Interim Results
For immediate release 26 September 2011
Roxi Petroleum plc
("Roxi" or "the Company")
Interim Results for the period ended 30 June 2011
Roxi Petroleum plc, the Central Asian oil and gas company with a focus on Kazakhstan, announces its unaudited results for the period ended 30 June 2011.
Financial highlights
· US$42.2 million profit for the period (2010 US$46.8 million loss)
· 31.8% reduction in administrative costs to US$2.9 million (2010 US$4.3 million)
· US$50 million Galaz farm-out with LGI completed
· Canamens returned 35% interest in BNG and assigned loans of US$23.6 million to Roxi
Operational highlights
· Completion of NW Konys reservoir study (Galaz)
· South Yelemes well 805 put on 90 day production test (BNG)
· Initial (time) processing of 1400km2 3D seismic cube completed on BNG
· 36 prospects and leads mapped at depths of 1700m to 5000m on BNG Contract Area
· Gaffney Cline completed Technical Audit of 202mmbbls risked resources on BNG and 13mmbbls of most-likely contingent
resources on South Yelemes
Comments
Clive Carver, Non-executive Chairman
"The most important developments during the period under review were the execution in January 2011, of the US$50 million farm-out deal for Galaz with LGI first announced in 2010 and the cancellation in May 2011 of the BNG farm-out arrangements with Canamens. Our future success now rests on finding a suitable replacement farm-out partner at BNG and securing additional support from our largest shareholder."
David Wilkes, Chief Executive Officer
"We continue to be challenged with finding the right financing solutions for the exploration of some of the deeper prospects on BNG, however, we believe that should we be able to put this in place, together with the ongoing development of the NW Konys field, the transformation process for Roxi will be complete, moving us from a pure exploration company to an oil producer with additional upside in the form of further unexplored acreage on both our core assets."
Qualified Person
Duncan McDougall, consultant to the Company and a Fellow in the Geological Society, London, has reviewed and approved the technical disclosure in this announcement. He holds a BSc in Geology and has 26 years international experience of exploration, appraisal, and development of oilfields in a variety of environments.
Chairman's Statement
I am pleased to report that in the first six months of 2011 your company recorded a substantial profit.
This resulted principally from the cancellation of the Canamens BNG farm-out arrangements, which saw some $39 million being written back through the profit and loss account to the value of our interest in this asset.
The other significant contributor to the recorded profit was $10 million added to the value of our interest in the Galaz asset following completion of the Galaz farm-out with LGI.
The third important component to the profit recorded were the benefits of the costs reduction programme initiated in 2010 by our CEO, David Wilkes.
BNG
We were pleased to reach an acceptable agreement with our previous farm-out partners, Canamens, in BNG following their decision to withdraw from Kazakhstan. As a result of the cancellation Roxi's interest in this asset increased from 23.41% to 58.41%. Roxi's principal objective is to negotiate an acceptable replacement farm-out arrangement to allow the development work at BNG, our most attractive asset, to continue.
The publication of the interpretation of the seismic data gathered on BNG provided the first meaningful independent assessment of the potential of this asset.
Galaz
We completed the $50 million farm-out with LGI on Galaz in January 2011.
This deal provided both the funding to develop that asset and funds that allowed Roxi to meet some of its liabilities.
Funding & Related party transaction
The Company is currently reliant on its largest shareholder Mr Kuat Oraziman, a director of the Company, for day to day funding. Mr Oraziman is interested in 46% of the issued share capital through his direct, indirect or controlling interests in Baverstock GMBH, Vertom International NV and Roditie NV. The Company has outstanding loans from Mr Oraziman (or companies he is associated with) totaling US$17.9m as at 23 September 2011 (US$15.9m at 30 June 2011), including an amount of US$4.6m (US$3.2m at 30 June 2011) drawn down from the US$6m working capital facility provided by Vertom International NV (Vertom) in April 2011.
In the absence of a replacement farm-in partner at BNG the Company requires an additional $5 million to fund its operations over the next 12 months. This matter is also identified in the Independent Review Report from the Company's auditors and in the Notes to the financial statements, both of which are set out in this report.
Mr Oraziman has indicated that he is willing to provide this further funding and to extend the repayment dates on all of the loans made by him and companies in which he is interested, on the condition that the Company grants security for the loans. Accordingly, the Company plans to grant to Vertom a fixed and floating charge over the Company's investments in operating assets as security for the $6 million working capital facility provided in April this year.
As Mr Oraziman is a director of the Company the variation to the Vertom loan is a related party transaction under the AIM Rules. The Independent Directors consider, having consulted with the Company's nominated adviser, Strand Hanson, that the terms of the planned grant of security to Vertom are fair and reasonable insofar as the Company's shareholders are concerned.
The Independent Directors do not believe that it is prudent to continue to organise the finances of the Company on such a large amount of short term debt. Accordingly, they have asked Mr Oraziman to consider converting a significant portion of the current debt to shares in the Company at a price no lower than current prevailing market price on the date of signing these interim statements, which he has indicated he is prepared to do as well as providing the additional $5 million required for the next 12 months, as long as this is secured against the Company's investments in operating assets. The directors have agreed with Mr Oraziman that security will only be offered on the loans, to the extent that they are not converted to equity. Mr Oraziman agreed that to the extent security is offered on his loans then he will extend the repayment dates of all his loans by a further 12 months.
With regard to the Company's requirement for further funding, the Independent Directors have considered alternative sources of funding, including bank debt and the issue of equity, and have concluded that such alternatives would be not available to the Company on terms more beneficial than those offered by Mr Oraziman, if indeed at all.
