Interim Results
LEPCO plc
26 October 2000
LEPCO plc ('the Company')
INTERIM RESULTS FOR THE 6 MONTHS TO 30 JUNE 2000
LEPCO plc, the oil production and exploration Company, today
announced its unaudited interim results for the six-month
period to 30 June 2000.
Chairman's Statement
The twin shocks of the dramatic fall in oil prices in 1998 and
its subsequent rise have had far reaching implications for both
the industry and the global economy. The fall in oil prices
created a world of near-zero spend on new oil developments and
the disappearance of many smaller oil and gas companies. The
rapid rise in prices to over $30 per barrel merely reduced the
potential for the re-birth of the smaller independents as the
oil majors became increasingly unwilling sellers of assets.
The Board has been actively reviewing a number of opportunities
to grow significantly the Group's business and I am delighted
that we have announced today that we have now an agreement of
intent for a transaction with DNO ASA. This transaction will
give shareholders access to oil assets in the Middle East and
the Group has also agreed a new £250,000 working capital
facility with DNO to assist in the Group's funding whilst the
transaction is put in place. The DNO transaction will be
subject to shareholder approval and other consents.
Interim Results
In the attached interim results for the six months to 30 June
2000, overhead costs resulted in the Group reporting an interim
loss of 0.8p per share (1999: 1.4p). During this period, LEPCO
has continued to add value to its Southern Gas Basin portfolio.
The seismic interpretation on Block 47/9c was completed in
August 2000 and in the first half of this year, the Company
spent £153,000 on completing the necessary work on this block.
As previously announced, from this evaluation we concluded that
block 47/9c contains a potentially commercial gas discovery and
we have advised the Department of Trade and Industry that we
will commit to drill a well on the block subject to finding
suitable farm-in partners, which we are now actively seeking.
In July we were awarded our first UK onshore licence in the UK
9th Onshore Round with a 20% equity in PEDL071 on the southern
margin of the Cleveland basin. PEDL071, operated by Egdon
Resources, is in the same geological basin as block 47/9c.
I believe that the DNO deal provides the Company with an
exciting opportunity to move forward and I look forward to
keeping shareholders informed of progress.
Peter Bassett
Chairman
For further information contact:
Peter Wilde Managing Director, LEPCO plc 020-7233 5245
Chris Callaway Beeson Gregory 020-7488 4040
26 October 2000
Notes to the financial statements
1) The Directors do not propose to pay an interim dividend.
2) Earnings per share have been computed on the basis of loss
after taxation of £79,842 (1999 - loss after taxation
£137,470), and the weighted average number of shares in issue
during the period of 9,846,269 (1998 - 9,832,733).
3) This statement does not comprise statutory accounts as
defined in section 240 of the Companies Act 1985.
4) The balance sheets as at 30 June 2000 and 30 June 1999 and
the results and cash flows for the 6 months ended 30 June 2000
and the comparatives for the 6 months ended 30 June 1999 are
neither audited nor reviewed.
5) The financial information included in this document has
been prepared on a consistent basis and using the same
accounting policies as the audited financial statements for the
year ended 31 December 1999.
6) The financial information included in this document has
been approved by the Directors of the Company.
7) The Group's primary unevaluated oil and gas interest at 30
June 2000 is in licence P.775 (book value 30 June 2000,
£861,683), covering acreage on block 47/9c in the UK Southern
Gas Basin and which includes an unappraised gas discovery. The
Group has operated block 47/9c since November 1999. There are
certain carried interests and the Group's net equity interest
is 89.5%. The Group completed a full evaluation of the
prospectivity of block 47/9c in August 2000. From this
evaluation the Group concluded that the block contains a
potentially commercial discovery and advised the UK Department
of Trade and Industry that it is committing to drill a well on
the block subject to finding suitable farm-out partners.
The Directors have fully considered and reviewed the
potential value of this licence, including analysis made by
an independent consultant. The Directors have also
considered the likely opportunities for realising the value
of the licence, either by the farm-out of the asset leading
to the development of the discovery or by the disposal of the
asset, and have concluded that the likely value is
significantly in excess of its net book value.
