Final Results

Soco International PLC 20 March 2002 SOCO International plc ('SOCO' or 'the Company') Preliminary Results for the year ended 31 December 2001 SOCO is an international oil and gas exploration and production company, headquartered in London, with operations in Mongolia, Vietnam, Yemen, Thailand, Tunisia and North Korea. SOCO today announces record preliminary results for the year ended 31 December 2001. HIGHLIGHTS • Realised value through Russian asset disposal generating proceeds of US$50 million • Developed two new areas of future growth: Libya and Vietnam • Entered into a new joint venture in Libya to exploit potential • Vietnam exploration programme underway • Second consecutive year of 75% drilling success in Mongolia • Production increased to 8,817 BOPD (2000: 8,810 BOPD) • Further strengthening of balance sheet: net cash of £58.6 million versus £38.0 million at year-end 2000 Ed Story, Chief Executive of SOCO, said: 'In 2001 we accomplished our goals of recognising opportunities, capturing potential and realising value. The disposal of our Russian interests and the creation of a new joint venture in Libya added a new dimension to the Company this year. 'With a strong balance sheet and a commitment to realise early value from our portfolio, we are well positioned to generate significant growth from an exciting high impact drilling programme in Vietnam.' 20 March 2002 ENQUIRIES: SOCO International plc Tel: 020 7457 2020 (today) Ed Story, Chief Executive Tel: 020 7399 3300 (thereafter) Roger Cagle, Chief Financial Officer College Hill Tel: 020 7457 2020 James Henderson Kate Aquila SOCO International plc Preliminary Results for the year ended 31 December 2001 CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT Results The year 2001 encapsulated the goals of SOCO to recognise opportunity, capture potential and realise value. Profit before taxation reduced slightly to £22.9 million from £24.1 million as it could not keep pace with the record levels set during last year's period of extremely high oil prices. Group production rose from 8,810 barrels of oil per day (BOPD) last year to 8,817 BOPD in 2001. Cash Position At the year-end 2002 cash and cash equivalents totalled £58.6 million, an increase of more than 50% over balances held a year ago. Dividend Even with the strength of the balance sheet, the Directors believe that in the near to intermediate term the interests of the Company's shareholders can best be served by conserving funds to finance further growth. Accordingly, the Board has decided not to declare a dividend. Operational Highlights In 2001, Group production rose to a new record of 8,817 BOPD. The Company continued its operating success in Mongolia as three of four wells drilled were successful. The Group completed its acquisition of the second block in Vietnam and conducted an extensive offshore 3D seismic acquisition programme. In November, the Group entered into a new joint venture in Libya to capture attractive development potential, forming the basis for future exploration in North Africa. The Group made progress in rationalising its portfolio with the disposal of its 50% interest in Permtex, the Russian joint venture, for US$50 million. Libya We have taken the first major step toward building a new core area in North Africa. In November, SOCO North Africa Ltd (SOCO North Africa), a subsidiary of SOCO, entered into a joint venture with Oilinvest, a private Dutch holding company with interests in all sectors of the downstream oil industry. The joint venture, ODEX Exploration Limited (ODEX), was formed to identify and secure delineated oil and gas projects which by reason of size, complexity, economic, or other reasons are available for development. ODEX will also pursue exploration opportunities in Libya and neighbouring countries in North Africa. No projects have been introduced yet into the joint venture however the process of identifying and injecting the right projects is underway. The model for success in the joint venture is to introduce quality, high-potential projects early and then use these to provide cash flow for exploration in the surrounding regions where Libya has influence. Vietnam SOCO Vietnam Ltd (SOCO Vietnam) acquired its 30% interest in Block 16-1 in 1999 and completed the acquisition of the 50% interest in Block 9-2 in 2001. The Group now enjoys an outstanding acreage position in Vietnam. Both Blocks are located in the highly prospective Cuu Long Basin that has been an area of significant discoveries during the past several months. The Blocks are contiguous to the Rang Dong field that is currently producing 40,000 BOPD and the Bach Ho field that is currently producing approximately 280,000 BOPD. Subject to regulatory approval in Vietnam, SOCO Vietnam will farm-out 50% of its interest in each block to PTTEP, the partially privatised state oil company of Thailand. Post farm-out SOCO Vietnam retains a 25% interest in Block 9-2 and a 15% interest in Block 16-1. The two Joint Operating Companies (JOCs), established to manage