No debt conversion has been possible before the publication of this interim statement, as any debt conversion would be a related party transaction and the Company by virtue of the publication of this interim statement has until now been in a closed period. It is the intention of the directors, other than Mr Oraziman, to seek such a debt conversion following publication of these interim statements.
As the Company is not subject to the provisions of the UK Takeover Code such a conversion would not lead to a mandatory offer under Rule 9 of the UK Takeover Code.
Kazakhstan
Kazakhstan has become a more difficult place from which to operate. The pace of receiving the required regulatory permits has slowed as the new government agencies start to operate and as the workings of new laws becomes clearer. However, we believe our policy of working in partnership with local and regional partners and our good relations with the regulatory authorities in general remains a core strength of the Company.
Outlook
It will not be until we have concluded a replacement farm-out arrangement on BNG that we can speak with confidence about the future. Based on our conversations to date we hope such an arrangement will be in place later this year.
Clive Carver
Non-Executive Chairman
23 September 2011
Chief Executive's Statement
I am very pleased to be able to present my interim report as Chief Executive Officer.
Strategy
Our strategy is to seek to improve the value of our assets by bringing them to production and proving the existence of reserves in the most cost efficient way, whilst maintaining high standards of safety and quality in our operations. Where we believe that the risks or costs associated with the continual development of some of our assets are too high, based on our interpretation of seismic data and drilling results, then we will assess whether the Company's resources should be better directed to assets where greater returns to our shareholders exist. This may involve divesting our interest in the higher risked assets either through farm-out arrangements, direct sales of interests or acquiring new assets with greater potential
We remain committed in the near-term, to finding new farm-out partners for BNG and Beibars as well as achieving production from BNG and Galaz. This will allow us to develop Galaz and move onto exploration of deeper horizons in BNG where we believe much greater potential can be exploited based on the results from our recent 3D seismic work completed.
Operational Update
Roxi's effective interest in the following assets was as follows:
|
Asset |
Interest at 1st January 2011 |
Interest at 30th June 2011 |
|
|
|
|
|
BNG Ltd LLP |
23.41% |
58.41% |
|
Galaz and Company LLP |
57.82% |
34.22% |
|
Ravninnoe Oil LLP |
30% |
30% |
|
Munaily Kazakhstan LLP |
58.41% |
58.41% |
|
Beibars Munai LLP |
50% |
50% |
Our two principal assets are Galaz and BNG. Roxi's interest in Galaz is 34.22% and in BNG is 58.41%. The cancellation of the deal with Canamens allowed us to increase our effective interest in BNG once again to 58.41% in the period. The farm-out deal with LGI provides funding for the next phase of development of that asset. Future funding to develop BNG depends on concluding an acceptable farm-out arrangement to replace the cancelled Canamens arrangements.
We plan for NW Konys and South Yelemes fields to move to pilot production during the fourth quarter this year. We are still waiting for the emissions license to commence pilot production on South Yelemes although have now received this license for NW Konys.
We and our partner LGI have developed and approved plans for the further development of NW Konys, based on a reservoir study undertaken and issued by Schlumberger during the 1st quarter of 2011. We plan to drill a series of appraisal and water injection wells during 2012 that should enable us to increase production and reserve estimates in Galaz by the end of 2013.
The 3D seismic undertaken on BNG over the last 2 years has highlighted a number of highly prospective targets in the BNG license acreage, the highest potential at depths of around 4,500 meters, which we plan to drill in late 2012 and early 2013. We continue to develop the South Yelemes field by testing and selling oil from well 805 during the 2nd and 3rd quarters of 2011. Going forward we plan to test the Neocomian reservoir in well 806 followed by further appraisal wells after pilot production commences on South Yelemes.
Gaffney Cline & Associates completed the technical audit of the BNG license area, during the 2nd quarter 2011. This evaluation confirmed total unrisked resources of 904 million barrels from 36 prospects that have been mapped from the 3D seismic work completed in 2009 and 2010. The report of Gaffney Cline also confirmed risked resources of 202 million barrels as well as Most-Likely Contingent Resources of 13 million barrels on South Yelemes.
Roxi's other assets comprise interests in Ravninnoe (30%), Beibars (50%) and Munaily (58.41%). Completion of the previously announced sale of Ravninnoe and Munaily are dependent on the purchaser's receiving an appropriate waiver from the regulatory authorities. At Beibars the military polygon remains in force and in consequence the force majeure on the development of the asset remains in force. We plan to farm-out part of our interest in Beibars should we find an investor willing to fund the drilling of exploratory wells that will enable us to assess the potential of this asset once the military polygon has been removed.
We continue to maintain our focus on cost reduction initiatives and are currently reviewing the possible restructuring of our holding companies structure in 2011. We achieved a 31.8% reduction in administrative costs compared to the same period in 2010. These will enable a much more efficient and transparent legal structure going forward and should enable further cost reductions to be achieved in addition to those put in place in 2010.
Financial Highlights
The results for the current period shown in the Consolidated Income Statement, have been transformed as a result of two significant transactions undertaken in the period, being the sale of an interest to LGI in Galaz LLP and the negotiation we performed with Canamens when they decided to return their interest in BNG LLP as well as their entitlement to associated loans to the operating entity. These two transactions resulted in book gains in the income statement for the period in aggregate of US$49 million. Although it is pleasing to achieve such results, it is important to emphasize that the majority of these gains were not cash generative but rather the consequence of the application of IFRS, generating accounting book profits and are one off in nature and are not expected to be re-occurring items.
