Interim Results

RNS Number : 9359Y

Predator Oil & Gas Holdings PLC

28 August 2018

 

28 August 2018

Predator Oil & Gas Holdings Plc

("Predator", the "Company" or the "Group")

Unaudited Interim Results for the six months ended 30 June 2018

Predator Oil & Gas Holdings Plc, the Jersey-based oil and gas company with an exciting portfolio of high impact oil and gas assets onshore Trinidad, on the Atlantic margin of Ireland and in the Celtic Sea, announces its Interim Results for the six months ended 30 June 2018.

Strategic highlights

·   Assembled an exciting portfolio of high impact oil and gas assets in the Republic of Trinidad and Ireland;

·   Potential for production and cash flow from Trinidad in the near to medium term;

·   Successful entry into offshore Ireland providing exposure to high potential, transformational gas acreage;

·   Potential for early monetisation in a success case offshore Ireland created by strategic focus on gas around offshore infrastructure prior to rising gas prices and concerns over security of gas supply; and

·   Fully funded for near to medium term operations.

Corporate

·   Consolidated an existing non-operated oil and gas business opportunity in the Republic of Trinidad and Tobago and an exploration and appraisal portfolio offshore Ireland;

·   Admission of the entire issued share capital to the Standard Listing segment of the Official List (the "Listing") and to trading on the Main Market of the London Stock Exchange; and

·   Application made for a Frontier Exploration Licence, a Successor Authorisation to Licensing Option 16/26 (Corrib South Prospect).

Operational

·   Accelerated planning for Enhanced Oil Recovery in the Inniss-Trinity field onshore Trinidad using carbon dioxide injection ("CO2 EOR"); and

·   Initial planning for the 18/25-3 Corrib South exploration well commenced to ensure regulatory consents and approvals in place ahead of potential drilling campaign in 2020, subject to the award of the frontier exploration licence.

Financial

·   Successful over-subscribed £1.3 million fundraising coinciding with Listing;

·   Cash at 30 June 2018: £1,325,967;

·   Fully funded for near to medium term operations; and

·   No revenue due to early stage of planning and execution of incremental production operations in Trinidad.  Loss for the period of £153,979.

Post-period highlights

·   Amended Well Participation Agreement executed on 30 July 2018 with FRAM Exploration (Trinidad) Ltd. providing for acceleration of CO2 EOR operations and potentially higher production rates; and

·   Heads of Agreement executed with CO2 Supplier for minimum daily delivery of 60 metric tonnes of CO2 to the Inniss-Trinity field, establishing Predator's footprint in Trinidad as the pathfinder for CO2 EOR.

Outlook

The Board's strategy remains to create shareholder value through; (i) implementing CO2 EOR operations in Trinidad, generating early cash flow; and (ii) achieving exploration success in the Group's high-potential gas assets offshore Ireland, retaining material positions following a farmout process utilising the Board's extensive network of industry relationships developed over many years.

The Group's strong financial position provides sufficient funding for the exciting CO2 EOR growth strategy onshore Trinidad which sets us apart from other onshore operators. Near-term activities offshore Ireland will focus on building the drilling partnership for a Corrib South well in 2020 and preparing all the materials required to receive regulatory approvals in a timely manner. The campaign offshore Ireland will focus on unlocking the resource potential of the large-scale gas prospects. 

Sarah Cope, Non-Executive Chairman, commented:

"The past few months have been a busy and transformational period for Predator. We have successfully built a business with a material portfolio of assets. We are excited to have entered Trinidad, an emerging area for CO2 EOR operations, which is proven technology currently delivering significant production from mature fields in the USA. As we are moving into the next stage of growth, our CO2 EOR operations are fully funded thanks to the capital raised this year.

Management's long track record offshore Ireland as gas explorers and producers, has allowed us to create a portfolio of attractive gas assets, including discovered gas adjacent to infrastructure, that differentiates Predator as the leading company offshore Ireland in relation to developing near-term indigenous gas resources to address fears over security of gas supply.  

Predator has rapidly demonstrated its ability to deliver a strong portfolio of assets for its shareholders; these form the foundation for near-term growth through cash flow and portfolio management focused on delivering medium-term value through the drill bit."

