Final Results
White Nile Limited
17 December 2007
White Nile Ltd / Ticker: WNL / Index: AIM / Sector: Oil & Gas
17 December 2007
White Nile Ltd ('White Nile' or 'the Company')
Final Results
White Nile Ltd, the AIM listed oil and gas exploration company, announces its
results for the year ended 30 June 2007.
Overview
White Nile's stated objectives have always been to develop the oil potential of
Block Ba in Southern Sudan and build a new independent oil producer focused in
Southern Sudan and the immediate region. To this end, during the period we made
significant progress on the ground, having implemented and interpreted an
extensive seismic programme, initiated local development programmes, identified
numerous drill targets and commenced drilling in Block Ba, 200 km due north of
Juba, in the Jonglei State of Southern Sudan.
However, as investors will be aware, much of the attention on White Nile has
become focussed on clarity of title for Block Ba. To date, we have had numerous
assurances from leading Southern Sudanese government figures that our interests
will be protected, with the likelihood being that we would be included in a
consortium that will develop Block B in Southern Sudan, would include Block Ba,
Block Bb and Block Bc. Indeed, when a delegation of Southern Sudanese
government officials, headed by His Excellency the Vice President of the
Government of Southern Sudan ('GoSS'), Dr Riek Machar, came to London in
September, they met with the Board, its nominated adviser and certain
shareholders, and reiterated that White Nile would receive a 22.5% interest in
the enlarged Block B. More recent indications are however that White Nile will
receive a majority stake in a new company that will control the 22.5% stake in
the aforementioned consortium in tandem with Nile Petroleum Corporation Limited
('NilePet'), although this has not been officially confirmed. Obtaining clarity
for shareholders over this matter remains the key priority for the Board.
In Ethiopia we have identified deep basins, potentially containing sedimentary
sections similar to that of the petroliferous Muglad and Melut Basins of
Southern Sudan. We are currently in negotiations to sign a Production Sharing
Agreement ('PSA') which we hope will be finalised before the end of the year.
The Board is also looking at additional opportunities in the region to fulfil
our strategy of creating a new independent oil producer focused in Southern
Sudan and the immediate region.
Southern Sudan
Following the interpretation of high-density 2D seismic, the Company has gained
a clearer understanding of the prospectivity of the Jonglei sub-basin of the
Muglad Basin. A sedimentary section of up to 7 km in thickness and rift
structures suitable for forming hydrocarbon traps are clearly shown, analogous
to the producing Southern Sudanese Thar Jath, Mala, Heglig and Unity oilfields
of the Muglad Basin to the northwest of Block Ba. In this way, the geological
conditions pertaining to the formation of oilfields in the Muglad Basin (Blocks
1, 2, 4 and 5A) have been extrapolated into the Jonglei sub-basin in Block Ba.
The Unity, Heglig and Thar Jath oilfields have estimated oil in place of circa
600 million, 550 million and 1 billion barrels respectively.
The interpretation of the seismic data has allowed White Nile to identify
numerous structures, of which a number were prioritised. The Kedelai exploration
well in Block Ba, 200 km due north of Juba, in the Jonglei State of Southern
Sudan was spudded on 19 April 2007 and was being drilled to determine the
hydrocarbon bearing potential of the south-eastern extension of the Muglad basin
and in particular to evaluate reservoir objectives in the Aradeiba and Bentiu
formations. This well has been suspended since the onset of the rainy season,
and latterly while we await clarity of title.
The Company has also been preparing additional drilling locations on two further
prospects identified through its initial seismic programme in the Jonglei State.
This is where the Board believes the Muglad Basin, which is productive at Thar
Jath, Mala, Heglig and Unity to the northwest of Block Ba, extends into the
concession area.
A further 2D seismic surveying programme has already been planned and 3D seismic
will be considered over any discoveries. Planning has also been finalised to
continue a high-density 2D seismic programme in the Pibor Post Basin, part of
the productive Melut Basin, which extends from Block Ba northwards and includes
the Great Palogue discovery and the Adar-Yale oilfield. These oilfields have
estimated oil in place of circa 2.9 billion barrels and circa 276 million
barrels respectively. However, these operations have now been temporarily
suspended until the Board receives full clarity of title as discussed above.
Ethiopia
In Ethiopia, White Nile has a Joint Study Agreement with the Ethiopian
Government's Petroleum Operations Department of the Ministry of Mines, over the
prospective East African Rift system in the southwest of the country, an area
which is based on the geological concept that the petroliferous Cretaceous and
early Tertiary basins of Southern Sudan extend south-eastwards beneath the
younger and less prospective East African rifts. The approximately 70,000 sq km
area is adjacent to Petronas' Gambela Block.
