Preliminary Results
Gulfsands Petroleum PLC
15 May 2006
15 May 2006
Gulfsands Petroleum PLC
('Gulfsands' or 'the Company') and its Subsidiaries (together 'the Group')
Preliminary Results for the Year Ended 31 December 2005
Gulfsands Petroleum PLC (symbol GPX), the AIM listed oil and gas exploration,
development and production company with activities in the USA, Syria and Iraq
announces its preliminary results for the year ended 31 December 2005.
Financial Highlights
• Turnover for the Group increased by 36% to $45,012,000 for the year ended
31 December 2005 as compared to $33,056,000 for the year ended 31 December
2004.
• Operating Profit increased by 36% to $10,242,000 for the year ended 31
December 2005 as compared to $7,510,000 for the year ended 31 December 2004.
• Pre-tax profit before exceptional items and after minority interest
increased by 530% to $3,683,000 for the year ended 31 December 2005
(exceptional items included a one time charge of $6,080,000 relating to the
partition of the former subsidiary Northstar Gulfsands LLC) as compared to
$584,000 for the year ended 31 December 2004.
• Cash in bank increased by 87% to $36,561,000 at 31 December 2005 as
compared to $19,579,000 at 31 December 2004.
• Net assets increased by 336% to $69,989,000 at 31 December 2005 as
compared to $16,060,000 at 31 December 2004.
• The Company completed an Initial Public Offering on the AIM market of the
London Stock Exchange raising approximately $57 million after expenses.
Operational Highlights
Syria
• An initial reserves study at 1 January 2006 was performed for the Tigris
structure in Block 26, Syria in which the Group has a 50% working interest
and is the operator. The study completed by Ryder Scott identifies gross
probable reserves in the Tigris structure of 442 billion cubic feet of
natural gas (BCFG). A further 442 BCFG was classified as possible reserves
and a further 3447 BCFG as a prospective resource should this structure be
gas bearing. Should the structure be oil bearing 104 million barrels of oil
(MMBO) and 64 BCFG were classified as possible reserves and a further 408
MMBO and 245 BCFG as a prospective resource.
• The Company increased its ownership in Block 26 in Syria from 20% to 50%
and became the operator.
• The Company executed two letters of intent for the drilling of the two
first wells in Block 26, Syria.
• The Company completed a 1,155 line kilometre 2D seismic programme in Block
26, Syria.
Gulf of Mexico, USA
• Gulfsands successfully completed a restructuring of its 52.6% owned Gulf
of Mexico subsidiary, Northstar Gulfsands LLC, whereby the Company now has
direct ownership of approximately 52.6% of all the property interests
formerly held by Northstar Gulfsands LLC.
• In association with the partition of Northstar Gulfsands LLC the Company
retired all of its debt and warrants associated with that entity leaving the
Company debt free.
• Proved and probable reserves in the USA Gulf of Mexico increased to 32.4
billion cubic feet of natural gas equivalents (BCFGE) as of 1 January 2006
as compared to 30.2 BCFGE at 1 November 2004. The net present value of
those reserves at 1 January 2006 increased to $183 million as compared to
$111 million at 1 November 2004.
• In the USA Gulf of Mexico the Company's reserve additions replaced 269% of
its 2005 produced oil and gas volumes.
• The Company participated in the drilling of six offshore Gulf of Mexico
exploration wells and four of those six have been discoveries. Subsequent
to year-end the Company drilled another successful exploration well in
January.
Iraq
• The Company signed a Memorandum of Understanding on the Misan Gas Project
in Iraq and increased its ownership interest to 100% from 85%.
Onshore Gulf Coast, USA
• Proved and probable reserves in Darcy Energy LLC, owned 83% by the
Company, for the onshore USA at 1 January 2006 were 1.6 BCFGE for a net
present value of $9.5 million.
• The Company drilled one onshore USA exploration well, which was a
discovery.
Gulfsands' CEO, John Dorrier, said:
'In spite of reduced production from the Gulf of Mexico during the fourth
quarter as a result of Hurricanes Rita and Katrina, the Company recorded strong
increases in its financial and operational performance for the year. With
further successes in drilling and field re-development, we anticipate continued
strong growth in the Company's reserves base and in production for 2006
particularly during the second half of the year.'