For further information please contact:

Predator Oil & Gas Holdings Plc Sarah Cope        Chairman Paul Griffiths     Chief Executive Officer	[phone] [e-mail]
Novum Securities Ltd (Broker) Jon Bellis	[phone]

Chairman's and Chief Executive Officer's Statement

We are pleased to report on the progress of Predator Oil & Gas Holdings Plc ("Predator" or the "Company") and present the unaudited interim results for the six-month period ended 30 June 2018.

Operations Review

Predator was formed to consolidate the acquisition of an existing non-operated oil and gas business opportunity in the Republic of Trinidad and Tobago, which should generate near-term income for the Group, and an exploration and appraisal portfolio offshore Ireland operated by its wholly-owned subsidiary Predator Oil and Gas Ventures Ltd.

On 24 May 2018 Predator successfully raised £1.3 million through the issue of 46,428,600 new ordinary shares in the Company (the "Placing") at a Placing Price of 2.8 pence each and completed the Admission of its entire issued share capital, being 100,137,150 ordinary shares, to the Standard Listing segment of the Official List (the "Listing") and to trading on the Main Market of the London Stock Exchange ("Admission"). 

Since Admission, Predator has moved quickly to fast-track CO2 EOR operations onshore Trinidad and to further develop the potentially high impact Irish gas exploration and appraisal assets in which the Group has material ground floor stakes. This is in line with the Group's strategy of organically developing its asset base using management's experience and expertise to reduce initial costs thereby providing the platform for building future, value-enhancing partnerships whereby significant disproportionate contribution to financing drilling can be achievable through the industry-standard farmout process.  

Onshore Trinidad

Following the execution of the Well Participation Agreement on 17 November 2017 with the operator of the Inniss-Trinity Incremental Production Services Contract, FRAM Exploration (Trinidad) Ltd. ("FRAM"), a subsidiary of Steeldrum Oil Company Inc., Predator has been carrying out a technical evaluation of its proposed two-well infill drilling programme in the context of potential well productivities versus those productivities that could be obtained from CO2 EOR operations.

Predator's technical analysis has identified a specific area of the Inniss-Trinity field most suitable for the initial Pilot CO2 EOR project. In this area Texaco, the previous operator, had identified approximately 3.1 million barrels of undeveloped oil and forecast 653,000 barrels of potential incremental recovery by applying secondary EOR techniques.

Texaco had previously forecast an initial yearly production rate of greater than 150,000 barrels of oil for the first year of EOR operations in this specific area, but this assumed no benefit whatsoever from also injecting CO2, as is currently proposed by Predator.

At the same time the Group has researched the CO2 supply market in Trinidad to determine the volumes of surplus CO2 currently available and accessible by trucking for CO2 EOR at Inniss Trinity.

Babcock LGE Process, the world market leader in the design, supply and project management of specialised systems for the processing, handling and storage of liquefied gases including CO2 liquefaction and transport, has provided Predator with a written expression of interest in working with predator to develop its CO2 EOR business in Trinidad.

Meetings have been held with all stakeholders in Trinidad to present Predator's analysis of the potential for CO2 EOR operations and to obtain feedback on any possible regulatory and environmental issues that might arise specific to CO2 EOR operations.

Based on the positive results of the above programme of work, all stakeholders recognise that a Pilot CO2 EOR project for the Inniss-Trinity field as proposed by Predator is potentially a more commercially attractive proposition compared to infill drilling. Accordingly, the Group has re-negotiated the Well Participation Agreement with FRAM to facilitate accelerating the commencement of the CO2 EOR Pilot and to defer infill drilling to assess the potential benefits for well productivities from CO2 injection.

The CO2 EOR Pilot can be fully funded from existing cash balances as a result of deferring the infill drilling programme for re-assessment once production rates from the Pilot CO2 EOR have been established.

Offshore Ireland

Licensing Option 16/26 Corrib South Gas Prospect

An application has been made by Predator for a Frontier Exploration Licence, a Successor Authorisation to Licensing Option 16/26.

Licensing Option 16/26 contains the Corrib South gas prospect, which is located just 18 kilometres from the Corrib gas field subsea infrastructure.

