Interim Results
Gulfsands Petroleum PLC
27 September 2007
Interim Results for the Six Months Ended 30 June 2007
London, 27th September, 2007: Gulfsands Petroleum plc ('Gulfsands', the 'Group'
or the 'Company' - AIM: GPX), the oil and gas production, exploration and
development company with activities in the U.S.A., Syria and Iraq announces its
interim results for the six months ended 30 June 2007. These figures are
presented under IFRS for the first time.
Summary
• Strong overall performance for first half of 2007
• Revenue, net cash flow from operations, assets, equity up from half year 2006
• Gross profit, operating profit, and profit before tax all up from half year
2006 on a UK GAAP basis (prior to IFRS conversion)
• Oil and gas discovery at Khurbet East in Block 26 Syria, followed by
successful appraisal well
HIGHLIGHTS
Due to the conversion from UK GAAP to IFRS the re-stated first half of 2006
results show a significant gain of $4.0 million resulting from oil and gas
hedges in place at that time. Without this adjustment and conversion to IFRS,
on a UK GAAP basis the first half of 2007 would have been substantially stronger
than the first half of 2006 in terms of revenue, gross profit, operating profit
and profit before tax.
IFRS adjusted UK GAAP equivalent
H1 2007 H1 2006 H1 2007 H1 2006
$ Million $ Million $ Million $ Million
Revenue 19.3 16.2 19.2 12.1
Gross profit 8.2 8.6 7.7 3.8
Operating profit 4.0 6.1 3.4 0.9
Profit before tax 2.3 6.3 1.7 1.5
Profit for the period 1.1 4.6 0.7 0.9
(profit after tax)
• Revenue for the Group increased by 19% to $19.3 million (H1 2006: $16.2
million). UK GAAP equivalent was $19.2 million (H1 2006: $12.1 million);
• Gross profit for the Group was $8.2 million (H1 2006: $8.6 million). UK
GAAP equivalent was $7.7 million (H1 2006: $3.8 million);
• Operating profit for the Group was $4.0 million (H1 2006: $6.1 million).
UK GAAP equivalent was $3.4 million (H1 2006: $0.9 million);
• Profit before tax for the Group was $2.3 million (H1 2006: $6.3 million).
UK GAAP equivalent was $1.7 million (H1 2006: $1.5 million);
• Profit for the period (profit after tax) for the Group was $1.1 million
(H1 2006: $4.6 million). UK GAAP equivalent was $0.7 million (H1 2006: $0.9
million);
• Net cash inflow from operations for the Group increased by 44% to $5.2
million (H1 2006: $3.6 million);
• Total assets of the Group increased by 13% to $101 million (H1 2006: $88.9
million);
• Equity of the Group increased by 3% to $74.7 million (H1 2006: $72.7
million);
• Average daily production for the Group increased by 24% to 2,566 working
interest barrels of oil equivalent per day ('boepd') (H1 2006: 2,076 boepd);
and
• The Company announced a significant oil and gas discovery in Syria known
as Khurbet East with potential recoverable reserves in excess of 100 million
barrels of oil equivalent. This discovery was followed up with a successful
appraisal well.
Gulfsands' CEO, John Dorrier, said:
'The figures announced today represent a solid result for the Company during the
first half of 2007 from our US oil and gas production operation. Looking
forward, the Company's oil and gas discovery at Khurbet East could begin to make
a significant financial impact as early as 2008 if we achieve our plans for
early production. We expect additional exploration successes in Block 26, Syria
and have high hopes of acquiring additional projects in Syria and Iraq to
further enhance the Company's financial performance during the years following
2008.'
