Interim Results

RNS Number : 3887N

San Leon Energy PLC

28 September 2012

 



Friday 28 September 2012

San Leon Energy Plc

Interim Results for the six months ended 30^th June 2012

San Leon Energy Plc ("San Leon"), the AIM listed company focused on oil and gas exploration in Europe and North Africa today announces its interim results for the six months ended 30 June 2012.

Highlights:

Poland:

·    New potential unconventional gas play confirmed by the Siciny-1 well

·    Lelechow-SL1 successfully finds oil, testing ongoing

·    Successful completion of Szymkowo-1 well, the Company's third shale gas exploration well in the Baltic Basin with Talisman Energy

·    Licence awards:

-    The Praszka concession, Southern Permian/SW Carboniferous Basin - 296,082 acres

-    The Czersk concession, Baltic Basin  - 173,584 acres

·    Expansion of the Rawicz Concession including existing Rawciz gas field

·    Acquired a 75% working interest in certain Polish assets held by Hutton Energy for US $15million

·    JV Partnership with Celtique Energie to jointly develop the existing Celtique concessions

·    Acquisition by NovaSeis of first seismic in Poland including 150 km 2D in the Baltic Basin and 220 km² 3D over the Gora Concession including the Siciny-2 well

Morocco:

·    Successful offshore farm-out agreements with free carries over two exploration wells:

-    Genel Energy farmed in to the Sidi Moussa Block

-    Cairn Energy farmed in to the Foum Draa Block

·    Cooperation agreement in oil shale development with Enefit Outotec Technology ("EOT")

·    Award of four additional shallow oil shale blocks and extension of exclusivity period to March 2014

Albania:

·    Numerous high quality oil & gas prospects identified across the Company's Durresi licence

·    Prestack Depth Migration completed by Western Geophysical on the 2011 840 km² Duressi 3D

Ireland:

·    Continued work on Barryroe indicates additional upside in the field

Corporate:

·    Admission of ADRs onto OTCQX with Deutsche Bank appointed as the Company's depository Bank

·    Appointed FirstEnergy as Joint Broker

·    Appointment of Con Casey as Non-Executive Director, effective after the Company's AGM later today

·    Establishment of Advisory Committee

Financial:

·    Profit for the six months to 30 June 2012 of €0.78million (2011: €1.48million)

·    Revenue for the six months to 30 June 2012 amounted to €1.16million (2011: €0.52million)

·    Cash and cash equivalents of €6.21million, excluding the €9.9million cash proceeds from the sale of the Amstel royalty

Outlook:

·    120km² 3D seismic over Rawicz gas field, Poland, with first appraisal well in Q2/Q3 2013 and first production expected in Q3 2013

·    Second exploration well, Czaslaw in Nowa Sol, Poland, expected to spud in October 2012

·    Free well carry on Sidi Moussa Block, targeted for 2014

·    Free well carry on Foum Draa Block, expected in 2013

·    Completion of farm-in process across the Durresi Block, Albania 

·    Data rooms opened on the North Porcupine and Slyne licences, Ireland, with a view to gaining farm-in partners

Oisin Fanning, Chairman of San Leon said:

"This has been San Leon's most active period to date both operationally and corporately.  We have continued to prove up the potential of our assets through the drillbit whilst the calibre and potential of these assets has been further endorsed by the partners we have brought in.

As we enter the next exciting phase of our development the level of activity seen in the last period is set to continue.  We have an extensive work programme across our portfolio and will continue to manage our risk profile through the completion of further transactions similar to those done in Morocco.  San Leon is well placed with a highly attractive portfolio of assets across a number of different play types and an excellent technical team in place.

We look forward to providing further updates in due course."