The other important characteristic of our financial position at the present is the fact that, apart from partner funding of our asset development through farm-out arrangements, we are still free of external institutional debt financing. This creates an opportunity in the future as our ability to secure traditional institutional debt financing should improve as we commence production on our two core assets and begin to prove up greater reserves from which lending institutions will be prepared to lend against going forward. At the same time our dependence on our principal shareholder to finance the business while the development of our core assets continues to increase. As referred to in the Chairman's Statement, we have entered into new discussions with Mr Oraziman to further increase the existing facility with Vertom by US$5 million to provide finance for our ongoing working capital needs and this in turn has resulted in further discussions surrounding the need to restructure a proportion of his existing debt going forward in the form of conversion of debt to equity. The Board is currently considering all options in this respect.
Ultimately, we need to find additional finance for the further development of the BNG asset, particularly if the Company is to explore some of the deeper horizons that we have identified. In this respect the Board remains cautiously confident that the Company will be able to secure a new farm-out deal for BNG in the near future.
Our aim going forward as we move towards production on our two core assets- is to continue to work on cost reduction initiatives as well as increase revenues on the top line as pilot production commences. This should result in a much healthier financial performance going forward.
Outlook
We continue to be challenged with finding the right financing solutions for the exploration of some of the deeper prospects on BNG, however, we believe that should we be able to put this in place, together with the ongoing development of the NW Konys field, the transformation process for Roxi will be complete, moving us from a pure exploration company to an oil producer with additional upside in the form of further unexplored acreage on both our core assets.
David Wilkes
Chief Executive Officer
23 September 2011
INDEPENDENT REVIEW REPORT
FOR THE PERIOD ENDED 30 JUNE 2011
INDEPENDENT REVIEW REPORT TO ROXI PETROLEUM PLC
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011 which comprises the Consolidated Condensed Income Statement, the Consolidated Condensed Statement of Financial Position, the Consolidated Condensed Cash Flow Statement, the Consolidated Condensed Statement of Comprehensive Income, the Consolidated Condensed Statement of Changes in Equity and the related notes.
We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
INDEPENDENT REVIEW REPORT
FOR THE PERIOD ENDED 30 JUNE 2011
INDEPENDENT REVIEW REPORT TO ROXI PETROLEUM PLC (CONTINUED)
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.
Emphasis of matter - Going concern
In forming our conclusion, which is not modified, we have considered the adequacy of the disclosures made in note 2 of the interim financial statements for the six months ended 30 June 2011 concerning the Group being reliant on securing additional funding to continue to operate in their normal course of business for the next 12 months.
As set out in note 2 the Group is dependent upon the continued support of the major shareholder. Whilst negotiations are at an advanced stage to provide an additional US$5 million and convert certain loans into equity there is no binding agreement in place. Should a binding agreement not be reached management would need to source alternative funding arrangements for the Group to remain a going concern.
These conditions indicate the existence of material uncertainties which may cast significant doubt about the Group's ability to continue as a going concern. The interim financial information does not include the adjustments that would result if the Group was unable to continue as a going concern.
BDO LLP
Chartered Accountants and Registered Auditors
United Kingdom
23 September 2011
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127)
CONSOLIDATED CONDENSED INCOME STATEMENT
|
|
|
Six months ended 30 June 2011 Unaudited |
|
Six months ended 30 June 2010 Unaudited |
|
Year ended 31 December 2010 Audited |
|
|
|
|
Note |
US$000s |
|
US$000s |
|
US$000s |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
592 |
|
143 |
|
123 |
|
|
|
Cost of sales |
|
(592) |
|
(143) |
|
(123) |
|
|
|
Gross Profit |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of unproven oil and gas assets |
4 |
- |
|
(14,630) |
|
(10,354) |
|
|
|
Profit on disposal of subsidiary excluding release of cumulative translation reserve |
7 |
11,622 |
|
1,641 |
|
1,641 |
|
|
|
Gain on acquisition of subsidiary |
8 |
33,642 |
|
- |
|
- |
|
|
|
Release of cumulative translation reserve |
7, 8 |
(3,980) |
|
(15,984) |
|
(15,984) |
|
|
|
Reversal of provision/(provision) against other receivables |
8 |
7,763 |
|
- |
|
(7,763) |
|
|
|
Share based payments |
|
(1,509) |
|
(182) |
|
(306) |
|
|
|
Provision against joint venture receivable |
|
- |
|
(9,063) |
|
(7,818) |
|
|
|
Other administrative expenses |
|
(2,941) |
|
(4,313) |
|
(7,564) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,597 |
|
(42,531) |
|
(48,148) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance cost |
|
(1,491) |
|
(4,614) |
|
(6,124) |
|
|
|
Finance income |
|
1,972 |
|
2,890 |
|
5,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) before taxation |
|
45,078 |
|
(44,255) |
|
(48,813) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation |
|
(2,833) |
|
(2,516) |
|
(5,248) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) after taxation |
|
42,245 |
|
(46,771) |
|
(54,061) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) attributable to non-controlling interests |
|
4,644 |
|
(2,965) |
|
(2,351) |
|
|
|
Profit/(loss) attributable to equity shareholders |
|
37,601 |
|
(43,806) |
|
(51,710) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,245 |
|
(46,771) |
|
(54,061) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings/(loss) per Ordinary share (US cents) |
3 |
8.94 |
|
(10.5) |
|
(12.3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 15 to 19 form part of these financial statements.