the joint venture Petroleum Contracts, signed a cooperation agreement during 2001 enabling them to share services to provide operating and cost efficiencies. During the year both JOCs were involved in various stages of preparation for the drilling programme that is scheduled to commence in May 2002. In January 2002 SOCO announced that it had increased its ownership of SOCO Vietnam, the company that holds interests in Vietnam, from 70% to 80%. Mongolia For the second year in a row, the Company continued its drilling successes in Mongolia with a success rate of 75% as three of four wells drilled were successful. The production and processing facilities in Mongolia that were damaged in October 2000 were reconstructed and completed in August. The Contract Area 19 wells were put on production in July and August and sales to China were reinstated in August. Sales from this pilot production programme, which were restricted due to a lack of trucking capacity, averaged approximately 150 BOPD for the year. Trucking capacity has been expanded with the initiation of a transportation agreement signed with a Chinese company that is expected to begin late in the first quarter of 2002. A budget has been approved for the 2002 drilling programme that includes the drilling of four wells in the Tamstag Basin. Russia On 17 August 2001 SOCO entered into a Purchase and Sale agreement with a subsidiary of OAO Lukoil to dispose of its 50% interest in the Russian joint venture Permtex for cash consideration of US$50 million subject to shareholder approval. The shareholders approved the disposal at an Extraordinary General Meeting held on 6 September. Subsequently the transaction received the approval of the Russian Anti-monopoly Committee, as required by law, and the transaction closed at the end of October. The Russian operations are reflected in 10 months of the full period operating results and contributed 2,853 BOPD to SOCO's total production net to its working interest. The Russian asset disposal added £8.5 million of exceptional income to operating income. The Company disposed of debt obligations on its balance sheet with the sale of the Russian assets. The Company's exit from Russia came not as a result of lack of success, but rather as the result of a successful conclusion of its aspirations for a particular project. It stands as a paradigm for realising value at an appropriate time in the life cycle of one of the portfolio holdings. Yemen Work continued on geological and geophysical studies associated with the 3D seismic acquisition of 2000. The Phase III drilling programme that was scheduled to commence in the fourth quarter of 2001 was delayed into 2002 due to the unavailability of a drilling rig. Phase III drilling began in January 2002 with the budget calling for up to eight wells to be drilled. The drilling campaign commenced with the Kharir 2.6 development well, after which the rig is scheduled to move to an exploration location. The exploration programme is targeting anomalies highlighted in the seismic programme acquired in 2000. Gross production for 2001 averaged approximately 27,450 BOPD (SOCO's working interest approximately 4,600 BOPD) from the Kharir, Atuf NW and Wadi Taribah fields. This was slightly lower than projections due to rapidly increasing water cuts and delays in Phase III drilling. SOCO's share of the crude produced is sold to the spot market. Tunisia As a result of operational problems during the first part of the year and modification of facilities during the second half that necessitated taking the production off-line, production declined from 1,293 BOPD net to the Group's working interest to 1,206 BOPD in 2001. The Didon production has averaged approximately 8,750 BOPD, approximately 1,950 BOPD net to the Group's working interest without any signs of pressure decline. Estimates of recoverable reserves in the Didon field have been increased approximately 300% since inception due to production performance to date. An additional well is likely to be drilled on the structure in 2002 to maximise the economic recovery of oil. Thailand Discussions with potential farm-out candidates began in February and continued throughout the year. In December, an exclusive, non-binding Heads of Agreement was signed with a company to farm-in to one half of the Group's interest in Thailand. Potential development of the Pornsiri field and additional exploration could follow. A small 2D seismic programme was acquired over Block B8/38 in the first quarter of 2002 as the Company fulfilled its only remaining commitment associated with the Thailand Concession Agreement. The Board At the Annual General Meeting in May, shareholders approved the expansion of the SOCO Board of Directors. The Company appointed Mr. Robert Cathery and Mr. Ettore Contini, bringing the total number of Directors to 11. Mr. Cathery's background is as a broker with SG Securities (London) Ltd and Mr. Contini is a banker employed by Banca Del Gottardo. Each Director brings skills and strengths to the Board that will help