San Leon Energy Plc	Tel: [phone]
Oisin Fanning, Executive Chairman
John Buggenhagen, Exploration Director
Macquarie Capital (Europe) Limited	Tel: [phone]
John Dwyer
Fox Davies Capital	Tel: [phone]
Daniel Fox-Davies
Richard Hail
FirstEnergy Capital LLP	Tel: [phone]
Hugh R. Sanderson
David Van Erp
Westhouse Securities (Nominated Advisor) Richard Johnson	Tel: [phone]
Antonio Bossi
College Hill Associates	Tel: [phone]
Nick Elwes
Alexandra Roper

The Interim results will shortly be available at: www.sanleonenergy.com

Qualified person

John Buggenhagen, who has reviewed this update, has over 15 years experience in the oil & gas industry. He has a Ph.D. and M.Sc. in Geophysics from the University of Wyoming and a B.Sc. in Geophysics from the University of Arizona. He is currently the Director of Exploration for the San Leon Energy Group and based in San Leon's Warsaw office in Poland.

Chairman's statement

During the six months under review and the period to date the Company has made continued progress both operationally and corporately. San Leon has continued to focus on its core areas of operations, being Poland, Morocco and Albania, with considerable achievements across each region.

Poland

Poland continues to be a core area for the Company, both in the Baltic Basin and the Southern Permian / SW Carboniferous Basin. During the six months under review and post the period significant progress has been made across both these regions proving up the respective plays.

The Szymkowo-1 well was the third shale gas exploration well that the Talisman / San Leon partnership drilled on the Baltic Basin with several intervals showing significant gas shows; with the strongest gas shows encountered in the lower Silurian and Ordovican shales.  This well completed the initial three well programme of the Talisman farm in.  The Company looks forward to working with Talisman towards the next stage of our cooperation which is expected to include horizontal drilling and potential testing in 2013.

Significant progress was also made across the SW Carboniferous basin of Poland through the successful drilling of the Siciny-2 well.  This well had a continuous gas column throughout the Carboniferous interval and proves up the huge potential upside this basin has to offer. In addition to this the Lelechow-SL1 well, in the Company's Nowa Sol Concession in the Southern Permian Basin, also found oil.  The Company looks forward to flow testing the Siciny-2 well later this year and believes that the Company can monetise any success there in the first half of next year.

Poland remains a key area of focus with the Company gaining further acreage in this region.  San Leon was delighted to be awarded the Praszka concession in the Southern Permian Basin and the Czersk concession in the Baltic Basin.  In addition to this the Company also purchased certain Polish assets from Hutton Energy for US$ 15 million, with a view to jointly developing those assets, as well as signing a joint Venture with Celtique Energie over two high quality exploration blocks on trend with some of San Leon's other projects.  The Company is also delighted to have expanded its existing Rawicz Concession, with the amended concession including the previously discovered Rawicz gas field.  The Company is currently acquiring a 120 km² of 3D seismic  over the Rawciz field.

San Leon has an unprecedented acreage position in Poland. The Company has built a portfolio of high potential assets across a number of different plays, a strategy the Company believes will prove successful in the future.

Albania  

In 2011 the Company completed an 840km² of 3D seismic over the Durresi block offshore Albania. This new 3D seismic has identified numerous large scale prospects and leads across the licence with un-risked prospective recoverable resources of more than one billion barrels of oil equivalent across the proven petroleum systems. 

The Company has also opened a data room on the Durresi block to select companies. There has been huge interest in our data room, which is now closed; letters of intent are expected and the Company expects to make a further announcement on this farm in process shortly. 

We are very excited about the potential of the Durresi Block and believe it has huge upside potential.

Ireland

Barryroe has continued to prove to be a success for our previous partners, Providence and Lansdowne. The Company is very pleased to see the results not least because San Leon had opted for a 4.5% net profit interest which will give the Company very good cash flow, but without the inherent costs of this well or development costs in the future. 

San Leon is also currently seeking farm-in partners for the Slyne and North Porcupine licences and have opened data rooms to facilitate this process.  Several companies are reviewing data and we will update the market as appropriate.

