Results for YE 31 December 2017

RNS Number : 1940S

Lansdowne Oil & Gas plc

22 June 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 Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain. If you have any queries on this, then please contact Steve Boldy, the Chief Executive Officer of the Company (responsible for arranging release of this announcement).

Lansdowne Oil & Gas plc

Results for the year ended 31 December 2017

22 June 2018

Lansdowne Oil & Gas ("Lansdowne" or "the Company") is pleased to announce its audited results, for the year ended 31 December 2017. Lansdowne is an upstream oil and gas company, focused on exploration and appraisal activities in the North Celtic Sea Basin, off the south coast of Ireland. The Company has targeted the Irish offshore shelf areas close to existing operating infrastructure for exploration, as these provide shallow water (generally less than 100 metres), and relatively low drilling costs and the Directors believe that these factors, combined with favourable fiscal terms, have the potential to deliver high value reserves.

Lord Torrington, Chairman commented:

"Throughout 2017 efforts continued to farm-out the Barryroe Oil Field and earlier this year a Farm-Out Agreement was signed with APEC Energy Enterprises Limited for a multi-well drilling programme in 2019. After several years of low oil prices, through which the Company has focused upon cost reduction and survival, it is refreshing to see a return to drilling activity on the horizon with the potential to create value for shareholders".

Operational highlights

·     Barryroe Oil Field

o  Extension granted to the duration of Standard Exploration Licence 1/11 which contains the Barryroe Field, such that the first phase will continue to July 2019 and the overall term will continue to July 2021

o  In December 2017, the Barryroe partners (Providence Resources plc, (Operator) 80% and Lansdowne 20%) announced that they had entered into a period of exclusivity with a potential farminee in order to conclude contractual negotiations, having reached provisional agreement on key commercial terms for a multi-well programme at Barryroe.

·     Helvick Oil Field

o  In November 2017, a Lease Undertaking was awarded for the Helvick Oil Field, in which following an initial farm-down to MFDEVCO, Lansdowne holds a 9% interest

Financial

·     Cash balances at 31 December 2017 of £0.02 million (2016: £0.17 million).

·     Operating expenses for the year were £0.2 million (2016: £0.7 million).

·     Loss for the year after tax of £0.3 million (2016: loss £1.2 million).

·     Loss per share of 0.1 pence (2016: loss 0.4 pence).

·     Post-balance sheet events ·     Barryroe Oil Field o  Farm-out agreement entered into with APEC Energy Enterprises Limited ("APEC") for a multi-well Drilling Programme o  Farm-out expected to close in Q3 2018 ·     Financial o  Share Placing completed in April 2018 at 1.3p/share to raise £900,000 before costs o  Brandon Hill Capital Loan converted to shares at the Placing Price o  LC Capital Master Fund Loan partially converted to shares at the Placing Price and the remainder extended until 30 June 2019 For further information please contact:
Lansdowne Oil & Gas plc Steve Boldy	[phone]
Cantor Fitzgerald Europe Nominated Adviser and Joint Broker David Porter Nicholas Tulloch	[phone]

Results for the year ended 31 December 2017

Chairman's Statement

Whilst 2017 continued to be very difficult for the sector, there was a recovery of the oil price, which has continued to strengthen into 2018 and it appears that we may have turned the corner, with oil supply returning to balance with demand.

For Lansdowne, 2017 was another year focused upon survival through the difficult conditions and ensuring retention of its appraisal projects in the Celtic Sea.

In the second quarter of 2017, the Company entered into a Loan Agreement for £350,000 with one of its major shareholders, Brandon Hill Capital Limited, and the LC Capital Master Fund Loan was further extended to 1 July 2018. These arrangements were put in place to allow additional time to pursue a farm-out of Barryroe (SEL 1/11).

Lansdowne's 20% interest in Barryroe is our core asset and in July 2017 an extension was granted to the duration of Standard Exploration Licence 1/11 which contains the Barryroe Field, such that the First Phase will continue to July 2019 and the overall term will continue to July 2021.

This was an important step in enabling farm-out negotiations to continue and in December the Barryroe partners (Providence Resources plc, (Operator) 80% and Lansdowne 20%) announced that they had entered into a period of exclusivity with a potential farminee in order to conclude contractual negotiations, having reached provisional agreement on key commercial terms for a multi-well programme at Barryroe.

