Interim Results

RNS Number : 4895E
Sound Oil PLC
29 September 2008
 
 
Sound Oil plc
(“Sound Oil” or the “Company”)
 
Unaudited interim results for the six months ended 30 June 2008
 
Sound Oil, the upstream oil and gas company with assets in Indonesia, announces its unaudited interim results for the six month period ended 30 June 2008.
 
Key features
 
·                  On the Citarum PSC, the operating company has been sold to Pan Orient Energy and we anticipate a close
              working relationship with the new operator
 
·                  The suspended Pasundan well is due for testing in November
 
·                  Work begins on the seismic survey in fulfilment of the Citarum PSC commitment and three wells are 
              planned for  2009
 
·                  The Company is finalising details of an agreement to establish a Joint Operating Company in relation 
              to the Bangkanai PSC
 
·                  The Company is in the process of farming-out some of its interest in the Bangkanai PSC licence
 
Sound Oil’s portfolio consists of 34.99% working interest in the Bangkanai PSC which includes the Kerendan gas field in Kalimantan, Indonesia, and a 20% working interest in the Citarurm PSC in Java, Indonesia.
 
Commenting on the results, Gerry Orbell Chairman of Sound Oil said:
 
“There has been a lot of corporate activity in the last six months and we can now look forward to drill-stem testing at the Pasundan well and some seismic and drilling action in the back end of 2008 and in 2009.”
 
Further information on the Company can be found at www.soundoil.co.uk
 
For further information please contact:

Sound Oil                                               
07903 861 145
Gerry Orbell, Chairman
 
 
 
Smith & Williamson Corporate Finance Limited
020 7131 4000
Azhic Basirov
 
David Jones
 
 
 
Buchanan Communications
020 7466 5000
Tim Thompson
 
Nick Melson
 
 



                            Chairman’s Statement

We have seen progress on the organisation and management structure of both the Bangkanai and the Citarum Production Sharing Contracts (PSC) in Indonesia. We anticipate that this will translate into positive exploration activity by the end of 2008 and during 2009.
 
On the Citarum PSC in Java the issue of funding for the Operator BPREC has been resolved following the sale of the entire Ranhill shareholding in BPREC to Pan Orient Energy, a Canadian-based E&P company. We expect BPREC to benefit from the experienced management team that Pan Orient has available in the region. Already planning and site preparation work is in progress to implement an additional drill stem test of the suspended Pasundan-1 well. The Operator anticipates that the test will be undertaken in November of this year. In addition, work has begun on the ground survey for the seismic commitments for both the First and Second Work Period of the PSC. Together these total 1250 km. The PSC First Commitment will expire in October 2008 and we expect an extension to the First Period to be granted by the Government authority, BPMigas, in recognition of our commitment to this extensive seismic programme. The results of the survey, expected in the second half of 2009, will establish drilling locations for the remaining three commitment wells which the Operator intends to drill in 2009.
 
On the Bangkanai PSC we are finalising the details of an agreement to establish a Joint Operating Company (JOC) to conduct future operations on the PSC. The Company will be part owners of, and participants in, the JOC. The JOC will help streamline both exploration and development activity including drilling of the Sungai Lahei-1 deep gas exploration well (P50 resource potential 940 Bscf) and new development wells for the Kerendan gas field. We expect the Operator to start field operations on site preparation for the first well during 4Q2008. This is a requirement to ensure the extension of the PSC for a further twelve months. For the Kerendan field development, discussions are taking place with a number of potential gas buyers and independent power producers and we expect to conclude a gas sales agreement by year end. Parallel with the drilling activity we will acquire 300 km of new seismic data over the large multi-trillion cubic feet gas potential Jupoi structure in the south of the block during the last quarter of 2008.
 
In the first six months of 2008 the group incurred a net loss of £726,000 compared with £885,000 in the same period last year. Exploration expenditure in the Income Statement was £293,000 (2007 £307,000). Administration costs were £668,000 compared with £628,000 in 2007. Bank deposit interest received was £221,000 (2007 £386,000) and there was an unrealised currency gain of £14,000 on our US$ holdings due to the recent weakness of sterling (2007 loss of £329,000). Capital investment in the Indonesian licences was £883,000. Cash balances were £12 million at end June 2008 and shareholders funds £30.7 million.
 
Notwithstanding the attractive prospectivity recognised on the Bangkanai PSC we are in the process of farming -out some of our interest in the licence. The forward costs of the well commitments are too large a proportion of our total budget exposure for a company of our size. We have seen interest from sixteen companies, including some major operators, and are at an advanced stage in this process with several parties.
 