Morocco

The Company has made good progress on our onshore Tarfaya licence, during the first half of the year we have further increased our acreage and we remain committed to early development of the huge potential our Tarfaya Oil Shale Acreage offers the Company. The Company has been awarded four additional blocks covering an area of 16 km² in addition to our existing oil shale acreage of 6,000 km² which was awarded back in 2009.

San Leon has entered into a cooperation agreement in oil shale development with Enefit Outotec Technology ("EOT"). EOT has been commissioned to conduct a study in the newly awarded onshore shallow oil shale blocks with a view to applying its proven Ex Situ retorting technology while we pursue, in parallel, our In Situ programme on the deeper zones on our existing acreage.

Post balance sheet the Company concluded the farm-out process on our two offshore blocks. Genel Energy ("Genel") farmed into the Sidi Moussa Block whilst Cairn Energy ("Cairn") farmed into the Foum Draa Block. These transactions have reduced our financial exposure through the free carries, whilst allowing the Company to retain an interest at a level that offers both the Company and its shareholders significant upside. Attracting companies of this calibre is a significant achievement and also endorses the attractiveness and potential of the Company's Moroccan acreage.  The Company, along with our partners, are targeting an exploration well on our Foum Draa Block in 2013 and planning to drill an exploration well on our Sidi Moussa Block most likely in 2014.

Financial Review

Revenue for the six months to 30 June 2012 was €1.16m compared to €0.52 for six months to 30 June 2011. Revenues from our share of gas production in the Seven Heads gas field sales was €0.5m for the six months to 30 June 2012 compared to €0.52m in comparative period. Other revenue for the period is attributable to the provision of seismic acquisition services to third parties by our seismic company, Novaseis valued at €0.66m for the six months to 30 June 2012 (nil in 2011).

San Leon made a profit before tax of €0.78m for the six months to 30 June 2012, compared to profit of €1.48m in six months to 30 June 2011. Earnings per share for the period is 0.069 cent per share (2011 H1: earnings per share of 0.19 cent per share).

Other income in the period of €5.4m relates to the profit on disposal of our royalty interest in the Amstel Field, Netherlands. The net cash proceeds received on the sale was €9.9m.

Cash and cash equivalents at 30 June 2012 amounted to €6.21m. This excludes cash proceeds from sale of the Amstel royalty of €9.9m which were collected subsequent to 30 June 2012. 

Corporate

During the six month period the Company has created an advisory committee, made up of a number of experienced industry professionals, to work alongside the management team. It is already making a considerable contribution. 

Their objective is to consider the macro issues associated with the industry and providence strategic insight.

With a view to increasing its profile to N.American investors San Leon listed ADRS onto OTCQX, with Deutsche Bank appointed as the Company's depository bank. FirstEnergy have also been appointed as joint broker to the Company.

The Company is also delighted to welcome Con Casey to the Board as Non-Executive Director.  Mr Casey has a wealth of experience having been involved with numerous quoted companies including being on the Board of Petroceltic since 2000.  Mr Casey's appointment becomes effective post the Company's AGM being held today.

Outlook

This has been a period of intense activity for the Company as we look to continue to deliver our strategy and prove up our extensive shale gas and conventional acreage; and during this period of intense activity the Company has made significant progress. 

Our drilling programme has continued to deliver with successful results seen in both the Baltic and the Southern Permian basins in Poland, further proving up the plays and potential of these regions.  The Company has also continued its policy of managing risk with the conclusion of the farm out process in Morocco, bringing in Genel and Cairn whilst still retaining significant exposure to the upside potential. Other farm outs are currently on-going and the Company hope to be able to announce similar deals in the near future.

San Leon has built up a highly attractive portfolio of assets across Europe and North Africa and is one of the leading shale gas players in Europe by acreage.  Whilst shale gas remains uncertain for many, the Company believes that there is incredible potential across Europe and is confident that it will become a significant resource in the future. 

San Leon is ideally placed to maximise this, whilst also having a portfolio of conventional assets which again hold significant potential. The Company's strategy is to prove up these assets, whilst continuing to manage risk across our portfolio and deliver value to our shareholders.  San Leon has the assets, the technical expertise and the partners to deliver this.