In November 2017, the Company announced that the Minister of State at the Department of Communications, Climate Action and Environment had given his consent for the assignment of 10% of Providence's interest in the Helvick Lease Undertaking ("LU") to Lansdowne Celtic Sea Limited and 10% interest in the Helvick LU to Marginal Field Development Company Limited (MFDEVCO) through a farm-out agreement.

Following these assignments, Lansdowne now holds a 9% interest in Helvick. MFDEVCO are continuing their evaluation work under the farm-in agreement, at their sole cost.

Financial Results

The Group recorded an after tax loss of £0.3 million for the year ended 31 December 2017 compared to a loss of £1.2 million for the year ended 31 December 2016.

Group operating expenses for the year were £0.2 million, compared to £0.7 million in 2016.

Net finance expense for the year was £121,000 (2016: £571,000).

Cash balances of £0.02 million (2016: £0.17 million) were held at the end of the financial year.

Total equity attributable to the ordinary shareholders of the Group was £12.1million as at 31 December 2017 (£12.5 million as at 31 December 2016).

Post Balance Sheet Events

In March 2018, the Company announced that it, along with EXOLA, a wholly owned subsidiary of Providence Resources, had entered into a Farm-Out Agreement ("FOA") with APEC Energy Enterprises Limited ("APEC") over SEL 1/11, containing the Barryroe Field.

APEC is a privately owned Chinese company which has a strategic partnership with China Oilfield Services Co., Ltd ("COSL") and JIC Capital Management Limited ("JIC") for the investment and development of offshore oil and gas opportunities worldwide utilising Chinese drilling units, services and equipment.

Under the terms of the FOA, in consideration for APEC taking a 50% working interest in SEL 1/11, the key commercial and operational terms provide for APEC to:

Commercial Terms

-  Be directly responsible for paying 50% of all the cost obligations associated with the drilling of 3 vertical wells, plus any associated side-tracks and well testing (hereinafter referred to as the "Drilling Programme");

-  Provide a drilling unit and related operational services for the Drilling Programme;

-  Finance, by way of a non-recourse loan facility (the "Loan"), the remaining 50% of all  costs  of the Barryroe Partners associated with the Drilling Programme;

-  The loan, drawable against the budget for the Drilling Programme, will incur an annual interest rate of LIBOR +5% and will be repayable from production cashflow from SEL 1/11, with APEC being entitled to 80% of production cashflow from SEL 1/11 until the Loan is repaid in full;

-  Following repayment of the Loan, APEC will be entitled to 50% of production cashflow from SEL 1/11 with EXOLA and Lansdowne being entitled to 40% and 10% of production cashflow, respectively.

Operational Terms

-  EXOLA will act as Operator for the Drilling Programme with technical assistance being provided by the APEC Consortium.

-  After the completion of the Drilling Programme, APEC will have the right to become Operator for the development/production phase.

Closing

The Closing of the Farm-Out ("Closing"), which is expected to occur in Q3 2018, is conditional on completion of all ancillary legal documentation required to implement the terms of the FOA, and is subject to the approval of the Minister of State at the Department of Communications, Climate Action and Environment and the approval of the Chinese Government. In addition, the details of, and schedule for, the Drilling Programme are subject to further ongoing technical discussions between APEC, Lansdowne and Exola. On closing, the revised equity in SEL 1/11 will be EXOLA (Operator, 40%), APEC (50%) & Lansdowne (10%).

In April 2018, the Company announced that it had placed 69,230,761 new ordinary shares at a placing price of 1.3p/share to raise £900,000 before costs, with these funds being used to meet the Company's share of ongoing Barryroe costs through to closing of the farm-out, expected to take place in Q3 2018, and to fund ongoing working capital requirements until mid-2019.

In addition, Brandon Hill Capital agreed to convert its entire Loan, amounting to £326,911 (including interest), into new shares at the placing price. Furthermore, LC Capital Master Fund agreed to convert a substantial portion of its Loan, amounting £680,000, into new shares, also at the placing price.

In May 2018, at a General Meeting of the Company, these conversions were formally approved.

Outlook

The signing of the Barryroe Farm-Out Agreement with the Chinese Consortium is of enormous significance to Lansdowne and has the potential to transform the Company.