Enquiries:
Gulfsands Petroleum (Houston) 001-713-626-9564
David DeCort, Chief Financial Officer
College Hill (London) 020-7457-2020
Ben Brewerton
Nick Elwes
Teather & Greenwood (London) 020-7426-9000
James Maxwell (Corporate Finance)
Tanya Clarke (Specialist Sales)
CHIEF EXECUTIVE'S REPORT TO SHAREHOLDERS
The year ending 31 December 2005 was a historic year for the Company. We
completed an Initial Public Offering on the AIM market of the London Stock
Exchange, broadened the share ownership, became operator of our Syrian asset,
executed a Memorandum of Understanding on a large development project in Iraq,
drilled five successful exploration wells in the USA, successfully restructured
the USA Gulf of Mexico operations and increased the Company's oil and gas
reserves significantly as a result of activities in the USA and Syria.
Syria
The Company capitalized on an opportunity in the summer of 2005 to increase its
interest to 50% and become operator in Block 26, located in northeast Syria.
The Company has identified 31 prospects within the Block with mean resources
potential exceeding 1 billion barrels of recoverable oil. Since becoming
operator, Gulfsands completed a 1,155 line kilometre seismic programme within
the Block and has determined the first two drilling locations for 2006. The
first well, known as Souedieh North, commenced drilling in late April 2006 and
has the potential to contain in excess of 100 million barrels of recoverable
oil. The second well, known as Tigris-1 is scheduled to commence drilling in
August 2006 and has the potential to contain in excess of 500 million barrels of
oil equivalent. An independent reserves report was issued in January 2006 on
the Tigris structure, which concluded that there are 442 BCFG of gross probable
recoverable reserves. Additionally, the report classified the possible reserves
as either natural gas or oil. The gas case reflects an additional 442 BCFG in
possible recoverable reserves and an additional 3447 BCFG as prospective
resource while the oil case reflects 104 MMBO and 64 BCFG in possible
recoverable reserves and a further 408 MMBO and 245 BCFG as prospective
resource.
USA
Gulfsands successfully completed a partition in December 2005 of Northstar
Gulfsands LLC, a former 52.6% owned subsidiary, which resulted in the Company
taking approximately 52.6% of the properties formerly held by Northstar
Gulfsands LLC into Gulfsands directly. Additionally, the Company retired all of
its mezzanine debt and warrants leaving the Company debt free. Gulfsands proved
and probable reserve base in the Gulf of Mexico at 1 January 2006 increased to
32.4 BCFGE with a net present value of $183 million. Reserve additions
primarily resulted from the drilling of four successful exploration wells during
the year along with numerous recompletions. The reserve additions replaced 269%
of the Company's 2005 produced oil and gas volumes.
Within Darcy Energy LLC, Gulfsands' 83% owned onshore USA subsidiary, proved and
probable reserves at 1 January 2006 were 1.6 BCFGE with a net present value of
$9.5 million. During the year, the Company participated in one onshore
exploration well, which was a discovery and commenced first production in the
first quarter of 2006.
Iraq
The Company signed a Memorandum of Understanding in January 2005 with the Iraq
Oil Ministry on the Misan Gas Project. The Misan Gas Project is a midstream
project that gathers gas currently being flared at oil fields in Southern Iraq,
brings the gas to a central processing plant to clean it of impurities and
remove 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. Discussions have been ongoing regarding the
execution of a definitive contract on this project and the Company is in good
position to get this contract executed during 2006. In May of 2005, Gulfsands
increased its interest in the Misan Gas Project to 100% from 85%.
AIM Listing
In April 2005 Gulfsands' completed an Initial Public Offering on the AIM market
of the London Stock Exchange. The Company placed approximately $57 million of
new equity (net of expenses) at £1.30/share. These new funds have
enabled the Company to restructure its Gulf of Mexico operations, conduct active
exploration and recompletion programmes in the Gulf of Mexico, fund a 1,155 2D
line kilometre seismic programme in Syria, fund the drilling of two upcoming
high potential wells in Syria, and fund its business development activity in
Iraq, in particular the Misan Gas Project.