For further information please refer to the Company's website www.gulfsands.net
or contact:
Gulfsands Petroleum (Houston) + 00-1-713-626-9564
John Dorrier, Chief Executive Officer
David DeCort, Chief Financial Officer
Gulfsands Petroleum (London) 020-7182-4016
Kenneth Judge, Director of Corporate Development 07733-001-002
College Hill (London) 020-7457-2020
Nick Elwes
Paddy Blewer
Landsbanki Securities (UK) Limited (London) 020-7426-9000
Andrew Matharu / Tom Hulme (Corporate Finance)
These interim results can also be viewed on Gulfsands' website:
www.gulfsands.net
CHAIRMAN'S STATEMENT
In the first six months of 2007 the Group recorded solid financial results,
drilled a significant oil and gas discovery in Khurbet East, Syria and commenced
a full field appraisal and early development and production plan for the Khurbet
East Field. Subsequent to 30 June the Company received proceeds of £11.6
million from a strategic equity private placement in the Middle East.
Financial
Conversion of our financial reporting from UK GAAP to IFRS has resulted in a
significant change to the Company's financial performance as compared to the
first half of 2006.
This relates primarily to oil and gas hedges that were in place in 2006 and as a
result of the conversion of the financials from UK GAAP to IFRS a one-time $4.0
million financial instrument gain is reflected in the re-stated results for the
first half of 2006. Additionally, an $821,000 reduction in depletion occurred
as a result of the IFRS conversion. Due to these one-time gains (which were not
cash items) a more valid comparison would be under UK GAAP.
On a UK GAAP basis, revenue of $19,152,000 and gross profit of $7,695,000 for
the first six months of 2007 compares to revenue of $12,143,000 and gross profit
of $3,781,000 for the same period of 2006. This improvement in gross profit was
achieved despite higher than expected operating costs associated with final
maintenance and repairs due to the 2005 hurricanes and the unwinding of
discounts on decommissioning also related to the hurricanes of 2005.
Overall profit before tax to the Group on a UK GAAP basis for the first six
months of 2007 was $1,727,000 and profit after tax was $699,000 as compared to
profit before tax of $1,462,000 and profit after tax of $880,000 for the same
period of 2006.
Syria
In the first half of 2007 Gulfsands made a significant oil and gas discovery on
Block 26, which has been named Khurbet East, with potential recoverable reserves
in excess of 100 million barrels of oil equivalent. Since the discovery the
Company has drilled a successful appraisal well and has commenced plans for an
early production programme and full field development of the Khurbet East
discovery with initial production targeted for the second half of 2008. The
Company has been granted rights of access to local pipeline and other
infrastructure. This includes an export oil pipeline which is located within
the presently mapped boundaries of the Khurbet East Field. A pipeline tie-in
facility may be able to be located just 2 kilometres away from the first two
wells drilled in the field. Subsequent to 30 June, the Company initiated the
first extension period of exploration on Block 26 which commenced on 23 August
2007 for a further period of three years.
Capital expenditures net to the Group in Block 26 were $7.0 million during the
first six months of 2007.
USA
Production for the first six months of 2007 in the Gulf of Mexico and onshore
Gulf Coast totaled 464,374 working interest barrels of oil equivalent (2,566
barrels of oil equivalent per day) and net revenue interest barrels (working
interest barrels less royalties) totaled 351,829. This compares to 373,700
working interest barrels (2,076 barrels of oil equivalent per day) and 266,498
net revenue interest barrels for the first six months of 2006.
Both working interest and net revenue interest volumes for 2007 do not include
plant product volumes of 55,004 and 41,643 barrels of oil equivalent
respectively. Revenue for the half year of 2007 totaled $19,253,000 which
includes gas sales of $10,983,000, oil sales of $6,637,000, plant product sales
(ethane, propane, isobutane, normal butane and gasoline) of $1,100,000 and
operating fees of $533,000. Approximately 69% of the daily production was in
natural gas at a price of approximately $7.55 per million cubic feet, and 31% in
oil production priced at approximately $60.71 per barrel.
Total capital expenditures, excluding plugging abandonment, in the U.S. during
the first six months of 2007 were $1.5 million.
