arabia, Russia and others.
As a result, the near term outlook is likely to be dominated by
extreme volatility, in the first instance, as public health
authorities globally grapple with containment and mitigation
measures with respect to the virus. The duration of the pandemic is
unclear at this stage, though there is some evidence from China in
recent days which suggest that the measures taken there have been
successful and that the peak of the epidemic there has now passed
(after 3 months). In addition, synchronized economic stimuli are
being put in place by governments across the main global economies
to cushion the immediate impacts and promote economic rebound.
In spite of this immediate outlook, proven plays, large
discovered volumes and prodigious exploration success rates,
continue to highlight the Guyana-Suriname Basin as a global
exploration hotspot. In addition, low break-even costs ($25/bbl
Liza Phase II) continue to sustain offshore Guyana as a major
investment growth area for the large incumbent players, in spite of
the near term sector headwinds in the form of collapsing oil prices
and poor economic growth prospects due to the Coronavirus
(COVID-19) pandemic. While the major incumbent players in the
Guyanese offshore sector have been guiding reduced capital
investment for 2020, in response to the sudden oil price collapse,
the picture so far suggests that near term discretionary
exploration drilling, offshore Guyana, may be less affected by
these immediate budgetary adjustments than drilling in other
regions. The main impact of COVID-19 is likely to be its potential
to delay some operational activities as travel restrictions upset
the international flow of
offshore workers.
At this stage, Westmount Energy is not experiencing any major
disruption to its business model from COVID-19. While the near term
oil price collapse/volatility effects market sentiment and
immediate valuations, the long term valuation and return on
Westmount investments will be determined by (a) drilling outcomes,
(b) longer term oil pricing and (c) the exit price achievable by
the investee companies (in drilling success case). The Company is
very well capitalised with GBP2.6M cash at 31st Dec. 2019 and with
a low fixed cost base. In this context, your Board remains focused
on investment opportunities and deployment of capital that gives
additional exposure to drilling in this prolific emerging
basin.
Westmount's current investment portfolio offers shareholders
exposure to potentially a minimum of 3 ExxonMobil operated Upper
Cretaceous wells, across the Canje and Kaieteur Blocks, over the
next 12 months. With independent geological risks these prospects
provide some risk diversification and a portfolio effect in
addition to drilling program results over a condensed timeframe.
Furthermore, c urrent guidance from the various deepwater operators
indicates that Westmount is likely to be the only London quoted
junior player offering exposure to drilling offshore Guyana in
2020. Success in some of these wells could result in
transformational value changes for the medium term and positive
times ahead for shareholders.
GERARD WALSH
Chairman
30 March 2020
Enquiries: -
David King / Anita Weaver
Westmount Energy Limited Tel: 01534 823059
Nicholas Wells / Harry Hargreaves
Nomad and Broker
Cenkos Securities plc Tel: 020 7397 8900
STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 31 DECEMBER 2019
Six months Six months Year ended
ended ended
31 Dec 2019 31 Dec 2018 30 Jun 2019
(unaudited) (unaudited) (audited)
GBP GBP GBP
Net (loss) /
gain on
financial
assets held
at fair value
through
profit or loss (756,794) 424,084 2,654,137
Net gain /
(loss) on
financial
liabilities
held at fair
value through
profit or loss 93,169 49,564 (183,753)
Impairment of
intangible
assets - - (66,667)
Administration (203,648)
expenses (200,458) (107,431)
(Loss) / gain (25,814)
on foreign
exchange (53,038) 1,228
Share options (80,853)
expensed (1,500) (3,000)
---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- --------------------------------------------------------------------
Operating
(loss) /
profit (918,621) 364,445 2,093,402
Finance charges
Loan interest
expense (37,189) (105,024) (79,987)
---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- --------------------------------------------------------------------
(Loss) / profit
before
tax (955,810) 259,421 2,013,415
Tax - - -
Comprehensive
(loss)
/ income for
the period
/ year (955,810) 259,421 2,013,415
================================================================================================================================== ==================================================================== ====================================================================
Basic (loss) /
profit
per share
(pence) (1.01) 0.55 3.83
---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- --------------------------------------------------------------------
Diluted (loss)
/ profit
per share
(pence) (0.94) 0.55 3.51
---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- --------------------------------------------------------------------
All results are derived from continuing operations.