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
|
|
|
Six months ended 30 June 2011 Unaudited |
|
Six months ended 30 June 2010 Unaudited |
|
Year ended 31 December 2010 Audited |
||||||
|
|
|
US$000s |
|
US$000s |
|
US$000s |
||||||
|
|
|
|
|
|
|
|
|
|||||
|
Income/(loss) after taxation |
|
42,245 |
|
(46,771) |
|
(54,061) |
||||||
|
Other comprehensive income/(loss): |
|
|
|
|
|
|
||||||
|
|
Exchange differences on translating foreign operations |
|
(270) |
|
1,332 |
|
102 |
|||||
|
Other comprehensive income/(loss) for the period |
|
(270) |
|
1,332 |
|
102 |
||||||
|
Total comprehensive income/(loss) for the period |
|
41,975 |
|
(45,439) |
|
(53,959) |
||||||
|
|
|
|
|
|
|
|
||||||
|
Total comprehensive income/(loss) attributable to: |
|
|
|
|
|
|
||||||
|
Owners of parent |
|
37,431 |
|
(42,954) |
|
(51,638) |
||||||
|
Non-controlling interest |
|
4,544 |
|
(2,485) |
|
(2,321) |
||||||
The notes on pages 15 to 19 form part of these financial statements.
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2010
|
|
Share capital |
Share premium |
Deferred shares |
Cumulative translation reserve |
Other reserve |
Capital contribution reserve |
Retained earnings |
Total |
Non-- controlling interests |
Total equity |
|
Unaudited |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
At start of period |
7,772 |
104,305 |
64,702 |
(19,094) |
2,378 |
265 |
(58,293) |
102,035 |
29,703 |
131,738 |
|
Total comprehensive income for the period |
- |
- |
- |
852 |
- |
- |
(43,806) |
(42,954) |
(2,485) |
(45,439) |
|
Arising on share issue |
60 |
493 |
- |
- |
- |
- |
- |
553 |
- |
553 |
|
Arising on loan from shareholder |
- |
- |
- |
- |
- |
(132) |
1,476 |
1,344 |
- |
1,344 |
|
Arising on exercise of warrants |
- |
- |
- |
- |
- |
- |
92 |
92 |
- |
92 |
|
Due to employee share options |
- |
- |
- |
- |
- |
- |
182 |
182 |
- |
182 |
|
Disposal of subsidiary |
- |
- |
- |
15,984 |
- |
- |
- |
15,984 |
(34,318) |
(18,334) |
|
At 30 June 2010 |
7,832 |
104,798 |
64,702 |
(2,258) |
2,378 |
133 |
(100,349) |
77,236 |
(7,100) |
70,136 |
For the six months ended 30 June 2011
|
|
Share capital |
Share premium |
Deferred shares |
Cumulative translation reserve |
Other reserve |
Capital contribution reserve |
Retained earnings |
Total |
Non-controlling interests |
Total equity |
||
|
Unaudited |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
||
|
At start of period |
7,832 |
104,798 |
64,702 |
(3,038) |
1,779 |
(2,229) |
(107,530) |
66,314 |
(7,954) |
58,360 |
|
|
|
Total comprehensive income for the period |
- |
- |
- |
(170) |
- |
- |
37,601 |
37,431 |
4,544 |
41,975 |
|
|
|
Purchase of subsidiary |
- |
- |
- |
2,056 |
- |
- |
- |
2,056 |
27,385 |
29,441 |
|
|
|
Arising on employee share options |
- |
- |
- |
- |
- |
- |
1,509 |
1,509 |
- |
1,509 |
|
|
|
Disposal of subsidiary |
- |
- |
- |
1,924 |
- |
- |
- |
1,924 |
(1,649) |
275 |
|
|
|
At 30 June 2011 |
7,832 |
104,798 |
64,702 |
772 |
1,779 |
(2,229) |
(68,420) |
109,234 |
22,326 |
131,560 |
|
|
For the year ended 31 December 2010
|
|
Share capital |
Share |
Deferred shares |
Cumulative translation reserve |
Other |
Capital |
Retained earnings |
Total |
Minority interests |
Total equity |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
Total equity as at 1 January 2010 |
7,772 |
104,305 |
64,702 |
(19,094) |
2,378 |
265 |
(58,293) |
102,035 |
29,703 |
131,738 |
|
Total comprehensive income for the year |
- |
- |
- |
72 |
- |
- |
(51,710) |
(51,638) |
(2,321) |
(53,959) |
|
Arising on share issues |
60 |
493 |
- |
- |
- |
- |
- |
553 |
- |
553 |
|
Arising on loan from shareholder |
- |
- |
- |
- |
- |
(132) |
1,476 |
1,344 |
- |
1,344 |
|
Forfeited warrants |
- |
- |
- |
- |
(599) |
- |
599 |
- |
- |
- |
|
Purchase of additional share in subsidiary |
- |
- |
- |
- |
- |
(2,362) |
- |
(2,362) |
(1,018) |
(3,380) |
|
Arising on exercise of warrants |
- |
- |
- |
- |
- |
- |
92 |
92 |
- |
92 |
|
Arising on employee share options |
- |
- |
- |
- |
- |
- |
306 |
306 |
- |
306 |
|
Disposal of subsidiary |
- |
- |
- |
15,984 |
- |
- |
- |
15,984 |
(34,318) |
(18,334) |
|
Total equity as at 31 December 2010 |
7,832 |
104,798 |
64,702 |
(3,038) |
1,779 |
(2,229) |
(107,530) |
66,314 |
(7,954) |
58,360 |
|
Reserve |
|
Description and purpose |
|
Share capital |
|
The nominal value of shares issued |
|
Share premium |
|
Amount subscribed for share capital in excess of nominal value |
|
Deferred shares |
|
The nominal value of deferred shares issued |
|
Cumulative translation reserve |
|
Losses arising on retranslating the net assets of overseas operations into US Dollars |
|
Other reserves |
|
Fair value of warrants issued |
|
Capital contribution reserve |
|
Capital contribution arising on discounted loans, step by step acquisitions and effect of issue costs of debt in subsidiary |
|
Retained earnings |
|
Cumulative losses recognised in the consolidated income statement |
|
Minority interests |
|
The interest of non-controlling interests in the net assets of the subsidiaries |
|
|
|
|
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
|
|
|
As at 30 June 2011 |
|
As at 30 June 2010 |
|
As at 31 December 2010 |
|
|||||
|