Outlook
In summary, 2005 was a very active and successful year for Gulfsands, resulting
in significant increases in oil and gas reserves, increased ownership in Block
26, Syria and the Misan Gas Project in Iraq, and increased turnover, operating
profit and pre-tax profit before exceptional items for the year. The Company's
current activities in Syria, the Gulf of Mexico, and Iraq provide significant
potential for expansion, as do future acquisition opportunities throughout the
Middle East during 2006 and beyond.
John P. Dorrier
Chief Executive Officer
15 May 2006
GULFSANDS PETROLEUM PLC
Consolidated Profit and Loss Account
Years Ended 31 December
Year Ended 31 December 2005
Minority
Share of
Northstar
Continuing Gulfsands Total Year Ended
Notes Group Share (see below) Operations 31
December
2004
US$'000 US$'000 US$'000 US$'000
Turnover 24,926 20,086 45,012 33,056
Cost of sales (13,866) (12,047) (25,913) (19,485)
Gross profit 11,060 8,039 19,099 13,571
General and administrative expenses (4,923) (1,330) (6,253) (4,602)
Amortisation of goodwill - - - (107)
Accretion of net present value decommissioning
provision (1,370) (1,234) (2,604) (1,352)
Administrative expenses (6,293) (2,564) (8,857) (6,061)
Operating profit 4,767 5,475 10,242 7,510
Exceptional items:
Loss on disposal of a subsidiary 2 (1,244) - (1,244) -
Goodwill written off on disposal of a 2 (1,286) - (1,286) -
subsidiary
Restructuring Costs on disposal of a 2 (3,550) - (3,550) -
subsidiary
Profit on activities before interest (1,313) 5,475 4,162 7,510
Investment loss - - - (675)
Interest receivable 1,413 205 1,618 143
Interest payable (2,510) (1,822) (4,332) (3,477)
Profit before taxation (2,410) 3,858 1,448 3,501
Tax on profit on ordinary activities 3 (1,551) - (1,551) 1,038
(Loss)/Profit on activities after (3,961) 3,858 (103) 4,539
taxation
Minority interests 4 13 (3,858) (3,845) (2,917)
RETAINED (LOSS)/PROFIT (3,948) - (3,948) 1,622
Basic (loss)/earnings per share in 5 (0.05) (0.05) 0.02
$'s
The profit and loss account 'Continuing group share' consists of GP's 52.6% of
Northstar Gulfsands LLC ('NSGS') and other GP activity, while the 'minority
share of NSGS' column is the NSGS 47.4% partner share.
GULFSANDS PETROLEUM PLC
Consolidated Balance Sheet
31 December
2005 2004
Note US$'000 US$'000
Fixed assets
Tangible fixed assets 6
39,236 56,038
Intangible fixed assets 7 35 2,629
39,271 58,667
Current assets
Debtors 8 4,983 10,749
Cash at bank and in hand 9 36,561 19,579
41,544 30,328
Creditors: amounts falling due within one year 10 (3,435) (18,688)
Net current assets 38,109 11,640
Total assets less current liabilities 77,380 79,307
Creditors: amounts falling due after more than one year 10 - (29,947)
Deferred Tax Liabilities 17 (173) -
Provision for liabilities and charges 11 (6,958) (16,427)
Equity minority interests 4 (260) (7,873)
NET ASSETS 69,989 16,060
SHARE CAPITAL AND RESERVES
12 9,971 7,306
Share capital
Share premium account 13 53,651 -
Other reserve 13 11,709 10,149
Profit and loss account 13 (5,342) (1,395)
SHAREHOLDERS' FUNDS 14 69,989 16,060
GULFSANDS PETROLEUM PLC
Consolidated Statements of Cash Flows
Years Ended 31 December
2005 2004
Note US$'000 US$'000
Net cash inflow from operating activities 15 9,504 14,802
Interest received 1,618 143
Interest paid (3,292) (2,916)
Net cash outflow from returns on investments and servicing of finance (1,674) (2,773)
Capital expenditure
Payments to acquire tangible fixed assets (16,289) (22,912)
Payments to acquire intangible fixed assets (35) (895)
Net cash outflow from capital expenditure (16,324) (23,807)
Financing
Issue of ordinary share capital 56,651 1,187
Issue costs (464) -
Warrants exercised for cash 1,689 -
Contributions in subsidiary undertaking 101 160
Receipt of loans less repayments prior to disposal of a subsidiary 2,803 35,236
undertaking
Repayment of loans (20,571) (12,825)
Payments in respect of warrants - restructuring costs (3,550) -
Minority share - payment as a result of disposal of a subsidiary (11,183) -
undertaking
Net cash inflow from financing
25,476 23,758
Increase in cash 16,982 11,980
Cash at bank and in hand brought forward 19,579 7,599
Cash at bank and in hand carried forward 36,561 19,579
Non-cash investing and financing
Non-cash capital contributions in subsidiary undertaking - 2,250
Provision for decommissioning 1,370 17,000
Exceptional items:
Loss on disposal of a subsidiary 1,244 -
Write off of goodwill on disposal of a subsidiary 1,286 -
GULFSANDS PETROLEUM PLC
NOTES TO THE CONSOLIDATED ACCOUNTS
1. Basis of preparation
The financial information has been prepared in accordance with applicable
accounting standards in the United Kingdom and under the historical cost
convention.