As part of the exploration programme, ground geophysical surveys, including
magneto-tellurics and gravity, have been completed in the Omo River area to the
north of Lake Turkana. This data is being used to determine basin disposition
and depth in this critical area of interference between three proven
petroliferous basin trends known as the Turkana Depression. Early results of the
interpretation have been encouraging and revealed deep basins, potentially
containing sedimentary sections similar to that of the petroliferous Muglad and
Melut Basins of Southern Sudan.
Prospective areas have now been identified and a PSA has been submitted to the
Council of Ministers. We expect to finalise negotiations on the PSA by the end
of the year, following which our plan would be to design a reconnaissance 2D
seismic programme to identify drill targets.
Political
In my Chairman's statement accompanying the 2006 report and financial
statements, I indicated that, recognising the need for complete clarity of
title, we were actively petitioning our partners, specifically the GoSS, to
obtain a solution to what we recognised as a political situation.
Unfortunately, the last year has involved a great deal of frustration in this
regard, and as yet we have not been able to secure the clarity of title we have
been seeking.
As shareholders will be aware, the Company entered into the licensing agreement
with NilePet in April 2005 in reliance on absolute assurances from the GoSS that
NilePet owned the legal title to Block Ba and therefore had the right to
allocate the oil concession.
Over the past year, in order to obtain a resolution in Sudan, White Nile was
requested by the GoSS to consider participating in a consortium to develop the
enlarged Block B. In line with this, at the beginning of June, White Nile was
informed that a Joint Executive Committee ('JEC') between the GoSS and the
Government of National Unity in Khartoum had met to reach a compromise agreement
with respect to certain oil concessions in Southern Sudan. The delegation from
the GoSS included Dr Riek Machar, the Honourable Justice Paul Mayom Akec, the
Minister of Internal Affairs and Chairman of NilePet, the Honourable Justice
Michael Makuei Lueth, the Minister of Legal Affairs and Constitutional
Development and the Honourable Luka Biong Deng, the Minister of the Operations
of the President. The delegation later confirmed, as a result of agreement
within the JEC, that White Nile would be entitled to participate in a consortium
consisting of Total SA, Kuwait Foreign Petroleum Exploration Company, NilePet
and Sudan National Petroleum Corporation, under which White Nile would hold a
22.5% interest and NilePet 10% in the enlarged Block B, consisting of Blocks Bb
and Bc as well as Block Ba. This was confirmed to the market in our announcement
of 6th and 14th June 2007.
On 6th July White Nile was made aware of resolutions of the National Petroleum
Commission of Sudan ('NPC') apparently signed by the Co-Chairman of the NPC on
17th June 2007. This indicated that White Nile would be removed from Block Ba
and compensation paid for activities and money expended by the Company, but no
official indication of these resolutions were given to the Board of White Nile.
Following further visits by the directors of White Nile to Southern Sudan, where
White Nile's participation in the aforementioned consortium was again
reaffirmed, a high powered GoSS delegation travelled to London in September
2007. This was led by Dr Riek Machar who was accompanied by Madame Angelina
Teny, the Minister of State for Energy in the Government of National Unity, the
two representatives of NilePet on the Board of White Nile and Dr Bullen Bol, the
Chief Executive of NilePet, amongst others. Meetings were held with the Board
of White Nile, the Company's nominated adviser and certain major shareholders
during which the GoSS delegation confirmed that White Nile would receive the
22.5% interest in the enlarged Block B. However, more recent indications are
that the GoSS wish to place the 22.5% interest in the enlarged Block B into a
new company called Southern Sudan Exploration & Production Company Limited. It
was originally envisaged that this new company would become a wholly owned
subsidiary of White Nile but later statements from the GoSS indicate that this
new company will not be wholly owned by White Nile, although White Nile will
have the majority interest in the company.
We are constantly pressing for a resolution of these issues and will take all
necessary steps to protect the position of White Nile. As stated earlier we
entered into the licensing agreement on Block Ba and incurred considerable
expenditure on seismic work and drilling in reliance on assurances from the GoSS
and NilePet that they held the rights to the Block. We are pressing the
relevant parties to confirm their position officially and I will update
shareholders as soon as I can.