|
Note |
US$000s |
|
US$000s |
|
US$000s |
|
|||||
|
Assets |
|
Unaudited |
|
Unaudited |
|
Audited |
|
|||||
|
Non-current assets |
|
|
|
|
|
|
|
|||||
|
Unproven oil and gas assets |
4 |
169,038 |
|
76,077 |
|
76,298 |
|
|||||
|
Property, plant and equipment |
|
643 |
|
791 |
|
674 |
|
|||||
|
Other receivables |
5 |
23,580 |
|
42,702 |
|
49,101 |
|
|||||
|
Restricted use cash |
|
330 |
|
220 |
|
221 |
|
|||||
|
Total non-current assets |
|
193,591 |
|
119,790 |
|
126,294 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
Current assets |
|
|
|
|
|
|
|
|||||
|
Inventories |
|
1,628 |
|
479 |
|
762 |
|
|||||
|
Other receivables |
5 |
792 |
|
24,004 |
|
1,748 |
|
|||||
|
Cash and cash equivalents |
|
359 |
|
5,443 |
|
4,959 |
|
|||||
|
Total current assets |
|
2,779 |
|
29,926 |
|
7,469 |
|
|||||
|
Assets in disposal group classified as held for sale |
|
8,568 |
|
- |
|
8,357 |
|
|||||
|
Total current assets |
|
11,347 |
|
29,926 |
|
15,826 |
|
|||||
|
Total assets |
|
204,938 |
|
149,716 |
|
142,120 |
|
|||||
|
Equity and liabilities |
|
|
|
|
|
|
|
|||||
|
Equity |
|
|
|
|
|
|
|
|||||
|
Share capital |
|
7,832 |
|
7,832 |
|
7,832 |
|
|||||
|
Share premium |
|
104,798 |
|
104,798 |
|
104,798 |
|
|||||
|
Deferred shares |
|
64,702 |
|
64,702 |
|
64,702 |
|
|||||
|
Other reserves |
|
1,779 |
|
2,378 |
|
1,779 |
|
|||||
|
Capital contribution reserve |
|
(2,229) |
|
133 |
|
(2,229) |
|
|||||
|
Retained earnings |
|
(68,420) |
|
(100,349) |
|
(107,530) |
|
|||||
|
Cumulative translation reserve |
|
772 |
|
(2,258) |
|
(3,038) |
|
|||||
|
Shareholders' equity |
|
109,234 |
|
77,236 |
|
66,314 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
Non-controlling interests |
|
22,326 |
|
(7,100) |
|
(7,954) |
|
|||||
|
Total equity |
|
131,560 |
|
70,136 |
|
58,360 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
Current liabilities |
|
|
|
|
|
|
|
|||||
|
Trade and other payables |
|
5,978 |
|
10,201 |
|
6,911 |
|
|||||
|
Purchase consideration received in advance |
|
490 |
|
- |
|
14,213 |
|
|||||
|
Short-term borrowings |
6 |
2,294 |
|
23,140 |
|
14,009 |
|
|||||
|
Warrant liability |
|
153 |
|
596 |
|
332 |
|
|||||
|
Current income tax |
|
631 |
|
1,006 |
|
580 |
|
|||||
|
Current provisions |
|
2,935 |
|
4,282 |
|
2,552 |
|
|||||
|
Total current liabilities |
|
12,481 |
|
39,225 |
|
38,597 |
|
|||||
|
Liabilities directly associated with assets in disposal group classified as held for sale |
|
7,353 |
|
- |
|
6,906 |
|
|||||
|
Total current liabilities |
|
19,834 |
|
39,225 |
|
45,503 |
|
|||||
|
|
|
|
|
|
|
|
||||||
|
Non-current liabilities |
|
|
|
|
|
|
|
|||||
|
Borrowings |
6 |
23,515 |
|
30,931 |
|
27,818 |
|
|||||
|
Deferred tax liabilities |
|
21,671 |
|
6,161 |
|
8,725 |
|
|||||
|
Non-current provisions |
|
656 |
|
2,597 |
|
695 |
|
|||||
|
Other payables |
|
7,702 |
|
666 |
|
1,019 |
|
|||||
|
Total non-current liabilities |
|
53,544 |
|
40,355 |
|
38,257 |
|
|||||
|
Total liabilities |
|
73,378 |
|
79,580 |
|
83,760 |
|
|||||
|
Total equity and liabilities |
|
204,938 |
|
149,716 |
|
142,120 |
|
|||||
The notes on pages 15 to 19 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board of Directors on 23 September 2011 and were signed on its behalf by:
|
Clive Carver |
David Wilkes |
|
Non-executive Chairman |
Chief Executive Officer |
CONSOLIDATED CONDENSED CASH FLOW STATEMENT
|
|
|
Six months ended 30 June 2011 |
|
Six months ended 30 June 2010 |
|
Year ended 31 December 2010 |
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
|
|
US$000s |
|
US$000s |
|
US$000s |
|
|
|
|
|
|
|
|
|
|
|
Cash flow used in operating activities |
|
|
|
|
|
|
|
|
Cash received from customers |
|
792 |
|
143 |
|
123 |
|
|
Payments made to suppliers and employees |
|
(3,888) |
|
(9,897) |
|
(12,838) |
|
|
Net cash used in operating activities |
|
(3,096) |
|
(9,754) |
|
(12,715) |
|
|
|
|
|
|
|
|
|
|
|
Cash flow used in investing activities |
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
- |
|
(62) |
|
(383) |
|
|
Additions to unproven oil and gas assets |
|
(1,252) |
|
(5,368) |
|
(11,926) |
|
|
Disposal of plant, property and equipment |
|
- |
|
- |
|
44 |
|
|
Transfer to restricted use cash |
|
(109) |
|
- |
|
193 |
|
|
Acquisition of subsidiaries, net of cash acquired |
|
136 |
|
- |
|
(3,380) |
|
|
Disposal of subsidiary, net of cash disposed |
|
(2,193) |
|
11,181 |
|
19,682 |
|
|
Purchase consideration received in advance |
|
- |
|
- |
|
13,723 |
|
|
Acquisition of joint venture |
|
750 |
|
82 |
|
165 |
|
|
Option fees, deposits and prepayment of acquisition costs |
|
- |
|
(1,000) |
|
- |
|
|
Cash flow used in investing activities |
|
(2,668) |
|
4,833 |
|
18,118 |
|
|
|
|
|
|
|
|
|
|
|
Cash flow used in financing activities |
|
|
|
|
|
|
|
|
Net proceeds from issue of ordinary share capital, net of expenses relating to issue of shares |
|
- |
|
553 |
|
553 |
|
|
Repayment of borrowings |
|
(2,500) |
|
(11,433) |
|
(16,433) |
|
|
Issue of loans |
|
3,150 |
|
26,000 |
|
27,878 |
|
|
Loans to joint venture from partners |
|
513 |
|
423 |
|
639 |
|
|
Issue of loans to joint venture |
|
- |
|
(9,129) |
|
(17,030) |
|
|
Net cash used in financing activities |
