Annual Financial Results

RNS Number : 9937B

Global Petroleum Ltd

26 September 2018

 

26 September 2018

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ('MAR). Upon the publication of this announcement via a Regulatory Information Service ('RIS'), this inside information is now considered to be in the public domain.

Global Petroleum Limited

("Global" or "the Company")

Final Results for the Year Ended 30 June 2018, Appendix 4G

The Directors of Global Petroleum Limited present their report together with the consolidated financial statements of the Group comprising of Global Petroleum Limited ("the Company" or "Global" or "Parent") and the entities it controlled at the end of, or during, the year ended 30 June 2018 ("Consolidated Entity" or "Group").

The Company confirms that a full copy of its latest Annual Report and Accounts, as well as the relevant Appendix 4G will be available shortly on the Company's website (www.globalpetroleum.com.au).

Full copies of the Directors' Report and 2017-2018 Financial Statements are available at: 

https://www.asx.com.au/asxpdf/20180926/pdf/43ynlshjrmv3vd.pdf

Chairman and CEO's Review

We are pleased to present to you the Global Petroleum 2018 Annual Report. Since we wrote to you a year ago in the last Annual Report, Global has continued to make good progress with its offshore Namibian acreage, and the hearings of the appeals against the first two Environmental Decrees in respect of our Italian Adriatic Sea licence applications are expected to take place in Q4 2018.

In terms of the wider economic picture during the last financial year, commodity prices have significantly improved with the Brent oil price averaging $63 per barrel during the reporting year to 30 June 2018, compared to $51 in the preceding year to end June 2017. Consequently, there has been increased operational and commercial activity within the upstream industry generally, and two wells are scheduled to spud during the second half of 2018 offshore Namibia one of which is marginally outside the Walvis Basin, where our acreage is located. Attracting capital for exploration activities remains challenging, however financing is available for the right opportunities, as particularly demonstrated within the London capital markets.

During the reporting period the Company completed a 2D seismic acquisition programme over its two operated blocks held under Petroleum Exploration Licence 0029 ("PEL 0029") in Namibia. Processing and interpretation of the data was completed in October 2017 with the new information indicating significantly improved prospectivity across the blocks.

Accordingly, the Company commissioned a Competent Persons Report ("CPR") in respect of its acreage from consultants AGR TRACS, which was completed in the reporting period. Prospective resources have been calculated on three prospects: the Company's primary structure, Gemsbok, as well as Dik-Dik and Lion. The results of the CPR are set out in more detail in the Company's announcement dated 15 January 2018. 

In late 2017, the Company negotiated and agreed with the Namibian Ministry of Mines and Energy ("MME") an extension of the First Renewal Exploration Period (Phase 2) of PEL 0029 for a period of 12 months until December 2018. In addition, the MME has agreed entry into the Second Renewal Period (Phase 3) effective from December 2018 for a period of two years. 

Following the release of the CPR, the Company appointed Stellar Energy Advisors, a specialised independent advisor providing acquisition and divestment services to upstream companies in the oil and gas business to provide support to the farm-out process. The farm-out process of the Company's Namibian acreage is designed with a view to seeking a partner to fund future operations on the blocks, commencing with the acquisition of 3D seismic data in accordance with the extension work programme agreed with the MME.

In the period since 30 June 2018, the Company was pleased to announce that it signed a Petroleum Agreement to acquire Block 2011A offshore Namibia via its wholly owned subsidiary Global Petroleum Namibia Limited.

Block 2011A is located in the northern Walvis Basin, immediately to the east of the Company's current licence, PEL 0029. The combination of the two licences increases the Company's presence in the region to 11,607 square kilometres offshore Namibia, making Global one of the largest net acreage holders within the region.

The Company believes that Block 2011A contains the same plays as those outlined in the CPR for PEL 0029. Regarding the Repsol operated Welwitschia-1 well drilled in the western part of Block 2011A in 2014, Global believes that there is significant prospectivity, similar to that in PEL 0029 - in the deeper Albian Carbonates, which Welwitschia-1A did not reach. (See Note 7.3 Subsequent Event for further detail).

