Interim Results

RNS Number : 7383K

Petrel Resources PLC

26 September 2016

 

26^th September 2016

Petrel Resources plc

("Petrel" or "the Company")

Interim Statement for the period ended 30 June 2016

The main focus of Petrel in the period under review was on activity in the Irish Atlantic Porcupine Basin:

Petrel has a 15% carried interest in two Frontier Exploration Licences, FEL 3/14 and FEL 4/14, which total 1,050km² and are operated by 85% holder Woodside Energy.

Petrel recently applied under the 2015 Bid Round and was awarded an additional two Licensing Options, LO 16/24 and LO 16/25.  Petrel operates and owns these Licensing Options 100%.

During that Irish Atlantic Bid Round, 17 companies applied for 46 Licensing Options - the most successful Irish Bid Round yet.  Among the successful companies were Exxon-Mobil, Statoil, ENI, Nexen-CNOOC and Woodside.

Joint Venture with Woodside Energy in the Irish Atlantic Porcupine Basin

The 'Bréanann' 3D seismic acquisition programme was successfully completed over c. 2,392km² of the northern Porcupine Basin, 150km west off the Kerry coast, south-western Ireland.  Water depth of the survey was 500m to 1,300m, but likely water depth for Petrel's targets is likely to be 600 to 800m.

The state-of-the-art 3D seismic was acquired over 40 days with PGS as contractor.  Circa 1,400km² is directly over or around FEL 3/14, in which Petrel has a 15% carried interest. 

Processing of the (Pre-Stacked Depth Migration) seismic data is now underway at the DownUnder GeoSolutions (DUG) operation in Australia.  We expect early results in January, with interpretation complete by mid-2017.

This work is intended to de-risk the identified primary targets of Upper Jurassic to Lower Cretaceous age, which may lead to one or more well commitments in the phase 2017 through 2021.  Petrel is fully carried on the expenditure.

2015 Irish Atlantic Bid Round

Petrel was been awarded 924 km² of prospective Irish Atlantic Porcupine Basin acreage in June 2016 by way of two Licensing Options.

We obtained our priority bid, Licensing Option 16/24, including 664 km² bordering the Connemara oil-field discovered by BP in 1983.

The Licensing Option 16/24 work programme is now underway with the acquisition of relevant available seismic and well data not already in Petrel's database.  These North-Western Porcupine Basin blocks are a priority, giving the best opportunity at a quality farm-out in a challenging environment.  We are particularly encouraged at pinch-outs being mapped in our priority 35/1 area which extend into 35/2.  The source rock is already established, as is the presence of good to excellent reservoir sands.  The main risk is seal.

Further information is available in our announcement of 10^th June 2016.

Ghanaian Tano Acreage

The Ghanaian Ministry of Energy and the Ghanaian National Petroleum Commission are actively considering the current re-application by Pan Andean Resources Ltd (30% Petrel, 60% Clontarf, 10% local interests) over a licence block in the prospective Tano Basin, West Africa. 

There is a long drawn out process in relation to an agreement reached in 2010 but not implemented.  In 2014, we agreed to withdraw a court case to force the Ghanaian authorities to respect our signed Petroleum Agreement. There was a dispute over the coordinates of our acreage.  Following discussions with the Ghanaian authorities, we were offered new, and in our opinion improved, co-ordinates.  As announced on 19 September 2016, we have accepted the new acreage in principle.  We now move into negotiation of the licence terms and look forward to providing shareholders with further updates in due course. 

This acreage seems more prospective than the deep-water acreage the technical team recently reviewed.  It combines the medium water attractions of recent nearby discoveries with potential for pinch-outs up-dip of those producing discoveries.

Despite past delays, there seems to be a renewed urgency and flexibility in discussions, though there can be no guarantee of a positive outcome given the need for all Petroleum Agreements to be ratified by the Ghanaian Cabinet and Parliament. 

Iraqi Turbulence Continues

Petrel holds a 5% carry through to production on any commercial production achieved by Oryx, a Canadian listed company, in the Wasit province, Iraq.  Iraq has experienced another year of political and economic turmoil.  Production from southern fields has continued to creep upwards to circa 4.35 million barrels daily (mmbod), despite infrastructural and decision-making challenges.  This production serves internal demand of 0.8mmbod, leaving c. 3.55mmbod available for export.  This is about 20% more than the pre-2003 output under sanctions, but well short of Iraq's potential.