|
1,163 |
|
6,414 |
|
(4,393) |
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
(4,601) |
|
1,493 |
|
1,010 |
|
|
Cash and cash equivalents at the start of the period |
|
4,960 |
|
3,950 |
|
3,950 |
|
|
Cash and cash equivalents at period end |
|
359 |
|
5,443 |
|
4,960 |
|
The notes on pages 15 to 19 form part of these financial statements.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
1. STATUTORY ACCOUNTS
The interim results for the period ended 30 June 2011 are unaudited. The financial information contained within this report does not constitute statutory accounts as defined by Section 435 of the Companies Act 2006.
2. BASIS OF PREPARATION
Roxi Petroleum plc is registered and domiciled in England and Wales.
These interim financial statements of the Company and its subsidiaries ("the Group") for the six months ended 30 June 2011 have been prepared on a basis consistent with the accounting policies set out in the Group's consolidated annual financial statements for the year ended 31 December 2010. They have not been audited, do not include all of the information required for full annual financial statements, and should be read in conjunction with the Group's consolidated annual financial statements for the year ended 31 December 2010. The 2010 annual report and accounts, which received an unqualified opinion from the auditors, did not draw attention to any matters by way of emphasis, and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006, have been filed with the Registrar of Companies. As permitted, the Group has chosen not to adopt IAS 34 'Interim Financial Reporting'.
The financial information is presented in US Dollars and has been prepared under the historical cost convention.
Going Concern
The Group currently needs to secure additional funding to finance the minimum working capital requirements for the next 12 months. The Group is reliant upon the continued support of the major shareholder and is currently finalising negotiations with the major shareholder to provide further finance and restructure the existing debt with certain debts being converted into equity. The Directors expect this to be concluded in the next month however there can be no certainty that these transactions will complete.
These financial statements have been prepared on the going concern basis as the Directors are confident that the Group will raise sufficient funds but clearly there can be no certainty of this given current market conditions.
These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not contain any adjustments that would result if the Group was unable to continue as a going concern.
3. EARNINGS/(LOSS) PER ORDINARY SHARE
Basic earnings/(loss) per share is calculated by dividing the earnings/(loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
In order to calculate diluted earnings/(loss) per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares according to IAS33. Dilutive potential ordinary shares include share options granted to employees and Directors where the exercise price (adjusted according to IAS33) is less than the average market price of the Company's ordinary shares during the period. During the period all potential warrants and shares options had an exercise price higher than the average market price of the Company's ordinary share therefore basic earnings per ordinary share equal to diluted earnings per ordinary share. In prior periods the potential ordinary shares are anti-dilutive and therefore diluted loss per share has not been calculated.
The calculation of earnings per ordinary share is based on:
|
|
Six months ended 30 June 2011 Unaudited |
Six months ended 30 June 2010 Unaudited |
Year ended 31 December 2010
Audited |
|
|
The basic weighted average number of ordinary shares in issue during the period |
420,818,386 |
418,865,945 |
419,847,345 |
|
|
The income/(loss) for the period attributable to equity shareholders (US$000s) |
37,601 |
(43,806) |
(51,710) |
|
4. UNPROVEN OIL AND GAS ASSETS
|
|
|
Six months ended 30 June 2011 US$000s Unaudited |
|
Six months ended 30 June 2010 US$000s Unaudited |
|
Year ended 31 December 2010 US$000s Audited |
|
|
|
|
|
|
|
|
|
At the start of the period |
|
76,298 |
|
187,608 |
|
187,608 |
|
Acquisition of subsidiary (note 8) |
|
115,114 |
|
- |
|
- |
|
Recognition of joint venture |
|
13,950 |
|
31,360 |
|
34,082 |
|
Additions |
|
4,913 |
|
5,368 |
|
8,937 |
|
Sales from test production |
|
(592) |
|
(143) |
|
(123) |
|
Disposal of subsidiary (note 7) |
|
(40,765) |
|
(133,959) |
|
(137,065) |
|
Foreign exchange differences |
|
120 |
|
473 |
|
808 |
|
Reclassification to assets held for sale |
|
- |
|
- |
|
(7,595) |
|
Impairment |
|
- |
|
(14,630) |
|
(10,354) |
|
At the end of the period |
|
169,038 |
|
76,077 |
|
76,298 |
The directors have carried out an impairment review of these assets on a field by field basis. In carrying out this review the directors have taken into account the potential net present values of expected future cash flows and values implied by farm-in agreements / sale and purchase agreements ("SPA"s) entered into during the period leading up to the period end and beyond.