The financial information contained in this report does not constitute full
statutory accounts with in the meaning of Section 240 of the Companies Act 1985.
The figures are extracted from the unaudited full financial statements for the
year ended 31 December 2005, which will be filed with the Registrar of Companies
following formal completion of the audit.
Gulfsands Petroleum Plc was incorporated on 5 December 2004 for the purpose of
achieving admission to trading on Alternative Investment Market ('AIM') of the
existing business of Gulfsands Petroleum Ltd. and its subsidiaries. On 18
February 2005, Gulfsands Petroleum Plc acquired the entire share capital of
Gulfsands Petroleum Ltd. by means of a share for share exchange. The transaction
qualified as a group reconstruction within the meaning of Financial Reporting
Standard 6 'Acquisition and Mergers', and has been accounted for using the
merger accounting method.
These financial statements are the first statutory accounts for Gulfsands
Petroleum Plc and reflect the results for the year to 31 December 2005. The
financial statements consolidate the accounts of Gulfsands Petroleum Plc and all
its subsidiary undertakings (the 'Group'), drawn up to 31 December each year.
In the Group financial statements, merged subsidiary undertakings are treated as
if they had always been a member of the Group. The results of such a subsidiary
are included for the whole period in the year it joins the Group. The
corresponding figures for the previous year include its results for that period,
the assets and liabilities at the previous balance sheet date and the shares
issued by Gulfsands Petroleum Plc as consideration as if they had always been in
issue. The balance sheet of the Gulfsands Petroleum Ltd. and its subsidiaries as
at 31 December 2004 is presented as a proforma comparative. Any difference
between the nominal value of the shares acquired and those issued by Gulfsands
Petroleum Plc to acquire them is taken to reserves.
Under the principles of merger accounting, the assets and liabilities of the
Gulfsands Petroleum Ltd. and its subsidiaries have been brought in at their book
values under the accounting policies of Gulfsands Petroleum Plc.
The results of subsidiaries acquired or sold are consolidated for the periods
from or to the date control passed. Acquisitions are accounted for under the
acquisition method, under which purchase consideration is allocated to the
assets and liabilities on the basis of fair value at the date of acquisition.
The Company's consolidated statements include the accounts of undertakings when
the Company has the power to exercise, or actually exercises, dominant influence
or control over the undertaking.
A full list of accounting policies will be shown in the group financial
statements. The significant accounting policies are detailed below:
(a) Reporting currency
The financial information is presented in U.S. dollars. The Company's operations
and the majority of all costs associated with foreign operations are paid in
U.S. dollars and not the local currency of the operations. Therefore, the
reporting and functional currency is the U.S. dollar. Gains and losses from
foreign currency transactions, if any, are recognised in current profit or loss
for the period.
(b) Oil and gas properties
The Group follows the full cost method of accounting for oil and gas properties
under which expenditure on pre-license, license acquisition, exploration,
appraisal and development activities is capitalised. All capitalised exploration
and development expenditures are recorded within an appropriate cost pool within
tangible fixed assets, except that certain exploration and appraisal costs may
be held outside a cost pool pending determination of commercial reserves, within
intangible fixed assets. The Group has two cost pools: USA and Syria. The
Group's definition of commercial reserves is proven and probable reserves.