The Western Desert, where Petrel has an interest in exploration ground, is impossible for international companies to operate in.  Neither Wasit nor provincial contracts have been a priority for the Iraqi federal government over the past year.  Nonetheless, Wasit (situated east of Baghdad) continues to be relatively quiet by the standards of the region, with a limited number of reported incidents.

We are encouraged that the Iraqi Government now plans to develop a small Wasit refinery, with a design capacity of 0.15mmbod, which would provide a local market for any output.  Oil is already being produced at the nearby Ahdab oilfield, operated by China National Petroleum Corporation, and Badra field operated by Gazprom Neft, both in Wasit.

Future

Since 2014 the hydrocarbons industry has had to weather severe storms.  Costs have been slashed - as has exploration.  But so far, our key Atlantic Joint Venture has not been adversely affected.  On the contrary, the recent Irish Bid Round attracted a record 46 applications from 17 companies, including Exxon-Mobil, Statoil, Woodside and Nexen/CNOOC.  This surge in international interest has already boosted 3D seismic programmes and will in time, we hope, lead to wells and discoveries.  It is an exciting time to be in the Porcupine Basin.  Petrel is funded for current activities.

John Teeling

Chairman

23^rd September 2016

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

Ends

Enquiries:

For further information please visit http://www.petrelresources.com/  or contact:

Petrel Resources Plc

John Teeling, Chairman                                                               [phone]

David Horgan, Director

Dipti Mehta

Nominated Adviser and Broker

Northland Capital Partners Limited

Edward Hutton / Gerry Beaney                                                    [phone]

John Howes (Broking)

Public Relations

Blytheweigh                                                                                [phone]

Tim Blythe                                                                                    [phone]

Camilla Horsfall                                                                            [phone]

Nick Elwes                                                                                    [phone]

Rachael Brooks                                                                            

Jonathan Garfield

PSG Plus

Colm Heatley                                                                                [phone]

Alan Tyrrell                                                                                   [phone]

Petrel Resources plc
Financial Information (Unaudited)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
									Six Months Ended				Year Ended
									30 Jun 16		30 Jun 15		31 Dec 15
									unaudited		unaudited		audited
CONTINUING OPERATIONS									€'000		€'000		€'000
Administrative expenses									(107)		(148)		(228)
OPERATING LOSS									(107)		(148)		(228)
Investment revenue									1		1		1
LOSS BEFORE TAXATION									(106)		(147)		(227)
Income tax expense									-		-		-
LOSS FOR THE PERIOD									(106)		(147)		(227)
Other comprehensive income
Exchange differences									(61)		237		306
TOTAL COMPREHENSIVE PROFIT FOR THE PERIOD									(167)		90		79
LOSS PER SHARE - basic and diluted									(0.11c)		(0.15c)		(0.23c)
CONDENSED CONSOLIDATED BALANCE SHEET									30 Jun 16		30 Jun 15		31 Dec 15
									unaudited		unaudited		audited
									€'000		€'000		€'000
ASSETS:
NON-CURRENT ASSETS
Financial assets									4,211		4,211		4,211
Intangible assets									1,907		1,767		1,871
									6,118		5,978		6,082
CURRENT ASSETS
Trade and other receivables									20		46		19
Cash and cash equivalents									984		1,166		1,111
									1,004		1,212		1,130
TOTAL ASSETS									7,122		7,190		7,212
CURRENT LIABILITIES
Trade and other payables									(392)		(281)		(315)
									(392)		(281)		(315)
NET CURRENT ASSETS									612		931		815
NET ASSETS									6,730		6,909		6,897
EQUITY
Share capital									1,246		1,246		1,246
Share premium									21,416		21,416		21,416
Reserves									(15,932)		(15,753)		(15,765)
TOTAL EQUITY									6,730		6,909		6,897