The increase in asset value can be attributed to the 35% interest in BNG being returned to the Company during the period (see note 8). This was offset by reduction in asset value through the sale of 40% Galaz to LGI during the period (see note 7).
5. OTHER RECEIVABLES
|
|
Six months ended |
Six months ended |
Year ended |
|
|
30 June 2011 |
30 June 2010 |
31 December 2010 |
|
|
US$'000 Unaudited |
US$'000 Unaudited |
US$'000 Audited |
|
Amounts falling due after one year: |
|
|
|
|
Loan indemnity |
8,079 |
12,234 |
7,769 |
|
Amounts due from BNG LLP |
- |
27,360 |
33,314 |
|
Amounts due from Galaz LLP |
6,646 |
- |
- |
|
Other receivables |
8,855 |
3,108 |
8,018 |
|
|
23,580 |
42,702 |
49,101 |
|
Amounts falling due within one year: |
|
|
|
|
Advances paid |
541 |
1,783 |
132 |
|
Prepayments |
112 |
- |
41 |
|
Amount due from JV partner |
- |
22,043 |
1,300 |
|
Other receivables |
139 |
178 |
275 |
|
|
792 |
24,004 |
1,748 |
6. BORROWINGS
|
|
|
||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
|
|
Six months ended 30 June 2011 |
Six months ended 30 June 2010 |
Year ended 31 December 2010 |
|
|||||||||||||||||||||||||||||||||||
|
US$'000 Unaudited |
US$'000 Unaudited |
US$'000 Audited |
|
||||||||||||||||||||||||||||||||||||
|
Amount payable after one year |
|
|
|
|
|||||||||||||||||||||||||||||||||||
|
Interest free loan from Kuat Oraziman |
- |
3,360 |
- |
|
|||||||||||||||||||||||||||||||||||
|
Interest bearing loan from Kuat Oraziman(a) |
12,750 |
12,478 |
- |
|
|||||||||||||||||||||||||||||||||||
|
Loan from JV partner to BNG Ltd LLP (b) |
- |
4,716 |
5,514 |
|
|||||||||||||||||||||||||||||||||||
|
Loan from JV partner to BNG Energy BV(b) |
- |
8,050 |
1,926 |
|
|||||||||||||||||||||||||||||||||||
|
Loan from JV partner to Rav LLP |
- |
2,327 |
- |
|
|||||||||||||||||||||||||||||||||||
|
Loan from Vertom N.V. (c) |
3,182 |
- |
- |
|
|||||||||||||||||||||||||||||||||||
|
Loan from LGI(d) |
7,583 |
- |
20,378 |
|
|||||||||||||||||||||||||||||||||||
|
|
23,515 |
30,931 |
27,818 |
|
|||||||||||||||||||||||||||||||||||
(a) At 30 June 2011, the amount of US$ 12,750,000 represents two interest bearing loans from Mr Kuat Oraziman, one of which was interest free as at 31 December 2010. The loans bear interest from LIBOR +7% to 12% fixed rate per annum and are originally repayable in July 2012.
(b) In prior periods the amount represents Group's share of debt owed by BNG Ltd LLP and BNG BV to Canamens, as a result of its acquisition of 35% interest in BNG Ltd LLP. As at 30 June 2011 the loan amount was re-assigned back to the Group by Canamens when it returned its 35% interest in BNG LLP (see note 8).
(c) The group entered into a two year unsecured loan facility agreement with Vertom International NV on 26 April 2011, whereby Vertom International NV agreed to lend up to US$ 6 million to the Group with an associated interest of 12% per annum.
(d) This represents the Group's share of Galaz LLP's loan due to LGI. At the period ended 30 June 2011 the loan to LGI was proportionately consolidated. As at 31 December 2010 the amount represented 100% of the consolidated loan, when Galaz LLP was a subsidiary of the Group (see note 7).
7. GALAZ DISPOSAL
During 2011 the Group entered into a sale and purchase agreement ("SPA") to dispose of 40% of its interest in Galaz and Copmany LLP. Under the terms of the agreement, LGI agreed to purchase 40% of the equity for a total consideration of US$15.6 million from the Group and agreed to lend Galaz and Company LLP US $34.4 million to develop the field.
This transaction completed on 20 January 2011.