Pre-license acquisition, exploration and appraisal costs of individual license
interests held outside a cost pool remain un-depreciated pending determination
but subject to there being no evidence of impairment. When a decision to develop
an oil and gas property has been taken, or if there is evidence of impairment in
value, the costs are transferred to the appropriate cost pool within tangible
fixed assets.
Costs carried within each pool are depreciated on a unit of production basis
using the ratio of oil and gas production in the period to the estimated
quantity of commercial reserves at the end of the period plus production in the
period. Costs in the unit of production calculation include the net book value
of capitalised costs plus estimated future development costs. Changes in
estimates of commercial reserves or future development costs are dealt with
prospectively.
When events or changes in circumstances indicate that the carrying amount of
expenditure within a cost pool may not be recoverable from future net revenues
from oil and gas reserves attributable to that pool, a comparison between the
net book value of the cost pool and the discounted future cash flows from that
cost pool is undertaken. To the extent that the carrying amount exceeds the
recoverable amount, the pool is written down to its recoverable amount and
charged as additional depreciation.
(c) Decommissioning
Where a material liability for the removal of production facilities and site
restoration at the end of the production life of a field exists, a provision for
decommissioning is recognised. The amount recognised is the present value of
estimated future expenditure determined in accordance with local conditions and
requirements. Accretion expense is recognised to represent the unwinding of the
discount of the present value of the provision for decommissioning. A tangible
fixed asset of an amount equivalent to the provision is also created and
depreciated on a unit of production basis. Changes in estimates are recognised
prospectively, with corresponding adjustments to the provision and the
associated fixed asset.
2. Exceptional Items
On 9 December 2005, one of the subsidiaries of the Company, Gulfsands Petroleum
USA Inc. ('GP USA') redeemed its membership interest (52.6%) in Northstar
Gulfsands LLC (a limited liability company registered in Cayman Islands) ('NSGS
') in return for the partition of certain assets in NSGS. This was accomplished
by a conveyance of a certain undivided interest in its oil and gas properties to
GP USA and the retention of the remaining interest therein to NSGS together with
certain other assets. As a result of this partition and redemption agreement,
NSGS has ceased to be a subsidiary of GP USA. However, the Group will continue
to earn its share of turnover from certain oil and gas properties owned and
managed by NSGS. Therefore, in accordance with Financial Reporting Standard 3 ('
Reporting Financial Performance'), the directors do not consider this change in
arrangement as a discontinued operation as the disposal of NSGS does not have a
material effect on the nature and focus of the Group's operations.
As a result of this change in arrangement, the Company recognized a loss on the
disposal of $1,243,583, wrote off the unamortised goodwill of $1,285,714, and
incurred restructuring costs of $3,550,000. The restructuring cost of
$3,550,000 represents payment made in respect of 52.6% of the outstanding
warrants in NSGS as at the time of the partition.
3. Tax on profit on ordinary activities
US$'000
Deferred tax - current year 1,211
UK Corporation tax - current year 340
1,551
4. Minority Interests
As a result of the change in arrangement, all minority equity interest resulting
from the disposal of NSGS was eliminated from the liability account. On the
profit and loss statement, the minority interest expense mostly represents the
minority's 47.4% share of the net income of the former subsidiary - NSGS.
US$'000
At 1 January 2005 7,873
Loss on ordinary activities after taxation - Darcy Energy LLC (13)
Profit on ordinary activities after taxation - Northstar Gulfsands LLC 3,858
Contributions 101
Effect of change in joint arrangement (11,559)
At 31 December 2005 260
Minority interest expense
Minority share - loss on ordinary activities - Darcy Energy LLC 13
Minority share - profit on ordinary activities - Northstar Gulfsands LLC (3,858)
(3,845)
5. Earnings per Share
The loss per ordinary share of $0.05 is based on the loss for the financial
period of $3,948,000 and 85,442,295 ordinary shares, being the average number of
shares in issue for the period.
No diluted loss per ordinary share has been disclosed because the conversion of
share options would decrease the net loss per share.