Corrib South is considered by the Company's management, based on 37 years of experience in gas exploration and production offshore Ireland, to contain the Triassic Sherwood sandstone, the Corrib gas field reservoir that was delivering an average of 345 mm cfgpd through Q1 to Q3 2017. Corrib South is likewise interpreted by the Company to be located in a geological structure that has strong similarities with that hosting the gas in the Corrib field. 

In the Best Estimate (equivalent to 2P) and High Estimate Cases the Prospective Gas Resources are respectively 424 bcf recoverable (212 bcf net to Predator) and 904 bcf recoverable (452 bcf net to Predator) with a 30% Chance of Success, based on Predator's Competent Person's Report by SLR Consulting. In the High Estimate Case Corrib South is considered by the Company to be similar in size to the Corrib gas field structure.

Future work will be focussed on potentially de-risking the High Estimate Prospective Gas Resources and updating the Competent Person's Report to reflect the results of this work.

Confidentiality Agreements have been executed with several potential future drilling partners based on the Group's selection strategy of targeting only those companies where the commercial rationale for a subsea tie-back to the Corrib gas field in the event of a gas discovery at Corrib South is clearly understood and appreciated.   Sufficient progress is being made to warrant the Group commencing initial planning for the 18/25-3 Corrib South exploration well to ensure that all regulatory consents and approvals are in place for drilling to start in 2020, subject to award of the licence.

Licensing Option 16/30 Ram Head Gas Prospect

Licensing Option 16/30 contains the Ram Head gas prospect, which is located just 40 kilometres from the Kinsale gas field offshore infrastructure.

On 28 June 2018 it was announced that an application by PSE Kinsale Energy for the Kinsale facilities to be de-commissioned and abandoned had been received and that a deadline for submissions had been set for 31 July 2018. Predator has made a submission, as have other Celtic Sea operators, to the Minister for Communications, Climate Action and the Environment regarding this Application and the decision to abandon this strategic national asset and leave behind material volumes of stranded gas that could potentially contribute to security of gas supply in a rapidly changing geopolitically-influenced energy environment.

Ram Head is a gas discovery made in 1984 by Marathon and Enterprise Oil (later acquired by Shell). It was never appraised due to the lack of a gas market in Ireland at that time and the absence of export infrastructure to the UK.

Predator's technical studies have re-focussed on the quality of the Jurassic gas reservoirs which at the time of drilling were considered to be poor. New intervals showing much better-quality reservoir characteristics have been assessed based on the same technology Predator's current management employed to de-risk similar, technically challenging, Triassic gas reservoirs that were successfully appraised from 2015 onwards at Tendrara onshore Morocco. 

Based on this work the forward work programme is to carry out reservoir engineering studies to determine the potential productivity of the gas-bearing sands in the Ram Head Prospect.

De-risking the potential for these gas sands to flow gas at commercial rates is the precursor for considering a potential gas appraisal well in 2020. Currently in the Best Estimate (equivalent to 2P) and High Estimate Cases the Prospective Gas Resources for Ram Head are respectively 1.016 TCF recoverable (0.508 TCF net to Predator) and 2.74 TCF recoverable (1.37 TCF net to Predator) with a 12% Chance of Success, based on Predator's Competent Person's Report by SLR Consulting.  

The Ram Head gas discovery potentially contains Ireland's largest discovered gas accumulation and therefore the Company's strategy is to accelerate its efforts to de-risk the reservoir for appraisal drilling given the backdrop of escalating gas prices and concerns over security of gas supply.

Confidentiality Agreements have been executed with several potential future partners for the further evaluation of the gas in Ram Head.  The Group's selection strategy has been to target only those companies where the commercial rational for developing gas in Ireland is understood, rather than to dissipate management time on an industry-wide marketing process. 

Financial Review and Working Capital

Predator is an early stage oil and gas company with no revenue generated to date. The Group is reporting a loss for the six-month period to 30 June 2018 of £153,979 that mainly reflects the important strategic step of the transition of the Company from a private company to a publicly listed oil and gas company with access to the capital markets. The loss for the period comprises general and administrative costs of £154,384.