The gain on disposal of Galaz and Company LLP was determined as follows:
|
|
At date of disposal |
|
||
|
|
$'000 |
|
||
|
|
|
|||
|
Total consideration |
15,600 |
|||
|
|
|
|||
|
Non-current assets |
40,765 |
|||
|
Inventories |
200 |
|||
|
Trade and other receivables |
12 |
|||
|
Cash and cash equivalents |
2,193 |
|||
|
Trade and other payables |
(8,536) |
|||
|
Non-current liabilities |
(24,689) |
|||
|
Net assets at date of disposal |
9,945 |
|
||
|
Less: 40% of net assets on disposal |
3,978 |
|||
|
Gain on disposal before the effect of cumulative translation reserve |
11,622 |
|||
|
Less: Release of cumulative translation reserve1 |
1,924 |
|||
|
|
|
|||
|
Gain on disposal |
9,698 |
|
||
|
|
|
|
||
|
|
|
|
||
|
The net cash inflow on disposal comprises: |
|
|
||
|
Cash received2 |
13,723 |
|
||
|
Cash disposed of |
(2,193) |
|
||
|
Net cash inflow |
11,530 |
|
||
1- the US$1.9 million release of cumulative translation reserves arose from the disposal of the Company's 40% interest in Galaz and Company LLP to LGI. This represents the proportion of previously capitalised translation losses attributed to the proportion of interest sold, now written off during the period.
2- of the US$15,600,000 purchase consideration US$1,877,000 was withheld by LGI in order to pay withholding tax on the capital gain that arose in Galaz BV.
Until the date of disposal, Galaz and Company LLP was treated as a subsidiary and was fully consolidated into the financial statements of the Group. From the date of disposal, Galaz and Company LLP was treated as a jointly controlled entity and proportionally consolidated.
8. BNG ACQUISITION
On 10 May 2011, the Company received back its 35% interest in BNG Ltd LLP from Canamens which increased its share in BNG Ltd LLP from 23.41% to 58.41%. In addition, Canamens assigned back to BNG Energy BV its share of loans receivable from the operating entity of US$23.6 million, representing Canamens share of funding provided to BNG Ltd LLP in 2009 and 2010. In return for the assignment of the loan to BNG Energy BV, Roxi Petroleum Plc agreed to pay to Canamens a royalty of 1.5% from future gross revenues from the operating asset. As a result, BNG Ltd LLP was treated as a subsidiary and fully consolidated to the Group's financials as at 30 June 2011. Before the transfer back of interest, BNG Ltd LLPwas treated as a jointly controlled entity and proportionally consolidated.
The determined fair values of the assets and liabilities as at the date the interest was transferred back to the Group was as follows:
|
|
|
|||||||||||
|
|
Book values |
Loans transferred |
Fair value adjustments |
Fair values |
|
|||||||
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|||||||
|
Unproven oil and gas assets |
53,552 |
- |
101,985 |
155,537 |
|
|||||||
|
Property, plant and equipment |
279 |
- |
- |
279 |
|
|||||||
|
Other receivables |
5,581 |
23,600 |
- |
29,181 |
|
|||||||
|
Cash and cash equivalents |
136 |
- |
- |
136 |
|
|||||||
|
Borrowings and other payables |
(74,106) |
- |
- |
(74,106) |
|
|||||||
|
Deferred taxation |
- |
- |
(20,397) |
(20,397) |
|
|||||||
|
Net assets |
(14,558) |
23,600 |
81,588 |
90,630 |
|
|||||||
|
Minority interests |
|
|
|
(27,385) |
|
|||||||
|
Net assets of JV previously held |
|
|
|
(16,600) |
|
|||||||
|
Net assets transferred back to the Group |
|
|
|
46,645 |
|
|||||||
|
|
|
|
|
|
||||||||
|
Cancellation of funding of obligation not paid by Canamens |
|
|
7,763 |
|
||||||||
|
1.5% of future royalty payment |
|
|
5,240 |
|
||||||||
|
Total |
|
|
13,003 |
|
||||||||
|
Net gain recognized in the Income Statement |
|
|
33,642 |
|
||||||||
|
|
|
|
|
|
||||||||
|
Related cash flows: |
|
|
|
|||||||||
|
- Loans repaid |
|
(2,500) |
|
|||||||||
|
- Cash acquired |
|
136 |
|
|||||||||
|
|
|
(2,364) |
|
|||||||||
As a result of BNG Ltd LLP accounting treatment changed from being consolidated using the proportional consolidation method to a full consolidation basis, the release of US$2 million of cumulative translation reserves arose. This represents the proportion of previously capitalised translation losses attributed to the previously held joint interest, now written off during the period.
Company Information
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Directors
Mr C Carver (Non-Executive Chairman) Mr D Wilkes (Chief Executive Officer) Mr Hyunsik Jang (Chief Operating Officer) Mr K Oraziman (Executive Director) Mr E Limerick (Non-Executive Director)
Company Secretary
London Registrars Plc.
Registered Office and Business address
4th Floor, Haines House, 21 John Street, London WC1N 2BP
Company Number
5966431
Nominated Adviser
Strand Hanson Ltd 26 Mount Row, London, WIK 3SQ
Broker
Renaissance Capital One Angel Court Copthall Avenue London, EC2R 7HJ
Solicitors
McCarthy Tetrault 5 Old Bailey, 2nd floor London, EC4M 7BA
Chadbourne & Parke LLP 43 Dostyk Avenue Almaty 050010, Kazakhstan
Puxon Murray LLP One Royal Exchange Avenue London, EC3V 3LT
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Auditors
BDO LLP Chartered Accountants 55 Baker Street London W1U 7EU
Share Register
Capita Registrars Northern House Woodsome Park Fenay Bridge Huddersfield, HD8 OLA
Public Relations
Buchanan Communications 107 Cheapside, London, EC2V 6DN
Principal Banker
Citibank Kazakhstan Park Palace, Building A, 2nd Floor, 41 Kazibek Bi Str., Almaty, 050010 Kazakhstan
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This information is provided by RNS
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