6. Tangible Fixed Assets
Oil and gas Fixed assets Total
properties
US$'000 US$'000 US$'000
At 1 January 2005 64,713 61 64,774
Additions 16,167 16,289
122
Transfer from intangible fixed assets 1,339 - 1,339
Disposals as a result of the disposal of a subsidiary
undertaking (35,156) (115) (35,271)
Disposals - (18) (18)
At 31 December 2005 47,063 50 47,113
Accumulated depreciation:
At 1 January 2005 (8,702) (34) (8,736)
Charge for the period (6,139) (18) (6,157)
Disposals as a result of the disposal of a subsidiary
undertaking 6,985 13 6,998
Disposals - 18 18
At 31 December 2005 (7,856) (21) (7,877)
Net book value at 31 December 2005 39,207 29 39,236
Net book value at 31 December 2004 56,011 27 56,038
The Directors have assessed the carrying value of the oil and gas properties and
in their opinion, no impairment provision is considered necessary.
7. Intangible Fixed Assets
(i) Oil and gas properties - unevaluated costs Syria Total
US$'000 US$'000
Cost and net book value:
At 1 January 2005 1,339 1,339
Transfer to tangible fixed assets (1,339) (1,339)
At 31 December 2005 - -
(ii) Goodwill
Net book value:
At 1 January 2005 1,286
Written off on disposal (1,286)
At 31 December 2005 -
(iii) Computer Software
Cost and net book value:
At 1 January 2005 4
Additions 35
Disposals (4)
Depreciation charge for the period -
At 31 December 2005 35
8. Debtors
At 31 December
2005 2004
US$'000 US$'000
Trade debtors 4,047 6,918
Other debtors 182 85
Underlift 919 1,748
Prepayments and accrued income 333 960
Deferred tax asset - 1,038
Prepaid Cash Calls (498) -
4,983 10,749
Underlift at 31 December 2005 represents underlift acquired as a result of the
acquisition of oil and gas properties in May 2004. In accordance with FRS 5,
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.
9. Cash at Bank and in Hand
The Company considers cash in hand and deposits repayable on demand with any
qualifying financial institution, less overdrafts from any qualifying financial
institution repayable on demand as cash at bank and in hand. Deposits are
repayable on demand if they can be withdrawn at any time without notice and
without penalty or if a maturity or period of notice of not more than 24 hours
or one working day has been agreed. Cash at bank and in hand includes cash in
hand and deposits denominated in foreign currencies.
The Company has classified as Cash at bank and in hand certain deposits that are
not available for use in its operations. At 31 December 2005, the Company
incurred a commitment as part of an escrow agreement for its future
decommissioning provision associated with its oil and gas properties at an
estimated cost of $17,370,121. At 31 December 2005, the Company had escrowed
$14,588,405 of cash for use in the settlement of its decommissioning provision.
10. Creditors
Amounts Falling Due Within One Year
At 31
December
2005 2004
US$'000 US$'000
Borrowings - accrued interest - 369
Borrowings - principal - 5,250
Provision for liabilities and charges (see note 11) 2,860 4,814
Trade creditors 235 6,180
UK Corporation tax payable 340 2,075
3,435 18,688
Amounts Falling Due After More Than One Year
At 31 December
2005 2004
US$'000 US$'000
Borrowings - 29,947
- 29,947
All borrowings were repaid as a result of disposal of a subsidiary undertaking.
11. 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 31 December 2005 the oil and gas properties
have estimated plugging and abandonment dates between 2006 and 2017. The portion
of the provision for decommissioning expected to be settled in 2006 totaling
approximately $2,860,000 is included in creditors: amounts falling due within
one year (see note 10) and the remainder totaling approximately $6,958,000 is
included in provision for liabilities and charges in the consolidated balance
sheet at 31 December 2005.
The provision for decommissioning is as follows: US$'000
At 1 January 2005 16,427
Additions 856
Current year accretion of net present value of decommissioning provision 1,370
Reduction due to disposal of a subsidiary undertaking (8,835)
At 31 December 2005 9,818
Less: current portion (classified within creditors: amounts falling due within one year) (2,860)
6,958
12. Share Capital
Gulfsands Petroleum Plc was incorporated on 2 December 2004 with an authorised
share capital of £10,000,000 divided into 17,840,000 ordinary shares and
2,160,000 convertible redeemable shares of 50p each. Gulfsands Petroleum Plc
was formed as the successor corporation to Gulfsands Petroleum Ltd. which was
originally established in 1997.