us further grow the business. Summary The past year was a defining year for the Company as we delivered on our strategy to build shareholder value: recognise opportunity, capture potential and realise value. The Company entered into a new joint venture in Libya, conducted an active drilling programme in Mongolia and realised value by selling its interests in the Russian joint venture, Permtex. The Company's priorities for 2002 are to continue to rationalise its portfolio, progress the drilling programme in Vietnam and add opportunities through the joint venture in Libya. There is potential in the year ahead for active portfolio rationalisation if the mid-range, stable oil price environment continues. The Company actively manages its portfolio with a focus on building value over time, not on simply securing a one-off project. It will be a significant year as we build the base for future growth in our core areas of North Africa and Vietnam. With a strong balance sheet and no debt burden, the Company is well positioned to exploit potential in new areas in 2002. Patrick Maugein Ed Story Chairman Chief Executive 20 March 2002 SOCO International plc Preliminary Results for the year ended 31 December 2001 Consolidated Profit and Loss Account 2001 2000 £000's £000's Turnover Continuing operations 22,841 31,323 Discontinued operations 14,476 14,529 37,317 45,852 Cost of sales (21,913) (21,830) Gross profit 15,404 24,022 Administrative expenses (2,079) (1,973) Operating profit Continuing operations 9,471 16,364 Discontinued operations 3,854 5,685 13,325 22,049 Profit on sale of discontinued operations 8,474 - Profit on ordinary activities before finance charges 21,799 22,049 Investment income 1,361 2,102 Interest payable and similar charges (302) (62) Profit on ordinary activities before taxation 22,858 24,089 Tax on profit on ordinary activities (5,118) (6,524) Profit for the financial year 17,740 17,565 Earnings per share Basic 25.9p 25.6p Diluted 23.8p 24.3p Consolidated Statement of Total Recognised Gains and Losses 2001 2000 £000's £000's Profit for the financial year 17,740 17,565 Unrealised currency translation differences 2,931 7,372 Total recognised gains relating to the year 20,671 24,937 SOCO International plc Preliminary Results for the year ended 31 December 2001 Balance Sheets Group Company 2001 2000 2001 2000 £000's £000's £000's £000's Fixed assets Tangible and intangible assets 84,950 94,064 90 133 Investments 1,418 368 49,355 49,355 86,368 94,432 49,445 49,488 Current assets Stocks 1,068 1,199 - - Debtors 5,352 7,869 1,611 229 Investments 2,690 22,252 2,690 8,977 Cash at bank and in hand 55,910 15,795 5,390 2,174 65,020 47,115 9,691 11,380 Creditors: Amounts falling due within one year (6,848) (12,668) (185) (672) Net current assets 58,172 34,447 9,506 10,708 Total assets less current liabilities 144,540 128,879 58,951 60,196 Creditors: Amounts falling due after more than one year - (5,021) - - Provisions for liabilities and charges (1,051) (1,040) - - Net assets 143,489 122,818 58,951 60,196 Capital and reserves Called-up equity share capital 14,026 14,026 14,026 14,026 Share premium account 38,910 38,910 38,910 38,910 Other reserves 34,961 34,961 - - Profit and loss account 55,592 34,921 6,015 7,260 Shareholders' funds 143,489 122,818 58,951 60,196 SOCO International plc Preliminary Results for the year ended 31 December 2001 Consolidated Cash Flow Statement 2001 2000 £000's £000's Net cash inflow from operating activities 19,337 30,902 Returns on investments and servicing of finance Interest received 1,508 1,947 Interest paid and similar charges (843) (290) 665 1,657 Taxation paid (5,024) (6,794) Capital expenditure and financial investment Purchase of tangible and intangible fixed assets (26,743) (22,814) Purchase of own shares by employee benefit trust (1,253) - (27,996) (22,814) Acquisitions and disposals Sale of business 29,497 507 Cash inflow before management of liquid resources and financing 16,479 3,458 Management of liquid resources Decrease (increase) in funds placed on short term deposit 19,711 (884) Financing Issue of ordinary share capital - 741 Issue of preference shares to minority interests - 8 Increase in bank loan due after more than one year 3,455 3,338 3,455 4,087 Increase in cash in the year 39,645 6,661 SOCO International plc Preliminary Results for the year ended 31 December 2001 Notes to the accounts 1. Basis of accounting The preliminary accounts have been prepared under the historic cost convention and in accordance with applicable accounting standards and on the same basis as the statutory accounts for the year ended 31 December 2000. 2. Basis of preparation The financial information presented above does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. An audit report has not yet been issued on the accounts for the year ended 31 December 2001, nor have they been delivered to the Registrar of Companies. The comparative financial information for the year ended 31 December 2000 has been derived from the statutory accounts for that year. Those statutory accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 3. Dividend The Directors are not recommending the payment of a dividend. 