Iraq
Discussions with the Iraqi Government have continued on the Maysan Gas Project
and this has become a high priority for the Group. Additionally, the Company is
in discussions with various parties in the region on numerous other projects in
both southern and northern Iraq.
The Maysan Gas Project is a midstream project that expects to gather gas
currently being flared at oil fields in Southern Iraq. The project brings the
gas to a central processing plant to clean it of impurities, removing the light
hydrocarbon liquid fraction (natural gas liquids), and then transmits the
natural gas for further distribution and use in Iraq. The extracted hydrocarbon
liquids are then transmitted to a southern port for storage, offloading and
export.
Outlook
The outlook for the Group remains financially strong as a result of continued
high energy prices coupled with the possible commencement of first production in
the second half of 2008 from the Khurbet East Field in Syria. Following this
significant discovery and the recent strategic private equity placement with
Middle Eastern investors of £11.6 million, the Company has become more active in
the Middle East and is moving forward with good prospects of securing one or
more projects in Syria and Iraq through the strong relationships it has
developed within both countries.
Andrew West
Chairman of the Board
26 September 2007
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
6 months ended Year ended
30 June 2007 30 June 2006 31 December 2006
Notes (unaudited) (unaudited)
$'000 $'000 $'000
Revenue 3 19,253 16,167 33,934
Cost of sales
- Depreciation (2,199) (1,658) (4,716)
- Impairment - - (1,334)
- Other cost of sales (8,811) (5,883) (14,465)
Gross profit 8,243 8,626 13,419
Administrative expenses before exceptional items (3,394) (2,266) (4,455)
Share based payments (328) (294) (851)
Hurricane repairs (517) - (2,573)
Total administrative expenses (4,239) (2,560) (7,879)
Operating profit 4,004 6,066 5,540
Unwinding of discount on decommissioning (2,153) (341) (2,223)
Interest income 432 582 1,193
Profit before taxation 2,283 6,307 4,510
Taxation (1,219) (1,695) (2,433)
PROFIT FOR THE PERIOD 3 1,064 4,612 2,077
Attributable to:
Equity holders of the Company 1,064 4,606 2,077
Minority interests - 6 -
PROFIT FOR THE PERIOD 1,064 4,612 2,077
Earnings per share (cents):
Basic 4 1.03 4.94 2.17
Diluted 1.02 4.90 2.15
The results shown above relate entirely to continuing operations.
CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2007
30 June 2007 30 June 2006 31 December 2006
Notes (unaudited) (unaudited)
$'000 $'000 $'000
ASSETS
Non current assets
Property, plant & equipment 5 45,583 40,181 46,247
Intangible assets 6 22,108 7,637 15,097
Deferred tax asset - 530 176
67,691 48,348 61,520
Current assets
Trade and other receivables 7 11,861 10,053 9,629
Cash and cash equivalents 21,101 30,457 26,724
32,962 40,510 36,353
Total assets 100,653 88,858 97,873
LIABILITIES
Current liabilities
Trade and other payables 8 (16,160) (8,679) (16,036)
Fair value derivatives - (261) (101)
(16,160) (8,940) (16,137)
Non-current liabilities
Deferred tax liability (838) - -
Provision for liabilities and charges 9 (8,947) (7,218) (8,420)
(9,785) (7,218) (8,420)
Total liabilities (25,945) (16,158) (24,557)
NET ASSETS 74,708 72,700 73,316
EQUITY
Capital and reserves attributable to equity
holders
Share capital 10 11,047 10,019 11,047
Share premium account 56,506 54,680 56,506
Other reserves 12,888 12,003 12,560
Profit and loss account (5,733) (4,268) (6,797)
74,708 72,434 73,316
Minority Interests - 266 -
TOTAL EQUITY and RESERVES 74,708 72,700 73,316
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
6 months ended Year ended
30 June 2007 30 June 2006 31 December 2006
(unaudited) (unaudited)
Notes $'000 $'000 $'000
Net cash inflow from operations 11 5,191 3,584 15,999
Interest received 432 582 1,193
Taxation paid (860) - (1,111)
Net cash (outflow)/inflow from operating (428) 582 82
activities
Investing activities (10,386) (11,346) (29,849)
Financing activities
Cash proceeds from issue of shares - 1,076 3,931
Net cash inflow from financing activities - 1,076 3,931
Net decrease in cash and cash equivalents (5,623) (6,104) (9,837)
Cash and cash equivalents at beginning of period 26,724 36,561 36,561