On 24 May 2018, as part of an over-subscribed share placing to coincide with the admission of the Company, £1,300,000 before costs was raised by the issue of 46,428,600 new ordinary shares of no par value each in the Company (the "Placing") at a Placing Price of 2.8 pence each and the Admission of its entire issued share capital, being 100,137,150 ordinary shares of no par value each, to the Standard Listing segment of the Official List (the "Listing") and to trading on the Main Market of the London Stock Exchange ("Admission"). 

The gross proceeds of £1,300,000 raised under the Placing will be used to facilitate its investment strategy and to provide working capital. Accordingly, the Group is now fully funded for its operational activities for the medium term.

Cash balances as at 30 June 2018 were £1,325,967.

Corporate Overview

In May 2018, the Predator Board was substantially strengthened with the appointments of Sarah Cope as non-Executive Chairman and Stephen Staley as non-Executive Director. The Predator Board now consists of Paul Griffiths and Ronald Pilbeam in executive roles while non-executive Director positions are held by Sarah Cope and Stephen Staley. Sarah Cope, as non-Executive Chairman holds the casting Board vote.  

Upon all their appointments to the Board, the Directors were granted an aggregate of 10,013,712 share options. Exercise of the share options are subject to certain production targets being achieved and maintained by the Group. 2,321,429 warrants were granted to Novum Securities Ltd. and Optiva Securities Ltd. in connection with the Placing on Listing.  All of the options and warrants granted are exercisable at an exercise price of £0.028 per share, the IPO market price on the date of Admission.

Outlook and Future Developments

The Group is fully funded to execute its CO2 EOR Pilot strategy in Trinidad by deferring infill drilling, given the modest capital commitment required in the short term to achieve the ramping up of production and cash flow from EOR operations. The Board is of the view that this leads to a more prudent gradual deployment of capital geared to step-by-step increases in production rates without exhausting the majority of its capital resources on expensive infill drilling before the establishment of production.

The progressive results of the CO2 EOR operations will be eagerly awaited over the coming months. Assuming successful implementation and positive commercial benefits Predator will be well-placed to be a CO2 EOR leader in Trinidad with potential to grow its business through the practical expertise that it is developing.

Offshore Ireland the focus will be on accelerating the ability to drill the Company's gas prospects by bringing in partners aligned with Predator's Irish gas strategy for sustained value-creating exploration work and drilling programmes.

The Board's strategy is to ensure that the Group retains a material, well-funded interest in its portfolio of prospects at the time of drilling. The Board has experience of creating shareholder value through exploration success and recognise the importance to maintain this ability in growing the business of the Group.

On behalf of the Board                 on 28 August 2018:

_____________________                                                               ______________________

Sarah Cope                                                                                         Paul Griffiths

Chairman                                                                                            Chief Executive Officer

Copy of the Interim Report

Copies of the Interim Report are available to download from the Company's website at

www.predatoroilandgas.com

Notes to Editors:

Predator is an oil and gas exploration company with the objective of participating with FRAM Exploration Trinidad Ltd. in further developing the remaining oil reserves at the producing Inniss Trinity oil field onshore Trinidad, primarily through the application of CO2 EOR technology. Potential for cash flow exists by executing a Pilot Enhanced Oil Recovery project using locally-sourced carbon dioxide for injection into the oil reservoirs ("CO2 EOR"). Near-term expansion and growth potential is focussed on upscaling the CO2 EOR operations in the Inniss-Trinity oil field and potential acquisitions of assets suitable for CO2 EOR development. 

In addition, Predator also owns and operates exploration and appraisal gas assets in current licensing options offshore Ireland adjoining Shell's Corrib gas field in the Slyne Basin on the Atlantic Margin and east of the Kinsale gas field and Barryroe oil field in the Celtic Sea.

The Company has a highly experienced management team with a proven track record in the oil and gas industry.