Gerry Orbell
Chairman
26 September 2008


 

  

Interim Consolidated Income Statement
for the six months ended 30 June 2008
 
 
Notes
Six months ended 30 June 2008
Six months ended 30 June 2007
Year ended
31 December 2007
 
 
Unaudited
 
Unaudited
 
Audited
 
 
 
£'000
£'000
£'000
Exploration costs
 
(293)
(307)
(630)
Gross loss
 
(293)
(307)
(630)
Administrative expenses
 
(668)
(628)
(1,513)
Group trading loss
 
(961)
(935)
(2,143)
Share of post-tax loss of associate
6
(7)
(59)
Group operating loss
 
(961)
(942)
(2,202)
Finance revenue
 
221
386
704
Other finance expense – foreign exchange gain/(loss)
 
14
(329)
(313)
Loss before tax
 
(726)
(885)
(1,811)
Tax
 
Loss for the period attributable to the equity holders of the parent
 
(726)
(885)
(1,811)
Loss per share (basic) for the period attributable to ordinary equity holders of the parent (pence)
5
(0.10)
(0.13)
(0.26)
 

Interim Consolidated Balance Sheet
at 30 June 2008
 
 
Note
30 June 2008
30 June 2007
31 December 2007
 
 
Unaudited
 
Unaudited
 
Audited
 
 
 
£’000
£’000
 
£’000
Non-current assets
 
 
 
 
Property, plant and equipment
 
79
81
77
Intangible assets
 
3,829
3,813
3,825
Exploration and evaluation assets
7
18,471
15,327
15,428
Investments in associates
6
1,431
2,162
Other debtors
 
425
231
 
 
22,804
20,652
21,723
Current assets
 
 
 
 
Prepayments
 
24
52
62
Inventories
 
249
Other debtors
 
654
370
9
Cash and short term deposits
 
11,994
15,244
13,623
 
 
12,921
15,666
13,694
Total assets
 
35,725
36,318
35,417
Current liabilities
 
 
 
 
Trade and other payables
 
1,115
381
274
 
 
1,115
381
274
Non-current liabilities
 
 
 
 
Deferred tax liabilities
 
3,829
3,813
3,825
Provisions
 
82
59
82
 
 
3,911
3,872
3,907
Total liabilities
 
5,026
4,253
4,181
Net assets
 
30,699
32,065
31,236
Capital and reserves
 
 
 
 
Equity share capital
 
36,456
36,456
36,456
Foreign currency reserve
 
(1,003)
(1,254)
(1,205)
Accumulated deficit
 
(4,754)
(3,137)
(4,015)
Total equity
 
30,699
32,065
31,236
Approved by the Board on 26 September 2008
 
 
 
 
 


Interim Consolidated Statement of Changes in Equity
for the six months ended 30 June 2008
 
 
Notes
Issued capital £’000
Share premium £’000
Accumulated
Deficit
£’000
Other reserves £’000
Total equity £’000
At 1 January 2008
 
692
35,764
(4,015)
(1,205)
31,236
Foreign currency translation
 
(13)
202
189
Total income and expense for the period recognised in equity
 
(13)
202
189
Total loss for the period
 
(726)
(726)
Total income and expense for the period
 
(739)
202
(537)
Share based payments
3
At 30 June 2008
(unaudited)
 
692
35,764
(4,754)
(1,003)
30,699
 
 
 
Issued capital £’000
Share premium £’000
Accumulated deficit
£’000
Other reserves £’000
Total equity £’000
At 1 January 2007
 
692
35,764
(2,294)
(974)
33,188
Foreign currency translation
 
(280)
(280)
Total income and expense for the period recognised in equity
 
(280)
(280)
Total loss for the period
 
(885)
(885)
Total income and expense for the period
 
(885)
(280)
(1,165)
Share based payments           
3
42
42
At 30 June 2007 (unaudited)
 
692
35,764
(3,137)
(1,254)
32,065


 

Interim Consolidated Cash Flow Statement
for the six months ended 30 June 2008
 
Six months ended 30 June 2008
Six months ended 30 June 2007
Year ended 31 December 2007
 
Unaudited
Unaudited
Audited
 
£'000
£'000
£'000
Cash flow from operating activities
 
 
 
Cash flow from operations
(1,146)
(947)
(2,098)
Interest received
221
386
704
Net cash flow from operating activities
(925)
(561)
(1,394)
 
 
 
 
Cash flow from investing activities
 
 
 