Cash and cash equivalents at end of period 21,101 30,457 26,724
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2007
Share Profit
Share premium Other and loss
capital account reserves account Total
$'000 $'000 $'000 $'000 $'000
Six months ended 30 June 2007
At 1 January 2007 11,047 56,506 12,560 (6,797) 73,316
Share based payment charge - - 328 - 328
Retained profit for the period - - - 1,064 1,064
At 30 June 2007 11,047 56,506 12,888 (5,733) 74,708
Six months ended 30 June 2006
At 1 January 2006 9,971 53,651 11,709 (8,873) 66,458
Share based payment charge - - 294 - 294
Share issues less costs 48 1,029 - 1,077
-
Retained profit for the period - - - 4,606 4,606
At 30 June 2006 10,019 54,680 12,003 (4,268) 72,434
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2007
1. Basis of preparation
On 1 January 2007, in accordance with the AIM Market of the London Stock
Exchange ('AIM') and endorsed for use by the European Union, the Group adopted
International Financial Reporting Standards ('IFRS'). This interim report for
the six months ended 30 June 2007 and the comparative restated financial
information for the year ended 31 December 2006 and the interim results for 2006
have been prepared in accordance with all applicable International Accounting
Standards ('IAS'), International Financial Reporting Standards ('IFRS') and
International Financial Reporting Interpretations Committee ('IFRIC')
interpretations issued by the International Accounting Standards Board ('IASB')
and with those parts of the Companies Act 1985 applicable to companies reporting
under IFRS and expected to be in effect for the year ending 31 December 2007.
The financial information is prepared under the historical cost basis, except
that oil and gas price derivative contracts are recognised at their fair values.
The next financial statements of the Group will be prepared in accordance with
those International Reporting Financial Standards adopted by the European Union,
and it is the expectation of the directors that the accounting policies applied
in this interim report will be applied in those annual financial statements.
The interim financial information for the six months ended 30 June 2006 and 30
June 2007 is unaudited and does not constitute statutory accounts as defined in
section 240 of the Companies Act 1985. The financial statements for the year
ended 31 December 2006 have been delivered to the Registrar of Companies and the
auditors' report on those financial statements was unqualified and did not
contain a statement made under Section 237(2) or Section 237(3) of the Companies
Act 1985.
Details of the Group's conversion to IFRS and the impact on 2006 and prior UK
GAAP results are presented in the IFRS First Time Adoption Statement (the 'IFRS
Statement') which is available on the Group's website (www.gulfsands.net). The
comparative figures for the year ended 31 December 2006 and period ended 30 June
2006 which are presented in these interim results are based on the IFRS
Statement. The IFRS Statement includes a summary of the Group's significant
accounting policies under IFRS and those policies have been applied to the
interim results for the six months ended 30 June 2007.
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2007
1. Basis of preparation (continued)
The table below summarises the IFRS changes for the six months ended 30 June
2006 and the year ended 31 December 2006:
6 months ended Year ended
30 June 2006 31 December 2006
$'000 $'000
Profit before tax under UK GAAP 1,462 2,101
IAS 39: Financial Under UK GAAP, oil and gas price derivative 4,024 4,184
Instruments contracts did not impact the profit and loss
account until the period in which the
settlement occurred. Under IFRS, such
contracts are shown in the balance sheet at
fair value and period to period movements
reflected in the income statement
IAS 16: Property, Under UK GAAP Development & Production assets 821 (441)
Plant and Equipment within Property, Plant and Equipment were
depreciated using a unit of production method
with net book values grouped into geographic
cost pools. Under IFRS, these assets are still
depreciated using a unit of production method
but the cost pools are now broken down into
cash generating units.