Environmental
White Nile is extremely conscious of its environmental obligations with the
objective being to ensure that the community's needs and concerns will be
addressed and that White Nile conforms to internationally accepted standards in
protecting the environment. International consultancy firms have been utilised
to conduct Environmental Impact Studies and we have a number of individuals
within the Company dedicated to the adherence to legislation and best practise.
Social
White Nile has a strong commitment to actively assist the local community and
helping the area regenerate as part of its commitment to social development. It
is the Company's objective to employ and train local people, respond to the
community's key needs and procure food locally, thus stimulating the local
economy. Our commitment is to Southern Sudan and we feel we have a
responsibility to help in its reconstruction and achieve its latent potential.
Fundraising
In June, the Company raised £18 million through the issue of 18,000,000 new
ordinary shares of 0.1p each at £1.00 per share. The proceeds of the placing,
conducted with existing as well as new institutional investors, are being
utilised to fund the development of operations in Southern Sudan and Ethiopia,
as well as to develop our activities within the region as a whole.
Results
White Nile remains focussed on the development of its oil concessions in
Southern Sudan. The Company is still in the exploration stage and therefore is
not producing revenue. In line with expectations, the Company is reporting a
pre-tax loss of £1,424,165 (2006: £1,417,577).
Conclusion
Technically, this has been another year of progress where we have advanced both
our Southern Sudanese and Ethiopian interests, both of which we believe to be
highly prospective for hydrocarbons. In Southern Sudan we have reached the drill
stage of exploration and in Ethiopia we are in the process of signing a PSA.
However, although we remain confident in our position, the lack of clarity of
title for Block Ba is obviously frustrating, which is highlighted by the recent
chronology of events. The JEC proposed the formation of a new consortium to
develop Block B which allocated 22.5% to White Nile. Reports then suggested
that the NPC had ruled that White Nile would not be included in any consortium
and would be compensated for its activities. Following subsequent meetings in
Juba, the Company was again informed that it would be part of a consortium which
was reinforced in London by a delegation of the GoSS officials led by the Vice
President of Southern Sudan, Dr Riek Machar. However, the most recent
development suggests that we would receive a controlling interest in a new
Southern Sudanese company that would hold a 22.5% interest in the Block B
consortium. As I believe investors will appreciate, the situation remains, at
the least, frustrating.
However, I remain positive about the Company and its prospects and believe that
once we receive the clarity of title that we have been actively seeking in
Southern Sudan, our value will be greatly enhanced and we can fully reward our
shareholders for their continued support.
Finally, I would like to take this opportunity of thanking all our employees and
partners for their hard work and I look forward to a continued strong
relationship with them going forward.
Phil Edmonds
Chairman
PROFIT AND LOSS ACCOUNT
for the year ended 30 June 2007
2007 2006
£ £
TURNOVER - -
Operating expenses (1,663,639) (1,852,380)
OPERATING LOSS (1,663,639) (1,852,380)
Interest receivable 245,292 439,372
Interest payable (5,818) (4,569)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (1,424,165) (1,417,577)
Taxation - -
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (1,424,165) (1,417,577)
LOSS PER ORDINARY SHARE
Basic and diluted (0.439p) (0.447p)
The operating loss for the period arises from the Company's continuing
operations.
No separate statement of Total Recognised Gains and Losses has been presented as
all such gains and losses have been dealt with in the profit and loss account.
BALANCE SHEET
30 June 2007
Restated
2007 2006
£ £
FIXED ASSETS
Intangible assets 30,413,539 17,343,039
Tangible assets 1,223,711 227,907
31,637,250 17,570,946
CURRENT ASSETS
Debtors 3,556,191 340,137
Cash at bank and in hand 16,729,370 6,049,114
20,285,561 6,389,251
CREDITORS: Amounts falling due within one year (1,697,507) (974,728)
NET CURRENT ASSETS 18,588,054 5,414,523
NET ASSETS 50,225,304 22,985,469
CAPITAL AND RESERVES
Called up share capital 347,000 317,000
Share premium account 52,464,085 23,992,085
Shares to be issued - -
Share option reserve 650,000 488,000
Profit and loss account (deficit) (3,235,781) (1,811,616)
SHAREHOLDERS' FUNDS 50,225,304 22,985,469
CASH FLOW STATEMENT
for the year ended 30 June 2007
2007 2006
£ £
Cash outflow from operating activities (865,834) (2,052,571)
Returns on investments and servicing of finance 239,474 434,803
Capital expenditure and financial investment (14,039,384) (7,034,227)
CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING (14,665,744) (8,651,995)
Management of liquid resources (6,002,713) 10,525,153
Financing 25,346,000 (89,850)
INCREASE IN CASH IN THE PERIOD 4,677,543 1,783,308
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2007 2006
£ £
Increase in cash in the period 4,677,543 1,783,308
Cash outflow/(inflow) from increase/(decrease) in liquid 6,002,713 (10,525,153)
resources
MOVEMENT IN NET FUNDS 10,680,256 (8,741,845)
Net funds at beginning of period 6,049,114 14,790,959
NET FUNDS AT END OF PERIOD 16,729,370 6,049,114
NOTES
for the period ended 30 June 2007
1 BASIS OF PREPARATION
The financial information for the year ended 30 June 2007 has not been audited
and does not constitute the Company's statutory financial statements within the
meaning of S240 of the Companies Act 1985. The preliminary report was approved
by the Board on 17 December 2007. The statutory accounts for the year ended 30
June 2007 have not been filed with the Registrar of Companies nor reported on by
the Company's auditors. The comparative results for the year ended 30 June 2006
are an abridged version of the audited financial statements subject to the prior
year adjustment noted below which have been filed with the UK Registrar of
Companies and contain an unqualified audit opinion.