Capital expenditure and disposals
(26)
(34)
(73)
Exploration expenditure
(883)
(323)
(408)
(Increase)/decrease in investment in associate
(910)
(1,634)
Net cash flow from investing activities
(909)
(1,267)
(2,115)
 
 
 
 
Cash flow from financing activities
 
 
 
Net decrease in cash and cash equivalents
(1,834)
(1,828)
(3,509)
Net foreign exchange difference
205
(317)
(257)
Cash and cash equivalents at the beginning of the period
13,623
17,389
17,389
Cash and cash equivalents at the end of the period
11,994
15,244
13,623


 

Notes to cash flow
Six months ended 30 June 2008
Six months ended 30 June 2007
Year ended 31 December 2007
 
Unaudited
Unaudited
Audited
 
£'000
£'000
£'000
Cash flow from operations reconciliation
 
 
 
Loss before tax
(726)
(885)
(1,811)
Finance revenue
(221)
(386)
(704)
Foreign exchange loss/(gain)
(14)
329
313
Increase/(decrease) in accruals and short term creditors
841
(303)
(410)
Depreciation
24
6
51
Share based payments charge
42
70
Increase in long term provisions
3
26
Increase in long term debtors
(194)
(163)
Increase in inventories
(249)
Decrease/(increase) in short term debtors
(607)
247
530
 
 
 
 
Cash flow from operations
(1,146)
(947)
(2,098)
 
  
Notes to the Interim Consolidated Financial Statements
 
1. Basis of preparation
The interim statement does not represent statutory accounts within the meaning of section 240 of the Companies Act 1985. The comparative financial information is based on the statutory accounts for the year ended 31 December 2007. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies and did not contain statements under section 237(2) or (3) of the Companies Act of 1985.
 
The interim financial information is unaudited and has been prepared on the basis of the accounting policies set out in the Group’s 2007 statutory accounts and in accordance with IAS 34 Interim Financial Reporting.
 
The seasonality or cyclicality of operations does not impact on the interim financial statements.
 
2. Segment information
IAS 34 requires the disclosure of segment results for each business segment. For the group there is no material difference between the consolidated results and the group's operating and business segments. The group’s principal area of operation and business is Indonesia. Therefore additional disclosure is not required.
 
3. Share-based payments
No share options were granted in the period.
 
4. Related party transactions
There were no sales or purchases to or from related parties, no guarantees provided or received for any related party receivables or payables and no other transactions with related parties, directors’ loans and other directors’ interests.
 
5. Loss per share
The calculation of basic loss per ordinary share is based on the loss after tax and on the weighted average number of ordinary shares in issue during the period. Basic loss per share is calculated as follows:
 
 
Loss after tax
Weighted average number of shares
Loss per share
 
June
2008
£’000
June
2007
£’000
December 2007
£’000
June
2008
million
June
2007
million
December 2007
million
June
2008
pence
June
2007
pence
December 2007
pence
Basic
(726)
(885)
(1,811)
692
692
692
(0.10)
(0.13)
(0.26)
 
Diluted loss per share has not been disclosed as inclusion of unexercised options would be anti-dilutive in all periods.
 
6. Investment in associate
At 31 December 2007 the Group had a 20% equity interest in PT. Bumi Parahyangan Ranhill Energia Citarum (BPREC), which holds the Production Sharing Contract (PSC) and is operator for the Citarum licence area. This investment was accounted for as an investment in an associate. In February 2008 the shares were cancelled and replaced by a direct interest in the PSC, which is accounted for as a jointly controlled asset. The amount of £2,162,000 which was shown in the balance sheet at 31 December 2007 as investment in associate has therefore been transferred to exploration and evaluation assets.
 
 
30 June 2008
30 June 2007
31 December
2007
 
£'000
£'000
£'000
At start of period
2,162
528
528
Additions during period
910
1,693
Share of loss after tax
(7)
(59)
Disposal during period
(2,162)
At end of period
1,431
2,162
 
7. Exploration and evaluation assets
 
 
30 June 2008
30 June 2007
31 December
2007
 
£'000
 
£'000
 
£'000
 
Costs
 
 
 
At start of period
15,428
15,288
15,288
Additions
3,045
347
389
Exchange adjustments
(2)
(308)
(249)
At end of period
18,471
15,327
15,428
Amortisation
 
 
 
At start of period
-
-
-
Charge for the period
-
-
-
At end of period
-
-
-
Net book amount at end of period
18,471
15,327
15,428
 
Additions in 2008 include £2,162,000 for the acquisition of the direct interest in the Citarum PSC as described in note 6.


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