8) The Group has an interest in the Donkerbroek concession
onshore the Netherlands and it is understood that the operator
of the field - Nederlandse Aardolie Maatschappij B.V. - is
reviewing the prospectivity of and future activities on this
licence. The Board will reconsider the carrying value (book
value 30 June 2000, £152,184) of this asset once the results of
this review are known.
9) In September 2000 HM Customs & Excise notified the Company
of a potential claim for VAT input tax reclaimed in 1997 at the
time of the Company's listing on the Alternative Investment
Market. The claim is for approximately £40,000. The Company
has provided HM Customs & Excise with full information in
respect of the claim and the Directors believe that the matter
will be finalised at no material cost to the Company. No
provision has therefore been made for this matter in the
accounts.
10) Further copies of this interim statement are available on
request from the Company Secretary, LEPCO plc, Vigilant House,
120 Wilton Road, London SW1V 1JZ.
LEPCO plc ('the Company')
DNO ASA ('DNO') and LEPCO plc ('LEPCO') have signed an
agreement of intent for LEPCO to acquire oil assets in return
for ordinary shares in the Company. DNO is expected to enter
into an agreement, subject to shareholder approval, prior to
the end of the calendar year.
The asset deal involves the transfer of part of DNO's equity in
Blocks 32 and 53 in the Yemen. Both blocks are held under
Production Sharing Contracts. Block 32 contains a number of
oil prospects and an estimated 6-million barrel development
(the Tasour field), which is due onstream later this year. The
block is operated by DNO.
Block 53 lies due east of Block 32 and in June 2000, a wildcat
well made an oil discovery, which flowed at 4,850 barrels/day
under test conditions. A further well is being drilled to
appraise this discovery.
The transaction will have an economic effective date of 1
January 2001 and after completion DNO will hold a majority
interest in the share capital of LEPCO. The agreement will be
conditional upon the 'white wash' provisions of the Panel on
Takeover and Mergers.
It is proposed to transact the asset-for-equity deal at 16.5p a
share, that being the bid price at close of business on the
Alternative Investment Market of the London Stock Exchange on
Friday 20th October 2000.
The completion of the sale and transfer of interests in the
Yemen are subject to governmental and coventurer approvals and
consents being given in a form acceptable to DNO. In addition,
LEPCO is required to obtain all necessary regulatory and
corporate approvals. An Extraordinary General Meeting will be
held to approve the transaction and a circular to shareholders
will be despatched in due course.
On completion of the transaction, the Board and Management of
LEPCO will be restructured. A majority of the current Board
members will resign and Berge Gerdt Larsen (Chief Executive of
DNO ASA) and a further nominee of DNO will be appointed. It
has also been agreed that upon completion of these changes
Peter Bassett will retire as Chairman of the Board and Berge
Larsen will be appointed as Chairman of the Board.
In a separate agreement, DNO has agreed to provide LEPCO with a
£250,000 loan facility.
Under this facility, DNO is entitled to require repayment in
either cash or ordinary shares in LEPCO at the then prevailing
market price. In the event of DNO requiring repayment in cash,
LEPCO is entitled to make repayment in shares to the extent
that it is unable to repay in cash.
In view of the loan facility agreed on 24 October 2000 and the
size of the proposed transaction which will result in DNO
having control of more than 50% of the Company's issued share
capital and DNO having a majority of the Board, the Directors
have requested that trading in the Company's shares is
suspended until full details of the transaction are circulated
to shareholders.
For further information contact:
Peter Wilde,Managing Director, LEPCO plc 020 7233 5245
Chris Callaway Beeson Gregory 020 7488 4040
26 October 2000
Editor's Notes:
LEPCO plc is an AIM quoted Company whose current principle
asset is a 90% operated WI in a 75 Bcf gas prospect in the
Southern Gas Basin. The Company floated on the AIM market in
1997 and its management has been seeking ways to expand
following the sale of its interest in the UK Forties field
after the oil price collapsed in 1998. LEPCO currently has 9.9
million shares in issue.