Work is underway to finalise the details of the Drilling Programme and to complete all the additional necessary legal work for closing.

It is anticipated that drilling will commence in mid-2019 and by late that year it is expected that the project could have advanced to development sanction.

The last few years have been very difficult for Lansdowne and it would not have survived without the support of our major shareholders, LC Capital and Brandon Hill Capital and I would once again like to thank them for this.

Tim Torrington

Chairman

Lansdowne Oil & Gas plc

Consolidated Statement of Financial Position

As at 31 December 2017

		2017	2016
	Note	£'000	£'000
Assets
Non- current assets
Intangible assets	4	14,672	14,399
Current Assets
Trade and other receivables		23	38
Cash at bank and on hand		15	165
		38	203
Total Assets		14,710	14,602
Equity and Liabilities
Shareholders' Equity
Share capital	5	11,571	11,571
Share premium		25,126	25,126
Currency translation reserve		59	59
Share-based payment reserve		923	923
Accumulated deficit		(25,533)	(25,186)
Total Equity		12,146	12,493
Non-Current Liabilities
Provisions for liabilities                          Current Liabilities Shareholder loan Trade and other payables		288 1,909 367	261 1,587 261
Total Liabilities		2,564	2,109
Total Equity and Liabilities		14,710	14,602

 

Lansdowne Oil & Gas plc

Consolidated Income Statement

For the year ended 31 December 2017

		2017	2016
	Note	£'000	£'000
Administrative expenses		(226)	(665)
Operating loss		(226)	(665)
Finance costs		(121)	(571)
Loss for the year before tax		(347)	(1,236)
Income tax		-	-
Loss for the year		(347)	(1,236)
Loss per share (pence):
Basic loss per ordinary share	3	(0.1p)	(0.4p)
Diluted loss per ordinary share	3	(0.1p)	(0.4p)

The results for the period all arise on continuing operations. The group has no other comprehensive income or expense in the current or prior year.

 

Lansdowne Oil & Gas plc

Consolidated Statement of Changes in Equity

For the year ended 31 December 2017

	Share capital £'000	Share premium £'000	Share based payment Reserve £'000	Currency translation reserves £'000	Accumulated deficit £'000	Total equity £'000
Balance at 1 January 2016	8,087	25,247	923	59	(23,950)	10,366
Loss for the financial year	-	-	-	-	(1,236)	(1,236)
Total comprehensive loss for the year	-	-	-	-	(1,236)	(1,236)
Issue of new shares - gross consideration	3,484	-	-	-	-	3,484
Cost of share issues	-	(121)	-	-	-	(121)
Balance at 31 December 2016	11,571	25,126	923	59	(25,186)	12,493
Balance at 1 January 2017	11,571	25,126	923	59	(25,186)	12,493
Loss for the financial year	-	-	-	-	(347)	(347)
Balance at 31 December 2017	11,571	25,126	923	59	(25,533)	12,146

 

Lansdowne Oil & Gas plc

Consolidated Statement of Cash Flows

For the year ended 31 December 2017

		2017	2016
		£'000	£'000
Cash flows from operating activities
Loss for the year		(347)	(1,236)
Adjustment for:
Interest payable and similar charges		119	571
Decrease in trade and other receivables		15	54
Increase/(decrease) in trade and other payables		106	(1,913)
Net cash used in operating activities		(107)	(2,524)
Cash flows from investing activities
Acquisition of intangible exploration assets		(273)	(64)
Net cash used in investing activities		(273)	(64)
Cash flows from financing activities
Proceeds from issue of shares		-	3,363
Proceeds from new loan		230	-
Repayment of loan		-	(930)
Net cash from financing activities		230	2,433
Net (decrease)/increase in cash and cash equivalents		(150)	(155)
Cash and cash equivalents at 1 January		165	320
Cash and cash equivalents at 31 December		15	165

 

Lansdowne Oil & Gas plc

Notes to the Financial Information

For the year ended 31 December 2017

1.        Basis of presentation

The consolidated financial statements are presented in Sterling, the Group's functional currency, and all values are rounded to the nearest thousand (£'000) except where otherwise indicated.

The Directors have prepared the financial statements on the going concern basis which assumes that the Group will continue in operational existence for at least twelve months from the date of the approval of these financial statements as described below.