2 SIGNIFICANT ACCOUNTING POLICIES
The preliminary results have been prepared using accounting policies and
practices consistent with those adopted in the accounts for the year ended 30
June 2006 with the exception of the application of FRS 20 (see below) and the
policies and procedures that will be adopted in the accounts for the year ended
30 June 2007 .
FRS 20
The adoption of FRS 20 - share based payments requires a prior period adjustment
to be made. This has created a share option reserve at 30 June 2006 of £488,000
and increased intangible fixed assets by £488,000 at 30 June 2006. There was no
impact in 2005.
3 LOSS PER ORDINARY SHARE
The calculation of basic and diluted loss per ordinary share is based on the
following losses and number of shares.
2007 2006
£ £
Loss for the financial period 1,424,165 1,417,577
2007 2006
No. of shares No. of shares
Weighted average number of shares 324,627,397 316,942,466
Due to the loss incurred in the period, there is no dilutive effect from the
issue of share options.
4 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
Restated
2007 2006
£ £
Loss for the financial period (1,424,165) (1,417,577)
Issue of shares during the period 30,000,000 -
Issue costs (1,498,000) (89,850)
Share option charge 162,000 488,000
Net addition to/(reduction in) shareholders' funds 27,239,835 (1,019,427)
Opening shareholders' funds 22,985,469 24,004,896
Closing shareholders' funds 50,225,304 22,985,469
5 CASH FLOWS
2007 2006
£ £
a Reconciliation of operating loss to net cash outflow from
operating activities
Operating loss (1,663,639) (1,852,380)
Depreciation 135,080 23,151
Increase in debtors (60,054) (340,137)
Increase in creditors 722,779 116,795
Net cash outflow from operating activities (865,834) (2,052,571)
b Analysis of cash flows for headings netted in the cash flow
Returns on investments and servicing of finance
Interest received 245,292 439,372
Interest paid (5,818) (4,569)
Net cash inflow from returns on investments and servicing of
finance 239,474 434,803
Capital expenditure and financial investment
Purchase of intangible fixed assets (12,908,500) (6,825,351)
Purchase of tangible fixed assets (1,130,884) (208,876)
Net cash outflow from capital expenditure and financial (14,039,384) (7,034,227)
investment
Management of liquid resources
(Increase)/decrease in cash deposited on short term deposit (6,002,713) 10,525,153
Net cash (outflow)/inflow from management of liquid resources (6,002,713) 10,525,153
Financing
Proceeds from issue of share capital 26,844,000 -
Share issue costs (1,498,000) (89,850)
Net cash inflow/(outflow) from financing 25,346,000 (89,850)
At 1 July Cash- At 30 June
c Analysis of net funds 2006 flow 2007
£ £ £
Cash at bank and in hand 2,049,114 4,677,543 6,726,657
Cash on deposit 4,000,000 6,002,713 10,002,713
6,049,114 10,680,256 16,729,370
Copies of the Report and Accounts for the period ended 30 June 2007 are being
sent to shareholders. Further copies will be available from the Company
Secretary's office, which is Salans, Millennium Bridge House, 2 Lambeth Hill,
London, EC4V 4AJ.
For further information please visit www.whitenile-ltd.com or contact:
Phil Edmonds White Nile Ltd Tel: 0845 108 6060
Jonathan Wright Seymour Pierce Ltd Tel: 020 7107 8000
Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7242 4477
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