The following financial information on San Leon Energy Plc represents the Group's interim results for the 6 months ended 30 June 2012.

Consolidated income statement  

For the six months ended 30 June 2012

		Un-audited	Un-audited	Audited
	Notes	30/06/12	30/06/11	31/12/11
		€	€	€
Continuing operations
Revenue		1,164,172	517,649	1,039,654
Cost of sales		(739,104)	(269,076)	(566,469)
Gross profit		425,068	248,573	473,185
Other income	2	5,338,951	3,492,434	25,990,204
Administrative expenses		(4,675,383)	(1,743,858)	(7,225,224)
Exploration costs written-off		-	-	(2,684,290)
Profit from operating activities		1,088,636	1,997,149	16,553,875
Finance expense		(359,660)	(679,238)	(1,258,186)
Finance income		72,210	161,614	344,255
Share of loss of equity-accounted investments		(13,621)	-	(4,715)
Profit before income tax		787,565	1,479,525	15,635,229
Income tax expense		(9,691)	-	(35,344)
Profit for the period attributable to equity holders of the Group		777,874	1,479,525	15,599,885

Consolidated statement of comprehensive income 

for the six months ended 30 June 2012

		Un-audited	Un-audited	Audited
		30/06/12	30/06/11	31/12/11
		€	€	€
Profit for the period		777,874	1,479,525	15,599,885
Foreign currency translation differences		2,169,779	207,606	915,281
Total comprehensive income for the period		2,947,653	1,687,131	16,515,166
Earnings per share:
Basic earnings per ordinary share		0.069 cent	0.19 cent	1.85 cent
Diluted earnings per ordinary share		0.068 cent	0.18 cent	1.77 cent

Consolidated statement of changes in equity

For the period ended 30 June 2012

	Share capital	Share premium	Currency translation reserve	Share based payment reserve	Retained earnings		Attributable to equity holders of the Group		Non-controlling interest		Total equity
	€	€	€	€	€		€		€		€
Period ended 30 June 2011
Balance at 1 January 2011	39,099,780	91,589,215	382,768	3,417,145	(13,262,316)		121,226,592		-		121,226,592
Total comprehensive income for period
Profit for the period	-	-	-	-	1,479,525		1,479,525		-		1,479,525
Other comprehensive income
Foreign currency translation differences	-	-	207,606	-	-		207,606		-		207,606
Total comprehensive income for period	-	-	207,606	-	1,479,525		1,687,131		-		1,687,131
Transactions with owners recognised directly in equity
Contributions by and distributions to owners
Issue of shares	461,796	66,763	-	-	-		528,559		-		528,559
Share based payment	-	-	-	315,506	-		315,506		-		315,506
Effect of share options exercised	-	-	-	(748,211)	748,211		-		-		-
Total transactions with owners	461,796	66,763	-	(432,705)	748,211		844,065		-		844,065
Balance at 30 June 2011	39,561,576	91,655,978	590,374	2,984,440	(11,034,580)		123,757,788		-		123,757,788
Period ended 30 June 2012
Balance at 1 January 2012	56,658,591	122,891,220	1,298,049	5,461,488	3,085,780		189,395,128		2,523,181		191,918,309
Total comprehensive income for period
Profit for the period	-	-	-	-	777,874		777,874		-		777,874
Other comprehensive income
Foreign currency translation differences	-	-	2,169,779	-	-		2,169,779		-		2,169,779
Total comprehensive income for period	-	-	2,169,779	-	777,874		2,947,653		-		2,947,653
Transactions with owners recognised directly in equity
Contributions by and distributions to owners
Issue of shares related to business combination	364,354	639,023	-	-	-		1,003,377		-		1,003,377
Share warrants exercised	8,250	17,404	-	-	-		25,654		-		25,654
Share based payment	-	-	-	1,994,646	-		1,994,646		-		1,994,646
Effect of share options lapsed	-	-	-	(574,088)	378,356		(195,732)		-		(195,732)
Shares issued to Realm shareholders on conversion of exchangeable shares	-	-	-	-	-		-		(1,003,377)		(1,003,377)
Total transactions with owners	372,604	656,427	-	1,420,558	378,356		2,827,945		(1,003,377)		1,824,568
Balance at 30 June 2012	57,031,195	123,547,647	3,467,828	6,882,046	4,242,010		195,170,726		1,519,804		196,690,530