The Company had no items of other comprehensive income during
the period / year.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
31 Dec 2019 31 Dec 2018 30 Jun 2019
(unaudited) (unaudited) (audited)
GBP GBP GBP
ASSETS
Non-current
assets
Intangible
assets 33,333 100,000 33,333
Financial
assets at
fair
value
through
profit or
loss 8,644,384 2,718,357 6,745,797
---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------
8,677,717 2,818,357 6,779,130
Current assets
Other 7,001
receivables 1,109 3,063
Cash and 63,374
cash
equivalents 2,618,986 1,343,190
---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------
2,620,095 1,346,253 70,375
---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------
Total assets 11,297,812 4,164,610 6,849,505
================================================================================================================================== ================================================================================================================================== ===================================================================
LIABILITIES AND EQUITY
Non-current liabilities
Derivative
financial
instruments 113,684 49,500 221,411
Borrowings 362,651 598,375 598,375
---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------
476,335 647,875 819,786
---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------
Current liabilities
Trade and
other
payables 54,595 46,360 45,422
Derivative
financial
instruments 1,900 936 3,592
Borrowings 12,683 957,254 50,967
---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------
69,178 1,004,550 99,981
---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------
Total
liabilities 545,513 1,652,425 919,767
EQUITY
Share 5,829,872
capital 11,606,743 4,244,166
Share option 444,846
account 446,346 366,993
Retained (344,980)
earnings (1,300,790) (2,098,974)
---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------
Total equity 10,752,299 2,512,185 5,929,738
Total
liabilities
and equity 11,297,812 4,164,610 6,849,505
================================================================================================================================== ================================================================================================================================== ===================================================================
STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 31 DECEMBER 2019
Share
capital Share option Total
account account Deficit equity
GBP GBP GBP GBP
------------------------------ ----------- ------------- ------------ -----------
As at 1 July 2018 4,244,166 363,993 (2,358,395) 2,249,764
Comprehensive Income Profit
for the year ended 30 June
2019 - - 2,013,415 2,013,415
Share issue 1,585,706 - - 1,585,706
Transactions with owners
Share options expensed - 80,853 - 80,853
As at 30 June 2019 5,829,872 444,846 (344,980) 5,929,738
------------------------------- ----------- ------------- ------------ -----------
Comprehensive Income
Loss for the period ended
31 December 2019 - - (955,810) (955,810)
Share issue 5,449,424 - - 5,449,424
Transactions with owners
Loan notes converted 327,447 327,447
Share options expensed - 1,500 - 1,500
As at 31 December
2019 11,606,743 446,346 (1,300,790) 10,752,299
------------------------------- ----------- ------------- ------------ -----------
Share capital Share option Total
account account Deficit equity
GBP GBP GBP GBP
--------------------------- -------------- ------------- ------------ ----------
As at 1 July 2017 3,772,244 352,906 (2,919,475) 1,205,675
Comprehensive Income
Profit for the year ended
30 June 2018 - - 561,080 561,080
Transactions with owners
Warrants converted 471,922 - - 471,922
Share options
expensed - 11,087 - 11,087
As at 30 June
2018 4,244,166 363,993 (2,358,395) 2,249,764
---------------------------- -------------- ------------- ------------ ----------
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 31 DECEMBER 2019
Six months Six months
ended ended Year ended
31 Dec 31 Dec
2019 2018 30 Jun 2019
(unaudited) (unaudited) (audited)
GBP GBP GBP
Cash flows from operating
activities
Total comprehensive (loss)
/ income for the period /
year (955,810) 259,421 2,013,415
Adjustments for:
Net loss / (gain) on financial
assets at fair value through
profit or loss 756,794 (424,084) (2,654,137)