Condensed consolidated statement of comprehensive income
For the 6 months to 30 June 2018
			01.01.2018 to 30.06.2018			19.12.2017 to 31.12.2017
			(unaudited)			(audited)
	Notes		£			£
Administrative expenses	3		(154,384)			-
Operating loss			(154,384)			-
Finance income			405			-
Loss for the period before taxation			(153,979)			-
Taxation			-			-
Loss for the period after taxation			(153,979)			-
Other comprehensive income			-			-
Total comprehensive loss for the period attributable to the owner of the parent			(153,979)			-
Earnings per share (in pence)	6		(0.4)			-
All items in the above statement derive from continuing operations.
Condensed consolidated statement of financial position
As at 30 June 2018
				30.06.2018			31.12.2017
				(unaudited)			(audited)
		Notes		£			£
Non-current assets
Tangible fixed assets				2,014			-
Current assets
Trade and other receivables		4		64,352			1
Cash and cash equivalents				1,325,967			-
				1,390,319			1
Total assets				1,392,333			1
Equity attributable to the owner of the parent
Share capital		5		-			-
Share premium		5		1,571,456			1
Other reserves				(65,793)			-
Retained deficit				(153,979)			-
Total equity				1,351,684			1
Current liabilities
Trade and other payables		7		40,649			-
Total liabilities				40,649			-
Total liabilities and equity				1,392,333			1

Condensed consolidated statement of changes in equity
For the 6 months to 30 June 2018
				Share Capital	Share premium		Other reserves	Retained deficit		Total
				£	£		£	£		£
On incorporation 19 December 2017				-	-		-	-		-
Issue of ordinary share capital				-	1		-	-		1
Total contributions by and distributions to owners of the parent recognised directly in equity				-	1		-	-		1
Loss for the period				-	-		-	-		-
Other comprehensive income				-	-		-	-		-
Total comprehensive income for the period				-	-		-	-		-
Balance at 31 December 2017				-	1		-	-		1
Issue of ordinary share capital				-	1,837,086		-	-		1,837,086
Listing costs capitalised				-	(265,631)		40,390	-		(225,241)
Merger reserve arising				-	-		(106,183)	-		(106,183)
Total contributions by and distributions to owners of the parent recognised directly in equity				-	1,571,455		(65,793)	-		1,505,662
Loss for the period				-	-		-	(153,979)		(153,979)
Other comprehensive income				-	-		-	-		-
Total comprehensive income for the period				-	-		-	(153,979)		(153,979)
Balance at 30 June 2018				-	1,571,456		(106,183)	(153,979)		1,351,684

Condensed consolidated statement of cash flows
For the 6 months to 30 June 2018
			01.01.2018 to 30.06.2018		19.12.2017 to 31.12.2017
			(unaudited)		(audited)
		Notes	£		£
Cash flows from operating activities
Loss for the period before taxation			(153,979)		-
Adjustments for:
Finance income			(405)		-
Increase in trade and other receivables			(20,894)		(1)
Increase in trade and other payables			40,649		-
Net cash used in operating activities			(134,629)		(1)
Cash flow from investing activities
Cash acquired from acquisition of subsidiary		2	387,444		-
Purchase of computer equipment			(2,013)		-
Net cash generated from investing activities			385,431		-
Cash flows from financing activities
Proceeds from issuance of shares, net of issue costs			1,074,760		1
Finance income received			405		-
Net cash generated from financing activities			1,075,165		1
Net increase in cash and cash equivalents			1,325,967		-
Cash and cash equivalents at the beginning of the period			-		-
Cash and cash equivalents at the end of the period			1,325,967		-
Major non-cash transactions
The consideration paid for the acquisition of the subsidiary Predator Oil & Gas Ventures Limited was satisfied by the issue of 53,708,550 new ordinary shares

Notes to the condensed consolidated interim financial statements
For the 6 months to 30 June 2018
1	General information
	Predator Oil and Gas Holdings plc ("The Company") is a Company incorporated in Jersey, Channel Islands.  The Company's shares were admitted to the Standard Listing segment of the Official List and to trade on the Main Market of the London Stock Exchange on 24 May 2018.
	The principal activity of the Group is the operation of an oil and gas business in the Republic of Trinidad and Tobago and an exploration and appraisal portfolio in Ireland.
	Basis of preparation
	The condensed consolidated interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") and should be read in conjunction with the audited financial statements for the period ended 31 December 2017, which have been prepared in accordance with IFRS as adopted by the European Union. The condensed consolidated interim financial statements are not prepared in accordance with IAS 34 as adopted by the European Union.
	The interim results for the six months ended 30 June 2018 are unaudited and have not been reviewed and therefore do not constitute statutory accounts under Companies (Jersey) Law 1991.
	Going concern
	The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and have adopted the going concern basis in preparing the condensed consolidated interim financial statements.
	Accounting policies
	The condensed consolidated interim financial statements have been prepared on the basis of the accounting policies set out in the financial statements for the year ended 31 December 2017 which are available on the Company's website.  The directors do not anticipate the addition of new standards to the Group's result for the year ended 31 December 2018 would materially impact the results.
	The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the period ended 31 December 2017.