The Directors have carried out a detailed assessment of the Group's current and prospective exploration activity, its relationship with the holder of its loan note, and the cash flow projections for the period to 30 June 2019.  The following represent the key assumptions underpinning the cash flow projections:

Barryroe farm out

On 28 March 2018, the Company announced a deal to Farm-Out a 50% working interest in its Barryroe prospect to a Chinese consortium led by APEC Energy Enterprise Limited. It is proposed that the Consortium will fund 100% of the drilling costs for 3 wells and associated side-tracks. It is further proposed that the Consortium will finance the Group's 50% share of the drilling programme costs by way of a non-recourse loan, secured against future Barryroe production cash-flow.

Placing

On 6 April 2018, the Company raised £900,000 before costs by placing 69,230,761 new ordinary shares with new and existing investors.

Brandon Hill Capital also agreed to convert the outstanding amount of its loan to the Company, amounting to £326,911 (including interest), into new ordinary shares at the placing price.

In addition, LC Capital Master Fund Ltd agreed to convert £680,000 of the senior secured loan (including associated interest) issued to it by the Company in March 2015 into new ordinary shares at the placing price, and extend the term of the remaining amounts under the Loan Note to 1st July 2019.

The Directors have considered the various matters set out above and have concluded that these assumptions are affected by material uncertainties that may cast significant doubt on the ability of the Group and Company to continue as going concerns and that they may therefore be unable to realise assets and discharge liabilities in the normal course of business. Nevertheless, the Group and Company will have sufficient cash resources available to meet their liabilities for at least 12 months from the date of approval of these financial statements.

It is on this basis that the directors consider it appropriate to prepare the financial statements on a going concern basis. These financial statements do not include any adjustment that would result from the going concern basis of preparation being inappropriate.

2.        Segmental reporting

The Group has one reportable operating and geographic segment, which is the exploration for oil and gas reserves in Ireland. All operations are classified as continuing and currently no revenue is generated from the operating segment.

3.        Loss per ordinary share

The loss for the year was wholly from continuing operations. 

	2017	2016
	£'000	£'000
Loss for the year attributable to equity holders	(347)	(1,236)
Weighted average number of ordinary shares in issue - basic and diluted	334,116,800	334,116,800
Loss per share arising from continuing operations attributable to the equity holders of the Company - basic and diluted (in pence)	(0.1)	(0.4)

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has one class of potential ordinary shares being share options. As a loss was recorded for both 2017 and 2016, potentially issuable shares would have been antidilutive. The number of potentially issuable shares at 31 December 2017 is 513,204,394 (2016: 513,204,394).

4.            Intangible assets            

Group	Exploration / appraisal assets
Cost	£'000
At 1 January 2016	14,335
Additions	64
Impairment	-
At 31 December 2016	14,399
Cost
At 1 January 2017
Additions	14,399
Impairment	273
At 31 December 2017	14,672

Oil and gas project expenditures, all of which relate to Ireland, including geological, geophysical and seismic costs, are accumulated as intangible fixed assets prior to the determination of commercial reserves.

5.        Share capital - Group and Company

	2017	2016
Authorised
510,164,394 ordinary shares at £0.01 pence each	510,164,394	510,164,394

Issued, called up and fully paid:
	Number of shares	Share Capital £'000	Share premium £'000	Total £'000
At 1 January 2016	161,741,795	8,087	25,247	33,334
Issued in year	348,422,599	3,484	-	3,484
Share issue costs	-	-	(121)	(121)
At 31 December 2016	510,164,394	11,571	25,126	36,697
Issued in year	-	-	-	-
At 31 December 2017	510,164,394	11,571	25,126	36,697

6.            Accounts

Copies of the annual accounts for the year ended 31 December 2017 will be sent to shareholders shortly and will be available from the Group's office at 6 Northbrook Road, Ranelagh, Dublin 6, Ireland and the Group's website www.lansdowneoilandgas.com.

Notes to Editors

About Lansdowne

Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea focussed, oil and gas exploration company quoted on the AIM market and headquartered in Dublin. Lansdowne's acreage holdings include a 20% stake in SEL 1/11, which contains the Barryroe oil field.

For more information on Lansdowne, please refer to www.lansdowneoilandgas.com

 

END

 

 

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