Net (gain) / loss on financial
liabilities at fair value
through profit or loss (93,169) (49,564) 183,753
Impairment of intangible assets - - 66,667
Interest on borrowings 37,189 105,024 79,987
Share options expensed 1,500 3,000 80,853
Decrease in other receivables 5,892 5,150 1,212
Increase in trade and other
payables 9,173 3,190 2,252
Purchase of investments (2,655,381) (808,999) (3,317,515)
Proceeds from sale of investments - 142,265 1,499,100
---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------
Net cash out flow from operating
activities (2,893,812) (764,597) (2,044,413)
--------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------
Cash flows from financing
activities
Proceeds from borrowings - 1,600,000 1,600,000
Interest and charges on borrowings - (49,395) (49,395)
Proceeds from issue of ordinary
shares 5,449,424 - -
---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------
Net cash generated from financing
activities 5,449,424 1,550,605 1,550,605
---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------
Net increase / (decrease)
in cash and cash equivalents 2,555,612 786,008 (493,808)
Cash and cash equivalents
at the beginning of the period
/ year 63,374 557,182 557,182
---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------
Cash and cash equivalents
at the end of the period /
year 2,618,986 1,343,190 63,374
---------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 31 DECEMBER 2019
1. Accounting Policies
Basis of accounting
The interim financial statements have been prepared in
accordance with the International Accounting Standard ("IAS") 34,
Interim Financial Reporting.
The interim financial statements do not include all the
information and disclosures required in the annual financial
statements and should be read in conjunction with the Company's
annual financial statements for the year ended 30 June 2019. The
annual financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS").
The same accounting policies and methods of computation are
followed in the interim financial statements as in the Company's
annual financial statements for the year ended 30 June 2019.
2. Investments
Six
months Year
Six months ended ended
ended 31 30
31 December December June
2019 2018 2019
(unaudited) (unaudited) (audited)
GBP GBP GBP
Argos Resources
Limited, at market
value 28,300 26,000 26,300
Cost, 1,000,000
shares 310,775 310,775 310,775
(31 December 2018:
1,000,000 shares,
30 June 2019:
1,000,000 shares)
Cataleya Energy
Corporation, at
market
value 4,281,697 - 1,993,317
Cost, 567,185
shares 4,518,215 - 1,943,894
(31 December 2018:
nil, 30 June 2019:
253,685 shares)
Eco Atlantic Oil &
Gas Oil Limited,
at market value 799,500 1,193,750 1,050,000
Cost, 1,500,000
shares 240,000 500,000 240,000
(31 December 2018:
3,125,000 shares,
30 June 2019:
1,500,000 shares)
JHI Associates Inc,
at market value 2,577,471 1,121,100 2,662,304
Cost, 2,213,770
shares 2,009,210 809,840 2,009,210
31 December 2018:
1,110,000 shares,
30 June 2019:
2,213,770 shares)
Ratio Petroleum
Energy Limited
Partnership
shares, at market
value 872,306 377,507 1,013,876
Cost, 1,200,000
shares 252,144 245,048 252,144
(31 December 2018:
1,200,000 shares,
30 June 2019:
1,200,000 shares)
Ratio Petroleum 85,110 - -
Energy Limited
Partnership
warrants, at market
value
Cost, 166,063 81,060 - -
warrants
(31 December 2018:
nil, 30 June 2019:
nil)
Total market value 8,644,384 2,718,357 6,745,797
------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------
Total cost 7,411,404 1,865,663 4,756,023
------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------
Total fair value
adjustment 1,232,980 852,694 1,989,774
Reverse prior year
fair value
adjustment (1,989,774) 621,452 621,452
------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------
Current period fair
value movement (756,794) 1,474,146 2,611,226
------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------
Realised loss - (1,050,062) 42,911
Unrealised gain (756,794) 1,474,146 2,611,226
------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------
Current period
income statement
impact (756,794) 424,084 2,654,137
------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------
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END
IR FLFETVDIIVII
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