Consolidated statement of changes in equity

For the period ended 30 June 2012

	Share capital	Share premium	Currency translation reserve	Share based payment reserve	Retained earnings		Attributable to equity holders of the Group		Non-controlling interest		Total equity
	€	€	€	€	€		€		€		€
Year to 31 December 2011
Balance at 1 January 2011	39,099,780	91,589,215	382,768	3,417,145	(13,262,316)		121,226,592		-		121,226,592
Total comprehensive income for year
Profit for the year	-	-	-	-	15,599,885		15,599,885		-		15,599,885
Other comprehensive income
Foreign currency translation differences	-	-	915,281	-	-		915,281		-		915,281
Total comprehensive income for year	-	-	915,281	-	15,599,885		16,515,166		-		16,515,166
Transactions with owners recognised directly in equity
Contributions by and distributions to owners
Issue of shares related to business combination	15,352,623	26,926,235	-	-	-		42,278,858		-		42,278,858
Issue of shares	1,542,267	3,938,527	-	-	-		5,480,794		-		5,480,794
Share options and warrants exercised	663,921	437,243	-	-	-		1,101,164		-		1,101,164
Share based payment	-	-	-	2,792,554	-		2,792,554		-		2,792,554
Effect of share options exercised	-	-	-	(748,211)	748,211		-		-		-
Shares to be issued on Realm acquisition on conversion of exchangeable shares	-	-	-	-	-		-		5,685,721		5,685,721
Shares issued to Realm shareholders on conversion of exchangeable shares	-	-	-	-	-		-		(3,162,540)		(3,162,540)
Total transactions with owners	17,558,811	31,302,005	-	2,044,343	748,211		51,653,370		2,523,181		54,176,551
Balance at 31 December 2011	56,658,591	122,891,220	1,298,049	5,461,488	3,085,780		189,395,128		2,523,181		191,918,309

Consolidated statement of financial position

As at 30 June 2012

	Notes	Un-audited	Un-audited	Audited
		30/06/12	30/06/11	31/12/11
		€	€	€
Assets
Non-current assets
Intangible assets	3	150,502,186	88,578,445	140,263,276
Equity accounted investments	4	3,544,232	-	3,026,864
Property, plant and equipment	5	9,575,188	8,761,217	9,278,608
Other non-current assets		812,977	-	816,928
Financial assets - Barryroe NPI	6	39,197,977	-	39,197,977
		203,632,560	97,339,662	192,583,653
Current assets
Inventory		861,236	-	757,669
Trade and other receivables	7	3,839,040	6,573,651	8,064,400
Other financial assets	8	520,276	1,379,193	502,620
Amstel royalty disposal proceeds receivable		9,900,000	-	-
Cash and cash equivalents **		6,214,286	42,213,207	26,197,963
		21,334,838	50,166,051	35,522,652
Total assets		224,967,398	147,505,713	228,106,305
Equity and liabilities
Equity
Called up share capital	13	57,031,195	39,561,576	56,658,591
Share premium account	13	123,547,647	91,655,978	122,891,220
Share based payments reserve		6,882,046	2,984,440	5,461,488
Currency translation reserve		3,467,828	590,374	1,298,049
Retained profit/(loss)		4,242,010	(11,034,580)	3,085,780
Attributable to equity holders of the Group		195,170,726	123,757,788	189,395,128
Non-controlling interest		1,519,804	-	2,523,181
Total equity		196,690,530	123,757,788	191,918,309
Non-current liabilities
Provision for decommissioning		5,345,211	5,345,211	5,345,211
Loans and borrowings	12	579,416	4,055,984	2,671,219
Deferred tax liabilities		9,329,447	-	9,329,447
		15,254,074	9,401,195	17,345,877
Current liabilities
Trade and other payables	9	6,438,317	9,424,648	12,113,951
Loans and borrowings	10	4,992,000	4,922,082	5,177,144
Provisions	11	1,592,477	-	1,551,024
		13,022,794	14,346,730	18,842,119
Total liabilities		28,276,868	23,747,925	36,187,996
Total equity and liabilities		224,967,398	147,505,713	228,106,305