2	Acquisition of Predator Oil and Gas Ventures Limited
	On 21 March 2018 the Company acquired the entire issued share capital of Predator Oil and Gas Ventures Limited for a consideration of £537,085.  The consideration was satisfied by the issue of the 53,708,550 new Ordinary shares of NPV.
														£
	Consideration
	Issue of 53,708,550 Ordinary NPV shares													537,085
	Total consideration													537,085
	The assets and liabilities recognised as a result of the acquisition are as follows:
	Cash													387,444
	Loans receivable													43,458
														430,902
	Merger reserve													106,183
	Net Assets acquired													537,085
	The acquisition of Predator Oil & Gas Ventures Limited does not constitute a business combination under IFRS3 because the entity was under common control and therefore merger accounting has been adopted.  A merger reserve of £106,183 has been recognised which represents the difference between the nominal value of shares issued for the acquisition and the net assets acquired.
3	Administrative expenses									01.01.2018 to 30.06.2018				19.12.2017 to 31.12.2017
										(unaudited)				(audited)
										£				£
	Administration fees									36,242				-
	Accountancy fees									3,500				-
	Non-executive directors' fees									6,589				-
	Annual return fee									420				-
	Insurance									1,512				-
	Listing cost not eligible for capitalisation									37,358				-
	Licencing options									7,995				-
	IT expenses									3,143				-
	Consultancy									31,356				-
	Travel expenses									24,931				-
	Bank charges									247				-
	ISE fee									540				-
	Sundry expenses									907				-
	Foreign exchange									(356)				-
										154,384				-
4	Trade and other receivables										01.01.2018 to 30.06.2018			19.12.2017 to 31.12.2017
											(unaudited)			(audited)
											£			£
	Current
	Loans receivable										31,758			1
	Prepayments										32,594			-
											64,352			1
	The loans are unsecured, interest free and repayable on demand.
5	Share capital										Number of shares			Weighted average shares
	Issued and fully paid
	21 December 2017
	Initial share capital										1			1
	21 March 2018
	Share for share exchange acquisition of Predator Oil & Gas Ventures Limited										53,708,549			28,400,856
	21 May 2018
	Share placing										46,428,600			9,723,267
	30 June 2018										100,137,150			38,124,124
	On 21 May 2018 Optiva Securities and Novum Securities as joint brokers and placing agents successfully raised £1,300,001 before costs placing 46,428,600 new Ordinary NPV shares at £0.028 each in the capital of the Company.
6	Earnings per share										01.01.2018 to 30.06.2018			19.12.2017 to 31.12.2017
											(unaudited)			(audited)
	Loss attributable to ordinary equity holders of the company										(153,979)			-
	Weighted average number of shares										38,124,124			1
	Total basic earnings per share attributable to the ordinary equity holders (in pence)										(0.4)			-
7	Trade and other payables									01.01.2018 to 30.06.2018			19.12.2017 to 31.12.2017
										(unaudited)			(audited)
										£			£
	Current
	Creditors and accruals									40,649			-
										40,649			-
8	Related party transactions
	During the period consultancy fees were paid to R Pilbeam £15,806 and Petro-Celtex Limited (a company 100% owned by P Griffiths) £15,550.
	During the period non-executive fees were paid to S Staley £3,041 and S Cope £3,548.
9	Subsequent events
	The Directors have evaluated and noted that no material events and transactions have occurred from 30 June 2018 that would require disclosure or adjustment.

 

END

 

 

IR SEFEFWFASEIA