On 4 January 2005, the Company redesignated 2,160,000 ordinary shares of 50p as
2,160,000 convertible redeemable shares, having the rights set out in the new
articles of association of the Company as described in paragraph 3 of Part 5 of
the AIM admission document.
On 18 February 2005, the Company issued 5,349,998 ordinary shares of 50p each
and 2,160,000 convertible redeemable shares as consideration for the acquisition
of the entire share capital of Gulfsands Petroleum Ltd. Subsequently on 1 April
2005 the company issued 270,000 ordinary shares of 50p each as consideration for
the acquisition of 270,000 shares in Gulfsands Petroleum Ltd. following the
exercise of warrants in that company.
By a resolution of the members passed 4 April 2005, each of the ordinary shares
of 50p each was subdivided into 8.75 ordinary shares. Following this
subdivision, the conversion rate of the convertible redeemable shares was
adjusted such that each convertible redeemable share was convertible into 8.75
ordinary shares.
On 8 April 2005, 24,300,000 new shares were issued for cash - placement at £1.30
each.
12. Share Capital (continued)
The movements in the share capital and options are summarised below:
At 31 December
2005 2004
Number Number
Authorised:
Ordinary Shares (par value 5.714p per share) 175,000,000 175,000,000
175,000,000 175,000,000
Allotted, called up and fully paid
93,031,250 ordinary shares of 5.714p each
Number of Number of
Ordinary Shares Convertible
redeemable shares
Issued on subscription 2 -
Issued on a share for share exchange on 18 February 2005 5,349,998 2,160,000
Issued on 1 April 2005 270,000 -
5,620,000 2,160,000
Conversion of convertible redeemable shares to ordinary shares 2,160,000 (2,160,000)
7,780,000 -
Sub-division of shares 8.75 68,075,000 -
Issue for cash - placement 24,300,000 -
Options exercised for cash 656,250 -
At 31 December 2005 93,031,250 -
13. Reserves
Share Profit
Share Premium Other And loss
capital account Reserve account Total
US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2005 7,306 - 10,149 (1,395) 16,060
Warrants and options exercised 71 1,618 - - 1,689
Transfer of share premium arising on exercise of - (1,560) 1,560 - -
warrants in a subsidiary
Shares issued on placement 2,594 53,593 - - 56,187
Retained loss for the year - - - (3,947) (3,947)
At 31 December 2005 9,971 53,651 11,709 (5,342) 69,989
14. Reconciliation of movements in shareholders' funds
At 31 December
2005 2004
US$'000 US$'000
(Loss)/profit for the financial period
(3,947) 1,622
Options and warrants exercised 1,689 -
Revaluation reserve - 212
Shares issued during the period 56,187 -
Net additions to shareholders' funds 53,929 1,834
Opening shareholders' funds 16,060 14,226
Closing shareholders' funds 69,989 16,060
15. Reconciliation of operating profit to net cash inflow from operating
activities
Years ended 31 December
2005 2004
US$'000 US$'000
Operating profit 10,242 7,510
Depreciation 6,157 7,959
Accretion of net present value decommissioning provision 2,604 1,352
Goodwill amortised - 107
Increase/(decrease) in debtors excluding deferred tax assets 4,726 (7,828)
(Decrease)/increase in creditors, excluding provision for
liabilities and charges (14,225) 5,702
Net cash inflow from operating activities 9,504 14,802
16. Analysis of change in net (debt)/funds
At 1 January 2005 Net Cash Flows Minority Share At 31 December
2005
US$'000 US$'000 US$'000 US$'000
Cash at bank and in hand 19,579 28,165 (11,183) 36,561
Net cash 19,579 28,165 (11,183) 36,561
Debt due after one year (29,947) 11,409 18,538 -
Debt due within one year (5,250) 5,250 - -
Net debt (15,618) 44,824 7,355 36,561
17. Deferred tax liabilities
At 31 December
2005
US$'000
Deferred tax liability - accelerated oil and gas tax depreciation allowances 221
Deferred tax asset - net operating losses (48)
At 31 December 2005 173
This information is provided by RNS
The company news service from the London Stock Exchange UQA
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