**excluding cash proceeds from the disposal of Amstel royalty collected subsequent to 30 June 2012

Consolidated statement of cash flows

For the six months ended 30 June 2012

		Un-audited	Un-audited	Audited
		30/06/12	30/06/11	31/12/11
		€	€	€
Cash flows from operating activities
Profit for the period before taxation		787,565	1,479,525	15,635,229
Adjustments for:
Depletion and depreciation		102,535	32,768	522,726
Finance expense		359,660	679,238	1,258,186
Finance income		(72,210)	(161,614)	(344,255)
Share based payments charge		205,074	85,434	866,038
Foreign exchange		650,595	-	(1,283,211)
Gain on assignment of Barryroe licence		-	-	(22,408,037)
Gain on disposal of Amstel royalty interest		(5,338,798)	-	-
Exploration costs written-off		-	-	2,684,290
(Increase) in stocks		(103,567)	-	(757,669)
Decrease /(increase) in trade and other receivables		4,251,407	(4,980,059)	(6,030,610)
(Decrease) /increase in trade and other payables		(5,733,608)	3,665,132	3,111,101
Share of loss of equity-accounted investments		13,621	-	4,715
Tax paid		-	-	(37,979)
Net cash flows (used in) /generated from operating activities		(4,877,726)	800,424	(6,779,476)
Cash flows from investing activities
Expenditure on exploration and evaluation assets		(12,405,504)	(12,324,032)	(39,440,563)
Joint venture partner share of exploration costs		491,233	-	8,999,859
Purchases of property, plant and equipment		(200,349)	(6,376,283)	(7,353,565)
Interest received		46,161	161,614	318,206
Net cash acquired with subsidiary		-	-	5,216,546
Advances to equity-accounted investments		(530,988)	-	-
Release of bank guarantees		-	-	941,883
Net cash (used) in investing activities		(12,599,447)	(18,538,701)	(31,317,634)
Cash flows from financing activities
Proceeds from issue of share capital, net of costs		15,184	528,559	6,302,541
Repayment of convertible loan		-	(2,150,000)	(2,150,000)
Repayment of other loans		(2,418,532)	(4,989,151)	(7,360,572)
Interest paid		(300,909)	(183,538)	(370,798)
Net cash (used) in/generated from financing activities		(2,704,257)	(6,794,130)	(3,578,829)
Net (decrease)/increase in cash and cash equivalents		(20,181,430)	(24,532,407)	(41,675,939)
Effect of foreign exchange fluctuation on cash and cash equivalents		197,753	(423,045)	705,243
Cash and cash equivalents at start of period		26,197,963	67,168,659	67,168,659
Cash and cash equivalents at end of period		6,214,286	42,213,207	26,197,963

Notes to the Interim Financial Information

1.         Basis of preparation and accounting policies

The Group interim financial information has been prepared in accordance with International Financial Reporting Standards and the accounting policies adopted are consistent with those followed in the preparation of the Group's financial statements for the year ended 31 December 2011. The interim financial information was approved by the Board of Directors on 27 September 2012.

The interim consolidated financial statements do not constitute statutory financial statements and therefore do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2011 which are available on the Group's website www.sanleonenergy.com.

The interim consolidated financial statements are presented in Euro ("€").