IFRS 6: Exploration Under UK GAAP, impairment testing was done on a - (1,334)
and Evaluation of geographic cost pool basis, under IFRS 6, the
Mineral Resources & cost pool size has been narrowed to individual
Accounting policy cash generating units.
change
Profit before tax under IFRS 6,307 4,510
The interim report was approved by the Board of Directors on 25 September 2007.
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2007
2. Significant accounting policies
The significant accounting policies shown below are extracts from the full
policies as detailed in the IFRS Statement released on 26 September 2007.
2.1 Oil and gas assets
There are two categories of oil and gas assets, Exploration and Evaluation
assets which are included in Intangible assets and Development and Production
assets that are included in Property, Plant and Equipment.
Exploration and evaluation assets
Recognition and measurement:
Exploration and evaluation assets ('E&E') consists of costs of license
acquisition, exploration, evaluation, appraisal and development activities for
and evaluating oil and gas properties. Costs incurred prior to having obtained
the legal rights to explore an area ('pre-license costs') are expensed directly
to the income statement as they are incurred and are not included in E&E assets.
E&E costs are accumulated and capitalized into cost pools and added to
Intangible Assets pending determination of commercial reserves.
The Group currently has only one intangible E&E cost pool, being Block 26 in
Syria. E&E assets relating to each exploration license/prospect are not
depreciated, but are carried forward until the existence or otherwise of
commercial reserves has been determined. If commercial reserves have been
discovered, the related E&E assets are assessed for impairment on a cash
generating unit basis as set out below and any impairment loss is recognised in
the income statement. The carrying value of the E&E assets, after any
impairment loss, is then reclassified as development and production assets in
Property, Plant and Equipment.
Impairment:
E&E assets are assessed for impairment when facts and circumstances suggest that
the carrying amount may exceed its recoverable amount. Such indicators include
the point at which a determination is made as to whether commercial reserves
exist.
Where the E&E assets concerned fall within the scope of a cash generating unit,
the E&E assets are tested for impairment together with all development and
production assets associated within the cash generating unit. The aggregate
carrying value is compared against the expected recoverable amount of the pool,
generally by reference to the present value of the future net cash flows
expected to be derived from production of commercial reserves. Where the E& E
assets to be tested fall outside the scope of a cash generating unit, there will
generally be no commercial reserves and the E&E assets concerned will generally
be written off in full.
Any impairment loss is recognized in the income statement as additional
depreciation, and separately disclosed. On the balance sheet it is recorded
against the carrying value of the related E&E asset.
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2007
2. Significant accounting policies (continued)
Development & production
Tangible oil and gas assets are grouped into a cash generating unit or groups of
units for purposes of impairment testing and for depreciating the Development
and Production assets. A cash generating unit is a well, field, area, block,
region, or other defined area that is considered interrelated in producing
revenue. Interrelationships can be measured by oil and gas production
agreements, reserve reports, or other documentation showing such relationships.
The only limitation in the size of a cash generating unit is that it cannot be
larger than a reporting segment of the Group.
Recognition and measurement:
Development and production assets are accumulated on a cash generating unit
basis and represent the cost of developing the commercial reserves discovered
and bringing them into production, together with the E&E expenditures incurred
in finding commercial reserves transferred from intangible E&E assets.
The cost of development and production assets also includes the cost of
acquisitions and purchases of such assets, directly attributable overheads, and
the cost of recognizing provisions for future restoration and decommissioning.
Depreciation of producing assets:
Net book values carried within each cash generating pool are depreciated by a
unit of production method using the ratio of oil and gas production in the year
compared to the estimated quantity of commercial reserves at the beginning of
the year. Changes in estimates of commercial reserves or future development
costs are dealt with prospectively.