In Italy, as previously reported, various local authorities and interest groups appealed against the Environmental Decrees in relation to applications d 82 F.R-GP and d 83 F.R-GP, which were published in October 2016. Publication of Environmental Decrees is the final administrative stage before grant of the Permits, and the Company has been notified that the appeals will be heard by the Latium Administrative Tribunal (Rome) in October 2018.

The Company announced in October 2017 that the remaining two Environmental Decrees in relation to the Permit Applications, designated d 80 F.R-GP and 81 F.R-GP, had been published by the Italian authorities.

As with the previous two Environmental Decrees, a number of appeals by various interested parties against the later Environmental Decrees have been made. The Company has been notified that these further appeals will be heard by the Latium Tribunal in November 2018.

The Company remains confident of the prospectivity of the application areas despite the continued delays with the granting of the licences and is encouraged by the calibre of companies with similar applications and or licences within the Southern Adriatic region.

Financial

During the year ended 30 June 2018, the Group recorded a loss after tax of US$1,965,570 (2017: loss US$1,856,463). Cash balances at 30 June 2018 amounted to US$4,928,998 (2017: US$7,807,605).  The Group has no debt.

Strategy and Outlook

The Company continues to monitor further exploration opportunities which may complement the Company's existing exploration assets offshore Namibia and remains encouraged by the recent increase in exploration activity both within the region and beyond.  In Namibia, wells are scheduled to be drilled by both Tullow Oil and Chariot Oil & Gas in 2H 2018 - the Tullow well spudded and completed in September.

We look forward to meeting Shareholders at the Company's Annual General Meeting later in 2018.

John van der Welle                                                                   Peter G. Hill

Non-Executive Chairman                                                         Chief Executive Officer

OPERATING AND FINANCIAL REVIEW

Namibian Project

The Namibian Project consists of (a) an 85% participating interest in PEL 0029 ("Licence") covering Blocks 1910B and 2010A in the Republic of Namibia and (b) Block 2011A in the Walvis Basin granted during the period subsequent to 30 June 2018.

PEL 0029

PEL 0029, issued on 3 December 2010, originally covered 11,730 square kilometres and is located offshore Namibia in water depths ranging from 1,300 metres to 3,000 metres.

The Company's wholly owned subsidiary, Global Petroleum Namibia Limited, is the operator of the Licence, with an 85% interest in the two blocks. Partners NAMCOR and Bronze Investments Pty Ltd (Bronze) hold 10% and 5% respectively, both as carried interests.

In December 2015, the Company entered into the First Renewal Exploration Period (Phase 2) of the Licence with a reduced Minimum Work Programme, making a mandatory relinquishment of 50% of the Licence Area. Phase 2 originally had a duration of 24 months.

Following reprocessing and evaluation of historic 2D data - as previously reported, the Company entered into a contract with Seabird Exploration of Norway in order to acquire 834 km of full fold 2D seismic data over its Blocks, which was shot in June/July 2017. Processing and interpretation of the new 2D seismic data was completed early in Q4 2017.

The new information significantly improved the prospectivity across PEL 0029 in general and the Gemsbok prospect in particular. Better imaging from the new 2D data revealed that the known source rock intervals are likely to be within the oil generative window and this, combined with data showing repeating oil seeps along the faulted flanks of Gemsbok, greatly improves the chance of a major oil discovery.

Consequently, the Company commissioned a CPR in respect of its acreage from consultants AGR TRACS, which was completed within the reporting period. Prospective resources have been calculated on three prospects: the Company's primary structure, Gemsbok, as well as Dik Dik and Lion.  The results of the CPR are set out in more detail in the Company's announcement on 15 January 2018.

In late 2017, the Company also negotiated and agreed with the MME an extension of the First Renewal Exploration Period (Phase 2) of the Company's Licence of 12 months to 3 December 2018. In addition, the MME has agreed entry into the Second Renewal Period (Phase 3) effective from 3 December 2018 for a period of two years.

The Minimum Work Programme for the one-year extension of Phase 2 is the acquisition of 600 square kilometres of 3D seismic data, contingent upon Global concluding a farm-out agreement with a third party to fund the acquisition of the 3D data. If the 3D acquisition is not completed during the Phase 2 extension period, it may be carried over into Phase 3. During Phase 3, the commitment is to drill one well (depth and location to be agreed) unless the MME and Global agree that circumstances dictate otherwise.