2.         Other income

	Un-audited	Un-audited	Audited
	30/06/12	30/06/11	31/12/11
	€	€	€
Profit on disposal of Amstel royalty	5,338,798	-	-
Assignment of Rockall Licence	-	3,492,434	3,492,433
Assignment of Barryroe Licence	-	-	22,408,037
Proceeds on sale of seismic data (North America)	-	-	87,590
Other	153	-	2,144
	5,338,951	3,492,434	25,990,204

In June 2012, San Leon Energy reached agreement to dispose of its royalty interest in the Amstel Field, Holland for net proceeds of €9.9m.

3.         Intangible assets

Cost and net book value	Exploration and evaluation assets	Royalty Interests	Total
	€	€	€
At 1 January 2011	71,503,653	4,561,202	76,064,855
Additions	32,311,681	-	32,311,681
Acquisitions through business combinations	49,804,747	-	49,804,747
Exchange rate adjustment	1,556,223	-	1,556,223
Assignment of Barryroe Licence interest	(16,789,940)	-	(16,789,940)
Write-off of USA exploration assets	(2,684,290)	-	(2,684,290)
At 31 December 2011	135,702,074	4,561,202	140,263,276
Additions	13,508,111	-	13,508,111
Disposals	-	(4,561,202)	(4,561,202)
Exchange rate adjustment	1,292,001	-	1,292,001
At 30 June 2012	150,502,186	-	150,502,186

An analysis of exploration assets by geographical area is set out below:

	30/06/2012 €
Poland	85,697,041
Morocco	39,798,418
Ireland	18,314,844
Albania	4,223,161
Other areas	2,468,722
Total	150,502,186

The Directors have considered the licence, exploration and appraisal costs capitalised in respect of its exploration and evaluation assets, which are carried at historical cost. Those assets have been assessed for impairment and in particular with regard to remaining licence terms, likelihood of licence renewal, likelihood of further expenditures and on-going appraisals for each year. The directors are satisfied that there are no current indications of impairment, but recognise that the future realisation of these exploration and evaluation assets is dependent on future successful exploration and appraisal activities and the subsequent economic production of oil and gas reserves.

4.         Equity accounted investments 

	Un-audited	Un-audited	Audited
	30/06/12	30/06/11	31/12/11
	€	€	€
Opening balance	3,026,864	-	-
Acquisitions through business combinations	-	-	2,883,863
Exchange adjustment and advances to entities	530,989	-	147,716
Share of loss of equity -accounted investments	(13,621)	-	(4,715)
Closing balance	3,544.232	-	3,026,864

5.         Property, plant and equipment

	Plant & Equipment €	Asset under construction €	Office Equipment €	Motor vehicles €	Total €
Cost At 1 January 2011	78,692	2,280,211	89,993	27,695	2,476,591
Additions	3,305,845	3,615,436	283,115	200,677	7,405,073
Exchange rate adjustment	2,573	-	(1,680)	(3,001)	(2,108)
At 31 December 2011	3,387,110	5,895,647	371,428	225,371	9,879,556
Additions	196,188	127,219	174,003	104,277	601,687
Exchange rate adjustment	165,344	-	13,121	11,097	189,562
At 30 June 2012	3,748,642	6,022,866	558,552	340,745	10,670,805
Depreciation
At 1 January 2011	26,230	-	45,713	6,462	78,405
Exchange rate adjustment	858	-	(341)	(700)	(183)
Charge for period	374,856	-	132,185	15,685	522,726
At 31 December 2011	401,944	-	177,557	21,447	600,948
Exchange rate adjustment	16,647	-	6,169	1,056	23,872
Charge for period	367,888	-	75,475	27,434	470,797
At 30 June 2012	786,479	-	259,201	49,937	1,095,617
Net book value
At 30 June 2012	2,962,163	6,022,866	299,351	290,808	9,575,188
At 31 Dec 2011	2,985,166	5,895,647	193,871	203,924	9,278,608

Asset under construction relates to the Company's Oil Shale Project in Morocco.

