2017 Financial Results

RNS Number : 9137H

Argos Resources Ltd

16 March 2018

 

16 March 2018

ARGOS RESOURCES LIMITED

("Argos" or "the Company")

2017 Financial Results

Highlights

Argos Resources Ltd (AIM: ARG.L), the Falkland Islands based exploration company focused on the North Falkland Basin, announces its financial results for the year ended 31 December 2017.

·      US$118,000 profit

·      US$758,000 cash reserves at 31 December 2017

·      The Company retains an Overriding Royalty Interest (the "ORRI") of 5% of all oil and gas produced over the life of Licence PL001 in the North Falkland Basin (the "Licence") from all hydrocarbon discoveries developed within the Licence area

·      All future expenditures incurred on the Licence will be at no cost to the Company

·      The Company will receive future cash payments of $405,000 per annum from Noble Energy Falklands Limited ("Noble") and Edison International S.p.A ("Edison") which will be sufficient to meet its ongoing running costs until first oil production ·      A three year extension of the Licence was approved in 2016 which extends the current Second Phase of the Licence to November 2019

The full Annual Report and Consolidated Financial Statements can be read and downloaded from the Company website:  http://www.argosresources.com/news.php?page=regulatory-news 

Argos Resources Limited ([phone])

www.argosresources.com

Ian Thomson, Chairman

John Hogan, Managing Director

Cenkos Securities plc (Nomad & Broker)

Derrick Lee ([phone])

Neil McDonald ([phone])

Combined Chairman's statement and Managing Director's review

Oil prices rose steadily during the second half of 2017, supported by sustained production curtailments from a number of leading OPEC and non-OPEC producers. The Brent oil price at year end 2017 approached $67 per barrel, an increase of over $10 per barrel from the beginning of the year. The industry response to this has so far been muted, with concerns about the sustainability of these price levels continuing for the long term.

A Participation Agreement between Noble, Edison and the Company continues to be in effect. The Participation Agreement confirms the Company's entitlement to a 5 percent Overriding Royalty Interest in Licence PL001 in the North Falkland Basin. This royalty interest entitles the Company to 5 percent of all oil and gas produced over the life of the Licence, free and clear of all costs. Also, under the terms of the Participation Agreement, the Company has been receiving quarterly cash payments totalling £300,000 per annum during 2017, which is sufficient to meet its ongoing running costs.

The Company announced in August 2016 that a three-year extension to the Licence had been approved by the Executive Council of the Falkland Islands Government and by the UK Secretary of State for Foreign and Commonwealth Affairs. This approval extends the current Second Phase of the Licence to November 2019, after which a Third Licence Phase of 10 years is available to the Licensees.

With world-wide exploration drilling activities still suppressed, the Company cannot yet forecast when drilling operations might commence on the Licence. However, the Overriding Royalty Interest in the Licence continues through the Second Phase of the Licence and any further phases beyond, and the Company's future running costs are covered, so we remain well positioned.  The Company continues to be positive about the exploration potential of the Licence Area.

Results and dividend

The results for the year and the Group's financial position as at the year-end are shown in the attached financial statements.  The directors have not recommended a dividend for the year (2016: $nil).

Business review

The Group has returned a profit for the year ended 31 December 2017 of $118,000 (2016: loss of $16,000) which equates to a profit per share of 0.05 cents (2016: loss per share of 0.007 cents).  The profit reflects the full effects of management efforts to cut costs in 2016, positive foreign exchange differences and the receipt of income under the Participation Agreement.

Administration expenses were $329,000 in 2017 compared to $427,000 in 2016.

Shareholders' equity has increased marginally from $29.32 million to $29.46 million in the year since 31 December 2016, as receipts under the Participation Agreement offset the administration costs, leaving a small surplus.  Cash in the year increased from $701,000 to $758,000.

Outlook for the next financial year

The Participation Agreement with Noble and Edison means that the Group will continue to receive quarterly cash payments totalling £300,000 per annum, in Sterling, which equates to $405,000 at the year-end exchange rate and covers the Group's ongoing costs.  There is a risk that Noble and Edison withdraw from the agreement. In such circumstances the Licence would revert back to Argos, subject to Government approval. Given that Noble and Edison have been granted an extension to the Licence, which now runs until November 2019, withdrawal is considered unlikely.  The Group is therefore fully funded for the foreseeable future.

Ian Thomson                                                                                                      John Hogan

Chairman                                                                                                            Managing Director

Consolidated statement of comprehensive income

Year ended 31 December 2017

			Year ended 31 December 2017 $'000	Year ended 31 December 2016 $'000
Other income			380	505
Administrative expenses			(329)	(427)
Finance income			1	1
Foreign exchange gains/(losses)			66	(95)
Profit/(loss) for the year attributable to owners of the parent			118	(16)
Total comprehensive income for the period
attributable to owners of the parent			118	(16)
Basic and diluted earnings/(loss) per share (cents)			0.05	(0.007)

Consolidated statement of financial position

As at 31 December 2017

			2017	2016
			$'000	$'000
Assets
Non-current assets
Royalty interests			28,749	28,749
			28,749	28,749
Current assets
Other receivables			14	15
Cash and cash equivalents			758	701
Total current assets			772	716
Total assets			29,521	29,465
Liabilities
Current liabilities
Trade and other payables			59	148
Total liabilities			59	148
Total net assets			29,462	29,317
Capital and reserves attributable to
equity holders of the Company
Share capital			6,696	6,669
Share premium			30,071	30,071
Retained losses			(7,305)	(7,423)
Total shareholders' equity			29,462	29,317

Consolidated statement of cash flows

Year ended 31 December 2017

		Year ended 31 December 2017 $'000	Year ended 31 December 2016 $'000
Cash flows from operating activities
Profit/(loss) for period before taxation		118	(16)
Adjustments for:
Finance income		(1)	(1)
Foreign exchange		(67)	92
Depreciation		-	3
Net cash inflow from operating activities
before changes in working capital		50	78
Decrease in other receivables		1	37
(Decrease)/increase in other payables		(89)	54
Net cash (outflow)/inflow from operating activities		(38)	169
Investing activities
Interest received		1	1
Proceeds on the sale of assets		-	172
Net cash received from investment activities		1	173
Financing activities
Issue of ordinary shares (share options exercised)		27	-
Net cash from financing activities		-	-
Net (decrease)/ increase in cash and cash equivalents		(10)	342
Cash and cash equivalents at beginning of period		701	451
Exchange gains/(losses) on cash and cash equivalents		67	(92)
Cash and cash equivalents at end of the year		758	701

Consolidated statement of changes in equity

Year ended 31 December 2017

		Share capital $'000	Share premium $'000	Retained losses $'000	Total equity $'000
At 1 January 2016		6,669	30,071	(7,407)	29,333
Total comprehensive income for the year		-	-	(16)	(16)
At 31 December 2016 And 1 January 2017		6,669	30,071	(7,423)	29,317
Total comprehensive income for the year		-	-	118	118
Shares issued (share options exercised)		27	-	-	27
At 31 December 2017		6,696	30,071	(7,305)	29,462

In preparing the financial information in this statement the Group, which consists of the Company Argos Resources Ltd, and its wholly owned subsidiary Argos Exploration Ltd, has applied policies in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS").  The financial information has been prepared under the historical cost convention.

The financial information set out above does not constitute the company's statutory accounts for 2016 or 2017. Statutory accounts for 2016 and 2017 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for 2016 and 2017 were unqualified and did not draw attention to any matters by way of emphasis.

 

END

 

 

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