Following the release of the CPR, the Company appointed Stellar Energy Advisors, a specialised, independent advisor providing acquisition and divestment services to upstream companies in the oil and gas business. Stellar launched a structured farm-out process of the Company's Namibian acreage with a view to seeking a partner to fund future operations on the block, commencing with 3D seismic data in accordance with the extension work programme agreed with the MME. It is believed that potential farminees have decided to await the results of the drilling being carried out in Q3 and Q4 2018 by operators nearby.

Block 2011A

In September 2018, the Company was pleased to announce that it signed a Petroleum Agreement to acquire Block 2011A offshore Namibia via its wholly owned subsidiary Global Petroleum Namibia Limited.

Block 2011A is located in the northern Walvis Basin, immediately to the east of the Company's current licence, PEL 0029. The combination of the two licences increases the Company's presence in the region to 11,607 square kilometres offshore Namibia, making Global one of the largest net acreage holders within the region.

The Company believes that Block 2011A contains the same plays as those outlined in the CPR for PEL 0029. Regarding the Repsol operated Welwitschia-1 well drilled in the western part of Block 2011A in 2014, Global

believes that there is significant prospectivity, similar to that in PEL 0029 - in the deeper Albian Carbonates, which Welwitschia-1A did not reach. (See Note 7.3 Subsequent Event for further detail).

The Company also believes that there is additional prospectivity in shallower Upper Cretaceous/Tertiary reservoirs on the eastern flank of the Welwitschia structure. These reservoirs have been proven by wells to the north-east and south-east of Block 2011A, and the Cretaceous is a target in both of the wells being drilled in Q3/Q4 2018 by other industry operators nearby.

Permit Applications in the Southern Adriatic, Offshore Italy

In August 2013, the Company submitted an application and proposed work programme and budget to the Italian Ministry of Economic Development for four exploration areas offshore Italy (the "Permit Applications").

As previously reported, various local authorities and interest groups appealed against the Environmental Decrees in relation to applications d 82 F.R-GP and d 83 F.R-GP, which were published in October 2016. Publication of Environmental Decrees is the final administrative stage before grant of the Permits, and the Company has been notified that the appeals will be heard by the Latium Administrative Tribunal (Rome) in October 2018.

The Company announced in October 2017 that the remaining two Environmental Decrees in relation to the Permit Applications, designated d 80 F.R-GP and 81 F.R-GP, had been published by the Italian authorities.

As with the previous two Environmental Decrees, a number of appeals by various interested parties against the later Environmental Decrees have been made. The Company has been notified that these further appeals will be heard by the Latium Tribunal in November 2018.

Global understands that recent appeals against other Environmental Decrees in the Southern Adriatic have been rejected by the same tribunal.

Permit Applications in the Southern Adriatic, Offshore Italy (continued)

The Southern Adriatic and adjacent areas continue to be the focus of industry activity. Most notably, in Montenegro, offshore concessions were awarded in 2016 /2017 to Eni/Novatek (the latter just 35 km from the nearest of the Applications). The four Application blocks are contiguous with the Italian median lines abutting Croatia, Montenegro and Albania respectively.

Business Development

Global remains in a strong financial position from which to fund work activity on its Namibian acreage, its Italian application interests (subject to award), and to acquire complementary assets with particular focus on Namibia where exploration activity has increased.  The Company is encouraged by planned wells which are scheduled to be drilled by both Tullow Oil and Chariot Oil & Gas in Q3 and Q4 2018.

Presentation Currency

The financial information in this annual report is presented in United States dollars (US$).

Results of operations

	2018 US$	2017 US$
Loss from continuing operations before tax	(1,965,570)	(1,856,463)
Income tax benefit (expense)	-	-
Net profit (loss)	(1,965,570)	(1,856,463)

Global Petroleum Limited
Peter Hill, Managing Director & CEO	[phone]
Cantor Fitzgerald Europe (Nominated Adviser & Joint Broker)
Nick Tulloch / David Porter	[phone]
GMP FirstEnergy Capital LLP (Joint Broker)
Hugh Sanderson	[phone]
Tavistock (Financial PR & IR)
Simon Hudson / Barney Hayward	[phone]

 

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