Impairment:
An impairment test is performed whenever events and circumstances arising during
the development or production phase indicate that the carrying value of a
development or production asset may exceed its recoverable amount. The
aggregate carrying value is compared against the recoverable amount of the cash
generating unit, generally by reference to the present value of the future net
cash flows expected to be derived from production of commercial reserves.
Acquisitions, asset purchases and disposals
Acquisitions of oil and gas properties are accounted for under the purchase
method where the transaction meets the definition of a business combination.
Transactions involving the purchases of an individual field interest or a group
of field interests, that do not qualify as a business combination, are treated
as asset purchases and the consideration is allocated to the assets and
liabilities purchased on an appropriate basis.
Proceeds on disposal are applied first to the carrying amount of the specific
development/ production asset disposed of and any surplus is applied against the
carrying amount of any unsuccessful E&E assets included in a cost pool. Any
remaining excess is recorded as a gain on disposal in the income statement.
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2007
3. Segmental information
The Group operates a single class of business being oil and gas exploration and
production. All revenue relates to income from the Group's oil and gas assets,
and arose in USA.
The Group profit for the period is analysed by geographical area as follows:
Six Months ended 30 June Year ended 31 December
2007 2006 2006
$'000 $'000 $'000
USA 6,096 7,572 8,525
Syria (332) (267) (643)
Iraq (313) (218) (497)
Colombia (10) (7) (15)
Common costs (1,437) (1,014) (1,830)
Group's profit before interest 4,004 6,066 5,540
Net finance costs (1,721) 241 (1,030)
Taxation (1,219) (1,695) (2,433)
Profit for the period 1,064 4,612 2,077
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2007
4. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following:
Six months ended 30 June Year ended 31 December
2007 2006 2006
$'000 $'000 $'000
except per except per except per
share amounts share amounts share amounts
Profit attributable to equity holders 1,064 4,606 2,077
Basic earnings (cents per share) 1.03 4.94 2.17
Diluted earnings (cents per share) 1.02 4.90 2.15
2007 2006 2006
Weighted average number of shares: Number Number Number
For basic earnings per share 103,018,750 93,168,063 95,565,086
Options outstanding 1,120,712 908,064 930,600
For diluted earnings per share 104,139,462 94,076,127 96,495,686
The calculation of basic earnings per share is based on the profit attributable
to equity shareholders and the weighted average number of ordinary shares in
issue during the year. Diluted earnings per share is calculated using the
weighted average number of ordinary shares in issue on the assumption of
conversion of all dilutive potential ordinary shares.
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2007
5. Property, plant and equipment
Oil and gas Other plant & Total
properties - USA equipment
$'000 $'000 $'000
Cost:
At 31 December 2006 61,028 273 61,301
Additions 1,499 30 1,529
Disposals - (8) (8)
At 30 June 2007 62,527 295 62,822
Accumulated depreciation/impairment:
At 31 December 2006 as previously stated (12,057) (80) (12,137)
Effect of IFRS Restatement (2,917) - (2,917)
Restated at 1 January 2007 (14,974) (80) (15,054)
Charge for the period (2,146) (45) (2,191)
Disposals - 6 6
At 30 June 2007 (17,120) (119) (17,239)
Net book value at 30 June 2007 45,407 176 45,583
Net book value at 31 December 2006 46,054 193 46,247
6. Intangible assets
Exploration and evaluation Computer Software Total
assets - Syria
$'000 $'000 $'000
Cost:
At 31 December 2006 15,066 49 15,115
Additions 7,018 - 7,018
At 30 June 2007 22,084 49 22,133
Accumulated depreciation:
At 31 December 2006 - (18) (18)
Charge for the period - (7) (7)
At 30 June 2007 - (25) (25)
Net book value at 30 June 2007 22,084 24 22,108
Net book value at 31 December 2006 15,066 31 15,097
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2007
7. Trade and other receivables
30 June 30 June 31 December
2007 2006 2006
$'000 $'000 $'000
Trade receivables 3,704 4,834 5,340
Other receivables 3,757 1,349 243
Underlift 919 919 919
Corporation tax recoverable 740 - 740
Prepayments and accrued income 2,741 2,951 2,387
11,861 10,053 9,629
Underlift arose as a result of the acquisition of oil and gas properties in May
2004. Underlift represents a right to future economic benefit (through
entitlement to receive equivalent future production), which constitutes an
asset. This amount is due after more than one year.