DNO ASA is a Norwegian quoted Company with assets in the North
Sea and the Yemen. In the UKCS DNO is the Operator of the
Heather field. In 1996, Berge Gerdt Larsen acquired a
controlling interest and restructured the Company's Board and
management. In the subsequent four years, the Company's market
capitalization has grown from £3m to approximately £100m.
INTERIM FINANCIAL STATEMENTS
TO 30 JUNE 2000
(Neither audited nor reviewed)
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 30 June 2000
6 months 6 months
30-Jun-00 30-Jun-99
£ £
Turnover
Continuing 11,553 21,779
11,553 21,779
Cost (a)
of
Sales
Continuing (820) (5,360)
Discontinued 0 (43,329)
(820) (48,689)
GrossProfit (Loss)
Continuing 10,733 16,419
Discontinued 0 (43,329)
10,733 (26,910)
Administrative Expenses
Continuing 100,472) (125,258)
(100,472) (125,258)
Operating Loss
Continuing (89,739) (108,839)
Discontinued 0 (43,329)
(89,739) (152,168)
Interest Receivable and similar income 9,897 14,698
Loss on ordinary activities before and after (79,842) (137,470)
taxation
Loss per share (£0.008) (£0.014)
6
months
to
Notes: 30 June 6 months to 30 June
2000 1999
a:Cost of Sales Continuing Continuing Discontinued
Operating costs 1,854 3,860 33,336
Royalty refund (1,034) 0 0
Forties insurance 0 0 9,993
Depletion 0 1,500 0
820 5,360 43,329
b: The Group's interest in the Forties field was sold during 1998
and accordingly costs incured in relation to Forties in the 6
months to 30 June 1999 have been classified as discontinued.
INTERIM FINANCIAL STATEMENTS
TO 30 JUNE 2000
(Neither audited nor reviewed)
CONSOLIDATED
BALANCESHEET
as at 30 June 2000 30 June 30 June
2000 1999
£ £
Fixed Assets
Tangible Assets 15,028 24,760
Intangible Assets 1,029,028 881,198
1,044,056 905,958
Current Assets
Debtors 73,069 48,695
Cash at bank and in hand 226,290 598,402
299,359 647,097
Creditors: amounts falling due within (133,246) (75,840)
1 year
Net current assets 166,113 571,257
Net assets 1,210,169 1,477,215
Capital and reserves
Called up share capital 990,273 983,273
Share premium account 1,672,144 1,669,144
Other reserves 34,544 35,509
Profit and loss account (1,486,792)(1,210,711)
Total shareholders' fund 1,210,169 1,477,215
INTERIM FINANCIAL STATEMENTS
TO 30 JUNE 2000
(Neither audited nor reviewed)
RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW
FROM OPERATIONS
For the six months ended 30 June 2000
June June
2000 1999
£ £
Operating loss (89,739) (152,168)
Depletion costs 0 1,500
Depreciation 4,221 4,238
(Increase)/decrease in debtors (1,235) 61,784
Decrease in creditors (21,223) (40,808)
Net cash outflow from operations (107,976) (125,454)
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2000
June June
2000 1999
Notes £ £
Net cash outflow from operations (107,976) (125,454)
Returns on investments and
servicing of finance 9,897 14,698
Capital expenditure
Disposal of tangible fixed assets 0 876,709
Purchase of tangible fixed assets (717) (36,156)
Purchase of intangible fixed assets (107,399) (79,279)
Net cash (outflow)/inflow before (206,195) 650,518
and after financing
(Decrease)/increase in cash (a) (206,195) 650,518
The accompanying notes are an integral part of this consolidated
cash flow statement.
Notes to the cash flow statement
(a) Reconciliation of net cash flow to June June
movement in net debt 2000 1999
£ £
(Decrease)/increase in cash before (206,195) 650,518
exchange differences
Exchange differences (3,753) 417
(Decrease)/increase in cash after (209,948) 650,935
exchange differences
Net funds/(debt)at beginning of period 436,238 (52,533)
Net funds at close of period 226,290 598,402
(b) Analysis of net funds 1 January 30 June
2000 Cash Flow 2000
£ £ £
Cash in bank and in hand, 436,238 (209,948) 226,290
being net funds