6.         Financial assets - Barryroe Net Profit Interest

In December 2011, San Leon Energy assigned its 30% working interest in Standard Exploration Licence 1/11 ("Licence" or "Barryroe") in the Celtic Sea, Ireland  to Providence Resources Plc ("Providence")  in exchange for a 4.5% Net profit interest ("NPI")  in the full field. Under the terms of the arrangement, San Leon Energy will not pay any further appraisal or development costs on the Licence.

The Directors have estimated the fair value of this NPI based on a technical evaluation of the licence area and with reference to a third party evaluation report prepared by RPS Energy in February 2011 for Lansdowne Oil & Gas plc, which estimated the net present value of 100% of the licence at USD 1.14 billion on a P50 case and NPV at a 10% discount rate. Having considered all available data on the underlying licence area including drilling and well test results subsequently announced by the licence operator (Providence),  in the opinion of the directors, the recoverable amount of the NPI is not less than this estimated fair value.

7.         Trade and other receivables

		Un-audited	Un-audited	Audited
		30/06/12	30/06/11	31/12/11
		€	€	€
Amounts falling due within one year: Trade receivables from joint operating partners		853,084	1,913,434	1,318,341
VAT and other taxes refundable		815,796	979,934	2,075,922
Other debtors		1,173,828	-	3,390,684
Prepayments and accrued income		996,332	3,680,283	1,279,453
		3,839,040	6,573,651	8,064,400

8.         Other financial assets

		Un-audited	Un-audited	Audited
		30/06/12	30/06/11	31/12/11
		€	€	€
Restricted cash at bank		520,276	1,379,193	502,620
		520,276	1,379,193	502,620

Restricted cash at bank relates to deposit accounts held in support of bank guarantees required under the Moroccan exploration licences held by the group.

9.         Trade and other payables

		Un-audited	Un-audited	Audited
		30/06/12	30/06/11	31/12/11
		€	€	€
Current
Trade payables		2,437,732	7,670,399	6,135,572
Corporation tax		-	2,635	-
PAYE / PRSI		212,232	62,993	154,389
Other creditors		39,134	907,331	290,336
Contingent liabilities on warrant holders		2,261,910	-	2,213,629
Accruals and deferred income		1,487,309	781,290	3,320,025
		6,438,317	9,424,648	12,113,951

10.       Loans and borrowings

		Un-audited	Un-audited	Audited
		30/06/12	30/06/11	31/12/11
		€	€	€
Current
Other loans		-	477,638	350,785
Delta Hydrocarbons B.V.		4,992,000	4,444,444	4,826,359
		4,992,000	4,922,082	5,177,144

11.       Provisions

Certain Realm Energy International Corporation shareholders exercised rights of dissent under Canadian law not to accept the terms of acquisition. Under Canadian law, these dissenting shareholders are eligible to receive a cash payment equal to the fair value of their shareholding at acquisition. The provision represents the directors' estimate of the cash consideration to be paid to those shareholders taking account of the market price of the Realm shares at acquisition.

12.       Loans and borrowings

		Un-audited	Un-audited	Audited
		30/06/12	30/06/11	31/12/11
		€	€	€
Non-current
Delta Hydrocarbons B.V.		579,416	4,055,984	2,671,219
		579,416	4,055,984	2,671,219

13.       Share capital

Un-audited		Un-audited
30/06/12		30/06/11
Authorised	€	€
1,500,000,000 Ordinary shares of €0.05 each	75,000,000	75,000,000
Issued share capital No. Ordinary Shares Share  capital € Share premium € At 1 Jan 2011 781,995,611 39,099,780 91,589,215 Issued in year 351,176,202 17,558,811 31,718,824 Share issue costs - - (416,819) At 31 Dec 2011 1,133,171,813 56,658,591 122,891,220 Issued in period 7,452,077 372,604 656,427 At 30 June 2012 1,140,623,890 57,031,195 123,547,647

 

END

 

 

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