4. Tax on profit on ordinary activities The tax charge comprises: 2001 2000 £000's £000's UK Corporation tax at 30% (2000 - 30%) - - Current overseas taxation 5,506 6,592 Deferred overseas taxation (388) (68) 5,118 6,524 Deferred taxation includes recognition of a net deferred tax charge of £27,000 (2000 - £601,000) in respect of the Tunisian interest and £111,000 (2000 - net deferred tax credit of £274,000) in respect of the Russian interest and a net deferred tax credit of £526,000 (2000 - £395,000) in respect of the Yemen interest. The overseas deferred tax credits arise primarily on the net foreign tax credits carried forward and fixed asset timing differences. There is no unprovided deferred taxation at either balance sheet date. 5. Earnings per share The calculation of the basic earnings per share is based on the profit for the financial year and on 68,625,106 (2000 - 68,591,969) ordinary shares, being the weighted average number of ordinary shares in issue and ranking for dividend during the year, excluding 1,502,603 (2000 - 600,000) ordinary shares of the Company held by the Group. The calculation of the diluted earnings per share is based on the profit for the financial year and on 74,427,164 (2000 - 72,416,560) ordinary shares, being the weighted average number of ordinary shares in issue and ranking for dividend during the year including 1,502,603 (2000 - 600,000) ordinary shares of the Company held by the Group, and 4,299,455 outstanding share options and warrants (2000 - 3,275,828) that have a diluting effect on earnings per share. 6. Reconciliation of movements in Group shareholders' funds 2001 2000 £000's £000's Opening shareholders' funds 122,818 97,140 Profit for the financial year 17,740 17,565 Unrealised currency translation differences 2,931 7,372 New shares issued - 741 Closing shareholders' funds 143,489 122,818 7. Reconciliation of operating profit to operating cash flows 2001 2000 £000's £000's Operating profit 13,325 22,049 Depreciation and amortisation 7,682 8,942 Movement in stocks (231) 169 Movement in debtors (1,729) (1,194) Movement in creditors 290 936 Net cash inflow from operating activities 19,337 30,902 Net cash inflow from operating activities comprises: Continuing operating activities 14,436 24,784 Discontinued operating activities 4,901 6,118 19,337 30,902 8. Analysis and reconciliation of net funds As at 31 Sale of Exchange As at 31 Dec 2000 Cash flow Business Movement Dec 2001 £000's £000's £000's £000's £000's Cash at bank and in hand 15,795 39,645 - 470 55,910 Current asset investments 22,252 (19,711) - 149 2,690 Bank loan due after more than one year (5,021) (3,455) 8,612 (136) - Net funds 33,026 16,479 8,612 483 58,600 9. Subsequent events In January 2002 pursuant to a Share Exchange Agreement the Group acquired an additional 10% of the share capital of SOCO Vietnam Ltd (SOCO Vietnam), increasing its interest in the majority owned subsidiary from 70% to 80%. The consideration for the exchange was £1,753,153 satisfied by 926,124 newly issued ordinary shares of £0.20 each (valuing each share at £1.893) in the share capital of SOCO. In February 2002 SOCO Vietnam executed a Farm-out Agreement (Agreement) with PTT Exploration and Production Public Company Limited of Thailand (PTTEP), subject to the approval of the Government of Vietnam. Per the Agreement, PTTEP will fund the Group's share of drilling four wells scheduled during 2002 on Blocks 9-2 and 16-1 in the Cuu Long Basin offshore Vietnam to a maximum of $50 million (£35 million), whichever is less. Post farm-out SOCO Vietnam, in which the Company holds an 80% interest, retains a 25% interest in Block 9-2 and a 15% interest in Block 16-1. 10. Disposal of interest in Permtex In October 2001 the Group sold its 50% interest in Permtex, a Russian limited liability company, through which the Group held its producing Russian interest. OAO Lukoil acquired the interest for cash consideration of approximately £34.5 million. The sale resulted in a reduction of Group debt of £8.6 million and a net cash inflow in 2001 in the amount of £29.5 million reflecting the £34.5 million cash consideration net of transaction costs and the Group's share of cash held by Permtex, and a profit of £8.5 million. During the period prior to the sale the Russian interest contributed £3.9 million to Group operating profit (2000 - £5.7 million). Immediately prior to the sale the Group's share of net assets held by the Russian interest was £25.6 million. 11. Preliminary results announced Copies of the announcement will be available from the Company's head office, Swan House, 32 - 33 Old Bond Street, London, W1S 4QJ. The Annual Report and Accounts will be posted to shareholders in due course. This information is provided by RNS The company news service from the London Stock Exchange

Companies

Pharos Energy (PHAR)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today