8. Trade and other payables
30 June 30 June 31 December
2007 2006 2006
$'000 $'000 $'000
Trade payables 8,772 4,484 10,987
Other payables 4,100 - 875
Provision for decommissioning (note 9) 3,089 3,352 3,319
US Corporation tax payable - 503 -
UK Corporation tax payable 199 340 855
16,160 8,679 16,036
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2007
9. Provision for liabilities and charges
The provision for decommissioning relates to the expected future costs of
plugging and abandoning the oil and gas properties held by Gulfsands Petroleum
USA, Inc and Darcy Energy LLC. At 30 June 2007 the oil and gas properties have
estimated plugging and abandonment dates between 2007 and 2032. The portion of
the provision for decommissioning expected to be settled in 2007 totaling
approximately $3.1million is included in trade and other payables (see note 8)
and the remainder totaling approximately $8.9 million is included in provision
for liabilities and charges in the consolidated balance sheet at 30 June 2007.
The provision for decommissioning is as follows:
$'000
At 31 December 2006 11,739
Liabilities settled during the period (1,856)
Unwinding of discount on decommissioning provision 2,153
At 30 June 2007 12,036
Less: current portion (note 8) (3,089)
8,947
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2007
10. Share capital
30 June 30 June 31 December
2007 2006 2006
Number Number Number
Authorised:
Ordinary Shares (par value 5.714 pence per share) 175,000,000 175,000,000 175,000,000
175,000,000 175,000,000 175,000,000
30 June 30 June 31 December
2007 2006 2006
$'000 $'000 $'000
Allotted, called up and fully paid:
103,018,750 (2005 - 93,031,250) ordinary shares of 11,047 9,971 11,047
5.714 pence each
The movements in share capital and options are summarised below:
Number of Number of
ordinary shares share options
At 31 December 2006 103,018,750 4,733,750
Share options granted - 820,000
Share options exercised for cash - -
Stock options expired - (50,000)
At 30 June 2007 103,018,750 5,503,750
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2007
11. Reconciliation of operating profit to net cash inflow from operations
6 months to 6 months to Year ended
30 June 30 June 31 December
2007 2006 2006
$'000 $'000 $'000
Operating profit 4,004 6,066 5,540
Depreciation 2,199 1,658 4,716
Disposal of assets 2 - -
Impairment charge - - 1,334
Change in fair value of derivatives (101) (4,024) (4,184)
Share based payment charge 328 294 851
Decrease in debtors, excluding deferred tax assets (2,232) (5,070) (3,885)
Increase in creditors, excluding provision for liabilities 991 4,660 11,627
and charges
Net cash inflow from operations 5,191 3,584 15,999
12. Post balance sheet events
In July 2007, the Company received £11.6 million from the private placement of 8
million ordinary shares with the Al Mashreq Investment Fund and Hickham
Ventures, at £1.45 per new Ordinary Share. The new Ordinary Shares rank pari
passu with the existing Ordinary Shares of the Company and were allotted and
issued as fully paid in July 2007.
Also in July, a previous employee exercised 75,000 share options.
Following the issue and allotment of the new ordinary shares and the share
options, the issued share capital of the Company was 111,093,750 Ordinary
Shares.
This information is provided by RNS
The company news service from the London Stock Exchange R ILFVDASIRFID
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