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
					Capital		Share based
	Share		Share		Conversion		Payment		Translation		Retained		Total
	Capital		Premium		Reserves		Reserves		Reserves		Losses		Equity
	€'000		€'000		€'000		€'000		€'000		€'000		€'000
As at 1 January 2015	1,246		21,416		8		26		349		(16,226)		6,819
Total comprehensive income							-		237		(147)		90
As at 30 June 2015	1,246		21,416		8		26		586		(16,373)		6,909
Total comprehensive loss							-		68		(80)		(12)
As at 31 December 2015	1,246		21,416		8		26		654		(16,453)		6,897
Total comprehensive loss							-		(61)		(106)		(167)
As at 30 June 2016	1,246		21,416		8		26		593		(16,559)		6,730
CONDENSED CONSOLIDATED CASH FLOW									Six Months Ended				Year Ended
									30 June 16		30 June 15		31 Dec 15
									unaudited		unaudited		audited
									€'000		€'000		€'000
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the period									(106)		(147)		(227)
Investment revenue recognised in loss									(1)		(1)		(1)
									(107)		(148)		(228)
Movements in Working Capital									54		(49)		(11)
CASH USED IN OPERATIONS									(53)		(197)		(239)
Investment revenue									1		1		1
NET CASH USED IN OPERATING ACTIVITIES									(52)		(196)		(238)
INVESTING ACTIVITIES
Payments for exploration and evaluation assets									(48)		(74)		(111)
NET CASH USED IN INVESTING ACTIVITIES									(48)		(74)		(111)
NET DECREASE IN CASH AND CASH EQUIVALENTS									(100)		(270)		(349)
Cash and cash equivalents at beginning of the period									1,111		1,331		1,331
Effect of exchange rate changes on cash held in foreign currencies									(27)		105		129
CASH AND CASH EQUIVALENT AT THE END OF THE PERIOD									984		1,166		1,111

Notes:

1.     INFORMATION

The financial information for the six months ended 30 June 2016 and the comparative amounts for the six months ended 30 June 2015 are unaudited.

The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The interim financial statements have been prepared applying the accounting policies and methods of computation used in the preparation of the published consolidated financial statements for the year ended 31 December 2015.

The interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the audited consolidated financial statements of the Group for the year ended 31 December 2015, which are available on the Company's website www.petrelresources.com

The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.

2.     No dividend is proposed in respect of the period.

3.     LOSS PER SHARE

	30 June 16	30 June 15	31 Dec 15
	€	€	€
Loss per share - Basic and Diluted	(0.11c)	(0.15c)	(0.23c)
Basic and diluted loss per share
The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:
	€'000	€'000	€'000
Loss for the period attributable to equity holders	(106)	(147)	(227)
Weighted average number of ordinary shares for the purpose of basic earnings per share	99,681,992	99,681,992	99,681,992

Basic and diluted loss per share are the same as the effect of the outstanding share options is anti-dilutive.

4.     INTANGIBLE ASSETS

	30 June 16	30 June 15	31 Dec 15
Exploration and evaluation assets:	€'000	€'000	€'000
Opening balance	1,871	1,539	1,539
Additions	70	96	156
Exchange translation adjustment	(34)	132	176
	________	________	________
Closing balance	1,907	1,767	1,871

               Exploration and evaluation assets at 30 June 2016 represent exploration and related expenditure in respect of projects in Ireland and Ghana. The directors are aware that by its nature there is an inherent uncertainty in relation to the recoverability of amounts capitalised on the exploration projects.    

               The directors believe there were no facts or circumstances indicating that the carrying value of these intangible assets may exceed their recoverable amount and thus no impairment review was deemed necessary by the directors.  The realisation of these intangible assets is dependent on the successful discovery and development of economic reserves and is subject to a number of significant potential risks, as set out below:

· Licence obligations;

· Funding requirements;

· Political and legal risks, including title to licence, profit sharing and taxation;

· Exchange rate risk;

· Financial risk management;

· Geological and development risks;

               Directors' remuneration of €15,000 (December 2015: €30,000) and salaries of €7,500 (December 2015: €15,000) were capitalised as exploration and evaluation expenditure during the period.

Regional Analysis	30 Jun 16 €'000	30 Jun 15 €'000	31 Dec 15 €'000
Ghana	909	888	911
Ireland	998	879	960
	_______	_______	_______
	1,907	1,767	1,871

5.     SHARE CAPITAL

	2016	2015
	€	€
Authorised:
200,000,000 ordinary shares of €0.0125	2,500,000	2,500,000

Allotted, called-up and fully paid:
	Number	Share Capital	Premium
		€	€
At 1 January 2015	99,681,992	1,246,025	21,416,085
Issued during the period	-	-	-
At 30 June 2015 and at 31 December 2015	99,681,992	1,246,025	21,416,085
Issued during the period	-	-	-
At 30 June 2016	99,681,992	1,246,025	21,416,085

6.    POST BALANCE SHEET EVENTS

At the Company's Annual General Meeting held on 28^th July 2016 resolutions were put to the meeting amending the Memorandum and Articles of Association to reflect the new Companies Act 2014 of Ireland.  The resolutions were passed.

7.    The Interim Report for the six months to June 30^th, 2016 was approved by the Directors on 23^rd September 2016.

8.     The Interim Report will be available on the company's website at www.petrelresources.com.

 

END

 

 

IR EXLFLQKFZBBX